Document:

Dated 1 April
      2010

                 

                 

              
	
                THE ROYAL
      BANK OF SCOTLAND GROUP PLC

                and

                BANCO
      SANTANDER, S.A.

                and

                THE STATE OF
      THE NETHERLANDS

                and

                RFS HOLDINGS
      B.V.

              
	 
	 
	
                RESTATED
      CONSORTIUM AND SHAREHOLDERS’ AGREEMENT

                 

              
	
                 

              	 
    
	 
    	 
    
	
                LINKLATERS
      LLP

                One Silk
      Street

                London EC2Y
      8HQ

              	 
    
	 	 
	
                Telephone (44-20) 7456
      2000

              	 
    
	
                Facsimile (44-20) 7456
      2222

              	 
    
	 
    	 
    
	
                Ref
      M.
      Middleditch

              	 
    

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

       

    

    Table of
Contents

     

    
      
        	
                Contents 

              	Page
	 	 	 
	
                1

              	
                Definitions
      and Interpretation

              	
                4

              
	 
    	 
    	 
    
	
                2

              	
                Restatement

              	
                15

              
	 
    	 
    	 
    
	
                3

              	
                Conditions
      and Effectiveness

              	
                15

              
	 
    	 
    	 
    
	
                4

              	
                Share
      Capital of the Company

              	
                16

              
	 
    	 
    	 
    
	
                5

              	
                Acquired
      Business Transfers

              	
                19

              
	 
    	 
    	 
    
	
                6

              	
                The
      Retained Group

              	
                24

              
	 
    	 
    	 
    
	
                7

              	
                Governance

              	
                24

              
	 
    	 
    	 
    
	
                8

              	
                Termination

              	
                27

              
	 
    	 
    	 
    
	
                9

              	
                Determinations

              	
                28

              
	 
    	 
    	 
    
	
                10

              	
                Representations
      and Warranties

              	
                30

              
	 
    	 
    	 
    
	
                11

              	
                Provision
      of Information and Preparation of Accounts

              	
                30

              
	 
    	 
    	 
    
	
                12

              	
                Transfer
      Restrictions for the Investors

              	
                31

              
	 
    	 
    	 
    
	
                13

              	
                Further
      Capital and Funding

              	
                32

              
	 
    	 
    	 
    
	
                14

              	
                New
      Shareholders

              	
                39

              
	 
    	 
    	 
    
	
                15

              	
                Distributions
      and Repurchases

              	
                40

              
	 
    	 
    	 
    
	
                16

              	
                Confidentiality
      and Announcements

              	
                41

              
	 
    	 
    	 
    
	
                17

              	
                Advisers
      and Costs

              	
                41

              
	 
    	 
    	 
    
	
                18

              	
                Supremacy
      of this Agreement

              	
                41

              
	 
    	 
    	 
    
	
                19

              	
                Entire
      Agreement and Non Reliance

              	
                42

              
	 
    	 
    	 
    
	
                20

              	
                General

              	
                43

              
	 
    	 
    	 
    
	
                21

              	
                Notices

              	
                45

              
	 
    	 
    	 
    
	
                22

              	
                Choice
      of law and arbitration

              	
                46

              
	 
    	 
    	 
    

      

    

    
      
        	 	
                Schedule
      1 – Part 1 Transfer of the Acquired Businesses

              	
                48

              
	 	 
    	 
    
	 	
                Schedule
      1 – Part 2 The Acquired Businesses

              	
                60

              
	 	 
    	 
    
	 	
                Schedule
      1 – Part 3 The Retained Businesses

              	
                63

              

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                Schedule1
      – Part 4 Employment

              	
                67

              
	 	 	 
	 	
                Schedule
      1 – Part 5 Pensions

              	
                72

              
	 	 	 
	 	
                Schedule
      1 – Part 6 Intellectual Property

              	76
	 	 	 
	 	
                Schedule
      1 – Part 7 Real Estate

              	78
	 	 	 
	 	
                Schedule
      1 – Part 8 Regulatory Matters

              	81
	 	 	 
	 	
                Schedule
      1 – Part 9 Tax Matters

              	83
	 	 	 
	 	
                Schedule
      2 The Retained Business

              	
                91

              
	 	 	 
	 	
                Schedule
      3 Corporate Governance

              	100
	 	 	 
	 	
                Schedule
      4 Representations and Warranties

              	
                108

              
	 	 	 
	 	
                Schedule
      5 Form of Deed of Accession

              	109
	 	 	 
	 	
                Schedule
      6 Permitted Disclosure

              	112
	 	 	 
	 	
                Schedule
      7 Governance Clearances

              	113
	 	 	 
	 	
                Schedule
      8 Other State Acquired Businesses

              	
                118

              
	 	 	 
	 	
                Schedule
      9 Charging Basis for Management of the Retained Business

              	
                121

              
	 	 	 
	 	
                Schedule
      10 4.95% Term Sheet

              	
                123

              
	 	 	 
	 	
                Schedule
      11 Operation of ID&J India

              	
                128

              
	 	 	 
	 	
                Schedule
      12 Worked Example for the purposes of Clause 13

              	
                137

              

      

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    This
Agreement is made on 1 April 2010 between:

     

    
      	
              (1)

            	
              THE
      ROYAL BANK OF SCOTLAND GROUP PLC,
      a company incorporated in Scotland (registered
      no. SC45551),
      whose registered office is at 36
      St Andrew Square,
      Edinburgh,
      EH2
      2YE (“RBS”);

            

    

     

    
      	
              (2)

            	
              BANCO
      SANTANDER, S.A.,
      a company incorporated in Spain (registered
      at
      the Cantabria Commercial Registry),
      whose registered office is at Paseo
      de Pereda 9-12, Santander,
      Spain (“Santander”);

            

    

     

    
      	
              (3)

            	
              THE
      STATE OF THE NETHERLANDS (De
      Staat der Nederlanden) having its
      seat at The
      Hague,
      The Netherlands, represented by the Minister of Finance, Korte
      Voorhout 7,
      The Hague, The Netherlands (the “State”);
      and

            

    

     

    
      	
              (4)

            	
              RFS
      HOLDINGS B.V.,
      a company incorporated in the
      Netherlands (registered
      no. 34273228),
      whose registered office is at Strawinskylaan
      3105, 1077 ZX Amsterdam,
      The Netherlands (the
      “Company”).

            

    

     

    Recitals:

     

    
      	
              (A)

            	
              In
      October 2007, the
      Investors invested in
      the Company, a limited company that
      was newly incorporated
      for the purpose of
      making an
      offer to acquire the whole of the issued share capital of RBS
      Holdings (which was at the time named ABN AMRO Holding N.V.). The
      Offer was declared unconditional on 10 October 2007 and, following
      completion of the squeeze out procedure, the Company now owns 100 per
      cent. of RBS Holdings.

            

    

     

    
      	
              (B)

            	
              The
      Original CSA regulated the
      relationship between the Investors and between
      the Investors and the
      Company,
      set out the terms on which the Investors were
      willing
      to
      acquire Shares in the Company and on
      which the Investors
      and the Company
      effected
      the
      Offer, and governed the
      ongoing management of the
      Company, before and after 10 October 2007.

            

    

     

    
      	
              (C)

            	
              Since 10
      October 2007, when the Offer was declared unconditional, many of the
      Acquired Businesses have been transferred to the Investors as contemplated
      by the Original CSA. The Investors have also reached agreements in
      relation to various aspects of the assets and liabilities of the RBS
      Holdings Group, how they will be managed and how they will be shared
      between the Investors.

            

    

     

    
      	
              (D)

            	
              In
      particular, the parties have agreed that RBS shall ultimately be the sole
      owner of the Company and that RBS shall acquire its Acquired Businesses
      either by the transfer of such businesses to RBS (or a member of its
      Group), or to a third party at RBS’ discretion or by becoming the sole
      shareholder of the Company following the Final Completion
      Date.

            

    

     

    
      	
              (E)

            	
              Accordingly,
      the parties have agreed to amend and restate the Original CSA in the form
      of this Agreement to reflect the restructuring of the RBS Holdings Group
      since 10 October 2007. Therefore this Agreement regulates the relationship
      between the Investors and between the Investors and the Company, sets out
      the terms on which the remaining Acquired Businesses will be managed and
      ultimately transferred to the
Investors.

            

    

     

    
      	
              (F)

            	
              This
      Agreement also provides for certain amendments to the share capital and
      governance of the Company, such changes to take effect upon obtaining the
      requisite regulatory and other
approvals.

            

    

     

    It
is agreed as follows:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              1

            	
              Definitions
      and Interpretation

            

    

     

    
      	
              1.1

            	
              Definitions

            

    

     

    “ABN
AMRO Bank” means
ABN AMRO Bank N.V. (formerly named ABN AMRO II N.V.) a company incorporated in
the Netherlands (registered no. 34334259), whose registered office is at Gustav
Mahlerlaan 10, 1082 PP Amsterdam, The Netherlands);

     

    “Acquired
Business(es)” in
the case of each Investor, means the businesses which were to be or which have
been acquired directly or indirectly by that Investor or a member of its Group
pursuant to the Original CSA (unless otherwise reallocated to another Investor
with the consent of the relevant Investors), or which are to be acquired
directly or indirectly by that Investor or a member of its Group pursuant to
this Agreement, as described in Part 2 of Schedule 1, in each case including the
Acquired Business Assets relevant to that business but subject to the
Liabilities, to the extent that such Liabilities relate to such
business;

     

    “Acquired
Business Assets” in
the case of each Acquired Business, means the Business Assets of that
business;

     

    “Acquired
Business Transfers” means the transfers of Acquired Businesses
contemplated pursuant to Clause 5.1 or 5.3, but excluding any transfer of the
Assigned IP;

     

    “Acquired
Companies” in
the case of each Investor, means the members of the RBS Holdings Group which
were to be or which have been acquired by that Investor or a member of its Group
pursuant to the Original CSA (unless otherwise reallocated to another Investor
with the consent of the relevant Investors), or which are to be acquired by that
Investor or a member of its Group pursuant to this Agreement, including any
companies established within the RBS Holdings Group for the purposes of
acquiring Acquired Business Assets prior to their transfer to an Investor or a
member of the relevant Investor’s Group, and “Acquired
Company” shall mean any one of such members;

     

    “Acquired
Company Shares” means such of the shares in the Acquired Companies as are
held by any member of the RBS Holdings Group or in which any member of the RBS
Holdings Group is interested;

     

    “Adjusted
Consortium Proportions” means:

     

    
      	
               
      

            	
              (a)

            	
              with respect
      to RBS, 53.0988%; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              with respect
      to the State, 46.9012%,

            

    

     

    subject to
adjustment in the event that there is an adjustment to the Consortium
Proportions;

     

    “Affiliate”
means in relation to any person, its connected persons and any company which is
its subsidiary or holding company or another subsidiary of any such holding
company from time to time;

     

     “Articles”
means the current articles of association of the Company or, following their
adoption in accordance with Clause 4.2, the New Articles or as the articles of
association of the Company may be subsequently altered from time to time in
accordance with this Agreement, and references in this Agreement to an “Article”
shall be construed accordingly;

     

    “Assigned
IP” has the meaning given to it in Clause 5.3.6;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Bank
of Spain” means Banco de Espana;

     

    “Board”
means the board of directors of the Company;

     

    “Board
Reserved Matters” means those matters listed in Schedule 3 Part
E;

     

    “Business
Assets” means, in the case of any Acquired Business or the Retained
Business, that business and the assets, rights, benefits and other property
owned by any member of the RBS Holdings Group which were exclusively or
principally used, and accounted for, by that business as at 10 October 2007
(including the goodwill attached to such business and including the shares of
each member of the RBS Holdings Group the activities of which exclusively or
principally involve the carrying on of that business) and any other assets,
rights, benefits and other property which have been exclusively or principally
used, and accounted for, by that business since 10 October 2007;

     

    “Business
Employees” means, in the case of each Acquired Business or the Retained
Business and at any particular time, those employees of members of the RBS
Holdings Group who are exclusively or principally engaged in that business at
the relevant time;

     

    “Business
Day” means a day (other than a Saturday, Sunday or a public holiday) on
which banks generally are open for business in London, Amsterdam and
Madrid;

     

    “Business
Unit” means a business unit through which the RBS Holdings Group carried
or carries on business, as described in the RBS Holdings Accounts;

     

    “Capital
Buffer” has the meaning given to it in Clause 13.4.1(i);

     

    “Challenge”
has the meaning given to it in Clause 12.1.4(i);

     

    “Cohabitation
Agreements” means the cohabitation agreements between RBS NV and ABN AMRO
Bank dated 1 April 2010 in respect of the international diamond and jewellery
business in Hong Kong and 1 April 2010 in respect of the international diamond
and jewellery business in United Arab Emirates, each of which sets out certain
principles for the management of the relevant State Acquired Business whilst it
is part of the RBS Holdings Group;

     

    “Companies
Act” means the Companies Act 2006;

     

    “Completed
Restructuring” means the transactions carried out pursuant to Clause 5
and Schedule 3 of the Original CSA prior to the date of this Agreement pursuant
to which certain State Acquired Businesses or Santander Acquired Businesses or
assets and liabilities attributable thereto have been acquired directly or
indirectly by the State or Santander, or parties nominated by them (as
applicable) and any related transactions;

     

    “Completion”
means, in the case of each transfer of all or part of an Acquired Business or
Acquired Company hereunder, Completion of that transfer pursuant to the
provisions of paragraph 4 of Schedule 1 – Part 1;

     

    “Completion
Date”
means, in respect of any Completion, the date on which such Completion takes
place, being the effective date of any Legal Demerger or, in the case of a
transfer of all or part of any Acquired Business by way of sale and purchase,
the date agreed between the parties for such completion;

     

    “Consortium
Proportions” means:

     

    
      	
               
      

            	
              (a)

            	
              with respect
      to RBS, 38.2780%;

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              with respect
      to Santander, 27.9117%; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              with respect
      to the State, 33.8103%.

            

    

     

    “Deed
of Accession” means a deed substantially in the form set out in Schedule
5;

     

    “Default
Interest Rate” means a rate equal to 3-month EURIBOR plus 250 basis
points;

     

    “Defaulting
Investor” has the meaning given to it in Clause 13.2.2;

     

    “Deferred
Tax Assets” means the State Deferred Tax Assets, the Santander Deferred
Tax Assets and/or the Retained Business Deferred Tax Assets;

     

    “Director”
means a director of the Company;

     

    “DNB”
means De Nederlandsche Bank (the Netherlands Central Bank);

     

    “D
Shares” means the unissued D Shares in the Company, the rights of which
are as set out in the Articles and which will be as set out in the New Articles,
which as at the date of this document are owned by the Company (having been
repurchased);

     

    “Effective
Notice” has the meaning given in Clause 3.2.1;

     

    “Encumbrance”
means a mortgage, charge, pledge, lien, option, restriction, right of first
refusal, right of pre-emption, third party right or interest, other encumbrance
or security interest of any kind or another type of agreement or arrangement
having similar effect;

     

    “EURIBOR”
means:

     

    
      	
               
      

            	
              (a)

            	
              the
      percentage rate per annum determined by the Banking Federation of the
      European Union for the relevant period;
or

            

    

     

    
      	
               
      

            	
              (b)

            	
              (if no such
      rate is available for the relevant currency or relevant period) the rate
      as supplied to the parties at their request quoted by Barclays Bank plc to
      leading banks in the European interbank
market,

            

    

     

    in either case,
calculated on a daily basis;

     

    “F
Shares” means the F Shares in the Company, the rights of which are as set
out in the Articles and which as will be set out in the New Articles, and which
as at the date of this Agreement are owned by the State;

     

    “Final
Completion Date” has the meaning given in Clause 4.3.1;

     

    “FSA”
means the Financial Services Authority;

     

    “Further
Restructuring” means Legal Separation and the transactions to be carried
out pursuant to this Agreement, including the Acquired Business Transfers, the
Retained Business Wind Down, the final transfers and the reorganisation of the
share capital of the Company pursuant to Clause 4, by virtue of which the State
shall acquire directly or indirectly the State Acquired Businesses, Santander
shall acquire directly or indirectly the Santander Acquired Businesses, RBS
shall acquire 100 per cent. ownership of the Company and therefore the RBS
Acquired Businesses, and the Retained Business shall be sold or wound down, and
any transactions ancillary thereto;

     

    “Governance
Amendments” means the amendments to the share capital of the Company, the
amendment of the Articles (by adopting the New Articles) and the changes to the
management of the Company as contemplated by Clauses 4.1, 4.2 and 7.2,
respectively;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “Governance
Clearances” means the anti-trust and regulatory consents, notifications
and approvals which must be obtained in connection with the Governance
Amendments, as set out in Schedule 7 ;

     

    “Group”
means, in relation to any company, its holding companies, subsidiaries and
subsidiary undertakings and subsidiaries or subsidiary undertakings of such
holding companies from time to time (but, in the case of RBS, shall exclude the
Company and its subsidiaries and subsidiary undertakings and, in the case of the
Company, shall exclude RBS and its Group, and in the case of the State, shall
mean the State, ABN AMRO Bank and its holding companies, subsidiaries and
subsidiary undertakings from time to time);

     

    “holding
company” means a holding company as defined in section 1159 of the
Companies Act;

     

    “ICC”
means the International Chamber of Commerce;

     

    “ID&J
India” has the meaning given in Clause 5.1.2(i);

     

    “ID&J
SPAs” means the substantially agreed form sale and purchase agreements
pursuant to which the State Acquired Businesses listed in Clause 5.1.2 will be
transferred to the State (or a member of its Group);

     

    “Independent
Accountants” has the meaning given in Clause 9.1;

     

    “Independent
Tax Advisers” has the meaning given in Clause 9.1;

     

    “Investor”
means any one of RBS, Santander and the State (which pursuant to the deed of
accession dated 24 December 2008 assumed the obligations of Fortis under the
Original CSA with effect as if it had been an Investor from the date of the
Original CSA) and “Investors”
means two or more of them as the context requires;

     

    “Investor
Group” means, in relation to an Investor, that Investor and the members
of its Group and “member
of an Investor Group” shall be construed accordingly;

     

    “L
Shares” means the L Shares in the Company, the rights of which are set
out in the Articles, and which will be as set out in the New Articles, which as
at the date of this Agreement are owned by RBS;

     

    “Leasing
Principles and Treatment of Property Stranded Costs Principles” means the
document agreed by the parties entitled “Leasing Principles and Treatment of
Property Stranded Costs Principles” version 12 dated 9 June 2008;

     

    “Legal
Demerger” means a division by acquisition in accordance with Article 2
and/or 25 of the Sixth Company Law Directive;

     

    “Legal
Demerger Agreement” means the agreement dated 5 February 2010 pursuant to
which, inter
alia, RBS NV agreed to transfer certain of the State Acquired Businesses
to ABN AMRO Bank;

     

    “Legal
Separation” means the transfer of ABN AMRO Bank to ABN AMRO Group N.V.
which took place on or around the date hereof in accordance with the sale and
purchase agreement between RBS Holding N.V. and ABN AMRO Group
N.V.;

     

    “Liabilities”
means losses, liabilities, costs, charges, actions, proceedings, claims,
demands, duties and obligations of every description, including fines and
penalties, whether deriving from contract, common law, statute or otherwise,
whether present or future, actual or contingent, known or unknown, ascertained
or unascertained, claimed or 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    unclaimed, disputed
or acknowledged and whether related to contracts or other obligations which have
been wholly or partly completed or performed and whether owed or incurred
severally or jointly and whether owed as principal or surety and, in each case,
whether incurred before or after Completion (including, without limitation,
accrued tax liabilities and regulatory fines);

     

    “LIBOR”
means:

     

    
      	
               
      

            	
              (a)

            	
              the British
      Bankers Association Interest Settlement Rate for Sterling and for a period
      most closely approximating the period for which a LIBOR rate is required
      displayed on the appropriate page of the Telerate screen, provided that if
      such page is replaced or the Telerate service ceases to be available, the
      parties may agree another page or service displaying the appropriate rate;
      or

            

    

     

    
      	
               
      

            	
              (b)

            	
              (if no such
      rate is available for the relevant currency or relevant period) the rate
      as supplied to the parties at their request quoted by Barclays Bank plc to
      leading banks in the London interbank
market;

            

    

     

    “Litigation
Management Agreement” means the agreement dated 5 February 2010 between
RBS, Santander, the State, RBS Holdings, RBS NV, ABN AMRO Bank and the Company
relating to, inter
alia, how litigation pertaining to the RBS Holdings Group will be
managed;

     

    “Minimum
Equity Ratio” has the meaning given to it in Clause
13.4.1(i);

     

    “Minimum
Funding Requirement” has the meaning given to it in Clause
13.4.1(iii);

     

    “Minimum
Ratios” has the meaning given to it in Clause 13.4.1;

     

    “Net
Funding Shortfall” has the meaning given to it in Clause
13.2.4;

     

    “Net
Funding Surplus” has the meaning given to it in Clause
13.2.5;;

     

    “New
Articles” means the articles of association of the Company proposed to be
adopted in accordance with Clause 4.2;

     

    “New
Company” means the Company and any company formed as part of or pursuant
to the Acquired Business Transfers or the Retained Business Wind Down or (where
the context requires) as part of or pursuant to the Completed
Restructuring;

     

    “New
Shareholder” has the meaning given to it in Clause 14.1;

     

    “Non
Defaulting Investors” has the meaning given to it in Clause
13.2.2;

     

    “O
Shares” means the O Shares in the capital of the Company, the rights of
which are as set out in the Articles and which will be as set out in the New
Articles, and which as at the date of this Agreement are owned by RBS, the State
and Santander in the Consortium Proportions;

     

    “Offer”
means the offer which was made by the Company for all of the issued and to be
issued shares in the capital of RBS Holdings (which at the time was named ABN
AMRO Holding N.V.) as contemplated by the Original CSA;

     

    “Original
CSA” means the consortium and shareholders’ agreement originally dated 27
May 2007 (as supplemented and amended by the supplemental consortium and
shareholders’ agreement dated 17 September 2007, the amendment agreement dated
26

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    August 2008 and the
deed of accession dated 24 December 2008) which has been amended and restated by
this Agreement;

     

    “Overfunded
Business” has the meaning given to it in Clause 13.6.1;

     

    “Paraguayan
Escrow Amount” means the US$753,891.98 currently held in an escrow
account with HSBC in the name of RBS NV and which relates to the sale of the
Paraguayan branch of RBS NV to Banco Regional S.A.;

     

    “Paraguayan
Tax Amounts” means any amounts which are received by RBS NV in respect of
tax credits sold to Banco Regional S.A. as purchaser of the RBS NV Paraguayan
branch;

     

    “Permitted
Disclosure” means any disclosure set out in Schedule
6;

     

    “Proceeding”
means any proceeding, suit or action arising out of or in connection with this
Agreement or any other Transaction Document;

     

    “Purchaser”
means an Investor or any member of an Investor Group which that Investor
nominates to be the company which is to acquire all or any part of any Acquired
Business to be acquired pursuant to this Agreement by such Investor (or a member
of its Group);

     

    “R
Shares” means the R Shares in the capital of the Company, the rights of
which are set out in the Articles and will be as set out in the New Articles,
and which owned by RBS;

     

    “RBI”
has the meaning given to it in Clause 5.3.3(i);

     

    “RBS
Acquired Businesses” means
the Acquired Businesses, as set out in Part 2 of Schedule 1 which (i) have prior
to the date of this Agreement been acquired by RBS, a member of its Group or a
third party; (ii) RBS, a member of its Group or a third party will directly or
indirectly acquire, or (iii) RBS will indirectly own through its ownership of
the Company;

     

    “RBS
Acquired Companies” means
the companies forming part of the RBS Acquired Business which RBS or a member of
its Group (i) has acquired; (ii) has sold to a third party (including any
sale by the RBS Holdings Group on behalf of RBS); (iii) will acquire
directly or indirectly hereunder, or (iv) will indirectly acquire through its
100 per cent. ownership of the Company;

     

    “RBS
Holdings” means RBS Holdings N.V. (formerly named ABN AMRO Holding
N.V.);

     

    “RBS
Holdings Accounts” means the audited consolidated accounts of the RBS
Holdings Group for the year ended 31 December 2006;

     

    “RBS
Holdings Combined Group” means the RBS Holdings Group and any former
subsidiaries or subsidiary undertakings of RBS Holdings which have been
transferred directly or indirectly to the State or Santander pursuant to the
Completed Restructuring and “RBS Holdings Combined Group Company” shall be
construed accordingly;

     

    “RBS
Holdings Group” means
RBS Holdings and its subsidiaries and subsidiary undertakings and “RBS
Holdings Group Company” shall be construed accordingly;

     

    “RBS
NV” means The Royal Bank of Scotland N.V. (formerly ABN AMRO Bank
N.V.);

     

    “Regulators”
means DNB, Bank of Spain, FSA and any other central bank or regulatory authority
having the responsibility for regulatory oversight over any member of the RBS
Holdings Group or an Investor;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    “Residual
Acquired Business” means any State Acquired Business or Santander
Acquired Business which is part of the RBS Holdings Group as at 30 June
2011;

     

    “Retained
Business” means,
as described in Part 3 of Schedule 1, the assets and Liabilities of RBS Holdings
and each member of the RBS Holdings Group other than the assets and Liabilities
which form part of the Acquired Businesses, including shares in the members of
the Retained Group, but subject to such Liabilities as relate to such assets or
undertakings;

     

    “Retained
Business Blue Book” means
the monthly management financial information that is provided by RBS NV to
Investors and relating to the Retained Business, to be provided in the form as
provided for the month ended 28 February 2010 unless otherwise agreed by each of
the Retained Business Representatives;

     

    “Retained
Business Deferred Tax Assets” means Tax Reliefs within Clause 5.3 and 5.4
of the Separation Tax Agreement which have been agreed by the parties as forming
part of the Retained Business;

     

    “Retained
Business Net Funding Shortfall Proportion” has the meaning given to it in
Clause 13.2.4;

     

    “Retained
Business Tier 2 Shortfall Proportion” has the meaning given to it in
Clause 13.2.3;

     

    “Retained
Business Representatives” means the persons nominated pursuant to
paragraph 14.1 of Schedule 2;

     

    “Retained
Business Wind Down” means the process of selling, winding down or
liquidating all of the assets forming part of the Retained Business, the
reduction of any unallocated costs forming part of the Retained Business to zero
and the full satisfaction of all Liabilities forming part of the Retained
Business, each as contemplated by Schedule 2;

     

    “Retained
Group” means
the RBS Holdings Group, excluding the Acquired Companies;

     

    “S
Shares” means the S Shares in the capital of the Company, the rights of
which are as set out in the Articles and which will be as set out in the New
Articles, and which as at the date of this Agreement are owned by
Santander;

     

    “Santander
Acquired Businesses” means
the Acquired Businesses, as set out in Part 2 of Schedule 1, which (i) have
prior to the date of this Agreement been acquired by Santander, a member of its
Group or a third party; or (ii) Santander, a member of its Group will acquire
directly or indirectly hereunder;

     

    “Santander
Acquired Companies” means
the companies forming part of the Santander Acquired Business which Santander or
a member of its Group (i) has acquired; (ii) has sold to a third party
(including any sale by the RBS Holdings Group on behalf of Santander); or
(iii) will directly or indirectly acquire hereunder;

     

    “Santander
Deferred Tax Assets” means Tax Reliefs in respect of Dutch corporate
income tax within Clause 5.3 of the Separation Tax Agreement which have been
agreed by the parties as forming part of the Santander Acquired
Businesses;

     

    “SEC”
means the US Securities and Exchange Commission;

     

    “Separation
Tax Agreement” means the tax agreement dated on or around the date hereof
between RBS, Santander, the State, the Company, RBS Holdings, RBS NV
and

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    ABN AMRO Bank
relating to the allocation of certain tax liabilities related to the Dutch
businesses and certain other matters in relation thereto;

     

    “Shareholder”
means a holder of Shares from time to time;

     

    “Shares”
means the F Shares, R Shares, S Shares, O Shares, L Shares and/or D Shares, as
the context may require;

     

    “Solution
Agreement” means the solution agreement between ABN AMRO Bank and RBS NV
dated 29 March 2010;

     

    “State
Acquired Businesses” means the Acquired Businesses, as set out in Part 2
of Schedule 1, which (i) have prior to the date of this Agreement been acquired
by the State, a member of its Group or a third party; or (ii) the State, a
member of its Group will acquire directly or indirectly hereunder;

     

    “State
Acquired Companies” means the companies forming part of the State
Acquired Business which the State or a member of its Group (i) has
acquired; (ii) has sold to a third party (including any sale by the RBS Holdings
Group on behalf of the State); or (iii) will acquire directly or indirectly
hereunder, ;

     

    “State
Deferred Tax Assets” means Tax Reliefs in respect of Dutch corporate
income tax within Clause 5.4 of the Separation Tax Agreement which have been
agreed by the parties as forming part of the State Acquired Businesses and Tax
Reliefs in respect of any Tax in any other jurisdiction which are agreed between
RBS and the State as forming part of the State Acquired Businesses;

     

    “subsidiary”
means a subsidiary as defined in section 1159 of the Companies Act;

     

    “subsidiary
undertaking” means a subsidiary undertaking as defined in section 1162 of
the Companies Act;

     

    “Super
Board Majority” means in respect of a meeting of the Board or a committee
of the Board held prior to the date of the Effective Notice, a decision agreed
by at least one Director appointed by RBS, one Director appointed by Santander
and one Director appointed by the State;

     

    “Support”
has the meaning given to it in Clause 13.4.1;

     

    “Support
Notification” has the meaning given to it in Clause 13.4.2;

     

    “Taxation”
or “Tax”
means all forms of taxation whether direct or indirect and whether levied by
reference to income, profits, gains, net wealth, asset values, turnover, added
value or other reference and statutory, governmental, state, provincial, local
governmental or municipal impositions, duties, contributions, rates and levies
(including without limitation social security contributions and any other
payroll taxes), whenever and wherever imposed (whether imposed by way of a
withholding or deduction for or on account of tax or otherwise) and in respect
of any person and all penalties, charges, costs and interest relating
thereto;

     

    “Tax
Agreements” means the Separation Tax Agreement, the Tax Segregation
Agreement and the other agreements relating to Tax entered into or to be entered
into as referred to in Schedule 1 Part 9 some of which agreements may contain
provisions relating to the Tax affairs of State Acquired Businesses which remain
part of the RBS Holdings Group following the date of this
Agreement;

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    “Tax
Audit” means any audit or investigation of a similar nature carried out
by a Tax Authority;

     

    “Tax
Authority” means any taxing or other authority competent to impose any
liability in respect of Tax or responsible for the administration and/or
collection of Tax or enforcement of any law in relation to
Taxation;

     

    “Tax
Correspondence” means computations and returns relating to Taxation,
claims, elections, surrenders, disclaimers, notices and consents for Taxation
purposes and any correspondence with any Tax authority in relation
thereto;

     

    “Tax
Dispute” means any contention by a Tax authority (including by way of the
issuance of any assessment or correspondence) that a liability to Tax may arise
or that a Tax Relief may not be available;

     

    “Tax
Documents” means claims, elections, surrenders, disclosures, notices and
consents for Tax purposes;

     

    “Tax
Relief” includes any relief, loss, allowance, exemption, set-off,
deduction or credit in computing or against profits or Taxation and any right to
repayment of Taxation;

     

    “Tax
Returns” means computations, returns and documents of a similar nature
relating to any Tax;

     

    “Tax
Segregation Agreement” means the tax agreement dated on or around the
date hereof between RBS, the State, ABN AMRO Bank, RBS NV, RBS Holdings and the
Company relating to the allocation of certain tax assets and liabilities related
to the segregation of the Dutch businesses and certain other matters in relation
thereto;

     

    “Tier
2 Shortfall” has the meaning given to it in Clause 13.2.3;

     

    “Total
Capital Ratio” has the meaning given to it in Clause 13.2.3;

     

    “Transaction”
means the Governance Amendments, the Acquired Business Transfers and the
Retained Business Wind Down pursuant to this Agreement;

     

    “Transaction
Documents” means this Agreement, the Articles, the Tax Agreements, the
Trade Mark Licenses, the Legal Demerger Agreement, the Litigation Management
Agreement, the ID&J SPAs, the Cohabitation Agreements and any other
agreements entered into pursuant to such Agreements;

     

    “Transitional
Plan” means the plan ordered by the Managing Board of RBS NV for (i) the
reorganisation of the RBS Holdings Group to achieve the allocation of businesses
as intended by the Investors, (ii) the Acquired Business Transfers and (iii) the
Retained Business Wind Down;

     

    “Transfer”
means, in relation to any share, loan note or other security or any legal or
beneficial interest in any share, to:

     

    
      	
               
      

            	
              (a)

            	
              sell, assign,
      transfer or otherwise dispose of
it;

            

    

     

    
      	
               
      

            	
              (b)

            	
              create or
      permit to subsist any Encumbrance over
it;

            

    

     

    
      	
               
      

            	
              (c)

            	
              direct (by
      way of renunciation or otherwise) that another person should, or assign
      any right to, receive it;

            

    

     

    
      	
               
      

            	
              (d)

            	
              enter into
      any agreement in respect of the votes or any other rights attached to the
      share other than by way of proxy for a particular shareholder meeting;
      or

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (e)

            	
              agree,
      whether or not subject to any condition precedent or subsequent, to do any
      of the foregoing,

            

    

     

    and “Transferred”,
“Transferor”
and “Transferee”
shall be construed accordingly;

     

    “Transfer
Conditions”
means the conditions set out in paragraph 1 of Part 1 of Schedule 1, being the
conditions precedent to the Acquired Business Transfers;

     

    “Transfer
Taxes” means stamp duties and taxes, stamp duty reserve tax, real estate
transfer taxes, registration duties and taxes and duties of a similar nature
payable in respect of a direct or indirect transfer of assets or
shares;

     

    “Undercapitalised
or Underfunded Business” has the meaning given to it in Clause
13.4.1;

     

    “Valuation
Range” means the range for the fair market value of a business as
determined in accordance with paragraph 13 of Schedule 2;

     

    “Valuer”
has the meaning given to it in paragraph 13 of Schedule 2;

     

    “VAT” means
within the European Community such tax as may be levied in accordance with (but
subject to derogations from) the Directive 2006/112/EC and outside the European
Community any tax levied by reference to added value or sales;

     

    “Wider
RBS Group” means, in relation to RBS, its holding companies, subsidiaries
and subsidiary undertakings and subsidiaries or subsidiary undertakings of such
holding companies from time to time; and

     

    “Wrong
Box Asset or Liability” means a Business Asset or Liability which is
indentified in accordance with paragraph 7.3 of Part 1 of Schedule 1 by the
parties at any time following the date of this Agreement but prior to 30 June
2011 as being owned by a member of the Retained Group but which is an asset or
liability which is exclusively or principally used, and accounted for, by an
Acquired Business (and accordingly should be an Acquired Business Asset) or
which is so indentified as being owned by an Acquired Company acquired or to be
acquired by one Investor but which is exclusively or principally used, and
accounted for, by an Acquired Business of another Investor or by the Retained
Business (and accordingly should be an asset of such Acquired Business or the
Retained Business as the case may be) or which is newly identified and which
prior to its identification had never been allocated to or accounted for by an
Acquired Business or the Retained Business.

     

    
      	
              1.2

            	
              Interpretation

            

    

     

    In this Agreement,
save where the context otherwise requires:

     

    
      	
               
      

            	
              1.2.1

            	
              the singular
      includes the plural and vice versa and reference to any gender includes a
      reference to all other genders;

            

    

     

    
      	
               
      

            	
              1.2.2

            	
              headings and
      the use of bold typeface shall be
ignored;

            

    

     

    
      	
               
      

            	
              1.2.3

            	
              references to
      any enactment shall include references to such enactment as it may, after
      the date of this Agreement, from time to time be amended, supplemented or
      re-enacted save where any amendment or modification to such enactment
      increases any liability under this Agreement or imposes obligations which
      are additional hereto;

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              1.2.4

            	
              unless
      otherwise expressly provided, expressions defined in the Companies Act
      have the meanings there given to
them;

            

    

     

    
      	
               
      

            	
              1.2.5

            	
              a reference
      to a “party” is to a party to this Agreement for the time being and a
      reference to the “parties” is, unless otherwise stated to the contrary, a
      reference to all parties to this Agreement for the time
    being;

            

    

     

    
      	
               
      

            	
              1.2.6

            	
              “including”
      and similar expressions are not to be construed as words of
      limitation;

            

    

     

    
      	
               
      

            	
              1.2.7

            	
              references to
      times of the day are to London time (unless otherwise
      specified);

            

    

     

    
      	
               
      

            	
              1.2.8

            	
              a person
      shall be deemed to be connected with another if that person is connected
      with another within the meaning of Section 839 ICTA
  1988;

            

    

     

    
      	
               
      

            	
              1.2.9

            	
              if a period
      of time is specified as from a given day, or from the day of an act or
      event, it shall be calculated exclusive of that
  day;

            

    

     

    
      	
               
      

            	
              1.2.10

            	
              any English
      legal term for any action, remedy, method of judicial proceeding, legal
      document, legal status, court, official or any legal concept or thing
      shall in respect of any jurisdiction other than England be deemed to
      include what most nearly approximates in that jurisdiction to the English
      legal term and a reference to any English statute shall be construed so as
      to include equivalent or analogous laws of any other
      jurisdiction;

            

    

     

    
      	
               
      

            	
              1.2.11

            	
              a specific
      Transaction Document is a reference to that document as amended, varied,
      novated, supplemented or replaced from time to time (other than in breach
      of the provisions of this Agreement) or the relevant Transaction
      Document;

            

    

     

    
      	
               
      

            	
              1.2.12

            	
              a document in
      the “agreed form” is a reference to a document in a form approved and for
      the purposes of identification initialled by or on behalf of the Investors
      and the Company;

            

    

     

    
      	
               
      

            	
              1.2.13

            	
              in this
      Agreement, the terms “Group”, “holding company” and other terms of similar
      import, when used in connection with the State, shall be construed as if
      the State were a company;

            

    

     

    
      	
               
      

            	
              1.2.14

            	
              for the
      purposes of this Agreement, De Nederlandsche Bank and the Dutch tax
      authorities do not form part of the State. Accordingly, obligations
      assumed by the State in this Agreement are not also assumed by De
      Nederlandsche Bank and/or the Dutch tax authorities. In addition, where
      the State undertakes a procurement obligation, such obligation does not
      imply a requirement to cause De Nederlandsche Bank or the Dutch tax
      authorities to take, or omit to take, any particular action, and requires
      the State to use only its powers as shareholder in the Company and not its
      legislative or other powers; and

            

    

     

    
      	
               
      

            	
              1.2.15

            	
              any reference
      in this Agreement to RBS as an Investor acquiring an RBS Acquired Business
      shall include RBS acquiring ownership of that Acquired Business by
      becoming the sole shareholder of the Company as contemplated by Clause
      4.

            

    

     

    
      	
              1.3

            	
              The
      Schedules are part of this Agreement and shall have effect accordingly,
      and terms defined therein and not in the main body of this Agreement shall
      have the meanings given to them in such
  Schedules.

            

    

     

    
      	
              1.4

            	
              References
      to this Agreement are to this Agreement as varied or supplemented from
      time to time.

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
              2

            	
              Restatement

            

    

     

    This Agreement
amends and restates the Original CSA with effect from the date hereof in
accordance with the terms of this Agreement. Unless otherwise stated herein, the
amendment and restatement of the Original CSA shall be without prejudice to any
rights or obligations accrued or incurred by any of the parties prior to the
date of this Agreement.

     

     

    
      	
              3

            	
              Conditions
      and Effectiveness

            

    

     

    
      	
              3.1

            	
              Regulatory
      Approvals for Governance Amendments

            

    

     

    The parties shall
cooperate and consult together to the extent necessary in seeking the Governance
Clearances and shall use their respective reasonable endeavours to ensure that
the Governance Clearances are obtained and/or made so as to enable the
Governance Amendments to be implemented as soon as reasonably practicable
following the date of this Agreement. In such connection, each of the Investors
will:

     

    
      	
               
      

            	
              3.1.1

            	
              promptly
      provide each other Investor and the Company with such information (which
      shall be complete and accurate in all material respects) as is required to
      complete any application for a Governance Clearance or to make any
      necessary filing in connection with the Governance Amendments (such
      information to be provided on a confidential basis and on a lawyer to
      lawyer basis if necessary);

            

    

     

    
      	
               
      

            	
              3.1.2

            	
              ensure by
      sharing required information that all applications for Governance
      Clearances and all necessary filings are made on a consistent
      basis;

            

    

     

    
      	
               
      

            	
              3.1.3

            	
              cooperate in
      responding to any enquiries made by any relevant government, anti-trust,
      tax or regulatory authority or any relevant stock exchange or listing
      authority, in particular so as to ensure that such responses are made on a
      consistent basis; and

            

    

     

    
      	
               
      

            	
              3.1.4

            	
              notify the
      other Investors and the Company as soon each Governance Clearance is
      obtained.

            

    

     

    No Investor shall
be required to share or otherwise provide information to the other Investors
that it reasonably believes is competitively sensitive or proprietary but such
information shall if relevant for any Governance Clearance be supplied to the
relevant authority on a confidential basis.

     

    The parties agree
that RBS shall be responsible for managing the process of seeking the Governance
Clearances and that all costs incurred in relation to obtaining the Governance
Clearances shall be borne by the Company and shall be borne indirectly by the
Investors in the Consortium Proportions.

     

    
      	
              3.2

            	
              Notification
      of all Governance Clearances

            

    

     

    
      	
               
      

            	
              3.2.1

            	
              Immediately
      following receipt of all Governance Clearances set out in Part A of
      Schedule 7, RBS shall be entitled to serve written notice on the other
      Investors and the Company that all necessary Governance Clearances have
      been received (or waived in accordance with Clause 3.2.2) (the “Effective
      Notice”) and the Governance Amendments shall take effect with
      effect from the date of such
notice.

            

    

     

    
      	
               
      

            	
              3.2.2

            	
              If each of
      the Investors agrees, any Governance Clearance that is required as a
      condition to implementing the Governance Amendments may be waived by the
      Investors.

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	
              4

            	
              Share
      Capital of the Company

            

    

     

    
      	
              4.1

            	
              Initial
      alterations of the share capital of the
    Company

            

    

     

    
      	
               
      

            	
              4.1.1

            	
              The parties
      agree that, conditional only on the issue of the Effective Notice in
      accordance with Clause 3.2.1, their intention is to amend and reduce the
      share capital of the Company such
that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              Santander
      owns 100 S Shares;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the State
      owns 100 F Shares;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the number of
      O Shares in issue is the minimum required to ensure that the Investors
      hold the O Shares in the Consortium Proportions;
  and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the L Shares
      are reclassified as R Shares.

            

    

     

    
      	
               
      

            	
              4.1.2

            	
              The parties
      agree that RBS will continue to own the R
  Shares.

            

    

     

    
      	
               
      

            	
              4.1.3

            	
              To achieve
      the objective set out in Clause 4.1.1, each of the Investors and the
      Company severally agree to take such actions and execute such documents as
      are reasonably necessary to cancel such number of F Shares and S Shares as
      would result in Santander owning 100 S Shares and the State owning 100 F
      Shares and such number of O Shares such that the remaining number of O
      Shares in issue would be the minimum required to ensure that the Investors
      hold O Shares in the Consortium Proportions, including without
      limitation:

            

    

     

    
      	
               
      

            	
              (i)

            	
              passing a
      resolution of the Shareholders to cancel all the F Shares save for 100 F
      Shares and all the S Shares save for 100 S
  Shares;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              passing a
      resolution of the holders of the F Shares approving the proposed
      cancellation of the F Shares as contemplated by Clause 4.1.1(ii)
      above;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              passing a
      resolution of the holders of the S Shares approving the proposed
      cancellation of the S Shares as contemplated by Clause 4.1.1(i)
      above;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              passing a
      resolution of the Shareholders to cancel such number of the O Shares such
      that, following the cancellation, RBS will hold 382,780 O Shares,
      Santander will hold 279,117 O Shares and the State will hold 338,103 O
      Shares;

            

    

     

    
      	
               
      

            	
              (v)

            	
              passing a
      resolution of the holders of the O Shares approving the proposed
      cancellation of the O Shares as contemplated by Clause 4.1.1(iii)
      above;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              passing a
      resolution of the shareholders to adopt the New Articles, including a
      re-classification of the L Shares as R
Shares;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              filing each
      of the resolutions referred to in (i) to (vi) above with the Dutch Trade
      Register, to the extent required under Dutch law;
  and

            

    

     

    
      	
               
      

            	
              (viii)

            	
              announcing
      the proposed cancellations of F Shares, S Shares and O Shares in a Dutch
      national newspaper.

            

    

     

    
      	
               
      

            	
              4.1.4

            	
              For the
      avoidance of doubt, the parties hereby confirm that Santander is and
      remains entitled to the contribution of EUR138,345,000 effected by
      Santander on or around 31 March 2010 - as share premium O and in payment
      of the nominal value of EUR 0.01 of one new O share issued to Santander -
      in order to maintain the minimum equity that Santander is required to
      leave in RBS NV to fund (its part

            

    

    
       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                of) the
      Retained Business. Such part of this amount will not be repaid to
      Santander upon the cancellation of a number of its O shares referred to in
      this Clause as is, at the time of such cancellation, required for funding
      of Santander’s part of the Retained Business. To the extent required and
      unless otherwise agreed, RBS and the State waive any rights to (the amount
      of) such contribution for the purposes of this Clause
  4.1.

              

      

       

    

    
      	
               
      

            	
              4.1.5

            	
              The Investors
      and the Company agree that any resolutions passed pursuant to Clause 4.1.3
      shall be conditional upon obtaining the Governance Clearances set out in
      Part A of Schedule 7 and that any cancellation proposed pursuant to Clause
      4.1.3 shall not become effective until the New Articles become
      effective.

            

    

     

    
      	
              4.2

            	
              Adoption
      of the New Articles

            

    

     

    
      	
               
      

            	
              4.2.1

            	
              Following the
      date of this Agreement the parties shall negotiate in good faith and use
      all reasonable endeavours to agree the form of the New Articles such that
      they reflect the terms of this
Agreement.

            

    

     

    
      	
               
      

            	
              4.2.2

            	
              The parties
      agree that the New Articles shall be substantially the same as the
      Articles save for any amendments as are necessary to reflect the terms of
      this Agreement, in particular Clauses 4 and 7. The parties agree that
      Santander and the State shall under the New Articles continue to have
      rights afforded to them pursuant to article 27.3 of the
      Articles.

            

    

     

    
      	
               
      

            	
              4.2.3

            	
              The Investors
      shall procure that all Shareholders adopt a written resolution to amend
      the Articles and execute a deed of amendment of the Articles before a
      Dutch civil law notary, implementing the agreed form of the New Articles
      conditional only upon RBS serving the Effective Notice. Such written
      resolution shall include a power of attorney to employees of that Dutch
      civil law notary to have the deed of amendment of the New Articles
      executed. On the date that Effective Notice is served, the Investors shall
      take such action (including filing any documents with the Dutch Trade
      Register) as is necessary to give effect to the New
    Articles.

            

    

     

    
      	
              4.3

            	
              Subsequent
      alterations of the share capital of the
Company

            

    

     

    
      	
               
      

            	
              4.3.1

            	
              The Investors
      have agreed that, as soon as reasonably practicable following completion
      of the Acquired Business Transfers (excluding any transfer or use of or
      payment for any Deferred Tax Assets) and the Retained Business Wind Down
      (excluding any transfer or use of or payment for any Retained Business
      Deferred Tax Assets) (the “Final
      Completion Date”), RBS will become the sole owner of the Company,
      RBS Holdings and RBS NV.

            

    

     

    
      	
               
      

            	
              4.3.2

            	
              Accordingly,
      and subject to applicable law and regulation (including obtaining all
      necessary anti-trust and regulatory approvals), the parties agree as soon
      as reasonably practicable following the Final Completion Date to take such
      actions and execute such documents as are necessary
  to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              cancel or
      have the Company repurchase or to transfer the S Shares, the F Shares and
      the O Shares; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              otherwise
      ensure that RBS is the sole shareholder of the
  Company,

            

    

     

    provided that
(i) if O Shares are repurchased or cancelled, each Investor shall have its
Consortium Proportion of O Shares cancelled or repurchased and (ii) the
parties shall negotiate in good faith to agree a process which is as efficient
for all parties

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    and the RBS
Holdings Group as is reasonably practicable from a Tax, regulatory, financial
and timing perspective, taking into account (in the case of Tax) the principles
in Part 9 of Schedule 1. If agreement cannot be reached under this Clause 4.3.2,
the matter shall be resolved by the respective Chief Financial Officers of the
Investors (which shall be the Minister of Finance in the case of the State) (or
such persons as they each may nominate).

     

    
      	
               
      

            	
              4.3.3

            	
              Notwithstanding
      Clause 4.3.2, the parties agree that if prior to the Final Completion
      Date:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the State
      Acquired Businesses (excluding for this purpose any State Deferred Tax
      Assets) have been transferred in accordance with this Agreement, if so
      requested by RBS and subject to any anti-trust or other regulatory
      approvals, as soon as reasonably practicable after such transfer the
      parties shall take such steps as are necessary to remove the F Shares from
      the capital of the Company, by cancellation or otherwise, or to transfer
      for nil consideration such Shares to the Company or
  RBS;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Santander
      Acquired Businesses have been transferred in accordance with this
      Agreement, if so requested by RBS and subject to any anti-trust or other
      regulatory approvals, as soon as reasonably practicable after such
      transfer the parties shall take such steps as are necessary to remove the
      S Shares from the capital of the Company, by cancellation or otherwise, or
      to transfer for nil consideration such Shares to the Company or RBS;
      or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the Retained
      Business Wind Down has been completed (excluding for this purpose any use
      or transfer of or payment for any Retained Business Deferred Tax Assets),
      if so requested by RBS and subject to any anti-trust or other regulatory
      approvals, as soon as reasonably practicable after such completion the
      parties shall take such steps as are necessary to remove the O Shares from
      the capital of the Company, by cancellation or otherwise, or to transfer
      for nil consideration such Shares to the Company or
  RBS.

            

    

     

    
      	
               
      

            	
              4.3.4

            	
              Without
      prejudice to Clause 5.3.1 and paragraphs 10.1.1 and 10.2 of Schedule 2,
      the cancellation or repurchase of the S Shares, F Shares and O Shares or
      the removal of such Shares from the capital of the Company as referred to
      in Clauses 4.3.2 and 4.3.3 shall be effected for no consideration or, to
      the extent applicable, for no consideration other than for any amounts due
      to the relevant holders of such Shares in respect of their entitlement to
      any part of the State Acquired Business, the Santander Acquired Business
      or the Retained Business and taking into account Clause
    4.1.4.

            

    

     

    
      	
               
      

            	
              4.3.5

            	
              The
      cancellation or repurchase of S Shares, F Shares and O Shares or the
      removal of such Shares from the capital of the Company as referred to in
      Clauses 4.3.2 and 4.3.3 shall be without prejudice to Clause
      5.3.5.

            

    

     

    
      	
              4.4

            	
              No
      Opposition 

            

    

     

    Each of the
Investors severally undertakes that it shall not exercise its rights as a
shareholder or creditor of the Company or through its nominee directors of the
Company to prevent any Investor or the Company from exercising its rights to
enforce the obligations of the Investors and/or the Company to alter the share
capital of the Company as set out in this Agreement. Notwithstanding any other
provision of this Agreement or any agreement

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    or document to be
entered into in connection with it, the parties agree that: (i) upon RBS issuing
the Effective Notice in accordance with Clause 3.2.1 their respective
obligations under Clauses 4.1 and 4.2 shall be unconditional and irrevocable;
and (ii) from the Final Completion Date their respective obligations under
Clause 4.3 shall be unconditional (subject to any anti-trust, regulatory or
other approvals that are required) and irrevocable.

     

     

    
      	
              5

            	
              Acquired
      Business Transfers

            

    

     

    
      	
              5.1

            	
              Acquired
      Business Transfers Terms and
Intentions

            

    

     

    
      	
               
      

            	
              5.1.1

            	
              This Clause 5
      and Schedule 1 set out the principles and terms on which those Acquired
      Businesses which have not already been transferred to the relevant
      Investor are proposed to be acquired from the RBS Holdings Group directly
      or indirectly by Santander and the State or members of their respective
      Groups. The parties acknowledge that the overriding principle of this
      Agreement and the basis on which the shareholdings in the Company of each
      Investor have been determined is that each Investor shall acquire the
      assets and Liabilities attributable to its Acquired Businesses as
      described in Part 2 of Schedule 1. The provisions of this Agreement shall
      be construed in accordance with this overriding
  principle.

            

    

     

    
      	
               
      

            	
              5.1.2

            	
              The parties
      agree that as of the date of this Agreement the following businesses have
      been identified as State Acquired Businesses which shall transfer to ABN
      AMRO (as the entity nominated by the State to be the transferee of the
      relevant State Acquired Businesses) in accordance with this Agreement and
      the ID&J SPAs (provided that where there is an inconsistency between
      this Agreement and the relevant ID&J SPA, the relevant ID&J SPA
      shall prevail) as soon as reasonably practicable following the date of
      this Agreement, taking into account the intention to maximise the
      efficiency of the Acquired Business Transfers from a Tax, regulatory,
      human resources, financial and operational point of view, while minimising
      the impact on any other Investor or its Acquired Business or the Retained
      Group, as well as with the aim to maximise so far as reasonably
      practicable value to each Investor and its
  shareholders:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      international diamond and jewellery business in India which forms part of
      BU Private Clients (“ID&J
      India”);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      international diamond and jewellery business in Hong Kong which forms part
      of BU Private Clients;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      international diamond and jewellery business in Japan which forms part of
      BU Private Clients; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      international diamond and jewellery business in United Arab Emirates which
      forms part of BU Private Clients.

            

    

     

    
      	
               
      

            	
              5.1.3

            	
              In addition
      to those assets and liabilities set out at clause 5.1.2, the parties have
      agreed that the assets and liabilities set out in Schedule 8 are assets
      and liabilities forming part of the State Acquired Business. The parties
      have agreed that in relation to each of these assets and liabilities the
      actions set out in Schedule 8 shall be taken with a view to transferring
      such assets and liabilities to the State (or a member of its Group) prior
      to 30 June 2011 and that the assets and liabilities shall remain within
      RBS NV until the relevant Completion on the basis set out in Schedule 8.
      The parties have also agreed that if such transfers do not take
      place

            

    

    
       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                prior to 30
      June 2011, the actions set out in column 5 of Schedule 8 shall be taken in
      relation to such assets and liabilities. The parties agree that as at the
      date of this Agreement the assets of the RBS Holdings Group which have
      been identified as assets forming part of the State Acquired Businesses
      include the State Deferred Tax Assets. The parties acknowledge that ABN
      AMRO Bank shall receive payments in respect thereof in accordance with
      Clause 5 of the Separation Tax Agreement (or the equivalent provisions of
      any other applicable Tax Agreement in the case of Tax Reliefs other than
      Tax Reliefs in respect of Dutch corporate income
  tax).

              

      

       

    

    
      	
               
      

            	
              5.1.4

            	
              Subject to
      5.1.2, pursuant to the Legal Demerger Agreement, RBS NV, ABN AMRO Bank and
      RBS Holdings have agreed that certain specified State Acquired Businesses
      (referred to in the Legal Demerger Agreement as the “Identified
      Non-Transferring Assets and Liabilities”) will transfer to ABN AMRO Bank
      in accordance with Clause 5.9 of the Legal Demerger Agreement. Such
      transfers will take place in accordance in with the terms of the Legal
      Demerger Agreement and the principles set out in this Agreement (in
      particular this Clause 5 and Schedule 1), provided that prior to 30 June
      2011 to the extent that there is any inconsistency between the terms of
      this Agreement and the Legal Demerger Agreement, the terms of the Legal
      Demerger Agreement shall prevail.

            

    

     

    
      	
               
      

            	
              5.1.5

            	
              The parties
      agree that as of the date of this Agreement the following assets of RBS
      Holding Group have been identified as assets forming part of the Santander
      Acquired Businesses:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Santander
      Deferred Tax Assets, in respect of which the parties acknowledge Santander
      shall receive payment in accordance with Clause 5 of the Separation Tax
      Agreement;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Paraguayan Escrow Amount; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Paraguayan Tax Amounts.

            

    

     

    
      	
               
      

            	
              5.1.6

            	
              The parties
      agree that the client relationship and loans made to Amsterdam Office
      B.V., which as at the date of this Agreement are owned by ABN AMRO Bank,
      will be transferred to RBS NV pending receipt of the requisite client
      consents and agreement between RBS NV and ABN AMRO as to the level of
      compensation payable to RBS NV if losses arise in relation to such loans.
      The parties agree that the transfer is expected to take place by 30 June
      2010.

            

    

     

    
      	
               
      

            	
              5.1.7

            	
              The parties
      acknowledge and agree that they will negotiate in good faith, and will use
      commercially reasonable efforts to apply the principles set out in this
      Agreement (and in particular this Clause 5.1), to resolve all issues
      between them arising out of or in connection with the Acquired Business
      Transfers.

            

    

     

    
      	
               
      

            	
              5.1.8

            	
              The intention
      of the parties is that the acquisition by the individual Investors or
      members of their respective Groups of the Acquired Businesses (which have
      not already been acquired) should be implemented in a manner that
      is:

            

    

     

    
      	
               
      

            	
              (i)

            	
              consistent
      with the principles set out in Schedule 1;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              as efficient
      for all parties and the RBS Holdings Group as is reasonably practicable
      from a Tax, regulatory, human resources, financial and operational point
      of view taking into account (in the case of Tax) the principles in Part 9
      of Schedule 1.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	
              5.2

            	
              Definitive
      Documents for the Acquired Business
Transfers

            

    

     

    Pursuant to the
agreement, acknowledgments and intentions set out in or contemplated by Clause
5.1, the applicable parties shall:

     

    
      	
               
      

            	
              5.2.1

            	
              as soon as
      reasonably practicable after the date of this Agreement and subject to
      Clause 5.3 below, negotiate in good faith to finalise definitive
      agreements for:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Acquired
      Business Transfers;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              (to the
      extent not already agreed by the parties) the provision of transitional or
      ongoing services between all or any of the Acquired Businesses and the
      Retained Business or between two or more Acquired Businesses (including,
      without limitation, information technology, operations and infrastructure
      support services) which are reasonably necessary to conduct the Acquired
      Businesses and the Retained Business on terms and in a manner which is in
      accordance with Clause 5.5 and Schedule
1;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              if so
      required, the allocation of Taxes and Tax Relief and dealing with Tax
      Correspondence and Tax Disputes, as provided for in Part 9 of Schedule 1,
      to the extent not already finalised prior to the date of this Agreement or
      otherwise agreed by the parties;
and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      implementation of such other matters as the parties consider
      appropriate,

            

    

     

    in each case on
terms which are consistent with the intention and principles set out in this
Clause 5 and Schedule 1.

     

    
      	
              5.3

            	
              Failure
      to complete the Acquired Business
Transfers

            

    

     

    
      	
               
      

            	
              5.3.1

            	
              If any
      Acquired Business Transfer has not been completed by 30 June 2011, RBS
      shall have the right at its
discretion:

            

    

     

    
      	
               
      

            	
              (i)

            	
              by written
      notice to the relevant Investor, to deem that the Transfer Conditions in
      relation to any Residual Acquired Business cannot be satisfied such that
      paragraph 1.4.1 of Schedule 1 Part 1 shall apply to that Residual Acquired
      Business(es); or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              subject to
      payment to the State and/or Santander (as the case may be) of the fair
      market value of the relevant businesses (as determined below), to
      determine that any Residual Acquired Businesses shall not be acquired by
      the State or Santander (as the case may be) but shall be acquired by the
      Wider RBS Group (either by reallocating such businesses as RBS Acquired
      Businesses, save for the purposes of paragraph 7.1 of Schedule 1 of this
      Agreement, or by purchasing such businesses, in each case for
      consideration which is greater than or equal to the lowest point of the
      Valuation Range as determined by the Valuer in accordance with the
      principles set out in paragraph 13 of Schedule 2 mutatis
      mutandis. RBS may only acquire a Residual Acquired Business of the
      State for a consideration of less than the lowest point of the Valuation
      Range with the consent of the State. RBS may only acquire a Residual
      Acquired Business of Santander for a consideration of less than the lowest
      point of the Valuation Range with the consent of
  Santander.

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              5.3.2

            	
              If RBS
      exercises its rights under Clause 5.3.1, for the purposes of Clause 4.3.1
      the completion of the Acquired Business Transfers shall be the date that
      the final Residual Acquired Business is sold in accordance with paragraph
      1.4 of Schedule 1 Part 1 or allocated to or purchased by RBS (or a member
      of the Wider RBS Group) in accordance with Clause
    5.3.1(ii).

            

    

     

    
      	
               
      

            	
              5.3.3

            	
              Notwithstanding
      Clause 5.3.1, in relation to ID&J India,
if:

            

    

     

    
      	
               
      

            	
              (i)

            	
              on or
      immediately prior to 30 June 2011 the State produces to RBS written
      evidence from the Reserve Bank of India (the “RBI”)
      confirming that the RBI is considering the licence application(s) made by
      ABN AMRO Bank in respect of the transfer of ID&J India;
    or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the RBI has
      on or shortly prior to 30 June 2011 confirmed in a meeting with RBS NV and
      ABN AMRO Bank that it is considering the licence application(s) made by
      ABN AMRO Bank in respect of the transfer of ID&J
  India,

            

    

     

    the time period for
transfer of ID&J India shall be extended to the earlier of (i) 30 June 2012
or (ii) the date that the RBI informs ABN AMRO Bank, the Company, RBS NV or any
Investor that it will not grant the requisite licence(s). If the requisite
licence(s) is granted prior to 30 June 2012, the timeframe for the transfer of
ID&J India shall be extended by RBS to permit the transfer to the State or a
member of its Group provided that the Completion must take place prior to 31
December 2012. If on or immediately prior to 30 June 2012 the RBI has not
granted the requisite licence(s) but has confirmed in writing to ABN AMRO Bank
(as evidenced by ABN AMRO Bank to RBS NV) that it will do so within six months,
RBS shall grant a further extension to ABN AMRO Bank to 31 December 2012. If any
extension is granted in accordance with this Clause 5.3.3, the provisions of
Clause 5.3.1 shall not apply to ID&J India until the end of the time period
granted by RBS in accordance with this Clause. Any extension granted pursuant to
this Clause 5.3.3 in relation to ID&J India shall not affect the rights of
RBS under Clause 5.3.1 in relation to any other Residual Acquired
Business.

     

    
      	
               
      

            	
              5.3.4

            	
              If the
      Transfer of ID&J India has not taken place by the end of the time
      period set by RBS in accordance with the Clause 5.3.3, Clause 5.3.1 shall
      apply to ID&J India mutatis
      mutandis.

            

    

     

    
      	
               
      

            	
              5.3.5

            	
              Notwithstanding
      Clauses 5.3.1 and 5.3.2, the parties acknowledge that pursuant to the
      provisions of Clause 5 of the Separation Tax Agreement (and/or, in the
      case of the State, the equivalent provisions of any other applicable Tax
      Agreement), Santander and/or ABN AMRO Bank may not have become entitled to
      receive payment in respect of all or part of the relevant Deferred Tax
      Assets by 30 June 2011 (or in the case of ID&J India, 30 June 2012 or
      31 December 2012 as applicable). The parties also acknowledge that the Tax
      affairs of members of the RBS Holdings Group in respect of periods covered
      by a Tax Agreement or by Part 9 of Schedule 1 to this Agreement may not be
      finalised by 30 June 2011 (or in the case of ID&J India, 30 June 2012
      or 31 December 2012 as applicable) such that certain Tax-related
      Liabilities attributable to a State Acquired Business or a Santander
      Acquired Business may remain in the relevant member of the RBS Holdings
      Group after 30 June 2011 (or in the case of ID&J India, 30 June 2012
      or 31 December 2012 as applicable). The parties therefore acknowledge that
      

            

    

    
       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                completion
      may not have occurred in relation to such Assets and Liabilities
      attributable to the State Acquired Businesses and Santander Acquired
      Businesses by 30 June 2011 (or in the case of ID&J India, 30 June 2012
      or 31 December 2012 as applicable) and the provisions of the Tax
      Agreements and Part 9 of Schedule 1 to this Agreement may remain in force
      in respect of such Assets and Liabilities after 30 June 2011 (or in the
      case of ID&J India, 30 June 2012 or 31 December 2012 as applicable).
      For the avoidance of doubt, the fact that any Deferred Tax Assets may not
      have been utilised prior to 30 June 2011 (or in the case of ID&J
      India, 30 June 2012 or 31 December 2012 as applicable) shall not prevent
      the Final Completion Date from occurring for the purpose of Clause
      4.3.

              

      

       

    

    
      	
               
      

            	
              5.3.6

            	
              Notwithstanding
      Clause 5.3.1, in respect any intellectual property which has been
      allocated by the Investors to an Acquired Business and for which an
      assignment of such Intellectual Property has been signed prior to 30 June
      2011, the provisions of Clause 5.3.1 shall not apply to such intellectual
      property (the "Assigned
      IP"). The Assigned IP shall transfer to the relevant Investor (or
      member of its Group, or in the case of RBS, the Wider RBS Group) in
      accordance with the relevant
assignment.

            

    

     

    
      	
              5.4

            	
              Accounting
      between the Parties

            

    

     

    The parties
acknowledge that the operation of this Clause 5 and Schedule 1 may lead to a
number of adjustments and payments between the parties which, in the absence of
agreement between the Investors, shall be determined in accordance with Clause
9. The parties will put in place reasonable arrangements to record such
adjustments and the liability to make such payments on the basis that, in order
to avoid numerous de minimis matters having to be dealt with, the Investors will
settle such Liabilities between themselves on a monthly basis (unless otherwise
agreed). Paragraph 1.1.8 of Schedule 1 Part 9 shall apply as regards the manner
of making such payments and adjustments.

     

    
      	
              5.5

            	
              Intra
      Group Arrangements

            

    

     

    
      	
               
      

            	
              5.5.1

            	
              Subject to
      Clause 5.5.2, if following the date of this Agreement any Acquired Company
      or any of the Acquired Businesses to be acquired by any one Investor (or a
      member of its Group) is found to be using any assets, facilities or
      services (including the management and allocation of credit default swaps
      and other derivatives exposure) of any member of the Retained Group or any
      Acquired Company or Acquired Business to be acquired by any other Investor
      (or a member of its Group) or if any member of the Retained Group uses any
      assets, facilities or services (including as aforesaid) of any Acquired
      Company or Acquired Business the Investors shall, and the Company shall
      procure that the Retained Group shall use their respective reasonable
      endeavours to procure that such arrangements are continued on the same
      basis as prevailing at the time the need for further arrangements is
      identified (or otherwise on such terms as the Investors agree) to the
      extent necessary to enable the relevant companies or businesses using such
      assets, facilities or services (including as aforesaid) to carry on their
      business in the manner in which it is carried on at the time that the need
      for further arrangements contemplated by this Clause 5.5 is
      identified.

            

    

     

    
      	
               
      

            	
              5.5.2

            	
              Save with the
      written consent of all parties, no arrangement may be entered into
      pursuant to Clause 5.5.1 if to do so would be inconsistent with intra
      group arrangements that have as at the date of this document been agreed
      by the parties.

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
              5.6

            	
              Allocation
      of Capital

            

    

     

    For the avoidance
of doubt and notwithstanding Clause 2, the parties agree that all discussion and
agreements on the allocation of capital of the RBS Holdings Group have been
completed and recorded in the term sheet and covering letter agreed by the
respective Chief Financial Officers of the Investors on 28 September 2009 in
Appendix 7 of the document entitled “ABN AMRO Restructuring: Agreed Package of
Solutions for pre-NL Demerger Filing Issues” (the “4.95
Term Sheet” as set out in Schedule 10 to this Agreement). Accordingly,
the provisions of Part 11 of Schedule 3 of the Original CSA shall terminate and
shall have no further effect in accordance with the 4.95 Term Sheet. Once so
terminated no party shall have any claim under those provisions, whether such
claim purportedly relates to events prior to or following the date of this
Agreement.

     

    
      	
              6

            	
              The
      Retained Group

            

    

     

    Each of the parties
agrees that, with respect to the Retained Group and the Retained Business, the
terms of Schedule 2 shall apply.

     

    
      	
              7

            	
              Governance

            

    

     

    
      	
              7.1

            	
              Appointment
      of Directors of
      the Company prior to the Effective
  Notice

            

    

     

    
      	
               
      

            	
              7.1.1

            	
              Until the New
      Articles become effective in accordance with Clause 4.2, the Board shall
      comprise four Directors, who shall, subject to Clause 7.7, be nominated
      for appointment by the Investors as
follows:

            

    

     

    
      	
               
      

            	
              (i)

            	
              RBS - two
      Directors (including the Chairman);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Santander -
      one Director; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the State -
      one Director.

            

    

     

    
      	
               
      

            	
              7.1.2

            	
              Until the New
      Articles become effective in accordance with Clause 4.2, any Director may
      be proposed for appointment, suspension or removal by the relevant
      Investor by written notice served on the Company and the other Investors.
      In such event, the Investors and the Company shall promptly take such
      steps as may be necessary to effect any such appointment, suspension or
      removal, including but not limited to procuring that all Shareholders
      shall (i) exercise their voting rights in a general meeting of
      Shareholders of the Company or adopt a resolution in writing to appoint,
      suspend or remove the relevant Investor Director and (ii) abstain from
      exercising their voting rights in the general meeting of Shareholders of
      the Company or adopt a resolution in writing in respect of the
      appointment, suspension or removal of an Investor Director other than in
      accordance with a proposal to that effect in accordance with this Clause 7
      by the relevant Investor.

            

    

     

    
      	
               
      

            	
              7.1.3

            	
              A Director
      may appoint another Director as his proxy for any specified meeting of the
      Board. In the case of the Directors appointed by the State and Santander,
      such proxy shall not be resident for Tax purposes in the United Kingdom.
      Such proxy may attend the specified meeting and exercise the votes of the
      Director who has appointed him and such appointing Director may direct his
      replacement on how to exercise such
votes.

            

    

     

    
      	
               
      

            	
              7.1.4

            	
              The parties
      agree that:

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (i)

            	
              no Director
      appointed upon nomination of the State shall be resident for Tax purposes
      in the United Kingdom; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              no Director
      appointed upon nomination of Santander shall be resident for Tax purposes
      in the United Kingdom.

            

    

     

    
      	
               
      

            	
              7.1.5

            	
              Until the New
      Articles become effective in accordance with Clause 4.2, the parties agree
      that, subject always to the need to comply with all applicable legal and
      regulatory requirements and with the fiduciary obligations of each
      Director and of the Board of the Company, unless otherwise provided in
      this Agreement, Board decisions shall be taken by majority vote and so as
      to be consistent with the provisions of this
  Agreement.

            

    

     

    
      	
              7.2

            	
              Appointment
      of Directors of
      the Company following the Effective
  Notice

            

    

     

    
      	
               
      

            	
              7.2.1

            	
              From the time
      that the New Articles become effective, the Board shall comprise such
      number of Directors as may be determined by RBS, who shall each be
      nominated for appointment by RBS.

            

    

     

    
      	
               
      

            	
              7.2.2

            	
              The Investors
      and the Company shall promptly take such steps as may be necessary to
      effect any appointment, suspension or removal of a Director required in
      order to implement Clause 7.2.1, including but not limited to procuring
      that all Shareholders shall exercise their voting rights in a general
      meeting of Shareholders of the Company or adopt a resolution in writing to
      appoint any persons nominated for appointment by RBS or to suspend or
      remove any Director appointed upon nomination by the State or Santander. A
      Director appointed upon nomination of the State or Santander that is
      removed shall be granted a release from liability for his management of
      the Company both upon removal and upon adoption of the annual accounts of
      the financial year during which the removal occurred, insofar as the
      exercise of his duties is reflected in the financial statements which have
      been made available to the general meeting or otherwise disclosed to the
      general meeting, unless release from liability cannot reasonably be
      expected to be granted for reasons of improper exercise of
      duties.

            

    

     

    
      	
               
      

            	
              7.2.3

            	
              From the time
      that RBS provides the Effective Notice in accordance with Clause 3.2, the
      parties agree that, subject to Clause 7.7, RBS shall in its absolute
      discretion determine the governance policies and practices of the Company
      and the RBS Holdings Group.

            

    

     

    
      	
              7.3

            	
              Appointment
      of the Chairman

            

    

     

    The Chairman shall
be appointed by RBS from amongst the Directors appointed by RBS. The Chairman
shall have a casting vote.

     

    
      	
              7.4

            	
              Agreements
      in relation the Acquired
Businesses

            

    

     

    
      	
               
      

            	
              7.4.1

            	
              Pursuant to
      the Cohabitation Agreements and ID&J SPAs, RBS NV and ABN AMRO Bank
      have agreed certain matters in relation to the State Acquired Businesses
      set out in Clause 5.1.2 that are owned by RBS NV at the date of this
      Agreement until such time as they are transferred to the State (or such
      member of the State’s Group as is nominated by the State). RBS and the
      State agree to take such action as is required to give effect to the
      Cohabitation Agreements and ID&J SPAs in relation to the operation of
      such State Acquired Businesses. Upon the reasonable request by RBS and the
      State, Santander shall take such action is

            

    

    
       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                required to
      give effect to the Cohabitation Agreements and ID&J SPAs in relation
      to the management of such State Acquired
  Business.

              

      

       

    

    
      	
               
      

            	
              7.4.2

            	
              Pursuant to
      the Legal Demerger Agreement, RBS NV and ABN AMRO Bank have agreed certain
      matters in relation to the State Acquired Businesses that are identified
      prior to or following the date of this Agreement until such time as they
      are transferred to the State (or such member of the State’s Group as is
      nominated by the State), such businesses being referred to in the Legal
      Demerger Agreement as “Non-Transferring Assets and Liabilities”. RBS and
      the State agree to take such action as is required to give effect to the
      Legal Demerger Agreement in relation to the operation of such State
      Acquired Businesses. Upon the reasonable request by RBS and the State,
      Santander shall take such action as is required to give effect to the
      Legal Demerger Agreement in relation to the management of such State
      Acquired Businesses.

            

    

     

    
      	
               
      

            	
              7.4.3

            	
              RBS and the
      State have agreed that ID&J India shall be governed in accordance with
      Schedule 11. RBS shall take such action as is required to procure that
      RBS NV shall adhere to the provisions of Schedule
  11.

            

    

     

    
      	
               
      

            	
              7.4.4

            	
              Subject to
      Clause 5.3, the parties agree that any State Acquired Businesses and any
      Santander Acquired Businesses may only be sold by RBS NV if the prior
      written consent of the State or Santander, respectively, is provided to
      RBS.

            

    

     

    
      	
              7.5

            	
              Regulation
      of Board Meetings

            

    

     

    
      	
               
      

            	
              7.5.1

            	
              Until the New Articles become
      effective in accordance with Clause 4.2, Board
      meetings of the Company shall be conducted in accordance with
      the
      provisions in Part A and Part C of Schedule
      3
      and other matters relating to the Board shall be regulated in accordance
      with Part D of Schedule 3.

            

    

     

    
      	
               
      

            	
              7.5.2

            	
              From the time
      that the New Articles become effective, subject only to Clause 7.7, RBS
      shall in its absolute discretion determine the conduct of Board meetings
      of the Company and Parts A, C and D of Schedule 3 shall have no effect in
      relation to Board meetings of the
Company.

            

    

     

    
      	
               
      

            	
              7.5.3

            	
              Until
      the New Articles become effective in
      accordance with Clause 4.2,
      the Company undertakes for the benefit of each Investor that none of the
      Board Reserved Matters shall be carried out without the approval of the
      Super Board Majority. Following the date of the Effective Notice, the
      Board Reserved Matters and Super Board Majority shall have no effect for
      the purposes of this
Agreement.

            

    

     

    
      	
              7.6

            	
              Regulation
      of Shareholder Meetings

            

    

     

    General
meetings shall be conducted in accordance with the provisions in Part B and Part
C of Schedule
3.

     

    
      	
              7.7

            	
              Tax
      Matters

            

    

     

    The
Investors agree that they will use all reasonable endeavours to ensure that the
Company is resident for Tax purposes in the Netherlands and
not in any other jurisdiction.

     

    
      	
              7.8

            	
              Conduct
      of Directors

            

    

     

    Each
Investor shall procure that the Directors nominated by it shall act in
accordance and in a manner consistent with the terms of this Agreement (subject
only to them not being in

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    breach
of their fiduciary duties as a result), including but not limited to exercising
their voting rights in meetings of the Board or otherwise.

     

    
      	
              7.9

            	
              Voting
      Trust

            

    

     

    The parties shall
procure that the Shareholders shall at all times exercise their voting rights in
the general meeting of Shareholders of the Company so as to ensure, or shall
otherwise procure, that full effect is given to the terms of this
Agreement.

     

    
      	
              7.10

            	
              Accounting
      Policies

            

    

     

    The accounting
policies of the Company and its Group for use in the Company’s own accounts and
in its Group consolidated accounts shall be determined by the
Board.

     

    
      	
              7.11

            	
              Waiver
      of certain rights

            

    

     

    
      	
               
      

            	
              7.11.1

            	
              RBS hereby
      unconditionally and irrevocably waives any and all of its rights as
      shareholder of the Company to
initiate:

            

    

     

    
      	
               
      

            	
              (i)

            	
              statutory
      squeeze out procedures pursuant to Section 2:201a of the Dutch civil code
      against the State and Santander for the purpose of obtaining 100% of the
      issued and outstanding shares in the capital of the Company;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              statutory
      dispute settlement proceedings pursuant to Section 2:336 of the Dutch
      civil code against the State and/or Santander for the purpose of
      requesting that the State and/or Santander transfer their Shares to
      RBS.

            

    

     

    
      	
               
      

            	
              7.11.2

            	
              In addition,
      each of RBS, the State and Santander hereby unconditionally and
      irrevocably vis-a-vis each other waive any and all of their rights to
      initiate statutory dispute settlement proceedings pursuant to Section
      2:343 of the Dutch civil code against each other for the purpose of
      requesting that their Shares are taken over by one or both of the other
      Shareholders.

            

    

     

     

    
      	
              8

            	
              Termination

            

    

     

    Save as specified
in this Agreement, this Agreement shall terminate only:

     

    
      	
               
      

            	
              (i)

            	
              with the
      unanimous written consent of the
Investors;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              with respect
      to Santander with immediate effect without notice if all the S Shares and
      O Shares held by Santander are cancelled, repurchased, acquired by RBS (or
      a member of its Group) or otherwise such that Santander no longer holds
      any Shares;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              with respect
      to the State with immediate effect without notice if all the F Shares and
      O Shares held by the State are cancelled, repurchased, acquired by RBS (or
      a member of its Group) or otherwise such that the State no longer holds
      any Shares; or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              with
      immediate effect without notice if all of the Shares are legally owned by
      one Investor or members of its
Group.

            

    

     

    The following
provisions of this Agreement shall survive termination of this Agreement:
Clause 1,
Clause 2, Clause 11 (but only to the extent required by Investors for their
regulatory compliance, tax and other legal requirements relating to (i) the
Financial Year in

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    which this
Agreement is terminated or (ii) the Financial Year prior to the Financial Year
in which this Agreement is terminated), Clauses 18 to 22 and paragraph 7 of Part
1 of Schedule 1 and Part 9 of Schedule 1 (save to the extent otherwise agreed).
The provisions of the Tax Agreements shall also survive termination of this
Agreement save to the extent otherwise agreed. Termination shall not affect a
party’s rights and obligations which have accrued as at the date of such
termination.

     

    
      	
              9

            	
              Determinations

            

    

     

    
      	
              9.1

            	
              Any matter
      which this Agreement expressly states shall be determined in accordance
      with this Clause 9 shall first be referred for agreement to the Chief
      Executive of each Investor (or such persons as they may nominate for the
      purpose). If agreement is not reached within 40 Business Days of such
      referral the matter will, on the application of any Investor, be
      determined by the Independent Accountants or, in the case of any dispute
      relating to Schedule 1 Part 9, by independent tax advisers. For the
      purposes of this Agreement, the Independent Accountants shall be a firm of
      independent chartered accountants of international repute, selected as
      soon as reasonably practicable by a unanimous decision of the Investors
      (acting reasonably and without delay) for the purposes of this Clause 9,
      or failing such agreement within 10 Business Days, nominated on the
      application of any Investor by the President for the time being of the
      Institute of Chartered Accountants in England and Wales (the “Independent
      Accountants”). For the purposes of this Agreement, the independent
      tax advisers shall be a firm of independent tax advisers of international
      repute, selected as soon as reasonably practicable by a unanimous decision
      of the Investors (acting reasonably and without delay) for the purposes of
      this Clause 9, or failing such agreement within 10 Business Days,
      nominated on the application of any Investor by the President for the time
      being of the Institute of Taxation (the “Independent
      Tax Advisers”).

            

    

     

    
      	
              9.2

            	
              The
      Independent Accountants or the Independent Tax Advisers (as the case may
      be) shall be fully briefed by the Investors as to their intended role as
      soon as reasonably practicable after their appointment and shall be
      engaged by the Company to deal with all matters referred to them in
      accordance with this Clause 9. The parties shall use all reasonable
      endeavours to agree the terms of engagement of the Independent Accountants
      or the Independent Tax Advisers (as the case may be) and shall not
      unreasonably withhold consent to the entry into by the Company of an
      engagement letter with the Independent Accountants or the Independent Tax
      Advisers (as the case may be) on normal market terms, (including
      provisions relating to the indemnification by the Company of the
      Independent Accountants or the Independent Tax Advisers (as the case may
      be) against Liabilities arising out of their engagement and the exclusion
      of liability of the Independent Accountants or the Independent Tax
      Advisers (as the case may be) for their acts or omissions, subject in both
      cases to exceptions).

            

    

     

    
      	
              9.3

            	
              In making any
      determination pursuant to this Agreement, the Independent Accountants or
      the Independent Tax Advisers (as the case may be) shall act as experts and
      not arbitrators and their determination shall be final and binding in the
      absence of manifest error. The fees and costs of the Independent
      Accountants or the Independent Tax Advisers (as the case may be) incurred
      in connection with this Agreement shall be borne as they shall direct or,
      failing such direction, equally between the Investors which are parties to
      the determination.

            

    

     

    
      	
              9.4

            	
              For the
      purpose of the Company and the Investors (including any matter between two
      or more Investors) agreeing any matter pursuant to this Agreement or for
      the purposes of any

            

    

    
       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                determination
      of any matter by the Independent Accountants or the Independent Tax
      Advisers (as the case may be), each Investor and the Company shall procure
      that the other(s), its/their advisers and (where applicable) the
      Independent Accountants or the Independent Tax Advisers (as the case may
      be) shall be given reasonable access at reasonable times to the books and
      records relating to such matter which are in its possession or control, or
      the possession or control of any of its subsidiaries, and shall procure
      that the other(s), its/their advisers and (where applicable) the
      Independent Accountants or the Independent Tax Advisers (as the case may
      be) are allowed to take copies of such books and records and the Company
      shall procure that RBS NV takes such actions as are necessary for the
      Company or an Investor to comply with its obligations under this Clause
      9.4.

              

      

       

    

    
      	
              9.5

            	
              Except to the
      extent that the parties agree otherwise, the Independent Accountants or
      the Independent Tax Advisers (as the case may be) shall determine their
      own procedure, but:

            

    

     

    
      	
               
      

            	
              9.5.1

            	
              shall make
      their determination pursuant to the provision of this Agreement as soon as
      is reasonably practicable;

            

    

     

    
      	
               
      

            	
              9.5.2

            	
              the procedure
      of the Independent Accountants or the Independent Tax Advisers (as the
      case may be) shall:

            

    

     

    
      	
               
      

            	
              (i)

            	
              give the
      relevant parties a reasonable opportunity to make written and oral
      representations to them;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              require that
      the relevant parties supply each other with a copy of any written
      representations at the same time as they are made to the Independent
      Accountants or the Independent Tax Advisers (as the case may be);
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              permit each
      relevant party to be present while oral submissions are being made by any
      other party (save to the extent that the Independent Accountants or the
      Independent Tax Advisers (as the case may be) determine that this would
      lead to a breach of confidence or the divulging of business secrets by any
      party).

            

    

     

    
      	
              9.6

            	
              The
      determination of the Independent Accountants or the Independent Tax
      Advisers (as the case may be) pursuant to Clause 9.1 shall be made in
      writing and made available for collection by the parties at the offices of
      the Independent Accountants at such time as they shall determine and,
      unless otherwise agreed by the parties, include reasons for each relevant
      determination.

            

    

     

    
      	
              9.7

            	
              The parties
      shall co-operate with the Independent Accountants or the Independent Tax
      Advisers (as the case may be) and comply with their reasonable requests
      made in connection with the carrying out of their duties under this
      Agreement.

            

    

     

    
      	
              9.8

            	
              Subject to
      Clause 9.9, nothing in this Clause 9 shall entitle a party or the
      Independent Accountants or the Independent Tax Advisers (as the case may
      be) access to any information or document which is protected by legal
      professional privilege, or which has been prepared by the other party or
      its accountants and other professional advisers with a view to assessing
      the merits of any claim or
argument.

            

    

     

    
      	
              9.9

            	
              A party shall
      not be entitled by reason of Clause 9.8 to refuse to supply such part or
      parts of documents as contain only the facts on which the relevant claim
      or argument is based.

            

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

       

    

    
      	
              9.10

            	
              Each party
      and the Independent Accountants or the Independent Tax Advisers (as the
      case may be) shall, and shall procure that its and their advisers shall,
      keep all information and documents provided to them pursuant to this
      Clause 9 confidential and shall not use the same for any purpose, except
      for use in connection with the proceedings of the Independent Accountants
      or the Independent Tax Advisers (as the case may be) or another matter
      arising out of this Agreement or in defending any claim or argument or
      alleged claim or argument relating to this Agreement or its subject
      matter.

            

    

     

    
      	
              9.11

            	
              The
      Independent Accountants or the Independent Tax Advisers (as the case may
      be) shall be entitled to obtain financial, legal, actuarial or other
      specialist advice as they may consider necessary or desirable for the
      purpose of fulfilling their obligations hereunder and the costs of
      obtaining such advice shall be met as provided in Clause
    9.3.

            

    

     

    
      	
              9.12

            	
              Any challenge
      to a determination by Independent Accountants or the Independent Tax
      Advisers (as the case may be) on the basis of manifest error shall be
      resolved by arbitration in accordance with Clause
  22.

            

    

     

     

    
      	
              10

            	
              Representations
      and Warranties

            

    

     

    
      	
              10.1

            	
              Each of the
      Investors represents and warrants to each of the other parties on the
      terms set out in Schedule
      4
      as at the date of this Agreement.

            

    

     

    
      	
              10.2

            	
              RBS hereby
      represents and warrants to the State, ABN AMRO Bank and Santander (and not
      to any other person) that, so far as it is aware and based on the facts,
      and circumstances known as at the date of this Agreement and on the
      applicable law and other regulation as at the date of this Agreement, the
      distributions or repurchases of Shares by the Company as contemplated by
      Clauses 4.3.2(i) and 15 do not contravene any agreement between RBS and
      the EC Commission.

            

    

     

     

    
      	
              11

            	
              Provision
      of Information and Preparation of
Accounts

            

    

     

    
      	
              11.1

            	
              Pursuant to
      the Cohabitation Agreements, RBS NV and ABN AMRO Bank have agreed that
      certain information relating to the State Acquired Businesses the subject
      thereof shall be provided by RBS NV to ABN AMRO Bank. RBS and the State
      shall procure that such information is provided in accordance with the
      Cohabitation Agreements.

            

    

     

    
      	
              11.2

            	
              RBS shall
      procure that information relating to the Retained Business is provided in
      accordance with Schedule 2.

            

    

     

    
      	
              11.3

            	
              An
      Investor may pass information on to those persons to whom the Investors
      are entitled
      to pass information under Clause
      16.

            

    

     

    
      	
              11.4

            	
              Each of the
      Investors shall ensure that information provided to it relating to any
      Acquired Business (other than the Acquired Businesses to be acquired by
      it) is used only for the purpose of implementing the provisions of this
      Agreement (including Clause 5 and Schedule 1) or for compliance with
      applicable legal or regulatory
obligations.

            

    

     

    
      	
              11.5

            	
              The Company
      shall prepare such audited consolidated financial information in relation
      to the Company and its Group as is determined by the Board to be required
      for the purposes of complying with RBS’, the Company’s and the Company’s
      Group’s obligations to prepare statutory accounts in accordance with Dutch
      generally accepted accounting principles and/or International Financial
      Reporting Standards (with the latter in any event
  being

            

    

    
       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                applied in
      relation to the Company’s Group’s audited consolidated financial
      information) and for the purposes of the accounts of the Company and its
      Group being consolidated into the consolidated accounts of RBS. In
      addition, the Company shall prepare such financial information as the
      Investors require for their consolidated accounts as set out in Clause
      11.6 below.

              

      

       

    

    
      	
              11.6

            	
              The Board
      shall procure the production and distribution to the Investors of such
      accounting information relating to the affairs of the Company and its
      Group as Investors may reasonably request for their own regulatory
      compliance, tax and other legal requirements, provided that the Company
      shall be reimbursed by the relevant Investor in respect of any costs in
      producing such information.

            

    

     

    
      	
              11.7

            	
              Notwithstanding
      any other provision of this Clause 11, the rights of the Investors under
      this Clause shall be subject to the duties of the Managing Board of RBS
      Holdings and shall not be exercised so as to cause any interruption in the
      business of the RBS Holdings Group or any breach of applicable law or
      regulation by the Wider RBS Group.

            

    

     

    
      	
              11.8

            	
              Provided that
      the Company or its Group provides an invoice in respect of such costs, to
      the extent that any reasonable costs are incurred by the Company or its
      Group in producing information for Santander or the State under this
      Clause 11 which would not otherwise have been incurred by the Company or
      its Group, such costs shall be charged to the Santander Acquired Business
      or the State Acquired Business,
respectively.

            

    

     

    
      	
              11.9

            	
              Pursuant to
      the Tax Agreements, certain of the parties thereto have agreed to provide
      to certain other parties information relating to the Tax affairs of
      certain companies. RBS, the State and (in the case of the Separation Tax
      Agreement only) Santander shall procure that such information is provided
      in accordance with the Tax
Agreements.

            

    

     

     

    
      	
              12

            	
              Transfer
      Restrictions for the Investors

            

    

     

    
      	
              12.1

            	
              General
      Restrictions

            

    

     

    
      	
               
      

            	
              12.1.1

            	
              Notwithstanding
      any provision to the contrary in this Agreement or the Articles, each
      Investor undertakes to each of the other Investors and to the Company that
      it shall not at any time during the life of this Agreement Transfer
      Shares, unless:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Transfer
      is permitted by Clause 12.1.2
      or has been approved by the Investors in writing (such approval not to be
      unreasonably withheld);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the proposed
      Transferee has entered into a Deed of Accession to this Agreement, in the
      form required by this Agreement and delivered this to the
      Company;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the Company
      and the Investors have received from the proposed Transferee a legal
      opinion addressed to each of them in a form approved by the Board
      confirming that the Transferee has capacity and authority to enter into
      the document referred to in Clause 12.1.1(ii)
      and that such document, this Agreement and the Articles will constitute
      legal, valid and binding obligations on the Transferee (or their
      successors and assigns), which are enforceable in accordance with their
      terms; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              it (or the
      Transferee, as the case may be) has obtained any necessary third party and
      regulatory consents.

            

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              12.1.2

            	
              Notwithstanding
      Clause 12.1.1(i), an Investor may transfer Shares to a wholly owned member
      of its Group provided that the Transferee undertakes to the Company that
      if the Transferee is to cease to be a wholly-owned member of its Group of
      the relevant Investor, all its Shares in the Company will, before the
      cessation, be Transferred to the original Investor (but only if such
      Investor would not have been in breach of this clause had that Investor
      continued to hold the Shares) or one of its wholly-owned Group members.
      Each of the Investors shall procure that its Investor Directors shall
      exercise their voting rights in meetings of the Board or otherwise to
      approve any Transfer of Shares in accordance with this Clause
      12.1.2.

            

    

     

    
      	
               
      

            	
              12.1.3

            	
              Following a
      transfer of Shares under this Clause 12.1, the original transferring
      Investor (but not a subsequent Transferor in a series of transfers to
      wholly-owned Group members) shall remain party to this Agreement and shall
      be jointly and severally liable with the Transferee under this Agreement
      as a Shareholder in respect of the transferred
  Shares.

            

    

     

    
      	
               
      

            	
              12.1.4

            	
              Each Investor
      acknowledges and undertakes as
follows:

            

    

     

    
      	
               
      

            	
              (i)

            	
              it shall not
      challenge the validity or enforceability of the restrictions in this
      Clause 12
      either as a matter of law or otherwise (“Challenge”);
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in the event
      of a Challenge, the Investor making such Challenge shall indemnify and
      keep indemnified each other Investor and the Company against each loss,
      liability and cost which such other Investor or the Company may incur
      arising out of or in connection with a Challenge including each loss,
      liability and cost reasonably incurred as a result of settling or
      defending a Challenge.

            

    

     

    
      	
              12.2

            	
              Intermediate
      Changes of Control

            

    

     

    Except as otherwise
expressly provided in this Agreement:

     

    
      	
               
      

            	
              12.2.1

            	
              RBS
      undertakes to procure that the Shares owned by it at the date of this
      Agreement and any further Shares issued to it or to one of its
      wholly-owned Group members are, subject to Clause 4, at all times held and
      beneficially owned by a wholly-owned member of its
  Group;

            

    

     

    
      	
               
      

            	
              12.2.2

            	
              Santander
      undertakes to procure that the Shares owned by it at the date of this
      Agreement and any further Shares issued to it or one of its wholly-owned
      Group members are, subject to Clause 4, at all times held and beneficially
      owned by a wholly-owned member of its Group;
and

            

    

     

    
      	
               
      

            	
              12.2.3

            	
              the State
      undertakes to procure that the Shares owned by it at the date of this
      Agreement and any further Shares issued to it or one of its wholly-owned
      Group members are, subject to Clause 4, at all times held and beneficially
      owned by a wholly-owned member of its
Group.

            

    

     

     

    
      	
              13

            	
              Further
      Capital and Funding

            

    

     

    
      	
              13.1

            	
              General

            

    

     

    Subject to the
remainder of this Clause 13 and the provisions of any Tax Agreement, the
Investors shall not have any obligation to provide any capital, funding or
liquidity to either

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    the Company or any
member of the RBS Holdings Group, nor any guarantee, collateral or security in
respect thereof.

     

    
      	
              13.2

            	
              Agreed
      principles relating to further Capital and
  Funding

            

    

     

    
      	
               
      

            	
              13.2.1

            	
              The Investors
      have agreed that any regulatory Tier 1 capital requirements (including an
      appropriate Capital Buffer (as defined below)) of the RBS Holdings Group
      shall be satisfied by the Investors providing ordinary equity share
      capital to the Company or, in the case of the State Acquired Business
      only, the State may satisfy its obligation by procuring the provision of a
      perpetual loan (which, in either case, the Company shall contribute to RBS
      Holdings in the form of ordinary equity share
  capital).

            

    

     

    
      	
               
      

            	
              13.2.2

            	
              In the event
      that any capital, liquidity, funding requirement or guarantee, collateral
      or security, or any other related cost is due to be contributed by an
      Investor (the “Defaulting
      Investor”) pursuant to Clause 13.3, but such Investor does not meet
      such obligation on time or at all, then the remaining Investors (the
      “Non
      Defaulting Investors”) shall be entitled, at their sole discretion
      and upon receiving any request from the Board in accordance with Clause
      13.3, to fulfil such obligation on behalf of the Defaulting Investor, and
      the Defaulting Investor shall (i) indemnify and keep indemnified the Non
      Defaulting Investors in respect thereof and (ii) make compensatory
      contributions as set out in Clause
13.5.

            

    

     

    
      	
               
      

            	
              13.2.3

            	
              The Investors
      have agreed that to the extent that any State Acquired Business, Santander
      Acquired Business and/or Retained Business does not meet the total capital
      ratio set by a Regulator (the ”Total
      Capital Ratio” and the deficit to the Total Capital Ratio being a
      “Tier
      2 Shortfall”), RBS shall satisfy the Tier 2 Shortfall on behalf of
      the relevant Investor, provided
that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the relevant
      Investor(s) will pay interest to RBS (or the RBS Acquired Business if so
      requested by RBS) on (a) the Tier 2 Shortfall in relation to a Tier 2
      Shortfall on its Acquired Business and (b) on its Retained Business Tier 2
      Shortfall Proportion in relation to a Tier 2 Shortfall on the Retained
      Business, in each case calculated at a rate of *** for the period that the
      Tier 2 Shortfall exists or until RBS issues a Support Notification in
      respect of the Tier 2 Shortfall;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              upon the
      issue of a Support Notification in respect of the Tier 2 Shortfall, the
      relevant Investor(s) shall provide Support in respect of the Tier 2
      Shortfall in accordance with Clause
13.4.

            

    

     

    The relevant
Investor(s) for the purposes of any Tier 2 Shortfall in the Retained Business
shall be (i) the State if and to the extent that the total capital in the
Retained Business that is attributable to the State is less than the State’s
Consortium Proportion of the total capital required to ensure the Retained
Business meets the Total Capital Ratio for the Retained Business and/or (ii)
Santander if and to the extent that the total capital in the Retained Business
that is attributable to Santander is less than Santander’s Consortium Proportion
of the total capital required to ensure the Retained Business meets the Total
Capital Ratio for the Retained Business. The amount by which the total capital
in the Retained Business that is attributable to an Investor is less than that
Investor’s Consortium Proportion

     

    
      
        
          

        

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

         

      

    

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    of the total
capital required to ensure the Retained Business meets the Total Capital Ratio
for the Retained Business shall be the “Retained
Business Tier 2 Shortfall Proportion” for that Investor.

     

    
      	
               
      

            	
              13.2.4

            	
              The Investors
      have agreed that to the extent that total assets less intracompany funding
      receivables (“Third
      Party Assets”) attributable to any State Acquired Business,
      Santander Acquired Business and/or Retained Business are greater than the
      equity capital and total liabilities excluding intracompany funding
      payables (“Third
      Party Liabilities”) attributable to that Business (the “Net
      Funding Shortfall”) RBS shall satisfy the Net Funding Shortfall on
      behalf of the relevant underfunded Investor, provided
  that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the relevant
      Investor(s) will pay interest to RBS (or the RBS Acquired Business if so
      requested by RBS) on (a) the Net Funding Shortfall in relation to a Net
      Funding Shortfall on its Acquired Business and (b) on its Retained
      Business Net Funding Shortfall Proportion in relation to a Net Funding
      Shortfall on the Retained Business, in each case calculated at *** for the
      period that the Net Funding Shortfall exists or until RBS issues a Support
      Notification in respect of the Net Funding Shortfall;
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              upon the
      issue of a Support Notification in respect of the Net Funding Shortfall,
      the relevant Investor(s) shall provide Support in respect of the Net
      Funding Shortfall in accordance with Clause
  13.5.

            

    

     

    The relevant
underfunded Investor(s) for the purposes of any Net Funding Shortfall in the
Retained Business shall be (i) the State if and to the extent that the Funding
of the State (as defined in clause 13.4.1) in the Retained Business is less than
the State’s corresponding Minimum Funding Requirement (as defined in clause
13.4.1) and/or (ii) Santander if and to the extent that the Funding of Santander
in the Retained Business is less than Santander’s corresponding Minimum Funding
Requirement. Such Funding shortfalls shall be the “Retained
Business Net Funding Shortfall Proportion” for that
Investor.

     

    
      	
               
      

            	
              13.2.5

            	
              Subject to
      Clause 13.6, the Investors have agreed that to the extent that in relation
      to any Acquired Business or the Retained Business the Funding attributable
      to an Investor exceeds that Investor’s Minimum Funding Requirement (the
      “Net
      Funding Surplus”) RBS shall pay interest (or will procure that
      interest is paid) to the relevant Acquired Business or in the case of the
      Retained Business for the benefit of the relevant Investor (as the case
      may be) on the Net Funding Surplus calculated at *** for the period that
      the Net Funding Surplus exists.

            

    

     

    
      	
               
      

            	
              13.2.6

            	
              RBS shall
      ensure that the RBS Acquired Business meets the applicable Minimum Ratios
      and will ensure that it maintains capital and funding in the Retained
      Business equal to at least the RBS Consortium Proportion of the capital
      and funding required for the Retained Business to meet the Minimum
      Ratios.

            

    

     

    
      	
               
      

            	
              13.2.7

            	
              For such time
      as the US$250 million Tier 2 Instrument (as referred to in Schedule 8)
      remains part of the State Acquired Business, such instrument shall be
      counted as Tier 2 capital of the State Acquired Business for the purposes
      of this Clause 13.

            

    

     

    
      	
               
      

            	
              13.2.8

            	
              The Investors
      have agreed that as from the date of this Agreement, in respect of the
      Retained Businesses, cash shall be provided by the Investors in the form
      of

            

    

    
       

      
        
          

        

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

         

      

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                equity
      capital or debt finance that is at least equal to the Investor’s share
      (expressed in Consortium Proportions) of all third party liabilities. A
      worked example of the principles set out in this Clause 13 is set out at
      Schedule 12.

              

      

       

    

    
      	
              13.3

            	
              Determinations
      by Regulators

            

    

     

    
      	
               
      

            	
              13.3.1

            	
              Notwithstanding
      Clauses 13.2 and 13.4, in the event that any relevant Regulator requires
      the Company or any part of the RBS Holdings Group to be provided with
      further capital, liquidity or other funding, or for any guarantee,
      collateral or security to be provided in respect thereof, the Board shall
      notify the Investors of full details of the requirement as soon as
      possible after the Company becomes aware of the
    requirement.

            

    

     

    
      	
               
      

            	
              13.3.2

            	
              To the extent
      that, prior to Completion, any further capital, liquidity, funding,
      guarantee, collateral or security requirement notified to the Investors by
      the Board under Clause 13.3.1 concerns or arises in respect of an Acquired
      Business, the relevant Investor which is to acquire that business shall
      either:

            

    

     

    
      	
               
      

            	
              (i)

            	
              contribute to
      the relevant Acquired Business such funding, capital or liquidity, or
      provide such guarantee, collateral or security as is required by the
      relevant Regulator on the terms required by such Regulator (such capital,
      funding, liquidity, guarantee, collateral or security to be provided
      directly for the benefit of the relevant Acquired Business);
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              with the
      written consent of RBS (such consent not to be unreasonably withheld),
      co-operate with the Board and the other Investors in taking or ensuring
      that such action is taken (at the cost of the relevant Investor, and
      including such action as may be required to limit the scope of operations
      of the relevant Acquired Business) as is required in order to reverse the
      requirement for such additional funding, capital, liquidity, guarantee,
      collateral or security,

            

    

     

    in either case
provided that the capital, liquidity, funding, guarantee, collateral or security
is provided, or the requisite action is taken (as the case may be) by no later
than the earlier of (i) the date specified by the relevant Regulator or (ii) 60
Business Days following the date on which the Board notifies the Investors
pursuant to Clause 13.3.1.

     

    
      	
               
      

            	
              13.3.3

            	
              To the extent
      that any further capital, funding, liquidity, guarantee, collateral or
      security requirement notified to the Investors by the Board under Clause
      13.3.1 concerns or arises in respect of the Retained Business Assets, each
      of the Investors undertakes to work with each other Investor and with the
      Board in order to either:

            

    

     

    
      	
               
      

            	
              (i)

            	
              contribute
      such capital, funding, liquidity or provide such guarantee, collateral or
      security as is required by the relevant Regulator on the terms required by
      such Regulator; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              take or
      ensure that such action is taken (including such action as may be required
      to limit the scope of the operations that have resulted in the additional
      requirement) as is required in order to reverse the requirement for such
      additional capital, liquidity, funding, guarantee, collateral or
      security,

            

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    as may be agreed
between the Investors (acting reasonably) in any such case.

     

    Any capital,
liquidity or funding requirement or other directly attributable cost incurred or
any guarantee, collateral or security provided by the Investors pursuant to this
Clause 13.3.3 shall be met by the Investors in the Consortium Proportions by no
later than the earlier of (i) the date specified by the relevant Regulator or
(ii) 60 Business Days following the date on which the Board notifies the
Investors pursuant to Clause 13.3.1.

     

    
      	
               
      

            	
              13.3.4

            	
              If the DNB or
      any other Regulator increases the capital, liquidity or other funding
      requirement of RBS, or requires an additional guarantee, collateral or
      security to be provided in respect thereof and such requirement arises in
      whole or in part in relation to a State Acquired Business or Santander
      Acquired Business, RBS and the State or Santander, respectively, will in
      good faith and acting reasonably consider what actions should be taken to
      meet the DNB or other Regulator’s requirement or otherwise alleviate the
      problem. Such actions could include the provision of additional capital,
      liquidity or other funding by the State to the State Acquired Business, by
      Santander to the Santander Acquired Business or, subject to the agreement
      of terms including as to the return of such capital, liquidity or other
      funding (such agreement not to be unreasonably withheld), the provision by
      the relevant Investor of additional capital, liquidity or other funding to
      RBS.

            

    

     

    
      	
              13.4

            	
              Minimum
      Ratios and Capital and Funding
Requirements

            

    

     

    
      	
               
      

            	
              13.4.1

            	
              If at any
      time (i) an Investor’s interest in the Retained Business or (ii) any
      Acquired Business (the “Undercapitalised
      or Underfunded Business”) does not, or is expected, on the basis of
      then current capital, funding and/or other projections, in the foreseeable
      future not to exceed the Minimum Ratios (as defined below), RBS shall
      notify the State (if the Undercapitalised or Underfunded Business is a
      State Acquired Business), Santander (if the Undercapitalised or
      Underfunded Business is a Santander Acquired Business) and/or the State
      and Santander (if the Undercapitalised or Underfunded Business is the
      Retained Business) and provide details of the funding, capital or
      liquidity that must be provided (the “Support”)
      to ensure that the Undercapitalised or Underfunded Business is in
      compliance with the Minimum Ratios. In the case of the Retained Business,
      compliance with the Minimum Ratios shall be determined for each Investor
      on the basis of that Investor’s share of the total assets, liabilities,
      and risk weighted assets of the Retained Business (determined in
      Consortium Proportions) and the equity capital and funding provided by the
      Investor. The Minimum Ratios are defined as
  follows:

            

    

     

    
      	
               
      

            	
              (i)

            	
              in the case
      of Tier 1 equity capital, satisfies the Tier 1 capital ratio set by the
      relevant Regulator (the “Minimum
      Equity Ratio”) plus 25 per cent. of the Tier 1 equity capital
      required under the Minimum Equity Ratio for the Undercapitalised or
      Underfunded Business (the “Capital
      Buffer”);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in the case
      of Tier 2 capital, satisfies the Total Capital Ratio, provided that if the
      Undercapitalised or Underfunded Business has sufficient Tier 1 equity
      capital in excess of the Minimum Equity Ratio to meet the Total Capital
      Ratio, no further Support shall be required;
and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              has Funding,
      defined as the sum of equity capital and Third Party Liabilities, that is
      at least equal to the Third Party Assets attributable to that Underfunded
      or Undercapitalised Business (the “Minimum
      Funding

            

    

    
       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                Requirement”).
      For the avoidance of doubt, in the case of the Retained Business, the
      Minimum Funding Requirement of each Investor shall be determined based on
      the Funding position of each Investor and that Investor’s share (based on
      Consortium Proportions) of the Third Party Assets of the Retained
      Business.

              

      

       

    

    the Minimum Equity
Ratio, the Total Capital Ratio and the Minimum Funding Requirement being
together the “Minimum
Ratios”. In the case of any Support in respect of the Retained Business,
the notice shall set out the Support that is required from each Investor to
ensure that the aggregate requirements of the Retained Business as to capital,
funding and liquidity are shared in the Consortium Proportions.

     

    
      	
               
      

            	
              13.4.2

            	
              At the time
      of or following notification under Clause 13.4.1, RBS may, if it
      determines that the prevailing circumstances are such that it cannot
      provide the Support in accordance with the principles set out in Clauses
      13.2.3 and 13.2.4, by giving notice to the relevant Investor(s) (such
      notice being a “Support
      Notification”), require the Investor that is required to acquire
      the Undercapitalised or Underfunded Business (if the Undercapitalised or
      Underfunded Business is an Acquired Business) or each Investor in the
      Consortium Proportions (if the Undercapitalised or Underfunded Business is
      part of the Retained Business) to contribute Support directly or
      indirectly, in a form that qualifies as regulatory capital as determined
      by the Regulators in the case of Support required in connection with the
      Minimum Equity Ratio, to the Undercapitalised or Underfunded Business to
      enable it to meet the relevant Minimum
Ratios.

            

    

     

    
      	
               
      

            	
              13.4.3

            	
              In respect of
      any additional Support to be provided to an Undercapitalised or
      Underfunded Business pursuant to Clause 13.4, such Support shall be
      provided by the relevant Investor within 60 Business Days of receipt of
      the Support Notification unless otherwise agreed by the relevant Investor
      and RBS.

            

    

     

    
      	
              13.5

            	
              Terms
      on which Further Capital and / or Funding will be
  provided

            

    

     

    If an Investor is
required to provide further funding, capital or liquidity pursuant to Clause
13.3 or 13.4, the relevant Investor shall be required to contribute or provide
the following amounts in addition to any funding, liquidity or capital to be
provided pursuant to Clauses 13.3 or 13.4, such additional funding, liquidity or
capital to be provided to the RBS Acquired Business:

     

    
      	
               
      

            	
              13.5.1

            	
              in respect of
      ordinary equity share capital, interest on the amount to be provided
      calculated at a rate of *** for the first 60 days from the notification of
      the equity capital requirement (either pursuant to Clause 13.3.1 or by a
      Support Notification) and at a rate of *** for any period thereafter, in
      each case to the date that the capital is
  provided;

            

    

     

    
      	
               
      

            	
              13.5.2

            	
              in respect of
      Tier 2 capital:

            

    

     

    
      	
               
      

            	
              (i)

            	
              interest on
      the amount to be provided calculated at a rate of *** from the
      notification of the Tier 2 requirement (either pursuant to Clause 13.3.1
      or by a Support Notification) to the date that the Tier 2 capital is
      provided; plus

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any interest
      due under Clause 13.2.3(i); and

            

    

     

    
      
        

      

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

    

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              13.5.3

            	
              in respect of
      funding or liquidity:

            

    

     

    
      	
               
      

            	
              (i)

            	
              interest on
      the amount to be provided calculated at *** from the notification of the
      funding or liquidity requirement (either pursuant to Clause 13.3.1 or by a
      Support Notification) to the date that the funding or liquidity is
      provided; plus

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any interest
      due under Clause 13.2.4(i).

            

    

     

    
      	
              13.6

            	
              Repatriations
      of Funding, Capital and Liquidity

            

    

     

    
      	
               
      

            	
              13.6.1

            	
              RBS will
      inform Santander and the State on a monthly basis whether their respective
      Acquired Businesses or the Retained Business has liquidity, capital or
      funding that exceeds the Minimum Ratios (an “Overfunded
      Business”). If the Overfunded Business
  exceeds:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Minimum
      Equity Ratio plus the Capital Buffer by €1,000,000 or more, the Company
      and the Investors shall use their reasonable endeavours to repatriate any
      excess equity capital to the State (after settlement of the Company’s
      obligations under any perpetual loan advanced to the Company by ABN AMRO
      Bank as contemplated in clause 13.2.1) if the Overfunded Business is a
      State Acquired Business, to Santander if the Overfunded Business is a
      Santander Acquired Business or the State and Santander in their respective
      Consortium Proportions if the Overfunded Business is the Retained
      Business, as soon as reasonably practicable after such notification and
      subject to applicable law and regulation, provided that such repatriation
      does not result in a breach of the Minimum Funding Requirement;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Minimum
      Funding Requirement by €1,000,000 or more, the Company and the Investors
      shall use their reasonable endeavours to repay any excess funding to the
      State if the Overfunded Business is a State Acquired Business, Santander
      if the Overfunded Business is a Santander Acquired Business or the State
      and Santander in their respective Consortium Proportions if the Overfunded
      Business is the Retained Business, as soon as reasonably practicable after
      such notification and subject to applicable law and regulation, provided
      that such repayment does not result in a breach of the Minimum Equity
      Ratio or Total Capital Ratio.

            

    

     

    
      	
               
      

            	
              13.6.2

            	
              The amount
      repatriated to the State and/or Santander shall be increased as
      follows:

            

    

     

    
      	
               
      

            	
              (i)

            	
              in respect of
      equity capital, interest on the amount to be repatriated calculated at a
      rate of *** for the first 60 days from the date the amount of equity
      capital exceeded the Minimum Equity Ratio plus the Capital Buffer by
      €1,000,000 or more and at a rate of *** for any period thereafter, in each
      case to the date that the Tier 1 equity capital is repatriated;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in respect of
      funding or liquidity, interest on the amount to be repaid calculated at
      *** from the date the level of funding exceeded the Minimum Funding
      Requirement to the date that the funding or liquidity is repaid,
      

            

    

     

    
      
        
          

        

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

      

    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 
      

              	
                 

              	
                provided that
      interest payable in respect of any excess shall only be payable pursuant
      to this Clause 13.6.2(ii) or 13.2.5, not
both.

              

      

       

    

    
      	
               
      

            	
              13.6.3

            	
              For the
      purposes of this Clause 13.6, references to “repatriations” shall include
      distributions and/or dividends to Investors directly or indirectly in
      accordance with Clause 15 or and references to “repayments” shall include
      repayment of loans as may be
appropriate.

            

    

     

    
      	
               
      

            	
              13.6.4

            	
              In relation
      to any repatriation for the purposes of this Clause 13.6 and only to the
      extent that RBS Holdings is unable or not permitted by law or regulation
      to provide the Company with the requisite funds to meet its obligations of
      this Clause 13.6, RBS undertakes to use reasonable endeavours to procure
      that the Company is funded such that it can make repatriations as
      contemplated by this Clause 13.6, provided
that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if RBS
      provides the Company with the requisite capital, liquidity or funding, the
      corresponding excess liquidity, funding or capital in the RBS Holdings
      Group is reallocated from the Overfunded Business to the RBS Acquired
      Business;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              RBS shall not
      be required to take any action pursuant to this Clause 13.6 which would
      give rise to any obligation on RBS to seek approval of its shareholders
      for the proposed transaction in accordance with the Listing Rules made by
      the FSA under Part VI of the Financial Services and Markets Act 2000 (as
      amended from time to time); and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              RBS shall not
      be required to take any action if such action would be contrary to any
      applicable regulation, law, or directions from
  Regulators.

            

    

     

    
      	
               
      

            	
              13.6.5

            	
              For the
      avoidance of doubt, an Investor’s entitlement to any excess equity or
      funding under this Clause 13.6 shall not expire until such excess no
      longer exists or repatriation of such excess has been
      effected.

            

    

     

    
      	
              13.7

            	
              Discussions
      with Investors

            

    

     

    In event of request
for additional funding or capital (or likewise) under this Clause 13, RBS shall,
immediately after it or the Company notifies the Investors of the request in
accordance with this Clause 13, arrange a meeting of the relevant
representatives of the Investors to discuss the background to the need for such
funding.

     

     

    
      	
              14

            	
              New
      Shareholders

            

    

     

    
      	
              14.1

            	
              Each of the
      parties undertakes to procure that no shares in the capital of the Company
      shall be allotted, issued or Transferred to or otherwise acquired by a
      person who is not already a party to this Agreement (a “New
      Shareholder”) unless the New Shareholder has executed and delivered
      a deed of accession in the form set out in Schedule
      6.
      The Company will, to the extent permitted by law, not enter the New
      Shareholder in the register of members unless this Clause 14
      has been complied with in all
respects.

            

    

     

    
      	
              14.2

            	
              The form of
      the deeds of accession set out in Schedule
      6
      and the requirements of this Clause 14
      may be varied in a manner approved in writing by the
      Shareholders.

            

    

     

    
      	
              14.3

            	
              All executed
      deeds of accession shall be delivered to and held by the Company (for both
      itself and the other parties to this
Agreement).

            

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    
      	
              14.4

            	
              Subject to
      Clause 14.5,
      no party may assign, Transfer or create any trust in respect of, or
      purport to assign, Transfer, or create any trust in respect of, any of its
      rights or obligations under this Agreement without having first obtained
      the consent of the Shareholders, together with all relevant third party
      and regulatory consents.

            

    

     

    
      	
              14.5

            	
              An Investor
      may assign all or any proportionate part of its rights under this
      Agreement (including its proportionate part of the benefit of the
      warranties) to a person to whom it Transfers Shares in the capital of the
      Company in accordance with this Agreement, and any other Transaction
      Document as appropriate. No such assignment shall release any such
      Investor of its obligations hereunder for which it shall be jointly and
      severally liable with such assignee and provided that if such assignee
      ceases to be a wholly owned member of its Group of the relevant Investor
      such Investor shall procure that such assignee immediately reassigns such
      rights and obligations to it or to another of its wholly owned Group
      members (such further assignee being itself subject to the provisions of
      this clause).

            

    

     

    
      	
              14.6

            	
              Subject to
      Clauses 14.5 and 14.7,
      a person who has entered into a Deed of Accession pursuant to this
      Agreement shall have the benefit of and be subject to the burden of all
      the provisions and continuing obligations of this Agreement as if it had
      been an original party in the capacity designated in the deed of accession
      and this Agreement shall be interpreted accordingly. Without limiting the
      general nature of this Clause 14.6,
      where the person is designated as an Investor in a Deed of Accession, it
      shall be entitled to the benefit of all representations, covenants,
      warranties and undertakings which this Agreement contemplates are given to
      the Investors, and “Investors” shall be construed
    accordingly.

            

    

     

    
      	
              14.7

            	
              Nothing in
      this Clause 14
      shall affect a party’s accrued rights and obligations under this Agreement
      or shall be construed as requiring any party to perform again any
      obligation or discharge again any liability already performed or
      discharged, or as entitling any party to receive again any benefit already
      enjoyed.

            

    

     

     

    
      	
              15

            	
              Distributions
      and Repurchases

            

    

     

    
      	
              15.1

            	
              Power
      of Board to pay dividends

            

    

     

    Subject to any
additional legal requirements, the payment or declaration of any dividend or
other distribution on account of shares in the capital of the Company (including
the timing and amounts of any such payments) shall be decided by the Board
provided that no dividend or other distribution shall be paid on any class of
Shares without the consent of the Investor(s) holding such Shares and that if
any decision to pay or make a dividend or other distribution is made it shall be
made in accordance with the rights attaching to the Shares.

     

    
      	
              15.2

            	
              Repurchases
      of Shares

            

    

     

    Subject
to any legal requirements, the Investors may agree that, rather than returning
any Business Assets of Acquired Businesses or the Retained Businesses to the
relevant Investor by way of dividends, any Business Assets (or cash equal to the
value of the Business Assets) shall be returned to Investors by the repurchase
by the Company of Shares or the purchase of Shares by RBS (or a member of the
RBS Group), in either case for consideration equal to the value of the Business
Assets to be returned to the relevant Investor.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    
      	
              16

            	
              Confidentiality
      and Announcements

            

    

     

    
      	
              16.1

            	
              General
      Restrictions

            

    

     

    None of the parties
shall, at any time, whether before or after the termination of this Agreement,
divulge or permit its officers, employees, agents, advisers or contractors to
divulge to any person (other than to any respective officers or employees of a
party or a person to whom, in each case, disclosure of information is permitted
by this Agreement and who require the same to enable them properly to carry out
their duties):

     

    
      	
               
      

            	
              16.1.1

            	
              any of the
      contents of any of the Transaction Documents or the Investors’ shared
      strategy with respect to the
Transaction;

            

    

     

    
      	
               
      

            	
              16.1.2

            	
              any
      information which it may have or acquire (whether before or after the date
      of this Agreement) relating to the business and/or any customers of or
      suppliers to the business, or otherwise to the business, assets or affairs
      of the Acquired Businesses which have been or which are to be acquired by
      any other party hereunder or, in each case, of the Retained
      Group;

            

    

     

    
      	
               
      

            	
              16.1.3

            	
              any
      information which, in consequence of the negotiations relating to this
      Agreement or of being a party being involved in the business in any manner
      whatsoever (including as an Investor and as a nominator of a Director) or
      performing or exercising its rights and obligations under this Agreement,
      any party may have acquired (whether before or after the date of this
      Agreement) with respect to the customers, business, assets or affairs of
      any other party.

            

    

     

    
      	
              16.2

            	
              Excluded
      Information

            

    

     

    The restrictions
imposed by Clause 16.1
shall be subject to Schedule 6 and shall not apply in respect of any
information:

     

    
      	
               
      

            	
              16.2.1

            	
              which now or
      hereafter comes into the public domain otherwise than as a result of a
      breach of such undertaking of
confidentiality;

            

    

     

    
      	
               
      

            	
              16.2.2

            	
              which is
      obtained by the receiving party from a person who is not party to this
      Agreement (other than any Investor’s Group member) and who is not subject
      to a confidentiality obligation to any other party to this Agreement in
      respect of the information being provided;
or

            

    

     

    
      	
               
      

            	
              16.2.3

            	
              which is
      obtained or transmitted by any party by virtue of a Permitted
      Disclosure.

            

    

     

     

    
      	
              17

            	
              Advisers
      and Costs

            

    

     

    Subject to the
provisions of each Tax Agreement, each Investor shall pay its own costs incurred
in connection with the Transaction and the preparation, execution and
implementation of the Transaction Documents, save the extent that the Investors
agree that such costs should be borne by the Company.

     

     

    
      	
              18

            	
              Supremacy
      of this Agreement

            

    

     

    
      	
              18.1

            	
              If there is
      any conflict or inconsistency between the provisions of this Agreement and
      the Articles then for the purposes of giving effect to the letter or
      spirit of this Agreement, this Agreement shall prevail to the extent
      legally permitted. Each Investor shall use its
  rights

            

    

    
       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                and powers to
      procure that the Articles are amended, to the extent legally permitted, so
      as to accord with and give effect to the provisions of this
      Agreement.

              

      

       

    

    
      	
              18.2

            	
              In relation
      to the subject matter of the Litigation Management Agreement, to the
      extent there is any conflict or inconsistency between the provisions of
      this Agreement and the Litigation Management Agreement, the provisions of
      the Litigation Management Agreement shall prevail to the extent legally
      permitted.

            

    

     

    
      	
              18.3

            	
              In relation
      to the subject matter of any Tax Agreement, paragraph 1.3 of Part 9 of
      Schedule 1 shall apply in the case of any conflict or inconsistency
      between the provisions of this Agreement and the relevant Tax
      Agreement.

            

    

     

     

    
      	
              19

            	
              Entire
      Agreement and Non Reliance

            

    

     

    
      	
              19.1

            	
              Entire
      Agreement

            

    

     

    This Agreement and
each Transaction Document constitute the entire agreement and, subject to Clause
2, supersede any previous agreements between the parties relating to the subject
matter of this Agreement.

     

    
      	
              19.2

            	
              Non
      Reliance

            

    

     

    Each
party acknowledges and represents that it has not relied on or been induced to
enter into this Agreement by a representation, warranty or undertaking (whether
contractual or otherwise) given by any other party
other than those set out in Clause 10 and
Schedule 4,
or otherwise as expressly set out in this Agreement or in a Transaction
Document.

     

    
      	
              19.3

            	
              Exclusion
      of Liability

            

    

     

    Save
as provided in Clause
10, no
party is liable to another party (in equity, contract or tort (including
negligence) for a representation, warranty or undertaking that is not set out
expressly in this Agreement or in a Transaction
Document.

     

    
      	
              19.4

            	
              Further
      acknowledgements

            

    

     

    Each
of the Investors acknowledges, represents
and
agrees that:

     

    
      	
               
      

            	
              19.4.1

            	
              (i) other
      than as set out in this Agreement, it has not relied on or been induced to
      enter into this Agreement by any representation, warranty, recommendation,
      advice or undertaking (whether contractual or otherwise) given by any
      member of another Investor Group and (ii) no member of an Investor Group
      shall have any liability to any other Investor or to any member of an
      Investor Group (in equity, contract or tort (including negligence)) for a
      representation, warranty or undertaking that is not expressly set out in
      this Agreement or in any other Transaction
  Document;

            

    

     

    
      	
               
      

            	
              19.4.2

            	
              it has made
      its own investigations into, and appraisals and assessment of, the
      Company, each member of the RBS Holdings Group and the business of the RBS
      Holdings Group and will continue to do so for so long as it is the holder
      of, or otherwise interested in, Shares, and no other Investor and no
      member of that Investor Group shall have any liability to it in connection
      with its decision to enter into the transactions contemplated by this
      Agreement and the other Transaction Documents (as
    applicable);

            

    

     

    
      	
               
      

            	
              19.4.3

            	
              save to the
      extent otherwise agreed in writing by any other Investor or by a member of
      that Investor Group, it is owed no duty of care or other obligation by
      any

            

    

    
       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                other
      Investor or by any member of that Investor Group in connection with its
      decision to enter into the transactions contemplated by this Agreement and
      the other Transaction Documents (as
applicable);

              

      

       

    

    
      	
              19.5

            	
              Fraud
      etc.

            

    

     

    Nothing
in this Clause
19 shall
have the effect of restricting or limiting any liability arising as a result of
any fraud, wilful misconduct or wilful concealment.

     

     

    
      	
              20

            	
              General

            

    

     

    
      	
              20.1

            	
              Counterparts

            

    

     

    This Agreement may
be executed in any number of counterparts, each of which when executed and
delivered is an original and all of which together evidence the same
agreement.

     

    
      	
              20.2

            	
              Variations

            

    

     

    A variation of this
Agreement is only valid if it is in writing and signed by or on behalf of each
of the Investors and the Company.

     

    
      	
              20.3

            	
              Waiver

            

    

     

    The failure to
exercise or delay in exercising a right or remedy provided by this Agreement or
by law does not impair or constitute a waiver of the right or remedy or an
impairment of or a waiver of other rights or remedies. No single or partial
exercise of a right or remedy provided by this Agreement or by law prevents
further exercise of the right or remedy or the exercise of another right or
remedy. The rights provided in this Agreement are cumulative and not exclusive
of any other rights (whether provided by law or otherwise). Any express waiver
of any breach of this Agreement shall not be deemed to be a waiver of any
subsequent breach.

     

    
      	
              20.4

            	
              Release

            

    

     

    Any liability to
any party under this Agreement may in whole or in part be released, compounded
or compromised or time or indulgence given by that party in its absolute
discretion as regards any party under such liability without in any way
prejudicing or affecting its rights against any other party under the same or a
like liability, whether joint and several or otherwise.

     

    
      	
              20.5

            	
              Continuing
      Obligations

            

    

     

    Except to the
extent that they have been performed and except where this Agreement provides
otherwise, the warranties, representations, obligations and undertakings
contained in this Agreement remain in force after Completion.

     

    
      	
              20.6

            	
              No
      Partnership

            

    

     

    Nothing contained
in this Agreement (and no action taken by a party pursuant to its terms) is to
be construed as creating a partnership or (unless expressly stated otherwise)
agency relationship between any of the parties.

     

    
      	
              20.7

            	
              Illegality

            

    

     

    If any provision in
this Agreement shall be held to be illegal, invalid or unenforceable, in whole
or in part, under the law of any jurisdiction, the legality, validity or
enforceability of

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    such provision or
part under the law of any other jurisdiction and the legality, validity and
enforceability of the remainder of this Agreement shall not be
affected.

     

    
      	
              20.8

            	
              Successors
      and Permitted
      Assigns

            

    

     

    The provisions of
this Agreement shall be binding upon the parties’ respective successors and
permitted assigns, but such persons shall not be entitled to the benefit of its
provisions unless they have entered into a deed of accession.

     

    
      	
              20.9

            	
              Several
      and not joint or joint and several
  obligations

            

    

     

    Except where
expressly stated otherwise in this Agreement, all obligations, undertakings and
statements in this Agreement are several and not joint or joint and
several.

     

    
      	
              20.10

            	
              Further
      Assurance

            

    

     

    
      	
            	
              20.10.1

            	
              Each of the
      parties (subject to applicable laws and regulation) agrees to take all
      such action or procure that all such action is taken as is reasonable in
      order to implement the terms of this Agreement or any transaction, matter
      or thing contemplated by this Agreement. Every representation, warranty,
      undertaking or indemnity in this Agreement which is expressed to be given
      to the Investors is given to each Investor separately and each Investor
      shall have a separate claim and right of action in respect of every
      breach.

            

    

     

    
      	
            	
              20.10.2

            	
              Each Investor
      shall exercise its respective voting rights in a general meeting of the
      Company in such a manner so as to be consistent with the intentions of the
      parties set out in this Agreement or with any provision of this Agreement
      including, without limitation, to procure that all resolutions required to
      facilitate the declaration or payment by any Group Company of dividends
      consistent with Clause 15.1 are
      duly passed.

            

    

     

    
      	
            	
              20.10.3

            	
              Notwithstanding
      any other provision of this Agreement, none of the parties or any members
      of their respective Groups shall be required to take any action or do or
      omit to do anything which causes any of the other parties, any member of
      their respective Groups or any member of the RBS Holdings Group to breach
      any applicable law or regulatory requirement. Each party will and shall
      procure that each member of its Group shall co-operate with each other
      party with a view to ensuring (insofar as it is reasonably able and
      subject to applicable law and regulations and the provisions of this
      Agreement) that for as long as any Acquired Business, Retained Business
      and/or RBS Holdings Group Company is the subject of clauses 5 and 6 of
      this Agreement, such business and/or company will conduct its affairs in
      compliance with the applicable regulatory requirements of each relevant
      Regulator.

            

    

     

    
      	
              20.11

            	
              Third
      Party Rights

            

    

     

    
      	
            	
              20.11.1

            	
              The
      obligations of each Investor under the terms of this Agreement expressed
      to be owed to any member of the Retained Group may be enforced by each
      relevant member of the Retained Group whilst such member remains part of
      the Retained Group from time to
time.

            

    

     

    
      	
            	
              20.11.2

            	
              Obligations
      of the Company under the terms of this Agreement expressed to be owed to
      an Investor (or members of its Group and in the case of RBS, the Wider RBS
      Group) may be enforced by that Investor or members of its Group
      (including, with effect from 10 October 2007, its Acquired Companies
      whilst such Acquired

            

    

    
       

      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

       

      
        	
              	
                 

              	
                Companies
      remain part of the RBS Holdings Group or the relevant Investor’s Group
      and, in the case of RBS, the Wider RBS
Group).

              

      

       

    

    
      	
            	
              20.11.3

            	
              The
      obligations of each Investor expressed to be owed to another Investor (or
      members of its Group and in the case of RBS, the Wider RBS Group) may be
      enforced by the relevant Investor or by members of its Group (including,
      with effect from 10 October 2007, its Acquired Companies whilst such
      Acquired Companies remain part of the RBS Holdings Group or the relevant
      Investor’s Group and, in the case of RBS, the Wider RBS
      Group).

            

    

     

    
      	
            	
              20.11.4

            	
              Except where
      expressly provided otherwise in this Agreement, a person who is not a
      party to this Agreement has no right under the Contracts (Rights of Third
      Parties) Act 1999 to enforce any term of this Agreement, but this does not
      affect any right or remedy of a third party which exists or is available
      apart from that Act.

            

    

     

    
      	
            	
              20.11.5

            	
              Where,
      pursuant to the terms of this Agreement, a third party has been expressly
      granted rights under the Contracts (Rights of Third Parties) Act 1999, the
      consent of such third party shall not be required for the variation of
      this Agreement or the waiver of any provision in
  it.

            

    

     

    
      	
            	
              20.11.6

            	
              Enforcement
      of third party rights in relation to this Agreement shall be in accordance
      with the provisions of Clause 22.2.

            

    

     

    
      	
              20.12

            	
              Unlawful
      fetters

            

    

     

    The Company shall
not be bound by any provision of this Agreement to the extent that it would
constitute an unlawful fetter on any of its statutory powers, but that provision
shall remain valid and binding as regards the other parties to this Agreement to
which it is expressed to apply.

     

    
      	
              20.13

            	
              Default
      Interest

            

    

     

    If any party fails
to pay any amount due and payable by it under this Agreement or under any
judgment in connection with this Agreement (save for any payments due under
Clause 13, for which the provisions of Clause 13.4 shall apply), such party
shall pay to the party or parties to whom the same was due, interest on such
overdue amount from the due date until the date of actual payment, both before
and after a judgment, at the Default Interest Rate.

     

     

    
      	
              21

            	
              Notices

            

    

     

    
      	
              21.1

            	
              Save as set
      out in paragraph 14 of Schedule 2, any notice or other document to be
      given under this Agreement shall be in writing in English and shall be
      deemed duly given if delivered to the recipient as its fax number or
      address set out below or any other fax number or address notified to the
      parties for the purposes of this Agreement, if left at or sent by (i)
      airmail or express or other fast postal service or (ii) facsimile
      transmission or other means of telecommunication in permanent written form
      to the following address or number:

            

    

     

    
      
        	 	
                21.1.1

              	
                RBS

              	 
      
	 	 
      	
                Address

              	
                House
      G

              
	 	 
      	 
      	
                RBS
      Gogarburn

              

      

    

    
    

     

    
    

    
    

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    
      
        	 	 
      	 
      	
                Edinburgh

              
	 	 
      	 
      	
                EH12
      1HQ

              
	 	 
      	
                Fax
      No.

              	
                +44 131 626
      2997

              
	 	 	 
	 	 
      	
                For the
      attention of Group General Counsel

              
	 	 	 
	 	
                21.1.2

              	
                Santander

              	 
      
	 	 	 	 
	 	 
      	
                Address

              	
                Cuidad Grupo
      Santander

              
	 	 
      	 
      	
                28660
      Boadilla del Monte

              
	 	 
      	 
      	
                Madrid

              
	 	 
      	 
      	
                Spain

              
	 	 
      	
                Fax
      No.

              	
                +34 91 257
      1524

              
	 	 	 
	 	 
      	
                For the
      attention of General Counsel

              
	 	 	 
	 	
                21.1.3

              	
                the
      State

              	 
      
	 	 	 	 
	 	 
      	
                Address

              	
                Ministry of
      Finance

              
	 	 
      	 
      	
                Korte
      Voorhout 7/P.O. Box 20201

              
	 	 
      	 
      	
                2500 EE The
      Hague

              
	 	 
      	
                Fax
      No.

              	
                +31 70342 79
      33

              
	 	 	 
	 	 
      	
                For the
      attention of the Director of Financieringen (at the time of this
      Agreement, Wouter Raab)
      and the Director of Bureau Financiele Instellingen (at the time of this
      Agreement,
      Rens Bröcheler)

              
	 	 	 	 
	 	
                21.1.4

              	
                Company

              	 
      
	 	 	 	 
	 	 
      	
                Address

              	
                Strawinskylaan
      3105

              
	 	 
      	 
      	
                1077ZX
      Amsterdam

              
	 	 
      	 
      	
                The
      Netherlands

              

      

    

    
    

     

    
      	
              21.2

            	
              Any notice
      shall be delivered by hand or sent by fax or by express or other fast
      means of postal service. Any notice shall be deemed to have been received
      on the next working day in the place to which it is sent if sent by fax or
      72 hours from the time of posting if sent by
  post.

            

    

     

    
      	
              22

            	
              Choice
      of law and arbitration

            

    

     

    
      	
              22.1

            	
              Governing
      Law

            

    

     

    This Agreement and
the documents to be entered into pursuant to it, save as expressly referred to
therein, and any non-contractual obligations arising out of or in connection
with this Agreement, shall be governed by and construed in accordance with
English law.

     

    
      	
              22.2

            	
              Arbitration

            

    

     

    
      	
               
      

            	
              22.2.1

            	
              Subject to
      Clause 9 (as varied where applicable in accordance with the Schedules to
      this Agreement), any dispute arising out of or connected with this
      Agreement, including a dispute as to the validity or existence of this
      Agreement and/or this Clause 22.2, shall be resolved by arbitration in
      Paris, France conducted in English by three arbitrators pursuant to the
      rules of the ICC, save that, unless the parties agree otherwise, the third
      arbitrator, who shall act as chairman of the tribunal,
    shall

            

    

    
       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                be chosen by
      the two arbitrators appointed by or on behalf of the parties. If he is not
      chosen and nominated to the ICC for appointment within 30 days of the date
      of confirmation by the ICC of the later of the two party-appointed
      arbitrators to be confirmed, he shall be chosen by the
  ICC.

              

      

       

    

    
      	
               
      

            	
              22.2.2

            	
              All the
      parties irrevocably submit to the non-exclusive jurisdiction of the courts
      of England to support and assist the arbitration process pursuant to
      Clause 22, including if necessary the grant of interlocutory relief
      pending the outcome of that
process.

            

    

     

    
      	
               
      

            	
              22.2.3

            	
              The
      substantive law of the arbitration shall be English
  law.

            

    

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

       

    

    Schedule
1 –
Part 1

     

    Transfer
of the Acquired Businesses

     

    Introduction

     

    
      	
              1

            	
              The
      Transfer Conditions

            

    

     

    
      	
              1.1

            	
              Completion of
      the transfer of any Acquired Business under this Agreement shall in all
      respects be conditional on the fulfilment of the following
      conditions:

            

    

     

    
      	
               
      

            	
              1.1.1

            	
              all
      authorisations, orders, grants, recognitions, confirmations, consents,
      clearances, certificates, licences, permissions and approvals necessary or
      reasonably considered by the relevant Investor and any other affected
      Investor to be necessary or appropriate for or in respect of the relevant
      transfer having been obtained, in terms and in a form reasonably
      satisfactory to that Investor and to any other affected
      Investor;

            

    

     

    
      	
               
      

            	
              1.1.2

            	
              no order
      having been issued (and remaining in effect) by any court or other
      governmental authority, and no statute, rule, regulation, executive order,
      decree or other order of any kind existing or having been enacted, entered
      or enforced by any governmental or regulatory authority, which (in any
      such case to an extent which is material in the context of the relevant
      sale and purchase) prohibits, restrains or restricts Completion of the
      sale of the relevant Acquired
Business;

            

    

     

    
      	
               
      

            	
              1.1.3

            	
              to the extent
      reasonably necessary for the transfer of such Acquired Business,
      negotiation or determination of any relevant definitive agreements as
      referred to in Clauses 5.2 and 9.

            

    

     

    
      	
              1.2

            	
              Each of the
      parties shall use its reasonable endeavours to procure the fulfilment of
      the Transfer Conditions as soon as
possible.

            

    

     

    
      	
              1.3

            	
              Each Investor
      may waive in whole or in part any of the Transfer Conditions set out in
      paragraphs 1.1.2 to 1.1.4 provided that such waiver does
    not:

            

    

     

    
      	
               
      

            	
              1.3.1

            	
              result in any
      breach by any other Investor, the Company or any member of their
      respective Groups of any legal or regulatory requirement;
    or

            

    

     

    
      	
               
      

            	
              1.3.2

            	
              result in any
      material financial detriment to any other Investor, the Company or any
      member of their respective Groups unless such persons are indemnified to
      their reasonable satisfaction against all Liabilities arising out of or in
      connection with such waiver; or

            

    

     

    
      	
               
      

            	
              1.3.3

            	
              result in any
      material non financial detriment to any other Investor, the Company or any
      member of their respective Groups.

            

    

     

    
      	
              1.4

            	
              If any of the
      Transfer Conditions attaching to the transfer of an Acquired Business
      becomes incapable of being satisfied (and, if the Transfer Condition is
      capable of being waived, the relevant party or parties refuse, when they
      are entitled to do so, to waive the Transfer Condition), all obligations
      of the parties under this Agreement in respect of such transfer shall
      terminate and the parties shall not have any claim against the others in
      respect thereof except for any prior breach of paragraph 1.2. To the
      extent that any asset is incapable of being transferred to an Investor
      (the “Relevant
      Investor”) or a member of
its

            

    

    
       

      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                Group as a
      result of a Transfer Condition failing to be satisfied, the following
      provisions shall apply:

              

      

       

    

    
      	
               
      

            	
              1.4.1

            	
              unless
      paragraph 1.4.2 applies such asset shall be sold on terms
      that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              RBS NV shall
      obtain a Valuation Range for the Acquired Business in accordance with the
      principles set out in paragraph 13 of Schedule 2, mutatis
      mutandis;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              such sale
      shall be conducted (which shall include the negotiation of any terms of
      such sale) by the Managing (and, if appropriate, Supervisory) Board(s) of
      RBS NV unless otherwise required by any relevant regulatory or anti trust
      authority (in which event such sale shall be conducted in accordance with
      such requirements);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the net
      proceeds of sale shall be applied for the benefit of, and the Liabilities
      arising out of or in connection with such sale (including, without
      limitation, professional costs, Taxation and any Liabilities associated
      with any warranties or indemnities given in connection with such sale)
      shall be for the account of the Relevant Investor;
  and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the Investors
      (other than the Relevant Investor) shall be entitled to match any third
      party offer for the relevant Acquired Business on the terms of paragraph
      11 of Schedule 2 mutatis
      mutandis;

            

    

     

    
      	
               
      

            	
              (v)

            	
              RBS NV shall
      not sell the relevant Acquired Business for consideration which is less
      than the lowest point of the Valuation Range less 7.5 per cent. without
      the prior written consent of the Relevant Investor (such consent not to be
      unreasonably withheld taking into account, inter
      alia, the number of potential purchasers for the Acquired Business,
      any restrictions on the transfer of the relevant business imposed by a
      Regulator and any other applicable impediments to transfer);
      or

            

    

     

    
      	
               
      

            	
              1.4.2

            	
              if all of the
      Investors so agree (and on such terms as they may agree), such asset shall
      be treated as and deemed part of the Retained
  Business.

            

    

     

    
      	
              2

            	
              Transfer
      of the Acquired Businesses

            

    

     

    
      	
              2.1

            	
              Subject to
      the Transfer Conditions being satisfied or waived in accordance with
      paragraph 1, and in each case as at Completion of the relevant transfer,
      the Company shall procure that RBS Holdings or the relevant members of its
      Group shall transfer and each of the State and Santander shall directly or
      indirectly acquire (or procure the acquisition by a member of its Group
      of):

            

    

     

    
      	
               
      

            	
              2.1.1

            	
              in the case
      of the State, the State Acquired Businesses;
and

            

    

     

    
      	
               
      

            	
              2.1.2

            	
              in the case
      of Santander, the Santander Acquired
Businesses.

            

    

     

    
      	
              2.2

            	
              The intention
      of the parties is that RBS will either acquire the RBS Acquired Businesses
      in accordance with the principles of Clause 5 and Schedule 1, that it will
      sell the RBS Acquired Businesses to third parties or that it will acquire
      indirect ownership of the RBS Acquired Businesses by becoming the sole
      owner of the Company in accordance with Clause
  4.

            

    

     

    
      	
              2.3

            	
              Each Investor
      shall accept without enquiry, requisition or objection such title in the
      Acquired Business to be acquired by it (or a member of its Group), as RBS
      Holdings or the

            

    

    
       

      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                relevant
      member of the RBS Holdings Group may have and the Acquired Business Assets
      shall be transferred without the benefit of any undertakings, warranties,
      representations or other assurances whatsoever except insofar as they are
      contained in this Agreement, the Tax Agreements or as otherwise agreed by
      the Investors.

              

      

       

    

    
      	
              2.4

            	
              All
      companies, businesses and assets the transfer of which is required to be
      procured hereunder shall be transferred in the condition, in the place in
      which or to which they are situate and subject to all benefits, burdens,
      rights and restrictions to which they are subject at the time when the
      obligation to effect the transfer shall have become unconditional (subject
      to any other provisions of this
Agreement).

            

    

     

    
      	
              2.5

            	
              No
      representation or warranty is given by any party as to the nature,
      condition, fitness for purpose, merchantability or suitability of any
      company, business or asset.

            

    

     

    
      	
              2.6

            	
              The
      provisions of:

            

    

     

    
      	
               
      

            	
              2.6.1

            	
              Part 4 of
      this Schedule shall have effect in relation to employment
      matters;

            

    

     

    
      	
               
      

            	
              2.6.2

            	
              Part 5 of
      this Schedule shall have effect in relation to pensions
      matters;

            

    

     

    
      	
               
      

            	
              2.6.3

            	
              Part 6 of
      this Schedule shall have effect in relation to intellectual
      property;

            

    

     

    
      	
               
      

            	
              2.6.4

            	
              Part 7 of
      this Schedule shall have effect in relation to real
  estate;

            

    

     

    
      	
               
      

            	
              2.6.5

            	
              Part 8 of
      this Schedule shall have effect in relation to regulatory matters;
      and

            

    

     

    
      	
               
      

            	
              2.6.6

            	
              Part 9 of
      this Schedule and any Tax Agreements entered into between the parties
      shall have effect in relation to tax
matters.

            

    

     

    
      	
              3

            	
              Consideration
      for Acquired Business Transfers

            

    

     

    
      	
              3.1

            	
              Unless
      otherwise agreed, the consideration for the sale and purchase of the
      relevant assets shall be the payment by the relevant Investor, or such
      persons as it may procure, in cash (unless otherwise agreed by the
      Investors) on Completion of the appropriate proportion (determined in
      accordance with paragraph 3.2 below) of the fair market value of its
      Acquired Business (subject to adjustment as provided in this Schedule) to
      RBS Holdings or such persons as the Company may
  direct.

            

    

     

    
      	
              3.2

            	
              The Investors
      shall endeavour to agree in good faith the fair market value among the
      Acquired Business Assets of their respective Acquired Businesses that are
      to be transferred in accordance with Clause 5, in the period following
      execution of this Agreement, failing which such apportionment of the fair
      market value shall be determined in accordance with Clause 9 of this
      Agreement. If any cash consideration is received hereunder by RBS Holdings
      in respect of any of the Acquired Businesses, it shall be received by RBS
      Holdings on behalf of the Investor or members of the RBS Holdings Group
      who are the beneficial owners of the shares or assets to which it
      relates.

            

    

     

    
      	
              3.3

            	
              Payment of
      the appropriate proportion of any fair market value pursuant to paragraph
      3.1 shall be a good discharge of each Investor’s obligations to pay the
      consideration due in respect of all and any of the Acquired Business
      Assets to be acquired by it and the Investors shall have no obligation to
      enquire into the application
thereof.

            

    

     

    
      	
              4

            	
              Completion

            

    

     

    
      	
              4.1

            	
              Subject as
      provided in paragraph 6, Completion of any transfer of any Acquired
      Business or part thereof, shall take place at such location outside the
      United Kingdom as the parties shall agree (taking into account the
      possible imposition of Transfer Taxes) on
the

            

    

    
       

      
        
          
          

        

        
          50

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                Completion
      Date applicable to that Completion when the parties shall do such things
      and execute such documents as may reasonably be required by any other
      party to complete the relevant transfer including complying with the terms
      of any agreement relating to the implementation of any Legal Demerger or
      if the transfer is taking place by means of a sale and purchase by
      implementation of the following:

              

      

       

    

    
      	
               
      

            	
              4.1.1

            	
              the Company
      shall procure that at Completion the RBS Holdings Group will procure the
      delivery to the relevant Investor, at such location or locations as each
      Investor may reasonably specify not later than 2 Business Days prior to
      the Completion Date, of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              undated
      transfers (to the extent required) in respect of such of the relevant
      Acquired Company Shares as are registered, duly executed by or on behalf
      of the registered holder and completed in favour of the relevant Investor
      or as it may direct, together with any certificates in respect of such
      Acquired Company Shares (to the extent required, duly endorsed in blank or
      in the name of the relevant
Investor);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              share
      warrants to bearer in respect of such of the relevant Acquired Company
      Shares as are not in registered certificated form;
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              such other
      documents, notarial deeds or certificates, transfers or written consents
      as may be required to give a good title to such Acquired Company Shares or
      of the relevant Acquired Business Assets and (where appropriate) to enable
      the relevant transferee to become the registered holders
      thereof;

            

    

     

    
      	
               
      

            	
              4.1.2

            	
              the Company
      shall procure that any transfers referred to above be duly registered to
      the extent required (subject only to their being duly stamped where
      applicable);

            

    

     

    
      	
               
      

            	
              4.1.3

            	
              the Company
      shall procure the RBS Holdings Group to make available for collection at
      the normal location at which they are held, used or stored and give
      physical possession to each Investor or as it may direct of such of the
      Acquired Business Assets as are transferable by delivery and deliver to
      the transferee company under the relevant Legal Demerger or, on a sale and
      purchase, to the relevant Investor or as it may direct such documents of
      title or other records establishing title to the relevant Acquired
      Business Assets as are within its possession or
  control;

            

    

     

    
      	
               
      

            	
              4.1.4

            	
              if the
      transfer is being effected by means of a sale and purchase, the relevant
      Investor shall pay, or procure the payment by electronic funds transfer
      (for value on the day of transfer) to such bank account or accounts as the
      Company may specify, not later than 2 Business Days prior to the relevant
      Completion Date the relevant proportion of the fair market value
      applicable to the assets being transferred on the relevant Completion
      (determined in accordance with paragraph
3.2).

            

    

     

    
      	
              5

            	
              Third
      Party consents and approvals and pre-emption
  rights

            

    

     

    
      	
              5.1

            	
              Where any
      consent, approval or agreement of any third party is required prior to the
      acquisition by a Purchaser of shares in any Acquired Company or any of the
      Acquired Business Assets to be transferred to it pursuant to this
      Agreement and such consent, approval or agreement has not been obtained at
      or before the due date for Completion of the transfer, the relevant shares
      or assets shall not be transferred to a
  Purchaser,

            

    

    
       

      
        
          
          

        

        
          51

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                notwithstanding
      Completion, until the consent, approval or agreement has been
      unconditionally obtained and the parties shall, and shall procure that
      their subsidiaries shall, use their respective reasonable endeavours to
      obtain such consent, approval or agreement and shall provide each other
      with all such assistance and co-operation as may reasonably be required in
      seeking any such consent, approval or agreement, provided that no person
      shall be under any obligation to make any payments (in money or moneys
      worth) to, or release any right against, any other party for the purpose
      of obtaining any such consent, approval or
  agreement.

              

      

       

    

    
      	
              5.2

            	
              Subject to
      Clause 5.3, if any such consent, approval or agreement as is referred to
      in paragraph 5.1 which is required prior to the acquisition by a Purchaser
      of any shares in any Acquired Company or any of the Acquired Business
      Assets hereunder has not been obtained within 12 months of Completion,
      unless the parties otherwise agree, the relevant shares or assets shall be
      excluded from the transfer, and paragraph 1.4 shall apply to the relevant
      assets as if the Transfer Conditions are incapable of being
      satisfied.

            

    

     

    
      	
              5.3

            	
              Save in
      relation to transfers under the Legal Demerger Agreement (to which the
      provisions of the Legal Demerger Agreement shall apply and subject to Part
      9 of Schedule 1, pending the receipt of such consent, approval or
      agreement as is required for the transfer to the relevant Investor, or as
      it may direct, of any of the Acquired Business Assets as provided in
      paragraph 5.1:

            

    

     

    
      	
               
      

            	
              5.3.1

            	
              the Company
      shall procure that RBS Holdings shall, or shall procure that the member of
      the Retained Group holding the relevant assets shall, in each case to the
      extent permissible under any relevant law and subject to the requirements
      of any relevant Regulator:

            

    

     

    
      	
               
      

            	
              (i)

            	
              hold all such
      assets as agent for the relevant Investor, at all times deal therewith in
      accordance with that Investor’s instructions and not take any step or do
      anything in relation thereto without that Investor’s prior
      consent;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              promptly
      account to that Investor, or as it may direct, for all amounts received by
      it in respect of or relating to such
assets;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              to the extent
      that the relevant asset comprises one or more companies or businesses,
      deliver to that Investor at the end of each month unaudited management
      accounts comprising a profit and loss account, cash flow statement and
      balance sheet showing the results of such Acquired Company or Business for
      the month to which they relate and, on a cumulative basis, for the period
      since Completion, prepared as if the Acquired Company or Business was a
      separately incorporated member of the RBS Holdings Group and complying
      with generally accepted accounting principles in the jurisdiction in which
      the relevant Acquired Company or Acquired Business operates;
      and

            

    

     

    
      	
               
      

            	
              5.3.2

            	
              the relevant
      Investor shall promptly reimburse each member of the Retained Group all
      costs and expenses and shall indemnify each member of the Retained Group
      against all Liabilities incurred by it in relation to such Acquired
      Company or Acquired Business Assets or in relation to any of the Business
      Employees (or any persons who would have been Business Employees if the
      relevant Acquired Business had been transferred at Completion) other than
      any costs, expenses or Liabilities incurred as a result, direct or
      indirect, of any step, act or omission in breach of paragraph 5.1 which
      was not consented to or caused (directly
or

            

    

    
       

      
        
          
          

        

        
          52

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                indirectly)
      by the Investor and other than Tax which shall be dealt with in accordance
      with Part 9 of this Schedule 1 or the relevant Tax
    Agreement.

              

      

       

    

    
      	
              5.4

            	
              Where any
      third party is entitled to be offered or to elect to acquire any shares of
      any Acquired Company or any Acquired Business Assets before such shares or
      assets may be transferred to an Investor or as it may direct (and has not
      waived that right) then, unless the relevant procedures by which such
      third party is entitled to be offered or to elect to acquire all or any of
      such shares or assets have been completed and the relevant offer period or
      periods have expired prior to Completion, such shares or assets shall not
      be transferred, notwithstanding Completion, until the relevant procedures
      have been completed and the relevant periods have
  expired.

            

    

     

    
      	
              5.5

            	
              If any such
      third party as is referred to in paragraph 5.3 exercises its right to
      acquire all or any shares in an Acquired Company or Acquired Business
      Assets then such shares or assets shall be excluded from the relevant sale
      and, within 3 Business Days of receipt thereof, the Company shall procure
      that the relevant member of the RBS Holdings Group shall, pay or procure
      payment to the relevant Investor, or as it may direct, by way of repayment
      of the appropriate proportion of the fair market value, an amount equal to
      the amount actually received from such third party as consideration for
      the acquisition of such shares or assets less any third party costs
      incurred by RBS Holdings or any member of the RBS Holdings Group in
      connection therewith. Any Taxation incurred in connection with such sale
      shall be dealt with in accordance with Part 9 of this Schedule 1 or the
      relevant Tax Agreement.

            

    

     

    
      	
              5.6

            	
              Notwithstanding
      paragraphs 5.1 to 5.4 above, an Investor may elect to proceed with a
      transfer of an Acquired Business Asset notwithstanding that any required
      consents, approvals or agreements have not been received or that any third
      party is entitled to be offered or to elect to acquire such asset as
      referred to in paragraph 5.4, subject to the conditions set out in
      paragraphs 1.3.1 to 1.3.3 of this Part 1 (which shall apply mutatis
      mutandis as if such an election were a waiver of a Transfer Condition)
      being satisfied.

            

    

     

    
      	
              5.7

            	
              Any amount
      payable to an Investor, or as it may direct, pursuant to paragraphs 5.2 or
      5.5 shall be paid together with interest thereon at the rate per annum
      equal to LIBOR from time to time, calculated on a daily basis in respect
      of the period from and including the date of receipt of the relevant
      payment from the third party to and including the date of
      payment.

            

    

     

    
      	
              6

            	
              Post-Completion
      obligations, further assurances

            

    

     

    
      	
              6.1

            	
              Save in
      relation to any transfer pursuant to the ID&J SPAs or the Legal
      Demerger Agreement, for which transfers the relevant provisions of the
      ID&J SPAs or the Legal Demerger Agreement, respectively, shall apply,
      both before and after (and notwithstanding) Completion, each Investor
      shall, and the Company shall procure that RBS Holdings shall, at each
      Investor’s own expense use reasonable endeavours to ensure the smooth
      transition into new ownership of the Acquired Businesses as agreed by the
      relevant Investors.

            

    

     

    
      	
              6.2

            	
              The Company
      shall procure that RBS Holdings shall, subject to all applicable
      regulations, use all reasonable endeavours to secure as soon as
      practicable after the date of this Agreement the release of each Acquired
      Company to be acquired by any Investor, without cost to it, from all
      guarantees and other contingent Liabilities given or undertaken by it to
      secure or support the obligations of any member of the Retained Group and
      pending such release shall procure that RBS Holdings or such member of the
      Retained Group shall indemnify and keep indemnified the relevant Acquired
      Company against all actions,

            

    

    
       

      
        
          
          

        

        
          53

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                proceedings,
      losses, costs, claims, damages, Liabilities and expenses which any of them
      may suffer or incur in respect of any claim made under any such guarantees
      or other contingent Liabilities after 10 October
  2007.

              

      

       

    

    
      	
              6.3

            	
              Each Investor
      shall, subject to all applicable regulations, use all reasonable
      endeavours to secure as soon as practicable after the date of this
      Agreement the release of each member of the Retained Group, and each
      Acquired Company to be acquired by any other Investor, without cost to
      them, from all guarantees or other contingent Liabilities given or
      undertaken by them to serve or support the obligations of any Acquired
      Company or Acquired Business to be acquired by such Investor (including,
      if required, offering its own guarantee or liability on the same terms,
      mutatis
      mutandis, as and in substitution for the existing guarantee or
      other liability) and pending such release shall indemnify the Retained
      Group and each such Acquired Company and keep them indemnified against all
      actions, proceedings, losses, costs, claims, damages, Liabilities and
      expenses which any of them may suffer or incur in respect of any claim
      made under or in respect of any such guarantees or other contingent
      Liabilities after 10 October 2007.

            

    

     

    
      	
              6.4

            	
              Without
      prejudice to any other provision of this Agreement, each of the parties
      shall in good faith, and so far as is permitted by applicable law (and
      subject to the requirements of any relevant
  Regulator):

            

    

     

    
      	
               
      

            	
              6.4.1

            	
              use all
      reasonable endeavours to secure the carrying out of the transactions
      contemplated by this Agreement in accordance with the terms and the spirit
      of this Agreement; and

            

    

     

    
      	
               
      

            	
              6.4.2

            	
              co-operate
      with one another to that end and negotiate with a view to resolving any
      issues which may arise in connection with the implementation of the terms
      and spirit of this Agreement.

            

    

     

    
      	
              7

            	
              Indemnification
      and Wrong Box Assets or Liabilities

            

    

     

    
      	
              7.1

            	
              Each Investor
      shall indemnify each member of the Retained Group (whilst such member
      remains part of the Retained Group) and each of the other Investors and
      members of their respective Groups (being, for this purpose, in the case
      of RBS, the Wider RBS Group) (including, for this purpose, with effect
      from 10 October 2007, their Acquired Companies whilst such Acquired
      Companies are members of the RBS Holdings Group or the relevant Investor’s
      Group); against all Liabilities whensoever incurred, including, without
      limitation, Liabilities incurred:

            

    

     

    
      	
               
      

            	
              7.1.1

            	
              prior to 10
      October 2007 and remaining outstanding at 10 October
  2007;

            

    

     

    
      	
               
      

            	
              7.1.2

            	
              after 10
      October 2007; or

            

    

     

    
      	
               
      

            	
              7.1.3

            	
              otherwise,

            

    

     

    to the extent that
the same relate to any of the first named Investor’s Acquired Business Assets
and not to the Retained Business or to the Acquired Business Assets of any other
Investor.

     

    For the avoidance
of doubt, the terms of this paragraph 7.1 of Schedule 1 – Part 1 shall not
prevent any member of the Retained Group (whilst such member remains part of the
Retained Group), an Investor or any member of its Group - being, for this
purpose, in the case of RBS, the Wider RBS Group - from making a claim under
this paragraph 7.1 of Schedule 1 – Part 1 in circumstances where it has disposed
of a member of the Retained Group or part of the Retained Business or of an
Acquired Company or any Acquired

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

    Business Assets to
a third party and suffers a Liability under the terms of that disposal to the
extent that the same relates to the Acquired Business Assets of another
Investor.

     

    
      	
              7.2

            	
              Each Investor
      shall, save to the extent that there is/are sufficient cash in or assets
      (which can be immediately realised) of the Retained Business in order to
      meet such Liabilities, severally indemnify each member of the Retained
      Group (whilst such member remains part of the Retained Group and the Wider
      RBS Group) and each of the other Investors and members of their respective
      Groups - being for this purpose, in the case of RBS, the Wider RBS Group -
      (including, for this purpose, with effect from 10 October 2007, their
      Acquired Companies whilst such Acquired Companies are members of the RBS
      Holdings Group or the relevant Investor’s Group) in their Consortium
      Proportions against all Liabilities whensoever incurred, including,
      without limitation, Liabilities
incurred:

            

    

     

    
      	
               
      

            	
              7.2.1

            	
              prior to 10
      October 2007 and remaining outstanding at 10 October
  2007;

            

    

     

    
      	
               
      

            	
              7.2.2

            	
              after 10
      October 2007; or

            

    

     

    
      	
               
      

            	
              7.2.3

            	
              otherwise,

            

    

     

    to the extent that
the same relate to the Retained Business.

     

    For the avoidance
of doubt, the terms of this paragraph 7.2 of Schedule 1 – Part 1 shall not
prevent any member of the Retained Group (whilst such member remains part of the
Retained Group and the Wider RBS Group), an Investor or any member of its Group
- being, for this purpose, in the case of RBS, the Wider RBS Group - from making
a claim under this paragraph 7.2 of Schedule 1 – Part 1 in circumstances where
it has disposed of a member of the Retained Group or part of the Retained
Business or an Acquired Company or any Acquired Business Assets to a third party
and suffers a Liability under the terms of that disposal to the extent that the
same relates to the Retained Business.

     

    
      	
              7.3

            	
              At any time
      prior to 30 June 2011 an Investor may (i) contend that an Acquired
      Business or the Retained Business contains a Wrong Box Asset or Liability,
      or (ii) identify a new asset or Liability which has never been allocated
      to or accounted for by an Acquired Business or the Retained Business, and,
      in default of agreement as to the classification of any such asset company
      or Liability, the matter shall be determined in accordance with Clause 9
      of this Agreement. So far as permitted by law and subject to the receipt
      of all relevant regulatory approvals, any such asset or Liability in an
      Acquired Business shall be reallocated to another Acquired Business or to
      the Retained Business and vice versa, as the case may be, and, if
      necessary and if completion of the transfer of such asset or Liability
      shall have taken place, transferred to a member of the Retained Group or
      to the relevant Investor or, in either case, as it may direct and any such
      asset or Liability in the Retained Group shall be transferred to the
      relevant Investor or as it may direct. The consideration for the
      reallocation or transfer shall be nil unless otherwise agreed in
      connection with the Legal Demerger Agreement (if applicable). The tax
      consequences of the operation of this paragraph 7.3 will be dealt with in
      accordance with Part 9 of this Schedule 1. RBS and the State acknowledge
      that RBS NV and ABN AMRO have agreed in the Legal Demerger Agreement that
      certain wrong box transfers may take place at any point prior to 5
      February 2012. Without prejudice to any transfers that may take place
      under the Legal Demerger Agreement between 1 July 2011 and 5 February
      2012, no reallocation under this paragraph 7.3 shall be permitted after 30
      June 2011.

            

    

     

    
      	
              8

            	
              Conduct
      of Claims

            

    

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    
      	
              8.1

            	
              The
      provisions of this paragraph 8 shall apply in respect of all indemnities
      expressed to be given under this Agreement and to the conduct of
      negotiations and proceedings where any party hereto has a claim against
      any other under such an indemnity or otherwise under this Agreement,
      provided that:

            

    

     

    
      	
               
      

            	
              8.1.1

            	
              they shall
      not apply to matters relating to any Third Party Claim (as defined in
      paragraph 8.3) where such Third Party Claim is or may be covered by a
      policy of insurance and the relevant insurer requires the Indemnified
      Party or the Indemnifying Party to act in a manner contrary to the
      provisions of this clause;

            

    

     

    
      	
               
      

            	
              8.1.2

            	
              if RBS or the
      State is the Principal Indemnifying Party, this paragraph 8 shall not
      apply if the Third Party Claim is “Relevant Litigation” for the purposes
      of the Solution Agreement and Schedule 4 of the Solution Agreement shall
      apply instead; and

            

    

     

    
      	
               
      

            	
              8.1.3

            	
              to the extent
      that any provisions of this paragraph 8 are inconsistent with the
      Litigation Management Agreement or the Tax Agreements, the provisions of
      the Litigation Management Agreement or the relevant Tax Agreement shall
      prevail.

            

    

     

    
      	
              8.2

            	
              Definitions

            

    

     

    In this paragraph
8:

     

    
      	
               
      

            	
              8.2.1

            	
              Indemnified
      Party means any party (or other person pursuant to Clause 20.11)
      who has any claim under an indemnity or otherwise under this
      Agreement;

            

    

     

    
      	
               
      

            	
              8.2.2

            	
              Indemnifying
      Party means the party against whom any such claim is made;
      and

            

    

     

    
      	
               
      

            	
              8.2.3

            	
              Principal
      Indemnifying Party means, in respect of any Third Party Claim (as
      defined below) the Indemnifying Party or in the event that there is more
      than one Indemnifying Party in respect of a particular Third Party Claim,
      the Indemnifying Party with the largest allocation in respect of that
      particular Third Party Claim (as determined under the Litigation
      Management Agreement).

            

    

     

    
      	
              8.3

            	
              Third
      Party Claim

            

    

     

    
      	
               
      

            	
              8.3.1

            	
              If an
      Indemnified Party becomes aware of any third party claim, potential claim,
      matter or event (a “Third
      Party Claim”) which might lead to a claim being made under this
      Agreement against the Principal Indemnifying Party, the Indemnified Party
      shall procure that notice of such Third Party Claim is given as soon as
      reasonably practicable to the Principal Indemnifying Party and, subject to
      being fully indemnified (on an after tax basis if appropriate in
      accordance with the principles in Schedule 1, Part 9) to its reasonable
      satisfaction by the Principal Indemnifying Party against all reasonable
      out-of-pocket costs and expenses incurred by the Indemnified Party, and
      otherwise subject at all times to this paragraph
  8:

            

    

     

    
      	
               
      

            	
              (i)

            	
              shall not
      make and shall procure that is not made any admission of liability,
      agreement or compromise with any person, body or authority nor consent to
      the entry of any judgement or final order in relation to any such Third
      Party Claim except with prior consultation with, and the prior agreement
      (not to be unreasonably withheld or delayed) of, the Principal
      Indemnifying Party;

            

    

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              shall take
      such action as the Principal Indemnifying Party may reasonably request
      after consultation with the Indemnified Party to avoid, dispute, resist,
      appeal, compromise or defend such Third Party Claim or any adjudication in
      respect of that Third Party Claim;
and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              if so
      required by the Principal Indemnifying Party in writing shall ensure that
      the Principal Indemnifying Party is placed in a position to take on or
      take over the day-to-day conduct of all proceedings or negotiations of
      whatever nature arising in connection with the Third Party Claim in
      question (by transferring the proceedings to the Principal Indemnifying
      Party if so required and where reasonably possible to do so, subject as
      set out below, through the provision of a power of attorney, or otherwise)
      and provide (or, if relevant, procure that there is provided) such
      information and assistance as the Principal Indemnifying Party may
      reasonably require in connection with the preparation for and conduct of
      such proceedings or negotiations provided that the Principal Indemnifying
      Party shall keep the Indemnified Party informed of the progress of any
      proceedings and shall consult with the Indemnified Party prior to taking
      any action which may affect the Indemnified Party, or any business or
      asset of the Indemnified Party.

            

    

     

    Nothing in this
paragraph 8.3.1 shall oblige the Indemnified Party to grant a power of attorney
to the Principal Indemnifying Party in respect of the Third Party
Claim.

     

    
      	
               
      

            	
              8.3.2

            	
              The
      Indemnified Party shall be at liberty, without reference to the Principal
      Indemnifying Party and without prejudice to its rights against the
      Principal Indemnifying Party or against any other Indemnifying Party, to
      admit, compromise, settle, discharge or otherwise deal with any Third
      Party Claim:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if no
      response is received from the Principal Indemnifying Party within a
      reasonable period (in respect of the situation) in relation to any
      communication from the Indemnified Party notifying the Principal
      Indemnifying Party that the Indemnified Party intends to admit,
      compromise, settle, discharge or otherwise deal with that Litigation;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if the
      Indemnified Party is not indemnified as required by paragraphs 7 and 8.3.1
      above.

            

    

     

    
      	
               
      

            	
              8.3.3

            	
              The Principal
      Indemnifying Party, or RBS (on behalf of the Investors) (should the
      largest allocation of the Third Party Claim in question be to the Retained
      Business), shall keep any other Indemnifying Party or Parties to whom the
      Third Party Claim in question has been allocated informed of significant
      developments in the Third Party Claim and shall provide updates as
      reasonably requested by such other Indemnifying Party or
      Parties.

            

    

     

    
      	
               
      

            	
              8.3.4

            	
              In the event
      that there is more than one Indemnifying Party in respect of a particular
      Third Party Claim:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Indemnifying Parties shall be severally, but not jointly, liable to
      indemnify the Indemnified Party in the proportions in which the Third
      Party Claim has been allocated to their respective Acquired Businesses;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              to the extent
      that the Third Party Claim is allocated to the Retained Business, the
      Investors shall severally indemnify the Indemnified Party in their
      Consortium Proportions.

            

    

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

    
      	
              8.4

            	
              Upon any
      claim under this Agreement being made, or notification pursuant to
      paragraph 8.1 above of any Third Party Claim which might lead to such a
      claim being made, the Indemnified Party shall, subject to being fully
      indemnified (on an after-tax basis if appropriate in accordance with the
      principles in Schedule 1, Part 9) to its reasonable satisfaction by the
      Indemnifying Parties against all reasonable out-of-pocket costs and
      expenses incurred by such Indemnified
Party:

            

    

     

    
      	
               
      

            	
              8.4.1

            	
              make
      available to accountants and other professional advisers appointed by the
      Principal Indemnifying Party such access to the personnel of the
      Indemnified Party and to any relevant records and information as the
      Principal Indemnifying Party reasonably requests in connection with such
      claim or Third Party Claim;

            

    

     

    
      	
               
      

            	
              8.4.2

            	
              use
      reasonable endeavours to procure that the auditors (both past and current)
      of the Indemnified Party make available their audit working papers in
      respect of audits of the Indemnified Party’s accounts for any relevant
      accounting period in connection with such claim or Third Party
      Claim.

            

    

     

    
      	
              8.5

            	
              Where any
      Indemnified Party is entitled (whether by reason of insurance or payment
      discount or otherwise) to recover from some other person any sum in
      respect of any Liability which is or could be the subject of a claim under
      this Agreement (and whether before or after the Indemnifying Parties have
      made payment thereunder), the Indemnified Party shall (or, as appropriate,
      shall procure that the other Indemnified Party shall) unless the
      Indemnified Party shall waive its claim against the Indemnifying Parties
      and refund any amounts repaid:

            

    

     

    
      	
               
      

            	
              8.5.1

            	
              promptly
      notify the Principal Indemnifying Party and provide such information as
      the Principal Indemnifying Party may reasonably require relating to such
      Liability or dispute and steps taken or to be taken by the Indemnifying
      Party in connection with it;

            

    

     

    
      	
               
      

            	
              8.5.2

            	
              if so
      required by the Principal Indemnifying Party (subject to each Indemnified
      Party being fully indemnified on an after-tax basis (if appropriate in
      accordance with the principles in Schedule 1 Part 9) to its reasonable
      satisfaction by the Indemnifying Parties against all reasonable
      out-of-pocket costs and expenses incurred by such Indemnified Party) take
      all steps (whether by way of a claim against its insurance or otherwise,
      including but without limitation, proceedings) as the Principal
      Indemnifying Party may reasonably require to enforce such recovery
      including rights equivalent to those in paragraph 8.3.1;
    and

            

    

     

    
      	
               
      

            	
              8.5.3

            	
              keep the
      Principal Indemnifying Party informed of the progress of any action
      taken.

            

    

     

    
      	
              8.6

            	
              Notwithstanding
      any other provision of this Agreement where any Indemnified Party may have
      a right to claim (in respect of any Liability in respect of which it is
      indemnified by the Indemnifying Party) against any third party, the
      obligation of the Indemnifying Parties shall be limited (in addition to
      any other limitations on the liability of the Indemnifying Parties
      referred to in this Agreement) to the amount by which the loss or damage
      suffered by the Indemnified Party as a result of such matter shall exceed
      any amounts recovered by the Indemnified Party from a third party and the
      reasonable out-of-pocket costs and expenses and Taxation incurred by the
      Indemnified Party in obtaining such recovery. If any amounts shall be
      recovered by an Indemnified Party from a third party following the payment
      of any amount or amounts hereunder by the Indemnifying Parties in respect
      of the same Liability, the Indemnified Party shall forthwith return to the
      Indemnifying Parties, an amount equal to the lesser
  of:

            

    

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              8.6.1

            	
              the amount
      recovered from the third party less the reasonable out-of-pocket costs and
      expenses of such recovery and any Taxation incurred in connection with
      such recovery; and

            

    

     

    
      	
               
      

            	
              8.6.2

            	
              the amount or
      amounts previously paid to the Indemnified Party by the Indemnifying
      Parties in respect of such
Liability.

            

    

     

    
      	
              8.7

            	
              Where any
      indemnity contained in this Agreement is expressed to be “on an after-tax
      basis”, then in calculating the liability of the Indemnifying Parties
      there shall be taken into account:

            

    

     

    
      	
               
      

            	
              8.7.1

            	
              the amount by
      which any liability to Taxation of the Indemnified Party or the relevant
      Acquired Company or member of the Retained Group (as the case may be) is
      actually reduced or extinguished as a result of the matter giving rise to
      the indemnity claim; and

            

    

     

    
      	
               
      

            	
              8.7.2

            	
              the amount by
      which any liability to Taxation of the Indemnified Party or the relevant
      Acquired Company or member of the Retained Group (as the case may be) is
      actually increased as a result of the payment by the Indemnifying Parties
      in respect of the matter giving rise to the indemnity
    claim.

            

    

     

    
      	
              8.8

            	
              In a Third
      Party Claim in respect of which it is entitled to be indemnified pursuant
      to paragraphs 7 and 8.3.1, the Indemnified
  Party:

            

    

     

    
      	
               
      

            	
              8.8.1

            	
              is not
      required to seek, or comply with, the requirements of the Principal
      Indemnifying Party under this paragraph 8 to the extent necessary to avoid
      the Indemnified Party or the relevant Investor breaching any criminal or
      regulatory laws, orders, regulations or
  equivalent;

            

    

     

    
      	
               
      

            	
              8.8.2

            	
              may instead
      conduct that Third Party Claim (including any negotiations of whatsoever
      nature arising in connection with it) in such manner as it considers
      appropriate so as to avoid breaching any criminal or regulatory laws,
      orders, regulations or equivalent;
and

            

    

     

    
      	
               
      

            	
              8.8.3

            	
              shall remain
      entitled to be indemnified pursuant to paragraph 7 provided that (subject
      to paragraph 8.9) the Indemnified Party or the relevant Investor provides
      immediate written notice to the Principal Indemnifying Party of relying on
      this paragraph, such notice to specify all relevant details of the Third
      Party Claim and the manner in which this paragraph is being relied
      upon.

            

    

     

    
      	
              8.9

            	
              If the giving
      of notice pursuant to paragraph 8.8.3 would, in the reasonable opinion of
      the Indemnified Party or its relevant Investor, involve the Indemnified
      Party or relevant Investor breaching any criminal or regulatory laws,
      orders, regulations or equivalent in respect of that Third Party Claim,
      such notification may be made as soon as it would no longer involve such
      breach, and the liability of the Indemnifying Parties to indemnify the
      Indemnified Party in respect of that Third Party Claim shall be
      unaffected.

            

    

     

    
      	
              8.10

            	
              Where the
      Indemnified Party is a member of the Retained Group, RBS (on behalf of the
      Investors) shall be considered to be its relevant Investor for the
      purposes of paragraphs 8.8 to 8.10.

            

    

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

       

    

    Schedule
1 – Part 2

    The
Acquired Businesses

     

    The assets of, and
Liabilities attributable to, Business Units or any business comprise, subject to
Clause 5 and the remaining provisions of this Schedule 2, those Business Assets
and Liabilities reflected in the RBS Holdings Accounts as being assets and
Liabilities of such Business Unit or business.

     

    1.
RBS Acquired Businesses

     

    The Business Assets
of the following businesses and Business Units of the RBS Holdings
Group:

     

    
      	 
    
	
              BU North
      America (pages 111 to 113 of the RBS Holdings Accounts)

            
	
              BU Global
      Clients (pages 53, 117 to 119 and 158 of the RBS Holdings Accounts,
      excluding the Brazil Global Clients Business).

            
	
              BU Asia
      (pages 115 to 117 of the RBS Holdings Accounts) excluding the interest in
      Saudi Hollandi

            
	
              BU Europe
      (excluding Antonveneta) (pages 109 to 111 of the ABN AMRO Accounts,
      excluding the Antonveneta profit and loss account and balance
      sheet)

            
	
              Former Dutch
      Wholesale Clients (reported under BU Netherlands, pages 107 to 109 of the
      RBS Holdings Accounts, in the RBS Holdings Accounts, as explained on page
      106 of the RBS Holdings Accounts and the RBS Holdings press release of 7
      April 2006).

            
	
              Former WCS
      Clients outside Brazil within BU Latin America (reported under BU Latin
      America, pages 113 to 115 of the RBS Holdings Accounts, as explained in
      the RBS Holdings press release of 7 April 2006).

            
	
              Private
      Clients India and Private Clients Indonesia

            
	
              Interest in
      Prime Bank, Pakistan

            
	 
    

    

     

    Where:

     

    “Brazil
Global Clients Business” means the RBS BU Global Clients business (as
defined above) as carried on in Brazil, to the extent that such business is
comprised of:

     

    
      	
               
      

            	
              (a)

            	
              the domestic
      revenues generated and booked in Brazil by Brazilian-domiciled global
      clients;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the off-shore
      booked revenues generated in Brazil by Brazilian-domiciled global clients
      and by Brazilian-domiciled subsidiaries of non-Brazilian-domiciled global
      clients; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              the domestic
      revenues generated and booked in Brazil by Brazilian-domiciled
      subsidiaries of non-Brazilian-domiciled global
  clients,

            

    

     

    but for the
avoidance of doubt does not include BU Global Clients business revenues
generated outside Brazil by Brazilian-domiciled global clients or
Brazilian-domiciled subsidiaries of non-Brazilian-domiciled global
clients.

     

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

     

    2.
Santander Acquired Businesses

     

    The Business Assets
of the following businesses and Business Units of the RBS Holdings
Group:

     

    
      	 
    
	
              BU Latin
      America (excluding all former WCS Clients outside of Brazil) (pages 113 to
      115 of RBS Holdings Accounts)

            
	
              BU
      Antonveneta (pages 109 to 111 of RBS Holdings Accounts, excluding
      everything but the Antonveneta accounts)

            
	
              Interbank and
      DMC Consumer Finance, Netherlands (reported under BU Netherlands in pages
      107 to 109 of the RBS Holdings Accounts).

            
	
              Brazil Global
      Clients Business

            
	
              Asset
      Management Brazil

            
	 
    

    

     

    Where:

     

    “Asset
Management Brazil” means ABN AMRO Asset Management Distibuidora de
Titulos e Valores Mobiliarios S.A. less the Carve-out Assets (as defined in a
Heads of Agreement between Santander and Fortis dated 26 February
2008).

     

    3.
State Acquired Businesses

     

    The Business Assets
of the following businesses and Business Units of the RBS Holdings
Group:

     

    
      	 
    
	
              BU Private
      clients (excluding Latin America) (pages 119 to 120 of the RBS Holdings
      Accounts, excluding the private banking business LatAM and excluding
      Private Clients India and Private Clients Indonesia)

            
	
              BU
      Netherlands (excluding former Dutch Wholesale Clients and Interbank and
      DMC Consumer Finance) (pages 107 to 109 of RBS Holdings Accounts,
      excluding former Dutch Wholesale Clients and Interbank Consumer
      Finance)

            
	
              BU Asset
      Management (excluding Asset Management Brazil) (pages 121 to 122 of RBS
      Holdings Accounts)

            
	
              The ABN AMRO
      Trade Marks (as defined in paragraph 1 of Part 6 of this Schedule
      2)

            
	 
    

    

     

    Part
4. Re- Allocations

     

    The following list
of Business Assets which are reflected in the Acquired Businesses have been
re-allocated from the different Acquired Businesses and the Retained Businesses
respectively with an effective date for the purpose of the allocation as set out
below. The parties agree that this list of reallocations is a non-exhaustive
list:

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

     

    
      	
              Business
      Asset

            	
              From

            	
              To

            	
              Effective
      date

            
	
              Private
      Clients India and Indonesia

            	
              State
      Acquired Business

            	
              RBS Acquired
      Business

            	
              1 January
      2008

            
	
              Interest in
      Prime Bank

            	
              Retained
      Business

            	
              RBS Acquired
      Business

            	
              10 October
      2007

            
	
              Brazil Global
      Clients

            	
              RBS Acquired
      Business

            	
              Santander
      Acquired Business

            	
              10 October
      2007

            
	
              Asset
      Management Brazil

            	
              State
      Acquired Business

            	
              Santander
      Acquired Business

            	
              10 October
      2007

            
	
              Infrastructure
      Capital Management

            	
              RBS Acquired
      Business

            	
              State
      Acquired Business

            	
              1 April
      2008

            
	
              AA
      Interfinance

            	
              State
      Acquired Business

            	
              Santander
      Acquired Business

            	
              The
      Completion date of the transfer

            
	
              Sterrebeeck
      B.V.

            	
              State
      Acquired Business

            	
              Santander
      Acquired Business

            	
              1 January
      2008

            

    

     

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

     

    Schedule
1 – Part 3

    The
Retained Businesses

     

    
      	
              1.

            	
              Retained
      Businesses

            

    

     

    
      	
              RBS Holdings
      interest in Capitalia

            
	
              BU Private
      Equity

            
	
              RBS Holdings
      interest in Saudi Hollandi

            
	
              The costs of
      eliminating central group functions and, if any, unallocated property and
      unallocated costs

            
	
              Unallocated
      pension fund deficit or surplus, to the extent not otherwise allocated to
      an Acquired Business under Part 5 of Schedule 2

            
	
              Other
      unallocated assets and Liabilities (including unallocated contingent
      Liabilities)

            

    

     

     

    For the effective
date of certain re-allocations of Business Assets out of the Retained Businesses
to certain Acquired Businesses a reference is made to Schedule 1 – Part
2.

     

    
      	
              2.

            	
              Agreed course of action in
      relation to certain assets forming part of the Retained
      Business

            

    

     

    As at the date of
this document, and following the sale of certain assets comprising the Retained
Business, the parties have agreed that the following actions will be taken in
relation to the following assets which form part of the Retained Business,
provided that following 30 June 2011 RBS NV shall be free, subject to the
provisions of Schedule 2 and Clause 5.3.5, to take such actions in relation to
the Retained Business as it determines in its absolute discretion:

     

    
      	
              Name
      of asset within the Retained Business

            	
              Proposed
      action to be taken as part of the Retained Business Wind
    Down

            
	
              AA Capital
      Nordic Fund II B.V.

            	
              Awaiting
      Liquidation

            
	
              AA PE Fund
      LP

            	
              Awaiting
      Liquidation

            
	
              AAB Media
      & Telecom 2005 B.V.

            	
              Awaiting
      Liquidation

            
	
              AAC Capital
      NEBO NL Feeder B.V.

            	
              Awaiting
      Liquidation

            
	
              AAC Spanish
      BOF 2005 B.V.

            	
              Shared Asset
      held for sale

            
	
              AACBOF Italy
      B.V.

            	
              In
      liquidation

            
	
              AACBOF NEBO
      B.V.

            	
              Shared Asset
      held for sale

            
	
              AAV Italy
      B.V.

            	
              In
      liquidation

            
	
              AAV NEBO
      B.V.

            	
              Shared Asset
      held for sale

            

    

     

     

    
       

      
        
          
          

        

        
          63

          
            

          

        

        
          
          

        

      

       

      
        	
                Name
      of asset within the Retained Business

              	
                Proposed
      action to be taken as part of the Retained Business Wind
    Down

              
	
                ABN AMRO Asia
      Capital Investment Limited

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Capital (Belgium) N.V.

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Capital BO Funds II B.V.

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Capital Limited

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Capital Management (Australia) Pty Limited

              	
                In
      liquidation

              
	
                ABN AMRO
      Capital S.p.A.

              	
                In
      liquidation

              
	
                ABN AMRO
      Corporate Investments Management B.V.

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Danube Ventures B.V.

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Participaties B.V.

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Private Equity B.V.

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Ventures (Jersey) Limited

              	
                Awaiting
      Liquidation

              
	
                ABN AMRO
      Ventures II B.V.

              	
                Awaiting
      Liquidation

              
	
                Achmea
      Holding N.V.

              	
                Awaiting
      Liquidation

              
	
                Alcover
      A.G.

              	
                Awaiting
      Liquidation

              
	
                Alsecure
      Insurance PCC Limited Transcred 1 Cell

              	
                Awaiting
      Liquidation

              
	
                B2 Seller
      Agent Pty Limited

              	
                Awaiting
      Liquidation

              
	
                Benedenwindse
      Offshore Bouw-en Exploitatie Maatschappiij

              	
                Awaiting
      Liquidation

              
	
                Bodycare
      International Group B.V.

              	
                Under
      investigation

              
	
                C.C.M.
      Central Commercial Management N.V.

              	
                Awaiting
      Liquidation

              
	
                Closenes
      SL

              	
                In
      liquidation

              
	
                DIBU
      Administratie & Consultancy B.V.

              	
                Awaiting
      Liquidation

              
	
                Escaline
      sarl

              	
                Sale
      process

              
	
                Euroclear
      plc

              	
                Pending
      confirmation

              
	
                Exody
      E-business Intelligence GmbH

              	
                In
      liquidation

              
	
                Expomedia
      Group Plc

              	
                In
      liquidation

              
	
                Forbion
      Capital Fund II C.V.

              	
                Split among
      R, N and S in process

              
	
                Fourth
      Channel, Inc

              	
                Under
      investigation

              
	
                Future
      Ventures B.V.

              	
                In
      liquidation

              
	
                Gesytas 2005
      S.L.

              	
                In
      liquidation

              
	
                Global
      Intranet B.V.

              	
                Sale
      process

              
	
                I2C
      S.A.

              	
                In
      liquidation

              

      

       

      
        
          
          

        

        
          64

          
            

          

        

        
          
          

        

      

       

    

    
      
        	
                Name
      of asset within the Retained Business

              	
                Proposed
      action to be taken as part of the Retained Business Wind
    Down

              

      

      
        	
                Impulsora del
      Fondo Mexico SA de CV

              	
                Sale
      process

              
	
                IMX,
      Inc

              	
                Under
      investigation

              
	
                Jan Everaers
      Beheer B.V. (in liquidation)

              	
                To be
      liquidated

              
	
                Jill Equity
      Participation B.V.

              	
                To be
      liquidated

              
	
                Lange
      Voorhout Investments B.V.

              	
                Awaiting
      Liquidation

              
	
                Mandrakeoft
      SA

              	
                Shared Asset
      held for sale

              
	
                Multi
      M.Retirement N.V.

              	
                Awaiting
      Liquidation

              
	
                Nexwave
      Inc.

              	
                In
      liquidation

              
	
                Nicator /
      Nicator New Holding AB

              	
                In
      liquidation

              
	
                Niksun,
      Inc.

              	
                Loan note,
      not for sale

              
	
                Nortel
      Inversora S.A.

              	
                Listed, but
      B-share not trade able

              
	
                Nueva Terrain
      S.L.

              	
                Shared Asset
      held for sale

              
	
                PGAM Advanced
      Technologies AG

              	
                In
      liquidation

              
	
                RBS Capital
      (USA) LLC

              	
                Awaiting
      Liquidation

              
	
                Retained
      Business Deferred Tax Assets

              	
                To be paid
      for in accordance with the Separation Tax Agreement if utilised by an RBS
      Acquired Company

              
	
                Silita
      S.L.

              	
                In
      liquidation

              
	
                Swyx
      Solutions GmbH

              	
                In
      liquidation

              
	
                Tavve
      Software Company Inc.

              	
                Sale
      process

              
	
                Telesystems
      International Wireless Inc

              	
                Sale
      process

              
	
                The second
      ABN AMRO LBO Fund

              	
                Awaiting
      Liquidation

              
	
                Saudi
      Hollandi Bank

              	
                Held for
      sale

              
	
                Saudi
      Hollandi Capital

              	
                Held for
      sale

              
	
                Viking Strip
      Finance Limited

              	
                In
      liquidation

              
	
                Westchester
      Holdings Limited (in liquidation)

              	
                In
      liquidation

              
	
                Wielkamp
      B.V.

              	
                In
      liquidation

              
	
                Yellowbrix
      Inc

              	
                Sale
      process

              

      

       

    

     

    
      	
              3.

            	
              Certain assets of the Retained
      Business which have been
sold

            

    

     

    The parties agree
that as at the date of this document, the following entities forming part of the
Retained Business have been sold:

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

    
      	
              Name
      of entity which have been sold

            
	
              ABN AMRO
      Capital Australia Fund II (ABN AMRO) B.V.

            
	
              Acer IP Fund
      One LP

            
	
              Corpfin
      Capital Fund II B.V.

            
	
              F.V.E. II
      LP

            
	
              Favonius
      Ventures Europe LP

            
	
              Freecom
      Technologies B.V.

            
	
              Integral
      Development Corporation

            
	
              iRex
      Technologies B.V.

            
	
              Monash IVF
      Pty Limited

            
	
              Monash IVF
      Pty Limited

            
	
              Siam
      Investment Fund II L.P.

            
	
              Siennax
      International B.V.

            

    

     

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

     

    Schedule
1 – Part 4

    Employment

     

    
      	
              1

            	
              Prior to the
      date of this Agreement, the parties agreed the allocation of employees to
      each of the Acquired Businesses which have been transferred to a relevant
      Investor and how liabilities relating to those employees would be borne by
      the relevant Investors. Such agreements are reflected in, inter alia, the
      Co-habitation Agreements and the Legal Demerger
  Agreement.

            

    

     

    
      	
              2

            	
              In respect of
      any of the Acquired Businesses which have not, as at the date of this
      Agreement, been transferred to a relevant Investor, the principles set out
      below in Part 4 of this Schedule determine how any employees relating to
      any such business (and any associated Liabilities, including but not
      limited to retention and termination costs) will be allocated as between
      Investors.

            

    

     

    
      	
              3

            	
              The parties
      will each nominate appropriate representative(s) to agree the matters
      which are required to be agreed pursuant to Part 4 of this Schedule 1,
      including determining how employees who do not work exclusively or
      principally in one of the Acquired Businesses or the Retained Business
      should be allocated between the RBS Acquired Business, the Santander
      Acquired Business, the State Acquired Business and the Retained Business
      (as the case may be). The parties will use reasonable endeavours to
      provide to the other parties information in their possession which might
      reasonably help facilitate this process through to the Final Completion
      Date.

            

    

     

    Once appropriate
allocations to a particular business have been made then no Appropriate Steps
shall be taken in relation to the affected employee(s) without the agreement of
the relevant Investor or the Company (as the case may be), such agreement not to
be unreasonably withheld or delayed.

     

    Where any
intra-group services are provided by any part of an Acquired Business to part of
another Acquired Business or by any part of an Acquired Business to part of the
Retained Business (or vice versa) the parties will take into account any
continuing requirements to provide such services in making any necessary
determinations in accordance with this part 4 of Schedule 1.

     

    
      	
              4

            	
              The parties
      shall use their respective reasonable endeavours to ensure that employees
      who are engaged exclusively or principally in the RBS Acquired Business,
      the Santander Acquired Business, the State Acquired Business or the
      Retained Business (as the case may be) shall continue to be so engaged
      immediately after the relevant Completion and shall take such Appropriate
      Steps as are necessary in the
circumstances.

            

    

     

    In this Schedule 1,
part 4, “Appropriate
Steps” may include, but shall not be limited to:

     

    
      	
               
      

            	
              ●

            	
              taking such
      steps, if any as are necessary to move the employee to the relevant
      Acquired Business or Retained Group, as appropriate, which may be the
      making of an offer of employment or a transfer of their employment under
      any relevant local law;

            

    

     

    
      	
               
      

            	
              ●

            	
              undertaking
      appropriate consultation with employees and/or bodies representing
      employees;

            

    

     

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              
                ●

              

            	
              ensuring that
      an employee is released from any obligations to his current employer in
      order to facilitate the change of employer proposed;
  and

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              taking such
      steps as are reasonable in the circumstances to mitigate any Liability
      associated with, as the case may be, the termination or change of employer
      (for example, moving the employee immediately prior to the relevant
      Completion rather than after that
Completion).

            

    

     

    
      	
              5

            	
              Where:

            

    

     

    
      	
              5.1

            	
              an employee
      who is exclusively or principally engaged in one of the RBS Acquired
      Business, Santander Acquired Business or State Acquired Business (as the
      case may be) is a director or employee of a member of the Retained Group
      or of an Acquired Company acquired by another Investor;
  or

            

    

     

    
      	
              5.2

            	
              an employee
      who is exclusively or principally engaged in the Retained Business is a
      director or employee of an Acquired Company, subject to there being no
      adverse effect upon the ability of any relevant company to maintain any
      regulatory approval, the relevant employee shall cease as soon as
      reasonably practicable after the relevant Completion to be a director or
      employee of the relevant company and the parties shall take Appropriate
      Steps to offer such employee employment by a company carrying on part of
      the Acquired Business or Retained Business in which he is engaged provided
      that the relevant Investor in respect of whose business the employee is
      principally or exclusively engaged (or the Company as the case may be) has
      approved the Appropriate Steps (such approval not to be unreasonably
      withheld or delayed). The parties shall use reasonable endeavours
      including taking any of the approved Appropriate Steps to minimise any
      Liabilities which may arise as a result of such cessation. If any
      Liabilities do arise then such Liabilities shall, in respect of an
      employee engaged exclusively or principally in the RBS, Santander or State
      Acquired Business (as the case may be) be borne by the relevant Investor
      (which Investor shall indemnify the Retained Group, the Company and the
      other Investors accordingly) and, in respect of an employee engaged
      exclusively or principally in the Retained Business, shall be borne by the
      Retained Group (and, accordingly, indirectly by the Investors in the
      Consortium Proportions).

            

    

     

    
      	
              6

            	
              The parties
      acknowledge that as a consequence of the transactions contemplated by this
      agreement, the requirements of the Retained Business and the Acquired
      Businesses in relation to employees may change or diminish and, as a
      consequence, it may be necessary to terminate the employment of certain
      employees. In effecting any such terminations, the parties will use
      reasonable endeavours, including taking the Appropriate Steps, to minimise
      any Liabilities which arise as a
consequence.

            

    

     

    Where the
employment of an employee of a member of the Retained Group is terminated where
that person is exclusively or principally engaged in an Acquired Business, the
relevant Investor which is to buy that Acquired Business will bear the cost (if
any) of such termination and will indemnify the appropriate member of the
Retained Group against any Liability accordingly. Such termination will not be
effected without the prior approval of the relevant Investor who will bear the
cost (such approval not to be unreasonably withheld or delayed).

     

    Where the
employment of an employee of an Acquired Company acquired by one Investor is
terminated where that person is exclusively or principally engaged in the
Acquired Business acquired by another Investor, that other Investor will bear
the cost (if any) of such termination and will indemnify the first-mentioned
Investor against any Liability accordingly. 

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

       

    

    
      Such termination
will not be effected without the prior approval of the relevant Investor who
will bear the cost (such approval not to be unreasonably withheld or
delayed).

       

      Where the
employment of an employee of an Acquired Company is terminated where that person
is exclusively or principally engaged in the Retained Business, then the
Retained Group (that is, indirectly, the Investors in the Consortium
Proportions) will bear the cost (if any) of such termination and shall indemnify
the Acquired Company against any Liability accordingly. 

    

     

    Such termination
will not be effected without the prior approval of the Company (such approval
not to be unreasonably withheld or delayed).

     

    Where any employee
whose employment would otherwise have been terminated (because the further
requirement for his or her services has changed or diminished) becomes employed
by a “mobility organisation” or some other local equivalent (such that the
employee becomes engaged by an employer other than a company in either one of
the Acquired Businesses or the Retained Business) the principles set out above
shall continue to apply in respect of any Liabilities relating to that
employee’s employment by the mobility organisation or the termination of his or
her employment by such organisation notwithstanding that such termination may
occur at a later date.

     

    
      	
              7

            	
              Where an
      employee is seconded from an Acquired Business to the Retained Business or
      vice versa the parties shall consult with a view to agreeing when the
      secondment shall end having regard to their respective business needs and
      whether or not an offer should be made to that employee so that he or she
      should cease to be an employee of an Acquired Company or (as the case may
      be) a member of the Retained Group and become an employee of a member of
      the Retained Group or (as the case may be) of an Acquired Company. Where
      the relevant parties agree such an offer is to be made, the parties will
      take such of the Appropriate Steps as are reasonably necessary to effect
      the change of employer of the employee concerned and to minimise any
      Liabilities associated with the termination of any such secondment
      arrangements. Any such Liabilities will be allocated according to the
      principles set out in paragraph 5 of this Part
  4.

            

    

     

    
      	
              8

            	
              Where an
      employee is seconded from one Acquired Business to an Acquired Business to
      be bought by another Investor the relevant Investors shall consult with a
      view to agreeing when the secondment shall end having regard to their
      respective business needs and whether or not an offer should be made to
      that employee so that he or she should cease to be an employee of one
      Acquired Company and become an employee of a different Acquired Company.
      Where the relevant parties agree such an offer is to be made, the parties
      will take such of the Appropriate Steps as are reasonably necessary to
      effect the change of employer of the employee concerned and to minimise
      any Liabilities associated with the termination of any such secondment
      arrangements. Any such Liabilities will be allocated according to the
      principles set out in paragraph 5 of this Part
  4.

            

    

     

    
      	
              9

            	
              Where the
      parties are unable to agree a resolution under paragraph 7 or 8, the
      employee will continue to be governed by the terms of his or her
      secondment agreement and shall return to the company by which he or she is
      employed at the end of the secondment agreement or otherwise in accordance
      with its terms.

            

    

     

    
      	
              10

            	
              In the case
      of those employees not covered by paragraphs 4, 5, 6, 7 and 8 of this Part
      4 the parties shall consult with each other as required, with a view to
      determining (as soon as reasonably
practicable):

            

    

     

    
      	
              10.1

            	
              whether or
      not all or any of such employees should become employees of an Acquired
      Company or a member of the Retained Group;
and

            

    

     

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

     

    
      	
              10.2

            	
              what
      arrangements should be made to ensure that an Investor or the Retained
      Group, as the case may be, does not suffer as a result of certain
      employees not becoming its
employees,

            

    

     

    and the parties
shall use their reasonable endeavours to give effect to such
determination.

     

    Once the parties
have determined which employees should be employed by a member of an Acquired
Group or the Retained Group (as the case may be), each Investor (in relation to
its Acquired Group) and the Company (in relation to the Retained Group) shall
procure that such Appropriate Steps as are agreed (such agreement not to be
unreasonably withheld or delayed) are taken in relation to each relevant
employee and the other parties shall procure a release of such employee’s
obligations in order that the employee is able to accept such an offer of
employment made to him as an Appropriate Step.

     

    
      	
              11

            	
              It is the
      intention of the parties, save (i) as provided otherwise in this Part 4;
      and (ii) as otherwise agreed between the parties; that all Liabilities in
      respect of an employee (whether relating to their employment prior to the
      relevant Completion, to steps taken to move their employment to a company
      carrying on the appropriate Acquired Business or to a company in the
      Retained Group or to the termination of their employment) shall be
      borne:

            

    

     

    
      	
              11.1

            	
              in respect of
      employees exclusively or principally engaged in the RBS, the State or
      Santander Acquired Businesses, as the case may be, by RBS, the State or
      Santander (respectively); and

            

    

     

    
      	
              11.2

            	
              in respect of
      employees exclusively or principally engaged in the Retained Business, by
      the Retained Group; and

            

    

     

    
      	
              11.3

            	
              where it is
      not possible to determine in accordance with the procedure set out in
      paragraph 3 above where such employees were engaged, between the Retained
      Group and the relevant Investor(s) or between the relevant Investors (as
      the case may be) having regard to (i) the proportion of the employee’s
      duties prior to the relevant Completion which related to each such entity;
      or (ii) to such other principles as the parties, acting reasonably,
      agree.

            

    

     

    
      	
              12

            	
              If the sale
      and purchase of any Acquired Business, or any act or omission after the
      relevant Completion by an Investor or a member of its Group or by a member
      of the Retained Group shall entitle any employee to treat his or her
      employment as terminated or otherwise to bring an action against any
      Acquired Company or any member of the Retained Group (as the case may be)
      in respect of his or her employment, the parties shall consult with a view
      to reducing or mitigating any Liabilities. To the extent that such
      Liabilities do arise, the costs in respect of an employee exclusively or
      principally engaged in the RBS, the State or Santander Acquired
      Businesses, as the case may be, shall be borne by RBS, the State or
      Santander (respectively) and the costs in respect of an employee
      exclusively or principally engaged in the Retained Business shall be borne
      by the Retained Group.

            

    

     

    If it is not
possible to determine that the relevant employee is exclusively or principally
engaged in one or more of the RBS, the State or Santander Acquired Businesses or
the Retained Business, the Liabilities shall be borne between the Retained
Group, and the relevant Investor(s) or between the relevant Investors (as the
case may be) having regard to (i) the proportion of the employee’s duties prior
to any relevant Completion which relate to each such entity; or (ii) such other
principles as the parties, acting reasonably agree.

     

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

      

    

     

    
      	
              13

            	
              Without
      prejudice to Clause 5.5 of this Agreement, prior to any relevant
      Completion, any Investor may provide management and other services to one
      or more of the other Acquired Businesses and/or the Retained Business on
      such terms (including appropriate charges) as may be agreed between the
      parties.

            

    

     

    
      	
              14

            	
              For the
      avoidance of doubt, all pension Liabilities in relation to employees and
      former employees of the Acquired Businesses and Retained Business will be
      dealt with in accordance with Part 5 of Schedule 1. Hence, this Part 4
      relates only to non-pension Liabilities in respect of such
      employees.

            

    

     

    
      	
              15

            	
              Where an
      employee is allocated to an Investor in accordance with the terms of Part
      4 of this Schedule 1, that Investor shall, in relation to employees
      allocated to it, take custody of (or if appropriate, retain custody of)
      any data which is held by the employer for the purpose of the employment
      relationship (“HR
      Data”) and will at all times treat such data in accordance with
      that Investor’s internal data protection policies and any applicable laws.
      Similarly, any Liability for failure to comply with any relevant data
      protection laws will fall on the Investor to whom that employee is
      allocated.

            

    

     

    
      	
              16

            	
              If the
      parties cannot, acting reasonably, determine (i) that an employee is
      exclusively or principally engaged in a particular Acquired Business or
      the Retained Business; or (ii) how Liabilities for any employee are
      allocated pursuant to this Part 4; any party affected by such failure to
      make a determination can escalate the issue in question, via its normal
      internal governance routes, to such party’s Head of HR, who will raise
      that issue with any other affected party/parties. For these purposes, the
      relevant Heads of HR are Tony Williams in respect of RBS, Alexandra
      Philippi in respect of State and Sinead O’Connor in respect of Santander
      and references to the relevant Head of HR shall include their successors
      from time to time.

            

    

     

    
      	
              17

            	
              Any dispute
      not covered by paragraph 16 shall if not resolved by agreement between the
      parties within 60 business days of such dispute arising, be determined in
      accordance with Clause 9 of the
Agreement.

            

    

     

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

     

    Schedule
1 – Part 5

    Pensions

     

    
      	
              1

            	
              As soon as
      reasonably practicable and subject to applicable legal and regulatory
      provisions, the Investors will in relation to each pension plan negotiate
      in good faith and enter into detailed agreements consistent with the
      following principles.

            

    

     

    
      	
              2

            	
              The Investors
      acknowledge that the general principles in respect of pensions are
      that:

            

    

     

    
      	
               
      

            	
              (a)

            	
              all pension
      Liabilities and pension costs in respect of employees will be borne by the
      appropriate Acquired Businesses or Retained Business on the same basis as
      all Liabilities of an employee will be allocated under paragraph 9 of
      Schedule 2 – Part 4 (Employment) of this Agreement;
  and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the pension
      Liabilities and pension costs in respect of former employees will be borne
      by the appropriate Acquired Businesses or Retained Business by applying,
      to the extent possible
      and
      having regard to paragraphs 11 and 12 of this Part of this
      Schedule,
      the principles of allocation of Liabilities under paragraph 9 of
      Schedule 2 – Part 4 (Employment) of this Agreement but with reference to
      the employment those former employees had at the time of termination of
      their employment agreement.

            

    

     

    
      	
              3

            	
              The Investors
      will, subject to applicable legal and regulatory provisions and having
      regard to the history and circumstances of the plan, agree whether
      following Completion each plan should continue
  as:

            

    

     

    
      	
               
      

            	
              (a)

            	
              a
      multi-employer plan; or

            

    

     

    
      	
               
      

            	
              (b)

            	
              a single
      employer plan.

            

    

     

    Multi-employer
plans

     

    
      	
              4

            	
              Where
      the Investors agree that following the relevant date of Completion
      a current plan should continue as a multi-employer plan, the relevant
      companies within the Acquired Businesses and the Retained Business will
      continue to participate in the plan on such other terms and conditions as
      are agreed by the Investors from time to time, provided that those terms
      and conditions, together with, where appropriate, any compensations agreed
      between the Acquired Businesses and the Retained Business, accord with the
      general principles stated in paragraph 2 of this Part of this
      Schedule.

            

    

     

    Single
employer plans

     

    
      	
              5

            	
              Where
      the Investors
      agree that following
      the
      relevant date of Completion
      a plan should continue
      as or be converted to a single employer plan, subject
      to applicable legal and regulatory provisions, the Investors will agree
      who will be the principal sponsoring employer. This could be a company
      within one of the Acquired Businesses or the Retained Business. This will
      normally be the company which is currently the principal sponsoring
      employer, but may be changed by agreement if the current membership of the
      plan is inconsistent with this. To the extent that this results in one
      Acquired Business or the Retained Business taking responsibility for
      Liabilities for former employees of another Acquired Business or the
      Retained Business (as the case may be), a valuation adjustment amongst the
      involved Acquired Business(es) and/or the Retained Business will be made
      in accordance with the financial position of the plan on an IAS19 basis
      (including allowance

            

    

    
       

      
        
          
          

        

        
          72

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                for discretionary benefits
      where this has been incorporated previously in the IAS19
      valuation).

              

      

       

    

    Cessation
of participation

     

    
      	
              6

            	
              If a company
      within the Acquired Businesses or the Retained Business ceases to
      participate in a plan, the Investors will use reasonable endeavours to
      procure that a transfer value is paid from that plan to a new plan for
      employees of that Acquired Business or Retained Business or company within
      that business (in respect of current employees and/or former employees).
      The Investors will agree a proposed transfer value basis to be put to the
      trustees or managers of the plan.

            

    

     

    
      	
              7

            	
              To the extent
      that the transfer value actually paid differs from the value of the
      Liabilities transferred on an IAS19 basis multiplied by the funding level
      of the plan on the IAS19 basis, a cash adjustment will be due between the
      Acquired Businesses and/or Retained Business which accords with the
      general principles stated in paragraph 2 of this Part of this Schedule.
      The Investors will cooperate to ensure that any adjustments are applied in
      as tax efficient manner as
possible.

            

    

     

    
      	
              8

            	
              The Investor
      which either is or owns the continuing principal sponsoring employer of
      any pension plan will indemnify and hold harmless in full each member of
      the Retained Group (whilst such member remains part of the Retained Group)
      and each of the other Investors and members of their respective Groups -
      being, for this purpose, in the case of RBS, the Wider RBS Group -
      (including, for this purpose their Acquired Companies whilst such Acquired
      Companies are members of the ABN AMRO Group or the relevant Investor’s
      Group in respect of any actions, proceedings, costs, claims and demands,
      incurred by any of those other Investors and members of their Groups
      (including their Acquired Companies), in relation to any liability arising
      in respect of that pension plan. The Investors agree that any liability
      incurred as a result of the indemnity in this paragraph 8 will not
      constitute a liability that is recoverable under paragraph 7.1 of Part 1
      of Schedule 1 in respect of pension liabilities relating to any of the
      pension plans and each such Investor undertakes not to seek to rely on the
      indemnity under paragraph 7.1 of Part 1 of Schedule 1 in respect of such
      liabilities.

            

    

     

    
      	
              9

            	
              Where a
      company within the Acquired Business or Retained Business ceases to
      participate in a plan, it will procure alternative pension provision for
      future service if it is required to do so by applicable legal or
      regulatory provisions.

            

    

     

    Defined
contribution plans and unfunded pension liabilities

     

    
      	
              10

            	
              The
      principles stated in this Part of this Schedule will be modified as
      appropriate as follows:

            

    

     

    
      	
               
      

            	
              (c)

            	
              the general
      principles stated above apply mutatis mutandis to defined contribution
      plans and, where possible, unfunded pension
  Liabilities;

            

    

     

    
      	
               
      

            	
              (d)

            	
              to the extent
      that any unfunded pension Liabilities or any excess of funding in any plan
      cannot be allocated to any Acquired Businesses and/or the Retained
      Business by applying the foregoing principles, such unfunded pension
      Liabilities or any excess of funding will be allocated to the Retained
      Business and shared by the Investors in accordance with their
      participation in the Retained Business;
and

            

    

     

    
      
        
        

      

      
        73

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (e)

            	
              to the extent
      that the Investors agree that defined contribution and unfunded pension
      Liabilities will be transferred under such general principles, the
      Investors will agree the appropriate transfer amount to be paid within a
      reasonable period.

            

    

     

    General

     

    
      	
              11

            	
              The Investors
      acknowledge that attributing Liabilities precisely for former employees to
      each Investor may be difficult or impossible and will use suitable
      approximations where appropriate, having regard to
  cost.

            

    

     

    
      	
              12

            	
              The Investors
      acknowledge that transfers of former employees between plans may be
      contentious or potentially contentious in
      some cases, and will cooperate to ensure that former employees may remain
      in their existing plan where this is appropriate and accords with the
      general principles stated in paragraph 2 of this Part of this
      Schedule.

            

    

     

    
      	
              13

            	
              The Investors
      agree that if any dispute arises in respect of pensions then it shall be
      determined in accordance with Clause 9 of this Agreement save that the
      Investors may agree that the dispute will be determined by an independent
      actuary instead of an Independent Accountant, in which case references in
      Clause 9 to Independent Accountants shall be read as references to an
      independent actuary and references in Clause 9 to the President of the
      Institute of Chartered Accountants shall be read as references to the
      President of the Institute of
Actuaries.

            

    

     

    
      	
              14

            	
              This
      paragraph 14 of this Part of this Schedule applies in respect of all
      pension plans in
      relation to which payments had not yet been made in accordance with
      paragraph 5 and (where applicable) paragraph 7 of this Part of this
      Schedule before the effective date of the Dutch legal demerger (afsplitsing)
      of certain assets and liabilities of RBS NV to ABN AMRO Bank, which
      occurred on 6 February 2010 (such pension plans the “Outstanding
      Plans”). The provisions in paragraphs 1 to 13 of this Part 5 of
      this Schedule 1 apply to the Outstanding Plans with the following
      exceptions:

            

    

     

    
      	
              14.1

            	
              In respect of
      the Outstanding Plans, no valuation adjustment shall be carried out in
      accordance with paragraph 5 of this Part of this Schedule and no cash
      adjustment will be due in accordance with paragraph 7 of this Part of this
      Schedule. Instead, in accordance with and pursuant to a “Pensions
      Unbundling and Settlement Deed” entered into by RBS, Santander, the State,
      the Company, ABN AMRO Bank and Fortis Investment Management N.V. dated 1
      April 2010 (the “Pensions
      Unbundling and Settlement Deed”), RBS and Santander shall each make
      the following one-off payments to ABN AMRO
Bank:

            

    

     

    
      	
               
      

            	
              14.1.1

            	
              a
      compensation payment in respect of future administration expenses of the
      Dutch Outstanding Plans equal to the following
  amounts:

            

    

     

    
      	
               
      

            	
              (i)

            	
              RBS: EUR 14.1
      million; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Santander:
      EUR 1.5 million;

            

    

     

    
      	
               
      

            	
              14.1.2

            	
              a
      compensation payment in respect of the future cost of purchasing annuities
      in respect of liabilities relating to the Dutch Outstanding Plans equal to
      the following amounts:

            

    

     

    
      	
               
      

            	
              (i)

            	
              RBS: EUR 21.1
      million; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Santander:
      EUR 1.8 million.

            

    

     

    
      	
              14.2

            	
              In respect of
      the Dutch Outstanding Plans, where the Investors or any of members of
      their Groups (including their Acquired Companies) cease participating in
      such pension plans,

            

    

    
       

      
        
          
          

        

        
          74

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                the relevant
      party will use reasonable endeavours to procure that a transfer value is
      paid from that Dutch Outstanding Plan to a new plan for relevant employees
      who participated in the Dutch Outstanding Plan (in respect of current
      employees and/or former employees) and that the relevant Investor or
      member of its Group (including their Acquired Companies) will apply the
      “opt-out mechanism” in respect of the Dutch Outstanding Plans, so that all
      relevant individual members will be informed that their accrued pension
      will be transferred to the new plan, unless they object within a certain
      specified period.

              

      

       

    

    
      	
              14.3

            	
              The policy of
      the trustees of the Dutch Outstanding Plans in the case of a transfer
      value basis referred to under paragraph 6 of this Part of this Schedule is
      to transfer assets that are the multiplication of the liabilities on an
      FTK-basis (Financieel
      ToetsingsKader) with, as a minimum, the lower of its funding ratio
      (calculated on the same FTK- basis) and the funding ratio of the receiving
      fund. In any event, the minimum transfer value will be at least as great
      as that which is required under the Decree on the implementation of the
      Pension Act and the Act on Compulsory Membership of an Occupational
      Pension Scheme (both Acts in the Netherlands, “Besluit
      uitvoering Pensioenwet en Wet verplichte beroepspensioenregeling”).
      If the transfer value calculated by the trustees of the Dutch Outstanding
      Plans is lower than the minimum transfer value set out in this paragraph
      14.3 of this Part of this Schedule, notwithstanding the obligation on RBS
      under paragraph 6 of this Part of this Schedule, RBS may refuse to accept
      a transfer from the relevant Dutch Outstanding Plan. For the avoidance of
      doubt, a refusal by RBS to accept a transfer in accordance with this
      paragraph 14.3 of this Part of this Schedule will not lead to an
      obligation to pay compensation in excess of the compensation referred to
      in paragraph 14.1.1 and 14.1.2 of this Part of this
    Schedule.

            

    

     

    
      	
              14.4

            	
              With the
      exception of the payment obligations under the Pensions Unbundling and
      Settlement Deed and payment of any transfer value in accordance with
      paragraph 6 of this Part of this Schedule, the Investors agree that none
      of the Investors or members of their Groups (including their Acquired
      Companies) shall have any further liability to make any payment, valuation
      adjustment or cash adjustments to any other Investor or members of their
      respective Groups (including their Acquired Companies) in respect of any
      of the Outstanding Plans.

            

    

     

    
      	
              14.5

            	
              To the extent
      that there is any conflict between this Agreement and the Pensions
      Unbundling and Settlement Deed then the wording in the Pensions Unbundling
      and Settlement Deed shall prevail over this Agreement. For the avoidance
      of doubt, to the extent that the provisions of the Pensions Unbundling and
      Settlement Deed do not relate in any way to any provision of this
      Agreement, the Pensions Unbundling and Settlement Deed and this Agreement
      shall not be deemed to conflict.

            

    

     

    
      
        
        

      

      
        75

        
          

        

      

      
        
        

      

       

    

    Schedule
1 – Part 6

    Intellectual
Property

     

    
      	
              1

            	
              In this
      Agreement:

            

    

     

    “ABN
AMRO Trade Marks” shall have the meaning given to it in the RBS
Transitional Trade Mark Licence;

     

    “ABN
AMRO Device Trademark” shall have the meaning given to it in the
Santander Transitional Trade Mark Licence;

     

    “Intellectual
Property” means trade marks, service marks, trade names, logos, domain
names, get-up, patents, inventions, design rights, copyrights, neighbouring
rights and moral rights, know-how, semi-conductor topography rights, database
rights and all other similar rights which may subsist in any part of the world,
whether or not such rights are registered, including, without limitation, any
registrations of such rights and applications and rights to apply for such
registrations;

     

    “RBS
Transitional
Trade Mark Licence” means the transitional trade mark licence entered
into between RBS NV and ABN AMRO Bank on 5 February 2010, as amended from time
to time; and

     

    “Santander
Transitional Trade Mark Licence” means the transitional trade mark
licence entered into between Santander, Banco Santander (Brasil) S.A. and ABN
AMRO Bank on 5 February 2010.

     

    
      	
              2

            	
              The parties
      recognise that as part of the transfer of the Acquired Businesses to the
      Investors the Acquired Business Assets for each Acquired Business shall
      include the Intellectual Property assets and related contracts which are
      exclusively or principally used by that Acquired Business. Nothing in this
      Part of this Schedule shall affect the ownership of these assets or the
      validity of the related contracts.

            

    

     

    
      	
              3

            	
              At any time a party may make a
      written request for a licence to use a particular item of Intellectual
      Property owned by another party and in existence as at 10 October 2007
      (other than the ABN AMRO Trade Marks to which the RBS Transitional Trade
      Mark Licence shall apply and the ABN AMRO Device Trademark to which the
      Santander Transitional Trade Mark Licence shall apply) and the relevant
      parties agree that within 90 days following such notice that they shall
      negotiate in good faith and use their best endeavours to agree any such
      request - with consent not being unreasonably withheld - with the
      intention that each of the RBS, Santander and State Acquired Businesses
      and the Retained Business shall be able to continue to operate without
      hindrance and for no additional consideration in the manner in which they
      operated immediately prior to the relevant Completion Date. Unless agreed
      otherwise the licence shall be non-exclusive, royalty-free, world-wide and
      perpetual, so far as the licensor is able to grant such a licence at no
      additional cost.

            

    

     

    
      	
              4

            	
              The parties
      acknowledge that much of the know-how owned or used by the RBS Holdings
      Group and Acquired Businesses is and will remain of a confidential nature
      and agree to take reasonable and appropriate steps to ensure that
      confidentiality is preserved following the transfer of the Acquired
      Business Assets and in the future conduct of the businesses to be carried
      on by the Acquired Group and the Retained
Group.

            

    

     

    
      	
              5

            	
              Any dispute
      in respect of the matters in this Part of this Schedule which is not
      resolved by agreement between the parties within 60 Business Days of such
      dispute arising (such 60 

            

    

    
       

      
        
          
          

        

        
          76

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                Business Days
      to commence, for the purposes of any dispute pursuant to paragraph 4 of
      this Part of this Schedule, on expiry of the 90-day period referred to in
      that paragraph) shall be determined in accordance with Clause 9 of this
      Agreement save that:

              

      

       

    

    
      	
               
      

            	
              (a)

            	
              references in
      Clause 9 to the Independent Accountants shall, for the purposes of this
      Schedule, be read as references to a single QC who is an expert in
      Intellectual Property in London, England, or, if the relevant parties
      jointly consider it to be more appropriate, an expert of equivalent
      seniority in the jurisdiction in which the Intellectual Property asset in
      question subsists; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              references in
      Clause 9 to the President of the Institute of Chartered Accountants shall
      be read as references to the President of the Law
  Society.

            

    

     

    The objective of
the expert determination pursuant to this paragraph, (i) in the case of a Wrong
Box Asset claim relating to Intellectual Property, shall be to determine which
business has the strongest claim to ownership of the relevant Intellectual
Property on a worldwide basis, taking into account which business has invested
the most in creating, developing and promoting the relevant Intellectual
Property to date, and, (ii) in the case of a request for a licence under
paragraph 4 of this Part of this Schedule, shall be to determine fair and
reasonable terms for such licence.

     

    
      	
              6

            	
              Without
      prejudice to Clause 20.10 of this Agreement, each party shall, and the
      Company shall use its reasonable endeavours to procure that any relevant
      third party shall, do all such things and execute all such documents as
      may reasonably be requested by any other party for the purposes of giving
      full legal effect to the provisions of this Part of this Schedule,
      including in order to vest or perfect title to any Intellectual Property,
      to record such title with any relevant registry or to apply for
      registration in respect of any new Intellectual Property at any
      registry.

            

    

     

    
      
        
        

      

      
        77

        
          

        

      

      
        
        

      

       

    

    Schedule
1 – Part 7

    Real
Estate

     

    
      	
              1

            	
              The parties
      shall use their reasonable endeavours to agree that the rights transferred
      pursuant to Clause 5 and the remaining provisions of this Schedule
      relating to real estate (including licenses, easements, rights of way and
      other similar rights) are sufficient to enable each of the Acquired
      Businesses and the Retained Business to be carried on in the ordinary
      course.

            

    

     

    
      	
              2

            	
              Until such
      time as specific real estate is allocated between the Acquired Businesses
      and/or to the extent that premises or real estate rights are shared
      between Acquired Businesses or between one or more Acquired Businesses and
      the Retained Business, both the costs and the benefits of such premises,
      or rights of such premises, shall be shared or allocated between the
      relevant Investors or members of the RBS Holdings Group in accordance with
      the principles set out in Clause 5 of this Agreement and in the Leasing
      Principles and Treatment of Property Stranded Costs
      Principles.

            

    

     

    
      	
              3

            	
              Without
      limitation, the parties shall use their reasonable endeavours to agree the
      following in addition to but following the general principles set out in
      paragraphs 1 and 2 of this Schedule 1 Part
7:

            

    

     

    
      	
              3.1

            	
              where
      premises are shared, which Acquired Business will retain ownership of the
      property or relevant lease and the basis of occupation of the other
      Acquired Businesses including any rent or licence fee to be paid for such
      occupation by the other Acquired Businesses, how long such occupation will
      last and the other terms of such
occupation;

            

    

     

    
      	
              3.2

            	
              where
      premises are shared, how existing services provided in respect of the
      relevant property are to be provided to all the relevant Acquired
      Businesses;

            

    

     

    
      	
              3.3

            	
              if any
      properties are held by a specific real estate holding company, which
      Acquired Business will own such entity and how the other Acquired
      Businesses will continue to occupy;

            

    

     

    
      	
              3.4

            	
              how
      guarantees already in place from one Acquired Business in respect of the
      occupation of real estate by another Acquired Business are to be dealt
      with;

            

    

     

    
      	
              3.5

            	
              which
      Acquired Business will be responsible for historic liabilities (including,
      but not limited to, environmental and regulatory liabilities) in respect
      of which properties;

            

    

     

    
      	
              3.6

            	
              that
      transfers of any properties or interests in any properties are carried out
      in the most tax efficient way for the Acquired Businesses involved;
      and

            

    

     

    
      	
              3.7

            	
              where the
      Acquired Businesses are controlled by, or consolidated into, any of the
      Investors, or otherwise leave the RBS Holdings Group, and this results in
      breaches of existing leases or licences, or adversely affects any ongoing
      occupations or ongoing disposals (by termination or otherwise), how this
      is to be dealt with.

            

    

     

    
      	
              4

            	
              Subject to
      paragraph 5 of this Schedule 2 Part 8, any dispute in respect of the
      matters in this Part of this Schedule which is not resolved by agreement
      between the parties within 60 Business Days of such dispute arising shall
      be determined in accordance with Clause 9 of the Agreement, but for the
      purposes of determining disputes where real estate assets are the primary
      disputed assets:

            

    

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              4.1

            	
              in England
      and Wales, the relevant parties shall appoint a chartered surveyor in the
      relevant jurisdiction or (in relation to legal issues) a single QC well
      versed in real estate law who shall determine any dispute arising as an
      expert and not as an arbitrator and in the absence of any agreement as to
      such a chartered surveyor or QC, the parties shall refer that appointment
      to the President of the Royal Institution of Chartered Surveyors or the
      President of the Law Society in London (as the case may be) who shall be
      substituted for the reference in Clause 9 of the Agreement to the
      “Independent Accountants”;

            

    

     

    
      	
               
      

            	
              4.2

            	
              in a
      jurisdiction other than England and Wales, the relevant parties shall
      appoint the local (national) nearest equivalent to either a chartered
      surveyor in the relevant jurisdiction or (in relation to legal issues) a
      single QC well versed in real estate law in the relevant jurisdiction who
      shall determine any dispute arising as an expert and not as an arbitrator
      and in the absence of any agreement as to such a equivalent to a chartered
      surveyor or QC, the parties shall refer that appointment to the local
      national equivalent to the president or chairman of the Royal Institution
      of Chartered Surveyors or the president or chairman of the Law Society (by
      way of example:

            

    

     

    
      	
               
      

            	
              4.2.1

            	
              equivalents
      to the Law Society of England and Wales
are:

            

    

     

    
      	
               
      

            	
              (i)

            	
              in Spain, the
      Colegio de Abogados de Madrid;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in Italy, the
      Consiglio Nazionale Forense;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              in Brazil,
      the Ordem dos Advogados do Brasil;
and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              in the
      Netherlands, the Nederlandse Orde van
Advocaten;

            

    

     

    and

     

    
      	
               
      

            	
              4.2.2

            	
              an equivalent
      to the Royal Institute of Chartered Surveyors in London in Spain is the
      Colegio Oficial de Aparejadores y Arquitectores Tecnicos de
      Madrid)

            

    

     

    who shall be
substituted for the reference in Clause 9 of the Agreement to the “Independent
Accountants”; or

     

    
      	
               
      

            	
              4.3

            	
              across more
      than one jurisdiction, this shall be determined in accordance with Clause
      9 of this Agreement.

            

    

     

    
      	
              5

            	
              Any dispute
      where real estate assets are the primary subject matter of the dispute,
      and the circumstances involve operations from one or more real estate
      assets being significantly adversely affected; and/or may result in any
      Investor being seriously reputationally adversely affected; shall be dealt
      with as follows:

            

    

     

    
      	
               
      

            	
              5.1

            	
              immediately
      an Investor is aware of a dispute or the potential of a dispute, it shall
      notify the other Investors of all relevant facts of the dispute of which
      it is aware (acting in good faith), such notice to be served following the
      requirements of Clause 21;

            

    

     

    
      	
               
      

            	
              5.2

            	
              following
      service of notice on all Investors under paragraph 5.1 of this Schedule 2
      Part 8, the Investors shall use all reasonable endeavours to resolve the
      dispute within 2 Business Days in a just and equitable
    manner;

            

    

     

    
      	
               
      

            	
              5.3

            	
              failing
      agreement being reached under paragraph 5.2 of this Schedule 2 Part 8, the
      dispute shall be immediately referred
to:

            

    

     

    
      
        
        

      

      
        79

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              5.3.1

            	
              in the case
      of RBS, the Chief Administrative Officer of the RBS
  Group;

            

    

     

    
      	
               
      

            	
              5.3.2

            	
              in the case
      of State, the Director of Financieringen;
and

            

    

     

    
      	
               
      

            	
              5.3.3

            	
              in the case
      of Santander, Chief Technology and Operations Officer, reporting directly
      to the Chief Executive of
Santander;

            

    

     

    which shall use all
reasonable endeavours to resolve the dispute within 2 Business Days in a just
and equitable manner;

     

    
      	
               
      

            	
              5.4

            	
              failing
      agreement being reached under paragraph 5.3 of this Schedule 2 Part 8, the
      dispute shall be immediately referred to the Chief Executive of each
      Investor which shall use all reasonable endeavours to resolve the dispute
      within 2 Business Days in a just and equitable
  manner.

            

    

     

    
      	
               
      

            	
              5.5

            	
              if agreement
      is still not reached under paragraph 5.4 of this Schedule 2 Part 8, then
      the dispute shall be resolved in accordance with paragraph 4 of this
      Schedule 2 part 8 in all respects, except that the first part of paragraph
      4 shall be replaced with the following
words

            

    

     

    “any dispute in
respect of the matters in this Part of this Schedule shall be determined in
accordance with Clause 9 of the Agreement, but for the purposes of determining
disputes where real estate assets are the primary disputed assets:

     

    [and the remainder
of paragraph 4, being 4.1 ...4.3, are read in full, unchanged]”

     

    and for the
avoidance of doubt the parties shall in this circumstance not wait 60 Business
Days before referring the matter for determination under Clause 9 (with the
amended references to Clause 9 provided for under paragraph 4 of this Schedule 2
Part 8).

     

    
      
        
        

      

      
        80

        
          

        

      

      
        
        

      

    

     

    Schedule
1 – Part 8

    Regulatory
Matters

     

    
      	
              1

            	
              The parties
      agree that RBS will take lead responsibility for running the RBS Holdings
      Group.

            

    

     

    
      	
              2

            	
              For the
      avoidance of doubt and notwithstanding any other provision of this
      Agreement (other than Clause 13), each of the Investors acknowledges that
      (subject to paragraph 3 below) the Company shall be governed and operated
      in accordance with the governance, risk management and systems and
      controls policies and procedures reasonably determined by RBS from time to
      time to be necessary or desirable to ensure that the Company, RBS Holdings
      Group and each RBS Holdings Group Company are managed in accordance with
      the regulatory requirements applying under applicable laws and regulations
      (including, in particular that RBS Holdings, RBS NV and ABN AMRO Bank are
      Dutch companies regulated by DNB).

            

    

     

    
      	
              3

            	
              Without
      prejudice to the provision of paragraph 2 above and to the extent
      acceptable to the DNB and any other Regulator and solely to the extent
      applicable to any State Acquired Businesses or Santander Businesses that
      are owned by the RBS Holdings Group, RBS shall have regard to the
      governance, risk management and systems and controls requirements which
      apply to the Investors and their respective Groups under applicable laws
      and regulations and which are notified from time to time in writing to RBS
      by the State and Santander, respectively. In addition, the Investors
      acknowledge that groups of Regulators may from time to time reach
      understandings in relation to the management of the Company and the RBS
      Holdings Group. The Investors agree to use all reasonable endeavours to
      ensure that all such understandings communicated to the Company are
      properly implemented.

            

    

     

    
      	
              4

            	
              In exercising
      its rights and fulfilling its duties under or pursuant to this Agreement
      with respect to the RBS Holdings Group, the Company will act, and the
      Investors shall procure that the Company shall act, in accordance with the
      policies and procedures determined by RBS pursuant to paragraph 2
      above.

            

    

     

    
      	
              5

            	
              None of the
      parties shall do or omit to do anything which causes any of the other
      parties, any member of their respective Groups or any member of the RBS
      Holdings Group to breach any applicable law
      or regulatory requirement. Each
      party will co-operate with
      each other party with a view to ensuring (insofar as it is reasonably able
      and subject to applicable law and regulations and the provisions of this
      Agreement) that for as long as any
      Acquired Business, Retained Business and/or RBS
      Holdings Group Company
      is the subject of clauses 5 and 6 of the Agreement, such company
      will conduct its affairs in compliance with the applicable regulatory
      requirements of each relevant
  Regulator.

            

    

     

    
      	
              6

            	
              Each
      party will co-operate with each other party with a view to ensuring
      (insofar
      as it is reasonably able and subject to applicable law and regulations and
      the provisions of this Agreement) that any
      information relating to the Company or any RBS
      Holdings Group Company
      which is required under applicable laws and regulations, or
      is requested
      by a relevant Regulator, to be provided by an Investor or a member of its
      Group to a relevant Regulator is made available to that Investor for it or
      the relevant member of its Group to provide to that Regulator.

            

    

     

    
      	
              7

            	
              Subject to
      applicable laws and regulations and the following provisions of this
      paragraph 7:

            

    

     

    
      
        
        

      

      
        81

        
          

        

      

      
        
        

      

    

     

    
      	
              7.1

            	
              the Company
      shall notify each of the Investors of any communication received by it
      from any relevant Regulator in relation to the latter’s regulation of the
      RBS Holdings Group as soon as reasonably practicable after receipt
      thereof;

            

    

     

    
      	
              7.2

            	
              each of the
      Investors shall be entitled to make representations to the Company to
      assist it in responding to any such communication;
  and

            

    

     

    
      	
              7.3

            	
              none of the
      Investors shall object to the other Investors (or their representatives)
      attending at any meeting or on any call between the Company and a relevant
      Regulator.

            

    

     

    
      	
              8

            	
              Notwithstanding
      the foregoing, each Investor acknowledges that it shall not be entitled to
      receive notice of any communication under paragraph 7.1 above, or to make
      representations pursuant to paragraph 7.2 above, or to attend or
      participate at any meeting or on any call between the Company and any
      Regulator, if (i) that Regulator objects (for whatever reason), or (ii)
      the Investor has no material interest in the specific subject matter which
      is the subject of the communication, meeting or
  call.

            

    

     

    
      
        
        

      

      
        82

        
          

        

      

      
        
        

      

    

     

    Schedule
1 – Part 9

    Tax
Matters

     

    
      	
              1

            	
              Tax
      Agreements

            

    

     

    
      	
              1.1

            	
              The parties
      acknowledge that the following Tax Agreements have been or will be entered
      into between the parties and that certain matters that would otherwise
      fall within the scope of the provisions of this Schedule 1 - Part 9 may be
      covered by such Tax Agreements:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Separation Tax Agreement;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Tax
      Segregation Agreement;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the Global
      Tax Agreement between RBS, the State, RBS NV and ABN AMRO Bank relating to
      the allocation of certain tax liabilities related to certain relevant
      Acquired Businesses and certain other Tax matters in relation thereto;
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              other Tax
      Agreements relating to the allocation of Tax liabilities related to
      Acquired Businesses in particular jurisdictions (including Luxembourg,
      Belgium, Singapore, Germany, Hong Kong, Japan and the USA) and certain
      other Tax matters in relation
thereto.

            

    

     

    The parties further
acknowledge that further Tax Agreements may be entered into following the date
of this Agreement.

     

    
      	
              1.2

            	
              The parties
      acknowledge that in relation to the Completed Restructuring, the
      provisions of the Original CSA applied in respect thereof (subject to the
      provisions of any Tax Agreement where relevant) and that the amendment and
      restatement of the Original CSA is without prejudice to the rights and
      obligations of the parties under the Original CSA or any Tax Agreement in
      relation to the Completed
Restructuring.

            

    

     

    
      	
              1.3

            	
              In the case
      of conflict between the relevant provisions of any Tax Agreement and the
      relevant provisions of this Agreement (or the Original CSA where
      applicable), the relevant Tax Agreement shall prevail in respect of
      matters covered by the relevant Tax Agreement, unless explicitly agreed
      otherwise in this Agreement or the relevant Tax Agreement. In the case of
      any matter which has not been agreed for the purpose of a Tax Agreement,
      the principles in this Part 9 shall
apply.

            

    

     

    
      	
              2

            	
              Tax
      efficiency

            

    

     

    
      	
               
      

            	
              2.1

            	
              The parties
      acknowledge that Clause 5 requires the Further Restructuring to be
      implemented in a manner that is as efficient for all parties and the RBS
      Holdings Group as is reasonably practicable from a tax point of view
      (subject to other non-Tax constraints and considerations) and the parties
      also acknowledge that the same principles applied to the Completed
      Restructuring. The parties acknowledge that this shall involve using all
      reasonable endeavours to:

            

    

     

    
      	
               
      

            	
              2.1.1

            	
              minimise the
      total Taxes (including not incurring such Taxes) which may arise on the
      Further Restructuring (including Transfer
  Taxes);

            

    

     

    
      	
               
      

            	
              2.1.2

            	
              subject to
      Clause 2.1.1, maximise the availability and benefit of Tax Reliefs (taking
      into account the ability of the parties to utilise such Tax Reliefs and
      any other benefits which may be
available);

            

    

     

    
      
        
        

      

      
        83

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              2.1.3

            	
              subject to
      Clause 2.1.1, procure that transfers of businesses pursuant to the Further
      Restructuring are not subject to VAT (for example by endeavouring to
      ensure that any applicable conditions for such transfers to be treated as
      transfers of going concerns for VAT purposes are
    satisfied);

            

    

     

    
      	
               
      

            	
              2.1.4

            	
              facilitate
      the distribution of cash (in the case of assets that have been sold for
      cash pursuant to the Further Restructuring) from the Company and RBS
      Holdings Group Companies in a tax-efficient
  manner;

            

    

     

    
      	
               
      

            	
              2.1.5

            	
              facilitate
      the making of distributions pursuant to clause 15 of this Agreement in a
      tax efficient manner;

            

    

     

    
      	
               
      

            	
              2.1.6

            	
              to the extent
      possible and consistent with the other principles in this Agreement,
      maximise deductions for costs attributable to the Retained Business (in
      particular head office costs), including by way of recharging such costs
      where appropriate;

            

    

     

    
      	
               
      

            	
              2.1.7

            	
              procure that
      indemnity payments, adjustments and allocations in connection with this
      Agreement and the Tax Agreements are structured in a tax-efficient manner
      to the extent possible.

            

    

     

    
      	
              3

            	
              Allocation
      of Taxes

            

    

     

    The cost of the
following Taxes shall be allocated between the Investors as follows, subject to
any agreement between the parties to the contrary:

     

    
      	
               
      

            	
              3.1

            	
              Taxes payable
      or suffered by a RBS Holdings Group Company or a New Company in connection
      with the direct or indirect transfer of any Retained Company or Retained
      Business or part thereof pursuant to the Further Restructuring, and any
      distribution of proceeds in connection with any cash sale of a Retained
      Business or Retained Company shall be allocated in Consortium
      Proportions.

            

    

     

    
      	
               
      

            	
              3.2

            	
              Taxes payable
      or suffered by a RBS Holdings Group Company or a New Company in connection
      with the direct or indirect transfer of any Santander Acquired Company or
      Santander Acquired Business to Santander or a member of its Group or to a
      New Company to be acquired by Santander pursuant to the Further
      Restructuring, and any distribution of proceeds in connection with any
      cash sale of a Santander Acquired Business or Santander Acquired Company
      shall be allocated to Santander.

            

    

     

    
      	
               
      

            	
              3.3

            	
              Taxes payable
      or suffered by a RBS Holdings Combined Group Company or a New Company in
      connection with the direct or indirect transfer of any State Acquired
      Company or State Acquired Business to the State or a member of its Group
      or to a New Company to be acquired by the State pursuant to the Acquired
      Business Further Restructuring, and any distribution of proceeds in
      connection with any cash sale of a State Acquired Business or State
      Acquired Company shall be apportioned between the State and RBS in the
      Adjusted Consortium Proportions subject to adjustment to reflect any
      breach by the State or RBS of their obligations under Clause 2
      above.

            

    

     

    
      	
               
      

            	
              3.4

            	
              Taxes payable
      or suffered by an RBS Holdings Group Company or a New Company in
      connection with the direct or indirect transfer of any RBS Acquired
      Company or RBS Acquired Business to RBS or a member of its Group or to a
      New Company to be acquired by RBS pursuant to the Further Restructuring,
      and any distribution of proceeds in connection with any cash sale of a RBS
      Acquired Business or RBS

            

    

    
       

      
        
          
          

        

        
          84

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                Acquired
      Company shall be apportioned between the State and RBS in the Adjusted
      Consortium Proportions subject to adjustment to reflect any breach by RBS
      or the State of their obligations under Clause 2
  above.

              

      

       

    

    
      	
               
      

            	
              3.5

            	
              Tax payable
      or suffered by an RBS Holdings Group Company or a New Company in
      connection with any transfer of assets contemplated by paragraph 7.3 of
      Schedule 1 Part 1 shall be allocated to the
  transferee.

            

    

     

    
      	
               
      

            	
              3.6

            	
              Subject to
      Paragraph 3.7, Taxes payable by an Investor or a member of the Investor’s
      Group (excluding for the avoidance of doubt any RBS Holdings Combined
      Group Company or any New Company) in the jurisdiction in which such person
      is resident for Tax purposes (including Taxes payable in respect of the
      Further Restructuring including the distribution of assets or cash to them
      pursuant to Clause 15 of this Agreement or the Further Restructuring)
      shall be borne by the relevant Investor (or Group
  member).

            

    

     

    
      	
               
      

            	
              3.7

            	
              Taxes arising
      in connection with payments pursuant to indemnity and adjustment
      provisions in this Agreement (including paragraph 7 of Schedule 1 Part 1
      other than paragraph 7.3 in respect of which paragraph 2.6 applies) or
      pursuant to the Tax Agreement shall be allocated to the party making the
      payment where such payment is made pursuant to Paragraph 7.1 of Schedule 1
      Part 1 or under the Tax Agreement or otherwise relates to a Liability of
      the paying party or is attributable to a breach or other default of such
      party. In other cases, such Taxes shall be allocated on a basis which it
      is agreed or determined produces a fair and reasonable result in
      accordance with the general principles in this
  Agreement.

            

    

     

    
      	
               
      

            	
              3.8

            	
              Other Taxes
      shall be allocated as follows:-

            

    

     

    
      	
               
      

            	
              ●

            	
              in the case
      of Taxes that relate solely to the RBS Acquired Business, to
      RBS;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              in the case
      of Taxes that relate solely to the State Acquired Business, to the
      State;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              in the case
      of Taxes that relate solely to the Santander Acquired Business, to
      Santander;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              in the case
      of Taxes that relate solely to the Retained Business (which the parties
      agree shall include Taxes that relate to activities which have been
      terminated but which cannot be attributed to the Acquired Business of one
      or more Investors), in the Consortium
  Proportions;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              in the case
      of Taxes payable or suffered by a company which has carried on more than
      one Acquired Business or an Acquired Business and Retained Business, where
      such Taxes cannot be attributed solely to one Acquired Business or
      Retained Business, to the relevant Investors in appropriate proportions
      determined by reference to the extent to which the relevant company
      carried on each business;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              in the case
      of Taxes which cannot be attributed to any Acquired Business or Retained
      Business (the parties having used best efforts to so attribute such
      Taxes), in the Consortium
Proportions.

            

    

     

    
      
        
        

      

      
        85

        
          

        

      

      
        
        

      

    

     

    Unless otherwise
agreed, it shall be assumed that Taxes payable in respect of transactions which
are taken into account in the profit and loss account of a particular business
relate to that business, save in the case of transactions effected on non-arm’s
length terms between businesses acquired by different Investors. In the case of
Dutch corporate income tax, the parties acknowledge that, except as already
agreed in a Tax Agreement, the relevant profit and loss account is the segmental
profit and loss account maintained for the RBS Holding corporate income tax
fiscal unity adjusted for Dutch corporate income tax purposes for each relevant
taxable period and that such profit and loss account will be used to determine
whether there are any Taxes for the relevant period that relate to the Acquired
Businesses of the respective Investors which form part of the fiscal
unity.

     

    
      	
               
      

            	
              3.9

            	
              In relation
      to certain Taxes within Clause 3.8 above and certain Reliefs within Clause
      5 below, the parties acknowledge that certain specific principles and
      agreements for allocating certain Taxes and Tax Reliefs have been agreed
      between the Investors (including allocations of specific Taxes and Tax
      risks which have been identified prior to the date hereof and agreed in
      accordance with the procedure in Clause 9 of this Agreement). The parties
      acknowledge that Clause 3.5 above and the provisions of any relevant Tax
      Agreement shall be interpreted in accordance with such principles and
      agreements. The parties also acknowledge that the provisions of paragraph
      3.8 and paragraph 4 below shall apply only in the case of Taxes and Tax
      Reliefs which are not covered by a Tax
  Agreement.

            

    

     

    
      	
               
      

            	
              3.10

            	
              For the
      avoidance of doubt, to the extent that any RBS Acquired Company is subject
      to Tax on any profits attributable to a State Acquired Company (such that
      the relevant Tax falls to be allocated to the State in accordance with
      Paragraph 3.8) in circumstances where (i) no Tax Reliefs attributable to a
      State Acquired Business are available to the relevant RBS Acquired Company
      to eliminate or reduce such liability to Tax and (ii) no Tax Reliefs
      attributable to a RBS Acquired Business can be used to eliminate or reduce
      such liability to Tax in accordance with the provisions of Paragraph 4
      below, the State shall fund, or procure the funding of, the relevant
      liability to Tax by procuring that there is paid to the relevant RBS
      Acquired Company (or otherwise at RBS's direction), an amount equal to the
      profits in question multiplied by the relevant statutory Tax rate
      applicable to those profits.

            

    

     

    
      	
               
      

            	
              3.11

            	
              Interest
      shall be dealt with on the following basis (unless otherwise agreed for
      the purpose of a specific Tax
Agreement):

            

    

     

    
      	
               
      

            	
              3.11.1

            	
              where a cash
      payment is made to the relevant Tax Authority which has included Interest,
      such interest will be allocated on the same basis as the Tax to which it
      relates.

            

    

     

    
      	
               
      

            	
              3.11.2

            	
              where an
      Investor or any of its Acquired Companies or members of its Group settles
      a liability to Tax by way of payment to the relevant Tax Authority and
      such Tax falls to be allocated to another Investor in accordance with the
      principles above, the former Investor shall notify the latter Investor
      accordingly and the adjustments to be made between the Investors shall
      include interest on the amount paid at 3-month EURIBOR on a daily
      compounding basis from the date of payment of the Tax liability (or the
      date of notification in accordance with this paragraph 3.10.2 in a case
      where such notification is not made within 10 Business Days of payment)
      until such time as settlement between the Investors has
      occurred.

            

    

     

    
      
        
        

      

      
        86

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              3.11.3

            	
              Any interest
      that is received from a Tax Authority shall be allocated on the same basis
      as the Tax repayment to which it
relates.

            

    

     

    
      	
               
      

            	
              3.12

            	
              The parties
      acknowledge that any payment of interest on Capital and interest on GALM
      between the Investors shall be made net of Dutch tax at the agreed
      rate.

            

    

     

    
      	
              4

            	
              Tax
      Reliefs

            

    

     

    
      	
               
      

            	
              4.1

            	
              It is
      acknowledged that the Further Restructuring may give rise to Tax Reliefs
      for an Investor (the “Relevant Investor”) or member of its Group or New
      Company or RBS Holdings Group Company which it is to acquire. Such Tax
      Reliefs shall be for the benefit of the Relevant Investor, save to the
      extent that the transaction giving rise to the Tax Relief also resulted in
      a Tax Liability which is to be borne or shared by another Investor in
      accordance with paragraph 3 hereof. In the latter case, the amount to be
      allocated in accordance with paragraph 3 shall be the amount by which the
      Tax liability exceeds the net present value of the Tax Relief and the
      balance shall be borne by the Relevant Investor. For the avoidance of
      doubt, any step up in the base cost of an asset which a party obtains as a
      result of the Further Restructuring shall not constitute a Tax Relief for
      this purpose. Further, any Tax Reliefs which arise as a result of any
      transaction effected by an Investor or a member of its Group after the
      acquisition by it of the relevant Acquired Business shall not fall within
      this paragraph but shall be for the benefit of such
    Investor.

            

    

     

    
      	
               
      

            	
              4.2

            	
              Subject to
      paragraph 4.3 below, any Tax Reliefs arising to any RBS Holdings Group
      Company in respect of periods beginning on or before the date of
      completion of the Further Restructuring (other than Tax Reliefs falling
      within Clause 4.1 above) shall be dealt with as
  follows:-

            

    

     

    
      	
               
      

            	
              4.2.1

            	
              To the extent
      any such Tax Relief can be used to reduce Tax liabilities which would
      otherwise arise on the Further Restructuring (in circumstances where the
      use of such Tax Relief for this purpose is in accordance with the
      principles in Clause 2 above), such Tax Relief shall first be used for
      that purpose. As between RBS and the State and in the case of any Tax
      Relief within paragraph 4.2.6 below, no adjustments shall be made in
      respect thereof. As between Santander on the one hand and the State and
      RBS on the other hand, save in the case of Tax Reliefs within Paragraph
      4.2.6 below, adjustments shall be made between the parties to compensate
      the party that would otherwise have been entitled to the Tax Relief (or
      the value thereof) in accordance with paragraphs 4.2.2 to 4.2.5 below (the
      “Affected Party”) for the loss of such Tax Relief. The amount of the
      payment shall equal the value of the Tax Relief to the Affected Party. The
      remaining provisions of this paragraph shall apply to Tax Reliefs which
      are not used in this way.

            

    

     

    
      	
               
      

            	
              4.2.2

            	
              To the extent
      that any such Tax Relief relates to a particular Acquired Business and
      such Tax Relief can be transferred with the relevant Acquired Business
      pursuant to the Further Restructuring or otherwise made available to the
      Relevant Investor (or any member of its Group or RBS Holdings Group
      Company acquired by it) without increased Tax costs, such Tax Relief shall
      be so transferred or made
available.

            

    

     

    
      	
               
      

            	
              4.2.3

            	
              To the extent
      that any such Tax Relief relates to a particular Acquired Business and
      such Tax Relief cannot be transferred with the relevant
  

            

    

    
       

      
        
          
          

        

        
          87

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                Acquired
      Business pursuant to the Further Restructuring or otherwise made available
      to the Relevant Investor (or any member of its Group or RBS Holdings Group
      Company acquired by it) but can be used by another Investor or member of
      its Group or RBS Holdings Group Company acquired by it, except as already
      agreed in a Tax Agreement, the relevant Investors shall, prior to the
      relevant Tax Relief being utilised, discuss in good faith with a view to
      agreeing the fair and reasonable amount to be paid for the utilisation of
      such Tax Relief. Absent agreement, no party shall be entitled or required
      to use any Tax Relief or tax capacity attributable to another Investor.
      The parties acknowledge that specific agreement has been reached in
      respect of the amount to be paid for the use of Tax Reliefs in certain
      jurisdictions and this is reflected in the relevant Tax
      Agreement.

              

      

       

    

    
      	
               
      

            	
              4.2.4

            	
              To the extent
      that any such Tax Relief is lost as a result of the acquisition of RBS NV
      by the Company or as a result of the Further Restructuring, no payments or
      adjustments shall be made between the
Investors.

            

    

     

    
      	
               
      

            	
              4.2.5

            	
              To the extent
      that any such Tax Relief relates to more than one Acquired Business, it
      shall be allocated between the relevant Investors in appropriate
      proportions and paragraphs 4.2.2 and 4.2.3 shall apply
      accordingly.

            

    

     

    
      	
               
      

            	
              4.2.6

            	
              To the extent
      that any such Tax Relief does not relate to a particular Acquired Business
      (and cannot be allocated as described at paragraph 4.2.5, the parties
      having used best efforts to so allocate it) it shall be treated as an
      asset of the Retained Business. In the event that such Tax Relief can be
      used by an Investor or a member of its Group (whether the Investor which
      acquires the relevant RBS Holdings Group Company or any other Investor to
      whom such Tax Relief is made available pursuant to Clause 4.2.7),the
      principles in Clause 4,2,3 shall apply to determine the adjustments to be
      made between the Investors for the use of such Tax Reliefs, with any such
      adjustments being made on the basis of the Consortium
      Proportions.

            

    

     

    
      	
               
      

            	
              4.2.7

            	
              In the event
      that a Tax Relief arises or has arisen to a RBS Holdings Combined Group
      Company acquired or to be acquired directly or indirectly by one Investor
      (the “Former Investor”) or a member of its Group and such Tax Relief can
      be made available to an RBS Holdings Combined Group Company acquired or to
      be acquired directly or indirectly by another Investor (the “Latter
      Investor”) or a member of its Group or vice versa, the Latter Investor
      shall be entitled to procure that such Tax Relief is so made available to
      it in priority to any third party (and the Investors will co-operate in
      completing any procedural formalities to facilitate this). Subject to
      paragraph 4.2.6, the principles in Clause 4.2.3 shall apply to determine
      the amount to be paid for such Tax
Reliefs.

            

    

     

    
      	
               
      

            	
              4.2.8

            	
              In the event
      that a transaction has been entered into between a RBS Holdings Combined
      Group Company acquired or to be acquired directly or indirectly by one
      Investor (the “Former Investor”) or a member of its Group and a RBS
      Holdings Combined Group Company acquired or to be acquired directly or
      indirectly by another Investor (the “Latter Investor”) or a member of its
      Group (other than a transaction falling within paragraph 5.2.9 below) and
      it is subsequently determined that for any Tax purpose such transaction
      

            

    

    
       

      
        
          
          

        

        
          88

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                was not
      regarded as having been effected on arm’s length terms such that the
      Former Investor or a member of its Group is subject to Tax (or is subject
      to an increased amount of Tax) or is denied a Tax Relief (or is entitled
      to a reduced Tax Relief) in respect of such transaction, the Latter
      Investor shall procure that, where possible, a corresponding Tax Relief is
      claimed. Where such Tax Relief is claimed and can be made available to the
      Former Investor or a member of its Group, such Tax Relief shall be so made
      available. Where the Tax Relief is obtained but cannot be made available,
      the Latter Investor shall indemnify the Former Investor in respect of such
      Tax liability up to an amount equal to the net present value of the Tax
      Relief to the Latter Investor. Where no Tax Relief can be claimed or where
      the Tax liability exceeds the amount of Tax Relief that is made available
      or the net present value of any Tax Relief that is claimed (as
      appropriate), the excess shall be dealt with in accordance with the
      principles in paragraph 2.

              

      

       

    

    
      	
               
      

            	
              4.2.9

            	
              Where under
      this Agreement or (prior to the date hereof) the Original CSA, it is
      contemplated that any member of the Retained Group or any Acquired Company
      or Acquired Business to be acquired by any one Investor or a member of its
      Group (the “Recipient”) should be supplied or should use or continue to be
      supplied or use assets, facilities or services of any member of the
      Retained Group or any Acquired Company or Acquired Business to be acquired
      by any other Investor or member of its Group (the “Provider”) and it is
      determined by any Tax authority that such provision is not made on arm’s
      length terms such that the Provider is subject to Tax (or to an Increased
      amount of Tax) or the Recipient is denied a Tax Relief (or is entitled to
      reduced Tax Relief) in respect thereof or vice versa such adjustments
      shall be made between the affected Investors to compensate for such Tax or
      loss of Tax Relief as is determined to be fair and
    reasonable.

            

    

     

    
      	
              5

            	
              Withholding
      Tax and VAT

            

    

     

    
      	
               
      

            	
              5.1

            	
              All payments
      to be made under any indemnity, adjustment or allocation provision shall
      be made without deduction or withholding for or on account of Tax unless
      required by law. If any deductions or withholding are required by law, the
      party making the payment shall be obliged to pay to the other party such
      sum as will after such deduction or withholding has been made leave the
      other party with the same amount as it would have been entitled to receive
      in the absence of any such requirement to make a withholding or deduction,
      but only in circumstances where the party making such payment would be
      required to bear the cost of any tax payable by the recipient on receipt
      of the payment in accordance with paragraph 3.7. In other cases no
      additional amount shall be payable and the cost of the withholding tax
      shall be allocated in accordance with the principles in paragraph
      3.7.

            

    

     

    
      	
               
      

            	
              5.2

            	
              In a case
      where an additional amount is paid pursuant to paragraph 6.1 and the
      recipient of the relevant payment receives a credit for or refund of any
      Tax payable by it or similar benefit by reason of any deduction or
      withholding for or on account of Tax then it shall reimburse to the other
      party such part of such additional amounts paid to it pursuant to
      paragraph 6.1 above as the recipient of the payment certifies to the other
      party will leave it (after such reimbursement) in no better and no
      worse

            

    

    
       

      
        
          
          

        

        
          89

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                position than
      it would have been if the other party had not been required to make such
      deduction or withholding.

              

      

       

    

    
      	
               
      

            	
              5.3

            	
              Where under
      the terms of this Agreement one party is liable to indemnify or reimburse
      another party in respect of any costs, charges or expenses, the payment
      shall include an amount equal to any VAT thereon not otherwise recoverable
      by the other party in respect of which it is reasonable to conclude that
      the other party is not entitled to credit or repayment in respect of such
      VAT from the relevant Tax Authority, subject to that party using all
      reasonable endeavours to recover such amount of VAT as may be
      practicable.

            

    

     

    
      	
               
      

            	
              5.4

            	
              If any
      payment under or contemplated by this Agreement constitutes the
      consideration for a taxable supply for VAT purposes, then in addition to
      that payment the payer shall pay any VAT
due.

            

    

     

    
      	
              6

            	
              Tax
      Correspondence and Tax Disputes

            

    

     

    The parties
acknowledge that each Tax Agreement will contain provisions for dealing with Tax
Correspondence and Tax Disputes in relation to Taxes within the scope of the
relevant Tax Agreement. In the case of Taxes not covered by a specific Tax
Agreement (and save in the case of India in respect of which Schedule 11 to this
Agreement shall apply), Clause 6 of the Separation Tax Agreement shall apply
(with appropriate modifications) for dealing with Tax Correspondence and Tax
Disputes in relation to such Taxes.

     

    
      	
              7

            	
              Disputes

            

    

     

    Any requirement in
this Schedule for any matter to be determined between the parties shall be
determined in accordance with Clause 9 of this Agreement unless otherwise
agreed.

     

    
      
        
        

      

      
        90

        
          

        

      

      
        
        

      

    

     

    Schedule
2

    The
Retained Business

     

    
      	
              1

            	
              The Company
      shall procure that the Retained Business shall be managed by RBS NV for
      the benefit of all the Investors. Save as otherwise expressly provided in
      this Agreement (including in particular Clause 5.5 of this Agreement), all
      transactions and dealings between the Retained Business and any Acquired
      Business shall be on arm’s length terms. The parties have agreed that in
      relation to the assets listed in paragraph 2 of Schedule 1 Part 3, the
      management of the Retained Business by RBS NV prior to 30 June 2011 shall
      involve taking the actions set out in the table in relation to each of the
      relevant assets.

            

    

     

    
      	
              2

            	
              Reasonable
      costs incurred by RBS NV through the performance of its duties to manage
      the Retained Business shall be charged to the Retained Business in
      accordance with Part B of Schedule 9, unless otherwise approved by the
      Investors (such approval not to be unreasonably withheld). Any costs
      charged to the Retained Business pursuant to this paragraph 2 shall be
      Liabilities of the Retained Business for the purposes of paragraph 6
      below.

            

    

     

    
      	
              3

            	
              Having regard
      to the prevailing market conditions and subject always to all applicable
      legal or other regulatory requirements, the Board shall use reasonable
      endeavours to sell, liquidate or otherwise manage all assets forming part
      of the Retained Business to maximise the value realised on the sale or
      liquidation of or other process relating to such assets including, in
      relation to the assets listed in paragraph 2 of Part 3 of Schedule 1,
      taking such action as is set out in paragraph 2 of Schedule 1 Part 3.
      Subject to the foregoing and the further provisions of this Schedule 2,
      RBS NV shall determine the timing and manner of any sale, liquidation or
      other process. Prior to 30 June 2011, Investors shall be entitled to
      participate in any auctions of assets to be sold in the manner
      contemplated in this Schedule 2. Following 30 June 2011, Investors shall
      be entitled to participate in any auctions of assets to be sold in
      accordance with paragraphs 11 and
12.

            

    

     

    
      	
              4

            	
              Direct costs
      borne centrally in accordance with Part A of Schedule 9 shall be borne by
      RBS NV and shall be accounted for as part of the Retained Business. The
      paragraph shall have effect subject to the provisions of Schedule 1 to the
      extent that they provide for the bearing of costs
      in a different manner.

            

    

     

    
      	
              5

            	
              The intention
      of the parties is to complete the actions set out in paragraph 3 above by
      30 June 2011.

            

    

     

    
      	
              6

            	
              Without
      prejudice to paragraph 7.2 of Part 1 of Schedule 1, Liabilities
      (including, without limitation, any direct costs borne by the RBS NV in
      accordance with paragraph 4 and any charged under paragraph 2 above) of
      the Retained Business shall be borne by the Retained Group (and therefore,
      indirectly, by the Investors in their respective Consortium Proportions).
      If and to the extent that additional funding is required to meet the
      Liabilities of the Retained Business, the Company shall procure, to the
      greatest extent possible, that Liabilities of the Retained Business are
      funded first by available cash accounted for as part of the Retained
      Business, and if insufficient, by further funding provided by RBS,
      Santander and the State in accordance with Clause
  13.

            

    

     

    
      	
              7

            	
              The Board
      shall procure that Santander, the State and RBS are notified promptly of
      all material and relevant events relating to the Retained Business,
      including (without limitation):

            

    

     

    
      
        
        

      

      
        91

        
          

        

      

      
        
        

      

    

     

    
      	
              7.1

            	
              any request
      from Saudi Hollandi Bank for further
funding;

            

    

     

    
      	
              7.2

            	
              any decision
      by Saudi Hollandi Bank to cease
trading;

            

    

     

    
      	
              7.3

            	
              any
      insolvency proceedings being threatened against Saudi Hollandi
      Bank;

            

    

     

    
      	
              7.4

            	
              any funding
      requests or commitments relating to the Retained
  Business;

            

    

     

    
      	
              7.5

            	
              the
      identification of any previously unidentified material liabilities within
      the Retained Business, and any material increase in the liabilities
      identified within the Retained Business as at the date of this
      Agreement;

            

    

     

    
      	
              7.6

            	
              any other
      event or information relating to the Retained Business, which the Company
      or RBS NV considers (in their respective reasonable discretions, but
      taking into account any matters notified to the Company and RBS NV as
      being relevant for this paragraph 7.6) to be material in the context of
      Retained Business; and

            

    

     

    
      	
              7.7

            	
              such other
      information as may reasonably be requested by an Investor, provided that
      the Investor pays any additional reasonable costs incurred by the Company
      and/or RBS NV in producing such information which not otherwise have been
      incurred,

            

    

     

    provided that the
rights of the Investors under this paragraph 7 shall be subject to the duties of
the Managing Board of RBS Holdings and shall not be exercised so as to cause any
disruption in the business of the RBS Holdings Group or any breach of applicable
law or regulation by the RBS Holdings Group.

     

    
      	
              8

            	
              Notwithstanding
      paragraph 1 of this Schedule 2 but subject always to any applicable law,
      regulation and Clause 13, the Company undertakes for the benefit of each
      Investor to procure that RBS NV shall not carry out any of the following
      in relation to the Retained Business without the approval of all of the
      Retained Business Representatives (such approval not to be unreasonably
      withheld):

            

    

     

    
      	
              8.1

            	
              the taking of
      steps in respect of any member of the Company’s Group which is a member of
      the Retained Group to:

            

    

     

    
      	
               
      

            	
              8.1.1

            	
              wind
      up or dissolve such Group
Company;

            

    

     

    
      	
               
      

            	
              8.1.2

            	
              obtain
      an administration order in respect of such Group
      Company;

            

    

     

    
      	
               
      

            	
              8.1.3

            	
              invite
      any person to appoint a receiver or receiver and manager of the whole or
      any part of the business or assets of such Group
      Company;

            

    

     

    
      	
               
      

            	
              8.1.4

            	
              make
      a proposal for a creditors’ voluntary
      arrangement in respect of such Group Company; and

            

    

     

    
      	
               
      

            	
              8.1.5

            	
              do anything
      similar or analogous to those steps referred to in paragraphs 8.1.1 to
      8.1.4 above, in any other
jurisdiction;

            

    

     

    
      	
              8.2

            	
              any capital
      expenditure in excess of *** (in respect of an individual item or a series
      of related items);

            

    

     

    
      	
              8.3

            	
              the entry
      into, termination or variation of any material contract or arrangement
      between any member of the Retained Business and an Investor or an Investor
      Group member, other than (i) as expressly provided for in this Agreement;
      or (ii) a contract on arm’s length terms in the ordinary course of
      business;

            

    

     

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

      

    

     

    
      
        
        

      

      
        92

        
          

        

      

      
        
        

      

    

     

     

    
      	
              8.4

            	
              the entry
      into of any joint venture, partnership, consortium or other similar
      arrangement other than in the ordinary course of
  business;

            

    

     

    
      	
              8.5

            	
              save as
      provided in the Litigation Management Agreement, or the Separation Tax
      Agreement, the commencement or settlement of any single litigation,
      arbitration or other proceedings with an individual value or expected
      value of greater than or equal to €250,000 (excluding costs) or the
      commencement or settlement of any series of related litigations,
      arbitrations or other proceedings with an aggregate value or expected
      value of greater than or equal to €500,000 (excluding costs) or such other
      litigation if an Investor has notified the Company and the other Investors
      that the litigation is of material importance to that Investor as a result
      of reputational or political
sensitivities;

            

    

     

    
      	
              8.6

            	
              the
      acquisition of any individual company or undertaking for consideration in
      excess of €250,000 or any series of related acquisitions where the
      aggregate consideration is in excess of €500,000, provided that if such
      acquisition is in the ordinary course of business for the relevant
      Retained Business and would not require approval by RBS NV as part of the
      internal management and risk policies of the RBS Holdings Group, no
      consent shall be required pursuant to this paragraph 8. Where such
      acquisition is a transaction with an Investor or a member of an Investor’s
      Group, the approval of each Shareholder will be required irrespective of
      the consideration;

            

    

     

    
      	
              8.7

            	
              (i) the sale
      or disposal of any individual company or undertaking for consideration or
      with a book value in excess of €250,000 or any series of related disposals
      where the aggregate consideration is in excess of €500,000, provided that
      if such sale or disposal is in the ordinary course of business for the
      relevant Retained Business, and the internal management and risks policies
      of the RBS Holdings Group would not require RBS NV to approve the
      disposal, no consent shall be required pursuant to this paragraph 8 or
      (ii) the sale or disposal of any individual company or undertaking to an
      Investor or a member of an Investor’s
Group;

            

    

     

    
      	
              8.8

            	
              save as
      provided in the Litigation Management Agreement, or the Separation Tax
      Agreement, any agreement, settlement or other compromise of any liability
      in the Retained Business, except where the agreement, settlement or other
      compromise is equal to or less than a provision made in the accounts of
      the Retained Business and where such provision has been previously
      approved by the board of RBS NV;

            

    

     

    
      	
              8.9

            	
              any decision
      of RBS NV which would give rise to a requirement for further capital,
      liquidity, funding, guarantee, collateral or security in relation to the
      Retained Business; and

            

    

     

    
      	
              8.10

            	
              the entry
      into any contract which is (i) outside the course of the Retained Business
      Wind Down; (ii) not on arm’s length terms; or (iii) material in the
      context of the Retained Business. For the purposes of this paragraph 8.10,
      “material” shall mean any individual contract the value of which is
      greater than or equal to €250,000 per annum or any series of related
      contracts the value of which is greater than or equal to €500,000 in
      aggregate and any contract which has a term of more than one
      year,

            

    

     

    provided that in
relation to any proposed action which has been agreed by the parties as set out
in paragraph 2 of Schedule 1 Part 3 in respect of the assets specified therein
(excluding any proposed sales which are not, as at the date of this Agreement,
agreed by RBS NV with a third party), no approval of the Retained Business
Representatives under this paragraph 8 shall be required prior to RBS taking
such action and provided that if consent is granted in relation to any matter in
accordance with this Schedule, only one

     

    
      
        
        

      

      
        93

        
          

        

      

      
        
        

      

    

     

    consent shall be
required notwithstanding that more than one sub-paragraph of this paragraph 8
may apply to that matter;

     

    
      	
              9

            	
              In relation
      to the Retained Business, and subject to any regulatory or other legal
      requirements, the information to be provided pursuant to Clause 11.2 shall
      comprise:

            

    

     

    
      	
              9.1

            	
              the Retained
      Business Blue Book;

            

    

     

    
      	
              9.2

            	
              a
      comprehensive overview of the capital and funding position of each
      Investor in relation to the Retained Business, as contemplated by Clause
      13; and

            

    

     

    
      	
              9.3

            	
              update packs
      that are prepared from time-to-time by RBS NV for the purposes of updating
      the Managing Board of RBS NV or delegates of that board on the progress of
      unwinding the Retained Business Wind
Down.

            

    

     

    
      	
              10

            	
              If the
      Retained Business Wind Down has not completed by 30 June 2011, paragraph 8
      of this Schedule shall cease to have effect to the extent necessary (as
      determined by RBS NV acting reasonably) to implement the Retained Business
      Wind Down and RBS NV shall be entitled to conduct the Retained Business
      Wind Down as it sees fit, including without limitation taking the actions
      set out in paragraphs 10.1 and 10.2, but subject always to paragraphs
      10.3, 10.4 and 10.5:

            

    

     

    
      	
              10.1

            	
              to sell all
      or part of the Retained Business to one or more third parties, provided
      that, subject to applicable law and
regulations:

            

    

     

    
      	
               
      

            	
              10.1.1

            	
              RBS NV
      accounts for any net proceeds of sales of assets forming part of the
      Retained Business (after satisfying any Liabilities of the Retained
      Business, including any arising out of or in connection with such sales,
      including, without limitation, professional costs and any Liabilities
      associated with any warranties or indemnities given in connection with
      such sale) to the Investors in the Consortium Proportions in accordance
      with Clause 15 and any Tax liabilities arising on such sales shall be
      dealt with in accordance with Part 9 of Schedule 1;
  and

            

    

     

    
      	
               
      

            	
              10.1.2

            	
              the
      provisions of paragraph 11 are adhered
to;

            

    

     

    
      	
              10.2

            	
              to determine
      that all or part of the Retained Businesses shall not be sold for value to
      a third party but shall be acquired by the Wider RBS Group (either by
      reallocating the Retained Business as RBS Acquired Businesses, save for
      the purposes of paragraphs 7.1 and 7.2 of Schedule 1 Part 1 of this
      Agreement or by purchasing all or part of the Retained Business), provided
      that:

            

    

     

    
      	
               
      

            	
              10.2.1

            	
              RBS obtains a
      Valuation Range for the Retained Business (or part thereof) in accordance
      with paragraph 13;

            

    

     

    
      	
               
      

            	
              10.2.2

            	
              either RBS
      (i) offers a price greater than the lowest point of the Valuation Range or
      (ii) with the consent of the State and Santander (such consent not to be
      unreasonably withheld taking into account, inter
      alia, the number of potential purchasers for the Retained Business
      (or part thereof), any restrictions on the transfer of the relevant
      business imposed by a Regulator and any other applicable impediments to
      transfer), offers a price less than the lowest point of the Valuation
      Range; and

            

    

     

    
      	
               
      

            	
              10.2.3

            	
              RBS pays to
      the State and Santander their respective Consortium Proportions of the
      consideration offered pursuant to paragraph
  10.2.2;

            

    

     

    
      
        
        

      

      
        94

        
          

        

      

      
        
        

      

    

     

    
      	
              10.3

            	
              in relation
      to Saudi Hollandi Bank, RBS NV shall only be entitled to sell its interest
      in Saudi Hollandi with the prior written consent of the other Investors,
      such consent not to be unreasonably withheld taking into account, inter
      alia:

            

    

     

    
      	
               
      

            	
              10.3.1

            	
              the number of
      third parties that have expressed an interest in acquiring Saudi Hollandi
      Bank since 10 October 2007;

            

    

     

    
      	
               
      

            	
              10.3.2

            	
              any
      restrictions that the local regulator of Saudi Hollandi Bank is likely to
      place on the sale of Saudi Hollandi Bank;
and

            

    

     

    
      	
               
      

            	
              10.3.3

            	
              any
      impediments to the transfer of the interest in Saudi Hollandi Bank as a
      result of the other shareholders in Saudi Hollandi
  Bank;

            

    

     

    
      	
              10.4

            	
              RBS NV may
      only carry out any matter which would fall under paragraphs 8.3, 8.8, 8.9
      or 8.10(ii) with the consent of the Retained Business Representatives,
      save that any action which is carried out in accordance with paragraphs
      10.1, 10.2, 11 and/or 12 of this Schedule shall not require consent from
      the Retained Business Representatives under this paragraph, provided
      however that the consent of the State's Retained Business Representative
      shall be required in the circumstances contemplated in paragraph 10.5
      below; and

            

    

     

    
      	
              10.5

            	
              if RBS NV
      proposes to carry out any action in accordance with paragraphs 10.1, 10.2,
      11 and/or 12 of this Schedule, to the extent that such action would give
      rise to a requirement for the State to provide further capital, liquidity,
      funding, guarantee, collateral or security in relation to the Retained
      Business the amount of which is in excess of the aggregate
    of:

            

    

     

    
      	
               
      

            	
              10.5.1

            	
              the capital,
      funding or liquidity in the Retained Business attributable to the State
      that is in excess of the State's Consortium Proportion of the capital,
      funding or liquidity required pursuant to the Minimum
    Ratios;

            

    

     

    
      	
               
      

            	
              10.5.2

            	
              €150,000,000;
      and

            

    

     

    
      	
               
      

            	
              10.5.3

            	
              the aggregate
      amount of any repatriations made to the State in respect of the Retained
      Business pursuant to Clause 13.6,

            

    

     

    (the aggregate of
10.5.1, 10.5.2 and 10.5.3 from time to time being the “Consent
Threshold”) the prior consent of the State's Retained Business
Representative will be required. For the avoidance of doubt, any action in
accordance with paragraphs 10.1, 10.2, 11 or 12 of this Schedule which gives
rise to a requirement for the State to provide further funding, capital,
liquidity, guarantee, collateral of security in relation to the Retained
Business the amount of which is less than or equal to the Consent Threshold
shall not require the approval of the State's Retained Business
Representative.

     

    
      	
              11

            	
              In exercising
      its right pursuant to paragraph 10.1 to sell all or part of the Retained
      Business to a third party (the “Sale
      Business”):

            

    

     

    
      	
              11.1

            	
              RBS NV shall
      keep Santander and the State informed of material developments relating to
      the sale process of the Sale Business, including any indications from
      third parties that may be interested in acquiring the Sale
      Business;

            

    

     

    
      	
              11.2

            	
              prior to any
      sale, RBS shall obtain a Valuation Range for the Sale Business in
      accordance with paragraph 13. RBS may not, without the prior written
      consent of the Investors (such consent not to be unreasonably withheld)
      sell the Sale Business for a consideration which is less than the lowest
      point of the Valuation Range less 7.5 per
cent.;

            

    

     

    
      
        
        

      

      
        95

        
          

        

      

      
        
        

      

    

     

    
      	
              11.3

            	
              if at any
      point prior to the sale of the Sale Business, Santander or the State wish
      to acquire the Sale Business, they shall be entitled to make an offer to
      RBS NV for the acquisition of the Sale Business (an “Investor
      Offer”). An Investor Offer shall be irrevocable once
      made;

            

    

     

    
      	
              11.4

            	
              if RBS NV
      considers (to its reasonable satisfaction) that the Investor Offer can be
      completed within a reasonable time period (which shall be no greater than
      6 months from the date of the Investor Offer) and provided
      that:

            

    

     

    
      	
               
      

            	
              11.4.1

            	
              the Investor
      Offer is at a consideration that is greater than or equal to the higher of
      (i) any third party offers or indicative offers received by RBS NV for the
      Sale Business and (ii) the lowest point of the Valuation Range less 7.5
      per cent.; and

            

    

     

    
      	
               
      

            	
              11.4.2

            	
              otherwise on
      substantially the same terms and conditions as any third party offer that
      has been received,

            

    

     

    RBS NV shall sell
the Sale Business to the relevant Investor on the terms of the Investor Offer
and otherwise in accordance with paragraph 10.1 above; and

     

    
      	
              11.5

            	
              if RBS NV
      determines that the Investor is incapable of completion within 6 months or
      that a higher consideration for the Retained Business can be achieved from
      a third party purchaser (in the latter case having discussed the Investor
      Offer with the Investor and concluded that the relevant Investor is not
      prepared to increase its Investor Offer), RBS NV shall be entitled to sell
      the Retained Business to a third party in accordance with paragraph 10.1
      above. Without prejudice to the first sentence of this paragraph 11.5, if
      a third party indicative offer as contemplated by paragraph 11.4 does not
      result in a binding agreement for the Sale Business at a consideration
      higher than an Investor Offer, RBS NV shall sell the Sale Business to the
      relevant Investor at the consideration in the Investor Offer, provided
      such consideration is greater than the lowest point of the Valuation Range
      less 7.5 per cent. and provided further that RBS NV considers (to its
      reasonable satisfaction) that the Investor Offer can be completed within a
      reasonable time period (which shall be no greater than 6 months from the
      date of the Investor Offer). If RBS NV considers that the Investor Offer
      cannot be so completed, it shall be entitled to conduct the Retained
      Business Wind Down in relation to the Sale Business in accordance with
      paragraph 10.

            

    

     

    
      	
              12

            	
              If RBS
      exercises its right pursuant to paragraph 10.2 to acquire all or part of
      the Retained Businesses:

            

    

     

    
      	
              12.1

            	
              RBS shall
      provide a written notice to each of Santander and the State (the “Buy
      Out Notice”) setting out the identity of the Retained Business (or
      part thereof) that RBS is prepared to acquire (the “Auction
      Business”), the consideration that RBS is prepared to pay for the
      Auction Business and the determination of fair market value in accordance
      with paragraph 13 of the Auction Business (including, if applicable, the
      breakdown of the values of its relevant constituent businesses in
      accordance with paragraph 13.3);

            

    

     

    
      	
              12.2

            	
              Santander
      and/or the State shall be entitled within 5 Business Days of the date of
      the Buy Out Notice to elect to notify RBS, the Company and the other
      Investor that it wishes to bid for the Auction Business (or part thereof)
      by serving written notice on the Company and the other Investors (a “Buy
      Out Counter Notice”) setting out the business to which the Buy Out
      Counter Notice relates (which may be all of the Auction Business or any
      one or more of its constituent businesses (the “Buy
      Out Business”). Once served, a Buy Out Counter Notice shall be
      irrevocable;

            

    

     

    
      	
              12.3

            	
              If:

            

    

     

    
      
        
        

      

      
        96

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              12.3.1

            	
              RBS and the
      Company have not received a Buy Out Counter Notice within 5 Business Days
      of the Buy Out Notice; or

            

    

     

    
      	
               
      

            	
              12.3.2

            	
              if RBS and
      the Company have received written notices from each of Santander and the
      State that they will not be exercising their respective rights under
      paragraph 12.2; or

            

    

     

    
      	
               
      

            	
              12.3.3

            	
              the Buy Out
      Counter Notice is in relation to part only of the Auction
      Business,

            

    

     

    RBS shall be
entitled to acquire or reallocate the Auction Business (if a Buy Out Counter
Notice is not given) or that part of the Auction Business which is not Buy Out
Business (if a Buy Out Counter Notice is given in respect of less than all of
the Auction Business), in accordance with paragraph 10.2;

     

    
      	
              12.4

            	
              if a Buy Out
      Counter Notice is served, each of RBS, Santander and the State shall be
      entitled to make a sealed bid for the Buy Out Business by sending their
      sealed bid to the Valuer appointed under paragraph 13 within 10 Business
      Days of the last received Buy Out Counter Notice (the “Auction
      Period”),
      provided that a sealed bid will only be valid if the consideration to be
      offered is greater than the lowest point of the Valuation Range. The
      Valuer shall notify the Company and the Investors in writing of the
      Investor that has offered the highest consideration for the Buy Out
      Business (the “Successful
      Investor”) immediately following the end of the Auction Period or,
      if earlier, within 1 Business Day of the last received sealed bid. The
      Successful Investor (or such person as is nominated by it) shall be
      obliged to acquire the Buy Out Businesses as soon as reasonably
      practicable following such notification, provided RBS NV considers (to its
      reasonable satisfaction) that the Successful Investor (or such person as
      is nominated by it) will be capable of completing the acquisition of the
      Buy Out Business within a reasonable time period (which shall be no
      greater than 6 months);

            

    

     

    
      	
              12.5

            	
              if RBS NV
      does not consider (to its reasonable satisfaction) that the Successful
      Investor (or such person as is nominated by it) will be capable of
      acquiring the Buy Out Business within 6 months, RBS NV shall be
      entitled:

            

    

     

    
      	
               
      

            	
              12.5.1

            	
              to sell the
      Buy Out Business to the Investor that provided the next highest sealed bid
      pursuant to paragraph 12.4 (as confirmed by the Valuer), provided that RBS
      NV considers (to its reasonable satisfaction) that Investor will be
      capable of completing the acquisition of the Buy Out Businesses within a
      reasonable time period (which shall be no greater than 6 months);
      or

            

    

     

    
      	
               
      

            	
              12.5.2

            	
              failing that,
      to sell or reallocate the Buy Out Business to RBS in accordance with
      paragraph 10.2 (or at the price offered by RBS in its sealed bid (if
      applicable)).

            

    

     

    
      	
              13

            	
              For the
      purposes of determining the fair market value of all or part of the
      Retained Business, RBS NV shall appoint an independent investment bank of
      international repute or an independent firm of chartered accountants of
      international repute (the “Valuer”),
      provided that no appointment can be made without the consent of Santander
      and the State, such consent not to be unreasonably withheld. If the
      Investors cannot agree on a Valuer within 10 Business Days, the matter
      shall be resolved by the respective Chief Financial Officers of the
      Investors (or such person as they nominate). If the Valuer is still not
      agreed after a further 5 Business Days, the President for the time being
      of the Institute of Chartered Accounts in England and Wales shall select
      the Valuer to be appointed. Such decision shall be final and binding on
      the Investors. Any cost incurred in association with the appointment of
      the Valuer shall be borne by the Retained Business and allocated to
      the

            

    

    
       

      
        
          
          

        

        
          97

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                Investors in
      Consortium Proportions. In determining fair market value, each Valuer
      shall make its determination of fair market value on the basis of the
      following:

              

      

       

    

    
      	
              13.1

            	
              an assumption
      that the Retained Business (or relevant part thereof) is to be sold on an
      arm’s length sale between a willing seller and a willing buyer who are
      acting knowledgeably, prudently and without
  compulsion;

            

    

     

    
      	
              13.2

            	
              if the
      Retained Business (or a part thereof) is then carrying on business as a
      going concern, on the assumption that it will continue to do
      so;

            

    

     

    
      	
              13.3

            	
              if one or
      more constituent businesses of the Retained Business is being valued, the
      Valuer shall include in their valuation a breakdown of the values of each
      of the constituent businesses;

            

    

     

    
      	
              13.4

            	
              a Valuer may
      take into account any other factors which it reasonably believes may
      affect the fair market value; and

            

    

     

    
      	
              13.5

            	
              if a Valuer
      encounters any difficulty in applying any of the assumptions or bases set
      out in this paragraph 13 then it shall resolve that difficulty in such
      manner as it shall in its absolute discretion think
  fit.

            

    

     

    The range of values
for the fair market value, as determined by the Valuer, shall be the “Valuation
Range”.

     

    
      	
              14

            	
              For the
      purposes of consenting to any matter as required by paragraphs 8, 10.4 or
      10.5 of this Schedule 2:

            

    

     

    
      	
              14.1

            	
              Each Investor
      shall nominate one representative to be its “Retained
      Business Representative” by notifying the other Investors, RBS NV
      and the Company of its proposed representative, together with fax and/or
      email contact details of such person. Each Investor may from time to time
      nominate a new Retained Business Representative by providing notice to the
      other Investors, RBS NV and the
Company;

            

    

     

    
      	
              14.2

            	
              if the
      consent of the Retained Business Representatives is required pursuant to
      paragraphs 8, 10.4 or 10.5, RBS NV shall notify the Retained Business
      Representatives of summary details of the proposed transaction (the “Consent
      Matter”) together with a notice requesting approval for the Consent
      Matter. Such information shall be sent to the contact details notified by
      the Investors in accordance with paragraph 14.1. Any notice sent by
      fax or by email shall be deemed to have been received on the next Business
      Day in the place to which it is
sent;

            

    

     

    
      	
              14.3

            	
              no Retained
      Business Representative shall unreasonably withhold its approval to any
      Consent Matter, taking into account the intentions of the parties in
      relation to the Retained Business as set out in paragraphs 3 and
      5;

            

    

     

    
      	
              14.4

            	
              subject to
      paragraph 14.6, if any Retained Business Representative wishes to
      withhold its approval it shall, within 10 Business Days of receiving the
      notice under paragraph 14.2 send a notice to the Company and RBS NV
      (by sending notice in accordance with Clause 21 to RBS NV’s
      registered office) confirming such;

            

    

     

    
      	
              14.5

            	
              if RBS NV and
      the Company do not receive a notice from any of the Retained Business
      Representatives pursuant to paragraph 14.3 within the specified
      timeframe, the approval of all the Retained Business Representatives shall
      be deemed to have been given for the purposes of paragraph 8, 10.4
      and 10.5. If each Retained Business Representative approves the Consent
      Matter by notifying the Company and RBS NV of its approval, or
      if

            

    

    
       

      
        
          
          

        

        
          98

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                such consent
      is deemed to have been given in accordance with this paragraph 14, RBS NV
      may proceed with the Consent Matter;
and

              

      

       

    

    
      	
              14.6

            	
              if the
      Consent Matter, in the discretion of RBS NV acting reasonably, is a matter
      which, for legal or regulatory reasons, requires an urgent response (a
      “Critical
      Consent Matter”), RBS NV shall notify the Investors of that fact in
      the notice provided pursuant to Clause paragraph 14.2. For the
      purposes of any Critical Consent Matter, the relevant time period for the
      purposes of paragraph 14.4 above shall be three Business
      Days.

            

    

     

    
      	
              15

            	
              Notwithstanding
      any provision of paragraphs 10 to 13 of this Schedule 2, RBS shall not be
      required to take any action which would give rise to any obligation on RBS
      to seek approval of its shareholders for the proposed transaction in
      accordance with the Listing Rules made by the FSA under Part VI of the
      Financial Services and Markets Act 2000 (as amended from time to
      time).

            

    

     

    
      
        
        

      

      
        99

        
          

        

      

      
        
        

      

    

     

    Schedule
3

    Corporate
Governance

     

    Part
A

     

    Proceedings
at Board Meetings until
the date of the Effective Notice

     

    
      	
              1

            	
              Convening
      a Meeting

            

    

     

    The Chairman of the
Board shall procure that a Board meeting is convened and held when reasonably
requested by any Director.

     

     

    
      	
              2

            	
              Quorum

            

    

     

    
      	
              2.1

            	
              No
      business shall be transacted at any meeting of the Board unless a quorum
      of eligible Directors is present at the time when the meeting proceeds to
      business and remains present during the transaction of
      business. The
      quorum necessary for the transaction of the business of the Board shall be
      the presence of three Directors or
      their duly appointed proxies,
      including at least one Director appointed
      by RBS, one Director appointed by Santander and
      one Director appointed by the State
      (or their respective proxies).
      A meeting of the Board shall not be quorate if a majority of the Directors
      present are resident for tax purposes in the United
      Kingdom.

            

    

     

    
      	
              2.2

            	
              Should
      a quorum not be constituted at a Board meeting, the relevant meeting shall
      be adjourned for not
      less than 3 Business
      Days and upon resumption the quorum shall be the
      presence of three Directors (or their respective proxies), including at
      least one Director appointed by RBS (or his proxy).

            

    

     

     

    
      	
              3

            	
              Notice

            

    

     

    Not less than 2
Business Days’ notice of any (including an adjourned) meeting shall be given to
all Directors.

     

     

    
      	
              4

            	
              Voting

            

    

     

    At any meeting of
the Directors or of a committee of Directors, each Director (or his proxy) shall
be entitled to one vote and in the case of an equality of votes, the Chairman of
the Board shall have a second or casting vote.

     

     

    
      	
              5

            	
              Delegation
      to committees

            

    

     

    
      	
              5.1

            	
              The Board may
      appoint standing and/or ad hoc committees from among its members, which
      are charged with tasks specified by and shall be composed as determined by
      the Boards from time to time, provided
that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              such
      committee comprises (unless otherwise agreed) one Director appointed by
      RBS, one Director appointed by Santander and one Director appointed by the
      State (or their respective
proxies);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Director
      appointed by RBS or his proxy, shall be the chairman of such committee and
      shall have a casting vote;

            

    

     

    
      
        
        

      

      
        100

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              no more than
      half of the members of such a committee shall be resident for tax purposes
      in the United Kingdom; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      proceedings of such a committee shall be conducted in accordance with
      Schedule 5 Part C.

            

    

     

    
      	
              5.2

            	
              The Board
      remains collectively responsible for decisions made by committees. A
      committee may only exercise such powers as are explicitly attributed or
      delegated to it and may never exercise powers beyond those exercisable by
      the Board as a whole.

            

    

     

    
      	
              5.3

            	
              Each
      committee must inform the Board in a clear and timely way of the manner in
      which it has used delegated authority and of any major development in the
      area of its responsibilities. All Board members have unrestricted access
      to all committee meetings and records. The Board shall receive a report
      from each committee of its deliberations and
  findings.

            

    

     

    
      
        
        

      

      
        101

        
          

        

      

      
        
        

      

    

     

    Part
B

    Proceedings
at General Meetings

     

    
      	
              1

            	
              Convening
      a Meeting

            

    

     

    
      	
              1.1

            	
              The
      Board shall,
      and
      any of the Directors shall be authorised to, immediately
      following notice from an Investor,
  procure:

            

    

     

    
      	
               
      

            	
              1.1.1

            	
              the
      convening and holding of
      a general
      meeting of Shareholders
      of the Company at
      such place and time as such Investor shall reasonably
      determine subject
      to paragraphs 2 and 3 of Part C of this Schedule;
      and

            

    

     

    
      	
               
      

            	
              1.1.2

            	
              that
      any resolution required by such Investor shall be proposed at that
      meeting.

            

    

     

     

    
      	
              2

            	
              Quorum

            

    

     

    
      	
              2.1

            	
              No
      business shall be transacted at any general
      meeting
      of Shareholders unless a quorum of Shareholders is
      present at the time when the meeting proceeds to business and remains
      present during the transaction of business. The
      quorum necessary for the transaction of business at a general
      meeting
      of Shareholders shall be three Shareholders (including
      at least one member of the RBS Group, one member of the Santander Group
      and one member of the State Group),
      present in person or by proxy or a representative duly
      authorised.

            

    

     

    
      	
              2.2

            	
              If
      there is a tie in voting, the proposal shall be deemed to have been
      rejected.

            

    

     

    
      	
              2.3

            	
              If
      within half an hour of the time appointed for a meeting a quorum is not
      present,
      a second meeting may be convened and, subject to paragraph 3 of Part C of
      this Schedule, held no earlier than 15 days after and no later than 30
      days later than the first meeting. In this second meeting, the items
      tabled for the first meeting can be adopted by a simple majority of the
      votes cast and the quorum for such second meeting shall be any one
      Shareholder. In the notice of the new meeting it must be stated that this
      concerns a second meeting as referred to in this paragraph 2.3 and
      explained that a resolution can be adopted with a quorum of one
      Shareholder.

            

    

     

     

    
      	
              3

            	
              Voting

            

    

     

    
      	
              3.1

            	
              All
      voting shall take place orally. The chairperson of the general meeting of
      Shareholders is, however, entitled to decide that votes be cast by a
      secret ballot. If it concerns the holding of a vote on persons, anyone
      present at the meeting with voting rights may demand a vote by a secret
      ballot. Votes by secret ballot shall be cast by means of secret, unsigned
      ballot papers.

            

    

     

    
      	
              3.2

            	
              Blank
      and invalid votes shall not be counted as
  votes

            

    

     

    
      	
              3.3

            	
              Resolutions
      may be adopted by acclamation if none of the persons with voting rights
      present at the meeting
objects.

            

    

     

    
      	
              3.4

            	
              The
      Chairman’s decision at the meeting on the result of a vote shall be final
      and conclusive. The same shall apply to the contents of an adopted
      resolution if a vote is taken on an unwritten proposal. However, if the
      correctness of such decision is challenged immediately after it is
      pronounced, a new vote shall be taken if either the majority of the
      persons with voting rights present at the meeting or, where the original
      vote was not taken

            

    

    
       

      
        
          
          

        

        
          102

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                by
      roll call or in writing, any person with voting rights present at the
      meeting, so demands. The legal consequences of the original vote shall be
      made null and void by the new
vote.

              

      

       

    

    
      	
              3.5

            	
              The
      Chairman of
      any meeting of the Company shall
      not be entitled in any circumstances to a second or casting vote in
      addition to any other vote he,
      if any, may
      have.

            

    

     

    
      	
              3.6

            	
              Notwithstanding
      the forgoing the Investors agree to procure
  that:

            

    

     

    
      	
               
      

            	
              3.6.1

            	
              no resolution
      shall be proposed or voted in favour of by any Shareholder that is part of
      their Group at any Shareholders meeting of the Company without the prior
      written consent of RBS; and

            

    

     

    
      	
               
      

            	
              3.6.2

            	
              no resolution
      relating to a Board Reserved Matter shall be passed at any Shareholders
      meeting of the Company without the unanimous approval of all
      Shareholders.

            

    

     

    
      
        
        

      

      
        103

        
          

        

      

      
        
        

      

       

    

    Part
C

    Administration
of Board until
the date of the Effective Notice and
Shareholder Meetings

     

    
      	
              1

            	
              All meetings
      of the Board, the Board Committees and the Shareholders shall be held in
      the Netherlands. 

            

    

     

    
      	
              2

            	
              A
      minimum of 5 Business
      Days’ notice
      of meetings of the Board and a
      minimum of 15 days’ notice of meetings of the general meeting of
      Shareholders, accompanied by details of the venue for such meeting (taking
      into account the requirements of paragraph 1 and an agenda of the business
      to be transacted (together with, where
      practicable, all
      papers to be circulated or presented to the same), shall be given to all
      the Directors
      or Shareholders(as
      appropriate). Where
      either (i) the Chairman of the Board or
      any Shareholder determines
      (acting reasonably) that urgent business has arisen, or (ii) with
      the
      prior consent of any
      two Investors,
      notice of meetings of the Board may be reduced to 2 Business
      Days.

            

    

     

    
      	
              3

            	
              A meeting of
      the Board or of the general meeting of Shareholders may be held at shorter
      notice than set out above or without notice with the unanimous consent of
      the Directors or the Shareholders (as appropriate), provided that in case
      of a general meeting of Shareholders, valid resolutions of the General
      Meeting may only be adopted if all of the Company’s issued capital is
      represented.

            

    

     

    
      	
              4

            	
              Subject
      to paragraph 1, a meeting of the Directors may consist of a conference
      call between Directors some or all of whom are in different places
      provided that each Director
      who participates in the meeting is
  able:

            

    

     

    
      	
              4.1

            	
              to
      hear each of the other participating Directors addressing the meeting;
      and

            

    

     

    
      	
              4.2

            	
              if
      he so wishes, to address each of the other participating Directors
      simultaneously,

            

    

     

    whether directly,
by conference telephone or by any other form of communication equipment or by a
combination of such methods and provided that the majority of the Directors
present is physically present in the Netherlands and resident for tax purposes
outside the United Kingdom. A quorum shall be deemed to be present if those
conditions are satisfied in respect of at least the number and designation of
Directors required to form a quorum. Subject to paragraph 1,
a meeting held in this way shall be deemed to take place at the place in the
Netherlands where the largest group of Directors is assembled or, if no such
group is readily identifiable, at the place in the Netherlands from where the
chairman of the meeting participates at the start of the relevant
meeting.

     

    Notwithstanding the
foregoing, no Director shall be entitled to participate in any conference call
or other form of communication equipment as aforesaid from the United
Kingdom.

     

    
      
        
        

      

      
        104

        
          

        

      

      
        
        

      

       

    

    Part
D

    Other
Board Matters until
the date of the Effective Notice

     

    
      	
              1

            	
              Directors’
      Insurance

            

    

     

    Each Investor
shall, for and on behalf of the Company, at all times maintain or procure the
maintenance of indemnity insurance in respect of any Directors appointed by that
Investor to the Board or to the board of directors of any other member of the
Group pursuant to this Agreement, on ordinary commercial terms.

     

    
      	
              2

            	
              Remuneration

            

    

     

    No Director shall
be entitled to remuneration from, or reimbursement of expenses by, the Company
unless otherwise determined and agreed by each of the Shareholders.

     

    
      	
              3

            	
              Interested
      Parties

            

    

     

    
      	
              3.1

            	
              Subject to
      the provisions of applicable law and save as notified to the contrary by a
      majority of the other Directors present at a meeting of the Board,
      provided that he has disclosed to the Board the nature and extent of any
      material interest of his, a Director notwithstanding his
      office:

            

    

     

    
      	
               
      

            	
              (i)

            	
              may be a
      party to, or otherwise interested in, any transaction or arrangement with
      the Company or a member of the Group, or in which the Company or a member
      of its Group is otherwise interested;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              may be a
      director or other officer of, or employed by, or a party to any
      transaction or arrangement with, or otherwise interested in, any body
      corporate promoted by the Company or a member of the Group or in which the
      Company or a member of its Group is otherwise interested;
    and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              shall not, by
      reason of his office, be accountable to the Company or a member of the
      Group for any benefit which he derives from any such office or employment
      or from any such transaction or arrangement or from any interest in any
      such body corporate and no such transaction or arrangement shall be liable
      to be avoided on the ground of any such interest or
    benefit.

            

    

     

    
      	
              3.2

            	
              Subject to
      the provisions of applicable law, provided that it has disclosed to the
      Investors the nature and extent of any material interest, an Investor may
      exercise its rights as a shareholder (including its voting rights) in
      respect of any transaction or arrangement which both the Investor and the
      Company or a member of their Groups may be a party to, or otherwise
      interested.

            

    

     

    
      	
              3.3

            	
              For the
      purposes of paragraphs 3.1 and 3.2:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a general
      notice given to the Board or the Investors that a Director or Investor,
      respectively, is to be regarded as having an interest of the nature and
      extent specified in the notice in any transaction or arrangement in which
      a specified person or class of persons is interested shall be deemed to be
      a disclosure that the Director or Investor has an interest in any such
      transaction of the nature and extent so specified;
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              an interest
      of which a Director or Investor has no actual knowledge shall not be
      treated as his or its interest.

            

    

     

    
      
        
        

      

      
        105

        
          

        

      

      
        
        

      

       

    

    Part
E

    Board
Reserved Matters until the date of the Effective Notice

     

    For the purposes of
this Schedule 3 Part E, any reference to the “Group”
shall be construed as a reference to the Company and its Group.

     

    
      	
              1

            	
              Share
      Capital

            

    

     

    
      	
               
      

            	
              1.1

            	
              Any
      variation, creation, increase, re-organisation, consolidation, sub
      division, conversion, reduction, redemption, repurchase, re-designation or
      other alteration of the authorised or issued share or loan capital of the
      Company or any member of its Group or the variation, modification,
      abrogation or grant of any rights attaching to any such share or loan
      capital except, in each case, as may be required by or permitted under
      this Agreement.

            

    

     

    
      	
               
      

            	
              1.2

            	
              The
      entry into or creation by the
      Company or any
      member of its
      Group
      of any agreement, arrangement or obligation requiring the creation,
      allotment, issue, Transfer, redemption or repayment of, or the grant to a
      person of the right (conditional or not) to require the creation,
      allotment, issue, Transfer, redemption or repayment of, a share in the
      capital of any member of the Company’s
      Group
      (including an option or right of pre emption or conversion) except, in
      each
      case, to a member of the Company’s
      Group
      or as may be required by or permitted under this Agreement or as provided
      for or contemplated in the Business
  Plan.

            

    

     

    
      	
               
      

            	
              1.3

            	
              Other
      than as expressly required by the Articles, the
      reduction, capitalisation, repayment or distribution of any amount
      standing to the credit of the share capital, any
      share
      premium account, capital redemption reserve or any other reserve of any
      member of the Company’s
      Group
      (other than a wholly-owned subsidiary undertaking of the Company), or the
      reduction of any uncalled liability in respect of partly paid shares of
      any member of the Company’s
      Group.

            

    

     

    
      	
               
      

            	
              1.4

            	
              Any
      amendment to the Articles.

            

    

     

     

    
      	
              2

            	
              Winding
      Up

            

    

     

    
      	
               
      

            	
              2.1

            	
              To the extent
      within the powers of the board, the taking of steps in respect of any
      member of the Company’s Group to:

            

    

     

    
      	
               
      

            	
              2.1.1

            	
              wind up or
      dissolve such Group Company;

            

    

     

    
      	
               
      

            	
              2.1.2

            	
              obtain an
      administration order in respect of such Group
  Company;

            

    

     

    
      	
               
      

            	
              2.1.3

            	
              invite any
      person to appoint a receiver or receiver and manager of the whole or any
      part of the business or assets of such Group
  Company;

            

    

     

    
      	
               
      

            	
              2.1.4

            	
              make a
      proposal for a creditors’ voluntary arrangement in respect of such Group
      Company;

            

    

     

    
      	
               
      

            	
              2.1.5

            	
              do anything
      similar or analogous to those steps referred to in paragraphs 2.1.1 to
      2.1.4 above, in any other
jurisdiction.

            

    

     

    
      	
              3

            	
              Capital
      Expenditure

            

    

     

    
      
        
        

      

      
        106

        
          

        

      

      
        
        

      

    

     

    Any capital
expenditure in excess of *** (in respect of an individual item or a series of
related items).

     

    
      	
              4

            	
              Related
      Party Contracts

            

    

     

    The entry into,
termination or variation of any material contract or arrangement between any
member of the Group and an Investor or an Investor Group member, other than (i)
as expressly provided for in this Agreement; or (ii) a contract on arm’s length
terms in the ordinary course of business.

     

    
      	
              5

            	
              Joint
      Venture Agreements

            

    

     

    The entry into of
any joint venture, partnership, consortium or other similar arrangement other
than in the ordinary course of business.

     

    
      	
              6

            	
              Acquired
      Businesses and Retained Business

            

    

     

    Any material change
in the nature of any Acquired Business or the Retained Business.

     

    
      	
              7

            	
              Litigation

            

    

     

    The commencement or
settlement of any litigation, arbitration or other proceedings which are
material in the context of the RBS Acquired Business, the Fortis Acquired
Business, the Santander Acquired Business or the Retained Business (as the case
may be).

     

    
      	
              8

            	
              Acquisitions

            

    

     

    The acquisition of
any company or undertaking.

     

    
      	
              9

            	
              Contracts

            

    

     

    The entering into
or termination of any contract which is not in the ordinary course of business
and which is material in the context of the RBS Acquired Business, the Fortis
Acquired Business, the Santander Acquired Business or the Retained Business (as
the case may be).

     

    

      

    
      
        	
                ***

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

              

      

       

      
        
          
          

        

        
          107

          
            

          

        

        
          
          

        

      

       

    

    Schedule
4

    Representations
and Warranties

     

    
      	
              1

            	
              Capacity

            

    

     

    The Investor has
capacity and power to carry on its activities as now carried on and as proposed
to be carried on, to own its property and other assets and sue and be sued in
its own name and to execute, deliver and perform its obligations under this
Agreement, the Transaction Documents (as applicable) and the transactions
contemplated by this Agreement.

     

     

    
      	
              2

            	
              Authority

            

    

     

    Except as provided
in Clause 8.2, the Investor has taken all necessary action to authorise the
execution, delivery and performance of its obligations under this Agreement and
the Transaction Documents (as applicable).

     

     

    
      	
              3

            	
              Legal,
      Valid and Binding

            

    

     

    
      	
              3.1

            	
              The
      Agreement and the Transaction Documents (as applicable) once executed by
      the Investor will constitute legal, valid and binding obligations of such
      party enforceable in accordance with their
  terms.

            

    

     

    
      	
              3.2

            	
              No
      authorisation, approvals or consents from any governmental or other
      authorities is necessary for the execution and delivery by the Investor of
      this Agreement or the Transaction Documents (as applicable) or,
      except to the extent set out in Clause 8.2 and/or reflected in the
      conditions to the Offer, the
      exercise of its rights and the performance of its obligations under this
      Agreement and the Transaction Documents (as applicable) including, the
      making of all payments due or to become due from it and to render the same
      legal, valid, enforceable and admissible in evidence. The
      execution, delivery and performance by it of this Agreement, the
      Transaction Documents (as applicable) and the transactions contemplated by
      this Agreement will not contravene any existing law, regulation,
      ordinance, decree or authorisation to which it is subject, or contravene
      any provision of its memorandum and articles of association or any
      equivalent documents in any jurisdiction where it is
      formed.

            

    

     

     

    
      	
              4

            	
              No
      Encumbrances

            

    

     

    Neither the
Investor’s execution nor its performance of this Agreement will result in the
creation of, or oblige it to create or permit to subsist, an Encumbrance over
any of its present or future assets or revenues.

     

    
      
        
        

      

      
        108

        
          

        

      

      
        
        

      

    

     

    Schedule
5

    Form
of Deed of Accession

     

    THIS
DEED is made on [●] 20[●]

     

    BY
[·],
a company incorporated under the laws of [•] having its [registered] office at
[•] (“New
Shareholder”).

     

    Whereas:

     

    
      	
              (A)

            	
              The
      New Shareholder has agreed to [purchase]
      [subscribe for] Shares
      in the capital of the Company in the capital of the Company as described
      in the Schedule (the “[Transferred] [Issued]
      Interest”)
      subject to and in accordance with the terms and conditions of [an
      agreement]
      [a notarial deed of [transfer] [issuance]] to
      be dated [date of Transfer/Subscription Agreement
      or
      Deed of Transfer/Issuance] and
      made between [
      ] (the
      “[Transferor]
      [Company]”)
      and the New Shareholder (the “[Transfer
      Agreement]
      [Subscription Agreement [Deed of Transfer] [Deed of Issuance]”)
      and the Amended
      and Restated Consortium and Shareholders’ Agreement
      dated [•] 20010 as
      amended, amended and restated or otherwise modified from time to time
      between, amongst others, the Company and
      the Investors (the
      “Shareholders’ Agreement”).

            

    

     

    Now
this Deed
witnesseth and it is hereby agreed with and for the benefit of each party to the
Shareholders’ Agreement
and each party who becomes a party to the Shareholders’ Agreement
after the date of this Deed:

     

    
      	
              1

            	
              Definitions
      and Interpretations

            

    

     

     

    
      	
              1.1

            	
              Definitions

            

    

     

    In this Deed
(including the Recitals and Schedule hereto), unless the subject or context
otherwise requires, words defined in the Shareholders’ Agreement shall have the
same meanings when used herein and:

     

    “Closing”
means the closing of the [Sale and Transfer] [Issuance] of the [Transferred]
[Issued] Interest to take place at the offices of [●] on [date];

     

    “Closing
Date” has the meaning ascribed thereto in Clause 2.

     

     

    
      	
              1.2

            	
              Interpretation

            

    

     

    The provisions of
Clause 1
of the Shareholders’ Agreement shall apply to this Deed mutatis
mutandis.

     

     

    
      	
              1.3

            	
              Headings

            

    

     

    Headings shall be
ignored in the construction of this Deed.

     

     

    
      	
              2

            	
              Undertakings
      of the New Shareholder

            

    

     

    In consideration of the agreement of
the [Transferor to Transfer the Transferred Interest] [Company to issue the
Issued Interest] to the New Shareholder, the New Shareholder undertakes, for the
benefit of each party to the Shareholders’ Agreement, that it will with effect
from the date of Transfer by the Transferor] [issue by the Company] to the
New

     

    
      
        
        

      

      
        109

        
          

        

      

      
        
        

      

    

     

    Shareholder of the [Transferred]
[Issued] Interest (the “Closing
Date”) and without prejudice to or assuming any liability of the
Transferor in respect of any breach by it of obligations under the Shareholders’
Agreement prior to the Closing Date], assume, perform and comply with each of
the obligations of [the Transferor] [an Investor] under the Shareholders’
Agreement as if it had been a party to the Shareholders’ Agreement at the date
of execution thereof and been named in it as an Investor. Each other party to
the Shareholders’ Agreement may enforce the terms of this Clause 2.

     

     

    
      	
              3

            	
              Rights
      of the New Shareholder

            

    

     

    There shall be
accorded to the New Shareholder with effect from the Closing Date all the rights
[of the Transferor] [of a Shareholder] with respect to the [Transferred Interest
(in each case without prejudice to the accrued rights of the Transferor under
the Shareholders’ Agreement in respect of any breach by any other party thereto
of its obligations thereunder at any time prior to the Transfer Date)] [Issued
Interest] as if the New Shareholder had been a party to the Shareholders’
Agreement at the date of execution thereof and had been named in it as an
Investor and, with effect from the Closing Date, the Transferor shall cease to
be entitled to those rights.

     

     

    
      	
              4

            	
              Notices

            

    

     

    The address and
facsimile number designated by the New Shareholder for the purposes of Clause
21
(Notices) of the Shareholders’ Agreement are:

     

    Address:

     

    Fax:

     

    For the attention
of:

     

     

    
      	
              5

            	
              Assignment
      and Transfer

            

    

     

    The New Shareholder
hereby acknowledges and agrees that it shall have no right to assign, transfer
or in any way dispose of the benefit (or any part thereof) or the burden (or any
part thereof) of this Deed without the prior consent of all the other parties to
the Shareholders’ Agreement.

     

     

    
      	
              6

            	
              Third
      Party Rights

            

    

     

    Except where
expressly stated otherwise in this Deed, other than by any party to the
Shareholders Agreement and by any person that is entitled from time to time to
enforce from the Shareholders Agreement pursuant to Clause 20.11 of the
Shareholders Agreement, no term of this Deed is enforceable under the Contracts
(Rights of Third Parties) Act 1999 by a person who is not a party to this
Deed.

     

     

    
      	
              7

            	
              General
      Provisions

            

    

     

    The provisions of
Clauses [10
(representations and warranties)], 16 (Confidentiality and
Announcements), [19 Entire Agreement and Non Reliance], 20 (General) and 22
(Governing Law and Arbitration) of the Shareholders’ Agreement shall apply
(mutatis
mutandis) to this Deed as if expressly set out herein.

     

    
      
        
        

      

      
        110

        
          

        

      

      
        
        

      

    

     

    In
witness whereof this Deed has been entered into the day and year first
before written.

     

    
      
        
        

      

      
        111

        
          

        

      

      
        
        

      

    

     

    Schedule
6

    Permitted
Disclosure

     

    Clause 16.1
shall not prevent:

     

    
      	
              1

            	
              any
      disclosure which is required by law or regulation to be disclosed to any
      person who is authorised by law or regulation to receive the
      same;

            

    

     

    
      	
              2

            	
              any
      disclosure which is required by the regulations of any exchange
      upon which the share capital of the disclosing party is or is proposed to
      be from time to time listed or dealt in provided
      that such disclosure is, where practicable, discussed with the other
      relevant parties hereto before being made;

            

    

     

    
      	
              3

            	
              any
      disclosure which is made to a court, arbitrator or administrative tribunal
      in the course of proceedings before it to which the disclosing party is a
      party in a case where such disclosure is required by such proceedings or
      is necessary in connection with enforcing any right, power or remedy it
      may have under a document to which it is a
  party;

            

    

     

    
      	
              4

            	
              any
      disclosure which is made to any professional advisers of the disclosing
      party who are bound to the disclosing party by a duty of confidence which
      applies to any information
disclosed;

            

    

     

    
      	
              5

            	
              any
      disclosure which is made to an Affiliate who is bound to the disclosing
      party by a duty of confidence which applies to any information
      disclosed;

            

    

     

    
      	
              6

            	
              any
      disclosure which is made to any person appointed as an Investor
      Director or Alternate
      Director; or

            

    

     

    
      	
              7

            	
              any
      disclosure which is made to an
      Investor’s or the
      Group’s
      bankers and financiers or proposed bankers and financiers from time to
      time;

            

    

     

    
      	
              8

            	
              any
      disclosure required by law, a governmental, taxation or other authority
      with relevant powers or professional standards body to which the party
      making the disclosure is subject or
  submits;

            

    

     

    
      	
              9

            	
              any
      disclosure which is made pursuant to the terms of this
      Agreement.

            

    

     

    
      
        
        

      

      
        112

        
          

        

      

      
        
        

      

    

     

    Schedule
7

    Governance
Clearances

     

     

    Part
A

     

     

    Regulatory
Approvals

     

    
      	
              No.

            	
              Jurisdiction

            	
              Regulator

            
	
              1.

            	
              Australia

            	
              Federal
      Reserve via Foreign Investment Review Board

            
	
              2.

            	
              Chile

            	
              Superinten-dencia
      de Bancos e Instituciones Financieras

            
	
              3.

            	
              Finland

            	
              Finnish
      Financial Supervision Authority

            
	
              4.

            	
              Italy

            	
              Bank of
      Italy

            
	
              5.

            	
              Malaysia

            	
              Minister of
      Finance

            
	
              6.

            	
              Netherlands

            	
              De
      Nederlandsche Bank

            
	
              7.

            	
              New
      Zealand

            	
              Overseas
      Investment Office

            
	
              8.

            	
              Romania

            	
              National Bank
      of Romania

            
	
              9.

            	
              Russia

            	
              Governmental
      Commission

            
	
              10.

            	
              Russia

            	
              Central
      Credit Institutions Licensing & Financial Rehabilitation
      Department

            
	
              11.

            	
              Singapore

            	
              Monetary
      Authority of Singapore

            
	
              12.

            	
              Singapore

            	
              Singapore
      Exchange Securities Trading Limited

            
	
              13.

            	
              Thailand

            	
              Ministry of
      Finance and Bank of Thailand

            
	
              14.

            	
              UK

            	
              Financial
      Services Authority

            
	
              15.

            	
              Uzbekistan

            	
              Central Bank
      of Uzbekistan

            

    

     

     

    
      
        
        

      

      
        113

        
          

        

      

      
        
        

      

    

     

    Regulatory
Pre-completion Notifications

     

    
      	
              No.

            	
              Jurisdiction

            	
              Regulator

            
	
              1.

            	
              Venezuela

            	
              Superintendencia
      de Bancos y Otras Instituciones Financieras

            
	
              2.

            	
              Singapore

            	
              Monetary
      Authority of Singapore

            
	
              3.

            	
              Canada

            	
              Ontario
      Securities Commission

            
	
              4.

            	
              UAE

            	
              Dubai
      Financial Services Authority

            
	
              5.

            	
              Ireland

            	
              Irish Stock
      Exchange

            
	
              6.

            	
              Indonesia

            	
              Employees of
      local entity

            
	
              7.

            	
              Australia

            	
              Australian
      Prudential Regulation Authority

            
	
              8.

            	
              Belgium

            	
              Works
      Council

            
	
              9.

            	
              Canada

            	
              Investment
      Industry Regulatory Organization of Canada

            
	
              10.

            	
              Cayman
      Islands

            	
              Cayman
      Islands Monetary Authority

            
	
              11.

            	
              Finland

            	
              Finnish
      Financial Supervision Authority

            
	
              12.

            	
              India

            	
              Reserve Bank
      of India

            
	
              13.

            	
              Italy

            	
              Bank of
      Italy

            
	
              14.

            	
              Malaysia

            	
              Bank Negara
      Malaysia

            

    

     

    
      
        
        

      

      
        114

        
          

        

      

      
        
        

      

    

     

    
      
        	
                15.

              	
                Malaysia

              	
                Securities
      Commission

              
	
                16.

              	
                Netherlands

              	
                De
      Nederlandsche Bank

              
	
                17.

              	
                South
      Africa

              	
                Registrar of
      Banks

              
	
                18.

              	
                South
      Africa

              	
                Registrar of
      Financial Service Providers

              
	
                19.

              	
                South
      Africa

              	
                South African
      Reserve Bank

              
	
                20.

              	
                Switzerland

              	
                FINMA

              
	
                21.

              	
                UK

              	
                Financial
      Services Authority

              

      

       

    

    Anti-trust
Approvals

     

    
      	
              No.

            	
              Jurisdiction

            
	
              1.

            	
              Indonesia

            
	
              2.

            	
              Japan

            
	
              3.

            	
              Russia

            
	
              4.

            	
              USA

            

    

     

     

    
      
        
        

      

      
        115

        
          

        

      

      
        
        

      

    

     

    Part
B

     

    Post-completion
notifications

     

    
      	
              No.

            	
              Jurisdiction

            	
              Regulator

            
	
              1.

            	
              Argentina

            	
              Central Bank
      of the Republic of Argentina

            
	
              2.

            	
              Argentina

            	
              Argentine
      Securities Commission and MAE

            
	
              3.

            	
              Canada

            	
              Office of the
      Superintendent of Financial Institutions Canada

            
	
              4.

            	
              Canada

            	
              Ontario
      Securities Commission.

            
	
              5.

            	
              Columbia

            	
              Superintendency
      of Finance

            
	
              6.

            	
              Finland

            	
              Finnish
      Financial Supervision Authority

            
	
              7.

            	
              Hong
      Kong

            	
              Securities
      and Futures Commission

            
	
              8.

            	
              Indonesia

            	
              Bank
      Indonesia

            
	
              9.

            	
              Indonesia

            	
              Indonesian
      Stock Exchange

            
	
              10.

            	
              Italy

            	
              Bank of
      Italy

            
	
              11.

            	
              Italy

            	
              Commissione
      Nazionale per le Società e la Borsa

            
	
              12.

            	
              Malaysia

            	
              Minister of
      Finance

            
	
              13.

            	
              Malaysia

            	
              Bank Negara
      Malaysia

            
	
              14.

            	
              Malaysia

            	
              Securities
      Commission

            
	
              15.

            	
              New
      Zealand

            	
              Overseas
      Investment Office

            
	
              16.

            	
              Singapore

            	
              Monetary
      Authority of Singapore

            
	
              17.

            	
              Singapore

            	
              Singapore
      Exchange Securities Trading Limited

            
	
              18.

            	
              South
      Korea

            	
              Financial
      Supervisory Service of Korea

            
	
              19.

            	
              UK

            	
              Financial
      Services Authority

            
	
              20.

            	
              USA

            	
              The Board of
      Governors of the Federal Reserve System

            
	
              21.

            	
              Vietnam

            	
              State Bank of
      Vietnam (Central Bank)

            

    

     

     

    
      
        
        

      

      
        116

        
          

        

      

      
        
        

      

    

     

    Schedule
8

    Other
State Acquired Businesses

     

    
      	
               (1)

              Asset/Liability

            	
              (2)

              Proposed
      Transfer Date

            	
              (3)

              Estimated
      fair market value at the date of this Agreement

            	
              (4)

              Proposed
      Transfer Mechanism prior to 30 June 2011

            	
              (5)

              Proposed
      Mechanism following 30 June 2011

            	
              (6)

              Other
      agreed actions or comments in relation to the Asset /
      Liability

            
	
              USD250
      million

              7.75%
      subordinated

              lower tier 2
      notes

              2023
      ISIN:

              US00077TAA25

            	
              As soon as
      possible following the date of this Agreement

            	
              Face value of
      USD250m

            	
              ***

            	
              ***

            	
              The
      instrument shall remain as a State Acquired Business

              All risks and
      rewards, including litigation risk, in respect of the instrument remain
      with ABN AMRO Bank and the State Acquired Businesses (as previously agreed
      by the CFOs in agreement #2). As such, any costs (including any reasonable
      costs incurred by RBS NV), liability and litigation risk that occurs as a
      result of ***.

            
	
              CDS 2003 with
      AIG and Radion

            	
              AIG:

              Mid-April
      2010

               

              Radion: End
      of April 2010

            	 
    	
              Novation

            	
              In accordance
      with Clause 5.3

            	
              AIG and
      Radian are reviewing latest drafts of novation agreement and transfer
      agreement. RBS awaits outcome of Portfolio & Investment Committee on
      30 March 2010. Following that a further approval of the Asset Protection
      Agency is required, which will take 5 working days.

            
	
              Natixis
      interest rate swaps

               

            	
              1 May
      2010

            	
              EUR
      850,000

            	
              SWAP needs to
      be novated from RBS N.V. to ABN AMRO Bank N.V.

            	
              In accordance
      with Clause 5.3

            	
              N/A

            

    

     

    
      

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

      

    

     

    
      
        
        

      

      
        117

        
          

        

      

      
        
        

      

    

     

    
       

      
        	
                 (1)

                Asset/Liability

              	
                (2)

                Proposed
      Transfer Date

              	
                (3)

                Estimated
      fair market value at the date of this Agreement

              	
                (4)

                Proposed
      Transfer Mechanism prior to 30 June 2011

              	
                (5)

                Proposed
      Mechanism following 30 June 2011

              	
                (6)

                Other
      agreed actions or comments in relation to the Asset /
      Liability

              
	
                Trades to be
      novated

                (with 12
      counter parties)

              	
                1 May
      2010

              	
                SGD 11.3
      million

                HKD 394
      million

              	
                By client’s
      signing of the novation agreement the contract is legally binding and are
      trades novated.

              	
                In accordance
      with Clause 5.3

              	
                ABN AMRO Bank
      and RBS have both signed the 12 novation agreements. The counter parties
      of the agreements still need to sign.

                Operational
      execution may take till 30 June 2010.

              
	
                Collateral of
      N-Share client Stichting Mooiland

              	
                15 April
      2010

              	
                EUR
      9,420,000

              	
                Collateral
      needs to be transferred from RBS N.V. London branch to ABN AMRO Bank
      N.V.

              	
                In accordance
      with Clause 5.3

              	
                N/A

              
	
                RALs

              	
                Within 3
      months after separation

              	
                EUR 150-220
      million

              	
                Replacement
      by external bank guarantee or refinancing

              	
                In accordance
      with Clause 5.3

              	
                The total
      amount in column (3) may vary depending on the solution agreed in
      individual cases with respect to continuation of facilities by RBS for its
      own account. The number of RALs left is as at 31 March 2010 approximately
      90. No risk for RBS NV as the existing RAL will stay in place as agreed in
      the Partnerbank Agreement.

              
	
                Security
      rights under foreign law

              	
                Within 3
      months after separation

              	
                EUR 10
      million

              	
                Transfer of
      security rights via assignment or transfer documentation.

                 Note
      that the exact transfer mechanism may vary per country.

              	
                In accordance
      with Clause 5.3

              	
                In case ABN
      AMRO Bank identifies a security right under foreign law after 30 June 2010
      that has not been identified and transferred at an earlier stage, RBS NV
      will cooperate to transfer such security rights and finalise the
      assignment or transfer documentation. Currently 8 remaining files
      (Belgium, Denmark, Ireland, Malta, Slovakia, UK, USA,
    Sweden).

              

      

       

      
        
          
          

        

        
          118

          
            

          

        

        
          
          

        

      

       

    

    
      
         

        
          	
                   (1)

                  Asset/Liability

                	
                  (2)

                  Proposed
      Transfer Date

                	
                  (3)

                  Estimated
      fair market value at the date of this Agreement

                	
                  (4)

                  Proposed
      Transfer Mechanism prior to 30 June 2011

                	
                  (5)

                  Proposed
      Mechanism following 30 June 2011

                	
                  (6)

                  Other
      agreed actions or comments in relation to the Asset /
      Liability

                
	
                  Shares held
      by RBS NV in Visa, Inc.

                	
                  30 June
      2010

                	 
    	
                  Transfer of
      shares to ABN AMRO Bank

                	
                  In accordance
      with Clause 5.3

                	
                  The transfer
      cannot take place until ABN AMRO Bank has appropriate arrangements to
      settle and trade the shares.

                
	
                  International
      Diamond & Jewellery business Taiwan

                	
                  17 April
      2010

                	
                  Approximately
      $4,000,000

                	
                  SPA

                	
                  In accordance
      with Clause 5.3

                	
                  Business is
      to be sold to a third party purchaser. SPA is agreed.

                
	
                  Germany
      Residential Fund Managing Director BV, Germany Residential Fund II
      Managing Director BV  and Germany Residential Fund III Managing
      Director BV

                	
                  By 30 June
      2011

                	
                  Approximately
      €5,000 in aggregate

                	
                  Transfer by
      SPA

                	
                  In accordance
      with Clause 5.3

                	
                  Transfer was
      delayed pending agreement on
valuation.

                

        

         

        
          
            
            

          

          
            119

            
              

            

          

          
            
            

          

           

        

      

    Schedule
9

    Charging
Basis for Management of the Retained Business

     

    RBS NV, as part of
its fiduciary responsibility to control and consolidate the Retained Business,
will incur costs to perform this duty and therefore is entitled to reimbursement
of these costs. The following sets forth a distinction to be made between the
direct costs of the Retained Business, in so far those services will be provided
by RBS NV or other outside service providers, and the costs to be considered a
general “Management Fee”.

     

     

    Part
A: Direct Costs

     

    RBS NV shall use
its best endeavours to accrue specific costs related to operating, liquidating
or distributing the Retained Business directly to the Retained Business. This
would include out of pocket professional fees (e.g. legal, external audit,
investment banking, insurance etc.) as well as services provided by other
Investors under service level agreements agreed between the Investors or members
of their respective Groups.

     

    It may be required
for legal services to be provided and sourced from RBS in-house counsel when
considered more effective and efficient to external counsel. Similarly there
maybe in-house internal audit preferred to external audit. When sourced in-house
the charge will be settled with the Retained Business for its total absorbed
cost plus 25%.

     

    Costs shall be
settled quarterly with a specification from RBS NV subject to pre-approval and
review by the business manager responsible for the Retained Business
..

     

    The parties
acknowledge that the Retained Business currently has €1.7 million budgeted for
legal fees in 2010.

     

     

    Part
B: General Management Fee

     

    The following table
reflects the current best estimate of the components of an Annual General
Management Fee:

     

    
      	
              Component

            	
              Description
      of Fully Absorbed Cost

            	
              Cost
      (€)

            
	
              Business
      Management

            	
              50% of the
      time of the fully loaded costs of one senior member of the RBS NV
      management team. Includes consultative time spent from other senior
      members of the RBS NV management team.

            	
              400,000

            
	
              Treasury
      & Funding Administration

            	
              25% of the
      time of one experienced staff member and 10% supervisory
    time.

            	
              200,000

            
	
              Accounting
      and administration

            	
              1.5 FTE to
      perform the monthly financial accounting and administration. Results in
      delivery of the monthly management information package (e.g. Blue
      Book).

            	
              200,000

            
	
              Subtotal

            	
              800,000

            
	
              Cost
      plus factor 25%

            	
              200,000

            
	
              Annual
      General Management Fee

            	
              1,000,000

            

    

     

    
      
        
        

      

      
        120

        
          

        

      

      
        
        

      

    

     

    The Annual General
Management Fee will be settled quarterly (by charging the Retained Business) and
reviewed annually. No costs charged under Part A as Direct Costs shall be
charged as part of the Annual General Management Fee. The parties acknowledge
that, as at the date of this Agreement, the Investors have provided in aggregate
€24,327,000 to the Retained Business in Consortium Proportions to meet the
future costs of the Retained Business.

     

    
      
        
        

      

      
        121

        
          

        

      

      
        
        

      

    

     

    Schedule
10

    4.95%
Term Sheet

     

    [LETTERHEAD
OF THE STATE OF THE NETHERLANDS]

    Mr
Miller McLean

    General
Counsel

    The Royal Bank of
Scotland Group PLC

    House
G

    RBS
Gogarburn

    Edinburgh

    EH12
1HQ

     

    Mr
Ignacio Benjumea Cabeza de Vaca

    General
Counsel

    Banco Santander
S.A.

    Ciudad Grupo
Santander

    28660 Boadilla del
Monte

    Madrid

    Spain

     

    Mr
Peter Goes

    Secretary

    RFS Holdings
B.V.

    Strawinskylaan
3105

    1077 ZX
Amsterdam

    The
Netherlands

     

    [●]
2009

     

     

    Dear
Sirs,

     

    Allocation
of Capital: Notice in relation to the Consortium and Shareholders Agreement -
Schedule 3 Part 11 and Clause 2.9 of the Deed of Accession

     

    We refer to the
consortium and shareholders agreement between RBS, Santander, Fortis N.V. and
Fortis SA/NV (together “Fortis”)
and RFS Holdings B.V. dated 28 May 2007. That agreement was acceded to by Fortis
Bank Nederland (Holding) N.V. (“FBNH”)
on 26 July 2007, and was amended on 17 September 2007 and further amended on 26
August 2008.

     

    Pursuant to a deed
of accession dated 24 December 2008 as between RBS, Santander, the State, FBNH
and RFS Holdings B.V. (the “Deed
of Accession”), the State agreed to assume the rights and obligations of
Fortis and FBNH under the consortium and shareholders agreement as amended,
including as amended by the Deed of Accession itself.

     

    For the purpose of
this Letter, the terms of the aforementioned agreements, as between RBS,
Santander, the State, FBNH and RFS Holdings B.V., shall be referred to as the
“Consortium
and Shareholders Agreement.”

     

    Save as otherwise
defined in this letter, capitalised terms shall have the meanings given to them
in the Consortium and Shareholders Agreement (as defined above).

     

    
      
        
        

      

      
        122

        
          

        

      

      
        
        

      

    

     

    Under Schedule 3 -
Part 11 of the Consortium and Shareholders Agreement (“Schedule
3 - Part 11”), certain agreements were reached as to the allocation of
core tier 1 capital of the ABN AMRO Group as between the Investors.

     

    Under Clause 2.9 of
the Deed of Accession (“Clause
2.9”), it was further acknowledged and agreed that in relation to the
State’s rights under Schedule 3 - Part 11, the parties would apply the
principles established out of discussions amongst the Chief Financial Officers
of the State, RBS and Santander and/or their delegates as recorded in the
minutes of the meetings amongst the Chief Financial Officers and/or their
delegates dated 6 November 2008, 12 November 2008, 27 November 2008, 4 December
2008, 11 December 2008 and 17 December 2008.

     

    Further to Clause
2.9, the State, RBS and Santander have now agreed a term sheet attached at
Appendix 1 to this Letter (the “Term
Sheet”), which is intended to form the basis of an underwriting agreement
to be entered into by (a) relevant member(s) of the Wider RBS Group on behalf of
RBS, (a) relevant member(s) of the Santander Group on behalf of Santander and,
as relevant, one or more of the State's Acquired Companies (which, for the
avoidance of any doubt, shall be defined in this Letter as per clause 5.1 of the
Deed of Accession and shall include all successors in title from time to time)
(the “Underwriting
Agreement”).

     

    The State hereby
specifically acknowledges and agrees, on behalf of both itself and its Acquired
Companies, that:

     

    
      	
              (A)

            	
              the terms of
      the Term Sheet shall apply with effect from (and not before) the
      Commencement Date (as defined
below);

            

    

     

    
      	
              (B)

            	
              with effect
      from and including the Cutoff Date (as defined below), irrespective of
      whether or not an Underwriting Agreement has been entered into, all of the
      rights and obligations of the Investors pursuant to Schedule 3 - Part 11
      and Clause 2.9 and the Term Sheet shall terminate (and have no further
      effect), and none of the Investors thereafter shall have any further
      rights or obligations of any kind pursuant to Schedule 3 - Part 11 and
      Clause 2.9 and the Term Sheet,

            

    

     

    SAVE and EXCEPT
that if the State gives written notice to the Investors not less than one
calendar month prior to the Cutoff Date (as defined below) that the relevant
parties should enter into an Underwriting Agreement on the basis of the Term
Sheet, then:

     

    
      	
               
      

            	
              (i)

            	
              the
      parties shall negotiate in good faith such Underwriting Agreement on the
      basis of the Term Sheet with the intention of executing the
      Underwriting Agreement within 3 months of such notice (the “Negotiation
      Period”) and if the parties (acting reasonably and in good faith)
      fail to execute the Underwriting Agreement within the Negotiation Period,
      any Investor may, by giving written notice to the Investors, refer the
      matter to an independent Investment Bank of international repute selected
      by unanimous decision of the Investors (and in the event of a failure by
      the Investors to agree, appointed by the Chairman of the International
      Chamber of Commerce from time to time) (a “Qualifying
      Expert") to assist the parties in reaching agreement on the terms
      of the Underwriting Agreement;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if no
      agreement is reached on the terms of the Underwriting Agreement within 3
      months of the appointment of the Qualifying Expert, the Qualifying Expert
      himself will decide on the items that are still outstanding;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              subject
      to (C) below,
      Schedule 3 – Part 11 and Clause 2.9 and the Term Sheet will continue to
      apply; and

            

    

     

    
      
        
        

      

      
        123

        
          

        

      

      
        
        

      

    

     

    
      	
               (C)

            	
              upon the execution of such
      Underwriting Agreement as agreed (at any time) all of the rights and
      obligations of the Investors pursuant to Schedule 3 - Part 11 and Clause
      2.9 and the Term Sheet shall terminate (and have no further effect), and
      thereafter none of the Investors shall have any further rights or
      obligations of any kind pursuant to
      Schedule 3 – Part 11, Clause 2.9 and the Term
      Sheet.

            

    

     

    For
the purposes of this letter:

     

    “Commencement
Date” means
the date upon which the later of the following Restructuring steps are
completed:

     

    
      	
              (a)

            	
              the
      State has acquired (directly or indirectly) ownership of the shares in ABN
      AMRO II N.V. (or such other entity which may own the BU NL business of ABN
      AMRO); and

            

    

     

    
      	
              (b)

            	
              a
      capital repatriation or repatriations are made to Santander of an
      amount equal to (i) the capital in ABN AMRO relating to the S-Shares as
      adjusted for necessary retentions for Santander ́s share of the Retained
      Business1, plus
      (ii) the amounts relating to Santander in RFS Holdings B.V. with respect
      to GALM pursuant to the Deed of Accession2 as adjusted for
      Appendix 6 (GALM and other Treasury Issues) to the Agreed Package dated 28
      September 2009 and for the necessary agreements between the Investors in
      the outstanding discussions in relation to
  taxes.

            

    

     

    
      	
               
      

            	
              "Cutoff
      Date" means the date falling two years after the Commencement
      Date.

            

    

     

    The provisions of Clauses
16 (Confidentiality and Announcements), 19 (Entire Agreement and Non Reliance),
20 (General) and 22 (Governing Law and Arbitration) of the Consortium and
Shareholders Agreement (in each case, for the avoidance of all doubt, as amended
by the terms of the Deed of Accession) shall apply (mutatis
mutandis)
to this letter as if expressly set out herein.

     

    Yours
faithfully,

     

    [●]

     

    The
State of the Netherlands acting
by its duly authorised signatories

     

    Acknowledged
and Agreed:

     

    [●]

     

    The
Royal Bank of Scotland Group PLC acting by its duly authorised
signatories

     

    [●]

     

    Banco
Santander S.A. acting by its duly authorised signatories

     

    [●]

     

    RFS
Holdings B.V. acting by its duly authorised signatories

     

     

    
      

    

    
      
        	
                1

              	
                In accordance with the “Shared
      Assets capital – proposal for discussion” memo from Ms Hofste to the CFOs
      Investors and CFO delegates dated 21 September 2009, amount was equal to
      €8,902 m.

              

      

       

    

    
      
        	
                2

              	
                In accordance with the
      “Unwinding shared assets – GALM DTA effect” memo from Mr de Mik to the Tax
      Working Group and CFO delegates dated 14 September 2009 this was equal to
      an amount of €744m

              

      

       

      
        
          
          

        

        
          124

          
            

          

        

        
          
          

        

      

       

    

    Appendix
1

     

    N shall
have the right but not the obligation to avail itself of the underwriting
commitment described below.

     

    
      	
              Issuer:

            	
              [Aurora]3

            
	
              Listing:

            	
              [Luxembourg Stock
      Exchange / Dublin Stock
      Exchange / London Stock
      Exchange / Euronext
      Amsterdam]

            
	
              Lead
      managers:

            	
              [Aurora]

              The
      Royal Bank of Scotland

              Banco
      Santander

            
	
              Underwriter(s):

            	
              The Royal
      Bank of Scotland 60% of the placement and Banco Santander 40% of the
      placement.

            
	
              Status:

            	
              Subordinated,
      Other
      Tier
      1 (Hybrid)

              Must meet
      debt accounting
      requirements

              Must be tax
      deductible

              Must meet DNB
      / CEBS draft and current requirements Tier 1 treatment at the time of
      issue

            
	
              Currency:

            	
              EUR

            
	
              Amount:

            	
              Up to
      ***

            
	
              Pricing
      Date:

            	
              Settlement
      date  – 2

            
	
              Settlement
      Date:

            	
              No
      later than the Cutoff Date as defined in the letter from the Dutch State relating
      to this termsheet

            
	
              Maturity
      Date:

            	
              Perpetual

            
	
              Call:

            	
              5 years after
      settlement and annually thereafter. Step up in line with the market and
      regulations for Tier 1.

            
	
              Coupon:

            	
              Determined
      by reference to a corresponding benchmark4 publicly
      or privately placed, preference share transaction by Aurora, or a
      publicly or privately placed proportion of this
      transaction.

            
	
              Coupon
      Payments:

            	
              Annual
      based on an
      ACT/ACT basis until 3 October 2019,
      quarterly based on an ACT/365 thereafter

            
	
              Non
      cumulative:

            	
              Non
      cumulative.

              Subject to
      regulatory approval and to ratios below minimum levels agreed with or
      required by regulator

               

            
	
              Voting
      Rights:

            	
              None

            
	
              Coupon
      Deferral / Dividend Pusher

            	
              Coupons must
      be paid in the event that regulatory ratios are above prescribed minimum
      levels (specified in the transaction documentation in line with Aurora’a
      publicly announced target and specified capital
ratios).

            
	
              Coupon
      Payment Dates:

            	
              Quarterly

            
	
              Issue
      / Reoffer Price:

            	
              [tba]

            
	
              Benchmark
      Reference Price:

            	
              [  ]
      %

            
	
              Benchmark
      Reference Yield:

            	
              [  ]

            

    

     

    
      

      
        3
Aurora is a working name given to the legal entity in which the asset and
liabilities of N-share will be demerged. The legal entity name will be
determined prior to legal segregation.

      

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

      

        
        4
“Benchmark” will mean a minimum size of €200 – 250m and distribution to be
agreed between the Issuer and the Underwriters (both parties acting
reasonably)

      

       

    

     

    
      
        
        

      

      
        125

        
          

        

      

      
        
        

      

    

     

     

    
      	
              Underwriting
      fees:

            	
              Nil

            
	
              Lead
      Management Fees

            	
              Nil

            
	
              All-in
      Price:

            	
              [tba]

            
	
              Net
      Proceeds

            	
              Up to
      ***

            
	
              Redemption:

            	
              100.00%

            
	
              Transaction
      Expenses:

            	
              For
      the account of the Issuer

            
	
              Business
      Days:

            	
              TARGET,
      Amsterdam

            
	
              Governing
      Law:

            	
              Dutch
      Law

            
	
              Denominations:

            	
              EUR
      1,000, 10,000, 100,000

            
	
              Lock
      up period:

            	
              Transferability
      restricted as follows:

               

              Period
      after

              settlement
      date                                           Maximum
      Transferability

               

              6
      months                                50%

              1
      year                                     75%

              18
      months                               no
      restriction

               

              on
      the amount allotted to each of The
      Royal Bank of Scotland and
      Banco Santander

            
	
              Minimum
      Credit Rating:

            	
              The
      securities will have a minimum rating by Moodys and S&P the same as or
      higher than RBS equivalent debt capital securities.

            
	
              Optional
      redemption date

            	
              Tax
      change and regulatory change, subject to approval of regulator.

            
	
              Optional
      Issuance:

            	
              Aurora is
      under no obligation to issue this
instrument.

            

    

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

     

     

    
      
        
        

      

      
        126

        
          

        

      

      
        
        

      

    

     

    Schedule
11

    Operation
of ID&J India

     

    The purpose of this
Schedule is to document the allocation of the ID&JG business conducted by
RBS NV in India to the State and the intention of the State for such business to
be transferred to ABN AMRO Bank, subject to all regulatory approvals needed to
establish a branch and obtain local licences in India and to complete all such
other arrangements as are necessary (including technical separation) to acquire
the ID&JG business in India from RBS NV. Such requirements for licenses and
arrangements for ABN AMRO Bank to acquire the ID&JG Business in India from
RBS NV being hereinafter referred to as the “Acquisition
Requirements”.

     

    In this Schedule,
“parties” means RBS, the State and the Company. Santander shall have no
obligation arising out of or in respect of this Schedule. However, upon the
reasonable request by RBS and the State, Santander shall take such action is
required to give effect to this Schedule.

     

    Until ABN AMRO Bank
has completed the Acquisition Requirements, the parties have agreed to put in
place arrangements to enable the ID&JG business in India to continue to
operate as part of RBS NV while protecting all commercial, legal and regulatory
interests of ABN AMRO Bank in the ID&JG business in India, subject to the
terms of this Schedule.

     

     

    Definitions
and Interpretation

     

     

    
      	
              1

            	
              Definitions

            

    

     

    
      	
              1.1

            	
              In this
      Schedule, unless the subject or context otherwise requires, words defined
      in the CSA shall have the same meanings when used herein
    and:

            

    

     

    “Business
Head” means the person specified in paragraph 3.1 of this
Schedule;

     

    “Completion”
means the date on which the ID&JG Business is transferred from RBS NV to the
Purchaser in accordance with the CSA;

     

    “CSA”
means the restated Consortium and Shareholders Agreement dated 1 April 2010 (as
supplemented and amended from time to time);

     

    “Expert”
has the meaning given to it in paragraph 12.3 of this Schedule;

     

    “Legal
Separation Date” means the date on which the shares in ABN AMRO Bank are
transferred by AAH to ABN AMRO Group N.V. being an entity directly owned by the
State;

     

    “Ordinary
Course” means the conduct of the ID&JG Business in accordance with
normal day-to-day customs, practices and procedures and consistent with past
practice but subject to compliance with all Regulatory
Requirements;

     

    “ID&JG”
means the international diamond and jewellery business group;

     

    “ID&JG
Business” means the ID&JG business in India which has been allocated
to the State under the CSA and which will remain in the RBS NV branch in India
until Completion;

     

    “ID&JG
Cost Centre” means in relation to the ID&JG Business the cost centre
assigned to the ID&JG Business and recorded in Magnitude consolidation
system;

     

    “Regulatory
Requirements” means all requirements applicable in relation to the
arrangements detailed in this Agreement and activities of ABN AMRO Bank and/or
RBS

     

    
      
        
        

      

      
        127

        
          

        

      

      
        
        

      

    

     

    NV, as the case may
be, arising from any law, enactment, order, regulation, regulatory policy,
guideline or industry code, in any applicable jurisdiction including but not
limited to those of a Regulator in India and in particular but without
limitation the Basel II capital adequacy requirements in relation to Pillar 1,
Pillar 2 and Pillar 3 as outlined by the RBI from time to time; and

     

    “Relevant
Employee” means the employees working exclusively or principally within
the ID&JG Business.

     

    
      	
              2

            	
              CSA
      and Effect of the Schedule

            

    

     

    
      	
              2.1

            	
              If the
      provisions of this Schedule do not specifically provide for or govern any
      matter relating to the management of the ID&JG Business, the parties
      agree to apply the principles set out in the CSA. In the event that this
      Schedule conflicts with any provision of the CSA (other than Part 9 of
      Schedule 1 in relation to Tax matters) this Schedule shall
      prevail.

            

    

     

    
      	
              2.2

            	
              ABN AMRO Bank
      and RBS NV agree that in the event that the CSA is amended (including but
      not limited to any amendment to the operative provisions relating to the
      governance and management of the AAH Group or the provision of information
      and preparation of accounts), and any such amendment has an impact on the
      governance, management or operations of the ID&JG Business within RBS
      NV, they will negotiate, in good faith, an amendment to this Schedule to
      ensure that the principles of the CSA as at the date of this Schedule and
      the specific provisions of this Schedule continue to apply to the
      ID&JG Business until
Completion.

            

    

     

    
      	
              2.3

            	
              In the event
      that either RBS NV or ABN AMRO Bank is required to obtain the approval of
      a Regulator with respect to the arrangements detailed in this Schedule (or
      any part thereof), the parties agree to co-operate and take all reasonable
      measures in good faith to achieve such requisite approval, provided,
      however, that no party shall be bound to take any action that is, in the
      reasonable opinion of a party, likely to breach its Regulatory
      Requirements. Should any Regulator (including but not limited to the
      Reserve Bank of India) require any change to be made to this Schedule or
      the principles expressed herein, the parties shall procure that this
      Schedule is amended in order to reflect such
  requirements.

            

    

     

    
      	
              2.4

            	
              Nothing in
      this Schedule shall be construed as in any way excluding, limiting or
      overriding the Regulatory Requirements or the respective obligations and
      responsibilities of RBS NV or ABN AMRO Bank there
  under.

            

    

     

     

    
      	
              3

            	
              Business
      Head

            

    

     

    
      	
              3.1

            	
              ABN AMRO Bank
      shall designate a Business Head, being Biju Patnaik, or such alternative
      person assigned by ABN AMRO Bank with the agreement of RBS NV, such
      consent not to be unreasonably withheld or delayed. The Business Head
      shall be an employee of RBS NV working within the ID&JG Business. The
      parties agree that if the Business Head is replaced under an agreement
      between the same parties relating to other international diamond and
      jewellery businesses remaining in RBS NV then the Business Head will be
      deemed to be replaced under this
Schedule.

            

    

     

    
      	
              3.2

            	
              Subject to
      paragraph 6 of this Schedule in relation to Tax matters, the parties agree
      that the Business Head shall be responsible for the management and
      oversight of the ID&JG Business from the Legal Separation Date to
      Completion, including but not limited
to:

            

    

     

    
      
        
        

      

      
        128

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (i)

            	
              managing the
      ID&JG Business on a day-to-day
basis;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              developing
      the ID&JG Business plan within the boundaries of the overall strategy
      of ABN AMRO Bank;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              driving
      revenues and growth for the ID&JG Business as well as setting the
      budget for the ID&JG Business and ensuring costs are maintained under
      control;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              approving any
      expenditure (which is to be recharged to the ID&JG Cost
      Centre);

            

    

     

    
      	
               
      

            	
              (v)

            	
              approving any
      credit and/or market risk limits for the ID&JG
    Business;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              approving the
      entry into any contract or agreement exclusively or principally supporting
      the ID&JG Business;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              settling any
      claims, actions, arbitrations, disputes or other proceedings relating to
      the ID&JG Business;

            

    

     

    
      	
               
      

            	
              (viii)

            	
              managing the
      ID&JG Business relationship managers and commercial support
      teams;

            

    

     

    
      	
               
      

            	
              (ix)

            	
              the hiring of
      any new employees or contractors to support the ID&JG
      Business;

            

    

     

    
      	
               
      

            	
              (x)

            	
              the dismissal
      of any Relevant Employee; and

            

    

     

    
      	
               
      

            	
              (xi)

            	
              the setting
      of remuneration or the payment of any bonus for Relevant Employees and/or
      any changes to the terms and conditions of employment of any Relevant
      Employee (including but not limited to benefit
  plans),

            

    

     

    in each case in
accordance with AIM and the Regulatory Requirements of RBS NV.

     

    
      	
              3.3

            	
              Unless
      prohibited by Regulatory Requirements and subject to paragraph 3.5 of this
      Schedule, where the ID&JG Business has its own dedicated control
      functions and services support, including but not limited to risk
      management, finance, compliance, human resources, legal, audit, IT and
      operations (“Functions
      and Services”), the heads of such Functions and Services shall have
      a direct reporting line to the Business Head as well as a functional
      reporting line to the relevant RBS NV line
  management.

            

    

     

    
      	
              3.4

            	
              The Business
      Head shall have a direct reporting line to the Chairman of the RBS NV
      Managing Board, in addition to the in country reporting line to the
      country executive of RBS NV in
India.

            

    

     

    
      	
              3.5

            	
              The general
      risk framework, including the authorities for approving general risk
      limits, for the AAB business (including the ID&JG Business) will be
      reviewed and approved by the relevant risk and control committees of RBS
      NV. The Business Head will be jointly responsible for the risk framework
      for the ID&JG Business. Any decisions taken by the relevant risk and
      control committees of RBS NV impacting the ID&JG Business will also
      need the approval of the Business
Head.

            

    

     

     

    
      	
              4

            	
              Operation
      of the ID&JG Business

            

    

     

    
      	
              4.1

            	
              RBS NV
      undertakes that during the period from the Legal Separation Date to
      Completion, RBS NV shall operate the ID&JG Business in the Ordinary
      Course under the management and direction of the Business Head (save
      insofar as agreed in writing by ABN AMRO Bank, such consent not to be
      unreasonably withheld or delayed).

            

    

     

    
      
        
        

      

      
        129

        
          

        

      

      
        
        

      

    

     

    
      	
              4.2

            	
              RBS NV agrees
      to record all revenues and costs relating to the ID&JG Business
      separately in the ID&JG Cost Centre such that the ID&JG Business
      remains clearly identifiable from RBS NV’s other businesses consistent
      with past practice.

            

    

     

    
      	
              4.3

            	
              RBS NV will
      continue to apply the policies and procedures currently in place as at the
      date of this Schedule, in relation to the operation of the ID&JG
      Business, including but not limited to the ID&JG CAAML policies. In
      the event that RBS NV wishes to change a policy such changes shall, save
      where a change is necessary to comply with Regulatory Requirements, be
      agreed between RBS NV and the Business Head before
      implementation.

            

    

     

    
      	
              4.4

            	
              The parties
      agree that in the event that the ID&JG Business is supported by
      hardware, equipment, software and/or other electronics, computer and
      telecommunications devices and equipment (“System”)
      which have already transferred from RBS NV to ABN AMRO Bank, that (subject
      to obtaining any necessary consents) a transitional service level
      agreement will be entered into between RBS NV and ABN AMRO Bank to ensure
      the continued support by such System to the ID&JG Business. RBS NV
      shall not be liable for any failure by ABN AMRO Bank to provide such
      on-going support. In the event that either RBS NV or ABN AMRO Bank is
      required to obtain the approval of a Regulator with respect to such
      service level arrangements, the parties agree to co-operate and take all
      reasonable measures in good faith to achieve such requisite
      approval.

            

    

     

    
      	
              4.5

            	
              From the
      Legal Separation Date until the Completion, RBS NV shall to the extent
      that it is lawfully able to do so without breaching any Regulatory
      Requirement:

            

    

     

    
      	
               
      

            	
              (i)

            	
              provide ABN
      AMRO Bank with a copy of any internal or external audit reports relating
      to the ID&JG Business;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              notify ABN
      AMRO Bank of any adverse findings relating to the ID&JG Business or
      the functions and services supporting the ID&JG Business highlighted
      during any internal or external audit of the RBS NV branch in India;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              if requested
      by ABN AMRO Bank, conduct, at the cost of ABN AMRO Bank, an internal audit
      of the ID&JG Business and provide the findings of such audit to ABN
      AMRO Bank.

            

    

     

     

    
      	
              5

            	
              Provision
      of Financial Information and
Reporting

            

    

     

    Subject to
paragraph 6 of this Schedule in relation to Tax matters, RBS NV shall supply ABN
AMRO Bank, at the reasonable cost of ABN AMRO Bank, with such information
relating to, and such access to, the ID&JG Business (including, for the
avoidance of doubt, information relating to the capital, liquidity and funding
requirements of the ID&JG Business) as it may reasonably require but not to
the extent that any such sharing of such information is in breach of any
Regulatory Requirement.

     

    Either at or
shortly before Completion, RBS NV undertakes to provide ABN AMRO Bank with the
following systems and materials necessary for ABN AMRO Bank to maintain Basel II
host compliance in India post Completion:

     

    
      	
               
      

            	
              ●

            	
              complete (and
      updated) documentation on Basel II regulations in
  India;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              complete set
      of RBI reporting templates with any accompanying explanations provided by
      RBI;

            

    

     

    
      
        
        

      

      
        130

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              
                ●

              

            	
              a copy of the
      Centralized Standardized Solution (CSS) for India host reporting (incl.
      calculator software, defined Business Objects reports, thorough and
      up-to-date technical documentation on the sourcing and the functionality
      of the calculator, and specifications of the Business Objects reports),
      reflecting all the updates in India host reporting regulations up to
      date;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              documentation
      reflecting the implementation choices for the host RWA calculation and the
      relation between the regulatory requirements and the implemented
      functionality (if the documentation of the CSS solution does not
      sufficiently reflect them);

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              a copy of the
      data used during the last run month for India including booking system
      extracts (SAFEGATE/CUID files), log files (specifying enrichments,
      defaulting rules, etc), CSS inbound and outbound data, reference data
      domains and other datasets used for enrichment of CSS input data
      (including but not limited to reference data domains and extracts from
      credit offer approval systems RAPID-IRD) and produced Business Objects
      reports;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              local ICAAP
      and/or any other Pillar 2 documentation, if required by and submitted to
      RBI. RBS shall also inform ABN AMRO Bank of the feedback received from RBI
      on local ICAAP and SREP, where such feedback is relevant for ABN AMRO
      Bank;

            

    

     

    
      	
               
      

            	
              
                ●

              

            	
              Information
      relating to any upcoming changes in India Basel II related regulations, of
      which RBS are aware.

            

    

     

    
      	
              6

            	
              Tax
      Matters

            

    

     

    
      	
              6.1

            	
              The parties
      acknowledge that for Indian Tax purposes the ID&JG Business forms part
      of RBS NV’s Indian operations and no separate Tax Returns are required to
      be or can be filed in respect of it. The parties acknowledge that Part 9
      of Schedule 1 to the CSA shall apply for the purpose of allocating Tax
      liabilities of RBS NV to the ID&JG Business. The parties also
      acknowledge that RBS NV or its duly authorised agents shall be responsible
      for preparing, submitting and dealing with all Tax Returns relating to the
      Indian Tax affairs of RBS NV together with all associated Tax Documents
      and correspondence, enquiries disputes, negotiations and settlements in
      relation thereto, and that it shall not be required to act under the
      direction of the Business Head in this regard. The parties acknowledge
      that the Indian Tax affairs of RBS NV shall be dealt with under the
      direction of the Head of Tax of RBS NV and that neither the State nor ABN
      AMRO Bank nor the Business Head shall be entitled to review any such Tax
      Return or related Tax Documents and correspondence, subject to Paragraph
      6.2 below.

            

    

     

    
      	
              6.2

            	
              In the event
      that RBS NV becomes aware of any Tax Audit or other informal request or
      investigation which relates specifically and predominantly to the
      ID&JG Business it shall ensure that the Business Head and the Head of
      Tax of RBS NV are informed and consulted in respect thereof. In respect of
      any such matter, RBS NV shall take such action as may be reasonably
      requested by the Business Head in consultation with the Head of Tax of RBS
      NV to deal with such matter, save that RBS NV shall not be obliged to take
      any action consisting of contesting any matter before a court or tribunal
      which will be heard in public or the judgment in respect of which may be
      published and available to the public otherwise than on an anonymous basis
      unless an opinion is obtained from a leading tax adviser to the effect
      that, in his or her opinion, it is more likely than not that the outcome
      will be successful and (if required by RBS NV) that such action should not
      be materially prejudicial to the business interests or reputation of RBS
      NV, RBS or any other member of

            

    

    
       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                the RBS
      Group. Further, if RBS reasonably considers that any action that RBS NV is
      requested to take pursuant hereto could be materially prejudicial to its
      business interests or reputation or those of RBS NV or any other member of
      the RBS Group, it will notify the Business Head of such concern. If the
      Business Head nevertheless wishes RBS NV to proceed with such action, the
      matter shall immediately be referred to the State CFO and RBS CFO, who
      shall have 21 Business Days, or such longer period as unanimously agreed
      by the CFOs, to agree whether such action could be materially prejudicial
      and, if so, whether such action shall be taken, which agreement shall be
      final and binding, save in the case of fraud or manifest error. If no
      agreement can be reached, the procedure in Clause 9 of this Agreement
      shall apply to determine whether such action should be
    taken.

              

      

       

    

    
      	
              6.3

            	
              The parties
      acknowledge that the costs to be debited to the ID& JG Cost Centre
      shall include a contribution of €3,500 per accounting period towards the
      costs of dealing with RBS NV’s Tax Returns and other Tax affairs. In the
      event that the Business Head requests any action to be taken under
      paragraph 6.2 of this Schedule, any associated external costs will also be
      debited to the ID&JG Cost
Centre.

            

    

     

     

    
      	
              7

            	
              Funding
      for ID&JG Business

            

    

     

    ABN AMRO Bank shall
undertake all and any measures necessary to ensure that the ID&JG Business
(including assets, liabilities, contingent liabilities and off balance sheet
items) that remain in RBS NV comply with all internal and regulatory
requirements in respect of capital, liquidity and funding on a segmental basis
(where any internal requirements will be determined in accordance with current
AAH Group practice as amended by migration to Basel II (or other arrangements in
relation to Basel II agreed with the relevant regulator(s)) and shall correct
any breaches thereof within seven days of becoming aware of or having received a
formal notification of any such breach. Such measures shall be taken at the
level of RFS Holdings B.V.

     

     

    
      	
              8

            	
              Liability

            

    

     

    RBS NV will not be
liable for any loss of revenue, profits, business, goodwill or loss of value
relating to the ID&JG Business as a result of its continued operation of the
ID&JG Business in the RBS NV branch in India during the term of this
Schedule, except to the extent such losses arise from fraud, wilful misconduct
or gross negligence of RBS NV but only where such losses are not caused by the
ID&JG Business, any State Acquired Business , any Relevant Employee or any
employee, contractor, officer or agent of any State Acquired Business. ABN AMRO
Bank also agrees that, save in the case of fraud, wilful misconduct or gross
negligence of RBS NV other than fraud or wilful misconduct of the ID&JG
Business, any State Acquired Business, any Relevant Employee or any employee,
contractor, officer or agent of any State Acquired Business, RBS NV will not be
liable for any breach of this Schedule by RBS NV other than any breach of
paragraph 10.1 or paragraph 14 of this Schedule.

     

     

    
      	
              9

            	
              Intellectual
      Property

            

    

     

    All Intellectual
Property rights belonging to a party prior to the signing of this Schedule will
remain vested in that party.

     

    
      
        
        

      

      
        131

        
          

        

      

      
        
        

      

    

     

    
      	
              10

            	
              Non-Solicitation

            

    

     

    
      	
              10.1

            	
              RBS NV agrees
      that during the period of this Schedule and for a period of one year after
      the Completion, it will not, and will ensure that no member of its Group
      knowingly solicit the customers of the ID&JG Business for the purpose
      of offering services which may be considered similar to the services
      offered by ID&JG Business to such
customers.

            

    

     

    
      	
              10.2

            	
              ABN AMRO Bank
      agrees that during the period of this Schedule and for a period of one
      year after Completion, it will not, and will ensure that no member of its
      Group knowingly solicit the customers of the RBS NV branch in India who
      are not customers of the ID&JG Business for the purpose of offering
      services which may be considered similar to the services offered by RBS NV
      to such customers.

            

    

     

    
      	
              10.3

            	
              RBS NV shall
      not at any time during the term of this Schedule, induce or seek to induce
      or entice or seek to entice away from being employed or hired by ABN AMRO
      Bank upon Completion, any Relevant Employee. The placement of an
      advertisement in the public domain and the recruitment of a person through
      an employment agency shall not constitute a breach of this paragraph 10.3
      provided that no member of RBS NV encourages or advises such agency to
      approach any Relevant Employee. Appointments to such role will be on terms
      and conditions of employment as appropriate to that role and that bank and
      terms and conditions will not be protected, and protection of continuity
      of service is at the discretion of RBS
NV.

            

    

     

    
      	
              10.4

            	
              ABN AMRO Bank
      shall not at any time during the term of this Schedule, induce or seek to
      induce or entice or seek to entice away from RBS NV any employee of RBS NV
      (other than a Relevant Employee at Completion). The placement of an
      advertisement in the public domain and the recruitment of a person through
      an employment agency shall not constitute a breach of this paragraph 10.4
      provided that no member of ABN AMRO Bank encourages or advises such agency
      to approach any such employees. Appointments to such role will be on terms
      and conditions of employment as appropriate to that role and that bank and
      terms and conditions will not be protected, and protection of continuity
      of service is at the discretion of ABN AMRO
  Bank.

            

    

     

    
      	
              11

            	
              Term
      and Termination

            

    

     

    Subject to earlier
termination in accordance with its terms this Schedule shall terminate on
Completion.

     

    
      	
              12

            	
              Completion

            

    

     

    Upon fulfilment of
Acquisition Requirements the ID&JG Business will be transferred to ABN AMRO
Bank in accordance with the CSA provisions.

     

    
      	
              13

            	
              Escalation
      and Dispute Resolution

            

    

     

    
      	
              13.1

            	
              In the event
      that there is a dispute in relation to any aspect of, or failure to agree
      any matter arising in relation to the conduct or operation of the
      ID&JG Business between RBS NV and the Business Head with respect to
      cannot be resolved at a local level, the Business Head will escalate the
      matter to the Chairman of the Managing Board of RBS NV. If the Business
      Head and the Chairman

            

    

    
       

      
        
          
          

        

        
          132

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                of the
      Managing Board of RBS NV cannot resolve the matter within ten Business
      Days of the matter being referred to the Chairman of the Managing Board of
      RBS NV, then the Chairman of the Managing Board of RBS NV will attempt to
      resolve the matter informally through discussion with the Chairman of the
      Managing Board of ABN AMRO Bank.

              

      

       

    

    
      	
              13.2

            	
              In the event
      that there is a dispute between RBS NV and ABN AMRO Bank in relation to
      any aspect of, or failure to agree any matter arising in relation to, this
      Schedule or any document agreed or contemplated as being agreed pursuant
      to this Schedule by the parties first attempting to resolve any dispute
      informally through discussion by the following
  individuals:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the Chief
      Administrative Officer of RBS NV on behalf of RBS NV and the Chief
      Executive Officer of the International Diamond & Jewellery Group on
      behalf of ABN AMRO Bank, who will meet to resolve the dispute and if they
      cannot resolve the dispute unanimously within five Business Days of the
      dispute being referred to them
then;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the dispute
      shall promptly be referred to the Chairman of the Managing Board of RBS NV
      and the Chairman of the Managing Board of ABN AMRO
  Bank.

            

    

     

    
      	
              13.3

            	
              Any dispute
      or any matter which is not resolved by agreement between the parties in
      accordance with Clauses 13.1 or 13.2 above, within 10 Business Days of
      such dispute being referred to the Chairman of the Managing Board of RBS
      NV and the Chairman of the Managing Board of ABN AMRO Bank, shall be
      determined in accordance with Clause 9 of the CSA, save that references in
      Clause 9 of the CSA to Independent Accountants shall be read as references
      to a relevant Expert and references to the President of the Institute of
      Chartered Accountants shall be read as references to the President of the
      relevant governing body to which such expert is a
  member.

            

    

     

    For the purpose of
this Schedule “Expert” shall mean a person agreed by RBS NV and ABN AMRO Bank as
a suitably qualified person as they determine appropriate having regard to the
nature of the dispute. Failing such agreement within ten Business Days of the
expiry of the period set out above, the Expert shall be the person nominated on
the application of either RBS NV or ABN AMRO Bank (as the case may be) by the
President for the time being of the Institute of Chartered Accountants in
England and Wales.

     

    
      	
              14

            	
              Confidentiality

            

    

     

    In the event that
RBS NV elects to sell all or any part of its business and assets, RBS NV
undertakes that it will not, without the written consent of ABN AMRO Bank, such
consent not to be unreasonably withheld or delayed, disclose confidential
information relating to the ID&JG Business or ABN AMRO Bank to any potential
buyer notwithstanding that any such potential buyer may have signed a
confidentiality agreement.

     

    
      	
              15

            	
              Notices

            

    

     

    
      	
              15.1

            	
              Any notice or
      other document to be given under this Schedule shall be in writing in
      English and shall be deemed duly given if delivered to the recipient at
      its fax number, email or address set out below or any other fax number,
      email or address notified to the parties for the purposes of this
      Schedule, if left at or sent by (i) airmail or express or other fast
      postal service or (ii) facsimile transmission or other means of
      telecommunication in permanent written form to the following address or
      number:

            

    

     

    
      
        
        

      

      
        133

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                RBS
      NV

              	 
      
	 	 
      	 
      
	 	
                Address

              	
                Head
      Office

              
	 	
              	
                Gustav
      Mahlerlaan 10

              
	 	
              	
                1082 PP
      Amsterdam

              
	 	 
      	 
      
	 	
                Fax
      No.

              	
                + 31
      206292163

              
	 	 
      	 
      
	 	
                For the
      attention of General Counsel

              
	 	 
      	 
      
	 	
                With a copy
      to:

              
	 	 
      	 
      
	 	
                The Royal
      Bank of Scotland Group plc

              
	 	 
      	 
      
	 	
                Address:

              	
                Cutlers
      Exchange

              
	 	
              	
                123
      Houndsditch

              
	 	
              	
                London EC3A
      7BU

              
	 	
              	
                United
      Kingdom

              
	 	 
      	 
      
	 	
                Fax
      No:

              	
                +44 (0) 20
      7857 9795

              
	 	 
      	 
      
	 	
                For the
      attention of Deputy Director, Group Legal

              
	 	 
      	 
      
	 	
                ABN
      AMRO Bank N.V.

              
	 	 
      	 
      
	 	
                Address

              	
                Gustav
      Maherlaan 10

              
	 	
              	
                1082PP
      Amsterdam

              
	 	
              	
                The
      Netherlands

              
	 	 
      	 
      
	 	
                Fax
      No.

              	
                + 31 20
      3830710

              
	 	 
      	 
      
	 	
                For the
      attention of: General Counsel

              
	 	 
      	 
      
	 	
                With a copy
      to:

              
	 	 
      	 
      
	 	
                Address

              	
                ABN AMRO Bank
      N.V

              
	 	
              	
                International
      Diamonds & Jewellery Group

              
	 	
              	
                Gustav
      Maherlaan 10

              
	 	
              	
                1082PP
      Amsterdam

              
	 	
              	
                The
      Netherlands

              
	 	 	 
	 	
                For the
      attention of: CEO, International Diamonds & Jewellery
      Group

              
	 	 	 
	 	Fax No.	+
      31 20 6290867
	 	 
	 	
                Email: victor.van.de.kwast@nl.abnamro.com

              

      

    

     

    
      	
              15.2

            	
              Any notice
      shall be delivered by hand or sent by fax or by express or other fast
      means of postal service. Any notice shall be deemed to have been received
      on the next working day in the place to which it is sent if sent by fax or
      72 hours from the time of posting if sent by
  post.

            

    

     

    
      	
              16

            	
              Amendments

            

    

     

    This Schedule may
be amended by agreement between RBS NV and ABN AMRO Bank, without the consent of
the Investors provided that any change shall only be effective if made in
writing and signed by or on behalf of each of RBS NV and ABN AMRO
Bank.

     

    
      
        
        

      

      
        134

        
          

        

      

      
        
        

      

    

     

    Schedule
12

    Worked
Example for the purposes of Clause 13

     

    
      	
              Consolidated
      balance sheet (assuming all "divisible" assets/liabilities transferred at
      separation)

            	 

    

     

    
      	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 
	
              EUR
      million

            	 	 	R	 	 	
              MoF

            	 	 	 	S	 	 	
              Total

            	 	 
    	 	 	R	 	 	
              MoF

            	 	 	 	S	 	 	
              Total

            	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Retained
      assets

            	 	 	307	 	 	 	271	 	 	 	224	 	 	 	802	 	
              Retained
      liabilities

            	 	 	205	 	 	 	181	 	 	 	149	 	 	 	535	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Intracompany
      receivable

            	 	 	183	 	 	 	129	 	 	 	106	 	 	 	418	 	
              Tier 1
      (equity)

            	 	 	190	 	 	 	219	 	 	 	139	 	 	 	548	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
              Tier
      2

            	 	 	95	 	 	 	85	 	 	 	70	 	 	 	250	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
              Equity offset
      to tier 2

            	 	 	 	 	 	 	(85	)	 	 	(28	)	 	 	(113	)
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Total

            	 	 	490	 	 	 	400	 	 	 	330	 	 	 	1,220	 	
              Total

            	 	 	490	 	 	 	400	 	 	 	330	 	 	 	1,220	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

    

    
      	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 
	
              Memo:
      overfunding position at
      Separation

            	 	 	 	 	 	 	 	 	 	 	 	 	
              Equity
      injection

            	 	 	190	 	 	 	219	 	 	 	139	 	 	 	548	 
	
              Intracompany
      receivable

            	 	 	 	 	 	 	 	 	129	 	 	 	106	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Less:
      'rented' Tier 2

            	 	 	 	 	 	 	 	 	---	 	 	 	(42	)	
              Basel II
      equity tier 1 support

            	 	 	152	 	 	 	134	 	 	 	111	 	 	 	397	 
	
              Adjusted
      intracompany receivable

            	 	 	 	 	 	 	 	 	129	 	 	 	64	 	
              Buffer @
      25%

            	 	 	38	 	 	 	34	 	 	 	28	 	 	 	100	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
              Minimum
      equity required

            	 	 	190	 	 	 	168	 	 	 	139	 	 	 	497	 
	
              Indicative
      annualised P&L:

            	 	
              Base

            	 	 	
              Margin

            	 	 	 	 	 	 	 	 	 	 
    	 	 	25	%	 	 	25	%	 	 	25	%	 	 	25	%
	
              Adjusted
      Intra group depo @ ***

            	 	 	***	 	 	 	***	 	 	 	***	 	 	 	***	 	
              Rented
      tier 2:

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Rented' tier
      2 @ ***

            	 	 	***	 	 	 	***	 	 	 	***	 	 	 	***	 	
              Tier 2
      requirement

            	 	 	 	 	 	 	85	 	 	 	70	 	 	 	 	 
	
              Total
      interest credit/(charge)

            	 	 	 	 	 	 	 	 	 	 	***	 	 	 	***	 	
              Less: equity
      buffer

            	 	 	 	 	 	 	(34	)	 	 	(28	)	 	 	 	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
              Less: excess
      equity over buffer

            	 	 	 	 	 	 	(51	)	 	 	---	 	 	 	 	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
              'Rented'
      tier 2 capital

            	 	 	 	 	 	 	---	 	 	 	42	 	 	 	 	 
	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

    

     

    
      	
              Note:
      MoF benefits from offset for qualifying tier 2 capital (USD250 million
      subordinated debt 2023) until exchange offer transfers this out of RBS NV
      when a rental requirement may be
      triggered  

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

            

    

     

    
      
        
        

      

      
        135

        
          

        

      

      
        
        

      

    

     

     

    In
witness whereof this Agreement has been entered into the day and year
first above written.

     

    
      	
              SIGNED
      by   

              behalf
      of

              THE ROYAL
      BANK OF SCOTLAND 

              GROUP
      PLC

            	on	 
    

    

     

     

    
      	
              SIGNED
      by  

              behalf
      of

              BANCO
      SANTANDER, S.A.

            	on	 
    

    

     

     

    
      	
              SIGNED
      by

              behalf
      of

              THE STATE OF
      THE NETHERLANDS

            	on	 
    

    

     

     

    
      	
              SIGNED by
      

              behalf
      of

              RFS HOLDINGS
      B.V.

            	onExhibit
4.28

     

    

     

    

     

    
 

     

    UK ASSET PROTECTION
SCHEME

    TERMS AND
CONDITIONS

     

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    CONTENTS

    

    
      
        	
                PART
      1: INTRODUCTION

              	
                5

              
	 
      	 
      	 
      
	
                1.

              	
                PREAMBLE

              	
                5

              
	 
      	 
      	 
      
	
                2.

              	
                SCHEME
      PRINCIPLES

              	
                6

              
	 
      	 
      
	
                PART
      2: THE SCHEME

              	
                13

              
	 
      	 
      	 
      
	
                3.

              	
                PARTICIPATION
      CONDITIONS

              	
                13

              
	 
      	 
      	 
      
	
                4.

              	
                COVERAGE
      AND TERMINATION

              	
                16

              
	 
      	 
      	 
      
	
                5.

              	
                TRIGGERS

              	
                34

              
	 
      	 
      	 
      
	
                6.

              	
                LOSSES

              	
                47

              
	 
      	 
      	 
      
	
                7.

              	
                RECOVERIES

              	
                69

              
	 
      	 
      	 
      
	
                8.

              	
                PAYMENTS

              	
                84

              
	 
      	 
      	 
      
	
                9.

              	
                FEES,
      COSTS AND EXPENSES

              	
                95

              
	 
      	 
      
	
                PART
      3: ASSET MANAGEMENT

              	
                100

              
	 
      	 
      	 
      
	
                10.

              	
                ASSET
      MANAGEMENT

              	
                100

              
	 
      	 
      	 
      
	
                11.

              	
                TRANSFER
      OF ASSET MANAGEMENT RESPONSIBILITY

              	
                110

              
	 
      	 
      	 
      
	
                12.

              	
                PROHIBITED
      CONDUCT

              	
                112

              
	 
      	 
      	 
      
	
                13.

              	
                OTHER
      RESTRICTIONS AND COVENANTS REGARDING ASSETS

              	
                114

              
	 
      	 
      
	
                PART
      4: MONITORING, REPORTING AND PROVISION OF DATA

              	
                117

              
	 
      	 
      	 
      
	
                14.

              	
                GENERAL
      PROVISIONS REGARDING MONITORING AND REPORTING

              	
                117

              
	 
      	 
      	 
      
	
                15.

              	
                PROVISION
      OF INFORMATION AND REPORTS TO THE TREASURY

              	
                121

              
	 
      	 
      	 
      
	
                16.

              	
                QUARTERLY
      STATEMENTS; QUARTERLY STATEMENT DATA

              	
                129

              
	 
      	 
      	 
      
	
                17.

              	
                INITIAL
      DATA AND POST-ACCESSION DATA

              	
                135

              
	 
      	 
      	 
      
	
                18.

              	
                MAINTENANCE
      OF BOOKS AND RECORDS

              	
                139

              
	 
      	 
      	 
      
	
                19.

              	
                ASSURANCE
      PLAN

              	
                142

              
	 
      	 
      	 
      
	
                20.

              	
                TREASURY’S
      RIGHT TO AUDIT, INVESTIGATE AND REVIEW

              	
                144

              
	 
      	 
      

      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      
        	
                PART
      5: GOVERNANCE AND OVERSIGHT

              	
                146

              
	 
      	 
      	 
      
	
                21.

              	
                SENIOR
      OVERSIGHT COMMITTEE

              	
                146

              
	 
      	 
      	 
      
	
                22.

              	
                SCHEME
      HEAD

              	
                149

              
	 
      	 
      	 
      
	
                23.

              	
                SCHEME
      EXECUTIVE TEAM

              	
                151

              
	 
      	 
      	 
      
	
                24.

              	
                GENERAL
      STAFFING REQUIREMENTS

              	
                154

              
	 
      	 
      	 
      
	
                25.

              	
                PROVISION
      OF GROUP SHARED SERVICES

              	
                156

              
	 
      	 
      	 
      
	
                26.

              	
                DETAILED
      ORGANISATIONAL STRUCTURE

              	
                158

              
	 
      	 
      	 
      
	
                27.

              	
                SYSTEMS,
      CONTROLS AND PROCESSES

              	
                159

              
	 
      	 
      
	
                PART
      6: REMUNERATION

              	
                160

              
	 
      	 
      	 
      
	
                28.

              	
                REMUNERATION
      POLICY

              	
                160

              
	 
      	 
      	 
      
	
                29.

              	
                IMPLEMENTATION
      OF REMUNERATION POLICY

              	
                164

              
	 
      	 
      
	
                PART
      7: REPRESENTATIONS AND WARRANTIES

              	
                165

              
	 
      	 
      	 
      
	
                30.

              	
                REPRESENTATIONS
      AND WARRANTIES

              	
                165

              
	 
      	 
      
	
                PART
      8: REMEDIES AND DISPUTES

              	
                168

              
	 
      	 
      	 
      
	
                31.

              	
                REMEDY
      EVENTS

              	
                168

              
	 
      	 
      	 
      
	
                32.

              	
                STEP-IN
      RIGHTS

              	
                180

              
	 
      	 
      	 
      
	
                33.

              	
                INDEMNITY

              	
                191

              
	 
      	 
      	 
      
	
                34.

              	
                ADJUSTMENT
      EVENTS

              	
                195

              
	 
      	 
      	 
      
	
                35.

              	
                DISPUTES

              	
                199

              
	 
      	 
      	 
      
	
                36.

              	
                DEFAULT
      INTEREST

              	
                209

              
	 
      	 
      	 
      
	
                37.

              	
                GENERAL
      PROVISIONS REGARDING REMEDIES AND WAIVERS

              	
                211

              
	 
      	 
      
	
                PART
      9: TAXATION

              	
                213

              
	 
      	 
      	 
      
	
                38.

              	
                TAXATION

              	
                213

              
	 
      	 
      
	
                PART
      10: GENERAL PROVISIONS

              	
                216

              
	 
      	 
      	 
      

      

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                39.

              	
                CONSENTS
      AND APPROVALS

              	
                216

              
	 
      	 
      	 
      
	
                40.

              	
                PAYMENT
      MECHANICS AND CURRENCY

              	
                218

              
	 
      	 
      	 
      
	
                41.

              	
                TRANSFERS

              	
                222

              
	 
      	 
      	 
      
	
                42.

              	
                CONFIDENTIAL
      INFORMATION AND RESTRICTED ASSET INFORMATION

              	
                224

              
	 
      	 
      	 
      
	
                43.

              	
                DATA
      PROTECTION

              	
                233

              
	 
      	 
      	 
      
	
                44.

              	
                ANNOUNCEMENTS
      AND PUBLICITY

              	
                235

              
	 
      	 
      	 
      
	
                45.

              	
                NATURE
      OF RELATIONSHIP

              	
                238

              
	 
      	 
      	 
      
	
                46.

              	
                THIRD
      PARTY PROVISIONS

              	
                239

              
	 
      	 
      	 
      
	
                47.

              	
                MODIFICATIONS
      TO THESE CONDITIONS

              	
                240

              
	 
      	 
      	 
      
	
                48.

              	
                PRACTICE
      STATEMENTS

              	
                245

              
	 
      	 
      	 
      
	
                49.

              	
                AGENT
      FOR SERVICE OF PROCESS

              	
                248

              
	 
      	 
      	 
      
	
                50.

              	
                ENTIRE
      AGREEMENT

              	
                249

              
	 
      	 
      	 
      
	
                51.

              	
                NOTICES

              	
                250

              
	 
      	 
      	 
      
	
                52.

              	
                INVALIDITY

              	
                252

              
	 
      	 
      	 
      
	
                53.

              	
                FURTHER
      ASSURANCE

              	
                253

              
	 
      	 
      	 
      
	
                54.

              	
                LANGUAGE

              	
                254

              
	 
      	 
      	 
      
	
                55.

              	
                CHOICE
      OF GOVERNING LAW

              	
                255

              
	 
      	 
      
	
                PART
      11: DEFINITIONS AND INTERPRETATION

              	
                256

              
	 
      	 
      	 
      
	
                56.

              	
                DEFINITIONS

              	
                256

              
	 
      	 
      	 
      
	
                57.

              	
                INTERPRETATION

              	
                279

              

      

      

    

     

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    PART
1: INTRODUCTION

     

    
      	
              1.

            	
              PREAMBLE

            

    

     

    
      	
              1.1

            	
              On 19 January
      2009, Her Majesty’s Government of the United Kingdom announced its
      intention to offer the Asset Protection Scheme (the “Scheme”) to protect
      certain eligible financial institutions against exceptional credit losses
      on certain portfolios of assets and
exposures.

            

    

     

    
      	
              1.2

            	
              On 26
      February 2009, the Treasury announced the proposed implementation, and
      issued a statement summarising the proposed terms, of the
      Scheme.  The Scheme constitutes “financial assistance” for the
      purpose of section 257 of the Banking Act
2009.

            

    

     

    
      	
              1.3

            	
              The Asset
      Protection Agency (the “Agency”) is being
      established as an executive agency of the Treasury.  The main
      objective of the Agency will be to operate the Scheme on behalf of the
      Treasury.  The functions, objectives and responsibilities of the
      Agency as regards the Scheme will be set out in a framework document drawn
      up for the Agency by the Treasury.

            

    

     

    
      	
              1.4

            	
              These are the
      terms and conditions of the Scheme in force on 26 November 2009 (as
      amended, modified, supplemented or replaced from time to time, the “Conditions”).

            

    

     

    
      	
              1.5

            	
              A financial
      institution participating in the Scheme (the “Participant”) will enter
      into an accession agreement (the “Accession Agreement”)
      with the Treasury which will
      incorporate these Conditions and set out certain other terms and
      conditions applicable to the Participant’s participation in the
      Scheme.  The Accession Agreement may vary these Conditions in
      respect of that Participant but only if and to the extent that it
      expressly states that it varies these
  Conditions.

            

    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
 

    
      	
              2.

            	
              SCHEME
      PRINCIPLES

            

    

     

    
      	
              2.1

            	
              These
      Conditions are intended to comply with and satisfy the Scheme
      Principles.  Terms defined in the Scheme Principles do not apply
      elsewhere in these Conditions.

            

    

     

    
      	
              2.2

            	
              In the event
      of any Dispute regarding the construction of a Condition, the parties to
      that Dispute and any Arbitrator shall have regard to the Scheme Principles
      in seeking to construe the relevant Condition and to ascertain the common
      intention of the parties in respect of that
  Condition.

            

    

     

    
      	
              2.3

            	
              The “Scheme Principles” are
      as follows:

            

    

     

    Coverage
and termination

     

    
      	
               
      

            	
              (A)

            	
              Protection
      under the Scheme will be provided in respect of covered entities and for a
      pre-defined portfolio (the “portfolio”) of assets
      and exposures (“covered
      assets”) which are identified in the initial data (the “initial data”) to be
      provided by the Participant in connection with the Scheme.  In
      the initial data, covered assets are allocated to “covered asset classes”
      and otherwise flagged according to the nature of the applicable assets and
      exposures.  Such allocation and flagging affects the treatment
      of covered assets under the Scheme and should not have been manipulated to
      the detriment of the Treasury.

            

    

     

    
      	
               
      

            	
              (B)

            	
              Protection
      under the Scheme will continue to be provided in respect of a covered
      asset if the agreements and instruments relating to the covered asset are
      amended or replaced only in accordance with the requirements of the
      Conditions, including an “asset continuity
      requirement”.  The asset continuity requirement will be
      satisfied if the relevant amendment or replacement constitutes or forms
      part of a Restructuring and in certain other specified
      circumstances.  If an amendment or replacement does not satisfy
      the asset continuity requirement, the covered asset will cease to be
      protected by the Scheme unless the Treasury determines
      otherwise.  The asset continuity requirement will not apply to a
      covered asset after the date on which a trigger (as described in Scheme
      Principle (E)) has occurred with respect to
it.

            

    

     

    
      	
               
      

            	
              (C)

            	
              Unless the
      Treasury determines otherwise, a covered asset will cease to be protected
      by the Scheme if it does not satisfy certain specified “asset eligibility
      criteria”.  The asset eligibility criteria will not apply
      to a covered asset from and including the date on which a trigger has
      occurred with respect to it.  The asset eligibility criteria are
      that the covered asset remains:

            

    

     

    
      	
               
      

            	
              (i)

            	
              included in
      the consolidated balance sheet of the Participant’s group under IFRS in
      force as at 31 December 2008 (“static IFRS”), with
      specific rules adapting this criterion, in order to identify analogous
      financial exposure, in respect of “covered liabilities”
      (including overdrafts); and

            

    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              legally and
      beneficially owned by, and within the control of, the relevant covered
      entity or entities, subject only to specific rules permitting (a)
      responsibility for the management and administration of covered assets to
      be delegated in specified circumstances or pursuant to specified types of
      arrangement (“permitted
      delegations”), (b) certain specified types of security and (c)
      covered assets to be subject to specified types of security, title
      transfer, securitisation, covered bond and conduit transactions (“permitted arrangements”)
      in circumstances where a covered entity continues to retain all or
      substantially all the economic exposure to the covered asset under static
      IFRS and (unless the permitted arrangement falls within certain specified
      exceptions) a covered entity is entitled following the occurrence of a
      trigger to obtain legal and beneficial ownership, and control, of the
      covered asset on notice.  Permitted arrangements should not be
      entered into for the purpose of affecting the treatment of covered assets
      under the Scheme.

            

    

     

    
      	
               
      

            	
              (D)

            	
              Protection
      under the Scheme for a covered asset may also terminate with retrospective
      effect if (i) it becomes unlawful for the Treasury to perform its payment
      obligations under the Scheme with respect to it, (ii) there is delay,
      exceeding a specified period, in reporting the occurrence of a trigger
      with respect to it, (iii) the initial data in respect of that covered
      asset contain errors such that it is not possible to identify the relevant
      assets and exposures which the Participant intended to include in the
      portfolio or (iv) (subject, where applicable, to specified grace periods)
      one of certain specified termination events occurs with respect to
      it.

            

    

     

    Triggers

     

    
      	
               
      

            	
              (E)

            	
              Losses (as
      described in Scheme Principles (H), (I) and (J)) with respect to a covered
      asset will be taken into account under the Scheme if one of three
      verifiable credit-related triggers (“triggers”) occurs in
      respect of that covered asset.  The triggers are intended to
      capture the following
circumstances:

            

    

     

    
      	
               
      

            	
              (i)

            	
              failure to pay: the
      counterparty to the covered asset has (subject to specified grace periods)
      failed to pay an amount due under the terms of the covered asset (with
      specific rules adapting the failure to pay trigger, in order to identify
      analogous non-performance, in respect of covered assets within the
      consumer finance and residential mortgage covered asset classes and in
      respect of long dated and other limited recourse
  assets);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              bankruptcy: the
      counterparty is subject to a specified insolvency- or bankruptcy-related
      event (or, in order to identify analogous credit deterioration, if the
      covered asset forms part of the consumer finance or residential mortgage
      covered asset class, the covered asset has been charged off within the
      systems of the relevant covered entity in accordance with its ordinary
      business practices consistently applied);
or

            

    

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (iii)

            	
              restructuring: the
      covered asset is subject to a restructuring and is (or, unless the covered
      asset forms part of the residential mortgage covered asset class, is
      required by static IFRS to be) subject to an individual asset-level
      impairment (provided that individual asset-level impairments made, or
      required by static IFRS to be made, on or before 31 December 2008 will be
      taken into account for this purpose only if the Participant complies with
      certain specified notice requirements), with specific rules adapting the
      restructuring trigger for covered assets accounted for on a fair value
      basis.

            

    

     

    
      	
               
      

            	
              (F)

            	
              For a covered
      asset which is a derivative agreement, the only triggers are (i) subject
      to a specified threshold, restructuring (as described in Scheme Principle
      (E)(iii)) and (ii) (subject to a specified grace period) the failure by
      the counterparty to that covered asset to pay the early termination amount
      for that derivative agreement after an early termination date has occurred
      under that derivative agreement.

            

    

     

    Losses

     

    
      	
               
      

            	
              (G)

            	
              Protection
      under the Scheme for each covered asset will be subject to a specified
      cap, the amount of which will reduce to zero over time or at a specified
      time and will never increase.  For this purpose, each covered
      asset will have its own cap.

            

    

     

    
      	
               
      

            	
              (H)

            	
              Protection
      under the Scheme will be provided for credit exposure in respect of each
      covered asset.  Accordingly, a “loss” in relation to a
      covered asset will (subject to the cap referred to in Scheme Principle
      (G)) correspond to the outstanding principal amount of the covered asset
      (excluding amounts capitalised after 31 December 2008, except in respect
      of an overdraft) on the first date a trigger occurs with respect to the
      covered asset (or, if later, 31 December 2008).  There are
      additional rules, intended to achieve analogous protection for credit
      exposure, defining the amount of the loss if a trigger occurs with respect
      to a covered asset which is a derivative agreement, limited recourse asset
      (which may be a long dated asset) or finance
  lease.

            

    

     

    
      	
               
      

            	
              (I)

            	
              Subject to
      specified limitations, further losses in respect of covered liabilities
      may arise where, after the date on which a trigger has occurred with
      respect to a covered asset (or, if later, 31 December 2008), the relevant
      covered entity or entities make certain further advances or payments
      pursuant to and in accordance with the terms of the covered
      asset.  The cap referred to in Scheme Principle (G) continues to
      apply to such further losses in respect of covered
      liabilities.

            

    

     

    
      	
               
      

            	
              (J)

            	
              Subject to
      specified limitations, the Treasury may elect that assets and exposures of
      the Participant’s group that are not protected under the Scheme (“non-covered assets”) and
      which (i) represent new debt funding or a decision to continue to make
      available existing debt funding, in each case on or after the date on
      which a trigger has occurred with respect to a related covered asset,
      

            

    

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              and (ii) meet
      criteria specified by the Treasury, will become protected by the
      Scheme.  The extent of the protection for such “extended protection
      assets” (which assets may or may not already be in existence at the
      time of the Treasury’s election) will be at the Treasury’s
      discretion.  Further losses which arise will be protected within
      the extent of the protection which the Treasury elects to provide.
      

            

    

     

    
      	
               
      

            	
              (K)

            	
              The losses
      referred to in Scheme Principle (H) and losses in respect of covered
      liabilities and extended protection assets, referred to in Scheme
      Principles (I) and (J) respectively, will be taken into account for the
      purpose of the calculation (the “payment calculation”)
      referred to in Scheme Principle
(Q).

            

    

     

    
      	
               
      

            	
              (L)

            	
              Protection
      under the Scheme may be rolled over to a specified extent in respect of
      certain classes of sterling covered assets in certain specified
      circumstances.  If protection for a covered asset is rolled
      over, following the date upon which the protection under the Scheme would
      have terminated but for the rollover, 55 per cent. of the covered asset
      will be protected by the Scheme (on the 90/10 basis set out in Scheme
      Principle (Q)).

            

    

     

    Recoveries

     

    
      	
               
      

            	
              (M)

            	
              If a trigger
      occurs with respect to a covered asset then the assets, receipts,
      realisations, recoveries, rights, interests and benefits made, realised,
      received, recovered or derived by covered entities, other members of their
      group and any other holders of the covered asset, with respect to,
      resulting from or arising out of the covered asset, hedging arrangements
      meeting certain specified criteria and junior assets meeting certain
      specified criteria (in each case whether or not relating to losses and
      including, in certain specified cases, those arising before the date on
      which the trigger occurs) will, subject to limited specified exceptions,
      constitute “recoveries”.

            

    

     

    
      	
               
      

            	
              (N)

            	
              Recoveries
      are calculated net of certain specified out-of-pocket
      expenses.  It is intended that expenses will be deductible from
      recoveries only if and to the extent there is a direct and verifiable
      connection between the incurrence of the relevant expense and the
      achievement of the relevant
recovery.

            

    

     

    
      	
               
      

            	
              (O)

            	
              Recoveries
      will be taken into account for the purpose of the payment calculation
      where they (i) are in the form of cash realisations, (ii) are in the form
      of assets transferred under any credit support arrangement relating to a
      derivative agreement or (iii) are not in the form of cash realisations but
      are deemed to be taken into account pursuant to specific
      rules.  Non-cash realisations are traced for the purpose of
      taking them into account once they are converted into or
      give  rise to cash
realisations.

            

    

     

    Payments

     

    
      	
               
      

            	
              (P)

            	
              Losses and
      recoveries will be converted into sterling for the purpose of the payment
      calculation by reference to a specified exchange rate.  It is
      not 

            

    

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	intended that
      the Participant should manipulate the process of reporting triggers,
      losses and recoveries in order to procure a different exchange rate or
      otherwise for the purpose of affecting the payment
  calculation.

    

     

    
      	
               
      

            	
              (Q)

            	
              Payments in
      respect of protection under the Scheme will be calculated on a whole
      portfolio basis by reference to the cumulative amount of losses and
      recoveries in respect of the portfolio and will, over time, represent 90
      per cent. of the amount by which cumulative losses (as reduced by
      cumulative recoveries) on the portfolio exceed a specified first loss
      amount.  All cumulative losses (as reduced by cumulative
      recoveries) on the portfolio up to the first loss amount, and 10 per cent.
      of the amount by which cumulative losses (as reduced by cumulative
      recoveries) on the portfolio exceed the first loss amount, will not be
      protected under the Scheme.

            

    

     

    
      	
               
      

            	
              (R)

            	
              In the
      payment calculation, recoveries will be applied first to reduce the amount
      of payments to be made by the Treasury in respect of losses, second to
      provide for the Participant to reimburse the Treasury in respect of
      payments it has made to the Participant and third towards reinstating the
      first loss amount.

            

    

     

    
      	
               
      

            	
              (S)

            	
              Payments in
      respect of losses and recoveries will, over time, reflect the credit
      performance of the covered assets (to the extent protected under the
      Scheme) without any manipulation which results in the Treasury providing
      protection for more than its 90 per cent. share of losses (as reduced by
      recoveries) in excess of the first loss amount or the Participant being
      exposed to less than the first loss amount plus its 10 per cent. share of
      losses (as reduced by recoveries).  The performance of covered
      assets (to the extent protected under the Scheme), including when compared
      with the performance of non-covered assets, should not be manipulated to
      the detriment of the Treasury (whether by the adoption, amendment or
      implementation in a particular manner of systems or business practices, or
      otherwise).

            

    

     

    
      	
               
      

            	
              (T)

            	
              The provision
      of protection under the Scheme in respect of a covered asset is subject to
      the Participant providing or making available, upon request by the
      Treasury, documentation, information and other evidence which is
      sufficient to (i) verify that the relevant payment obligation has arisen
      pursuant to the Conditions and (ii) enable the amount of the payment
      required to be made by the Conditions to be determined
      accurately.  Such documentation, information and other evidence
      may (without limitation) be required by the Treasury in order to verify
      satisfaction of the asset continuity requirement and the asset eligibility
      criteria, the occurrence and timing of a trigger and the amount of any
      loss or recovery.

            

    

     

    Asset
management

     

    
      	
               
      

            	
              (U)

            	
              Subject to
      certain specified exceptions, the Participant must ensure that any conduct
      in relation to covered assets (to the extent protected by the Scheme),
      non-cash recoveries and certain closely related hedges (together, the
      

            

    

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              “protected assets”)
      complies with certain specified “asset management
      requirements”, including a specified “asset management
      objective”.  

            

    

     

    
      	
               
      

            	
              (V)

            	
              The asset
      management objective does not apply to protected assets within the
      consumer finance and residential mortgage covered asset classes that are
      managed and administered alongside non-covered assets within those classes
      by personnel who are unaware of whether or not such assets and exposures
      are protected under the Scheme, provided that the other asset management
      requirements are complied with such that (without
    limitation):

            

    

     

    
      	
               
      

            	
              (i)

            	
              the policies,
      practices and procedures of the Participant’s group are applied
      consistently to a particular type or class of asset or exposure regardless
      of whether or not the asset or exposure is protected under the Scheme;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              there is no
      prejudice to, discrimination against or disproportionate adverse effect on
      the relevant protected assets when compared to assets and exposures of the
      same type or class that are non-covered
assets.

            

    

     

    
      	
               
      

            	
              (W)

            	
              It is
      intended that where (i) there is a conflict between a protected asset and
      a non-covered asset or (ii) a protected asset and a non-covered asset are
      related for credit aggregation purposes (including where they have a
      common obligor or have obligors that are members of the same group),
      Scheme Principle (U) should also apply to the non-covered asset to the
      extent necessary to ensure that the protected asset is managed and
      administered in accordance with the asset management requirements (except
      where the non-covered asset is publicly-traded and managed separately from
      the protected asset by virtue of a Chinese
  wall).

            

    

     

    
      	
               
      

            	
              (X)

            	
              It is also
      intended that Scheme Principle (U) should apply to any decision to dispose
      of a protected asset in respect of which a trigger has
      occurred.

            

    

     

    
      	
               
      

            	
              (Y)

            	
              None of
      Scheme Principles (U) to (X) is intended to result in any behaviour which
      breaches applicable law or regulation or any contractual term of any asset
      or exposure which was in effect as at 31 December 2008 or was formed or
      amended in accordance with the
Conditions.

            

    

     

    
      	
               
      

            	
              (Z)

            	
              The triggers
      (including the grace periods), the calculation of losses and recoveries
      and the asset management requirements are intended (without limitation) to
      ensure that the Participant is not incentivised to enforce any rights
      against obligors earlier than it would enforce such rights but for its
      participation in the Scheme.

            

    

     

    Exposure
to 10 per cent. share

     

    
      	
               
      

            	
              (AA)

            	
              Subject to
      specified exceptions, the Participant must ensure that, at all times when
      the amount of cumulative losses (as reduced by cumulative recoveries) is
      

            

    

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              in excess of
      the first loss amount, it or the relevant covered or other specified
      entity has, following a trigger, a full, unhedged economic exposure to its
      10 per cent. share of recoveries.

            

    

     

    Step-in

     

    
      	
               
      

            	
              (BB)

            	
              As the
      Treasury’s exposure under the Scheme, and its ability to monitor that
      exposure, depends (amongst other things) on the effective management and
      administration of certain assets and exposures (including covered assets)
      and the availability of information relevant to such exposure, the
      Treasury benefits from certain specified step-in rights upon the
      occurrence of specified step-in trigger events.  The step-in
      rights may be exercised for a number of different purposes, including to
      enable the Treasury to gather information and oversee the management and
      administration of the covered assets or specific covered assets and/or to
      enable the Treasury to require the appointment of a third party to manage
      and administer the covered assets or specific covered assets, in each case
      for the purpose of fulfilling certain specified step-in
      objectives.  If any step-in trigger event occurs, the Treasury’s
      ability to exercise the step-in rights effectively (including by the
      appointment of a step-in manager) and in a timely fashion is a crucial
      remedy.  It is intended that the Conditions which provide for
      the step-in rights should achieve these
  objectives.

            

    

     

    Regulatory
capital treatment

     

    
      	
               
      

            	
              (CC)

            	
              It is
      intended that the protection under the Scheme should, so far as possible,
      satisfy the requirements for eligible credit risk mitigation techniques
      set out in chapters 4, 5 and 9 (as relevant) of BIPRU.  It is
      intended that the credit risk mitigation achieved through participation in
      the Scheme should reflect the Treasury’s sovereign risk
      weighting.

            

    

     

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    PART
2: THE SCHEME

     

    
      	
              3.

            	
              PARTICIPATION
      CONDITIONS

            

    

     

    It shall be a
condition precedent to the Participant’s participation in the Scheme
that:

     

    
      	
              (A)

            	
              the events
      set out in sub-paragraphs (i) to (iv) (inclusive) below shall have
      occurred to the satisfaction of the Treasury or been waived in accordance
      with the terms of the Accession
Agreement:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the due
      execution and delivery of the Accession Agreement by the Participant and
      the Participant’s Ultimate Parent (if
any);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              to the extent
      required to be discharged on or before the Accession Date, the
      Participant’s obligations with respect to the Fee having been discharged
      in accordance with the terms of the Accession Agreement and the other
      Scheme Documents;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the receipt
      by the Treasury of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              evidence that
      the European Commission has adopted a decision (whether subject to
      commitments from the Treasury or otherwise) that the Participant’s
      participation in the Scheme is aid compatible with article 87 of the EC
      Treaty;

            

    

     

    
      	
               
      

            	
              (b)

            	
              evidence that
      all other Authorisations required in connection
  with:

            

    

     

    
      	
               
      

            	
              (1)

            	
              the Scheme
      (including for its implementation and operation);
  and

            

    

     

    
      	
               
      

            	
              (2)

            	
              the
      Participant’s participation in the Scheme and related matters (including
      any Authorisations required pursuant to the Listing
  Rules),

            

    

     

    have been made or
obtained;

     

    
      	
               
      

            	
              (c)

            	
              written
      confirmation from the FSA that it has no objection to the Participant’s
      participation in the Scheme;

            

    

     

    
      	
               
      

            	
              (d)

            	
              a copy of
      such legal and accounting opinions as are considered by the Treasury to be
      necessary or desirable in connection with the Participant’s participation
      in the Scheme, such opinions having been issued to the Participant by the
      Participant’s relevant professional
advisers;

            

    

     

    
      	
               
      

            	
              (e)

            	
              a copy of
      such opinions, confirmations or letters of comfort as are considered by
      the Treasury to be necessary or desirable relating to the regulatory
      capital treatment of the Scheme in respect of the Participant
    

            

    

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	 	 	and
      the other Covered Entities, such opinions, confirmations or letters of
      comfort having been issued to the Participant by the relevant Authority or
      professional adviser;

    

     

    
      	
               
      

            	
              (f)

            	
              a copy of a
      resolution of the board of directors of the Participant and a resolution
      of the board of directors of the Participant’s Ultimate Parent (if any)
      which in each case:

            

    

     

    
      	
               
      

            	
              (1)

            	
              approves the
      Participant’s participation in the Scheme;
and

            

    

     

    
      	
               
      

            	
              (2)

            	
              approves and
      authorises the Participant to sign, execute or adopt (as appropriate), and
      to perform its obligations under, each Scheme
  Document;

            

    

     

    
      	
               
      

            	
              (g)

            	
              a copy of a
      resolution of the board of directors (or equivalent corporate authority)
      of each member of the Participant’s Group that is entering into any Scheme
      Document which:

            

    

     

    
      	
               
      

            	
              (1)

            	
              approves the
      relevant Scheme Documents; and

            

    

     

    
      	
               
      

            	
              (2)

            	
              approves and
      authorises such member of the Participant’s Group to sign, execute or
      adopt (as appropriate), and to perform its obligations under, the relevant
      Scheme Documents;

            

    

     

    
      	
               
      

            	
              (h)

            	
              a copy of any
      resolution of the shareholders of the Participant or its Ultimate Parent
      which may be required by Applicable Law to authorise the Participant’s
      participation in the Scheme;

            

    

     

    
      	
               
      

            	
              (i)

            	
              a copy of
      such documents as may be required by the Accession Agreement or Part 3 in
      connection with the implementation of the Asset Management Conditions
      (including the Asset Management Framework and the Conflicts Management
      Policy);

            

    

     

    
      	
               
      

            	
              (j)

            	
              a copy of
      such documents as may be required by the Accession Agreement or Part 4 in
      connection with the implementation of the Monitoring and Reporting
      Conditions;

            

    

     

    
      	
               
      

            	
              (k)

            	
              a copy of
      such documents as may be required by the Accession Agreement or Part 5 in
      connection with the implementation of the Governance and Oversight
      Conditions;

            

    

     

    
      	
               
      

            	
              (l)

            	
              a copy of
      such documents as may be required by the Accession Agreement or Part 6 in
      connection with the implementation of the Remuneration Conditions;
      and

            

    

     

    
      	
               
      

            	
              (m)

            	
              a certificate
      of the company secretary of the Participant (or the Participant’s Ultimate
      Parent, if any) certifying that, so far as he or she is aware having duly
      made all due and reasonable enquiries, each copy
  

            

    

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	 	 	document
      referred to in this sub-paragraph (iii) is a complete and accurate copy of
      the original and, where applicable, is in full force and
  effect,

    

     

    in each case in
form and substance satisfactory to the Treasury, acting reasonably;
and

     

    
      	
               
      

            	
              (iv)

            	
              such further
      events as may be specified in the Accession Agreement;
  and

            

    

     

    
      	
              (B)

            	
              (unless
      waived in accordance with the terms of the Accession Agreement) the
      Treasury is satisfied that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the member of
      the Participant’s Group which has entered into the Lending Commitments
      Deed Poll is not in breach of that deed poll;
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the member of
      the Participant’s Group which has entered into the Pre-Accession
      Undertakings Deed Poll is not in breach of that deed
  poll,

            

    

     

    in each case as at
the date upon which the events set out in sub-paragraphs (A)(i) to (A)(iv)
(inclusive) above shall have occurred to the satisfaction of the Treasury or
been waived in accordance with the terms of the Accession
Agreement,

     

    (together, the
“Participation Conditions”).

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    
      	
              4.

            	
              COVERAGE
      AND TERMINATION

            

    

     

    Covered
Assets

     

    
      	
              4.1

            	
              The
      protection provided by the Treasury to the Participant under the Scheme
      will, subject to these Conditions, apply only in respect of Covered
      Assets.

            

    

     

    
      	
              4.2

            	
              Subject to
      these Conditions:

            

    

     

    
      	
               
      

            	
              (A)

            	
              a “Covered Asset” means the
      assets and exposures which comprise that Covered Asset as identified (by
      being allocated an “APS Covered Asset ID”) in the Initial Data (stated as
      at 31 December 2008), to the extent they have not ceased to form part of
      that Covered Asset pursuant to the terms of the Scheme
      Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              subject to
      Condition 4.4, the assets and exposures comprising a Covered Asset shall
      include the applicable rights and liabilities from time to time of the
      relevant Covered Entity or Covered Entities (or, in the case of a Covered
      Asset that is the subject of a Permitted Arrangement, the relevant
      Applicable Entity or Applicable Entities) under the agreements or
      instruments relating (or to the extent relating) to those assets and
      exposures, as such agreements or instruments may, on any day falling after
      31 December 2008, be amended or
replaced;

            

    

     

    
      	
               
      

            	
              (C)

            	
              where a
      Covered Asset is or includes:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a guarantee
      in respect of which a Covered Entity (or, in the case of a Covered Asset
      that is the subject of a Permitted Arrangement, the relevant Applicable
      Entity) is the guarantor;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a letter of
      credit or performance bond in respect of which a Covered Entity (or, in
      the case of a Covered Asset that is the subject of a Permitted
      Arrangement, the relevant Applicable Entity) is the issuer;
    or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an agreement
      or instrument analogous to one of those described in sub-paragraphs (i)
      and (ii) above,

            

    

     

    the rights and
liabilities referred to in paragraph (B) above shall include the rights and
liabilities arising under the arrangement pursuant to which the relevant Covered
Entity or Applicable Entity (as the case may be) is entitled to be reimbursed or
indemnified for any amounts paid or advanced by it pursuant to the guarantee,
letter of credit or analogous agreement or instrument; and

     

    
      	
               
      

            	
              (D)

            	
              save to the
      extent the Treasury in its sole discretion determines otherwise, a Covered
      Asset within the “Derivative” Covered Asset Class may include only assets
      and exposures comprising a Derivative Agreement (including the
      transactions governed by that Derivative Agreement) together with any
      guarantee, intercreditor, security, credit support, collateral or netting
      agreements 

            

    

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              or
      instruments to the extent relating to that Derivative Agreement and the
      transactions governed by it and, if and to the extent that a Covered Asset
      within the “Derivative” Covered Asset Class would (but for this paragraph
      (D)) comprise or include other assets or exposures, those other assets and
      exposures shall be deemed not to form part of that Covered
      Asset.

            

    

     

    
      	
              4.3

            	
              For the
      avoidance of doubt, the agreements or instruments relating (or to the
      extent relating) to the assets and exposures comprising a Covered Asset
      may include guarantee, intercreditor, security, credit support, collateral
      and netting agreements or instruments.  Such agreements or
      instruments may be documented separately from the principal agreements or
      instruments relating (or to the extent relating) to the assets and
      exposures comprising the Covered Asset and may relate to both assets and
      exposures comprising the Covered Asset and assets and exposures not
      comprising the Covered Asset.

            

    

     

    Certain
consequences of a failure to satisfy the Asset Continuity
Requirements

     

    
      	
              4.4

            	
              If any
      agreement or instrument relating (or to the extent relating) to the assets
      and exposures comprising a Covered Asset is amended or replaced (including
      pursuant to a Rollover) on or before the Trigger Date for that Covered
      Asset (or on or before the date which, but for this Condition 4.4, would
      have been the Trigger Date for that Covered Asset) in a manner which fails
      to satisfy the Asset Continuity Requirements then, unless and to the
      extent that the Treasury in its sole discretion determines otherwise, that
      Covered Asset shall cease permanently to be a Covered Asset with effect
      from (and including) the day on which the amendment or replacement becomes
      effective.

            

    

     

    Asset
Continuity Requirements

     

    
      	
              4.5

            	
              Subject to
      Condition 4.6, an amendment or replacement of any agreement or instrument
      relating (or to the extent relating) to the assets and exposures
      comprising a Covered Asset will satisfy the “Asset Continuity
      Requirements” if:

            

    

     

    
      	
               
      

            	
              (A)

            	
              it is not
      approved, or agreed or consented to, by any Applicable Entity or any of
      its Representatives and could not be prevented by any Applicable Entity or
      the Applicable Entities;

            

    

     

    
      	
               
      

            	
              (B)

            	
              it is
      required by Applicable Law;

            

    

     

    
      	
               
      

            	
              (C)

            	
              it
      constitutes or forms part of a Restructuring with respect to that Covered
      Asset; or

            

    

     

    
      	
               
      

            	
              (D)

            	
              it satisfies
      all of the following requirements:

            

    

     

    
      	
               
      

            	
              (i)

            	
              (in the case
      only of a Covered Asset within the “Residential Mortgage” Covered Asset
      Class) the amendment or replacement does not result in that Covered Asset
      ceasing to benefit from Security over residential
  property;

            

    

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (ii)

            	
              (unless it is
      a Covered Asset within the “Consumer Finance” Covered Asset Class and in
      any case only in respect of a replacement) the replacement occurs in
      connection with the direct refinancing of
      the old asset with the new asset;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              at least one
      of the following requirements is
satisfied:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the amendment
      or replacement does not result in the new obligor differing from the old
      obligor;

            

    

     

    
      	
               
      

            	
              (b)

            	
              in the case
      of a Covered Asset which is not within the “Consumer Finance” or
      “Residential Mortgage” Covered Asset
Class:

            

    

     

    
      	
               
      

            	
              (1)

            	
              the new
      obligor is a member of the same Group as the old obligor;
    or

            

    

     

    
      	
               
      

            	
              (2)

            	
              the new
      obligor or any of its Parent Undertakings is the successor of the old
      obligor or any of its Parent
Undertakings,

            

    

     

    and, in either
case, in the Participant’s opinion (acting reasonably and in good faith and
based on reasonable criteria, consistently applied), the amendment or
replacement does not increase the expected loss with respect to that Covered
Asset; and

     

    
      	
               
      

            	
              (c)

            	
              (in the case
      only of a Covered Asset within the “Consumer Finance” or “Residential
      Mortgage” Covered Asset Class) the new obligor is, in the opinion of the
      Participant (acting reasonably and in good faith and based on reasonable
      criteria, consistently applied), an individual who has a close connection
      with the old obligor; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the amendment
      or replacement will not result in the loss or reduction of potential
      Recoveries which might otherwise result under a Closely Related Hedge if
      that Covered Asset is or were to become a Triggered
  Asset.

            

    

     

    For the avoidance
of doubt, and by way of example, an amendment or replacement of the agreements
or instruments relating (or to the extent relating) to the assets and exposures
comprising a Covered Asset in the “Consumer Finance” Covered Asset Class may
occur where the old asset comprises a loan or an overdraft and the new asset
comprises a loan (whether or not such loan is itself amended) and an overdraft
or vice versa.

     

    
      	
              4.6

            	
              An amendment
      or replacement of any agreement or instrument relating (or to the extent
      relating) to the assets and exposures comprising a Covered Asset within
      the 

            

    

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              “Residential
      Mortgage” Covered Asset Class shall not fail to satisfy the Asset
      Continuity Requirements solely by reason of there being any period (a
      “permitted non-continuity
      period”), relating to the sale and purchase of residential property
      that is the subject of that Covered Asset and not exceeding five Business
      Days, during which the Covered Asset does not
  exist.

            

    

     

    
      	
              4.7

            	
              For the
      purpose of Condition 4.5(D)(ii), and by way of example, a replacement may
      occur in connection with a direct refinancing of the old asset with the
      new asset where:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Actual
      Exposure with respect to the new asset is greater than the Actual Exposure
      with respect to the old asset (and vice
versa);

            

    

     

    
      	
               
      

            	
              (B)

            	
              the number of
      separate agreements or instruments constituting the new asset is greater
      than the number of separate agreements or instruments constituting the old
      asset (and vice versa);

            

    

     

    
      	
               
      

            	
              (C)

            	
              the amounts
      made available to the Obligors under the new asset are used to discharge
      all or substantially all of the amounts due from the Obligors under the
      old asset;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      availability to the Obligors of all or substantially all of the amounts
      under the new asset is conditional upon the discharge of all the amounts
      due from the Obligors, and the cancellation of all undrawn availability,
      under the old asset; or

            

    

     

    
      	
               
      

            	
              (E)

            	
              (in the case
      only of a Covered Asset within the “Residential Mortgage” Covered Asset
      Class) the new asset is originated in connection with a loan to purchase
      the residential property that is the subject of the new asset where,
      within five Business Days and by way of a related transaction, the
      proceeds of the sale of the residential property that is the subject of
      the old asset are applied in discharge of the old asset and the old asset
      is discharged in full.

            

    

     

    
      	
              4.8

            	
              For the
      purposes of Conditions 4.5 to 4.7 and this Condition
  4.8:

            

    

     

    
      
        	 
      	
                an “amendment”

              	
                includes a
      novation;

              
	 	 	 
	 
      	
                a “close
      connection”

              	
                may exist as
      a result of two people being closely connected or closely related to each
      other by marriage, civil partnership, adoption, common ancestry or
      cohabitation (or any combination of the foregoing);

              
	 	 	 
	 
      	
                “new
    asset”

              	
                means, with
      respect to a replacement of any agreement or instrument relating (or to
      the extent relating) to the assets and exposures comprising a Covered
      Asset, the assets and exposures as they exist immediately following such
      replacement;

              
	 	 	 
	 
      	
                “new
    obligor”

              	
                means, with
      respect to an amendment or replacement of any agreement or instrument
      relating (or to the extent 

              

      

       

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                relating) to
      the assets and exposures comprising a Covered Asset, the person who would
      be identified in the “Obligor name” Post-Accession Data Field with respect
      to that Covered Asset if that Post-Accession Data Field were to be
      properly updated, in accordance with the Data Field Rules (or, where no
      person would be so identified as a result of any Data Field Rule
      permitting redaction of information, the person who would, but for that
      rule, be so identified), immediately following that amendment or
      replacement to the extent necessary to reflect the amendment or
      replacement;

              
	 	 	 
	 
      	
                “old
    asset”

              	
                means, with
      respect to a replacement of any agreement or instrument relating (or to
      the extent relating) to the assets and exposures comprising a Covered
      Asset, the assets and exposures as they exist immediately before such
      replacement;

              
	 	 	 
	 
      	
                “old
    obligor”

              	
                means, with
      respect to an amendment or replacement of any agreement or instrument
      relating (or to the extent relating) to the assets and exposures
      comprising a Covered Asset, the person who would be identified in the
      “Obligor name” Post-Accession Data Field with respect to that Covered
      Asset immediately before that amendment or replacement if that
      Post-Accession Data Field were to be properly updated, in accordance with
      the Data Field Rules (or, where no person could be so identified as a
      result of any Data Field Rule permitting redaction of information, the
      person who would, but for that rule, be so identified), immediately before
      that amendment or replacement; and

              
	 	 	 
	 
      	
                “successor”

              	
                means, with
      respect to a person (the first person), a person that succeeds (whether by
      operation of law or pursuant to an agreement, or otherwise) to a majority
      of the first person’s undertaking and
assets.

              

      

    

     

    Certain
consequences of a failure to satisfy the Asset Eligibility Criteria

     

    
      	
              4.9

            	
              If a Covered
      Asset (other than a Compliant Triggered Asset) does not satisfy or ceases
      to satisfy any of the Asset Eligibility Criteria then, unless and to the
      extent that the Treasury in its sole discretion determines otherwise, that
      Covered Asset shall cease permanently to be a Covered Asset with effect
      from (and including) the first day falling on or after 31 December 2008 on
      which the Covered Asset did not satisfy or ceased to satisfy the Asset
      Eligibility Criteria.

            

    

     

    
      	
              4.10

            	
              A “Compliant Triggered
      Asset” means a Triggered Asset which satisfied the Asset
      Eligibility Criteria throughout the period from (and including) 31
      December 2008 to but 

            

    

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              excluding its
      Trigger Date or, in the case of a Triggered Asset the Trigger Date for
      which occurred on or before 31 December 2008, which satisfied the Asset
      Eligibility Criteria on 31 December
2008.

            

    

     

    Asset
Eligibility Criteria

     

    
      	
              4.11

            	
              A Covered
      Asset will satisfy the “Asset Eligibility
      Criteria” if that Covered
Asset:

            

    

     

    
      	
               
      

            	
              (A)

            	
              was
      Economically Owned by one or more Covered Entities throughout the period
      from (and including) 31 December 2008 to (and including) the Accession
      Date;

            

    

     

    
      	
               
      

            	
              (B)

            	
              has been
      Economically Owned by one or more Covered Entities at all times since the
      Accession Date;

            

    

     

    
      	
               
      

            	
              (C)

            	
              was included
      in the audited consolidated balance sheet of the Participant’s Group on
      31 December 2008 (or would have been so included if no Accounting
      Adjustment had been recorded against the value of such Covered
      Asset);

            

    

     

    
      	
               
      

            	
              (D)

            	
              would be
      included in the consolidated balance sheet of the Participant’s Group on
      each day in the period from (and including) 31 December 2008 to (and
      including) the Accession Date (or would have been so included if no
      Accounting Adjustment had been recorded against the value of such Covered
      Asset) if such a consolidated balance sheet had been prepared as at that
      day in accordance with Static IFRS;
and

            

    

     

    
      	
               
      

            	
              (E)

            	
              would be
      included in the consolidated balance sheet of the Participant’s Group on
      each day since the Accession Date (or would have been so included if no
      Accounting Adjustment had been recorded against the value of such Covered
      Asset) if such a consolidated balance sheet were to be prepared as at that
      day in accordance with Static IFRS.

            

    

     

    
      	
              4.12

            	
              If and to the
      extent that a Covered Asset is a Covered Liability and (in accordance with
      Static IFRS) it is not included (or would not be included) in a particular
      consolidated balance sheet as contemplated in Condition 4.11, it shall
      nevertheless be deemed for the purpose of Condition 4.11 that it is
      included (or would be included) in such consolidated balance sheet if (in
      accordance with Static IFRS):

            

    

     

    
      	
               
      

            	
              (A)

            	
              (in the case
      of a Covered Liability that is not an Overdraft) it is included (or would
      be included) in the aggregation and preparation of the financial
      statements of which such consolidated balance sheet forms part and those
      financial statements include (or would include) a note which specifies (or
      would specify) that liabilities including such Covered Liability are
      actual or contingent liabilities of the Participant’s Group to pay money;
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              (in the case
      of an Overdraft) the applicable drawn amounts would be included in such
      consolidated balance sheet upon their payment by the relevant Covered
      

            

    

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	
              Entity (or,
      in the case of a Covered Asset that is the subject of a Permitted
      Arrangement, the relevant Applicable
Entity).

            

    

     

    
      	
              4.13

            	
              In respect of
      an Equity Accounting Covered Asset, Conditions 4.11(C), 4.11(D) and
      4.11(E) apply only to the extent of the exposure which the Participant’s
      Group records (or would record) in respect of that Equity Accounting
      Covered Asset on its consolidated balance sheet in accordance with Static
      IFRS.  An “Equity Accounting Covered
      Asset” means a Covered Asset in respect of which, in accordance
      with its ordinary accounting practices, the Participant’s Group records
      (or would record) an exposure on its consolidated balance sheet which is
      less than the applicable Covered Entity's or Covered Entities’ legal
      exposure in respect of that Covered Asset because a member of the
      Participant’s Group holds an equity interest in one or more of the
      applicable Obligors, provided that an Equity Accounting Covered Asset
      shall not include (and this Condition 4.13 shall not apply to) a Covered
      Asset in respect of which one or more of the applicable Obligors is (or
      would be) itself consolidated into the balance sheet of the Participant’s
      Group in accordance with Static IFRS unless both of the following
      requirements are satisfied:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the events
      resulting in such consolidation into the balance sheet of the
      Participant’s Group are not approved, or agreed or consented to, by any
      Applicable Entity or any of their respective Representatives and could not
      have been prevented by any Applicable Entity or the Applicable Entities;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              none of the
      applicable Obligors would have been itself consolidated into the balance
      sheet of the Participant’s Group in accordance with Static IFRS as at the
      Accession Date.

            

    

     

    
      	
              4.14

            	
              In the case
      only of a Covered Asset within the “Residential Mortgage” Covered Asset
      Class, any permitted non-continuity period (within the meaning of
      Condition 4.6) during which the Asset Eligibility Criteria referred to in
      Conditions 4.11(A) or 4.11(B), as applicable, and Conditions 4.11(D) or
      4.11(E), as applicable, are not satisfied shall be ignored for the purpose
      of determining whether that Covered Asset satisfies the Asset Eligibility
      Criteria.

            

    

     

    
      	
              4.15

            	
              If the
      agreements or instruments relating (or to the extent relating) to the
      assets and exposures comprising a Covered Asset are amended or replaced,
      the determination as to whether the Asset Eligibility Criteria are
      satisfied with respect to that Covered Asset
  shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in respect of
      the period before the amendment or replacement, be determined by reference
      to the Covered Asset as it exists before the amendment or replacement;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              in respect of
      the period after the amendment or replacement, be determined by reference
      to the Covered Asset as it exists after the amendment or
      replacement,

            

    

     

    provided that, for
the purpose of determining whether the Asset Eligibility Criteria are satisfied
on the basis set out in Condition 4.30 following the sale, transfer or other

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    disposal by a
Covered Entity (or, in the case of a Covered Asset that is the subject of a
Permitted Arrangement, by the relevant Applicable Entity) of part of a Covered
Asset, Conditions 4.30 and 4.31 shall be applied on the basis that the Covered
Asset continues to include the part which was the subject of that sale, transfer
or other disposal (but, for the avoidance of doubt, without prejudice to
paragraph (C) of Condition 4.31).

     

    Sub-participations

     

    
      	
              4.16

            	
              Subject to
      Condition 5.26, if an asset or exposure forming part of a Covered Asset is
      held by the applicable Covered Entity or Covered Entities (or, in the case
      of a Covered Asset that is the subject of a Permitted Arrangement, the
      relevant Applicable Entity or Applicable Entities) by way of a
      sub-participation in a loan or facility agreement, the sub-participation
      shall be treated as the asset or exposure for the purpose of these
      Conditions (whether or not it is properly identified as a
      sub-participation in the Initial Data) and satisfaction of the Asset
      Eligibility Criteria shall be determined
  accordingly.

            

    

     

    
      	
              4.17

            	
              For the
      purposes of Conditions 4.16 and 5.26, an asset or exposure will be treated
      as having been “properly
      identified” as a sub-participation in the Initial Data only if the
      Participant completed, in the Initial Data, the “Sub-participation flag”
      and “Sub-participation grantor name” Initial Data Fields in respect of
      that asset or exposure in accordance with the Data Field
      Rules.

            

    

     

    
      	
              4.18

            	
              For the
      purposes of Conditions 4.16, 4.17, 4.29 and 5.26, a “sub-participation” in a
      loan or facility agreement does not include the holding of an asset or
      exposure as lender of record.

            

    

     

    Definitions
and interpretation relating to eligibility

     

    
      	
              4.19

            	
              An asset or
      exposure is “Economically
      Owned” by one or more
      Covered Entities if:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (i)

            	
              those Covered
      Entities Own the asset or exposure;
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the asset or
      exposure is the subject of a Permitted Arrangement entered into by those
      Covered Entities; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              those Covered
      Entities are able to control (directly or indirectly) the management and
      administration of the asset or exposure save to the extent that the
      rights, responsibilities, duties or obligations with respect to the
      management and administration of the asset or exposure are (or have been
      and continue to be) transferred in accordance with Condition
      11,

            

    

     

    and “Economic Ownership” shall be
construed accordingly.

     

    
      	
              4.20

            	
              “Ownership”
      means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              with respect
      to an asset, full legal and beneficial ownership of that asset;
      and

            

    

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              with respect
      to an exposure (including any undrawn availability of funds, whether
      committed or uncommitted):

            

    

     

    
      	
               
      

            	
              (i)

            	
              having the
      contractual liability in respect of that exposure and the right to full
      legal and beneficial ownership of an asset resulting from or in respect of
      the discharge of, or obligation to discharge, the liability represented by
      that exposure; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              (in the case
      of an Overdraft) having the right to full legal and beneficial ownership
      of an asset resulting from the Overdraft being
  drawn,

            

    

     

    and “Owned”, “Owns”, “Own” and other grammatical
variations thereof shall be construed accordingly, provided that, for the
purpose of this Condition 4.20:

     

    
      	
               
      

            	
              (a)

            	
              a person
      shall be deemed to be the legal owner of an asset if that asset is owned
      in dematerialised form through a clearing system or a custodian (excluding
      any such holding through a prime brokerage account or analogous
      arrangement) on a basis which would, at the time of determination for the
      purpose of this sub-paragraph (a), be regarded in the applicable market as
      conventional with respect to the ownership of an asset of that type;
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the existence
      of any Security permitted by Condition 13.1(B) or 13.1(C) shall not
      preclude full legal and beneficial
ownership.

            

    

     

    
      	
              4.21

            	
              A “Permitted Arrangement” entered
      into by a Covered Entity (whether before or after 31 December 2008 and
      whether before or after the Accession Date) in respect of an asset or
      exposure means any of the
following:

            

    

     

    
      	
               
      

            	
              (A)

            	
              a Security
      Interest granted by that Covered Entity over that asset or exposure or a
      repurchase agreement, stock loan, asset swap (including under the Bank of
      England’s special liquidity scheme of 21 April 2008, as amended from time
      to time) or other title transfer arrangement entered into by that Covered
      Entity in respect of that asset or exposure, in each case where a Covered
      Entity:

            

    

     

    
      	
               
      

            	
              (i)

            	
              has and
      continues to retain all or substantially all the economic exposure to that
      asset or exposure for the purpose of Static IAS 39;
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              is entitled
      following the occurrence of a Trigger (including upon substituting other
      eligible collateral) to obtain Ownership and direct or indirect control
      over the management and administration of that asset or exposure (or, in
      the case of securities and financial instruments, an Equivalent Asset)
      upon giving the requisite notice, save to the extent that the rights,
      duties or obligations with respect to the management and administration of
      the asset or exposure are transferred in accordance with Condition 11 and
      such transfer is not in connection with a Permitted
      Arrangement.  Where the Covered Entity is required to obtain the
      consent of the counterparty to obtain Ownership of that asset or exposure,
      the arrangement will be deemed to be one where the
  

            

    

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              Covered
      Entity is entitled to obtain Ownership of that asset or exposure (or, in
      the case of securities and financial instruments, an Equivalent Asset)
      upon giving the requisite notice where such consent would customarily be
      granted by parties to such an
arrangement;

            

    

     

    
      	
               
      

            	
              (B)

            	
              a
      securitisation or covered bond transaction (a “Permitted
      Securitisation”) involving that asset or exposure which meets all
      of the following requirements:

            

    

     

    
      	
               
      

            	
              (i)

            	
              one or more
      third parties (which may include a special purpose vehicle) have acquired
      the beneficial interest in that asset or exposure (whether with or without
      the legal title) as part of the securitisation or covered bond
      transaction;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a Covered
      Entity has and continues to retain all or substantially all the economic
      exposure to that asset or exposure for the purpose of Static IAS 39;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              either (a) a
      Covered Entity is entitled following the occurrence of a Trigger
      (including upon substituting other eligible collateral or by any other
      process) to obtain Ownership and direct or indirect control over the
      management and administration of the asset or exposure, save to the extent
      that the rights, duties or obligations with respect to the management and
      administration of the asset or exposure are transferred in accordance with
      Condition 11 and such transfer is not in connection with a Permitted
      Arrangement or (b) the securitisation or covered bond transaction is a
      Restricted Securitisation;

            

    

     

    
      	
               
      

            	
              (C)

            	
              a conduit
      transaction (a “Permitted
      Conduit Arrangement”) involving that asset or exposure which meets
      all of the following requirements:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a CP Entity
      or a CP AssetCo has acquired the beneficial interest in that asset or
      exposure (whether with or without the legal title and whether from a
      Covered Entity or a third party) as part of the conduit
      transaction;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a Covered
      Entity has and continues to retain all or substantially all the economic
      exposure to that asset or exposure for the purpose of Static IAS 39;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              either (a) a
      Covered Entity is entitled following the occurrence of a Trigger
      (including upon substituting other eligible collateral or by any other
      process) to obtain Ownership and direct or indirect control over the
      management and administration of the asset or exposure, save to the extent
      that the rights, duties or obligations with respect to the management and
      administration of the asset or exposure are transferred in accordance with
      Condition 11 and such transfer is not in connection with a Permitted
      Arrangement or (b) the conduit transaction is a Restricted
      Conduit,

            

    

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    where for the
purpose only of this paragraph (C):

     

    (1)       a
“CP AssetCo” is a
special purpose vehicle that:

     

    
      	
               
      

            	
              (a)

            	
              funds itself
      wholly or partly by borrowing funds from a CP
  Entity;

            

    

     

    
      	
               
      

            	
              (b)

            	
              is operated
      and administered, or has its assets and exposures administered, by or on
      behalf of a Covered Entity; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              would be
      consolidated into the balance sheet of the Participant’s Group if such a
      balance sheet were to be prepared in accordance with Static IFRS;
      and

            

    

     

    (2)       a
“CP Entity” is a special
purpose vehicle that:

     

    
      	
               
      

            	
              (a)

            	
              (i)

            	
              intends to
      fund itself wholly or partly by the issuance of asset-backed commercial
      paper in the ordinary course of its business;
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              forms part of
      the same conduit programme structure under which a special purpose vehicle
      issues asset-backed commercial paper in the ordinary course of its
      business; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              is operated
      and administered by or on behalf of a Covered Entity or with the approval
      of a Covered Entity; and

            

    

     

    
      	
               
      

            	
              (D)

            	
              a conduit
      funding arrangement (a “Permitted Conduit Funding
      Arrangement”) involving that asset or exposure which meets all of
      the following requirements:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the asset or
      exposure is a loan, bond, note or other debt funding arrangement from a CP
      Entity (or from a CP Entity and a Covered Entity) to a CP
      AssetCo;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a Covered
      Entity has and continues to retain all or substantially all the economic
      exposure to that asset or exposure for the purpose of Static IAS 39;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the asset or
      exposure is a CP Funding Agreement,

            

    

     

    where for the
purpose only of this paragraph (D):

     

    (1)       a
“CP AssetCo” is a
special purpose vehicle that:

     

    
      	
               
      

            	
              (a)

            	
              funds itself
      wholly or partly by borrowing funds from a CP Entity (or from a CP Entity
      and a Covered Entity) pursuant to the applicable CP Funding Agreement;
      and

            

    

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              is identified
      by the Participant as a CP AssetCo in the Initial Data or is approved in
      writing by the Treasury as a CP
AssetCo;

            

    

     

    (2)       
a “CP Entity” is a
special purpose vehicle that:

     

    
      	
               
      

            	
              (a)

            	
              (i)

            	
              intends to
      fund itself wholly or partly by the issuance of asset-backed commercial
      paper in the ordinary course of its business;
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              forms part of
      the same conduit programme structure under which a special purpose vehicle
      issues asset-backed commercial paper in the ordinary course of its
      business;

            

    

     

    
      	
               
      

            	
              (b)

            	
              is operated
      and administered by or on behalf of a Covered Entity or with the approval
      of a Covered Entity;

            

    

     

    
      	
               
      

            	
              (c)

            	
              would be
      consolidated into the balance sheet of the Participant’s Group if such a
      balance sheet were to be prepared in accordance with Static IFRS;
      and

            

    

     

    
      	
               
      

            	
              (d)

            	
              is identified
      by the Participant as a CP Entity in the Initial Data or is approved in
      writing by the Treasury as a CP Entity;
and

            

    

     

    
      	
               
      

            	
              (3)

            	
              “CP Funding Agreement”
      means an asset or exposure which is identified by the Participant as a CP
      Funding Agreement in the Initial
Data.

            

    

     

    
      	
              4.22

            	
              The Asset
      Continuity Requirements and the Asset Eligibility Criteria continue to
      apply on the terms set out in this Condition 4 to assets and exposures
      that are the subject of Permitted
Arrangements.

            

    

     

    
      	
              4.23

            	
              A “Restricted
      Securitisation” means a securitisation or covered bond transaction
      in respect of which the applicable Covered Entity is not entitled
      following the occurrence of a Trigger (whether immediately or on any
      period of notice and whether by substituting other eligible collateral or
      by any other process) to obtain Ownership and direct or indirect control
      over the management and administration of the asset or exposure and which
      (i) was in place as at 31 December 2008 and is identified by the
      Participant as a Restricted Securitisation in the Initial Data or (ii) is
      approved in writing by the Treasury as a Restricted Securitisation (which
      approval may be provided by way of a written consent to amend the Initial
      Data).

            

    

     

    
      	
              4.24

            	
              A “Restricted Conduit”
      means a conduit transaction in respect of which the applicable Covered
      Entity is not entitled following the occurrence of a Trigger (whether
      immediately or on any period of notice and whether by substituting other
      eligible collateral or by any other process) to obtain Ownership and
      direct or indirect control over the management and administration of the
      asset or exposure and which (i) was in place as at 31 December 2008 and is
      identified by the Participant as a Restricted Conduit in the Initial
      

            

    

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              Data or (ii)
      is approved in writing by the Treasury as a Restricted Conduit (which
      approval may be provided by way of a written consent to amend the Initial
      Data).

            

    

     

    
      	
              4.25

            	
              “Static IFRS” means IFRS
      in force and as adopted by the European Union as at 31 December 2008 and
      “Static IAS 39”
      means International Accounting Standard 39 under Static
      IFRS.  If IFRS in force and as adopted by the European Union
      from time to time differs from Static IFRS in any respect that is material
      to these Conditions, the Treasury and the Participant (each acting in good
      faith) shall consider, and consult with each other in relation to, any
      reasonable request by the other with respect to any consequential
      amendment that should be made to these
  Conditions.

            

    

     

    
      	
              4.26

            	
              “Accounting Adjustment”
      means, in respect of a Covered Asset, any individual asset
      level:

            

    

     

    
      	
               
      

            	
              (A)

            	
              impairment;

            

    

     

    
      	
               
      

            	
              (B)

            	
              adjustment
      arising from equity accounting, provided that this paragraph (B) shall not
      apply to a Covered Asset in respect of which one or more of the applicable
      Obligors is (or would be) itself consolidated onto the balance sheet of
      the Participant’s Group in accordance with Static IFRS;
  or

            

    

     

    
      	
               
      

            	
              (C)

            	
              fair value
      adjustment,

            

    

     

    in each case
required by Static IFRS to be recorded against the value of that Covered Asset
in the consolidated balance sheet of the Participant’s
Group.  Derecognition (in whole or in part) for the purpose of Static
IAS 39 does not constitute an Accounting Adjustment.

     

    
      	
              4.27

            	
              A “Covered Entity”
      means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              at any time
      before the Accession Date, each member of the Participant’s Group at that
      time;

            

    

     

    
      	
               
      

            	
              (B)

            	
              at any time
      from (and including) the Accession Date, the Covered Parent and each of
      the Covered Parent’s wholly-owned Subsidiaries at that time;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              at any time,
      each Undertaking (an “Additional Covered
      Entity”) which at that time satisfies such other criteria for being
      a Covered Entity as are set out in the Accession
  Agreement.

            

    

     

    
      	
              4.28

            	
              The “Covered Parent”
      means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              save where
      paragraph (B) below applies, the Initial Parent;
  and

            

    

     

    
      	
               
      

            	
              (B)

            	
              at any time
      from (and including) the first day (if any) on which the Participant
      ceases to be a wholly-owned Subsidiary of the Initial Parent, the
      Participant.

            

    

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	
              4.29

            	
              Where a
      Covered Asset is part of a larger asset or exposure (including where the
      Covered Asset is a participation or sub-participation in a syndicated
      facility), references in these Conditions to that Covered Asset shall be
      references only to that part of the larger asset or exposure and not to
      that larger asset or exposure.

            

    

     

    
      	
               
      

            	
              Partial
      satisfaction of Asset Eligibility
Criteria

            

    

     

    
      	
              4.30

            	
              If the Asset
      Eligibility Criteria are satisfied with respect to only part of a Covered
      Asset (but are not satisfied with respect to the rest of that Covered
      Asset), then the whole of that Covered Asset shall be deemed not to
      satisfy the Asset Eligibility Criteria.  This Condition 4.30 is
      subject to, and does not apply to, Condition
  4.31.

            

    

     

    
      	
              4.31

            	
              If the whole
      of a Vertical Slice (the “Disposed Slice”) of a
      Covered Asset (other than a Compliant Triggered Asset) does not satisfy or
      ceases to satisfy any of the Asset Eligibility Criteria, but the whole of
      the rest of that Covered Asset continues to satisfy the Asset Eligibility
      Criteria, then:

            

    

     

    
      	
               
      

            	
              (A)

            	
              unless and to
      the extent that the Treasury in its sole discretion determines otherwise,
      the Disposed Slice shall cease permanently to form part of that Covered
      Asset with effect from (and including) the first day falling on or after
      31 December 2008 on which the Disposed Slice did not satisfy or ceased to
      satisfy the Asset Eligibility
Criteria;

            

    

     

    
      	
               
      

            	
              (B)

            	
              where the
      Disposed Slice ceases to form part of that Covered Asset pursuant to
      paragraph (A) above, the Covered Amount and the Outstanding Amount of that
      Covered Asset shall be reduced in proportion to the resulting reduction in
      the Covered Asset (and any other amounts which are required to be
      determined in order to calculate the Covered Amount and the Outstanding
      Amount shall be adjusted accordingly);
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              for the
      purpose of determining whether that Covered Asset satisfies the Asset
      Eligibility Criteria on the basis set out in Condition 4.30, the Disposed
      Slice shall be treated as not forming part of that Covered
      Asset.

            

    

     

    
      	
              4.32

            	
              A “Vertical Slice” means,
      with respect to a Covered Asset, a consistent proportion of all the
      constituent parts of the Covered Asset.  By way of example, in
      the case of a Covered Asset which comprises a senior loan and a junior
      loan, x% of both
      loans would be a Vertical Slice, but each of the following would not be a
      Vertical Slice:

            

    

     

    
      	
              
              

            	
              (A)

            	
              the senior
      loan only;

            

    

     

    
      	
              
              

            	
              (B)

            	
              the junior
      loan only;

            

    

     

    
      	
               
      

            	
              (C)

            	
              x% of the senior loan
      and y% of the
      junior loan (where x% does not equal y%);
  or

            

    

     

    
      	
               
      

            	
              (D)

            	
              the right to
      receive interest in respect of the loans (or either of
    them).

            

    

     

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    The examples in
paragraphs (A) to (D) above are not exhaustive.  By way of further
example, in the case of a Covered Asset which comprises one loan, x% of that loan would be a
Vertical Slice.

     

    Duplicate
assets

     

    
      	
              4.33

            	
              If, at any
      time, two or more Covered Assets comprise or include the same asset or
      exposure (whether or not the amount thereof is the same in each case),
      with the consequence that the same asset or exposure may have been
      included twice in the Scheme, then, in order to determine whether there
      has been a duplication of protection under the Scheme, the Asset
      Eligibility Criteria shall be applied to those Covered Assets on the basis
      that they are deemed to constitute a single Covered Asset comprising all
      of those Covered Assets.  If part of that deemed single Covered
      Asset does not satisfy the Asset Eligibility Criteria, then there will
      have been a duplication of protection under the Scheme.  Any
      such duplication of protection shall be eliminated, so that Losses or
      Recoveries are not increased as a result of such
      duplication.  In order to effect such elimination, the
      Participant shall consult with the Treasury with a view to agreeing what
      changes need to be made to the Covered Assets.  In the absence
      of agreement between the Participant and the Treasury as to the changes
      that need to be made to the Covered Assets, the Treasury shall determine
      those changes in its sole discretion.  Any such changes shall
      have retrospective effect and may result in adjustments being made
      pursuant to Condition 8.7.  By way of example of the application
      of this Condition 4.33, suppose there are two Covered Assets, each
      comprising bonds with the same ISIN and each with a principal amount of
      £10,000,000.  If Covered Entities have Economically Owned
      £20,000,000 or more in principal amount of those bonds since 31 December
      2008 (with a corresponding principal amount of those bonds having been
      included in the consolidated balance sheet of the Participant’s Group on
      the basis set out in the definition of the Asset Eligibility Criteria),
      then there will have been no duplication of protection under the
      Scheme.  However, there will have been duplication of protection
      if, for example, Covered Entities have Economically Owned less than
      £20,000,000 in principal amount of those bonds since 31 December 2008,
      including (without limitation) as a result of a sale, transfer or other
      disposal since 31 December 2008.

            

    

     

    Pre-Trigger
Withdrawal Notices

     

    
      	
              4.34

            	
              The
      Participant may at any time deliver a Pre-Trigger Withdrawal Notice in
      respect of the whole of a Non-Triggered Asset or a Vertical Slice of a
      Non-Triggered Asset.  If the Participant gives a Pre-Trigger
      Withdrawal Notice in respect of the whole of a Non-Triggered Asset then,
      from and including the date on which such notice becomes effective, such
      Non-Triggered Asset shall cease permanently to be a Covered
      Asset.  If the Participant gives a Pre-Trigger Withdrawal Notice
      in respect of a Vertical Slice of a Non-Triggered Asset then, with effect
      from and including the date on which such notice becomes effective, that
      Vertical Slice shall cease permanently to form part of that Covered Asset
      and the Covered Amount and the Outstanding Amount of that Non-Triggered
      Asset shall be reduced in proportion to the resulting reduction in the
      Non-Triggered Asset (and any other amounts which are required to be
      determined in order to calculate the Covered Amount and the Outstanding
      Amount shall be adjusted
accordingly).

            

    

     

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      	
              4.35

            	
              A “Pre-Trigger Withdrawal
      Notice” is an irrevocable written notice from the Participant to
      the Treasury referring to Condition 4.34, identifying the relevant
      Non-Triggered Asset and stating that the Participant wishes to withdraw
      (i) the whole of that Non-Triggered Asset from the Scheme or (ii) a
      specified Vertical Slice of that Non-Triggered Asset from the
      Scheme.  Pre-Trigger Withdrawal Notices shall have immediate
      effect upon the notice being duly given pursuant to Condition
      51.

            

    

     

    Post-Trigger
Withdrawal Notices

     

    
      	
              4.36

            	
              In respect of
      a Triggered Asset where the Trigger which occurred was a Restructuring or
      a Bankruptcy, the Participant may at any time during the period from (and
      including) the Trigger Date to (but excluding) the first anniversary of
      the Trigger Date (the “Withdrawal Determination
      Period”) deliver a Post-Trigger Withdrawal Notice in respect of all
      (but not some only) of that Triggered Asset.  If the Participant
      gives a Post-Trigger Withdrawal Notice within the Withdrawal Determination
      Period then, with effect from and including the date on which such notice
      becomes effective, such Triggered Asset shall cease permanently to be a
      Covered Asset.

            

    

     

    
      	
              4.37

            	
              A “Post-Trigger Withdrawal
      Notice” is an irrevocable written notice from the Participant to
      the Treasury referring to Condition 4.36, identifying the relevant
      Triggered Asset, Restructuring or Bankruptcy (as appropriate) and Trigger
      Date and stating that the Participant wishes to withdraw that Triggered
      Asset from the Scheme.  Post-Trigger Withdrawal Notices shall
      have immediate effect upon the notice being duly given pursuant to
      Condition 51.

            

    

     

    Termination
of participation in the Scheme by the Participant

     

    
      	
              4.38

            	
              The
      Participant may request the termination of its participation in the Scheme
      by giving to the Treasury not less than 40 Business Days’ irrevocable
      written notice, referring to this Condition 4.38, of a proposed
      termination date.  Such termination shall become effective on
      the proposed termination date if, as at such date, all of the conditions
      to termination pursuant to this Condition 4.38 specified in the Accession
      Agreement are satisfied.  If such conditions are not satisfied
      as at such date, such notice shall be of no
  effect.

            

    

     

    
      	
              4.39

            	
              If the
      Participant’s participation in the Scheme is terminated pursuant to
      Condition 4.38 then:

            

    

     

    
      	
               
      

            	
              (A)

            	
              it shall be
      deemed that no further Triggers, Losses or Recoveries will occur at any
      time following such termination;

            

    

     

    
      	
               
      

            	
              (B)

            	
              there shall
      be no further amounts due from the Treasury or the Participant under
      Condition 8 at any time following such termination;
  and

            

    

     

    
      	
               
      

            	
              (C)

            	
              (save to the
      extent the Accession Agreement states that it varies this paragraph (C))
      these Conditions and the Scheme Documents shall terminate, except this
      Condition 4.39 and Conditions 1, 2, 9 (including the Participant’s
      obligations with respect to the Fee under the Accession Agreement and any
      other Scheme 

            

    

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	 	 	Document),
      33, 35, 36, 37 and 38, Part 10 (other than Condition 44.8) and Part 11
      (including any definitions referred to or incorporated by reference into
      Part 11), which shall remain in full force and
effect.

    

     

    
      	
              4.40

            	
              Termination
      of the Participant’s participation in the Scheme pursuant to Condition
      4.38 shall be without prejudice to the rights of the Treasury or the
      Participant and the liabilities of the Participant or the Treasury, in
      each case in respect of any breach by the Participant or the Treasury of
      any Scheme Document occurring before such
  termination.

            

    

     

    Termination
by agreement

     

    
      	
              4.41

            	
              The Treasury
      and the Participant may agree in writing that the Participant’s
      participation in the Scheme shall terminate in respect of some or all
      Covered Assets.  In accordance with any such agreement, such
      Covered Assets shall cease permanently to be Covered Assets.  In
      connection with such agreement, the Treasury and the Participant shall
      also agree what value adjustments (if any) will apply and what the other
      consequences (if any) of such termination will be, taking into account the
      respective then current and anticipated positions of the Treasury and the
      Participant under these Conditions with respect to Losses and
      Recoveries.  Without prejudice to Condition 4.38, the Treasury
      shall consider in good faith, and consult with the Participant in relation
      to, any reasonable request by the Participant to terminate its
      participation in the Scheme in respect of some or all Covered Assets
      (including any proposal by the Participant with respect to such value
      adjustments).  Such request shall be made by way of written
      notice to the Treasury and may not be made more than once in each
      Quarter.

            

    

     

    
      	
              4.42

            	
              On at least
      one occasion in each calendar year (commencing in 2011), the Treasury and
      the Participant shall meet with one another for the purpose of reviewing,
      in good faith, the then current status of the Participant’s participation
      in the Scheme and the matters referred to in Condition
    4.41.

            

    

     

    Certain
consequences of assets and exposures ceasing to be Covered Assets

     

    
      	
              4.43

            	
              The
      consequences of a Covered Asset ceasing to be a Covered Asset as a result
      of Conditions 4.4, 4.9, 4.33, 4.34, 4.36, 4.48, 8.14, 8.15, 17.9, 31.21(A)
      and 31.22(A) include the following:

            

    

     

    
      	
               
      

            	
              (A)

            	
              no Loss or
      Recovery with respect to that Covered Asset shall arise under the Scheme
      Documents, whether before or after the date on which it ceased to be a
      Covered Asset and whether or not a Trigger has occurred in respect of that
      Covered Asset before the date on which it ceased to be a Covered Asset;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              if that
      Covered Asset was a Triggered Asset at the time it ceased to be a Covered
      Asset, such adjustments shall be made pursuant to and in accordance with
      Condition 8.7 as are required to give effect to paragraph (A)
      above.

            

    

     

    
      	
              4.44

            	
              Condition
      4.43 shall operate without prejudice to the Treasury’s or the
      Participant’s other rights, powers and remedies whether arising pursuant
      to the Scheme Documents (including pursuant to the Indemnity) or
      otherwise.

            

    

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    Asset
Purchase Requests

     

    
      	
              4.45

            	
              The Treasury
      may at any time, and from time to time, deliver an Asset Purchase Request
      in respect of some or all of the assets and exposures (the “Requested Assets”)
      comprising one or more Covered Assets and/or Non-Cash
      Realisations.  An “Asset Purchase Request”
      is a written notice from the Treasury to the Participant (referring to
      this Condition 4.45 and specifying the Requested Assets) stating that the
      Treasury wishes to acquire, or enter into a total return swap (or economic
      equivalent) with respect to, the Requested Assets.  An Asset
      Purchase Request shall also specify (i) the proposed transferee(s) or
      counterparty(ies) (which may be the Treasury and/or its nominee(s)), (ii)
      the proposed date for completion of the transaction and (iii) the
      Treasury’s proposal as to pricing with respect to the
      transaction.

            

    

     

    
      	
              4.46

            	
              If the
      Treasury gives an Asset Purchase Request, the Treasury and the Participant
      shall negotiate in good faith to attempt to agree (as soon as reasonably
      practicable following the date of the Asset Purchase Request) (i) pricing
      with respect to the transaction (to take into account the value, if any,
      of the credit protection provided by the Scheme which would be lost by the
      Participant) and (ii) the method, timing and associated terms and
      documentation for the transaction (where possible, in the case of a
      purchase, consistent with a transfer of the entire and unencumbered legal
      and beneficial ownership of the Requested Assets free from any
      Security).

            

    

     

    
      	
              4.47

            	
              Completion of
      the transaction with respect to the Requested Assets (or such portion of
      the Requested Assets, if any, in respect of which the Treasury and the
      Participant have reached agreement in writing as to the matters referred
      to in sub-paragraphs (i) and (ii) of Condition 4.46) shall take place on
      such date as may be agreed in writing between the Treasury and the
      Participant.  Upon completion (i) in the case of a purchase, the
      relevant holder or holders of the Requested Assets will transfer the
      Requested Assets (or the relevant portion) to the transferee(s) specified
      in the Asset Purchase Request in consideration of payment in cash of the
      acquisition price by or on behalf of the Treasury to the relevant holder
      or holders of the Requested Assets or (ii) in the case of a total return
      swap (or economic equivalent), the relevant holder or holders of the
      Requested Assets and the proposed counterparty(ies) will enter into the
      total return swap (or other documentation for the
      transaction).

            

    

     

    Termination
if Scheme unlawful

     

    
      	
              4.48

            	
              If it becomes
      unlawful for the Treasury to perform any of its payment obligations under
      the Scheme Documents with respect to a Covered Asset, the Treasury shall
      have the right to determine, by giving written notice to the Participant,
      that such Covered Asset shall cease permanently to be a Covered
      Asset.  Such Covered Asset shall cease permanently to be a
      Covered Asset with effect from and including the date on which such notice
      becomes effective.

            

    

     

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

     

    
      	
              5.

            	
              TRIGGERS

            

    

     

    Triggered
Assets

     

    
      	
              5.1

            	
              A Covered
      Asset will be a “Triggered Asset” from
      and including its Trigger Date.  A “Non-Triggered Asset”
      means a Covered Asset which is not a Triggered Asset.  The
      “Trigger Date” for
      a Covered Asset is the day on which a Trigger occurs in respect of that
      Covered Asset.  The first Trigger to occur in respect of a
      Covered Asset shall, for the purposes of the Scheme Documents, be treated
      as the only Trigger to have occurred in respect of that Covered
      Asset.

            

    

     

    Triggers

     

    
      	
              5.2

            	
              The “Triggers”
      are:

            

    

     

    
      	
               
      

            	
              (A)

            	
              Failure to
      Pay;

            

    

     

    
      	
               
      

            	
              (B)

            	
              Bankruptcy;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              Restructuring,

            

    

     

    provided
that:

     

    
      	
               
      

            	
              (i)

            	
              the only
      Triggers in respect of a Covered Asset which is a Derivative Agreement
      within the “Derivative” Covered Asset Class shall
  be:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      occurrence of the Early Termination Date under that Derivative Agreement
      and, after the applicable Grace Period has expired, the failure by an
      Obligor (or a person on its behalf if and to the extent it constitutes an
      effective discharge) to pay, when due, the Early Termination Amount (if
      any) and that failure to pay has not been remedied in full by an Obligor
      (or a person on its behalf if and to the extent it constitutes an
      effective discharge) or waived before the expiry of the applicable Grace
      Period (and for the purpose of Condition 5.1 the Trigger will occur on the
      date on which the applicable Grace Period expires), provided that any such
      failure to pay which was remedied or waived on or before 31 December 2008
      shall not be a Trigger; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              Restructuring,
      provided that, unless the Treasury in its sole discretion determines
      otherwise, the Restructuring Trigger shall not apply to such a Covered
      Asset in respect of which a Restructuring occurs where the Loss which
      would arise in respect of that Covered Asset as a result of it thereby
      becoming a Triggered Asset would exceed £10 million (or such higher
      threshold as the Treasury may from time to time notify the Participant in
      writing, provided that such notification shall be effective only in
      relation to Restructurings occurring after the date on which the
      notification becomes effective);

            

    

     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (ii)

            	
              a Failure to
      Pay or a Bankruptcy which was remedied or waived on or before
      31 December 2008 shall not be a Trigger;
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              a
      Restructuring which occurred on or before 31 December 2008 shall not be a
      Trigger.

            

    

     

    For the purpose of
this Condition 5.2, “waived” means, in the context
of a failure to pay an amount due, that there has been a binding, unconditional
and permanent waiver of the failure to pay, such that the amount is no longer
payable (whether by way of instalments or as part of a larger amount or
otherwise and whether on the original due date or any later date).

     

    Failure
to Pay

     

    
      	
              5.3

            	
              “Failure to Pay”
      means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (in respect
      of a Covered Asset that is within neither the “Residential Mortgage” nor
      the “Consumer Finance” Covered Asset Class) after the applicable Grace
      Period has expired, the failure by an Obligor to make, when due, any
      payments under that Covered Asset in accordance with the terms of that
      Covered Asset and that failure to pay has not been remedied in full by an
      Obligor (or a person on its behalf if and to the extent it constitutes an
      effective discharge) or waived (as such term is defined in Condition 5.2)
      before the expiry of the applicable Grace Period (and for the purpose of
      Condition 5.1 the Failure to Pay will occur on the date on which the
      applicable Grace Period expires);

            

    

     

    
      	
               
      

            	
              (B)

            	
              (in respect
      of a Covered Asset that is within the “Residential Mortgage” Covered Asset
      Class) that the Covered Asset is 365 Days Past Due;
  and

            

    

     

    
      	
               
      

            	
              (C)

            	
              (in respect
      of a Covered Asset that is within the “Consumer Finance” Covered Asset
      Class) that the Covered Asset is 180 Days Past
  Due.

            

    

     

    Failure
to Pay in respect of Long Dated Assets

     

    
      	
              5.4

            	
              In addition
      to the circumstances referred to in Condition 5.3, a Failure to Pay will
      occur in respect of a Covered Asset that is a Long Dated Asset
      if:

            

    

     

    
      	
               
      

            	
              (A)

            	
              a Material
      Writedown; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              an Implied
      Writedown,

            

    

     

    occurs in respect
of that Covered Asset.  A Covered Entity that Economically Owns a Long
Dated Asset must perform (or procure the performance of) such calculations as
are necessary to determine whether or not a Material Writedown and/or an Implied
Writedown has occurred in respect of that Long Dated Asset.  Such
calculations must be performed at least once per Quarter and (where possible)
must be based on the information included in the then most recently published
servicing or asset management or similar report for the relevant
transaction.

     

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

     

    
      	
              5.5

            	
              A “Long Dated Asset” is a
      Covered Asset within the “Structured Finance” Covered Asset Class which is
      identified as a Long Dated Asset in the Initial
  Data.

            

    

     

    
      	
              5.6

            	
              A “Material Writedown” will
      occur in respect of a Covered Asset if, at any time, the sum (without
      double counting) of (i) aggregate Writedowns (taking into account any
      intervening reversal of any such Writedown) and (ii) the aggregate amount
      of Deferred Unpaid Interest, in each case with respect to that Covered
      Asset, is equal to or greater than five per cent. of the then current
      Outstanding Amount of that Covered
Asset.

            

    

     

    
      	
              5.7

            	
              A “Writedown” in respect of
      a Covered Asset means the occurrence in respect of that Covered Asset of a
      writedown, principal deficiency or realised or applied loss (however
      described in the contracts relating to that Covered Asset) resulting in a
      reduction in or extinguishment of the outstanding principal amount of that
      Covered Asset (other than as a result of a scheduled or unscheduled
      payment of principal).  For the avoidance of doubt, the
      references in this Condition 5.7 and in Condition 5.9 to “writedowns” are
      not references to accounting provisions or
  impairments.

            

    

     

    
      	
              5.8

            	
              “Deferred Unpaid
      Interest” means, in respect of a Covered Asset, the aggregate
      amount of interest that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              has been
      deferred, or been the subject of the economic equivalent of a deferral,
      pursuant to the terms of that Covered Asset as a result of an Obligor
      having (as at the date on which the relevant amount would, but for such
      deferral or economic equivalent, have become due and payable) insufficient
      funds to pay the relevant amount;

            

    

     

    
      	
               
      

            	
              (B)

            	
              would, but
      for such deferral or economic equivalent, have become due and payable;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              remains
      unpaid.

            

    

     

    
      	
              5.9

            	
              An “Implied Writedown” will
      occur in respect of a Covered Asset if the contracts relating to that
      Covered Asset do not provide for writedowns, principal deficiencies or
      realised or applied losses as described in the definition of Writedown and
      on any two successive payment dates under that Covered
    Asset:

            

    

     

    (A - B) / C
(expressed as a percentage) is greater than five per cent.

     

    where:

     

    
      	
               
      

            	
              A

            	
              is the sum
      (without double counting) of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Outstanding Amount of the Covered
Asset;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the aggregate
      amount of Deferred Unpaid Interest with respect to the Covered
      Asset;

            

    

     

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Outstanding Amount with respect to all payment obligations of the relevant
      Obligor ranking pari
      passu with, or senior to, the Covered Asset;
  and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the aggregate
      amount of Deferred Unpaid Interest with respect to all payment obligations
      of the relevant Obligor ranking pari passu with, or
      senior to, the Covered Asset,

            

    

     

    
      in
each case as at the relevant payment date;

    

     

    
      	
               
      

            	
              B

            	
              is the lesser
      of (i) “A” and (ii) the aggregate outstanding asset pool balance securing
      or designated pursuant to the terms of the relevant transaction to fund
      the payment obligations under the Covered Asset and all payment
      obligations of the relevant Obligor ranking pari passu with, or
      senior to, the Covered Asset, in each case as at the relevant payment date
      (as shown, where applicable, in the then most recently published servicing
      or asset management or similar report for the relevant transaction);
      and

            

    

     

    
      	
               
      

            	
              C

            	
              is the
      Outstanding Amount of the Covered Asset plus the Outstanding Amount of all
      payment obligations of the relevant Obligor ranking pari passu with the
      Covered Asset, in each case as at the relevant payment
    date.

            

    

     

    For the purpose of
this Condition 5.9, the Outstanding Amount of, and the amount of Deferred Unpaid
Interest with respect to, a payment obligation which is not a Covered Asset
shall be determined, mutatis mutandis, as if it were a Covered Asset (and, if
applicable, a Limited Recourse Asset).

     

    
      Failure
to Pay in respect of Limited Recourse Assets

    

     

    
      	
              5.10

            	
              In addition
      to the circumstances referred to in Condition 5.3, a Failure to Pay will
      occur in respect of a Covered Asset that is a Limited Recourse Asset if
      the Outstanding Amount of that Covered Asset remains greater than zero
      after the expiry of the applicable Grace Period following the first to
      occur of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      contractual final maturity date of that Covered Asset;
  and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the date on
      which the assets securing or designated pursuant to the terms of that
      Covered Asset to fund the payment obligations under that Covered Asset are
      liquidated, distributed or otherwise disposed of in full and the proceeds
      thereof are distributed or otherwise disposed of in
  full.

            

    

     

    
      	
              5.11

            	
              A “Limited Recourse Asset”
      is a Covered Asset which satisfies all of the following
      requirements:

            

    

     

    
      	
               
      

            	
              (A)

            	
              it is within
      neither the “Consumer Finance” nor the “Residential Mortgage” Covered
      Asset Class;

            

    

     

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              it is a
      Covered Asset in respect of which the Obligor is obliged to make payments
      only to the extent the Obligor has funds available to it for that purpose;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              it is
      identified in the Initial Data as a Limited Recourse Asset or a Long Dated
      Asset.

            

    

     

    Definitions
relating to Failure to Pay and other Triggers

     

    
      	
              5.12

            	
              An “Obligor” means, in
      relation to a Covered Asset, a person (including a guarantor) with an
      obligation under the terms of that Covered Asset (whether present or
      future, actual or contingent and as principal, surety or otherwise) to pay
      or repay money to, or for onward transmission to, a Covered Entity (or, in
      the case of a Covered Asset that is the subject of a Permitted
      Arrangement, the relevant Applicable Entity) but excluding a person to the
      extent acting:

            

    

     

    
      	
               
      

            	
              (A)

            	
              as lender,
      facility agent, arranger, security trustee, security agent or other
      finance party with respect to a facility
  agreement;

            

    

     

    
      	
               
      

            	
              (B)

            	
              as holder,
      trustee, security trustee, security agent, fiscal agent, paying agent,
      calculation agent, servicer, collateral agent, collateral manager,
      collateral administrator, cash manager or liquidity provider with respect
      to a debt instrument; or

            

    

     

    
      	
               
      

            	
              (C)

            	
              in a capacity
      which is analogous to those referred to in paragraphs (A) and (B)
      above.

            

    

     

    
      	
              5.13

            	
              The “Grace Period” means, in
      respect of a payment due under a Covered Asset, the period ending on the
      day which falls the Applicable Period after the date on which that payment
      is due under the terms of that Covered
Asset.

            

    

     

    
      	
              5.14

            	
              The “Applicable Period”
      means, with respect to a Covered Asset, the applicable period set out
      below for the Covered Asset Class to which that Covered Asset
      belongs:

            

    

     

    
      	
              Covered
      Asset Class

            	
              Applicable
      Period

            
	 	 
	
              Bond

            	
              30
      days

            
	 	 
	
              Loan

            	
              270
      days

            
	 	 
	
              Lease
      Finance

            	
              270
      days

            
	 	 
	
              Project
      Finance

            	
              270
      days

            
	 	 
	
              Leveraged
      Finance

            	
              270
      days

            
	 	 
	
              Commercial
      Real Estate Finance

            	
              270
      days

            
	 	 
	
              Structured
      Finance

            	
              30
      days

            

    

     

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    
       

      
        	
                Covered
      Asset Class

              	
                Applicable
      Period

              
	 	 
	
                Derivative

              	
                30
      days

              

      

       

    

     

    
      	
              5.15

            	
              “Days Past Due” means,
      with respect to a Covered Asset, days past due as calculated for that
      Covered Asset in the regulatory reporting systems of the relevant Covered
      Entity in accordance with its ordinary business practices from time to
      time, consistently applied, provided that the basis on which that Covered
      Entity and the Participant’s Group treat assets and exposures which form
      part of Covered Assets does not differ from the basis on which that
      Covered Entity and the Participant’s Group treat equivalent assets and
      exposures of that Covered Entity and the Participant’s Group which do not
      form part of Covered Assets.

            

    

     

    Bankruptcy

     

    
      	
              5.16

            	
              “Bankruptcy”
      means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in respect of
      a Covered Asset which is within neither the “Consumer Finance” nor the
      “Residential Mortgage” Covered Asset Class, that one or more Obligors in
      respect of that Covered Asset:

            

    

     

    
      	
               
      

            	
              (i)

            	
              is dissolved
      (other than pursuant to a consolidation, amalgamation or
      merger);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              becomes
      bankrupt or insolvent, is unable to pay its debts or fails or admits in
      writing in a judicial, regulatory or administrative proceeding or filing
      its inability generally to pay its debts as they become due or suspends
      payments of its debts generally;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              makes a
      general assignment, arrangement or composition with or for the benefit of
      its creditors;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              institutes or
      has instituted against it a proceeding seeking a judgment of insolvency or
      bankruptcy or any other relief under any bankruptcy or insolvency law or
      other similar law affecting creditors’ rights, or a petition is presented
      for its winding-up, liquidation or bankruptcy, and, in the case of any
      such proceeding or petition instituted or presented against it, such
      proceeding or petition (a) results in a judgment of insolvency or
      bankruptcy, the entry of an order for relief or the making of an order for
      its winding-up, liquidation or bankruptcy or (b) is not dismissed,
      discharged, stayed or restrained in each case within 30 calendar days of
      the institution or presentation
thereof;

            

    

     

    
      	
               
      

            	
              (v)

            	
              has a
      resolution passed for its winding-up, official management or liquidation
      (other than pursuant to a consolidation, amalgamation or
      merger);

            

    

     

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (vi)

            	
              seeks or
      (otherwise than as a direct result of his or her death) becomes subject to
      the appointment of an administrator, provisional liquidator, liquidator,
      conservator, receiver, trustee or custodian or other similar official for
      it or for all or substantially all its
assets;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              has a secured
      party take possession of all or substantially all its assets or has a
      distress, execution, attachment, sequestration or other legal process
      levied, enforced or sued on or against all or substantially all its assets
      and such secured party maintains possession, or any such process is not
      dismissed, discharged, stayed or restrained, in each case within 30
      calendar days thereafter; or

            

    

     

    
      	
               
      

            	
              (viii)

            	
              causes or is
      subject to any event with respect to it which, under the applicable laws
      of any jurisdiction, has an analogous effect to any of the events
      specified in sub-paragraphs (i) to (vii) (inclusive)
  above,

            

    

     

    provided that a
Bankruptcy shall not occur under this paragraph (A) in relation to a Covered
Asset in respect of which there is more than one Obligor where:

     

    
      	
               
      

            	
              (1)

            	
              for at least
      one of those Obligors (a “Solvent Obligor”), none
      of the events set out in sub-paragraphs (i) to (viii) (inclusive) above
      has occurred; and

            

    

     

    
      	
               
      

            	
              (2)

            	
              one or more
      Solvent Obligors remains liable for all of the payment obligations of all
      the Obligors comprised within that Covered Asset (and, for the avoidance
      of doubt, a Solvent Obligor shall not be regarded as liable for all such
      payment obligations if recourse against that Solvent Obligor is limited by
      the terms of that Covered Asset);

            

    

     

    
      	
               
      

            	
              (B)

            	
              in respect of
      a Covered Asset within the “Consumer Finance” or “Residential Mortgage”
      Covered Asset Class, that the Covered Asset is recorded as charged off in
      the systems of the relevant Covered Entity in accordance with its ordinary
      business practices from time to time, consistently applied, provided that
      the basis on which that Covered Entity and the Participant’s Group treat
      assets and exposures which form part of Covered Assets does not differ
      from the basis on which that Covered Entity and the Participant’s Group
      treat equivalent assets and exposures of that Covered Entity and the
      Participant’s Group which do not form part of Covered Assets;
      or

            

    

     

    
      	
               
      

            	
              (C)

            	
              in respect of
      any Covered Asset, that one or more Obligors in respect of that Covered
      Asset:

            

    

     

    
      	
               
      

            	
              (i)

            	
              has a secured
      party take possession of any of its assets or has a distress, execution,
      attachment, sequestration or other legal process levied, enforced or sued
      on or against any of its assets, where such taking of possession or such
      distress, execution, attachment, sequestration or other legal process
      occurs in connection with the enforcement of any Security for that Covered
      Asset; or

            

    

     

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (ii)

            	
              causes or is
      subject to any event with respect to it which, under the applicable laws
      of any jurisdiction, has an analogous effect to any of the events
      specified in sub-paragraph (i)
above.

            

    

     

    
      	
              5.17

            	
              For the
      purpose of Condition 5.1:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (subject to
      paragraph (B) below) in the case of an event described in Condition
      5.16(A)(ii), the Bankruptcy will occur on the date on which the relevant
      Covered Entity determines that the event has occurred in accordance with
      its ordinary business practices from time to time, consistently applied,
      provided that the basis on which that Covered Entity and the Participant’s
      Group treat assets and exposures which form part of Covered Assets does
      not differ from the basis on which that Covered Entity and the
      Participant’s Group treat equivalent assets and exposures of that Covered
      Entity and the Participant’s Group which do not form part of Covered
      Assets;

            

    

     

    
      	
               
      

            	
              (B)

            	
              in the case
      of an event described in Condition 5.16(A)(ii), if the date on which the
      Bankruptcy occurs (as determined in accordance with paragraph (A) above,
      the “original
      date”) falls within the period from (and including) the date on
      which a Potential Failure to Pay occurs with respect to the Covered Asset
      to (and including) the last day of the month in which the Grace Period
      with respect to that Potential Failure to Pay expires, the Bankruptcy will
      occur on the first day after the end of that period instead of the
      original date; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              in the case
      of any other event described in Condition 5.16, the Bankruptcy will occur
      on the date on which the event
occurs.

            

    

     

    Restructuring

     

    
      	
              5.18

            	
              A “Restructuring” means,
      with respect to a Covered Asset, that such Covered Asset is an Impaired
      Asset and any one or more of the following events occurs in a form that
      binds the relevant Covered Entity or Covered Entities (or, in the case of
      a Covered Asset that is the subject of a Permitted Arrangement, the
      relevant Applicable Entity or Applicable Entities), is agreed between an
      Obligor or a Governmental Authority and a sufficient number of holders of
      the Covered Asset and equivalent assets (whether or not including the
      relevant Covered Entity or Covered Entities or Applicable Entity or
      Applicable Entities (as the case may be)) to bind the relevant Covered
      Entity or Covered Entities or Applicable Entity or Applicable Entities (as
      the case may be) or is announced (or otherwise decreed) by an Obligor or a
      Governmental Authority in a form that binds the relevant Covered Entity or
      Covered Entities or the relevant Applicable Entity or Applicable Entities
      (as the case may be), and in each case the relevant event is not expressly
      provided for under the terms of the Covered
  Asset:

            

    

     

    
      	
               
      

            	
              (A)

            	
              a reduction
      in the rate or amount of interest payable or the amount of scheduled
      interest accruals;

            

    

     

    
      	
               
      

            	
              (B)

            	
              a reduction
      in the amount of principal or premium payable at maturity or at scheduled
      redemption dates or, in the case of a Covered Asset which is a
      

            

    

     

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	
              Derivative
      Agreement within the “Derivative” Covered Asset Class: (i) a reduction in
      the Early Termination Amount payable to the relevant Covered Entity or
      Covered Entities or Applicable Entity or Applicable Entities (as the case
      may be); (ii) a termination (including a partial termination) of one or
      more of the transactions governed by that Derivative Agreement where the
      amount (if any) payable to the relevant Covered Entity or Covered Entities
      or Applicable Entity or Applicable Entities (as the case may be) in
      respect of such termination is less than the amount that would have been
      the Early Termination Amount had the date of such termination been an
      Early Termination Date and had the only transactions governed by that
      Derivative Agreement been the terminated transactions (or, as the case may
      be, the terminated part of any transactions that were partially
      terminated); or (iii) an amendment to one or more of the transactions
      governed by that Derivative Agreement by which any scheduled payment or
      payments under the relevant transaction or transactions are reduced and
      where the amount (if any) payable to the relevant Covered Entity or
      Covered Entities or Applicable Entity or Applicable Entities (as the case
      may be) in respect of such amendment is less than the excess (if any) of
      (a) the amount that would have been the Early Termination Amount had the
      date of such amendment been an Early Termination Date (calculated without
      regard to the relevant amendment), over (b) the amount that would have
      been the Early Termination Amount had the date of such amendment been an
      Early Termination Date (calculated taking into account the relevant
      amendment);

            

    

     

    
      	
               
      

            	
              (C)

            	
              a
      postponement or other deferral of a date or dates for either (i) the
      payment or accrual of interest or (ii) the payment of principal or premium
      or, in the case of a Covered Asset which is a Derivative Agreement within
      the “Derivative” Covered Asset Class, a postponement or other deferral of
      (x) a date or dates for any scheduled payment under that Derivative
      Agreement or (y) the date for payment of the Early Termination
      Amount;

            

    

     

    
      	
               
      

            	
              (D)

            	
              (if the
      Covered Asset is not secured) a change in the ranking in priority of
      payment, causing the Subordination of the Covered
  Asset;

            

    

     

    
      	
               
      

            	
              (E)

            	
              (if the
      Covered Asset is secured) a change in the ranking or priority of the
      Covered Asset, causing the Subordination of the Covered Asset to any other
      obligation which is secured on all or some of the same assets as the
      Covered Asset; and

            

    

     

    
      	
               
      

            	
              (F)

            	
              (if the
      Covered Asset is secured) a release or discharge of all Security, other
      than where (i) the Security is immediately replaced by other Security,
      (ii) the proceeds of such release or discharge are used to repay secured
      debt which has a priority or ranking which is equal to or senior to the
      Covered Asset or (iii) the proceeds are otherwise disposed of in a manner
      expressly provided for under the terms of the Covered
    Asset,

            

    

     

    (each of the events
referred to in paragraphs (A) to (F) above being a “Restructuring Event”) provided
that neither of the following shall constitute a Restructuring:

     

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (i)

            	
              if the
      Covered Asset is denominated in a currency of a Member State of the
      European Union that adopts or has adopted the euro, the payment in euros
      of interest or principal in relation to the Covered Asset;
    and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      occurrence of, agreement to or announcement of any Restructuring Event due
      to an administrative adjustment, accounting adjustment or tax adjustment
      or other technical adjustment occurring in the ordinary course of
      business.

            

    

     

    
      	
              5.19

            	
              For the
      purpose of Condition 5.1, the date on which a Restructuring occurs will be
      the earlier of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the date the
      Restructuring Event becomes effective;
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the date on
      which the Pre-Restructuring Event (if any) in respect of that
      Restructuring becomes effective,

            

    

     

    where “Pre-Restructuring Event”
means, with respect to a Restructuring, the earliest amendment or replacement of
any agreement or instrument relating (or to the extent relating) to the assets
and exposures comprising the relevant Covered Asset which (but for Condition
4.5(C)) would not have satisfied the Asset Continuity Requirements and which
forms part of a series of two or more related events (one of which is the
relevant Restructuring Event) which together constitute a restructuring of that
Covered Asset.  For the purpose of Condition 4.5(C), each such event
shall be deemed to form part of the Restructuring of that Covered
Asset.

     

    
      	
              5.20

            	
              For the
      purpose only of determining whether a Restructuring has occurred in
      respect of a Covered Asset, the refinancing or replacement of that Covered
      Asset shall be treated as if it were an amendment of the terms of that
      Covered Asset so that they reflect the terms of the refinancing or
      replacement.

            

    

     

    
      	
              5.21

            	
              Subject to
      Condition 5.23, for the purpose of determining whether a Restructuring has
      occurred in respect of a Covered Asset, that Covered Asset is an “Impaired Asset”
      if:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Covered
      Asset is:

            

    

     

    
      	
               
      

            	
              (i)

            	
              accounted for
      at amortised cost; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              accounted for
      at fair value and classified as available for
  sale,

            

    

     

    and, at the time or
as a result of the occurrence of, agreement to or announcement of the applicable
Restructuring Event, that Covered Asset is or becomes (or Static IFRS would
require that Covered Asset to be or become) the subject of:

     

    
      	
               
      

            	
              (a)

            	
              a Specific
      Impairment, other than a Specific Impairment which was made (or which
      Static IFRS would require to be made) on or before 31 December 2008;
      or

            

    

     

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              a Specific
      Impairment which was made (or which Static IFRS would require to be made)
      on or before 31 December 2008 and which the Participant elects to treat as
      a Specific Impairment for the purpose of this Condition 5.21, which
      election may be made only by reporting (for the avoidance of doubt other
      than by way of a correction or adjustment) the Restructuring as a Trigger
      pursuant to an election made under this Condition 5.21(A)(b) in the
      Quarterly Statement relating to the Quarterly Statement Period during
      which the applicable Restructuring Event
occurs,

            

    

     

    excluding in each
case any Specific Impairment that has been (or which Static IFRS would require
to be) fully reversed; or

     

    
      	
               
      

            	
              (B)

            	
              the Covered
      Asset is accounted for at fair value and classified as fair value through
      the profit and loss account and, at the time or as a result of the
      occurrence of, agreement to or announcement of the applicable
      Restructuring Event, that Covered Asset would be or would become (or
      Static IFRS would require that Covered Asset to be or become), the subject
      of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a Specific
      Impairment were that Covered Asset classified as available for sale, other
      than a Specific Impairment which would have been made (or which Static
      IFRS would require to have been made) on or before 31 December 2008 were
      that Covered Asset classified as available for sale;
  or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a Specific
      Impairment which would have been made (or which Static IFRS would require
      to have been made) on or before 31 December 2008 were that Covered Asset
      classified as available for sale and which the Participant elects to treat
      as a Specific Impairment for the purpose of this Condition 5.21, which
      election may be made only by reporting (for the avoidance of doubt other
      than by way of a correction or adjustment) the Restructuring as a Trigger
      pursuant to an election made under this Condition 5.21(B)(ii) in the
      Quarterly Statement relating to the Quarterly Statement Period during
      which the applicable Restructuring Event
occurs,

            

    

     

    excluding in each
case any Specific Impairment that would have been (or which Static IFRS would
require to have been) fully reversed were that Covered Asset classified as
available for sale.

     

    
      	
              5.22

            	
              Subject to
      Condition 5.23, a “Specific Impairment”
      means an individual asset level impairment recorded against the value of
      the Covered Asset in the relevant accounting records of the relevant
      member of the Participant’s Group (to the extent taken account of in the
      consolidated accounts of the Participant’s Group) calculated on a
      discounted cash flow basis in accordance with the applicable impairment
      rules set out in Static IFRS for:

            

    

     

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              (in the case
      of a Covered Asset which is accounted for at amortised cost) financial
      instruments held at amortised cost;
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              (in the case
      of a Covered Asset which is accounted for as available for sale) available
      for sale financial instruments held at fair
  value.

            

    

     

    For the avoidance
of doubt, collective and portfolio level impairments are not Specific
Impairments for the purposes of these Conditions.

     

    
      	
              5.23

            	
              For the
      purposes of Conditions 5.21 and 5.22, Static IFRS shall be deemed not to
      require (i) a Covered Asset within the “Residential Mortgage” Covered
      Asset Class to be the subject of any individual asset level impairment or
      (ii) any individual asset level impairment to be made or recorded (or,
      once made or recorded, reversed) in respect of any such Covered
      Asset.

            

    

     

    
      	
              5.24

            	
              A “Governmental Authority”
      means any de
      facto or de
      jure government (or any agency, instrumentality, ministry or
      department thereof), court, tribunal, administrative or other governmental
      authority or any other entity (public or private) charged with the
      regulation of financial markets (including a central bank) which has or
      asserts jurisdiction over an
Obligor.

            

    

     

    
      	
              5.25

            	
              “Subordination” will
      occur, with respect to a Covered Asset, if an obligation (a “Subordinated
      Obligation”) owed by an Obligor which is comprised within that
      Covered Asset becomes subject to a contractual, trust or similar
      arrangement which provides that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              upon the
      liquidation, dissolution, reorganisation, bankruptcy or winding-up of the
      relevant Obligor, claims of the holders of any other obligation (a “Senior Obligation”) of
      that Obligor will be satisfied prior to the claims of the holders of the
      Subordinated Obligation; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              the holders
      of the Subordinated Obligation will not be entitled to receive or retain
      payments in respect of their claims against the relevant Obligor at any
      time that the relevant Obligor is in payment arrears or is otherwise in
      default under the Senior
Obligation,

            

    

     

    and Subordination
will also occur, with respect to a Covered Asset which is secured, if, at any
time after 31 December 2008, the Senior Obligation is secured by Security
Interests and entitled to the receipt of the application of any proceeds
realised following enforcement of any such Security Interest, in each case
having a priority or ranking senior to that of the Security Interests securing
the Subordinated Obligation (or, if the Subordinated Obligation is secured by
Security Interests having more than one level of priority or ranking, having a
priority or ranking senior to that of the Security Interests securing the
Subordinated Obligation with the highest priority or ranking) on any
assets.  For the purpose of determining whether Subordination has
occurred, the existence of preferred creditors arising by operation of law shall
not be taken into account, unless the Obligor is a sovereign
entity.

     

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    Sub-participations

     

    
      	
              5.26

            	
              If an
      underlying asset or exposure forming part of a Covered Asset is held by
      the applicable Covered Entity or Covered Entities (or, in the case of a
      Covered Asset that is the subject of a Permitted Arrangement, the relevant
      Applicable Entity or Applicable Entities) by way of a sub-participation in
      a loan or facility agreement, then for the purpose only of determining
      whether a Trigger has occurred in respect of that Covered
      Asset:

            

    

     

    
      	
               
      

            	
              (A)

            	
              if that asset
      or exposure was properly identified as a sub-participation in the Initial
      Data, it shall be treated as comprising both the underlying asset or
      exposure and the sub-participation (such that a Trigger in respect of
      either is capable of being a Trigger in respect of that Covered Asset for
      the purpose of these Conditions);
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              if that asset
      or exposure was not properly identified as a sub-participation in the
      Initial Data, it shall be treated as comprising only the underlying asset
      or exposure,

            

    

     

    where “properly identified” has the
meaning given to it in Condition 4.17 and “sub-participation” shall be
construed in accordance with Condition 4.18.

     

    Certain
events not to preclude a Trigger

     

    
      	
              5.27

            	
              Subject to
      Conditions 15.16, 30.2 and 31.4(B), if the occurrence of an event or
      events would otherwise constitute a Trigger, such occurrence will
      constitute a Trigger whether or not such occurrence arises directly or
      indirectly from or is subject to a defence based
  on:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any lack or
      alleged lack of authority or capacity of an Obligor to enter into any
      obligation in respect of a Covered
Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any actual or
      alleged unenforceability, illegality, impossibility or invalidity in
      respect of any obligation in respect of a Covered Asset, however
      described;

            

    

     

    
      	
               
      

            	
              (C)

            	
              any
      applicable law, order, regulation, decree or notice, however described, or
      the promulgation of, or any change in, the interpretation by any court,
      tribunal, regulatory authority or similar judicial or administrative body
      with competent or apparent jurisdiction of any applicable law, order,
      regulation, decree or notice, however described;
  or

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      imposition of, or any change in, any exchange controls, capital
      restrictions or any other similar restrictions imposed by any monetary or
      other authority, however described.

            

    

     

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

     

    
      	
              6.

            	
              LOSSES

            

    

     

    Occurrence
of a Loss

     

    
      	
              6.1

            	
              Subject to
      these Conditions, a “Loss” will occur in
      respect of a Triggered Asset on its Trigger Date (or, if later, on
      31 December 2008) in an amount equal to the Sterling Equivalent (the
      Exchange Date being the Trigger Date or, if later, 31 December 2008)
      of the lesser of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              its
      Outstanding Amount on the Trigger Date (or, if later, on 31 December
      2008); and

            

    

     

    
      	
               
      

            	
              (B)

            	
              its Covered
      Amount on the Initial Event Date (or, if later, on 31 December
      2008).

            

    

     

    Initial
Event Date

     

    
      	
              6.2

            	
              The “Initial Event Date”
      means, with respect to a Triggered Asset the later
  of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      applicable date below:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if the
      Trigger was a Failure to Pay, the Initial Failure to Pay Date in respect
      of that Failure to Pay;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if the
      Trigger was a Bankruptcy or a Restructuring and a Potential Failure to Pay
      had occurred and was continuing as at the Trigger Date, the Initial
      Failure to Pay Date in respect of that Potential Failure to
      Pay;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              if the
      Triggered Asset is a Derivative Agreement within the “Derivative” Covered
      Asset Class and the Trigger was a failure to pay as described in Condition
      5.2(i)(a), the date on which the event which gave rise to the Early
      Termination Date occurred; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              in any other
      case, the Trigger Date; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      applicable date below:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if the
      Triggered Asset is not within any of the “Consumer Finance”, “Retail
      Mortgage” and “Derivative” Covered Asset Classes, the date which falls the
      Applicable Period before the Trigger
Date;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if the
      Triggered Asset is within the “Derivative” Covered Asset Class, the date
      which falls the Applicable Period before the earlier of the Trigger Date
      and the date on which the Early Termination Date is
      designated;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              if the
      Triggered Asset is within the “Consumer Finance” Covered Asset Class, the
      date which falls 180 days before the Trigger Date;
  and

            

    

     

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (iv)

            	
              if the
      Triggered Asset is within the “Retail Mortgage” Covered Asset Class, the
      date which falls 365 days before the Trigger
  Date.

            

    

     

    
      	
              6.3

            	
              A “Potential Failure to
      Pay” means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (in respect
      of a Covered Asset that is within neither the “Residential Mortgage” nor
      the “Consumer Finance” Covered Asset Class) the failure by an Obligor to
      make, when due, any payments under that Covered Asset in accordance with
      the terms of that Covered Asset which would, if not remedied in full by an
      Obligor (or a person on its behalf if and to the extent it constitutes an
      effective discharge) or waived (as such term is defined in Condition 5.2)
      before the expiry of the applicable Grace Period, constitute a Failure to
      Pay; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              (in respect
      of a Covered Asset that is within either the “Residential Mortgage” or
      “Consumer Finance” Covered Asset Class) the failure by an Obligor to make,
      when due, any payments under that Covered Asset in accordance with the
      terms of that Covered Asset which has not been remedied in full by an
      Obligor (or a person on its behalf if and to the extent it constitutes an
      effective discharge) or waived (as such term is defined in Condition
      5.2).

            

    

     

    
      	
              6.4

            	
              In respect of
      any Failure to Pay or Potential Failure to Pay which has occurred and is
      continuing, the “Initial
      Failure to Pay Date” shall
be:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (in respect
      of a Covered Asset that is within neither the “Residential Mortgage” nor
      the “Consumer Finance” Covered Asset Class) the earliest day on which an
      Obligor failed to make a payment which gave rise to that Failure to Pay or
      Potential Failure to Pay (as applicable);
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              (in respect
      of a Covered Asset that is within either the “Residential Mortgage” or
      “Consumer Finance” Covered Asset Class) the earliest day on which a
      Potential Failure to Pay occurred which has not been remedied in full by
      an Obligor (or a person on its behalf if and to the extent it constitutes
      an effective discharge), assuming for this purpose that any amounts
      received in discharge of unpaid amounts are applied to discharge those
      amounts in the order in which they fell due, or waived (as such term is
      defined in Condition 5.2).

            

    

     

    Covered
Amount

     

    
      	
              6.5

            	
              Subject to
      Condition 34, the “Covered Amount” of a
      Covered Asset means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              on 31
      December 2008, the amount specified by the Participant in the Initial Data
      as the “Covered Amount” of that Covered Asset, being an amount denominated
      in the currency (the “Covered Amount
      Currency”) specified by the Participant in the Initial Data as the
      “Currency” of that Covered Asset (or, if no such amount or currency is
      specified by the Participant in the Initial Data,
  zero);

            

    

     

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (B)

            	
              on each day
      (for the purpose of this paragraph (B), the “relevant day”) from (and
      including) 1 January 2009 to (and including) the Cover Termination Date,
      the lesser of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Covered
      Amount Cap on the relevant day; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Covered
      Amount of that Covered Asset on the day immediately preceding the relevant
      day; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              on each day
      falling after the later of (i) the Cover Termination Date and (ii)
      31 December 2008, zero.

            

    

     

    
      	
              6.6

            	
              The “Cover Termination Date”
      means, in respect of a Covered Asset, but subject to Condition
      6.35(A)(ii), the date specified by the Participant in the Initial Data as
      the “Cover Termination Date” of that Covered
  Asset.

            

    

     

    Covered
Amount Cap

     

    
      	
              6.7

            	
              The “Covered Amount Cap” of a
      Covered Asset on any day (for the purpose of this Condition 6.7, the
      “relevant day”)
      means an amount denominated in the Covered Amount Currency of that Covered
      Asset which:

            

    

     

    
      	
               
      

            	
              (A)

            	
              if that
      Covered Asset is within neither the “Consumer Finance” nor the
      “Derivative” Covered Asset Class, is an amount equal to the sum
      of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the lesser
      of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the Original
      Maximum Exposure; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the Actual
      Exposure,

            

    

     

    with respect to
that Covered Asset on the day immediately preceding the relevant day;
and

     

    
      	
               
      

            	
              (ii)

            	
              the overdraft
      proportion of the Imputed Maximum Exposure with respect to that Covered
      Asset on the relevant day,

            

    

     

    where the “overdraft proportion”
is:

     

    
      	
               
      

            	
              (1)

            	
              if that
      Covered Asset did not include or comprise an Overdraft on 31 December
      2008, zero; and

            

    

     

    
      	
               
      

            	
              (2)

            	
              if that
      Covered Asset did include or comprise an Overdraft on 31 December
      2008, a fraction determined as
follows:

            

    

     

    
      	
               
      

            	
              A /
      B

            

    

     

    
      	
               
      

            	
              where:

            

    

     

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              A

            	
              is an amount
      equal to the lesser of:

            

    

     

    
      	
               
      

            	
              (x)

            	
              the Advised
      Amount with respect to that Overdraft;
and

            

    

     

    
      	
               
      

            	
              (y)

            	
              the Covered
      Amount of that Covered Asset on 31 December 2008 less the Original
      Maximum Exposure with respect to that Covered Asset on 31 December 2008
      (or, if greater, zero)

            

    

     

    
      	
               
      

            	
              B

            	
              is the
      Covered Amount of that Covered Asset on 31 December
  2008;

            

    

     

    
      	
               
      

            	
              (B)

            	
              if that
      Covered Asset is within the “Derivative” Covered Asset Class, is an amount
      equal to the Covered Amount of that Covered Asset on 31 December 2008;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              if that
      Covered Asset is within the “Consumer Finance” Covered Asset Class, is an
      amount equal to the higher of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Imputed
      Maximum Exposure with respect to that Covered Asset on the relevant day;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the lesser
      of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the Original
      Maximum Exposure; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the Actual
      Exposure,

            

    

     

    with respect to
that Covered Asset on the day immediately preceding the relevant
day.

     

    
      	
              6.8

            	
              In these
      Conditions:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the “Actual Exposure” with
      respect to a Covered Asset on any day means an amount denominated in the
      Covered Amount Currency of that Covered Asset equal to the sum
      of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Outstanding Amount of that Covered Asset on that day;
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if that
      Covered Asset is or includes a Covered Liability (but without double
      counting amounts), the maximum aggregate amount as of that day which the
      applicable Covered Entity or Covered Entities have (or, in the case of a
      Covered Asset that is the subject of a Permitted Arrangement, the relevant
      Applicable Entity or Applicable Entities have) an actual or contingent
      liability to pay in respect of CL Payment Amounts relating to that Covered
      Liability (but, for these purposes, excluding any Covered Liability which
      is an undrawn Overdraft);

            

    

     

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              the “Original Maximum Exposure” with
      respect to a Covered Asset on any day (in this paragraph (B), the “relevant day”) means
      (subject to Condition 6.35(A)(i)), an amount denominated in the Covered
      Amount Currency of that Covered Asset equal to the maximum aggregate
      amount of the exposure which the terms of that Covered Asset in effect on
      31 December 2008 commit the applicable Covered Entity or Covered
      Entities (or, in the case of a Covered Asset that is the subject of a
      Permitted Arrangement, the relevant Applicable Entity or Applicable
      Entities) to have on the relevant day, such amount to be determined
      without regard to any amendment or replacement affecting that Covered
      Asset or its terms after 31 December 2008 and on the basis
      that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the exposure
      of the applicable Covered Entity or Covered Entities (or, in the case of a
      Covered Asset that is the subject of a Permitted Arrangement, the relevant
      Applicable Entity or Applicable Entities) with respect to a Covered Asset
      on any day is an amount denominated in the Covered Amount Currency of that
      Covered Asset equal to the sum of (a) the Outstanding Amount of that
      Covered Asset on that day and (b) if that Covered Asset is or includes a
      Covered Liability (but without double counting amounts), the maximum
      aggregate amount as of that day which the applicable Covered Entity or
      Covered Entities have (or, in the case of a Covered Asset that is the
      subject of a Permitted Arrangement, the relevant Applicable Entity or
      Applicable Entities have) an actual or contingent liability to pay in
      respect of CL Payment Amounts relating to that Covered
      Liability;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      applicable Obligors comply with their payment obligations under the terms
      of that Covered Asset;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              all
      conditions precedent to the effectiveness
of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      obligations and liabilities (whether actual or contingent) of the
      applicable Covered Entity or Covered Entities or the relevant Applicable
      Entity (as the case may be); and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the rights
      and assets (whether actual or contingent) of the applicable
      Obligors,

            

    

     

    with respect to
that Covered Asset are satisfied;

     

    
      	
               
      

            	
              (iv)

            	
              no events of
      default, early termination events or mandatory prepayment events (however
      described) have occurred or will occur in respect of that Covered
      Asset;

            

    

     

    
      	
               
      

            	
              (v)

            	
              the
      applicable Covered Entity or Covered Entities do not (or, in the case of a
      Covered Asset that is the subject of a Permitted Arrangement, the relevant
      Applicable Entity or Applicable Entities do not) make any election,
      exercise any discretion or grant any consent which would
  

            

    

     

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	
              increase the
      amount of the Original Maximum Exposure with respect to that Covered Asset
      on any day; and

            

    

     

    
      	
               
      

            	
              (vi)

            	
              the Original
      Maximum Exposure on any day with respect to any part of that Covered Asset
      which on 31 December 2008 was an Overdraft shall be deemed to be
      zero,

            

    

     

    provided that, if
and for so long as there is, following the notification to the Treasury in a
Quarterly Statement of any Loss in respect of that Covered Asset, an absence of
reasonable evidence as to the terms of that Covered Asset in effect on
31 December 2008 that needs to be known in order to calculate the Original
Maximum Exposure with respect to that Covered Asset on any day, the Original
Maximum Exposure with respect to that Covered Asset on that day shall be deemed
to be zero;

     

    
      	
               
      

            	
              (C)

            	
              the “Imputed Maximum
      Exposure” with respect to a Covered Asset on any day (in this
      paragraph (C), the “relevant day”)
      means:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if the
      relevant day falls during the period from 1 January 2009 to
      31 December 2010 (both dates inclusive), an amount equal to the
      Covered Amount of that Covered Asset on 31 December 2008;
    and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if the
      relevant day falls during the period from 1 January 2011 to
      31 December 2012 (both dates inclusive), an amount determined as
      follows:

            

    

     

    (A / 25) *
B

     

    where:

     

    
      	
               
      

            	
              A

            	
              is the actual
      number of calendar months in the period from (and including) the month in
      which the relevant day occurs to (and including) December
      2012;

            

    

     

    
      	
               
      

            	
              B

            	
              is the
      Covered Amount of that Covered Asset on 31 December 2008;
    and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              if the
      relevant day falls on or after 1 January 2013,
  zero;

            

    

     

    
      	
               
      

            	
              (D)

            	
              an “Overdraft” means a
      Covered Asset which is (or to the extent it includes) an overdraft or
      other similar indebtedness (or a facility, to the extent an overdraft or
      other similar indebtedness may be incurred pursuant to that facility)
      which any member of the Participant’s Group (or, in the case of a Covered
      Asset that is the subject of a Permitted Arrangement, a relevant
      Applicable Entity) is entitled at any time (whether on demand or on notice
      but without the need for any contractual event of default, termination
      event or specified repayment or prepayment requirement to have arisen) to
      terminate or require to be repaid in

            

    

     

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              full or fully
      cash collateralised, provided that (for the avoidance of doubt) a
      Revolving Facility is not an Overdraft;
and

            

    

     

    
      	
               
      

            	
              (E)

            	
              the “Advised Amount” with
      respect to a Covered Asset which is or includes an Overdraft means an
      amount denominated in the Covered Amount Currency equal to the sum
      (without double counting) of the following as at 31 December
      2008:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Outstanding Amount of that Covered Asset (to the extent it is an
      Overdraft);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if and to the
      extent that Overdraft includes a Covered Liability falling within
      Condition 6.23(A)(i), the maximum aggregate amount of cash collateral for
      which the applicable Covered Entity or Covered Entities are (or, in the
      case of an Overdraft that is the subject of a Permitted Arrangement, the
      relevant Applicable Entity or Applicable Entities are) entitled to call in
      respect of liabilities under letters of credit, guarantees, performance
      bonds or analogous instruments issued or granted by them or it which are
      comprised within that Overdraft;
and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the maximum
      aggregate amount of any unutilised portion of that Overdraft which the
      applicable Covered Entity or Covered Entities have (or, in the case of an
      Overdraft that is the subject of a Permitted Arrangement, the relevant
      Applicable Entity or Applicable Entities have) advised the applicable
      Obligors is available for
utilisation,

            

    

     

    provided that, if
and for so long as there is, following the notification to the Treasury in a
Quarterly Statement of any Loss in respect of that Covered Asset, an absence of
reasonable evidence as to the facts that need to be known in order to calculate
the Advised Amount with respect to that Covered Asset, the Advised Amount with
respect to that Covered Asset shall be deemed to be zero.

     

    Outstanding
Amount

     

    
      	
              6.9

            	
              Save as
      otherwise provided in these Conditions, the “Outstanding Amount” of a
      Covered Asset on any day means an amount denominated in the Covered Amount
      Currency of that Covered Asset equal to the sum (without double counting)
      of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the aggregate
      outstanding principal amount (if any) of that Covered Asset on that day
      (after taking into account any reduction in the aggregate outstanding
      principal amount on that day) and shall
exclude:

            

    

     

    
      	
               
      

            	
              (i)

            	
              any interest,
      fee, premium or other non-principal sum which has accrued or is payable in
      respect of that Covered Asset (save to the extent it was capitalised on or
      before 31 December 2008 or capitalised in respect of an overdraft),
      provided that the exclusion of such non-principal sums shall not apply to
      (i) any outstanding principal amount that was drawn to pay such
      non-principal sums in cash before the

            

    

     

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	
              Trigger Date
      and (ii) in the case only of a Covered Asset within the “Consumer Finance”
      or “Residential Mortgage” Covered Asset Class, any outstanding principal
      amount representing the premium in respect of a related loan or mortgage
      payment protection insurance policy;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any amount
      payable or paid by the applicable Covered Entity or Covered Entities (or,
      in the case of a Covered Asset that is the subject of a Permitted
      Arrangement, the relevant Applicable Entity or Applicable Entities)
      pursuant to a Covered Liability falling within Condition 6.23(A)(i) (if
      and to the extent such amount would, but for this sub-paragraph (ii), be
      regarded as an outstanding principal amount) (and without prejudice to
      paragraph (B) below); and

            

    

     

    
      	
               
      

            	
              (B)

            	
              in the case
      of a Covered Asset which is or includes a Covered Liability falling within
      Condition 6.23(A)(i), the aggregate amount which the applicable Covered
      Entity or Covered Entities have (or, in the case of a Covered Asset that
      is the subject of a Permitted Arrangement, the relevant Applicable Entity
      or Applicable Entities have) paid pursuant to such Covered Liability and
      for which the applicable Covered Entity or Covered Entities have or
      relevant Applicable Entity has (as the case may be) neither been
      reimbursed, nor waived (as such term is defined in Condition 5.2) their or
      its right to reimbursement, in each case as at that
  day.

            

    

     

    
      	
              6.10

            	
              If and to the
      extent that, on or after the Trigger Date in respect of a Covered Asset
      (or, if later, 31 December 2008), any payment which had the effect of
      reducing the Outstanding Amount of that Covered Asset becomes repayable as
      a result of Applicable Law which is binding on the applicable Covered
      Entity or Covered Entities or relevant Applicable Entity (as the case may
      be) or in accordance with the terms of the Covered Asset (including
      equalisation, turnover or loss-sharing provisions) and is repaid
      (including by way of set-off or true-up), the amount of such repayment
      shall be deemed to be added for the purposes of Conditions 6.1, 6.22 and
      6.38 to the Outstanding Amount of that Covered Asset on its Trigger Date
      (or, if later, 31 December 2008) and (if and to the extent necessary) such
      adjustments shall be made pursuant to and in accordance with Condition 8.7
      as are required to give effect to such deemed
  addition.

            

    

     

    Restructurings

     

    
      	
              6.11

            	
              For the
      purpose of determining the Loss under Condition 6.1 in respect of a
      Covered Asset which becomes a Triggered Asset as a result of a
      Restructuring, no account shall be taken of a reduction in the outstanding
      principal amount of that Triggered Asset (or, in the case of a Triggered
      Asset which is a Derivative Agreement within the “Derivative” Covered
      Asset Class, of a reduction in its Early Termination Amount) pursuant to
      the relevant Restructuring Event (so that the Outstanding Amount of that
      Covered Asset is the Outstanding Amount immediately prior to the
      occurrence of such reduction).

            

    

     

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

    Derivative
Agreements

     

    
      	
              6.12

            	
              If a Covered
      Asset which is a Derivative Agreement within the “Derivative” Covered
      Asset Class becomes a Triggered Asset, its Outstanding Amount on the
      Trigger Date (or, if later, on 31 December 2008) shall be the greater
      of zero and an amount denominated in the Covered Amount Currency of that
      Covered Asset equal to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the lesser
      of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Early
      Termination Amount (if any); and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the amount
      (if any) that the Early Termination Amount would be if no transactions
      governed by or comprising that Derivative Agreement were entered into
      after 31 December 2008 and the terms of that Derivative Agreement and the
      transactions governed by or comprising it were not amended, changed or
      replaced after 31 December 2008 (except by way of an amendment carried out
      solely for the purpose of adhering to any industry standard amendment,
      including any protocol sponsored by the International Swaps and
      Derivatives Association, Inc. or any analogous financial trading
      association in any relevant jurisdiction, provided that such adherence is
      in the Participant’s opinion, acting reasonably, consistent with the Asset
      Management Objective); less

            

    

     

    
      	
               
      

            	
              (B)

            	
              the relevant
      proportion of the aggregate amount of the Cash Realisations (if any)
      arising with respect to that Derivative Agreement during the period from
      (and including) the Early Termination Date to (but excluding) the Trigger
      Date or, if later, 1 January 2009 (but excluding any such Cash Realisation
      the receipt of which was taken into account in the determination of the
      amount referred to in paragraph (A) above), where the “relevant proportion”
      means the lower of 100 per cent. and the fraction (expressed as a
      percentage) obtained by dividing the amount referred to in paragraph
      (A)(ii) above by the amount referred to in paragraph (A)(i)
      above.

            

    

     

    No Outstanding
Amount shall be attributed to any Derivative Agreement which is comprised or
included in a Covered Asset which is not within the “Derivative” Covered Asset
Class.

     

    
      	
              6.13

            	
              A “Derivative Agreement”
      means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (i)

            	
              a 1992 ISDA
      Master Agreement or 2002 ISDA Master Agreement, each as published by the
      International Swaps and Derivatives Association, Inc., including the
      schedule and any credit support annex (or equivalent, howsoever described)
      thereto;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              an agreement
      in the form of the 1992 ISDA Master Agreement or the 2002 ISDA Master
      Agreement, each as published by the International Swaps and Derivatives
      Association, Inc., which is deemed to have been entered into by the
      parties to a transaction by virtue of provisions
  

            

    

     

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	
              included in
      the confirmation for that transaction, as such form may be amended in that
      confirmation, including any credit support annex (or equivalent, howsoever
      described) thereto;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any other
      master agreement governing over-the-counter derivative transactions,
      including any Rahmenvertrag, FBF
      Master Agreement, AFB Master Agreement, Contrato Marco de Operaciones
      Financieras or Algemene Bepalingen
      Derivatentransactie or an agreement in the form of any such master
      agreement which is entered into by the parties to a transaction or deemed
      to have been entered into by the parties to a transaction by virtue of
      provisions included in the confirmation (or equivalent, howsoever
      described) for that transaction, as such form may be amended in that
      confirmation (and, in each case, including any credit support annex (or
      equivalent, howsoever described) thereto);
or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              any agreement
      in respect of a single over-the-counter derivative transaction which is
      not documented under (or deemed to be subject to) a master agreement in a
      form described in sub-paragraphs (i), (ii) and (iii)
  above,

            

    

     

    
      	
               
      

            	
              and which
      provides for a single close-out payment (or equivalent, howsoever
      described) to be made either by the relevant Covered Entity or Covered
      Entities (or, in the case of a Covered Asset that is the subject of a
      Permitted Arrangement, the relevant Applicable Entity or Applicable
      Entities) or by the relevant Obligor (but not both) upon early termination
      of any transaction governed thereby or comprising it;
  or

            

    

     

    
      	
               
      

            	
              (B)

            	
              any agreement
      in respect of one or more FX transactions (a “Foreign Exchange
      Agreement”) which is not governed by and does not comprise any of
      the master or other agreements referred to in paragraph (A) above and, for
      this purpose, the term “FX transaction” shall
      include any foreign exchange spot or forward transaction, any currency
      option transaction and any combination of these transactions (in each
      case, whether deliverable or
non-deliverable).

            

    

     

    
      	
              6.14

            	
              Subject to
      Condition 6.15, “Early
      Termination Amount” means, in respect of a Covered Asset which is a
      Derivative Agreement, the greater
of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              zero;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the relevant
      amount (if any) that is payable to the relevant Covered Entity or Covered
      Entities (or, in the case of a Covered Asset that is the subject of a
      Permitted Arrangement, the relevant Applicable Entity or Applicable
      Entities) by the relevant Obligor:

            

    

     

    
      	
               
      

            	
              (i)

            	
              (in the case
      of a Derivative Agreement other than a Foreign Exchange Agreement)
      pursuant to and in accordance with the terms of that Derivative Agreement;
      and

            

    

     

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              (in the case
      of a Derivative Agreement which is a Foreign Exchange Agreement) whether
      pursuant to and in accordance with the terms of that Foreign Exchange
      Agreement or otherwise,

            

    

     

    in each case reflecting:

     

    
      	
               
      

            	
              (a)

            	
              the value of
      each transaction which was terminated as a result of the occurrence of the
      Early Termination Date; and

            

    

     

    (b)       (without
double counting) any unpaid amounts,

     

    or, in the case of
such a Covered Asset where the Trigger is a Restructuring and in respect of
which no Early Termination Date has occurred on or before the Trigger Date, the
amount that would have been the Early Termination Amount if the Trigger Date had
been the Early Termination Date (and, accordingly, determined on the basis that
all outstanding transactions governed by or comprising that Derivative Agreement
terminated as a result of the occurrence of that Early Termination Date,
including both (x) transactions which were terminated in whole or in part as a
result of the Restructuring and (y) transactions which continued in whole or in
part following the Restructuring), except that:

     

    
      	
               
      

            	
              (1)

            	
              any third
      party providing a quotation for the purpose of determining the Early
      Termination Amount shall be asked (I) not to take account of the current
      creditworthiness of any party to the Derivative Agreement or any existing
      credit support document (or equivalent, howsoever described) and (II) to
      provide mid-market quotations; and

            

    

     

    
      	
               
      

            	
              (2)

            	
              in any other
      case, mid-market values will be used to determine the Early Termination
      Amount, without regard to the creditworthiness of any party to the
      Derivative Agreement.

            

    

     

    
      	
              6.15

            	
              Notwithstanding
      any term to the contrary in a Covered Asset which is a Derivative
      Agreement:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Early
      Termination Amount shall be calculated excluding the value of any assets
      transferred to, or secured in favour of, the relevant Covered Entity or
      Covered Entities (or, in the case of a Covered Asset that is the subject
      of a Permitted Arrangement, the relevant Applicable Entity or Applicable
      Entities) by an Obligor under any credit support annex or other credit
      support or collateral arrangement or agreement or Security, in each case,
      which forms part of, supplements or otherwise relates to the relevant
      Derivative Agreement, but such assets shall give rise to one or more
      Realisations pursuant to Condition 7 and, in the case of assets
      transferred to the relevant Covered Entity, Covered Entities or Applicable
      Entity (as the case may be) by an Obligor pursuant to a credit support
      annex or similar title transfer arrangement, such assets shall give rise
      to a Cash Realisation, the Cash Realisation Date for which is the earlier
      of (x) the date the Early Termination Amount is due for payment pursuant
      to the 

            

    

     

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

    
      	 	 	applicable
      Derivative Agreement and (y) the Trigger Date, such Cash Realisation being
      equal to the amount by which the Early Termination Amount is increased as
      a result of this paragraph (A); and

    

     

    
      	
               
      

            	
              (B)

            	
              the Early
      Termination Amount in respect of a Derivative Agreement which is a Limited
      Recourse Asset shall be the amount as described in Condition 6.14 which is
      payable to the relevant Covered Entity or Covered Entities (or, in the
      case of a Covered Asset that is the subject of a Permitted Arrangement,
      the relevant Applicable Entity or Applicable Entities) by the relevant
      Obligor or which would be payable to the relevant Covered Entity, Covered
      Entities or Applicable Entity (as the case may be) by the relevant
      Obligor, but for the extinguishment of amounts or limitation of rights
      pursuant to the limited recourse provisions of that Derivative
      Agreement.

            

    

     

    
      	
              6.16

            	
              In the case
      of a Covered Asset which is a Derivative Agreement, where the Trigger was
      a Restructuring which has not resulted in the termination of all
      outstanding transactions governed by or comprising that Derivative
      Agreement, the Close-Out Value of all the transactions governed by or
      comprising that Derivative Agreement which are outstanding following the
      date the Restructuring Event becomes effective (the “Continuing
      Transactions”) shall be deemed to be a Cash Realisation, the Cash
      Realisation Date for which shall be the Trigger Date, provided that there
      shall be no double counting of Cash Realisations arising under this
      Condition 6.16 and Cash Realisations referred to in Condition
      7.6(B).

            

    

     

    
      	
              6.17

            	
              The “Close-Out Value” of all
      the Continuing Transactions shall be the amount that would have been the
      Early Termination Amount in respect of the relevant Derivative Agreement,
      if the Trigger Date had been the Early Termination Date and the only
      transactions which were governed by or comprised that Derivative Agreement
      were the Continuing Transactions (and, accordingly, determined on the
      basis that all the Continuing Transactions were terminated as a result of
      the occurrence of that Early Termination Date), except
    that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any third
      party providing a quotation for the purpose of determining the Early
      Termination Amount shall be asked (i) not to take account of the current
      creditworthiness of any party to the Derivative Agreement or any existing
      credit support document (or equivalent, howsoever described) and (ii) to
      provide mid-market quotations; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              in any other
      case, mid-market values will be used to determine the Early Termination
      Amount, without regard to the creditworthiness of any party to the
      Derivative Agreement.

            

    

     

    
      	
              6.18

            	
              “Early Termination Date”
      means, in respect of a Covered Asset which is a Derivative Agreement, the
      termination date (or equivalent, howsoever defined), pursuant to the terms
      of the relevant Derivative Agreement, the occurrence of which results in
      the termination of all outstanding transactions governed by or comprising
      that Derivative Agreement.

            

    

     

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

     

     

    Limited
Recourse Assets

     

    
      	
              6.19

            	
              The
      Outstanding Amount of a Covered Asset (other than a Covered Asset which is
      a Derivative Agreement) which is a Limited Recourse Asset, on any day,
      means an amount denominated in the Covered Amount Currency of that Covered
      Asset equal to the sum (without double counting)
  of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the aggregate
      outstanding principal balance on that day (or the aggregate outstanding
      principal balance which would be owing on that day but for the
      extinguishment of amounts or limitation of rights pursuant to the limited
      recourse provisions of that Covered Asset) taking into account all
      scheduled or unscheduled repayments (to the extent made) of or in respect
      of principal and any reduction in the aggregate outstanding principal
      balance on that day, but without taking into
  account:

            

    

     

    
      	
               
      

            	
              (i)

            	
              any principal
      deficiencies, writedowns or realised or applied losses (however described
      in the indenture, trust deed or pooling or servicing agreement or other
      relevant agreement setting out the terms of the Covered Asset) which
      result in a reduction in (or extinguishment of, as applicable) the
      aggregate outstanding principal balance of that Covered Asset (other than
      as a result of a scheduled or unscheduled repayment of or in respect of
      principal); or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any increase
      in the aggregate outstanding principal balance of that Covered Asset that
      reflects a reversal of any prior reduction (or extinguishment, as
      applicable) referred to in paragraph (i)
above,

            

    

     

    and, for the
avoidance of doubt, such aggregate outstanding principal balance shall
exclude:

     

    
      	
               
      

            	
              (iii)

            	
              any interest,
      fee, premium or other non-principal sum and any portion of the aggregate
      outstanding principal balance of the Covered Asset that is attributable to
      the deferral (or the economic equivalent of a deferral) or capitalisation
      of any interest, fee, premium or other amount (save in each case to the
      extent it was capitalised on or before 31 December 2008), provided that
      the exclusion of such non-principal sums shall not apply to any portion of
      the outstanding principal balance of the Covered Asset that was drawn to
      pay such non-principal sums in cash before the Trigger Date;
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              any amount
      payable or paid by the applicable Covered Entity or Covered Entities (or,
      in the case of a Covered Asset that is the subject of a Permitted
      Arrangement, the relevant Applicable Entity or Applicable Entities)
      pursuant to a Covered Liability falling within Condition 6.23(A)(i) (if
      and to the extent such amount would, but for this sub-paragraph (iv), be
      regarded as an outstanding principal amount) (and without prejudice to
      paragraph (B) below); and

            

    

     

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              the aggregate
      amount (if any) referred to in paragraph (B) of Condition
    6.9.

            

    

     

    Finance
Leases

     

    
      	
              6.20

            	
              The
      Outstanding Amount of a Covered Asset which is a Finance Lease, on any
      day, means an amount denominated in the Covered Amount Currency of that
      Covered Asset equal to its outstanding principal amount as of such day
      determined in accordance with the method of calculation (based on the
      present value, as at the date on which the Finance Lease was entered into,
      of the minimum lease payments discounted at the interest rate implicit in
      the lease such that the finance charge is allocated so as to produce a
      constant periodic rate of interest on the remaining balance of the
      outstanding principal amount) prescribed by International Accounting
      Standard 17 under Static IFRS and applied by the relevant Covered Entity
      or Covered Entities (or in the case of a Covered Asset that is the subject
      of a Permitted Arrangement, the relevant Applicable Entity or Applicable
      Entities) as at 31 December 2008.  For the avoidance of doubt,
      such outstanding principal amount shall exclude any interest, fee, premium
      or other non-principal sum (including any amount calculated or payable by
      reference to any actual or assumed liability to Tax, or any actual or
      assumed Tax benefit or the loss or non-availability thereof) which has
      accrued or is payable in respect of that Covered
  Asset.

            

    

     

    
      	
              6.21

            	
              A “Finance Lease” means a
      lease that transfers substantially all the risks and rewards incidental to
      ownership of an asset as defined in International Accounting Standard 17
      under Static IFRS.

            

    

     

    Covered
Liabilities

     

    
      	
              6.22

            	
              Subject to
      these Conditions, a “Loss” will (in addition
      to the circumstances referred to in Conditions 6.1 and 6.38) occur in
      respect of a Triggered Asset which is (or to the extent it includes) a
      Covered Liability on each CL Payment Date in an amount equal to the
      Sterling Equivalent (the Exchange Date being that CL Payment Date) of the
      lesser of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the relevant
      CL Payment Amount; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Loss
      Limit of that Triggered Asset on that CL Payment
  Date.

            

    

     

    
      	
              6.23

            	
              A “Covered Liability” means
      a Covered Asset (other than a Derivative Agreement) which is (or to the
      extent it includes):

            

    

     

    
      	
               
      

            	
              (A)

            	
              an actual or
      contingent liability of a Covered Entity (or, in the case of a Covered
      Asset that is the subject of a Permitted Arrangement, a relevant
      Applicable Entity) to pay money:

            

    

     

    
      	
               
      

            	
              (i)

            	
              under (or by
      way of reimbursement or indemnification of another person’s obligations
      under) a letter of credit, guarantee, performance bond or analogous
      instrument issued or granted on or before the Trigger
  Date;

            

    

     

     

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              under (or by
      way of reimbursement or indemnification of another person’s obligations
      under) a letter of credit, guarantee, performance bond or analogous
      instrument issued or granted after the Trigger Date pursuant to a binding
      commitment to do so; or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              by way of the
      advance of money under a binding commitment to lend;
  or

            

    

     

    
      	
               
      

            	
              (B)

            	
              an undrawn
      Overdraft.

            

    

     

    
      	
              6.24

            	
              A “CL Payment Date” means,
      with respect to a Triggered Asset which is or includes a Covered
      Liability, each date falling after the Trigger Date (or, if later,
      31 December 2008) on which an applicable Covered Entity (or, in the
      case of a Covered Asset that is the subject of a Permitted Arrangement,
      the relevant Applicable Entity) pays a CL Payment
  Amount.

            

    

     

    
      	
              6.25

            	
              A “CL Payment Amount”
      means, with respect to any date and a Covered Asset which is or includes a
      Covered Liability, an amount denominated in the Covered Amount Currency of
      that Covered Asset equal to the aggregate amount which the applicable
      Covered Entities pay (or, in the case of a Covered Asset that is the
      subject of a Permitted Arrangement, the relevant Applicable Entities pay),
      on that date, pursuant to and in accordance with the terms of that Covered
      Liability, but excluding any such amount which is payable, or paid, to any
      Applicable Entity (unless the payee Applicable Entity is a Permitted
      Payee).  For the purpose of this Condition 6.25, a payee
      Applicable Entity is a “Permitted Payee”
      if:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in the case
      only of a Covered Asset which is an Equity Accounting Covered Asset, the
      Applicable Entity is an Obligor that is not consolidated into the balance
      sheet of the Participant's Group in accordance with IFRS and would not be
      consolidated into the balance sheet of the Participant's Group if such a
      balance sheet were to be prepared in accordance with Static IFRS;
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              (i)

            	
              the
      Applicable Entity is acting in its capacity as the facility agent, paying
      agent, fiscal agent, cash manager or servicer with respect to a facility
      agreement or debt instrument (or in a capacity that is analogous to any of
      the foregoing) in respect of the relevant Covered Asset, is not
      beneficially entitled to the relevant amount and receives such amount for
      onward transmission to the person ultimately entitled to such amount under
      the terms of that Covered Asset; and

            
	 	 	 	 

    

    
      	
               
      

            	
              (ii)

            	
              the person
      ultimately entitled to the relevant amount under the terms of the relevant
      Covered Asset is not an Applicable
Entity.

            

    

     

    
      	
              6.26

            	
              The “Loss Limit” of a
      Triggered Asset which is or includes a Covered Liability on any day (for
      the purpose of this Condition 6.26, the “relevant day”)
      means:

            

    

     

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (A)

            	
              if the
      relevant day is the Trigger Date of that Triggered Asset (or, if later, 31
      December 2008), an amount equal to the Covered Amount of that Triggered
      Asset on its Initial Event Date (or, if later, 31 December 2008);
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              if the
      relevant day falls after the Trigger Date of that Triggered Asset (or, if
      later, 31 December 2008), an amount equal to the lesser
  of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Covered
      Amount of that Triggered Asset on the relevant day;
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Remaining
      Covered Amount of that Triggered Asset on the relevant
  day,

            

    

     

    where:

     

    
      	
               
      

            	
              (1)

            	
              the “Remaining Covered
      Amount” of a Triggered Asset which is or includes a Covered
      Liability, on the relevant day, means an amount equal to the greater of
      zero and the amount determined as
follows:

            

    

     

    
      	
               
      

            	
              LL – L +
      RL

            

    

     

    
      	
               
      

            	
              where:

            

    

     

    
      	
               
      

            	
              LL

            	
              is the Loss
      Limit of that Triggered Asset on the CL Payment Date immediately preceding
      the relevant day (or, if there is no such immediately preceding CL Payment
      Date, the Loss Limit of that Triggered Asset on its Trigger Date (or, if
      later, on 31 December 2008))

            

    

     

    
      	
               
      

            	
              L

            	
              is the CL
      Payment Amount for that Triggered Asset on the CL Payment Date immediately
      preceding the relevant day (or, if there is no such immediately preceding
      CL Payment Date, the Outstanding Amount of that Triggered Asset on its
      Trigger Date (or, if later, on 31 December
  2008))

            

    

     

    
      	
               
      

            	
              RL

            	
              is the
      aggregate amount of the Reversed Losses in respect of that Triggered
      Asset, the Cash Realisation Date for which occurred during the period
      commencing on (but excluding) the CL Payment Date immediately preceding
      the relevant day (or, if there is no such immediately preceding CL Payment
      Date, commencing on (but excluding) its Trigger Date (or, if later,
      commencing on (but excluding) 31 December 2008)) and ending on (and
      including) the relevant day; and

            

    

     

    
      	
               
      

            	
              (2)

            	
              a “Reversed Loss” means,
      with respect to a Triggered Asset, the amount (denominated in the Covered
      Amount Currency of that Triggered Asset) of any Cash Realisation
      which:

            

    

     

    
      	
               
      

            	
              (a)

            	
              has a Cash
      Realisation Date falling after the Trigger Date (or, if later, after 31
      December 2008) but on or before the relevant
  day;

            

    

     

     

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (b)

            	
              gives rise
      (or to the extent it gives rise) to a Recovery in respect of that Covered
      Asset; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              constitutes
      (or to the extent it constitutes), in accordance with the terms of the
      Triggered Asset, a repayment of a principal amount (or a non-principal
      amount capitalised on or before 31 December 2008 or capitalised in respect
      of an overdraft) which an Obligor is permitted to redraw (including where
      the redraw is effected by the issue or grant of a letter of credit,
      guarantee, performance bond or analogous instrument) on or after the
      applicable Cash Realisation Date under the terms of the Triggered Asset in
      effect on the applicable Cash Realisation
Date.

            

    

     

    Revolving
Facilities

     

    
      	
              6.27

            	
              For the
      purpose only of determining whether any Loss has occurred pursuant to
      Condition 6.22 or 6.38(B) or whether any Recoveries have occurred pursuant
      to Condition 7 with respect to a Covered Asset which is (or to the extent
      it includes) a Revolving Facility, each Revolving Advance under that
      Revolving Facility shall be deemed to constitute the same continuing
      advance (being the advance which that Revolving Advance
      refinances).

            

    

     

    
      	
              6.28

            	
              A “Revolving Facility” is a
      committed facility allowing an Obligor to draw amounts (up to a limit) for
      periods upon the expiry of which repayment must occur and pursuant to
      which amounts so repaid can be redrawn.  For the avoidance of
      doubt, an Overdraft is not a Revolving
Facility.

            

    

     

    
      	
              6.29

            	
              A “Revolving Advance” is an
      advance under a Revolving Facility on the day that a maturing advance
      (drawn under the same Revolving Facility) is due to be repaid, for the
      purpose of (or to the extent it is for the purpose of) refinancing that
      maturing advance.

            

    

     

    Conversion
of amounts into the Covered Amount Currency

     

    
      	
              6.30

            	
              If an amount
      (for the purpose of this Condition 6.30, the “relevant amount”)
      referred to in the definition of and used to
  calculate:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Actual
      Exposure, Original Maximum Exposure or Outstanding Amount with respect to
      a Covered Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Advised
      Amount with respect to an Overdraft that is or forms part of a Covered
      Asset;

            

    

     

    
      	
               
      

            	
              (C)

            	
              any CL
      Payment Amount with respect to a Covered Asset;
  or

            

    

     

    
      	
               
      

            	
              (D)

            	
              any Reversed
      Loss with respect to a Covered
Asset,

            

    

     

    is denominated in a
currency other than the Covered Amount Currency of that Covered Asset, then for
the purpose of determining such Actual Exposure, Original Maximum 

     

     

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

     

    Exposure,
Outstanding Amount, Advised Amount, CL Payment Amount or Reversed
Loss:

     

    
      	
               
      

            	
              (i)

            	
              if the terms
      of that Covered Asset (or, for the purpose only of determining a Reversed
      Loss, the terms of any agreement or instrument relating, or to the extent
      relating, to any relevant Non-Cash Realisation in respect of that Covered
      Asset) prescribe a basis for converting the relevant amount into that
      Covered Amount Currency and such basis reflects the applicable Covered
      Entity’s or Covered Entities’ exposure with respect to that Covered Asset
      (or, for the purpose only of determining a Reversed Loss, any relevant
      Non-Cash Realisation in respect of that Covered Asset) then such basis
      shall apply; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if
      sub-paragraph (i) above does not apply, the relevant amount shall be
      converted into that Covered Amount Currency on such other basis
      (consistent with the regulatory reporting systems and ordinary business
      practices of the applicable Covered Entity or Covered Entities, provided
      that the manner in which such systems and business practices treat assets
      and exposures which form part of Covered Assets or Non-Cash Realisations
      does not differ from the basis on which they treat equivalent assets and
      exposures which do not form part of Covered Assets or Non-Cash
      Realisations) which reflects the applicable Covered Entity’s or Covered
      Entities’ exposure with respect to that Covered Asset (or, for the purpose
      only of determining a Reversed Loss, any relevant Non-Cash Realisation in
      respect of that Covered Asset).

            

    

     

    Rollovers

     

    
      	
              6.31

            	
              A “Rollover” is the
      amendment or replacement of the agreements or instruments relating (or to
      the extent relating) to a Rollover Asset
which:

            

    

     

    
      	
               
      

            	
              (A)

            	
              becomes
      effective after 31 December 2008 and on or before the Cover Termination
      Date of that Rollover Asset (without regard to any extension pursuant to
      Condition 6.35);

            

    

     

    
      	
               
      

            	
              (B)

            	
              results in or
      constitutes the extension of the final maturity date of that Rollover
      Asset to a date which falls after the Cover Termination Date of that
      Rollover Asset (without regard to any extension pursuant to Condition
      6.35);

            

    

     

    
      	
               
      

            	
              (C)

            	
              satisfies the
      Asset Continuity Requirements and does not result in or constitute
      Prohibited Conduct; and

            

    

     

    
      	
               
      

            	
              (D)

            	
              does not
      result in or constitute a
Restructuring.

            

    

     

    
      	
              6.32

            	
              A “Rollover Asset” is a
      Non-Triggered Asset which satisfies all of the following
      requirements:

            

    

     

    
      	
               
      

            	
              (A)

            	
              its Covered
      Amount Currency is sterling;

            

    

     

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              it is within
      the “Loan” or the “Commercial Real Estate Finance” Covered Asset
      Class;

            

    

     

    
      	
               
      

            	
              (C)

            	
              in accordance
      with its terms in effect on 31 December 2008, it had a final maturity date
      prior to 1 January 2011;

            

    

     

    
      	
               
      

            	
              (D)

            	
              its Cover
      Termination Date (without regard to any extension pursuant to Condition
      6.35) is prior to 1 January 2011;
and

            

    

     

    
      	
               
      

            	
              (E)

            	
              it has not
      previously been the subject of a
Rollover.

            

    

     

    For the avoidance
of doubt, paragraph (E) above does not prevent the final maturity date of a
Covered Asset from being extended on more than one occasion.

     

    
      	
              6.33

            	
              “Rollover Date” means,
      with respect to a Covered Asset which has been the subject of a Rollover,
      the date on which that Rollover became
  effective.

            

    

     

    
      	
              6.34

            	
              If an
      amendment or replacement of the agreements or instruments relating (or to
      the extent relating) to, or any other Management and Administration of, a
      Covered Asset results in or constitutes a Restructuring and would, but for
      such Restructuring, be a Rollover, then it shall be treated as a
      Restructuring and not as a Rollover for the purposes of the Scheme
      Documents.  If an amendment or replacement of the agreements or
      instruments relating (or to the extent relating) to, or any other
      Management and Administration of, a Covered Asset is a Rollover and not a
      Restructuring, then the consequences of that Rollover in respect of the
      protection provided under the Scheme for that Covered Asset shall be as
      set out in this Condition 6.

            

    

     

    Certain
consequences of a Rollover

     

    
      	
              6.35

            	
              If a Covered
      Asset becomes subject to a Rollover
then:

            

    

     

    
      	
               
      

            	
              (A)

            	
              with effect
      from and including the Rollover
Date:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Original
      Maximum Exposure of that Covered Asset on any day from and including the
      Rollover Date shall be deemed to be the greater
  of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the amount
      which, but for this paragraph (A), would have been the Original Maximum
      Exposure of that Covered Asset on that day;
and

            

    

     

    
      	
               
      

            	
              (b)

            	
              an amount
      equal to 55% of the Covered Amount of that Covered Asset on the Rollover
      Date; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Cover
      Termination Date of that Covered Asset shall be deemed to be 31 December
      2013 (with the effect that the Covered Amount of that Covered Asset shall
      reduce to zero with effect from and including 1 January 2014 (if it has
      not reduced to zero before then));
and

            

    

     

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (B)

            	
              with effect
      from and including the original Cover Termination Date of that Covered
      Asset (prior to its extension pursuant to paragraph (A)(ii) above),
      references to that Covered Asset shall, except for the purpose of
      determining the Original Maximum Exposure of that Covered Asset (which
      shall continue to be the deemed amount referred to in paragraph (A)(i)
      above), be deemed to refer instead to 55% of the Covered Asset as it
      exists on such original Cover Termination Date and the Actual Exposure,
      Imputed Maximum Exposure and Outstanding Amount (but not the Original
      Maximum Exposure) of that Covered Asset shall be adjusted
      accordingly.

            

    

     

    Extended
Protection Assets

     

    
      	
              6.36

            	
              The Treasury
      may from time to time notify a Participant in writing (an “Extended Protection
      Notice”) that specified Unprotected Assets or a specified part of
      specified Unprotected Assets (“Extended Protection
      Assets”) will be protected under the Scheme.  If an
      Extended Protection Asset does not already form part of a Triggered Asset,
      it will be deemed to be a Triggered Asset (and, therefore, a Covered
      Asset), its Trigger Date will be the same as the Trigger Date of the
      Related Triggered Asset and the Trigger will be the same as the Trigger
      with respect to the Related Triggered
Asset.

            

    

     

    
      	
              6.37

            	
              An Extended
      Protection Notice may:

            

    

     

    
      	
               
      

            	
              (A)

            	
              be
      retrospective or prospective;

            

    

     

    
      	
               
      

            	
              (B)

            	
              relate to
      identified Unprotected Assets or to a class of Unprotected Assets which
      meet specified criteria;

            

    

     

    
      	
               
      

            	
              (C)

            	
              specify the
      extent to which the Unprotected Asset which will be protected (including
      by reference to a percentage, cap or time limit);
  and

            

    

     

    
      	
               
      

            	
              (D)

            	
              specify any
      additional Information reporting requirements in respect of Extended
      Protection Assets (including for the purposes of Conditions 16.5(B)(iv)(d)
      and 16.5(G)), such additional Information reporting requirements (except
      in so far as they relate to the matters referred to in paragraphs (B) and
      (C) above) to be consistent with the Information reporting requirements
      applicable to Covered Assets that are not Extended Protection
      Assets,

            

    

     

    provided that the
Participant shall be deemed not to be in breach of any provision of the
Conditions if and to the extent that such a breach would have resulted from the
retrospective effect of an Extended Protection Notice.

     

    
      	
              6.38

            	
              Subject to
      these Conditions, a “Loss” will (in addition
      to the circumstances referred to in Conditions 6.1 and 6.22) occur in
      respect of an Extended Protection
Asset:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in an amount
      equal to its Outstanding Amount (if any) on the Trigger Date (or, if
      later, on 31 December 2008); and

            

    

     

     

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              in the case
      of an Extended Protection Asset which is (or to the extent applicable
      includes) a Covered Liability, on each CL Payment Date in an amount equal
      to the Sterling Equivalent (the Exchange Date being that CL Payment Date)
      of the relevant CL Payment Amount.

            

    

     

    In this Condition
6.38 and in Condition 7.26(D) (to the extent it relates to Extended Protection
Assets) references to Covered Entities in the definitions of Covered Liability,
CL Payment Date and CL Payment Amount shall be deemed to refer to members of the
Participant’s Group.

     

    
      	
              6.39

            	
              To avoid
      double counting of Losses, no Losses in respect of Extended Protection
      Assets shall arise under Condition 6.1 or 6.22.  For the
      avoidance of doubt, Extended Protection Assets may (by virtue of being
      Triggered Assets) give rise to Recoveries in accordance with Condition
      7.

            

    

     

    
      	
              6.40

            	
              An “Unprotected Asset”
      means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any part of a
      Triggered Asset which (were it not an Extended Protection Asset) would be
      treated as if it were not a Covered Asset pursuant to paragraph (C) or (D)
      of Condition 7.26; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              any asset or
      exposure of a member of the Participant’s Group (or, in the case of an
      asset or exposure which is the subject of a Permitted Arrangement, of a
      relevant Applicable Entity) which is not a Covered Asset and which arises
      in respect of the debt financing of an Obligor with respect to a Triggered
      Asset (the “Related
      Triggered Asset”),

            

    

     

    provided that the
relevant part of the Triggered Asset referred to in paragraph (A) or the
relevant asset or exposure referred to in paragraph (B) satisfies one or more of
the following criteria:

     

    
      	
               
      

            	
              (i)

            	
              it represents
      new debt funding made available to the applicable Obligor or Obligors,
      which was not available before the Trigger Date of that Triggered Asset or
      (as the case may be) of that Related Triggered
  Asset;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              it represents
      an Overdraft which was (or to the extent it was) undrawn on the Trigger
      Date of that Triggered Asset or (as the case may be) of that Related
      Triggered Asset;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              it represents
      an undrawn commitment which was or had become terminable by the relevant
      member of the Participant’s Group or (as the case may be) by the relevant
      Applicable Entity on or before the Trigger Date of that Triggered Asset or
      (as the case may be) of that Related Triggered Asset;
  or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      Participant and the Treasury agree that it may be treated as falling
      within the definition of an Unprotected
Asset.

            

    

     

     

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

     

     

    
      	
              6.41

            	
              The Treasury
      may from time to time notify a Participant in writing (a “Protection Termination
      Notice”) that an Extended Protection Notice is being terminated in
      whole or in part, provided that such termination may not be retrospective
      and, accordingly, any Extended Protection Assets the Trigger Date for
      which occurred (or in relation to which the applicable member of the
      Participant’s Group had, in reliance on the relevant Extended Protection
      Notice, entered into a binding legal commitment to provide (or to continue
      to provide) the applicable funding) on or before the date of the
      Protection Termination Notice shall not be affected by a Protection
      Termination Notice.

            

    

     

    
      	
              6.42

            	
              If a
      Triggered Asset is withdrawn pursuant to a Post-Trigger Withdrawal Notice,
      that Post-Trigger Withdrawal Notice shall be deemed also to extend to (and
      therefore to have effect with respect to) any Extended Protection Asset
      relating to that Triggered Asset (and any retrospective specification of
      an Extended Protection Asset with respect to that withdrawn Triggered
      Asset shall have no effect), provided that this Condition 6.42 shall not
      apply to an Extended Protection Asset which relates primarily to another
      Triggered Asset which is not withdrawn (and, in the absence of agreement
      as to whether an Extended Protection Asset relates primarily to another
      Triggered Asset, the determination shall be made by the Treasury in its
      sole discretion).

            

    

     

    Continuing
protection

     

    
      	
              6.43

            	
              Subject to
      these Conditions, the protection provided by the Treasury to the
      Participant under the Scheme is continuing protection.  Such
      protection will extend, on the terms set out in Conditions 4 to 8, to the
      ultimate balance of sums payable by any Obligor under a Covered Asset,
      regardless of any intermediate payment or discharge, in whole or in
      part.

            

    

     

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

     

     

    
      	
              7.

            	
              RECOVERIES

            

    

     

    Recoveries

     

    
      	
              7.1

            	
              Subject to
      Conditions 7.2, 7.3 and 7.4, whenever there is a Cash Realisation in
      respect of a Triggered Asset, a “Recovery” will have been
      made in respect of that Triggered Asset on the applicable Cash Realisation
      Date in an amount equal to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in the case
      of a Triggered Asset which is not a Derivative Agreement, the Sterling
      Equivalent (the Exchange Date being the Cash Realisation Date) of that
      Cash Realisation; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              in the case
      of a Triggered Asset which is a Derivative Agreement, the Sterling
      Equivalent (the Exchange Date being the Cash Realisation Date) of the
      relevant proportion of that Cash Realisation, where “relevant proportion” has
      the meaning given to it in Condition
6.12(B)),

            

    

     

    
      	
               
      

            	
              provided that
      a Recovery may not be a negative
amount.

            

    

     

    
      	
              7.2

            	
              Recoveries do
      not include Cash Realisations with a Cash Realisation Date falling before
      the later of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              1 January
      2009; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Trigger
      Date of the Triggered Asset,

            

    

     

    except:

     

    
      	
               
      

            	
              (i)

            	
              where the
      Trigger was a Restructuring, Cash Realisations with respect to, resulting
      from, arising out of or received in connection with that Restructuring or
      any amendment or replacement of any agreement or instrument relating (or
      to the extent relating) to the relevant Covered Asset which forms part of
      a series of two or more related events (one of which is the relevant
      Restructuring Event) which together constitute a restructuring of that
      Covered Asset;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Cash
      Realisations with respect to, resulting from or arising out of any Closely
      Related Hedge (including Cash Realisations in respect of the Realisations
      referred to in sub-paragraph (vii) of the definition of
      Realisation);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Cash
      Realisations in respect of the Realisations referred to in sub-paragraph
      (vi) of the definition of
Realisation;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Cash
      Realisations with respect to, resulting from or arising out of any Related
      Junior Asset in respect of a Triggered Asset with a Cash Realisation Date
      falling on or after the Initial Event
Date;

            

    

     

    
      	
               
      

            	
              (v)

            	
              Cash
      Realisations referred to in Condition 6.15(A) (arising from title transfer
      arrangements) and Cash Realisations in respect of Realisations referred to
      in 

            

    

     

     

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	
              sub-paragraphs
      (v), (viii), (x) and (xii) of the definition of Realisation (and where, if
      the Realisation arises out of a Related Junior Asset, the Related Junior
      Asset is in respect of the Triggered Asset) with a Cash Realisation Date
      falling on or after the Initial Event
Date,

            

    

     

    which in each case
shall (even if the Cash Realisation Date falls before the later of 1 January
2009 and the Trigger Date) comprise a Recovery made on the later of the Cash
Realisation Date and the Trigger Date.

     

    
      	
              7.3

            	
              Where, on or
      after the Trigger Date and in accordance with the Asset Management
      Objective, a Cash Realisation is funded by the acquisition by a member of
      the Participant’s Group of a Non-Cash Asset the subject of Security
      relating to a Triggered Asset, such Cash Realisation will not be treated
      as a Recovery and the acquired Non-Cash Asset will instead be a Non-Cash
      Realisation in respect of that Triggered
Asset.

            

    

     

    
      	
              7.4

            	
              A Cash
      Realisation will not be treated as a Recovery in respect of a Covered
      Asset if and to the extent it reduces the amount of a Loss in respect of
      that Covered Asset.

            

    

     

    
      	
              7.5

            	
              For the
      avoidance of doubt, the aggregate of the Recoveries for a Triggered Asset
      may exceed the aggregate of the Losses for that Triggered
      Asset.

            

    

     

    Cash
Realisations

     

    
      	
              7.6

            	
              A “Cash Realisation” means,
      in respect of a Covered Asset:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any
      Realisation other than one which, for the time being, takes the form of a
      Non-Cash Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any Cash
      Realisation referred to in Condition 6.15(A) (arising from title transfer
      arrangements);

            

    

     

    
      	
               
      

            	
              (C)

            	
              any Cash
      Realisation referred to in Condition
6.16;

            

    

     

    
      	
               
      

            	
              (D)

            	
              any
      Realisation of a kind falling within Condition
  7.22;

            

    

     

    
      	
               
      

            	
              (E)

            	
              any Cash
      Realisation referred to in Condition
7.25;

            

    

     

    
      	
               
      

            	
              (F)

            	
              any Cash
      Realisation referred to in Condition 7.28;
and

            

    

     

    
      	
               
      

            	
              (G)

            	
              any
      Realisation of a kind falling within sub-paragraph (ii), (vii) or (xii)(b)
      of the definition of Realisation.

            

    

     

    A Realisation
which, having not been a Realisation of a kind falling within paragraph (A)
above, subsequently becomes a Realisation of a kind falling within paragraph (A)
above shall become a Cash Realisation (and such Cash Realisation will be deemed
to be made) on the date it becomes a Realisation of a kind falling within
paragraph (A) above.

     

     

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

      

    

     

    
      	
              7.7

            	
              The “Cash Realisation Date”
      means, with respect to a Cash Realisation, the date on which that Cash
      Realisation is made, realised, received, recovered or
    derived.

            

    

     

    Realisations

     

    
      	
              7.8

            	
              A “Realisation” means (in
      addition to the assets, receipts, realisations, recoveries, rights,
      interests and benefits referred to as such in Condition 7.27), with
      respect to a Covered Asset, any asset, receipt, realisation, recovery,
      right, interest or benefit, made, realised, received, recovered or derived
      by any Applicable Entity, with respect to, resulting from or arising out
      of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              that Covered
      Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any Closely
      Related Hedge with respect to that Covered Asset (but not from any other
      hedging arrangement, except (x) to the extent the Scheme Documents provide
      to the contrary and (y) any hedging arrangement pursuant to or in
      connection with which all or part of that Covered Asset or any Non-Cash
      Realisation in respect of that Covered Asset is sold, delivered,
      transferred or disposed of, including by way of auction and whether or not
      to the hedge counterparty, by an Applicable Entity);
  or

            

    

     

    
      	
               
      

            	
              (C)

            	
              any Related
      Junior Asset in respect of that Covered
Asset,

            

    

     

    in each case
whether on a direct or indirect basis, to which any Applicable Entity is
beneficially entitled, including:

     

    
      	
               
      

            	
              (i)

            	
              any payment
      received (whether in respect of interest, principal, dividends or other
      amounts);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any reduction
      in or discharge of obligations owed to (or by) any Applicable Entity as a
      result of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              setting off
      against or netting with obligations owed by (or to) any Applicable Entity;
      or

            

    

     

    
      	
               
      

            	
              (b)

            	
              any other
      process or arrangement (including counterclaim) having a substantially
      similar effect;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any Non-Cash
      Asset received (including any debt or equity security received in a
      restructuring or otherwise) and all receipts, realisations, recoveries,
      rights, interests and benefits with respect to, resulting from or arising
      out of each such Non-Cash Asset (which may include rent and
      dividends);

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the proceeds
      of any sale, assignment, transfer or other disposal, including of or all
      or any part of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              any Covered
      Asset;

            

    

     

     

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              any Non-Cash
      Realisation; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              any Related
      Junior Asset;

            

    

     

    
      	
               
      

            	
              (v)

            	
              the proceeds
      of any insurance claim;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              any receipt,
      recovery or benefit under any Other Protection
  Scheme;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              in the case
      of a Closely Related Hedge which is a credit-linked note (or analogous
      instrument), any reduction or expected future reduction in any amount that
      would otherwise have been payable by any Applicable Entity in respect of
      that Closely Related Hedge;

            

    

     

    
      	
               
      

            	
              (viii)

            	
              the proceeds
      of any claim against any person (including any Representative to which any
      responsibilities, duties or obligations in connection with the Management
      and Administration of any Covered Asset or Non-Cash Realisation may have
      been transferred), including any claim for negligence, misrepresentation,
      breach of warranty, breach of contract, breach of duty, fraud, bad faith
      or wilful default;

            

    

     

    
      	
               
      

            	
              (ix)

            	
              the proceeds
      of enforcement of, or any other asset, receipt, realisation, recovery,
      right, interest or benefit with respect to, resulting from or arising out
      of, any Security;

            

    

     

    
      	
               
      

            	
              (x)

            	
              the proceeds
      of any claim under an indemnity (but not including any Non-Recoverable
      Indemnity Amount);

            

    

     

    
      	
               
      

            	
              (xi)

            	
              any fee
      received for acting as an agent, trustee, servicer, manager or
      administrator or in any other capacity substantially similar to any of the
      foregoing (but, in respect of any Covered Asset within the “Bond”, “Loan”,
      “Project Finance”, “Leveraged Finance” or “Commercial Real Estate Finance”
      Covered Asset Class, not including any Non-Recoverable Agency
      Amount);

            

    

     

    
      	
               
      

            	
              (xii)

            	
              in the case
      of any Covered Asset within the “Consumer Finance” or “Residential
      Mortgage” Covered Asset Class:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the proceeds
      of any related loan or mortgage payment protection insurance policy;
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the amount of
      any rebate which any Applicable Entity would have been obliged to account
      for to any Obligor in respect of that Covered Asset in connection with any
      related loan or mortgage payment protection insurance policy if all
      outstanding amounts in respect of that Covered Asset had been repaid in
      full on or before its Trigger Date;
and

            

    

     

     

    
      
        
        

      

      
        72

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (xiii)

            	
              without
      limitation of any of the foregoing, any refunds of or payments received in
      respect of any withholdings, deductions or Tax credits (except to the
      extent that any Applicable Entity is obliged to account for the same to
      any Obligor in respect of that Covered Asset), and any amounts received in
      respect of any VAT or Stamp Duty.

            

    

     

    
      	
              7.9

            	
              A Realisation
      may not be a negative amount.

            

    

     

    
      	
              7.10

            	
              The amount of
      each Realisation is to be
determined:

            

    

     

    
      	
               
      

            	
              (A)

            	
              after
      deducting Realisation Expenses in respect of that
    Realisation;

            

    

     

    
      	
               
      

            	
              (B)

            	
              without
      double counting;

            

    

     

    
      	
               
      

            	
              (C)

            	
              on the basis
      that intra-group transactions which would be eliminated upon consolidation
      (if a consolidated balance sheet of the Participant’s Group were to be
      prepared in accordance with Static IFRS) shall not be treated as giving
      rise to a Realisation, provided
that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              such
      intra-group transactions shall continue to be taken into account for the
      purpose of tracing receipts, realisations, recoveries, rights, interests
      and benefits which may subsequently give rise to
    Realisations;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              such an
      intra-group transaction shall be treated as giving rise to a Realisation
      if and to the extent that the Treasury (acting reasonably) determines that
      the transaction was not, in substance, an intra-group
      transaction;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              for the
      purpose of applying this paragraph (C), Obligors shall be deemed to be
      neither members of the Participant’s Group nor consolidated into the
      balance sheet of the Participant’s Group under Static IFRS (and,
      accordingly, transactions with Obligors shall not be treated as
      transactions which would be eliminated upon consolidation);
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              this
      paragraph (C) shall not apply to the Realisations referred to in Condition
      7.8(C)(xii)(a) (and, accordingly, the proceeds of any related loan or
      mortgage payment protection insurance policy shall be capable of giving
      rise to Realisations even if the insurer is a member of the Participant’s
      Group);

            

    

     

    
      	
               
      

            	
              (D)

            	
              on the basis
      that any asset, receipt, realisation, recovery, right, interest or benefit
      made, realised, received, recovered or derived by any Applicable Entity
      which is not a member of the Participant’s Group may give rise to a
      Realisation even if there is no corresponding asset, receipt, realisation,
      recovery, right, interest or benefit made, realised, received, recovered
      or derived by any member of the Participant’s Group;
  and

            

    

     

     

    
      
        
        

      

      
        73

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (E)

            	
              subject to
      Condition 6.16, in the case of a Covered Asset which is a Derivative
      Agreement, where the Trigger was a Restructuring which has not resulted in
      the termination of all outstanding transactions governed by or comprising
      that Derivative Agreement, excluding any asset, receipt, realisation,
      recovery, right, interest or benefit if and to the extent it was made,
      realised, received, recovered or derived by any Covered Entity in respect
      of any Continuing Transaction.

            

    

     

    
      	
              7.11

            	
              If and to the
      extent that any receipt by any relevant Applicable Entity (other than from
      another Applicable Entity) of a payment constituting a Realisation becomes
      repayable as a result of Applicable Law which is binding on the Applicable
      Entity or in accordance with the terms of the Covered Asset (including
      equalisation, turnover or loss-sharing provisions) and is repaid
      (including by way of set-off or true-up), the amount of such repayment
      shall be (subject to Condition 7.9) deemed to be deducted for the purpose
      of Condition 7.8 from the amount of such Realisation and (if and to the
      extent necessary) such adjustments shall be made pursuant to and in
      accordance with Condition 8.7 as are required to give effect to such
      deemed deduction.

            

    

     

    Definitions
relating to Recoveries

     

    
      	
              7.12

            	
              “Closely Related Hedge”
      means, with respect to a Covered Asset, any other asset, agreement,
      instrument or arrangement which is identified as a “Closely Related Hedge”
      in respect of that Covered Asset in the Initial
  Data.

            

    

     

    
      	
              7.13

            	
              The
      Participant shall, in respect of each Covered Asset, identify as “Closely
      Related Hedges” in respect of that Covered Asset in the Initial Data all
      other assets, agreements, instruments and arrangements that were hedging
      arrangements in existence as at 31 December 2008 which have, at any time,
      resulted in the credit risk management, credit line, trading line or
      equivalent system of any member of the Participant’s
  Group:

            

    

     

    
      	
               
      

            	
              (A)

            	
              recording a
      reduction (or not recording an increase) in its credit risk, un-hedged
      credit risk or equivalent measure;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              recording an
      increase (or not recording a reduction) in its credit line, trading line
      or equivalent measure,

            

    

     

    to any Obligor with
respect to that Covered Asset.  For the purpose of this Condition
7.13, “hedging
arrangement” includes any credit default swap, credit-linked bond or
note, sub-participation agreement, guarantee or similar credit risk
mitigant.

     

    
      	
              7.14

            	
              The
      Participant shall fully and effectively indemnify and hold harmless the
      Treasury against any loss, cost (including any cost of enforcement),
      liability, claim or damage which the Treasury incurs or suffers as a
      result of any default by the Participant in the performance of its
      obligations under Condition 7.13.  Without limitation, such loss
      may be incurred or suffered as result of a reduction in the aggregate
      amount of Recoveries.

            

    

     

    
      	
              7.15

            	
              “Related Junior Asset”
      means, with respect to a Covered Asset, any asset or exposure in respect
      of which one or more of the Counterparties (or any Group Member of any
      

            

    

     

     

    
      
        
        

      

      
        74

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              such
      Counterparty) is also an Obligor (or a Group Member of an Obligor) in
      respect of that Covered Asset, where the asset or
  exposure:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (i)

            	
              is a share,
      equity security or equity interest;
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              ranks junior
      to the assets and exposures comprising that Covered
  Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              is not a
      publicly traded security which is Managed and Administered by a
      market-making desk of a member of the Participant’s Group and by personnel
      who are (i) required by Applicable Law to be segregated by a Chinese wall
      or similarly effective measure from the personnel who Manage and
      Administer that Covered Asset or any Non-Cash Realisation in respect of
      that Covered Asset and (ii) unaware (and are not authorised to access any
      information which will enable them to determine) whether or not the asset
      or exposure is an asset or exposure in respect of which one or more of the
      Counterparties (or any Group Member of any such Counterparty) is also an
      Obligor (or a Group Member of an Obligor) in respect of that Covered
      Asset;

            

    

     

    
      	
               
      

            	
              (C)

            	
              is not part
      of that Covered Asset; and

            

    

     

    
      	
               
      

            	
              (D)

            	
              would not be
      a Non-Cash Realisation in respect of that Covered Asset, but for paragraph
      (C) of Condition 7.8.

            

    

     

    
      	
              7.16

            	
              Paragraph (C)
      of Condition 7.8 shall not give rise to any double counting of Recoveries
      in Condition 8.  If and to the extent such paragraph would (but
      for this Condition 7.16) give rise to such double counting, including as a
      result of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              an asset or
      exposure comprising a Related Junior Asset in respect of two or more
      Covered Assets (that are or become Triggered Assets);
  or

            

    

     

    
      	
               
      

            	
              (B)

            	
              an asset or
      exposure comprising both a Covered Asset (that is or becomes a Triggered
      Asset) and a Related Junior Asset in respect of one or more other Covered
      Assets (that are or become Triggered
Assets),

            

    

     

    then the applicable
Recoveries shall be allocated between the relevant Covered Assets in order of
their respective Trigger Dates (earliest first).

     

    
      	
              7.17

            	
              “Other Protection Scheme”
      means any scheme or arrangement (other than the Scheme) made available by
      an Authority the purpose or effect of any part of which is to provide
      protection or relief (whether by way of risk transfer, asset purchase or
      otherwise) in respect of credit losses on assets.  For the
      avoidance of doubt, any payment made by or on behalf of the Treasury
      pursuant to Condition 4.47 shall be capable of constituting a
      Realisation.

            

    

     

     

    
      
        
        

      

      
        75

        
          

        

      

      
        
        

      

    

     

    
      	
              7.18

            	
              “Non-Recoverable Agency
      Amount” means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              where a
      Covered Asset is or includes a direct or indirect participation in a
      syndicated facility and an Applicable Entity acts as facility agent,
      security trustee or security agent in respect of that syndicated facility;
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              where a
      Covered Asset is or includes a bond or note issuance and an Applicable
      Entity acts as bond or note trustee, security trustee, security agent or
      fiscal, paying or calculation agent in respect of that bond or note
      issuance,

            

    

     

    and that Applicable
Entity receives a payment in respect of its fee for acting in such capacity, the
following portion of that payment:

     

    (A – B) /
A

     

    where

     

    
      	
               
      

            	
              A

            	
              is the
      aggregate principal amount outstanding under that syndicated facility or
      bond or note issuance; and

            

    

     

    
      	
               
      

            	
              B

            	
              is the
      aggregate principal amount outstanding under the portion of that
      syndicated facility or bond or note issuance that is or forms part of the
      Covered Asset,

            

    

     

    
      	
               
      

            	
              in each case
      at the time of receipt of such
payment.

            

    

     

    
      	
              7.19

            	
              “Non-Recoverable Indemnity
      Amount” means the lesser of (x) the proceeds of any claim by an
      Applicable Entity under an indemnity comprised within the terms of a
      Covered Asset (the “relevant claim”) and (y)
      the amount referred to in paragraph (C) below,
  where:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the relevant
      claim would not have arisen but for the existence of a claim by a third
      party (other than any Applicable Entity or any of its Group Members, or
      any of their respective Affiliates) against an Applicable Entity (the
      “third party
      claim”);

            

    

     

    
      	
               
      

            	
              (B)

            	
              the third
      party claim would not have arisen but for the fact that the Covered Asset
      was Owned or Economically Owned by an Applicable
  Entity;

            

    

     

    
      	
               
      

            	
              (C)

            	
              an amount has
      been paid or is required by Applicable Law to be paid by an Applicable
      Entity in satisfaction of the third party claim;
  and

            

    

     

    
      	
               
      

            	
              (D)

            	
              the third
      party claim arises as a result of (i) an Applicable Entity’s actual or
      alleged liability for negligence or (ii) an Applicable Entity’s actual or
      alleged liability pursuant to any Applicable Law relating to the
      environment, pollution, health and safety, contamination, product
      liability, employment, workplace conditions or
  pensions.

            

    

     

     

    
      
        
        

      

      
        76

        
          

        

      

      
        
        

      

    

     

    Realisation
Expenses

     

    
      	
              7.20

            	
              A “Realisation Expense”
      means, with respect to a Covered Asset and a
  Realisation:

            

    

     

    
      	
               
      

            	
              (A)

            	
              an actual
      expense (including an expense which would otherwise be excluded by
      Condition 7.21) which the Treasury specifically and expressly agrees in
      writing with the Participant may be treated as a Realisation Expense with
      respect to that Realisation; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              subject to
      Condition 7.21, an actual expense which satisfies all of the following
      requirements:

            

    

     

    
      	
               
      

            	
              (i)

            	
              it is
      incurred by, and paid to third parties (other than any Applicable Entity
      or any of its Group Members, or any of their respective Affiliates) by,
      any Applicable Entity or any of its Group
  Members;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              it is
      proportionate;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              it is
      properly and reasonably incurred in good
faith;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              in the case
      of an expense incurred following the Accession Date, it is incurred in
      accordance with the Asset Management
Conditions;

            

    

     

    
      	
               
      

            	
              (v)

            	
              it is
      directly associated with that Realisation;
and

            

    

     

    
      	
               
      

            	
              (vi)

            	
              (unless and
      to the extent the Treasury in its sole discretion determines otherwise in
      writing, including as a result of the process referred to in Condition
      10.16) it does not represent a cost or expense payable to a third party as
      a result of the outsourcing of a function to that third party, where the
      function which has been outsourced was or would have been (in each case as
      at 31 December 2008) performed by a member of the Participant’s Group
      or, as the case may be, by the relevant Applicable Entity or any of its
      Group Members.

            

    

     

    
      	
              7.21

            	
              Realisation
      Expenses shall not include:

            

    

     

    
      	
               
      

            	
              (A)

            	
              Taxes,
      amounts in respect of Taxes and any expenses related thereto,
      except:

            

    

     

    
      	
               
      

            	
              (i)

            	
              any amounts
      of or in respect of Tax withheld or deducted (and required to be withheld
      or deducted) from that Realisation;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any output
      VAT payable in respect of that
Realisation;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any input VAT
      suffered in connection with that Realisation which cannot be recovered by
      refund or credit; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              any Stamp
      Duty required to be paid in respect of that
  Realisation;

            

    

     

     

    
      
        
        

      

      
        77

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              salaries or
      other compensation and related benefits of any employee, director,
      secondee or contract worker (including any bonus, commission or severance
      arrangements or training, payroll taxes or travel- or relocation-related
      expenses);

            

    

     

    
      	
               
      

            	
              (C)

            	
              the cost of
      office space, the rental of and maintenance of furniture and equipment and
      expenses for data processing (including the purchase or enhancement of
      data processing systems);

            

    

     

    
      	
               
      

            	
              (D)

            	
              any other
      overhead or general and administrative
expenses;

            

    

     

    
      	
               
      

            	
              (E)

            	
              any amount
      payable under or in respect of a Closely Related Hedge, except (in the
      case of a Closely Related Hedge which gives rise to a Realisation) any fee
      required to be paid under such Closely Related Hedge following the Trigger
      Date for the Covered Asset to which such Closely Related Hedge relates in
      order to maintain the benefit of ongoing benefit thereof following such
      Trigger Date.  For the avoidance of doubt, in the case of a
      Closely Related Hedge which is a credit derivative (including a credit
      linked note), any amount required to be paid under such Closely Related
      Hedge representing interest or any other financing cost (howsoever
      described) shall not be regarded as a fee for this purpose;
      and

            

    

     

    
      	
               
      

            	
              (F)

            	
              any
      Participant Step-In Costs or Treasury Step-In
  Costs.

            

    

     

    Adjustments
in relation to Permitted Structured Financings

     

    
      	
              7.22

            	
              In the case
      of a Covered Asset which is the subject of a Permitted Structured
      Financing:

            

    

     

    
      	
               
      

            	
              (A)

            	
              If the
      relevant Covered Entity’s actual economic exposure or the relevant Covered
      Entities’ aggregate actual economic exposure, as the case may be, to the
      Covered Asset is different from that which it would have been but for the
      existence of Third Party Interests in that Permitted Structured Financing,
      the benefit represented by that difference shall be treated as a
      Realisation.  Such Realisation shall be determined as an amount
      equal to the part of the Loss (as reduced by Recoveries resulting from
      other Realisations) with respect to the Covered Asset that was borne by or
      allocated to Third Party Interests and shall be deemed to have been made
      as of the Trigger Date or, if later, 31 December 2008.  Such a
      difference may arise, without limitation, as result of a reduction or
      expected future reduction in any amount that would otherwise have been
      paid or payable to the holders of Third Party Interests in that Permitted
      Structured Financing to the extent such reduction is attributable
      to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Covered
      Asset being worth less than its Outstanding Amount;
  or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              (without
      double counting) the value of the consideration paid or other assets
      provided (together, the “Substitute Assets”) by a
      Covered Entity in exchange or substitution for a Covered Entity obtaining
      Ownership of 

            

    

     

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	the
      Covered Asset being less than the Outstanding Amount of that Covered
      Asset,

    

     

    provided that, if
the Third Party Interests suffer losses on the Covered Asset and other assets,
then the Realisation for the Covered Asset shall be calculated as
follows:

     

    Realisation =
(aggregate losses under the Permitted Structured Financing with respect to the
Covered Asset / aggregate losses under the Permitted Structured Financing with
respect to all assets) x aggregate losses suffered by the Third Party
Interests.

     

    “Third Party Interests” in a
Permitted Structured Financing means interests which are not held by a Covered
Entity, including as a result of debt or equity securities issued in connection
with that Permitted Structured Financing not being held by a Covered Entity or a
liquidity facility or swap or credit enhancement being provided to that
Permitted Structured Financing otherwise than by a Covered Entity.

     

    
      	
               
      

            	
              (B)

            	
              The payment
      or provision of Substitute Assets by a Covered Entity shall not be treated
      as a Realisation Expense.

            

    

     

    
      	
               
      

            	
              (C)

            	
              There shall
      be no double counting between this Condition 7.22 and Condition
      7.8.

            

    

     

    By way of example
(which is illustrative only) of a circumstance in which this Condition 7.22 may
have effect, if:

     

    
      	
               
      

            	
              (i)

            	
              the
      beneficial interest in a pool of residential mortgages was acquired by a
      special purpose vehicle pursuant to a
  securitisation;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      securitisation is a Permitted
Arrangement;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              as part of
      the securitisation, senior notes and junior notes were
    issued;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the senior
      notes are held by third parties;

            

    

     

    
      	
               
      

            	
              (v)

            	
              the junior
      notes are held by a Covered Entity;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              losses in
      respect of the pool of residential mortgages have reached a level where
      they have reduced the amounts payable or expected to be payable to the
      holders of the senior notes (with the consequence that holders of the
      senior notes have absorbed losses in respect of the pool);
    and

            

    

     

    
      	
               
      

            	
              (vii)

            	
              the pool of
      residential mortgages includes one or more Covered
  Assets,

            

    

     

    then, for the
purposes of this Condition 7.22, the relevant Covered Entity’s actual economic
exposure to those Covered Assets will have reduced as a result of the

     

     

     

    
      
        
        

      

      
        79

        
          

        

      

      
        
        

      

    

     

    holders of the
senior notes absorbing losses in respect of the pool and a Realisation will fall
to be determined in accordance with this Condition 7.22.

     

    
      	
              7.23

            	
              If after 31
      December 2008 a Covered Entity increases its actual economic exposure to a
      Covered Asset which is the subject of a Permitted Structured Financing in
      a way that reduces Third Party Interests in that Permitted Structured
      Financing, such reduction shall be ignored for the purpose of calculating
      Realisations under Condition
7.22(A).

            

    

     

    
      	
              7.24

            	
              A “Permitted Structured
      Financing” means (i) a Permitted Securitisation, (ii) a Permitted
      Conduit Arrangement, (iii) a Permitted Conduit Funding Arrangement or (iv)
      a synthetic securitisation involving the transfer to a special purpose
      vehicle of credit risk in respect of an asset or exposure forming part of
      a Covered Asset.

            

    

     

    Failure
to provide Conflicts Certificates

     

    
      	
              7.25

            	
              If the
      Participant breaches its obligations under Condition 15.14 with respect to
      a Covered Asset, the Treasury shall be entitled to determine that there
      has been a Cash Realisation (the Cash Realisation Date for which is the
      Trigger Date) in respect of that Covered Asset, such Cash Realisation
      corresponding to the excess receipts, realisations, recoveries, benefits
      or value (as determined by the Treasury, acting reasonably) received or
      derived by the Participant’s Group with respect to, resulting from,
      arising out of or in connection with the relevant agreements, transactions
      or arrangements entered into or effected during the period from and
      including the Initial Event Date to and including the Trigger Date, as
      referred to in Condition 15.14(B), not being commercially fair, reasonable
      and on arm’s length terms. 

            

    

     

    Application
of payments

     

    
      	
              7.26

            	
              Without
      prejudice to the Asset Management
Conditions:

            

    

     

    
      	
               
      

            	
              (A)

            	
              Where an
      Applicable Entity makes, realises, receives, recovers or derives an asset,
      receipt, realisation, recovery, right, interest or benefit (the “obligor receipt”) in
      respect of an obligor’s obligations in circumstances where it is unclear
      which obligation the obligor receipt related to then, for the purpose of
      determining which part (if any) of the obligor receipt comprises a
      Realisation with respect to a particular asset or exposure forming part of
      a Covered Asset, the obligor receipt shall be allocated to that obligor’s
      obligations in accordance with Applicable Law and the relevant terms of
      (or relating to) those obligations.  If, in accordance with
      Applicable Law and such relevant terms, there is more than one obligation
      of a given seniority owed to an Applicable Entity to which the obligor
      receipt could be allocated, the obligor receipt shall be allocated to all
      such obligations of that seniority pro rata to their value on the date of
      the obligor receipt.

            

    

     

    
      	
               
      

            	
              (B)

            	
              Where an
      Applicable Entity is entitled to exercise a right of set off (or other
      right, including counterclaim, having a substantially similar effect) in
      respect of an obligor’s obligations in circumstances where, in accordance
      with Applicable Law and the relevant terms of (or relating to) those
      obligations, there is more than 

            

    

     

     

    
      
        
        

      

      
        80

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	one
      obligation of a given seniority in respect of which such right could be
      exercised, the benefit of that right shall be allocated mutatis mutandis
      in accordance with paragraph (A) above.

    

     

    
      	
               
      

            	
              (C)

            	
              Where, on the
      Trigger Date of a Triggered Asset, the Sterling Equivalent (the Exchange
      Date being the Trigger Date or, if later, 31 December 2008) of the
      Outstanding Amount of that Triggered Asset exceeds the Loss under
      Condition 6.1 with respect to that Covered Asset, then, for the
      purpose only of this Condition 7, the Triggered Asset shall be deemed to
      comprise only the relevant proportion of the whole Triggered Asset (and
      the remainder of the whole Triggered Asset shall be treated as if it were
      not a Covered Asset, save to the extent that it is or becomes an Extended
      Protection Asset), where the “relevant proportion” is
      the amount of such Loss divided by the Sterling Equivalent (the Exchange
      Date being the Trigger Date or, if later, 31 December 2008) of such
      Outstanding Amount.

            

    

     

    
      	
               
      

            	
              (D)

            	
              Where, after
      the Trigger Date of a Triggered Asset, a Covered Entity makes a payment in
      respect of a Covered Liability which does not (or to the extent to which
      it does not) give rise to a Loss, then, for the purpose only of this
      Condition 7, the Covered Entity’s rights with respect to or resulting from
      such payment shall be treated as if they were not part of that Triggered
      Asset.

            

    

     

    Portfolio
Disposals

     

    
      	
              7.27

            	
              If there is a
      single transaction (including a portfolio sale) pursuant to which there is
      a sale, transfer or other disposal of multiple assets (at least one of
      which is a Triggered Asset, Non-Cash Realisation or Related Junior Asset)
      (a “Portfolio
      Disposal”) then a Realisation in respect of the applicable
      Triggered Asset shall be deemed to have been made by the Participant upon
      completion of the Portfolio Disposal.  For the purpose of
      determining that Realisation:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      Participant shall, as soon as reasonably practicable and in any event
      within five Business Days after the date of completion of the Portfolio
      Disposal, give written notice to the Treasury of the Portfolio Disposal
      (i) providing reasonable details of the Portfolio Disposal, the assets,
      receipts, realisations, recoveries, rights, interests or benefits, made,
      realised, received, recovered or derived by any Applicable Entity (the
      “disposal
      receipt”) and the actual expenses (the “disposal expenses”)
      incurred by, and paid to third parties (other than any Applicable Entity
      or any of its Group Members, or any of their respective Affiliates) by,
      any Applicable Entity or any of its Group Members in connection with the
      Portfolio Disposal, (ii) stating the Participant’s proposal as to that
      Realisation, (iii) setting out in reasonable detail the Participant’s
      calculation of that Realisation and the basis for that calculation
      (including any relevant information and assumptions) and (iv) including
      such further information as the Participant reasonably considers will be
      required to enable the Treasury to assess the Participant’s
      proposal;

            

    

     

     

    
      
        
        

      

      
        81

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              the
      Participant shall, as soon as reasonably practicable following written
      request by the Treasury, provide the Treasury with such further
      information in relation to the Portfolio Disposal, the disposal receipt
      and the disposal expenses as the Treasury may
  request;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the Treasury
      and the Participant shall participate in good faith discussions with each
      other for a period of five Business Days after the Treasury’s receipt of
      the notice referred to in paragraph (A) above with a view to agreeing that
      Realisation; and

            

    

     

    
      	
               
      

            	
              (D)

            	
              if the
      Treasury and the Participant have not agreed that Realisation within 15
      Business Days after the date of completion of the Portfolio Disposal, that
      Realisation shall be as determined, and notified in writing to the
      Participant, by the Treasury (in its sole
  discretion).

            

    

     

    Degrouping

     

    
      	
              7.28

            	
              If an
      Undertaking which holds or Economically Owns a Triggered Asset, Non-Cash
      Realisation or Related Junior Asset (or has a right, interest or benefit,
      whether direct or indirect, in or with respect thereto) ceases to be a
      Consolidated Entity (a “Degrouping”) then a Cash
      Realisation in respect of the applicable Triggered Asset shall be deemed
      to have been made by the Participant upon the date on which the Degrouping
      became effective.  For the purpose of this Condition 7.28, an
      Undertaking is a "Consolidated Entity" if
      it is either (or both):

            

    

     

    
      	
               
      

            	
              (A)

            	
              a member of
      the Participant's Group; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              an
      Undertaking which would be consolidated into the balance sheet of the
      Participant's Group if such a consolidated balance sheet were to be
      prepared in accordance with Static
IFRS.

            

    

     

    
      	
              7.29

            	
              For the
      purpose of determining the amount of that Cash
  Realisation:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      Participant shall, as soon as reasonably practicable and in any event
      within five Business Days after the date on which the Degrouping became
      effective, give written notice to the Treasury of the Degrouping (i)
      providing reasonable details of the Degrouping, (ii) stating the
      Participant's proposal as to the amount of that Cash Realisation, (iii)
      setting out in reasonable detail the Participant's calculation of that
      amount and the basis for that calculation (including any relevant
      information and assumptions) and (iv) including such further information
      as the Participant reasonably considers will be required to enable the
      Treasury to assess the Participant's
proposal;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      Participant shall, as soon as reasonably practicable following written
      request by the Treasury, provide the Treasury with such further
      information in relation to the Degrouping as the Treasury may
      request;

            

    

     

     

    
      
        
        

      

      
        82

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (C)

            	
              the Treasury
      and the Participant shall participate in good faith discussions with each
      other for a period of five Business Days after the Treasury's receipt of
      the notice referred to in paragraph (A) above with a view to agreeing the
      amount of that Cash Realisation;

            

    

     

    
      	
               
      

            	
              (D)

            	
              this
      Condition 7.29 shall be applied such that there is no double counting of
      Realisations arising under this Condition 7.29 and Condition 7.27;
      and

            

    

     

    
      	
               
      

            	
              (E)

            	
              if the
      Treasury and the Participant have not agreed the amount of that Cash
      Realisation within 15 Business Days after the date on which the Degrouping
      became effective, the amount of that Cash Realisation shall be as
      determined, and notified in writing to the Participant, by the Treasury
      (in its sole discretion).

            

    

     

    Subrogation,
contribution and other rights

     

    
      	
              7.30

            	
              Save to the
      extent provided in the Scheme Documents, the Treasury shall not exercise
      any right which it may have against any Obligor by reason only of
      performance by the Treasury of its obligations under Condition 8 to
      exercise, receive, claim or have the benefit of any right of payment,
      guarantee, indemnity, contribution or security from or on account of any
      Obligor in respect of any Covered Asset (in whole or in
    part).

            

    

     

    
      	
              7.31

            	
              Nothing in
      the Scheme Documents shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              prohibit the
      Treasury or any other Government Entity from exercising any other right,
      power or remedy which it may have against any Obligor (including where
      such right, power or remedy arises other than by reason only of
      performance by the Treasury of its obligations under Condition 8) or
      exercising any right, power or remedy in the discharge of its functions as
      a public body, whether or not the same relates to any Covered Asset (in
      whole or in part); or

            

    

     

    
      	
               
      

            	
              (B)

            	
              require the
      Treasury or any other Government Entity to exercise any right, power or
      remedy referred to in paragraph (A) above or to exercise any such right,
      power or remedy in any particular
manner.

            

    

     

     

    
      
        
        

      

      
        83

        
          

        

      

      
        
        

      

    

     

    
      
        	
                8.

              	
                PAYMENTS

              

      

    

     

    Loss
Amounts

     

    
      	
              8.1

            	
              Subject to
      these Conditions, a “Loss
      Amount” shall be determined as at the end of each Quarter ending on
      or after 31 December 2009 in respect of such Quarter relating to the
      Treasury’s 90 per cent. share of Losses in excess of the First Loss
      Amount, such amount to be determined in respect of each such Quarter as
      follows:

            

    

     

    90% * (Current
Excess Losses – Previous Excess Losses)

     

    where

     

    
      
        	
                Current
      Excess Losses

              	
                means the
      amount (that shall not be less than zero) equal to the aggregate amount of
      all Losses that have occurred on or before the last day of the applicable
      Quarter for which the computation is being performed minus the First Loss
      Amount

              
	 	 
	
                Previous
      Excess Losses

              	
                means the
      amount (that shall not be less than zero) equal to the aggregate amount of
      all Losses that have occurred on or before the last day of the Quarter
      immediately prior to the applicable Quarter for which the computation is
      being performed minus the First Loss
      Amount (provided that, in respect of the Quarter ending on 31 December
      2009, the Previous Excess Losses shall be
zero).

              

      

    

     

    Recovery
Amounts

     

    
      	
              8.2

            	
              Subject to
      these Conditions, a “Recovery Amount” shall
      be determined as at the end of each Quarter ending on or after 31 December
      2009 in respect of such Quarter relating to the Treasury’s 90 per cent.
      share of Recoveries as follows:

            

    

     

    (90% * Total
Recoveries to Date) – Applied Amounts to Date

     

    where

     

    
      
        	
                Total
      Recoveries to Date

              	
                means the
      aggregate amount of all Recoveries made on or before the last day of the
      applicable Quarter for which the computation is being
      performed

              
	 	 
	
                Applied
      Amounts to Date

              	
                means the
      aggregate of all Recovery Amounts in respect of all Quarters prior to the
      applicable Quarter for which the computation is being performed (provided
      that, in respect of the Quarter ending on 31 December 2009, the Applied
      Amounts to Date shall be
zero),

              

      

    

     

     

    
      
        
        

      

      
        84

        
          

        

      

      
        
        

      

    

     

    provided that the
Recovery Amount in respect of each such Quarter shall not exceed an amount
calculated as follows:

     

    Past Treasury
Payments + Pending Treasury Payments

     

    where

     

    
      
        	
                Past Treasury
      Payments

              	
                means the
      balance, as of the last day of the applicable Quarter for which the
      computation is being performed, of the Treasury Account

              
	 	 
	
                Pending
      Treasury Payments

              	
                means the
      balance, as of the last day of the Quarter for which the computation is
      being performed, of the Pending Account plus the Loss Amount in respect of
      the applicable Quarter for which the computation is being performed as
      determined pursuant to
Condition 8.1.

              

      

    

     

    Other
Amounts

     

    
      	
              8.3

            	
              The “Other Amount” means, in
      respect of a Quarter, such other adjusting amount (which may be positive
      or negative) as may be agreed in writing between the Treasury and the
      Participant (each acting in its sole discretion).  In the
      absence of any such agreement in respect of a Quarter, the Other Amount
      for that Quarter shall be zero.

            

    

     

    Quarterly
Payable

     

    
      	
              8.4

            	
              The “Quarterly Payable”
      means, for each Quarter (in this Condition 8.4, a “relevant Quarter”) which
      ends on or after 31 December 2009, an amount determined as follows in
      respect of the relevant Quarter:

            

    

     

    
      	
               
      

            	
              Quarterly
      Payable = (Loss Amount + Other Amount) – Recovery
  Amount

            

    

     

    
      	
               
      

            	
              where

            

    

     

    
      	
               
      

            	
              (A)

            	
              “Loss
      Amount”, “Other Amount” and “Recovery Amount” refer to the Loss Amount,
      the Other Amount and the Recovery Amount for the relevant Quarter;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Quarterly
      Payable may be a positive or a negative amount, and shall be applied
      pursuant to Condition 8.5(B).

            

    

     

     

    
      
        
        

      

      
        85

        
          

        

      

      
        
        

      

    

     

    Pending
Account and payments

     

    
      	
              8.5

            	
              The Treasury
      shall establish an account (the “Pending Account”) in
      respect of the Quarterly Payables which shall be operated as
      follows:

            

    

     

    
      	
               
      

            	
              (A)

            	
              The Pending
      Account balance at the beginning and at the end of the Quarter ending on
      31 December 2009 shall be zero.

            

    

     

    
      	
               
      

            	
              (B)

            	
              The Quarterly
      Payable for each Quarter shall be added to the balance of the Pending
      Account as of the first day of the following Quarter.  A
      positive Quarterly Payable shall increase the balance of the Pending
      Account and a negative Quarterly Payable shall reduce the balance of the
      Pending Account.

            

    

     

    
      	
               
      

            	
              (C)

            	
              If, as of the
      first day of a Quarter for which a determination under this paragraph (C)
      is made (in this Condition 8.5 the “relevant Quarter”), the
      balance (the “opening
      balance”) of the Pending Account after its adjustment pursuant to
      paragraph (B) above, but before its adjustment pursuant to paragraph (D)
      below:

            

    

     

    
      	
               
      

            	
              (i)

            	
              is greater
      than zero and the balance of the Pending Account has been greater than
      zero on the last day of each of the eight Quarters preceding the relevant
      Quarter, then the Treasury shall pay to the Participant an amount equal to
      the lesser of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the greater
      of:

            

    

     

    
      	
               
      

            	
              (1)

            	
              zero;
      and

            

    

     

    
      	
               
      

            	
              (2)

            	
              X –
      Y

            
	 	 	 
	 	 	where:

    

     

    
      	
               
      

            	
              X

            	
              is the
      above-mentioned opening balance of the Pending Account;
  and

            

    

     

    
      	
               
      

            	
              Y

            	
              is the
      aggregate of each of the Quarterly Payables for the eight Quarters
      preceding the relevant Quarter (for the avoidance of doubt, including the
      Quarterly Payable for the Quarter immediately preceding the relevant
      Quarter, which shall have been included in the above-mentioned opening
      balance of the Pending Account in accordance with paragraph (B) above);
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              such opening
      balance of the Pending Account;

            

    

     

     

    
      
        
        

      

      
        86

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (ii)

            	
              is negative,
      then the Participant shall pay to the Treasury an amount equal to the
      absolute value of the above-mentioned opening balance of the Pending
      Account; or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              is:

            

    

     

    
      	
               
      

            	
              (a)

            	
              zero;
      or

            

    

     

    
      	
               
      

            	
              (b)

            	
              greater than
      zero and the balance of the Pending Account has not been greater than zero
      on the last day of each of the eight Quarters preceding the relevant
      Quarter,

            

    

     

    then no payment
shall be made pursuant to this paragraph (C) in respect of the relevant
Quarter.

     

    
      	
               
      

            	
              (D)

            	
              A payment
      referred to in paragraph (C) above shall be made on the Quarterly Payment
      Date which falls within the relevant Quarter and (in the case of a payment
      referred to in sub-paragraph (i)) shall reduce the balance of the Pending
      Account by a corresponding amount and (in the case of a payment referred
      to in sub-paragraph (ii)) shall restore the balance of the Pending Account
      to zero, in either case as of the first day of the relevant
      Quarter.

            

    

     

    
      	
               
      

            	
              (E)

            	
              An amount
      equal to interest shall accrue from day to day during each Quarter on the
      balance of the Pending Account at the beginning of the relevant Quarter
      (after its adjustment pursuant to paragraphs (B) and (D) above) at the
      Funding Rate for that Quarter.  Such amount shall be calculated
      on the basis of the actual number of days in that Quarter and a year of
      365 days and shall be added to the balance of the Pending Account as of
      the last day of the relevant
Quarter.

            

    

     

    Treasury
Account

     

    
      	
              8.6

            	
              The Treasury
      shall establish an account (the “Treasury Account”) in
      respect of payments made pursuant to Condition 8.5 which shall be operated
      as follows:

            

    

     

    
      	
               
      

            	
              (A)

            	
              The Treasury
      Account balance at the beginning and at the end of the Quarter ending on
      31 December 2009 shall be zero.

            

    

     

    
      	
               
      

            	
              (B)

            	
              Each payment
      made by the Treasury pursuant to Condition 8.5(C)(i) shall increase the
      balance of the Treasury Account as of the first day of the Quarter in
      which it is made.

            

    

     

    
      	
               
      

            	
              (C)

            	
              Each payment
      by the Participant pursuant to Condition 8.5(C)(ii) shall reduce the
      balance of the Treasury Account as of the first day of the Quarter in
      which it is made.

            

    

     

    
      	
               
      

            	
              (D)

            	
              An amount
      equal to interest shall accrue from day to day during each Quarter on the
      balance of the Treasury Account as at the beginning of each Quarter
      

            

    

     

     

    
      
        
        

      

      
        87

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              (after its
      adjustment pursuant to paragraphs (B) and (C) above) at the Funding Rate
      for the relevant Quarter.  Such amount shall be calculated on
      the basis of the actual number of days in that Quarter and a year of 365
      days and shall be added to the balance of the Treasury Account as of the
      last day of the relevant Quarter.

            

    

     

    
      	
               
      

            	
              (E)

            	
              The balance
      of the Treasury Account shall not reduce below
  zero.

            

    

     

    Corrections
and adjustments

     

    
      	
              8.7

            	
              If any amount
      set out in a Quarterly Statement is incorrect or requires adjustment in
      accordance with these Conditions (including as a result of corrections or
      adjustments to the underlying Quarterly Statement Data), each such amount
      shall be corrected or adjusted as soon as is practicable in the Quarterly
      Statement for a subsequent Quarter (in this Condition 8.7 the “adjustment
      Quarter”).  If, with respect to any Quarter (in this
      Condition 8.7 the “applicable Quarter”)
      which ended on or before the last day of the adjustment Quarter, following
      any such correction or adjustment:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the amount
      that was actually paid by the Treasury during the applicable Quarter
      pursuant to Condition 8.5 is greater than the amount that should have been
      paid by the Treasury, then the excess shall represent an amount payable by
      the Participant to the Treasury;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the amount
      that was actually paid by the Treasury during the applicable Quarter
      pursuant to Condition 8.5 is less than the amount that should have been
      paid by the Treasury, then the shortfall shall represent an amount payable
      by the Treasury to the Participant;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the amount
      that was actually paid by the Participant during the applicable Quarter
      pursuant to Condition 8.5 is greater than the amount that should have been
      paid by the Participant, then the excess shall represent an amount payable
      by the Treasury to the Participant;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the amount
      that was actually paid by the Participant during the applicable Quarter
      pursuant to Condition 8.5 is less than the amount that should have been
      paid by the Participant, then the shortfall shall represent an amount
      payable by the Participant to the
Treasury.

            

    

     

    Each such amount
payable shall be paid by the payer to the payee on the Quarterly Payment Date
next following the adjustment Quarter together with an amount equal to interest
accrued on such amount during the period from (and including) the first day of
the applicable Quarter to (and including) the last day of the adjustment
Quarter, accruing from day to day during each Quarter falling within such period
at the Funding Rate for that Quarter and calculated on the basis of the actual
number of days in that Quarter and a year of 365 days (and being compounded at
the end of each such Quarter).  The balances of the Pending Account
and the Treasury Account shall be adjusted (with retrospective effect) to
reflect the position that would have resulted had the corrected or adjusted
amount been paid during the applicable Quarter (which may 

     

     

     

    
      
        
        

      

      
        88

        
          

        

      

      
        
        

      

    

     

    result in
corrections or adjustments having to be made pursuant to this Condition 8.7 in
respect of subsequent Quarters).  References in this Condition 8.7 to
“the amount actually paid by the Treasury during the applicable Quarter” or to
“the amount actually paid by the Participant during the applicable Quarter”
shall be construed as including reference to any such amount as previously
adjusted pursuant to this Condition 8.7.

     

    By way of example
(which is illustrative only), if:

     

    
      	
               
      

            	
              (A)

            	
              the Loss
      Amount for a particular Quarter (“Quarter 1”) was reported
      as £10,000,000 in the Quarterly Statement for Quarter 1;
    and

            

    

     

    
      	
               
      

            	
              (B)

            	
              during the
      second following Quarter (“Quarter 3”), the
      Participant validly delivered a Post-Trigger Withdrawal Notice in respect
      of a Triggered Asset, the Trigger Date for which had occurred in Quarter 1
      and in respect of which a Loss of £1,000,000 had arisen during Quarter 1
      (which Loss had been included in the Loss Amount of £10,000,000 which had
      been reported in respect of Quarter
1),

            

    

     

    then:

     

    
      	
               
      

            	
              (i)

            	
              as a result
      of the delivery of that Post-Trigger Withdrawal Notice, the Loss Amount
      for Quarter 1 will have reduced from £10,000,000 to
      £9,000,000;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Participant will be obliged to report this reduction in the Loss Amount
      for Quarter 1 by providing details of the adjustment in the Quarterly
      Statement for Quarter 3 (and, for the purpose of this example, it is
      assumed that the adjustment is reported in the Quarterly Statement for
      Quarter 3);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              within the
      Agreed Model, the Loss Amount for Quarter 1 will be updated (with
      retrospective effect) to show a Loss Amount of £9,000,000 for Quarter 1,
      with the consequence that other cells within the Agreed Model (including
      cells showing the balance of the Pending Account during the Quarter
      (“Quarter 2”) next
      following Quarter 1) will update
  automatically;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              if, as a
      result of the updating referred to in sub-paragraph (iii) above, the
      Agreed Model computes an amount (“amount B”) as being
      payable during Quarter 3 pursuant to Condition 8.5(C) which differs from
      the amount (“amount
      A”) which (prior to such updating) the Agreed Model had computed as
      being payable during Quarter 3 pursuant to Condition 8.5(C) (and, for the
      purpose of this example, it is assumed that amount A was the amount
      actually paid during Quarter 3),
then:

            

    

     

    
      	
               
      

            	
              (1)

            	
              an amount
      shall be payable by one party to the other pursuant to Condition 8.7 in
      respect of the difference between amount A and amount
  B;

            

    

     

     

    
      
        
        

      

      
        89

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (2)

            	
              in connection
      with such payment, Quarter 3 will be both the applicable Quarter (being
      the Quarter during which amount A was actually paid) and the adjustment
      Quarter (because the adjustment was reported in the Quarterly Statement
      for Quarter 3);

            

    

     

    
      	
               
      

            	
              (3)

            	
              the amount
      payable pursuant to Condition 8.7 as a result of the adjustment will be
      the difference between amount A and amount B together with an amount
      representing interest on such difference accrued from (and including) the
      first day of Quarter 3 (being the first day of the applicable
      Quarter) to (and including) the last day of Quarter 3 (being the last day
      of the adjustment Quarter), such interest accruing from day to day at the
      Funding Rate for Quarter 3;

            

    

     

    
      	
               
      

            	
              (4)

            	
              such amount
      shall be payable on the Quarterly Payment Date next following Quarter 3
      (being the adjustment Quarter);

            

    

     

    
      	
               
      

            	
              (5)

            	
              if each of
      amount A and amount B represented an amount payable by the Treasury to the
      Participant and amount B was less than amount A, then the payment referred
      to in paragraph (4) would be a payment by the Participant to the Treasury;
      and

            

    

     

    
      	
               
      

            	
              (6)

            	
              amount B
      might be less than amount A because, for
  example:

            

    

     

    
      	
               
      

            	
              (x)

            	
              the reduction
      in the Loss Amount for Quarter 1 reduced the balance of the Pending
      Account during Quarter 2;

            

    

     

    
      	
               
      

            	
              (y)

            	
              as a
      consequence of the reduction referred to in sub-paragraph (x) above, the
      amount of interest credited to the balance of the Pending Account pursuant
      to Condition 8.5(E) on the last day of Quarter 2 reduced;
      and

            

    

     

    
      	
               
      

            	
              (z)

            	
              as a
      consequence of the reduction referred to in sub-paragraph (y) above, the
      amount payable by the Treasury to the Participant pursuant to Condition
      8.5(C)(i) during Quarter 3 reduced.

            

    

     

    Reporting
of Losses and Recoveries

     

    
      	
              8.8

            	
              Without
      prejudice to Condition 31.14, the Treasury shall be obliged to make a
      payment pursuant to Condition 8.5(C) or Condition 8.7 only to the extent
      that the amount of the payment and the inputs into the Agreed Model in
      respect of Losses and Recoveries from which the amount of that payment is
      derived have been notified to the Treasury in Quarterly Statements and
      Quarterly Statement Data in accordance with Condition
  16.

            

    

     

     

    
      
        
        

      

      
        90

        
          

        

      

      
        
        

      

    

     

    
      	
              8.9

            	
              Neither
      Condition 8.8 nor any lapse of time following the date of a Quarterly
      Statement nor the making of any payment pursuant to this Condition 8 shall
      prevent the Treasury from disputing the accuracy of any Quarterly
      Statement or Quarterly Statement Data (including the amounts attributable
      to any Covered Asset which are reflected in any Quarterly Statement or
      contained in the underlying Quarterly Statement Data) nor the inputs into
      the Agreed Model nor the amount of Losses which have occurred or of
      Recoveries which have been made in any
period.

            

    

     

    Sudden
Notification Statements

     

    
      	
              8.10

            	
              If a
      Quarterly Statement (the “Sudden Notification Statement”)
      discloses that the amount of the payment which the Treasury would, but for
      this Condition 8.10, have been obliged to make pursuant to Condition
      8.5(C) or Condition 8.7 on the Quarterly Payment Date next following the
      Quarter to which the Sudden Notification Statement relates exceeds the
      amount of such payment as output by the Agreed Model on the basis only of
      inputs in respect of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      information in respect of Losses and Recoveries disclosed by Quarterly
      Statements issued before the Sudden Notification Statement;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Funding
      Rate for each Quarter,

            

    

     

    then the Treasury
may elect to pay the excess on the next following Quarterly Payment Date
together with an amount equal to interest accrued on such excess during the
period from (but excluding) the last day of the Quarter to which the Sudden
Notification Statement relates to (and including) the last day of the next
following Quarter at the Funding Rate for the Quarter to which the Sudden
Notification Statement relates.

     

    Other
consequences of late reporting

     

    
      	
              8.11

            	
              Subject to
      Conditions 8.12 and 8.13, if and to the extent a correction or adjustment
      notified in a Quarterly Statement increases the amount of the Losses or
      reduces the amount of the Recoveries in respect of a Covered Asset for a
      Quarter which ended more than one year before the Quarterly Statement Date
      in relation to that Quarterly Statement, the correction or adjustment
      shall be disregarded (with the consequence that the correction or
      adjustment shall be deemed for the purpose of this Condition 8 (including
      Condition 8.8) not to have been notified to the Treasury in a Quarterly
      Statement and, accordingly, the Treasury shall not be required to make any
      payment pursuant to these Conditions in respect of or as a result of that
      correction or adjustment).

            

    

     

    
      	
              8.12

            	
              Condition 8.11
      shall not apply, and this Condition 8.12 shall apply instead, to any
      adjustment if and to the extent such adjustment arises as a result of the
      operation of Condition 6.10 or 7.11.  If and to the extent any
      adjustment (to which this Condition 8.12 is expressed to apply) notified
      in a Quarterly Statement increases the amount of the Losses or reduces the
      amount of the Recoveries in respect of a Covered Asset for a Quarter and
      the applicable repayment referred to in Condition 6.10 or 7.11 was made in
      a Quarter which ended more than one year before the Quarterly Statement
      Date in 

            

    

     

     

    
      
        
        

      

      
        91

        
          

        

      

      
        
        

      

    

     

    
      	 	relation to
      that Quarterly Statement, the adjustment shall be disregarded (with the
      consequence that the adjustment shall be deemed for the purpose of this
      Condition 8 (including Condition 8.8) not to have been notified to the
      Treasury in a Quarterly Statement and, accordingly, the Treasury shall not
      be required to make any payment pursuant to these Conditions in respect of
      or as a result of that adjustment).

    

     

    
      	
              8.13

            	
              Condition
      8.11 shall not apply, and this Condition 8.13 shall apply instead, to any
      adjustment if and to the extent such adjustment arises as a result of the
      retrospective effect of an Extended Protection Notice.  If and
      to the extent any adjustment (to which this Condition 8.13 is expressed to
      apply) notified in a Quarterly Statement increases the amount of the
      Losses or reduces the amount of the Recoveries in respect of a Covered
      Asset for a Quarter where both:

            

    

     

    
      	
               
      

            	
              (A)

            	
              that Quarter;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Quarter
      in which the applicable Extended Protection Notice became
      effective,

            

    

     

    ended more than one
year before the Quarterly Statement Date in relation to that Quarterly
Statement, the adjustment shall be disregarded (with the consequence that the
adjustment shall be deemed for the purpose of this Condition 8 (including
Condition 8.8) not to have been notified to the Treasury in a Quarterly
Statement and, accordingly, the Treasury shall not be required to make any
payment pursuant to these Conditions in respect of or as a result of that
adjustment).

     

    
      	
              8.14

            	
              Subject to
      Condition 8.15, if a Quarterly Statement notifies the occurrence of a
      Trigger which occurred in a Quarter which ended more than one year before
      the Quarterly Statement Date in relation to that Quarterly Statement, then
      (unless the Treasury in its sole discretion determines otherwise) the
      Trigger shall be deemed not to have occurred and the Covered Asset shall
      cease permanently to be a Covered Asset with effect from and including
      that Quarterly Statement Date.

            

    

     

    
      	
              8.15

            	
              Condition
      8.14 shall not apply, and this Condition 8.15 shall apply instead,
      to the notification of a Trigger if such Trigger arises as a result
      of the retrospective effect of an Extended Protection
      Notice.  If any Trigger (to which this Condition 8.15 is
      expressed to apply) notified in a Quarterly Statement occurred in a
      Quarter which ended more than one year before the Quarterly Statement Date
      in relation to that Quarterly Statement and the Quarter in which the
      applicable Extended Protection Notice became effective ended more than one
      year before that Quarterly Statement Date, then (unless the Treasury in
      its sole discretion determines otherwise) the Trigger shall be deemed not
      to have occurred and the Covered Asset shall cease permanently to be a
      Covered Asset with effect from and including that Quarterly Statement
      Date.

            

    

     

    Definitions
relating to payments

     

    
      	
              8.16

            	
              The “First Loss Amount” has
      the meaning given to it in the Accession
  Agreement.

            

    

     

    
      	
              8.17

            	
              The “Funding Rate” means,
      with respect to a Quarter:

            

    

     

     

    
      
        
        

      

      
        92

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              the
      percentage rate per annum which is the British Bankers’ Association three
      month “Sterling General Collateral Repo Rate” displayed on page BBAM6 of
      the Bloomberg service as of 11:00 a.m. London time on the first day of
      that Quarter (or, if that day is not a day for which the British Bankers’
      Association is scheduled to publish such rate, the immediately succeeding
      day for which the British Bankers’ Association is scheduled to publish
      such rate), provided that if such page is replaced or service ceases to be
      available, the Treasury may specify another page or service displaying the
      appropriate rate; or

            

    

     

    (at the Treasury’s
option)

     

    
      	
               
      

            	
              (B)

            	
              such other
      rate as the Treasury may from time to time, for the purpose of this
      Condition 8.17, notify the Participant in writing as corresponding to the
      Treasury’s cost of funds, provided
that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              such
      notification may not be retrospective (relative to Quarter Dates) and,
      accordingly, the rate applicable to any Quarter the Quarter Date for which
      occurred on or before the date of such notice shall not be affected by
      such notice; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              no more than
      one rate shall apply to any given
Quarter.

            

    

     

    
      	
              8.18

            	
              A “Quarterly Payment Date”
      means each date falling 10 Business Days after a Quarterly Statement
      Date.

            

    

     

    Agreed
Model

     

    
      	
              8.19

            	
              The “Agreed Model” is the
      spreadsheet identified as such in and attached to the Accession Agreement,
      containing the formulae for generating the following
    outputs:

            

    

     

    
      	
               
      

            	
              (A)

            	
              Quarterly
      Payables,

            

    

     

    
      	
               
      

            	
              (B)

            	
              movements in
      the Pending Account,

            

    

     

    
      	
               
      

            	
              (C)

            	
              movements in
      the Treasury Account, and

            

    

     

    
      	
               
      

            	
              (D)

            	
              amounts
      payable by the Treasury or the Participant under Condition
      8.5,

            

    

     

    from the following
inputs:

     

    
      	
               
      

            	
              (i)

            	
              the Losses
      which have occurred in each Quarter (after giving effect to Conditions
      8.11 to 8.15);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Recoveries which have been made in each Quarter (after giving effect to
      Conditions 8.11 to 8.15);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any Other
      Amount which is agreed for each Quarter;
and

            

    

     

     

    
      
        
        

      

      
        93

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (iv)

            	
              the Funding
      Rate for each Quarter.

            

    

     

    
      	
              8.20

            	
              The Treasury
      and the Participant acknowledge and agree that for the purpose of these
      Conditions, the Agreed Model shall be prima facie evidence of the intended
      operation of this Condition 8, provided that, in the event of any
      inconsistency between the Agreed Model and these Conditions, these
      Conditions shall prevail.  In the event of any such
      inconsistency, the Treasury and the Participant shall participate in good
      faith discussions with each other with a view to agreeing such amendments
      to the Agreed Model as may be required in order to eliminate the
      inconsistency.

            

    

     

     

    
      
        
        

      

      
        94

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

            	
              FEES,
      COSTS AND EXPENSES

            

    

     

    Participation
fee

     

    
      	
              9.1

            	
              The Treasury
      will charge a fee for participation in the Scheme.  The amount
      of the fee payable by the Participant to the Treasury (the “Fee”), and the manner in
      which and time at which it is to be paid or satisfied, shall be as set out
      in the Accession Agreement.

            

    

     

    Defined
terms

     

    
      	
              9.2

            	
              For the
      purposes of this Condition 9, “costs and expenses”
      shall include:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the costs and
      expenses incurred by a person:

            

    

     

    
      	
               
      

            	
              (i)

            	
              in respect of
      the employment of its employees (including the gross emoluments and all
      “Pay-As-You-Earn” and employer national insurance contributions paid in
      respect of those employees, and the out-of-pocket expenses of those
      employees incurred in the course of their employment);
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in relation
      to any other person seconded to it;
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              all legal,
      accounting, investment banking and other third party advisory fees and
      expenses incurred by that person.

            

    

     

    
      	
              9.3

            	
              “Treasury Step-In Costs” means all
      costs and expenses incurred by the Treasury, the Treasury Solicitor and
      any Government Entity, in each case arising out of or in connection with
      the exercise by the Treasury of any Step-In Rights (whether or not the
      relevant Step-In Trigger is subsequently remedied or waived) and including
      (i) any costs or expenses arising out of or in connection with the
      selection of, negotiation of terms of engagement with or the appointment
      (or termination of the appointment) of, any Step-In Manager in accordance
      with such Step-In Manager’s terms of engagement, (ii) any costs and
      expenses arising out of or in connection with the implementation of any
      recommendations made by any Step-In Manager in accordance with such
      Step-In Manager’s terms of engagement and (iii) any amounts payable to any
      Step-In Manager arising out of or in connection with the appointment (or
      termination of that appointment) of that Step-In Manager, or the
      activities of that Step-In Manager pursuant to any provision of the Scheme
      Documents.

            

    

     

    Participant’s
costs and expenses

     

    
      	
              9.4

            	
              The
      Participant shall bear (or shall procure that the members of the
      Participant’s Group and their respective Affiliates shall bear) all of the
      costs and expenses incurred by it, the other members of the Participant’s
      Group and their respective Affiliates arising out of or in connection with
      the Participant’s accession to, and participation in, the
      Scheme.

            

    

     

    
      	
              9.5

            	
              If, after the
      Signing Date, the Participant (or any member of the Participant’s Group or
      any of such member’s Affiliates) proposes to engage or continue the
      engagement of 

            

    

     

     

    
      
        
        

      

      
        95

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              after the
      Signing Date, any legal, accounting, investment banking or other third
      party adviser to provide any services directly in connection with the
      Scheme and the provision (or continued provision) of such services will or
      may result in the payment to the relevant adviser of fees in excess of
      £2,500,000 (or its equivalent in any other currency) in any 12-month
      period or during the term of the relevant engagement (a “significant adviser
      engagement”), then the Participant shall ensure that such
      engagement is undertaken in accordance with the “Adviser Engagement
      Principles” designated by the Participant and the Treasury or
      otherwise specified in the Accession
Agreement.

            

    

     

    
      	
              9.6

            	
              The
      Participant shall, in relation to any significant adviser engagement (and
      otherwise on request by the Treasury in relation to the engagement of any
      other legal, accounting, investment banking or other third party adviser
      to provide any services directly in connection with the Scheme) provide
      the Treasury with:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the identity
      of the relevant adviser together with reasonable details of the engagement
      which shall include:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the nature of
      the engagement (including details of the services to be
      provided);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a breakdown
      showing the manner in which the fees will be
  calculated;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the quantum
      (or, where this cannot be determined in advance, the Participant’s good
      faith estimate) of the proposed fees for the services to be provided;
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the analysis
      undertaken by the Participant (or the relevant member of the Participant’s
      Group or any of such member’s Affiliates) to ensure that advisory fees are
      not excessive or disproportionate and, where relevant, are in accordance
      with reasonable market fee levels, taking into account the nature of the
      services and the circumstances in which such services are to be provided;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              a certificate
      confirming that the proposed terms of the significant adviser engagement
      (including the quantum of the proposed fees) are in accordance with the
      Adviser Engagement Principles,

            

    

     

    (together, the
“adviser engagement
information”).

     

    
      	
              9.7

            	
              The
      Participant shall provide the adviser engagement information to the
      Treasury prior to entering into the relevant engagement (or, in the case
      of any such engagement which has been entered into prior to the Signing
      Date, on or prior to the Signing
Date).

            

    

     

    
      	
              9.8

            	
              The
      Participant shall, within 15 Business Days of the end of each financial
      year of the Participant, provide the Treasury with a certificate
      confirming that, except to the extent specifically disclosed in that
      certificate, the quantum of the fees paid and/or payable pursuant to each
      significant adviser engagement does not exceed that specified in the
      relevant adviser engagement
information.

            

    

     

     

    
      
        
        

      

      
        96

        
          

        

      

      
        
        

      

    

     

    Establishment
and Accession Costs

     

    
      	
              9.9

            	
              The
      Participant shall pay to the Treasury the amount calculated by the
      Treasury as being the Participant’s share of the costs and expenses
      incurred by the Treasury, the Treasury Solicitor and any other Government
      Entity:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in
      establishing the Scheme (including in establishing any Government Entity
      and any systems, controls and processes for the purposes of managing and
      administering the Scheme); and

            

    

     

    
      	
               
      

            	
              (B)

            	
              arising out
      of or in connection with the Participant’s proposed participation in, and
      accession to, the Scheme, including in respect of the negotiation,
      preparation, execution and carrying into effect of the Scheme Documents,
      due diligence, valuation and the Treasury’s determination as to the
      satisfaction by the Participant of the Participation
      Conditions,

            

    

     

    such costs and
expenses together being the “Establishment and Accession
Costs”.

     

    Management
and Administration Costs

     

    
      	
              9.10

            	
              The
      Participant shall pay to the Treasury the amount calculated by the
      Treasury as being the Participant’s share of the costs and expenses
      incurred by the Treasury, the Treasury Solicitor and any other Government
      Entity arising out of or in connection with the management and
      administration of the Scheme, including with respect
  to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the general
      overhead costs of the Treasury, the Treasury Solicitor and any other
      Government Entity (including any Government Entity established for the
      purposes of managing and administering the Scheme), including any costs
      and expenses relating to the winding-down of any functions of any such
      Government Entity whether over time or
  otherwise;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any services
      provided to or by the Treasury, the Treasury Solicitor or any other
      Government Entity in connection with the management and administration of
      the Scheme;

            

    

     

    
      	
               
      

            	
              (C)

            	
              determinations,
      consents, approvals and calculations to be made, and other rights, powers
      and discretions to be exercised, in respect of matters which are the
      subject of the Scheme Documents;
and

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      monitoring and enforcement of the Participant’s (and each member of the
      Participant’s Group’s) compliance with the Scheme Documents (including any
      Treasury Step-In Costs),

            

    

     

    
      	
               
      

            	
              such costs
      and expenses together being the “Management and Administration
      Costs”.

            

    

     

    
      	
              9.11

            	
              Without
      prejudice to any other provision of this Condition 9, as soon as
      reasonably practicable following 1 April in each year following the
      Accession Date, the Treasury will 

            

    

     

     

    
      
        
        

      

      
        97

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              provide to
      the Participant an estimate of the Participant’s share of the expected
      general overhead costs, for the year to the following 31 March, of any
      Government Entity established for the purposes of managing and
      administering the Scheme.  Such an estimate shall not be binding
      on the Treasury and, accordingly, shall not limit any amount to be paid by
      the Participant pursuant to this Condition
9.

            

    

     

    Calculation
of share of costs and expenses

     

    
      	
              9.12

            	
              In
      calculating the Participant’s share of (i) Establishment and Accession
      Costs and (ii) Management and Administration Costs, payable under this
      Condition 9, the Treasury will have regard to the following
      principles:

            

    

     

    
      	
               
      

            	
              (A)

            	
              such costs
      and expenses that the Treasury determines (acting reasonably) as being
      directly attributable to a Participant will be charged to that
      Participant;

            

    

     

    
      	
               
      

            	
              (B)

            	
              such costs
      and expenses that the Treasury determines (acting reasonably) as being not
      directly attributable to a Participant will be apportioned between
      Participants on a pro-rata basis reflecting the proportion that (i) the
      total of the Covered Amounts of the Covered Assets of that Participant and
      its Covered Entities bears to (ii) the total of the Covered Amounts of all
      Covered Assets of all Participants and their Covered Entities under the
      Scheme, in each case as at the Accession Date for each Participant
      (provided that, in respect only of Management and Administration Costs
      incurred after 31 March in each year following the Accession Date, the
      relevant apportionment shall be calculated by reference to the Outstanding
      Amounts of the Covered Assets of each Participant and its Covered Entities
      as at the previous 31 December);

            

    

     

    
      	
               
      

            	
              (C)

            	
              in
      determining the apportionment referred to in paragraph (B) above, the
      Treasury will take account of any potential Participant which it expects
      to accede to the Scheme, with a view to apportioning such costs and
      expenses on the assumption that the potential Participant does accede to
      the Scheme with the total Covered Amount of all Covered Assets of that
      potential Participant being as estimated by the Treasury at that
      time;

            

    

     

    
      	
               
      

            	
              (D)

            	
              if, in
      accordance with paragraph (C), the Treasury has determined the
      apportionment referred to in paragraph (B) on the assumption that a
      potential Participant accedes to the Scheme then the Treasury may
      subsequently adjust the amount of that apportionment in the following
      manner in the following
circumstances:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if the
      Treasury considers that the potential Participant will not accede to the
      Scheme or if that potential Participant accedes to the Scheme in respect
      of Covered Assets that have a total Covered Amount at its Accession Date
      of less than the amount assumed by the Treasury at the time of that
      apportionment, an additional amount of such costs and expenses, to be
      calculated by the Treasury, will be apportioned among and payable by the
      other Participant(s); and

            

    

     

     

    
      
        
        

      

      
        98

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              if that
      potential Participant accedes to the Scheme in respect of Covered Assets
      that have a total Covered Amount at its Accession Date of more than the
      amount assumed by the Treasury at the time of that apportionment, an
      amount of any such costs and expenses previously invoiced to Participants,
      to be calculated by the Treasury (acting reasonably), will be credited
      against the future liability of the Participants for the payment of
      Management and Administration Costs pursuant to this Condition 9;
      and

            

    

     

    
      	
               
      

            	
              (E)

            	
              if, at any
      time, the Treasury considers that a cost or expense is being unfairly
      charged to a Participant, the Treasury may make such adjustments
      (including retrospective adjustments) as it considers necessary to provide
      for a fair reallocation of that cost or
expense.

            

    

     

    Invoices

     

    
      	
              9.13

            	
              The Treasury
      (or the Treasury Solicitor or the relevant Government Entity) may deliver
      an invoice to the Participant in respect of Establishment and Accession
      Costs at any time following the Accession Date, but shall not deliver more
      than one invoice for Establishment and Accession Costs to the Participant
      in any one calendar month.

            

    

     

    
      	
              9.14

            	
              The Treasury
      (or the Treasury Solicitor or the relevant Government Entity) may deliver
      an invoice to the Participant in respect of Management and Administration
      Costs at any time following the end of the calendar month in which such
      Management and Administration Costs were incurred, but shall not deliver
      more than one invoice for Management and Administration Costs to the
      Participant in any one calendar
month.

            

    

     

    
      	
              9.15

            	
              Each invoice
      shall set out a breakdown of the Establishment and Accession Costs or
      Management and Administration Costs to which that invoice relates, but
      provided that such breakdown shall contain no more information than the
      Treasury, the Treasury Solicitor or the relevant Government Entity intends
      at that time to disclose to the public in respect of such costs and
      expenses.

            

    

     

    
      	
              9.16

            	
              The
      Participant shall pay all invoices delivered to it in respect of
      Establishment and Accession Costs and Management and Administration Costs
      within 30 days of the date on which such invoice is
    delivered.

            

    

     

    
      	
              9.17

            	
              Any failure
      by the Treasury to include a particular Establishment and Accession Cost
      or Management and Administration Cost in any invoice shall not prejudice
      the right of the Treasury to claim, and receive payment for, that cost or
      expense in accordance with this Condition
9.

            

    

     

    

    
      
        
           

        

        
          99

          
            

          

        

        
           

        

      

    

    

    PART
3: ASSET MANAGEMENT

     

    
      	
              10.

            	
              ASSET
      MANAGEMENT

            

    

     

    Asset
management: defined terms

     

    
      	
              10.1

            	
              The “Asset Management
      Objective” is to maximise the expected net present value of the
      Protected Assets, including by minimising losses and potential losses and
      maximising recoveries and potential recoveries in respect
      thereof.  For the purpose of the foregoing sentence, net present
      value shall be assessed, on a risk-adjusted basis, using a discount rate
      corresponding to the Treasury’s cost of funds, such cost of funds being
      derived at any time:

            

    

     

    
      	
               
      

            	
              (A)

            	
              from the rate
      that is the mean of the applicable new loan fixed rates for maturity loans
      and premature prepayment fixed rates for maturity loans of the Public
      Works Loan Board published on the website of the Debt Management Office of
      Her Majesty’s Government of the United Kingdom, provided that if such
      source is replaced or ceases to be available, the Treasury may specify
      another source displaying the appropriate rate;
  or

            

    

     

    (at the Treasury’s
option)

     

    
      	
               
      

            	
              (B)

            	
              from such
      other similar rate as the Treasury may from time to time, for the purpose
      of this Condition 10.1, select by giving not less than 20 Business Days’
      written notice to the Participant.

            

    

     

    
      	
              10.2

            	
              The “Asset Management
      Framework” means the written statement designated as such pursuant
      to the Accession Agreement, setting out the details referred to in
      Condition 10.22.

            

    

     

    
      	
              10.3

            	
              A “Conflict” means any
      actual or potential conflict (whether in respect of assets, exposures,
      rights, interests, duties, liabilities, obligations, risks or otherwise)
      between:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (i)

            	
              the Treasury
      in its capacity as provider of credit risk protection to the Participant
      pursuant to the Scheme (including where such conflict arises with respect
      to full compliance with the provisions of the Scheme Documents);
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any member of
      the Participant’s Group; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              (i)

            	
              any member of
      the Participant’s Group with respect to a Protected Asset (including where
      such conflict arises with respect to full compliance with the provisions
      of the Scheme Documents); and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any member of
      the Participant’s Group with respect to (a) an asset, exposure, right,
      interest, duty, liability, obligation or risk (including a Related Party
      Asset) which does not comprise a Protected Asset or
  (b)

            

    

     

     

    
      
        
        

      

      
        100

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	any
      business, activity or operation or proposed business, activity or
      operation of a member of the Participant’s
Group.

    

     

    
      	
              10.4

            	
              The “Conflicts Management
      Policy” means the written statement designated as such pursuant to
      the Accession Agreement.

            

    

     

    
      	
              10.5

            	
              The “Credit Aggregation
      Policy” means a written statement designated as such pursuant to
      the Accession Agreement, setting out the policy of the Participant’s Group
      for aggregating credit limits, credit lines or trading lines (or
      equivalent) in respect of the same counterparty or issuer or group of
      connected counterparties or
issuers.

            

    

     

    
      	
              10.6

            	
              A “Protected Asset”
      is:

            

    

     

    
      	
               
      

            	
              (A)

            	
              a
      Non-Triggered Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              a Triggered
      Asset, but excluding:

            

    

     

    
      	
               
      

            	
              (i)

            	
              any part of
      it which would be treated as if it were not a Covered Asset pursuant to
      Condition 7.26(D); and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              (in the case
      of a Covered Asset which is a Derivative Agreement where the Trigger was a
      Restructuring which has not resulted in the termination of all outstanding
      transactions governed by or comprising the Derivative Agreement) the
      Continuing Transactions;

            

    

     

    
      	
               
      

            	
              (C)

            	
              a Non-Cash
      Realisation, but excluding for the avoidance of doubt (in the case of a
      Covered Asset which is a Derivative Agreement where the Trigger was a
      Restructuring which has not resulted in the termination of all outstanding
      transactions governed by or comprising the Derivative Agreement) any
      asset, receipt, realisation, recovery, right, interest or benefit if and
      to the extent it was made, realised, received, recovered or derived by any
      Covered Entity in respect of any Continuing Transaction;
  or

            

    

     

    
      	
               
      

            	
              (D)

            	
              (for the
      purpose only of this Condition 10) a Closely Related
  Hedge.

            

    

     

    
      	
              10.7

            	
              A “Related Party Asset”
      is:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any part of a
      Triggered Asset which would be treated as if it were not a Covered Asset
      pursuant to Condition 7.26(D);

            

    

     

    
      	
               
      

            	
              (B)

            	
              an asset or
      exposure (other than a Protected Asset) of any person falling within
      paragraph (A) or (C) of the definition of Applicable Entity in respect of
      which:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the credit
      limit, credit line or trading line (or equivalent) in respect of a
      Counterparty is aggregated with the credit limit, credit line or trading
      line (or equivalent) of a Counterparty in respect of a Protected Asset
      pursuant to the Credit Aggregation Policy, or would be so aggregated if
      the Credit Aggregation Policy were to be consistently applied as
      

            

    

     

     

    
      
        
        

      

      
        101

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	between
      Protected Assets and assets and exposures (including Related Party Assets)
      that do not comprise Protected Assets; or

    

     

    
      	
               
      

            	
              (ii)

            	
              there is a
      Conflict which is required to be managed pursuant to the Conflicts
      Management Policy.

            

    

     

    For the purpose of
paragraph (i) above, an asset or exposure (other than a Protected Asset) of any
person falling within paragraph (A) or (C) of the definition of Applicable
Entity in respect of which any Counterparty (or any Group Member of any such
Counterparty) is also a Counterparty (including an Obligor) in respect of a
Protected Asset (or a Group Member of any such Counterparty) shall be deemed to
be regarded by the Credit Aggregation Policy as, prima facie, a Related Party
Asset.

     

    Asset
management: principal obligations

     

    
      	
              10.8

            	
              The
      Participant shall ensure that (i) the portfolio of Protected Assets as a
      whole, (ii) the portfolio of Protected Assets within (or, in the case of a
      Non-Cash Realisation or Closely Related Hedge, being in respect of a
      Covered Asset within) each Covered Asset Class; and (iii) each Protected
      Asset is, in each case, Managed and Administered (regardless of whether
      such Management and Administration is undertaken by a member of the
      Participant’s Group or by a Representative of a member of the
      Participant’s Group) at all times and in all
  respects:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in accordance
      with Applicable Law;

            

    

     

    
      	
               
      

            	
              (B)

            	
              in accordance
      with the Asset Management
Objective;

            

    

     

    
      	
               
      

            	
              (C)

            	
              in such a way
      so as to ensure that there is no prejudice to, discrimination against or
      disproportionate and adverse effect on the Protected Assets when compared
      with the Management and Administration of assets and exposures (including
      the Related Party Assets) which are not Protected
  Assets;

            

    

     

    
      	
               
      

            	
              (D)

            	
              in accordance
      with any provisions of the Accession Agreement relating to the Management
      and Administration of the Protected Assets (including the Asset Management
      Framework and the Conflicts Management
Policy);

            

    

     

    
      	
               
      

            	
              (E)

            	
              in a manner
      which will facilitate compliance with the Monitoring and Reporting
      Conditions and the Governance and Oversight Conditions;
  and

            

    

     

    
      	
               
      

            	
              (F)

            	
              in accordance
      with the ordinary course business and banking policies, practices and
      procedures of the Participant or other relevant member of the
      Participant’s Group (including the policies, practices and procedures
      which the Participant or other relevant member of the Participant’s Group
      would apply in the ordinary course of business when Managing and
      Administering any asset, exposure, right, interest, duty, liability,
      obligation or risk which is equivalent or similar to the relevant
      Protected Asset), to the extent consistent with (a) the business and
      

            

    

     

     

    
      
        
        

      

      
        102

        
          

        

      

      
        
        

      

    

     

    
      	 	 	banking
      policies, practices and procedures of a reasonable and prudent banking
      organisation and (b) Good Industry
Practice.

    

     

    
      	
              10.9

            	
              In the event
      of any conflict between the requirements of any of the paragraphs of
      Condition 10.8, the requirements shall apply in the order of priority in
      which they appear in that Condition such that, for example, the
      requirements of Condition 10.8(A) shall prevail to the extent that those
      requirements conflict with the ordinary course business and banking
      policies, practices and procedures of the Participant or other relevant
      member of the Participant’s Group referred to in Condition
      10.8(F).

            

    

     

    
      	
              10.10

            	
              The
      Participant shall ensure that each Related Party Asset is Managed and
      Administered and each Conflict is managed (regardless of whether such
      Management and Administration or management, as appropriate, is undertaken
      by a member of the Participant’s Group or by a Representative of a member
      of the Participant’s Group) at all times and in all respects in accordance
      with Condition 10.8 (mutatis mutandis) but only in so far as is necessary
      to ensure that the Protected Assets are Managed and Administered in
      accordance with Condition 10.8.

            

    

     

    Consideration
of disposals

     

    
      	
              10.11

            	
              As part of
      the Management and Administration of the Protected Assets, the Participant
      shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              ensure that
      it and each other relevant member of the Participant’s Group (and each of
      their respective Representatives) seeks to identify and gives due
      consideration to any potential sales, transfers or other disposals of a
      Protected Asset (or portfolio of Protected Assets) which would be
      consistent with the requirements set out in Conditions 10.8 and
      10.10;

            

    

     

    
      	
               
      

            	
              (B)

            	
              notify the
      Treasury as soon as reasonably practicable of any such potential sales,
      transfers or other disposals which it identifies, including details of the
      relevant Protected Asset (or portfolio of Protected Assets);
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              discuss any
      such potential sales, transfers or other disposals which it identifies in
      good faith with the Treasury and, in determining whether to effect any
      such potential sale, transfer or other disposal, pay due regard to the
      benefit (if any) which the Treasury agrees to make available if such sale,
      transfer or other disposal were to be
effected.

            

    

     

    Withdrawals
and disposals

     

    
      	
              10.12

            	
              Neither the
      Participant’s obligation to ensure that the Protected Assets and the
      Related Party Assets are Managed and Administered in accordance with
      Conditions 10.8 and 10.10 nor the Participant’s obligations under
      Condition 10.11 shall require, preclude or
  prohibit:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any
      withdrawal of all or part of a Non-Triggered Asset or Triggered Asset
      pursuant to and in accordance with Conditions 4.34 to
  4.37;

            

    

     

     

    
      
        
        

      

      
        103

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (B)

            	
              the full
      termination of the Scheme pursuant to Condition 4.38 or the full or
      partial termination of the Scheme pursuant to Condition 4.41;
      or

            

    

     

    
      	
               
      

            	
              (C)

            	
              any sale,
      transfer or other disposal of a Non-Triggered
  Asset.

            

    

     

    Additional
financing

     

    
      	
              10.13

            	
              The
      Participant acknowledges that, in order to comply with Conditions 10.8 and
      10.10, there may be circumstances in which a member of the Participant’s
      Group is required to provide (or make available) additional finance by
      advancing (or continuing to advance beyond the existing contractual
      maturity date) money or committing to advance (or continuing to commit to
      advance beyond the existing contractual maturity) money to an Obligor, a
      Group Member of an Obligor or another relevant person.  The
      consequences of providing (or making available) additional finance by
      advancing (or continuing to advance beyond the existing contractual
      maturity date) money or committing to advance (or continuing to commit to
      advance beyond the existing contractual maturity) money shall be taken
      into account for the purpose of determining whether such provision (or
      making available) of additional finance is required in order to comply
      with Conditions 10.8 and 10.10.

            

    

     

    
      	
              10.14

            	
              The
      Participant’s obligation to ensure that the Protected Assets and the
      Related Party Assets are Managed and Administered in accordance with
      Conditions 10.8 and 10.10 shall not require any member of the
      Participant’s Group to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              provide
      additional financing by advancing (or continuing to advance beyond the
      existing contractual maturity) money;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              make
      available additional finance by committing to advance (or continuing to
      commit to advance beyond the existing contractual maturity)
      money,

            

    

     

    if and to the
extent the money advanced would not result in a Loss, or increase the Treasury’s
exposure to Losses or potential Losses, under the Scheme.  Losses in
this Condition 10.14 are not intended to refer to Losses net of Recoveries or
potential Recoveries.

     

    Consideration
of additional financing

     

    
      	
              10.15

            	
              As part of
      the Management and Administration of the Protected Assets and the Related
      Party Assets, the Participant
shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              ensure that
      it and each other relevant member of the Participant’s Group (and each of
      their respective Representatives) seek to identify and give due
      consideration to instances where the provision (or making available) of
      additional finance by advancing (or continuing to advance beyond the
      existing contractual maturity) money or committing to advance (or
      committing to continue to advance beyond the existing contractual
      maturity) money to an Obligor, a Group Member of an Obligor or another
      relevant person would, but 

            

    

     

     

    
      
        
        

      

      
        104

        
          

        

      

      
        
        

      

    

     

    
      	 	 	for
      Condition 10.14, be consistent with the requirements set out in Conditions
      10.8 and 10.10; and

    

     

    
      	
               
      

            	
              (B)

            	
              (unless the
      relevant member of the Participant’s Group provides (or makes available)
      the additional finance notwithstanding Condition 10.14) notify the
      Treasury as soon as reasonably practicable of any such instance which it
      identifies, discuss the same in good faith with the Treasury and, in
      determining whether to provide (or make available) such additional
      finance, pay due regard to any Extended Protection Notice which the
      Treasury agrees to give if such additional finance were to be provided or
      made available.

            

    

     

    Consideration
of outsourcing

     

    
      	
              10.16

            	
              As part of
      the Management and Administration of the Protected Assets, the Participant
      shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              ensure that
      it and each other relevant member of the Participant’s Group (and each of
      their respective Representatives) seeks to identify and gives due
      consideration to any potential outsourcing of functions (including
      front-office functions requiring expertise in the Management and
      Administration of certain assets or exposures or classes of asset or
      exposure) to third parties which would be consistent with the requirements
      set out in Conditions 10.8 and
10.10;

            

    

     

    
      	
               
      

            	
              (B)

            	
              notify the
      Treasury as soon as reasonably practicable of any such potential
      outsourcing which it identifies, including details of the relevant
      Protected Asset (or portfolio of Protected Assets);
  and

            

    

     

    
      	
               
      

            	
              (C)

            	
              discuss any
      such potential outsourcing which it identifies in good faith with the
      Treasury and, in determining whether to effect any such outsourcing, pay
      due regard to the determination (if any) which the Treasury agrees to make
      for the purpose of Condition
7.20(B)(vi).

            

    

     

    Blind
Pool Assets and publicly traded securities

     

    
      	
              10.17

            	
              Without
      prejudice to Conditions 10.8 (other than paragraph (B) thereof) and 10.10,
      the Participant’s obligations to ensure that the Protected Assets are
      Managed and Administered, and to ensure that the Management and
      Administration of the Related Party Assets is undertaken so as to ensure
      that the Protected Assets are Managed and Administered, in accordance with
      the Asset Management Objective shall not apply if and to the extent that
      (and only for so long as) the relevant Protected Asset or Related Party
      Asset is Managed and Administered as a Blind Pool Asset.  This
      Condition 10.17 shall not apply to any Covered Asset, Non-Cash Realisation
      or Closely Related Hedge if and to the extent its Management and
      Administration is being undertaken by a Step-In Manager pursuant to
      Condition 32.

            

    

     

    
      	
              10.18

            	
              For the
      purposes of Conditions 10.17, 12.2 and 15.15, a Covered Asset, Protected
      Asset or Related Party Asset shall be deemed to be Managed and
      Administered as a “Blind
      Pool Asset” if:

            

    

     

     

    
      
        
        

      

      
        105

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (A)

            	
              it falls
      within (or (i) in the case of a Non-Cash Realisation, it is in respect of
      a Covered Asset which falls within or (ii) in respect of a Related Party
      Asset, it would, according to the Data Field Rules (mutatis mutandis) fall
      within) (a) the “Residential Mortgage” Covered Asset Class, (b) the
      “Consumer Finance” Covered Asset Class or (c) any other Covered Asset
      Class or category of Covered Assets, Protected Assets or Related Party
      Assets identified in the Accession Agreement as falling within this
      paragraph (A); and

            

    

     

    
      	
               
      

            	
              (B)

            	
              such
      Management and Administration (i) is being undertaken by personnel who are
      unaware (and are not authorised to access any information which will
      enable them to determine) whether or not the relevant asset or exposure
      forms part of a Covered Asset, Protected Asset or Related Party Asset or
      (ii) solely comprises a compliance, reporting or administrative function
      and does not carry with it any responsibility for, or influence over,
      strategy, risk, credit, trading or similar decisions or any conduct
      relating thereto.

            

    

     

    
      	
              10.19

            	
              Without
      prejudice to Condition 10.8, the Participant shall not be required by
      Condition 10.10 to ensure that the Management and Administration of
      Related Party Assets and Conflicts is undertaken so as to ensure that the
      Protected Assets are Managed and Administered in accordance with the Asset
      Management Objective if and to the extent that (and only for so long
      as):

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Related
      Party Assets are, or the Conflicts arise in respect of assets or exposures
      which are, publicly traded securities;
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the personnel
      who Manage and Administer the Related Party Assets, or the assets and
      exposures in respect of which the Conflicts arise, are required by
      Applicable Law to be segregated by a Chinese wall or similarly effective
      measure from the personnel who Manage and Administer the Protected
      Assets.

            

    

     

    Compliance
with contractual terms

     

    
      	
              10.20

            	
              Without
      prejudice to Conditions 10.8 (other than paragraph (B) thereof) and 10.10,
      the Participant’s obligations to ensure that the Protected Assets are
      Managed and Administered, and to ensure that the Management and
      Administration of the Related Party Assets is undertaken so as to ensure
      that the Protected Assets are Managed and Administered, in accordance with
      the Asset Management Objective shall not apply if and to the extent that
      this would require any member of the Participant’s Group (or its
      Representatives) to breach any of the terms of a Protected Asset (or the
      terms of any Permitted Arrangement to which a Protected Asset is subject)
      or Related Party Asset in effect at the relevant time if and to the extent
      that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              such terms
      were in effect as at 31 December 2008;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              the formation
      of such terms, or the amendment which gave rise to them, was effected in
      accordance with the requirements of the Scheme Documents (including
      Conditions 10.8 and 10.10).

            

    

     

     

    
      
        
        

      

      
        106

        
          

        

      

      
        
        

      

    

     

    Termination
of protection

     

    
      	
              10.21

            	
              The
      Participant’s obligation to ensure that the Protected Assets and the
      Related Party Assets are Managed and Administered in accordance with
      Conditions 10.8 and 10.10 shall not require any member of the
      Participant’s Group to undertake any conduct (other than conduct
      comprising the provision (or making available) of additional finance)
      which would terminate or reduce, or entitle the Treasury to terminate or
      reduce, the protection provided by the Treasury to the Participant under
      the Scheme in respect of a Covered Asset other than in circumstances where
      there is a corresponding termination or reduction in the exposure in
      respect of that Covered Asset.

            

    

     

    Content
of Asset Management Framework

     

    
      	
              10.22

            	
              The
      Participant shall ensure that the Asset Management
    Framework:

            

    

     

    
      	
               
      

            	
              (A)

            	
              is prepared
      on an “asset class by asset class” basis or on such other basis as the
      Treasury may agree with the Participant from time to
  time;

            

    

     

    
      	
               
      

            	
              (B)

            	
              complies with
      Applicable Law;

            

    

     

    
      	
               
      

            	
              (C)

            	
              (unless and
      to the extent that the Treasury agrees otherwise in writing) is consistent
      with the other provisions of the Scheme Documents (including the Asset
      Management Objective and the other Asset Management
      Conditions);

            

    

     

    
      	
               
      

            	
              (D)

            	
              contains the
      Conduct Approvals Hierarchy; and

            

    

     

    
      	
               
      

            	
              (E)

            	
              sets
      out:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      framework, including internal governance arrangements, for the Management
      and Administration by the Participant’s Group of the Protected Assets and
      the Related Party Assets (including the management of credit risk in
      relation thereto);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              procedures
      for regular review of the Protected Assets and the Related Party Assets;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              appropriate
      arrangements for enhancing and increasing the level and frequency of
      review of, and internal reporting in respect of, the Protected Assets and
      the Related Party Assets and for considering and taking appropriate
      remedial management steps, as Losses, or the likelihood of any or further
      Losses, increase (which arrangements may include or be based on any “watch
      list” or similar systems, controls or processes of the Participant’s Group
      established prior to the Accession Date for the purpose of monitoring
      distressed assets or exposures).

            

    

     

    Content
and application of Conflicts Management Policy

     

    
      	
              10.23

            	
              The
      Participant shall ensure that the Conflicts Management
    Policy:

            

    

     

     

    
      
        
        

      

      
        107

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              sets out
      details of the systems, controls and processes for the purposes
      of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              (where
      possible) avoiding Conflicts;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              identifying
      Conflicts as early as possible;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              monitoring,
      managing and mitigating Conflicts that arise from time to time;
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              preventing
      conduct (whether in relation to a Protected Asset, a Related Party Asset
      or otherwise) which is intended to circumvent or otherwise avoid (or has
      the effect of circumventing or otherwise avoiding) the application of the
      Conflicts Management Policy;

            

    

     

    
      	
               
      

            	
              (B)

            	
              complies with
      Applicable Law;

            

    

     

    
      	
               
      

            	
              (C)

            	
              (unless and
      to the extent that the Treasury agrees otherwise in writing) is consistent
      with the other provisions of the Scheme Documents (including the other
      Asset Management Conditions); and

            

    

     

    
      	
               
      

            	
              (D)

            	
              requires that
      any Conflict that is identified, and action taken in respect of any such
      Conflict, be recorded in writing.

            

    

     

    
      	
              10.24

            	
              The Conflicts
      Management Policy shall apply in respect of the monitoring, management and
      mitigation following the Accession Date of any Conflicts which (i) arose
      prior to the Accession Date or (ii) arise following the Accession
      Date.

            

    

     

    
      	
              10.25

            	
              The Conflicts
      Management Policy may be incorporated within the Asset Management
      Framework or other policies or strategies of the Participant but shall be
      subject to the requirements set out in this Condition
  10.

            

    

     

    Review
of Asset Management Framework and Conflicts Management Policy

     

    
      	
              10.26

            	
              The
      Participant shall ensure that each of the Asset Management Framework and
      the Conflicts Management Policy is reviewed, following the Accession Date,
      no less frequently than annually by the SOC (and, in the first year
      commencing on the Accession Date, no less frequently than every six
      months), in accordance with the Governance and Oversight Conditions, to
      determine any modifications thereto that the SOC reasonably considers to
      be necessary or appropriate for the purpose of ensuring that the Asset
      Management Framework and the Conflicts Management Policy comply with the
      Scheme Documents.

            

    

     

    Modifications
to Asset Management Framework, Conflicts Management Policy and Credit
Aggregation Policy

     

    
      	
              10.27

            	
              No
      modification to the Asset Management Framework, the Conflicts Management
      Policy  or the Credit Aggregation Policy shall be implemented or
      adopted unless:

            

    

     

     

    
      
        
        

      

      
        108

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              the
      Participant has given notice to the Treasury of the proposed
      modification;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the proposed
      modification has been approved in writing by the SOC;
  and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the proposed
      modification has been approved by the
Treasury.

            

    

     

     

     

    
      
        
        

      

      
        109

        
          

        

      

      
        
        

      

    

     

    
      	
              11.

            	
              TRANSFER
      OF ASSET MANAGEMENT RESPONSIBILITY

            

    

     

    Treasury
approval for transfer of rights, responsibilities, duties or
obligations

     

    
      	
              11.1

            	
              The
      Participant shall ensure that no member of the Participant’s Group shall
      transfer to any person, whether by way of novation, sub-contract,
      delegation or otherwise, any rights, responsibilities, duties or
      obligations in connection with the management and administration of any
      Covered Asset except with the prior approval of the Treasury (such
      approval not to be unreasonably withheld or delayed),
    unless:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the transfer
      occurred prior to the Accession
Date;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the transfer
      is not within the direct control of the Participant’s Group or any member
      thereof;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      transfer:

            

    

     

    
      	
               
      

            	
              (i)

            	
              is to a
      transferee who is, and continues to be, to a member of the Participant’s
      Group; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              is to a third
      party for the purposes of the provision of centralised shared services
      within or to the Participant’s
Group;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the transfer
      is entered into on commercially reasonable arm’s length terms
      and:

            

    

     

    
      	
               
      

            	
              (i)

            	
              can be
      terminated on notice of no more than 12-months without material cost;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              forms part of
      a Permitted Arrangement and (at the time of entering into the transfer) is
      in respect of a Non-Triggered Asset;
or

            

    

     

    
      	
               
      

            	
              (E)

            	
              it effects
      the transfer of management or administration rights, responsibilities,
      duties or obligations in respect of Covered Assets which are syndicated
      loans or similar to a third party acting as trustee, agent, paying agent,
      security agent, security trustee, liquidator, receiver, administrator or
      similar in respect of those Covered Assets and is entered into on
      commercially reasonable arm’s length
terms,

            

    

     

    provided that, in
respect of transfers within paragraph (C)(ii), (D)(i) or (to the extent
compliance with this proviso is within the direct control of the Participant’s
Group or any member thereof) paragraph (B) above, the Participant shall ensure
that the relevant member of the Participant’s Group shall:

     

    
      	
               
      

            	
              (i)

            	
              exercise due
      skill, care and diligence in selecting, and negotiating the terms of
      appointment of, the transferee taking into account all relevant factors
      including price, service standards and
  reputation;

            

    

     

     

    
      
        
        

      

      
        110

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (ii)

            	
              ensure that
      such transfer does not limit, prejudice or adversely affect in any
      material respect:

            

    

     

    
      	
               
      

            	
              (a)

            	
              its ability
      to comply with the Scheme Documents (including the Asset Management
      Conditions); or

            

    

     

    
      	
               
      

            	
              (b)

            	
              any right or
      ability of the Treasury to exercise any of the Step-In Rights or the
      ability of any Step-In Manager to carry out any of the Step-In Functions;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              without
      prejudice to the generality of paragraphs (i) and (ii) above, retain and
      exercise commercially reasonable oversight and control rights in respect
      of the conduct of the transferred rights, responsibilities, duties or
      obligations, including the ability to access or review appropriate levels
      of Information from the transferee, and exercise any other rights it may
      have against the transferee from time to time, in each case to the extent
      necessary in order to comply with paragraphs (i) and (ii)
      above.

            

    

     

    
      	
              11.2

            	
              Any transfer
      pursuant to this Condition 11 shall be without prejudice to the
      Participant’s liabilities, responsibilities, duties and obligations under
      the Scheme Documents.

            

    

     

    
      	
              11.3

            	
              For the
      avoidance of doubt, this Condition 11 does not apply to a transfer of the
      rights, responsibilities, duties or obligations in connection with the
      management and administration of a Covered Asset if and to the extent the
      Covered Asset itself (or part thereof) is sold, transferred or otherwise
      disposed of.

            

    

     

     

    
      
        
        

      

      
        111

        
          

        

      

      
        
        

      

    

     

     

    
      	
              12.

            	
              PROHIBITED
      CONDUCT

            

    

     

    Prohibited
Conduct

     

    
      	
              12.1

            	
              The
      Participant shall ensure that no Prohibited Conduct occurs following the
      Accession Date.

            

    

     

    
      	
              12.2

            	
              “Prohibited Conduct” is
      any conduct relating to a Covered Asset, Related Party Asset or Closely
      Related Hedge which would constitute or
cause:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the release
      of any Security, guarantee, indemnity or collateral held by, or given for
      the benefit of, any Applicable Entity or other person for a Covered
      Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              (if and to
      the extent it does not give rise to a Recovery) any return of value on
      equity (including any share, equity security or other equity interest and
      whether by way of declaration or payment of any dividend, distribution
      (whether or not in cash) or otherwise) by any Obligor of any Covered Asset
      to any Applicable Entity, other than any return of value that,
      irrespective of such conduct, the Obligor was obliged (as at the Accession
      Date) by written contract to make;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the sale,
      transfer or other disposal (including by way of an Undertaking Disposal)
      of the whole or any part of any Triggered Asset(s) and/or any Non-Cash
      Realisation(s), other than any sale, transfer or other disposal (not being
      an Undertaking Disposal) by one member of the Participant’s Group to
      another member of the Participant’s Group;
or

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      amendment, replacement or termination of any Closely Related
      Hedge,

            

    

     

    in each case excepting any such conduct
which:

     

    
      	
               
      

            	
              (i)

            	
              falls within
      paragraph (A) above (and does not fall within paragraph (B), (C) or (D)
      above) and constitutes the management and administration of the Covered
      Asset or Related Party Asset (as the case may be) as a Blind Pool
      Asset;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              has been
      approved or consented to in accordance with the Conduct Approvals
      Hierarchy; or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              is not
      approved, or agreed or consented to, by any member of the Participant’s
      Group or any of its Representatives and could not be prevented by any
      member of the Participant’s Group or the members of the Participant’s
      Group.

            

    

     

    Conduct
Approvals Hierarchy

     

    
      	
              12.3

            	
              The Asset
      Management Framework shall set out a hierarchy of approvals (the “Conduct Approvals
      Hierarchy”) with which the Participant shall comply (and with which
      it shall procure compliance by its Representatives and each other member
      of the 

            

    

     

     

    
      
        
        

      

      
        112

        
          

        

      

      
        
        

      

    

     

     

    
      	 	Participant’s
      Group and their respective Representatives) in respect of any proposed
      conduct which would be Prohibited Conduct if undertaken without first
      obtaining the requisite approval or consent specified therein (“Conduct Requiring
      Approval”).

    

     

    
      	
              12.4

            	
              The Conduct
      Approvals Hierarchy shall set out certain thresholds which shall determine
      which of the persons or bodies specified below must approve or consent to
      any Conduct Requiring Approval:

            

    

     

    
      	
               
      

            	
              (A)

            	
              certain
      categories of personnel of the Participant’s Group specified in the
      Conduct Approvals Hierarchy;

            

    

     

    
      	
              
              

            	
              (B) 

            	
              a member of
      the Scheme Executive Team;

            

    

     

    
      	
              
              

            	
              (C) 

            	
              the Scheme
      Head;

            

    

     

    
      	
              
              

            	
              (D) 

            	
              the SOC;
      or

            

    

     

    
      	
              
              

            	
              (E) 

            	
              the
      Treasury,

            

    

     

    provided
that:

     

    
      	
               
      

            	
              (i)

            	
              conduct which
      falls within paragraph (A), (B) or (C) (and does not fall within paragraph
      (D)) of Condition 12.2 and constitutes or forms part of a Restructuring
      which is the Trigger for a Covered Asset;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              conduct which
      is necessary in order to ensure that the relevant member of the
      Participant’s Group does not breach (i) Applicable Law  or (ii)
      the requirements of any of the agreements or instruments relating (or to
      the extent relating) to the relevant Covered Asset or Related Party Asset
      which are binding on that member of the Participant’s Group (provided such
      requirements were in existence and binding on that member of the
      Participant’s Group as at the Accession
Date),

            

    

     

    shall not, for the
purpose of the Conduct Approvals Hierarchy, require the approval or consent of
the Treasury.

     

    
      	
              12.5

            	
              The grant by
      the Treasury of any approval or consent in respect of any Conduct
      Requiring Approval shall constitute confirmation that the relevant conduct
      is not Prohibited Conduct and shall not constitute any other confirmation,
      approval or waiver.

            

    

     

    
      	
              12.6

            	
              Compliance
      with the Conduct Approvals Hierarchy in respect of any Conduct Requiring
      Approval shall not relieve the Participant of any of its obligations to
      ensure that such conduct complies with the Asset Management
      Conditions.

            

    

     

     

    
      
        
        

      

      
        113

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                13.

              	
                OTHER
      RESTRICTIONS AND COVENANTS REGARDING
ASSETS

              

      

    

     

    Negative
pledge

     

    
      	
              13.1

            	
              The
      Participant shall ensure that, save
for:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any Permitted
      Arrangement;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any Security
      arising by operation of law or otherwise in circumstances where it is not
      approved, or agreed or consented to, by any member of the Participant’s
      Group or any of its Representatives and could not be prevented by any
      member of the Participant’s Group or the members of the Participant’s
      Group; or

            

    

     

    
      	
               
      

            	
              (C)

            	
              any Security
      constituting a lien or set-off arising in the ordinary course of business
      and pursuant to customary terms and
conditions,

            

    

     

    no member of the
Participant’s Group will do any of the following:

     

    (i)           grant
any Security over any Covered Asset;

     

    
      	
               
      

            	
              (ii)

            	
              permit any
      Covered Asset to become subject to any
Security;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              become a
      party to any order, agreement or instrument under which it is or may be
      required to create, assume or permit to arise any Security over any
      Covered Asset; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              permit any
      Covered Asset to become bound by any such order, agreement or
      instrument,

            

    

     

    in each case
(subject to Condition 39.4) without the prior written consent of the
Treasury.

     

    Release
of Permitted Arrangements upon Trigger

     

    
      	
              13.2

            	
              As soon as
      reasonably practicable (having regard to the shortest period of time
      within which any applicable release, withdrawal, buy-back or similar right
      existing under the relevant agreements or instruments, or Applicable Law,
      may be exercised and given effect to) after the date on which a Trigger
      occurs in respect of a Covered Asset, and in any event no later than the
      date falling 20 Business Days after the date on which a Trigger occurs in
      respect of that Covered Asset, the Participant shall ensure
      that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any Permitted
      Arrangement falling within Condition 4.21(A) to which that Covered Asset
      or any Non-Cash Realisation in respect of that Covered Asset (or, in each
      case, any part thereof) is subject is released and discharged in full in
      so far as it relates to that Covered Asset or Non-Cash Realisation (or
      part thereof); and

            

    

     

     

    
      
        
        

      

      
        114

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              a Covered
      Entity Owns, and is able to control (directly or indirectly) the
      management and administration of, the whole of that Covered Asset and any
      Non-Cash Realisation in respect of that Covered Asset (save to the extent
      that the rights, responsibilities, duties or obligations with respect to
      the management and administration of the asset or exposure are transferred
      in accordance with Condition 11 and such transfer is not in connection
      with a Permitted Arrangement falling within Condition
      4.21(A)).

            

    

     

    
      	
              13.3

            	
              Condition
      13.2 shall not require the discharge of any Security referred to in
      Condition 13.1(B).

            

    

     

    
      	
              13.4

            	
              As soon as
      reasonably practicable (having regard to the shortest period of time
      within which any applicable release, withdrawal, buy-back or similar right
      existing under the relevant agreements or instruments, or Applicable Law,
      may be exercised and given effect to) after the date on which a Trigger
      occurs in respect of a Covered Asset, and in any event no later than the
      date falling 90 days after the date on which a Trigger occurs in respect
      of that Covered Asset, the Participant shall ensure
  that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any Permitted
      Arrangement falling within paragraph (B), (C) or (D) of Condition 4.21 to
      which that Covered Asset or any Non-Cash Realisation in respect of that
      Covered Asset (or, in each case, any part thereof) is subject is released
      and discharged in full in so far as it relates to that Covered Asset or
      Non-Cash Realisation (or part thereof);
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              a Covered
      Entity Owns, and is able to control (directly or indirectly) the
      management and administration of, the whole of that Covered Asset and any
      Non-Cash Realisation in respect of that Covered Asset (save to the extent
      that the rights, responsibilities, duties or obligations with respect to
      the management and administration of the asset or exposure are transferred
      in accordance with Condition 11 and such transfer is not in connection
      with a Permitted Arrangement falling within paragraph (B), (C) or (D) of
      Condition 4.21).

            

    

     

    
      	
              13.5

            	
              Condition
      13.4 shall not apply to any Covered Asset (i) if and for so long as it is
      the subject of a Restricted Securitisation or a Restricted Conduit or (ii)
      if it is a CP Funding Agreement.

            

    

     

    Hedging

     

    
      	
              13.6

            	
              Save as may
      be consented to by the Treasury from time to time, the Participant shall
      ensure that no member of the Participant’s Group shall enter into any
      arrangement, or (to the extent within its control) allow any arrangement
      entered into by a member of the Participant’s Group to continue, in each
      case where any purpose of the arrangement is (directly or indirectly),
      following the occurrence of a Trigger, to hedge, or otherwise mitigate the
      credit risk in respect of, all or part of the financial interest of the
      relevant member of the Participant’s Group in its 10 per cent. share of
      Recoveries (other than Recoveries made when the balances of both the
      Pending Account and the Treasury Account are zero) and whether such
      arrangement relates to all or any of the Covered
  Assets.

            

    

     

     

    
      
        
        

      

      
        115

        
          

        

      

      
        
        

      

    

     

     

    
      	
              13.7

            	
              Condition
      13.6 shall not restrict any member of the Participant’s Group from
      entering into or maintaining any Closely Related Hedges or any
      back-to-back risk transfer arrangements entered into between the members
      of the Participant’s Group in respect of the Covered
    Assets.

            

    

     

    

    
      
        
           

        

        
          116

          
            

          

        

        
           

        

      

    

    

    PART
4: MONITORING, REPORTING AND PROVISION OF DATA

     

    
      	
              14.

            	
              GENERAL
      PROVISIONS REGARDING MONITORING AND
REPORTING

            

    

     

    Basic
principles of monitoring and reporting

     

    
      	
              14.1

            	
              The
      Participant shall engage in a constructive, open and transparent dialogue
      with the Treasury and its Representatives in relation to its participation
      in the Scheme and its compliance with the Scheme
  Documents.

            

    

     

    
      	
              14.2

            	
              The
      Participant acknowledges that compliance with the Monitoring and Reporting
      Conditions is required (among other things) to enable and assist the
      Treasury: 

            

    

     

    
      	
               
      

            	
              (A)

            	
              to monitor
      and assess compliance by the Participant and each member of the
      Participant’s Group (and their respective Representatives) with the Scheme
      Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              to oversee
      the management and operation of the Scheme (including (i) to verify that
      assets and exposures meet the Asset Eligibility Criteria and the Asset
      Continuity Requirements in relation to any amendment or instrument
      relating (or to the extent relating) to the assets and exposures forming
      part of a Covered Asset, (ii) to ensure that the arrangements for
      calculation of payments to be made pursuant to the Scheme Documents can
      operate effectively and the quantum of such payments can be accurately
      verified and (iii) to monitor the performance and expected performance of
      each Covered Asset); and

            

    

     

    
      	
               
      

            	
              (C)

            	
              to fulfil any
      of the Treasury Permitted Purposes.

            

    

     

    General
obligations relating to monitoring and reporting

     

    
      	
              14.3

            	
              The
      Participant shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              monitor and
      assess compliance by it and each member of the Participant’s Group (and
      their respective Representatives) with the Scheme
    Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              monitor the
      performance and expected performance of the Covered Assets (including in
      respect of the occurrence of any Trigger and the associated Trigger Date,
      and Losses, Recoveries and
Realisations);

            

    

     

    
      	
               
      

            	
              (C)

            	
              develop and
      maintain such reporting systems, controls and processes as are necessary
      to ensure that the Participant and each member of the Participant’s Group
      (and their respective Representatives) comply with the Scheme Documents
      (including by (i) identifying each Covered Asset and each Related Party
      Asset as such in its systems and attributes of such Covered Assets and
      Related Party Assets which are relevant to compliance with the Scheme
      Documents and (ii) taking all measures necessary to ensure the accurate
      quantification of payments to be made pursuant to the Scheme
      Documents);

            

    

     

     

    
      
        
        

      

      
        117

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (D)

            	
              ensure
      appropriate finance and risk reporting in relation to the Covered Assets
      at the business level in accordance with its ordinary business practices
      as a reasonable and prudent banking organisation;
  and

            

    

     

    
      	
               
      

            	
              (E)

            	
              ensure that
      it has the ability to report internally and to the Treasury on the Covered
      Assets in each case on an aggregate basis separately from other assets and
      exposures.

            

    

     

    Required
format of Scheme Information

     

    
      	
              14.4

            	
              All Scheme
      Information shall be produced or delivered in the format specified in the
      Scheme Documents or, if no such format has been so specified (or agreed
      between the Participant and the Treasury from time to time), in such a
      format as the Treasury reasonably considers to be appropriate for the
      purposes for which the Scheme Information is required to be produced or
      delivered (after consulting with the
    Participant).  

            

    

     

    
      	
              14.5

            	
              If the
      Treasury or the Participant proposes any modification to a specified or
      agreed format for production or delivery of any Scheme Information, the
      Treasury and the Participant shall consult with each other in good faith
      (acting reasonably) to seek to agree such
  modification.

            

    

     

    Standard
of Information

     

    
      	
              14.6

            	
              If and to the
      extent that any Information required to be produced or delivered to the
      Treasury on (or on or before) a day pursuant to the Scheme Documents
      constitutes Information which any member of the Participant’s Group is
      required by Applicable Law or Accounting Standards to publish, issue or
      release on (or on or before) that day or include in any reports or
      accounts published, issued or released by a member of the Participant’s
      Group on or before that day, then the Participant shall ensure that any
      such Information produced or delivered to the Treasury is prepared to at
      least the same standard as would be required for such publication, issue,
      release or inclusion.

            

    

     

    Information
procedures

     

    
      	
              14.7

            	
              Each of the Treasury and the
      Participant shall liaise with each other in relation to any requests for,
      and the delivery of any, Information pursuant to the Scheme Documents and
      shall seek to establish suitable procedures for logging and tracking any
      Information requests and deliveries. 

            

    

     

    No
implied or other duties of disclosure

     

    
      	
              14.8

            	
              The duties of
      disclosure of the members of the Participant’s Group in respect of any
      fact, matter or circumstance arising out of or in relation to the Scheme,
      or any Covered Asset or Related Party Asset, are limited to those
      requirements expressly set out in these Conditions and the other Scheme
      Documents and exclude any
      other duties to provide or disclose information to the Treasury, or any
      other person, whether implied by law or otherwise arising under or
      pursuant to any Applicable
Law.

            

    

     

     

    
      
        
        

      

      
        118

        
          

        

      

      
        
        

      

    

     

    Public
disclosure

     

    
      	
              14.9

            	
              The
      Participant shall ensure that any public financial statements published by
      it or any other member of the Participant’s Group
  shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              comply with
      best industry practice in relation to the public financial statements of
      banking institutions; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              implement and
      be consistent with any code or statement of best practice on public
      disclosure for authorised deposit-takers and other banking institutions
      that may be published by the FSA from time to
  time.

            

    

     

    
      	
              14.10

            	
              As soon as
      reasonably practicable following the Accession Date, the Participant shall
      enter into discussions with the Treasury, each acting in good faith, for
      the purposes of establishing whether and in what way processes and
      procedures can be developed in relation to the public financial statements
      of banking institutions to ensure that such public financial statements,
      so far as possible:

            

    

     

    
      	
               
      

            	
              (A)

            	
              enable
      investors to assess:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the quality
      of the assets and liabilities of banking institutions and their
      groups;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the financial
      position and performance of banking institutions and their
      groups;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the nature
      and extent of risks arising from financial instruments to which banking
      institutions and their groups are exposed and the manner in which such
      risks are managed; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the impact of
      the Scheme on the assets and liabilities of the Participant and the
      Participant’s Group; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              are
      comparable as between similar banking
  institutions.

            

    

     

    
      	
              14.11

            	
              For the
      purpose of Condition 14.9, “best industry practice”
      means the level of skill, care, diligence, prudence, foresight, expertise
      and experience consistent with the standards which would ordinarily be
      adhered to by a prudent banking institution in the ordinary course of its
      business, taking account of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              applicable
      corporate governance and corporate responsibility
    principles;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any published
      guidance or recommendations (including guidance or recommendations from
      any Authority in the United Kingdom) relating to good industry practice in
      the banking and financial sectors as may be published from time to time;
      and

            

    

     

     

    
      
        
        

      

      
        119

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (C)

            	
              other
      guidelines, recommendations, methods, practices or procedures which would
      be adopted or complied with from time to time by a prudent banking
      institution in the ordinary course of its
  business.

            

    

     

     

     

    
      
        
        

      

      
        120

        
          

        

      

      
        
        

      

    

     

     

    
      	
              15.

            	
              PROVISION
      OF INFORMATION AND REPORTS TO THE
TREASURY

            

    

     

    General
obligation to provide Information; Requested Reports

     

    
      	
              15.1

            	
              The
      Participant shall provide to the Treasury such Information in connection
      with the Scheme (or which is otherwise required by the Treasury for the
      purposes specified in Condition 14.2) as the Treasury may request from
      time to time, including Information
regarding:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Covered
      Assets (including with respect to the nature or occurrence of Triggers and
      the nature and quantum of Losses, Recoveries and Realisation Expenses),
      Related Party Assets and Conflicts;

            

    

     

    
      	
               
      

            	
              (B)

            	
              compliance
      with the Scheme Documents (including the systems, controls, processes,
      practices and policies of the Participant’s Group relating to the Covered
      Assets, Related Party Assets, Conflicts and the Scheme);
    and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      Participant’s Group or any member thereof (including with respect to the
      financial condition, business and affairs of the Participant’s
      Group).

            

    

     

    
      	
              15.2

            	
              Without
      prejudice to the generality of Condition 15.1, the Treasury may from time
      to time require the Participant to produce and deliver a report containing
      Information relating to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the manner
      and extent to which, and the steps taken by any member of the
      Participant’s Group to ensure that,
it:

            

    

     

    
      	
               
      

            	
              (i)

            	
              is adequately
      capitalised and funded or has a realistic plan for accessing adequate
      capital and funding;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              has a
      sustainable business model and delivery plan and demonstrable ability to
      deliver such business model and delivery plan;
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              has a
      broad-based and sustainable funding profile, sources and
    mix;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      performance of any Covered Asset or Covered Asset Class over any period,
      whether or not by reference to the performance of any market index or
      other benchmark or performance target for such Covered
    Assets;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      performance targets and metrics used by the Participant (or any other
      member of the Participant’s Group) to measure or assess the performance of
      the Covered Assets within any Covered Asset Class and/or the procedures
      employed by the Participant (or any other member of the Participant’s
      Group) for the review and, if appropriate, resetting of such targets and
      metrics;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      investment objectives and strategies employed by the Participant (or any
      other member of the Participant’s Group) in connection with the Management
      and Administration of any Covered Asset
Class;

            

    

     

     

    
      
        
        

      

      
        121

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (E)

            	
              Rollovers;

            

    

     

    
      	
               
      

            	
              (F)

            	
              the
      satisfaction of the Asset Eligibility Criteria and the Asset Continuity
      Requirements with respect to any Covered
Asset;

            

    

     

    
      	
               
      

            	
              (G)

            	
              details of
      the criteria applied by the Participant in
  determining:

            

    

     

    
      	
               
      

            	
              (i)

            	
              whether an
      amendment or replacement of any applicable agreement or instrument
      relating to the assets and exposures comprising a Covered Asset increases
      the expected loss with respect to that Covered Asset pursuant to Condition
      4.5(D)(iii)(b);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              whether a new
      obligor is an individual who has a close connection with an old obligor
      pursuant to Condition
4.5(D)(iii)(c);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              whether a
      Covered Asset is recorded as charged off in the systems of the relevant
      Covered Entity pursuant to Condition 5.16(B);
or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the date on
      which an event described in Condition 5.16(A)(ii) occurs in respect of the
      relevant Covered Entity pursuant to Condition
  5.17(A);

            

    

     

    
      	
               
      

            	
              (H)

            	
              the
      withdrawal of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      Non-Triggered Asset or a Vertical Slice of a Non-Triggered Asset from the
      Scheme; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a Triggered
      Asset during the Withdrawal Determination
  Period;

            

    

     

    
      	
               
      

            	
              (I)

            	
              any sale,
      transfer or other disposal of the whole or any part of any Triggered Asset
      or any Non-Cash Realisation;

            

    

     

    
      	
               
      

            	
              (J)

            	
              any hedging
      arrangements (including any credit default swaps, credit-linked bonds or
      notes, sub-participation agreements, guarantees and similar credit risk
      mitigants) entered into in respect of Covered
  Assets;

            

    

     

    
      	
               
      

            	
              (K)

            	
              any apparent
      material trends, or material variations from prior trends, in respect of
      Losses and Recoveries and any material anticipated trends in respect of
      Losses and Recoveries for future
periods;

            

    

     

    
      	
               
      

            	
              (L)

            	
              any events or
      circumstances which have materially affected the level of Losses and
      Recoveries in respect of Covered Assets in aggregate or in respect of
      Covered Assets within particular Covered Asset Classes, and any events or
      circumstances considered by the Participant to be reasonably likely to
      occur in future periods which could result in a material increase or
      decrease, as the case may be, in the level of such Losses and Recoveries
      when compared with previous
periods;

            

    

     

     

    
      
        
        

      

      
        122

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (M)

            	
              any Initial
      Data, Post-Accession Data, Quarterly Statement Data
      or  Notification Report provided to the
  Treasury;

            

    

     

    
      	
               
      

            	
              (N)

            	
              any material
      impact (actual or estimated, as appropriate) of any modifications that
      have occurred or are proposed to be made to, or failures of or
      deficiencies in, reporting methodologies or any other systems, processes
      and controls relating to Covered Assets, Related Party Assets, Conflicts
      or the Scheme;

            

    

     

    
      	
               
      

            	
              (O)

            	
              the impact of
      any material modifications that have been made, or are proposed to be
      made, to the Asset Management Framework, the Conflicts Management Policy,
      the Remuneration Policy, the Detailed Organisational Structure, the
      Transitional Exceptions Document or the manner in which any of them is
      being implemented;

            

    

     

    
      	
               
      

            	
              (P)

            	
              any
      circumstances in respect of which the Treasury considers that the
      Management and Administration of the Covered Assets or Related Party
      Assets is failing to comply with the Asset Management
      Conditions;

            

    

     

    
      	
               
      

            	
              (Q)

            	
              the
      deliberations of any risk committee or credit committee (or any equivalent
      body or forum) of any member of the Participant’s Group with respect to
      any matters relating to Covered Assets, Related Party Assets or
      Conflicts;

            

    

     

    
      	
               
      

            	
              (R)

            	
              any
      consultation with the European Commission or any Authority in relation to
      any material matter related to or in connection with the Scheme (which may
      include Information not relating to the Covered Assets or the Scheme to
      the extent required in connection with any state aid or other matters
      within the jurisdiction of the relevant Authority);
  or

            

    

     

    
      	
               
      

            	
              (S)

            	
              the impact of
      any Other Protection Scheme on the Participant’s participation in the
      Scheme or on any Covered Assets.

            

    

     

    
      	
              15.3

            	
              Any
      Information required to be produced and delivered to the Treasury pursuant
      to Condition 15.1 or Condition 15.2 constitutes a “Requested
      Report”.

            

    

     

    
      	
              15.4

            	
              The
      Participant shall produce and deliver any Requested Report by such time or
      times as may be specified by the Treasury having regard to the matters
      described in Conditions 15.17 and
15.18.

            

    

     

    
      	
              15.5

            	
              The Treasury
      may require a Requested Report to include a qualitative narrative
      discussion and analysis in respect of the matters which are the subject of
      the relevant report.

            

    

     

    
      	
              15.6

            	
              The
      Participant shall deliver a Compliance Certificate to the Treasury with
      each Requested Report.

            

    

     

     

    
      
        
        

      

      
        123

        
          

        

      

      
        
        

      

    

     

    Notification
Reports

     

    
      	
              15.7

            	
              The
      Participant shall, as soon as reasonably practicable after it has become
      aware of the relevant matter (taking into account the development of
      systems in accordance with the Transitional Exceptions Document), give
      notice in writing and deliver reasonable details to the Treasury
      of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      occurrence of any Remedy Event and the existence of any circumstances that
      it considers will or are reasonably likely to result in a Remedy
      Event;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any material
      breach of the Scheme Documents (including the Asset Management
      Conditions);

            

    

     

    
      	
               
      

            	
              (C)

            	
              any material
      breach of Applicable Law or Accounting Standards which could have a
      material impact on (i) any Covered Asset, (ii) any portfolio of Covered
      Assets or (iii) Covered Assets within a Covered Asset
    Class;

            

    

     

    
      	
               
      

            	
              (D)

            	
              any Conflict
      which could have a material impact on (i) any Covered Asset, (ii) any
      portfolio of Covered Assets or (iii) the Covered Assets within a Covered
      Asset Class;

            

    

     

    
      	
               
      

            	
              (E)

            	
              a Covered
      Entity ceasing to be a Covered Entity for any
  reason;

            

    

     

    
      	
               
      

            	
              (F)

            	
              the
      occurrence of any Step-In Trigger or circumstance that it considers will
      or is likely to result in the occurrence of any Step-In
      Trigger;

            

    

     

    
      	
               
      

            	
              (G)

            	
              the
      implementation or amendment of any policy, practice or procedure by any
      member of the Participant’s Group, where a substantial percentage of the
      assets or exposures affected by that policy, practice or procedure (or the
      amendment thereto) are Covered Assets to which Condition 10.17 applies or
      Related Party Assets to which Condition 10.19
  applies;

            

    

     

    
      	
               
      

            	
              (H)

            	
              any material
      change to Applicable Law, Good Industry Practice or Accounting Standards
      (in each case, as compared with those prevailing at the Accession Date)
      which the Participant reasonably considers is likely to have a material
      adverse effect on (i) any member of the Participant’s Group, (ii) any
      Covered Asset, (iii) any portfolio of Covered Assets or (iv) the Covered
      Assets within a Covered Asset Class (and a description of that effect), or
      which the Participant reasonably considers is likely to result in the
      Participant or any other member of the Participant’s Group becoming unable
      lawfully to perform any of its obligations under the Scheme
      Documents;

            

    

     

    
      	
               
      

            	
              (I)

            	
              any material
      litigation, disciplinary or enforcement proceedings being commenced by any
      third party (including any Authority) against any member of the
      Participant’s Group which the Participant reasonably considers is likely
      to have a material adverse effect on (i) the Participant’s Group, (ii) any
      Covered Asset, (iii) any portfolio of Covered Assets or (iv) the Covered
      Assets within a Covered Asset Class (and a description of that effect), or
      which the Participant 

            

    

     

     

    
      
        
        

      

      
        124

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	
              reasonably
      considers is likely to result in the Participant or any other member of
      the Participant’s Group becoming unable to perform any of its obligations
      under the Scheme Documents (it being understood that litigation or other
      proceedings between a member of the Participant’s Group and an Obligor in
      relation to a Covered Asset shall not, of itself, require disclosure under
      this paragraph (I));

            

    

     

    
      	
               
      

            	
              (J)

            	
              any proposed
      material reorganisation of the Participant’s
  Group;

            

    

     

    
      	
               
      

            	
              (K)

            	
              a member of
      the Participant’s Group being unable to pay its debts or otherwise
      becoming, or being declared,
insolvent;

            

    

     

    
      	
               
      

            	
              (L)

            	
              other than in
      connection with a solvent voluntary
winding-up:

            

    

     

    
      	
               
      

            	
              (i)

            	
              an order
      being made, petition presented or resolution passed for, or the convening
      of any meeting for the purpose of, the winding up of a member of the
      Participant’s Group; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              steps being
      taken for the appointment of an administrator or receiver (including an
      administrative receiver) or similar insolvency practitioner of all or any
      part of the assets of a member of the Participant’s Group;
    and

            

    

     

    
      	
               
      

            	
              (M)

            	
              by reason of
      actual or anticipated financial difficulties, the commencement of
      negotiations between any member of the Participant's Group and any of its
      creditors or any class of its creditors with a view to rescheduling any of
      its indebtedness or the making or proposal of any arrangement or
      composition with its creditors or any class of its
    creditors,

            

    

     

    any such notice,
together with any notice required to be given under Condition 15.16(B), being a
“Notification
Report”.

     

    
      	
              15.8

            	
              The
      Participant shall deliver a Compliance Certificate to the Treasury with
      each Notification
      Report.

            

    

     

    Reconciliation
Statements

     

    
      	
              15.9

            	
              The
      Participant shall deliver a Reconciliation Statement to the Treasury on
      each date on which Post-Accession Data (or any updates or corrections
      thereto) are delivered to the
Treasury.

            

    

     

    
      	
              15.10

            	
              The
      Participant shall state the Reconciliation Statement as at the date at
      which the relevant Post-Accession Data (or any updates or corrections
      thereto) are stated.

            

    

     

    
      	
              15.11

            	
              The
      Participant shall deliver any updates or corrections to a Reconciliation
      Statement as soon as reasonably practicable following the delivery to the
      Treasury of such Reconciliation
Statement.

            

    

     

     

    
      
        
        

      

      
        125

        
          

        

      

      
        
        

      

    

     

     

    
      	
              15.12

            	
              A “Reconciliation
      Statement” is a statement, in a form approved by the Treasury,
      comprising a list of the Covered Assets which have permanently ceased to
      be Covered Assets since the delivery of the most recent Post-Accession
      Data, indicating in respect of each such Covered Asset whether that
      Covered Asset has permanently ceased to be a Covered Asset by reason
      of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the operation
      of Condition 4.4 following a failure to satisfy the Asset Continuity
      Requirements in respect of that Covered
Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the operation
      of Condition 4.9 following that Covered Asset ceasing to satisfy any of
      the Asset Eligibility Criteria, including by reason
  of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a sale,
      transfer or other disposal of that Covered Asset;
  or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the full
      discharge of all outstanding obligations in respect of that Covered Asset,
      including in connection with the Covered Asset maturing or being fully
      prepaid;

            

    

     

    
      	
               
      

            	
              (C)

            	
              in respect of
      a Disposed Slice of that Covered Asset, the operation of Condition 4.31
      following that Disposed Slice ceasing to satisfy any of the Asset
      Eligibility Criteria (in which case the Disposed Slice of that Covered
      Asset which has ceased to satisfy any of the Asset Eligibility Criteria
      shall be indicated in the Reconciliation
  Statement);

            

    

     

    
      	
               
      

            	
              (D)

            	
              that Covered
      Asset (or a Vertical Slice thereof) having been subject to a Pre-Trigger
      Withdrawal Notice pursuant to Condition
4.34;

            

    

     

    
      	
               
      

            	
              (E)

            	
              that Covered
      Asset having been subject to a Post-Trigger Withdrawal Notice pursuant to
      Condition 4.36;

            

    

     

    
      	
               
      

            	
              (F)

            	
              that Covered
      Asset having been subject to a written notice from the Treasury pursuant
      to Condition 4.48;

            

    

     

    
      	
               
      

            	
              (G)

            	
              the operation
      of Conditions 8.11 to 8.15;

            

    

     

    
      	
               
      

            	
              (H)

            	
              that Covered
      Asset having been subject to a written notice from the Treasury pursuant
      to Condition 17.9;

            

    

     

    
      	
               
      

            	
              (I)

            	
              the operation
      of Condition 31.21(A) following that Covered Asset having been designated
      as a Partial Termination Asset;

            

    

     

    
      	
               
      

            	
              (J)

            	
              the operation
      of Condition 31.22(A) following that Covered Asset having been designated
      as a Full Termination Asset; or

            

    

     

    
      	
               
      

            	
              (K)

            	
              any other
      reason,

            

    

     

    and such other
Information as the Treasury may require to be included in a Reconciliation
Statement.

     

     

    
      
        
        

      

      
        126

        
          

        

      

      
        
        

      

    

     

    
      	
              15.13

            	
              The
      Participant shall deliver a Compliance Certificate to the Treasury with
      each Reconciliation Statement.  Any such Compliance Certificate
      may be subject only to qualifications
which:

            

    

     

    
      	
               
      

            	
              (A)

            	
              are contained
      in that Compliance Certificate; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              describe in
      reasonable detail:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the nature
      and extent of the qualifications being made (including the specific items
      of Information to which they apply);
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the reasons
      why it was not possible to provide the relevant Information on an
      unqualified basis.

            

    

     

    Conflicts
Certificates

     

    
      	
              15.14

            	
              Subject to
      Condition 15.15, if aggregate Losses in respect of any Covered Asset (as
      reported as at any Quarter Date) exceed £10 million (or such higher amount
      as may be notified by the Treasury to the Participant from time to time),
      the Participant shall deliver to the Treasury (at the same time as the
      next Quarterly Statement delivered following such Quarter Date) a
      certificate (the “Conflicts Certificate”)
      that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              identifies
      that Covered Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              confirms that
      all agreements, transactions or arrangements entered into or effected
      either (i) in connection with the Management and Administration of that
      Covered Asset or any Related Party Asset or (ii) which constitute, create
      or give rise to any Conflict, in either case during the period from and
      including the Initial Event Date to and including the Trigger Date (the
      “relevant period”)
      in respect of that Covered Asset were commercially fair and reasonable and
      on arm's length terms;

            

    

     

    
      	
               
      

            	
              (C)

            	
              confirms that
      the Participant has complied with Condition 10.10 in relation to that
      Covered Asset at all times during the relevant period;
  and

            

    

     

    
      	
               
      

            	
              (D)

            	
              is signed by
      the Scheme Head (or another member of the Scheme Executive Team acceptable
      to the Treasury) and confirms that to the best of his or her knowledge and
      belief, having made all due and reasonable enquiries, the Conflicts
      Certificate is true and accurate, fairly presents the Information it
      contains and is not misleading for the purpose for which it is
      prepared.

            

    

     

    
      	
              15.15

            	
              The
      requirement to deliver a Conflicts Certificate under Condition 15.14 shall
      not apply in respect of any Covered Asset which has at all times during
      the relevant period (as defined in Condition 15.14(B)) been Managed and
      Administered as a Blind Pool Asset in accordance with Condition
      10.18.

            

    

     

    Disclosure
of Material Criminal Conduct

     

     

    
      
        
        

      

      
        127

        
          

        

      

      
        
        

      

    

     

     

    
      	
              15.16

            	
              The
      Participant shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              no later than
      7 April in each year, deliver a certificate to the Treasury signed by the
      Scheme Head (or another member of the Scheme Executive Team acceptable to
      the Treasury) confirming that, so far as the Participant and each other
      member of the Participant’s Group is aware after all due and reasonable
      enquiry, as at the immediately preceding 31 March there was and had been
      no Material Criminal Conduct save as may previously have been notified to
      the Treasury pursuant to and in accordance with paragraph (B) below;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              notify the
      Treasury of any Material Criminal Conduct promptly after the Participant
      or relevant member of the Participant’s Group becomes aware of the same
      (including in circumstances where such awareness arises as a result of
      Information provided to the Participant by the Treasury, any Government
      Entity or any of their respective
  Representatives).

            

    

     

    Other
obligations relating to Information requests

     

    
      	
              15.17

            	
              The Treasury
      shall not make a request for Information pursuant to Condition 15.1 or
      Condition 15.2 if and to the extent that the Treasury considers that the
      request:

            

    

     

    
      	
               
      

            	
              (A)

            	
              would be (in
      itself or when taken together with other requests) disproportionate or
      excessive for the purposes for which the Treasury requires the Information
      or relates to matters which are immaterial;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              would result
      in an excessive interference with the commercial operations of the
      Participant’s Group which would impede the ability of the management and
      personnel of the Participant’s Group to fulfil their day-to-day
      functions.

            

    

     

    
      	
              15.18

            	
              In making a
      determination pursuant to Condition 15.17, the Treasury shall take into
      account (i) the nature and extent of the request, (ii) any ongoing
      development of systems specified in the Transitional Exceptions Document,
      (iii) the frequency of requests that are being made and (iv) the extent to
      which the request is consistent with any reporting cycle agreed to by the
      Treasury in connection with the production and delivery of Information
      pursuant to the Monitoring and Reporting
  Conditions.

            

    

     

    
      	
              15.19

            	
              The Treasury
      acknowledges that Information provided pursuant to this Condition 15 may
      contain estimates or statements of opinion or statements which relate to
      events or which depend on circumstances outside the control of the members
      of the Participant’s Group, or which may be of a subjective nature or
      subject to different interpretations (such estimates or statements only to
      the extent that they so relate and/or to the extent only that they are
      subjective or subject to different interpretations, the “Good Faith
      Statements”).  No liability will attach to any member of
      the Participant’s Group or its Representatives under any Scheme Document
      in respect of any Good Faith Statement which is honestly held (to the
      extent it constitutes an opinion), given in good faith and prepared with
      reasonable skill and care, having made all due and reasonable
      enquiries.

            

    

     

    

    
      
        
           

        

        
          128

          
            

          

        

        
           

        

      

    

     

    
      	
              16.

            	
              QUARTERLY
      STATEMENTS; QUARTERLY STATEMENT
DATA

            

    

     

    Preparation
and delivery of Quarterly Statements

     

    
      	
              16.1

            	
              Subject to
      Conditions 16.2 to 16.4 (inclusive), on or before the date falling 20
      Business Days after each Quarter Date (each such date falling 20 Business
      Days after a Quarter Date, a “Quarterly Statement
      Date”), the Participant shall deliver to the Treasury a Quarterly
      Statement for the Quarter ending on that Quarter Date (the “Quarterly Statement
      Period”).

            

    

     

    Initial
Quarterly Statements

     

    
      	
              16.2

            	
              The first
      Quarterly Statement shall be provided in respect of the period from (and
      including) 31 December 2008 to (and including) 31 December
      2009.  That period shall be the “Quarterly Statement
      Period” for the first Quarterly Statement and shall be treated as a
      “Quarter” for the
      purposes of these Conditions (including Condition 8), and 31 December 2009
      shall be the “Quarter
      Date” for that Quarter.  The first Quarterly Statement
      shall be delivered to the Treasury on or before 28 February 2010 (which
      date shall be the “Quarterly Statement
      Date” for that Quarterly
Statement).

            

    

     

    
      	
              16.3

            	
              The second
      Quarterly Statement shall be provided in respect of the Quarter from (and
      including) 1 January 2010 to (and including) 31 March 2010 and shall be
      delivered to the Treasury on or before the date falling 40 Business Days
      after 31 March 2010 (which date falling 40 Business Days after 31 March
      2010 shall be the “Quarterly Statement
      Date” for that Quarterly
Statement).

            

    

     

    
      	
              16.4

            	
              The third
      Quarterly Statement shall be provided in respect of the Quarter from (and
      including) 1 April 2010 to (and including) 30 June 2010 and shall be
      delivered to the Treasury on or before the date falling 30 Business Days
      after 30 June 2010 (which date falling 30 Business Days after 30 June 2010
      shall be the “Quarterly
      Statement Date” for that Quarterly
  Statement).

            

    

     

    Contents
of Quarterly Statements and Quarterly Statement Data

     

    
      	
              16.5

            	
              A “Quarterly Statement”
      means a statement substantially in the form set out in, or appended to,
      the Accession Agreement or in such other form as may be agreed between the
      Treasury and the Participant.  Each Quarterly Statement, when
      taken together with the Quarterly Statement Data delivered at the same
      time as such Quarterly Statement, must set out as at the relevant
      Quarterly Statement Date all information necessary to calculate any
      payment required to be made under Condition 8 on the Quarterly Payment
      Date falling immediately after the Quarterly Statement Date for such
      Quarterly Statement, which shall include the following
      information:

            

    

     

     

    
      
        
        

      

      
        129

        
          

        

      

      
        
        

      

    

     

    Withdrawn
Triggered Assets

     

    
      	
               
      

            	
              (A)

            	
              which
      Triggered Assets were the subject of any Post-Trigger Withdrawal Notice
      during the Quarterly Statement Period and the date on which each such
      Post-Trigger Withdrawal Notice became
effective;

            

    

     

    Losses

     

    
      	
               
      

            	
              (B)

            	
              in respect of
      each Loss that has occurred during the Quarterly Statement
      Period:

            

    

     

    
      	
               
      

            	
              (i)

            	
              details of
      the Triggered Asset to which that Loss
relates;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the date on
      which that Loss occurred;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the amount of
      that Loss in sterling; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      components of the calculation of that Loss,
  including:

            

    

     

    
      	
               
      

            	
              (a)

            	
              for a Loss
      pursuant to Condition 6.1, the Outstanding Amount as at the relevant
      Trigger Date (or, if later, as at 31 December 2008) and the Covered Amount
      as at the Initial Event Date (or, if later, as at 31 December 2008), each
      in both sterling and the Covered Amount Currency of that Triggered Asset
      and the Applicable Exchange Rate applied for the purpose of converting
      that Covered Amount Currency into
sterling;

            

    

     

    
      	
               
      

            	
              (b)

            	
              for a Loss
      pursuant to Condition 6.22, the CL Payment Amount and the Loss Limit and
      the Remaining Covered Amount as at the relevant CL Payment Date, each in
      both sterling and the Covered Amount Currency of that Triggered Asset and
      the Applicable Exchange Rate applied for the purpose of converting that
      Covered Amount Currency into
sterling;

            

    

     

    
      	
               
      

            	
              (c)

            	
              for a Loss
      pursuant to Condition 6.1 or Condition 6.22, if the underlying currency of
      the Outstanding Amount or the CL Payment Amount (as applicable) is not the
      Covered Amount Currency of the relevant Covered Asset, the equivalent
      amount of the Outstanding Amount or the CL Payment Amount (as applicable)
      as at the relevant Trigger Date (or, if later, as at 31 December 2008) or
      CL Payment Date (as applicable) in that underlying currency and the
      exchange rate applied pursuant to Condition 6.30 for the purpose of
      converting that underlying currency into that Covered Amount Currency;
      and

            

    

     

    
      	
               
      

            	
              (d)

            	
              for a Loss
      pursuant to Condition 6.38 such Information in respect of that Loss as the
      Treasury may require to be reported

            

    

     

     

    
      
        
        

      

      
        130

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	under this
      sub-paragraph (d) pursuant to an Extended Protection
  Notice;

    

     

    
      	
               
      

            	
              (C)

            	
              the aggregate
      amount of the Losses that have occurred during the Quarterly Statement
      Period;

            

    

     

    Realisations
and Recoveries

     

    
      	
               
      

            	
              (D)

            	
              in respect of
      each Realisation made during the Quarterly Statement Period (and, in the
      Quarterly Statement for the first Quarterly Statement Period for which a
      Covered Asset is reported as a Triggered Asset, any Cash Realisation which
      is made prior to the Trigger Date for that Covered Asset and is to be
      included within Recoveries for that Covered
  Asset):

            

    

     

    
      	
               
      

            	
              (i)

            	
              details of
      the Triggered Asset to which that Realisation
  relates;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the date on
      which that Realisation was made;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              whether or
      not that Realisation is a Cash
Realisation;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              if that
      Realisation is a Cash Realisation:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the amount of
      that Realisation in sterling, net of Realisation Expenses;
    and

            

    

     

    
      	
               
      

            	
              (b)

            	
              if the
      underlying currency of that Realisation is not sterling, the equivalent
      amount of that Realisation in that underlying currency (net of Realisation
      Expenses) and the Applicable Exchange Rate applied for the purpose of
      converting that underlying currency into sterling;
  and

            

    

     

    
      	
               
      

            	
              (v)

            	
              the amount in
      sterling of any Realisation Expense in respect of that Realisation and, if
      the underlying currency of that Realisation Expense is not sterling, the
      equivalent amount of that Realisation Expense in that underlying currency
      and the Applicable Exchange Rate applied for the purpose of converting
      that underlying currency into
sterling;

            

    

     

    
      	
               
      

            	
              (E)

            	
              in respect of
      each Recovery made during the Quarterly Statement Period, the amount of
      that Recovery in sterling;

            

    

     

    
      	
               
      

            	
              (F)

            	
              the aggregate
      amount of the Recoveries made during the Quarterly Statement
      Period;

            

    

     

    Extended
Protection Assets

     

    
      	
               
      

            	
              (G)

            	
              such other
      Information in respect of Extended Protection Assets as the Treasury may
      require to be reported under this paragraph (G) pursuant to an Extended
      Protection Notice;

            

    

     

     

    
      
        
        

      

      
        131

        
          

        

      

      
        
        

      

    

     

    Amounts payable

     

    
      	
               
      

            	
              (H)

            	
              the Quarterly
      Payable in respect of the Quarterly Statement Period, including the
      components of such amount;

            

    

     

    
      	
               
      

            	
              (I)

            	
              the balance
      of the Pending Account and the Treasury Account as of the last day of the
      Quarterly Statement Period and the movements in each such account during
      that period;

            

    

     

    
      	
               
      

            	
              (J)

            	
              the amount
      (if any) that will be payable pursuant to Condition 8.5 on the next
      Quarterly Payment Date and the components of such
  amount;

            

    

     

    
      	
               
      

            	
              (K)

            	
              any
      correction or adjustment made pursuant to or required by these Conditions
      to any amount stated in any previous Quarterly Statement, the reason for
      each such correction or adjustment being made and any amount that will be
      payable pursuant to Condition 8.7 as a result of such correction or
      adjustment and the components of each such amount;
  and

            

    

     

    Late
reporting

     

    
      	
               
      

            	
              (L)

            	
              each of the
      items referred to in paragraphs (A) to (K) above restated so as to reflect
      any correction or adjustment that is to be disregarded (for the purpose of
      Condition 8) pursuant to Conditions 8.11 to 8.15
    (inclusive).

            

    

     

    Agreed
Model

     

    
      	
              16.6

            	
              The
      Participant shall, if requested by the Treasury, deliver to the Treasury
      at the same time as it provides a Quarterly Statement (or at such later
      time as the Treasury may request), a statement in the form of the Agreed
      Model for the Quarterly Statement Period, duly completed in respect of the
      matters set out in the Quarterly
Statement.

            

    

     

    Quarterly
Statement Data

     

    
      	
              16.7

            	
              The
      Participant shall, no later than each Quarterly Statement Date, deliver to
      the Treasury the Quarterly Statement Data for each Quarterly Statement
      Data Field:

            

    

     

    
      	
               
      

            	
              (A)

            	
              (subject to
      any valid qualifications set out in the relevant QS Compliance
      Certificate) accurately completed in accordance with the Data Field Rules;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              stated as at
      the date or dates specified in the Data Field Rules or otherwise in this
      Condition 16,

            

    

     

    in each case in
respect of the relevant Quarterly Statement Period.

     

    QS
Compliance Certificate

     

    
      	
              16.8

            	
              The
      Participant shall deliver to the Treasury, at the same time as it delivers
      each Quarterly Statement, a certificate signed by the Scheme Head (or
      another member of

            

    

     

     

    
      
        
        

      

      
        132

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              the Scheme
      Executive Team acceptable to the Treasury) confirming that such Quarterly
      Statement, and the Quarterly Statement Data delivered pursuant to
      Condition 16.7, is, to the best of his or her knowledge and belief, having
      made all due and reasonable enquiries, true and accurate, fairly presents
      the Information it contains and is not misleading for the purpose for
      which it is prepared (a “QS Compliance
      Certificate”).

            

    

     

    
      	
              16.9

            	
              A QS
      Compliance Certificate may be subject only to valid qualifications. A
      “valid
      qualification” means a qualification
  which:

            

    

     

    
      	
               
      

            	
              (A)

            	
              is contained
      in a QS Compliance Certificate; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              describes in
      reasonable detail:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the nature
      and extent of the qualification being made (including the specific items
      of Information (including any Quarterly Statement Data) to which it
      applies); and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the reasons
      why it was not possible to provide the relevant Information on an
      unqualified basis.

            

    

     

    
      	
              16.10

            	
              If any QS
      Compliance Certificate delivered pursuant to Condition 16.8 is given
      subject to any valid qualifications, the Participant shall deliver to the
      Treasury a QS Compliance Certificate (without qualifications) no later
      than the Quarterly Statement Date for the corresponding Quarter in the
      following year (or, in the case of the first Quarterly Statement to be
      provided pursuant to Condition 16.2, no later than 20 Business Days after
      31 December 2010).

            

    

     

    Adjustments
for errors in Quarterly Statement Data

     

    
      	
              16.11

            	
              If an error
      is identified in respect of any Quarterly Statement Data for any Quarterly
      Statement Period (regardless of whether such error was contemplated by way
      of a valid qualification to the corresponding QS Compliance Certificate)
      the Participant shall, as soon as practicable, deliver to the
      Treasury:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Quarterly
      Statement Data which is to be corrected, accurately completed in
      accordance with the Data Field
Rules;

            

    

     

    
      	
               
      

            	
              (B)

            	
              a report
      describing in reasonable detail the corrections made to the Quarterly
      Statement Data; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              such other
      Information as the Treasury may notify the Participant from time to time
      as being required to enable the Treasury (i) to reconcile corrections to
      the Quarterly Statement Data against the Quarterly Statement Data provided
      pursuant to Condition 16.7 in respect of the relevant Quarterly Statement
      Period and (ii) to monitor corrections to the Quarterly Statement
      Data.

            

    

     

    
      	
              16.12

            	
              If an error
      is identified in respect of any Quarterly Statement Data for any Quarterly
      Statement Period and such errors are corrected in accordance with
      Condition 16.11, the

            

    

     

     

    
      
        
        

      

      
        133

        
          

        

      

      
        
        

      

    

     

     

    
      	 	necessary
      corrections and adjustments shall be made to the Quarterly Statement in an
      adjustment Quarter in accordance with Condition
8.7.

    

     

    Remedies
in respect of Quarterly Statement Data

     

    
      	
              16.13

            	
              Any exercise
      by the Treasury of its rights under this Condition 16 is in addition to,
      and shall not be construed to limit, affect or prejudice any right, power
      or remedy provided by law or under or pursuant to any Scheme Document
      (including any right it may have pursuant to the Indemnity, the Step-In
      Rights or Condition 34).

            

    

     

     

    
      
        
        

      

      
        134

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                17.

              	
                INITIAL
      DATA AND POST-ACCESSION DATA

              

      

    

     

    Initial
Data

     

    
      	
              17.1

            	
              On or prior
      to the Signing Date, the Participant shall have delivered to the Treasury
      the Initial Data (accurately completed in accordance with the Data Field
      Rules) in the form specified in the Accession
  Agreement.

            

    

     

    
      	
              17.2

            	
              Identification
      of an asset or exposure in the Initial Data shall not be taken
      as:

            

    

     

    
      	
               
      

            	
              (A)

            	
              evidence that
      such asset or exposure satisfies the Asset Eligibility
      Criteria;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      Treasury’s acceptance or agreement that any of the factual Information
      contained in the Initial Data in respect of such asset or exposure is
      correct; or

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      Treasury’s agreement to waive any breach of the Scheme
      Documents.

            

    

     

    Covered
Asset Classes

     

    
      	
              17.3

            	
              Each Covered
      Asset shall be allocated, in accordance with the Data Field Rules, to one
      of the following mutually exclusive classes of Covered Assets (each a
      “Covered Asset
      Class”): (i) Residential Mortgage; (ii) Consumer Finance; (iii)
      Bond; (iv) Loan; (v) Lease Finance; (vi) Project Finance; (vii) Leveraged
      Finance; (viii) Commercial Real Estate Finance; (ix) Structured Finance;
      or (x) Derivative.

            

    

     

    
      	
              17.4

            	
              The Covered
      Asset Class to which a Covered Asset is allocated shall be that specified
      by the Participant in the Initial Data in accordance with the Data Field
      Rules.  An amendment to, or a replacement of, any agreement or
      instrument that relates to any asset and exposure forming part of a
      Covered Asset shall not result in any change to the Covered Asset Class to
      which that Covered Asset belongs.

            

    

     

    Corrections
to Initial Data

     

    
      	
              17.5

            	
              If any member
      of the Participant’s Group is or becomes aware
  that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any Initial
      Data Field for a Covered Asset has not been completed in accordance with
      the Data Field Rules (including where the Initial Data Field should have
      been completed as “Not Applicable” or “N/A”);
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              there is an
      error or inaccuracy in any Initial Data for a Covered
    Asset,

            

    

     

    (each an “Error”) then the Participant
shall notify the Treasury in writing as soon as practicable of that fact and the
amendments to the Initial Data which it proposes to make (the “Proposed
Correction”).

     

    
      	
              17.6

            	
              If the
      Proposed Correction is in respect of any Initial Data set out in a Fixed
      Data Field, then the Proposed Correction shall be made only if the
      Treasury consents to it, which consent may, where the Proposed Correction
      relates to a Coverage Data Field, be

            

    

     

     

    
      
        
        

      

      
        135

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              given subject
      to agreement by the Treasury and the Participant upon, or determination
      of, an Adjustment in respect of the relevant Error in accordance with
      Condition 34.

            

    

     

    
      	
              17.7

            	
              If the
      Proposed Correction is in respect of any Initial Data set out in an
      Initial Data Field which is not a Fixed Data Field, then the Treasury will
      determine whether the Proposed Correction is compliant with the principle
      that there should be no substitution of a Covered Asset originally
      identified in the Initial Data with a different asset or exposure (except
      to the extent agreed by the Treasury) (the “Correction Principle”),
      such determination to be made having regard
to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any
      associated Proposed Correction(s) in respect of the relevant Covered
      Asset;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the extent to
      which:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Proposed
      Correction relates to Initial Data which reflects or is derived from the
      contractual terms, or is pertinent to the identification, of the relevant
      Covered Asset; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Initial
      Data will (if the Proposed Correction is made) (a) reconcile with any
      corresponding Pre-Accession Data or (b) reflect any agreement by the
      Treasury that the Participant may substitute certain assets or exposures
      identified in the Pre-Accession
Data;

            

    

     

    
      	
               
      

            	
              (C)

            	
              whether the
      Data Field Rules required the Participant to make a subjective judgement
      in relation to any Information the subject of the Proposed Correction;
      and

            

    

     

    
      	
               
      

            	
              (D)

            	
              whether the
      Error (i) arose from an administrative error in transposing Information to
      the relevant Initial Data Fields from the underlying Books and Records of
      the Participant’s Group (or from the transposition of erroneous
      Information from those Books and Records) or (ii) is a failure to complete
      an Initial Data Field which should have been completed as “Not Applicable”
      or “N/A”.

            

    

     

    
      	
              17.8

            	
              If the
      Treasury:

            

    

     

    
      	
               
      

            	
              (A)

            	
              gives its
      consent to any Proposed Correction pursuant to Condition 17.6;
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              determines
      pursuant to Condition 17.7 that any Proposed Correction is compliant with
      the Correction Principle,

            

    

     

    then the Proposed
Correction shall be made and:

     

    
      	
               
      

            	
              (i)

            	
              the Treasury
      shall have no right to make any claim under the Indemnity in respect of
      the relevant Error; and

            

    

     

     

    
      
        
        

      

      
        136

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              subject as
      provided in Condition 17.6, such Error shall not constitute an Adjustment
      Event.

            

    

     

    If any Proposed
Correction is made to the Initial Data in relation to a Covered Asset pursuant
to this Condition 17.8, any Losses in respect of that Covered Asset shall be
calculated on the basis of such Initial Data as corrected (but subject to any
Adjustment agreed or determined in respect of that Covered Asset pursuant to
Condition 17.6).

     

    
      	
              17.9

            	
              If the
      Treasury determines pursuant to Condition 17.7 that, as a result of any
      Proposed Correction(s) to the Initial Data relating to the relevant
      Covered Asset, it is not possible to identify the assets and exposures
      which the Participant intended to include within the Scheme, then (subject
      to any contrary determination pursuant to the Dispute Resolution
      Procedure) the Treasury shall have the right (exercisable by giving
      written notice to the Participant) to determine that such Covered Asset
      shall cease permanently to be a Covered Asset.  Such Covered
      Asset shall, with effect from and including the date on which such notice
      becomes effective, cease permanently to be a Covered
  Asset.

            

    

     

    Post-Accession
Data

     

    
      	
              17.10

            	
              The
      Participant shall deliver to the Treasury the Post-Accession Data in
      respect of each Post-Accession Data
Field:

            

    

     

    
      	
               
      

            	
              (A)

            	
              by no later
      than the date or dates specified in the Data Field Rules;
    and

            

    

     

    
      	
               
      

            	
              (B)

            	
              accurately
      completed in accordance with, and stated as at the date or dates specified
      in, the Data Field Rules.

            

    

     

    
      	
              17.11

            	
              If the Data
      Field Rules do not state a specific date by which Post-Accession Data in
      respect of certain Post-Accession Data Fields must be delivered, then the
      Participant shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              use all
      reasonable endeavours to deliver to the Treasury such Post-Accession Data
      as soon as reasonably practicable following the Accession Date (accurately
      completed and stated as at the most recent practicable date, in accordance
      with the Data Field Rules); and

            

    

     

    
      	
               
      

            	
              (B)

            	
              update such
      Post-Accession Data at least annually or with the frequency otherwise
      agreed with the Treasury.

            

    

     

    
      	
              17.12

            	
              Any
      Post-Accession Data delivered to the Treasury shall reflect (in accordance
      with the Data Field Rules) the occurrence of each of the
      following:

            

    

     

    
      	
               
      

            	
              (A)

            	
              a Covered
      Asset becoming a Triggered Asset or being subject to a Pre-Trigger
      Withdrawal Notice or a Post-Trigger Withdrawal
  Notice;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any conduct
      (including any amendment, modification or waiver) relating to a Covered
      Asset or Related Party Asset that has
occurred;

            

    

     

     

    
      
        
        

      

      
        137

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (C)

            	
              the
      correction of any errors which have been identified in any Post-Accession
      Data;

            

    

     

    
      	
               
      

            	
              (D)

            	
              all events or
      circumstances which have resulted in any amendment to any Information
      previously provided in any Data Field being necessary in order to state
      the relevant Information accurately as at the date at which that
      Post-Accession Data is stated or is updated or corrected;
    and

            

    

     

    
      	
               
      

            	
              (E)

            	
              any other
      event or circumstance, of which the Participant is aware, which has
      resulted in any Post-Accession Data being incorrect as at the date at
      which the Post-Accession Data was stated or was updated or
      corrected.

            

    

     

    Modifications
to Data Fields

     

    
      	
              17.13

            	
              The Treasury
      and the Participant may agree, from time to time, to modify the required
      content of any of the Post-Accession Data Fields or Quarterly Statement
      Data Fields, to include additional such Data Fields, or to vary the
      deadlines for, or the frequency of, the completion and updating of such
      Data Fields.

            

    

     

    Remedies
in respect of data

     

    
      	
              17.14

            	
              Subject to
      Condition 17.8, any exercise by the Treasury of its rights under this
      Condition 17 is in addition to, and shall not be construed to limit,
      affect or prejudice any right, power or remedy provided by law or under or
      pursuant to any Scheme Document (including any right it may have pursuant
      to the Indemnity, the Step-In Rights or Condition
  34).

            

    

     

     

    
      
        
        

      

      
        138

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                18.

              	
                MAINTENANCE
      OF BOOKS AND RECORDS

              

      

    

     

    Preparation
and maintenance of Books and Records

     

    
      	
              18.1

            	
              The
      Participant shall prepare and maintain (or procure the preparation and
      maintenance of) Books and Records (including with respect to the Covered
      Assets and any Related Party Assets) that are in such form and detail as
      are required by Good Industry Practice and as are necessary to (i) verify
      compliance with the Scheme Documents (ii) ensure that the Participant can
      provide the Information required to be provided pursuant to the Scheme
      Documents and (iii) enable accurate calculation of the payments to be made
      pursuant to Condition 8 and the Information underlying such calculations
      to be verified (together, the “records objectives”),
      and in particular:

            

    

     

    
      	
               
      

            	
              (A)

            	
              subject to
      the Transitional Exceptions Document, ensure that its Books and Records
      separately identify and track the Covered Assets and, to the extent only
      as may be required to ensure the Participant’s compliance with the Scheme
      Documents, Related Party Assets and
Conflicts;

            

    

     

    
      	
               
      

            	
              (B)

            	
              prepare and
      maintain Books and Records in compliance with Accounting Standards,
      Applicable Law and Good Industry Practice in relation to all dealings and
      transactions in relation to the Covered Assets and, to the extent only as
      may be required to ensure the Participant’s compliance with the Scheme
      Documents, any Related Party Assets and
  Conflicts;

            

    

     

    
      	
               
      

            	
              (C)

            	
              subject to
      the Transitional Exceptions Document, ensure that all Books and Records
      which record financial matters are prepared in such a manner that
      Information necessary to determine compliance with any requirement of the
      Scheme Documents will be reasonably easily obtainable;
  and

            

    

     

    
      	
               
      

            	
              (D)

            	
              subject to
      the Transitional Exceptions Document, maintain its Books and Records in a
      manner that allows it to produce or deliver (as appropriate) the Reports
      within the timeframes applicable to such Reports and otherwise comply with
      its obligations under the Scheme Documents, and in formats compatible with
      the systems requirements agreed in writing between the Treasury and the
      Participant from time to time.

            

    

     

    Document
retention and destruction

     

    
      	
              18.2

            	
              The
      Participant shall ensure that each member of the Participant’s Group shall
      develop and maintain, and (subject to this Condition 18) operate and
      implement, document retention and destruction policies that comply with
      Applicable Law and are consistent with Good Industry
    Practice.

            

    

     

    
      	
              18.3

            	
              Without
      prejudice to Condition 18.2, the Participant shall ensure that each member
      of the Participant’s Group shall keep, and that no member of the
      Participant’s Group shall (unless required to do so by Applicable Law)
      destroy or (to the extent within its control) permit the destruction of
      any of:

            

    

     

     

    
      
        
        

      

      
        139

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (A)

            	
              the Books and
      Records which evidence the terms of the agreements or instruments
      comprising a Covered Asset (whether or not such terms have subsequently
      been amended, modified or
replaced);

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Books and
      Records which constitute accounting and financial records relating to any
      Covered Asset; or

            

    

     

    
      	
               
      

            	
              (C)

            	
              other Books
      and Records if (and to the extent that) the failure to keep or the
      destruction of such Books and Records would prevent or prejudice the
      satisfaction of the records
objectives,

            

    

     

    provided that any
member of the Participant’s Group may copy any Books and Records into one or
more alternative storage formats (and subsequently destroy any Books and Records
from which any such copies were made) where to do so would be in accordance with
Good Industry Practice and would not otherwise prevent or prejudice the
satisfaction of the records objectives.

     

    
      	
              18.4

            	
              If, by virtue
      of Condition 18.3, the Participant notifies the Treasury in writing that
      it will be required to operate document retention and destruction policies
      which are more onerous than those which are required by Applicable Law and
      Good Industry Practice, the Treasury shall consult with the Participant in
      good faith with a view to agreeing whether the Books and Records
      identified by the Participant need not be retained, notwithstanding
      Condition 18.3.  Such consultation will be undertaken having
      regard, amongst other things, to whether (i) the cost of retaining such
      Books and Records beyond the period which would otherwise be required by
      Applicable Law and Good Industry Practice is disproportionate or excessive
      and (ii) such Books and Records are material to the Participant’s ability
      to satisfy the records objectives.

            

    

     

    
      	
              18.5

            	
              Without
      prejudice to the other requirements of this Condition 18 and any other
      provision of the Scheme Documents, where the Treasury or any of its
      Representatives or any Step-In Manager has given notice to the Participant
      in writing that it wishes or they wish the Participant to ensure that
      specified Books and Records of the kind described in Condition 18.3 are
      kept and not destroyed, or if any such Books and Records may reasonably be
      expected to be relevant or required in connection with any Report, or any
      audit, investigation, verification or other review that may be conducted
      pursuant to the Scheme Documents, then the Participant shall take all
      steps necessary to ensure that any such Books and Records shall be kept
      and not destroyed until the Treasury has confirmed in writing that the
      relevant Books and Records may be destroyed.  In determining
      whether to deliver a notice pursuant to this Condition 18.5, the Treasury
      will consult in good faith with the Participant as to whether (i) the
      costs to the Participant of retaining the relevant Books and Records
      beyond the period which would otherwise be required by virtue of the
      Participant’s document retention and destruction policies is
      disproportionate or excessive and (ii) such Books and Records are material
      to the Participant’s ability to satisfy the records
      objectives.

            

    

     

    
      	
              18.6

            	
              As soon as
      reasonably practicable following a Trigger in respect of any Covered
      Asset, the Participant shall use its best endeavours to gather and
      preserve all of the Books and Records relating to that Covered Asset as
      are described in Conditions 18.3 and
18.5.

            

    

     

     

    
      
        
        

      

      
        140

        
          

        

      

      
        
        

      

    

     

     

    
      	
              18.7

            	
              None of
      Conditions 18.3, 18.5 or 18.6 shall require any member of the
      Participant’s Group to keep any Books and Records to the extent that they
      relate to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any asset or
      exposure which is not a Triggered Asset and which has ceased, at the
      relevant time, to be a Covered Asset;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              any asset or
      exposure that is a Related Party Asset only in respect of one or more
      assets or exposures described in paragraph
(A),

            

    

     

    or any Books and
Records that constitute immaterial internal or external correspondence regarding
any such asset or exposure.

     

     

    
      
        
        

      

      
        141

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              19.

            	
              ASSURANCE
      PLAN

            

    

     

    Assurance
Plan

     

    
      	
              19.1

            	
              On or prior
      to the Signing Date, the Participant shall have delivered to the Treasury,
      and thereafter shall maintain, an assurance plan (the “Assurance Plan”) for the
      conduct, by its internal audit or risk function and, to the extent that
      the Participant considers appropriate, external auditors or other
      contractors, of a regular (and, following the Accession Date, not less
      than annual) review of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the adequacy
      of the systems, controls and processes of the members of the Participant’s
      Group for ensuring compliance with the Scheme
  Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              whether, and
      the extent to which, any member of the Participant’s Group has failed to
      comply with the Scheme Documents;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      completeness, accuracy and validity of the Quarterly Statements and the
      Losses and Recoveries reported in the Quarterly
  Statements;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      completeness and accuracy of the Information provided by completion of the
      Data Fields and the effectiveness of the associated processes and controls
      in relation to the compilation, maintenance and provision of such
      Information to the Treasury in accordance with the Scheme
      Documents;

            

    

     

    
      	
               
      

            	
              (E)

            	
              the systems,
      controls and processes applicable to costs and expenses of the members of
      the Participant’s Group incurred in connection with the Scheme and the
      Covered Assets (including Realisation
Expenses);

            

    

     

    
      	
               
      

            	
              (F)

            	
              compliance by
      members of the Participant’s Group with the Asset Management Conditions in
      respect of each Covered Asset Class (but without any obligation to review
      compliance in respect of each individual Covered Asset), such review and
      reporting to be undertaken no less frequently than every six months in the
      first year commencing on the Accession Date;
and

            

    

     

    
      	
               
      

            	
              (G)

            	
              whether the
      practices, procedures and conduct of the SOC are effective and comply with
      Good Industry Practice in respect of corporate
  governance.

            

    

     

    
      	
              19.2

            	
              The Assurance
      Plan must set out detailed procedures for the review and reconciliation
      described in Conditions 19.1 and 19.9, respectively, shall clearly
      disclose any materiality thresholds that are to be applied for in
      conducting such procedures and shall identify the department or external
      contractor that will conduct each such procedure and when each such
      procedure is intended to occur.

            

    

     

    
      	
              19.3

            	
              The
      Participant shall ensure that the Assurance Plan is carried out in
      accordance with its terms.  The first review and reconciliation
      to be conducted pursuant to the Assurance Plan shall be in respect of the
      period from the Signing Date (or, to the extent that such review relates
      to the matters described in Condition 19.1(C), 1 January 2009) to 31
      December in the year of the Accession
Date.

            

    

     

     

    
      
        
        

      

      
        142

        
          

        

      

      
        
        

      

    

     

    
      	
              19.4

            	
              The
      Participant may modify its Assurance Plan from time to time as it
      considers necessary or desirable, provided that the Assurance Plan (as
      modified) complies with Conditions 19.1 and
  19.2.

            

    

     

    
      	
              19.5

            	
              The
      Participant shall deliver to the Treasury a copy of any material
      modifications to the Assurance Plan as soon as reasonably practicable
      following the preparation of any such
  modifications.

            

    

     

    
      	
              19.6

            	
              The
      Participant shall prepare and deliver to the SOC and the Treasury, by no
      later than 31 March in each year, a report which sets out the results of
      the review conducted in accordance with the Assurance Plan and any changes
      to the systems, controls and processes of the members of the Participant’s
      Group that the Participant intends to implement, following such review and
      reconciliation, in order to ensure that it complies with the Scheme
      Documents (the “Annual
      Assurance Report”).

            

    

     

    
      	
              19.7

            	
              If the
      Treasury so requests on reasonable written notice, a copy of any final
      reports and any other material Information prepared pursuant to the
      Assurance Plan during the course of the year to which the Annual Assurance
      Report relates shall be provided to the Treasury at the same time as the
      Annual Assurance Report.

            

    

     

    
      	
              19.8

            	
              Any third
      party engagement letters entered into by any member of the Participant’s
      Group in relation to the Assurance Plan shall allow for the provision of
      any such reports and Information produced by those third parties to be
      provided to the Treasury and for the Treasury to be able to rely on the
      findings of those reports.

            

    

     

    Reconciliation
to financial statements

     

    
      	
              19.9

            	
              As soon as
      reasonably practicable, and in any event within 30 Business Days, after
      the publication of the audited consolidated balance sheet of the
      Participant's Group for any financial year, the Participant shall ensure
      that a reconciliation is performed
between:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the aggregate
      of the Outstanding Amounts of the Covered Assets (as reported to the
      Treasury in the most recent Post-Accession Data relating to the period
      ending on the final day of that financial year);
  and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the total
      assets of the Participant's Group, as recorded on that audited
      consolidated balance sheet,

            

    

     

    and report the
results of such reconciliation in writing to the Treasury.

     

     

    
      
        
        

      

      
        143

        
          

        

      

      
        
        

      

    

     

    
      20.       TREASURY’S
RIGHT TO AUDIT, INVESTIGATE AND REVIEW

    

     

    
      	
              20.1

            	
              Notwithstanding
      any other provision of the Scheme Documents, the Treasury shall at any
      time have the right to conduct or commission any audit, investigation or
      review of, or in relation to, any or all of the
  following:

            

    

     

    
      	
               
      

            	
              (A)

            	
              compliance by
      any member of the Participant’s Group with its obligations under the
      Scheme Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any Reports
      or other Information provided or delivered pursuant to the Scheme
      Documents or otherwise in connection with the
  Scheme;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the payments
      to be made pursuant to the Scheme
Documents;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      performance of any of the Covered Assets and the satisfaction by such
      Covered Assets of the Asset Eligibility Criteria and the Asset Continuity
      Requirements in relation to any amendment or replacement of an agreement
      or instrument relating (or to the extent relating) to the assets and
      exposures forming part of a Covered
Asset;

            

    

     

    
      	
               
      

            	
              (E)

            	
              Related Party
      Assets and Conflicts (in each case to the extent necessary to monitor
      compliance with the Scheme
Documents);

            

    

     

    
      	
               
      

            	
              (F)

            	
              any other
      aspect of the Scheme or the Scheme Documents;
  and

            

    

     

    
      	
               
      

            	
              (G)

            	
              any other
      aspect of the business, financial condition and affairs of any member of
      the Participant’s Group (to the extent the Treasury considers it necessary
      in connection with monitoring of the operation of, and risks relating to,
      the Scheme and the Covered Assets or otherwise in connection with the
      Scheme).

            

    

     

    
      	
              20.2

            	
              The scope and
      duration of any such audit, investigation or review shall be determined by
      the Treasury, and the Participant shall bear all costs of any such audit,
      investigation or review as a Management and Administration Cost in
      accordance with Condition 9.10.

            

    

     

    
      	
              20.3

            	
              The
      Participant shall ensure that each member of the Participant’s Group shall
      cooperate in all respects with any such audit, investigation or review,
      and shall make available to the Treasury such Representatives, premises
      and Information (including Books and Records) as the Treasury and its
      Representatives may require in connection with such audit, investigation
      or review.

            

    

     

    
      	
              20.4

            	
              The
      Participant shall and shall ensure that each member of the Participant’s
      Group will:

            

    

     

    
      	
               
      

            	
              (A)

            	
              permit the
      Representatives of the Treasury and any Step-In Manager to visit and
      examine and take copies of any Books and Records relating to the Covered
      Assets or Related Party Assets where such Books and Records are within the
      possession or control of a member of the Participant’s Group or its
      Representatives, for any purpose in connection with the Scheme, during
      normal business hours as often as the Treasury or Step-In Manager may
      decide;

            

    

     

     

    
      
        
        

      

      
        144

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              discuss with
      any such Representative of the Treasury or Step-In Manager any aspect of
      such Books and Records as the Treasury or Step-In Manager may request, and
      answer any questions that may be raised as part of such discussions;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              provide
      access to such of its Representatives, facilities and office space as the
      Treasury or Step-In Manager may require for that
  purpose.

            

    

     

    
      	
              20.5

            	
              The Treasury
      may, from time to time and at its sole discretion, appoint any Agency
      personnel or employees or officials of the Treasury (the “Treasury Monitors”) to
      attend meetings of any credit committee or risk committee (or any
      equivalent body or forum) of the Participant or any other member of the
      Participant’s Group, on a sample basis, for the purpose of enabling the
      Treasury to monitor the Participant’s compliance with the Asset Management
      Conditions.  The Participant shall ensure that the Treasury
      Monitors are permitted to attend such
meetings.

            

    

     

    
      	
              20.6

            	
              If the
      Treasury notifies the Participant that it wishes Treasury Monitors to
      attend any meeting pursuant to Condition 20.5, the Participant shall give
      the Treasury and the Treasury Monitors the same period of notice of the
      time, date and location for such meetings as is given to the members of
      the relevant committee (or equivalent body or forum) and the Participant
      shall send to the Treasury and the Treasury Monitors copies of all
      documents circulated for the purposes of such meetings and all minutes of
      those meetings at the same time as they are sent to such
      members.

            

    

     

    
      	
              20.7

            	
              The Treasury
      Monitors may, but shall not be required or obliged to, speak or
      participate in any way in any such meeting but shall not be entitled to
      exercise any vote in respect of any decision taken at any such
      meeting.

            

    

     

    

    
      
        
           

        

        
          145

          
            

          

        

        
           

        

      

    

    

    PART
5: GOVERNANCE AND OVERSIGHT

     

    
      	
              21.

            	
              SENIOR
      OVERSIGHT COMMITTEE

            

    

     

    Establishment
of the SOC

     

    
      	
              21.1

            	
              The
      Participant shall establish and maintain a senior oversight committee or
      body (the “SOC”)
      which shall be governed by, and shall have the functions described in,
      this Condition 21 and the SOC Terms of
  Reference.

            

    

     

    Composition
of the SOC

     

    
      	
              21.2

            	
              The SOC shall
      comprise at least one non-executive director of the Participant’s Ultimate
      Parent and such members of the senior management of the Participant’s
      Group, as in each case as may be approved in advance by the Treasury
      (acting reasonably).  The initial composition of the SOC, and
      any requirements as to the amount of time each member of the SOC shall
      devote to the functions of the SOC, shall be as set out in the SOC Terms
      of Reference.

            

    

     

    Functions
of the SOC

     

    
      	
              21.3

            	
              The SOC shall
      have the functions set out in, and operate in accordance with, the written
      terms of reference designated as such pursuant to the Accession Agreement
      for the purposes of these Conditions (the “SOC Terms of
      Reference”).  The SOC Terms of Reference shall include
      the following:

            

    

     

    
      	
               
      

            	
              (A)

            	
              ensuring,
      setting strategy for, and providing oversight and supervision of,
      compliance with the Scheme Documents, including with respect
      to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      calculation of the Quarterly Payables (and other amounts which fall to be
      calculated, accounted for or reported pursuant to and in accordance with
      the Scheme Documents);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Asset
      Management Conditions and the Monitoring and Reporting Conditions;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      establishment of systems, controls and processes to comply with the Scheme
      Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              reviewing,
      approving and periodically reassessing the business strategies and
      governance arrangements of the members of the Participant’s Group in
      connection with the Scheme (including the Asset Management Framework, the
      Conflicts Management Policy, Business-Level Guidelines and any other
      policies and practices relating to the Participant’s participation in the
      Scheme) which have been developed by the Scheme Executive Team from time
      to time in accordance with the Scheme Documents), including proposed
      modifications to such strategies and governance arrangements arising out
      of changes to business conditions, Applicable Law or Good Industry
      Practice;

            

    

     

     

    
      
        
        

      

      
        146

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (C)

            	
              delivering
      and implementing the systems, controls and processes described or referred
      to in the Transitional Exceptions
Document;

            

    

     

    
      	
               
      

            	
              (D)

            	
              ensuring
      fully open, transparent and constructive communications and relations with
      the Treasury and its Representatives in respect of the Scheme and the
      Covered Assets and compliance with the Scheme
  Documents;

            

    

     

    
      	
               
      

            	
              (E)

            	
              (where
      required pursuant to the Asset Management Conditions) determining
      whether or not to approve Conduct Requiring Approval notified to
      it;

            

    

     

    
      	
               
      

            	
              (F)

            	
              the functions
      required to be undertaken by the SOC pursuant to the Remuneration
      Conditions; and

            

    

     

    
      	
               
      

            	
              (G)

            	
              overseeing
      and assessing any impact on the Covered Assets or the Participant’s
      participation in the Scheme arising from or relating to any Other
      Protection Scheme in which any member of the Participant’s Group
      participates.

            

    

     

    Meetings
of the SOC

     

    
      	
              21.4

            	
              The SOC shall
      meet at least monthly and on such other
      occasions as it considers necessary or appropriate in order to carry out
      its functions.

            

    

     

    Treasury
Observers

     

    
      	
              21.5

            	
              The Treasury
      shall have the right to appoint, from time to time and at its sole
      discretion, any individuals to attend meetings of the SOC as non-voting
      observers (the “Treasury
      Observers”) and shall notify the Participant in writing of the
      identities of the Treasury Observers from time to time.  The
      Participant shall ensure that the Treasury Observers are permitted to
      attend meetings of the SOC.

            

    

     

    
      	
              21.6

            	
              The
      Participant shall give the Treasury and the Treasury Observers the same
      period of notice of the time, date and location for all meetings of the
      SOC as is given to the members of the SOC (which, save in the event of
      exceptional circumstances which the Participant reasonably considers to
      warrant a meeting on short notice, shall be no less than one Business Day
      prior to the relevant meeting) and the Participant shall send to the
      Treasury and the Treasury Observers copies of all documents circulated for
      the purposes of such meetings and all minutes of those meetings at the
      same time as they are sent to the members of the SOC (or any member of the
      SOC).

            

    

     

    
      	
              21.7

            	
              The Treasury
      Observers may, but shall not be required or obliged to, speak or
      participate in any way in any meeting of the SOC and shall not be entitled
      to exercise any vote in respect of any decision taken by the
      SOC.

            

    

     

    Records
of the SOC

     

    
      	
              21.8

            	
              The SOC shall
      have a non-voting secretary who shall keep the minutes of SOC meetings and
      records of all matters considered or decided by the
  SOC.

            

    

     

     

    
      
        
        

      

      
        147

        
          

        

      

      
        
        

      

    

     

    
      	
              21.9

            	
              Without
      prejudice to Condition 21.6, the Participant shall provide to the Treasury
      and the Treasury Observer copies of all reports, presentations, records
      and other documents given to or created by the SOC (or any of its members
      in connection with the functions of the SOC), together with all minutes of
      meetings of the SOC, as soon as reasonably practicable following the
      receipt or creation thereof.

            

    

     

     

    
      
        
        

      

      
        148

        
          

        

      

      
        
        

      

    

     

    
      
        	
                22.

              	
                SCHEME
      HEAD

              

      

    

     

    Appointment
of the Scheme Head

     

    
      	
              22.1

            	
              The
      Participant shall appoint (and shall use its best endeavours to ensure
      that there is at all times appointed) one of its executive directors or a
      member of its senior management team to be the Scheme Head for the
      Participant, such appointment being subject to the prior approval of the
      Treasury (acting reasonably).  The “Scheme Head” shall be
      the individual so appointed from time to
time.

            

    

     

    Functions
of the Scheme Head

     

    
      	
              22.2

            	
              The Scheme
      Head shall report to the SOC and his or her functions shall
      include:

            

    

     

    
      	
               
      

            	
              (A)

            	
              being the
      primary senior point of contact for the Treasury with regard to the Scheme
      and the Covered Assets and compliance with the Scheme Documents and
      providing such briefings and Information to the Treasury as may be
      required in accordance with the Scheme Documents from time to
      time;

            

    

     

    
      	
               
      

            	
              (B)

            	
              leading,
      overseeing and ensuring the performance by the Scheme Executive Team of
      their respective functions under the Scheme
  Documents;

            

    

     

    
      	
               
      

            	
              (C)

            	
              proposing to
      the SOC a strategy for ensuring, overseeing and supervising compliance
      with the Scheme Documents;

            

    

     

    
      	
               
      

            	
              (D)

            	
              (in
      conjunction with the Scheme Executive Team) day-to-day oversight of
      compliance with the Scheme Documents, including with respect
      to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      calculation of the Quarterly Payables (and other amounts which fall to be
      calculated, accounted for or reported pursuant to and in accordance with
      the Scheme Documents);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Asset
      Management Conditions, the Governance and Oversight Conditions and the
      Monitoring and Reporting
Conditions;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      establishment of systems, controls and processes to comply with the Scheme
      Documents; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the functions
      set out in the Remuneration
Conditions;

            

    

     

    
      	
               
      

            	
              (E)

            	
              (in
      conjunction with the Scheme Executive Team) developing, periodically
      reassessing and providing recommendations to the SOC in respect of the
      business strategies and governance arrangements of the members of the
      Participant’s Group in connection with the Scheme (including the Asset
      Management Framework, the Conflicts Management Policy, Business-Level
      Guidelines and any other policies and practices relating to the
      Participant’s participation in the
Scheme);

            

    

     

     

    
      
        
        

      

      
        149

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (F)

            	
              delivering
      and implementing the systems, controls and processes described or referred
      to in the Transitional Exceptions
Document;

            

    

     

    
      	
               
      

            	
              (G)

            	
              (in
      conjunction with the Scheme Executive Team) determining whether or not to
      approve any Conduct Requiring Approval notified to him or her pursuant to
      the Conduct Approvals Hierarchy and monitoring and overseeing all Conduct
      Requiring Approval; and

            

    

     

    
      	
               
      

            	
              (H)

            	
              coordinating
      the Participant’s participation in the Scheme with the participation of
      any member of the Participant’s Group in any Other Protection Scheme, and
      overseeing and assessing any impact on the Covered Assets or the
      Participant’s participation in the Scheme arising from or relating to any
      such Other Protection Scheme.

            

    

     

    
      	
              22.3

            	
              The Scheme
      Head shall meet regularly with the Treasury, on reasonable written notice
      at the Treasury’s request, to discuss such matters relating to the Scheme,
      the Covered Assets and the Participant’s Group as the Treasury may
      reasonably require.

            

    

     

    Scheme
Head to be dedicated

     

    
      	
              22.4

            	
              The
      Participant shall ensure that the Scheme Head shall, subject to Applicable
      Law and except as otherwise provided in the Accession Agreement, devote
      all of his or her working time to the performance of his or her functions
      pursuant to the Scheme Documents, provided that the Scheme Head shall be
      permitted to spend such working time as is necessary to carry out internal
      reporting in connection with such
functions.

            

    

     

    Liability
of Scheme Head

     

    
      	
              22.5

            	
              No personal
      liability shall attach to the Scheme Head by virtue of his or her signing
      any QS Compliance Certificate, Compliance Certificate or any certificate
      required pursuant to Condition 15.14 or Condition
  15.16(A).

            

    

     

     

    
      
        
        

      

      
        150

        
          

        

      

      
        
        

      

    

     

    
      
        	
                23.

              	
                SCHEME
      EXECUTIVE TEAM

              

      

    

     

    Appointment
of Scheme Executive Team

     

    
      	
              23.1

            	
              The
      Participant shall appoint a team of personnel to support the SOC and the
      Scheme Head in the performance of their functions (such personnel being,
      together with the Scheme Head, the “Scheme Executive
      Team”).

            

    

     

    Composition
of Scheme Executive Team

     

    
      	
              23.2

            	
              The
      Participant shall use its best endeavours to ensure that the Scheme
      Executive Team comprises a sufficient number of individuals with
      appropriate levels of expertise and industry qualifications having
      sufficient functional and product knowledge of the relevant Covered Asset
      Classes and their administrative requirements to be able to carry out
      their duties.  In addition, the Scheme Executive Team shall be
      supported by a sufficient number of administrative and other
      personnel.

            

    

     

    
      	
              23.3

            	
              The Scheme
      Executive Team shall include an individual who shall be nominated as the
      deputy to the Scheme Head and who is available to carry out the functions
      of the Scheme Head in his or her absence.  The Participant shall
      consult with the Treasury as to the identity of that deputy prior to that
      individual being appointed to that
role.

            

    

     

    
      	
              23.4

            	
              The Scheme
      Executive Team shall be organised in such a way as the SOC and the Scheme
      Head may determine in order to carry out its
  functions.

            

    

     

    
      	
              23.5

            	
              The
      organisational structure, and the initial composition, of the Scheme
      Executive Team shall be set out in the Detailed Organisational
      Structure.  Any change which the Participant proposes to make to
      the composition or structure of the Scheme Executive Team shall be subject
      to approval in writing by the SOC and shall be notified to the
      Treasury.

            

    

     

    Functions
of the Scheme Executive Team

     

    
      	
              23.6

            	
              The functions
      of the Scheme Executive Team shall
include:

            

    

     

    
      	
               
      

            	
              (A)

            	
              carrying out
      such functions and responsibilities as the SOC and the Scheme Head may
      determine from time to time in connection with the implementation and
      administration of, and compliance with, the Scheme
    Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              monitoring
      compliance with the Monitoring and Reporting Conditions (including
      production and delivery to the Treasury of Scheme Information and liaising
      with other personnel of the Participant’s Group if and to the extent
      required to prepare or obtain such Scheme
  Information);

            

    

     

    
      	
               
      

            	
              (C)

            	
              monitoring
      compliance with the Asset Management Conditions (including the Asset
      Management Framework and the Conflicts

            

    

     

     

    
      
        
        

      

      
        151

        
          

        

      

      
        
        

      

    

     

    
      	 	 	Management
      Policy) and the implementation of the Asset Management Framework and the
      Conflicts Management Policy, in which regard the functions of the Scheme
      Executive Team shall include:

    

     

    
      	
               
      

            	
              (i)

            	
              reviewing,
      and reporting to the Scheme Head in respect of, compliance with the Asset
      Management Conditions (including in respect of the Asset Management
      Framework and Conflicts Management
Policy);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              liaising with
      relevant personnel to ensure that any Conduct Requiring Approval is
      effected in accordance with the Asset Management
    Conditions;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              developing,
      maintaining and monitoring compliance with the Business-Level
      Guidelines;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              communicating
      the Business-Level Guidelines to relevant Representatives of the
      Participant’s Group, as necessary for the purposes of ensuring compliance
      with the Scheme Documents;

            

    

     

    
      	
               
      

            	
              (v)

            	
              liaising with
      relevant personnel as necessary in connection with the performance of
      their functions regarding the Scheme (including the Covered Assets,
      Related Party Assets and
Conflicts);

            

    

     

    
      	
               
      

            	
              (vi)

            	
              periodically
      reviewing, in conjunction with relevant personnel, the applicable
      investment objectives and strategies with respect to the Covered Assets
      and (to the extent necessary) Related Party Assets to ensure that they are
      consistent with the policies and principles described in the Scheme
      Documents and, as may be necessary or appropriate, implementing
      modifications to such investment objectives and strategies so as to ensure
      such consistency; and

            

    

     

    
      	
               
      

            	
              (vii)

            	
              monitoring
      the Management and Administration and performance of the Covered Assets
      and (to the extent necessary) Related Party Assets against such investment
      objectives and strategies; and

            

    

     

    
      	
               
      

            	
              (D)

            	
              to the extent
      that such attendance is required or envisaged by the Asset Management
      Framework or the Conflicts Management Policy, ensuring that a member of
      the Scheme Executive Team attends each meeting of any credit committee
      established by any member of the Participant’s Group relating to Covered
      Assets and/or Related Party Assets and exercises decision-making powers on
      such credit committee in such a way as the relevant member of the Scheme
      Executive Team thinks fit having regard to the requirements of the Scheme
      Documents.

            

    

     

    Roles
of Scheme Executive Team in relation to Information

     

    
      	
              23.7

            	
              The
      Participant shall ensure that:

            

    

     

     

    
      
        
        

      

      
        152

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              the Scheme
      Executive Team oversees and coordinates the preparation and delivery of
      the Scheme Information; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              each member
      of the Participant’s Group and its Representatives provide all such
      Information and assistance as the Scheme Executive Team considers
      necessary in order to prepare, produce or deliver any Scheme
      Information.

            

    

     

    Scheme
Executive Team to be dedicated

     

    
      	
              23.8

            	
              The
      Participant shall ensure that the members of the Scheme Executive Team
      shall (subject to Applicable Law and except as otherwise provided in the
      Accession Agreement) devote all of their working time to the performance
      of their functions in relation to the Scheme including those functions set
      out in Condition 23.6, provided that those members shall be permitted to
      spend such working time as is necessary to carry out internal reporting in
      connection with such functions.

            

    

     

    Resources
for Scheme Executive Team

     

    
      	
              23.9

            	
              The
      Participant shall permit the Scheme Executive Team to identify its own
      reasonable resource requirements (including additional personnel,
      information technology, legal, administrative and other resources) and
      recommend to the SOC any changes or additions necessary to meet its
      responsibilities under the Scheme Documents.  The Participant
      shall ensure that the Scheme Executive Team is provided with such
      resources.

            

    

     

    Authorities
of Scheme Executive Team

     

    
      	
              23.10

            	
              The
      Participant shall ensure that each member of the Participant’s Group shall
      give the Scheme Executive Team, and maintain, all such internal
      authorities as may be necessary or appropriate for the Scheme Executive
      Team to carry out its functions and responsibilities, including the
      authority to direct the Representatives of the members of the
      Participant’s Group to take (or refrain from taking) actions with respect
      to Covered Assets, Related Party Assets and
  Conflicts.

            

    

     

    Liability
of Scheme Executive Team members

     

    
      	
              23.11

            	
              No personal
      liability shall attach to any member of the Scheme Executive Team by
      virtue of his or her signing any QS Compliance Certificate, Compliance
      Certificate or any certificate required pursuant to Condition 15.14 or
      Condition 15.16(A).

            

    

     

     

    
      
        
        

      

      
        153

        
          

        

      

      
        
        

      

    

     

    
      
        	
                24.

              	
                GENERAL
      STAFFING REQUIREMENTS

              

      

    

     

    Retention
of sufficient and appropriate staff

     

    
      	
              24.1

            	
              The
      Participant shall (and shall ensure that each member of the Participant’s
      Group will) use its best endeavours to retain or, if applicable, recruit
      sufficient personnel to ensure full compliance with the Scheme Documents,
      such staff to be of such numbers, experience and skill, to be distributed
      across employment grades, and to have available to them such other
      resources, as in each case may be necessary and appropriate for those
      purposes and so as to ensure that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              there shall
      be no prejudice to, discrimination against, or disproportionate adverse
      effect on the Management and Administration of the Covered Assets when
      compared with the Management and Administration of other assets and
      exposures which are not Covered Assets (including Related Party
      Assets);

            

    

     

    
      	
               
      

            	
              (B)

            	
              the provision
      of staffing and other resources shall be at least equivalent as
      between:

            

    

     

    
      	
               
      

            	
              (i)

            	
              Covered
      Assets and other matters relating to the Scheme;
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the other
      businesses, assets and activities of the members of the Participant’s
      Group,

            

    

     

    in each case having
regard to (a) any reduction over time in the number of Covered Assets or the
Covered Amount in respect of all of the Covered Assets or any Covered Asset
Class and (b) any improvement in the systems, controls, and processes of the
members of the Participant’s Group that has been implemented for the purposes of
compliance with the Scheme; and

     

    
      	
               
      

            	
              (C)

            	
              the SOC, the
      Scheme Head and the Scheme Executive Team can perform their designated
      functions in accordance with the Scheme
  Documents.

            

    

     

    
      	
              24.2

            	
              The
      Participant shall (and shall ensure that each member of the Participant’s
      Group will):

            

    

     

    
      	
               
      

            	
              (A)

            	
              in
      determining whether to reassign personnel involved in the Management and
      Administration of Covered Assets to other matters, have regard to the
      benefits of continuity of personnel;
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              give notice
      in writing to the Treasury a reasonable period in advance of any proposed
      announcement or (if no announcement is proposed to be made) any proposed
      implementation of any material reductions in the number of personnel
      wholly or substantially involved in the Management and Administration of
      Covered Assets or any material changes in the distribution of those
      personnel across business units and
functions.

            

    

     

     

    
      
        
        

      

      
        154

        
          

        

      

      
        
        

      

    

     

    Appropriate
training

     

    
      	
              24.3

            	
              The
      Participant shall ensure that appropriate training is provided to all
      Representatives of the Participant’s Group as necessary or appropriate
      (including on the purpose, content and effects of the Asset Management
      Framework, the Conflicts Management Policy and any of the requirements of
      the Scheme Documents, together with any modifications made to them in
      accordance with the Scheme Documents from time to
  time).

            

    

     

    Monitoring
of performance

     

    
      	
              24.4

            	
              The
      Participant shall establish and maintain appropriate arrangements to
      monitor the performance by the Scheme Executive Team and all other
      relevant Representatives of the Participant’s Group of their duties
      pursuant to, and to ensure compliance with, the Scheme
      Documents.

            

    

     

    Scheme
Escalation Procedure

     

    
      	
              24.5

            	
              The
      Participant shall, by no later than the Accession Date, establish and
      maintain a confidential reporting mechanism to permit any individual to
      report matters of material concern regarding compliance with the Scheme
      Documents or the financial position or performance of any member of the
      Participant’s Group to (at the individual’s
  election):

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Scheme
      Head; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              a Treasury
      Observer (or an individual nominated in writing by such Treasury
      Observer),

            

    

     

    without passing
through or reporting to any other individual employed by any member of the
Participant’s Group and shall communicate that mechanism in writing to its
officers and employees (and, to the extent appropriate, its other
Representatives) and the Treasury in the Scheme Escalation
Procedure.

     

    
      	
              24.6

            	
              The “Scheme Escalation
      Procedure” means the written statement designated as such pursuant
      to the Accession Agreement.

            

    

     

     

    
      
        
        

      

      
        155

        
          

        

      

      
        
        

      

    

     

    
      
        	
                25.

              	
                PROVISION
      OF GROUP SHARED SERVICES

              

      

    

     

    Provision
of Shared Services for Scheme functions

     

    
      	
              25.1

            	
              The
      Participant shall ensure the provision from the Accession Date (i) to, and
      at the request of, the Scheme Head or the Scheme Executive Team, (ii) in
      relation to compliance with the Scheme Documents and (iii) generally in
      relation to the Covered Assets, of the same shared services as are
      provided from time to time by the Participant’s Group on a centralised
      basis in respect of assets and exposures which are not Covered Assets, and
      to the other businesses, operations and activities of the members of the
      Participant’s Group (“Shared Services”),
      including with respect to services relating to operations and operational
      management, finance and accounting, human resources, technology, risk,
      legal and compliance and Tax
compliance.

            

    

     

    
      	
              25.2

            	
              Shared
      Services shall be provided in accordance with Condition
    25.1:

            

    

     

    
      	
               
      

            	
              (A)

            	
              to the extent
      necessary to ensure compliance with the Scheme Documents, having regard to
      (i) any reduction over time in the number of Covered Assets or the Covered
      Amount in respect of all of the Covered Assets or any Covered Asset Class
      and (ii) any improvement in the systems, controls and processes of the
      members of the Participant’s Group that has been implemented for the
      purposes of compliance with the
Scheme;

            

    

     

    
      	
               
      

            	
              (B)

            	
              to a standard
      of skill and care and otherwise on a basis that is at least equivalent to
      the standards and (if any) commercial terms applicable to the provision of
      Shared Services to other members of the Participant’s Group or in respect
      of other assets or exposures, or businesses, operations or activities, of
      the members of the Participant’s
Group;

            

    

     

    
      	
               
      

            	
              (C)

            	
              in accordance
      with Applicable Law and Good Industry
Practice;

            

    

     

    
      	
               
      

            	
              (D)

            	
              on a basis
      such that the provision of such Shared Services does not prejudice the
      Covered Assets and is at least equivalent as between Covered Assets and
      other assets and exposures of the members of the Participant’s Group and
      on terms that are at least equivalent to the commercial terms in force (if
      any) from time to time for the provision of reasonably comparable services
      provided to other members of the Participant’s Group or in respect of
      other assets or exposures, or businesses, assets or activities, of the
      members of the Participant’s Group;
and

            

    

     

    
      	
               
      

            	
              (E)

            	
              on a basis
      such that the provision of such Shared Services shall be given at least
      the same priority as the provision of Shared Services to other members of
      the Participant’s Group or in respect of other businesses, assets or
      activities of the members of the Participant’s
  Group.

            

    

     

    Treasury
approval of substantive reductions in Shared Services

     

    
      	
              25.3

            	
              If any member
      of the Participant’s Group
proposes:

            

    

     

     

    
      
        
        

      

      
        156

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              to make any
      material reduction in the scope of Shared Services or the service levels
      applicable to any Shared Services;

            

    

     

    
      	
               
      

            	
              (B)

            	
              to make a
      material adverse amendment to the terms upon which such Shared Services
      are provided; or

            

    

     

    
      	
               
      

            	
              (C)

            	
              otherwise to
      make any amendment to the manner in which Shared Services are to be
      provided which will or is likely to prejudice or adversely affect
      compliance with the Scheme Documents in any material
    respect,

            

    

     

    such reduction or
amendment shall be subject to the prior approval of the Treasury.

     

     

    
      
        
        

      

      
        157

        
          

        

      

      
        
        

      

    

     

    
      
        	
                26.

              	
                DETAILED
      ORGANISATIONAL STRUCTURE

              

      

    

     

    Preparation
of Detailed Organisational Structure

     

    
      	
              26.1

            	
              The Treasury
      and the Participant shall designate a document setting out a detailed
      governance and organisational structure which is consistent with the
      provisions of this Part 5 and which reflects any additional governance and
      organisational structures of the Participant’s Group in so far as they
      are relevant to the operation of the Scheme as the “Detailed Organisational
      Structure”.  The Participant shall ensure that the
      governance and organisational structure of the Participant’s Group is at
      all times consistent in all material respects with the Detailed
      Organisational Structure, subject to the provisions of the Scheme
      Documents.

            

    

     

    Treasury
approval of changes to Detailed Organisational Structure

     

    
      	
              26.2

            	
              No proposed
      material change to the Detailed Organisational Structure shall be
      implemented unless:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      Participant has given notice to the Treasury of the proposed
      modification;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the proposed
      modification has been approved in writing by the SOC;
  and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the proposed
      modification has been approved by the
Treasury.

            

    

     

     

    
      
        
        

      

      
        158

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                27.

              	
                SYSTEMS,
      CONTROLS AND PROCESSES

              

      

    

     

    Development
and maintenance of systems

     

    
      	
              27.1

            	
              The
      Participant shall ensure that each member of the Participant’s Group and
      its Representatives shall develop, maintain and (subject to this Condition
      27) operate and implement all systems, controls, processes, practices and
      policies that are necessary to comply with its obligations under the
      Scheme Documents (including the Asset Management Conditions and the
      Monitoring and Reporting
Conditions).

            

    

     

    Priority
for Scheme systems

     

    
      	
              27.2

            	
              In so far as
      is consistent with Applicable Law, the development, maintenance, operation
      and implementation of such systems, controls and processes shall be given
      at least the same priority as any other operational, technical,
      organisational or systems-related project being developed and implemented
      by any member of the Participant’s
Group.

            

    

     

    
      	
              27.3

            	
              The
      Participant shall use its best endeavours to ensure that each member of
      the Participant’s Group and its Representatives in respect of Covered
      Assets and Related Party Assets establishes and maintains appropriate
      business continuity and disaster recovery procedures, in accordance with
      Good Industry Practice, for the purposes of mitigating the effect of any
      failure in its systems, controls, processes, practices and policies (or
      any other exceptional circumstances) on its ability to comply with the
      Scheme Documents.

            

    

     

    

    
      
        
           

        

        
          159

          
            

          

        

        
           

        

      

    

    

    PART
6: REMUNERATION

     

    
      	
              28.

            	
              REMUNERATION
      POLICY

            

    

     

    Development
of Remuneration Policy; Content of Remuneration Policy

     

    
      	
              28.1

            	
              The
      Participant shall ensure that the remuneration committee of the board of
      directors of its Ultimate Parent (the “Remuneration Committee”)
      shall, as soon as reasonably practicable following the Accession Date,
      prepare in accordance with Condition 28.3 a policy for the remuneration of
      all directors, officers and employees of the Participant’s Group (such
      policy, as may be amended or replaced from time to time, the “Remuneration
      Policy”).  The Participant shall ensure that the
      Remuneration Policy is adopted and applied in full with effect from no
      later than the start of the Participant’s next financial year commencing
      on or after the Accession Date.

            

    

     

    
      	
              28.2

            	
              The
      Participant shall provide a copy of the Remuneration Policy (and any
      modifications to it from time to time) to the Treasury as soon as
      practicable following its adoption.

            

    

     

    
      	
              28.3

            	
              The
      Participant shall ensure that the Remuneration
  Policy:

            

    

     

    
      	
               
      

            	
              (A)

            	
              complies with
      the FSA Remuneration Code;

            

    

     

    
      	
               
      

            	
              (B)

            	
              complies with
      the Remuneration Conditions if and to the extent the Remuneration Policy
      relates to the remuneration of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Scheme
      Head, the other members of the SOC or any member of the Scheme Executive
      Team (together, the “Scheme
      Personnel”);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any executive
      director of the Participant’s Ultimate Parent (each, a “Director”);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any executive
      officer or member of senior management who reports directly to the Chief
      Executive Officer of the Participant’s Ultimate Parent and whose
      responsibilities extend to Scheme-related matters or who is otherwise
      involved in the Management and Administration of Covered Assets or Related
      Party Assets (“Level 1
      Executives”); or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              any of the
      Level 2 Executives (such Level 2 Executives, together with each Director
      and each Level 1 Executive, the “Senior Executives”);
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              sets out the
      specific policies which shall be implemented in respect of the
      remuneration of each category of Scheme Personnel (such categorisation to
      be undertaken by reference to the employment grade or the level of
      responsibility of the relevant Scheme Personnel), and each Senior
      Executive, in order to comply with the Remuneration
      Conditions,

            

    

     

     

    
      
        
        

      

      
        160

        
          

        

      

      
        
        

      

    

     

    and shall use its
best endeavours to ensure that its Remuneration Policy shall at all times comply
with Applicable Law.

     

    
      	
              28.4

            	
              The
      Participant shall deliver to the Treasury a list of 10 to 15 executive
      officers or members of senior management (in addition to the Level 1
      Executives) whose responsibilities extend to Scheme-related matters or who
      are otherwise involved in the Management and Administration of Covered
      Assets or Related Party Assets (the executive officers or members of
      senior management so designated being “Level 2 Executives”) in
      the final quarter of each financial year following the Accession
      Date.

            

    

     

    
      	
              28.5

            	
              If any member
      of the SOC also falls within the definition of a “Senior Executive”, his
      or her remuneration shall be determined with regard exclusively to the
      provisions relating to Senior
Executives.

            

    

     

    Remuneration
requirements: Scheme Personnel

     

    
      	
              28.6

            	
              The
      Participant shall ensure that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the quantum
      and structure of the remuneration paid to the Scheme Personnel is at least
      equivalent to the remuneration of other personnel of the Participant’s
      Group who have the same employment grades and/or equivalent levels of
      responsibility but who are not engaged in matters relating to the Scheme
      or the Management and Administration of the Covered Assets;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Scheme
      Personnel shall be remunerated in accordance with employment gradings that
      are appropriate to the responsibilities of the relevant Scheme Personnel
      when compared with the employment grades and responsibilities of other
      individuals employed by the members of the Participant’s
      Group.

            

    

     

    
      	
              28.7

            	
              The
      Participant shall ensure that a substantial majority (or such other
      appropriate proportion as may be agreed in writing by the Treasury) of any
      incentive and bonus components of the remuneration of the Scheme Personnel
      shall be linked to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              a specific
      target or targets in respect of the long-term performance of the Covered
      Assets and Covered Asset Classes, adjusted for risk (a “Performance Target”);
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              compliance by
      the Participant (and the other members of the Participant’s Group) with
      the Scheme Documents, taking into account each individual’s own
      performance in seeking to ensure overall compliance with the Scheme
      Documents (a “Compliance
      Requirement”),

            

    

     

    and that the
incentive and bonus components of the remuneration of Scheme Personnel shall be
at least equivalent to those of other personnel of the Participant’s Group
(having regard to their employment grades and levels of
responsibility).

     

     

    
      
        
        

      

      
        161

        
          

        

      

      
        
        

      

    

     

    Remuneration
requirements: Senior Executives

     

    
      	
              28.8

            	
              The
      Participant shall ensure that an appropriate proportion of the incentive
      and bonus components of the remuneration of each Senior Executive shall be
      linked to that Senior Executive’s performance as measured against a
      Performance Target and a Compliance
Requirement.

            

    

     

    
      	
              28.9

            	
              The
      Participant shall not, in respect of any Senior Executive, set, implement
      or amend any Performance Target or Compliance Requirement, or any
      proportion required for the operation of Condition 28.8, unless the
      Treasury has been notified, and has given its prior consent to the
      setting, implementation or amendment (as the case may be) of the proposed
      Performance Target, Compliance Requirement or
  proportion.

            

    

     

    
      	
              28.10

            	
              For the
      purpose of Conditions 28.8 and 28.9, but subject to Condition 28.11, the
      “appropriate
      proportion” for each Senior Executive shall be no less than the
      proportion of: (x) the total risk-adjusted value of all Risk-Weighted
      Assets of the Participant’s Group in respect of which management or
      administration responsibility, or substantive control or influence, rests
      wholly or partially with the relevant Senior Executive; represented by (y)
      Covered Assets (the “RWA
      Test”). By way of example (which is illustrative only) if a Senior
      Executive has management or administration responsibilities, control or
      influence over or in respect of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      Participant’s Group as a whole, the RWA Test will be applied by reference
      to the proportion of the total risk-adjusted value of all Risk-Weighted
      Assets of the Participant’s Group represented by Covered Assets;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              a specific
      business area or division of the Participant’s Group, the RWA Test will be
      applied by reference to the proportion of the total risk-adjusted value of
      all Risk-Weighted Assets of the relevant business area or division of the
      Participant’s Group represented by Covered
  Assets.

            

    

     

    
      	
              28.11

            	
              Notwithstanding
      Condition 28.10, the Treasury may consent to the use of a substitute
      methodology to the RWA Test either with respect to: (i) a particular
      Senior Executive or Senior Executives; and/or (ii) a particular
      performance year or performance years. The Treasury and the Participant
      shall consult with each other in good faith as to whether a substitute
      methodology to the RWA Test is demonstrably more appropriate and should be
      adopted. For the avoidance of doubt, such substitute methodology may
      result in the appropriate proportion being higher or lower than the
      proportion that would otherwise result from the application of the RWA
      Test.

            

    

     

    
      	
              28.12

            	
              For the
      purpose of Condition 28.10:

            

    

     

    
      	
               
      

            	
              (A)

            	
              “Risk-Weighted Asset”
      means any asset or off-balance sheet liability that should be taken into
      consideration for the purposes of calculating the consolidated capital
      requirement of the Participant’s Group in respect of credit risk;
      and

            

    

     

     

    
      
        
        

      

      
        162

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              the “risk-adjusted value” of
      Risk-Weighted Assets shall be determined in accordance with the
      FSA-approved internal model used to calculate the capital requirements of
      the Participant’s consolidated Group, or such other method as may be
      required by the FSA from time to time, in the period to which the
      incentive and bonus components of the relevant Senior Executive’s
      remuneration relate.

            

    

     

    In determining the
risk-adjusted value of any Risk-Weighted Asset that is also a Covered Asset no
account shall be taken of the effect of the Scheme (and for this purpose (x)
amounts deducted from capital resources in respect of Covered Assets shall be
treated as if they had not been so deducted and were instead asset values
appropriately risk-weighted to reflect that deduction and (y) the risk-weighting
applied in respect of defaulted assets shall be appropriately adjusted by
consultation between the Treasury and the Participant (each acting in good
faith)).

     

     

    
      
        
        

      

      
        163

        
          

        

      

      
        
        

      

    

     

    
      
        	
                29.

              	
                IMPLEMENTATION
      OF REMUNERATION POLICY

              

      

    

     

    
      	
              29.1

            	
              The
      Participant shall ensure that the Remuneration Committee sets the
      remuneration of the Scheme Personnel and each Senior Executive in
      accordance with the Remuneration
Policy.

            

    

     

    
      	
              29.2

            	
              The SOC shall
      be responsible for:

            

    

     

    
      	
               
      

            	
              (A)

            	
              consulting
      with the Remuneration Committee over the setting of the remuneration of
      the Scheme Personnel;

            

    

     

    
      	
               
      

            	
              (B)

            	
              evaluating
      the performance of the Scheme Head and the other members of the Scheme
      Executive Team against such goals, objectives and performance criteria as
      are specified in the Remuneration Policy, and providing a report of their
      evaluations to the Remuneration Committee;
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              liaising with
      the Scheme Executive Team to identify any material concerns that the
      Scheme Executive Team may have regarding the performance of personnel
      other than Scheme Personnel who are involved in the Management and
      Administration of Covered Assets or Related Party Assets to a material
      extent or who carry out other functions in connection with the
      Participant’s participation in the Scheme to a material extent, including
      any respects in which the Scheme Executive Team considers that the
      performance of such personnel may not comply with the Scheme Documents in
      any material respect, and reporting any such concerns (if the SOC
      considers them to be legitimate) to the Remuneration
      Committee.

            

    

     

    
      	
              29.3

            	
              The
      Participant shall ensure that any reports by the SOC to the Remuneration
      Committee in respect of the remuneration of Scheme Personnel are taken
      into account for the purposes of setting the remuneration of the Scheme
      Personnel (including any incentive and bonus components of such
      remuneration).

            

    

     

    
      	
              29.4

            	
              If any
      concerns in respect of the performance of personnel (other than Scheme
      Personnel) are provided by the SOC to the relevant senior managers within
      the Participant’s Group pursuant to Condition 29.2(C), the Participant
      shall ensure that such concerns are taken into account for the purposes of
      determining any incentive and bonus components of the remuneration of such
      personnel.

            

    

     

    
      	
              29.5

            	
              The
      Participant shall provide to the Treasury, as soon as practicable after
      request by the Treasury:

            

    

     

    
      	
               
      

            	
              (A)

            	
              such
      Information regarding the remuneration payments, practices and policies of
      the members of the Participant’s Group in respect of each category of
      Scheme Personnel as the Treasury may reasonably request from time to time,
      to be provided on an anonymised basis;
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              if and to the
      extent that the Treasury so requests, a narrative description evidencing
      the manner in which the Remuneration Policy and its implementation
      satisfies the Remuneration
Conditions.

            

    

     

    

    
      
        
           

        

        
          164

          
            

          

        

        
           

        

      

    

    

    PART
7: REPRESENTATIONS AND WARRANTIES

     

    
      	
              30.

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              30.1

            	
              The
      Participant represents and warrants (on behalf of itself and, where
      expressly stated, on behalf of each other applicable member of the
      Participant’s Group) to the Treasury on the Signing Date and on the
      Accession Date by reference to the facts and circumstances then existing,
      as follows:

            

    

     

    
      	
               
      

            	
              (A)

            	
              The
      Participant and each other member of the Participant’s Group is a
      corporation or company with limited liability, duly incorporated and
      validly existing under the law of its jurisdiction of incorporation and
      the Participant and each other member of the Participant’s Group has the
      power to own its assets and carry on its business as it is being
      conducted.

            

    

     

    
      	
               
      

            	
              (B)

            	
              The
      obligations expressed to be assumed by the Participant and (where
      applicable) each other member of the Participant’s Group in the Scheme
      Documents, subject to any general principles of law limiting such
      obligations which are specifically referred to in any legal opinion
      delivered pursuant to Condition 3, legal, valid, binding and enforceable
      obligations.

            

    

     

    
      	
               
      

            	
              (C)

            	
              The
      Participant and (where applicable) each other member of the Participant’s
      Group has the power to enter into, perform and deliver, and has taken all
      necessary action to authorise its entry into, performance and delivery of,
      the Scheme Documents to which it is a party and the transactions
      contemplated by such Scheme Documents (including the power to pay fees,
      costs and expenses provided for in such Scheme
  Documents).

            

    

     

    
      	
               
      

            	
              (D)

            	
              The entry
      into and performance by the Participant and (where applicable) each other
      member of the Participant’s Group of, and the transactions contemplated
      by, the Scheme Documents do not conflict
with:

            

    

     

    
      	
               
      

            	
              (i)

            	
              any
      Applicable Law; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Participant’s or any such other member of the Participant’s Group’s
      constitutional documents.

            

    

     

    
      	
               
      

            	
              (E)

            	
              (i)

            	
              All
      Authorisations required:

            

    

     

    
      	
               
      

            	
              (a)

            	
              to enable the
      Participant and (where applicable) each other member of the Participant’s
      Group lawfully to enter into, exercise its rights and comply with its
      obligations pursuant to the Scheme Documents;
  and

            

    

     

    
      	
               
      

            	
              (b)

            	
              to make the
      Scheme Documents admissible in evidence in its jurisdiction of
      incorporation; and

            

    

     

     

    
      
        
        

      

      
        165

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              all material
      Authorisations required to enable the Participant and each other member of
      the Participant’s Group lawfully to carry on its
  business,

            

    

     

    have been obtained
or effected and are in full force and effect and, so far as the Participant
(acting reasonably and having made all due and reasonable enquiries) is aware,
there are no circumstances which might reasonably be expected to lead to any of
such Authorisations being revoked, suspended, varied or refused renewal to an
extent which would, or would be reasonably likely to, be (singly or in the
aggregate) material in the context of the Scheme Documents.

     

    
      	
               
      

            	
              (F)

            	
              No Covered
      Asset is subject to any Security other than Security falling within
      paragraph (A), (B) or (C) of Condition
13.1.

            

    

     

    Representation
as to no Material Criminal Conduct

     

    
      	
              30.2

            	
              The
      Participant further represents and warrants (on behalf of itself and each
      other member of the Participant’s Group) to the Treasury on the Accession
      Date by reference to the facts and circumstances then existing that, so
      far as the Participant and each other member of the Participant’s Group is
      aware after all due and reasonable enquiry, there is and has been no
      criminal conduct under Applicable Law on the part of any member of the
      Participant’s Group or any office or branch of any member of the
      Participant’s Group or any of their respective directors, officers or
      employees affecting or relating to the Covered Assets or any of them which
      is material or systemic in relation to that member of the Participant’s
      Group, office or branch as the case may be (“Material Criminal
      Conduct”).

            

    

     

    Disclosure

     

    
      	
              30.3

            	
              The Treasury
      shall not be entitled to claim that any matter or circumstance causes any
      Representation set out in Condition 30.1 to be breached if and to the
      extent that such matter or circumstance has been fairly disclosed in
      writing by the Participant and acknowledged in writing by the Treasury, in
      each case on or before the date on which the Representation is made or
      deemed to have been made, but no such disclosure
  shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              be construed
      to limit, affect or prejudice any other right, power or remedy provided by
      law or under or pursuant to any Scheme Document;
  or

            

    

     

    
      	
               
      

            	
              (B)

            	
              without
      prejudice to the generality of paragraph (A)
  above:

            

    

     

    
      	
               
      

            	
              (i)

            	
              prevent the
      Treasury or any Indemnified Person from making any claim pursuant to the
      Indemnity in respect of Indemnified Amounts arising out of or in
      connection with any Representation being or proving to have been incorrect
      or misleading when made or deemed to have been made (disregarding for
      these purposes any disclosures made by the Participant pursuant to this
      Condition 30.3); or

            

    

     

     

    
      
        
        

      

      
        166

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              where a
      Step-In Trigger or a Remedy Event arises out of or in connection with any
      matter or circumstance the subject of any such disclosure, prevent the
      Treasury from exercising any of its rights under Conditions 31 and 32 in
      respect of that Step-In Trigger or Remedy
Event.

            

    

     

    This Condition 30.3
shall not apply to any Representation made or deemed to have been made pursuant
to Condition 30.2.

     

    

    
      
        
           

        

        
          167

          
            

          

        

        
           

        

      

    

    

    PART
8: REMEDIES AND DISPUTES

     

    
      	
              31.

            	
              REMEDY
      EVENTS

            

    

     

    Defined terms

     

    
      	
              31.1

            	
              “Remedy Event Date” means
      the date on which a Remedy Event
occurs.

            

    

     

    
      	
              31.2

            	
              A “Remedy Event” means a
      Terminable Event or a Suspensory
Event.

            

    

     

    
      	
              31.3

            	
              A “Suspensory Event” shall
      occur if the Participant breaches a Specified
  Obligation.

            

    

     

    
      	
              31.4

            	
              A “Terminable Event” shall
      occur if:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      Participant breaches a Specified Obligation and that breach continues
      unremedied by the Participant and unwaived by the Treasury for a period
      of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              where the
      Participant has delivered completed Post-Accession Data Fields by the date
      or dates (and with the frequency) specified for such delivery in the Data
      Field Rules, but those Post-Accession Data Fields have not been accurately
      completed in accordance with the Data Field Rules, 120 Business Days;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in each other
      case, 60 Business Days,

            

    

     

    following the
relevant Partial Suspension Effective Date or Full Suspension Effective Date in
respect of that breach;

     

    
      	
               
      

            	
              (B)

            	
              the
      Participant notifies the Treasury of any Material Criminal Conduct;
      or

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      Participant repudiates a Scheme
Document.

            

    

     

    
      	
              31.5

            	
              “Specified Obligations”
      means each of the obligations summarised in column (B) in the table
      below.  If and to the extent that there is any conflict or
      inconsistency between the summary of any Specified Obligation as set out
      in column (B) in the table below and the Specified Obligation itself, the
      latter shall prevail.  Column (C) of the table below states
      whether or not the breach of a Specified Obligation is capable of being
      remedied for the purposes of this Condition
  31.  

            

    

     

    
      
        	
                 (A)

              	
                (B)

              	
                (C)

              
	
                Part

              	
                Specified
      Obligation

              	
                Whether
      capable of being remedied

              
	
                2

              	
                To make any
      payment to the Treasury in accordance with Condition ‎8

              	
                Yes

              
	
                To pay to the
      Treasury Establishment and Accession Costs in accordance with
      Condition

              	
                Yes

              

      

    

     

     

    
      
        
        

      

      
        168

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 (A)

              	
                (B)

              	
                (C)

              
	
                Part

              	
                Specified
      Obligation

              	
                Whether
      capable of being remedied

              
	 
    	
                ‎9

              	 
    
	
                To pay to the
      Treasury Management and Administration Costs in accordance with Condition
      ‎9

              	
                Yes

              
	
                3

              	
                To ensure
      that the Asset Management Framework and the Conflicts Management Policy
      are reviewed by the SOC in accordance with Condition ‎10.26

              	
                Yes

              
	
                Not to modify
      the Asset Management Framework, the Conflicts Management Policy or the
      Credit Aggregation Policy otherwise than in accordance with Condition
      ‎10.27

              	
                Yes

              
	
                Not to
      transfer rights, responsibilities, duties or obligations in connection
      with any Covered Asset otherwise than in accordance with Condition ‎11.1

              	
                Yes

              
	
                To ensure, in
      accordance with Condition ‎12,
      that no Prohibited Conduct occurs

              	
                Yes, subject
      to Condition ‎31.9

              
	
                To comply
      with Condition ‎13.1

              	
                Yes

              
	
                To comply
      with Conditions ‎13.2
      within the 20 Business Day period referred to therein and Condition ‎13.4 within the 90 day
      period referred to therein

              	
                No

              
	
                Not to enter
      into arrangements (including regarding hedging), or allow any such
      arrangement to be entered into, in breach of Condition ‎13.6

              	
                Yes

              
	
                4

              	
                To prepare
      and deliver Requested Reports to the Treasury in accordance with
      Conditions ‎15.2 and ‎15.4 if and to the
      extent that such Requested Reports are to contain, or be generated from,
      Information

              	
                Yes

              
	
                To deliver
      Compliance Certificates to the Treasury in accordance with
      Conditions ‎15.6 and ‎15.8

              	
                Yes

              

      

    

    

     

    
      
        
        

      

      
        169

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 (A)

              	
                (B)

              	
                (C)

              
	
                Part

              	
                Specified
      Obligation

              	
                Whether
      capable of being remedied

              
	 
    	
                To deliver
      Notification Reports to the Treasury in accordance with Condition ‎15.7

              	
                Yes

              
	
                To deliver
      certificates to the Treasury regarding the absence of Material Criminal
      Conduct, in accordance with Condition ‎15.16(A)

              	
                Yes

              
	
                To notify the
      Treasury of any Material Criminal Conduct in accordance with Condition
      ‎15.16(B)

              	
                Yes

              
	
                To produce
      and deliver Quarterly Statements, statements in the form of the Agreed
      Model, Quarterly Statement Data and QS Compliance Certificates, in each
      case in accordance with Condition ‎16

              	
                Yes

              
	
                To produce
      and deliver corrected Quarterly Statement Data and reports describing the
      corrections made, in accordance with Condition ‎16.11

              	
                Yes

              
	
                To notify the
      Treasury of Proposed Corrections in accordance with Condition ‎17.5

              	
                Yes

              
	
                To deliver
      Post-Accession Data (and updates and corrections thereto) to the Treasury
      in accordance with Conditions ‎17.10 to ‎17.12
      (inclusive)

              	
                Yes

              
	
                To retain and
      not destroy (or (to the extent within its control) permit the destruction
      of) Books and Records, in accordance with Conditions ‎18.3
      and ‎18.5

              	
                No

              
	
                To prepare
      and maintain an Assurance Plan in accordance with Conditions ‎19.1
      and ‎19.2

              	
                Yes

              
	
                To comply
      with its obligations pursuant to Condition ‎19.3

              	
                Yes

              
	
                To deliver
      any material modifications to the  Assurance Plan to the
      Treasury in accordance

              	
                Yes

              

      

    

     

     

    
      
        
        

      

      
        170

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 (A)

              	
                (B)

              	
                (C)

              
	
                Part

              	
                Specified
      Obligation

              	
                Whether
      capable of being remedied

              
	 
    	
                with
      Condition ‎19.5

              	 
    
	
                To prepare
      and deliver to the SOC and the Treasury the Annual Assurance Report in
      accordance with Condition ‎19.6
      together with such other reports and Information required by the Treasury
      pursuant to Condition ‎19.7

              	
                Yes

              
	
                To ensure
      that the reconciliation exercise described in Condition ‎19.9 is performed and
      reported within the 30 Business Day period referred to
    therein

              	
                Yes

              
	
                To comply
      with the requirements of Conditions ‎20.3 and ‎20.4 in connection
      with any audit, investigation or review carried out or commissioned by the
      Treasury

              	
                Yes

              
	
                5

              	
                To establish
      and maintain the SOC in accordance with Condition ‎21.1

              	
                Yes

              
	
                To appoint
      the Scheme Head in accordance with Condition ‎22.1

              	
                Yes

              
	
                To appoint
      the Scheme Executive Team in accordance with Condition ‎23.1

              	
                Yes

              
	
                To establish
      and maintain a confidential reporting mechanism, and to communicate that
      mechanism to its officers, employees, other Representatives and the
      Treasury, in accordance with Condition ‎24.5

              	
                Yes

              
	
                6

              	
                To prepare,
      adopt and apply a Remuneration Policy in accordance with Condition ‎28.1

              	
                Yes

              
	
                To provide a
      copy of the Remuneration Policy (and any modifications to it) to the
      Treasury in accordance with Condition ‎28.2

              	
                Yes

              
	
                Not to set,
      implement or amend any Performance Target or Compliance Requirement, or
      any proportion set under

              	
                Yes

              

      

    

     

     

    
      
        
        

      

      
        171

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 (A)

              	
                (B)

              	
                (C)

              
	
                Part

              	
                Specified
      Obligation

              	
                Whether
      capable of being remedied

              
	 
    	
                Condition
      ‎28.8, other than
      in accordance with Condition ‎28.9

              	 
    
	
                To provide to
      the Treasury the Information required by and in accordance with
      Condition ‎29.5

              	
                Yes

              
	
                8

              	
                Not to
      appoint any Step-In Manager unless the terms of engagement have been
      submitted to and approved by the Treasury in accordance with Condition
      ‎32.13 and
      otherwise comply with Condition ‎32.13

              	
                Yes

              
	
                To appoint
      the Step-In Manager in accordance with Condition ‎32.13 or ‎32.14
      (as the case may be)

              	
                Yes

              
	
                To cooperate
      with the Step-In Manager in accordance with Condition ‎32.18

              	
                Yes

              
	
                To comply
      with the instructions of the Step-In Manager in accordance with Condition
      ‎32.19

              	
                Yes

              
	
                To comply
      with the terms of the Step-In Manager’s appointment in accordance with
      Condition ‎32.20

              	
                Yes

              
	
                To comply
      with the restrictions set out in Condition ‎32.21 regarding the
      termination or variation of the appointment of any Step-In
      Manager

              	
                Yes

              
	
                To terminate
      the appointment of a Step-In Manager and appoint an alternative Step-In
      Manager as required by the Treasury in accordance with Condition ‎32.22

              	
                Yes

              
	
                To make
      payments under the Indemnity when due pursuant to Condition ‎33

              	
                Yes

              
	
                9

              	
                To comply
      with Conditions ‎38.1 to ‎38.6
      (inclusive)

              	
                Yes

              

      

    

     

     

    
      
        
        

      

      
        172

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 (A)

              	
                (B)

              	
                (C)

              
	
                Part

              	
                Specified
      Obligation

              	
                Whether
      capable of being remedied

              
	
                10

              	
                Not to effect
      any Transfer in breach of Condition ‎41.1

              	
                Yes

              
	
                To enter into
      agreements in connection with any Transfer by the Treasury, as required by
      Condition ‎41.4

              	
                Yes

              
	
                n/a

              	
                To comply
      with the terms of, and to pay all costs and expenses incurred in relation
      to and as specified in, the State Aid Deed

              	
                Yes

              
	
                n/a

              	
                Each other
      Specified Obligation specified in the Accession Agreement

              	
                As specified
      in the Accession
Agreement

              

      

    

     

    Partial
Suspension Notice

     

    
      	
              31.6

            	
              If a
      Suspensory Event occurs but relates solely to a particular Covered Asset,
      or to a group of Covered Assets or to a Covered Asset Class, then the
      Treasury may, at any time, deliver to the Participant a “Partial Suspension Notice” in respect of that
      Covered Asset, or group of Covered Assets or Covered Asset Class (as
      applicable).  A Partial Suspension Notice must state that it
      constitutes a Partial Suspension Notice and
  specify:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Specified
      Obligation which, having been breached, has given rise to the relevant
      Suspensory Event;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Covered
      Asset, group of Covered Assets or Covered Asset Class (as relevant) to
      which the Suspensory Event relates and which the Treasury is designating
      as “Partial Suspension Assets” (the Covered Asset, or group of Covered
      Assets or Covered Asset Class so designated being “Partial Suspension Assets”);
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the date from
      which such designation shall take effect (the “Partial Suspension Effective
      Date”), such date to be no earlier than the date of the Partial
      Suspension Notice.

            

    

     

    Full
Suspension Notice

     

    
      	
              31.7

            	
              If a
      Suspensory Event occurs but does not relate solely to a particular Covered
      Asset, or to a group of Covered Assets or to a Covered Asset Class, the
      Treasury may, at any time, deliver a “Full Suspension Notice”
      to the Participant.  A Full Suspension Notice must state
      that it constitutes a Full Suspension Notice and
      specify:

            

    

     

     

    
      
        
        

      

      
        173

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              the Specified
      Obligation which, having been breached, has given rise to the relevant
      Suspensory Event;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Covered
      Assets which the Treasury is designating as “Full Suspension Assets”
      (the Covered Assets so designated being “Full Suspension
      Assets”), provided that unless the event giving rise to the
      Terminable Event is a failure to comply with the requirements of the State
      Aid Deed (in which case the Treasury may designate any or all of the
      Covered Assets as Full Suspension Assets), the Treasury may make such a
      designation only in respect of (a) Covered Asset(s) which was/were
      either:

            

    

     

    
      	
               
      

            	
              (i)

            	
              (a)
      Non-Triggered Asset(s) on the relevant Remedy Event Date;
    or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              (a) Triggered
      Asset(s) on the relevant Remedy Event Date which had a Trigger Date
      falling within the nine Quarters to and including the Quarter in which the
      relevant Remedy Event Date
occurred,

            

    

     

    
      	
               
      

            	
              (C)

            	
              the date from
      which such designation shall take effect (the “Full Suspension Effective
      Date”), such date to be no earlier than the date of the Full
      Suspension Notice.

            

    

     

    Consequences
of a Partial Suspension Notice or a Full Suspension Notice

     

    
      	
              31.8

            	
              If a
      Suspensory Event is remedied (or waived by the Treasury) prior to the
      relevant Partial Suspension Effective Date or Full Suspension Effective
      Date (as appropriate), then the corresponding Partial Suspension Notice or
      Full Suspension Notice (as appropriate) shall not take
    effect.

            

    

     

    
      	
              31.9

            	
              A breach of
      the Specified Obligation to ensure that no Prohibited Conduct occurs
      following the Accession Date shall not be capable of being remedied by
      ratification of the Prohibited Conduct in accordance with the Conduct
      Approvals Hierarchy.

            

    

     

    
      	
              31.10

            	
              If a Partial
      Suspension Notice is delivered by the Treasury to the Participant and,
      prior to the relevant Partial Suspension Effective Date, the Suspensory
      Event is not remedied (or waived by the Treasury),
  then:

            

    

     

    
      	
               
      

            	
              (A)

            	
              for the
      purpose of Condition 8 there shall be deemed to be no Losses (whether
      arising before or after the Partial Suspension Effective Date) with
      respect to each Partial Suspension Asset (but without prejudice to the
      operation of the Scheme Documents in respect of Recoveries attributable to
      each such Partial Suspension Asset whether arising before or after the
      Partial Suspension Effective Date) and such adjustments shall be made
      pursuant to and in accordance with Condition 8.7 as are required to give
      effect to this paragraph (A); and

            

    

     

    
      	
               
      

            	
              (B)

            	
              subject to
      paragraph (A) above, the Partial Suspension Notice shall otherwise operate
      without prejudice to: (i) the Treasury’s obligations to make payments
      pursuant to Condition 8; and (ii) the Participant’s obligations to make
      payments 

            

    

     

     

    
      
        
        

      

      
        174

        
          

        

      

      
        
        

      

    

     

    
      	 	 	pursuant to
      Condition 8 and otherwise to comply with its obligations pursuant to the
      Scheme Documents (including its obligations to deliver Quarterly
      Statements pursuant to Condition 16).

    

     

    
      	
              31.11

            	
              If a Covered
      Asset is designated as a Partial Suspension Asset in any Partial
      Suspension Notice, and the relevant Suspensory Event is remedied (or
      waived by the Treasury) in respect of that Partial Suspension Asset before
      it becomes a Terminable Event, the relevant Partial Suspension Asset shall
      cease to constitute a Partial Suspension Asset, Condition 31.10 shall
      cease to apply in respect of that Partial Suspension Asset and such
      adjustments shall be made pursuant to and in accordance with Condition 8.7
      as are required to give effect to this Condition
  31.11.

            

    

     

    
      	
              31.12

            	
              If a Full
      Suspension Notice is delivered by the Treasury to the Participant and,
      prior to the relevant Full Suspension Effective Date, the Suspensory Event
      is not remedied (or waived by the Treasury),
  then:

            

    

     

    
      	
               
      

            	
              (A)

            	
              for the
      purpose of Condition 8 there shall be deemed to be no Losses (whether
      arising before or after the Full Suspension Effective Date) with respect
      to each Full Suspension Asset (but without prejudice to the operation of
      the Scheme Documents in respect of Recoveries attributable to each such
      Full Suspension Asset whether arising before or after the Full Suspension
      Effective Date) and such adjustments shall be made pursuant to and in
      accordance with Condition 8.7 as are required to give effect to this
      paragraph (A); and

            

    

     

    
      	
               
      

            	
              (B)

            	
              subject to
      paragraph (A) above, the Full Suspension Notice shall otherwise operate
      without prejudice to the Participant’s obligations to make payments
      pursuant to Condition 8 and otherwise pursuant to the Scheme
      Documents; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      Treasury’s obligations to make payments pursuant to Condition 8, or
      otherwise pursuant to the Scheme Documents, shall be suspended and no
      interest shall accrue in respect of any such suspended
      payments.

            

    

     

    
      	
              31.13

            	
              If a Covered
      Asset is designated as a Full Suspension Asset in any Full Suspension
      Notice, and the relevant Suspensory Event is remedied (or waived by the
      Treasury) in respect of that Full Suspension Asset before it becomes a
      Terminable Event, the relevant Full Suspension Asset shall cease to
      constitute a Full Suspension Asset, paragraph (A) of Condition 31.12
      shall cease to apply in respect of that Full Suspension Asset and such
      adjustments shall be made pursuant to and in accordance with Condition 8.7
      as are required to give effect to this Condition 31.13.  If the
      relevant Suspensory Event is remedied (or waived by the Treasury) in
      respect of all the Full Suspension Assets before it becomes a Terminable
      Event, the Full Suspension Assets shall cease to constitute Full
      Suspension Assets, Condition 31.12 shall cease to apply, such adjustments
      shall be made pursuant to and in accordance with Condition 8.7 as
      are  required to give effect to this Condition 31.13 and the
      suspension of the Treasury’s payment obligations pursuant to Condition
      31.12(C) shall cease.

            

    

     

    
      	
              31.14

            	
              Without
      prejudice to Conditions 4 to 8 (inclusive) or the generality of
      Conditions 31.6 and 31.7, if:

            

    

     

     

    
      
        
        

      

      
        175

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              the Treasury
      has exercised, or sought to exercise, any of its rights pursuant to
      Condition 20 in order to verify, in respect of any Covered Asset
      identified in the Quarterly Statement Data accompanying any Quarterly
      Statement, either:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      obligation of the Treasury to make a payment pursuant to the Scheme
      Documents; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the amounts
      attributable to such Covered Asset which are (a) reflected in the
      Quarterly Statement or (b) contained in the underlying Quarterly Statement
      Data; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      Participant (or any of its Representatives) has not provided or made
      available to the Treasury (or its Representatives) reasonable evidence, in
      respect of any such Covered Asset, of such matters as are necessary to
      enable verification of the matters described in paragraph (A), including
      with respect to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      occurrence of any Trigger or Trigger
Date;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the amount of
      any Losses which have occurred or of Recoveries which have been made in
      any period; or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      satisfaction of the Asset Eligibility Criteria or Asset Continuity
      Requirements,

            

    

     

    then the Treasury
may elect to deliver a Partial Suspension Notice to the Participant designating
such Covered Asset as a Partial Suspension Asset.  Nothing in this
Condition 31.14 shall require disclosure of sensitive personal data (as defined
in the Data Protection Act 1998).

     

    
      	
              31.15

            	
              Without
      prejudice to its rights under Condition 31.14, the Treasury shall use
      reasonable endeavours to notify the Participant of the Information which,
      in the Treasury’s opinion, is required to enable verification of the
      matters described in Condition 31.14, no later than six months following
      the date of the Treasury’s receipt in accordance with Condition 16 of a QS
      Compliance Certificate (without qualifications) covering the relevant
      Quarterly Statement and Quarterly Statement
  Data.

            

    

     

    Partial
Termination Notice

     

    
      	
              31.16

            	
              If a
      Terminable Event occurs but relates solely to a particular Covered Asset,
      or to a group of Covered Assets or to a Covered Asset Class, then the
      Treasury may, at any time, deliver to the Participant a “Partial Termination
      Notice”, in respect of that Covered Asset, or group of Covered
      Assets or Covered Asset Class (as applicable).  A Partial
      Termination Notice must state that it constitutes a Partial Termination
      Notice and specify:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the matter,
      event or circumstance giving rise to the Terminable
  Event;

            

    

     

     

    
      
        
        

      

      
        176

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              the Covered
      Asset, group of Covered Assets or Covered Asset Class (as relevant) to
      which the Terminable Event relates and which the Treasury (subject to
      Condition 31.18) is designating as “Partial Termination Assets” (the
      Covered Asset, or group of Covered Assets or Covered Asset Class so
      designated being “Partial Termination Assets”);
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the date from
      which such designation shall take effect (the “Partial Termination Effective
      Date”), such date to be no earlier than the date of the Partial
      Termination Notice.

            

    

     

    
      	
              31.17

            	
              If the event
      giving rise to the Terminable Event falls within paragraph (A) of the
      definition thereof, the Partial Termination Assets (as designated pursuant
      to Condition 31.16(B)) may include any of the Covered Assets designated in
      the corresponding Partial Suspension Notice as Partial Suspension
      Assets.

            

    

     

    Full
Termination Notice

     

    
      	
              31.18

            	
              If a
      Terminable Event occurs but does not relate solely to a particular Covered
      Asset, or to a group of Covered Assets or to a Covered Asset Class, the
      Treasury may, at any time, deliver a “Full Termination Notice”
      to the Participant.  A Full Termination Notice must state that
      it constitutes a Full Termination Notice and
  specify:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the matter,
      event or circumstance giving rise to the Terminable
  Event;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Covered
      Assets which the Treasury is designating as “Full Termination Assets” (the
      Covered Assets so designated being “Full Termination
      Assets”), provided that unless the event giving rise to the
      Terminable Event is a failure to comply with the requirements of the State
      Aid Deed (in which case the Treasury may designate any or all of the
      Covered Assets as Full Termination Assets), the Treasury may (subject to
      Condition 31.19) make such a designation only in respect of (a) Covered
      Asset(s) which was/were either:

            

    

     

    
      	
               
      

            	
              (i)

            	
              (a)
      Non-Triggered Asset(s) on the relevant Remedy Event Date;
    or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              (a) Triggered
      Asset(s) on the relevant Remedy Event Date which had a Trigger Date
      falling within the nine Quarters to and including the Quarter in which the
      relevant Remedy Event Date occurred;
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the date from
      which such designation shall take effect (the “Full Termination Effective
      Date”), such date to be no earlier than the date of the Full
      Termination Notice.

            

    

     

    
      	
              31.19

            	
              If the event
      giving rise to the Terminable Event falls within paragraph (A) of the
      definition thereof, the Full Termination Assets (as designated pursuant to
      Condition 31.18(B)) may include any Covered Assets designated in the
      corresponding Full Suspension Notice as Full Suspension
      Assets.

            

    

     

     

    
      
        
        

      

      
        177

        
          

        

      

      
        
        

      

    

     

    Consequences
of Partial Termination Notice and Full Termination Notice

     

    
      	
              31.20

            	
              If a
      Terminable Event occurs as a result
of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      Participant’s repudiation of a Scheme Document, and the Participant
      reaffirms its commitment to that Scheme Document such that the performance
      of the Participant’s obligations under that Scheme Document are unaffected
      by the repudiation; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      Participant having breached a Specified Obligation, and that breach is
      remedied (or waived by the
Treasury),

            

    

     

    in either case
prior to the Partial Termination Effective Date or Full Termination Effective
Date (as appropriate), then the Partial Termination Notice or Full Termination
Notice (as appropriate) shall not take effect.

     

    
      	
              31.21

            	
              If a Partial
      Termination Notice is delivered by the Treasury to the Participant and
      Condition 31.20 does not apply,
then:

            

    

     

    
      	
               
      

            	
              (A)

            	
              each Covered
      Asset designated therein as a Partial Termination Asset shall cease
      permanently to be a Covered Asset and the consequences of such cessation
      shall include those specified in Condition
4.43;

            

    

     

    
      	
               
      

            	
              (B)

            	
              Condition 8
      shall continue to operate with respect to each Covered Asset which is not
      a Partial Termination Asset; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              subject to
      paragraph (A), the Partial Termination Notice shall otherwise operate
      without prejudice to the Treasury’s obligations to make payments pursuant
      to Condition 8 and the Participant’s obligations to make payments
      pursuant to Condition 8 and otherwise to comply with its obligations
      pursuant to the Scheme Documents.

            

    

     

    
      	
              31.22

            	
              If a Full
      Termination Notice is delivered by the Treasury to the Participant and
      Condition 31.20 does not apply,
then:

            

    

     

    
      	
               
      

            	
              (A)

            	
              each Covered
      Asset designated therein as a Full Termination Asset shall cease
      permanently to be a Covered Asset and the consequences of such cessation
      shall include those specified in Condition
4.43;

            

    

     

    
      	
               
      

            	
              (B)

            	
              Condition 8
      shall continue to operate with respect to each Covered Asset which is not
      a Full Termination Asset but on the basis that it shall be deemed that no
      further Triggers or Losses have occurred or will occur at any time with
      respect to that Covered Asset following the relevant Remedy Event
      Date;

            

    

     

    
      	
               
      

            	
              (C)

            	
              subject to
      paragraphs (A) and (B), the Full Termination Notice shall otherwise
      operate without prejudice to the Participant’s obligations to make
      payments pursuant to Condition 8 and otherwise to comply with its
      obligations pursuant to the Scheme Documents;
  and

            

    

     

     

    
      
        
        

      

      
        178

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (D)

            	
              the
      Treasury’s obligations to make payments pursuant to Condition 8, or
      otherwise pursuant to the Scheme Documents, shall
    terminate.

            

    

     

    Other
remedies

     

    
      	
              31.23

            	
              Notwithstanding
      any other provision of the Scheme Documents, any exercise by the Treasury
      of its rights in respect of a Suspensory Event or Terminable Event is in
      addition to, and shall not be construed to limit, affect or prejudice any
      right, power or remedy provided by law or under or pursuant to any Scheme
      Document (including any right it may have pursuant to the Indemnity or the
      Step-In Rights), but shall prevent the Treasury exercising any rights
      under Condition 34 in respect of that Remedy
  Event.

            

    

     

    Continuation
of Suspensory Events

     

    
      	
              31.24

            	
              If the
      Treasury becomes aware that a Terminable Event falling within paragraph
      (A) of the definition thereof has occurred or if the Treasury has
      delivered a Partial Suspension Notice or a Full Suspension Notice and the
      breach of the relevant Specified Obligation continues unremedied at the
      end of the period specified in Condition 31.4, the Treasury shall, in
      respect of each applicable Covered Asset,
  either:

            

    

     

    
      	
               
      

            	
              (A)

            	
              deliver a
      notice to the Participant waiving the breach of the relevant Specified
      Obligation(s) in respect of that Covered Asset such that Condition 31.11
      or 31.13 shall apply; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              deliver a
      Partial Termination Notice or Full Termination Notice (as appropriate) in
      respect of that Covered Asset.

            

    

     

    The Treasury is not
required to make the same election in respect of all the applicable Covered
Assets.

     

    Waivers

     

    
      	
              31.25

            	
              Any waiver
      granted by the Treasury to the Participant under this Condition 31 shall
      only be effective if such waiver is in writing and has been delivered by
      the Treasury to the Participant.

            

    

     

     

    
      
        
        

      

      
        179

        
          

        

      

      
        
        

      

    

     

    
      
        	
                32.

              	
                STEP-IN
      RIGHTS

              

      

    

     

    Right
to exercise Step-In Rights

     

    
      	
              32.1

            	
              The Treasury
      may exercise some or all of the Step-In Rights (at its election), in
      accordance with this Condition 32, if any Step-In Trigger has
      occurred.

            

    

     

    Step-In
Triggers; Step-In Assets

     

    
      	
              32.2

            	
              The
      occurrence of any Step-In Trigger shall give rise to Step-In Rights in
      respect of the relevant “Step-In Assets”
      specified in Condition 32.3 in respect of that
      Step-In Trigger.

            

    

     

    
      	
              32.3

            	
              The “Step-In Triggers” are as
      follows:

            

    

     

    
      	
               
      

            	
              (A)

            	
              aggregate
      Losses net of all Recoveries (as at the most recent Quarter Date for which
      a Quarterly Statement has been delivered) in respect
  of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the entire
      Covered Assets exceed the applicable Step-In Threshold Amount, in which
      case the relevant Step-In Assets shall be all of the Covered Assets or any
      of them (at the Treasury’s election);
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Covered
      Assets within a particular Covered Asset Class (or group of Covered Asset
      Classes) exceed the applicable Step-In Threshold Amount for that Covered
      Asset Class (or group of Covered Asset Classes), in which case the
      relevant Step-In Assets shall be the Covered Assets within that Covered
      Asset Class (or group of Covered Asset Classes) or any of those Covered
      Assets (at the Treasury’s
election);

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      occurrence of any Remedy Event, in which case the relevant Step-In Assets
      shall be all of the Covered Assets or any of them (at the Treasury’s
      election), provided that if the relevant Remedy Event relates only to a
      Covered Asset, group of Covered Assets or Covered Assets in a certain
      Covered Asset Class or Covered Asset Classes, then the relevant Step-In
      Assets shall be all of the Covered Assets in that or those Covered Asset
      Classes or any of them (at the Treasury’s
  election);

            

    

     

    
      	
               
      

            	
              (C)

            	
              in the
      Treasury’s opinion (acting
reasonably):

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Participant has failed or is failing to comply with any of the Asset
      Management Conditions, the Monitoring and Reporting Conditions or the
      Governance and Oversight Conditions (in each case regardless of whether or
      not such failure constitutes a Remedy Event);
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              such failure
      is (a) a persistent or material failure or (b) a failure which evidences a
      systemic problem which prejudices compliance with any of the Asset
      Management Conditions, the Monitoring and Reporting Conditions or the
      Governance and Oversight
Conditions,

            

    

     

     

    
      
        
        

      

      
        180

        
          

        

      

      
        
        

      

    

     

    in which case the
relevant Step-In Assets shall be all of the Covered Assets (or any of them, at
the Treasury’s election) in the Covered Asset Class to which, in the opinion of
the Treasury (acting reasonably), the relevant failure to comply relates or (in
the circumstances described in Condition 32.3(C)(ii)(b)) all of the Covered
Assets or any of them (at the Treasury’s election); and

     

    
      	
               
      

            	
              (D)

            	
              in the
      Treasury’s opinion (acting reasonably), any Information (including any
      Initial Data, Post-Accession Data and Quarterly Statement Data and the
      Information contained in any Quarterly Statement) required to be provided
      to the Treasury pursuant to the Scheme Documents is incomplete, incorrect,
      inaccurate or has not been delivered by the applicable time specified in
      the Scheme Documents (together, “data deficiencies”) (in
      each case regardless of whether or not such data deficiencies constitute a
      Remedy Event), and the Treasury determines (acting reasonably) that such
      data deficiencies:

            

    

     

    
      	
               
      

            	
              (i)

            	
              are
      persistent or material;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              constitute
      material errors in Initial Data, Post-Accession Data or Quarterly
      Statement Data (including material failures to comply with the Data Field
      Rules); or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              evidence a
      systemic problem which prejudices:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the provision
      of correct, accurate and complete Information to the Treasury in
      accordance with the Scheme Documents;
or

            

    

     

    
      	
               
      

            	
              (b)

            	
              the accurate
      calculation of the payments to be made pursuant to Condition 8 and the
      Information underlying such calculations to be
  verified,

            

    

     

    in which case the
relevant Step-In Assets shall be all of the Covered Assets (or any of them, at
the Treasury’s election) in the Covered Asset Class to which, in the opinion of
the Treasury (acting reasonably), the relevant data deficiencies relate or (in
the circumstances described in Condition 32.3(D)(iii)) all of the Covered Assets
or any of them (at the Treasury’s election).

     

    Step-In
Objectives

     

    
      	
              32.4

            	
              The Step-In
      Rights shall be exercised by the Treasury in good faith and with a view
      solely to the achievement of the Step-In Objectives and not for any other
      purposes.

            

    

     

    
      	
              32.5

            	
              The “Step-In Objectives”
      are:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in requiring
      the Participant to appoint a Step-In Manager to carry out any Oversight
      Functions (including as part of carrying out any Direct Management
      Functions), to fulfil those Oversight
Functions;

            

    

     

     

    
      
        
        

      

      
        181

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              in requiring
      the Participant to appoint a Step-In Manager to carry out any Direct
      Management Functions or Additional
Functions:

            

    

     

    
      	
               
      

            	
              (i)

            	
              to mitigate
      the effects of, and (to the extent capable of being remedied) remedy, any
      Step-In Trigger and to avoid the occurrence of a similar Step-In Trigger
      in the future; and/or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              to ensure
      that the Covered Assets are Managed and Administered in accordance with
      Conditions 10.8(A), 10.8(B), 10.8(C) and 10.8(D) (subject to Conditions
      10.9, 10.12, 10.14 and 10.20);
and/or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              to the extent
      possible within the scope of the Step-In Functions, to ensure the
      compliance by the Participant and each other member of the Participant’s
      Group with the Scheme Documents.

            

    

     

    Scope
of Step-In Rights

     

    
      	
              32.6

            	
              The “Step-In Rights” consist
      of the right to require the Participant to appoint or procure the
      appointment of a Step-In Manager, as the duly authorised agent and
      attorney for all or any of the members of the Participant’s Group, to
      carry out some or all (at the Treasury’s election)
  of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Oversight
      Functions;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Direct
      Management Functions; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      Additional Functions,

            

    

     

    
      	
               
      

            	
              (together,
      the “Step-In
      Functions”).

            

    

     

    Identity
of Step-In Manager

     

    
      	
              32.7

            	
              The Treasury
      may require:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      appointment of different Step-In Managers to carry out different Step-In
      Functions in respect of the same Step-In Trigger;
  or

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      appointment of two or more Step-In Managers to act together in carrying
      out any Step-In Function (in which case the provisions of this Condition
      32 shall apply mutatis mutandis to such Step-In Managers acting
      together).

            

    

     

    
      	
              32.8

            	
              The “Step-In Manager” shall
      be (at the Treasury’s election)
either:

            

    

     

    
      	
               
      

            	
              (A)

            	
              a person
      identified by the Treasury;

            

    

     

    
      	
               
      

            	
              (B)

            	
              a person
      selected by the Participant from a panel of persons notified in writing to
      the Participant by the Treasury; or

            

    

     

     

    
      
        
        

      

      
        182

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (C)

            	
              a person
      identified by the Participant (if the Treasury requires, following an
      appropriate tender process) and approved in advance by the
      Treasury,

            

    

     

    and may (in the
case of any person referred to in paragraph (A) or (B)) be a Representative of
the Treasury.

     

    
      	
              32.9

            	
              In
      identifying any proposed Step-In Manager pursuant to Condition 32.8(A) or
      determining the members of any panel pursuant to Condition 32.8(B), the
      Treasury shall take into account the extent to which the proposed Step-In
      Manager is in direct competition with the Participant and the nature of
      that competition (and any representations of the Participant in this
      regard).

            

    

     

    Step-In
Notice

     

    
      	
              32.10

            	
              If the
      Treasury intends to exercise any Step-In Rights following a Step-In
      Trigger, it shall give notice to the Participant of that
      fact.  The notice (the “Step-In Notice”) shall
      specify:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the relevant
      Step-In Trigger;

            

    

     

    
      	
               
      

            	
              (B)

            	
              details of
      the Step-In Rights that the Treasury intends to
  exercise;

            

    

     

    
      	
               
      

            	
              (C)

            	
              details of
      the Step-In Assets in respect of which the Treasury intends to exercise
      those Step-In Rights;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the date on
      which the appointment of the Step-In Manager must commence (which shall be
      no earlier than the date falling 10 Business Days following the date that
      the Step-In Notice is delivered) (the “Step-In Date”);
      and

            

    

     

    
      	
               
      

            	
              (E)

            	
              (i) if
      Condition 32.8(A) applies, the Step-In Manager identified by the Treasury;
      (ii) if Condition 32.8(B) applies, the persons from among whom the
      Participant is required to select any Step-In Manager; or (iii) if
      Condition 32.8(C) applies, whether the Treasury requires the Participant
      to undertake a tender process before proposing a Step-In
      Manager.

            

    

     

    Appointment
of Step-In Manager

     

    
      	
              32.11

            	
              Promptly
      following delivery of a Step-In Notice, the Participant
    shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              if required
      to select any person as Step-In Manager pursuant to Condition 32.8(B) or
      (subject to paragraph (B)) to propose any person as Step-In Manager
      pursuant to Condition 32.8(C), notify the Treasury of the identity of the
      person it has selected or proposes;

            

    

     

    
      	
               
      

            	
              (B)

            	
              if required
      to undertake a tender process pursuant to Condition 32.8(C), undertake
      that process and, following its conclusion, notify the Treasury of the
      person the Participant proposes to appoint as Step-In Manager;
      and

            

    

     

     

    
      
        
        

      

      
        183

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (C)

            	
              seek to agree
      terms of engagement with any Step-In Manager identified or selected
      pursuant to Condition 32.8 (on the basis that the first draft of any such
      terms of engagement shall be produced by the Step-In
    Manager).

            

    

     

    
      	
              32.12

            	
              The
      Participant shall ensure that any terms of engagement agreed with a
      Step-In Manager (including the regulatory and other authorisations which
      the Step-In Manager is required under such terms of engagement to hold)
      shall be consistent in all respects
with:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the scope of
      the Step-In Rights that the Treasury intends to exercise (as specified in
      the Step-In Notice);

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Step-In
      Assets in respect of which the Treasury intends to exercise those Step-In
      Rights (as specified in the Step-In Notice);
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              any
      requirements that the Treasury has notified to the Participant in writing
      (whether in the Step-In Notice or otherwise) with regard
    to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the fees and
      scope of engagement of the Step-In Manager, provided that the scope of the
      engagement of the Step-In Manager shall be (a) limited to the scope of the
      applicable Step-In Functions and (b) consistent with, and shall be for the
      purpose of meeting, the applicable Step-In
  Objectives;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the date from
      which the appointment of the Step-In Manager must take effect (being no
      earlier than the Step-In Date); and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      performance standards to which the Step-In Manager must adhere in carrying
      out the Step-In Functions.

            

    

     

    
      	
              32.13

            	
              Subject to
      Condition 32.14, the Participant shall not appoint any Step-In Manager
      unless the terms of engagement of that Step-In Manager have been approved
      by the Treasury.  If the Participant provisionally agrees terms
      of engagement with a Step-In Manager, it shall submit those terms of
      engagement to the Treasury for approval.  If the Treasury gives
      such approval, the Participant shall promptly thereafter appoint that
      Step-In Manager, on the terms approved by the Treasury, with effect from
      the Step-In Date or such later date as the Treasury may
      specify.

            

    

     

    
      	
              32.14

            	
              If:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Treasury
      requires the Participant to appoint any Step-In Manager pursuant to this
      Condition 32; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      Participant has failed, by the date falling five Business Days prior to
      the Step-In Date, to submit for approval by the Treasury terms of
      engagement with that Step-In Manager that have been provisionally agreed
      with the Step-In Manager and are satisfactory to the
    Treasury,

            

    

     

     

    
      
        
        

      

      
        184

        
          

        

      

      
        
        

      

    

     

    then the
Participant shall promptly appoint that Step-In Manager with effect from the
Step-In Date or such later date as the Treasury may specify, on such terms of
engagement as the Treasury may agree with the Step-In Manager and notify to the
Participant, provided that the Treasury shall use reasonable endeavours to
ensure that such terms of engagement shall, subject to Applicable Law, be
consistent with (and no less favourable to the Participant than) the Designated
Step-In Terms.

     

    Scope
of Step-In Functions

     

    
      	
              32.15

            	
              The “Oversight Functions”
      are:

            

    

     

    
      	
               
      

            	
              (A)

            	
              to observe
      all or any conduct of any member of the Participant’s Group and its
      Representatives in connection with the Management and Administration of
      the Step-In Assets and any relevant Related Party Assets and (including by
      working alongside the relevant personnel of the Participant’s Group and
      any other Representatives to the extent that the Step-In Manager considers
      necessary) and to obtain an understanding of the Step-In Assets and any
      relevant Related Party Assets, and the conduct in respect of
      them;

            

    

     

    
      	
               
      

            	
              (B)

            	
              to write
      reports and provide Information to the Treasury in connection with all or
      any such conduct referred to in paragraph (A) above, including the Step-In
      Manager’s opinion as to the performance of the members of the
      Participant’s Group and their respective Representatives in connection
      with such conduct, and the compliance of the Participant and any other
      member of the Participant’s Group with the provisions of the Scheme
      Documents, so far as ascertainable by the Step-In
  Manager;

            

    

     

    
      	
               
      

            	
              (C)

            	
              to gather,
      review or discuss, in accordance with Condition 20.4, any relevant
      Information from or with any member of the Participant’s Group and its
      Representatives in respect of the Step-In Assets (and any relevant Related
      Party Assets) and compliance with the Scheme Documents and provide such
      Information to the Treasury upon request by the
  Treasury;

            

    

     

    
      	
               
      

            	
              (D)

            	
              to assess the
      performance of particular Representatives of any member of the
      Participant’s Group who are involved in the Management and Administration
      of the Covered Assets (or any relevant Related Party Assets) and interview
      any such Representative for that purpose;
and

            

    

     

    
      	
               
      

            	
              (E)

            	
              to make
      recommendations to the SOC and the Scheme Head, following discussions with
      the Treasury (if the Treasury so requires), for the purposes of ensuring
      compliance by the Participant and each other member of the Participant’s
      Group with the Scheme Documents.

            

    

     

    
      	
              32.16

            	
              The “Direct Management
      Functions” are:

            

    

     

    
      	
               
      

            	
              (A)

            	
              to exercise
      all or any of the rights, powers (including decision-making powers) and
      discretions of the relevant member of the Participant’s Group under, or in
      relation to the Management and Administration of, the Step-In Assets as
      the 

            

    

     

     

    
      
        
        

      

      
        185

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	agent and
      attorney of the relevant member of the Participant’s Group, with full
      authority to (amongst other things):

    

     

    
      	
               
      

            	
              (i)

            	
              (notwithstanding
      the provisions of Condition 10.12) sell, transfer or otherwise dispose of
      any Step-In Assets (whether Triggered Assets or Non-Triggered Assets),
      provided that any sale, transfer or other disposal of a Non-Triggered
      Asset shall not be effected by a Step-In Manager without the prior
      approval of the relevant member of the Participant’s Group, such approval
      not to be unreasonably withheld or delayed (and in determining whether the
      relevant member of the Participant’s Group is acting reasonably for these
      purposes regard shall be had only to financial considerations including
      (a) the probability of default on that Step-In Asset, (b) the loss given
      default attributable to that Step-In Asset and (c) the economic value
      expected to be received by the Participant’s Group in connection with such
      sale, transfer or other disposal, including any proceeds from the sale,
      transfer or other disposal and the value of any benefit made available to
      the Participant by the Treasury in connection with such sale, transfer or
      other disposal);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              subject to
      sub-paragraph (i) above, effect any other transaction involving any
      Step-In Assets; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              monitor and
      enforce the rights of any member of the Participant’s Group in respect of
      any Step-In Assets, including in relation to any arrangements with any
      Representative of such Group Member in respect of any Step-In Assets (or
      any relevant Related Party Assets),

            

    

     

    in each case as the
Step-In Manager deems appropriate from time to time in order to achieve the
Step-In Objectives and (except as provided for in sub-paragraph (i) above)
without the need for further approval by or on behalf of any member of the
Participant’s Group in respect of the exercise of such rights, powers (including
decision-making powers) and discretions; and

     

    
      	
               
      

            	
              (B)

            	
              to write
      reports and provide such Information to the Treasury in connection with
      the exercise of the rights, powers (including decision-making powers) and
      discretions referred to in paragraph (A) above as the Treasury may
      require.

            

    

     

    
      	
              32.17

            	
              The “Additional Functions”
      are to take such other action as the Step-In Manager or the Treasury
      considers necessary or appropriate so as to achieve the Step-In Objectives
      including:

            

    

     

    
      	
               
      

            	
              (A)

            	
              to require
      the modification of the Asset Management Framework and/or the Conflicts
      Management Policy to the extent the Step-In Manager or the Treasury
      considers necessary or appropriate so as to achieve the Step-In
      Objectives, in which case the Participant shall ensure that such
      modifications are promptly implemented and complied
  with;

            

    

     

    
      
        
        

      

      
        186

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (B)

            	
              to require
      that certain conduct in respect of the Step-In Assets, as may be specified
      by the Step-In Manager or the Treasury from time to time, shall not be
      carried out by any member of the Participant’s Group or its
      Representatives without the prior approval of the Step-In Manager, such
      approval not to be unreasonably withheld or
  delayed;

            

    

     

    
      	
               
      

            	
              (C)

            	
              to approve or
      not approve any such conduct referred to in paragraph (B) above in
      accordance with any instructions of the Treasury;
  and

            

    

     

    
      	
               
      

            	
              (D)

            	
              to
      investigate and require or effect the modification or replacement of any
      of the systems, controls and processes of the members of the Participant’s
      Group, including such systems, controls and processes in respect of the
      production and delivery of Information pursuant to the Scheme Documents.
      

            

    

     

    Cooperation

     

    
      	
              32.18

            	
              The
      Participant shall ensure that each member of the Participant’s Group shall
      do all such things, including:

            

    

     

    
      	
               
      

            	
              (A)

            	
              providing
      access to Books and Records, other Information, Representatives, premises,
      IT and other systems, and other
resources;

            

    

     

    
      	
               
      

            	
              (B)

            	
              holding
      meetings, entering into discussions and answering
    questions;

            

    

     

    
      	
               
      

            	
              (C)

            	
              establishing
      additional systems, controls and processes;
and

            

    

     

    
      	
               
      

            	
              (D)

            	
              to the extent
      possible without breaching any contract, implementing, maintaining,
      modifying and/or replacing any custodian or other asset management
      arrangements and practices,

            

    

     

    in each case as the
Step-In Manager may reasonably require (having considered the relative costs and
benefits thereof) for the purposes of carrying out the Step-In Functions or
facilitating the exercise of the Step-In Rights in accordance with this
Condition 32 (provided, and to the extent that, such things are within the
control of that member of the Participant’s Group).

     

    
      	
              32.19

            	
              The
      Participant shall ensure that each relevant member of the Participant’s
      Group shall, to the extent within the control of such member of the
      Participant’s Group, comply with all instructions of the Step-In Manager
      pursuant to its carrying out of the Direct Management Functions and the
      Additional Functions, in accordance with any reasonable timetable that the
      Step-In Manager may require (having consulted with the Participant and
      taking into account all relevant circumstances including the reason for
      the relevant instruction and any need to establish additional or modify
      existing systems, controls or processes), provided that compliance with
      such instructions would not result in the breach of any Applicable Law or
      the contractual terms of any Covered Asset or Permitted
      Arrangement.

            

    

     

     

    
      
        
        

      

      
        187

        
          

        

      

      
        
        

      

    

     

    
      	
              32.20

            	
              The
      Participant shall ensure that each member of the Participant’s Group
      complies with the terms of the Step-In Manager’s
    appointment.

            

    

     

    Termination
or variation of Step-In Manager’s appointment

     

    
      	
              32.21

            	
              Subject to
      Condition 32.25, the Participant shall not terminate, or vary the terms
      of, the appointment of any Step-In Manager unless the Treasury has
      required or consented to such termination or variation by notice to the
      Participant.

            

    

     

    
      	
              32.22

            	
              At any time
      following the appointment of a Step-In Manager, the Treasury may, by
      notice to the Participant, require the termination of the appointment of
      that Step-In Manager and the appointment of an alternative Step-In
      Manager.  Promptly upon receipt of any such notice and with
      effect from such date as the Treasury may specify in that notice, the
      Participant shall terminate the appointment of the relevant Step-In
      Manager in accordance with the Step-In Manager’s terms of
      appointment.  Conditions 32.11 to 32.14 (inclusive) shall apply
      (mutatis mutandis) in respect of the appointment of any replacement
      Step-In Manager, such replacement to take effect at the same time as the
      termination of the replaced Step-In Manager (or at such other time as the
      Treasury may require).

            

    

     

    
      	
              32.23

            	
              The Treasury
      may, at any time, elect to cease to exercise its Step-In Rights, in whole
      or part.

            

    

     

    
      	
              32.24

            	
              The Treasury
      shall cease to exercise its Step-In Rights in respect
  of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any Step-In
      Trigger which is capable of being remedied and which has been remedied,
      provided that the Treasury is satisfied that the Step-In Objectives have
      been achieved and provided that there is no unremedied Step-In Trigger;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              any Step-In
      Assets which are designated as Partial Termination Assets or Full
      Termination Assets by the Treasury under Condition 31.16 or 31.18 as a
      result of a Remedy Event.

            

    

     

    
      	
              32.25

            	
              If the
      Treasury elects or is required to cease to exercise any of its Step-In
      Rights pursuant to Condition 32.23 or 32.24, the Treasury shall give
      notice in writing to the Participant of that fact (the “Step-Out Notice”)
      stating the date on which the Treasury proposes to cease exercising those
      Step-In Rights (the “Step-Out
      Date”).  The Participant shall be entitled to terminate
      the appointment of the Step-In Manager at any time following the Step-Out
      Date, but only to the extent that the appointment relates to those Step-In
      Rights that the Treasury has ceased to exercise (as specified in the
      Step-Out Notice).

            

    

     

    
      	
              32.26

            	
              The Step-Out
      Date shall not be earlier than the date falling five Business Days after
      the date of the Step-Out Notice or, if later, the earliest termination
      date set out in the terms of appointment of the Step-In
      Manager.  In the circumstances described in Condition 32.24(A),
      the Step-Out Date shall be the earliest date on which the appointment of
      the Step-In Manager can be terminated in accordance with its terms of
      appointment 

            

    

     

    
      
        
        

      

      
        188

        
          

        

      

      
        
        

      

    

     

     

    
      	 	following the
      later of (i) the date on which the Treasury is satisfied that the Step-In
      Objectives have been achieved and (ii) the date on which each Step-In
      Trigger has been remedied.

    

     

    Without
prejudice to other Scheme obligations

     

    
      	
              32.27

            	
              Any
      appointment of a Step-In Manager under this Condition 32 shall be without
      prejudice to the liabilities, obligations and responsibilities of the
      Participant and any other member of the Participant’s Group under the
      Scheme Documents (including the Asset Management Conditions) save only
      that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              no member of
      the Participant’s Group shall be obliged to carry out any of the Step-In
      Functions that a Step-In Manager has been appointed to perform pursuant to
      the Step-In Rights;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the SOC and
      the other Scheme Personnel shall have no obligation under the Scheme
      Documents to monitor the performance of the Step-In Functions or to carry
      out any of the Step-In Functions that are being carried out by the Step-In
      Manager, and (subject to Condition 32.16(A)(i)) shall have no rights or
      obligations to veto or prevent any conduct by the Step-In Manager in
      carrying out the Step-In Functions in accordance with this Condition 32,
      save for any such conduct which would breach any of the Step-In Manager’s
      terms of engagement (as approved by the Treasury under Condition 32.13);
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              if any member
      of the Participant’s Group would otherwise be treated as having breached
      any provision of the Scheme Documents by virtue of any conduct of the
      Step-In Manager or by complying with any direction, instruction or
      recommendation of the Step-In Manager, then that breach shall be deemed to
      have been waived by the Treasury for the purposes of the Scheme
      Documents.

            

    

     

    No
liability for acts or omissions of Step-In Manager

     

    
      	
              32.28

            	
              The Treasury
      shall have no liability to any member of the Participant’s Group or any
      other person for or in connection with any act or omission of any Step-In
      Manager.

            

    

     

    Other
remedies

     

    
      	
              32.29

            	
              The exercise
      of any Step-In Rights shall not:

            

    

     

    
      	
               
      

            	
              (A)

            	
              be construed
      to limit, affect or prejudice any right, power or remedy provided by law
      or under or pursuant to any Scheme Document;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              without
      prejudice to the generality of paragraph (A)
  above:

            

    

     

    
      	
               
      

            	
              (i)

            	
              prevent the
      Treasury from making any claim pursuant to the Indemnity or Condition 34
      in respect of any matter, event or circumstance which constituted the
      Step-In Trigger for such Step-In Rights;
or

            

    

     

     

    
      
        
        

      

      
        189

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              where a
      Step-In Trigger occurs in the course of such exercise, prevent the
      Treasury from exercising any further Step-In Rights in respect of that
      Step-In Trigger.

            

    

     

     

    
      
        
        

      

      
        190

        
          

        

      

      
        
        

      

    

     

    
      
        	
                33.

              	
                INDEMNITY

              

      

    

     

    Scope
of Indemnity

     

    
      	
              33.1

            	
              Subject to
      Condition 33.2, the Participant shall, within 10 Business Days of written
      demand from the relevant Indemnified Person setting out reasonable details
      of the relevant Indemnified Claim(s) and Indemnified Amount(s), fully and
      effectively indemnify and hold harmless each Indemnified Person from and
      against any and all Indemnified Amounts suffered or incurred by or on
      behalf of that Indemnified Person arising out of or in connection
      with:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Covered
      Assets (except for any Indemnified Amount which constitutes a Loss, or an
      adjustment to a Loss, for the purposes of these Conditions) and any other
      assets, exposures, liabilities and obligations of any member of the
      Participant’s Group;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the proper
      enforcement or the preservation of any rights, benefits, powers or
      discretions against any member of the Participant’s Group under or in
      connection with any Scheme
Documents;

            

    

     

    
      	
               
      

            	
              (C)

            	
              any
      Representation which is or proves to have been incorrect or misleading
      when made or deemed to be made (disregarding for these purposes any
      disclosures made by the Participant pursuant to Condition
      30.3);

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      occurrence of a Remedy Event;

            

    

     

    
      	
               
      

            	
              (E)

            	
              any
      Information (including any Information contained in the Data Fields)
      provided by any member of the Participant’s Group or its Representatives
      in or pursuant to any Scheme Document being untrue, inaccurate, incomplete
      or misleading, except that this Indemnity shall not
  apply:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if and to the
      extent that such Information is contained in an Initial Data Field and is
      corrected in accordance with Conditions 17.5 to 17.8
      (inclusive);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in respect of
      any Information contained in any Data Field, if and to the extent that
      such Data Field has been completed in accordance with Condition 16.7,
      Condition 17 and the Data Field Rules;
or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              if and to the
      extent that any such Information was required to set out the Participant’s
      subjective judgement in relation to a certain matter, did accurately set
      out that subjective judgement and that subjective judgement was reached by
      the Participant in good faith and exercising reasonable skill and care,
      having made all due and reasonable enquiries;
or

            

    

     

     

    
      
        
        

      

      
        191

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (F)

            	
              any failure
      by any member of the Participant’s Group or any of its Representatives to
      comply in all material respects with any requirement of Applicable Law
      which is binding on it,

            

    

     

    
      	
               
      

            	
              in each case
      whether or not the relevant Indemnified Amount is suffered or incurred or
      arises in respect of circumstances or events existing or occurring before,
      on or after the Accession Date (the “Indemnity”).

            

    

     

    
      	
              33.2

            	
              No
      Indemnified Person shall be entitled to claim under the Indemnity in
      respect of an Indemnified Amount if and to the extent that such
      Indemnified Amount:

            

    

     

    
      	
               
      

            	
              (A)

            	
              is not
      suffered or incurred by the Indemnified Person in connection with the
      Treasury’s capacity as a provider of credit risk protection under the
      Scheme or otherwise in connection with the provision of credit risk
      protection under the Scheme; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              is determined
      in accordance with the Dispute Resolution Procedure to have arisen as a
      result of the fraud, bad faith or wilful default of that Indemnified
      Person.

            

    

     

    Notice
of and information relating to Indemnified Claims

     

    
      	
              33.3

            	
              The Treasury
      shall (and shall use reasonable endeavours to ensure that each Indemnified
      Person will):

            

    

     

    
      	
               
      

            	
              (A)

            	
              give notice
      (stating in reasonable detail the nature of the matter and, so far as
      practicable, the amount claimed) to the Participant as promptly as
      reasonably practicable after commencement of any action against an
      Indemnified Person, or receipt of a written notice by any Indemnified
      Person, in respect of an Indemnified Claim;
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              give notice
      as promptly as reasonably practicable to the Participant after any such
      Indemnified Claim is formally commenced (by way of service with a summons
      or other legal process giving information as to the nature and basis of
      the Indemnified Claim),

            

    

     

    in each case so as
to enable the Participant to investigate the matter or circumstances alleged to
have given rise to such Indemnified Claim and whether (and, if so, to what
extent) any amount is payable in respect thereof.

     

    
      	
              33.4

            	
              The Treasury
      shall (and shall use reasonable endeavours to ensure that each Indemnified
      Person will) keep the Participant informed of and, to the extent
      reasonably practicable, consult with the Participant in relation to all
      material developments in respect of any Indemnified Claim in each case
      insofar as may be consistent with or required by the terms of any relevant
      insurance policy and provided (in each case) that to do so would not, in
      such Indemnified Person’s view, having taken legal advice, be materially
      prejudicial to it (or to any other Indemnified Person) or breach any
      obligation 

            

    

     

     

    
      
        
        

      

      
        192

        
          

        

      

      
        
        

      

    

     

    
      	 	of
      confidentiality or other legal or regulatory obligation which that
      Indemnified Person owes to any third party or under any regulatory request
      that has been made of it.

    

     

    
      	
              33.5

            	
              Any failure
      by any Indemnified Person to comply with Conditions 33.3 and 33.4 shall
      not relieve the Participant from any liability under this Condition 33 to
      the extent it is not materially prejudiced as a result thereof and in any
      event shall not relieve the Participant from any liability which it may
      have otherwise than on account of the
Indemnity.

            

    

     

    
      	
              33.6

            	
              The identity
      of the legal advisers for particular Indemnified Persons shall, on
      request, be notified in writing by the Treasury to the
      Participant.  The Participant may participate at its own expense
      in the defence of any action commenced against any relevant Indemnified
      Person provided however that legal advisers for the Participant shall not
      (except with the written consent of the relevant Indemnified Person) also
      be legal advisers for the Indemnified Person (such consent not to be
      unreasonably withheld or delayed).

            

    

     

    
      	
              33.7

            	
              No
      Indemnified Person shall be entitled to recover more than once under the
      Indemnity in respect of any Indemnified
Amount.

            

    

     

    Settlement
or compromise

     

    
      	
              33.8

            	
              The
      Participant shall not, without the prior written consent of the relevant
      Indemnified Persons  (such consent not to be unreasonably
      withheld or delayed), settle, compromise or consent to the entry of any
      judgment with respect to any claim, action, liability, demand, proceeding,
      investigation, judgment or award whatsoever (in each case whether
      threatened, asserted, established or instituted), in respect of which
      indemnification could be sought under this Condition 33 (whether or not
      the Indemnified Persons are actual or potential parties thereto), unless
      such settlement, compromise or
consent:

            

    

     

    
      	
               
      

            	
              (A)

            	
              includes an
      unconditional release of each Indemnified Person from all liability
      arising out of such claim, action, liability, demand, proceeding,
      investigation, judgment or award;
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              does not
      include a statement as to or an admission of fault, culpability or a
      failure to act by or on behalf of any Indemnified
  Person.

            

    

     

    General
provisions relating to the Indemnity

     

    
      	
              33.9

            	
              This
      Condition 33 will remain in full force and effect notwithstanding the
      termination of the Scheme in respect of the
  Participant.

            

    

     

    
      	
              33.10

            	
              Any amount
      payable pursuant to the Indemnity may, without limiting the Treasury’s
      rights, be claimed as a debt or liquidated
  demand.

            

    

     

     

    
      
        
        

      

      
        193

        
          

        

      

      
        
        

      

    

     

    Other
remedies

     

    
      	
              33.11

            	
              Notwithstanding
      any other provision of the Scheme Documents, but subject to Condition
      33.12, the Indemnity is in addition to, and shall not be construed to
      limit, affect or prejudice any liability which any member of the
      Participant’s Group and/or its Affiliates, and/or their respective
      Representatives, may otherwise have to the Indemnified Persons or any
      other right, power or remedy in law or otherwise available to any
      Indemnified Person.

            

    

     

    
      	
              33.12

            	
              The making of
      any claim pursuant to the Indemnity shall not prevent the Treasury from
      exercising any rights under Condition 31 or from exercising any Step-In
      Rights, in either case in respect of the relevant matter, event or
      circumstance which gave rise to the Indemnity claim, but shall prevent the
      Treasury from exercising any rights pursuant to Condition 34 in respect of
      that matter, event or circumstance.

            

    

     

     

    
      
        
        

      

      
        194

        
          

        

      

      
        
        

      

    

     

    
      
        	
                34.

              	
                ADJUSTMENT
      EVENTS 

              

      

    

     

    Adjustment
Events

     

    
      	
              34.1

            	
              If at any
      time (whether before, on or after the Trigger Date for the relevant
      Covered Asset) any of the following events occurs (each an “Adjustment
      Event”):

            

    

     

    
      	
               
      

            	
              (A)

            	
              any
      Prohibited Conduct;

            

    

     

    
      	
               
      

            	
              (B)

            	
              a Proposed
      Correction is made pursuant to Condition 17.6;
  or

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      Participant is in breach of either Condition 16 or 17 (as applicable) in
      respect of any amendment, correction or update that is required thereunder
      to be made in respect of a Covered
Asset:

            

    

     

    
      	
               
      

            	
              (i)

            	
              to correct an
      error in any Post-Accession Data under Conditions 17.10 to 17.12
      (inclusive); or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              to correct an
      error in any Quarterly Statement Data under Condition
    16.12,

            

    

     

    then the Treasury
may at any time following the Adjustment Event deliver a written notice to the
Participant stating that an Adjustment Event has occurred in respect of that
Covered Asset (an “Adjustment
Notice”).

     

    Agreement
of Adjustment

     

    
      	
              34.2

            	
              If the
      Treasury delivers an Adjustment Notice, the Treasury and the Participant
      shall negotiate in good faith (acting reasonably) to agree an adjustment
      (which may be in whole or in part retrospective) to the Covered Amount (or
      equivalent in respect of any Extended Protection Asset) of that Covered
      Asset (the “Adjustment”) such that
      the Treasury’s financial exposure under the Scheme in respect of that
      Covered Asset shall be no greater than it would have been if (as the case
      may be) (i) the relevant Prohibited Conduct had not occurred, (ii) the
      relevant Initial Data had been correct as provided on or prior to the
      Signing Date, (iii) the relevant Post-Accession Data had been amended,
      corrected or updated in accordance with Condition 17 or (iv) the relevant
      Quarterly Statement Data had been amended, corrected or updated in
      accordance with Condition 16.  The Adjustment shall be
      determined by reference to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the amount by
      which the aggregate Losses that would reasonably be expected to arise in
      respect of that Covered Asset are greater as a result of the Adjustment
      Event than would reasonably have been expected if that Adjustment Event
      had not occurred; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the amount by
      which the aggregate Recoveries that would reasonably be expected to arise
      in respect of that Covered Asset are lower as a result of the Adjustment
      Event than would reasonably have been expected if that Adjustment Event
      had not occurred,

            

    

     

     

    
      
        
        

      

      
        195

        
          

        

      

      
        
        

      

    

     

    provided that under
no circumstances will the Covered Amount on any day increase as a result of an
Adjustment.

     

    Election
for Expert determination

     

    
      	
              34.3

            	
              If the
      Treasury and the Participant have not agreed in writing the Adjustment
      within 10 Business Days following the date of delivery of the Adjustment
      Notice, then the Treasury may elect for the determination of the
      Adjustment by an Expert and, if it so elects, shall notify the Participant
      in writing (the “Determination
      Notice”).

            

    

     

    Appointment
of Expert

     

    
      	
              34.4

            	
              For the
      purpose of this Condition 34, the “Expert” shall be any
      independent, internationally recognised firm of chartered accountants or
      international investment bank in London, as the Treasury and the
      Participant may agree in writing.  If the Treasury and the
      Participant cannot agree on an Expert within 10 Business Days following
      the delivery of the Determination Notice, the Treasury shall request that
      the President or vice-President of the Institute of Chartered Accountants
      in England and Wales nominate such an
Expert.

            

    

     

    
      	
              34.5

            	
              The Expert
      shall be appointed by the Treasury and the Participant promptly thereafter
      for the purposes of determining the Adjustment.  The Expert
      shall be appointed as an expert and not an arbitrator and any Applicable
      Law relating to arbitration shall not apply to any such Expert or the
      determinations or the procedure by which such determination is
      made.

            

    

     

    Determination
of Adjustment

     

    
      	
              34.6

            	
              Following the
      appointment of the Expert in accordance with Condition
    34.5:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Treasury
      and the Participant shall have the right to make representations and
      submissions to the Expert.  Each of the Treasury and the
      Participant shall serve on the other and the Expert its written
      submissions and any documents which the Treasury or the Participant, as
      the case may be, relies on, within 20 Business Days following the Expert’s
      appointment.  Except as may be requested by the Expert pursuant
      to Condition 34.6(B), there shall be no formal hearing before the
      Expert;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Expert
      may request any data, information, submissions (including oral submissions
      or a hearing) or other assistance, which it considers necessary for the
      determination and the Treasury and the Participant shall comply with such
      requests as soon as reasonably practicable in respect of any such data or
      information which is within their possession or control, except if (and to
      the extent that) to do so would breach any Applicable Law or contractual
      obligation to which the provider of that information is
      subject.  All data, information or submissions supplied to the
      Expert by the Participant shall be copied simultaneously to the Treasury
      and vice versa;

            

    

     

     

    
      
        
        

      

      
        196

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (C)

            	
              the Expert
      shall make a determination of the Adjustment in writing, giving reasons
      for that determination, as soon as practicable and, in any event, within
      20 Business Days following its
appointment;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the Expert’s
      determination shall (in the absence of fraud or manifest error) be final
      and binding on the Treasury and the Participant.  The Treasury
      and the Participant hereby agree to waive any right of appeal or recourse
      they might have against the determination of the Expert (in the absence of
      fraud or manifest error); and

            

    

     

    
      	
               
      

            	
              (E)

            	
              the costs and
      expenses of and incidental to the appointment of the Expert and the
      determination of the Adjustment by the Expert shall be borne by the
      Participant as Management and Administration Costs in accordance with
      Condition 9.

            

    

     

    
      	
              34.7

            	
              Unless
      otherwise agreed by the Treasury and the Participant in
      writing:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any meetings
      or hearings in connection with the determination of the Adjustment by the
      Expert shall be in private and confidential and shall take place in
      London; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              all data,
      information and submissions supplied to the Expert shall be confidential
      and shall not be used for any purpose other than the
      determination.  Any such data, information and submissions may
      be disclosed (i) to the Treasury’s or the Participant’s Representatives,
      (ii) to the extent required to be disclosed by Applicable Law or by the
      rules of any relevant securities exchange, (iii) for the purposes of
      enforcement of any determination or (iv) in the case of the Treasury only,
      in accordance with Condition 42.

            

    

     

    Effect
of Adjustment

     

    
      	
              34.8

            	
              If an
      Adjustment is agreed in writing or determined pursuant to this Condition
      34, then the Adjustment shall (unless the Treasury, in its sole
      discretion, determines otherwise in writing) apply to the Covered Amount
      in respect of the relevant Covered Asset and all such adjustments as are
      necessary in order to give effect to that reduction shall be made pursuant
      to and in accordance with Condition
8.7.

            

    

     

    Inability
to determine the Adjustment

     

    
      	
              34.9

            	
              If the Expert
      relinquishes its appointment or if it becomes apparent that it will be
      unable or unwilling to complete the duties specified in its appointment,
      the Treasury and the Participant may agree in writing to appoint an
      alternative Expert in its place (following the procedure set out in
      Condition 34.4), which procedure may be repeated as many times as
      necessary.  The appointment of a previous Expert shall cease
      upon the service of notice by the Treasury to that Expert and the previous
      Expert will be required to return all papers, documents, data and
      information to whichever of the Treasury or the Participant provided
      them.

            

    

     

    
      
        
        

      

      
        197

        
          

        

      

      
        
        

      

    

     

    
      	
              34.10

            	
              If the Expert
      concludes that it cannot determine the Adjustment based on the information
      available to it, then the Treasury shall be permitted to exercise any
      other rights that it may have under the Scheme in respect of the event or
      circumstance that constituted the Adjustment
  Event.

            

    

     

    Privileged
Information

     

    
      	
              34.11

            	
              Nothing in this Condition
      34 shall entitle the Treasury or the
      Participant or the Expert access to any Information or document which is
      protected by legal professional privilege or litigation privilege,
      provided that neither the Treasury nor the Participant shall be entitled
      to refuse to supply such part or parts of documents as contain only the
      facts that the Expert may reasonably
  request.

            

    

     

    Update
to Post-Accession Data

     

    
      	
              34.12

            	
              The
      Participant shall update the Post-Accession Data and Quarterly Statement
      Data, in accordance with Condition 17, in order to reflect any change or
      adjustment that is agreed in writing or determined pursuant to this
      Condition 34.

            

    

     

    Withdrawal
of Adjustment Notice

     

    
      	
              34.13

            	
              The Treasury
      may withdraw an Adjustment Notice at any time prior to the agreement in
      writing or determination of the Adjustment pursuant to this Condition 34,
      in which case it shall be permitted to exercise any other rights that it
      may have under the Scheme in respect of the event or circumstance that
      constituted the Adjustment Event.

            

    

     

    Other
remedies

     

    
      	
              34.14

            	
              If any
      Adjustment is agreed in writing, or determined by the Expert, pursuant to
      this Condition 34, the Treasury shall (unless, in the case of
      determination by the Expert, the Treasury determines in writing pursuant
      to Condition 34.8 that the Adjustment shall not apply to the Covered
      Amount in respect of the relevant Covered Asset) not be permitted to
      exercise any rights under Conditions 17.9, 31 or 33 in respect of the
      Adjustment Event to which that Adjustment
  relates.

            

    

     

    
      	
              34.15

            	
              Nothing in
      this Condition 34 shall prevent the Treasury from exercising any Step-In
      Rights arising from an Adjustment Event, whether or not any Adjustment is
      agreed or determined pursuant to this Condition
  34.

            

    

     

     

    
      
        
        

      

      
        198

        
          

        

      

      
        
        

      

    

     

    
      
        	
                35.

              	
                DISPUTES

              

      

    

     

    Objective
for resolution of Disputes

     

    
      	
              35.1

            	
              If a Dispute
      arises, the objective of the parties shall be to seek to ensure that the
      Dispute is resolved as quickly, as efficiently and as cost-effectively as
      possible.  Each party to the Dispute shall, at each stage of the
      procedure set out in this Condition 35, endeavour in good faith to resolve
      such Dispute through negotiation in accordance with this
      objective.

            

    

     

    Performance
of obligations during a Dispute

     

    
      	
              35.2

            	
              The Treasury
      shall, and the Participant shall ensure that each member of the
      Participant’s Group will, continue to observe and perform all of their
      duties, responsibilities and obligations under the Scheme Documents
      notwithstanding any Dispute which falls to be resolved in accordance with
      this Condition 35, except to the extent that any such duty, responsibility
      or obligation is or becomes the subject of the relevant
      Dispute.

            

    

     

    Internal
escalation and resolution of Disputes

     

    
      	
              35.3

            	
              If a Dispute
      arises, each party to the Dispute shall take such action as may be
      necessary to escalate the Dispute within its respective organisation to
      ensure that appropriate directors, officers, officials or other personnel
      of suitable seniority and expertise are engaged in seeking to resolve the
      relevant Dispute.

            

    

     

    
      	
              35.4

            	
              If a Dispute
      arises, each party shall ensure that each other party has reasonable,
      written details of the provision or provisions of the Scheme Documents in
      connection with which the Dispute has arisen, the nature of the Dispute,
      the Covered Entities and Covered Assets relevant to that Dispute (where
      relevant) and the resolution sought.  The parties to the Dispute
      shall seek to meet each other as soon as reasonably practicable, and as
      often as may be appropriate, once a Dispute has arisen and endeavour to
      resolve the Dispute in good faith within 10 Business Days (or such other
      time period as the parties to the Dispute may agree in writing) from the
      date on which a party to the Dispute first provided written details of the
      Dispute in accordance with this
Condition.

            

    

     

    
      	
              35.5

            	
              All
      discussions and meetings between the parties to the Dispute in connection
      with that Dispute are to be “without prejudice” unless stated to be
      “without prejudice save as to costs”, and the details of the discussions
      and any meetings, minutes and/or statements relating to such meetings
      shall be inadmissible in any arbitration or other Proceedings that may
      follow, except that those stated to be “without prejudice save as to
      costs” shall be admissible for the purposes of Condition
      35.28.

            

    

     

    Escalation
to Arbitration

     

    
      	
              35.6

            	
              Any Dispute
      which is not resolved following escalation and discussions pursuant to
      Conditions 35.3 and 35.4 may, subject to Conditions 34, 47.16 and 48.5, be
      referred to 

            

    

     

     

    
      
        
        

      

      
        199

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              and finally
      resolved by arbitration under the provisions of the Arbitration Act (an
      “Arbitration”).  Any
      Arbitration shall be conducted in accordance with the Dispute Resolution
      Procedure.  If any provision of the Dispute Resolution Procedure
      conflicts with the provisions of the Arbitration Act then, to the fullest
      extent permitted by law, that provision of the Dispute Resolution
      Procedure shall prevail.

            

    

     

    No
other Proceedings

     

    
      	
              35.7

            	
              Subject to
      Condition 35.38, any Dispute is to be finally resolved by Arbitration and
      neither the Treasury nor the Participant nor any other person shall
      commence any Proceedings in connection with a Dispute other than in
      accordance with the Dispute Resolution Procedure.  If any such
      person commences any Proceedings in breach of the Dispute Resolution
      Procedure, it shall not oppose an application for strike-out, termination,
      discontinuance or stay of such
Proceedings.

            

    

     

    The
Arbitration Panel

     

    
      	
              35.8

            	
              The “Arbitration Panel” shall
      comprise the individuals set out in the Accession Agreement and such
      additions or replacements as may be agreed in writing between the Treasury
      and the Participant from time to time, and shall include at all times at
      least:

            

    

     

    
      	
               
      

            	
              (A)

            	
              five legal
      experts, each being either a practising Queen’s Counsel or retired judge
      of the High Court, retired Lord Justice of Appeal, retired Lord of Appeal
      in Ordinary or retired Justice of the Supreme Court of the United Kingdom,
      in each case of national repute with over 15 years of experience of
      substantial commercial Proceedings (each, a “Legal Expert”);
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              five
      practising or retired accountancy experts, each of whom shall have over 15
      years of experience accounting for assets similar to the Covered Assets or
      particular Covered Asset Classes, each being or having been a partner in
      an international accountancy firm (each an “Accounting
      Expert”).

            

    

     

    
      	
              35.9

            	
              If it becomes
      necessary to replace an individual on the Arbitration Panel and the
      Treasury and the Participant do not agree on the identity of that
      replacement, then the Treasury shall request that the president or
      vice-president of the LCIA nominate, within five Business Days of such
      request, up to four individuals who have the equivalent experience and
      qualifications of the individual being replaced, who are impartial and
      independent of the Treasury and the Participant and who are willing to be
      appointed to the Arbitration Panel.  The Treasury shall, within
      five Business Days of receiving these nominations, appoint one of those
      individuals as the replacement on the Arbitration
  Panel.

            

    

     

    Commencement
of an Arbitration

     

    
      	
              35.10

            	
              No party
      shall submit a Dispute to Arbitration pursuant to Condition 35.6 unless it
      (the “Claimant”)
      has, after completion of the procedure set out in Conditions 35.3 and
      35.4, given 10 Business Days’ written notice (the “Commencement Notice”) to
      the other party (the “Respondent”) of its
      intention to do so specifying:

            

    

     

     

    
      
        
        

      

      
        200

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              that an
      Arbitration will be commenced in 10 Business
  Days;

            

    

     

    
      	
               
      

            	
              (B)

            	
              reasonable
      details of the Dispute and the matter which gives rise to the Dispute, and
      the nature and amount of the claim being made by the Claimant or other
      remedy being sought by the Claimant;
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              that it is
      being given pursuant to this Condition
35.

            

    

     

    
      	
              35.11

            	
              Following
      receipt of a Commencement Notice and provided that the Respondent has
      carried out the procedure set out in Conditions 35.3 and 35.4, the
      Respondent shall be entitled to send to the Claimant a statement
      containing reasonable details of any counterclaim Dispute and the matter
      which gives rise to such counterclaim Dispute, and the nature and amount
      of the counterclaim being made by the Respondent or other remedy being
      sought by the Respondent.

            

    

     

    Appointment
of the Arbitrator

     

    
      	
              35.12

            	
              Subject to
      Condition 35.14:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the number of
      arbitrators shall be one; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Claimant
      and the Respondent shall agree on the arbitrator from the Arbitration
      Panel whose expertise and experience is most suited to considering the
      Dispute or, if no agreement can be reached within 10 Business Days of
      delivery of the Commencement Notice, the parties to the Dispute shall
      request that the president or vice-president of the LCIA nominate such
      arbitrator from the Arbitration Panel within five Business Days of such
      request (the agreed or nominated arbitrator being the “Selected
      Arbitrator”).

            

    

     

    
      	
              35.13

            	
              Any
      arbitrator appointed pursuant to either Condition 35.12 or Condition 35.14
      below must be impartial and independent of the Treasury and the
      Participant.  For the purposes of this Dispute Resolution
      Procedure, the impartiality and independence of an individual shall not
      necessarily be affected by any other engagement (whether past, present or
      future) of the employer of that individual (or any organisation to which
      that individual belongs) where such engagement relates to the Treasury or
      the Participant (or any of their respective Representatives), provided
      that such individual has not been personally involved in that
      engagement.

            

    

     

    Ability
to enhance Arbitration process for Major Disputes

     

    
      	
              35.14

            	
              If a Dispute
      is a Major Dispute:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the number of
      arbitrators shall be three and the Claimant and Respondent shall each
      appoint one Arbitrator from the Arbitration Panel whose expertise and
      experience is, in the appointing party’s opinion, most suited to
      considering the particular Major Dispute.  Each party shall
      notify the other of the identity of the Arbitrator it has selected (each
      an “MD Selected
      Arbitrator”) within five Business Days of receipt of the
      Commencement Notice.  The MD Selected

            

    

     

     

    
      
        
        

      

      
        201

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	
              Arbitrators
      shall choose the third Arbitrator from the Arbitration Panel who will act
      as the presiding Arbitrator (the “Presiding
      Arbitrator”).  The MD Selected Arbitrators shall notify
      the parties of the identity of the Presiding Arbitrator within two
      Business Days of the Presiding Arbitrator’s appointment.  If
      within 10 Business Days of the date of notification of the identity of the
      second MD Selected Arbitrator, the MD Selected Arbitrators cannot agree on
      the choice of the Presiding Arbitrator, the MD Selected Arbitrators shall
      request that the president or vice-president of the LCIA select the
      Presiding Arbitrator from the Arbitration Panel or, if no member of the
      Arbitration Panel is available, the president or vice-president of the
      LCIA will nominate up to four alternatives to that Arbitrator who have the
      equivalent experience and qualifications of the MD Selected Arbitrators
      and who are impartial and independent of the Claimant and the Respondent,
      in which case the Treasury shall, within five Business Days of receiving
      these nominations, appoint one of those individuals as the Presiding
      Arbitrator;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any decision,
      determination, direction or award of the Arbitrators shall be given by the
      Arbitrators as a majority (and not necessarily unanimous) decision,
      determination, direction or award;
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              any party to
      the Major Dispute shall have the right, by notice to the other parties to
      the Major Dispute, to elect that the timetable for the Arbitration shall
      provide for the Arbitrators to render their award by such time as the
      Arbitrators may determine having regard to the complexity of the Major
      Dispute (being not more than 15 months after the date of service of the
      Commencement Notice, save in exceptional
  circumstances).

            

    

     

    
      	
              35.15

            	
              A “Major Dispute” means a
      Dispute:

            

    

     

    
      	
               
      

            	
              (A)

            	
              where:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the amount in
      Dispute; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the Covered
      Amount of any Covered Asset or Loss or Recovery which is the subject to
      the Dispute,

            

    

     

    exceeds the
applicable amount designated in the Accession Agreement as the “Major Dispute Amount”;
or

     

    
      	
               
      

            	
              (B)

            	
              which either
      the Participant or the Treasury considers (acting reasonably and in good
      faith) to be of exceptional complexity or importance in the context of the
      Scheme.

            

    

     

    
      	
              35.16

            	
              If there is
      any Dispute as to whether a matter is a Major Dispute which is not
      resolved between the parties within 10 Business Days, the matter shall be
      treated as a Major Dispute for the purposes of the Dispute Resolution
      Procedure.

            

    

     

     

    
      
        
        

      

      
        202

        
          

        

      

      
        
        

      

    

     

    
      	
              35.17

            	
              If any
      Selected Arbitrator, MD Selected Arbitrator or Presiding Arbitrator (each
      an “Arbitrator”)
      for an Arbitration is not available to conduct the Arbitration for
      whatever reason, or if at any time during an Arbitration an Arbitrator
      becomes incapable of performing his or her functions (owing to death,
      resignation, refusal to act or any other incapacity or reason) then the
      parties shall, within three Business Days of becoming aware of these
      circumstances, agree in writing with each other party to the
      Arbitration:

            

    

     

    
      	
               
      

            	
              (A)

            	
              to appoint
      one of the other Legal Experts (if the relevant Arbitrator is a Legal
      Expert) or one of the other Accounting Experts (if the relevant Arbitrator
      is an Accounting Expert) as the replacement for that Arbitrator;
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              the identity
      of an alternative Arbitrator, who is not a member of the Arbitration
      Panel.

            

    

     

    If no such
agreement can be reached, the Treasury shall request that the president or
vice-president of the LCIA nominate, within five Business Days of such request,
one of the Legal Experts or Accounting Experts (as the case may be) from the
Arbitration Panel as the replacement for that Arbitrator or, if the LCIA
discovers that no such Legal Expert or Accounting Expert is available, up to
four alternatives to that Arbitrator who have the equivalent experience and
qualifications of that Arbitrator, in which case the Treasury shall, within five
Business Days of receiving these nominations, appoint one of those alternatives
as the replacement for that Arbitrator.

     

    Directions
Hearing

     

    
      	
              35.18

            	
              Subject to
      Conditions 35.14 and 35.19 and unless otherwise agreed by the Claimant and
      the Respondent:

            

    

     

    
      	
               
      

            	
              (A)

            	
              within five
      Business Days of the appointment of the Arbitrator(s), the Claimant and
      the Respondent shall fix a hearing (the “Directions Hearing”) to
      decide directions as to the procedures and timetable for the Arbitration,
      which may include (if and to the extent appropriate) directions concerning
      the service of statements of case, disclosure, the service of factual and
      expert evidence and whether (and, if at all, to what extent) oral hearings
      shall be permitted;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the timetable
      shall provide for the Arbitrator(s) to render his or her (or their) award
      within 12 months of the date of service of the Commencement Notice or such
      other period as may be determined pursuant to Condition
    35.14;

            

    

     

    
      	
               
      

            	
              (C)

            	
              any such
      Arbitration shall be conducted on an expedited basis and the Claimant and
      the Respondent in any such Arbitration shall so instruct the
      Arbitrator(s); and

            

    

     

    
      	
               
      

            	
              (D)

            	
              save where
      the Arbitrator(s) consider(s) that exceptional circumstances exist, having
      regard to the spirit of the expedited process envisaged by the Dispute
      Resolution Procedure, the Arbitrator(s) shall have no power to extend the
      period of 12 months from the date of service of the Commencement Notice
      (or such other period pursuant to Condition 35.14) within which he or she
      (or they) must 

            

    

     

     

    
      
        
        

      

      
        203

        
          

        

      

      
        
        

      

    

     

    
      	 	 	render his or
      her (or their) award and, should he or she (or they) do so in any such
      circumstances, the Arbitrator(s) shall have regard to Condition 35.32 in
      extending that period.

    

     

    Continuation
on replacement of Arbitrator

     

    
      	
              35.19

            	
              If an
      Arbitrator is replaced during an Arbitration pursuant to Condition 35.13,
      the Arbitration shall continue before the replacement Arbitrator in
      accordance with the Dispute Resolution Procedure and from the stage which
      the Arbitration had reached.

            

    

     

    Arbitration
process

     

    
      	
              35.20

            	
              Unless
      otherwise agreed by the Claimant and the Respondent in
      writing:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the seat, or
      legal place, of the Arbitration shall be London and all meetings and
      hearings shall be in private and confidential and shall take place in
      London;

            

    

     

    
      	
               
      

            	
              (B)

            	
              all
      submissions and documents produced or sent to any person, any expert or
      the Arbitrator and every interim or final award made during the course of
      the Arbitration shall be confidential and shall not be used by the
      recipient for any purpose other than the Arbitration.  All such
      submissions, documents and awards may be disclosed (i) to the Claimant’s
      or the Respondent’s Representatives, (ii) to the extent required to be
      disclosed by Applicable Law or by the rules of any relevant securities
      exchange, (iii) for the purposes of enforcement of an interim or final
      award or (iv) in the case of the Treasury only, in accordance with
      Condition 42; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              each party to
      the Dispute shall ensure that all meetings and hearings relating to the
      Arbitration are attended by a Representative of suitable seniority (which,
      in the case of any member of the Participant’s Group, shall mean a member
      of the senior management team of the Participant’s Ultimate
      Parent).

            

    

     

    
      	
              35.21

            	
              The language
      to be used in the Arbitration shall be
English.

            

    

     

    Powers
of the Arbitrator

     

    
      	
              35.22

            	
              The
      Arbitrator (or Arbitrators, as the case may be) shall have the power to
      rule on his or her (or their) own jurisdiction, including any objection to
      the initial or continuing existence, validity or effectiveness of this
      Condition 35.22.  For that purpose, the Dispute Resolution
      Procedure shall be treated as an arbitration agreement independent of any
      Scheme Document.  A decision by the Arbitrator (or Arbitrators)
      that a Scheme Document (or any part of it) is non-existent, invalid or
      ineffective shall not entail, by operation of law, the non-existence,
      invalidity or ineffectiveness of the Dispute Resolution Procedure (or any
      part of it).

            

    

     

    
      	
              35.23

            	
              A plea by the
      Claimant or the Respondent that the Arbitrator (or Arbitrators) does not
      have jurisdiction shall be treated as having been irrevocably waived
      unless it is raised not later than the relevant Directions
      Hearing.  A plea that the Arbitrator (or Arbitrators)
      

            

    

     

     

    
      
        
        

      

      
        204

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              is
      exceeding the scope of his or her (or their) authority shall be raised
      within 5 Business Days after the Arbitrator has (or Arbitrators have)
      indicated his or her (or their) intention to decide on the matter alleged
      to be beyond the scope of his or her (or their) authority, failing which
      such plea shall also be treated as having been waived
      irrevocably.

            

    

     

    
      	
              35.24

            	
              By entering
      into the Accession Agreement, the Claimant and the Respondent under an
      Arbitration waive, and no such person shall assert, as a defence in any
      Proceedings in connection with a Dispute that the Claimant or the
      Respondent is not subject to the personal jurisdiction of the Arbitrator
      (or Arbitrators) or that such Proceedings may not be brought or are not
      maintainable before the Arbitrator (or Arbitrators) or that the venue of
      the Proceedings is inappropriate or inconvenient or that the Dispute
      Resolution Procedure (or any part of it) may not be enforced by such
      Arbitrator (or Arbitrators).  The Claimant and the Respondent
      under an Arbitration shall abide by the conditions of procedure applied by
      the Arbitrator (or Arbitrators) in accordance with the requirements of the
      Dispute Resolution Procedure (including the procedures for expedited
      resolution of any Dispute) and waive any objection to any such procedure
      on the ground that such procedure is not authorised by the Arbitration
      Act, would not be permitted in the courts of some other jurisdiction or
      would be contrary to the laws of some other
  jurisdiction.

            

    

     

    
      	
              35.25

            	
              The
      Arbitrator (or Arbitrators) shall decide all procedural, interlocutory and
      evidential matters (including any provisions relating to factual or expert
      witnesses and the production of documents), subject to the right of the
      Claimant and the Respondent to agree any matter in writing among
      themselves.

            

    

     

    
      	
              35.26

            	
              The
      Arbitrator (or Arbitrators) shall have jurisdiction to order consolidation
      with any other Arbitration in accordance with the procedures set out in
      Conditions 35.33 to 35.37 (inclusive) or to hold concurrent hearings in
      respect of the relevant Disputes.

            

    

     

    Arbitration
award

     

    
      	
              35.27

            	
              Subject to
      Condition 35.18(D), within one month of the conclusion of the Arbitration
      proceedings (or such other period as the parties to the Dispute may
      agree), the Arbitrator (or Arbitrators) shall issue his or her (or their)
      award in a written decision stating the reasons upon which it is
      based.  The award shall also state the date when the award is
      made and the seat of the arbitration.  The award, if monetary,
      shall be expressed in sterling.  In the case of a monetary
      award, the Arbitrator (or Arbitrators) may order that simple or compound
      interest shall be paid by any person on any sum awarded at such rates as
      the Arbitrator (or Arbitrators) determines to be appropriate in respect of
      any period which it determines (or they determine) to be appropriate
      ending not later than the date upon which the award is complied
      with.

            

    

     

    
      	
              35.28

            	
              The
      Arbitrator (or Arbitrators) shall specify in his or her (or their) award
      the costs of the Arbitration, which shall include the fees and expenses of
      the Arbitrator (or Arbitrators), legal fees and disbursements, experts’
      fees and disbursements and witnesses’ expenses and shall make a
      determination as to the extent that such costs and any other costs and
      expenses of the Claimant and/or the Respondent shall be borne by the
      Claimant and/or the Respondent.  In reaching that determination,
      the Arbitrator (or Arbitrators) shall have regard to all of the
      circumstances including:

            

    

     

     

    
      
        
        

      

      
        205

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              the extent to
      which a party has succeeded in all or part of its
  case;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the conduct
      of the Claimant and the Respondent in connection with the Dispute and the
      Arbitration including:

            

    

     

    
      	
               
      

            	
              (i)

            	
              conduct
      before as well as during the Arbitration proceedings and the extent to
      which the parties have followed any relevant procedural directions or
      other requirements of the Arbitrator (or Arbitrators) or the Dispute
      Resolution Procedure;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              whether it
      was reasonable for a party to raise, pursue or contest a particular
      allegation or issue;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the manner in
      which a party has pursued or defended its case or a particular allegation
      or issue; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              whether a
      party has exaggerated its claim or case in any
  respect;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the amount
      in, or value of the, Dispute;

            

    

     

    
      	
               
      

            	
              (D)

            	
              the
      complexity of the matter and the difficulty or novelty of the questions
      raised;

            

    

     

    
      	
               
      

            	
              (E)

            	
              the skill,
      effort, specialised knowledge and responsibility
  involved;

            

    

     

    
      	
               
      

            	
              (F)

            	
              the time
      spent on the matter; and

            

    

     

    
      	
               
      

            	
              (G)

            	
              any
      admissible offer to settle made by a party which is drawn to the attention
      of the Arbitrator (or Arbitrators).

            

    

     

    
      	
              35.29

            	
              Any decision,
      determination, direction or award made by the Arbitrator (or Arbitrators),
      including any decision on any procedural, interlocutory and evidential
      matters (including any provisions relating to factual or expert witnesses
      and the production of documents) and any award of equitable or monetary
      relief shall be final and binding on the Claimant and the Respondent, and
      shall be deemed to have been accepted and approved by each of
      them.  No appeal shall arise from any decision, determination,
      direction or award of the Arbitrator (or Arbitrators) and neither the
      Claimant nor the Respondent may apply to any court or tribunal of any kind
      to determine any question of law arising in the course of the Arbitration
      pursuant to section 45 of the Arbitration Act or otherwise or appeal to
      any such court or tribunal of any kind on a question of law arising from
      an award made in the Arbitration pursuant to section 69 of the Arbitration
      Act or otherwise.

            

    

     

    
      	
              35.30

            	
              Subject only
      to the extent set out in Condition 35.31, the Claimant and the Respondent
      to any Arbitration shall carry out any award in accordance with its terms
      and irrevocably waive, and shall not assert, any defence to any
      enforcement of any award in any
jurisdiction.

            

    

     

    
      	
              35.31

            	
              Within five
      Business Days of an award, any Claimant or Respondent may request the
      Arbitrator (or Arbitrators) to, or the Arbitrator (or Arbitrators) may on
      his or her (or their) 

            

    

     

     

    
      
        
        

      

      
        206

        
          

        

      

      
        
        

      

    

     

     

    
      	 	own
      initiative, correct any errors in computation or clerical or typographical
      type errors in the award.

    

     

    Spirit
of expedited procedure

     

    
      	
              35.32

            	
              In all
      matters not expressly provided for in the Dispute Resolution Procedure,
      the Claimant and the Respondent to an Arbitration, and the Arbitrator (or
      Arbitrators), shall act in the spirit of the expedited process envisaged
      by the Dispute Resolution Procedure.  The Claimant and the
      Respondent in any Dispute will use their best endeavours to respond
      without delay in their dealings with the Arbitrator (or Arbitrators) in
      connection with that Dispute.

            

    

     

    Ability
to seek consolidation of Related Disputes

     

    
      	
              35.33

            	
              If any
      Dispute raises issues (of fact and/or law) which are substantially the
      same as, connected with or related to issues raised in any other Dispute
      or Disputes between the same parties (each a “Related Dispute”), and
      Arbitrations have been commenced in relation to the Related Disputes, then
      any party to the Related Disputes may request consolidation of those
      Related Disputes so that the Related Disputes shall be determined together
      in accordance with the Dispute Resolution Procedure, subject to the
      provisions of Conditions 35.34 to 35.37
  (inclusive).

            

    

     

    
      	
              35.34

            	
              Where a party
      wishes to consolidate Related Disputes pursuant to Condition 35.33, that
      party shall give notice in writing to all of the parties to the Related
      Disputes (a “Consolidation Notice”)
      no later than 10 Business Days after the issue of the Commencement Notice
      in respect of the last in time of the Related Disputes.  The
      Consolidation Notice shall be copied to the Arbitrator(s) of the Related
      Disputes at the same time that it is served on the other party or parties,
      or, to the extent that the Arbitrator(s) have not been appointed at that
      date, forthwith upon appointment of the
      Arbitrator(s).  

            

    

     

    
      	
              35.35

            	
              Following
      delivery of a Consolidation Notice, the parties shall use their best
      endeavours to procure that Arbitrator(s) of Related Disputes shall, within
      five Business Days thereafter, determine between them whether they are
      satisfied both that the issues of fact and/or law raised in the Related
      Disputes are substantially the same as, or connected or related to, each
      other, and that consolidation of the Related Disputes will not materially
      affect the timetable for resolution of either Related Dispute, and if they
      are so satisfied by majority (or, if there are only two Arbitrators,
      unanimously), they shall give notice in writing of that fact to the
      parties to the Related Dispute and the Related Disputes shall be
      consolidated.  If they are not so satisfied by majority (or, if
      there are only two Arbitrators, unanimously), the Related Disputes shall
      not be consolidated unless and until the Arbitrators of the Related
      Disputes become so satisfied and determine that they shall be
      consolidated.

            

    

     

    
      	
              35.36

            	
              If different
      Arbitrators have been appointed in respect of Related Disputes prior to
      their being consolidated in accordance with the Dispute Resolution
      Procedure and those Arbitrators deliver a written notice, in accordance
      with Condition 35.35, that the Related Disputes shall be consolidated, the
      parties shall agree in writing, within five Business
  

            

    

     

     

    
      
        
        

      

      
        207

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              Days of
      delivery of that notice, which of the Arbitrators shall be the
      Arbitrator(s) for the consolidated Related Disputes.  If no such
      agreement can be reached, the parties to the Related Dispute shall request
      that the president or vice-president of the LCIA select, within five
      Business Days of such request, which of those Arbitrators shall be the
      Arbitrator(s) for the consolidated Related
  Disputes.

            

    

     

    
      	
              35.37

            	
              If the
      Arbitrator(s) of consolidated Related Disputes is or are unable to give
      his or her (or their) award in respect of the consolidated Related
      Disputes at the same time then the awards shall be given in such order as
      the Arbitrator(s) may determine.

            

    

     

    Ability
to enforce decisions and seek urgent equitable relief in the English
courts

     

    
      	
              35.38

            	
              Nothing in
      the Dispute Resolution Procedure or in any other provision of the Scheme
      Documents shall limit the right of a Claimant or Respondent to commence or
      prosecute any Proceedings against the other in the courts of England and
      Wales to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              enforce any
      and all decisions, determinations, directions, judgments, orders and
      awards of the Arbitrator (or
Arbitrators);

            

    

     

    
      	
               
      

            	
              (B)

            	
              seek urgent
      injunctive or other equitable relief, including specific performance;
      or

            

    

     

    
      	
               
      

            	
              (C)

            	
              seek judicial
      review (to the extent jurisdiction may exist and save insofar as the
      existence of alternative remedies under the Scheme Documents would under
      normal principles exclude judicial
review).

            

    

     

    
      	
              35.39

            	
              For the
      purpose of any Proceedings referred to in Condition
  35.38:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the courts of
      England and Wales are to have exclusive jurisdiction in relation to any
      such Proceedings;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any such
      Proceedings shall be brought only in the courts of England and
      Wales;

            

    

     

    
      	
               
      

            	
              (C)

            	
              (save in
      relation to Proceedings in respect of judicial review) each party waives
      (and agrees not to raise) any objection, on the ground of forum non conveniens or
      on any other ground, to the taking of any such Proceedings in the courts
      of England and Wales and agrees that a judgment against it in any such
      Proceedings brought in England and Wales shall be conclusive and binding
      upon it and may be enforced in any other jurisdiction;
  and

            

    

     

    
      	
               
      

            	
              (D)

            	
              each party
      irrevocably submits and agrees to submit to the jurisdiction of the courts
      of England and Wales in respect of any such
  Proceedings.

            

    

     

     

    
      
        
        

      

      
        208

        
          

        

      

      
        
        

      

    

     

    
      
        	
                36.

              	
                DEFAULT
      INTEREST

              

      

    

     

    
      	
              36.1

            	
              Other than in
      the case of a sum which is the subject of a Dispute (in good faith)
      pursuant to the Dispute Resolution Procedure, if the Participant or the
      Treasury fails to pay any sum payable by it under any Scheme Document
      (including any arbitral award) on the due date for payment, interest
      (“Default
      Interest”) shall accrue on that sum at the Default Rate for the
      period from (and including) the due date for payment to (but excluding)
      the date of actual payment of that sum (after as well as before award or
      judgment).

            

    

     

    
      	
              36.2

            	
              Default
      Interest shall accrue from day to day and be calculated on the basis of
      the actual number of days elapsed and a year of 365
  days.

            

    

     

    
      	
              36.3

            	
              The “Default Rate” for any
      period is a rate per annum equal
to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              Compound
      SONIA for that period; plus

            

    

     

    
      	
               
      

            	
              (B)

            	
              one per
      cent.

            

    

     

    
      	
              36.4

            	
              “Compound SONIA” means,
      for any period (a “calculation period”),
      the rate of return for that calculation period of a daily compound
      interest investment (it being understood that the reference rate for the
      calculation of interest is the sterling daily overnight reference rate)
      calculated as follows:

            

    

     

    
      

    

     

    
      
        where

      

    

     

    
      
        	
              	
                D

              	
                is the number
      of Business Days in that calculation
period

              

      

    

     

    
      
        	
              	
                i

              	
                is a series
      of whole numbers from one to “D”, each representing the relevant Business
      Day in chronological order from, and including, the first Business Day in
      that calculation period

              

      

    

     

    
      
        	
              	
                SONIAi

              	
                for any
      Business Day “i” in that calculation period, is a reference rate equal to
      the overnight rate (expressed as a per annum rate) as calculated by the
      Wholesale Markets Brokers’ Association and appearing on the Bloomberg
      SONIO/N Page in respect of that day (or, if the Bloomberg SONIO/N Page
      ceases to provide that rate or ceases to be available, such other sterling
      overnight rate as 

              

      

    

     

     

    
      
        
        

      

      
        209

        
          

        

      

      
        
        

      

    

     

    
      the Treasury
determines to be an appropriate replacement)

    

     

    
      
        	
              	
                DCFi 

              	
                is the number
      of calendar days in that calculation period for which the rate is
      SONIAi
      divided by 365

              

      

    

     

    
      
        	
              	
                d

              	
                is the number
      of calendar days in that calculation
period

              

      

    

     

    
      	
              36.5

            	
              The Late
      Payment of Commercial Debts (Interest) Act 1998 shall not apply in respect
      of any unpaid sum due under any Scheme Document.  Without
      limiting Condition 37 and save as provided in the previous sentence, the
      right to receive Default Interest under this clause in respect of any
      unpaid sum is not exclusive of any rights, powers and remedies provided by
      law in respect of the failure to pay the relevant sum on the due date or
      at all.

            

    

     

     

    
      
        
        

      

      
        210

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                37.

              	
                GENERAL
      PROVISIONS REGARDING REMEDIES AND
WAIVERS

              

      

    

     

    
      	
              37.1

            	
              Without
      prejudice to its obligations to make payments to the Participant pursuant
      to Condition 8, the Treasury shall have no liability (save where such
      liability may not by law be effectively excluded or limited) to any member
      of the Participant’s Group or any other person under or in connection with
      the Scheme or any Scheme Document, whether in contract, tort (including
      negligence or breach of statutory duty), or otherwise, for any costs,
      expenses, damages or losses (whether direct or indirect), loss of profit,
      contracts, opportunity, business or revenue, failure to realise
      anticipated savings or benefits, loss of goodwill, loss of operation time,
      loss of or corruption to data, wasted management or staff time or any
      indirect, special or consequential cost, expense, damage or loss of any
      kind whatsoever and howsoever caused, even if reasonably foreseeable and
      even if the Treasury has been advised of the possibility of any of the
      foregoing being sustained or incurred by any member of the Participant’s
      Group or other person under or in connection with the Scheme or any Scheme
      Document.

            

    

     

    
      	
              37.2

            	
              No delay or
      omission by the Treasury or the Participant (as the case may be) in
      exercising any right, power or remedy provided by law or under or pursuant
      to any Scheme Document shall:

            

    

     

    
      	
               
      

            	
              (A)

            	
              affect that
      right, power or remedy; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              operate as a
      waiver of it.

            

    

     

    
      	
              37.3

            	
              No waiver by
      the Treasury of any right, power or remedy provided by law or under or
      pursuant to any Scheme Document shall be effective unless given in
      writing.

            

    

     

    
      	
              37.4

            	
              The single or
      partial exercise by the Treasury or the Participant (as the case may be)
      of any right, power or remedy provided by law or under or pursuant to any
      Scheme Document shall not, unless otherwise expressly stated, preclude any
      other or further exercise of it or the exercise of any other right, power
      or remedy.

            

    

     

    
      	
              37.5

            	
              The exercise
      by the Treasury, any Government Entity or any of their respective
      Representatives of any discretion under the terms of the Scheme Documents
      (including in respect of any consent, approval, waiver or agreement that
      may be given under any Scheme Document) shall in no way limit the manner
      in or extent to which that discretion may be exercised in future or (save
      as otherwise agreed in writing signed by each of the Participant and the
      Treasury in accordance with Condition 47.17) give rise to any amendment or
      modification to the Scheme Documents (whether by virtue of its evidencing
      a course of conduct or otherwise).

            

    

     

    
      	
              37.6

            	
              Any right of
      any person under any Scheme Document is cumulative and not exclusive of
      any other right (whether provided under any Scheme Document, by law or
      otherwise) except and to the extent that any such exclusion is expressly
      stated in the Scheme Documents.

            

    

     

    
      	
              37.7

            	
              The
      Participant acknowledges and agrees that damages may not be an adequate
      remedy for any breach of any of these Conditions or any provision of any
      other Scheme 

            

    

     

     

    
      
        
        

      

      
        211

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              Document and
      that, without prejudice to any other rights or remedies which the Treasury
      may have, whether pursuant to a provision of a Scheme Document or
      otherwise, the Treasury may, pursuant to Condition 35.38 seek the remedies
      of injunction, specific performance and other equitable relief for any
      such breach (or potential breach) without proof of special damages being
      required.  The Participant agrees not to raise any objection to
      any application by the Treasury for any such
  remedies.

            

    

     

    
      	
              37.8

            	
              Without
      prejudice to the other provisions of the Scheme Documents, nothing in
      Condition 7 or Condition 10 shall make the payment obligations of the
      Treasury pursuant to Condition 8 in respect of a Triggered Asset subject
      to any member of the Participant’s Group first having to pursue an
      Obligor.

            

    

     

    

     

    
      
        
        

      

      
        212

        
          

        

      

      
        
        

      

    

     

    

    PART
9: TAXATION

     

    
      	
              38.

            	
              TAXATION

            

    

     

    Withholdings
and Taxes on payments

     

    
      	
              38.1

            	
              All payments
      by the Participant under or in connection with the Scheme Documents shall
      be paid without any deduction or withholding, unless required by
      Applicable Law.  If any Tax is required by Applicable Law to be
      deducted or withheld from or in connection with any such payment, the
      amount payable shall be increased so as to ensure that the amount received
      by the Treasury or any other Indemnified Person (after such deduction or
      withholding, including for the avoidance of doubt any additional deduction
      or withholding required as a result of such increase) is equal to the
      amount which the Treasury or such other Indemnified Person would have
      received if no such deduction or withholding had been
      required.

            

    

     

    
      	
              38.2

            	
              If any
      Indemnified Person is subject to Tax in respect of any sum payable under
      or in connection with the Scheme Documents (other than any sum payable as
      part of the Fee or, in the case of any Indemnified Person other than the
      Treasury, any professional fees or similar remuneration payable to such
      Indemnified Person), or if any such sum is taken into account in computing
      the profits, income or gains of any Indemnified Person for Tax purposes,
      the sum payable shall be increased so as to ensure that the amount
      retained by such Indemnified Person (after the payment of such Tax,
      including for the avoidance of doubt any additional Tax payable as a
      result of such increase) is equal to the amount which such Indemnified
      Person would have retained in the absence of such
  Tax.

            

    

     

    Output
VAT

     

    
      	
              38.3

            	
              Each sum
      (including any sum payable as part of the Fee) payable by the Participant
      under or in connection with the Scheme Documents is expressed exclusive of
      any amount in respect of VAT which is chargeable on any supply or supplies
      for which such sum (or any part thereof) is the whole or part of the
      consideration for VAT purposes.  If any Indemnified Person makes
      (or is deemed to make) any supply for VAT purposes in consideration for
      such sum (or any part thereof) and VAT is or becomes chargeable in respect
      of such supply, the Participant shall pay to such Indemnified Person
      (within 14 days of the receipt of a valid VAT invoice) an additional sum
      equal to the amount of such VAT.

            

    

     

    Input
VAT

     

    
      	
              38.4

            	
              If the
      Participant is obliged to pay any sum under or in connection with the
      Scheme Documents by way of indemnity, reimbursement, damages or
      compensation for or in respect of any liability, damage, cost, demand,
      charge or expense (the “Relevant Cost”), the
      calculation of such sum shall include an amount determined as
      follows:

            

    

     

    
      	
               
      

            	
              (A)

            	
              if the
      Relevant Cost is, for VAT purposes, the consideration for a supply of
      goods or services made to the relevant Indemnified Person (including where
      

            

    

     

     

    
      
        
        

      

      
        213

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              such supply
      is made to the relevant Indemnified Person as agent for the Participant
      within the terms of section 47 of the Value Added Tax Act 1994), such
      additional amount shall be equal to any input VAT which was incurred by
      the relevant Indemnified Person in respect of that supply and which it is
      not able to recover from the relevant Tax authority;
  and

            

    

     

    
      	
               
      

            	
              (B)

            	
              if the
      Relevant Cost is, for VAT purposes, a disbursement incurred by the
      relevant Indemnified Person as agent on behalf of the Participant and the
      relevant supply is made to the Participant for VAT purposes, such
      additional amount shall be equal to any amount in respect of VAT which was
      paid in respect of the Relevant Cost by the relevant Indemnified Person,
      and the relevant Indemnified Person shall use reasonable endeavours to
      procure that the relevant third party issues a valid VAT invoice in
      respect of the Relevant Cost to the
Participant.

            

    

     

    IPT

     

    
      	
              38.5

            	
              Each sum
      (including for the avoidance of doubt any sum payable as part of the Fee)
      payable by the Participant under or in connection with the Scheme
      Documents is expressed exclusive of any amount in respect of Insurance
      Premium Tax which is chargeable by reference to that sum and, if any
      Indemnified Person is subject to Insurance Premium Tax by reference to
      such sum, the Participant shall pay to the Indemnified Person on demand an
      additional sum equal to the amount of such Insurance Premium
      Tax.

            

    

     

    Stamp
Duties

     

    
      	
              38.6

            	
              The
      Participant shall pay and bear, and shall indemnify each Indemnified
      Person on demand against, any Stamp Duty which is payable or paid (whether
      by such Indemnified Person or otherwise) in connection with the execution,
      delivery, performance or enforcement of any of the Scheme
      Documents.

            

    

     

    Tax
returns and correspondence

     

    
      	
              38.7

            	
              Unless
      otherwise provided in the Accession Agreement, the Participant shall (and
      shall procure that each other member of the Participant’s Group will)
      prepare its Tax returns and any related claims, elections, notices and
      other correspondence, and conduct any related claims, appeals or
      proceedings, if and to the extent that they relate to the Tax treatment or
      Tax implications of participation in the Scheme, on a basis which is
      consistent with any principles agreed between any member of the
      Participant’s Group (or any of its advisers) and the Treasury and/or HMRC,
      or set out by the Treasury or HMRC in each case in response to any request
      or inquiry on the relevant subject by any member of the Participant’s
      Group (or any of its advisers), in connection with (whether prior to, at
      the time of or following) the Participant’s accession to the Scheme,
      except to the extent that the Participant or the relevant other member of
      the Participant’s Group is prevented from doing so as a result of any
      change in Applicable Law or IFRS (or other relevant generally accepted
      accounting principles) taking effect after the Accession
    Date.

            

    

     

     

    
      
        
        

      

      
        214

        
          

        

      

      
        
        

      

    

     

    Treaty
claims etc.

     

    
      	
              38.8

            	
              The Treasury
      shall co-operate in completing any treaty forms or other procedural
      formalities reasonably requested by the Participant for the purpose of
      enabling the Participant to make any payment under or in connection with
      the Scheme Documents without any deduction or withholding in respect of
      Tax.

            

    

     

     

    
      
        
        

      

      
        215

        
          

        

      

      
        
        

      

    

     

    
 

    PART
10: GENERAL PROVISIONS

     

    
      	
              39.

            	
              CONSENTS
      AND APPROVALS

            

    

     

    
      	
              39.1

            	
              This
      Condition 39 shall apply if the Transitional Period has expired and any
      member of the Participant’s Group:

            

    

     

    
      	
               
      

            	
              (A)

            	
              wishes to
      carry out any action of a type specified in the table set out in Condition
      39.4 (the “Relevant
      Action”);

            

    

     

    
      	
               
      

            	
              (B)

            	
              requires the
      consent or approval of the Treasury under the Condition (the “Relevant Condition”)
      specified in the column next to that Relevant Action in the table set out
      in Condition 39.4; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              notifies the
      Treasury in writing that it requests such consent or approval in
      accordance with the Scheme
Documents.

            

    

     

    
      	
              39.2

            	
              If this
      Condition 39 applies, the Treasury shall be deemed to have given its
      consent or approval to the Relevant Action for the purposes of the
      Relevant Condition unless it has, within the consent period specified in
      the table set out in Condition 39.4 (the “Applicable Consent
      Period”):

            

    

     

    
      	
               
      

            	
              (A)

            	
              notified the
      relevant member of the Participant’s Group, in accordance with the Scheme
      Documents, that it does not consent to or approve the Relevant Action;
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              made a
      request for Information in relation to the Relevant
  Action.

            

    

     

    The first day of
the Applicable Consent Period shall be the first Business Day following the date
on which the Participant gives written notice to the Treasury of its request for
consent or approval.  Any such deemed consent or approval shall be
deemed to have been given on the Business Day immediately following the last day
of the relevant Applicable Consent Period.

     

    
      	
              39.3

            	
              Nothing in
      this Condition 39 shall preclude or prevent the Treasury from notifying
      the Participant that it does not consent to or approve any Relevant Action
      in circumstances where the Treasury considers that it has insufficient
      Information for the purposes of assessing such Relevant
      Action.

            

    

     

     

    
      
        
        

      

      
        216

        
          

        

      

      
        
        

      

    

     

     

    
      	
              39.4

            	
              The Relevant
      Conditions, Relevant Actions and Applicable Consent Periods
      are:

            

    

     

    
      	
              Relevant
      Condition

            	
              Relevant
      Action

            	
              Applicable
      Consent Period (Business Days)

            
	
              10.27(C)

            	
              Proposed
      modifications to the Asset Management Framework, Conflicts Management
      Policy or Credit Aggregation Policy

            	
              20

            
	
              11.1

            	
              Proposed
      transfer (whether by way of novation, sub-contract, delegation or
      otherwise) to any person of any responsibilities, duties or obligations in
      connection with any Covered Asset where not permitted

            	
              20

            
	
              12

            	
              Conduct
      Requiring Approval

            	
              5

            
	
              13.1

            	
              Proposed
      creation of any Security in respect of any Covered Asset other than in
      respect of any Permitted Arrangement

            	
              20

            
	
              21.2

            	
              Proposed
      appointment of SOC members

            	
              20

            
	
              21.3

            	
              Proposed
      alterations to the SOC Terms of Reference

            	
              20

            
	
              22.1

            	
              Proposed
      appointment of Scheme Head

            	
              20

            
	
              25.3

            	
              Proposed
      material changes to Shared Services which will or are likely to prejudice
      or adversely affect compliance or ability to comply with the Scheme
      Documents in any material respect

            	
              20

            
	
              26.2

            	
              Changes to
      Detailed Organisational Structure if required

            	
              20

            
	
              32.8(C)

            	
              Approval of
      Step-In Manager identified by the Participant

            	
              10

            
	
              32.13

            	
              Approval of
      terms of engagement of Step-In Manager

            	
              20

            

    

     

     

    
 

    
      
        
        

      

      
        217

        
          

        

      

      
        
        

      

    

     

    
      
        	
                40.

              	
                PAYMENT
      MECHANICS AND CURRENCY

              

      

    

     

    Payment
on due date

     

    
      	
              40.1

            	
              On each date
      on which payment is required to be made by the Treasury or the Participant
      under any Scheme Document, such payment shall be made to the Treasury or
      the Participant (as the case may be) for value on the due
      date.

            

    

     

    Set-off

     

    
      	
              40.2

            	
              The Treasury
      may, without notice to the Participant, set off any matured obligation
      owed by the Participant under any Scheme Document to the Treasury against
      any obligation (whether or not matured) owed by the Treasury to the
      Participant, regardless of the place of payment or currency of the
      obligation.

            

    

     

    
      	
              40.3

            	
              If the
      obligations referred to in Condition 40.2 are in different currencies, the
      Treasury may convert the obligations at market rates of exchange for the
      purpose of any set-off.

            

    

     

    
      	
              40.4

            	
              Condition
      40.2 is intended to give rise to rights in contract only and is not
      intended to constitute, create or give rise to a Security Interest of any
      kind over any asset of the Participant.  If and to the extent
      that any right conferred under Condition 40.2 would, notwithstanding the
      foregoing sentence, constitute, create or give rise to any Security
      Interest, such right shall be of no
effect.

            

    

     

    
      	
              40.5

            	
              All payments
      required to be made by the Participant under any Scheme Document shall be
      made in full.  They will be free and clear of any right of
      set-off and from any restriction, condition or deduction because of any
      counterclaim.

            

    

     

    Accounts

     

    
      	
              40.6

            	
              Payments to
      the Treasury shall be made to such account as may be notified to the
      Participant in writing by the Treasury from time to
  time.

            

    

     

    
      	
              40.7

            	
              Payments to
      the Participant shall be made to the account of the Participant held with
      the Bank of England.

            

    

     

    
      	
              40.8

            	
              Any change in
      the account or account details for payment shall be notified to the party
      required to make the payment.  Any such change shall take effect
      on the date falling five Business Days after such notice is delivered or,
      if later, the date specified in the
notice.

            

    

     

    Non-Business
Days

     

    
      	
              40.9

            	
              Any payment
      which is due to be made on a day that is not a Business Day shall be made
      on the next Business Day in the same Quarter (if there is one) or the
      preceding Business Day (if there is
not).

            

    

     

     

    
      
        
        

      

      
        218

        
          

        

      

      
        
        

      

    

     

    Currency

     

    
      	
              40.10

            	
              Each payment
      under these Conditions or the Accession Agreement shall be made in
      sterling.  To the extent permitted by Applicable Law, any
      obligation to make payments under any Scheme Document in sterling shall
      not be discharged or satisfied by any tender in any currency other than
      sterling, except to the extent such tender results in the actual receipt
      by the party to which payment is owed, acting in good faith and using
      commercially reasonable procedures in converting the currency so tendered
      into sterling, of the full amount in sterling of all amounts payable under
      that Scheme Document.  If for any reason the amount in sterling
      so received falls short of the amount in sterling payable under that
      Scheme Document, the party required to make the payment shall, to the
      extent permitted by Applicable Law, immediately pay such additional amount
      in sterling as may be necessary to compensate for the
      shortfall.  If for any reason the amount in sterling so received
      exceeds the amount in sterling payable under that Scheme Document, the
      party receiving the payment shall refund promptly the amount of such
      excess in sterling.

            

    

     

    
      	
              40.11

            	
              To the extent
      permitted by Applicable Law, if any judgment, order or award expressed in
      a currency other than sterling is
rendered:

            

    

     

    
      	
               
      

            	
              (A)

            	
              for the
      payment of any amount owing under or in respect of any Scheme
      Document;

            

    

     

    
      	
               
      

            	
              (B)

            	
              for the
      payment of any amount resulting from any early termination in respect of
      any Scheme Document; or

            

    

     

    
      	
               
      

            	
              (C)

            	
              in respect of
      a judgment, order or award for the payment of any amount described in
      paragraph (A) or (B) above,

            

    

     

    the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, shall be entitled to receive
immediately from the other party the amount of any shortfall of sterling
received by such party as a consequence of sums paid in such other currency and
shall refund promptly to the other party any excess of sterling received by such
party as a consequence of sums paid in such other currency if such shortfall or
such excess arises or results from any variation between the rate of exchange at
which sterling is converted into the currency of the judgment or order for the
purposes of such judgment or order and the rate of exchange at which such party
is able, acting in good faith and using commercially reasonable procedures in
converting the currency received into sterling, to purchase sterling with the
amount of the currency of the judgment or order actually received by such
party.  For the purpose of this Condition 40.11, the term “rate of
exchange” includes any premiums and costs of exchange payable in connection with
the purchase of or conversion into sterling.

     

    Sterling
Equivalent and Applicable Exchange Rate

     

    
      	
              40.12

            	
              “Sterling Equivalent”
      means:

            

    

     

     

    
      
        
        

      

      
        219

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              in the case
      of an amount denominated in sterling, such amount;
  and

            

    

     

    
      	
               
      

            	
              (B)

            	
              in the case
      of an amount denominated in any Other Currency, the amount of sterling
      required to purchase such amount of the Other Currency at the Applicable
      Exchange Rate.

            

    

     

    
      	
              40.13

            	
              “Applicable Exchange
      Rate” means, with respect to an amount denominated in any Other
      Currency, the arithmetic mean of the Other Currency/sterling exchange
      rates, expressed as the amount of the Other Currency per £1, which will be
      the Mid Rates for each Fixing Date, as published on the WM Company website
      or via another data distributor.

            

    

     

    
      	
               
      

            	
              If:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Other
      Currency is not a currency covered by the WM/Reuters Service;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              on any Fixing
      Date, the Mid Rate is not published on the WM Company website or via
      another distributor,

            

    

     

    and, in either
case, the Treasury and the Participant are unable to agree on an alternative
rate by 5:00 p.m. London time (the “Cut-off Time”) on the relevant
Fixing Date, the Other Currency/sterling exchange rate for that Fixing Date
shall be the equivalent rate published or otherwise made available for that
Fixing Date by a foreign exchange agent selected by the Treasury, provided that
if such equivalent rate is not published or otherwise made available for that
Fixing Date by that foreign exchange agent then the Other Currency/sterling
exchange rate for that Fixing Date shall:

     

    
      	
               
      

            	
              (a)

            	
              if the
      Alternative Fixing Date for that Fixing Date is less than 10 days before
      the Fixing Date, be the equivalent rate published or otherwise made
      available for the Alternative Fixing Date by that foreign exchange agent;
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              in any other
      case, be the exchange rate determined by the
  Treasury.

            

    

     

    
      	
              40.14

            	
              If, in
      accordance with Condition 40.13, the Other Currency/sterling exchange rate
      for a Fixing Date is to be the equivalent rate of a foreign exchange agent
      selected by the Treasury, the Treasury shall request such foreign exchange
      agent to provide a quotation of what the Other Currency/sterling exchange
      rate would have been for that Fixing Date (or for the Alternative Fixing
      Date with respect to that Fixing Date, as applicable) had the Other
      Currency been a currency covered by the WM/Reuters Service and published
      for that Fixing Date (or for the Alternative Fixing Date with respect to
      that Fixing Date, as applicable) on the WM Company website or via another
      distributor at the Cut-off Time, or as close to such time as is reasonably
      practicable.

            

    

     

    
      	
              40.15

            	
              If the
      WM/Reuters Service ceases to be available, the Treasury shall specify an
      alternative service which publishes exchange rates and, in that case,
      references in these Conditions to:

            

    

     

     

    
      
        
        

      

      
        220

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              “WM/Reuters
      Service” shall be deemed to be references to the alternative
      service;

            

    

     

    
      	
               
      

            	
              (B)

            	
              “WM Company”
      shall be deemed to be references to the sponsor or other provider of the
      alternative service; and

            

    

     

    
      	
               
      

            	
              (C)

            	
              “Mid Rate”
      shall be deemed to be references to the equivalent rate published by the
      alternative service.

            

    

     

    
      	
              40.16

            	
              Subject to
      Condition 40.15, in these
Conditions:

            

    

     

    “Alternative Fixing Date”
means, with respect to a Fixing Date, the then most recent date:

     

    
      	
               
      

            	
              (A)

            	
              that is
      neither (i) another Fixing Date nor (ii) an Alternative Fixing Date with
      respect to another Fixing Date for which an Alternative Fixing Date is
      required for the purpose of paragraph (a) of Condition 40.13;
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              for which the
      equivalent rate of the relevant foreign exchange agent was published or
      otherwise made available;

            

    

     

    “Exchange Date” means the
applicable date which is specified as the Exchange Date in these
Conditions;

     

    “Fixing Date” means each of the
five Scheduled Service Days immediately preceding the Fixing Reference
Date;

     

    “Fixing Reference Date”
means:

     

    
      	
               
      

            	
              (A)

            	
              if the
      relevant Exchange Date falls on or after 31 December 2008, the date which
      is three Business Days before the Quarterly Statement Date immediately
      following the Quarter in which such Exchange Date falls;
    and

            

    

     

    
      	
               
      

            	
              (B)

            	
              if the
      relevant Exchange Date falls before 31 December 2008, the date which is
      three Business Days before 28 February
2010;

            

    

     

    “Mid Rate” means the rate
quoted as the “mid rate” of the “WM/Reuters” Other Currency / sterling “closing
spot rates”;

     

    “Other Currency” means a
currency other than sterling;

     

    “Scheduled Service Day” means
any day for which the WM Company is scheduled to publish the Mid
Rate;

     

    “WM Company” means The World
Markets Company plc; and

     

    “WM/Reuters Service” means the
WM/Reuters closing spot rate service provided by the WM Company.

     

     

    
      
        
        

      

      
        221

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                41.

              	
                TRANSFERS

              

      

    

     

    Restriction
on Transfers

     

    
      	
              41.1

            	
              Subject to
      Conditions 41.2 and 41.7, no person
may:

            

    

     

    
      	
               
      

            	
              (A)

            	
              assign all or
      any part of the benefits of, or all or any of its rights or benefits
      under, any of the Scheme Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              make a
      declaration of trust in respect of or enter into any arrangement whereby
      it agrees to hold in trust for any person all or any part of the benefit
      of, or its rights or benefits under, any of the Scheme Documents;
      or

            

    

     

    
      	
               
      

            	
              (C)

            	
              transfer
      (whether by way of novation, sub-contract, delegation or otherwise), or
      enter into an arrangement whereby any person is to perform, any or all of
      its obligations under any Scheme
Document,

            

    

     

    (each, a “Transfer”) except as provided
for in this Condition 41.

     

    Permitted
Transfers by the Treasury

     

    
      	
              41.2

            	
              Notwithstanding
      Condition 41.1, the Treasury may effect a Transfer
  to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any person
      (including a Government Entity) of any of its obligations to make payments
      to (and any of its rights to receive payments from) the Participant under
      the Scheme Documents; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              any
      Government Entity of any of its other rights, benefits or obligations
      under the Scheme Documents (including any of its monitoring,
      administration and enforcement  rights under the Scheme
      Documents),

            

    

     

    in each case on
such terms (subject to Condition 41.5) as it considers appropriate.

     

    
      	
              41.3

            	
              The Treasury
      shall effect a Transfer pursuant to Condition 41.2 by giving not less than
      10 Business Days’ prior written notice to the Participant specifying the
      identity of the transferee and the rights, benefits or obligations under
      the Scheme Documents that are to be the subject of the Transfer (the
      “Substituted Rights and
      Obligations”).

            

    

     

    
      	
              41.4

            	
              If a
      notification is given by the Treasury pursuant to Condition 41.3, the
      Participant shall enter into such further agreements as are necessary in
      order to substitute the relevant transferee for the Treasury in respect of
      the Substituted Rights and Obligations and to effect any consequential
      amendments or modifications to the Scheme Documents that are necessary to
      give effect thereto.

            

    

     

    
      	
              41.5

            	
              Any Transfer
      by the Treasury pursuant to Condition 41.2 shall be subject to the
      Participant continuing to be entitled to apply risk weightings to its
      exposures of Covered Assets (under any relevant capital adequacy regime
      binding on it) which, overall, are no greater than the risk
      weightings which it was entitled to apply to those exposures
    

            

    

     

     

    
      
        
        

      

      
        222

        
          

        

      

      
        
        

      

    

     

     

    
      	 	immediately
      prior to the Transfer (taking account of any collateral, surety or other
      ancillary risk mitigation arrangements effected in connection with such
      Transfer).

    

     

    
      	
              41.6

            	
              If the
      Treasury effects any Transfer pursuant to this Condition 41, the Participant shall not
      incur any greater liability under Conditions 38.1 to 38.6 (inclusive) than
      would have been the case but for such
Transfer.

            

    

     

    Permitted
Transfers by the Participant

     

    
      	
              41.7

            	
              The
      Participant may sub-contract or delegate its obligations under the Scheme
      Documents only if and to the extent permitted pursuant to Condition 11 or
      required pursuant to Condition 32.

            

    

     

    Costs

     

    
      	
              41.8

            	
              Each member
      of the Participant’s Group, the Treasury and any Indemnified Person shall
      bear its own costs and expenses (including legal and other third party
      advisory costs) arising out of or in connection with any
      Transfer.

            

    

     

     

    
      
        
        

      

      
        223

        
          

        

      

      
        
        

      

    

     

    
      
        	
                42.

              	
                CONFIDENTIAL
      INFORMATION AND RESTRICTED ASSET
INFORMATION

              

      

    

     

    Confidential
Information is subject to this Condition

     

    
      	
              42.1

            	
              Confidential
      Information provided pursuant to or in connection with the Scheme shall be
      subject to the provisions in this Condition 42, which, unless
      otherwise provided for in the Accession Agreement, supersedes each APS
      Confidentiality Agreement.  Any such APS Confidentiality
      Agreement shall be deemed to be terminated with effect from the Accession
      Date (but without prejudice to any accrued rights or obligations under
      such agreement at the date of
termination).

            

    

     

    Defined
Terms used in this Condition

     

    
      	
              42.2

            	
              “APS Confidentiality
      Agreement” means each separate agreement relating to the Scheme
      which provides for undertakings of confidentiality and/or undertakings
      pertaining to the FOI Act between (i) the Treasury and/or its
      Representatives and (ii) any member of the Participant’s Group, which is
      identified as such in the Accession
Agreement.

            

    

     

    
      	
              42.3

            	
              “Confidential
      Information” means Treasury Confidential Information and/or
      Participant Confidential
Information.

            

    

     

    
      	
              42.4

            	
              “Excluded Information”
      means Information (i) in, or which enters, the public domain otherwise
      than as a consequence of a breach of any provision of the Scheme Documents
      or the terms of any APS Confidentiality Agreement or (ii) properly in the
      possession of the recipient on a non-confidential basis and not to the
      knowledge of the recipient as a result of a breach of any duty of
      confidentiality attaching thereto prior to it being acquired by or
      furnished to it.

            

    

     

    
      	
              42.5

            	
              “Inside Information”
      means Participant Confidential Information which is “inside information”
      within the meaning of section 118C of FSMA or section 56 of the Criminal
      Justice Act 1993 in relation to the Participant, any Ultimate Parent of
      the Participant or any member of the Participant’s
  Group.

            

    

     

    
      	
              42.6

            	
              “Treasury Confidential
      Information” means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              all
      Information relating directly or indirectly to the Treasury or any of its
      Representatives which any member of the Participant’s Group or its
      Representatives receives or shall have received from the Treasury, any of
      its Representatives or any third party who has received the Information
      from the Treasury or any of its Representatives in connection with the
      Participant’s participation or proposed participation in the Scheme
      (including all such Information which any member of the Participant’s
      Group or any of its Representatives prepares which contains or reflects or
      is generated from such Information);
and

            

    

     

    
      	
               
      

            	
              (B)

            	
              all
      Information relating to or arising from negotiations, discussions and
      correspondence in connection with the Scheme between (i) the Treasury or
      any 

            

    

     

    
      
        
        

      

      
        224

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	of
      its Representatives and (ii) any member of the Participant’s Group or any
      of its Representatives, but excluding in each case any Excluded
      Information.

    

     

    
      	
              42.7

            	
              “Treasury Permitted
      Purposes” means (i) complying with the Treasury’s responsibilities
      and obligations, and exercising the Treasury’s rights, powers and
      discretions, under or in connection with the Scheme or the Scheme
      Documents, (ii) providing or enabling the provision of financial support
      to the Participant or protecting or enhancing the stability of the
      financial system of the United Kingdom, (iii) reporting on the
      establishment, performance or operation of, or compliance with, the Scheme
      (including in connection with any forecast of the aggregate projected cost
      of the Scheme, whether as part of national budget forecasts and reports or
      otherwise) and (iv) discharging the Treasury’s responsibilities and
      functions.

            

    

     

    
      	
              42.8

            	
              “Participant Confidential
      Information” means:

            

    

     

    
      	
               
      

            	
              (A)

            	
              all
      Information which the Treasury or any of its Representatives receives or
      shall have received from a member of the Participant’s Group or any of its
      Representatives, or from any third party who has received the Information
      from a member of the Participant’s Group or any of its Representatives,
      pursuant to these Conditions or any other Scheme Document or otherwise in
      connection with the Participant’s participation or proposed participation
      in the Scheme (including all such Information which the Treasury or any of
      its Representatives prepare which contains or reflects or is generated
      from such Information); and

            

    

     

    
      	
               
      

            	
              (B)

            	
              all
      Information relating to or arising from negotiations, discussions and
      correspondence between (i) the Treasury or any of its Representatives and
      (ii) any member of the Participant’s Group or any of its Representatives,
      in connection with the Scheme, but excluding in each case any Excluded
      Information.

            

    

     

    Confidential
Information: Obligations and Exceptions applicable to the Treasury

     

    
      	
              42.9

            	
              The Treasury
      shall (and shall ensure that its Representatives will) keep all
      Participant Confidential Information confidential and not, without the
      prior written consent of the Participant, disclose Participant
      Confidential Information to any other person other than as expressly
      permitted in the Scheme Documents.

            

    

     

    
      	
              42.10

            	
              The Treasury
      shall (and shall ensure that its Representatives will) at all times have
      in place and maintain security measures and procedures to protect the
      confidentiality of the Participant Confidential
    Information.

            

    

     

    
      	
              42.11

            	
              The
      restrictions in Condition 42.9 do not apply to the disclosure of
      Participant Confidential Information by the Treasury to its
      Representatives to the extent that such Representatives require the
      Participant Confidential Information to enable or assist the Treasury to
      fulfil any of the Treasury Permitted
Purposes.

            

    

     

    
      	
              42.12

            	
              The
      restrictions in Condition 42.9 do not apply to any disclosure of
      Participant Confidential Information by the Treasury (or its
      Representatives):

            

    

     

     

    
      
        
        

      

      
        225

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              which is
      required by (i) Applicable Law or (ii) the rules of the Bank of England or
      any Authority to which the Treasury (or any relevant Representative of the
      Treasury) is subject;

            

    

     

    
      	
               
      

            	
              (B)

            	
              to any
      Step-In Manager (or proposed Step-In Manager), or any of its
      Representatives, to the extent that the Treasury considers (acting
      reasonably) that such disclosure is required in connection with the
      proposed or potential exercise of the Treasury’s rights, powers and
      discretions under Condition 32;

            

    

     

    
      	
               
      

            	
              (C)

            	
              on a
      confidential basis, to any Permitted Government Recipient or any successor
      organisation of any Permitted Government Recipient, to the extent that the
      Treasury considers (acting reasonably) that such disclosure is required
      (i) to enable or assist the Treasury to fulfil any of the Treasury
      Permitted Purposes or (ii) to enable or assist any Permitted Government
      Recipient (or any of its successors) to fulfil its
    functions;

            

    

     

    
      	
               
      

            	
              (D)

            	
              to Parliament
      or to any Parliamentary committee (including the Public Accounts
      Committee, the House of Commons Treasury Select Committee and any Select
      Committee of the Parliament of the United Kingdom), in each case if and to
      the extent that the Treasury considers such disclosure is required to
      enable or assist it to fulfil any Treasury Permitted
    Purpose;

            

    

     

    
      	
               
      

            	
              (E)

            	
              to the
      European Commission, if and to the extent that the Treasury considers such
      disclosure is necessary in connection with the application of the state
      aid rules of the EC Treaty or in connection with any European Commission
      decision relating to those rules;

            

    

     

    
      	
               
      

            	
              (F)

            	
              on a
      confidential basis, where the Treasury considers (acting reasonably) that
      such disclosure is required to enable or assist it to fulfil any Treasury
      Permitted Purpose;

            

    

     

    
      	
               
      

            	
              (G)

            	
              to the extent
      required for the purpose of any arbitration pursuant to the Dispute
      Resolution Procedure or any expert determination pursuant to Condition 34;
      or

            

    

     

    
      	
               
      

            	
              (H)

            	
              which the
      Participant has agreed to in
advance,

            

    

     

    subject as provided
in Condition 42.16 in the case of disclosure in reliance on the exceptions in
any of paragraphs (A), (B), (C), (E), (F) or (G) above.

     

    
      	
              42.13

            	
              Prior to any
      disclosure of Participant Confidential Information by the Treasury or any
      of its Representatives in reliance on an exception set out in Condition
      42.12(D), the Treasury shall, so far as it is lawful and the Treasury
      considers it is reasonably practicable, and not inconsistent with
      Parliamentary convention, to do so in the circumstances, use reasonable
      endeavours to notify the Participant in writing of the Participant
      Confidential Information to be disclosed. The notification obligation in
      this Condition 42.13 shall not apply to the disclosure of Participant
      Confidential Information comprised in any non-scripted oral
      statement.

            

    

     

    
      
        
        

      

      
        226

        
          

        

      

      
        
        

      

    

     

     

    
      	
              42.14

            	
              Prior to any
      disclosure of Participant Confidential Information by the Treasury or any
      of its Representatives in reliance on an exception set out in Condition
      42.12(E), the Treasury shall, so far as it is lawful and the Treasury
      considers it is reasonably practicable to do
so:

            

    

     

    
      	
               
      

            	
              (A)

            	
              consult with
      the Participant as soon as reasonably practicable as to the Participant
      Confidential Information that the Treasury (or any of its Representatives)
      proposes to disclose and the reason for disclosure and, as part of any
      such consultation process, the Treasury shall take into account any
      representation from the Participant as to whether such information is
      commercially sensitive and/or subject to contractual, legal or regulatory
      restrictions on disclosure owed to third parties, and any other
      representations from the Participant as to whether or not (and the extent
      to which) such information is required to be disclosed and as to the
      timing and nature of such
disclosure;

            

    

     

    
      	
               
      

            	
              (B)

            	
              if the
      Treasury determines that such disclosure is required and the Participant
      has objected to such disclosure, give the Participant as much prior notice
      as is reasonably practicable of the Participant Confidential Information
      to be disclosed and the proposed timing and nature of such disclosure;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              having regard
      to any representations received from the Participant pursuant to paragraph
      (A) above, anonymise the relevant Participant Confidential Information
      (whether by aggregation, redaction or otherwise) if and to the extent that
      the Treasury considers that the relevant requirement or need for
      disclosure can be satisfied by the disclosure of anonymised
      Information.

            

    

     

    
      	
              42.15

            	
              If the
      Treasury is informed that it (or any of its Representatives) is in
      possession of any Inside Information, whether pursuant to the consultation
      process described in Condition 42.29 or as a result of a notification from
      the Participant to the Treasury that any Participant Confidential
      Information is Inside Information, then the Treasury shall (and shall
      ensure that its Representatives will) upon disclosure of any Inside
      Information in reliance on an exception set out in any of paragraphs (A),
      (B), (C), (E), (F) or (G) of Condition 42.12, notify the relevant
      recipient (a "third party
      recipient") that the Participant Confidential Information being
      disclosed constitutes Inside Information and that such Inside Information
      should be kept confidential.

            

    

     

    
      	
              42.16

            	
              If any
      disclosure of Inside Information is made in reliance on an exception set
      out in any of paragraphs (A), (B), (C), (E), (F) or (G) of Condition
      42.12, the Treasury shall (and shall ensure that its Representatives
      will):

            

    

     

    
      	
               
      

            	
              (A)

            	
              keep a record
      of the persons to whom such Inside Information is
    disclosed;

            

    

     

    
      	
               
      

            	
              (B)

            	
              notify the
      Participant of the Inside Information it has disclosed to the relevant
      third party recipient but only if and to the extent that such notification
      complies with Applicable Law and is not otherwise prejudicial either to
      the purpose for which the Inside Information has been disclosed or the
      purpose for which the Inside Information may be used by the third party
      recipient; and

            

    

     

     

    
      
        
        

      

      
        227

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (C)

            	
              use
      reasonable endeavours to ensure that, prior to any public disclosure of
      Inside Information by any third party recipient,
  either:

            

    

     

    
      	
               
      

            	
              (i)

            	
              (a) the third
      party recipient notifies the Treasury in writing of any Participant
      Confidential Information proposed to be publicly disclosed by such third
      party recipient; and (b) the Treasury notifies the Participant of the
      Participant Confidential Information to be publicly disclosed by the third
      party recipient; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the third
      party recipient notifies the Participant in writing of the Participant
      Confidential Information proposed to be publicly disclosed by such third
      party recipient,

            

    

     

    but in each case
only if and to the extent that such notification complies with Applicable Law
and is not otherwise prejudicial either to the purpose for which the Inside
Information has been disclosed or the purpose for which the Inside Information
may be used by the third party recipient.

     

    
      	
              42.17

            	
              Nothing in
      these Conditions is intended to facilitate or permit the Treasury to
      disclose Participant Confidential Information if and to the extent that
      such disclosure is in contravention of or inconsistent with Applicable Law
      relating to market abuse or insider
dealing.

            

    

     

    
      	
              42.18

            	
              Nothing in
      the Scheme Documents shall prevent or restrict HMRC from using, holding,
      retaining (including, without limitation, keeping records of) or
      disclosing any Participant Confidential Information if and to the extent
      that HMRC would have been required or permitted to use, hold, retain or
      disclose such information if it had been provided to HMRC pursuant to
      applicable law (including, without limitation, the Corporation Tax Acts
      (as defined in the Interpretation Act 1978) and the Taxes Management Act
      1970).

            

    

     

    Confidential
Information: FOI Act

     

    
      	
              42.19

            	
              If the
      Treasury is requested to disclose any Participant Confidential Information
      pursuant to the provisions of the FOI Act (an “FOI Request”), the
      Treasury shall (to the extent practicable and permissible under the FOI
      Act and consistent with the Code of Practice of the Secretary of State for
      Constitutional Affairs on discharge of public authorities’ functions under
      Part 1 of the FOI Act):

            

    

     

    
      	
               
      

            	
              (A)

            	
              notify the
      Participant in writing of the nature and content of such FOI Request as
      soon as practicable;

            

    

     

    
      	
               
      

            	
              (B)

            	
              prior to the
      making of a disclosure pursuant to an FOI Request, for a period of no less
      than 5 Business Days consult with the Participant as
  to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              whether such
      FOI Request is valid;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              whether or
      not disclosure pursuant to the FOI Act is required;
  and

            

    

     

     

    
      
        
        

      

      
        228

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              (if the
      Treasury determines that disclosure pursuant to the FOI Act is required)
      the scope and content of any proposed
  disclosure,

            

    

     

    and, as part of
such consultation process, the Treasury shall take into account any
representation from the Participant as to whether the Participant Confidential
Information is commercially sensitive and any other representations from the
Participant as to whether or not there is an obligation to disclose such
Participant Confidential Information and/or the extent of any such required
disclosure; and

     

    
      	
               
      

            	
              (C)

            	
              (if the
      Treasury determines that disclosure pursuant to the FOI Act is required
      and the Participant has objected to such disclosure or the extent of the
      proposed disclosure) give the Participant as much prior notice as is
      reasonably practicable prior to such disclosure being
  made.

            

    

     

    
      	
              42.20

            	
              Nothing in
      this Condition 42 or Condition 43 shall restrict or prevent the
      publication by the Treasury, or any public authority (as defined in the
      FOI Act) to whom it discloses Participant Confidential Information in
      accordance with this Condition 42, of any Information (whether Participant
      Confidential Information or
otherwise):

            

    

     

    
      	
               
      

            	
              (A)

            	
              in accordance
      with any publication scheme (as defined in the FOI Act) adopted and
      maintained by the Treasury or such public authority in accordance with the
      FOI Act; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              in accordance
      with any model publication scheme (as defined in the FOI Act) applicable
      to the Treasury or such public authority as may be published from time to
      time by the Information
Commissioner.

            

    

     

    In deciding whether
to publish Information (whether Participant Confidential Information or
otherwise) in accordance with any publication scheme or model publication scheme
the Treasury shall have due regard to whether, in its sole opinion, such
Information would be exempt from disclosure under the FOI Act.

     

    Confidential
Information: Use by Treasury

     

    
      	
              42.21

            	
              The Treasury
      shall (and shall ensure that its Representatives will) use Participant
      Confidential Information only for the Treasury Permitted Purposes (or, in
      the case of any such Permitted Government Recipient referred to in
      Condition 42.12(C), for the purpose of enabling or assisting it to fulfil
      its functions). In particular, the Treasury shall (and shall ensure that
      its Representatives will) not use the Confidential Information for the
      benefit of any third party, including any financial institution which is
      also a Participant or in which the Treasury has an ownership interest from
      time to time or in communications to or discussions with such financial
      institutions or any of their Group Members or
    Representatives.

            

    

     

     

    
      
        
        

      

      
        229

        
          

        

      

      
        
        

      

    

     

    Confidential
Information: Obligations and Exceptions applicable to the
Participant

     

    
      	
              42.22

            	
              The
      Participant shall (and shall ensure that each member of the Participant’s
      Group and its and their respective Representatives
  will):

            

    

     

    
      	
               
      

            	
              (A)

            	
              keep all
      Treasury Confidential Information confidential and shall not, without the
      prior written consent of the Treasury, disclose Treasury Confidential
      Information to any person other than as expressly permitted in the Scheme
      Documents;

            

    

     

    
      	
               
      

            	
              (B)

            	
              without
      prejudice to the generality of paragraph (A) above, hold the Treasury
      Confidential Information, and disclose Treasury Confidential Information,
      only in accordance with procedures which it shall maintain to ensure that
      such information is not disclosed to third parties (including any
      Participants and their respective Representatives);
  and

            

    

     

    
      	
               
      

            	
              (C)

            	
              not disclose
      or transfer Treasury Confidential Information outside the United Kingdom
      without the Treasury’s prior written consent, except to the extent
      required in order to comply with its obligations under Condition
      3(A)(iii)(e).

            

    

     

    
      	
              42.23

            	
              The
      restrictions in Condition 42.22 do not apply to the disclosure of Treasury
      Confidential Information by members of the Participant’s Group to their
      respective Representatives to the extent that such Representatives require
      the Treasury Confidential Information to enable or assist the Participant
      to comply with its responsibilities and obligations, and to exercise its
      rights, powers and discretions, under the Scheme or the Scheme Documents
      (the “Participant
      Permitted Purpose”).

            

    

     

    
      	
              42.24

            	
              The
      restrictions in Condition 42.22 do not apply to any disclosure of Treasury
      Confidential Information by the Participant, any member of the
      Participant’s Group or their respective
  Representatives:

            

    

     

    
      	
               
      

            	
              (A)

            	
              which is
      required by (i) Applicable Law or (ii) the rules of the Bank of England,
      or of any securities exchange, clearing system or Authority (including the
      FSA) to which the discloser is subject or
  submits;

            

    

     

    
      	
               
      

            	
              (B)

            	
              to the extent
      required for the purpose of any arbitration pursuant to the Dispute
      Resolution Procedure or any expert determination pursuant to Condition 34;
      or

            

    

     

    
      	
               
      

            	
              (C)

            	
              which the
      Treasury has agreed to in advance.

            

    

     

    
      	
              42.25

            	
              Without
      prejudice to the Participant’s obligations under Condition 43, if any
      member of the Participant’s Group or any of its Representatives reasonably
      determines that any disclosure of Treasury Confidential Information is
      permitted pursuant to Condition 42.24(A), the Participant shall, so far as
      is lawful:

            

    

     

    
      	
               
      

            	
              (A)

            	
              promptly
      notify the Treasury in writing of the Treasury Confidential Information
      required to be disclosed, with a view to providing (so far as it is lawful
      and practicable to do so) the opportunity for the Treasury to contest such
      disclosure 

            

    

     

    
      
        
        

      

      
        230

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	or
      to otherwise agree the timing, nature and content of such disclosure prior
      to that disclosure being made; and

    

     

    
      	
               
      

            	
              (B)

            	
              limit
      disclosure to that portion of the relevant Treasury Confidential
      Information which is required to be
disclosed.

            

    

     

    Confidential
Information: Use by Participant

     

    
      	
              42.26

            	
              The
      Participant shall (and shall ensure that each member of the Participant’s
      Group and its and their respective Representatives will) use Treasury
      Confidential Information only for the Participant Permitted
      Purpose.

            

    

     

    Duration

     

    
      	
              42.27

            	
              The
      obligations set out in this Condition 42 shall continue notwithstanding
      the cessation of the Participant’s participation in the
      Scheme.

            

    

     

    Representatives

     

    
      	
              42.28

            	
              The Treasury
      shall, and the Participant shall ensure that the members of the
      Participant’s Group shall, inform its and their respective Representatives
      of their respective obligations under this Condition 42 and Condition 43
      and each of the Treasury and the Participant (as appropriate) shall be
      responsible for any failure by its Representatives to comply with the
      terms of this Condition 42 or Condition 43 as if they were subject to
      it.

            

    

     

    Insider
dealing and market abuse

     

    
      	
              42.29

            	
              The
      Participant shall consult with the Treasury in good faith, from time to
      time upon request by the Treasury, in relation to whether Participant
      Confidential Information held by the Treasury or any Permitted Government
      Recipient or any of their respective Representatives constitutes at that
      time Inside Information.  Nothing in this Condition 42.29 is
      intended to or shall result in the Participant or any of its
      Representatives (i) incurring any liability whatsoever under or in respect
      of the Treasury’s or any Permitted Government Recipient’s (or any of their
      respective Representative’s) obligations and responsibilities pursuant to
      FSMA or the Criminal Justice Act 1993 or (ii) being obliged to consult
      with the Treasury on Participant Confidential Information to be provided
      to the Treasury which constitutes (or may constitute) “inside information”
      (within the meaning of section 118C of FSMA or section 56 of the Criminal
      Justice Act 1993) in respect of any person other than the Ultimate Parent
      of the Participant, the Participant and members of the Participant’s
      Group.

            

    

     

    Privileged
Information

     

    
      	
              42.30

            	
              To the extent
      any Confidential Information attracts any form of privilege or refers to
      other documents which attract any form of privilege, such privilege shall
      not be waived, prejudiced or otherwise affected in any way (directly or
      indirectly) by the relevant Confidential Information being made available
      to (i) the Treasury or its Representatives

            

    

     

    
      
        
        

      

      
        231

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              or (ii) any
      member of the Participant’s Group or its Representatives.  This
      includes any documents disclosed which relate to actions in which (a) the
      Treasury and (b) a member of the Participant’s Group, presently share a
      common interest, which actions are set out in a list agreed between the
      Treasury and the Participant dated the same date as the Accession
      Agreement (the “Actions”).  In
      disclosing documents relating to any such Actions, the Treasury and the
      relevant members of the Participant’s Group expressly intend not to waive
      or prejudice (directly or indirectly) any form of applicable privilege
      with respect to such documents nor create any form of attorney-client
      relationship between the Treasury and the legal advisers of any member of
      the Participant’s Group.

            

    

     

    
      	
              42.31

            	
              To the extent
      that disclosure of any Confidential Information would cause the loss of
      any form of privilege then, without limiting the Participant’s obligations
      or the Treasury’s rights under the Scheme Documents to disclose
      Confidential Information, the Participant may consult the Treasury with
      respect to any alternative means of providing such Information to the
      Treasury which would not involve the loss of such
    privilege.

            

    

     

    No
Licence

     

    
      	
              42.32

            	
              No right or
      licence is granted to any person in relation to any Confidential
      Information except as explicitly set out in this Condition
    42.

            

    

     

    Restricted
Asset Information

     

    
      	
              42.33

            	
              Notwithstanding
      any other provision of the Scheme Documents, the Participant shall, so far
      as practicable, use all reasonable endeavours to ensure that no member of
      the Participant’s Group or any of their Representatives (but, for the
      purposes of this Condition 42.33, excluding any Step-In Manager) becomes
      or is capable of becoming aware (or is authorised to access any
      Information which states) whether an asset or exposure is comprised in a
      Covered Asset or a Related Party Asset or whether (as the case may be)
      that person is dealing with, managing or administering an asset or
      exposure comprised in a Covered Asset or a Related Party Asset (the “Restricted Asset
      Information”), save to the extent permitted pursuant to Condition
      42.23 or to the extent that any such member of the Participant’s Group or
      Representative reasonably needs to know the Restricted Asset Information
      for the Participant Permitted Purpose or for the purpose of Managing and
      Administering that asset or
exposure.

            

    

     

    
      	
              42.34

            	
              Save to the
      extent required by Applicable Law, the Participant shall ensure that no
      member of the Participant’s Group nor any of their respective
      Representatives will inform or disclose to any counterparty to an asset or
      exposure that the asset or exposure is or is not comprised in a Covered
      Asset or a Related Party Asset under the
Scheme.

            

    

     

     

    
      
        
        

      

      
        232

        
          

        

      

      
        
        

      

    

     

    
      
        	
                43.

              	
                DATA
      PROTECTION

              

      

    

     

    
      	
              43.1

            	
              If and to the
      extent that the Treasury or any of its Representatives is or becomes a
      Data Controller in respect of any Personal Data which forms part of any
      Information provided by the Participant pursuant to these Conditions
      (“Relevant Personal
      Data”), then:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Treasury
      or its Representative (as applicable) shall not disclose Information to
      third parties in response to a Data Subject access request unless it
      reasonably considers that it is obliged to do so by Applicable
      Law;

            

    

     

    
      	
               
      

            	
              (B)

            	
              prior to the
      date on which such response must be made pursuant to Applicable Law, the
      Treasury shall consult with the Participant for a period of no less than 5
      Business Days and take into account all reasonable representations made by
      the Participant concerning whether such disclosure is required and the
      form of that disclosure; 

            

    

     

    
      	
               
      

            	
              (C)

            	
              where the
      Treasury or its Representative reasonably considers that such disclosure
      is required by Applicable Law, the Treasury shall remove or redact
      Information from the material to be disclosed to the fullest extent it
      reasonably considers permissible or required under Applicable Law;
      and

            

    

     

    
      	
               
      

            	
              (D)

            	
              if the
      Treasury determines that disclosure pursuant to Applicable Law is required
      and the Participant has objected to such disclosure or the extent of the
      proposed disclosure, the Treasury shall give the Participant as much prior
      notice as is reasonably practicable prior to such disclosure being
      made.

            

    

     

    
      	
              43.2

            	
              The
      Participant shall (and shall ensure that each relevant member of the
      Participant’s Group will) provide to each of its or their customers and
      counterparties in respect of which a member of the Participant’s Group
      holds Personal Data (“Relevant Persons”) such
      information in a form approved by the Treasury as is necessary to identify
      the Treasury and any of its Representatives and the purposes for which
      they may process Relevant Personal Data together with such other
      Information as may be necessary to satisfy the obligations of the Treasury
      and its Representatives under paragraph 2(3) of Part II of Schedule 1 to
      the Data Protection Act 1998 (and any equivalent obligation under any
      other Applicable Law) in respect of its processing of Relevant Personal
      Data pursuant to the Scheme Documents.  The Participant shall
      ensure that such Information is provided as soon as reasonably practicable
      after the Accession Date (or, in the case of any person who becomes a
      Relevant Person after the Accession Date, as soon as reasonably
      practicable after the date on which that person becomes a Relevant
      Person).  It is the intention of the parties that the
      information to be provided to Relevant Persons pursuant to this Condition
      43.2 shall, to the extent that it is in accordance with Applicable Law, be
      included as part of the general communications between the relevant member
      of the Participant’s Group and the Relevant Persons made in the ordinary
      course of such member’s business.

            

    

     

    
      	
              43.3

            	
              To the extent
      that the Treasury’s exercise of its rights under the Scheme Documents
      would cause it or any of its Representatives to be subject to any
      Applicable Law of a jurisdiction other than the United Kingdom that
      imposes obligations:

            

    

     

     

    
      
        
        

      

      
        233

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              in respect of
      the use of Information the same as or similar to Personal Data;
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              which are
      similar in nature to any of those in the Data Protection Act 1998 but
      which apply to any Information relating to Relevant Persons that forms
      part of any Information provided by any member of the Participant’s Group
      pursuant to these Conditions,

            

    

     

    the Participant
shall (and shall procure that each member of the Participant’s Group will) do
all such things as may be necessary in order to ensure that access to and use of
the Information by the Treasury and its Representatives in accordance with the
Scheme Documents complies with that Applicable Law.  Without prejudice
to the foregoing, the Participant shall notify the Treasury of the requirements
of any such Applicable Law (as they relate to the Treasury and any of its
Representative’s access to and use of the Information in accordance with the
Scheme Documents) and shall discuss with it the steps that it intends to take,
and shall keep the Treasury informed of the steps it does take, to comply with
this Condition 43.3.

     

    
      	
              43.4

            	
              The
      Participant acknowledges and agrees that nothing in these Conditions or
      any other Scheme Document shall result or be deemed to result in any
      member of the Participant’s Group, on the one hand, and the Treasury or
      any of its Representatives, on the other, becoming joint Data Controllers
      with respect to any Personal Data and accordingly neither the Treasury nor
      any of its Representatives shall have any liability with respect to any
      breach of the obligations of any member of the Participant’s Group as a
      Data Controller from time to time, and nor shall any member of the
      Participant’s Group have any liability with respect to any breach of the
      obligations of the Treasury or any of its Representatives as a Data
      Controller from time to time (other than to the extent that any such
      breach of the Treasury or any of its Representative’s obligations is
      caused by the Participant’s breach of this Condition
  43).

            

    

     

    
      	
              43.5

            	
              Nothing in
      these Conditions or any other Scheme Document shall require disclosure of
      Sensitive Personal Data (as defined in the Data Protection Act
      1998).

            

    

     

    
      
        
        

      

      
        234

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                44.

              	
                ANNOUNCEMENTS
      AND PUBLICITY

              

      

    

     

    
      	
              44.1

            	
              Subject to
      Condition 44, the Participant shall ensure that no member of the
      Participant’s Group nor any of their respective Representatives shall
      make, publish, issue or release any announcement or public statement in
      relation to, or which refers to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the Scheme
      (including the Participant’s participation or proposed participation in
      the Scheme); or

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Treasury
      in connection with the Scheme,

            

    

     

    (including in any
annual report and accounts or other documents issued or made available to
holders of securities, whether in electronic or paper written form, or in any
oral announcement or statement) (each a “Scheme
Statement”).

     

    Exceptions

     

    
      	
              44.2

            	
              Notwithstanding
      Condition 44.1:

            

    

     

    
      	
               
      

            	
              (A)

            	
              each member
      of the Participant’s Group may (and each such member’s Representatives may
      on its behalf) make, publish, issue or release a Scheme Statement in
      connection with (and at or around the time of) the Participant’s entry
      into the Accession Agreement and the Participant’s accession or proposed
      accession to the Scheme (each a “Participation
      Announcement”), provided that any such Participation Announcement
      is in form and substance satisfactory to the Treasury (acting
      reasonably);

            

    

     

    
      	
               
      

            	
              (B)

            	
              each member
      of the Participant’s Group may (and each such member’s Representatives may
      on its behalf)  make, publish, issue or release any Scheme
      Statement if and to the extent required by (i) Applicable Law or (ii) the
      rules of the Bank of England or of any securities exchange, clearing
      system or Authority (including the FSA) to which it is subject or submits
      (each, a “Permitted
      Statement”) provided that any such Permitted Statement is made,
      published or issued in compliance with Conditions 44.4 to 44.7
      (inclusive); and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      Representatives of each member of the Participant’s Group may make on
      behalf of that member Scheme Statements which are unscripted oral
      statements (each, a “Permitted Oral
      Statement”), provided that the Participant shall use all reasonable
      endeavours to ensure that processes are in place with a view to ensuring
      that any such unscripted oral statements are consistent with any other
      Scheme Statements made in accordance with this Condition 44 by or on
      behalf of the Participant or any other member of the Participant’s
      Group.

            

    

     

    
      	
              44.3

            	
              Any Scheme
      Statement which does not constitute a Participation Announcement, a
      Permitted Statement or a Permitted Oral Statement may be made, issued,
      published or released only if it is in form and substance satisfactory to
      the Treasury.

            

    

     

    
      
        
        

      

      
        235

        
          

        

      

      
        
        

      

    

     

     

    
      	
              44.4

            	
              Any Permitted
      Statement:

            

    

     

    
      	
               
      

            	
              (A)

            	
              must be (in
      the honestly held opinion of any director or officer of the company making
      or authorising the Permitted Statement) accurate and not
      misleading;

            

    

     

    
      	
               
      

            	
              (B)

            	
              subject to
      Condition 44.6, must be made, published, issued or released only after the
      Participant has given as much prior notification as is reasonably
      practicable to, and has consulted to the fullest extent reasonably
      practicable with, the Treasury with a view to giving the Treasury as much
      time as is reasonably practicable, in all the circumstances, to review and
      comment on such Permitted Statement;
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              subject to
      Condition 44.6, must reflect any amendments which the Treasury (acting
      reasonably) proposes be made, including in respect of references to the
      Treasury or the Scheme, save to the extent that any such proposed
      amendment:

            

    

     

    
      	
               
      

            	
              (i)

            	
              is not
      permitted by Applicable Law;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              conflicts
      with the fiduciary duties of any director or officer of the company making
      or authorising the Permitted
Statement;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              (in the
      honestly held opinion of any director or officer of the company making or
      authorising the Permitted Statement) is not accurate or is misleading;
      or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              reflects a
      disagreement between the Participant and the Treasury as to the
      interpretation of the Scheme Documents (or any provision of them) or any
      other matters and the Participant’s interpretation of the Scheme Documents
      or other matters is honestly believed by the director(s) or officer(s) of
      the company making or authorising the Permitted Statement to be accurate
      and not misleading.

            

    

     

    
      	
              44.5

            	
              If, in
      respect of any Permitted Statement, any member of the Participant’s Group
      or any of its Representatives proposes, pursuant to Condition 44.4(C), not
      to adopt, or does not adopt, any amendment proposed by the Treasury, the
      Participant shall (to the extent reasonably practicable, prior to the
      making, publication, issuance or release of the relevant Permitted
      Statement or, if not reasonably practicable, promptly thereafter) provide
      to the Treasury, in writing, reasons explaining why such amendments are
      not proposed to be, or were not,
adopted.

            

    

     

    
      	
              44.6

            	
              If any member
      of the Participant’s Group, or any of its Representatives, proposes to
      make a Permitted Statement and
either:

            

    

     

    
      	
               
      

            	
              (A)

            	
              notification
      to, and consultation with, the Treasury prior to the making, publication,
      issuance or release of such Permitted Statement is not permissible under
      (i) Applicable Law or (ii) the rules of the Bank of England or of any
      

            

    

     

    
      
        
        

      

      
        236

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 	securities
      exchange, clearing system or Authority (including the FSA) to which it is
      subject or submits; or

    

     

    
      	
               
      

            	
              (B)

            	
              the Permitted
      Statement must be made urgently such that prior notification to or
      consultation with the Treasury is not reasonably
    practicable,

            

    

     

    then the
Participant shall as soon as permissible under Applicable Law or the relevant
rules (as applicable) and as soon as is reasonably practicable, provide a copy
of such Permitted Statement to the Treasury, together with a notification
providing reasonable details of the circumstances giving rise to the Permitted
Statement, the nature of the relevant Permitted Statement and the basis upon
which that Group Member or Representative was prevented from complying with
Condition 44.4(B).

     

    
      	
              44.7

            	
              The
      Participant shall ensure that any Scheme Statement that is submitted to
      the Treasury pursuant to Condition 44.3 or 44.4 for the Treasury’s review,
      comment or approval is identified as a Scheme Statement or a Permitted
      Statement to which Condition 44.3 or 44.4 (respectively)
      applies.

            

    

     

    
      	
               
      

            	
              Other
      Announcements by the Participant

            

    

     

    
      	
              44.8

            	
              The
      Participant shall provide to the Treasury, as early as reasonably
      practicable prior to its proposed issue, publication or release, an
      advanced draft of any material announcement to be made by any member of
      the Participant’s Group in relation to the financial position of any
      member of the Participant’s Group or the Participant’s Group as a whole,
      even where such announcement does not constitute (in whole or in part) a
      Scheme Statement.

            

    

     

    Announcements
by the Treasury

     

    
      	
              44.9

            	
              The Treasury
      and its Representatives may make, publish, issue or release any
      announcement or statement in relation to the Scheme, any Participant’s
      participation in the Scheme or any other matter pertaining to the
      establishment or operation of the Scheme that the Treasury considers to be
      necessary, desirable or appropriate (acting reasonably), provided that, if
      and to the extent that such announcement or statement contains any
      Participant Confidential Information, the making, publication, issuance or
      release does not breach Condition
42.

            

    

     

    
      	
              44.10

            	
              Notwithstanding
      any provision of this Condition 44 or Condition 42 if any Remedy Event or
      Step-In Trigger occurs and the Treasury exercises any of its rights
      pursuant to Condition 31 or 32 or any other provision of the Scheme
      Documents, the Treasury may publish a public announcement of that fact,
      setting out reasonable details of the relevant Remedy Event or Step-In
      Trigger and the rights exercised by it in
  consequence.

            

    

     

    
      	
              44.11

            	
              Notwithstanding
      any provision of this Condition 44 or Condition 42, the Treasury and its
      Representatives may announce or publish these Conditions, any Condition
      Modification and any Practice Statement and, except to the extent
      otherwise agreed with the Participant, any Accession
      Agreement.

            

    

     

    
      
        
        

      

      
        237

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                45.

              	
                NATURE
      OF RELATIONSHIP

              

      

    

     

    No
partnership

     

    
      	
              45.1

            	
              The
      Participant shall ensure that no member of the Participant’s Group shall
      act in any way in relation to the Scheme which constitutes or gives rise
      to a relationship of partnership, agency or joint venture between any
      member of the Participant’s Group and the Treasury or which imputes or
      imposes any liability, duty, responsibility or obligation upon the
      Treasury (other than pursuant to and in accordance with the express terms
      of the Scheme Documents to which it is a
party).

            

    

     

    
      	
              45.2

            	
              The
      Participant shall ensure that no member of the Participant’s Group shall
      hold itself out as having any authority to act for or represent the
      Treasury in any way, nor act in any way which confers on any member of the
      Participant’s Group any express, implied or apparent authority to incur
      any obligation or liability on behalf of the
  Treasury.

            

    

     

    Independent
advice and appraisal

     

    
      	
              45.3

            	
              The
      Participant acknowledges and agrees that neither the Treasury, nor any
      Government Entity nor any of their respective Representatives is acting as
      fiduciary of any member of the Participant’s Group or any of its
      Affiliates, or any of their respective Representatives.  In
      addition, the Participant acknowledges that neither the Treasury, nor any
      Government Entity nor any of their respective Representatives is advising
      any member of the Participant’s Group or any of its Affiliates, or any of
      their respective Representatives, as to any financial, legal, Tax,
      investment, accounting or regulatory matters in any
      jurisdiction.  Neither the Treasury, nor any Government Entity
      nor any of their respective Representatives shall have any responsibility
      or liability to any member of the Participant’s Group or any of its
      Affiliates, or any of their respective Representatives, with respect
      thereto.  The Participant further acknowledges and agrees that
      any review by the Treasury, any Government Entity or any of their
      respective Representatives of any member of the Participant’s Group or any
      of its Affiliates, or any of their respective Representatives, shall be
      performed or has been performed solely for the benefit of the Treasury and
      not on behalf of any member of the Participant’s Group or any of its
      Affiliates, or any of their respective Representatives, or any other
      person.

            

    

     

    No
duty of utmost good faith

     

    
      	
              45.4

            	
              The
      relationship between (i) the Treasury and (ii) the Participant, and their
      respective obligations, under the Scheme Documents shall not be subject to
      the common law principle of uberrima fides or any equivalent or similar
      duty.

            

    

     

     

    
      
        
        

      

      
        238

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                46.

              	
                THIRD
      PARTY PROVISIONS

              

      

    

     

    
      	
              46.1

            	
              Conditions
      33, 38.1 to 38.6 (inclusive) and 45.3 confer benefits on certain persons
      named therein who are not or may not be a party to any of the Scheme
      Documents (each, a “Third
      Party”) (such Conditions, together with any other provisions of any
      Scheme Document which are expressed as such, being “Third Party
      Provisions”).

            

    

     

    
      	
              46.2

            	
              Subject to
      the remaining provisions of this Condition 46, the Third Party Provisions
      are intended to be enforceable by each Third Party by virtue of the
      Contracts (Rights of Third Parties) Act 1999 (the “C(RTP)A
      1999”).

            

    

     

    
      	
              46.3

            	
              Other than
      the Third Party Provisions, or as otherwise expressly agreed in another
      Scheme Document, no other term of these Conditions or any Scheme Document
      shall be enforceable, nor shall any person enjoy the benefit of any term
      of these Conditions or any Scheme Document, by virtue of the C(RTP)A 1999,
      other than the Treasury, the Participant and any person (including any
      other member of the Participant’s Group) who is a party to the relevant
      Scheme Document.

            

    

     

    
      	
              46.4

            	
              No Third
      Party may enforce, or take any step to enforce, any Third Party Provision
      without the prior written consent of the Treasury, which may, if given, be
      given on and subject to such terms as the Treasury may
      determine.

            

    

     

    
      	
              46.5

            	
              Notwithstanding
      Conditions 46.1 and 46.2, any amendment or modification to, or replacement
      of, any of these Conditions or any other Scheme Document, (including any
      amendment, modification or replacement effected pursuant to Condition 47
      or Condition 48) may be made without the consent of any Third
      Party.

            

    

     

     

    
      
        
        

      

      
        239

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                47.

              	
                MODIFICATIONS
      TO THESE CONDITIONS

              

      

    

     

    Ability
to modify Conditions for certain purposes

     

    
      	
              47.1

            	
              If the
      Treasury considers at any time
that:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      operation, interpretation or application of any Condition (a “Conflicting Condition”)
      is in conflict with any Scheme
Principle;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any Condition
      (an “Incorrect
      Condition”) contains a manifest error;
or

            

    

     

    
      	
               
      

            	
              (C)

            	
              it is
      necessary to modify any Condition (an “Updating Condition”) in
      order to take account of any Change in
Law,

            

    

     

    in each case taking
into account any applicable Practice Statement, the Treasury may (subject to
this Condition 47) amend, modify or replace such Condition, in respect of all
Participants, in such a manner as the Treasury considers necessary (acting
reasonably) to remove or reduce such conflict or remedy the effects of such
conflict, to correct such manifest error or to take account of the relevant
Change in Law (each a “Condition
Modification”).  Any Condition Modification may have
retrospective effect.

     

    
      	
              47.2

            	
              The Treasury
      may effect a Condition Modification only in accordance with the procedure
      set out in Conditions 47.7 to 47.13 (inclusive) (the “Condition Modification
      Procedure”).

            

    

     

    
      	
              47.3

            	
              A Condition
      Modification shall be effected pursuant to this Condition 47 only
      if:

            

    

     

    
      	 	
              (A) 

            	
              it is
      consistent with each of the Scheme
Principles;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the Treasury
      has complied with its obligations under Condition
  47.13;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the FSA has
      not formally notified the Treasury that the Condition Modification would,
      if effected, be expected to result in any protection provided to the
      Participant under the Scheme ceasing to satisfy the requirements for
      eligible credit risk mitigation techniques set out in chapters 4, 5 and 9
      (as relevant) of BIPRU; and

            

    

     

    
      	
               
      

            	
              (D)

            	
              the Treasury has considered in
      good faith and had regard to any submissions, communications or
      representations made by the Participant regarding the anticipated impact
      of the Condition Modification under any non-UK capital adequacy regime
      which is binding on the Participant or a Covered
      Entity.

            

    

     

    
      	
              47.4

            	
              To the extent
      a Condition Modification has retrospective effect, it shall be effected
      pursuant to this Condition 47 only if it would not result in a Remedy
      Event arising immediately upon, and by reason of, the Condition
      Modification becoming effective.

            

    

     

    
      
        
        

      

      
        240

        
          

        

      

      
        
        

      

    

     

     

    
      	
              47.5

            	
              The
      Treasury’s entitlement to effect a Condition
  Modification:

            

    

     

    
      	
               
      

            	
              (A)

            	
              pursuant to
      Condition 47.1(A) shall apply only in respect of Condition 4 (excluding
      Conditions 4.34 to 4.48 (inclusive)), Conditions 5 to 8 (inclusive), the
      Conditions set out in Part 3 (excluding Condition 10.1 and Condition 12)
      and Condition 32; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              pursuant to
      Conditions 47.1(B) or 47.1(C) shall not apply to any of the Conditions set
      out in Part 1 or to Condition 41.

            

    

     

    
      	
              47.6

            	
              In no
      circumstances shall the Treasury be obliged to propose or effect a
      Condition Modification.

            

    

     

    Condition
Modification Notice

     

    
      	
              47.7

            	
              If the
      Treasury intends, pursuant to Condition 47.1, to effect a Condition
      Modification it shall deliver a written notice (a “Condition Modification
      Notice”) to each Participant. The Condition Modification Notice
      shall specify:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the nature
      and details of the proposed Condition
  Modification;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the date on
      which the Condition Modification is proposed to become effective in
      respect of all Participants (the “Modification Effective
      Date”) and, if such Condition Modification is proposed to have
      retrospective effect, the reason why the Treasury considers it should have
      such an effect;

            

    

     

    
      	
               
      

            	
              (C)

            	
              in respect of
      a Condition Modification relating to a Conflicting
    Condition:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Scheme
      Principle with which the Treasury considers the Conflicting Condition is
      in conflict; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the reason
      why the Treasury considers that the Conflicting Condition conflicts with
      the relevant Scheme Principle and why the proposed Condition Modification
      is necessary to remove, reduce or remedy the effects of such
      conflict;

            

    

     

    
      	
               
      

            	
              (D)

            	
              in respect of
      a Condition Modification of an Incorrect Condition, details of the
      manifest error to which the Condition Modification relates;
      and

            

    

     

    
      	
               
      

            	
              (E)

            	
              in respect of
      a Condition Modification of an Updating
  Condition:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the Change in
      Law of which the Treasury has determined to take account;
    and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the reason
      why the Treasury has determined that such Condition Modification is
      necessary to take account of such Change in
Law.

            

    

     

     

    
      
        
        

      

      
        241

        
          

        

      

      
        
        

      

    

     

    Consultation

     

    
      	
              47.8

            	
              The Treasury
      shall seek to meet and consult in good faith each Participant as soon as
      practicable following delivery of the Condition Modification Notice with a
      view to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              agreeing:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the proposed
      Condition Modification; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Modification Effective Date; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              determining
      and identifying any consequential matters arising from the proposed
      Condition Modification becoming effective (including with respect to the
      implementation of such Condition
Modification).

            

    

     

    
      	
              47.9

            	
              Within 20
      Business Days following delivery of the Condition Modification Notice to
      each Participant, the Participant must
either:

            

    

     

    
      	
               
      

            	
              (A)

            	
              confirm, by
      notice in writing to the Treasury, that the Participant agrees with the
      proposed Condition Modification and the proposed Modification Effective
      Date; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              specify, by
      notice in writing to the Treasury (a “Modification Representation
      Notice”), the detail and nature of any objections which the
      Participant has to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the proposed
      Condition Modification (including detailing any proposal by the
      Participant to address the matter identified in the Condition Modification
      Notice by means of an alternative amendment or modification to, or
      replacement of, any Condition (whether or not the Conflicting Condition,
      Incorrect Condition or Updating Condition) (an “Alternative Condition
      Modification”));

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the proposed
      Modification Effective Date; and/or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      consequential matters arising from the proposed Condition Modification
      becoming effective (including with respect to the implementation of such
      Condition Modification).

            

    

     

    
      	
              47.10

            	
              If a
      Participant issues a notice to the Treasury in accordance with Condition
      47.9(A) or does not issue any notice to the Treasury in accordance with
      Condition 47.9(B), that Participant shall be deemed irrevocably to have
      confirmed that it agrees with the proposed Condition Modification and the
      proposed Modification Effective
Date.

            

    

     

    
      	
              47.11

            	
              If a
      Participant provides a Modification Representation Notice pursuant to
      Condition 47.9(B), the Treasury:

            

    

     

     

    
      
        
        

      

      
        242

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              shall
      consider and have regard to any objections raised in such notice and take
      into account any other submissions, communications or representations made
      by the Participant; 

            

    

     

    
      	
               
      

            	
              (B)

            	
              may (and
      shall, if requested) discuss with and consult the Participant with respect
      to any of the matters referred to in Condition 47.9(B);
  and

            

    

     

    
      	
               
      

            	
              (C)

            	
              may determine
      either that (i) the proposed Condition Modification need not be effected
      or (ii) the proposed Condition Modification (or any Alternative Condition
      Modification notified by Treasury to the Participant) is to become
      effective on the proposed Modification Effective Date (or such later date
      as is notified by the Treasury to Participants in writing) in respect of
      all Participants with such amendments as the Treasury may consider
      necessary or desirable to achieve the purpose of that Condition
      Modification.

            

    

     

    
      	
              47.12

            	
              Any
      discussions or other communications that may take place between the
      Treasury and a Participant or (with respect to any written submissions,
      representations or communications) that may be delivered to the Treasury
      or a Participant with respect to a Condition Modification or Alternative
      Condition Modification, shall be without prejudice to the Treasury’s, and
      the Participant’s, rights, powers, discretions, duties, liabilities and
      obligations pursuant to the Scheme Documents and details of such
      discussions or communications shall be inadmissible in any arbitration or
      other Proceedings that may follow (except that those stated to be “without
      prejudice save as to costs” shall be admissible for the purpose of
      Condition 35.28).

            

    

     

    Consultation
with the FSA prior to Condition Modification

     

    
      	
              47.13

            	
              Prior to the
      Treasury determining whether a Condition Modification should become
      effective in accordance with the Condition Modification Procedure, the
      Treasury shall (if and to the extent that the Condition Modification is
      pertinent to any of the matters described in Condition 2.3(CC)) consult
      with the FSA and consider in good faith, and have regard to, any
      submissions, communications or representations of or made by the FSA to
      the Treasury in connection with such Condition Modification. The Treasury
      shall not be required to disclose any such submission, communication or
      representation to any Participant.

            

    

     

    Treasury’s
determination in effecting Condition Modification

     

    
      	
              47.14

            	
              The Treasury
      shall act reasonably with regard to its determination as to whether a
      Condition Modification (or Alternative Condition Modification) should
      become effective, whether it should have retrospective effect, and the
      associated Modification Effective
Date.

            

    

     

    Conduct
pending Condition Modification

     

    
      	
              47.15

            	
              Until such
      time as a Condition Modification becomes effective in accordance with this
      Condition 47, the Participant shall ensure that each member of the
      Participant’s Group shall continue to comply with the Scheme Documents to
      which it is a party then in force 

            

    

     

    
      
        
        

      

      
        243

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              and shall not
      be obliged to comply with or otherwise conduct itself with a view to
      compliance with these Conditions as may be amended, modified or replaced
      by any proposed Condition
Modification.

            

    

     

    
      	
              47.16

            	
              If the
      subject matter of any proposed Condition Modification relates to or arises
      from any Dispute which is the subject of a Commencement Notice, that
      Dispute shall be suspended once a Condition Modification Notice has been
      issued, until either the Treasury determines that the proposed Condition
      Modification need not be effected or the proposed Condition Modification
      becomes effective (subject to any amendments which the Treasury may make
      in accordance with this Condition 47).  Should the subject
      matter of the suspended Dispute no longer be in issue following such
      determination by the Treasury or the proposed Condition Modification
      becoming effective, the parties shall agree to discontinue that
      Dispute.

            

    

     

    Other
modifications

     

    
      	
              47.17

            	
              Except as
      provided in Conditions 47 and 48, these Conditions and the Accession
      Agreement may be amended, modified or replaced only in writing signed by
      each of the Participant and the
Treasury.

            

    

     

     

    
      
        
        

      

      
        244

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                48.

              	
                PRACTICE
      STATEMENTS

              

      

    

     

    
      	
              48.1

            	
              The Treasury
      and the Participant acknowledge that there may be circumstances in which
      it would be beneficial for a statement of practice to be prepared by the
      Treasury and agreed with all Participants setting out how a specific
      Condition or Conditions are to be interpreted or applied, or how a
      specific situation will be treated under these Conditions (a “Practice Statement”), in
      each case in a manner that ensures the consistency of treatment of
      Participants under these
Conditions.

            

    

     

    
      	
              48.2

            	
              A Practice
      Statement may be proposed by the Treasury, or the Participant may, by
      notice in writing to the Treasury, propose that a Practice Statement be
      prepared in respect of any matter.  If such a notice is given to
      the Treasury, the Treasury shall determine in good faith (acting
      reasonably) whether it would be appropriate to prepare such a Practice
      Statement and to propose it to all
Participants.

            

    

     

    
      	
              48.3

            	
              If the
      Treasury proposes a Practice Statement (whether or not in response to a
      request from a Participant), it shall deliver to each Participant a notice
      (a “Practice Statement
      Notice”).  The Practice Statement Notice shall
      specify:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the nature
      and details of the proposed Practice Statement including a description of
      the matters or situations intended to be addressed by the Practice
      Statement;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the relevant
      Condition or Conditions to which it
relates;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the date on
      which the Treasury proposes the Practice Statement to become effective in
      respect of all Participants (the “Practice Statement Effective
      Date”); and

            

    

     

    
      	
               
      

            	
              (D)

            	
              a
      consultation period of no less than 20 Business Days (the “Consultation Period”)
      during which each Participant shall consult in good faith (acting
      reasonably) with the Treasury as to the contents of the Practice
      Statement.

            

    

     

    
      	
              48.4

            	
              A proposed
      Practice Statement may be amended to reflect discussions that occur during
      the Consultation Period.  If it considers it reasonable to do
      so, the Treasury may extend the Consultation Period by giving notice of
      the extension to all Participants.

            

    

     

    
      	
              48.5

            	
              If the
      subject matter of a proposed Practice Statement relates to or arises from
      any Dispute which is the subject of a Commencement Notice, that Dispute
      shall be suspended until either the proposal for that Practice Statement
      has been revoked or an award has been made pursuant to Condition 48.8.
      Should the subject matter of the suspended Dispute no longer be in issue
      following any award under Condition 48.8, the parties shall agree to
      discontinue that Dispute.

            

    

     

    
      	
              48.6

            	
              By no later
      than the end of the Consultation Period, the Participant shall notify the
      Treasury (i) whether or not it agrees with the proposed Practice Statement
      (as updated and amended) and if the Participant does not agree with the
      proposed Practice Statement it shall set out in detail the reasons why it
      disagrees with the proposed 

            

    

     

     

    
      
        
        

      

      
        245

        
          

        

      

      
        
        

      

    

     

     

    
      	 	Practice
      Statement and (ii) whether or not it wishes to commence a Dispute in
      respect of the Practice Statement.

    

     

    
      	
              48.7

            	
              If, by the
      end of the Consultation Period, no Participant has notified the Treasury
      in writing that it does not agree with the proposed Practice Statement and
      that it wishes to commence a Dispute in respect of the Practice Statement,
      then the Treasury shall deliver to the Participants a final form of the
      Practice Statement which shall become binding on the Treasury and all
      Participants on the Practice Statement Effective Date (or such other date
      as may be agreed between the Treasury and each Participant, acting
      reasonably and having regard to any changes in systems, controls or
      processes which the Participants are required to make in order to ensure
      compliance with the Practice Statement).  Once the Practice
      Statement comes into effect, it shall form part of these Conditions and,
      therefore, any breach of that Practice Statement shall be a breach of the
      relevant Condition or Conditions.

            

    

     

    
      	
              48.8

            	
              If any
      Participant notifies the Treasury by the end of the Consultation Period
      that it does not agree with the proposed Practice Statement and that it
      wishes to commence a Dispute in respect of the Practice Statement, then
      the Treasury shall have the right either to (i) revoke the proposal for
      the Practice Statement or (ii) issue a Commencement Notice to each of the
      Participants in respect of that Dispute pursuant to the Dispute Resolution
      Procedure.  If the Treasury issues such a Commencement Notice to
      the Participants, that Dispute shall be treated as a single Dispute
      between the Treasury and the Participants as to whether or not the
      proposed Practice Statement correctly interprets or applies the relevant
      Condition or Conditions and the Dispute Resolution Procedure shall apply
      to that Dispute accordingly.  Conditions 35.3 to 35.5
      (inclusive) shall not apply to such a Dispute. If a Commencement Notice is
      issued in respect of that Dispute, then the relevant Arbitrator shall
      determine whether or not the Practice Statement correctly interprets or
      applies the relevant Condition or Conditions and shall give his or her
      award accordingly.  The Arbitrator’s award shall, in accordance
      with the Dispute Resolution Procedure, specify the Arbitrator’s award as
      to the costs and expenses in connection with that
  Dispute.

            

    

     

    
      	
              48.9

            	
              If the
      Arbitrator awards that the relevant Practice Statement does correctly
      interpret or apply the relevant Condition or Conditions, then the Practice
      Statement shall be binding on the Treasury and all Participants with
      effect from the date falling 20 Business Days after the date of the
      Arbitrator’s award (or such other date as may be agreed between the
      Treasury and the Participants, acting reasonably and having regard to any
      changes in systems or practices which the Participants are required to
      make in order to ensure compliance with the Practice
      Statement).  Once the Practice Statement comes into effect, it
      shall form part of these Conditions and, therefore, any breach of that
      Practice Statement shall be a breach of the relevant Condition or
      Conditions.

            

    

     

    
      	
              48.10

            	
              If the
      Arbitrator’s award is such that the relevant Practice Statement does not
      correctly interpret or apply the relevant Condition or Conditions, then
      the Practice Statement shall not be binding on any of the Participants and
      the Treasury may propose amendments to the Practice Statement to ensure
      that the Practice Statement is consistent with the
      Conditions.  If the Treasury proposes any such amendments, the
      amended Practice Statement shall be treated as the proposal of a new
      Practice Statement and the 

            

    

     

     

    
      
        
        

      

      
        246

        
          

        

      

      
        
        

      

    

     

     

    
      	 	provisions of
      Conditions 48.3 to this Condition 48.10 shall apply to that amended
      Practice Statement.

    

     

     

    
      
        
        

      

      
        247

        
          

        

      

      
        
        

      

    

     

    
      
        	
                49. 

              	
                AGENT
      FOR SERVICE OF PROCESS

              

      

    

     

    Appointment

     

    
      	
              49.1

            	
              The
      Participant agrees to appoint an agent for service of process in any
      country other than England and Wales or Scotland in which the Participant
      or the Treasury is subject to Proceedings within 14 days of receiving
      written notice of such Proceedings and the request to appoint such agent
      for service.  If the Participant does not appoint such an agent
      within 14 days of the notice requesting it to do so, the Treasury may
      appoint a commercial agent for service for the Participant on the
      Participant’s behalf and at the Participant’s expense and the Participant
      accepts that, subject to being notified of such appointment in writing,
      service upon such commercial agent will constitute service upon the
      Participant.

            

    

     

    
      	
              49.2

            	
              If the
      Participant is not incorporated in England and Wales or Scotland, the
      Participant:

            

    

     

    
      	
               
      

            	
              (A)

            	
              shall, no
      later than the Signing Date, irrevocably appoint an agent having an
      address for service in England and Wales to be its agent (the “Service Agent”) for
      receipt of Service Documents; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              agrees that
      any Service Document may be effectively served on it in connection with
      Proceedings in England and Wales by service on the Service Agent effected
      in any manner permitted by the Civil Procedure
  Rules.

            

    

     

    Replacement

     

    
      	
              49.3

            	
              If the
      Service Agent at any time ceases for any reason to act as such, the
      Participant shall appoint a replacement Service Agent having an address
      for service in England or Wales and shall notify the Treasury in writing
      of the name and address of the replacement Service
      Agent.  Failing such appointment and notification, the Treasury
      shall be entitled by written notice to the Participant to appoint a
      replacement Service Agent to act on behalf of the
      Participant.  The provisions of this Condition 49 applying to
      service on a Service Agent apply equally to service on a replacement
      Service Agent.

            

    

     

    Service
of process

     

    
      	
              49.4

            	
              Process by
      which any Proceedings are begun in England and Wales may be served on the
      Participant by being delivered in accordance with this Condition
      49.  Nothing contained in this Condition 49 affects the right to
      serve process in another manner permitted by
  law.

            

    

     

    
      
        
        

      

      
        248

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                50.

              	
                ENTIRE
      AGREEMENT

              

      

    

     

    
      	
              50.1

            	
              The Scheme
      Documents constitute the whole and only agreement between the Participant
      and the Treasury relating to the subject matter of the Scheme
      Documents.

            

    

     

    
      	
              50.2

            	
              By entering
      into the Accession Agreement, each of the Treasury and the Participant
      acknowledges that it is not relying upon any pre-contractual statement
      that is not set out in the Scheme
Documents.

            

    

     

    
      	
              50.3

            	
              Except in the
      case of fraud, neither the Participant nor the Treasury shall have any
      right of action against the other arising out of or in connection with any
      pre-contractual statement except to the extent that it is repeated in the
      Scheme Documents.

            

    

     

    
      	
              50.4

            	
              For the
      purpose of this Condition 50, “pre-contractual
      statement” means any draft, agreement, undertaking, representation,
      warranty, promise, assurance or arrangement of any nature whatsoever,
      whether or not in writing, relating to the subject matter of the Scheme
      Documents made or given by the Treasury, any Government Entity, the
      Participant, any other member of the Participant’s Group or any of their
      respective Representatives at any time prior to the Accession
      Date.

            

    

     

     

    
      
        
        

      

      
        249

        
          

        

      

      
        
        

      

    

     

    
      
        	
                51.

              	
                NOTICES

              

      

    

     

    
      	
              51.1

            	
              Subject to
      Condition 51.2, any notice, submission or other communication under or in
      connection with any Scheme Document (in this Condition 51, a “notice”) shall be
      effective only if it is in writing and delivered by hand or email in
      accordance with Condition 51.3.

            

    

     

    
      	
              51.2

            	
              In connection
      with the delivery of any Information to the Treasury pursuant to any
      Scheme Document (whether pursuant to the Monitoring and Reporting
      Conditions, the Remuneration Conditions or otherwise), the Treasury may,
      by notice to the Participant, permit the delivery of such Information in
      any other format or manner acceptable to the Treasury (acting
      reasonably).

            

    

     

    
      	
              51.3

            	
              Each notice
      shall be sent:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in the case
      of the Treasury, to the physical address or to the email address, and for
      the attention of the department or individual, set out in the Accession
      Agreement; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              in the case
      of the Initial Parent, the Participant or any other member of the
      Participant’s Group, to the Participant’s registered office or such other
      physical address, or to the email address, and for the attention of the
      department or individual, set out in the Accession
    Agreement.

            

    

     

    
      	
              51.4

            	
              A copy of
      each notice delivered by email shall be sent by hand to the recipient in
      accordance with Condition 51.3, but failure to send such a copy shall not
      render any notice ineffective.

            

    

     

    
      	
              51.5

            	
              Each of the
      Treasury, the Initial Parent, the Participant, or any other member of the
      Participant’s Group may change its notice details for the purposes of this
      Condition 51 by notifying in the case of the Treasury, the Participant
      and, in the case of the Initial Parent, the Participant or any other
      member of the Participant’s Group, the Treasury, of such change provided
      that such notification shall only be effective
  on:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the date
      specified in the notification as the date on which the change is to take
      place, not being less than five Business Days after the date of such
      notice; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              if no date is
      specified or the date specified is less than five Business Days after the
      date on which notice is given, the date falling five Business Days after
      notice of any such change has been
given.

            

    

     

    
      	
              51.6

            	
              Subject to
      Condition 51.7, any notice under this Condition 51 shall be deemed to have
      been duly given:

            

    

     

    
      	
               
      

            	
              (A)

            	
              if sent by
      email, when sent (provided that an email shall be deemed not have to been
      sent if the sender receives a delivery failure notification);
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              if delivered
      by hand, at the time of actual
delivery,

            

    

     

     

    
      
        
        

      

      
        250

        
          

        

      

      
        
        

      

    

     

    provided that it is
expressly marked for the attention of the department or individual set out in
the Accession Agreement.

     

    
      	
              51.7

            	
              Any notice
      given outside Working Hours in the place to which it is addressed shall be
      deemed not to have been given until the start of the next period of
      Working Hours in such place.

            

    

     

    
      	
              51.8

            	
              Each notice
      given by the Initial Parent, the Participant or any other member of the
      Participant’s Group to the Treasury must be duly
  signed:

            

    

     

    
      	
               
      

            	
              (A)

            	
              in the
      manner, and by the person, specified in the relevant Condition or relevant
      provision of the relevant Scheme Document;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              (where no
      such requirement is specified) by an authorised signatory of the Initial
      Parent, the Participant or that other member of the Participant’s Group
      (as the case may be).

            

    

     

    
      	
              51.9

            	
              This
      Condition 51 shall not apply in relation to the service of Service
      Documents.

            

    

     

    
      	
              51.10

            	
              Any notice
      must be in English.

            

    

     

    

    
      
        
        

      

      
        251

        
          

        

      

      
        
        

      

    

     

    
      
        	
                52.

              	
                INVALIDITY

              

      

    

     

    If at any time any
provision of the Accession Agreement, any Condition or any part of any such
provision or Condition is or becomes illegal, invalid or unenforceable in any
respect under the law of any jurisdiction, that shall not affect or
impair:

     

    
      	
               
      

            	
              (A)

            	
              the legality,
      validity or enforceability in that jurisdiction of any other provision of
      the Accession Agreement, any other Condition or any other part of any such
      provision or Condition; or

            

    

     

    
      	
               
      

            	
              (B)

            	
              the legality,
      validity or enforceability under the law of any other jurisdiction of that
      or any other provision of the Accession Agreement, any Condition or any
      part of any such provision or
Condition.

            

    

     

     

    
      
        
        

      

      
        252

        
          

        

      

      
        
        

      

    

     

    
      
        	
                53. 

              	
                FURTHER
      ASSURANCE

              

      

    

     

    The Participant
shall at its own cost, and so far as it is able to do so in accordance with
Applicable Law, from time to time on request, do or procure the doing of all
acts and/or execute or procure the execution of all documents in a form
satisfactory to the Treasury which the Treasury may (acting reasonably) consider
necessary for giving full effect to these Conditions, the Accession Agreement or
any other Scheme Document and securing to the Treasury the full benefit of the
rights, powers and remedies conferred upon the Treasury under or pursuant to
these Conditions, the Accession Agreement or any other Scheme Document.

     

    
      
        
        

      

      
        253

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                54. 

              	
                LANGUAGE

              

      

    

     

    
      	
              54.1

            	
              Unless
      otherwise agreed by the Treasury, all Information provided by the
      Participant under or in connection with these Conditions (excluding any
      original documentation in respect of the Covered Assets) shall be in
      English. The absence of objection from the Treasury to a document that is
      not in English shall not constitute the Treasury’s agreement for the
      purpose of this Condition 54.1.

            

    

     

    
      	
              54.2

            	
              In the case
      of any Information which is translated into English prior to its being
      delivered to the Treasury pursuant to the Scheme Documents, the
      Participant shall ensure that any such translation is carried out (at the
      Participant’s cost) by a recognised and appropriately qualified and
      skilled translation agent.

            

    

     

    
      	
              54.3

            	
              Any agreement
      by the Treasury under Condition 54.1 may be given subject to an
      undertaking by the Participant to bear any costs or expenses incurred by
      the Treasury in translating the relevant Information into English, as a
      Management and Administration Cost in accordance with Condition
      9.10.

            

    

     

     

    
      
        
        

      

      
        254

        
          

        

      

      
        
        

      

    

     

    
      
        	
                55. 

              	
                CHOICE
      OF GOVERNING LAW

              

      

    

     

    These Conditions
and the other Scheme Documents shall be governed by and construed in accordance
with English law.  Any matter, claim or dispute arising out of or in
connection with these Conditions or any other Scheme Document (including any
Dispute), whether such matter, claim or dispute is contractual or
non-contractual, shall be governed by and determined in accordance with English
law.

     

     

    
      
        
        

      

      
        255

        
          

        

      

      
        
        

      

    

    

    PART
11: DEFINITIONS AND INTERPRETATION

     

    
      	
              56.

            	
              DEFINITIONS

            

    

     

    
      	
              56.1

            	
              In these
      Conditions:

            

    

     

    “Accession Agreement” has the
meaning given to it in Condition 1.5;

     

    “Accession Date” has the
meaning given to it in the Accession Agreement;

     

    “Accounting Adjustment” has the
meaning given to it in Condition 4.26;

     

    “Accounting Expert” has the
meaning given to it in Condition 35.8(B);

     

    “Accounting Standards” means
(i) IFRS and (ii) any other accounting standards generally accepted in the
relevant jurisdiction of incorporation of the relevant person and approved by
the relevant regulatory or other accounting bodies in that jurisdiction and
which apply in respect of that person;

     

    “Actions” has the meaning given
to it in Condition 42.30;

     

    “Actual Exposure” has the
meaning given to it in Condition 6.8(A);

     

    “Additional Covered Entity” has
the meaning given to it in Condition 4.27(C);

     

    “Additional Functions” has the
meaning given to it in Condition 32.17;

     

    “Adjustment” has the meaning
given to it in Condition 34.2;

     

    “Adjustment Event” has the
meaning given to it in Condition 34.1;

     

    “Adjustment Notice” has the
meaning given to it in Condition 34.1;

     

    “Advised Amount” has the
meaning given to it in Condition 6.8(E);

     

    “Adviser Engagement Principles”
has the meaning given to it in Condition 9.5;

     

    “Affiliate” means, in relation
to a person (i) any person connected with such person (and, for this purpose,
“connected” shall have the meaning given in section 839 of ICTA) and (ii) any
Associated Company of such person;

     

    “Agency” has the meaning given
to it in Condition 1.3;

     

    “Agreed Model” has the meaning
given to it in Condition 8.19;

     

    “Alternative Condition
Modification” has the meaning given to it in Condition
47.9(B)(i);

     

    
      
        
        

      

      
        256

        
          

        

      

      
        
        

      

    

     

     

    “Alternative Fixing Date” has
the meaning given to it in Condition 40.16;

     

    “Annual Assurance Report” has
the meaning given to it in Condition 19.6;

     

    “Applicable Consent Period” has
the meaning given to it in Condition 39.2;

     

    “Applicable Entity”
means:

     

    
      	
               
      

            	
              (A)

            	
              any member of
      the Participant’s Group;

            

    

     

    
      	
               
      

            	
              (B)

            	
              (in the case
      of a Covered Asset which is the subject of a Permitted Arrangement) any
      person which Owns (or otherwise holds pursuant to the Permitted
      Arrangement) that Covered Asset;
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              any entity
      that would be consolidated into the balance sheet of the Participant’s
      Group if such a balance sheet were to be prepared in accordance with
      Static IFRS;

            

    

     

    “Applicable Exchange Rate” has
the meaning given to it in Condition 40.13;

     

    “Applicable Law” means any and
all law (whether civil, criminal or administrative), common law, statutes,
statutory instruments, treaties, conventions, directives, regulations or rules
made thereunder, by-laws, demands, decrees, injunctions, resolutions, orders or
judgments in any applicable jurisdiction, including the FSA Rules and any
related or similar rules of any other Authority, in each case which is binding
on the Participant, the relevant other member of the Participant’s Group or the
relevant other person or in respect of the relevant matter as the context
requires;

     

    “Applicable Period” has the
meaning given to it in Condition 5.14;

     

    “APS Confidentiality Agreement”
has the meaning given to it in Condition 42.2;

     

    “Arbitration” has the meaning
given to it in Condition 35.6;

     

    “Arbitration Act” means the
Arbitration Act 1996;

     

    “Arbitration Panel” has the
meaning given to it in Condition 35.8;

     

    “Arbitrator” has the meaning
given to it in Condition 35.17;

     

    “Asset Continuity Requirements”
has the meaning given to it in Condition 4.5;

     

    “Asset Eligibility Criteria”
has the meaning given to it in Condition 4.11;

     

    “Asset Management Conditions”
means the Conditions set out in Part 3;

     

    “Asset Management Framework”
has the meaning given to it in Condition 10.2;

     

    
      
        
        

      

      
        257

        
          

        

      

      
        
        

      

    

     

    “Asset Management Objective”
has the meaning given to it in Condition 10.1;

     

    “Asset Purchase Request” has
the meaning given to it in Condition 4.45;

     

    “Associated Company” means an
Undertaking in which another Undertaking has a “participating interest” (as
defined in section 421A of the FSMA);

     

    “Assurance Plan” has the
meaning given to it in Condition 19.1;

     

    “Authorisations” means
authorisations, consents, approvals, resolutions, licences, exemptions, filings,
notarisations, registrations, orders, recognitions, grants, confirmations,
clearances and permissions;

     

    “Authority” means (i) any
government, (ii) any governmental or quasi-governmental authority, body, agency
or association, (iii) any supranational, federal, state or local government,
(iv) any statutory or regulatory body, agency or association, (v) any body,
agency or association having the power to impose, collect or administer any Tax
and (vi) any court, tribunal or other judicial body;

     

    “Bank of England” means The
Governor and Company of the Bank of England;

     

    “Bankruptcy” has the meaning
given to it in Condition 5.16;

     

    “BIPRU” means the FSA’s
prudential sourcebook for banks, building societies and investment firms forming
part of the FSA Handbook;

     

    “Blind Pool Asset” has the
meaning given to it in Condition 10.18;

     

    “Books and Records” has its
common law meaning and includes all notices, correspondence, orders, enquiries,
drawings, plans, books of account and other documents and all computer disks or
tapes or other machine-readable programs or other records;

     

    “Business Day” means a day
(other than a Saturday, Sunday or public holiday in England and Wales) on which
banks are open for general business in London;

     

    “Business-Level Guidelines”
means such systems, controls, processes and policies as may be necessary or
desirable to ensure compliance by the Participant and each other member of the
Participant’s Group with the Scheme Documents (including the Asset Management
Conditions);

     

    “Cash Realisation” has the
meaning given to it in Condition 7.6;

     

    “Cash Realisation Date” has the
meaning given to it in Condition 7.7;

     

    “Change in Law” means the
occurrence of any of the following after the Signing Date:

     

    
      	
               
      

            	
              (A)

            	
              the enactment
      or coming into effect of any Applicable
Law;

            

    

     

     

    
      
        
        

      

      
        258

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              any
      amendment, supplement, restatement, re-enactment or replacement of any
      Applicable Law (whether carried out by primary or secondary legislation or
      otherwise);

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      publication or announcement by any Authority, following the Accession Date
      of a change in, or clarification of, the interpretation or application of
      any Applicable Law; or

            

    

     

    
      	
               
      

            	
              (D)

            	
              any decision
      of any court, tribunal or other judicial body relating to the
      interpretation or application of any Applicable
  Law,

            

    

     

    other than (i) the
coming into effect of any Applicable Law (or any amendment, supplement,
restatement, re-enactment or replacement thereof) which was enacted, or
published or announced in final form, prior to the Signing Date with a
commencement date after the Signing Date and (ii) any decision referred to in
paragraph (D) above which was made prior to the Signing Date but which takes
effect from a date after the Signing Date;

     

    “Civil Procedure Rules” means
the Civil Procedure Rules 1998 (SI 1998/3132) and the Practice Directions made
under section 5 of the Civil Procedure Act 1997;

     

    “Claimant” has the meaning
given to it in Condition 35.10;

     

    “Closely Related Hedge” has the
meaning given to it in Condition 7.12;

     

    “Close-Out Value” has the
meaning given to it in Condition 6.17;

     

    “CL Payment Amount” has the
meaning given to it in Condition 6.25;

     

    “CL Payment Date” has the
meaning given to it in Condition 6.24;

     

    “Commencement Notice” has the
meaning given to it in Condition 35.10;

     

    “Compliance Certificate” means
a certificate signed by the Scheme Head (or another member of the Scheme
Executive Team acceptable to the Treasury) confirming that the relevant Report
or other Information with which the certificate is provided is, to the best of
his or her knowledge and belief, having made all due and reasonable enquiries,
true and accurate, fairly presents the Information it contains and is not
misleading for the purpose for which it is prepared;

     

    “Compliance Requirement” has
the meaning given to it in Condition 28.7(B);

     

    “Compliant Triggered Asset” has
the meaning given to it in Condition 4.10;

     

    “Compound SONIA” has the
meaning given to that term in Condition 36.4;

     

    “Condition Modification” has
the meaning given to it in Condition 47.1;

     

    
      
        
        

      

      
        259

        
          

        

      

      
        
        

      

    

     

     

    “Condition Modification Notice”
has the meaning given to it in Condition 47.7;

     

    “Condition Modification
Procedure” has the meaning given to it in Condition 47.2;

     

    “Conditions” has the meaning
given to it in Condition 1.4 and a “Condition” means any of the
Conditions;

     

    “Conduct Approvals Hierarchy”
has the meaning given to it in Condition 12.3;

     

    “Conduct Requiring Approval”
has the meaning given to it in Condition 12.3;

     

    “Confidential Information” has
the meaning given to it in Condition 42.3;

     

    “Conflict” has the meaning
given to it in Condition 10.3;

     

    “Conflicting Condition” has the
meaning given to it in Condition 47.1(A);

     

    “Conflicts Certificate” has the
meaning given to it in Condition 15.14;

     

    “Conflicts Management Policy”
has the meaning given to it in Condition 10.4;

     

    “Consolidated Entity” has the
meaning given to it in Condition 7.28;

     

    “Consolidation Notice” has the
meaning given to it in Condition 35.34;

     

    “Consultation Period” has the
meaning given to it in Condition 48.3(D);

     

    “Continuing Transactions” has
the meaning given to it in Condition 6.16;

     

    “Correction Principle” has the
meaning given to it in Condition 17.7;

     

    “Counterparty”
means:

     

    
      	
               
      

            	
              (A)

            	
              in relation
      to any asset or exposure, a person (including a guarantor) with an
      obligation under the terms of that asset or exposure (whether present or
      future, actual or contingent and as principal, surety or otherwise) to pay
      or repay money to, or for onward transmission to, the person which Owns or
      otherwise holds that asset or exposure, but excluding any person to the
      extent acting:

            

    

     

    
      	
               
      

            	
              (i)

            	
              as lender,
      facility agent, arranger, security trustee, security agent or other
      finance party with respect to a facility
  agreement;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              as holder,
      trustee, security trustee, security agent, fiscal agent, paying agent,
      calculation agent, servicer, collateral agent, collateral manager,
      collateral administrator, cash manager or liquidity provider with respect
      to a debt instrument; or

            

    

     

     

    
      
        
        

      

      
        260

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              in a capacity
      which is analogous to those referred to in sub-paragraphs (i) and (ii)
      above; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              in relation
      to any asset or exposure which is a share, equity security or equity
      interest, the issuer;

            

    

     

    “Coverage Data Fields” means
the Initial Data Fields which are identified as being “Coverage Data Fields” in
the Accession Agreement;

     

    “Covered Amount” has the
meaning given to it in Condition 6.5;

     

    “Covered Amount Cap” has the
meaning given to it in Condition 6.7;

     

    “Covered Amount Currency” has
the meaning given to it in Condition 6.5(A);

     

    “Covered Asset” has the meaning
given to it in Condition 4.2(A);

     

    “Covered Asset Class” has the
meaning given to it in Condition 17.3;

     

    “Covered Entity” has the
meaning given to it in Condition 4.27;

     

    “Covered Liability” has the
meaning given to it in Condition 6.23;

     

    “Covered Parent” has the
meaning given to it in Condition 4.28;

     

    “Cover Termination Date” has
the meaning given to it in Condition 6.6;

     

    “CP AssetCo” has the meaning given to
it in Condition 4.21(C) or 4.21(D) as appropriate;

     

    “CP Entity” has the meaning
given to it in Condition 4.21(C) or 4.21(D) as appropriate;

     

    “CP Funding Agreement” has the
meaning given to it in Condition 4.21(D);

     

    “Credit Aggregation Policy” has
the meaning given to it in Condition 10.5;

     

    “C(RTP)A 1999” has the meaning
given to it in Condition 46.2;

     

    “Cut-off Time” has the meaning
given to it in Condition 40.13;

     

    “Data Controller” has the
meaning given to “data controller” in the Data Protection Act 1998;

     

    “Data Field Rules” means the
rules in relation to the completion and delivery of the Data Fields provided by
the Treasury to the Participant prior to the Accession Date and set out in, or
appended to, the Accession Agreement;

     

    
      
        
        

      

      
        261

        
          

        

      

      
        
        

      

    

     

     

    “Data Fields” means the Initial
Data Fields, the Post-Accession Data Fields and the Quarterly Statement Data
Fields;

     

    “Data Subject” has the meaning
given to “data subject” in the Data Protection Act 1998;

     

    “Days Past Due” has the meaning
given to it in Condition 5.15;

     

    “Default Interest” has the
meaning given to it in Condition 36.1;

     

    “Default Rate” has the meaning
given to it in Condition 36.3;

     

    “Deferred Unpaid Interest” has
the meaning given to it in Condition 5.8;

     

    “Degrouping” has the meaning
given to it in Condition 7.28;

     

    “Delegate” means (A) any person
who carries out any function on behalf of another person or (B) any person to
whom the right, responsibility, duty or obligation of a person to carry out any
function is transferred;

     

    “Derivative Agreement” has the
meaning given to it in Condition 6.13;

     

    “Designated Step-In Terms” has
the meaning given to it in the Accession Agreement;

     

    “Detailed Organisational
Structure” has the meaning given to it in Condition 26.1;

     

    “Determination Notice” has the
meaning given to it in Condition 34.3;

     

    “Directions Hearing” has the
meaning given to it in Condition 35.18(A);

     

    “Direct Management Functions”
has the meaning given to it in Condition 32.16;

     

    “Director” has the meaning
given to it in Condition 28.3(B)(ii);

     

    “Disposed Slice” has the
meaning given to that term in Condition 4.31;

     

    “Dispute” means any dispute,
claim or controversy in any way relating to, in connection with or arising out
of the Scheme or any of the Scheme Documents, including in respect
of:

     

    
      	
               
      

            	
              (A)

            	
              the
      compliance or satisfaction of any asset or exposure with the Asset
      Eligibility Criteria or the Asset Continuity
  Requirements;

            

    

     

    
      	
               
      

            	
              (B)

            	
              any breach or
      alleged breach of any provision of any Scheme Document or any
      non-contractual obligation arising out of a Scheme Document or the
      Scheme;

            

    

     

    
      	
               
      

            	
              (C)

            	
              any question
      regarding the existence, validity or termination of, or sum payable under
      or in connection with, any Scheme Document or the
  Scheme;

            

    

     

     

    
      
        
        

      

      
        262

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (D)

            	
              any Report or
      Information provided pursuant to the Scheme Documents or otherwise in
      connection with the Scheme (including in connection with the computation
      of a Quarterly Payable);

            

    

     

    
      	
               
      

            	
              (E)

            	
              any action
      taken by or omission of the Treasury, any Government Entity, any member of
      the Participant’s Group or its Affiliates or any of their respective
      Representatives; and

            

    

     

    
      	
               
      

            	
              (F)

            	
              whether the
      amendment, modification or replacement of any Condition has been effected
      in accordance with Condition 47;

            

    

     

    “Dispute Resolution Procedure”
means the procedure for the resolution and determination of Disputes set out in
Condition 35;

     

    “Early Termination Amount” has
the meaning given to it in Condition 6.14;

     

    “Early Termination Date” has
the meaning given to it in Condition 6.18;

     

    “Economically Owned” and “Economic Ownership” have the
meanings given to them in Condition 4.19;

     

    “EC Treaty” means the
consolidated version of the Treaty establishing the European
Community;

     

    “Equity Accounting Covered
Asset” has the meaning given to it in Condition 4.13;

     

    “Equivalent Asset” means, in respect of an
asset which is a security or other financial instrument, an asset of the same
issuer, part of the same issue and of an identical type, nominal value,
description and amount;

     

    “Error” has the meaning given
to it in Condition 17.5;

     

    “Establishment and Accession
Costs” has the meaning given to it in Condition 9.9;

     

    “Exchange Date” has the meaning
given to it in Condition 40.16;

     

    “Excluded Information” has the
meaning given to it in Condition 42.4;

     

    “Expert” has the meaning given
to it in Condition 34.4;

     

    “Extended Protection Assets”
has the meaning given to it in Condition 6.36;

     

    “Extended Protection Notice”
has the meaning given to it in Condition 6.36;

     

    “Failure to Pay” has the
meaning given to it in Condition 5.3;

     

    “Fee” means the fee associated
with the Participant’s participation in the Scheme, as described in Condition 9
and in the Accession Agreement;

     

    
      
        
        

      

      
        263

        
          

        

      

      
        
        

      

    

     

     

    “Finance Lease” has the meaning
given to it in Condition 6.21;

     

    “First Loss Amount” has the
meaning given to it in Condition 8.16;

     

    “Fixed Data Fields” means the
Initial Data Fields which are identified as being “Fixed Data Fields” in the
Accession Agreement;

     

    “Fixing Date” has the meaning
given to it in Condition 40.16;

     

    “Fixing Reference Date” has the
meaning given to it in Condition 40.16;

     

    “FOI Act” means the Freedom of
Information Act 2000;

     

    “FOI Request” has the meaning
given to it in Condition 42.19;

     

    “Foreign Exchange Agreement”
has the meaning given to it in Condition 6.13(B);

     

    “FSA” means the Financial
Services Authority, including when acting in its capacity as the competent
authority for the purposes of Part VI of the FSMA (and any successor
authority);

     

    “FSA Handbook” means the FSA’s
published handbook of principles, rules and guidance;

     

    “FSA Remuneration Code” means
the Remuneration Code of the FSA as published and defined in the FSA’s Senior
Management Arrangements, Systems and Controls (Remuneration Code) Instrument
2009 (FSA 2009/48), or any replacement or successor code for remuneration
policies and practices relating to banking institutions as may be published by
the FSA from time to time, whether constituted by rules, guidance or other
regulatory provisions made by the FSA or otherwise;

     

    “FSA Rules” means the
principles, rules and guidance (including the TCF Principles) set out in the FSA
Handbook;

     

    “FSMA” means the Financial
Services and Markets Act 2000, including any regulations made pursuant
thereto;

     

    “Full Suspension Assets” has
the meaning given to it in Condition 31.7(B);

     

    “Full Suspension Effective
Date” has the meaning given to it in Condition 31.7(C);

     

    “Full Suspension Notice” has
the meaning given to it in Condition 31.7;

     

    “Full Termination Assets” has
the meaning given to it in Condition 31.18(B);

     

    “Full Termination Effective
Date” has the meaning given to it in Condition 31.18(C);

     

    “Full Termination Notice” has
the meaning given to it in Condition 31.18;

     

    
      
        
        

      

      
        264

        
          

        

      

      
        
        

      

    

     

     

    “Funding Rate” has the meaning
given to it in Condition 8.17;

     

    “Good Faith Statements” has the
meaning given to it in Condition 15.19;

     

    “Good Industry Practice” means
the level of skill, care, diligence, prudence, foresight, expertise and
experience consistent with the standards which would ordinarily be adhered to by
a prudent banking institution in the ordinary course of its business, taking
account of (i) applicable corporate governance and corporate responsibility
principles, (ii) any published guidance or recommendations (including guidance
or recommendations from any Authority) relating to good industry practice in the
banking and financial sectors as may be published from time to time and (iii)
other guidelines, recommendations, methods, practices or procedures which would
be adopted or complied with from time to time by a prudent banking institution
in the ordinary course of its business;

     

    “Governance and Oversight
Conditions” means (i) the Conditions contained in Part 5 and (ii) any
other provisions relating to governance and oversight contained in the Accession
Agreement;

     

    “Governmental Authority” has
the meaning given to it in Condition 5.24;

     

    “Government Entity”
means:

     

    
      	
               
      

            	
              (A)

            	
              any
      department, non-departmental public body, authority or agency of Her
      Majesty’s Government of the United Kingdom or the Crown, including the
      Agency;

            

    

     

    
      	 	
              (B) 

            	
              any of Her
      Majesty’s Secretaries of State and any other Minister of the
      Crown;

            

    

     

    
      	 	
              (C) 

            	
              the Treasury
      Solicitor;

            

    

     

    
      	
               
      

            	
              (D)

            	
              any body
      corporate established by statute some or all of the members of which are
      appointed by a Secretary of State or Minister of the Crown;
      and

            

    

     

    
      	
               
      

            	
              (E)

            	
              any other
      entity or person directly or indirectly wholly-owned by, or held on trust
      for, any of the foregoing, including UK Financial Investments
      Limited,

            

    

     

    but shall exclude
(i) any person which became directly or indirectly wholly-owned by any of the
foregoing pursuant to the Banking (Special Provisions) Act 2008 or the Banking
Act 2009 and (ii) any other person that the Treasury may notify to the
Participant from time to time;

     

    “Government Owned Entity” means
an entity in which a Government Entity has an ownership interest but which is
not itself a Government Entity and which is designated as a “Government Owned
Entity” by the Treasury by notice to the Participant;

     

    “Grace Period” has the meaning
given to it in Condition 5.13;

     

    
      
        
        

      

      
        265

        
          

        

      

      
        
        

      

    

     

     

    “Group” means, in relation to
an Undertaking, such Undertaking and all of its Group Undertakings, and "Group Member" shall be
construed accordingly;

     

    “Group Undertakings” has the
meaning given in section 1161(5) of the Companies Act 2006;

     

    “HMRC” means Her Majesty’s
Revenue and Customs;

     

    “ICTA” means the Income and
Corporation Taxes Act 1988;

     

    “IFRS” means International
Financial Reporting Standards as adopted by the European Union;

     

    “Impaired Asset” has the
meaning given to it in Condition 5.21;

     

    “Implied Writedown” has the
meaning given to it in Condition 5.9;

     

    “Imputed Maximum Exposure” has
the meaning given to it in Condition 6.8(C);

     

    “Incorrect Condition” has the
meaning given to it in Condition 47.1(B);

     

    “Indemnified Amounts” means any and all losses,
damages, costs, liabilities, demands, charges or expenses (including legal and
other third party advisory fees and the costs of enforcement), in each case
whether joint or several, which any Indemnified Person may suffer or incur,
including:

     

    
      	
               
      

            	
              (A)

            	
              in connection
      with any and all Indemnified
Claims;

            

    

     

    
      	
               
      

            	
              (B)

            	
              in
      investigating, preparing for or disputing or defending or settling any
      Indemnified Claim;

            

    

     

    
      	
               
      

            	
              (C)

            	
              in
      establishing its right to be indemnified pursuant to the Conditions;
      and

            

    

     

    
      	
               
      

            	
              (D)

            	
              in seeking
      advice regarding any Indemnified
Claim,

            

    

     

    but excluding any
arbitration award against that Indemnified Person pursuant to the Dispute
Resolution Procedure;

     

    “Indemnified Claims” means any and all
claims, actions, liabilities, demands, proceedings, investigations, judgments or
awards whatsoever (and in each case whether or not successful, compromised or
settled and whether joint or several) threatened, asserted, established or
instituted against any Indemnified Person and “Indemnified Claim” shall be construed
accordingly;

     

    “Indemnified Persons” means (i)
the Treasury, (ii) the Treasury Solicitor, (iii) any other Government Entity and
(iv) any Representative of any person specified in (i) to (iii), and “Indemnified Person” shall be
construed accordingly;

     

    
      
        
        

      

      
        266

        
          

        

      

      
        
        

      

    

     

    “Indemnity” has the meaning
given to it in Condition 33.1;

     

    “Information” means all
information of whatever nature and in whatever form, including in writing,
orally, electronically and in a visual or machine-readable medium (including
CD-ROM, magnetic and digital form) and, in relation to any obligation on any
person to provide information pursuant to these Conditions or any other Scheme
Document, shall be limited to such information that is within the control of
that person (and for these purposes information shall be deemed to be within a
person’s control if:

     

    
      	 	
              (A) 

            	
              it is within
      the possession of that person or any other member of its
      Group;

            

    

     

    
      	 	
              (B) 

            	
              that person
      or any other member of its Group has a right to possession of it;
      or

            

    

     

    
      	
               
      

            	
              (C)

            	
              that person
      or any other member of its Group has a right to inspect or take copies of
      it);

            

    

     

    “Initial Data” means the
Information contained in the Initial Data Fields, comprising certain terms or
features of, or matters pertaining to, each Covered Asset stated as at 31
December 2008, together with any other Information designated in the Accession
Agreement as Initial Data;

     

    “Initial Data Fields” means the
data fields identified as being “Initial Data Fields” in the Accession
Agreement;

     

    “Initial Event Date” has the
meaning given to it in Condition 6.2;

     

    “Initial Failure to Pay Date”
has the meaning given to it in Condition 6.4;

     

    “Initial Parent” has the
meaning given to it in the Accession Agreement;

     

    “Inside Information” has the
meaning given to it in Condition 42.5;

     

    “Insurance Premium Tax” means
insurance premium tax as referred to in section 48 of the Finance Act
1994;

     

    “LCIA” means the London Court
of International Arbitration;

     

    “Legal Expert” has the meaning
given to it in Condition 35.8(A);

     

    “Lending Commitments Deed Poll”
means the deed poll identified as the “Lending Commitments Deed Poll” in the
Accession Agreement;

     

    “Limited Recourse Asset” has
the meaning given to it in Condition 5.11;

     

    “Listing Rules” means the
Listing Rules made by the FSA pursuant to section 73A of the FSMA;

     

    “Long Dated Asset” has the
meaning given to it in Condition 5.5;

     

    
      
        
        

      

      
        267

        
          

        

      

      
        
        

      

    

     

     

    “Loss” has the meaning given to
it in Conditions 6.1, 6.22 and 6.38;

     

    “Loss Amount” has the meaning
given to it in Condition 8.1;

     

    “Loss Limit” has the meaning
given to it in Condition 6.26;

     

    “Major Dispute” has the meaning
given to it in Condition 35.15;

     

    “Major Dispute Amount” has the
meaning given to it in Condition 35.15(A);

     

    “Management and Administration”
means, in respect of an asset or exposure (including Covered Assets, Protected
Assets and Related Party Assets), any and all conduct (including any decision
whether or not to undertake any particular conduct) relating, whether directly
or indirectly, to that asset or exposure including (i) the creation,
acquisition, amendment, replacement, termination, sale, transfer, assignment or
disposal of that asset or exposure, (ii) any transaction in relation to that
asset or exposure, including the creation of any Security, the creation of any
trust, the conferring of any interest or participation right, the entering into
of any agreement in respect of votes or the right to receive dividends or any
other return of value, the renunciation or assignment of any right to subscribe
for or receive an asset or exposure or any legal or beneficial interest in an
asset or exposure, the entering into of any arrangement having the effect of
reducing or mitigating a person’s legal, beneficial or economic interest in an
asset or exposure and any Undertaking Disposal, (iii) any conduct which will
result in an increased commitment, lending or exposure to a Counterparty (or to
a Group Member of a Counterparty), or any determination as to whether or not (or
how) such increased commitment, lending or exposure should be created, including
through the provision of or making available additional finance, (iv) any
Rollover, (v) any act of making an asset or exposure the subject of a Permitted
Arrangement and the exercise of any rights with respect to that Permitted
Arrangement (including any right to withdraw an asset or exposure from it), (vi)
any conduct relating to or constituting a Recovery or a Realisation (including
the taking of, or refraining from taking, any enforcement action), (vii) the
incurrence of, or commitment to incur, any Realisation Expenses and (viii) the
exercise of any voting or other rights, but in any case excluding any conduct
which consists of delivering any notification, report or Information to the
Treasury, and “Manage and
Administer” shall be construed accordingly;

     

    “Management and Administration
Costs” has the meaning given to it in Condition 9.10;

     

    “Material Criminal Conduct” has
the meaning given to it in Condition 30.2;

     

    “Material Writedown” has the
meaning given to it in Condition 5.6;

     

    “MD Selected Arbitrator” has
the meaning given to it in Condition 35.14(A);

     

    “Mid Rate” has the meaning
given to it in Condition 40.16;

     

    “Modification Effective Date”
has the meaning given to it in Condition 47.7(B);

     

     

    
      
         

      

      
        268

        
          

        

      

      
         

      

    

     

     

    “Modification Representation
Notice” has the meaning given to it in Condition 47.9(B);

     

    “Monitoring and Reporting
Conditions” means (A) the Conditions set out in Part 4; and (B) any
additional provisions relating to monitoring and reporting set out in the
Accession Agreement;

     

    “Non-Cash Asset” means any
asset other than cash;

     

    “Non-Cash Realisation” means
any Non-Cash Asset that is a Realisation;

     

    “Non-Recoverable Agency Amount”
has the meaning given to it in Condition 7.18;

     

    “Non-Recoverable Indemnity
Amount” has the meaning given to it in Condition 7.19;

     

    “Non-Triggered Asset” has the
meaning given to it in Condition 5.1;

     

    “Notification Report” has the
meaning given to it in Condition 15.7;

     

    “Obligor” has the meaning given
to it in Condition 5.12;

     

    “Original Maximum Exposure” has
the meaning given to it in Condition 6.8(B);

     

    “Other Amount” has the meaning
given to it in Condition 8.3;

     

    “Other Currency” has the
meaning given to it in Condition 40.16;

     

    “Other Protection Scheme” has
the meaning given to it in Condition 7.17;

     

    “Outstanding Amount” has the
meaning given to it in Condition 6.9;

     

    “Overdraft” has the meaning
given to it in Condition 6.8(D);

     

    “Oversight Functions” has the
meaning given to it in Condition 32.15;

     

    “Ownership”, “Owned”, “Owns” and “Own” have the meanings given
to them in Condition 4.20;

     

    “Parent Undertaking" has the
meaning given in section 1162 of the Companies Act 2006;

     

    “Partial Suspension Assets” has
the meaning given to it in Condition 31.6(B);

     

    “Partial Suspension Effective
Date” has the meaning given to it in Condition 31.6(C);

     

    “Partial Suspension Notice” has
the meaning given to it in Condition 31.6;

     

    “Partial Termination Assets”
has the meaning given to it in Condition 31.16(B);

     

     

    
      
         

      

      
        269

        
          

        

      

      
         

      

    

     

     

    “Partial Termination Effective
Date” has the meaning given to it in Condition 31.6(C);

     

    “Partial Termination Notice”
has the meaning given to it in Condition 31.16;

     

    “Participant” has the meaning
given to it in Condition 1.5 and “Participants” means, at any
time, all of the Participants participating in the Scheme at that
time;

     

    “Participant Confidential
Information” has the meaning given to it in Condition 42.8;

     

    “Participant Permitted Purpose”
has the meaning given to it in Condition 42.23;

     

    “Participant Step-In Costs” means all costs
and expenses (including all legal and other third party advisory costs) incurred
by any Applicable Entity or any of its Group Members (or any of their respective
Affiliates), in each case arising out of or in connection with the exercise by
the Treasury of any Step-In Rights (whether or not the relevant Step-In Trigger
is subsequently remedied or waived) and including (i) any costs or expenses
arising out of or in connection with the selection of, negotiation of terms of
engagement with or the appointment (or termination of the appointment) of, any
Step-In Manager in accordance with such Step-In Manager’s terms of engagement,
(ii) any costs and expenses arising out of or in connection with the
implementation of any recommendations made by any Step-In Manager in accordance
with such Step-In Manager’s terms of engagement and (iii) any amounts payable to
any Step-In Manager arising out of or in connection with the appointment (or
termination of that appointment) of that Step-In Manager, or the activities of
that Step-In Manager pursuant to any provision of the Scheme
Documents;

     

    “Participation Announcement”
has the meaning given to it in Condition 44.2(A);

     

    “Participation Conditions” has
the meaning given to it in Condition 3;

     

    “Pending Account” has the
meaning given to it in Condition 8.5;

     

    “Performance Target” has the
meaning given to it in Condition 28.7(A);

     

    “Permitted Arrangement” has the
meaning given to it in Condition 4.21;

     

    “Permitted Conduit Arrangement”
has the meaning given to it in Condition 4.21(C);

     

    “Permitted Conduit Funding
Arrangement” has the meaning given to it in Condition
4.21(D);

     

    “Permitted Government
Recipients” means:

     

    
      	
               
      

            	
              (A)

            	
              the FSA, the
      Bank of England, HMRC, the National Audit Office, the National Archive and
      the Cabinet Office; and

            

    

     

    
      	
               
      

            	
              (B)

            	
              any
      Government Entity other than (i) any person falling only within paragraph
      (D) of the definition of “Government Entity” (an “excluded government
      entity”)

            

    

     

     

    
      
         

      

      
        270

        
          

        

      

      
         

      

    

     

     

    
      
        	
                 
      

              	
                 

              	
                and (ii) any
      entity or person directly or indirectly wholly-owned by, or held on trust
      for, any excluded government entity; and (ii) any entity or person
      directly or indirectly wholly-owned by, or held on trust for, any excluded
      government entity;

              

      

    

     

    “Permitted Oral Statement” has
the meaning given to it in Condition 44.2(C);

     

    “Permitted Payee” has the
meaning given to it in Condition 6.25;

     

    “Permitted Securitisation” has
the meaning given to it in Condition 4.21(B);

     

    “Permitted Statement” has the
meaning given to it in Condition 44.2(B);

     

    “Permitted Structured
Financing” has the meaning given to it in Condition 7.24;

     

    “Personal Data” has the meaning
given to “personal data” in the Data Protection Act 1998;

     

    “Portfolio Disposal” has the
meaning given to it in Condition 7.27;

     

    “Post-Accession Data” means the
Information contained in the Post-Accession Data Fields, comprising certain
terms or features of, or matters pertaining to, each Covered Asset, together
with any other Information designated in the Accession Agreement as
Post-Accession Data (whether pertaining to Covered Assets or
otherwise);

     

    “Post-Accession Data Fields”
means the data fields identified as being “Post Accession Data Fields” in the
Accession Agreement;

     

    “Post-Trigger Withdrawal
Notice” has the meaning given to it in Condition 4.37;

     

    “Potential Failure to Pay” has
the meaning given to it in Condition 6.3;

     

    “Practice Statement” has the
meaning given to it in Condition 48.1;

     

    “Practice Statement Effective
Date” has the meaning given to it in Condition 48.3(C);

     

    “Practice Statement Notice” has
the meaning given to it in Condition 48.3;

     

    “Pre-Accession Data” means the Information provided
to the Treasury or its Representatives as part of the due diligence and
valuation process undertaken prior to the Signing Date, comprising amongst other
things certain terms or features of, or matters pertaining to, each Covered
Asset, as contained in the data tapes identified in or pursuant to the Accession
Agreement;

     

    “Pre-Accession Undertakings Deed
Poll” means the deed poll made by a member of the Participant’s Group in
favour of, among others, the Treasury setting out certain undertakings in
relation to, among other things, provision of information and assistance,
consultation rights, oversight and control procedures in relation to certain
assets and exposures and the management and servicing of such assets and
exposures;

     

     

    
      
         

      

      
        271

        
          

        

      

      
         

      

    

     

     

    “Pre-Restructuring Event” has
the meaning given to it in Condition 5.19;

     

    “Presiding Arbitrator” has the
meaning given to it in Condition 35.14(A);

     

    “Pre-Trigger Withdrawal Notice”
has the meaning given to it in Condition 4.35;

     

    “Proceedings” means any
proceeding, suit or action, including any court, tribunal or arbitration
proceedings, arising out of or in connection with a Dispute or otherwise in
connection with the Scheme (including any proceeding, suit or action in respect
of judicial review), whether contractual or non-contractual and wherever
located;

     

    “Prohibited Conduct” has the
meaning given to it in Condition 12.2;

     

    “Proposed Correction” has the
meaning given to it in Condition 17.5;

     

    “Protected Asset” has the
meaning given to it in Condition 10.6;

     

    “Protection Termination Notice”
has the meaning given to it in Condition 6.41;

     

    “QS Compliance Certificate” has
the meaning given to it in Condition 16.8;

     

    “Quarter” means (subject to
Condition 16.2) each period from (but excluding) a Quarter Date to (and
including) the next following Quarter Date;

     

    “Quarter Date” means (subject
to Condition 16.2) 31 March, 30 June, 30 September and 31 December in each
year;

     

    “Quarterly Payable” has the
meaning given to it in Condition 8.4;

     

    “Quarterly Payment Date” has
the meaning given to it in Condition 8.18;

     

    “Quarterly Statement” has the
meaning given to it in Condition 16.5;

     

    “Quarterly Statement Data”
means the Information contained in the Quarterly Statement Data Fields,
comprising certain terms or features of, or matters pertaining to, certain
Covered Assets, together with any other Information designated in the Accession
Agreement as Quarterly Statement Data; 

     

    “Quarterly Statement Data
Fields” means the data fields identified as being “Quarterly Statement
Data Fields” in the Accession Agreement;

     

    “Quarterly Statement Date” has
the meaning given to it in Conditions 16.1, 16.2, 16.3, or 16.4 (as
applicable);

     

    “Quarterly Statement Period”
has the meaning given to it in Conditions 16.1 or 16.2 (as
applicable);

     

    “Realisation” has the meaning
given to it in Condition 7.8;

     

     

    
      
         

      

      
        272

        
          

        

      

      
         

      

    

     

     

    “Realisation Expense” has the
meaning given to it in Condition 7.20;

     

    “Reconciliation Statement” has
the meaning given to it in Condition 15.12;

     

    “Recovery” has the meaning
given to it in Condition 7.1;

     

    “Recovery Amount” has the
meaning given to it in Condition 8.2;

     

    “Related Dispute” has the
meaning given to it in Condition 35.33;

     

    “Related Junior Asset” has the
meaning given to it in Condition 7.15;

     

    “Related Party Asset” has the
meaning given to it in Condition 10.7;

     

    “Related Triggered Asset” has
the meaning given to it in Condition 6.40(B);

     

    “Relevant Action” has the
meaning given to it in Condition 39.1(A);

     

    “Relevant Condition” has the
meaning given to it in Condition 39.1(B);

     

    “Relevant Cost” has the meaning
given to it in Condition 38.4;

     

    “Relevant Personal Data” has
the meaning given to it in Condition 43.1;

     

    “Relevant Persons” has the
meaning given to it in Condition 43.2;

     

    “Remaining Covered Amount” has
the meaning given to it in Condition 6.26(1);

     

    “Remedy Event” has the meaning
given to it in Condition 31.2;

     

    “Remedy Event Date” has the
meaning given to it in Condition 31.1;

     

    “Remuneration Committee” has
the meaning given to it in Condition 28.1;

     

    “Remuneration Conditions” means
(i) the Conditions set out in Part 6 and (ii) any additional provisions relating
to remuneration set out in the Accession Agreement;

     

    “Remuneration Policy” has the
meaning given to it in Condition 28.1;

     

    “Reports” means the Quarterly
Statements, the Data Fields, any Requested Reports and any Notifications
Reports, and a “Report”
means any of the Reports;

     

    “Representations” means the
representations and warranties set out in Condition 30;

     

    “Representatives”
means:

     

     

    
      
         

      

      
        273

        
          

        

      

      
         

      

    

     

     

    
      	
               
      

            	
              (A)

            	
              in the
      context of the Treasury, the Treasury Solicitor and the officials,
      employees, agents, professional advisers and contractors of the Treasury
      (including each Treasury Observer) and of the Treasury
      Solicitor;

            

    

     

    
      	
               
      

            	
              (B)

            	
              in the
      context of any other Government Entity (including the Treasury Solicitor),
      the officials, directors, employees, agents, professional advisers and
      contractors of such Government Entity;
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              in the
      context of any other person, directors, officers, employees, agents,
      professional advisers, contractors and
  Delegates,

            

    

     

    
      	
               
      

            	
              provided
      that, for the purposes of Conditions 4, 10.8, 10.10 and 12, the references
      to “agents” in paragraphs (A), (B) and (C) above shall not include any
      person to the extent acting as facility agent, security agent, fiscal
      agent, paying agent or calculation agent with respect to a facility
      agreement or debt instrument;

            

    

     

    “Requested Assets” has the
meaning given to it in Condition 4.45;

     

    “Requested Report” has the
meaning given to it in Condition 15.3;

     

    “Respondent” has the meaning
given to it in Condition 35.10;

     

    “Restricted Asset Information”
has the meaning given to it in Condition 42.33;

     

    “Restricted Conduit” has the
meaning given to it in Condition 4.24;

     

    “Restricted Securitisation” has
the meaning given to it in Condition 4.23;

     

    “Restructuring” has the meaning
given to it in Condition 5.18;

     

    “Restructuring Event” has the
meaning given to it in Condition 5.18;

     

    “Reversed Loss” has the meaning
given to it in Condition 6.26(B)(2);

     

    “Revolving Advance” has the
meaning given to it in Condition 6.29;

     

    “Revolving Facility” has the
meaning given to it in Condition 6.28;

     

    “Risk-Weighted Asset” has the
meaning given to it in Condition 28.8;

     

    “Rollover” has the meaning
given to it in Condition 6.31;

     

    “Rollover Asset” has the
meaning given to it in Condition 6.32;

     

    “Rollover Date” has the meaning
given to it in Condition 6.33;

     

    “Scheduled Service Day” has the
meaning given to it in Condition 40.16;

     

     

    
      
         

      

      
        274

        
          

        

      

      
         

      

    

     

     

    “Scheme” has the meaning given
to it in Condition 1.1;

     

    “Scheme Documents” means, with
respect to the Participant, these Conditions, the Accession Agreement and any
other document designated in writing as such by the Treasury and the
Participant;

     

    “Scheme Escalation Procedure”
has the meaning given to it in Condition 24.6;

     

    “Scheme Executive Team” has the
meaning given to it in Condition 23.1;

     

    “Scheme Head” has the meaning
given to it in Condition 22.1;

     

    “Scheme Information” means the
Information required to be included in (i) the Data Fields, (ii) the Quarterly
Statements and (iii) any Requested Reports, any Notification Reports and any
other reports or Information to be provided or delivered under the Scheme
Documents;

     

    “Scheme Personnel” has the
meaning given to it in Condition 28.3(B)(i);

     

    “Scheme Principles” has the
meaning given to it in Condition 2.3;

     

    “Scheme Statement” has the
meaning given to it in Condition 44.1;

     

    “Security” or “Security Interest” means a
mortgage, charge, pledge, lien or other security interest securing any
obligation of any person or any other agreement or arrangement having a similar
effect;

     

    “Selected Arbitrator” has the
meaning given to it in Condition 35.12(B);

     

    “Senior Executives” has the meaning given to it
in Condition 28.3(B)(iii);

     

    “Senior Obligation” has the
meaning given to it in Condition 5.25(A);

     

    “Service Agent” has the meaning
given to it in Condition 49.2(A);

     

    “Service Document” means a
notice, claim form, application notice, order, judgment or other document
relating to any Proceedings;

     

    “Shared Services” has the
meaning given to it in Condition 25.1;

     

    “Signing Date” has the meaning
given to it in the Accession Agreement;

     

    “SOC” has the meaning given to
it in Condition 21.1;

     

    “SOC Terms of Reference” has
the meaning given to it in Condition 21.3;

     

    “Solvent Obligor” has the
meaning given to it in Condition 5.16(A)(1);

     

     

    
      
         

      

      
        275

        
          

        

      

      
         

      

    

     

     

     

    “Specific Impairment” has the
meaning given to it in Condition 5.22;

     

    “Specified Obligations” has the
meaning given to it in Condition 31.5;

     

    “Stamp Duty” means any stamp,
documentary, registration or capital duty or tax (including stamp duty, stamp
duty reserve tax and any other similar duty or similar tax) and any fine,
penalty, charge, cost or interest relating thereto, and “Stamp Duties” shall be
construed accordingly;

     

    “State Aid Deed” means the deed
to be entered into between the Treasury and the Initial Parent which is
designated as the “State Aid Deed” pursuant to the Accession
Agreement;

     

    “Static IAS 39” has the meaning
given to it in Condition 4.25;

     

    “Static IFRS” has the meaning
given to it in Condition 4.25;

     

    “Step-In Assets” has the
meaning given to it in Condition 32.2;

     

    “Step-In Date” has the meaning
given to it in Condition 32.10(D);

     

    “Step-In Functions” has the
meaning given to it in Condition 32.6;

     

    “Step-In Manager” has the
meaning given to it in Condition 32.8;

     

    “Step-In Notice” has the
meaning given to it in Condition 32.10;

     

    “Step-In Objectives” has the
meaning given to it in Condition 32.5;

     

    “Step-In Rights” has the
meaning given to it in Condition 32.6;

     

    “Step-In Threshold Amount”
means the amount designated as such in the Accession Agreement;

     

    “Step-In Triggers” has the
meaning given to it in Condition 32.3;

     

    “Step-Out Date” has the meaning
given to it in Condition 32.25;

     

    “Step-Out Notice” has the
meaning given to it in Condition 32.25;

     

    “Sterling Equivalent” has the
meaning given to it in Condition 40.12;

     

    “Subordinated Obligation” has
the meaning given to it in Condition 5.25;

     

    “Subordination” has the meaning
given to it in Condition 5.25;

     

    “Subsidiary” has the meaning
given in section 1159 of the Companies Act 2006;

     

     

    
      
         

      

      
        276

        
          

        

      

      
         

      

    

     

     

     

    “Subsidiary Undertaking” has
the meaning given in section 1162 of the Companies Act 2006;

     

    “Substitute Assets” has the
meaning given to it in Condition 7.22(A)(ii);

     

    “Substituted Rights and
Obligations” has the meaning given to it in Condition 41.3;

     

    “Sudden Notification Statement”
has the meaning given to it in Condition 8.10;

     

    “Suspensory Event” has the
meaning given to it in Condition 31.3;

     

    “Tax” or “Taxes” means any tax and any
levy, impost, duty or other charge in the nature of taxation (whether of the
United Kingdom or elsewhere in the world) and any fine, penalty, charge, cost or
interest relating to any of the foregoing;

     

    “TCF Principles” means the principles,
rules, guidance, recommendations and commentary comprising the FSA’s treating
customers fairly initiative, including Principle 6 (Customers’ interests: a firm must
pay due regard to the interests of its customers and treat them fairly)
and the FSA’s six TCF outcomes, as such requirements are interpreted and
applied by the FSA from time to time, whether generally or in any particular
circumstances;

     

    “Terminable Event” has the
meaning given to it in Condition 31.4;

     

    “Third Party” has the meaning
given to it in Condition 46.1;

     

    “Third Party Interests” has the
meaning given to it in Condition 7.22(A);

     

    “Third Party Provisions” has
the meaning given to it in Condition 46.1;

     

    “Transfer” has the meaning
given to it in Condition 41.1;

     

    “Transitional Exceptions
Document” means the document designated as such pursuant to the Accession
Agreement;

     

    “Transitional Period” has the
meaning given to it in the Accession Agreement;

     

    “Treasury” means the
Commissioners of Her Majesty’s Treasury;

     

    “Treasury Account” has the
meaning given to it in Condition 8.6;

     

    “Treasury Confidential
Information” has the meaning given to it in Condition 42.6;

     

    “Treasury Monitors” has the
meaning given to it in Condition 20.5;

     

    “Treasury Observers” has the
meaning given to it in Condition 21.5;

     

    “Treasury Permitted Purposes”
has the meaning given to it in Condition 42.7;

     

     

    
      
         

      

      
        277

        
          

        

      

      
         

      

    

     

     

     

    “Treasury Solicitor” has the
same meaning as in the Treasury Solicitor Act 1876;

     

    “Treasury Step-In Costs” has
the meaning given to it in Condition 9.3;

     

    “Trigger Date” has the meaning
given to it in Condition 5.1;

     

    “Triggered Asset” has the
meaning given to it in Condition 5.1;

     

    “Triggers” has the meaning
given to it in Condition 5.2;

     

    "Ultimate Parent" means, in
respect of an Undertaking, the ultimate Parent Undertaking of that
Undertaking;

     

    “Undertaking" has the meaning
given in section 1161(1) of the Companies Act 2006;

     

    “Undertaking Disposal” means
the sale, transfer or other disposal of any Undertaking or any shares or other
interest in any Undertaking;

     

    “United Kingdom” means the
United Kingdom of Great Britain and Northern Ireland;

     

    “Unprotected Asset” has the
meaning given to it in Condition 6.40;

     

    “Updating Condition” has the
meaning given to it in Condition 47.1(C);

     

    “VAT” means (i) any Tax imposed
in conformity with the council directive of 28 November 2006 on the common
system of value added tax (EC Directive 2006/112) (including, in relation to the
United Kingdom, any value added tax imposed by the Value Added Tax Act 1994
and/or any legislation or regulations supplemental thereto) and (ii) any other
Tax of a similar nature (whether imposed in a Member State of the European Union
in substitution for or in addition to the Tax mentioned above or imposed
elsewhere);

     

    “Vertical Slice” has the
meaning given to that term in Condition 4.32;

     

    “Withdrawal Determination
Period” has the meaning given to it in Condition 4.36;

     

    “WM Company” has the meaning
given to it in Condition 40.16;

     

    “WM/Reuters Service” has the
meaning given to it in Condition 40.16;

     

    “Working Hours” means 9.30 a.m.
to 5.30 p.m. on a Business Day; and

     

    “Writedown” has the meaning
given to it in Condition 5.7.

     

     

    
      
         

      

      
        278

        
          

        

      

      
         

      

    

     

     

    
      
        
          	
                  57. 

                	
                  INTERPRETATION

                

        

      

    

     

    
      	
              57.1

            	
              As used in
      these Conditions and in any other Scheme Documents and any certificate or
      other document made or delivered pursuant to any of them, save where the
      context otherwise requires:

            

    

     

    
      	
               
      

            	
              (A)

            	
              any
      references to an “Accession Agreement”
      shall be deemed to include any schedules, annexes and appendices to the
      Accession Agreement and any documentation to be produced pursuant to
      it;

            

    

     

    
      	
               
      

            	
              (B)

            	
              the word
      “company” shall be
      construed so as to include any corporation or other body corporate,
      wherever and however incorporated or
  established;

            

    

     

    
      	
               
      

            	
              (C)

            	
              the word
      “conduct” shall be
      construed so as to include any decision, action, omission, activity or
      other conduct;

            

    

     

    
      	
               
      

            	
              (D)

            	
              references to
      the “consolidated balance
      sheet of the Participant’s Group” are to the consolidated balance
      sheet of the Group of which the Participant is a
  member;

            

    

     

    
      	
               
      

            	
              (E)

            	
              any reference
      to the “earlier
      of” or to the “later of” two or more
      dates (and any other like expression) shall, in a case where all such
      dates are identical, be deemed to refer to any one of such identical
      dates;

            

    

     

    
      	
               
      

            	
              (F)

            	
              the words
      “include”, “includes” and “including” shall be
      deemed to be followed by the phrase “without
  limitation”;

            

    

     

    
      	
               
      

            	
              (G)

            	
              any reference
      to the “lesser of”
      or to the “greater
      of” two or more amounts (and any other like expression) shall, in a
      case where all such amounts are identical, be deemed to refer to any one
      of such identical amounts;

            

    

     

    
      	
               
      

            	
              (H)

            	
              any reference
      to a “person”
      shall be construed so as to include any individual, firm, company,
      corporation, body corporate, government, state or agency of a state, local
      or municipal authority or governmental body or any joint venture,
      association or partnership (whether or not having separate legal
      personality);

            

    

     

    
      	
               
      

            	
              (I)

            	
              references to
      any gender include the other
genders;

            

    

     

    
      	
               
      

            	
              (J)

            	
              subject to
      Condition 39, any reference to a matter to which the Treasury “agrees”, “approves” or “consents” (or any
      grammatical variation thereof) shall be construed as references to the
      Treasury so agreeing, approving or consenting in
  writing;

            

    

     

    
      	
               
      

            	
              (K)

            	
              any reference
      to Information being “produced” or “delivered” (and
      grammatical variations thereof) to the Treasury shall be construed in
      accordance with Condition 14.4;

            

    

     

     

    
      
         

      

      
        279

        
          

        

      

      
         

      

    

     

     

     

    
      	
               
      

            	
              (L)

            	
              headings and
      sub-headings in Scheme Documents are included for ease of reference only
      and shall not affect the interpretation of Scheme
    Documents;

            

    

     

    
      	
               
      

            	
              (M)

            	
              references to
      Conditions, paragraphs, sub-paragraphs and Parts are to Conditions,
      paragraphs, sub-paragraphs and Parts of these
  Conditions;

            

    

     

    
      	
               
      

            	
              (N)

            	
              references to
      any English legal term for any action, remedy, method of judicial
      proceeding, legal document, legal status, court, official or any legal
      concept or thing shall in respect of any jurisdiction other than England
      be treated as including what most nearly approximates in that jurisdiction
      to the English legal term;

            

    

     

    
      	
               
      

            	
              (O)

            	
              the rule of
      interpretation known as the ejusdem generis rule
      shall not apply and accordingly general words introduced by the word
      “other” shall not be given a restrictive meaning by reason of the fact
      that they are preceded by words indicating a particular class of acts,
      matters or things;

            

    

     

    
      	
               
      

            	
              (P)

            	
              references to
      times are references to London
time;

            

    

     

    
      	
               
      

            	
              (Q)

            	
              any reference
      to a “day”
      (including within the phrase “Business Day”) shall mean a period of
      24 hours running from (and including) midnight to (but excluding) the
      next midnight;

            

    

     

    
      	
               
      

            	
              (R)

            	
              any reference
      to any statute, statutory provision or rules or regulations made
      thereunder shall be construed as a reference to the same as it may have
      been, or may from time to time be, amended, modified, re-enacted or
      replaced;

            

    

     

    
      	
               
      

            	
              (S)

            	
              a reference
      to any document is a reference to that document as amended, varied or
      supplemented at any time; and

            

    

     

    
      	
               
      

            	
              (T)

            	
              any reference
      to a Government Entity includes any successor to such Government Entity or
      any other Government Entity to which some or all of its powers or
      functions may from time to time be
transferred.

            

    

     

    
      	
              57.2

            	
              For the
      purposes of Parts 4 to 10 (inclusive) of these Conditions, references to
      “Covered Assets” shall be deemed to include Non-Cash Realisations unless
      the context requires otherwise.

            

    

     

    
      	
              57.3

            	
              If and to the
      extent any asset, receipt, realisation, recovery, right, interest or
      benefit, made, realised, received, recovered or derived by any Applicable
      Entity would give rise to a Realisation but for the operation of Condition
      7.10(C), from and including the date of the relevant intra-group
      transaction any party to such intra-group transaction that is not a member
      of the Participant's Group shall, for the purposes of these Conditions
      (including Part 3), be deemed to be a member of the Participant's Group
      unless the Treasury in its sole discretion determines
      otherwise.

            

    

     

     

    
      
         

      

      
        280

        
          

        

      

      
         

      

    

     

     

     

    
      	
              57.4

            	
              Each
      Government Entity and each Government Owned Entity shall be deemed not to
      be an Affiliate, Associated Company, Group Member, Parent Undertaking or
      Ultimate Parent of or in relation to the Participant or any other member
      of the Participant’s Group.

            

    

     

    
      	
              57.5

            	
              Interest
      shall (unless otherwise stated) accrue from day to day and be calculated
      on the basis of the actual number of days elapsed and a year of 365
      days.

            

    

     

     

    281

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