Document:

Exhibit 4.2

 

Execution Version

 

 

 

 

THE
ROYAL BANK OF SCOTLAND GROUP PLC

 

as Company,

 

and

 

THE
BANK OF NEW YORK MELLON ACTING THROUGH ITS

LONDON BRANCH

 

as Trustee

 

 

 

THIRD
SUPPLEMENTAL INDENTURE

 

dated as
of August 15, 2016

 

to

 

CONTINGENT
CONVERTIBLE SECURITIES INDENTURE

 

dated as
of August 10, 2015

 

in
respect of

 

$2,650,000,000
8.625% Perpetual Subordinated Contingent Convertible 

Additional
Tier 1 Capital Notes

 

 

     

     

    

TABLE
OF CONTENTS

 

 

Page

 

 

	Article 1
	Definitions
	 
	Section 1.01.  Definition of Terms	2
	Section 1.02.  Separability Clause	18
	Section 1.03.  Benefits of Instrument	18
	Section 1.04.  Relation to Contingent Convertible
    Securities Indenture	18
	 	 
	Article
    2	 
	Amendments To The Contingent Convertible
    Securities Indenture	 
	Section 2.01.  Amended Definitions	19
	Article 3
	The Contingent Capital Notes
	 
	Section 3.01.  Form, Title, Terms and Payments	19
	Section 3.02.  Interest	20
	Section 3.03.  Interest Payments Discretionary	21
	Section 3.04.  Restrictions on Interest Payments	22
	Section 3.05.  Agreement to Interest Cancellation	23
	Section 3.06.  Notice of Interest Cancellation	23
	Section 3.07.  Payment of Principal, Interest and
    Other Amounts	23
	Section 3.08.  Optional Redemption	24
	Section 3.09.  Optional Tax Redemption	24
	Section 3.10.  Capital Disqualification Event Redemption	25
	Section 3.11.  Optional Repurchase	25
	Section 3.12.  Pre-conditions to Redemptions and Repurchases	26
	Section 3.13.  Notice of Redemption	27
	Section 3.14.  Cancelled Interest Not Payable upon
    Redemption	28
	Section 3.15.  Automatic Conversion upon Conversion
    Trigger Event	28
	Section 3.16.  Settlement Shares	32
	Section 3.17.  Settlement Shares Offer	33
	Section 3.18.  Settlement Procedure	34
	Section 3.19.  Failure to Deliver a Settlement Notice	36
	Section 3.20.  Delivery of ADSs	37
	Section 3.21.  Agreement with Respect to Exercise
    of U.K. Bail-in Power	37
	 	 
	Article 4
	Anti-Dilution
	 
	Section 4.01.  Adjustment of Conversion Price	40
	Section 4.02.  Takeover Event	45
	Section 4.03.  Agreement with Respect to a Non-Qualifying
    Takeover Event	47

 

 

    i 

     

    

 

	Article 5
	Enforcement Events and Remedies
	 
	Section 5.01.  Winding-up or Administration Event	48
	Section 5.02.  Non-Payment Event	48
	Section 5.03.  Limited Remedies for Breach of Performance
    Obligations	49
	Section 5.04.  No Other Remedies and Other Terms	49
	Section 5.05.  Waiver of Past Defaults	50
	 	 
	Article 6
	Subordination
	 
	Section 6.01.  Subordination to Claims of Senior Creditors	51
	Section 6.02.  No Set-Off	52
	 	 
	Article 7
	Satisfaction and Discharge
	 
	Section 7.01.  Satisfaction and Discharge of Indenture	53
	 	 
	Article 8
	Supplemental Indentures
	 
	Section 8.01.  Amendments or Supplements without Consent
    of Holders	54
	Section 8.02.  Amendments or Supplements With Consent
    of Holders	54
	Section 8.03.  Holders’ Approval of Amendments	54
	Section 8.04.  PRA Consent	54
	 	 
	Article 9
	Amendments to the Contingent Convertible Securities Indenture applicable to the Contingent Capital Notes only
	 
	Section 9.01.  Additional Amounts	55
	 	 
	Article 10
	Miscellaneous
	 
	Section 10.01.  Effect of Supplemental Indenture	56
	Section 10.02.  Other Documents to Be Given to the
    Trustee	57
	Section 10.03.  Notices to, and Consents Required
    from, the PRA to Be Given to the Trustee	57
	Section 10.04.  Survival	57
	Section 10.05.  Confirmation of Indenture	57
	Section 10.06.  Concerning the Trustee	57
	Section 10.07.  Governing Law	58
	Section 10.08.  Entire Agreement	58

 

    ii 

     

    

 

	Section 10.09.  Counterparts	58

 

 

    iii 

     

    

 

This THIRD
SUPPLEMENTAL INDENTURE (“Third Supplemental Indenture”), dated as of August 15, 2016, between, THE ROYAL BANK
OF SCOTLAND GROUP PLC, a company incorporated in Scotland with registered number SC045551, as issuer (the “Company”),
having its registered office at 36 St Andrew Square, Edinburgh EH2 2YB, United Kingdom and THE BANK OF NEW YORK MELLON, acting
through its London Branch, a banking corporation duly organized and existing under the laws of the State of New York as trustee
under the Contingent Convertible Securities Indenture (the “Trustee”), having its Corporate Trust Office at
One Canada Square, London E14 5AL, United Kingdom.

 

WITNESSETH:

 

WHEREAS,
the Company and the Trustee have executed and delivered a Contingent Convertible Securities Indenture, dated as of August 10,
2015 (the “Contingent Convertible Securities Indenture” and, together with this Third Supplemental Indenture,
the “Indenture”), to provide for the issuance of the Company’s Contingent Convertible Securities (the
“Securities”);

 

WHEREAS,
the Company hereto desires to issue a series of Securities to be known as the $2,650,000,000 8.625% Perpetual Subordinated Contingent
Convertible Additional Tier 1 Capital Notes (the “Contingent Capital Notes”);

 

WHEREAS,
the parties hereto desire to establish that the Contingent Capital Notes shall be issued in the form of one of more Global Securities
substantially in the form of Exhibit A to this Third Supplemental Indenture pursuant to Sections 2.01 and 3.01 of the Contingent
Convertible Securities Indenture;

 

WHEREAS,
Section 9.01(f) of the Contingent Convertible Securities Indenture permits the Company and the Trustee to enter into a supplemental
indenture to establish the forms or terms of Securities of any series as permitted under Sections 2.01 and 3.01 of the Contingent
Convertible Securities Indenture without the consent of Holders;

 

WHEREAS,
Section 9.01(d) of the Contingent Convertible Securities Indenture permits the Company and the Trustee to add to, change or eliminate
any provisions of the Contingent Convertible Securities Indenture, subject to certain conditions, without the consent of Holders;

 

WHEREAS,
this Third Supplemental Indenture shall amend and supplement the Contingent Convertible Securities Indenture but only with respect
to the Contingent Capital Notes; to the extent the terms of the Contingent Convertible Securities Indenture are inconsistent with
such provisions of this Third Supplemental Indenture, the terms of this Third Supplemental Indenture shall govern, but only with
respect to the Contingent Capital Notes;

 

WHEREAS,
there are no debt securities outstanding of any series created prior to the execution of this Third Supplemental Indenture which
are entitled to the benefit of the provisions set forth herein or would be adversely affected by such provisions;

 

     

     

    

WHEREAS,
the entry into of this Third Supplemental Indenture has been authorized pursuant to a Board Resolution, as required by Section
9.01 of the Contingent Convertible Securities Indenture; and

 

WHEREAS,
the Company has requested and does hereby request that the Trustee execute and deliver this Third Supplemental Indenture, and
whereas all actions required by the Company to be taken in order to make this Third Supplemental Indenture a valid, binding and
enforceable instrument in accordance with its terms, have been taken and performed, and the execution and delivery of this Third
Supplemental Indenture has been duly authorized in all respects,

 

NOW, THEREFORE,
the Company and the Trustee mutually covenant and agree as follows:

 

Article
1

Definitions

 

Section 1.01.Definition
of Terms. For all purposes of this Third Supplemental Indenture:

 

(a)a
term defined anywhere in this Third Supplemental Indenture has the same meaning throughout;

 

(b)capitalized
terms used herein but not otherwise defined shall have the meanings assigned to them in the Contingent Convertible Securities
Indenture;

 

(c)the
singular includes the plural and vice versa;

 

(d)headings
are for convenience of reference only and do not affect interpretation;

 

(e)for
purposes of this Third Supplemental Indenture and the Contingent Convertible Securities Indenture, the term “series”
shall mean the series of Securities designated as the Contingent Capital Notes as defined in this Third Supplemental Indenture;

 

(f)the
words “hereof”, “herein” and “hereunder” and words of similar import,
when used in this Third Supplemental Indenture, refer to this Third Supplemental Indenture as a whole and not to any particular
provision of this Third Supplemental Indenture;

 

(g)the
terms “dollars” and “$” mean United States Dollars;

 

(h)the
terms “pounds sterling” and “£” mean British pounds sterling;

 

(i)references
herein to a specific Section, Article or Exhibit refer to Sections or Articles of, or an Exhibit to, this Third Supplemental Indenture;

 

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(j)wherever
the words “include”, “includes” or “including” are used in this Third
Supplemental Indenture, they shall be deemed to be followed by the words “without limitation”;

 

(k)the
use of “or” is not intended to be exclusive unless expressly indicated otherwise;

 

(l)for
purposes of this Third Supplemental Indenture, references therein to any act or statute or any provision of any act or statute
shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation
made thereunder or under such modification or re-enactment; and

 

(m)references
to any issue or offer or grant to Shareholders “as a class” or “by way of rights” shall be taken to be
references to an issue or offer or grant to all or substantially all Shareholders, other than Shareholders to whom, by reason
of the laws of any territory or requirements of any recognized regulatory body or any other stock exchange or securities market
in any territory or in connection with fractional entitlements, it is determined not to make such issue or offer or grant.

 

“Accrued
Interest” means any accrued and unpaid interest on the Contingent Capital Notes, excluding any interest which has been
cancelled or deemed to be cancelled in accordance with the terms of this Third Supplemental Indenture.

 

“Acquirer”
means the person which, following a Takeover Event, controls the Company.

 

“ADS”
means the American Depository Shares which are the subject of the ADS Deposit Agreement.

 

“ADS
Deposit Agreement” means the Amended and Restated Deposit Agreement among the Company, The Bank of New York Mellon and
all holders from time to time of American Depositary Receipts issued thereunder.

 

“ADS
Depository” means The Bank of New York Mellon, as the depositary under the Company’s ADS Deposit Agreement.

 

“Alternative
Consideration” means, in respect of each Contingent Capital Note and as determined by the Company (i) if all of the
Settlement Shares to be issued and delivered following Automatic Conversion are sold in the Settlement Shares Offer, the pro rata
share of the cash proceeds from the sale of such Settlement Shares attributable to such Contingent Capital Notes translated from
sterling into U.S. dollars at a then-prevailing exchange rate as determined by the Settlement Share Depository (less the pro rata
share of any foreign exchange transaction costs and an amount equal to the pro rata share of any taxes and duties (including,
without limitation, any stamp duty, stamp duty reserve tax, or any other capital, issue, transfer, registration, financial transaction
or documentary tax or duty) that may arise or be paid in connection with the issue and delivery of Settlement Shares to the Settlement
Share Depository pursuant to the Settlement Shares Offer); (ii) if some but not all of such Settlement Shares to be issued

 

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and
delivered upon Automatic Conversion are sold in the Settlement Shares Offer, (x) the pro rata share of the cash proceeds from
the sale of such Settlement Shares attributable to such Contingent Capital Notes translated from sterling into U.S. dollars at
a then-prevailing exchange rate as determined by the Settlement Share Depository (less the pro rata share of any foreign exchange
transaction costs and an amount equal to the pro rata share of any taxes and duties (including, without limitation, any stamp
duty, stamp duty reserve tax, or any other capital, issue, transfer, registration, financial transaction or documentary tax or
duty) that may arise or be paid in connection with the issue and delivery of Settlement Shares to the Settlement Share Depository
pursuant to the Settlement Shares Offer) and (y) the pro rata share of such Settlement Shares not sold pursuant to the Settlement
Shares Offer attributable to such Contingent Capital Notes rounded down to the nearest whole number of Settlement Shares; and
(iii) if no Settlement Shares are sold in the Settlement Shares Offer, the relevant number of Settlement Shares that would have
been received had the Company not elected that the Settlement Share Depository should carry out a Conversion Shares Offer.

 

“Approved
Entity” means a body corporate that is incorporated or established under the laws of an OECD member state and which,
on the occurrence of the Takeover Event, has in issue Relevant Shares.

 

“Assets”
means the unconsolidated gross assets of the Company, as shown in the latest published audited balance sheet of the Company, adjusted
for subsequent events in such manner as the directors of the Company may determine.

 

“Automatic
Conversion” means the irrevocable and automatic release of all of the Company’s obligations under the Contingent
Capital Notes in consideration of the Company’s issuance and delivery of the Settlement Shares at the Conversion Price on
the Conversion Date to the Settlement Share Depository (on behalf of the Holders and Beneficial Owners) in accordance with the
terms of the Contingent Capital Notes or the Indenture.

 

“Banking
Act” means the U.K. Banking Act 2009, as has been or may be amended from time to time, whether pursuant to the U.K.
Financial Services (Banking Reform) Act 2013, secondary legislation or otherwise;

 

“Beneficial
Owners” shall mean (a) with respect to Global Securities, the owners of beneficial interests in the Securities prior
to the occurrence of the Final Cancellation Date and (b) with respect to definitive Securities, the Holders in whose names the
Securities are registered in the Contingent Convertible Security Register.

 

“Business
Day” means any weekday, other than one on which banking institutions are authorized or obligated by law, regulation
or executive order to close in London, England, or in New York City.

 

“Calculation
Agent” means The Royal Bank of Scotland plc, or its successor appointed by the Company pursuant to the Calculation Agent
Agreement between the Company and The Royal Bank of Scotland plc, dated as of the date hereof.

 

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“Cancellation
Date” means (i) with respect to any Contingent Capital Note for which a Settlement Notice is received by the Settlement
Share Depository on or before the Notice Cut-off Date, the applicable Settlement Date and (ii) with respect to any Contingent
Capital Note for which a Settlement Notice is not received by the Settlement Share Depository on or before the Notice Cut-off
Date, the Final Cancellation Date.

 

A “Capital
Disqualification Event” shall occur if the Company determines that, as a result of any amendment to, or change in the
regulatory classification of the Contingent Capital Notes under the Capital Regulations (or official interpretation thereof),
in any such case becoming effective on or after the Issue Date, the whole or part of the Contingent Capital Notes are, or are
likely to be, excluded from the Tier 1 Capital (as defined in the Capital Regulations) of the Company and/or the Tier 1 Capital
of the Regulatory Group.

 

“Cash
Component” means that portion, if any, of the Alternative Consideration consisting of cash.

 

“Cash
Dividend” means any dividend or distribution in respect of the ordinary shares which is to be paid or made to the Shareholders
as a class in cash (in whatever currency) and however described and whether payable out of share premium account, profits, retained
earnings or any other capital or revenue reserve or account, and including a distribution or payment to the Shareholders upon
or in connection with a reduction of capital.

 

“CET1
Capital” means the sum, expressed in pounds sterling, of all amounts that constitute Common Equity Tier 1 Capital of
the Regulatory Group, less any deductions from Common Equity Tier 1 Capital of the Regulatory Group required to be made, in each
case as calculated by the Company on a consolidated and fully loaded basis in accordance with the Capital Regulations applicable
to the Regulatory Group as at that point in time (which calculation shall be binding on the Trustee and the Holders).

 

“CET1
Ratio” means the ratio of CET1 Capital to Risk Weighted Assets expressed as a percentage and on the basis that all measures
used in such calculation shall be calculated on a fully loaded basis.

 

“commencement”
means, in relation to the winding up of the Company, the date on which such winding up commences, or is deemed to commence,
determined in accordance with Section 86 or 129 of the Insolvency Act 1986.

 

“Common
Equity Tier 1 Capital” shall have the meaning ascribed to such term in CRD IV (as the same may be amended or replaced
from time to time) as interpreted and applied in accordance with the Capital Regulations then applicable to the Regulatory Group.

 

“control”
means, for the purposes of the definition of a Takeover Event:

 

		(a)	the acquisition or holding of legal
                                         or beneficial ownership of more than 50% of the issued ordinary shares of the Company;
                                         or

 

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		(b)	the right to appoint and/or remove
                                         all or the majority of the members of the Board of Directors of the Company, whether
                                         obtained directly or indirectly and whether obtained by ownership of share capital, contract
                                         or otherwise.

 

“Conversion
Date” means the date on which the Automatic Conversion shall take place as specified in the Conversion Trigger Notice,
which shall occur without delay upon, and in any event within one month of, the occurrence of the Conversion Trigger Event.

 

“Conversion
Price” means $2.284, subject to the anti-dilution provisions set forth under ‎Article
4.

 

“Conversion
Trigger Event” means any point in time at which the CET1 Ratio is less than 7.00%.

 

“Conversion
Trigger Notice” means the written notice to be delivered by the Company to the Trustee and the Holders of the Contingent
Capital Notes in accordance with Section 1.06 of the Contingent Convertible Securities Indenture and in the form of Exhibit B
attached thereto following the occurrence of the Conversion Trigger Event. The date on which the Conversion Trigger Notice shall
be deemed to have been given shall be the date on which it is dispatched by the Company to DTC (or if the Contingent Capital Notes
are held in definitive form, to the Holders of the Contingent Capital Notes directly). The Conversion Trigger Notice shall specify
(i) that the Conversion Trigger Event has occurred and the CET1 Ratio resulting in such Conversion Trigger Event, (ii) the Conversion
Date, (iii) the then-prevailing Conversion Price (which Conversion Price shall remain subject to any subsequent adjustment pursuant
to ‎Article 4 up to the Conversion Date), (iv) the contact
details of any Settlement Share Depository, or, if the Company has been unable to appoint a Settlement Share Depository, such
other arrangements for the issuance and/or delivery of the Settlement Shares, or, if the Holder elects, ADSs or any Alternative
Consideration to the Holders as it shall consider reasonable in the circumstances, (v) that the Company has the option, at its
sole and absolute discretion, to elect that a Settlement Shares Offer be conducted and that, if the Company so elects, it will
issue a Settlement Shares Offer Notice within ten Business Days following the Conversion Date notifying the Holders of its election
and (vi) the Suspension Date and that the Contingent Capital Notes shall remain in existence for the sole purpose of evidencing
the Holder’s right to receive Settlement Shares, or, if the Holder elects, ADSs or the Alternative Consideration, as applicable,
from the Settlement Share Depository and that the Contingent Capital Notes may continue to be transferable until the Suspension
Date.

 

“CRD
IV” means (i) the CRD IV Directive and the CRD IV Regulation to the extent applicable to the Issuer or the Regulatory
Group and (ii) the Capital Regulations.

 

“CRD
IV Directive” means Directive 2013/36/EU of the European Parliament and of the Council of June 26, 2013, on access to
the activity of credit institutions and the prudential supervision of credit institutions and investment firms amending Directive

 

     6

     

    

2002/87/EC
and repealing Directives 2006/48/EC and 2006/49/EC, and any successor or amending directive.

 

“CRD
IV Regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of June 26, 2013, on
prudential requirements for credit institutions and investment firms amending Regulation (EU) No. 648/2012, and any successor
or amending regulation.

 

“CREST”
means the relevant system, as defined in the CREST Regulations, or any successor clearing system.

 

“CREST
Regulations” means the Uncertificated Securities Regulations 2001 (SI 2001 No. 01/378), as amended.

 

“Current
Market Price” means in respect of an ordinary share at a particular date, the average of the daily Volume Weighted Average
Price of an ordinary share on each of the five (5) consecutive Dealing Days ending on the Dealing Day immediately preceding such
date; provided that, if at any time during the said five (5) Dealing Day period the Volume Weighted Average Price shall have been
based on a price ex-dividend (or ex- any other entitlement) and during some other part of that period the Volume Weighted Average
Price shall have been based on a price cum-dividend (or cum-any other entitlement), then:

 

(i)if
the ordinary shares to be created, issued, transferred or delivered do not rank for the dividend (or entitlement thereto) in question,
the Volume Weighted Average Price on the dates on which the ordinary shares shall have been based on a price cum-dividend (or
cum- any other entitlement), shall, for the purposes of this definition, be deemed to be the amount thereof reduced by an amount
equal to the Fair Market Value of any such dividend or entitlement per ordinary share as at the date of first public announcement
relating to such dividend or entitlement, in any such case, determined on a gross basis and disregarding any withholding or deduction
required to be made on account of tax, and disregarding any associated tax credit; or

 

(ii)if
the ordinary shares to be created, issued, transferred or delivered do rank for the dividend (or entitlement) in question, the
Volume Weighted Average Price on the dates on which the ordinary shares shall have been based on a price ex-dividend (or ex- any
other entitlement) shall, for the purposes of this definition, be deemed to be the amount thereof increased by an amount equal
to the Fair Market Value of any such dividend or entitlement per ordinary share as at the date of first public announcement relating
to such dividend or entitlement, in any such case, determined on a gross basis and disregarding any withholding or deduction required
to be made on account of tax, and disregarding any associated tax credit;

 

and provided
further that, if on each of the said five (5) Dealing Days, the Volume Weighted Average Price shall have been based on a price
cum-dividend (or cum- any other entitlement) in respect of a dividend (or other entitlement) which has been declared or announced
but the ordinary shares to be issued and delivered do not rank for that

 

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dividend
(or other entitlement), the Volume Weighted Average Price on each of such dates shall, for the purposes of this definition, be
deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of any such dividend or entitlement per ordinary
share as at the date of first public announcement relating to such dividend or entitlement, in any such case, determined on a
gross basis and disregarding any withholding or deduction required to be made on account of tax, and disregarding any associated
tax credit;

 

and provided
further that, if the Volume Weighted Average Price of an ordinary share is not available on one or more of the said five (5) Dealing
Days, (disregarding for this purpose the proviso to the definition of Volume Weighted Average Price), then the average of such
Volume Weighted Average Prices which are available in that five (5) Dealing Day period shall be used (subject to a minimum of
two such prices), and if only one, or no, such Volume Weighted Average Price is available in the relevant period, the Current
Market Price shall be determined in good faith by an Independent Financial Adviser (acting as an expert).

 

“Dealing
Day” means a day on which the Relevant Stock Exchange or relevant stock exchange or securities market is open for business
and on which ordinary shares, Other Securities, options, warrants or other rights (as the case may be) may be dealt in (other
than a day on which the Relevant Stock Exchange or relevant stock exchange or securities market is scheduled to or does close
prior to its regular weekday closing time).

 

“Distributable
Items” means subject as otherwise defined in, and/or interpreted in accordance with, the Capital Regulations applicable
to the Company from time to time, the amount of the Company’s profits at the end of the latest financial year plus any profits
brought forward and reserves available for that purpose before distributions to holders of the Contingent Capital Notes, any Parity
Securities and Junior Securities less any losses brought forward, profits which are non-distributable pursuant to the Companies
Act 2006 (U.K.) (the “Companies Act”) or any other provisions of English law from time to time applicable to
the Company or the Company’s Memorandum and Articles of Association from time to time (together, the “Articles
of Association”) and sums placed to non-distributable reserves in accordance with the Companies Act or other provisions
of English law from time to time applicable to the Company or the Articles of Association, those losses and reserves being determined
on the basis of the Company’s individual accounts and not on the basis of the Company’s consolidated accounts.

 

“DTC”
means The Depository Trust Company, or any successor clearing system.

 

“EEA
Regulated Market” means a market as defined by Article 4.1(14) of Directive 2004/39/EC of the European Parliament and
of the Council on markets in financial instruments (as amended from time to time).

 

“Enforcement
Event” means any of (i) a Winding-up or Administration Event prior to the occurrence of a Conversion Trigger Event,
(ii) a Non-Payment Event, or (iii) a breach of a Performance Obligation.

 

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“Equity
Share Capital” has the meaning provided in Section 548 of the Companies Act 2006.

 

“Extraordinary
Dividend” means any Cash Dividend that is expressly declared by the Company to be a capital distribution, extraordinary
dividend, extraordinary distribution, special dividend, special distribution or return of value to its Shareholders as a class
or any analogous or similar term, in which case the Extraordinary Dividend shall be such Cash Dividend.

 

“Fair
Market Value” means, with respect to any property on any date, the fair market value of that property as determined
by an Independent Financial Adviser in good faith, provided that (i) the Fair Market Value of a Cash Dividend shall be the amount
of such Cash Dividend; (ii) the Fair Market Value of any other cash amount shall be the amount of such cash; (iii) where Other
Securities, options, warrants or other rights are publicly traded on a stock exchange or securities market of adequate liquidity
(as determined in good faith by an Independent Financial Adviser), the Fair Market Value (a) of such Other Securities shall equal
the arithmetic mean of the daily Volume Weighted Average Prices of such Other Securities and (b) of such options, warrants or
other rights shall equal the arithmetic mean of the daily closing prices of such options, warrants or other rights, in the case
of (a) and (b), during the period of five (5) Dealing Days on the relevant stock exchange or securities market commencing on such
date (or, if later, the first such Dealing Day such Other Securities, options, warrants or other rights are publicly traded) or
such shorter period as such Other Securities, options, warrants or other rights are publicly traded; (iv) where Other Securities,
options, warrants or other rights are not publicly traded on a stock exchange or securities market of adequate liquidity (as aforesaid),
the Fair Market Value of such Other Securities, options, warrants or other rights shall be determined in good faith by an Independent
Financial Adviser, on the basis of a commonly accepted market valuation method and taking account of such factors as it considers
appropriate, including the market price per ordinary share, the dividend yield of an ordinary share, the volatility of such market
price, prevailing interest rates and the terms of such Other Securities, options, warrants or other rights, including as to the
expiry date and exercise price (if any) thereof. Such amounts shall, in the case of (i) above, be translated into the Relevant
Currency (if declared, announced, made, paid or payable in a currency other than the Relevant Currency, and if the relevant dividend
is payable at the option of the Company or a shareholder in any currency additional to the Relevant Currency, the relevant dividend
shall be treated as payable in the Relevant Currency) at the rate of exchange used to determine the amount payable to shareholders
who were paid or are to be paid or are entitled to be paid the Cash Dividend in the Relevant Currency; and, in any other case,
shall be translated into the Relevant Currency (if expressed in a currency other than the Relevant Currency) at the Prevailing
Rate on that date. In addition, in the case of (i) and (ii) above, the Fair Market Value shall be determined on a gross basis
and disregarding any withholding or deduction required to be made on account of tax, and disregarding any associated tax credit.

 

“Final
Cancellation Date” means the date, as specified in the Settlement Request Notice, on which the Contingent Capital Notes
in relation to which no Settlement Notice has been received by the Settlement Share Depository on or before the Notice Cut-off

 

     9

     

    

Date
shall be cancelled, which date may be up to twelve (12) Business Days following the Notice Cut-off Date.

 

“First
Call Date” means August 15, 2021.

 

“fully
loaded” means, in relation to a measure that is presented or described as being on a “fully loaded basis”
that such measure is calculated in accordance with the PRA Rulebook CRR Firms Instrument 2013 (as may be amended from time to
time).

 

“Governmental
Entity” means (i) the United Kingdom Government, (ii) an agency of the United Kingdom Government or (iii) a Person or
entity (other than a body corporate) controlled by the United Kingdom Government or any such agency referred to in clause (ii)
of this definition. If the Company is then organized in another jurisdiction, the references to “United Kingdom Government”
shall be read as references to the government of such other jurisdiction.

 

“Holder”
means a Person in whose name a Contingent Capital Note in global or definitive form is registered in the Contingent Convertible
Security Register.

 

“Independent
Financial Adviser” means an independent financial institution of international repute appointed by the Company at its
own expense.

 

“Interest
Payment Date” means each of March 31, June 30, September 30 and December 31 of each year, commencing on September 30,
2016.

 

“Issue
Date” means August 15, 2016, being the date of the initial issue of the Contingent Capital Notes.

 

“Junior
Securities” means (i) any ordinary shares or other securities of the Company ranking, or expressed to rank, junior to
the Contingent Capital Notes in a Winding-up or Administration Event and/or (ii) any securities issued by any other member of
the Group where the terms of such securities benefit from a guarantee or support agreement entered into by the Company which ranks,
or is expressed to rank, junior to the Contingent Capital Notes in a Winding-up or Administration Event.

 

“Liabilities”
means the unconsolidated gross liabilities of the Company, as shown in the latest published audited balance sheet of the Company,
adjusted for contingent liabilities and prospective liabilities and for subsequent events in such manner as the directors of the
Company may determine.

 

“Mid-Market
Swap Rate” means the mid-market U.S. dollar swap rate Libor basis having a five-year maturity appearing on Bloomberg
page “USISDA 05” (or such other page as may replace such page on Bloomberg, or such other page or service as may be
nominated by the person providing or sponsoring the information appearing on such page for purposes of displaying comparable rates)
as at approximately 11:00 a.m. (New York time) on the Reset Determination Date, as determined by the Calculation Agent. If such
swap rate does not appear on such page (or such other page or service), the Mid-Market Swap Rate shall instead be determined by
the Calculation Agent as being equal to

 

     10

     

    

the
arithmetic mean expressed as a percentage and rounded, if necessary, to the nearest 0.001% (0.0005% being rounded upwards) of
the quotations provided by the principal office of each of four major banks in the U.S. dollar swap rate market (which banks shall
be selected by the Calculation Agent with the prior agreement of the Company not less than 20 calendar days prior to the Reset
Determination Date) (the “Reference Banks”) of the rates at which swaps in U.S. dollars are offered by it at
approximately 11.00 a.m. (New York time) (or thereafter on the Reset Determination Date, with the Calculation Agent acting on
a best efforts basis) on the Reset Determination Date to participants in the U.S. dollar swap rate market for a five-year period.
If the Mid-Market Swap Rate is still not determined on the relevant Reset Determination Date in accordance with the foregoing
procedures, the Mid-Market Swap Rate shall be the mid-market U.S. dollar swap rate Libor basis having a five-year maturity that
appeared on the most recent Bloomberg page “USISDA 05” (or such other page as may replace such page on Bloomberg,
or such other page or service as may be nominated by the person providing or sponsoring the information appearing on such page
for purposes of displaying comparable rates) that was last available prior to 11.00 a.m. (New York time) on the relevant Reset
Determination Date, as determined by the Calculation Agent.

 

“New
Conversion Condition” shall be satisfied if by not later than seven calendar days following the occurrence of a Takeover
Event where the Acquirer is an Approved Entity, the Company shall have entered into arrangements to the Company’s satisfaction
with the Approved Entity pursuant to which the Approved Entity irrevocably undertakes to the Trustee, for the benefit of the Holders
and Beneficial Owners, to deliver the Relevant Shares to the Settlement Share Depository upon Automatic Conversion.

 

“New
Conversion Condition Effective Date” means the date with effect from which the New Conversion Condition shall have been
satisfied.

 

“New
Conversion Price” means the amount determined by the Company in accordance with the following formula:

 

	NCP = ECP ×	VWAPRS
    

    VWAPOS

 

where:

 

		NCP	is the New Conversion Price.

 

		ECP	is the Conversion Price in effect
                                         on the Dealing Day immediately prior to the New Conversion Condition Effective Date.

 

		VWAPRS	   means the average of the Volume
                                         Weighted Average Price of the Relevant Shares (translated, if necessary, into U.S. dollars
                                         at the Prevailing Rate on the relevant Dealing Day) on each of the 10 Dealing Days ending
                                         on the Dealing Day prior to the date the Takeover Event shall have occurred (and where
                                         references in the definition of “Volume Weighted Average Price” to “ordinary

 

     11

     

    

shares”
shall be construed as a reference to the Relevant Shares and in the definition of “Dealing Day”, references to the
“Relevant Stock Exchange” shall be to the primary Regulated Market on which the Relevant Shares are then listed, admitted
to trading or accepted for dealing).

 

		VWAPOS	   is the average of the Volume
                                         Weighted Average Price of the ordinary shares (translated, if necessary, into U.S. dollars
                                         at the Prevailing Rate on the relevant Dealing Day) on each of the 10 Dealing Days ending
                                         on the Dealing Day prior to the date the Takeover Event shall have occurred.

 

“Non-Payment
Event” has the meaning specified in ‎Section 5.02.

 

“Non-Qualifying
Takeover Event” means a Takeover Event that is not a Qualifying Takeover Event.

 

“Notice
Cut-Off Date” means the date specified as such in the Settlement Request Notice.

 

“Notional
Preference Shares” means an actual or notional class of preference shares in the capital of the Company having an equal
right to return of assets in a Winding-up or Administration Event to, and so ranking pari passu with, the most senior class
or classes of issued preference shares with non-cumulative dividends (if any) in the capital of the Company from time to time
and which have a preferential right to a return of assets in the Winding-up or Administration Event over, and so rank ahead of
all other classes of issued shares for the time being in the capital of the Company but ranking junior to the claims of Senior
Creditors and junior to any notional class of preference shares in the capital of the Company which is referenced in any instrument
of the Company for the purposes of determining a claim in the winding-up or administration of the Company, and, as so referenced,
(i) is expressed to have a preferential right to a return of assets in the Company’s winding-up or administration over the
holders of all other classes of shares for the time-being in the capital of the Company and (ii) is not expressed to rank junior
to any other notional class of preference shares in the capital of the Company.

 

“ordinary
shares” means the ordinary shares of the Company, with a nominal value of £1.00 each.

 

“Ordinary
Share Capital” has the meaning provided in Section 1119 of the Income and Corporation Taxes Act 2010.

 

“Other
Securities” means any securities including, without limitation, shares in the capital of the Company, or options, warrants
or other rights to subscribe for or purchase or acquire shares in the capital of the Company (and each an “Other
Security”).

 

“Outstanding
Amount” has the meaning set forth in ‎Section 3.16(a).

 

     12

     

    

“Parity
Securities” means (i) the most senior ranking class or classes of non-cumulative preference shares in the capital of
the Company from time to time and any other securities of the Company ranking, or expressed to rank, pari passu with the
Contingent Capital Notes and/or such preference shares following a Winding-up or Administration Event and/or (ii) any securities
issued by any other member of the Group where the terms of the securities benefit from a guarantee or support agreement entered
into by the Company which ranks or is expressed to rank pari passu with the Contingent Capital Notes and/or such preference
shares following a Winding-up or Administration Event.

 

“Performance
Obligation” has the meaning specified in ‎Section
5.03.

 

“Prevailing
Rate” means, in respect of any currencies on any day, the spot rate of exchange between the relevant currencies prevailing
as at or about 12 noon (London time) on that date as appearing on or derived from the Relevant Page or, if such a rate cannot
be determined at such time, the rate prevailing as at or about 12 noon (London time) on the immediately preceding day on which
such rate can be so determined or, if such rate cannot be so determined by reference to the Relevant Page, the rate determined
in such other manner as an Independent Financial Adviser shall in good faith prescribe.

 

“Prospectus”
means the prospectus on Form F-3 related to the offering and sale of the Contingent Capital Notes dated March 31, 2015, as amended
or supplemented.

 

“Prudential
Regulation Authority” or “PRA” means the Prudential Regulation Authority or such other governmental
authority having primary supervisory authority with respect to the prudential regulation of the Company’s business.

 

“Qualifying
Takeover Event” means a Takeover Event where:

 

		(i)	the Acquirer is an Approved Entity;
                                         and

 

		(ii)	the New Conversion Condition
                                         is satisfied.

 

“Record
Date” means the 15th calendar day preceding each Interest Payment Date, whether or not such day is a Business Day.

 

“Reference
Banks” has the meaning set forth in the definition of Mid-Market Swap Rate.

 

“Regular
Record Date” means, with respect to the payment of interest on the Contingent Capital Notes, the 15th calendar day (whether
or not a Business Day) preceding an Interest Payment Date.

 

“Regulated
Market” means an EEA Regulated Market or another regulated, regularly operating, recognized stock exchange or securities
market in an OECD member state.

 

     13

     

    

“Regulatory
Group” means the Company, its subsidiary undertakings, participations, participating interests and any subsidiary undertakings,
participations or participating interests held (directly or indirectly) by any of its subsidiary undertakings from time to time
and any other undertakings from time to time consolidated with it for regulatory purposes, in each case in accordance with the
rules and guidance of the PRA then in effect.

 

“Relevant
Currency” means sterling or, if at the relevant time or for the purposes of the relevant calculation or determination
the London Stock Exchange is not the Relevant Stock Exchange, the currency in which the ordinary shares or the Relevant Shares
(as applicable) are quoted or dealt in on the Relevant Stock Exchange at such time.

 

“Relevant
Page” means the relevant page on Bloomberg or such other information service provider that displays the relevant information.

 

“Relevant
Shares” means Ordinary Share Capital of the Approved Entity that constitutes Equity Share Capital or the equivalent
(or depositary or other receipts representing the same) which is listed and admitted to trading on a Regulated Market.

 

“Relevant
Stock Exchange” means the London Stock Exchange or, if at the relevant time the ordinary shares are not at that time
listed and admitted to trading on the London Stock Exchange, the principal stock exchange or securities market on which the ordinary
shares are then listed, admitted to trading or quoted or accepted for dealing.

 

“relevant
U.K. resolution authority” means any authority with the ability to exercise a U.K. bail-in power.

 

“Reset
Determination Date” means the second Business Day immediately preceding each Reset Date.

 

“Reset
Date” means the First Call Date and every fifth anniversary thereafter.

 

“Risk
Weighted Assets” means the aggregate amount, expressed in pounds sterling, of the risk weighted assets of the Regulatory
Group, as calculated by the Company on a consolidated and fully loaded basis in accordance with the Capital Regulations applicable
to the Regulatory Group (which calculation shall be binding on the Trustee and the Holders) and where the term “risk weighted
assets” means the risk weighted assets or total risk exposure amount, as calculated by the Company in accordance with the
Capital Regulations applicable to the Regulatory Group as at that point in time.

 

“Senior
Creditors” means creditors of the Company (i) who are unsubordinated creditors, (ii) whose claims are, or are expressed
to be, subordinated (whether only in the event of a Winding-up or Administration Event or otherwise) to the claims of unsubordinated
creditors of the Company but not further or otherwise, or (iii) who are subordinated creditors of the Company (whether as aforesaid
or otherwise), other than those whose claims rank, or are expressed to rank, pari passu with, or junior to, the

 

     14

     

    

claims
of the Holders and/or pari passu with or junior to any claims ranking pari passu with the claims of the Holders,
in each case, in a Winding-up or Administration Event occurring prior to any Conversion Trigger Event.

 

“Settlement
Date” means:

 

(i)with
respect to any Contingent Capital Note in relation to which a Settlement Notice is received by the Settlement Share Depository
on or before the Notice Cut-off Date where the Company has not elected that the Settlement Share Depository will carry out a Settlement
Shares Offer in accordance with ‎Section 3.17, the date that
is two (2) Business Days after the latest of (i) the Conversion Date, (ii) the date on which the Company announces that it will
not elect for the Settlement Share Depository to carry out a Settlement Shares Offer (or, if no such announcement is made, the
last date on which the Company is entitled to give a Settlement Shares Offer Notice), and (iii) the date on which the relevant
Settlement Notice has been received by the Settlement Share Depository;

 

(ii)with
respect to any Contingent Capital Note in relation to which a Settlement Notice is received by the Settlement Share Depository
on or before the Notice Cut-off Date where the Company has elected that the Settlement Share Depository will carry out a Settlement
Shares Offer in accordance with ‎Section 3.17, the date that
is the later of ‎(a) two (2) Business Days after the
day on which the Settlement Shares Offer Period expires or is terminated and ‎(b)
two (2) Business Days after the date on which such Settlement Notice has been so received by the Settlement Share Depository;
and

 

(iii)with
respect to any Contingent Capital Note in relation to which a Settlement Notice is not so received by the Settlement Share Depository
on or before the Notice Cut-off Date, the date on which the Settlement Share Depository delivers the relevant Settlement Shares,
or, if the Holder elects, ADSs or the Alternative Consideration, as applicable, to the relevant Holders or Beneficial Owners.

 

“Settlement
Notice” means a written notice (substantially in the form attached hereto as Exhibit F) to be delivered by a Holder
or Beneficial Owner (or custodian, broker, nominee or other representative thereof) to the Settlement Share Depository, with a
copy to the Trustee, on or before the Notice Cut-off Date containing the following information: (i) the name of the Holder or
Beneficial Owner (or custodian, broker, nominee or other representative thereof), (ii) the Tradable Amount of the book-entry interests
in the Contingent Capital Notes held by such Holder or Beneficial Owner (or custodian, broker, nominee or other representative
thereof) on the date of such notice, (iii) the name to be entered in the Company’s share register, (iv) whether Settlement
Shares are to be delivered to the Holder or Beneficial Owner or ADSs, if the Holder elects, are to be deposited with the ADS Depository
on behalf of the Holder or Beneficial Owner into the Company’s ADS facility, (v) the details of the CREST or other clearing
system account (subject to the limitations set out in ‎Section
3.18(i)), the details of the registered account in the Company’s ADS facility or, if the Settlement Shares are not a participating
security in CREST or another clearing system, the address to which the Settlement Shares (or the Settlement Share Component, if
any, of any Alternative

 

     15

     

    

Consideration)
and/or cash (if not expected to be delivered through DTC) should be delivered and (vi) such other details as may be required by
the Settlement Share Depository.

 

“Settlement
Request Notice” means the written notice (substantially in the form attached hereto as Exhibit E) to be delivered by
the Company to the Trustee directly and to DTC as the Holder of the Global Securities (or, if the Contingent Capital Notes are
in definitive form, by the Company to the Trustee directly and to the Holders at their registered addresses as shown on the Contingent
Convertible Security Register) on the Suspension Date requesting that Holders and Beneficial Owners complete a Settlement Notice
and specifying (i) the Notice Cut-off Date and (ii) the Final Cancellation Date.

 

“Settlement
Share Component” means that portion, if any, of the Alternative Consideration consisting of Settlement Shares.

 

“Settlement
Share Depository” means a reputable financial institution, depository entity, trust company or similar entity (which
in each such case is wholly independent of the Company) to be appointed by the Company on or prior to any date when a function
ascribed to the Settlement Share Depository in the Indenture is required to be performed, to perform such functions and which
will be required to undertake, for the benefit of the Holders and Beneficial Owners, to hold the Settlement Shares (and the Alternative
Consideration, if any) on behalf of such Holders and Beneficial Owners in one or more segregated accounts, unless otherwise required
to be transferred out of such accounts for the purposes of the Settlement Shares Offer on terms consistent with the Indenture.

 

“Settlement
Shares” means the ordinary shares credited as fully paid to be issued and delivered to the Settlement Share Depository
by the Company on the Conversion Date.

 

“Settlement
Shares Offer” has the meaning attributed to such term in ‎Section
3.17.

 

“Settlement
Shares Offer Price” has the meaning attributed to such term in ‎Section
3.17.

 

“Settlement
Shares Offer Notice” means the written notice (substantially in the form attached hereto as Exhibit D) to be delivered
by the Company to the Trustee directly and to the Holders at their addresses shown on the Contingent Convertible Security Register
if the Company has elected that a Settlement Shares Offer be made specifying (i) the Settlement Shares Offer Period, and (ii)
the Suspension Date, if the Suspension Date has not previously been specified in the Conversion Trigger Notice.

 

“Settlement
Shares Offer Period” means the period during which the Settlement Shares Offer may occur, which period shall end no
later than forty (40) Business Days after the delivery of the Settlement Shares Offer Notice.

 

“Shareholders”
means the holders of ordinary shares.

 

     16

     

    

“Solvency
Condition” has the meaning set forth in ‎Section
6.01(e) hereof.

 

“Subsidiary”
means a subsidiary or a “subsidiary undertaking” as such terms are defined in Sections 1159 and 1162 of the U.K. Companies
Act 2006.

 

“Suspension
Date” means the date specified in the Conversion Trigger Notice or Settlement Shares Offer Notice as the date on which
DTC shall suspend all clearance and settlement of transactions in the Contingent Capital Notes in accordance with its rules and
procedures.

 

A “Takeover
Event” shall occur if, at any time after the Issue Date, any person or persons acting in concert (as defined in the
Takeover Code of the United Kingdom Panel on Takeovers and Mergers) acquires control of the Company.

 

“Takeover
Event Notice” has the meaning attributed to such term as set forth in ‎Section
4.02.

 

“Tax
Event” has the meaning specified in ‎Section 3.09.

 

“Tier
1 Capital” has the meaning given to it by the PRA from time to time.

 

“Tier
2 Capital” has the meaning given to it by the PRA from time to time.

 

“Tradable
Amount” has the meaning specified in ‎Section 3.01(m)
hereof.

 

“U.K.
bail-in power” means any write-down, conversion, transfer, modification or suspension power existing from time to time
under any laws, regulations, rules or requirements relating to the resolution of banks, banking group companies, credit institutions
and/or investment firms incorporated in the United Kingdom in effect and applicable in the United Kingdom to the Company or other
members of the Group, including but not limited to any such laws, regulations, rules or requirements which are implemented, adopted
or enacted within the context of a European Union directive or regulation of the European Parliament and of the Council establishing
a framework for the recovery and resolution of credit institutions and investment firms and/or within the context of a U.K. resolution
under the Banking Act, pursuant to which any obligations of a bank, banking group company, credit institution or investment firm
or any of its affiliates can be reduced, cancelled, modified, transferred and/or converted into shares or other securities or
obligations of the obligor or any other person (or suspended for a temporary period) or pursuant to which any right in a contract
governing such obligation may be deemed to have been exercised.

 

“Volume
Weighted Average Price” means, in respect of an ordinary share or Other Security on any Dealing Day, the order book
volume-weighted average price of an ordinary share or Other Security published by or derived (in the case of an ordinary share)
from the relevant Bloomberg page or (in the case of Other Securities (other than ordinary shares), options, warrants or other
rights) from the principal stock exchange or securities market on which such Other Securities, options, warrants or other rights
are then listed or quoted or dealt in, if any, or, in any such case, such other source as shall be

 

     17

     

    

determined
in good faith to be appropriate by an Independent Financial Adviser on such Dealing Day, provided that if on any such Dealing
Day such price is not available or cannot otherwise be determined as provided above, the Volume Weighted Average Price of an ordinary
share, Other Security, option, warrant or other right, as the case may be, in respect of such Dealing Day shall be the Volume
Weighted Average Price, determined as provided above, on the immediately preceding Dealing Day on which the same can be so determined
or determined as an Independent Adviser might otherwise determine in good faith to be appropriate.

 

“Winding-up
or Administration Event” means:

 

(i) an order
is made, or an effective resolution is passed, for the winding up of the Company (excluding in any such case a solvent winding-up
solely for the purpose of a reconstruction, amalgamation, reorganization, merger or consolidation of the Company, or the substitution
in place of the Company of a successor in business of the Company, the terms of which have previously been approved by the Trustee
or in writing by Holders of not less than 2/3 (two-thirds) in aggregate principal amount of the Contingent Capital Notes); or

 

(ii) an administrator
of the Company is appointed and such administrator gives notice that it intends to declare and distribute a dividend.

 

Section 1.02.Separability
Clause. In case any provision in this Third Supplemental Indenture or the Contingent Capital Notes shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired
thereby.

 

Section 1.03.Benefits
of Instrument. Nothing in this Third Supplemental Indenture, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under
the Indenture.

 

Section 1.04.Relation
to Contingent Convertible Securities Indenture. This Third Supplemental Indenture constitutes an integral part of the Contingent
Convertible Securities Indenture. Notwithstanding any other provision of this Third Supplemental Indenture, all provisions of
this Third Supplemental Indenture are expressly and solely for the benefit of the Holders and Beneficial Owners and any such provisions
shall not be deemed to apply to any other Securities issued under the Contingent Convertible Securities Indenture and shall not
be deemed to amend, modify or supplement the Contingent Convertible Securities Indenture for any purpose other than with respect
to the Contingent Capital Notes; provided that pursuant to and in accordance with Section 3.08 of the Contingent Convertible Securities
Indenture, the duties of the Trustee under the Indenture shall extend only to Persons deemed to be Holders.

 

     18

     

    

Article
2

Amendments To The Contingent Convertible Securities Indenture

 

Section 2.01.Amended
Definitions. With respect to the Contingent Capital Notes only, the definition of “Capital Regulations” in Section
1.01 of the Contingent Convertible Securities Indenture is amended and restated in its entirety by the following definition:

 

“Capital
Regulations” means, at any time, the laws, regulations, requirements, guidelines and policies relating to capital adequacy
binding on credit institutions (including, without limitation, as to leverage) then in effect as applicable to us or the Regulatory
Group including if and to the extent applicable to us or the Regulatory Group and, without limitation to the generality of the
foregoing, any delegated or implementing acts (such as regulatory technical standards) adopted by the European Commission and
any laws or regulations, as well as requirements, guidelines and policies adopted by the PRA from time to time (whether or not
such laws, regulations, requirements, guidelines or policies are applied generally or specifically to us or to the Regulatory
Group), in each case relating to capital adequacy.

 

Article
3

The Contingent Capital Notes

 

Section 3.01.Form,
Title, Terms and Payments. The form of any Security that is designated as a Contingent Capital Note shall be evidenced by
one or more global notes in registered form (each, a “Global Note”) deposited with, or on behalf of, DTC on
the Issue Date. The Global Notes shall be registered in the name of Cede & Co. and executed and delivered in substantially
the form attached hereto as Exhibit A. The terms of the Global Notes are hereby incorporated herein by reference and made a part
hereof as if set forth herein in full.

 

(a)There
is hereby established a new series of Securities designated as the 2021 Perpetual Subordinated Contingent Convertible Additional
Tier 1 Capital Notes (the “Contingent Capital Notes”).

 

(b)The
Contingent Capital Notes shall be issued in denominations of $200,000 principal amount and integral multiples of $1,000 in excess
thereof.

 

(c)The
Contingent Capital Notes shall be initially limited in aggregate principal amount to $2,650,000,000. The Company may from time
to time, without the consent of the Holders, issue additional Contingent Capital Notes having the same ranking and same interest
rate, interest cancellation terms, redemption terms, Conversion Price and other terms as the Contingent Capital Notes described
in this Third Supplemental Indenture, except for the price to public and Issue Date. Any such additional Contingent Capital Notes
subsequently issued shall rank equally and ratably with the Contingent Capital Notes in all respects, so that such further Contingent
Capital Notes shall be consolidated and form a single series with the Contingent Capital Notes.

 

     19

     

    

(d)The
Contingent Capital Notes shall be perpetual Securities and shall have no Stated Maturity in respect of principal.

 

(e)The
Securities shall not have a sinking fund.

 

(f)Any
proposed transfer of an interest in the Contingent Capital Notes held in the form of a Global Note shall be effected through the
book-entry system maintained by DTC.

 

(g)The
interest rate on the Contingent Capital Notes is set forth in ‎Section 3.02 hereof.

 

(h)All
references to Foreign Government Securities and U.S. Government Obligations in the Contingent Convertible Securities Indenture
shall be deleted in their entirety and be inapplicable to the Contingent Capital Notes, including but not limited to the definition
of “Outstanding” in the Contingent Convertible Securities Indenture and any references to such terms in Sections 4.01,
4.02 and 4.03 of the Contingent Convertible Securities Indenture.

 

(i)Payments
in respect of the Contingent Capital Notes, including payments of principal and interest, shall be subject to the conditions set
forth under Sections ‎3.02, ‎3.03, ‎3.04, ‎3.05, ‎3.12 and ‎3.14
hereof.

 

(j)The
Contingent Capital Notes shall be subject to Automatic Conversion following the occurrence of a Conversion Trigger Event as provided
in ‎Section 3.15 hereof and shall be subject to the Enforcement Events as provided in ‎Article 5 hereof.

 

(k)The
Company may, subject to ‎Section 3.12 hereof, redeem or repurchase the Contingent Capital Notes in accordance with
Sections ‎3.08, ‎3.09, ‎3.10 and ‎3.11 hereof.

 

(l)The
Company shall undertake reasonable efforts to list the Contingent Capital Notes on the Global Exchange Market of the Irish Stock
Exchange on the Issue Date or as soon as practicable thereafter. The Company shall endeavor to maintain such listing as long as
the Contingent Capital Notes remain outstanding.

 

(m)The
denomination of each interest in a Global Note shall be the “Tradable Amount” of such book-entry interest.
Prior to the Automatic Conversion, the aggregate Tradable Amount of the interests in each Global Note shall equal such Global
Note’s outstanding principal amount. Following the Automatic Conversion, the principal amount of each Contingent Capital
Note shall equal zero, but the Tradable Amount of the book-entry interests in each Contingent Capital Note shall remain unchanged
as a result of the Automatic Conversion.

 

Section 3.02.Interest.

 

(a)From
and including the Issue Date to but excluding the First Call Date, interest will accrue on the Contingent Capital Notes at an
initial rate equal to 8.625% per

 

     20

     

    

annum.
From and including each Reset Date to but excluding the next succeeding Reset Date (each such period, a “Reset Period”),
interest will accrue on the Contingent Capital Notes at a rate per annum equal to the sum of the then prevailing Mid-Market Swap
Rate on the relevant Reset Determination Date and 7.598% converted to a quarterly rate in accordance with market convention (rounded
to two decimal places, with 0.005 rounded down). Subject to Sections ‎
‎3.03 and ‎3.04‎
and the last two sentences of this paragraph below, and other than with respect to any interest payment made on the
first Interest Payment Date, interest, if any, on the Contingent Capital Notes shall be payable in four equal quarterly installments
in arrear on each Interest Payment Date in the relevant Reset Period, provided that if such Interest Payment Date is not a Business
Day, the Interest Payment Date shall be postponed to the next Business Day, and no further interest or other payment shall be
owed or made in respect of such delay. If any scheduled redemption date is not a Business Day, payment of interest, if any, and
principal shall be postponed to the next Business Day, but interest on that payment will not accrue during the period from and
after any scheduled redemption date. If any Reset Date is not a Business Day, the Reset Date shall occur on the next succeeding
Business Day. Subject to Sections ‎3.03 and ‎3.04‎
below, if any interest payment on the Contingent Capital Notes is to be made on a date other than on an Interest Payment
Date, including on any scheduled redemption date, it shall be computed by the Calculation Agent by applying the interest rate
applicable during the applicable Reset Period and multiplying the product by “30/360” and rounding the resulting figure
to the nearest cent (half a cent being rounded upwards). For this purpose “30/360” means in respect of any period,
the number of days in the relevant period, from and including the first day in such period to but excluding the last day in such
period, such number of days being calculated on the basis of a 360 day year consisting of twelve (12) months of thirty (30) days,
divided by 360.

 

(b)In
addition to any other restrictions on payments of principal and interest contained in this Third Supplemental Indenture, no payment
of the principal amount of the Contingent Capital Notes following any proposed redemption or payment of interest on the Contingent
Capital Notes shall become due and payable after the exercise of any U.K. bail-in power by the relevant U.K. resolution authority
unless, at the time that such repayment or payment, respectively, is scheduled to become due, such repayment or payment would
be permitted to be made by the Company under the laws and regulations of the United Kingdom and the European Union applicable
to the Company and the Group.

 

Section 3.03.Interest
Payments Discretionary.

 

(a)Interest
on the Contingent Capital Notes shall be due and payable only at the full discretion of the Company, and the Company shall have
sole and absolute discretion at all times and for any reason to cancel (in whole or in part) any interest payment that would otherwise
be payable on any Interest Payment Date. If the Company does not make an interest payment in respect of the Contingent Capital
Notes on the relevant Interest Payment Date (or if the Company elects to make a payment of a portion, but not all, of such interest
payment), such non-payment shall evidence the Company’s exercise of its discretion to cancel such interest payment (or the
portion of such interest payment not paid), and accordingly such interest payment (or the portion thereof not

 

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paid)
shall not be or become due and payable. For the avoidance of doubt, if the Company provides notice to cancel a portion, but not
all, of an interest payment in respect of the Contingent Capital Notes, and the Company subsequently does not make a payment of
the remaining portion of such interest payment on the relevant Interest Payment Date, such non-payment shall evidence the Company’s
exercise of its discretion to cancel such remaining portion of such interest payment, and accordingly such remaining portion of
the interest payment shall also not be due and payable.

 

(b)Interest
on the Contingent Capital Notes shall only be due and payable on an Interest Payment Date to the extent it is not cancelled or
deemed cancelled (in each case, in whole or in part) in accordance with the provisions set forth in ‎Section 3.02(b),
‎Section 3.03(a), ‎Section 3.04, ‎Section 3.15(h) and ‎Section 6.01 hereof, respectively,
and any interest cancelled or deemed cancelled (in each case, in whole or in part) pursuant to such sections shall not be due
and shall not accumulate or be payable at any time thereafter, and Holders and Beneficial Owners shall have no rights thereto
or to receive any additional interest or compensation as a result of such cancellation or deemed cancellation of interest in respect
of the Contingent Capital Notes.

 

Section 3.04.Restrictions
on Interest Payments.

 

(a)Without
limitation on the provisions of ‎Section 3.03 and subject to the extent permitted in paragraph ‎(b) below
hereof in respect of partial interest payments in respect of the Contingent Capital Notes, the Company shall not make an interest
payment in respect of the Contingent Capital Notes on any Interest Payment Date (and such interest payment shall therefore be
deemed to have been cancelled and thus shall not be due and payable on such Interest Payment Date) if:

 

(i)the
Company has an amount of Distributable Items on any such scheduled Interest Payment Date that is less than the sum of (i)
all payments (other than redemption payments which do not reduce Distributable Items) made or declared by the Company since the
end of its latest financial year and prior to such Interest Payment Date on or in respect of any Parity Securities, the Contingent
Capital Notes and any Junior Securities and (ii) all payments (other than redemption payments which do not reduce Distributable
Items) payable by the Company on such Interest Payment Date (x) on the Contingent Capital Notes and (y) on or in respect of any
Parity Securities or any Junior Securities, in the case of each of (i) and (ii), excluding any payments already accounted for
in determining the Distributable Items, or

 

(ii)the
Solvency Condition is not (or would not be) satisfied in respect of such interest payment.

 

(b)The
Company may, in its sole discretion, elect to make a partial interest payment in respect of the Contingent Capital Notes on any
Interest Payment Date, only to the extent that such partial interest payment may be made without breaching the restriction in
paragraph ‎(a) above.

 

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(c)For
purposes of this Third Supplemental Indenture, any interest cancelled pursuant to ‎Section 3.04(a) shall be deemed
cancelled under the terms of the Contingent Capital Notes and the Indenture and shall not be due and payable.

 

Section 3.05.Agreement
to Interest Cancellation. By its acquisition of the Contingent Capital Notes, each Holder and each Beneficial Owner shall
be deemed to have acknowledged and agreed that:

 

(a)interest
is payable solely at the discretion of the Company, and no amount of interest shall become due and payable in respect of the relevant
interest period to the extent that it has been (x) cancelled (in whole or in part) by the Company at the Company’s sole
discretion and/or (y) deemed cancelled (in whole or in part) including as a result of the Company having insufficient Distributable
Items or failing to satisfy the Solvency Condition; and

 

(b)a
cancellation or deemed cancellation of interest (in each case, in whole or in part) in accordance with the terms of the Indenture
and the Contingent Capital Notes shall not constitute a default in payment or otherwise under the terms of the Contingent Capital
Notes or the Indenture.

 

Section 3.06.Notice
of Interest Cancellation. Notwithstanding anything to the contrary in the Indenture (including Section 1.06 of the Contingent
Convertible Securities Indenture), if practicable, the Company shall provide notice of any cancellation or deemed cancellation
of interest (in each case, in whole or in part) to the Holders of the Contingent Capital Notes through DTC (or, if the Contingent
Capital Notes are held in definitive form, to the Holders directly at their addresses shown in the Contingent Convertible Security
Register) and to the Trustee directly on or prior to the relevant Interest Payment Date. Failure to provide such notice shall
have no impact on the effectiveness of, or otherwise invalidate, any such cancellation or deemed cancellation of interest (and
accordingly, such interest will not be due and payable), or give the Holders and Beneficial Owners any rights as a result of such
failure.

 

Section 3.07.Payment
of Principal, Interest and Other Amounts.

 

(a)Payments
of principal of and interest, if any, on the Contingent Capital Notes shall be made in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and private debts and such payments on Contingent Capital
Notes represented by a Global Note shall be made through one or more Paying Agents appointed under the Contingent Convertible
Securities Indenture to DTC or its nominee, as the Holder of the Global Note. Initially, the Paying Agent and the Security Registrar
for the Contingent Capital Notes shall be The Bank of New York Mellon, London Branch, One Canada Square, London E14 5AL, United
Kingdom. The Company may change the Paying Agent without prior notice to the Holders of the Contingent Capital Notes, and in such
an event the Company may act as Paying Agent or Contingent Capital Securities Registrar.

 

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(b)Payments
of principal, interest and other amounts in respect of the Contingent Capital Notes represented by a Global Note shall be made
by wire transfer of immediately available funds on the date such payment is scheduled to be paid.
The Company shall, on each date on which any payment in respect of the Contingent Capital Notes becomes due, transfer
to the Paying Agent such amount as may be required for the purposes of such payment.

 

Section 3.08.Optional
Redemption. Subject to the satisfaction of the Solvency Condition and the pre-conditions described in ‎Section
3.12 and ‎Section 3.13 hereof, the Company may, at the Company’s option and in its sole discretion, redeem the
Contingent Capital Notes, in whole but not in part, on the First Call Date or on any Reset Date thereafter at a redemption price
equal to 100% of the principal amount of the Contingent Capital Notes together with any Accrued Interest to (but excluding) the
date of redemption.

 

Section 3.09.Optional
Tax Redemption. Subject to the satisfaction of the Solvency Condition and the pre-conditions described in ‎Section
3.12 and ‎Section 3.13 hereof, if a Tax Event shall occur the Company may at any time and at the Company’s option
and in its sole discretion redeem the Contingent Capital Notes, in whole but not in part, at a redemption price equal to 100%
of the principal amount of the Contingent Capital Notes together with any Accrued Interest to (but excluding) the date of redemption.
A “Tax Event” will be deemed to have occurred with respect to the Contingent Capital Notes if, at any time,
the Company shall determine that, as a result of any change in, or amendment to, the laws or regulations of the U.K. or any political
subdivision or any authority thereof or therein having power to tax (including any treaty to which the U.K. or any political subdivision
or any authority thereof or therein is a party), or any change in the official application of such laws or regulations (including
a decision of any court or tribunal or the application by any tax authority), which change or amendment becomes effective or applicable,
or, in the case of a change in or amendment to law, where such change or amendment is enacted by a U.K. Act of Parliament or by
a Statutory Instrument, if such U.K. Act of Parliament or Statutory Instrument is enacted, on or after the Issue Date:

 

(a)in
making a payment under the Contingent Capital Notes in respect of interest, the Company has or will or would on the next Interest
Payment Date become obligated to pay Additional Amounts;

 

(b)a
payment of interest on the next Interest Payment Date in respect of any of the Contingent Capital Notes would be treated as a
“distribution” within the meaning of Section 1000 of the U.K. Corporation Tax Act 2010 (or any statutory modification
or re-enactment thereof for the time being);

 

(c)the
Company would not be entitled to claim a deduction in respect of a payment of interest payable on the next Interest Payment Date
in computing its U.K. taxation liabilities (or the value of such deduction to the Company would be materially reduced);

 

     24

     

    

(d)as
a result of the Contingent Capital Notes being in issue, the Company would not be able to have losses or deductions (including
in respect of a payment of interest on the Contingent Capital Notes) set against the profits or gains, or profits or gains offset
by losses or deductions, of companies with which it is or would otherwise be grouped for applicable U.K. tax purposes (whether
under the group relief system current as at the date of issue of the Contingent Capital Notes or any similar system or systems
having like effect as may exist from time to time);

 

(e)a
future write-down of the principal amount of the Contingent Capital Notes or conversion of the Contingent Capital Notes into ordinary
shares would result in a U.K. tax liability, or income, profit or gain being treated for U.K. tax purposes as accruing, arising
or being received;

 

(f)the
Contingent Capital Notes would no longer be treated as loan relationships for U.K. tax purposes; or

 

(g)the
Contingent Capital Notes or any part thereof would be treated as a derivative or an embedded derivative for U.K. tax purposes,

 

in each case,
the effect of which cannot be avoided by the Company taking reasonable steps available to it.

 

In any case
where the Company shall determine that as a result of a Tax Event, it is entitled to redeem the Contingent Capital Notes, it shall
be required to deliver to the Trustee prior to the giving of any notice of redemption a written legal opinion of independent United
Kingdom counsel of recognized standing (selected by the Company), in a form satisfactory to the Trustee confirming that the Tax
Event has occurred.

 

Section 3.10.Capital
Disqualification Event Redemption. Subject to the satisfaction of the Solvency Condition and the pre-conditions described
in ‎Section 3.12 and ‎Section 3.13 hereof, the Company may, at the Company’s option and in its sole
discretion, at any time redeem the Contingent Capital Notes, in whole but not in part, at a redemption price equal to 100% of
the principal amount of the Contingent Capital Notes together with any Accrued Interest to (but excluding) the date fixed for
redemption, if, at any time on or after the Issue Date, a Capital Disqualification Event has occurred.

 

Section 3.11.Optional
Repurchase. The Company may at any time and from time to time and to the extent not prohibited by CRD IV repurchase beneficially
or procure others to repurchase beneficially for its account the Contingent Capital Notes in the open market, by tender or by
private agreement, in any manner and at any price or at differing prices. Contingent Capital Notes purchased or otherwise acquired
by the Company may be (i) held, (ii) resold or (iii) at the Company’s sole discretion, surrendered to the Trustee for cancellation
(in which case all Contingent Capital Notes so surrendered will forthwith be cancelled in accordance with applicable law and thereafter
may not be reissued or resold). Any such purchases will be subject to the satisfaction of the Solvency Condition and of the pre-conditions
described in ‎Section 3.12 hereof.

 

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Section 3.12.Pre-conditions
to Redemptions and Repurchases. Contingent Capital Notes may be redeemed or repurchased by the Company as provided under Sections
‎3.08, ‎3.09, ‎3.10, ‎3.11 and 3.13 of this Third Supplemental Indenture, provided
that (except to the extent the PRA no longer so requires) the Company has met the following conditions:

 

(a)the
Company has notified the PRA of its intention to do so at least one month (or such other, longer or shorter period, as the PRA
may then require or accept) before the Company becomes committed to the proposed redemption or repurchase;

 

(b)the
PRA has granted permission for the Company to make any such redemption or repurchase of the Contingent Capital Notes upon a satisfactory
finding that either:

 

(i)on
or before such redemption or repurchase of any of the Contingent Capital Notes, the Company replaces such Contingent Capital Notes
with own funds instruments (as defined by the Capital Regulations) of an equal or higher quality on terms that are sustainable
for its income capacity; or

 

(ii)the
Company has demonstrated to the satisfaction of the PRA that its Tier 1 capital and Tier 2 capital (as defined by the Capital
Regulations) would, following such redemption or repurchase, exceed the capital ratios required under CRD IV and the combined
buffer requirement defined in CRD IV by a margin that the PRA may consider necessary on the basis set out in CRD IV for it to
determine the appropriate level of capital of an institution;

 

(c)no
Conversion Trigger Notice has been delivered;

 

(d)the
Company has complied with any additional or alternative pre-conditions as set out in the Capital Regulations and/or required by
the PRA as a prerequisite to its permission for such redemptions or repurchases, at the time; and

 

(e)with
respect to Sections ‎3.09 and ‎3.10 only, and except to the extent that the PRA no longer so requires, the
Company may only redeem the Contingent Capital Notes before five years after the Issue Date if, in addition to the conditions
set out in (a), (b), (c) and (d) above, the following conditions are met:

 

(i)in
the case of a redemption due to a Tax Event pursuant to ‎Section 3.09, the Company demonstrates to the satisfaction
of the PRA that the Tax Event relating to the Contingent Capital Notes is material and was not reasonably foreseeable at the time
of issuance of the Contingent Capital Notes; or

 

(ii)in
the case of a redemption due to the occurrence of a Capital Disqualification Event pursuant to ‎Section 3.10,
(x) the PRA considers such change to be sufficiently certain and (y) the Company demonstrates to the satisfaction of the PRA that
the Capital Disqualification Event was not reasonably foreseeable at the time of the issuance of the Contingent Capital Notes.

 

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Section 3.13.Notice
of Redemption.

 

(a)Before
the Company may redeem the Contingent Capital Notes pursuant to Sections ‎3.08, ‎3.09 or ‎3.10,
the Company shall deliver to DTC as the Holder of the Global Securities (or, if the Contingent Capital Notes are in definitive
form, to the Holders directly at their addresses shown on the Contingent Convertible Security Register) prior notice of not less
than thirty (30) days, nor more than sixty (60) days. The Company shall deliver written notice of such redemption of the Contingent
Capital Notes to the Trustee at least five (5) Business Days prior to the date on which the relevant notice of redemption is sent
to Holders (unless a shorter notice period shall be satisfactory to the Trustee). Such notice shall specify the Company’s
election to redeem the Contingent Capital Notes and the date fixed for such redemption and shall be irrevocable except in the
limited circumstances described in paragraphs ‎(b), ‎(c), ‎(d), (e), ‎(f) or ‎(g)
below.

 

(b)If
the Company has delivered a notice of redemption pursuant to clause ‎(a) of this ‎Section 3.13, but the
Solvency Condition is not satisfied immediately prior to, and immediately following, the date specified for redemption in such
notice, such redemption notice shall be automatically rescinded and shall be of no force and effect, and no payment in respect
of the redemption amount shall be due and payable.

 

(c)If
the Company has delivered a notice of redemption pursuant to clause ‎(a) of this ‎Section 3.13, but prior
to the payment of the redemption amount with respect to such redemption a Conversion Trigger Notice has been delivered pursuant
to ‎Section 3.15(b), such notice of redemption shall be automatically rescinded and shall be of no force and effect,
and no payment in respect of the redemption amount shall be due and payable.

 

(d)If
the Company has delivered a notice of redemption pursuant to clause ‎(a) of this ‎Section 3.13, but prior
to the payment of the redemption amount with respect to such redemption the relevant U.K. resolution authority exercises its U.K.
bail-in power with respect to the Company, the relevant redemption notice shall be automatically rescinded and shall be of no
force and effect, and no payment of the redemption amount shall be due and payable.

 

(e)If
the Company has delivered a notice of redemption pursuant to clause ‎(a) of this ‎Section 3.13, but prior
to the date of any such redemption the Company has not given notice to the PRA and/or the PRA has objected to or refused to grant
permission to the Company, as applicable, to redeem the relevant Contingent Capital Notes (in each case to the extent, and in
the manner, required by the relevant Capital Regulations), such notice of redemption shall be automatically rescinded and shall
be of no force and effect and no payment in respect of any redemption amount, if applicable, shall be due and payable.

 

(f)If
the Company has delivered a notice of redemption pursuant to clause ‎(a) of this ‎Section 3.13, but in
respect of any redemption proposed to be made prior to the fifth anniversary of the Issue Date, if and to the extent then required
under the Capital 

 

     27

     

    

Regulations
(A) in the case of redemption following the occurrence of a Tax Event, the Company has not demonstrated to the satisfaction of
the PRA that the Tax Event is material and was not reasonably foreseeable as at the Issue Date, or (B) in the case of redemption
following the occurrence of a Capital Disqualification Event, the PRA does not consider such change to be sufficiently certain
and/or the Company has not demonstrated to the satisfaction of the PRA that the relevant change was not reasonably foreseeable
as at the Issue Date; such notice of redemption shall be automatically rescinded and shall
be of no force and effect and no payment in respect of any redemption amount, if applicable, shall be due and payable.

 

(g)If
the Company has delivered a notice of redemption pursuant to clause ‎(a) of this ‎Section 3.13, but prior
to the payment of the redemption amount with respect to such redemption the Company is not in compliance with any alternative
or additional pre-conditions required by the PRA as a pre-requisite to its permission for such redemption, such notice of redemption
shall be automatically rescinded and shall be of no force and effect, and no payment in respect of the redemption amount shall
be due and payable.

 

If
any of the events specified in paragraphs ‎(b), ‎(c),
‎(d), ‎(e),
‎(f) or ‎(g)
above occurs, the Company shall promptly deliver notice to DTC, as the Holder of the Global Securities (or, if the Contingent
Capital Notes are definitive Securities, to the Holders directly at their addresses shown on the Contingent Convertible Security
Register) and to the Trustee directly, specifying the occurrence of the relevant event.

 

Any
notice of redemption shall state:

 

(i)the
redemption date;

 

(ii)that
on the redemption date the redemption price will, subject to the satisfaction of the conditions set forth in the Indenture, become
due and payable upon each Contingent Capital Note being redeemed and that, subject to certain exceptions, interest will cease
to accrue on or after that date;

 

(iii)the
place or places where the Contingent Capital Notes are to be surrendered for payment of the redemption price; and

 

(iv)the
CUSIP, Common Code and/or ISIN number or numbers, if any, with respect to the Contingent Capital Notes being redeemed.

 

Section 3.14.Cancelled
Interest Not Payable upon Redemption. Any interest payments that have been cancelled or deemed cancelled pursuant to Sections
‎3.03 or ‎3.04 hereof shall not be payable if the Contingent Capital Notes are redeemed pursuant to Sections
‎3.08, ‎3.09 or ‎3.10 hereof.

 

Section 3.15.Automatic
Conversion upon Conversion Trigger Event.

 

(a)If
the Conversion Trigger Event has occurred, then the Automatic Conversion shall occur on the Conversion Date and all of the Company’s
obligations

 

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under
the Contingent Capital Notes shall be irrevocably and automatically released in consideration of the Company’s issuance
and delivery of the Settlement Shares to the Settlement Share Depository, and the principal amount of the Contingent Capital Notes
shall equal zero at all times thereafter (for the avoidance of doubt, the Tradable Amount shall remain unchanged as a result of
the Automatic Conversion). Under no circumstances shall such released obligations be reinstated. If the Company has been unable
to appoint a Settlement Share Depository, it shall effect, by means it deems reasonable in the circumstances (including, without
limitation, issuance of the Settlement Shares to another independent nominee or to the Holders of the Contingent Capital Notes
directly), the issuance and delivery of the Settlement Shares or any Alternative Consideration, as applicable, to the Holders
of the Contingent Capital Notes, and such issuance and delivery of the Settlement Shares or any Alternative Consideration, as
applicable, shall irrevocably and automatically release all of the Company’s obligations under the Contingent Capital Notes
as if the Settlement Shares had been issued and delivered to the Settlement Share Depository and, in which case, where the context
so admits, references in this Third Supplemental Indenture and the Contingent Capital Notes to the issue and delivery of Settlement
Shares to the Settlement Share Depository shall be construed accordingly and apply mutatis mutandis. Where practicable,
the Company shall make such other arrangements to allow Holders, if they so elect, to take delivery of their Settlement Shares
in the form of ADSs.

 

(b)Upon
its determination that a Conversion Trigger Event has occurred, the Company shall ‎(a) immediately inform the PRA of
the occurrence of a Conversion Trigger Event, ‎(b) prior to the delivery of the Conversion Trigger Notice, deliver
to the Trustee an Officer’s Certificate substantially in the form attached hereto as Exhibit C, specifying that the Conversion
Trigger Event has occurred. The Trustee is entitled to conclusively rely on and accept such Officer’s Certificate without
any duty whatsoever of further inquiry as sufficient and conclusive evidence of the occurrence of the Conversion Trigger Event,
in which event such Officer’s Certificate shall be conclusive and binding on the Trustee, the Holders and the Beneficial
Owners, and (c) deliver a Conversion Trigger Notice to the Trustee directly and to DTC as the Holder of the Global Securities
without delay after the occurrence of such Conversion Trigger Event (and in any event within such period as the PRA may require).

 

(c)The
date on which the Conversion Trigger Notice shall be deemed to have been given shall be the date on which it is dispatched by
the Company to DTC (or, if the Contingent Capital Notes are in definitive form, to the Holders and Beneficial Owners directly).

 

(d)The
Company shall request that DTC post the Conversion Trigger Notice on its Reorganization Inquiry for Participants System pursuant
to DTC’s procedures then in effect (or such other system as DTC uses for providing notices to holders of securities). Within
two (2) Business Days of its receipt of the Conversion Trigger Notice, the Trustee shall transmit the Conversion Trigger Notice
to the direct participants in DTC holding the Contingent Capital Notes at such time.

 

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(e)The
Settlement Shares to be issued and delivered shall be so issued and delivered on terms permitting a Settlement Shares Offer and
shall, except where the Company has been unable to appoint a Settlement Share Depository and/or as otherwise provided herein and
by the Contingent Capital Notes, initially be registered in the name of the Settlement Share Depository, which, subject to a Settlement
Shares Offer, shall hold such Settlement Shares on behalf of the Holders and Beneficial Owners. By virtue of its holding of any
Contingent Capital Notes, each Holder and Beneficial Owner shall be deemed to have irrevocably directed the Company to issue and
deliver the Settlement Shares corresponding to the conversion of its holding of Contingent Capital Notes to the Settlement Share
Depository (or to such other relevant recipient).

 

(f)The
Settlement Share Depository (or the relevant recipient in accordance with this Third Supplemental Indenture and the terms of the
Contingent Capital Notes, as applicable) shall hold the Settlement Shares (and the Alternative Consideration, if any) on behalf
of the Holders and Beneficial Owners. For so long as the Settlement Shares are held by the Settlement Share Depository, each Holder
and Beneficial Owner shall be entitled to direct the Settlement Share Depository or such other relevant recipient, as applicable,
to exercise on its behalf all rights of an ordinary Shareholder (including voting rights and rights to receive dividends); provided,
however, that Holders and Beneficial Owners shall not have any rights to sell or otherwise transfer such Settlement Shares unless
and until such time as the Settlement Shares have been delivered to the Holders or Beneficial Owners in accordance with the procedures
set forth under ‎Section 3.18 hereof.

 

(g)Provided
that the Company issues and delivers the Settlement Shares to the Settlement Share Depository (or the relevant recipient in accordance
with the terms of the Contingent Capital Notes) in accordance with the terms of the Contingent Capital Notes and the Indenture,
with effect from and on the Conversion Date, Holders and Beneficial Owners shall have recourse only to the Settlement Share Depository
(or to such other relevant recipient, as applicable) for the delivery to them of Settlement Shares, or, if the Holder elects,
ADSs or the Alternative Consideration, as the case may be, to which such Holders and Beneficial Owners are entitled. Subject to
the occurrence of a Winding-up or Administration Event on or following the Conversion Trigger Event, if the Company fails to issue
and deliver the Settlement Shares upon Automatic Conversion to the Settlement Share Depository on the Conversion Date, the only
right of Holders and Beneficial Owners shall be to claim to have such Settlement Shares so issued and delivered.

 

(h)Effective
upon, and following, the occurrence of the Automatic Conversion, provided that the Company issues and delivers the Settlement
Shares to the Settlement Share Depository (or the relevant recipient in accordance with the terms of the Contingent Capital Notes)
in accordance with the terms of the Contingent Capital Notes, Holders and Beneficial Owners shall not have any rights against
the Company with respect to repayment of the principal amount of the Contingent Capital Notes or payment of interest or any other
amount on or in respect of such Contingent Capital Notes, which liabilities of the Company shall be automatically released, and
accordingly the principal amount of the Contingent Capital Notes shall equal zero at all times thereafter. Any interest in respect
of an interest period ending on any Interest Payment Date falling

 

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between
the date of a Conversion Trigger Event and the Conversion Date shall be deemed to have been cancelled pursuant to ‎Section
3.03 above upon the occurrence of such Conversion Trigger Event and shall not be due and payable.

 

(i)Notwithstanding
any other provision herein, by its acquisition of the Contingent Capital Notes, each Holder and each Beneficial Owner shall be
deemed to have (1) agreed to all of the terms and conditions of the Contingent Capital Notes, including, without limitation, to
those related to (x) Automatic Conversion of its Contingent Capital Notes following the Conversion Trigger Event and (y) the appointment
of the Settlement Share Depository, the issuance of the Settlement Shares to the Settlement Share Depository (or to the relevant
recipient in accordance with the terms of this Third Supplemental Indenture or the Contingent Capital Notes) and the potential
sale of the Settlement Shares pursuant to a Settlement Shares Offer and acknowledged that such events in (x) and (y) may occur
without any further action on the part of such Holders or Beneficial Owners or the Trustee, (ii) agreed that effective upon, and
following, the occurrence of the Automatic Conversion, no amount shall be due and payable to the Holders or the Beneficial Owners
under the Contingent Capital Notes and the liability of the Company to pay any such amounts (including the principal amount of,
or any interest in respect of, the Contingent Capital Notes) shall be automatically released, and the Holders and the Beneficial
Owners shall not have the right to give any direction to the Trustee with respect to the Conversion Trigger Event and any related
Automatic Conversion, (iii) waived, to the extent permitted by the Trust Indenture Act, any claim against the Trustee arising
out of its acceptance of its trusteeship under, and the performance of its duties, powers and rights in respect of, the Indenture
and in connection with the Contingent Capital Notes, including, without limitation, claims related to or arising out of or in
connection with the Conversion Trigger Event and/or any Automatic Conversion, and (iv) authorized, directed and requested DTC
and any direct participant in DTC or other intermediary through which it holds such Contingent Capital Notes to take any and all
necessary action, if required, to implement the Automatic Conversion without any further action or direction on the part of such
Holder or Beneficial Owner or the Trustee.

 

(j)The
procedures set forth in this ‎Section 3.15 are subject to change to reflect changes in DTC practices, and the Company
may make changes to the procedures set forth in this ‎Section 3.15 to the extent reasonably necessary, in the opinion
of the Company, to reflect such changes in DTC practices. Any such changes shall be subject to the provisions of ‎Section
8.01.

 

(k)Notwithstanding
anything to the contrary contained in the Indenture or the Contingent Capital Notes, once the Company has delivered a Conversion
Trigger Notice following the occurrence of a Conversion Trigger Event, (2) subject to the right of Holders and Beneficial Owners
pursuant to ‎Section 5.03 in the event of a failure by the Company to issue and deliver any Settlement Shares to the
Settlement Share Depository on the Conversion Date, the Indenture shall impose no duties upon the Trustee whatsoever with regard
to an Automatic Conversion upon a Conversion Trigger Event and the Holders and Beneficial Owners shall have no rights whatsoever
under the Indenture or the Contingent Capital Notes to instruct the Trustee to take any action

 

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whatsoever,
and (3) as of the date of the Conversion Trigger Notice, except for any indemnity and/or security provided by any Holder or by
any Beneficial Owner in such direction or related to such direction, any direction previously given to the Trustee by any Holders
or by any Beneficial Owners shall cease automatically and shall be null and void and of no further effect; except in each case
of ‎(i) and ‎(ii) of this ‎Section 3.15(k), with respect to any rights of Holders or Beneficial
Owners with respect to any payments under the Contingent Capital Notes that were unconditionally due and payable prior to the
date of the Conversion Trigger Notice or unless the Trustee is instructed in writing by the Company to act otherwise.

 

(l)All
authority conferred or agreed to be conferred by each Holder and Beneficial Owner pursuant to this ‎Section 3.15, including
the consents given by such Holder and Beneficial Owner, shall be binding upon the successors, assigns, heirs, executors, administrators,
trustees in bankruptcy and legal representatives of such Holder and Beneficial Owner.

 

(m)The
Trustee shall not be liable with respect to (4) the calculation or accuracy of the CET1 Ratio in connection with the occurrence
of a Conversion Trigger Event and the timing of such Conversion Trigger Event, (5) the failure of the Company to post or deliver
the underlying CET1 Ratio calculations of a Conversion Trigger Event to DTC, the Holders or the Beneficial Owners, (6) any aspect
of the Company’s decision to deliver a Conversion Trigger Notice or the related Automatic Conversion, (7) the adequacy of
the disclosure of these provisions in the Prospectus or any other offering material in respect of the Contingent Capital Notes
or for the direct or indirect consequences thereof or (v) any other requirement of the Company contained herein related to a Conversion
Trigger Event or the Automatic Conversion.

 

(n)Following
the issuance and delivery of the Settlement Shares to the Settlement Share Depository (or to the relevant recipient in accordance
with the terms of the Contingent Capital Notes) on the Conversion Date, the Contingent Capital Notes shall remain in existence
until the applicable Cancellation Date for the sole purpose of evidencing the Holders’ and Beneficial Owners’ right
to receive Settlement Shares, or, if the Holder elects, ADSs or the Alternative Consideration, as the case may be, from the Settlement
Share Depository (or such other relevant recipient, as applicable).

 

(o)The
Holders and Beneficial Owners shall not at any time have the option to convert the Contingent Capital Notes into Settlement Shares.

 

(p)The
occurrence of the Automatic Conversion shall not constitute an Enforcement Event.

 

Section 3.16.Settlement
Shares.

 

(a)The
number of Settlement Shares to be issued to the Settlement Share Depository on the Conversion Date shall equal the quotient obtained
by dividing the (8) aggregate principal amount of the Contingent Capital Notes Outstanding immediately prior to the Automatic
Conversion on the Conversion Date, (the “Outstanding 

 

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Amount”)
by (9) the Conversion Price prevailing on the Conversion Date. The number of Settlement Shares to be delivered to each Holder
shall be rounded down, if necessary, to the nearest whole number of Settlement Shares. Fractions of Settlement Shares will not
be delivered to the Settlement Share Depository following the Automatic Conversion and no cash payment shall be made in lieu thereof.
The number of Settlement Shares to be held by the Settlement Share Depository for the benefit of each Holder shall equal the number
of Settlement Shares thus calculated multiplied by a fraction equal to (i) the Tradable Amount of the book-entry interests in
the Contingent Capital Notes held by such Holder on the Conversion Date divided by (ii) the Outstanding Amount, rounded down,
if necessary, to the nearest whole number of Settlement Shares.

 

(b)The
Settlement Shares issued following the Automatic Conversion shall be fully paid and non-assessable and shall in all respects rank
pari passu with the fully paid ordinary shares of the Company in issue on the Conversion Date, except in any such case
for any right excluded by mandatory provisions of applicable law, and except that the Settlement Shares so issued shall not rank
for (or, as the case may be, the relevant Holder or Beneficial Owner shall not be entitled to receive) any rights, the record
date for entitlement to which falls prior to the Conversion Date.

 

(c)The
procedures set forth in this ‎Section 3.16 are subject to change to reflect changes in DTC practices, and the Company
may make changes to the procedures set forth in this ‎Section 3.16 to the extent reasonably necessary, in the opinion
of the Company, to reflect such changes in DTC practices as provided under ‎Section 3.18(a) hereof. Any such changes
shall be subject to the provisions of ‎Section 8.01.

 

Section 3.17.Settlement
Shares Offer.

 

(a)Within
ten (10) Business Days following the Conversion Date, the Company may, in its sole and absolute discretion, elect that the Settlement
Share Depository (or an agent on its behalf) make an offer of, in the Company’s sole and absolute discretion, all or some
of the Settlement Shares to, at the Company’s sole and absolute discretion, all or some of the Shareholders upon Automatic
Conversion (the “Settlement Shares Offer”), such offer to be at a cash price per Settlement Share that will
be no less than the Conversion Price (translated from U.S. dollars into pounds sterling at the then-prevailing rate as determined
by the Company in its sole discretion) and subject to certain adjustments as provided under ‎Article 4 of this Third
Supplemental Indenture (the “Settlement Shares Offer Price”).

 

(b)Any
Settlement Shares Offer shall be made subject to applicable laws and regulations in effect at the relevant time and shall be conducted,
if at all, only to the extent that the Company, in its sole and absolute discretion, determines that the Settlement Shares Offer
is practicable. The Company reserves the right, in its sole and absolute discretion, to elect that the Settlement Share Depository
terminate the Settlement Shares Offer at any time during the Settlement Shares Offer Period. If the Company makes such an election,
it shall provide at least three (3) Business Days’ notice to the Trustee directly and to DTC as the Holder of the Global
Securities (or, if the Contingent Capital Notes are definitive Securities, by the Company to the Trustee directly and to the

 

     33

     

    

Holders
at their addresses shown on the Contingent Convertible Security Register) and if it does so, the Settlement Share Depositary may,
in its sole and absolute discretion, (including, without limitation, by changing the Suspension Date) take steps to deliver to
Holders and Beneficial Owners (or the custodian, nominee, broker or other representative thereof) of the Contingent Capital Notes
the Settlement Shares or, if the Holder elects, ADSs, as applicable, at a time that is earlier than the time at which such Holders
and Beneficial Owners (or the custodian, nominee, broker or other representative thereof) would have otherwise received the Alternative
Consideration, had the Settlement Shares Offer been completed.

 

(c)Upon
expiry of the Settlement Shares Offer Period, the Settlement Share Depository shall provide notice to the Holders of the Contingent
Capital Notes of the composition of the Alternative Consideration (and of the deductions to the Cash Component, if any, of the
Alternative Consideration (as set out in the definition of “Alternative Consideration” in ‎Section
1.01)) per $1,000 Tradable Amount of the Contingent Capital Notes. The Alternative Consideration will be held by the Settlement
Share Depository on behalf of the Holders and Beneficial Owners and will be delivered to Holders and Beneficial Owners pursuant
to the procedures set forth under ‎Section 3.18.

 

(d)The
Cash Component of any Alternative Consideration shall be payable by the Settlement Share Depository to the Holders and Beneficial
Owners (or the custodian, nominee, broker or other representative thereof) of the Contingent Capital Notes whether or not the
Solvency Condition is satisfied.

 

(e)By
its acquisition of the Contingent Capital Notes, each Holder and Beneficial Owner, acknowledges and agrees that, if the Company
elects, in its sole and absolute discretion, that a Settlement Shares Offer be conducted by the Settlement Share Depository, such
Holder or Beneficial Owner shall be deemed to have (10) irrevocably consented to any Settlement Shares Offer and, notwithstanding
that such Settlement Shares are held by the Settlement Share Depository on behalf of Holders and Beneficial Owners, to the Settlement
Share Depository’s using the Settlement Shares delivered to it to settle any Settlement Shares Offer, (11) irrevocably consented
to the transfer of the beneficial interest it holds in the Settlement Shares delivered upon Automatic Conversion to the Settlement
Share Depository or to one or more purchasers identified by the Settlement Share Depository in connection with the Settlement
Shares Offer, (12) irrevocably agreed that the Company and the Settlement Share Depository may take any and all actions necessary
to conduct the Settlement Shares Offer in accordance with the terms of the Contingent Capital Notes, and (13) irrevocably agreed
that none of the Company, the Trustee or the Settlement Share Depository shall, to the extent permitted by applicable law, incur
any liability to the Holders or Beneficial Owners in respect of the Settlement Shares Offer (except for the obligations of the
Settlement Share Depository in respect of the Holders’ and Beneficial Owners’ entitlement to, and subsequent delivery
of, any Alternative Consideration).

 

Section 3.18.Settlement
Procedure. 

 

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(a)Delivery
of the Settlement Shares, or, if the Holder elects, ADSs or the Alternative Consideration, as applicable, to the Holders and Beneficial
Owners shall be made in accordance with the procedures set forth in this ‎Section 3.18, which remain subject to change
to reflect changes in DTC practices and the Company may make changes to the procedures set forth in this ‎Section 3.18
to the extent necessary, in the opinion of the Company, to reflect such changes in DTC practices.

 

(b)The
Settlement Shares Offer Notice shall specify the Suspension Date, provided that the Suspension Date has not previously been specified
in the Conversion Trigger Notice.

 

(c)On
the Suspension Date, the Company shall deliver, to the Trustee directly and to DTC as the Holder of the Global Securities (or,
if the Contingent Capital Notes are in definitive form, to the Holders directly at their addresses shown on the Contingent Convertible
Security Register), a Settlement Request Notice, pursuant to which the Company shall request that Holders and Beneficial Owners
complete a Settlement Notice and shall specify the Notice Cut-off Date and the Final Cancellation Date.

 

(d)Holders
and Beneficial Owners (or the custodian, nominee, broker or other representative thereof) shall not receive delivery of the relevant
Settlement Shares, or, if the Holder elects, ADSs or the Alternative Consideration, as applicable, unless such Holders or Beneficial
Owners (or the custodian, nominee, broker or other representative thereof) deliver the Settlement Notice to the Settlement Share
Depository on or before the Notice Cut-off Date; provided that, if such delivery is made after the end of normal business hours
at the specified office of the Settlement Share Depository, such delivery shall be deemed for all purposes to have been made or
given on the next following Business Day.

 

(e)If
the Contingent Capital Notes are held through DTC, the Settlement Notice must be given in accordance with the standard procedures
of DTC (which may include, without limitation, delivery of the notice to the Settlement Share Depository by electronic means)
and in a form acceptable to DTC and the Settlement Share Depository. With respect to any Contingent Capital Notes held in definitive
form, the Settlement Notice must be delivered to the specified office of the Settlement Share Depository together with the relevant
Contingent Capital Notes.

 

(f)Subject
to satisfaction of the requirements and limitations set forth in this ‎Section 3.18 and provided that the Settlement
Notice and the relevant Contingent Capital Notes, if applicable, are delivered on or before the Notice Cut-Off Date, the Settlement
Share Depository shall deliver the relevant Alternative Consideration or Settlement Shares (rounded down to the nearest whole
number of Settlement Shares) to, or shall deposit such relevant Settlement Shares with the ADS Depository on behalf of, the relevant
Holder or Beneficial Owner (or custodian, nominee, broker or other representative thereof) of the relevant Contingent Capital
Notes completing the relevant Settlement Notice in accordance with the instructions given in such Settlement Notice or its nominee
on the applicable Settlement Date.

 

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(g)Each
Settlement Notice shall be irrevocable. The Settlement Share Depository shall determine, in its sole and absolute discretion,
whether any Settlement Notice has been properly completed and delivered, and such determination shall be conclusive and binding
on the relevant Holder or Beneficial Owner. If any Holder or Beneficial Owner fails to properly complete and deliver a Settlement
Notice and the relevant Contingent Capital Notes, if applicable, the Settlement Share Depository shall be entitled to treat such
Settlement Notice as null and void.

 

(h)Neither
the Company nor any member of the Group shall pay any taxes or duties (including without limitation, any stamp duty, stamp duty
reserve tax, or any other capital issue, transfer, registration, financial transaction or documentary tax or duty) arising upon
Automatic Conversion or that may arise or be paid as a consequence of the issue and delivery of Settlement Shares to the Settlement
Share Depository or in connection with the issue of ADSs. A Holder or Beneficial Owner must pay any taxes or duties (including
without limitation, any stamp duty, stamp duty reserve tax, or any other capital issue, transfer, registration, financial transaction
or documentary tax or duty) arising upon Automatic Conversion in connection with the issue and delivery of the Settlement Shares
to the Settlement Share Depository and/or the issue of ADSs and such Holder or Beneficial Owner must pay all, if any, such taxes
or duties (including without limitation, any stamp duty, stamp duty reserve tax, or any other capital issue, transfer, registration,
financial transaction or documentary tax or duty) arising by reference to any disposal or deemed disposal of such Holders or Beneficial
Owner’s Contingent Capital Note or interest therein. Any taxes and duties (including without limitation, any stamp duty,
stamp duty reserves tax, or any other capital issue, transfer, registration, financial transaction or documentary tax or duty)
arising on delivery or transfer of Settlement Shares to a purchaser in any Settlement Shares Offer shall be payable by the relevant
purchaser of those Settlement Shares.

 

(i)Except
to the extent a Holder or Beneficial Owner has elected to receive ADSs, the Settlement Shares (and the Settlement Share Component,
if any, of any Alternative Consideration) shall not be available for delivery (14) to, or to a nominee for any person providing
a clearance service within the meaning of Section 96 of the Finance Act 1986 of the United Kingdom (which would include delivery
into Euroclear or Clearstream, Luxembourg, but not, subject to (iii) below, delivery into CREST) or (15) to a person, or nominee
or agent for a person, whose business is or includes issuing depository receipts within the meaning of Section 93 of the Finance
Act 1986 of the United Kingdom, in each case at any time prior to the “abolition day” as defined in Section 111(1)
of the Finance Act 1990 of the United Kingdom, or (16) to the CREST account of such a person described in ‎(i) or ‎(ii).

 

(j)The
Company may make changes to the procedures set forth in this ‎Section 3.18 to the extent such changes are reasonably
necessary, in the opinion of the Company, to effect the delivery of the Settlement Shares or, if the Holder elects, ADSs, as applicable,
to the Holders and Beneficial Owners.

 

Section 3.19.Failure
to Deliver a Settlement Notice. If any Holder or Beneficial Owner (or custodian, nominee, broker or other representative thereof)
fails to deliver a

 

     36

     

    

Settlement
Notice and the relevant Contingent Capital Notes, if applicable, to the Settlement Share Depository on or before the Notice Cut-off
Date, the Settlement Share Depository shall continue to hold the Settlement Shares or Alternative Consideration in respect of
such Holder or Beneficial Owner, until a Settlement Notice (and the relevant Contingent Capital Notes, if applicable) are so delivered;
provided, however, that the relevant Contingent Capital Notes shall be cancelled on the Final Cancellation Date,
and any Holder or Beneficial Owner (or custodian, nominee, broker or other representative thereof) of Contingent Capital Notes
delivering a Settlement Notice after the Notice Cut-off Date shall be required to provide evidence of its entitlement to the relevant
Settlement Shares, or, if the Holder elects, ADSs or the Alternative Consideration, as applicable, satisfactory to the Settlement
Share Depository in its sole and absolute discretion in order to receive delivery of such Settlement Shares, Alternative Consideration
or ADSs (if so elected to be deposited with the ADS Depository on its behalf). The Company shall have no liability to any Holder
or Beneficial Owner of the Contingent Capital Notes for any loss resulting from such Holder’s or Beneficial Owner’s
failure to receive any Alternative Consideration, Settlement Shares or ADSs, or from any delay in the receipt thereof, in each
case as a result of such Holder or Beneficial Owner (or custodian, nominee, broker or other representative thereof) failing to
duly submit a Settlement Notice and the relevant Contingent Capital Notes, if applicable, on a timely basis or at all.

 

Section 3.20.Delivery
of ADSs. In respect of Settlement Shares for which Holders or Beneficial Owners elect to be converted into ADSs as specified
in the Settlement Notice, subject to the Company’s right to elect that a Settlement Shares Offer be made in accordance with
‎Section 3.17(a), the Settlement Share Depository shall deposit with the ADS Depository, the number of Settlement Shares
to be issued upon Automatic Conversion of the relevant Contingent Capital Notes, and the ADS Depository shall issue the corresponding
number of ADSs to such Holders or Beneficial Owner (per the ADS-to-ordinary share ratio in effect on the Conversion Date). Once
deposited, the ADS Depository shall be entitled to the economic rights of a holder or beneficial owner of the Settlement Shares
for the purposes of any dividend entitlement and otherwise on behalf of the ADS holders, and the Holder or Beneficial Owner will
become the record holder of the related ADSs for all purposes under the ADS Deposit Agreement. However, the issuance of the ADSs
by the ADS Depository may be delayed until the depositary bank or the custodian receives confirmation that all required approvals
have been given and that the Settlement Shares have been duly transferred to the custodian and that all applicable depositary
fees and payments have been paid to the ADS Depository.

 

Section 3.21.Agreement
with Respect to Exercise of U.K. Bail-in Power.

 

(a)Notwithstanding
any other agreements, arrangements, or understandings between the Company and any Holder or Beneficial Owner of the Contingent
Capital Notes, by its acquisition of the Contingent Capital Notes, each Holder and Beneficial Owner acknowledges, accepts, agrees
to be bound by and consents to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority that may result
in (i) the reduction or cancellation of all, or a portion, of the principal amount of, or interest on, the Contingent Capital
Notes, (ii) the conversion of all, or a portion of, the principal amount of, or interest on, the Contingent Capital Notes into
ordinary shares or other securities or

 

     37

     

    

other
obligations of the Company or another person and/or (iii) the amendment of the amount of interest due on the Contingent Capital
Notes, or the dates on which interest becomes payable, including by suspending payment for a temporary period; which U.K. bail-in
power may be exercised by means of variation to the terms of the Contingent Capital Notes solely to give effect to the above.
With respect to (i), (ii) and (iii) above, references to principal and interest shall include payments of principal and interest
that have become due and payable, but which have not been paid, prior to the exercise of any U.K. bail-in power. Each Holder and
Beneficial Owner of the Contingent Capital Notes further acknowledges and agrees that the rights of the Holders and/or Beneficial
Owners under the Contingent Capital Notes are subject to, and will be varied, if necessary, solely to give effect to the exercise
of any U.K. bail-in power by the relevant U.K. resolution authority. For the avoidance of doubt, the potential conversion of the
Contingent Capital Notes into ordinary shares, other securities or other obligations in connection with the exercise of any U.K.
bail-in power by the relevant U.K. resolution authority is separate and distinct from the Automatic Conversion following a Conversion
Trigger Event.

 

(b)By
its acquisition of the Contingent Capital Notes, each Holder and Beneficial Owner:

 

(i)acknowledges
and agrees that the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Contingent
Capital Notes or cancellation or deemed cancellation of interest on the Contingent Capital Notes pursuant to Sections ‎3.03
or ‎3.04 shall not give rise to a default for purposes of Section 315(b) (Notice of Default) and Section
315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act;

 

(ii)to
the extent permitted by the Trust Indenture Act, waives any and all claims against the Trustee for, agrees not to initiate a suit
against the Trustee in respect of, and agrees that the Trustee shall not be liable for, any action that the Trustee takes, or
abstains from taking, in either case in accordance with the exercise of the U.K. bail-in power by the relevant U.K. resolution
authority with respect to the Contingent Capital Notes;

 

(iii)acknowledges
and agrees that, (a) upon the exercise of any U.K. bail-in power by the relevant U.K. resolution authority, (a) the Trustee shall
not be required to take any further directions from Holders or Beneficial Owners of the Contingent Capital Notes under Section
5.12 of the Contingent Convertible Securities Indenture and (b) the Indenture shall impose no duties upon the Trustee whatsoever
with respect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. Notwithstanding the foregoing,
if, following the completion of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority, the Contingent
Capital Notes remain outstanding (for example, if the exercise of the U.K. bail-in power results in only a partial write-down
of the principal of the Contingent Capital Notes) then the Trustee’s duties under the Indenture shall remain applicable
with respect to the Contingent Capital Notes following such completion to the extent that the Company and the Trustee

 

     38

     

    

agree
pursuant to a supplemental indenture, unless the Company and the Trustee agree that a supplemental indenture is not necessary;
and

 

(iv)shall
be deemed to have (y) consented to the exercise of any U.K. bail-in power as it may be imposed without any prior notice by the
relevant U.K. resolution authority of its decision to exercise such power with respect to the Contingent Capital Notes and (z)
authorized, directed and requested DTC and any direct participant in DTC or other intermediary through which it holds such Contingent
Capital Notes to take any and all necessary action, if required, to implement the exercise of any U.K. bail-in power with respect
to the Contingent Capital Notes as it may be imposed, without any further action or direction on the part of such Holder and such
Beneficial Owner or the Trustee.

 

(c)Each
Holder or Beneficial Owner that acquires its Contingent Capital Notes in the secondary market shall be deemed to acknowledge and
agree to be bound by and consent to the same provisions specified in the Indenture to the same extent as the Holders and Beneficial
Owners that acquire the Contingent Capital Notes upon their initial issuance, including, without limitation, with respect to the
acknowledgement and agreement to be bound by and consent to the terms of the Contingent Capital Notes, including in relation to
interest cancellation, Automatic Conversion, the U.K. bail-in power, the Settlement Shares Offer, the write-down in the event
of a Non-Qualifying Takeover Event and the limitations on remedies specified in ‎Section 5.04 hereof.

 

(d)No
payment of the principal amount of the Contingent Capital Notes following any proposed redemption of the Contingent Capital Notes
or payment of interest on the Contingent Capital Notes shall become due and payable after the exercise of any U.K. bail-in power
by the relevant U.K. resolution authority unless, at the time that such repayment or payment, respectively, is scheduled to become
due, such repayment or payment would be permitted to be made by the Company under the laws and regulations of the United Kingdom
and the European Union applicable to the Company and the Group.

 

(e)Upon
the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Contingent Capital Notes,
the Company shall provide a written notice to DTC as soon as practicable regarding such exercise of the U.K. bail-in power for
purposes of notifying Holders and Beneficial Owners of such occurrence. The Company shall also deliver a copy of such notice to
the Trustee for information purposes.

 

(f)The
Company’s obligations to indemnify the Trustee in accordance with Section 6.07 of the Contingent Convertible Securities
Indenture shall survive any exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Contingent
Capital Notes and any Automatic Conversion hereunder.

 

(g)The
exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Contingent Capital Notes shall
not constitute an Enforcement Event.

 

     39

     

    

Article
4

Anti-Dilution

 

Section 4.01.Adjustment
of Conversion Price. Upon the occurrence of any of the events described below, the Conversion Price shall be adjusted as follows:

 

(a)If
and whenever there shall be a consolidation, reclassification, redesignation or subdivision in relation to the ordinary shares
which alters the number of ordinary shares in issue, the Conversion Price shall be adjusted by multiplying the Conversion Price
in force immediately prior to such consolidation, reclassification, redesignation or subdivision by the following fraction:

 

	 	A

    B

 

where:

 

		A	is the aggregate number of ordinary
                                         shares in issue immediately before such consolidation, reclassification, redesignation
                                         or subdivision, as the case may be; and

 

		B	is the aggregate number of ordinary
                                         shares in issue immediately after, and as a result of, such consolidation, reclassification,
                                         redesignation or subdivision, as the case may be.

 

			Such adjustment shall become effective
                                         on the date the consolidation, reclassification, redesignation or subdivision, as the
                                         case may be, takes effect.

 

(b)If
and whenever the Company shall issue any ordinary shares to Shareholders credited as fully paid by way of capitalization of profits
or reserves (including any share premium account or capital redemption reserve) other than (1) where any such ordinary shares
are or are to be issued instead of the whole or part of a Cash Dividend which the Shareholders would or could otherwise have elected
to receive, (2) where the Shareholders may elect to receive a Cash Dividend in lieu of such ordinary shares or (3) where any such
ordinary shares are or are expressed to be issued in lieu of a dividend (whether or not a Cash Dividend equivalent or amount is
announced or would otherwise be payable to the Shareholders, whether at their election or otherwise), the Conversion Price shall
be adjusted by multiplying the Conversion Price in force immediately prior to such issue by the following fraction:

 

	 	A

    B

 

where:

 

		A	is the aggregate number of ordinary
                                         shares in issue immediately before such issue; and

 

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		B	is the aggregate number of ordinary
                                         shares in issue immediately after such issue.

 

Such
adjustment shall become effective on the date of issue of such ordinary shares.

 

(c)If
and whenever the Company shall pay any Extraordinary Dividend to its Shareholders, the Conversion Price shall be adjusted by multiplying
the Conversion Price in force immediately prior to the Effective Date by the following fraction:

 

	 	A – B

       A

 

where:

 

		A	is the Current Market Price of one
                                         ordinary share on the Effective Date; and

 

		B	is the portion of the aggregate Extraordinary
                                         Dividend attributable to one ordinary share, with such portion being determined by dividing
                                         the aggregate Extraordinary Dividend by the number of ordinary shares entitled to receive
                                         the relevant Extraordinary Dividend. If the Extraordinary Dividend shall be expressed
                                         in a currency other than the Relevant Currency, it shall be converted into the Relevant
                                         Currency at the Prevailing Rate on the relevant Effective Date.

 

			Such adjustment shall become effective
                                         on the Effective Date.

 

“Effective
Date” means, in respect of this ‎Section 4.01(c),
the first date on which the ordinary shares are traded ex-the Extraordinary Dividend on the Relevant Stock Exchange.

 

(d)If
and whenever the Company shall issue ordinary shares to its Shareholders as a class by way of rights or the Company or any member
of the Group or (at the direction or request or pursuant to arrangements with the Company or any member of the Group) any other
company, person or entity, shall issue or grant to Shareholders as a class by way of rights, any options, warrants or other rights
to subscribe for or purchase ordinary shares, or any Other Securities which by their terms of issue carry (directly or indirectly)
rights of conversion into, or exchange or subscription for, any ordinary shares (or shall grant any such rights in respect of
existing Other Securities so issued), in each case at a price per ordinary share which is less than 95% of the Current Market
Price per ordinary share on the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion Price in
force immediately prior to the Effective Date by the following fraction:

 

	 	A + B

    A + C

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where:

 

		A	is the number of ordinary shares
                                         in issue on the Effective Date;

 

		B	is the number of ordinary shares
                                         which the aggregate consideration (if any) receivable for the ordinary shares issued
                                         by way of rights, or for the Other Securities issued by way of rights, or for the options
                                         or warrants or other rights issued by way of rights and for the total number of ordinary
                                         shares deliverable on the exercise thereof, would purchase at such Current Market Price
                                         per ordinary share on the Effective Date; and

 

		C	is the number of ordinary shares
                                         to be issued or, as the case may be, the maximum number of ordinary shares which may
                                         be issued upon exercise of such options, warrants or rights calculated as at the date
                                         of issue of such options, warrants or rights or upon conversion or exchange or exercise
                                         of rights of subscription or purchase in respect thereof at the initial conversion, exchange,
                                         subscription or purchase price or rate.

 

provided that
if, on the Effective Date, such number of ordinary shares is to be determined by reference to the application of a formula or
other variable feature or the occurrence of any event at some subsequent time, then for the purposes of this ‎Section
4.01(d), “C” shall be determined by the application of such formula or variable feature or as if the relevant event
occurs or had occurred as at the Effective Date and as if such conversion, exchange, subscription, purchase or acquisition had
taken place on the Effective Date.

 

Such adjustment
shall become effective on the Effective Date.

 

“Effective
Date” means, in respect of this ‎Section 4.01(d),
the first date on which the ordinary shares are traded ex-rights, ex-options or ex-warrants on the Relevant Stock Exchange.

 

For the
purpose of any calculation of the consideration receivable or price pursuant to this ‎Section
4.01(d), the following provisions shall apply:

 

		(i)	the aggregate consideration receivable
                                         or price for ordinary shares issued for cash shall be the amount of such cash;

 

		(ii)	(x) the aggregate consideration
                                         receivable or price for ordinary shares to be issued or otherwise made available upon
                                         the conversion or exchange of any Other Securities shall be deemed to be the consideration
                                         or price received or receivable for any such Other Securities and (y) the aggregate consideration
                                         receivable or price for ordinary shares to be issued or otherwise made available upon
                                         the exercise of rights of subscription attached to any Other Securities or upon the exercise
                                         of any options,

 

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warrants
or rights shall be deemed to be that part (which may be the whole) of the consideration or price received or receivable for such
Other Securities or, as the case may be, for such options, warrants or rights which are attributed by the Company to such rights
of subscription or, as the case may be, such options, warrants or rights or, if no part of such consideration or price is so attributed,
the Fair Market Value of such rights of subscription or, as the case may be, such options, warrants or rights as at the relevant
Effective Date, plus in the case of each of (x) and (y) above, the additional minimum consideration receivable or price (if any)
upon the conversion or exchange of such Other Securities, or upon the exercise of such rights of subscription attached thereto
or, as the case may be, upon exercise of such options, warrants or rights and (z) the consideration receivable or price per ordinary
share upon the conversion or exchange of, or upon the exercise of such rights of subscription attached to, such Other Securities
or, as the case may be, upon the exercise of such options, warrants or rights shall be the aggregate consideration or price referred
to in (x) or (y) above (as the case may be) divided by the number of ordinary shares to be issued upon such conversion or exchange
or exercise at the initial conversion, exchange or subscription price or rate;

 

		(iii)	if the consideration or price
                                         determined pursuant to (i) or (ii) above (or any component thereof) shall be expressed
                                         in a currency other than the Relevant Currency, it shall be converted into the Relevant
                                         Currency at the Prevailing Rate on the relevant Effective Date;

 

		(iv)	in determining the consideration
                                         or price pursuant to the above, no deduction shall be made for any commissions or fees
                                         (howsoever described) or any expenses paid or incurred for any underwriting, placing
                                         or management of the issue of the relevant ordinary shares or Other Securities or options,
                                         warrants or rights, or otherwise in connection therewith; and

 

		(v)	the consideration or price shall
                                         be determined as provided above on the basis of the consideration or price received,
                                         receivable, paid or payable, regardless of whether all or part thereof is received, receivable,
                                         paid or payable by or to the Company or another entity.

 

		(e)	Notwithstanding provisions
of Sections ‎4.01(a) through ‎(d) above:

 

(i)where
the events or circumstances giving rise to any adjustment to the Conversion Price have already resulted or will result in an adjustment
to the Conversion Price or the events or circumstances giving rise to any adjustment arise by virtue of any other events or circumstances
that have already given or will give rise to an adjustment to the Conversion Price or where more than one event which gives rise
to an adjustment to the Conversion Price occurs within such a short period of time that, in the opinion of the Company, a modification
to the adjustment provisions is required to give the intended result, such

 

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modification
shall be made to the operation of the provisions of ‎Section 4.01(a) to ‎Section 4.01(d) as
may be determined in good faith by an Independent Financial Adviser to be in its opinion appropriate to give the intended result;

 

(ii)such
modification shall be made to the operation of the provisions of ‎Section 4.01(a) to ‎Section
4.01(d) as may be determined in good faith by an Independent Financial Adviser to be in its opinion appropriate (x) to ensure
that an adjustment to the Conversion Price or the economic effect thereof shall not be taken into account more than once, (y)
to ensure that the economic effect of an Extraordinary Dividend is not taken into account more than once, and (z) to reflect a
redenomination of the issued ordinary shares for the time being into a new currency;

 

(iii)other
than provided under paragraphs (i) and (ii) above, if any doubt shall arise as to whether an adjustment falls to be made to the
Conversion Price or as to the appropriate adjustment to the Conversion Price, the Company may at its discretion appoint an Independent
Financial Adviser and, following consultation between the Company and such Independent Financial Adviser, a written opinion of
such Independent Financial Adviser in respect thereof shall be conclusive and binding on the Company, the Holders and the Beneficial
Owners, save in the case of manifest error;

 

(iv)no
adjustment will be made to the Conversion Price where ordinary shares or Other Securities (including rights, warrants and options)
are issued, offered, exercised, allotted, purchased, appropriated, modified or granted to, or for the benefit of, employees or
former employees (including directors holding or formerly holding executive office or the personal service company of any such
person) or their spouses or relatives, in each case, of the Company or any of its Subsidiaries or any associated company or to
a trustee or trustees to be held for the benefit of any such person, in any such case pursuant to any share or option scheme;

 

(v)on
any adjustment, if the resultant Conversion Price has more decimal places than the initial Conversion Price, it shall be rounded
to the same number of decimal places as the initial Conversion Price (with 0.005 being rounded down). No adjustment shall be made
to the Conversion Price where such adjustment (rounded down if applicable) would be less than 1% of the Conversion Price then
in effect. Any adjustment not required to be made pursuant to the above, and/or any amount by which the Conversion Price has been
rounded down, shall be carried forward and taken into account in any subsequent adjustment, and such subsequent adjustment shall
be made on the basis that the adjustment not required to be made had been made at the relevant time and/or, as the case may be,
that the relevant rounding down had not been made;

 

(vi)notice
of any adjustments to the Conversion Price shall be given by the Company to DTC as the Holder of the Global Securities (or, if
the Contingent

 

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Capital
Notes are in definitive form, via the Trustee) promptly after the determination thereof;

 

(vii)any
adjustment to the Conversion Price shall be subject to such Conversion Price not being less than the U.S. dollar equivalent of
the nominal amount of an ordinary share at such time (currently £1.00). The Company undertakes that it shall not take any
action, and shall procure that no action is taken, that would otherwise result in an adjustment to the Conversion Price to below
such nominal value then in effect; and

 

(viii)references
to the Conversion Price shall be deemed to include the Settlement Shares Offer Price. References to the Conversion Price and ordinary
shares shall be deemed to include any New Conversion Price and any Relevant Shares, such that any New Conversion Price shall be
subject to price adjustments upon the occurrence of the events of set forth in Sections ‎4.01(a) through ‎(d)
above, subject to any modifications as an Independent Financial Adviser shall determine to be appropriate.

 

Section 4.02.Takeover
Event.

 

(a)Within
ten (10) days following the occurrence of a Takeover Event, the Company shall give notice thereof to the Holders and Beneficial
Owners by means of a “Takeover Event Notice”, with a copy to the Trustee.

 

(b)The
Takeover Event Notice shall specify:

 

		(i)	the identity of the Acquirer;

 

		(ii)	whether the Takeover Event is
                                         a Qualifying Takeover Event or a Non-Qualifying Takeover Event;

 

		(iii)	if it is a Qualifying Takeover
                                         Event, the New Conversion Price; and

 

		(iv)	in the case of a Non-Qualifying
                                         Takeover Event, unless the Conversion Date shall have occurred prior to the date of the
                                         Non-Qualifying Takeover Event, that, following such Non-Qualifying Takeover Event, outstanding
                                         Contingent Capital Notes shall not be subject to Automatic Conversion at any time notwithstanding
                                         that a Conversion Trigger Event may have occurred or may occur subsequently but that,
                                         instead, upon any subsequent Conversion Trigger Event (or where the Conversion Date occurs
                                         on or after the date of the Non-Qualifying Takeover Event), the principal amount of each
                                         Contingent Capital Note will be automatically written down to zero, the Contingent Capital
                                         Notes will be cancelled, the Holders and Beneficial Owners will be automatically deemed
                                         to have irrevocably waived their right to receive, and no longer have any rights against
                                         the Company with respect to repayment of the aggregate principal amount of the Contingent
                                         Capital Notes so written down and all Accrued Interest and any other amounts payable
                                         on the Contingent Capital Notes shall be

 

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automatically
cancelled, irrespective of whether such amounts have become due and payable prior to the occurrence of the Conversion Trigger
Event.

 

(c)If
a Qualifying Takeover Event occurs, the Contingent Capital Notes shall, where the Conversion Date (if any) falls on or after the
New Conversion Condition Effective Date, be converted on such Conversion Date into Relevant Shares of the Approved Entity, mutatis
mutandis as provided under ‎Section 3.15 above, at a Conversion Price that shall be the New Conversion Price. Such
conversion shall be effected by the delivery by the Company of such number of Settlement Shares as set forth under ‎Section
3.15 above to, or to the order of, the Approved Entity. Such delivery shall irrevocably discharge and satisfy all of the Company’s
obligations under the Contingent Capital Notes, but shall be without prejudice to the rights of the Trustee and the Holders and
Beneficial Owners against the Approved Entity in connection with its undertaking to deliver Relevant Shares as provided in the
definition of “New Conversion Condition”. Such delivery shall be in consideration of the Approved Entity irrevocably
undertaking for the benefit of the Holders and Beneficial Owners to deliver the Relevant Shares to the Settlement Share Depository.
For the avoidance of doubt, the Company may elect that a Settlement Shares Offer be made by the Settlement Share Depository in
respect of the Relevant Shares.

 

(d)The
New Conversion Price shall be subject to adjustment in the circumstances provided for under Sections ‎4.01(a) through
‎4.01(d) above (if necessary with such modifications as an Independent Financial Adviser acting in good faith shall
determine to be appropriate), and the Company shall give notice to the Holders of the New Conversion Price and of any such modifications
thereafter.

 

(e)In
the case of a Qualifying Takeover Event:

 

(i)the
Company shall, on or prior to the New Conversion Condition Effective Date, enter into such agreements and arrangements (including,
without limitation, supplemental indentures to the Indenture and amendments and modifications to the terms and conditions of the
Contingent Capital Notes and the Indenture) as may be required to ensure that, effective upon the New Conversion Condition Effective
Date, the Contingent Capital Notes shall (following the occurrence of a Conversion Trigger Event) be convertible into, or exchangeable
for, Relevant Shares of the Approved Entity, mutatis mutandis in accordance with, and subject to, the provisions of ‎Section
3.15 of this Third Supplemental Indenture (as may be supplemented or amended), at the New Conversion Price; and

 

(ii)subject
as set out above, the Company shall, where the Conversion Date falls on or after the New Conversion Condition Effective Date,
procure (to the extent within its control) the issue and/or delivery of the relevant number of Relevant Shares mutatis mutandis
in the manner provided under ‎Section 3.16 of this Third Supplemental Indenture (as may be supplemented
or amended).

 

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(f)Upon
a Conversion Trigger Event occurring subsequently to a Non-Qualifying Takeover Event, the Company shall provide a written notice
to DTC as soon as practicable regarding the automatic write-down to zero of the Contingent Capital Notes for purposes of notifying
Holders of such occurrence. The Company shall also deliver a copy of such notice to the Trustee for information purposes.

 

Section 4.03.Agreement
with Respect to a Non-Qualifying Takeover Event.

 

(a)By
its acquisition of the Contingent Capital Notes, each Holder and Beneficial Owner:

 

(i)acknowledges
and agrees that in the case of a Non-Qualifying Takeover Event, unless the Conversion Date shall have occurred prior to the date
of the Non-Qualifying Takeover Event, following such Non-Qualifying Takeover Event, outstanding Contingent Capital Notes shall
not be subject to Automatic Conversion at any time notwithstanding that a Conversion Trigger Event may have occurred or may occur
subsequently but that, instead, upon any subsequent Conversion Trigger Event (or where the Conversion Date occurs on or after
the date of a Non-Qualifying Takeover Event), the principal amount of each Contingent Capital Note will be automatically written
down to zero, the Contingent Capital Notes will be cancelled, it will be automatically deemed to have irrevocably waived its right
to receive, and no longer have any rights against the Company with respect to repayment of the aggregate principal amount of the
Contingent Capital Notes so written down and all Accrued Interest and any other amounts payable on the Contingent Capital Notes
shall be automatically cancelled, irrespective of whether such amounts have become due and payable prior to the occurrence of
the Conversion Trigger Event;

 

(ii)acknowledges
and agrees that a write-down of the Contingent Capital Notes upon the occurrence of a Conversion Trigger Event following a Non-Qualifying
Takeover Event with respect to the Contingent Capital Notes shall not give rise to a default for purposes of Section 315(b) (Notice
of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act;

 

(iii)to
the extent permitted by the Trust Indenture Act, waives any and all claims against the Trustee for, agrees not to initiate a suit
against the Trustee in respect of, and agrees that the Trustee shall not be liable for, any action taken by the Trustee or which
the Trustee abstains from taking, in either case in connection with the write-down to zero of the Contingent Capital Notes following
the occurrence of a Conversion Trigger Event subsequently to any Non-Qualifying Takeover Event;

 

(iv)acknowledges
and agrees that, (c) in connection with the write-down to zero of the Contingent Capital Notes following the occurrence of a Conversion
Trigger Event subsequently to any Non-Qualifying Takeover Event, (a) the Trustee shall not be required to take any further directions
from Holders or

 

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Beneficial
Owners of the Contingent Capital Notes under Section 5.12 of the Contingent Convertible Securities Indenture and (d) the Indenture
shall impose no additional duties upon the Trustee whatsoever in connection with the write-down to zero of the Contingent Capital
Notes following the occurrence of a Conversion Trigger Event subsequently to any Non-Qualifying Takeover Event;

 

(v)shall
be deemed to have authorized, directed and requested DTC and any direct participant in DTC or other intermediary through which
it holds such Contingent Capital Notes to take any and all necessary action, if required, to implement the write-down to zero
of the Contingent Capital Notes, without any further action or direction on the part of such Holders and such Beneficial Owners
of the Contingent Capital Notes or the Trustee;

 

(b)A
write-down of the Contingent Capital Notes upon the occurrence of a Conversion Trigger Event following a Non-Qualifying Takeover
Event with respect to the Contingent Capital Notes will not constitute an Enforcement Event.

 

Article
5

Enforcement Events and Remedies

 

With respect
to the Contingent Capital Notes only, ‎Section 5.01 of the
Contingent Convertible Securities Indenture shall be amended and restated in its entirety as follows in ‎Section
5.01 hereof, Section 5.02 of the Contingent Convertible Securities Indenture shall be amended and restated in its entirety as
follows in Sections ‎5.02 and ‎5.03
hereof, Section 5.03(a) of the Contingent Convertible Securities Indenture shall be amended and restated in its entirety as follows
in ‎Section 5.04 hereof, Section 5.03(b) of the Contingent
Convertible Securities Indenture shall be amended and restated in its entirety as follows in ‎Section
6.02 hereof, Section 5.13 of the Contingent Convertible Securities Indenture shall be amended and restated in its entirety as
follows in ‎Section 5.05 hereof, and references in the Contingent
Convertible Securities Indenture to such Sections shall be to such Sections as amended and restated in their entirety by this
Third Supplemental Indenture. Section 5.07 and Section 5.10 of the Contingent Convertible Securities Indenture shall apply to
the Contingent Capital Notes subject to the limitations on remedies specified in this ‎Article
5.

 

Section 5.01.Winding-up
or Administration Event. If a Winding-up or Administration Event occurs prior to the occurrence of a Conversion Trigger Event,
subject to the subordination provisions of ‎Article 6, the principal amount of the Contingent Capital Notes shall become
immediately due and payable, without the need of any further action on the part of the Trustee, the Holders or any other Person,
including the declaration by the Trustee, the Holders or any other Person that the principal amount of the Contingent Capital
Notes will become immediately due and payable.

 

Section 5.02.Non-Payment
Event. If the Company does not make payment of principal in respect of the Contingent Capital Notes for a period of fourteen
(14) calendar days or more after the date on which such payment is due (a “Non-Payment Event”), then the Trustee,
on behalf of the Holders and Beneficial Owners, may, at its discretion,

 

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or
shall at the direction of Holders of 25% or more of the aggregate principal amount of Outstanding Contingent Capital Notes, subject
to any applicable laws, institute proceedings for the winding up of the Company. In the event of a Winding-up or Administration
Event or a liquidation of the Company, whether or not instituted by the Trustee, the Trustee may prove the claims of the Holders,
Beneficial Owners and the Trustee in the Winding up or Administration Event and/or claim in the liquidation of the Company, such
claims as set out in ‎Section 6.01 hereof. For the avoidance of doubt, the Trustee may not declare the principal amount
of any outstanding Contingent Capital Notes to be due and payable and may not pursue any other legal remedy, including a judicial
proceeding for the collection of the sums due and unpaid on the Contingent Capital Notes.

 

Section 5.03.Limited
Remedies for Breach of Performance Obligations. In the event of a breach of any term, obligation or condition binding upon
the Company under the Contingent Capital Notes or the Indenture (other than any payment obligation of the Company under or arising
from the Contingent Capital Notes or the Indenture, including payment of any principal or interest, including any damages awarded
for breach of any obligation) (such obligation, a “Performance Obligation”), the Trustee may without
further notice institute such proceedings against the Company as it may deem fit to enforce the Performance Obligation, provided
that the Company shall not by virtue of the institution of any such proceedings be obliged to pay any sum or sums, in cash or
otherwise (including damages) earlier than the same would otherwise have been payable under the Contingent Capital Notes or the
Indenture. For the avoidance of doubt, any breach by the Company of any Performance Obligation shall not confer upon the Trustee
(acting on behalf of the Holders) and/or the Holders or Beneficial Owners of the Contingent Capital Notes any claim for damages
and, in the event of such a breach of a Performance Obligation, the sole and exclusive remedy that the Trustee (acting on behalf
of the Holders) and/or the Holders or Beneficial Owners of the Contingent Capital Notes may seek under the Contingent Capital
Notes and the Indenture is specific performance under the laws of the State of New York. By its acquisition of the Contingent
Capital Notes, each Holder and Beneficial Owner of the Contingent Capital Notes acknowledges and agrees (i) that such Holder and
Beneficial Owner shall not seek, and shall not direct the Trustee (acting on their behalf) to seek, any claim for damages against
the Company in respect of any breach by the Company of a Performance Obligation, and (ii) that the sole and exclusive remedy that
such Holder and Beneficial Owner and/or the Trustee (acting on their behalf) may seek under the Contingent Capital Notes and the
Indenture for a breach by the Company of a Performance Obligation is specific performance under the laws of the State of New York.

 

Section 5.04.No
Other Remedies and Other Terms. 

 

(a)Other
than the limited remedies specified in this ‎Article 5, and subject to paragraph ‎(c) below, no remedy against
the Company shall be available to the Trustee (acting on behalf of the Holders) or to the Holders and Beneficial Owners, whether
for the recovery of amounts owing in respect of such Contingent Capital Notes or under the Indenture, or in respect of any breach
by the Company of any of the Company’s obligations under or in respect of the terms of such Contingent Capital Notes or
under the

 

     49

     

    

Indenture
in relation thereto; provided, however, that the Company’s obligations to the Trustee under, and the Trustee’s
lien provided for in, Section 6.07 of the Contingent Convertible Securities Indenture and the Trustee’s rights to have money
collected applied first to pay amounts due to it under such Section pursuant to Section 5.06 of the Contingent Convertible Securities
Indenture shall not be limited or impaired by this Article 5 or otherwise and expressly survive any Enforcement Event and are
not subject to the subordination provisions of ‎Section 6.01 of this Third Supplemental Indenture.

 

(b)For
purposes of the Contingent Convertible Securities Indenture, “Event of Default” shall mean an “Enforcement
Event” as defined in this Third Supplemental Indenture, except that the term “Event of Default” as used
in Article 8 of the Contingent Convertible Securities Indenture shall mean “Winding-up or Administration Event”
and as used in Article 5.08 of the Contingent Convertible Securities Indenture shall mean “Non-Payment Event”.

 

(c)Notwithstanding
the limitations on remedies specified in this ‎Article 5, (i) the Trustee shall have such powers as are required to
be authorized to it under the Trust Indenture Act in respect of the rights of the Holders and Beneficial Owners under the provisions
of the Indenture, and (ii) nothing shall impair the right of a Holder or Beneficial Owner of the Contingent Capital Notes under
the Trust Indenture Act, absent such Holder’s or Beneficial Owner’s consent, to sue for any payment due but unpaid
with respect to the Contingent Capital Notes as provided for in Section 5.08 of the Contingent Convertible Securities Indenture;
provided that, in the case of (i) and (ii) above, any payments in respect of, or arising from, the Contingent Capital Notes, including
any payments or amounts resulting or arising from the enforcement of any rights under the Trust Indenture Act in respect of the
Contingent Capital Notes, shall be subject to the subordination provisions set forth in ‎Section 6.01 of this Third
Supplemental Indenture.

 

(d)In
furtherance of Section 6.01 of the Contingent Convertible Securities Indenture:

 

(i)For
purposes of Sections 315(a) and 315(c) of the Trust Indenture Act, the term “default” is hereby defined to mean an
Enforcement Event which has occurred and is continuing.

 

(ii)Notwithstanding
anything contained in the Contingent Convertible Securities Indenture to the contrary, the duties and responsibilities of the
Trustee under this Indenture shall be subject to the protections, exculpations and limitations on liability afforded to an indenture
trustee under the provisions of the Trust Indenture Act.

 

Section 5.05.Waiver
of Past Defaults.

 

(a)Holders
of not less than a majority in aggregate principal amount of the Outstanding Contingent Convertible Securities may on behalf of
the Holders of all of the Contingent Capital Notes waive any past Enforcement Event that results from a breach by the Company
of a Performance Obligation. Holders of a majority of the aggregate

 

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principal
amount of the Outstanding Contingent Capital Notes shall not be entitled to waive any past Enforcement Event that results from
a Winding-up or Administration Event or a Non-Payment Event.

 

(b)Upon
the occurrence of any waiver permitted by paragraph ‎(a) above, such Enforcement Event shall cease to exist, and any
Enforcement Event with respect to the Contingent Capital Notes arising therefrom shall be deemed to have been cured and not to
have occurred for every purpose of the Contingent Convertible Securities Indenture, but no such waiver shall extend to any subsequent
or other Enforcement Event or impair any right consequent thereon.

 

Article
6

Subordination

 

Section 6.01.Subordination
to Claims of Senior Creditors.

 

(a)With
respect to the Contingent Capital Notes only, and pursuant to Section 12.01(a) of the Contingent Convertible Securities Indenture,
the extent and manner in which the payment of principal of (and premium, if any) and interest, if any, on the Contingent Convertible
Securities is subordinated to the claims of the holders of certain other present or future obligations of the Company shall be
determined as set out in this ‎Section 6.01. References in the Contingent Convertible Securities Indenture to Section
12.01(a) thereof shall be to ‎Section 6.01 hereof. For the avoidance of doubt, no provision of Article 12 of the Contingent
Convertible Securities Indenture other than replacing Section 12.01(a) with this ‎Section 6.01 shall be amended by
this Third Supplemental Indenture.

 

(b)The
Contingent Capital Notes shall constitute the Company’s direct, unsecured and subordinated obligations, ranking pari
passu without any preference among themselves. The rights and claims of the Holders and Beneficial Owners in respect of or
arising from the Contingent Capital Notes (including any damages, if payable) shall be subordinated to the claims of Senior Creditors.

 

(c)If
a Winding-up or Administration Event occurs before the date on which the Conversion Trigger Event occurs, there shall be payable
by the Company in respect of each Contingent Capital Note (in lieu of any other payment by the Company) such amount, if any, as
would have been payable to a Holder or Beneficial Owner if, on the day prior to the commencement of the Winding-up or Administration
Event and thereafter, such Holder or Beneficial Owner were the holder of one of a class of Notional Preference Shares on the assumption
that the amount that such Holder or Beneficial Owner was entitled to receive in respect of such Notional Preference Shares, on
a return of assets in such Winding-up or Administration Event, was an amount equal to the principal amount of the relevant Contingent
Capital Note, together with any Accrued Interest and any damages (if payable), regardless of whether the Solvency Condition is
satisfied on the date upon which the same would otherwise be due and payable.

 

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(d)If
a Winding-up or Administration Event occurs on or after the date on which the Conversion Trigger Event occurs but the Settlement
Shares to be issued and delivered to the Settlement Share Depository on the Conversion Date have not been so delivered, there
shall be payable by the Company in respect of each Contingent Capital Note (in lieu of any other payment by the Company) such
amount, if any, as would have been payable to the Holder or Beneficial Owner of such Contingent Capital Note in a Winding-up or
Administration Event if the Conversion Date in respect of the Automatic Conversion had occurred immediately before the occurrence
of a Winding-up or Administration Event (and, as a result, such Holder or Beneficial Owner were the holder of such number of the
Company’s ordinary shares as such Holder or Beneficial Owner would have been entitled to receive on the Conversion Date,
ignoring for this purpose the Company’s right to make an election for a Settlement Shares Offer to be effected pursuant
to ‎Section 3.17 hereof), regardless of whether the Solvency Condition is satisfied on the date upon which the same
would otherwise be due and payable.

 

(e)Other
than in the event of a Winding-up or Administration Event of the Company as described in paragraph ‎(c) and ‎(d)
above, or in relation to the Cash Component of any Alternative Consideration in any Settlement Shares Offer, payments in respect
of or arising from the Contingent Capital Notes (including any damages for breach of any obligations thereunder) shall, in addition
to the right of the Company to cancel payments of interest pursuant to ‎Section 3.03 or ‎3.04 hereof, be
conditional upon the Company’s being solvent at the time when the relevant payment is due to be made, and no principal,
interest or other amount shall be due and payable in respect of or arising from the Contingent Capital Notes except to the extent
that the Company could make such payment and still be solvent immediately thereafter (such condition referred to herein as the
“Solvency Condition”). For purposes of determining whether the Solvency Condition is met, the Company shall
be considered to be solvent at a particular point in time if (i) it is able to pay its debts as they fall due and (ii) its Assets
are at least equal to its Liabilities. An Officer’s Certificate (which shall only be required if the Company at the relevant
time has not satisfied the Solvency Condition and is relying on that fact as the basis for not making a payment on the Contingent
Capital Notes) as to the Company’s solvency shall, unless there is manifest error, be treated and accepted by the Company,
the Trustee and any Holder as correct and sufficient evidence that the Solvency Condition is not satisfied. If the Company fails
to make a payment because the Solvency Condition is not satisfied, such payment shall not be or become due and payable and shall
be deemed cancelled.

 

Section 6.02.No
Set-Off. Subject to applicable law, the Trustee (acting on behalf of the Holders) and the Holders of the Contingent Capital
Notes by their acceptance thereof will be deemed to have waived any right of set-off, counterclaim or combination of accounts
with respect to the Contingent Capital Notes, this Third Supplemental Indenture or the Contingent Convertible Securities Indenture
(or between the Company’s obligations under or in respect of the Contingent Capital Notes and any liability owed by a Holder
to the Company) that they (or the Trustee acting on their behalf) might otherwise have against the Company, whether before or
during any Winding-up or Administration Event. Notwithstanding the above, if any of such rights and claims of any such Holder
(or the Trustee acting on behalf of such Holders) against

 

     52

     

    

the
Company are discharged by set-off, such Holder (or the Trustee acting on behalf of such Holders) will immediately pay an amount
equal to the amount of such discharge to the Company or, in the event of any Winding-up or Administration Event, the liquidator
or administrator (or other relevant insolvency official), as the case may be, to be held on trust for the Senior Creditors and
until such time as payment is made will hold a sum equal to such amount on trust for the Senior Creditors and accordingly such
discharge shall be deemed not to have taken place.

 

Article
7

Satisfaction and Discharge

 

Section 7.01.Satisfaction
and Discharge of Indenture. For purposes of the Contingent Capital Notes, ‎Section 4.01 of the Contingent Convertible
Securities Indenture shall be amended and restated in its entirety and shall read as follows:

 

This Indenture shall
upon Company Request cease to be of further effect with respect to the Contingent Capital Notes (except as to any surviving rights
of registration of transfer of the Contingent Capital Notes herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and discharge of the Indenture with respect to the Contingent
Capital Notes when:

 

(a)all
Contingent Capital Notes theretofore authenticated and delivered (other than Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.06 of the Contingent Convertible Securities Indenture) have been
delivered to the Trustee for cancellation;

 

(b)the
Company has paid or caused to be paid all other sums payable hereunder (including Accrued Interest, if any) by the Company with
respect to the Contingent Capital Notes; and

 

(c)the
Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of the Indenture with respect to the Contingent Capital
Notes have been complied with.

 

Notwithstanding
any satisfaction and discharge of the Indenture, the obligations of the Company to the Trustee under Section 6.07 of the Contingent
Convertible Securities Indenture, the obligations of the Trustee to any Authenticating Agent under Section 6.14 of the Contingent
Convertible Securities Indenture and the obligations of the Trustee under ‎Section
4.02 of the Contingent Convertible Securities Indenture and the last paragraph of Section 10.03 of the Contingent Convertible
Securities Indenture shall survive such satisfaction and discharge.

 

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Article
8

Supplemental Indentures

 

Section 8.01.Amendments
or Supplements without Consent of Holders. In addition to any permitted amendment or supplement to the Contingent Convertible
Securities Indenture pursuant to ‎Section 9.01 of the Contingent Convertible Securities Indenture, the Company and
the Trustee may amend or supplement the Indenture or the Contingent Capital Notes without notice to or the consent of any Holder
of the Contingent Capital Notes (i) to conform this Third Supplemental Indenture and the form or terms of the Contingent Capital
Notes to the section entitled “Description of the Contingent Capital Notes” as set forth in the Prospectus, (ii) to
reflect changes to the procedures set forth in ‎Section 3.15 or ‎Section 3.16 above or (iii) pursuant to
‎Section 3.21(b)(iii).

 

Section 8.02.Amendments
or Supplements With Consent of Holders. The Company and the Trustee may amend the Contingent Capital Notes and the Indenture
with respect to the Contingent Capital Notes as provided in ‎Section 9.02 of the Contingent Convertible Securities
Indenture. Notwithstanding the foregoing provision and in addition to the provisions of ‎Section 9.02 of the Contingent
Convertible Securities Indenture, without the consent of each Holder of an outstanding Security affected thereby, no amendment
or waiver may make any change that adversely affects the conversion rights of any of the Contingent Capital Notes.

 

Section 8.03.Holders’
Approval of Amendments. The consent of the Holders is not necessary under the Indenture to approve the particular form of
any proposed amendment, supplement or waiver, but it will be sufficient if such consent approves the substance of such proposed
amendment, supplement or waiver. After an amendment, supplement or waiver becomes effective, the Company shall give to the Holders
affected by such amendment, supplement or waiver a notice in accordance with the Indenture briefly describing such amendment,
supplement or waiver. The Company shall mail supplemental indentures to Holders upon request. Any failure of the Company to mail
such notice, or any defect in such notice, will not, however, in any way impair or affect the validity of any such supplemental
indenture or waiver.

 

Section 8.04.PRA
Consent. No modification shall be effected to this Third Supplemental Indenture or in relation to the Contingent Capital Notes,
unless the Company has received any consent (or indication of no objection) from the PRA as may be required under the Capital
Regulations. The Trustee is entitled to request and rely on an Officer’s Certificate as to the satisfaction of this condition
precedent to any modification without further enquiry.

 

     54

     

    

Article
9 

Amendments
to the Contingent Convertible Securities Indenture applicable to the Contingent Capital Notes only

 

Section 9.01.Additional
Amounts. With respect to the Contingent Capital Notes only, Section 10.04 of the Contingent Convertible Securities Indenture
is amended and restated in its entirety and shall read as follows:

 

Section
10.04. Additional Amounts. All amounts of principal and interest, if any, on the Contingent Capital Notes will be paid
by the Company without deduction or withholding for, or on account of, any and all present and future income, stamp and other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings now or hereafter imposed, levied, collected, withheld
or assessed by or on behalf of the United Kingdom or any political subdivision or any authority thereof or therein having the
power to tax (the “Taxing Jurisdiction”), unless such deduction or withholding is required by law.

 

If deduction
or withholding of any such taxes, levies, imposts, duties, charges, fees, deductions or withholdings shall at any time be required
by the Taxing Jurisdiction, the Company will pay such additional amounts in respect of the payment of any interest on (but not,
for the avoidance of doubt, in respect of the payment of the principal amount of) the Contingent Capital Notes (“Additional
Amounts”) as may be necessary in order that the net amounts in respect of any interest paid to the Holders of the Contingent
Capital Notes, after such deduction or withholding, shall equal the amount of any interest which would have been payable in respect
of such Contingent Capital Notes had no such deduction or withholding been required; provided, however, that the
foregoing will not apply to any such tax, levy, impost, duty, charge, fee, deduction or withholding that would not have been payable
or due but for the fact that:

 

(i)the
Holder or the beneficial owner of the Contingent Capital Note is a domiciliary, national or resident of, or engaging in business
or maintaining a permanent establishment or physically present in, the Taxing Jurisdiction or otherwise has some connection with
the Taxing Jurisdiction other than the mere holding or ownership of a Contingent Capital Note, or the collection of any payment
of (or in respect of) any interest on the Contingent Capital Notes

 

(ii)except
in the case of a winding up of the Company in the United Kingdom, the Contingent Capital Note is presented (where presentation
is required) for payment in the United Kingdom,

 

(iii)the
Contingent Capital Note is presented (where presentation is required) for payment more than 30 days after the date payment became
due or was provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional
Amount on presenting (where presentation is required) the Contingent Capital Note for payment at the close of such 30 day period,

 

     55

     

    

(iv)the
Holder or the beneficial owner of the Contingent Capital Note or the beneficial owner of any payment of (or in respect of) any
interest on such Contingent Capital Note failed to comply with a request of the Company or its liquidator or other authorized
Person addressed to the Holder (x) to provide information concerning the nationality, residence or identity of the Holder or such
beneficial owner or (y) to make any declaration or other similar claim, which in the case of (x) or (y), is required or imposed
by a statute, treaty, regulation or administrative practice of the Taxing Jurisdiction as a precondition to exemption or relief
from all or part of such deduction or withholding,

 

(v)the
withholding or deduction is required to be made pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986,
as amended, any agreement with the U.S. Treasury entered into with respect thereto, any U.S. Treasury regulation issued thereunder
or any other official interpretations or guidance issued with respect thereto; any intergovernmental agreement entered into with
respect thereto, or any law, regulation, or other official interpretation or guidance promulgated pursuant to such an intergovernmental
agreement,

 

(vi)any
combination of subclauses (i) through (v) above,

 

nor
shall Additional Amounts be paid with respect to a payment of any interest on the Contingent Capital Notes to any Holder who is
a fiduciary or partnership or Person other than the sole beneficial owner of such payment to the extent such payment would be
required by the laws of the Taxing Jurisdiction to be included in the income for tax purposes of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Additional
Amounts, had it been the Holder.

 

Whenever
in this Third Supplemental Indenture there is mentioned, in any context, the payment of any interest on, or in respect of, any
Contingent Capital Notes such mention shall be deemed to include mention of the payment of Additional Amounts provided for in
this Section to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant
to the provisions of this Section and as if express mention of the payment of Additional Amounts (if applicable) were made in
any provisions hereof where such express mention is not made.

 

Article
10

Miscellaneous

 

Section 10.01.Effect
of Supplemental Indenture. Upon the execution and delivery of this Third Supplemental Indenture by each of the Company and
the Trustee, the Contingent Convertible Securities Indenture shall be supplemented and amended in accordance herewith, and this
Third Supplemental Indenture shall form a part of the Contingent Convertible Securities Indenture for all purposes in respect
of any Contingent Capital Notes.

 

     56

     

    

Section 10.02.Other
Documents to Be Given to the Trustee. As specified in ‎Section 9.03 of the Contingent Convertible Securities Indenture
and subject to the provisions of Section 6.03 of the Contingent Convertible Securities Indenture, the Trustee shall be entitled
to receive an Officer’s Certificate stating the recitals contained in ‎Section 1.02 of the Contingent Convertible
Securities Indenture have been complied with and an Opinion of Counsel stating that this Third Supplemental Indenture is permitted
by the Contingent Convertible Securities Indenture, conforms to the requirements of the Trust Indenture Act, and (subject to ‎Section
1.03 of the Contingent Convertible Securities Indenture) constitutes valid and binding obligations of the Company enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally, concepts of reasonableness and equitable principles of general applicability. The Trustee shall be entitled to rely
on such Officer’s Certificate and Opinion of Counsel as conclusive evidence that this Third Supplemental Indenture complies
with the applicable provisions of the Contingent Convertible Securities Indenture.

 

Section 10.03.Notices
to, and Consents Required from, the PRA to Be Given to the Trustee. The Trustee shall be entitled to receive, and shall be
fully protected in relying upon without any investigation, a copy of all notifications provided to, and prior consents required
from, the PRA pursuant to the Indenture.

 

Section 10.04.Survival.
Anything herein to the contrary notwithstanding, for purposes of the Contingent Capital Notes, Section 6.08 of the Contingent
Convertible Securities Indenture is hereby amended in its entirety as follows: The Trustee’s right to payment of its fees,
reimbursement and indemnity under, and in its lien provided for in, Sections 5.06 and 6.07 of the Contingent Convertible Securities
Indenture shall survive the payment in full of the Contingent Capital Notes, the satisfaction and discharge of the Indenture,
the Automatic Conversion upon a Conversion Trigger Event, the resignation or removal of the Trustee, the termination for any reason
of the Indenture and any exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Contingent
Capital Notes.

 

Section 10.05.Confirmation
of Indenture. The Contingent Convertible Securities Indenture, as supplemented and amended by this Third Supplemental Indenture,
is in all respects ratified and confirmed, and the Contingent Convertible Securities Indenture and this Third Supplemental Indenture
shall, in respect of any Contingent Capital Notes, be read, taken and construed as one and the same instrument. This Third Supplemental
Indenture constitutes an integral part of the Contingent Convertible Securities Indenture with respect to the Contingent Capital
Notes. In the event of a conflict between the terms and conditions of the Contingent Convertible Securities Indenture and the
terms and conditions of this Third Supplemental Indenture, the terms and conditions of this Third Supplemental Indenture shall
prevail with respect to the Contingent Capital Notes.

 

Section 10.06.Concerning
the Trustee. The Trustee does not make any representations as to the validity or sufficiency of this Third Supplemental Indenture.
The recitals and statements herein are deemed to be those of the Company and not the Trustee. In entering into this Third Supplemental
Indenture, the Trustee shall be entitled

 

     57

     

    

to
the benefit of every provision of the Contingent Convertible Securities Indenture relating to the conduct of or affecting the
liability of or affording protection to the Trustee.

 

Section 10.07.Governing
Law. This Third Supplemental Indenture and the Contingent Capital Notes shall be governed by and construed in accordance with
the laws of the State of New York, except that (i) Sections ‎Section 6.01 and ‎Section 6.02 of this Third
Supplemental Indenture (other than the Trustee’s own rights, duties or immunities thereunder) shall be governed by and construed
in accordance with the laws of Scotland and (ii) the authorization and execution by the Company of this Third Supplemental Indenture
and the Contingent Capital Notes shall be governed by (in addition to the laws of the State of New York relevant to execution)
the jurisdiction of the Company.

 

Section 10.08.Entire
Agreement. With respect to Contingent Capital Notes issued pursuant to this Third Supplemental Indenture, any agreements,
arrangements or understandings between the Company and any Holder and Beneficial Owner of the Contingent Capital Notes with respect
to the Contingent Capital Notes must be entered into in accordance with the terms of the Indenture.

 

Section 10.09.Counterparts.
This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

 

[Signature
Pages Follow]

 

     58

     

    

IN WITNESS
WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first written above.

 

	THE ROYAL BANK OF SCOTLAND GROUP PLC, as Company
	 
	 
	By:	/s/ John Cummins
	 	Name:John Cummins
	 	Title:RBS Treasurer

	 
	THE BANK OF NEW YORK MELLON, as Trustee
	 
	 
	By:	/s/ Thomas Vanson
	 	Name:Thomas Vanson
	 	Title:Authorized Signatory

 

	 

 

[Signature
Page to Third Supplemental Indenture]

 

     

     

    

EXHIBIT
A

 

FORM OF
GLOBAL NOTE

 

THIS SECURITY
IS A GLOBAL REGISTERED SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

THE RIGHTS
OF THE HOLDER OF THIS SECURITY ARE, TO THE EXTENT AND IN THE MANNER SET FORTH IN SECTION 12.01 OF THE INDENTURE, SUBORDINATED
TO THE CLAIMS OF OTHER CREDITORS OF THE COMPANY, AND THIS SECURITY IS ISSUED SUBJECT TO THE PROVISIONS OF THAT SECTION 12.01,
AND THE HOLDER OF THIS SECURITY, BY ACCEPTING THE SAME, AGREES TO AND SHALL BE BOUND BY SUCH PROVISIONS. THE PROVISIONS OF SECTION
12.01 OF THE INDENTURE AND THE TERMS OF THIS PARAGRAPH ARE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
SCOTLAND.

 

This Security
is one of a duly authorized issue of securities of the Company (as defined below) (herein called the “Securities”
and each, a “Security”) issued and to be issued in one or more series under and governed by the Contingent
Convertible Securities Indenture, dated as of August 10, 2015 (the “Contingent Convertible Securities Indenture”),
as supplemented by the Third Supplemental Indenture, dated as of August [●], 2016 (the “Third Supplemental Indenture”
and, together with the Contingent Convertible Securities Indenture, the “Indenture”). Capitalized terms used
herein but not otherwise defined shall have the meaning ascribed to them in the Third Supplemental Indenture.

 

The rights
of the Holder and Beneficial Owners of this Security are, to the extent and in the manner set forth in Section 6.01 of the Third
Supplemental Indenture (which amends in its entirety Section 12.01(a) of the Contingent Convertible Securities Indenture), subordinated
to the claims of other creditors of the Company, and this Security is issued subject to the provisions of that Section 6.01, and
the Holder (and Beneficial Owners) of this Security, by accepting the same, agrees to, and shall be bound by, such provisions.
The provisions of Sections 6.01 and 6.02 of the Third Supplemental Indenture and the terms of this paragraph are governed by,
and shall be construed in accordance with, Scots law.

 

The rights
of the Holder of this Security are subject to ‎Section 3.15
of the Third Supplemental Indenture. Effective upon, and following, the occurrence of the Automatic Conversion, provided that
the Company issues and delivers the Settlement Shares to the Settlement Share Depository (or the relevant recipient in accordance
with this Security or

 

    1 

     

    

the
Third Supplemental Indenture), Holders and Beneficial Owners shall not have any rights against the Company with respect to repayment
of the principal amount of this Security or payment of interest or any other amount on or in respect of this Security, which liabilities
of the Company shall be irrevocably and automatically released, and accordingly the principal amount of this Security shall equal
zero at all times thereafter.

 

Notwithstanding
any other agreements, arrangements, or understandings between the Company and any Holder or Beneficial Owner of the Contingent
Capital Notes, by its acquisition of the Contingent Capital Notes, each Holder and Beneficial Owner of the Contingent Capital
Notes, acknowledges, accepts, agrees to be bound by and consents to the exercise of any U.K. bail- in power by the relevant U.K.
resolution authority that may result in the (i) reduction or cancellation of all, or a portion, of the principal amount of, or
interest on, the Contingent Convertible Securities, (ii) the conversion of all, or a portion of, the principal amount of, or interest
on, the Contingent Convertible Securities into ordinary shares or other securities or other obligations of the Company or another
person and/or (iii) the amendment of the amount of interest due on the Contingent Capital Notes, or the dates on which interest
becomes payable, including by suspending payment for a temporary period; which U.K. bail-in power may be exercised by means of
variation to the terms of the Contingent Convertible Securities, solely to give effect to the above. With respect to (i), (ii)
and (iii) above, references to principal and interest shall include payments of principal and interest that have become due and
payable, but which have not been paid, prior to the exercise of any U.K. bail-in power. By its acquisition of the Contingent Capital
Notes, each Holder and Beneficial Owner further acknowledges and agrees that the rights of the Holders and/or Beneficial Owners
under the Contingent Capital Notes are subject to, and will be varied, if necessary, solely to give effect to, the exercise of
any U.K. bail-in power by the relevant U.K. resolution authority.

 

THE
ROYAL BANK OF SCOTLAND GROUP PLC

$[       ] [ ]% Perpetual Subordinated Contingent Convertible Additional Tier 1 Capital Notes

(Callable [●], 2021 and Every Five Years Thereafter)

 

	No. [    ]	$[                  ]
	 	CUSIP NO. [          ]
	 	ISIN NO. [          ]

 

THE ROYAL
BANK OF SCOTLAND GROUP plc (herein called the “Company”, which term includes any successor Person under the
Indenture (as defined on the reverse hereof)), for value received, hereby promises to pay to CEDE & CO., or registered assignees,
the principal sum of $[] ([] Dollars), if and to the extent due, and to pay interest thereon, if any, in accordance with the terms
hereof and the Indenture. The Contingent Capital Notes shall have no fixed maturity or fixed redemption date. From (and including)
the Issue Date to (but excluding) [●], 2021 (the “First Call Date”), the interest rate on the Contingent
Capital Notes shall be []% per annum. From and including the First Call Date and each fifth anniversary date thereafter (each
such date, a “Reset Date”), to (but excluding) the next following Reset Date, the applicable per annum rate

 

    2 

     

    

shall
be equal to the sum of the applicable Mid-Market Swap Rate on the Reset Determination Date and []% converted to a quarterly rate
in accordance with market convention. Subject to the provisions on the reverse of this Security relating to cancellation and deemed
cancellation of interest and to ‎Section 3.03, ‎Section
3.04, ‎Section 3.15(h) and ‎Section
6.01 of the Third Supplemental Indenture and to the two last sentences of this paragraph, interest, if any, shall be payable in
four equal quarterly installments in arrear on March 31, June 30, September 30 and December 31 of each year (each, an “Interest
Payment Date”). The first date on which interest may be paid will be September 30, 2016. Subject to the limitations
specified on the reverse of this Security, if any interest payment is to be made in respect of the Contingent Capital Notes on
any other date, including on any scheduled redemption date, it shall be calculated by the Calculation Agent by applying the interest
rate as described above and multiplying the product by 30/360 and rounding the resulting figure to the nearest cent (half a cent
being rounded upwards). For this purpose “30/360” means, in respect of any period, the number of days in the
relevant period, from and including the first day in such period to but excluding the last day in such period, such number of
days being calculated on the basis of a 360 day year consisting of 12 months of 30 days each, divided by 360.

 

The “Mid-Market
Swap Rate” is the mid-market U.S. dollar swap rate Libor basis having a five-year maturity appearing on Bloomberg page
“USISDA 05” (or such other page as may replace such page on Bloomberg, or such other page or service as may be nominated
by the person providing or sponsoring the information appearing on such page for purposes of displaying comparable rates) as at
approximately 11:00 a.m. (New York time) on the Reset Determination Date, as determined by the Calculation Agent. If such swap
rate does not appear on such page (or such other page or service), the Mid-Market Swap Rate shall instead be determined by the
Calculation Agent as being equal to the arithmetic mean expressed as a percentage and rounded, if necessary, to the nearest 0.001%
(0.0005% being rounded upwards) of the quotations provided by the principal office of each of four major banks in the U.S. dollar
swap rate market (which banks shall be selected by the Calculation Agent with the prior agreement of the Company not less than
20 calendar days prior to the Reset Determination Date) (the “Reference Banks”) of the rates at which swaps
in U.S. dollars are offered by it at approximately 11.00 a.m. (New York time) (or thereafter on the Reset Determination Date,
with the Calculation Agent acting on a best efforts basis) on the Reset Determination Date to participants in the U.S. dollar
swap rate market for a five-year period. If the Mid-Market Swap Rate is still not determined on the relevant Reset Determination
Date in accordance with the foregoing procedures, the Mid-Market Swap Rate shall be the mid-market U.S. dollar swap rate Libor
basis having a five-year maturity that appeared on the most recent Bloomberg page “USISDA 05” (or such other page
as may replace such page on Bloomberg, or such other page or service as may be nominated by the person providing or sponsoring
the information appearing on such page for purposes of displaying comparable rates) that was last available prior to 11.00 a.m.
(New York time) on the relevant Reset Determination Date, as determined by the Calculation Agent. The “Reset Determination
Date” shall be the second Business Day immediately preceding each Reset Date.

 

    3 

     

    

If any Interest
Payment Date is not a Business Day, the Interest Payment Date shall be postponed to the next Business Day, and no further interest
or other payment shall be owed or made in respect of such delay.

 

If any scheduled
redemption date is not a Business Day, payment of interest, if any, and principal shall be postponed to the next Business Day,
but interest on that payment will not accrue during the period from and after any scheduled redemption date. If any Reset Date
is not a Business Day, the Reset Date shall occur on the next succeeding Business Day.

 

The interest,
if any, so payable, and paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security is registered at the close of business on the Regular Record Date for such interest which
shall be the 15th calendar day preceding each Interest Payment Date, whether or not such day is a Business Day.

 

In addition
to any other restrictions on payments of principal and interest contained in the Third Supplemental Indenture, no payment of the
principal amount of this Security following any proposed redemption or payment of interest on this Security shall become due and
payable after the exercise of any U.K. bail-in power by the relevant U.K. resolution authority unless, at the time that such repayment
or payment, respectively, is scheduled to become due, such repayment or payment would be permitted to be made by the Company under
the laws and regulations of the United Kingdom and the European Union applicable to the Company and the Group.

 

Interest
on the Contingent Capital Notes shall be due and payable only at the full discretion of the Company, and the Company shall have
sole and absolute discretion at all times and for any reason to cancel (in whole or in part) any interest payment that would otherwise
be payable on any Interest Payment Date. If the Company elects not to make an interest payment in respect of the Contingent Capital
Notes on the relevant Interest Payment Date (or if the Company elects to make a payment of a portion, but not all, of such interest
payment), such non-payment shall evidence the Company’s exercise of its discretion to cancel such interest payment (or the
portion of such interest payment not paid), and accordingly such interest payment (or the portion thereof not paid) shall not
be or become due and payable.

 

Any interest
cancelled or deemed cancelled (in each case, in whole or in part) pursuant to this Security shall not be due and shall not accumulate
or be payable at any time thereafter, and Holders and Beneficial Owners of the Contingent Capital Notes shall have no right to
or claim against the Company with respect to such interest amount. In addition, any such cancellation or deemed cancellation shall
not constitute a default under this Security and Holders and Beneficial Owners of this Security shall have no rights thereto or
to receive any additional interest or compensation as a result of such cancellation or deemed cancellation.

 

Without limitation
on the foregoing paragraph, the Company shall cancel any interest in respect of the Contingent Capital Notes (or, as appropriate,
any part thereof) on

 

    4 

     

    

any
Interest Payment Date (and such interest payment shall therefore be deemed to have been cancelled and thus shall not be due and
payable on such Interest Payment Date) if in respect of such Interest Payment Date (a) the Company has an amount of Distributable
Items on such scheduled Interest Payment Date that is less than the sum of (i) all payments (other than redemption payments which
do not reduce Distributable Items) made or declared by the Company since the end of the Company’s latest financial year
and prior to such Interest Payment Date on or in respect of any Parity Securities, the Contingent Capital Notes and any Junior
Securities and (ii) all payments (other than redemption payments which do not reduce Distributable Items) payable by the Company
on such Interest Payment Date (x) on the Contingent Capital Notes and (y) on or in respect of any Parity Securities or any Junior
Securities, in the case of each of (i) and (ii), excluding any payments already accounted for in determining the Distributable
Items, or (b) if the Solvency Condition is not (or would not be) satisfied in respect of such amounts payable on such Interest
Payment Date.

 

By its acquisition
of the Contingent Capital Notes, each Holder and each Beneficial Owner shall be deemed to have contracted and agreed that (i)
interest is payable solely at the discretion of the Company, and no amount of interest shall become due and payable in respect
of the relevant interest period to the extent that it has been (x) cancelled (in whole or in part) by the Company at the Company’s
sole discretion and/or (y) deemed cancelled pursuant to ‎Section
3.04(a) of the Third Supplemental Indenture, and (ii) a cancellation or deemed cancellation of interest (in each case, in whole
or in part) in accordance with the terms of the Indenture and the Contingent Capital Notes shall not constitute a default in payment
or otherwise under the terms of the Contingent Capital Notes or the Indenture.

 

Interest
on the Contingent Capital Notes shall only be due and payable on an Interest Payment Date to the extent it is not cancelled or
deemed cancelled under the terms of this Security and Sections 3.02(b), 3.03(a), 3.04, 3.15(h) and Section 6.01 of the Third Supplemental
Indenture. Any interest cancelled or deemed cancelled (in each case, in whole or in part) in the circumstances described in this
Security shall not be due and shall not accumulate or be payable at any time thereafter, and Holders and Beneficial Owners of
the Contingent Capital Notes shall have no rights thereto or to receive any additional interest or compensation as a result of
such cancellation or deemed cancellation of interest in respect of the Contingent Capital Notes.

 

Payments
of principal of and interest, if any, on the Contingent Capital Notes shall be made in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and private debts and such payments on Contingent Convertible
Securities represented by a Global Note shall be made through one or more Paying Agents appointed under the Contingent Convertible
Securities Indenture to DTC or its nominee, as the Holder of this Security. Initially, the Paying Agent and the Security Registrar
for the Contingent Capital Notes shall be The Bank of New York Mellon, London Branch, One Canada Square, London E14 5AL, United
Kingdom. The Company may change the Paying Agent or the Security Registrar without prior notice to the Holders of the Contingent
Capital Notes, and in such an event the Company may act as Paying Agent or Security Registrar. Payments of principal of and

 

    5 

     

    

interest
on the Contingent Capital Notes shall be made by wire transfer of immediately available funds; provided, however,
that in the case of payments of principal, this Security is first surrendered to the Paying Agent.

 

This Security
shall be governed by and construed in accordance with the laws of the State of New York, irrespective of conflicts of laws principles,
except as stated in Section 10.07 of the Third Supplemental Indenture and as stated herein, and except that the authorization
and execution of this Security shall be governed by (in addition to the laws of the State of New York relevant to execution) the
respective jurisdictions of the Company and the Trustee, as the case may be.

 

Reference
is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

 

All terms
used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture, as defined
herein.

 

THIS SECURITY
IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY
OF THE UNITED STATES OR THE UNITED KINGDOM.

 

Unless the
certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

 

[The
rest of this page is intentionally left blank.]

 

    6 

     

    

  

IN WITNESS
WHEREOF, the Company has caused this instrument to be duly executed.

 

Date: [       ]

 

	THE ROYAL BANK OF SCOTLAND GROUP PLC
	 
	 
	By:	 
	 	Name:
	 	Title:

 

	 

 

 

    7 

     

    

Trustee’s
Certificate of Authentication

 

This is one
of the Contingent Capital Notes of the series designated herein referred to in the Indenture.

 

Date: [      ]

 

	THE BANK OF NEW YORK MELLON, 

    as Trustee
	 
	 
	By:	 
	 	Authorized Signatory

 

	 

 

 

    8 

     

    

(Reverse
of Security)

 

This Security
is one of a duly authorized issue of securities of the Company (herein called the “Securities” and each, a
“Security”) issued and to be issued in one or more series under and governed by the Contingent Convertible
Securities Indenture, dated as of August 10, 2015 (herein called the “Contingent Convertible Securities Indenture”),
between the Company and The Bank of New York Mellon, London Branch, as Trustee (herein called the “Trustee,”
which term includes any successor trustee under the Contingent Convertible Securities Indenture), as supplemented and amended
by the Third Supplemental Indenture, dated as of August [●], 2016 (the “Third Supplemental Indenture”
and, together with the Contingent Convertible Securities Indenture, the “Indenture”), and reference is hereby
made to the Indenture, the terms of which are incorporated herein by reference, for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the Holders of the Contingent Capital Notes and of the
terms upon which the Contingent Capital Notes are, and are to be, authenticated and delivered. Insofar as the provisions of the
Indenture may conflict with the provisions set forth in this Security, the former shall control for purposes of this Security.

 

This Security
is one of the series designated on the face hereof, limited to a principal amount of $[aggregate principal amount of series
of Contingent Capital Notes], which amount may be increased at the option of the Company if in the future it determines that
it may wish to sell additional Securities of this series. References herein to “this series” mean the series
designated on the face hereof.

 

All payments
of principal and/or interest to the Holders by or on behalf of the Company in respect of the Contingent Capital Notes shall be
made without withholding or deduction for or on account of any present or future tax, duty, assessment or governmental charge
of whatsoever nature imposed, levied, collected, withheld or assessed by or on behalf of the United Kingdom or any authority thereof
or therein having power to tax, unless such withholding or deduction is required by law. In that event, and in respect of withholding
or deduction imposed in respect of interest only (and not, for the avoidance of doubt, principal), the Company shall pay such
additional amounts (“Additional Amounts”) as will result (after such withholding or deduction) in receipt by
the Holders of the sums which would have been receivable (in the absence of such withholding or deduction) from it in respect
of their Contingent Capital Notes; except that no such Additional Amounts shall be payable with respect to any Contingent Capital
Note in accordance with Section 10.04 of the Contingent Convertible Securities Indenture (as amended and restated with respect
to the Contingent Capital Notes only by Section 9.01 of the Third Supplemental Indenture).

 

Payments
under the Contingent Capital Notes will be subject in all cases to any applicable fiscal or other laws and regulations in the
place of payment or other laws and regulations to which the Company or its Paying Agents agree to be subject and the Company will
not, save as provided under Section 10.04 of the Contingent Convertible Securities Indenture (as amended and restated with respect
to the Contingent Capital Notes only by Section 9.01 of the Third Supplemental Indenture), be liable for any taxes

 

    9 

     

    

or
duties of whatever nature imposed or levied by such laws, regulations or agreements. No commission or expenses shall be charged
to the Holders in respect of such payments.

 

Subject to
the Solvency Condition and the pre-conditions specified below, the Company may, at the Company’s option and in its sole
discretion, redeem the Contingent Capital Notes, in whole but not in part, on the First Call Date or on any Reset Date thereafter
at a redemption price equal to 100% of the principal amount of the Contingent Capital Notes then outstanding, together with any
Accrued Interest to (but excluding) the date fixed for redemption.

 

Subject to
the Solvency Condition and the pre-conditions specified below, the Company may, at the Company’s option and in its sole
discretion at any time, redeem the Contingent Capital Notes, in whole but not in part at a redemption price equal to 100% of the
principal amount of the Contingent Capital Notes then outstanding, together with any Accrued Interest to (but excluding) the date
fixed for redemption, if at any time the Company determines that as a result of any amendment to, or change in the regulatory
classification of the Contingent Capital Notes under the Capital Regulations (or official interpretation thereof), in any such
case becoming effective on or after the Issue Date, the whole or part of the Contingent Capital Notes are, or are likely to be,
excluded from the Tier 1 Capital (as defined in the Capital Regulations) of the Company and/or the Regulatory Group (a “Capital
Disqualification Event”).

 

Subject to
the Solvency Condition and the pre-conditions specified below, on the occurrence of a Tax Event, the Company may, at the Company’s
option and in its sole discretion, at any time redeem all, but not some only, of the Contingent Capital Notes at 100% of their
principal amount together with any Accrued Interest to (but excluding) the date of redemption. A “Tax Event”
will be deemed to have occurred with respect to the Contingent Capital Notes if, at any time, the Company determines that, as
a result of any change in, or amendment to, the laws or regulations of the U.K. or any political subdivision or any authority
thereof or therein having power to tax (including any treaty to which the U.K. or any political subdivision or any authority thereof
or therein is a party), or any change in the official application of such laws or regulations (including a decision of any court
or tribunal or the application by any tax authority), which change or amendment becomes effective or applicable, or, in the case
of a change in or amendment to law, where such change or amendment is enacted by a U.K. Act of Parliament or by a Statutory Instrument,
if such U.K. Act of Parliament or Statutory Instrument is enacted on or after the Issue Date:

 

		(a)	in
                                         making a payment under the Contingent Capital Notes in respect of interest, the Company
                                         has or will or would on the next Interest Payment Date become obligated to pay Additional
                                         Amounts;

 

		(b)	a
                                         payment of interest on the next Interest Payment Date in respect of any of the Contingent
                                         Capital Notes would be treated as a “distribution” within the meaning of
                                         Section 1000 of the U.K. Corporation Tax Act 2010 (or any statutory modification or re-enactment
                                         thereof for the time being);

 

    10 

     

    

		(c)	the
                                         Company would not be entitled to claim a deduction in respect of a payment of interest
                                         payable on the next Interest Payment Date in computing its U.K. taxation liabilities
                                         (or the value of such deduction to the Company would be materially reduced);

 

		(d)	as
                                         a result of the Contingent Capital Notes being in issue, the Company would not be able
                                         to have losses or deductions (including in respect of a payment of interest on the Contingent
                                         Capital Notes) set against the profits or gains, or profits or gains offset by losses
                                         or deductions, of companies with which it is or would otherwise be grouped for applicable
                                         U.K. tax purposes (whether under the group relief system current as at the date of issue
                                         of the Contingent Capital Notes or any similar system or systems having like effect as
                                         may exist from time to time);

 

		(e)	a
                                         future write-down of the principal amount of the Contingent Capital Notes or conversion
                                         of the Contingent Capital Notes into ordinary shares would result in a U.K. tax liability,
                                         or income, profit or gain being treated for U.K. tax purposes as accruing, arising or
                                         being received;

 

		(f)	the
                                         Contingent Capital Notes would no longer be treated as loan relationships for U.K. tax
                                         purposes; or

 

		(g)	the
                                         Contingent Capital Notes or any part thereof would be treated as a derivative or an embedded
                                         derivative for U.K. tax purposes,

 

in each case, the effect of which
cannot be avoided by the Company taking reasonable steps available to it.

 

In any case
where the Company shall determine that as a result of a Tax Event, it is entitled to redeem the Contingent Capital Notes, it shall
be required to deliver to the Trustee prior to the giving of any notice of redemption a written legal opinion of independent United
Kingdom counsel of recognized standing (selected by the Company), in a form satisfactory to the Trustee confirming that the Tax
Event has occurred.

 

Any interest
payments that have been cancelled or deemed cancelled pursuant to the terms of this Security and the Indenture shall not be payable
if the Contingent Capital Notes are redeemed pursuant to any of the preceding paragraphs.

 

Before the
Company may redeem the Contingent Capital Notes pursuant to any of the preceding paragraphs relating to the Company’s rights
of redemption, the Company shall deliver to DTC as the Holder of the Global Securities (or, if the Contingent Capital Notes are
in definitive form, to the Holders directly at their addresses shown on the Contingent Convertible Security Register) prior notice
of not less than thirty (30) days, nor more than sixty (60) days. The Company shall deliver written notice of such redemption
of the Contingent Capital Notes to the Trustee at least five (5) Business Days prior to the date on which the relevant notice
of redemption is sent to the Holders (unless a shorter notice period shall be satisfactory to the Trustee).

 

    11 

     

    

Such notice
shall specify the Company’s election to redeem the Contingent Capital Notes and the date fixed for such redemption and shall
be irrevocable except in the limited circumstances described below.

 

Any notice
of redemption shall state (i) the redemption date, (ii) that on the redemption date the redemption price will, subject to the
satisfaction of the conditions set forth in the Indenture, become due and payable upon each Contingent Capital Note being redeemed
and that, subject to certain exceptions, interest will cease to accrue on or after that date, (iii) the place or places where
the Contingent Capital Notes are to be surrendered for payment of the redemption price, and (iv) the CUSIP, Common Code and/or
ISIN number or numbers, if any, with respect to the Contingent Capital Notes being redeemed.

 

If the Company
has delivered a notice of redemption, but the Solvency Condition is not satisfied immediately prior to, and immediately following,
the date specified for redemption in such notice, such redemption notice shall be automatically rescinded and shall be of no force
and effect, and no payment in respect of the redemption amount shall be due and payable.

 

If the Company
has delivered a notice of redemption, but prior to the payment of the redemption amount with respect to such redemption a Conversion
Trigger Notice has been delivered, such redemption notice shall be automatically rescinded and shall be of no force and effect,
and no payment in respect of the redemption amount shall be due and payable.

 

If the Company
has delivered a notice of redemption, but prior to the date of any such redemption the Company has not given notice to the PRA
and/or the PRA has objected to or refused to grant permission to the Company, as applicable, to redeem the relevant Contingent
Capital Notes (in each case to the extent, and in the manner, required by the relevant Capital Regulations), such notice of redemption
shall be automatically rescinded and shall be of no force and effect and no payment in respect of any redemption amount, if applicable,
shall be due and payable.

 

If the Company
has delivered a notice of redemption but in respect of any redemption proposed to be made
prior to the fifth anniversary of the Issue Date, if and to the extent then required under the Capital Regulations (A) in the
case of redemption following the occurrence of a Tax Event, the Company has not demonstrated to the satisfaction of the PRA that
the Tax Event is material and was not reasonably foreseeable as at the Issue Date, or (B) in the case of redemption following
the occurrence of a Capital Disqualification Event, the PRA does not consider such change to be sufficiently certain or the Company
has not demonstrated to the satisfaction of the PRA that the relevant change was not reasonably foreseeable as at the Issue Date;
such notice of redemption shall be automatically rescinded and shall be of no force and effect and no payment in respect
of any redemption amount, if applicable, shall be due and payable.

 

If the Company
has delivered a notice of redemption but prior to the payment of the redemption amount with respect to such redemption the Company
is not in

 

    12 

     

    

compliance
with any alternative or additional pre-conditions required by the PRA as a prerequisite to its permission for such redemption,
such notice of redemption shall be automatically rescinded and shall be of no force and effect, and no payment in respect of the
redemption amount shall be due and payable.

 

If any of
the events specified in each of the preceding five paragraphs occurs, the Company shall promptly deliver notice to DTC as the
Holder of the Global Securities (or, if the Contingent Capital Notes are definitive Securities, to the Holders directly at their
addresses shown on the Contingent Convertible Security Register) and to the Trustee directly, specifying the occurrence of the
relevant event.

 

Subject to
the Solvency Condition and the pre-conditions specified below, the Company may at any time and from time to time, and to the extent
not prohibited by CRD IV, repurchase beneficially or procure others to repurchase beneficially for its account the Contingent
Capital Notes in the open market, by tender or by private agreement, in any manner and at any price or at differing prices. Contingent
Capital Notes purchased or otherwise acquired by the Company may be (i) held, (ii) resold or (iii) at the Company’s sole
discretion, surrendered to the Trustee for cancellation (in which case all Contingent Capital Notes so surrendered will forthwith
be cancelled in accordance with applicable law and thereafter may not be reissued or resold).

 

Contingent
Capital Notes may be redeemed or repurchased by the Company as provided under ‎‎Section
3.08, ‎‎Section 3.09, ‎‎Section
3.10, ‎Section 3.11 and ‎‎Section
3.13 of the Third Supplemental Indenture, provided that (except to the extent the PRA no longer so requires) the Company has met
the following conditions:

 

(a)the
Company has notified the PRA of its intention to do so at least one month (or such other, longer or shorter period, as the PRA
may then require or accept) before the Company becomes committed to the proposed redemption or repurchase;

 

(b)the
PRA has granted permission for the Company to make any such redemption or repurchase of the Contingent Capital Notes upon a satisfactory
finding that either:

 

(i)on
or before such redemption or repurchase of any of the Contingent Capital Notes, the Company replaces such Contingent Capital Notes
with own funds instruments (as defined by the Capital Regulations) of an equal or higher quality on terms that are sustainable
for its income capacity; or

 

(ii)the
Company has demonstrated to the satisfaction of the PRA that its Tier 1 capital and Tier 2 capital (as defined by the Capital
Regulations) would, following such redemption or repurchase, exceed the capital ratios required under CRD IV and the combined
buffer requirement defined in CRD IV by a margin that the PRA may consider necessary on the basis set out in CRD IV for it to
determine the appropriate level of capital of an institution;

 

(c)no
Conversion Trigger Notice has been delivered; and

 

    13 

     

    

(d)the
Company has complied with any alternative or additional pre-conditions as set out in the Capital Regulations and/or required by
the PRA as a prerequisite to its permission for such redemptions or repurchases, at that time; and

 

(e)with
respect to Sections 3.09 and 3.10 of the Third Supplemental Indenture only, and except to the extent that the PRA no longer so
requires, the Company may only redeem the Contingent Capital Notes before five years after the Issue Date if, in addition to the
conditions set out in (a), (b), (c) and (d) above, the following conditions are met:

 

(i)in
the case of a redemption due to a Tax Event pursuant to Section 3.09 of the Third Supplemental Indenture, the Company demonstrates
to the satisfaction of the PRA that the Tax Event relating to the Contingent Capital Notes is material and was not reasonably
foreseeable at the time of issuance of the Contingent Capital Notes; or

 

(ii)in
the case of a redemption due to the occurrence of a Capital Disqualification Event pursuant to Section 3.10 of the Third Supplemental
Indenture, (x) the PRA considers such change to be sufficiently certain and (y) the Company demonstrates to the satisfaction of
the PRA that the Capital Disqualification Event was not reasonably foreseeable at the time of the issuance of the Contingent Capital
Notes.

 

If a Conversion
Trigger Event has occurred, then the Automatic Conversion shall occur on the Conversion Date and all of the Company’s obligations
under the Contingent Capital Notes shall be irrevocably and automatically released in consideration of the Company’s issuance
and delivery of the Settlement Shares to the Settlement Share Depository, and the principal amount of the Contingent Capital Notes
shall equal zero at all times thereafter (for the avoidance of doubt, the Tradable Amount shall remain unchanged as a result of
the Automatic Conversion). Under no circumstances shall such released obligations be reinstated. If the Company has been unable
to appoint a Settlement Share Depository, it shall effect, by means it deems reasonable in the circumstances (including, without
limitation, issuance of the Settlement Shares to another independent nominee or to the Holders of the Contingent Capital Notes
directly), the issuance and delivery of the Settlement Shares, or, if the Holder elects, ADSs or the Alternative Consideration,
as applicable, to the Holders of the Contingent Capital Notes, and such issuance and delivery shall irrevocably and automatically
release all of the Company’s obligations under the Contingent Capital Notes as if the Settlement Shares had been issued
and delivered to the Settlement Share Depository and, in which case, where the context so admits, references in the Third Supplemental
Indenture and in this Security to the issue and delivery of Settlement Shares to the Settlement Share Depository shall be construed
accordingly and apply mutatis mutandis.

 

The procedures
set forth in this Security and Section 3.15 of the Third Supplemental Indenture are subject to change to reflect changes in DTC
practices, and the Company may make changes to the procedures set forth in Section 3.15 to the extent reasonably necessary, in
the opinion of the Company, to reflect such changes in DTC

 

    14 

     

    

practices.
Any such changes shall be subject to the provisions of Section 8.01 of the Third Supplemental Indenture.

 

Notwithstanding
anything to the contrary contained in the Indenture or this Security, once the Company has delivered a Conversion Trigger Notice
following the occurrence of a Conversion Trigger Event, (i) subject to the right of the Holders and Beneficial Owners pursuant
to ‎Section 5.03 in the event of a failure by the Company
to issue and deliver any Settlement Shares to the Settlement Share Depository on the Conversion Date, the Indenture shall impose
no duties upon the Trustee whatsoever with regard to an Automatic Conversion upon a Conversion Trigger Event and the Holders and
Beneficial Owners shall have no rights whatsoever under the Indenture or the Contingent Capital Notes to instruct the Trustee
to take any action whatsoever, and (ii) as of the date of the Conversion Trigger Notice, except for any indemnity and/or security
provided by any Holder or by any Beneficial Owner in such direction or related to such direction, any direction previously given
to the Trustee by any Holder or by any Beneficial Owner shall cease automatically and shall be null and void and of no further
effect; except in each case of (i) and (ii) of this paragraph, with respect to any rights of the Holders or Beneficial Owners
with respect to any payments under the Contingent Capital Notes that were unconditionally due and payable prior to the date of
the Conversion Trigger Notice or unless the Trustee is instructed in writing by the Company to act otherwise.

 

All authority
conferred or agreed to be conferred by each Holder and Beneficial Owner pursuant to this Security, including the consents given
by such Holder and Beneficial Owner, shall be binding upon the successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of such Holder and Beneficial Owner.

 

The Trustee
shall not be liable with respect to (i) the calculation or accuracy of the CET1 Ratio in connection with the occurrence of a Conversion
Trigger Event and the timing of such Conversion Trigger Event, (ii) the failure of the Company to post or deliver the underlying
CET1 Ratio calculations of a Conversion Trigger Event to DTC, the Holders or the Beneficial Owners, (iii) any aspect of the Company’s
decision to deliver a Conversion Trigger Notice or the related Automatic Conversion, (iv) the adequacy of the disclosure of these
provisions in the Prospectus or any other offering material in respect of the Contingent Capital Notes or for the direct or indirect
consequences thereof, or (v) any other requirement of the Company contained herein related to a Conversion Trigger Event or the
Automatic Conversion.

 

Following
the issuance and delivery of the Settlement Shares to the Settlement Share Depository (or to the relevant recipient in accordance
with the terms of the Contingent Capital Notes, as applicable) on the Conversion Date, this Contingent Capital Note shall remain
in existence until the applicable Cancellation Date for the sole purpose of evidencing the Holders’ and Beneficial Owners’
right to receive Settlement Shares, or, if the Holder elects, ADSs or the Alternative Consideration, as the case may be, from
the Settlement Share Depository (or such other relevant recipient, as applicable).

 

    15 

     

    

The Holders
and the Beneficial Owners shall not at any time have the option to convert the Contingent Capital Notes into Settlement Shares.

 

The occurrence
of the Automatic Conversion shall not constitute an Enforcement Event.

 

Notwithstanding
any other provision herein, by its acquisition of the Contingent Capital Notes, each Holder and each Beneficial Owner shall be
deemed to have (i) agreed to all of the terms and conditions of the Contingent Capital Notes, including, without limitation, to
those related to (x) Automatic Conversion of its Contingent Capital Notes following the Conversion Trigger Event and (y) the appointment
of the Settlement Share Depository, the issuance of the Settlement Shares to the Settlement Share Depository (or to the relevant
recipient in accordance with the terms of the Third Supplemental Indenture or the Contingent Capital Notes) and the potential
sale of the Settlement Shares pursuant to a Settlement Shares Offer and acknowledged that such events in (x) and (y) may occur
without any further action on the part of such Holders or Beneficial Owners or the Trustee, (ii) agreed that effective upon, and
following, the occurrence of the Automatic Conversion, no amount shall be due and payable to the Holders or the Beneficial Owners
under the Contingent Capital Notes and the liability of the Company to pay any such amounts (including the principal amount of,
or any interest in respect of, the Contingent Capital Notes) shall be automatically released, and the Holders and the Beneficial
Owners shall not have the right to give any direction to the Trustee with respect to the Conversion Trigger Event and any related
Automatic Conversion, (iii) waived, to the extent permitted by the Trust Indenture Act, any claim against the Trustee arising
out of its acceptance of its trusteeship under, and the performance of its duties, powers and rights in respect of, the Indenture
and in connection with the Contingent Capital Notes, including, without limitation, claims related to or arising out of or in
connection with the Conversion Trigger Event and/or any Automatic Conversion, and (iv) authorized, directed and requested DTC
and any direct participant in DTC or other intermediary through which it holds such Contingent Capital Notes to take any and all
necessary action, if required, to implement the Automatic Conversion without any further action or direction on the part of such
Holder or Beneficial Owner or the Trustee.

 

The Conversion
Price shall be subject to adjustment as provided in Article 4 of the Third Supplemental Indenture.

 

In the Company’s
sole and absolute discretion, within ten (10) Business Days following the Conversion Date, the Company may elect that the Settlement
Share Depository (or an agent on its behalf) make an offer of all or some of the Settlement Shares to all or some of the Company’s
Shareholders upon Automatic Conversion, such offer to be at a cash price per Settlement Share that will be no less than the Conversion
Price (translated from U.S. dollars into pounds sterling at the then-prevailing rate as determined by the Company in its sole
discretion) (the “Settlement Shares Offer”).

 

If the Company
elects, in its sole and absolute discretion, that a Settlement Shares Offer be conducted by the Settlement Share Depository, each
Holder or Beneficial Owner, by its acquisition of the Contingent Capital Notes, shall be deemed to have: (i)

 

    16 

     

    

irrevocably
consented to any Settlement Shares Offer and, notwithstanding that such Settlement Shares are held by the Settlement Share Depository
on behalf of the Holders and Beneficial Owners, to the Settlement Share Depository’s using the Settlement Shares delivered
to it to settle any Settlement Shares Offer in accordance with the terms of the Contingent Capital Notes, (ii) irrevocably consented
to the transfer of the beneficial interest it holds in the Settlement Shares delivered upon Automatic Conversion to the Settlement
Share Depository or to one or more purchasers identified by the Settlement Share Depository in connection with the Settlement
Shares Offer in accordance with the terms of the Contingent Capital Notes, (iii) irrevocably agreed that the Company and the Settlement
Share Depository may take any and all actions necessary to conduct the Settlement Shares Offer in accordance with the terms of
the Contingent Capital Notes, and (iv) irrevocably agreed that none of the Company, the Trustee or the Settlement Share Depository
shall, to the extent permitted by applicable law, incur any liability to the Holders or Beneficial Owners in respect of the Settlement
Shares Offer (except for the obligations of the Settlement Share Depository in respect of the Holders’ and Beneficial Owners’
entitlement to, and subsequent delivery of, any Alternative Consideration).

 

Following
the occurrence of a Conversion Trigger Event, subsequent to a Takeover Event having occurred, the Contingent Convertible Notes
will be subject to conversion into Relevant Shares of the Approved Entity in the case of a Qualifying Takeover Event, or write-down
to zero in the case of a Non-Qualifying Takeover Event, as provided in ‎Section
4.03 of the Third Supplemental Indenture.

 

Notwithstanding
any other agreements, arrangements, or understandings between the Company and any Holder or Beneficial Owner of the Contingent
Capital Notes, by its acquisition of the Contingent Capital Notes, each Holder and Beneficial Owner acknowledges, accepts, agrees
to be bound by and consents to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority that may result
in (i) the reduction or cancellation of all, or a portion, of the principal amount of, or interest on, the Contingent Capital
Notes, (ii) the conversion of all, or a portion of, the principal amount of, or interest on, the Contingent Capital Notes into
ordinary shares or other securities or other obligations of the Company or another person and/or (iii) the amendment of the amount
of interest due on the Contingent Capital Notes, or the dates on which interest becomes payable, including by suspending payment
for a temporary period; which U.K. bail-in power may be exercised by means of variation to the terms of the Contingent Capital
Notes solely to give effect to the above. With respect to (i), (ii) and (iii) above, references to principal and interest shall
include payments of principal and interest that have become due and payable, but which have not been paid, prior to the exercise
of any U.K. bail-in power. Each Holder and Beneficial Owner of the Contingent Capital Notes further acknowledges and agrees that
the rights of the Holders and/or Beneficial Owners under the Contingent Capital Notes are subject to, and will be varied, if necessary,
solely to give effect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. For the avoidance of
doubt, the potential conversion of the Contingent Capital Notes into ordinary shares, other securities or other obligations in
connection with the exercise of any U.K. bail-in power by the relevant U.K. resolution authority is separate and distinct from
the Automatic Conversion following a Conversion Trigger Event.

 

    17 

     

    

By its acquisition
of the Contingent Capital Notes, each Holder and Beneficial Owner (i) acknowledges and agrees that the exercise of the U.K. bail-in
power by the relevant U.K. resolution authority with respect to the Contingent Capital Notes or any cancellation or deemed cancellation
of interest pursuant to ‎Section 3.03 or ‎Section
3.04 of the Third Supplemental Indenture and the terms of this Security shall not give rise to a default for purposes of Section
315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the U.S. Trust Indenture
Act of 1939, (ii) to the extent permitted by the Trust Indenture Act, waives any and all claims against the Trustee for, agrees
not to initiate a suit against the Trustee in respect of, and agrees that the Trustee shall not be liable for, any action that
the Trustee takes, or abstains from taking, in either case in accordance with the exercise of the U.K. bail-in power by the relevant
U.K. resolution authority with respect to the Contingent Capital Notes, (iii) acknowledges and agrees that, (a) upon the exercise
of any U.K. bail-in power by the relevant U.K. resolution authority, the Trustee shall not be required to take any further directions
from Holders or Beneficial Owners of the Contingent Capital Notes under Section 5.12 of the Contingent Convertible Securities
Indenture and (b) the Indenture shall impose no duties upon the Trustee whatsoever with respect to the exercise of any U.K. bail-in
power by the relevant U.K. resolution authority. Notwithstanding the foregoing in (iii), if, following the completion of the exercise
of the U.K. bail-in power by the relevant U.K. resolution authority, the Contingent Capital Notes remain outstanding, (for example,
if the exercise of the U.K. bail-in power results in only a partial write-down of the principal of the Contingent Capital Notes)
then the Trustee’s duties under the Indenture shall remain applicable with respect to the Contingent Capital Notes following
such completion to the extent that the Company and the Trustee agree pursuant to a supplemental indenture, unless the Company
and the Trustee agree that a supplemental indenture is not necessary, and (iv) shall be deemed to have (y) consented to the exercise
of any U.K. bail-in power as it may be imposed without any prior notice by the relevant U.K. resolution authority of its decision
to exercise such power with respect to the Contingent Capital Notes and (z) authorized, directed and requested DTC and any direct
participant in DTC or other intermediary through which it holds such Securities to take any and all necessary action, if required,
to implement the exercise of any U.K. bail-in power with respect to the Contingent Capital Notes as it may be imposed, without
any further action or direction on the part of such Holder and such Beneficial Owner or the Trustee.

 

Each Holder
and Beneficial Owner that acquires its Contingent Capital Notes in the secondary market shall be deemed to acknowledge and agree
to be bound by and consent to the same provisions specified in the Indenture to the same extent as the Holders and Beneficial
Owners of the Contingent Capital Notes that acquire the Contingent Capital Notes upon their initial issuance, including, without
limitation, with respect to the acknowledgement and agreement to be bound by and consent to the terms of the Contingent Capital
Notes, including in relation to interest cancellation, Automatic Conversion, the Settlement Shares Offer, the U.K. bail-in power,
the write-down in the event of a Non-Qualifying Takeover Event and the limitations on remedies specified in this Security and
Section 5.04 of the Third Supplemental Indenture.

 

Upon the
exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Contingent Capital Notes, the
Company shall provide a

 

    18 

     

    

written
notice to DTC as soon as practicable regarding such exercise of the U.K. bail-in power for purposes of notifying Holders and Beneficial
Owners of such occurrence. The Company shall also deliver a copy of such notice to the Trustee for information purposes.

 

The Company’s
obligations to indemnify the Trustee in accordance with Section 6.07 of the Contingent Convertible Securities Indenture shall
survive any exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Contingent Capital
Notes and any Automatic Conversion.

 

The exercise
of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Contingent Capital Notes shall not constitute
an Enforcement Event.

 

A “Winding-up
or Administration Event” shall result if (i) an order is made, or an effective resolution is passed, for the winding
up of the Company (excluding in any such case a solvent winding-up solely for the purpose of a reconstruction, amalgamation, reorganization,
merger or consolidation of the Company, or the substitution in place of the Company of a successor in business of the Company,
the terms of which have previously been approved by the Trustee or in writing by Holders of not less than 2/3 (two-thirds) in
aggregate principal amount of the Contingent Capital Notes); or (ii) an administrator of the Company is appointed and such administrator
gives notice that it intends to declare and distribute a dividend.

 

If a Winding-up
or Administration Event occurs prior to the occurrence of a Conversion Trigger Event, subject to the subordination provisions
of Article 6 of the Third Supplemental Indenture, the principal amount of the Contingent Capital Notes shall become immediately
due and payable, without the need of any further action on the part of the Trustee, the Holders or any other Person, including
the declaration by the Trustee, the Holders or any other Person that the principal amount of the Contingent Capital Notes will
become immediately due and payable.

 

Subject to
‎Section 3.12 of the Third Supplemental Indenture, if the
Company does not make payment of principal in respect of the Contingent Capital Notes for a period of fourteen (14) calendar days
or more after the date on which such payment is due (a “Non-Payment Event”), then the Trustee, on behalf of
the Holders and Beneficial Owners, may, at its discretion, or shall at the direction of Holders of 25% or more of the aggregate
principal amount of Outstanding Contingent Capital Notes, subject to any applicable laws, institute proceedings for the winding
up of the Company. In the event of a Winding-up or Administration Event or liquidation of the Company, whether or not instituted
by the Trustee, the Trustee may prove the claims of the Holders, Beneficial Owners and the Trustee in the Winding up or Administration
Event of the Company and/or claim in the liquidation of the Company, such claims as set out in ‎Section
6.01 of the Third Supplemental Indenture. For the avoidance of doubt, the Trustee may not declare the principal amount of any
outstanding Contingent Capital Notes to be due and payable and may not pursue any other legal remedy, including a judicial proceeding
for the collection of the sums due and unpaid on the Contingent Capital Notes.

 

    19 

     

    

In the event
of a breach of any term, obligation or condition binding upon the Company under the Contingent Capital Notes or the Indenture
(other than any payment obligation of the Company under or arising from the Contingent Capital Notes or the Indenture, including
payment of any principal or interest including any damages awarded for breach of any obligation) (such obligation, a “Performance
Obligation”), the Trustee may without further notice institute such proceedings against the Company as it may deem fit
to enforce the Performance Obligation, provided that the Company shall not by virtue of the institution of any such proceedings
be obliged to pay any sum or sums, in cash or otherwise (including damages) earlier than the same would otherwise have been payable.
For the avoidance of doubt, any breach by the Company of any Performance Obligation shall not confer upon the Trustee (acting
on behalf of the Holders) and/or the Holders or Beneficial Owners of the Contingent Capital Notes any claim for damages and, in
the event of such a breach of a Performance Obligation, the sole and exclusive remedy that the Trustee (acting on behalf of the
Holders) and/or the Holders or Beneficial Owners of the Contingent Capital Notes may seek under the Contingent Capital Notes and
the Indenture is specific performance under the laws of the State of New York. By its acquisition of the Contingent Capital Notes,
each Holder and Beneficial Owner of the Contingent Capital Notes acknowledges and agrees (i) that such Holder and Beneficial Owner
shall not seek, and shall not direct the Trustee (acting on their behalf) to seek, any claim for damages against the Company in
respect of any breach by the Company of a Performance Obligation, and (ii) that the sole and exclusive remedy that such Holder
and Beneficial Owner and/or the Trustee (acting on their behalf) may seek under the Contingent Capital Notes and the Indenture
for a breach by the Company of a Performance Obligation is specific performance under the laws of the State of New York.

 

Other than
the limited remedies specified in this Security and Article 5 of the Third Supplemental Indenture, and subject to the second paragraph
below, no remedy against the Company shall be available to the Trustee (acting on behalf of the Holders) or to the Holders and
Beneficial Owners, whether for the recovery of amounts owing in respect of such Securities or under the Indenture, or in respect
of any breach by the Company of any of the Company’s obligations under or in respect of the terms of such Securities or
under the Indenture in relation thereto; provided, however, that the Company’s obligations to the Trustee
under, and the Trustee’s lien provided for in, Section 6.07 of the Contingent Convertible Securities Indenture and the Trustee’s
rights to have money collected applied first to pay amounts due to it under such Section pursuant to Section 5.06 of the Contingent
Convertible Securities Indenture expressly survive any Enforcement Event and are not subject to the subordination provisions of
‎Section 6.01 of the Third Supplemental Indenture.

 

For purposes
of the Contingent Convertible Securities Indenture, “Event of Default” shall mean an “Enforcement
Event” as defined in the Third Supplemental Indenture, except that the term “Event of Default” as used in
Article 8 of the Contingent Convertible Securities Indenture shall mean “Winding-up or Administration Event.”

 

Notwithstanding
the limitations on remedies specified in this Security and under Article 5 of the Third Supplemental Indenture, (i) the Trustee
shall have such powers as are required to be authorized to it under the Trust Indenture Act in respect of the rights of

 

    20 

     

    

the
Holders and Beneficial Owners of the Contingent Capital Notes under the provisions of the Indenture, and (ii) nothing shall impair
the right of a Holder or Beneficial Owner of the Contingent Capital Notes under the Trust Indenture Act, absent such Holder’s
or Beneficial Owner’s consent, to sue for any payment due but unpaid with respect to the Contingent Capital Notes; provided
that, in the case of (i) and (ii) above, any payments in respect of, or arising from, the Contingent Capital Notes, including
any payments or amounts resulting or arising from the enforcement of any rights under the Trust Indenture Act in respect of the
Contingent Capital Notes, shall be subject to the subordination provisions set forth in ‎Section
6.01 of the Third Supplemental Indenture.

 

In furtherance
of Section 6.01 of the Contingent Convertible Securities Indenture:

 

(i) For
purposes of Sections 315(a) and 315(c) of the Trust Indenture Act, the term “default” is hereby defined to mean an
Enforcement Event which has occurred and is continuing.

 

(ii) Notwithstanding
anything contained in the Contingent Convertible Securities Indenture to the contrary, the duties and responsibilities of the
Trustee under this Indenture shall be subject to the protections, exculpations and limitations on liability afforded to an indenture
trustee under the provisions of the Trust Indenture Act.

 

With respect
to the Contingent Capital Notes only, and pursuant to Section 12.01(a) of the Contingent Convertible Securities Indenture, the
extent and manner in which the payment of principal of (and premium, if any) and interest, if any, on the Contingent Convertible
Securities is subordinated to the claims of the holders of certain other present or future obligations of the Company shall be
determined as set out in ‎Section 6.01 of the Third Supplemental
Indenture. References in the Contingent Convertible Securities Indenture to Section 12.01(a) thereof shall be to ‎Section
6.01 of the Third Supplemental Indenture. For the avoidance of doubt, no provision of Article 12 of the Contingent Convertible
Securities Indenture other than replacing Section 12.01(a) with ‎Section
6.01 of the Third Supplemental Indenture shall be amended by the Third Supplemental Indenture.

 

The Contingent
Capital Notes shall constitute the Company’s direct, unsecured and subordinated obligations, ranking pari passu without
any preference among themselves. The rights and claims of the Holders and Beneficial Owners of the Contingent Capital Notes in
respect of or arising from the Contingent Capital Notes shall be subordinated to the claims of Senior Creditors.

 

If a Winding-up
or Administration Event occurs before the date on which the Conversion Trigger Event occurs, there shall be payable by the Company
in respect of each Contingent Capital Note (in lieu of any other payment by the Company) such amount, if any, as would have been
payable to a Holder or Beneficial Owner if, on the day prior to the commencement of a Winding-up or Administration Event and thereafter,
such Holder or Beneficial Owner were the holder of one of a class of Notional Preference Shares on the assumption that the amount
that such Holder or Beneficial Owner was entitled to receive in respect of such Notional Preference Shares, on a return of assets
in

 

    21 

     

    

such
Winding-up or Administration Event, was an amount equal to the principal amount of the relevant Contingent Capital Note, together
with any Accrued Interest and any damages (if payable), regardless of whether the Solvency Condition is satisfied on the date
upon which the same would otherwise be due and payable.

 

In the paragraph
above, “Notional Preference Shares” means an actual or notional class of preference shares in the capital of the Company
having an equal right to return of assets in a Winding-up or Administration Event to, and so ranking pari passu with, the
most senior class or classes of issued preference shares with non-cumulative dividends (if any) in the capital of the Company
from time to time and which have a preferential right to a return of assets in a Winding-up or Administration Event over, and
so rank ahead of all other classes of issued shares for the time being in the capital of the Company but ranking junior to the
claims of Senior Creditors and junior to any notional class of preference shares in the capital of the Company which is referenced
in any instrument of the Company for the purposes of determining a claim in the winding-up or administration of the Company and,
as so referenced, (i) is expressed to have a preferential right to a return of assets in the Company’s winding-up or administration
over the holders of all other classes of shares for the time-being in the capital of the Company and (ii) is not expressed to
rank junior to any other notional class of preference shares in the capital of the Company. The terms “Parity Securities”
and “Senior Creditors” have the meaning given to such terms in the Third Supplemental Indenture.

 

If a Winding-up
or Administration Event occurs on or after the date on which the Conversion Trigger Event occurs but the Settlement Shares to
be issued and delivered to the Settlement Share Depository on the Conversion Date have not been so delivered, there shall be payable
by the Company in respect of each Contingent Capital Note (in lieu of any other payment by the Company) such amount, if any, as
would have been payable to the Holder or Beneficial Owner of such Contingent Capital Note in a Winding-up or Administration Event
if the Conversion Date in respect of the Automatic Conversion had occurred immediately before the occurrence of a Winding-up or
Administration Event (and, as a result, such Holder or Beneficial Owner were the holder of such number of the Company’s
ordinary shares as such Holder or Beneficial Owner would have been entitled to receive on the Conversion Date, ignoring for this
purpose the Company’s right to make an election for a Settlement Shares Offer to be effected pursuant to ‎Section
3.17 of the Third Supplemental Indenture), regardless of whether the Solvency Condition is satisfied on the date upon which the
same would otherwise be due and payable.

 

Other than
in the event of a Winding-up or Administration Event of the Company, or in relation to the Cash Component of any Alternative Consideration
in any Settlement Shares Offer payments in respect of or arising from the Contingent Capital Notes (including any damages for
breach of any obligations thereunder) shall, in addition to the right of the Company to cancel payments of interest pursuant to
the terms of the Third Supplemental Indenture or this Security, be conditional upon the Company’s being solvent at the time
when the relevant payment is due to be made, and no principal, interest or other amount shall be due and payable in respect of
or arising from the Contingent Capital Notes except to the extent that the Company could make such

 

    22 

     

    

payment
and still be solvent immediately thereafter (such condition referred to herein as the “Solvency Condition”).

 

For purposes
of determining whether the Solvency Condition is met, the Company shall be considered to be solvent at a particular point in time
if (i) it is able to pay its debts as they fall due and (ii) its Assets are at least equal to its Liabilities.

 

Subject to
applicable law, the Trustee (acting on behalf of the Holders) and the Holders of the Contingent Capital Notes by their acceptance
thereof will be deemed to have waived any right of set-off, counterclaim or combination of accounts with respect to the Contingent
Capital Notes, the Third Supplemental Indenture or the Contingent Convertible Securities Indenture (or between the Company’s
obligations under or in respect of the Contingent Capital Notes and any liability owed by a Holder to the Company) that they (or
the Trustee acting on their behalf) might otherwise have against the Company, whether before or during any Winding-up or Administration
Event. Notwithstanding the above, if any of such rights and claims of any such Holder (or the Trustee acting on behalf of such
Holders) against the Company are discharged by set-off, such Holder (or the Trustee acting on behalf of such Holder) will immediately
pay an amount equal to the amount of such discharge to the Company or, in the event of any Winding-up or Administration Event,
the liquidator or administrator (or other relevant insolvency official), as the case may be, to be held on trust for the Senior
Creditors and until such time as payment is made will hold a sum equal to such amount on trust for Senior Creditors, and accordingly
such discharge shall be deemed not to have taken place.

 

The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations
of the Company and the rights of the Holders of the Contingent Capital Notes of each series to be affected under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of
the Contingent Capital Notes then outstanding of each series to be affected.

 

With respect
to Contingent Capital Notes issued pursuant to the Third Supplemental Indenture, any agreements, arrangements or understandings
between the Company and any Holder and Beneficial Owner of the Contingent Capital Notes with respect to the Contingent Capital
Notes must be entered into in accordance with the terms of the Contingent Convertible Securities Indenture and the Third Supplemental
Indenture.

 

Holders of
not less than a majority in aggregate principal amount of the Outstanding Contingent Capital Notes may on behalf of the Holders
of all of the Contingent Capital Notes waive any past Enforcement Event that results from a breach by the Company of a Performance
Obligation. Holders of a majority of the aggregate principal amount of the outstanding Contingent Capital Notes shall not be entitled
to waive any past Enforcement Event that results from a Winding-up or Administration Event or a Non-Payment Event.

 

    23 

     

    

As set forth
in, and subject to, the provisions of the Indenture, no Holder will have the right to institute any proceeding, judicial or otherwise,
with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless such
Holder fulfils the requirements of Section 5.07 of the Contingent Convertible Securities Indenture.

 

This Security,
and any other Securities of this series and of like tenor, are issuable only in registered form without coupons in initial denominations
of $200,000 and increments of $1,000 thereafter. The denominations cannot be changed without the consent of the Trustee. The denomination
of each interest in this Security shall be the “Tradable Amount” of such book-entry interest. Prior to the
Automatic Conversion, the aggregate Tradable Amount of the interests in this Security shall equal this Security’s outstanding
principal amount. Following the Automatic Conversion, the principal amount of this Security shall equal zero, but the Tradable
Amount of the book-entry interests in this Security shall remain unchanged as a result of the Automatic Conversion.

 

Prior to
due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security
be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

This Security shall be governed
by and construed in accordance with the laws of the State of New York, except (i) as otherwise provided for pursuant to Section
1.12 of the Contingent Convertible Securities Indenture and ‎Section
10.07 of the Third Supplemental Indenture, the subordination provisions referred to herein and in ‎Section
6.01 of the Third Supplemental Indenture (which replaces in its entirety Section 12.01(a) of the Contingent Convertible Securities
Indenture) and the waiver of the right to set-off referred to herein and in ‎Section
6.02 of the Third Supplemental Indenture, which are governed by, and construed in accordance with, Scots law (other than the Trustee’s
own rights, duties or immunities under Article 12 of the Contingent Convertible Securities Indenture, as amended by ‎Section
6.01 of the Third Supplemental Indenture, or otherwise), and (ii) the authorization and execution by the Company of this Security
shall be governed by (in addition to the laws of the State of New York relevant to execution) the jurisdiction of the Company.

 

    24 

     

    

Exhibit
B

 

Form
of Conversion Trigger Notice[1]

 

NOTICE
TO DTC AND FOR PUBLICATION

AS A NOTICE TO HOLDERS AND BENEFICIAL OWNERS

 

[RBS
Letterhead]

 

		To:	The
                                         Depository Trust Company

                                         55 Water Street, 25th Floor

                                         New York, NY 10041-0099

                                         Attn: Mandatory Reorganization Department

                                         Fax: +1 (212) 855-5488

                                         Email: mandatoryreorgannouncements@dtcc.com

 

	 	Cc:	The
                           Bank of New York Mellon

        

        One
        Canada Square

        

        London
        E14 5AL

        

        United
        Kingdom

        

        Attn:
        [       ]

        

        Email:[
              ]

        

        Fax:
          [       ]

        

        Tel:
          [       ]

         
	The
                           Bank of New York Mellon

        

        One
        Wall Street

        

        New
        York, NY 10286

        

        United
        States of America

        

        Attn:[
              ]

        

        Email:[      ]

        

        Fax:
          [      ]

        

        Tel:
          [      ]

         

Re: The
Royal Bank of Scotland Group plc [$][       ] Perpetual Subordinated Contingent Convertible Additional Tier 1 Capital Notes (CUSIP:
[       ], ISIN: [       ]) – Notice to DTC, Holders and Beneficial Owners of the Occurrence of a Conversion Trigger Event

 

This notice
is in relation to The Royal Bank of Scotland Group plc’s (the “Company”) [$][       ] Perpetual Subordinated
Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [       ], ISIN: [       ]) issued on [       ], 2016 (the “Securities”)
pursuant to the Contingent Convertible Securities Indenture, dated August 10, 2015, between the Company and The Bank of New York
Mellon, London Branch, as Trustee (the “Trustee”), as supplemented by the Third Supplemental Indenture, dated
August [●], 2016, between the Company and the Trustee (together, the “Indenture”), and pursuant to the
prospectus dated March 31, 2015. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed
to such terms in the Indenture.

 

The Company
hereby notifies The Depository Trust Company (“DTC”), the Holders and Beneficial Owners of the Contingent Capital
Notes that a Conversion Trigger Event has occurred with respect to the Contingent Capital Notes. Such Conversion Trigger Event
has occurred because the Regulatory Group’s CET1 Ratio as determined on [       ] was less than 7.00%.

 

 

 

1
Note: Addresses to be reconfirmed prior to when notice is sent; subject to modification if Securities are in definitive
form and to changes in DTC (or successor clearing system) policies and procedures.

 

    25 

     

    

 

Upon the
occurrence of the Conversion Trigger Event, the terms of the Contingent Capital Notes provide for the Automatic Conversion of
the Contingent Capital Notes into Settlement Shares on the Conversion Date, which is expected to be [date], at the Conversion
Price. Upon the Automatic Conversion, all of the Company’s obligations under the Contingent Capital Notes shall be irrevocably
and automatically released in consideration of the Company’s issuance and delivery of Settlement Shares to the Settlement
Share Depository (or other relevant recipient). However, the terms of the Contingent Capital Notes provide that the Contingent
Capital Notes shall remain in existence until the applicable Settlement Date for the sole purpose of evidencing a right to receive
Settlement Shares, or, if the Holder elects, ADSs or Alternative Consideration, as applicable, from the Settlement Share Depository.

 

Accordingly,
the Company hereby instructs DTC to indicate to all participants that payments of principal and interest are no longer payable
under the Contingent Capital Notes as of the Conversion Date and that the Contingent Capital Notes will have no further entitlement
to interest or principal as of such date by making a note to that effect in its systems.

 

The Company
further requests DTC to post this notice on its Reorganization Inquiry for Participants System (or such other system as DTC uses
for providing notices to holders of securities).

 

Should DTC,
any Holder or any Beneficial Owner of the Contingent Capital Notes have any inquiries, please contact either the Company at [Telephone,
Fax, Email] or [Name] or the Settlement Share Depository, at [Telephone, Fax, Email].[2]

 

 

 

2 Insert
contact details of any Settlement Share Depository, or, if RBSG has been unable to appoint a Settlement Share Depository, any
other details required to set out the issuance and/or delivery procedures in respect of the Settlement Shares, ADSs or any Alternative
Consideration as to Holders and Beneficial owners as RBSG shall consider reasonable in the circumstances.

 

 

    26 

     

    

Exhibit
C

 

Form
of Conversion Trigger Event Officer’s Certificate

 

THE
ROYAL BANK OF SCOTLAND GROUP PLC

 

Conversion
Trigger Event Officer’s Certificate

 

This Officer’s
Certificate is being delivered in relation to The Royal Bank of Scotland Group plc’s (the “Company”)
[$][       ] Perpetual Subordinated Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [       ], ISIN: [       ]) issued on [       ], 2016
(the “Securities”) pursuant to the Contingent Convertible Securities Indenture, dated August 10, 2015, between
the Company and The Bank of New York Mellon, London Branch, as Trustee (the “Trustee”), as amended and supplemented
by the Third Supplemental Indenture, dated August [●], 2016, between the Company and the Trustee (together, the “Indenture”).

 

Capitalized
terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.

 

Pursuant
to ‎Section 1.02 of the Contingent Convertible Securities
Indenture and ‎‎Section 3.15(b) of the Third Supplemental
Indenture, the undersigned, being authorized signatory of the Company and authorized by the Company to give this certificate,
hereby certifies as follows:

 

(a)I
have read all of the covenants and conditions in the Indenture, setting forth certain provisions in respect of the occurrence
of a Conversion Trigger Event, including ‎ ‎Section 3.15(b) of the Third Supplemental Indenture, and the definitions relating
thereto;

 

(b)[Include
a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate
are based][I have reviewed such other documents as I have deemed necessary as a basis for the opinion hereinafter expressed];

 

(c)I
have made such other examinations and investigations as I have deemed necessary to enable me to express an informed opinion as
to (i) whether or not such covenants and conditions have been complied with, and (ii) the matters set forth in ‎(d) below;
and

 

(d)In
my opinion, such conditions (including all conditions precedent) and covenants have been complied with; and

 

(e)a
Conversion Trigger Event has occurred with respect to the Contingent Capital Notes. Such Conversion Trigger Event has occurred
because the Regulatory Group’s CET1 Ratio, as determined on [       ], was less than 7.00%.

 

    27 

     

    

[Concurrently
with][Immediately following] the delivery of this Conversion Trigger Event Officer’s Certificate, the Company is delivering
to The Depository Trust Company (“DTC”) the Conversion Trigger Notice attached hereto as Exhibit A as a notice
to DTC and for publication as a notice to Holders and Beneficial Owners in the form set forth in Exhibit B to the Third Supplemental
Indenture.

 

The Trustee
is entitled to conclusively rely on and accept this Conversion Trigger Event Officer’s Certificate without any duty whatsoever
of further inquiry as sufficient and conclusive evidence of the occurrence of a Conversion Trigger Event, and this Conversion
Trigger Event Officer’s Certificate shall be conclusive and binding on the Trustee, the Holders and the Beneficial Owners.

 

Dated: [
      ]

 

	 
	 	 
	 	Name:
	 	Title:

 

 

 

	 

 

 

    28 

     

    

Exhibit
D

 

Form
of Settlement Shares Offer Notice3

 

NOTICE
TO DTC AND FOR PUBLICATION

AS A NOTICE TO HOLDERS AND BENEFICIAL OWNERS

 

[RBS
Letterhead]

 

	To:	The
        Depository Trust Company

        

        55
        Water Street, 25th Floor

        

        New
        York, NY 10041-0099

        

        Attn:
        Mandatory Reorganization Department

        

        Fax:
        +1 (212) 855-5488

        

        Email:
        mandatoryreorgannouncements@dtcc.com

         
	

        

         

	Cc:	The
        Bank of New York Mellon

        

        One
        Canada Square

        

        London
        E14 5AL

        

        United
        Kingdom

        

        Attn:
        [       ]

        

        Email:[      
        ]

        

        Fax:
          [       ]

        

        Tel:
           [       ]

         
	The
        Bank of New York Mellon

        

        One
        Wall Street

        

        New
        York, NY 10286

        

        United
        States of America

        

        Attn:
        [       ]

        

        Email:[      
        ]

        

        Fax:
          [       ]

        

        Tel:
           [       ]

         

Re: The
Royal Bank of Scotland Group plc [$][       ] Perpetual Subordinated Contingent Convertible Additional Tier 1 Capital Notes (CUSIP:
[       ], ISIN: [       ]) – Notice to DTC, Holders and Beneficial Owners –Election to Conduct a Settlement Shares Offer

 

This notice
is in relation to The Royal Bank of Scotland Group plc’s (the “Company”) [$][       ] Perpetual Subordinated
Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [       ], ISIN: [       ]) issued on [ ], 2016 (the “Securities”)
pursuant to the Contingent Convertible Securities Indenture, dated August 10, 2015, between the Company and The Bank of New York
Mellon, London Branch, as Trustee (the “Trustee”), as supplemented by the Third Supplemental Indenture, dated
August [●], 2016, between the Company and the Trustee (together, the “Indenture”), and pursuant to the
prospectus dated March 31, 2015 (the “Prospectus”). Capitalized terms used herein and not defined herein shall
have the respective meanings ascribed to such terms in the Indenture.

 

The Company
hereby notifies The Depository Trust Company (“DTC”), the Holders and the Beneficial Owners of the Contingent
Capital Notes that it has elected that

 

 

3
Note: Addresses to be reconfirmed prior to when notice is sent; subject to modification
if Securities are in definitive form and to changes in DTC (or successor clearing system) policies and procedures.

 

    29 

     

    

 

the
Settlement Share Depository conduct a Settlement Shares Offer. The Settlement Shares Offer Period will extend from the date of
this notice until [Date]4

 

[In addition,
the Company hereby notifies DTC, the Holders and the Beneficial Owners of the Contingent Capital Notes that the Suspension Date
shall be [Date]5. Accordingly, the Company
hereby instructs DTC to implement a “chill” on the clearance and settlement of the Contingent Capital Notes on the
Suspension Date. As described in the Prospectus, Holders and Beneficial Owners will not be able to settle the transfer of any
Contingent Capital Notes following the Suspension Date, and any sale or other transfer of the Contingent Capital Notes that a
Holder or Beneficial Owner may have initiated prior to the Suspension Date that is scheduled to settle after the Suspension Date
will be rejected by DTC and will not be settled within DTC.]6

 

The Royal
Bank of Scotland Group plc further requests DTC to post this notice on its Reorganization Inquiry for Participants System (or
such other system as DTC uses for providing notices to holders of securities).

 

Should DTC,
any Holder or any Beneficial Owner of the Contingent Capital Notes have any inquiries, please contact either the Company at [Telephone,
Fax, Email] or [Name], the Settlement Share Depository, at [Telephone, Fax, Email] 7

 

 

 

 

4
Note: Insert the date that the Settlement Shares Offer expires, which shall be no later
than forty (40) business days after the delivery of this Settlement Shares Offer Notice.

 

5
Note: Insert the Suspension Date, which is the date on which DTC shall suspend all clearance
and settlement of the Contingent Capital Notes.

 

6
Insert information concerning the Suspension Date if such information has not previously
been included in the Conversion Trigger Notice.

 

7
Insert contact details of any Settlement Share Depository, or, if RBSG has been unable
to appoint a Settlement Share Depository, any other details required to set out the issuance and/or delivery procedures in respect
of the Settlement Shares, ADSs or any Alternative Consideration as to Holders and Beneficial owners as RBSG shall consider reasonable
in the circumstances.

 

 

    30 

     

    

Exhibit
E

 

Form
of Settlement Request Notice8 

 

NOTICE
TO DTC AND FOR PUBLICATION

AS A NOTICE TO HOLDERS AND BENEFICIAL OWNERS

 

[RBS
Letterhead]

 

	To:	The
        Depository Trust Company

        

        55
        Water Street, 25th Floor

        

        New
        York, NY 10041-0099

        

        Attn:
        Mandatory Reorganization Department

        

        Fax:
        +1 (212) 855-5488

        

        Email:
        mandatoryreorgannouncements@dtcc.com

         
	

        

         

	Cc:	The
        Bank of New York Mellon

        

        One
        Canada Square

        

        London
        E14 5AL

        

        United
        Kingdom

        

        Attn:
        [       ]

        

        Email:[      
        ]

        

        Fax:
          [       ]

        

        Tel:
         [       ]

         
	The
        Bank of New York Mellon

        

        One
        Wall Street

        

        New
        York, NY 10286

        

        United
        States of America

        

        Attn:
        [       ]

        

        Email:[      
        ]

        

        Fax:
          [       ]

        

        Tel:
          [       ]

         

Re: The
Royal Bank of Scotland Group plc [$][       ] Perpetual Subordinated Contingent Convertible Additional Tier 1 Capital Notes (CUSIP:
[ ], ISIN: [       ]) – Notice to DTC, Holders and Beneficial Owners –Election to Conduct a Settlement Shares Offer

 

This notice
is in relation to The Royal Bank of Scotland Group plc’s (the “Company”) [$][       ] Perpetual Subordinated
Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [       ], ISIN: [       ]) issued on [       ], 2016 (the “Securities”)
pursuant to the Contingent Convertible Securities Indenture, dated August 10, 2015, between the Company and The Bank of New York
Mellon, London Branch, as Trustee (the “Trustee”), as supplemented by the Third Supplemental Indenture, dated
August [●], 2016, between the Company and the Trustee (together, the “Indenture”), and pursuant to the
prospectus dated March 31, 2015 (the “Prospectus”). Capitalized terms used herein and not defined herein shall
have the respective meanings ascribed to such terms in the Indenture.

 

The Company
hereby requests that Holders and Beneficial Owners of the Contingent Capital Notes provide notice to [Name of Settlement Share
Depository (or

 

 

 

8
Note: Addresses to be reconfirmed prior to when notice is sent; subject to modification
if Securities are in definitive form and to changes in DTC (or successor clearing system) policies and procedures.

 

 

    31 

     

    

other
nominee)], as [Settlement Share Depository ]9, with
a copy to the Trustee, in the form provided in Exhibit F to the Third Supplemental Indenture before [Date] (the “Notice
Cut-off Date”).

 

If a Holder
or Beneficial Owner of the Contingent Capital Notes properly completes and delivers a Settlement Notice on or before the Notice
Cut-off Date, the Settlement Share Depository shall, in accordance with the terms of the Third Supplemental Indenture, deliver
to such Holder or Beneficial Owner the relevant Settlement Shares (rounded down to the nearest whole number of Settlement Shares),
ADSs or Alternative Consideration, as applicable, [on the date which is the later of (a) two (2) Business Days after the date
on which the Settlement Notice is received by the Settlement Share Depository and (b) two (2) Business Days after [Date]10.

 

If a Holder
or Beneficial Owner of the Contingent Capital Notes fails to properly complete and deliver a Settlement Notice before the Notice
Cut-off Date, the Settlement Share Depository shall continue to hold the relevant Settlement Shares or Alternative Consideration.
However, the relevant Securities shall be cancelled on the Final Cancellation Date, which shall be [Date],11
and any Holder or Beneficial Owner delivering a Settlement Notice after the Notice Cut-off Date will have to provide
evidence of its entitlement to the relevant Settlement Shares, ADSs or Alternative Consideration, as applicable, satisfactory
to the Settlement Share Depository in its sole and absolute discretion in order to receive delivery of such Settlement Shares,
ADSs or Alternative Consideration (if so elected to be deposited with the ADS Depository on its behalf). The Company shall have
no liability to any Holder or Beneficial Owner of the Contingent Capital Notes for any loss resulting from such Holder’s
or Beneficial Owner’s failure to receive any Alternative Consideration, Settlement Shares or ADSs, or from any delay in
the receipt thereof, in each case as a result of such Holder or Beneficial Owner (or custodian, nominee, broker or other representative
thereof) failing to duly submit a Settlement Notice and the relevant Contingent Capital Notes, if applicable, on a timely basis
or at all.

 

The Company
further requests DTC to post this notice on its Reorganization Inquiry for Participants System (or such other system as DTC uses
for providing notices to holders of securities).

 

Should DTC,
any Holder or any Beneficial Owner of the Contingent Capital Notes have any inquiries, please contact either the Company at [Telephone,
Fax, Email] or [Name], the [Settlement Share Depository], at [Telephone, Fax, Email].

 

    32 

     

    

Exhibit
F

 

Form
of Settlement Notice12

NOTICE TO THE [SETTLEMENT SHARES DEPOSITORY AND] DTC

 

	To:	The
        Depository Trust Company

        

        55
        Water Street, 25th Floor

        

        New
        York, NY 10041-0099

        

        Attn:
        Mandatory Reorganization Department

        

        Fax:
        +1 (212) 855-5488

        

        Email:
        mandatoryreorgannouncements@dtcc.com

         
	

        

         

	Cc:	The
        Bank of New York Mellon

        

        One
        Canada Square

        

        London
        E14 5AL

        

        United
        Kingdom

        

        Attn:
        [       ]

        

        Email:[      
        ]

        

        Fax:
        [       ]

        

        Tel:
        [       ]

         
	The
        Bank of New York Mellon

        

        One
        Wall Street

        

        New
        York, NY 10286

        

        United
        States of America

        

        Attn:
        [       ]

        

        Email:[      
        ]

        

        Fax:
        [       ]

        

        Tel:
        [       ]

         

Re: The
Royal Bank of Scotland Group plc [$][       ] Perpetual Subordinated Contingent Convertible Additional Tier 1 Capital Notes (CUSIP:
[       ], ISIN: [       ]) – Notice to DTC, Holders and Beneficial Owners –Election to Conduct a Settlement Shares Offer

 

This notice
is in relation to The Royal Bank of Scotland Group plc’s (the “Company”) [$][       ] Perpetual Subordinated
Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [       ], ISIN: [       ]) issued on [       ], 2016 (the “Securities”)
pursuant to the Contingent Convertible Securities Indenture, dated August 10, 2015, between the Company and The Bank of New York
Mellon, London Branch, as Trustee (the “Trustee”), as supplemented by the Third Supplemental Indenture, dated
August [●], 2016, between the Company and the Trustee (together, the “Indenture”), and pursuant to the
prospectus dated March 31, 2015 (the “Prospectus”). Capitalized terms used herein and not defined herein shall
have the respective meanings ascribed to such terms in the Indenture.

 

 

 

12
Note: Addresses to be reconfirmed prior to when notice is sent; subject to modification
if Securities are in definitive form and to changes in DTC and CREST (or successor clearing system) policies and procedures.

 

    33 

     

    

 

INFORMATION
OF THE HOLDER OR BENEFICIAL OWNER FOR DELIVERY OF SETTLEMENT SHARES, ADSs OR ALTERNATIVE CONSIDERATION

 

Surname/Company
Name:

 

First name:

 

Name to
be entered in the share register of The Royal Bank of Scotland Group plc:

 

Tradable
Amount of the Contingent Capital Notes held on the date hereof:

 

Securities
to be delivered:

 

□
Settlement Shares

 

CREST participant
ID:

 

CREST member
account (if applicable):

 

[Account
details of clearing system account]13

 

[Address
to which any Settlement Shares should be delivered]14

 

□
American Depositary Shares

 

Registered
account in the Company’s American Depositary Share facility: 

 

Cash account
details (if applicable):

 

YOU MUST
DELIVER THE SETTLEMENT NOTICE TO THE SETTLEMENT SHARE DEPOSITORY AND THE TRUSTEE VIA DTC BEFORE [DATE].

 

If you fail
to properly complete and deliver the Settlement Notice on or before the Notice Cut-off Date, the Settlement Share Depository shall
continue to hold your Settlement Shares or Alternative Consideration. However, your Contingent Capital Notes shall be cancelled
on the Final Cancellation Date, which shall be [Date],15
and you will have to provide evidence of your entitlement to the relevant Settlement Shares, ADSs or Alternative Consideration,
as applicable, satisfactory to the Settlement Share Depository

 

 

13
Note: To be included if the Settlement Shares will be delivered through a clearing system
account other than CREST.

 

14
Note: To be included if the Settlement Shares are not a participating security in CREST
or any another clearing system.

 

15
Note: The Final Cancellation Date may be up to twelve (12) Business Days following the
Notice Cut-off Date.

 

 

    34 

     

    

in
its sole and absolute discretion in order to receive delivery of such Settlement Shares, ADSs or Alternative Consideration.

 

 

 

    35Exhibit 4.2

 

TENTH SUPPLEMENTAL INDENTURE

 

Dated as of August 15, 2016

 

to

 

INDENTURE

 

Dated as of October 11, 2012

 

Between

 

AIR LEASE CORPORATION

 

and

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

 

as Trustee

 

3.000% Senior Notes due 2023

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE 1   DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.1.
    	
Definitions
    	
1
    
	
Section 1.2.
    	
Other Defined Terms
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE 2   TERMS AND DESCRIPTION OF NOTES
    	
7
    
	
 
    	
 
    	
 
    
	
Section 2.1.
    	
Indenture
    	
7
    
	
Section 2.2.
    	
Designation and Amount
    	
7
    
	
Section 2.3.
    	
Form of Notes
    	
7
    
	
Section 2.4.
    	
Maturity
    	
7
    
	
Section 2.5.
    	
Denominations Of Notes
    	
7
    
	
Section 2.6.
    	
Additional Notes
    	
7
    
	
Section 2.7.
    	
Interest
    	
7
    
	
Section 2.8.
    	
Paying Agent,   Registrar, Place of Payment
    	
7
    
	
Section 2.9.
    	
Sinking Fund
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE 3   SATISFACTION AND DISCHARGE
    	
8
    
	
 
    	
 
    	
 
    
	
Section 3.1.
    	
Satisfaction and   Discharge of Indenture
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE 4   AMENDMENTS AND WAIVERS
    	
8
    
	
 
    	
 
    	
 
    
	
Section 4.1.
    	
Supplemental Indentures   without Consent of Holders
    	
8
    
	
Section 4.2.
    	
Supplemental Indentures   with Consent of Holders
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE 5   CERTAIN COVENANTS OF THE COMPANY
    	
9
    
	
 
    	
 
    	
 
    
	
Section 5.1.
    	
Limitation on Liens
    	
9
    
	
Section 5.2.
    	
Release of Liens
    	
10
    
	
Section 5.3.
    	
Merger, Consolidation   or Sale of All or Substantially All Assets
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE 6   DEFAULTS AND REMEDIES
    	
11
    
	
 
    	
 
    	
 
    
	
Section 6.1.
    	
Events of Default
    	
11
    
	
Section 6.2.
    	
Acceleration
    	
12
    
	
Section 6.3.
    	
Control by Holders
    	
12
    
	
Section 6.4.
    	
Waivers
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE 7   DEFEASANCE
    	
13
    
	
 
    	
 
    	
 
    
	
Section 7.1.
    	
Covenant Defeasance
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE 8   REPURCHASE OF NOTES AT OPTION OF HOLDERS
    	
13
    
	
 
    	
 
    	
 
    
	
Section 8.1.
    	
Offer to Repurchase   Upon Change of Control Repurchase Event
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE 9   OPTIONAL REDEMPTION
    	
15
    
	
 
    	
 
    	
 
    
	
Section 9.1.
    	
Optional Redemption
    	
15
    
	
Section 9.2.
    	
Modification of Base   Indenture
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE 10   MISCELLANEOUS PROVISIONS
    	
16
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 10.1.
    	
Governing Law
    	
16
    
	
Section 10.2.
    	
Effect of Headings
    	
16
    
	
Section 10.3.
    	
Severability
    	
16
    
	
Section 10.4.
    	
Ratification of   Indenture
    	
16
    
	
Section 10.5.
    	
Trustee Not Responsible   for Recitals
    	
16
    
	
Section 10.6.
    	
Waiver of Jury Trial
    	
16
    
	
Section 10.7.
    	
Counterparts
    	
16
    

 

ii

 

TENTH SUPPLEMENTAL INDENTURE, dated as of August 15, 2016 (this “Supplemental Indenture”), by and among Air Lease Corporation, a corporation duly organized and existing under the laws of the State of Delaware (the “Company”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as Trustee (the “Trustee”).

 

RECITALS

 

WHEREAS, the Company has executed and delivered to the Trustee the Indenture, dated as of October 11, 2012 (the “Base Indenture”), to provide for the issuance of the Company’s debt securities, to be issued in one or more series;

 

WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the establishment of a new series of debt securities to be known as the “3.000% Senior Notes due 2023” (the “Notes”), the form and substance and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture, as supplemented by this Supplemental Indenture;

 

WHEREAS, the Board of Directors of the Company by duly adopted resolutions has authorized certain officers of the Company to, among other things, determine the terms of the debt securities to be issued under the Indenture and execute any and all documents necessary or appropriate to effect each such issuance;

 

WHEREAS, this Supplemental Indenture is being entered into pursuant to the provisions of Sections 2.01, 3.01 and 9.01 of the Base Indenture;

 

WHEREAS, Sections 9.01(e) and 9.01(g) of the Base Indenture provide that without the consent of Holders of the Securities of any series issued under the Indenture, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the Base Indenture, in form satisfactory to the Trustee, to (i) add to, change or eliminate any of the provisions of the Indenture when there is no Security Outstanding of any series created prior to the execution of a supplemental indenture that is entitled to the benefit of such provision and (ii) to establish the form or terms of any Securities of any series permitted by Section 2.01 and Section 3.01 of the Base Indenture;

 

WHEREAS, the Company desires to establish the form and terms of the Notes and to modify, alter, supplement and change certain provisions of the Base Indenture for the benefit of the Holders of the Notes (except as may be provided in a future supplemental indenture to the Indenture (“Future Supplemental Indenture”));

 

WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental Indenture; and

 

WHEREAS, all things necessary to make this Supplemental Indenture a valid agreement of the Company, in accordance with its terms, and to make the Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have, in each case, been performed, and the execution and delivery of this Supplemental Indenture has been duly authorized in all respects.

 

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

 

For and in consideration of the premises and the purchase of the Notes by the Holders thereof, and for the purpose of setting forth, as provided in the Indenture, the forms and terms of the Notes, the Company covenants and agrees, with the Trustee, as follows:

 

ARTICLE 1
 DEFINITIONS

 

Section 1.1.                                 Definitions.  For all purposes of the Indenture, except as otherwise expressly provided or unless the context otherwise requires:

 

1

 

(a)                                 the terms defined in this Article 1 shall have the respective meanings assigned to them in this Article 1 and include the plural as well as the singular and, to the extent applicable, supersede the definitions thereof in the Base Indenture with respect to the Notes;

 

(b)                                 all words, terms and phrases defined in the Base Indenture (but not otherwise defined herein) shall have the same meanings as in the Base Indenture;

 

(c)                                  unless the context otherwise requires, (i) any reference to an “Article” or “Section” refers to an Article or Section, as the case may be, of this Supplemental Indenture; and (ii) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to the Indenture as a whole as amended and/or supplemented by this Supplemental Indenture and not to any particular Article, Section or other subdivision; and

 

(d)                                 unless otherwise expressly provided, the word “including” does not limit the preceding words or terms.

 

“Aircraft Assets” means (x) aircraft, airframes, engines (including spare engines), propellers, parts and other operating assets and pre-delivery payments relating to any of the items in this clause (x); and (y) intermediate or operating leases relating to any of the items in the foregoing clause (x).

 

“ALC Maillot” means ALC Maillot Jaune Borrower, LLC, a Delaware limited liability company.

 

“ALC Warehouse” means ALC Warehouse Borrower, LLC, a Delaware limited liability company.

 

“Applicable Premium” means, with respect to a Note on any Redemption Date, the excess, if any, of (x) the present value as of such Redemption Date of (i) 100% of the principal amount of such Note plus (ii) all required interest payments due on such Note through July 15, 2023, assuming such Note matured on such date (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 30 basis points, over (y) the then outstanding principal of such Note.

 

“Bankruptcy Law” means Title 11, U.S. Code, as amended, or any similar federal, state or foreign law for the relief of debtors.

 

“Below Investment Grade Rating Event” means that at any time within 60 days (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies) from the date of the public notice of a Change of Control or of the Company’s intention or that of any Person to effect a Change of Control, the rating on the Notes is lowered, and the Notes are rated below an Investment Grade Rating, by (x) one Rating Agency if the Notes are rated by less than two Rating Agencies, (y) both Rating Agencies if the Notes are rated by two Rating Agencies or (z) at least a majority of such Rating Agencies if the Notes are rated by three or more Rating Agencies; provided, that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).

 

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close, and when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in that Place of Payment are authorized or obligated by law or executive order to close.

 

2

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.

 

“Capital Stock” of a Person means all equity interests in such Person, including any common stock, preferred stock, limited liability or partnership interests (whether general or limited), and all warrants or options with respect to, or other rights to purchase, the foregoing, but excluding Convertible Notes and other indebtedness (other than preferred stock) convertible into equity.

 

“Change of Control” means, the occurrence of any one of the following:

 

(x) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than the Company, a direct or indirect Subsidiary, or any employee or executive benefit plan of the Company and/or its Subsidiaries, has become the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Company’s Common Stock representing more than 50% of the total voting power of all Common Stock of the Company then outstanding and constituting Voting Stock;

 

(y) the consummation of (i) any consolidation or merger of the Company pursuant to which the Company’s Common Stock will be converted into the right to obtain cash, securities of a Person other than the Company, or other property; or (ii) any sale, lease or other transfer in one transaction or a series of related transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any other Person other than a direct or indirect Subsidiary of the Company; provided, that Aircraft Asset leasing in the ordinary course of business of the Company or any of its Subsidiaries shall not be considered the leasing of “all or substantially all” of the Company’s consolidated assets; provided further, however, that a transaction described in clause (i) or (ii) in which the holders of the Company’s Common Stock immediately prior to such transaction own or hold, directly or indirectly, more than 50% of the voting power of all Common Stock of the continuing or surviving corporation or the transferee, or the parent thereof, outstanding immediately after such transaction and constituting Voting Stock shall not constitute a Change of Control; or

 

(z)                                  the adoption of a plan relating to the Company’s liquidation or dissolution.

 

“Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.

 

“Common Stock” shall mean and include any class of capital stock of any corporation now or hereafter authorized, the right of which to share in distributions of either earnings or assets of such corporation is without limit as to any amount or percentage.

 

“Consolidated Tangible Assets” at any date means the total assets of the Company and its Subsidiaries reported on the most recently prepared consolidated balance sheet of the Company filed with the Commission or delivered to the Trustee as of the end of a fiscal quarter, less all assets shown on such consolidated balance sheet that are classified and accounted for as intangible assets of the Company or any of its Subsidiaries or that otherwise would be considered intangible assets under GAAP, including, without limitation, franchises, patents and patent applications, trademarks, brand names, unamortized debt discount and goodwill.

 

“Convertible Notes” means indebtedness of the Company that is optionally convertible into Capital Stock of the Company (and/or cash based on the value of such Capital Stock) and/or indebtedness of a Subsidiary of the Company that is optionally exchangeable for Capital Stock of the Company (and/or cash based on the value of such Capital Stock).

 

“Default” means any event that is, or after the notice or passage of time or both would be, an Event of Default.

 

“DTC” means The Depository Trust Company.

 

3

 

“ECA Indebtedness” means any indebtedness incurred in order to fund the deliveries of new Aircraft Assets, which indebtedness is guaranteed by one or more Export Credit Agencies, including guarantees thereof by the Company or any of its Subsidiaries.

 

“Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time and the rules and regulations of the Commission promulgated thereunder.

 

“Export Credit Agencies” means collectively, the export credit agencies or other governmental authorities that provide export financing of new Aircraft Assets (including, but not limited to, the Brazilian Development Bank, Compagnie Francaise d’Assurance pour le Commerce Exterieur, Her Britannic Majesty’s Secretary of State acting by the Export Credits Guarantee Department, Euler-Hermes Kreditversicherungs AG, the Export-Import Bank of the United States, the Export Development Canada or any successor thereto).

 

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date.

 

“Holder” means a Person in whose name a Note is registered in the Security Register for the Notes, and such Person shall be treated as the owner of such Note for all purposes under the Indenture.

 

“Indenture” means the Base Indenture as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions thereof, including, for all purposes of the Base Indenture and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern the Base Indenture and any such supplemental indenture, respectively. The term “Indenture,” when used with respect to a particular series of Securities (including the Notes), shall also include the terms of such particular series of Securities (including the Notes) established as contemplated by Section 3.01 of the Base Indenture, including by this Supplemental Indenture.

 

“interest” with respect to the Notes means interest with respect thereto.

 

“Investment Grade Rating” means a rating equal to or higher than BBB- by S&P, or the equivalent of any other Rating Agency, as applicable, or in each case the equivalent under any successor category of such Rating Agency.

 

“Issue Date” means August 15, 2016.

 

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any Capital Lease, upon or with respect to any property or asset of such Person.

 

“Non-Recourse Indebtedness” means, with respect to any Person, any indebtedness of such Person or its Subsidiaries that is, by its terms, recourse only to specific assets and non-recourse to the assets of such Person generally and that is neither guaranteed by any Affiliate (other than a Subsidiary) of such Person or would become the obligation of any Affiliate (other than a Subsidiary) of such Person upon a default thereunder, other than (x) recourse for fraud, misrepresentation, misapplication of cash, waste, environmental claims and liabilities, prohibited transfers, violations of single purpose entity covenants and other circumstances customarily excluded by institutional lenders from exculpation provisions and/or included in separate guaranty or indemnification agreements in non-recourse financings, (y) recourse to the equity interests of such Person or its Subsidiaries and to a guarantee by the Company or any Affiliate of the Company that does not exceed 10% of the outstanding indebtedness of such Person and its Subsidiaries, including such a guarantee of Warehouse Facility Indebtedness, and (z) the existence of a guarantee that does not constitute a guarantee of payment of principal, interest or premium on indebtedness.

 

4

 

“Notice of Default” means a written notice of the kind specified in clause (c) of Section 6.1 of this Supplemental Indenture.

 

“Place of Payment” means, with respect to the Notes, the place or places where the principal of and any premium and interest on the Notes are payable as specified as contemplated in the Indenture.

 

“Rating Agency” means S&P and any additional rating agency that provides a rating with respect to the Notes and is a “nationally recognized statistical rating organization” as defined in Section 3(a)(62) of the Exchange Act (“NRSRO”); provided, that if any such Rating Agency ceases to provide rating services to issuers or investors, the Company may appoint a replacement for such Rating Agency that is a NRSRO.

 

“S&P” means Standard & Poor’s Ratings Services or any successor to its rating agency business.

 

“Securities Act” means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time and the rules and regulations of the Commission promulgated thereunder.

 

“Special Purpose Aircraft Financing Entity” means a Subsidiary of the Company (x) that engages in no business other than the purchase, finance, refinance, lease, sale and management of Aircraft Assets, the ownership of Special Purpose Aircraft Financing Entities and business incidental thereto; (y) substantially all of the assets of which are comprised of Aircraft Assets and/or Capital Stock in Special Purpose Aircraft Financing Entities; and (z) that is not obligated under, or the organizational documents or financing documents of which prevent it from incurring, in each case, indebtedness for money borrowed other than indebtedness incurred to finance or refinance the purchase, lease or acquisition of Aircraft Assets and the purchase of Special Purpose Aircraft Financing Entities or the cost of construction, repair, refurbishment, modification or improvement thereof.

 

“Subsidiary” of any Person means (x) any corporation, association or similar business entity (other than a partnership, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors or trustees thereof (or Persons performing similar functions) or (y) any partnership, limited liability company, trust or similar entity of which more than 50% of the capital accounts, distribution rights or total equity, as applicable, is, in the case of clauses (x) and (y), at the time owned, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

 

“Treasury Rate” means as of any Redemption Date the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the Redemption Date to July 15, 2023; provided, however, that if the period from the Redemption Date to July 15, 2023 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Redemption Date to July 15, 2023 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

“U.S. Government Obligation” means (x) any security that is (i) a direct obligation of the United States of America for the payment of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any U.S. Government Obligation that is specified in clause (x) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation which is so specified and held, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such

 

5

 

depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

 

“Voting Stock” means Capital Stock of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect the corporate directors (or Persons performing similar functions).

 

“Warehouse Facility Indebtedness” means indebtedness under (x) that certain Amended and Restated Warehouse Loan Agreement, dated as of June 21, 2013 and as amended as of October 14, 2013, July 23, 2014 and December 24, 2015, among ALC Warehouse, the lenders party thereto and Credit Suisse AG, New York Branch, as Agent, and (y) that certain Second Amended and Restated Credit Agreement, dated as of March 27, 2014, among ALC Maillot, the subsidiary guarantors party thereto, the lenders party thereto, Credit Agricole Corporate and Investment Bank, as administrative agent, and Deutsche Bank Trust Company Americas, as collateral agent, in the case of each of the foregoing clauses (x) and (y), as any such agreement may be amended, supplemented, extended, refinanced, renewed or replaced.

 

Section 1.2.                                 Other Defined Terms.  In addition to the definitions set forth in Section 1.1 above, the following terms shall have the respective meanings given in the Sections of this Supplemental Indenture set forth below:

 

	
Defined Term
    	
 
    	
Section
    
	
acceleration default
    	
 
    	
6.1(d)
    
	
Additional Notes
    	
 
    	
2.6
    
	
Bankruptcy Default
    	
 
    	
6.1(e)(ii)
    
	
Base Indenture
    	
 
    	
Recitals
    
	
Change of Control Offer
    	
 
    	
8.1(a)
    
	
Change of Control Payment
    	
 
    	
8.1(a)
    
	
Change of Control Payment Date
    	
 
    	
8.1(a)(ii)
    
	
Company
    	
 
    	
Recitals
    
	
Event of Default
    	
 
    	
6.1
    
	
Future Supplemental Indenture
    	
 
    	
Recitals
    
	
Notes
    	
 
    	
Recitals
    
	
payment default
    	
 
    	
6.1(d)
    
	
property
    	
 
    	
5.1
    
	
Successor Company
    	
 
    	
5.3(a)(i)
    
	
Supplemental Indenture
    	
 
    	
Recitals
    
	
Threshold Amount
    	
 
    	
6.1(d)
    
	
Trustee
    	
 
    	
Recitals
    

 

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ARTICLE 2
 TERMS AND DESCRIPTION OF NOTES

 

Section 2.1.                                 Indenture.  The changes, modifications and supplements to the Indenture effected by this Supplemental Indenture shall be applicable only with respect to, and shall only govern the terms of, the Notes that may be issued from time to time, and shall not apply to any other Securities that may be issued under the Indenture unless an Officers’ Certificate or supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements. The provisions of this Supplemental Indenture shall supersede any conflicting provisions in the Indenture with respect to the Notes.

 

Section 2.2.                                 Designation and Amount.  There is hereby authorized and established a series of Securities under the Indenture, designated as the “3.000% Senior Notes due September 15, 2023.” The aggregate principal amount of Notes that may be authenticated and delivered under the Indenture is initially limited to $750,000,000, except upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 3.04, 3.05, 3.06, 9.06 or 11.07 of the Base Indenture and any Notes that, pursuant to Section 3.03 of the Base Indenture, are deemed never to have been authenticated and delivered, and subject to the Company’s ability to issue Additional Notes pursuant to Section 2.6.

 

Section 2.3.                                 Form of Notes.  The Notes are to be substantially in the form set forth in Exhibit A hereto.  The Notes will initially be issued as Global Securities and registered in the name of Cede & Co., the nominee of DTC.

 

Section 2.4.                                 Maturity.  The Stated Maturity of principal of the Notes is September 15, 2023.

 

Section 2.5.                                 Denominations Of Notes.  The Notes shall be issuable in registered form without coupons in a minimum denomination of $2,000 or integral multiples of $1,000 in excess thereof.

 

Section 2.6.                                 Additional Notes.  Pursuant to Section 3.01 of the Base Indenture, the Company may, from time to time reopen the series and issue additional Notes (the “Additional Notes”) without notice to or consent of the Holders; provided, that such Additional Notes are fungible with the Notes issued on the Issue Date or are issued under separate CUSIP numbers (or other relevant identifying numbers); provided, further, that the Company will not be permitted to issue Additional Notes if, at the time of such issuance, the Company is not in compliance with Article 5 and Article 8.  The Notes and any such Additional Notes shall be consolidated and form a single series of Securities and shall vote together as one class on all matters.

 

Section 2.7.                                 Interest.  The Notes will bear interest at the rate of 3.000% per annum. Interest payable on each Interest Payment Date will include interest accrued from (and including) the Issue Date, or from (and including) the most recent date to which interest has been paid or duly provided for, to (but excluding) the applicable Interest Payment Date or the Maturity, as the case may be. The Interest Payment Dates for the Notes are March 15 and September 15 commencing on March 15, 2017 and ending on Maturity; and the Regular Record Date for the interest payable on any Interest Payment Date is the March 1 or September 1, as the case may be, next preceding the relevant Interest Payment Date. If any Interest Payment Date or Redemption Date of a Note is not a Business Day, the payment otherwise required to be made on such date may be made on the next Business Day with the same force and effect as if made on such Interest Payment Date or Redemption Date, as the case may be, and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or Redemption Date, as the case may be.

 

Section 2.8.                                 Paying Agent, Registrar, Place of Payment.  The Company initially appoints the Trustee to act as Paying Agent and Security Registrar for the Notes, initially designates the corporate trust office of the Trustee located in The City of New York as the Place of Payment for the Notes and the office or agency described in Section 10.02 of the Base Indenture and initially designates DTC as the Depositary for the Notes.  The Company may change the Paying Agent, the Security Registrar, the Depositary or the Place of Payment without prior notice to or consent of the Holders, and the Company or any of its Subsidiaries may act as Paying Agent or Security

 

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Registrar.  The Company will pay principal of, premium, if any, and interest on Notes in global form registered in the name of or held by DTC or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the Holder of such Global Security.

 

Section 2.9.                                 Sinking Fund.  The Notes shall not be entitled to the benefit of any sinking fund.

 

ARTICLE 3
 SATISFACTION AND DISCHARGE

 

Section 3.1.                                 Satisfaction and Discharge of Indenture.  Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Indenture, whether now or hereafter issued and Outstanding, Section 4.01 of the Base Indenture is amended and restated in its entirety as follows with respect to the Notes:

 

(a)                                 The Indenture will be discharged as to all Notes and will cease to be of further effect as to all Notes, when either:

 

(i)                                     all Notes that have been authenticated and delivered (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust) have been delivered to the Trustee for cancellation; or

 

(ii)                                  (A) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the giving of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company has irrevocably deposited or caused to be deposited with the Trustee, as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption, as the case may be; (B) no Default or Event of Default has occurred and is continuing on the date of such deposit or will occur as a result of such deposit (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to make such deposit and any similar and simultaneous deposit relating to other indebtedness and, in each case, the granting of Liens in connection therewith) and the deposit will not result in a breach or violation of, or constitute a default under, any material agreement or material instrument (other than the Indenture) to which the Company is a party or by which the Company is bound; (C) the Company has paid or caused to be paid all sums payable or due and owing by the Company under the Indenture; and (D) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.

 

(b)                                 In addition, the Company shall deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) stating that all conditions precedent to satisfaction and discharge have been satisfied.

 

(c)                                  Notwithstanding the satisfaction and discharge of the Indenture, the obligations of the Company to the Trustee under Section 6.07 of the Base Indenture, the obligations of the Trustee to any Authenticating Agent under Section 6.14 of the Base Indenture and, if money shall have been deposited with the Trustee pursuant to subclause (ii)(A) of clause (a) of this Section 3.1, the obligations of the Trustee under Section 4.02 of the Base Indenture and the last paragraph of Section 10.03 of the Base Indenture shall survive.

 

ARTICLE 4
 AMENDMENTS AND WAIVERS

 

Section 4.1.                                 Supplemental Indentures without Consent of Holders.  Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the

 

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Indenture, whether now or hereafter issued and Outstanding, Section 9.01 of the Base Indenture is hereby amended with respect to the Notes by the following:

 

(a)                                 replacing the language in clause (d) thereof with “to add to or change any of the provisions of the Indenture or the terms of the Notes to such extent as shall be necessary to permit or facilitate the issuance of Notes in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Notes in uncertificated form; provided, in each case, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Internal Revenue Code of 1986, as amended”; and

 

(b)                                 replacing the word “indenture” in clause (q) thereof with “Indenture.”

 

Section 4.2.                                 Supplemental Indentures with Consent of Holders.  Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Indenture, whether now or hereafter issued and Outstanding, Section 9.02 of the Base Indenture is hereby amended with respect to the Notes by the following:

 

(a)                                 replacing the period at the end of clause (c) thereof with “, or”; and

 

(b)                                 adding a new clause (d) after the end of clause (c) thereof, as follows: “(d) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed or repurchased as described in Article 8 or Article 9 of the Supplemental Indenture whether through an amendment or waiver of provisions in the covenants, definitions or otherwise (except amendments to the definition of “Change of Control” or “Below Investment Grade Ratings Event”).”

 

ARTICLE 5
 CERTAIN COVENANTS OF THE COMPANY

 

Section 5.1.                                 Limitation on Liens.  The Company will not, and will not permit any Subsidiary to, at any time pledge or otherwise subject to any Lien any of its or such Subsidiary’s property, tangible or intangible, real or personal (hereinafter “property”), without thereby expressly securing the Notes (together, if the Company so chooses, with any other securities entitled to the benefit of a similar covenant) equally and ratably with any and all other indebtedness for borrowed money or Capital Leases, including any guarantee, secured by such Lien, so long as any such other indebtedness or Capital Lease shall be so secured, and the Company covenants that if and when any such Lien is created, the Notes will be so secured thereby; provided, that, the foregoing shall not apply to any Lien on any property existing as of the Issue Date or to the following Liens securing indebtedness for borrowed money or Capital Leases, including any guarantee:

 

(a)                                 any Lien on any property (including Aircraft Assets and Capital Stock in any Special Purpose Aircraft Financing Entity) securing Non-Recourse Indebtedness;

 

(b)                                 any Lien on any property (including Aircraft Assets and Capital Stock in any Special Purpose Aircraft Financing Entity) (i) existing at the time of acquisition of such property or the entity owning such property (including acquisition through merger or consolidation), or (ii) given to secure the payment of all or any part of the purchase, lease or acquisition thereof or the cost of construction, repair, refurbishment, modification or improvement of property (including Aircraft Assets and Capital Stock in any Special Purpose Aircraft Financing Entity) or to secure any indebtedness (including ECA Indebtedness) or Capital Lease incurred prior thereto, at the time of, or within 180 days (18 months in the case of Aircraft Assets and Capital Stock in any Special Purpose Aircraft Financing Entity) after, the acquisition, construction, repair, refurbishment, modification or improvement of property (including Aircraft Assets and Capital Stock in any Special Purpose Aircraft Financing Entity) for the purpose of financing all or part of the purchase, lease or acquisition thereof or the cost of construction, repair, refurbishment, modification or improvement;

 

(c)                                  Liens by a Subsidiary as security for indebtedness owed to the Company or any Subsidiary;

 

9

 

(d)                                 a banker’s lien or right of offset of the holder of such indebtedness in favor of any lender of moneys or holder of commercial paper of the Company or any Subsidiary in the ordinary course of business on moneys of the Company or such Subsidiary deposited with such lender or holder in the ordinary course of business;

 

(e)                                  any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien existing on the Issue Date or referred to in the foregoing clauses including in connection with the refinancing of indebtedness of the Company and its Subsidiaries secured by such Lien; and

 

(f)                                   other Liens not permitted by any of the foregoing clauses (a) through (e) on any property, now owned or hereafter acquired; provided, that, no such Liens shall be incurred pursuant to this subsection (f) if the aggregate principal amount of outstanding indebtedness (without duplication for any guarantee of such indebtedness) and Capital Leases secured by Liens incurred pursuant to this subsection (f) subsequent to the Issue Date, including the Lien proposed to be incurred, shall exceed 20% of Consolidated Tangible Assets after giving effect to such incurrence and the use of proceeds of such indebtedness or Capital Leases.

 

(g)                                  For the avoidance of doubt, nothing in this Section 5.1 shall limit Liens that do not secure indebtedness for borrowed money or Capital Leases.

 

Section 5.2.                                 Release of Liens.  Any Lien that is granted to secure the Notes pursuant to Section 5.1 shall be automatically released and discharged at the same time as the release (other than through the exercise of remedies with respect thereto) of each Lien that gave rise to such obligation to secure the Notes under Section 5.1.

 

Section 5.3.                                 Merger, Consolidation or Sale of All or Substantially All Assets.  Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Indenture, whether now or hereafter issued and Outstanding, Section 8.01 of the Base Indenture is hereby amended and restated in its entirety as follows with respect to the Notes by this Section 5.3:

 

(a)                                 The Company will not consolidate with or merge with or into or wind up into (whether or not the Company is the surviving corporation), or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of the Company’s properties and assets, in one or more related transactions, to any Person unless:

 

(i)                                     the resulting, surviving or transferee Person (the “Successor Company”) is a Person organized and existing under the laws of the United States of America, any state or territory thereof or the District of Columbia;

 

(ii)                                  the Successor Company (if other than the Company) expressly assumes all of the obligations of the Company under the Notes and the Indenture pursuant to a supplemental indenture;

 

(iii)                               immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and

 

(iv)                              the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, winding up or disposition, and such supplemental indenture, if any, comply with the Indenture.

 

(b)                                 The Company will be released from its obligations under the Indenture and the Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Notes; provided, that in the case of a lease of all or substantially all its assets, the Company will not be released from the obligation to pay the principal of and interest on the Notes.

 

(c)                                  For purposes of this Section 5.3, Aircraft Asset leasing in the ordinary course of business of the Company or any of its Subsidiaries shall not be considered the leasing of “all or substantially all” of the Company’s consolidated assets.

 

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ARTICLE 6
 DEFAULTS AND REMEDIES

 

Section 6.1.                                 Events of Default.  Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Indenture, whether now or hereafter issued and Outstanding, Section 5.01 of the Base Indenture is hereby amended and restated in its entirety as follows with respect to the Notes by this Section 6.1:

 

Each of the following is an “Event of Default”:

 

(a)                                 default in any payment of interest on any Note when due, which default continues for a period of 30 days;

 

(b)                                 default in the payment of principal of, or premium, if any, on any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise;

 

(c)                                  default in the performance, or breach, of any covenant or warranty of the Company in the Indenture with respect to the Notes (other than a covenant or warranty with respect to which a default in performance or breach is elsewhere in this Section 6.1 specifically addressed or which covenant or warranty has been included in the Indenture solely for the benefit of one or more series of notes other than the Notes), and continuance of such default or breach for a period of 90 consecutive days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Notes, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” under the Indenture;

 

(d)                                 default under any mortgage, indenture (including the Indenture) or instrument under which there is issued, or which secures or evidences, any indebtedness for borrowed money of the Company (or the payment of which is guaranteed by the Company) (other than indebtedness owed to any Subsidiary or Non-Recourse Indebtedness of the Company) now existing or hereafter created, which default shall constitute a failure by the Company to pay principal in an amount exceeding $200.0 million (the “Threshold Amount”) when due and payable by the Company at final stated maturity, after expiration of any applicable grace period with respect thereto (such default, a “payment default”), or shall have resulted in an aggregate principal amount of such indebtedness exceeding the Threshold Amount becoming due and payable by the Company prior to the date on which it would otherwise have become due and payable (such default, an “acceleration default”); provided, however, that in connection with any series of the Convertible Notes, (i) any conversion of such indebtedness by a holder thereof into shares of common stock, cash or a combination of cash and shares of common stock, (ii) the rights of holders of such indebtedness to convert into shares of common stock, cash or a combination of cash and shares of common stock and (iii) the rights of holders of such indebtedness to require any repurchase by the Company of such indebtedness in cash upon a fundamental change shall not, in itself, constitute an Event of Default hereunder; or

 

(e)

 

(i)                                     the Company, pursuant to or within the meaning of any Bankruptcy Law: (A) commences proceedings to be adjudicated bankrupt or insolvent; (B) consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking an arrangement of debt, reorganization, dissolution, winding up or relief under applicable Bankruptcy Law; (C) consents to the appointment of a receiver, interim receiver, receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) makes an admission in writing of its inability to pay its debts generally as they become due; or

 

(ii)                                  a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in a proceeding in which the Company is to be adjudicated bankrupt or insolvent; (B) appoints a receiver, interim receiver, receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of the Company; or (C) orders the liquidation, dissolution or

 

11

 

winding up of the Company; and the order or decree remains unstayed and in effect for 90 consecutive days (any such Event of Default specified in this clause (e), for purposes of the Notes, shall constitute a “Bankruptcy Default”).

 

Within 60 days following the date on which the Company becomes aware of a Default or receives notice of such Default, as applicable, if such Default is continuing, the Company shall deliver a certificate to the Trustee specifying any events which would constitute a Default, their status and what action the Company is taking or proposing to take in respect thereof.

 

In the event of a declaration of acceleration of the Notes solely because an Event of Default described in Section 6.1(d) above has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically rescinded and annulled if (i) the default or defaults triggering such Event of Default pursuant to Section 6.1(d) shall be remedied or cured by the Company or waived by the holders of the relevant indebtedness within 30 days after the declaration of acceleration with respect thereto; (ii) the rescission and annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction; and (iii) all Events of Default with respect to Notes, except non-payment of principal of, or premium, if any, or interest on, the Notes that have become due solely by such declaration of acceleration of the Notes of such series, have been cured or waived as provided in the Indenture.

 

Section 6.2.                                 Acceleration.

 

(a)                                 Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Indenture, whether now or hereafter issued and Outstanding, the first three paragraphs of Section 5.02 of the Base Indenture are hereby replaced with the following with respect to the Notes:

 

“If an Event of Default (other than an Event of Default described in Section 6.1(e) of the Supplemental Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then Outstanding Notes may declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes to be due and payable by notice in writing to the Company (and to the Trustee if given by Holders). Upon such a declaration, such principal, premium, if any, and accrued and unpaid interest, if any, will be due and payable immediately.

 

If an Event of Default described in Section 6.1(e) occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.”

 

(b)                                 Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Indenture, whether now or hereafter issued and Outstanding, the fourth paragraph of Section 5.02 of the Base Indenture is hereby amended by replacing the period at the end of clause (b) thereof with “; and” and adding the following clause (c) thereafter: “(c) such rescission would not conflict with any judgment or decree of a court of competent jurisdiction.”

 

Section 6.3.                                 Control by Holders.  Notwithstanding Section 5.12 of the Base Indenture, the Trustee may refuse to follow any direction that conflicts with any law, rule, regulation or court order or the Indenture or the Notes, or that the Trustee determines in good faith is unduly prejudicial to the rights of any Holder or that would involve the Trustee in personal liability. Any application by the Trustee for written instructions from the requisite amount of Holders may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under the Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application unless prior to taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions from the requisite amount of Holders in response to such application specifying the action to be taken or omitted.

 

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Section 6.4.                                 Waivers.  It shall not be necessary for any Act of Holders to approve the particular form of any waiver, but it shall be sufficient if such Act shall approve the substance thereof.  A consent to any waiver by any Holder given in connection with a sale, tender or exchange of such Holder’s Notes will not be rendered invalid by such sale, tender or exchange.

 

ARTICLE 7
 DEFEASANCE

 

Section 7.1.                                 Covenant Defeasance.  The covenants provided pursuant to Section 3.01(r), 9.01(b) or 9.01(g) of the Base Indenture for purposes of Section 13.03 of the Base Indenture are the covenants in Article 5 and Article 8 of this Supplemental Indenture and Section 5.15 of the Base Indenture.

 

ARTICLE 8
 REPURCHASE OF NOTES AT OPTION OF HOLDERS

 

Section 8.1.                                 Offer to Repurchase Upon Change of Control Repurchase Event.

 

(a)                                 If a Change of Control Repurchase Event occurs, unless the Company has exercised its right to redeem all of the Notes pursuant to Section 9.1 of this Supplemental Indenture, the Company will make an offer to purchase all the Notes (the “Change of Control Offer”) at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the date of purchase (the “Change of Control Payment”).  If a Note is repurchased pursuant to a Change of Control Offer on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the holder of record as of such Record Date.  Within 30 days following the date upon which a Change of Control Repurchase Event occurred, or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, unless the Company has exercised its right to redeem all of the Notes pursuant to Section 9.1 of this Supplemental Indenture, the Company will mail a notice of such Change of Control Offer to each Holder or otherwise give notice, which will govern the terms of the Change of Control Offer, in accordance with the applicable procedures of DTC, with a copy to the Trustee, stating:

 

(i)                                     that a Change of Control Offer is being made pursuant to this Section 8.1 and that all Notes validly tendered pursuant to such Change of Control Offer will be accepted for purchase by the Company at a purchase price in cash equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to the date of purchase;

 

(ii)                                  the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed or given, other than as may be required by law) (the “Change of Control Payment Date”);

 

(iii)                               if sent prior to the date of consummation of the Change of Control, that the Change of Control Offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date; provided, that if a Change of Control is consummated after a proposed Change of Control Payment Date and such Change of Control Offer is therefore not consummated, the Company shall make a Change of Control Offer in accordance with this Section 8.1 within 30 days following the later of the consummation of such Change of Control or a Below Investment Grade Rating Event;

 

(iv)                              that Notes must be tendered in multiples of $1,000, and any Note not validly tendered will remain outstanding and continue to accrue interest;

 

(v)                                 that, unless the Company defaults in the payment of the Change of Control Payment, any Note accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on and after the Change of Control Payment Date;

 

13

 

(vi)                              that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at the address specified in the notice, or transfer their Notes to the Paying Agent by book-entry transfer pursuant to the applicable procedures of the Paying Agent, prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

 

(vii)                           that Holders shall be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes; provided, that the Paying Agent receives at the address specified in the notice, not later than the close of business on the 30th day following the date of the Change of Control notice, a telegram, facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

 

(viii)                        that if a Holder is tendering less than all of its Notes, such Holder will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (the unpurchased portion of the Notes must be equal to $2,000 or an integral multiple of $1,000 in excess thereof); and

 

(ix)                              the other instructions, as determined by the Company, consistent with this Section 8.1 that a Holder must follow.

 

The notice, if mailed or given in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. If (A) the notice is mailed or given in a manner herein provided and (B) any Holder fails to receive such notice or a Holder receives such notice but it is defective, such Holder’s failure to receive such notice or such defect shall not affect the validity of the proceedings for the purchase of the Notes as to all other Holders that properly received such notice without defect.

 

(b)                                 On the Change of Control Payment Date, the Company will, to the extent lawful:

 

(i)                                     accept for payment all Notes or portions of Notes (of integral multiples of $1,000) validly tendered pursuant to the Change of Control Offer;

 

(ii)                                  deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes so tendered;

 

(iii)                               deliver or cause to be delivered to the Trustee for cancellation the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company in accordance with this Section 8.1; and

 

(iv)                              deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to the making of such Change of Control Payment have been complied with.

 

(c)                                  The Paying Agent will promptly pay to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate, upon receipt of an authentication order, and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided, that each such new Note will be in a principal amount of $2,000 or integral multiples of $1,000 in excess thereof.

 

(d)                                 If the Change of Control Payment Date is on or after a Regular Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest to the Change of Control Payment Date will be paid on the relevant Interest Payment Date to the Person in whose name a Note is registered at the close of business on such Regular Record Date.

 

14

 

(e)                                  Prior to making a Change of Control Payment, and as a condition to such payment (i) the requisite holders of each issue of indebtedness issued under an indenture or other agreement that would be violated by the making of such payment shall have consented to such Change of Control Payment being made and waived the event of default, if any, caused by the Change of Control or (ii) the Company will repay all outstanding indebtedness issued under an indenture or other agreement that would be violated by the making of a Change of Control Payment or the Company will offer to repay all such indebtedness, make payment to the holders of such indebtedness that accept such offer and obtain waivers from the requisite remaining holders of such indebtedness of any event of default arising under the relevant indenture or other agreement as a result of the Change of Control. The Company covenants to effect such repayment or obtain such consent prior to making a Change of Control Payment, it being a default of this Section 8.1 if the Company fails to comply with such covenant.

 

(f)                                   The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 8.1 applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

 

(g)                                  The Company will comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by virtue of the conflict.

 

(h)                                 Other than as specifically provided in this Section 8.1, any purchase pursuant to this Section 8.1 shall be made pursuant to the provisions of Sections 11.03, 11.05 and 11.07 of the Base Indenture.

 

(i)                                     Notwithstanding anything to the contrary in the foregoing clauses (a) though (h), the Company’s obligation to make a Change of Control Offer may, subject to Section 4.2(b) of this Supplemental Indenture, be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes.

 

ARTICLE 9
 OPTIONAL REDEMPTION

 

Section 9.1.                                 Optional Redemption.

 

(a)                                 At any time prior to July 15, 2023, the Company may redeem the Notes, in whole or in part, upon notice pursuant to Section 11.04 of the Base Indenture, at a Redemption Price equal to 100% of the aggregate principal amount of the Notes plus the Applicable Premium, plus accrued and unpaid interest, if any, to the Redemption Date. Promptly after the determination thereof, the Company shall give the Trustee written notice of the Redemption Price provided for in this Section 9.1(a), and the Trustee shall not be responsible for such calculation.  On or after July 15, 2023, the Company may redeem the Notes, in whole or in part, at a Redemption Price equal to 100% of the principal amount thereof plus accrued and unpaid interest to the Redemption Date.  If a Note is redeemed on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the holder of record as of such Record Date.  Unless the Company defaults in payment of the Redemption Price, from and after the Redemption Date, interest will cease to accrue on the Notes or portions thereof called for redemption.

 

(b)                                 Except pursuant to clause (a) of this Section 9.1, the Notes shall not be redeemable at the Company’s option prior to September 15, 2023.

 

(c)                                  Any redemption pursuant to this Section 9.1 shall be made pursuant to the provisions of Sections 11.01 through 11.07 of the Base Indenture; provided, that the words “by such method as the Trustee shall deem fair and appropriate and” in Section 11.03 of the Base Indenture shall be replaced with “by lot.”

 

15

 

(d)                                 Any redemption notice may, at the Company’s discretion, be subject to one or more conditions precedent, including completion of a corporate transaction.  In such event, the related notice of redemption shall describe each such condition and, if applicable, shall state that, at the Company’s discretion, the Redemption Date may be delayed until such time as any or all such conditions shall be satisfied or waived (provided that in no event shall such Redemption Date be delayed to a date later than 60 days after the date on which such notice was given), or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied or waived by the Redemption Date, or by the Redemption Date as so delayed.

 

(e)                                  The Company may acquire Notes by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws, so long as such acquisition does not otherwise violate the terms of the Indenture.

 

Section 9.2.                                 Modification of Base Indenture.  Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Indenture, whether now or hereafter issued and Outstanding, Section 11.06 of the Base Indenture is hereby amended by deleting the words “Record Dates” and replacing them with “Regular Record Date.”

 

ARTICLE 10
 MISCELLANEOUS PROVISIONS

 

Section 10.1.                          Governing Law.  This Supplemental Indenture and each Note shall be governed by, and construed in accordance with, the laws of the State of New York.

 

Section 10.2.                          Effect of Headings.  The article and section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.

 

Section 10.3.                          Severability.  In case any one or more of the provisions contained in the Indenture, this Supplemental Indenture or the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of the Indenture, this Supplemental Indenture or the Notes, but the Indenture, this Supplemental Indenture and the Notes shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

 

Section 10.4.                          Ratification of Indenture.  The Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided; provided, however, that the provisions of this Supplemental Indenture shall apply solely to the Notes.

 

Section 10.5.                          Trustee Not Responsible for Recitals.  The recitals herein contained are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof.  The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture

 

Section 10.6.                          Waiver of Jury Trial.  Section 1.15 of the Base Indenture is hereby incorporated herein.

 

Section 10.7.                          Counterparts.  This Supplemental Indenture may be executed in any number of counterparts each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

 

16

 

IN WITNESS WHEREOF, the parties hereto have caused this Tenth Supplemental Indenture to be duly executed, all as of the day and year first above written.

 

	
 
    	
AIR LEASE   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gregory   B. Willis
    
	
 
    	
 
    	
Name: Gregory B. Willis
    
	
 
    	
 
    	
Title: Executive Vice President and   Chief Financial Officer
    

 

[Signature Page to Tenth Supplemental Indenture]

 

 

	
 
    	
DEUTSCHE BANK TRUST   COMPANY
   AMERICAS, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michele   H.Y. Voon
    
	
 
    	
 
    	
Name: Michele H.Y. Voon
    
	
 
    	
 
    	
Title: Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Susan   Barstock
    
	
 
    	
 
    	
Name: Susan Barstock
    
	
 
    	
 
    	
Title: Vice President
    

 

[Signature Page to Tenth Supplemental Indenture]

 

 

Exhibit A

 

Form of Note

 

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO AIR LEASE CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

AIR LEASE CORPORATION

 

**************************

 

3.000% Senior Notes due 2023

 

CUSIP: 00912XAT1

ISIN: US00912XAT19

 

	
No. [ ]
    	
 
    	
$[  ]
    
	
 
    	
 
    	
(as revised by the Schedule of Increases and   Decreases in Global Security attached hereto)
    

 

AIR LEASE CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., the registered Holder hereof, the principal sum of [    ] Dollars ($[      ]) (as revised by the Schedule of Increases and Decreases in Global Security attached hereto) on September 15, 2023 and to pay interest thereon from and including August 15, 2016 or from and including the most recent date to which interest has been paid or duly provided for, semi-annually on March 15 and September 15 in each year, commencing March 15, 2017 (each an “Interest Payment Date”), at the rate of 3.000% per annum (the “Interest Rate”), until the principal hereof is paid or made available for payment; provided that any principal, and any such installment of interest, that is overdue shall bear interest at the Interest Rate (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand. If any Interest Payment Date or Redemption Date of a Note is not a Business Day, the payment otherwise required to be made on such date may be made on the next Business Day with the same force and effect as if made on such Interest Payment Date or Redemption Date, as the case may be, and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or Redemption Date, as the case may be. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest so payable but not so punctually paid or duly provided for on any Interest Payment Date will forthwith cease to be payable to the Holder on such Regular Record Date and, at the Company’s election, may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof to be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the

 

 

requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture.

 

Payment of the principal of and interest on this Note will be made at the office or agency of the Company maintained for that purpose in The City of New York, New York (or, if the Company does not maintain such office or agency, at the corporate trust office of the Trustee in The City of New York or if the Trustee does not maintain an office in The City of New York, at the office of a Paying Agent in The City of New York), in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of principal and interest on Global Securities shall be made by wire transfer in accordance with the procedures of the Depositary.

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature of one or more authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

	
Dated: [        ]
    	
AIR LEASE CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION
 This is one of the Securities of the series designated therein

referred to in the within-mentioned Indenture.

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,
 as Trustee

 

	
By:
    	
 
    	
 
    
	
 
    	
Authorized Signatory
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized Signatory
    	
 
    

 

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized series of securities of the Company designated as the “3.000% Senior Notes due 2023” (herein called the “Notes”), issued under an Indenture, dated as of October 11, 2012 (herein called the “Base Indenture”), as supplemented by the Tenth Supplemental Indenture dated as of August 15, 2016 (the “Tenth Supplemental Indenture”; the Base Indenture, as so supplemented, is herein called the “Indenture”), among the Company, as issuer, and Deutsche Bank Trust Company Americas, as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered.  This Note is one of the series designated on the face hereof, initially limited in aggregate principal amount to $750,000,000. The Company may at any time issue Additional Notes under the Indenture in unlimited amounts having the same terms as the Notes, except as otherwise permitted by the Indenture.

 

The Notes do not have the benefit of any sinking fund obligation.

 

The Notes are redeemable prior to the Stated Maturity Date as provided in the Indenture.  In the event of redemption of this Note in part only, a new Note or Notes in an authorized denomination for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.

 

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Note or of certain restrictive covenants and Events of Default with respect to the Notes, in each case upon compliance with certain conditions set forth in the Indenture.

 

If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding, judicial or otherwise, with respect to the Indenture or this Note, or for the appointment of a receiver or trustee or for any other remedy thereunder, unless (i) an Event of Default has occurred and is continuing and the Holder of this Note has previously given written notice to the Trustee of such Event of Default and the continuance thereof, (ii) the Holders of not less than 25% in principal amount of the Outstanding Notes have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder, (iii) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding, and (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Notes. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or the Holder’s attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

 

The Indenture and this Note are governed by and construed in accordance with the laws of the State of New York.

 

The Notes are issuable in registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of any authorized denomination, as requested by the Holder surrendering the same.

 

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent thereof may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Company, the Trustee or any such agent shall be affected by notice to the contrary.

 

All terms used in this Note that are not defined herein and are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

To the extent that any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

 

 

SCHEDULE OF INCREASES AND DECREASES IN GLOBAL SECURITY

 

The following increases or decreases in this Note have been made:

 

	
Date of decrease or
   increase
    	
 
    	
Amount of decrease in
   principal amount of
   this Note
    	
 
    	
Amount of increase in
   principal amount of this
   Note
    	
 
    	
Principal amount of this
   Note following such
   decrease or increase
    	
 
    	
Signature of authorized
   signatory of Trustee or
   Security Custodian
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

ASSIGNMENT

 

	
 
    	
FOR VALUE RECEIVED, the undersigned   assigns and transfers this Note to:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(Insert assignee’s social security   or tax identification number)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(Insert address and zip code of   assignee)
    	
 
    

 

and irrevocably appoints         as agent to transfer this Note on the Security Register. The agent may substitute another to act for him or her.

 

	
 
    	
Dated:
    	
Signature:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature Guarantee:
    	
 
    

 

(Sign exactly as your name appears on the other side of this Note)

 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Company pursuant to Section 8.1 of the Tenth Supplemental Indenture, check the box below:

 

[   ] Section 8.1

 

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 8.1 of the Tenth Supplemental Indenture, state the amount you elect to have purchased:

 

	
 
    	
$
    	
(integral multiples of $1,000, provided that the unpurchased portion   must be in a minimum principal amount of $2,000)
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
(Sign exactly as your name appears   on the face of this Note)
    
	
 
    	
 
    	
 
    
	
 
    	
Tax Identification No.:
    	
 
    
	
 
    	
 
    	
 
    
	
Signature Guarantee*:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
								

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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