Document:

Exhibit

EXHIBIT 10.1

NORTHSTAR REAL ESTATE INCOME II, INC.
 
SECOND AMENDED AND RESTATED
INDEPENDENT DIRECTORS COMPENSATION PLAN

ARTICLE 1
PURPOSE

1.1. PURPOSE. The purpose of the Plan is to attract, retain and compensate highly-qualified individuals who are not employees of NorthStar Real Estate Income II, Inc. or any of its subsidiaries or affiliates for service as members of the Board by providing them with competitive compensation and an ownership interest in the Stock of the Company. The Company intends that the Plan will benefit the Company and its stockholders by allowing Independent Directors and Non-Management Directors to have a personal financial stake in the Company through an ownership interest in the Stock and will closely associate the interests of Independent Directors and Non-Management Directors with that of the Company’s stockholders.

1.2. ELIGIBILITY. Independent Directors and Non-Management Directors of the Company who are Eligible Participants, as defined below, shall automatically be participants in the Plan.

ARTICLE 2
DEFINITIONS

2.1. DEFINITIONS. Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Incentive Plan. Unless the context clearly indicates otherwise, the following terms shall have the following meanings:

“Base Annual Retainer” means the annual retainer payable by the Company to an Independent Director or a Non-Management Director pursuant to Section 5.1 hereof for service as a director of the Company (i.e., excluding any Supplemental Annual Retainer), as such amount may be changed from time to time.

“Eligible Participant” means any person who is or becomes an Independent Director or a Non-Management Director while this Plan is in effect; except that during any period a director is prohibited from participating in the Plan by his or her employer or otherwise waives participation in the Plan, such director shall not be an Eligible Participant.

“Incentive Plan” means the NorthStar Real Estate Income II, Inc. Long Term Incentive Plan, or any subsequent equity compensation plan approved by the Board and designated as the Incentive Plan for purposes of this Plan.

“Non-Management Director” means a director of the Company who is not a common law employee of the Company, the Company’s sponsor or the Company’s advisor but who does not otherwise meet the additional requirements set forth for an “independent director” in the Charter.

“Plan” means this NorthStar Real Estate Income II, Inc. Second Amended and Restated Independent Directors Compensation Plan, as amended from time to time.

“Plan Year(s)” means the approximate twelve-month period beginning with the annual stockholders meeting and ending at the next annual stockholders meeting.

“Share Value,” on any date, means (i) if the Company is engaged in any “best efforts” public offering of the Stock prior to the date the Stock is listed on a national securities exchange or quoted on an interdealer quotation system, the offering price of the Stock; (ii) if following the termination of any such “best efforts” public offering but prior to the date the Stock is listed on a national securities exchange or quoted on an interdealer quotation system, the most recent estimated per share value of the Stock disclosed by the Company or if no estimated per share value of the Stock has been disclosed, the most 
recent offering price of the Stock; (iii) if the Stock is listed on a national securities exchange, the closing sales price on such exchange or over such system on such date or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported; or (iv) if the Stock is quoted on an interdealer quotation system but not listed on a national securities exchange, the mean between the bid and offered prices as quoted by the applicable interdealer quotation system for such date; provided that if it is determined that the fair market value is not properly reflected by such quotations, Share Value will be determined by such other method as the Board determines in good faith to be reasonable and in compliance with Code Section 409A.

“Supplemental Annual Retainer” means the annual retainer payable by the Company to an Independent Director pursuant to Section 5.2 hereof for service as the chair of the Audit Committee of the Board, as such amount may be changed from time to time.

ARTICLE 3
ADMINISTRATION

3.1. ADMINISTRATION. The Plan shall be administered by the Board. Subject to the provisions of the Plan, the Board shall be authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. The Board’s interpretation of the Plan, and all actions taken and determinations made by the Board pursuant to the powers vested in it hereunder, shall be conclusive and binding upon all parties concerned, including the Company, its stockholders and persons granted awards under the Plan. The Board may appoint a plan administrator to carry out the ministerial functions of the Plan, but the administrator shall have no other authority or powers of the Board.

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3.2. RELIANCE. In administering the Plan, the Board may rely upon any information furnished by the Company, its public accountants and other experts. No individual will have personal liability by reason of anything done or omitted to be done by the Company or the Board in connection with the Plan. This limitation of liability shall not be exclusive of any other limitation of liability to which any such person may be entitled under the Company’s certificate of incorporation or otherwise.

ARTICLE 4
SHARES

4.1. SOURCE OF SHARES FOR THE PLAN. The shares of Stock that may be issued pursuant to the Plan shall be issued under the Incentive Plan, subject to all of the terms and conditions of the Incentive Plan. The terms contained in the Incentive Plan are incorporated into and made a part of this Plan with respect to shares of Stock, Restricted Stock and any other equity granted pursuant hereto and any such grant shall be governed by and construed in accordance with the Incentive Plan. In the event of any actual or alleged conflict between the provisions of the Incentive Plan and the provisions of this Plan, the provisions of the Incentive Plan shall be controlling and determinative. This Plan does not constitute a separate source of shares for the grant of Restricted Stock or shares of Stock described herein.

ARTICLE 5
RETAINERS AND EXPENSES

5.1. BASE ANNUAL RETAINER. Each Eligible Participant shall be paid a Base Annual Retainer for service as a director during each Plan Year, payable in such form as shall be elected by the Eligible Participant in accordance with Section 6.1. The amount of the Base Annual Retainer shall be established from time to time by the Board. Until changed by the Board, the Base Annual Retainer for a full Plan Year shall be $80,000. The Base Annual Retainer shall be payable in approximately equal quarterly installments in arrears. Each person who first becomes an Eligible Participant on a date other than an annual meeting date shall be paid a retainer equal to the quarterly installment of the Base Annual Retainer for the first quarter of eligibility, based on the number of full months he or she serves as an Independent Director or a Non-Management Director during such quarter. In no event shall any installment of the Base Annual Retainer be paid later than March 15 of the year following the year to which such installment relates.

5.2. AUDIT COMMITTEE CHAIRPERSON SUPPLEMENTAL ANNUAL RETAINER. The chairperson of the Audit Committee of the Board shall be paid a Supplemental Annual Retainer for his or her service as such chairperson during a Plan Year, payable at the same times as installments of the Base Annual Retainer are paid and in such form as shall be elected by such chairperson in accordance with Section 6.1. The amount of the Supplemental Annual Retainer for the chairperson of the Audit Committee shall be established from time to time by the Board. Until changed by the Board, the Supplemental Annual Retainer for a full Plan Year for the chairperson of the Audit Committee shall be $15,000. A pro rata Supplemental Annual Retainer will be paid to any Eligible Participant who becomes the chairperson of the Audit Committee of the Board on a date other than the beginning of a Plan Year, based on the number of full months he or she 

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serves as a chairperson of the Audit Committee of the Board during the Plan Year. In no event shall any installment of the Supplemental Annual Retainer be paid later than March 15 following the year to which such installment relates.

5.3. TRAVEL EXPENSE REIMBURSEMENT. All Eligible Participants shall be reimbursed for reasonable travel expenses in connection with attendance at meetings of the Board and its committees, or other Company functions at which the Chief Executive Officer or Chair of the Board requests the Independent Director or the Non-Management Director to participate. Notwithstanding the foregoing, the Company’s reimbursement obligations pursuant to this Section 5.3 shall be limited to expenses incurred during such director’s service as an Independent Director or a Non-Management Director. Such payments will be made within 30 days after delivery of the Independent Director’s or the Non-Management Director’s written requests for payment, accompanied by such evidence of expenses incurred as the Company may reasonably require, but in no event later than the last day of the Independent Director’s or the Non-Management Director’s tax year following the tax year in which the expense was incurred. The amount reimbursable in any one tax year shall not affect the amount reimbursable in any other tax year. Independent Directors’ or Non-Management Directors’ right to reimbursement pursuant to this Section 5.3 shall not be subject to liquidation or exchange for another benefit.

ARTICLE 6
ALTERNATIVE FORM OF PAYMENT FOR BASE ANNUAL RETAINER AND SUPPLEMENTAL ANNUAL RETAINER 

6.1. PAYMENT OF BASE ANNUAL RETAINER AND SUPPLEMENTAL ANNUAL RETAINER. At the election of each Eligible Participant, in accordance with Section 6.2, the Base Annual Retainer or the Supplemental Annual Retainer for a given Plan Year shall be either: (i) payable in cash in approximately equal quarterly installments in arrears, with the first quarter of the Plan Year beginning on the date of the annual stockholders meeting; or (ii) subject to share availability under the Incentive Plan, payable by a grant on the day an installment of the Base Annual Retainer or Supplemental Annual Retainer is normally paid (the “Stock Grant Date”) of that number of shares of Stock (rounded up to the nearest whole share) determined by dividing the Base Annual Retainer or Supplemental Annual Retainer installment otherwise payable by the Share Value as of the Stock Grant Date. Any shares of Stock granted under the Plan as the Base Annual Retainer or Supplemental Annual Retainer under clause (ii) above will be 100% vested and nonforfeitable as of the Stock Grant Date, and the Eligible Participant receiving such shares of Stock (or his or her custodian, if any) will have immediate rights of ownership in the shares of Stock, including the right to vote the shares of Stock and the right to receive dividends or other distributions thereon.

6.2. TIMING AND MANNER OF PAYMENT ELECTION. Each Eligible Participant shall elect the form of payment desired for his or her Base Annual Retainer and Supplemental Annual Retainer (if applicable) for a Plan Year by delivering a valid election form in such form as the Board or the plan administrator shall prescribe (the “Election Form”) to the Board or the plan administrator prior to the 

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beginning of such Plan Year, which will be effective as of the first day of the Plan Year beginning after the Board or the plan administrator receives the Eligible Participant’s Election Form. The Election Form signed by the Eligible Participant prior to the Plan Year will be irrevocable for the coming Plan Year. However, prior to the commencement of the following Plan Year, an Eligible Participant may change his or her election for future Plan Years by executing and delivering a new Election Form indicating different choices. If an Eligible Participant fails to deliver a new Election Form prior to the commencement of the new Plan Year, his or her Election Form in effect during the previous Plan Year shall continue in effect during the new Plan Year. If no Election Form is filed or effective, or if there are insufficient shares of Stock in the Incentive Plan, the Base Annual Retainer and Supplemental Annual Retainer (if applicable) will be paid in cash.

ARTICLE 7
EQUITY COMPENSATION

7.1. INITIAL RESTRICTED STOCK GRANT. Subject to share availability under the Incentive Plan and the terms of this Section 7.1, on the first date that an Independent Director or a Non-Management Director is initially elected or appointed to the Board, he or she shall receive an award of Restricted Stock (the “Initial Stock Grant”) in an amount established from time to time by the Board. Until changed by the Board, the Initial Stock Grant shall be $50,000 in shares of Restricted Stock, with the number of shares of Stock determined by dividing the amount of the Initial Stock Grant by the Share Value as of the grant date. Such shares of Restricted Stock shall be subject to the terms and restrictions described below in Section 7.3 and shall be in addition to any otherwise applicable annual grant of Restricted Stock granted to such Independent Director or Non-Management Director under Section 7.2.

7.2. SUBSEQUENT RESTRICTED STOCK GRANT. Subject to share availability under the Incentive Plan and the terms of this Section 7.2, on the date following an Independent Director’s or a Non-Management Director’s subsequent re-election to the Board, such director shall receive a subsequent grant of Restricted Stock (the “Subsequent Stock Grant”) in an amount established from time to time by the Board. Until changed by the Board, the Subsequent Stock Grant shall be $35,000 in shares of Restricted Stock, with the number of shares of Stock determined by dividing the amount of the Subsequent Stock Grant by the Share Value as of the grant date. Such shares of Restricted Stock shall be subject to the terms and restrictions described below in Section 7.3.

7.3. TERMS AND CONDITIONS OF RESTRICTED STOCK. Shares of Restricted Stock shall be evidenced by a written Award Certificate, and shall be subject to such restrictions and risk of forfeiture as determined by the Board, and shall be granted under and pursuant to the terms of the Incentive Plan. Unless and until provided otherwise by the Board, the Restricted Stock granted pursuant to Section 7.1 and Section 7.2 herein shall vest and become non-forfeitable over two (2) years in equal quarterly installments beginning on the first day of the first quarter following the Restricted Stock grant date. Notwithstanding the foregoing vesting schedule, the shares of Restricted Stock shall become fully vested on the earlier occurrence of: (i) the termination of the Independent Director’s or the Non-Management Director’s service as a director of the Company due to his or her death or Disability; or (ii) a Change in Control of the Company. If the Independent 

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Director’s or the Non-Management Director’s service as a director of the Company terminates other than as described in clause (i) of the foregoing sentence, then the Independent Director or the Non-Management Director shall forfeit all of his or her right, title and interest in and to any unvested shares of Restricted Stock as of the date of such termination from the Board and such Restricted Stock shall be reconveyed to the Company without further consideration or any act or action by the Independent Director or the Non-Management Director.

ARTICLE 8
AMENDMENT, MODIFICATION AND TERMINATION

8.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board may, at any time and from time to time, amend, modify or terminate the Plan without stockholder approval; provided, however, that if an amendment to the Plan would, in the reasonable opinion of the Board, require stockholder approval under applicable laws, policies or regulations or the applicable listing or other requirements of a securities exchange on which the Stock is listed or traded, then such amendment shall be subject to stockholder approval; and provided, further, that the Board may condition any other amendment or modification on the approval of stockholders of the Company for any reason.

ARTICLE 9
GENERAL PROVISIONS

9.1. ADJUSTMENTS. The adjustment provisions of the Incentive Plan shall apply with respect to Restricted Stock or other equity awards outstanding or to be granted pursuant to this Plan.

9.2. DURATION OF THE PLAN. The Plan shall remain in effect until terminated by the Board.

9.3. EXPENSES OF THE PLAN. The expenses of administering the Plan shall be borne by the Company.

9.4. EFFECTIVE DATE. The Plan was originally adopted by the Board on May 2, 2013, and became effective as of that date. The Plan was amended and restated by the Board on March 3, 2015, effective as of January 1, 2015 and on March 21, 2016, effective as of January 1, 2016.

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*****

The foregoing is hereby acknowledged as being the NorthStar Real Estate Income II, Inc. Independent Directors Compensation Plan as adopted by the Board.

NORTHSTAR REAL ESTATE INCOME II, INC.

	
				
	 

	 
	 
	 
	 

	 
	By:
	/s/ Jenny B. Neslin

	 
	 
	Name:
	Jenny B. Neslin

	 
	 
	Title:
	General Counsel and SecretaryExhibit 4.2

 

FORM OF GLOBAL NOTE

 

THIS SUBORDINATED NOTE 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 SUBORDINATED NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SUBORDINATED NOTE REGISTERED, AND NO TRANSFER OF THIS SUBORDINATED
NOTE 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 SUBORDINATED
NOTE 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 SUBORDINATED NOTE IS ISSUED SUBJECT TO THE PROVISIONS OF THAT SECTION 12.01, AND THE HOLDER OF THIS SUBORDINATED
NOTE, 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.

 

     

     

    

CUSIP No. 53944YAB9

ISIN No. US53944YAB92

Common Code: 138616169

 

LLOYDS BANKING GROUP PLC

 

4.650% SUBORDINATED DEBT SECURITIES DUE
2026

 

	No. [1]	$500,000,000

 

LLOYDS BANKING 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 assigns, the principal sum of $500,000,000 (five hundred million dollars) on March 24,
2026 or on such earlier date as the principal hereof may become due in accordance with the terms hereof and to pay interest thereon
semi-annually in arrears on March 24 and September 24 of each year, commencing on September 24, 2016, and ending on March 24, 2026
(each, a “Payment Date”). Interest so payable on any Payment Date shall be paid to the holder in whose name this Subordinated
Note is registered on the 15th calendar day immediately preceding the relevant Payment Date, whether or not such day is a Business
Day, as defined in the Indenture (each a “Regular Record Date”). If (i) the Company fails to pay any installment of
interest on any Subordinated Note on or before its Payment Date and such failure continues for 14 days or (ii) the Company fails
to pay all or any part of the principal of any Subordinated Note on any date on which such principal shall otherwise have become
due and payable, whether upon redemption or otherwise, and such failure continues for seven days (each of (i) and (ii), a “Default”),
the Trustee may commence a proceeding for the winding up of the Company or a Qualifying Administration, provided that the Trustee
may not, upon the occurrence of a Default, declare the principal amount of any of the Outstanding Subordinated Notes to be due
and payable.

 

Interest shall accrue on this Subordinated
Note from day to day from the date of issuance hereof or from the most recent Payment Date at the rate of 4.650% per annum, until
the principal amount hereof is paid or made available for payment.

 

Payments of interest on this Subordinated
Note shall be computed on the basis of a 360-day year divided into twelve months of 30 days each and, in the case of an incomplete
month, the actual number of days elapsed in such period.

 

Payment of the principal amount of (and
premium, if any) and any interest on, this Subordinated Note will 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. Such payment shall be made to the Holder including
through a Paying Agent of the Company outside the United Kingdom for collection by the Holder. If the date for payment of the principal
amount hereof (and premium, if any) or interest thereon is not a Business Day, then (subject as provided in the Indenture) such
payment shall be made on the next succeeding Business Day with the same force and effect as if made on such date for payment and
without any interest or other payment in respect of such delay.

 

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Prior to due presentment of this Subordinated
Note 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 Subordinated Note is registered as the owner of such Subordinated Note for the purpose of receiving payment of
principal and interest, if any, on such Subordinated Note and for all other purposes whatsoever, whether or not such Subordinated
Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to
the contrary.

 

Reference is hereby made to the further
provisions of this Subordinated 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, this Subordinated Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

The exercise of any U.K. bail-in power (as
defined below) 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 Subordinated Notes; (ii) the conversion of all, or a portion, of the principal
amount of, or interest on, the Subordinated Notes into shares or other securities or other obligations of the Company or another
person; and/or (iii) the amendment or alteration of the maturity of the Subordinated Notes, or amendment of the amount of interest
due on the Subordinated 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 of the terms of the Subordinated Notes solely to give effect
to the exercise by the relevant U.K. resolution authority of such U.K. bail-in power. 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 (including
principal that has become due and payable at Maturity), but which have not been paid, prior to the exercise of any U.K. bail-in
power. Each Holder and Beneficial owner of the Subordinated Notes further acknowledges and agrees that the rights of the Holders
and/or Beneficial Owners under the Subordinated 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 these purposes, a “U.K. bail-in
power” is any write-down and/or conversion 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 and 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 regime under the Banking Act 2009 as the same has been or may
be amended from time to time (whether pursuant to the Banking Reform Act 2013, secondary legislation or otherwise), pursuant to
which obligations of a bank, banking group company, credit institution or investment firm or any of its affiliates can be reduced,
cancelled, amended, transferred and/or converted into shares or other securities or obligations of the obligor or any

 

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other person (and a reference to the “relevant
U.K. resolution authority” is to any authority with the ability to exercise a U.K. bail-in power).

 

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

 

Dated: March 24, 2016

 

	LLOYDS BANKING GROUP PLC
	 
	By:	 
	 	Name:
	 	Title:

 

 

[Global Note No. [1] Signature Page]

 

    	 

     

    

CERTIFICATE OF AUTHENTICATION

 

This is one of the Subordinated Notes of
the series designated herein referred to in the within-mentioned Indenture.

 

Dated: March 24, 2016

 

	THE BANK OF NEW YORK MELLON, 

as Trustee
	 
	By:	 
	 	Authorized Signatory
	 	 

 

[Global Note No. [1] Signature Page]

 

    	 

     

    

[REVERSE OF SECURITY]

 

This Subordinated Note is one of a duly
authorized issue of securities of the Company (herein called the “Subordinated Notes”) issued and to be issued in one
or more series under a Subordinated Indenture, dated as of November 4, 2014 (herein called the “Subordinated Indenture”),
between the Company, as issuer, and The Bank of New York Mellon, as Trustee (herein called the “Trustee,” which term
includes any successor trustee under the Subordinated Indenture), as supplemented by the Fourth Supplemental Indenture, dated as
of March 24, 2016, between the Company and the Trustee (the “Fourth Supplemental Indenture, and, together with the Subordinated
Indenture, the “Indenture”) to which Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Subordinated Notes and of the terms upon which the Subordinated Notes are, and are to be, authenticated and delivered.

 

This Subordinated Note is one of the series
designated on the face hereof, initially limited in aggregate principal amount to $1,500,000,000. The Company may, from time to
time, without the consent of the Holders of the Subordinated Notes, issue additional Subordinated Notes of one or more of the series
of Subordinated Notes issued under the Subordinated Indenture, having the same ranking and the same interest rate, Maturity, redemption
terms and other terms as the Subordinated Notes, except for the price to the public, issue date, first Interest Payment Date and
temporary CUSIP, ISIN and/or other identifying numbers, provided that such additional Subordinated Notes must be fungible with
the outstanding Subordinated Notes for U.S. federal income tax purposes. Any such additional Subordinated Notes, together with
the Subordinated Notes of the applicable series, may constitute a single series of Subordinated Notes under the Subordinated Indenture
and shall be included in the definition of “Securities” in the Subordinated Indenture where the context requires.

 

The Subordinated Notes will constitute our
direct, unconditional, unsecured and subordinated obligations ranking pari passu without any preference among themselves and ranking
junior in right of payment to the claims of any existing and future unsecured and unsubordinated indebtedness of the Company.

 

The rights of the Holders of the Subordinated
Notes of this series are, to the extent and in the manner set forth in Section 12.01 of the Indenture, subordinated to the claims
of all Senior Creditors of the Company, and this series of Subordinated Notes is issued subject to the provisions of that Section
12.01, and the holders of this series of Subordinated Notes, by accepting the same, agree 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.

 

If an Event of Default occurs with respect
to Subordinated Notes of any series, then in every such case the Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Outstanding Subordinated Notes of this series may declare the principal amount, together with accrued interest
(if any), and Additional Amounts (if any), payable on such Subordinated Notes, of all the Subordinated Notes to be due and payable
immediately, by a

 

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notice in writing to the Company (and to the
Trustee if given by the Holder or Holders), and upon any such declaration such amount shall become immediately due and payable.

 

Except as otherwise provided in Article
5 of the Indenture, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of
the Subordinated Notes by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce
any such rights, whether for the specific enforcement of any covenant or agreement in the Subordinated Indenture or in aid of the
exercise of any power granted herein, or to enforce any other legal or equitable right vested in the Trustee by the Subordinated
Indenture or by law, provided, however, that the Company shall not, as a result of the bringing of such judicial proceedings, be
required to pay any amount representing or measured by reference to the principal of, or any interest on, the Subordinated Notes
prior to any date on which the principal of, or any interest on, the Subordinated Notes would have otherwise been payable by the
Company.

 

If a Default occurs, the Trustee may commence
a proceeding for the winding-up of the Company and/or prove in a winding-up of the Company or a Qualifying Administration, provided
that the Trustee may not, upon the occurrence of a Default, declare the principal amount of any of the Outstanding Subordinated
Notes to be due and payable.

 

Failure to make any payment in respect of
this Subordinated Note shall not be a Default if such payment is withheld or refused and an Opinion of Counsel is delivered to
the Trustee concluding that such sums were not paid in order to comply with any fiscal or other law or regulation or with the order
of any court of competent jurisdiction, provided, however, that the Trustee may by notice to the Company require the Company to
take such action (including but not limited to proceedings for a declaration by a court of competent jurisdiction) as the Trustee
may be advised in an Opinion of Counsel, upon which opinion the Trustee may conclusively rely, is appropriate and reasonable in
the circumstances to resolve such doubt, in which case the Company shall forthwith take and expeditiously proceed with such action
and shall be bound by any final resolution of the doubt resulting therefrom. If any such action results in a determination that
the relevant payment can be made without violating any applicable law, regulation or order then the provisions of the preceding
sentence shall cease to have effect and the payment shall become due and payable on the expiration of 14 days (in the case of payments
under clause 5.03(a) of the Indenture) or seven days (in the case of payments under clause 5.03(b) Indenture) after the Trustee
gives written notice to the Company informing it of such resolution.

 

Subject to applicable law, no Holder may
exercise or claim any right of set-off, counterclaim, combination of accounts, compensation or retention in respect of any amount
owed to it by the Company arising under or in connection with the Subordinated Debt Securities. The Holders of Subordinated Debt
Securities by their acceptance thereof will be deemed to have waived any right of set-off, counterclaim, combination of accounts,
compensation and retention with respect to the Subordinated Debt Securities or this Subordinated Indenture (or between the obligations
under or in respect of any Subordinated Debt Securities and any liability owed by a Holder to the Company) that they might otherwise
have against the Company.

 

No remedy against the Company other than
as referred to in Article 5 of the Indenture shall be available to the Trustee or the Holders, whether for the recovery of amounts
owing in

 

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respect of the Subordinated Notes or under
the Indenture or in respect of any breach by the Company of any of its other obligations under or in respect of the Subordinated
Notes or under the Subordinated Indenture, except that the Trustee and the Holders shall have such rights and powers as they are
required to have under the Trust Indenture Act.

 

Amounts to be paid on the Subordinated Notes
will be made without deduction or withholding for, or on account of, any and all present and future income, stamp and other taxes,
levies, imposts, duties, charges or fees imposed, levied, collected, withheld or assessed by or on behalf of the United Kingdom
or any political subdivision or authority thereof or therein having the power to tax (the “Taxing Jurisdiction”), unless
such deduction or withholding is required by law. If at any time a Taxing Jurisdiction requires the Company to make such deduction
or withholding, the Company will pay additional amounts with respect to the principal of, interest and any other payment on, the
Subordinated Notes (“Additional Amounts”) that are necessary in order that the net amounts paid to the Holders of Subordinated
Notes, after the deduction or withholding, shall equal the amounts which would have been payable on the Subordinated Notes if the
deduction or withholding had not been required. However, this will not apply to any such tax, levy, impost, duty, charge or fee,
which would not have been deducted or withheld but for the fact that:

 

(i) the Holder or the Beneficial Owner of
the Subordinated 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 having some connection with the Taxing Jurisdiction other than the
holding or ownership of a Subordinated Note, or the collection of any payment of, or in respect of, principal of, or any interest
or other payment on, any Subordinated Note;

 

(ii) except in the case of winding-up in
the United Kingdom, the relevant Subordinated Note is presented (where presentation is required) for payment in the United Kingdom;

 

(iii) the relevant Subordinated 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 the Additional Amounts on presenting the same
for payment at the close of that 30 day period;

 

(iv) the Holder or the Beneficial Owner
of the relevant Subordinated Note or the Beneficial Owner of any payment of, or in respect of, principal of, or any interest or
other payment on, the Subordinated 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 the Beneficial
Owner or (y) to make any declaration or other similar claim to satisfy any requirement, 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
from all or part of the tax, levy, impost, duty, charge or fee;

 

(v) the withholding or deduction is required
to be made pursuant to European Council Directive 2003/48/EC on the taxation of savings income, or any directive amending,

 

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supplementing or replacing such directive
or any law implementing or complying with, or introduced in order to conform to, such directive or directives;

 

(vi) the Subordinated Note is presented
(where presentation is required) for payment by or on behalf of a Holder who would have been able to avoid such withholding or
deduction by presenting the Subordinated Note to another paying agent;

 

(vii) the deduction or withholding is imposed
by reason of Sections 1471-1474 of the US Internal Revenue Code and the U.S. Treasury regulations thereunder or any agreement with
the U.S. Internal Revenue Service in connection with these sections and regulations (“FATCA”), any intergovernmental
agreement between the United States and the United Kingdom or any other jurisdiction with respect to FATCA, or any law, regulation
or other official guidance enacted in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement;
or

 

(viii) any combination of subclauses (i)
through (vii) above,

 

nor shall Additional Amounts be paid with
respect to the principal of or any interest or other payment on, the Subordinated Notes to any Holder who is a fiduciary or partnership
or any person other than the sole Beneficial Owner of such payment to the extent such payment would be required by the laws of
any Taxing Jurisdiction to be included in the income for tax purposes of a beneficiary or partner 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 the Indenture there is mentioned,
in any context, the payment of the principal of or any interest or other payments on, or in respect of, any Subordinated Notes
of any series 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. Upon request from the Trustee or a paying agent, the Company shall provide information
reasonably necessary and readily available in order to enable to the Trustee or paying agent to determine whether any withholding
obligations under FATCA apply. None of the Company, the Trustee or a paying agent shall have any liability in connection with the
Company’s or Trustee’s or paying agent’s compliance with any such withholding obligation under applicable law.

 

Subordinated Notes may not be redeemed except
in accordance with provisions of applicable law, applicable provisions of the Regulatory Capital Requirements Regulations and except
as provided in the Indenture. The Subordinated Notes may not be redeemed in whole or in part at the option of the Holder thereof.

 

Subject to the limitations specified below,
the Company may, at the option of the Company, on not less than 30 nor more than 60 days’ notice, redeem the Subordinated
Notes, as a whole but not in part, at a redemption price equal to 100% of the principal amount, of the

 

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Subordinated Notes then outstanding, together
with any accrued interest to (but excluding) the date fixed for redemption, if at any time:

 

(i)the Company determines
that as a result of a change in, or amendment to, the laws or regulations of the United Kingdom, or any political subdivision or
authority therein or thereof, having the power to tax, including any treaty to which the United Kingdom is a party, or any change
in any generally published application or interpretation of such laws, including a decision of any court or tribunal, or any change
in the generally published application or interpretation of such laws by any relevant tax authority or any generally published
pronouncement by any tax authority, which change, amendment or pronouncement (x) (subject to (y)) becomes effective on or after
the Issue Date, or (y) in the case of a change in law, is enacted by United Kingdom Act of Parliament or implemented by statutory
instrument, on or after the Issue Date (a “Tax Law Change”), the Company has paid or will or would on the next payment
date be required to pay Additional Amounts to any Holder of the Subordinated Notes; and/or

 

(ii)a Tax Law Change would:

 

(A)result in the Company not
being entitled to claim a deduction in respect of any payments in computing the Company’s taxation liabilities or materially
reducing the amount of such deduction;

 

(B)prevent the Subordinated
Notes from being treated as loan relationships for United Kingdom tax purposes;

 

(C)as a result of the Subordinated
Notes being in issue, result in the Company not being able to have losses or deductions set against the profits or gains, or profits
or gains offset by the losses or deductions, of companies with which it is or would otherwise be so grouped for applicable United
Kingdom tax purposes (whether under the group relief system current as of the date of issue of the Subordinated Notes or any similar
system or systems having like effect as may from time to time exist);

 

(D) result in a United Kingdom
tax liability, or the receipt of income or profit which would be subject to United Kingdom tax, in respect of a write-down of the
principal amount of the Subordinated Notes or the conversion of the Subordinated Notes into shares or other obligations of the
Company; or

 

(E)result in a Subordinated
Note or any part thereof being treated as a derivative or an embedded derivative for United Kingdom tax purposes,

 

(each such Tax Law Change, a “Tax Event”); provided,
however, in each case that the Company could not avoid the consequences of the Tax Event by taking measures reasonably available
to it.

 

Prior to the delivery of any such notice
of redemption, the Company shall deliver to the Trustee (i) a written legal opinion of independent United Kingdom counsel of recognized
standing (selected by the Company), in a form satisfactory to the Trustee, to the effect that a Tax Event has occurred, and (ii)
an Officer’s Certificate confirming (1) that all the conditions

 

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necessary for redemption have occurred and
that the Company could not avoid the consequences of the Tax Event by taking measures reasonably available to it, and (2) that
the Relevant Regulator is satisfied that the relevant change or event is material and was not reasonably foreseeable by the Company
on the Issue Date. The Trustee is entitled to conclusively rely on and accept such opinion and Officer’s Certificate without
any duty whatsoever of further inquiry, in which event such opinion and Officer’s Certificate shall be conclusive and binding
on the Trustee, the Holders and the Beneficial Owners.

 

Subject to the conditions set out below,
the Subordinated Notes are redeemable, as a whole but not in part, at the option of the Company, on not less than 30 calendar days’
nor more than 60 calendar days’ notice, at any time, at a redemption price equal to 100% of the principal amount, together
with accrued but unpaid interest, if any, in respect of Subordinated Notes to the date fixed for redemption if, immediately prior
to the giving of the notice referred to above, a Capital Disqualification Event has occurred.

 

Prior to the giving of any notice of redemption,
the Company must deliver to the Trustee an Officer’s Certificate stating that (i) a Capital Disqualification Event has occurred,
and (ii) the Company has demonstrated to the satisfaction of the Relevant Regulator that the relevant change was not reasonably
foreseeable by the Company as at the Issue Date. The Trustee shall be entitled to accept such Officer’s Certificate without
any further inquiry, in which event such Officer’s Certificate shall be conclusive and binding on the Trustee and the Holders
and Beneficial Owners.

 

Subject to the conditions set out below,
the Company may from time to time purchase Subordinated Notes in the open market or by tender or by private agreement, in any manner
and at any price or at differing prices. Subordinated Notes purchased or otherwise acquired by the Company may be held, resold
or at its sole discretion, surrendered to the Trustee for cancellation (in which case all Subordinated Notes so surrendered will
forthwith be cancelled in accordance with applicable law and thereafter may not be re-issued or resold).

 

The Subordinated Notes may be redeemed or
purchased by the Company prior to Maturity as provided in the foregoing paragraphs, subject to:

 

(a) the Company giving notice to the Relevant
Regulator and the Relevant Regulator granting permission to the Company to redeem or purchase the Subordinated Notes;

 

(b) in respect of any redemption of the
Subordinated Notes proposed to be made prior to the fifth anniversary of the date of issuance of the Subordinated Notes, if and
to the extent then required under the relevant Regulatory Capital Requirements (a) in the case of an optional redemption due to
a Tax Event, the Company having demonstrated to the satisfaction of the Relevant Regulator that the relevant change or event is
material and was not reasonably foreseeable by the Company as at the Issue Date or (b) in the case of redemption following the
occurrence of a Capital Disqualification Event, the Company having demonstrated to the satisfaction of the Relevant Regulator that
the relevant change was not reasonably foreseeable by the Company as at the Issue Date; and

 

    	12

     

    

(c) if and to the extent then required by
the relevant Regulatory Capital Requirements (A) on or before the relevant redemption or purchase date, the Company replacing the
Subordinated Debt Securities with instruments qualifying as own funds of equal or higher quality on terms that are sustainable
for the income capacity of the Company; or (B) the Company demonstrating to the satisfaction of the Relevant Regulator that its
Tier 1 Capital and Tier 2 Capital would, following such redemption or purchase, exceed its minimum capital requirements by a margin
that the Relevant Regulator may consider necessary at such time based on the Regulatory Capital Requirements.

 

Notwithstanding the above conditions, if,
at the time of any redemption or purchase, the prevailing Regulatory Capital Requirements permit the repayment or purchase only
after compliance with one or more alternative or additional preconditions to those set out above, the Company shall comply with
such other and/or, as appropriate, additional pre-condition(s).

 

If the Company elects to redeem the Subordinated
Notes, the Subordinated Notes will cease to accrue interest from the date of redemption, provided the redemption price has been
paid in accordance with the Indenture.

 

Upon payment of (i) the amount of principal
(and premium, if any) so declared due and payable and (ii) accrued and unpaid interest, all of the Company’s obligations
in respect of the payment of the principal of (and premium, if any), and accrued and unpaid interest on, the Subordinated Notes
of this series shall terminate.

 

Notwithstanding any other agreements, arrangements,
or understandings between the Company and any Holder or Beneficial Owner of the Subordinated Notes, by purchasing or acquiring
the Subordinated Notes, each Holder (including each Beneficial Owner) of the Subordinated Notes acknowledges, accepts, agrees to
be bound by and consents to the exercise of any U.K. bail-in power (as defined below) 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 Subordinated
Notes; (ii) the conversion of all, or a portion, of the principal amount of, or interest on, the Subordinated Notes into shares
or other securities or other obligations of the Company or another person; and/or (iii) the amendment or alteration of the maturity
of the Subordinated Notes, or amendment of the amount of interest due on the Subordinated 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 of the terms of the Subordinated Notes solely to give effect to the exercise by the relevant U.K. resolution authority
of such U.K. bail-in power. 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 (including principal that has become due and payable at Maturity), but
which have not been paid, prior to the exercise of any U.K. bail-in power. Each Holder and Beneficial Owner of the Subordinated
Notes further acknowledges and agrees that the rights of the Holders and/or Beneficial Owners under the Subordinated 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 these purposes, a “U.K. bail-in
power” is any write-down and/or conversion power existing from time to time under any laws, regulations, rules or requirements
relating to the

 

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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 and 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 regime under the Banking Act 2009 as the same has been or may be amended from time to time (whether pursuant
to the Banking Reform Act 2013, secondary legislation or otherwise), pursuant to which obligations of a bank, banking group company,
credit institution or investment firm or any of its affiliates can be reduced, cancelled, amended, transferred and/or converted
into shares or other securities or obligations of the obligor or any other person (and a reference to the “relevant U.K.
resolution authority” is to any authority with the ability to exercise a U.K. bail-in power).

 

By purchasing or acquiring the Subordinated
Notes each Holder and Beneficial Owner of the Subordinated Notes:

 

(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 Subordinated Notes shall not
give rise to a default or event of 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; and

 

(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 Subordinated Notes; and

 

(iii) acknowledges and agrees
that, 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 under Section 5.12 of the Subordinated Indenture, and (b) neither the Subordinated
Indenture nor this Fourth Supplemental Indenture shall impose any 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 Subordinated 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 Subordinated
Notes), then the Trustee’s duties under the Subordinated Indenture shall remain applicable with respect to the Subordinated
Notes following such completion to the extent that the Issuer and the Trustee shall agree pursuant to a supplemental indenture
or an amendment to the Subordinated Indenture.

 

By purchasing the Subordinated Notes, each
Holder and Beneficial Owner that acquires its Subordinated 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 Subordinated Notes that acquire the Subordinated Notes upon their initial issuance, including, without limitation, with
respect to the acknowledgement

 

    	14

     

    

and agreement to be bound by and consent to
the terms of the Subordinated Notes related to the U.K. bail-in power.

 

By purchasing the Subordinated Notes, each
Holder and Beneficial Owner shall be deemed to have (i) 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 Subordinated
Notes and (ii) authorized, directed and requested DTC and any direct participant in DTC or other intermediary through which it
holds such Subordinated 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 Subordinated Notes as it may be imposed, without any further action or direction on the part of such
Holder or Beneficial Owner or the Trustee.

 

No repayment of the principal amount of
the Subordinated Notes or payment of interest on the Subordinated 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.

 

Upon the exercise of the U.K. bail-in power
by the relevant U.K. resolution authority with respect to the Subordinated 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 of such occurrence.
The Company shall also deliver a copy of such notice to the Trustee for information purposes only.

 

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 Subordinated Notes to be affected thereby by the Company and the Trustee with the consent of the Holders of
not less than two-thirds in principal amount of the Subordinated Notes at the time outstanding. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the Outstanding Subordinated Notes, on behalf of the Holders
of all Subordinated 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 Subordinated Note shall be conclusive
and binding upon such Holder and upon all future Holders of this Subordinated Note and of any Subordinated Note issued in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Subordinated Note.

 

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

 

As set forth in, and subject to, the provisions
of the Indenture, no Holder of any Subordinated Note of this series shall have any right to institute any proceeding, judicial
or otherwise, with respect to the Subordinated Indenture, or for the appointment of a receiver or

 

    	15

     

    

trustee, or for any other remedy hereunder,
unless such holder fulfills the requirements of Section 5.07 under the Indenture.

 

No reference herein to the Indenture and
no provision of this Subordinated Note or of the Indenture shall alter or impair the right of the Holder of this Subordinated Note,
which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and interest on, this Subordinated
Note when due and payable in accordance with the provisions of this Subordinated Note and the Indenture.

 

The Subordinated Indenture, the Fourth Supplemental
Indenture and the Subordinated Notes are governed by, and construed in accordance with, the laws of the State of New York, except
for the subordination and waiver of set-off provisions relating to the Subordinated Notes, which are governed by, and construed
in accordance with, the laws of Scotland.

 

Unless otherwise defined herein, all terms
used in this Subordinated Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

    	16

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