LUNAR FUNDING I LIMITED LUNAR FUNDING III LIMITED LUNAR FUNDING IV LIMITED

LUNAR FUNDING I LIMITED LUNAR FUNDING III LIMITED LUNAR FUNDING IV LIMITED

ISSUE MEMORANDUM LUNAR FUNDING I LIMITED LUNAR FUNDING III LIMITED LUNAR FUNDING IV LIMITED LUNAR FUNDING V PLC US$10,000,000,000 SECURED ASSET-BACKED MEDIUM TERM NOTE PROGRAMME arranged by THE ROYAL BANK OF SCOTLAND PLC LUNAR FUNDING V PLC (incorporated as a public company with limited liability in Ireland) SERIES 2008-64 EUR 10,000,000 Limited Recourse Secured Floating Rate Credit-Linked Notes due 2051 Issue Price: 100 per cent. THE ROYAL BANK OF SCOTLAND PLC Linklaters LLP One Silk Street London EC2Y 8HQ Ref: VCS/DJP The date of this Issue Memorandum is 16 May 2008

This Issue Memorandum, under which the Notes described herein (the “Notes”) are issued by Lunar Funding V PLC (the “Issuer”), incorporates by reference, and should be read in conjunction with, the Programme Memorandum dated 8 November 2007 (the “Programme Memorandum”) issued in relation to the US$10,000,000,000 Secured Asset-Backed Medium Term Note Programme (the “Programme”) of Lunar Funding I Limited, Lunar Funding III Limited, Lunar Funding IV Limited, Lunar Funding V PLC and other Additional Issuers adhering to the Programme from time to time.

Terms defined in the Programme Memorandum have the same meaning in this Issue Memorandum.

Application will be made to the Irish Financial Services Regulatory Authority (“IFSRA”) as competent authority under Directive 2003/71/EC (the “Prospectus Directive”) for this Issue Memorandum to be approved. Application will be made to the Irish Stock Exchange for the Notes to be admitted to the Official List and trading on its regulated market. This Issue Memorandum comprises a prospectus for such application and, where required, a copy thereof will be delivered to the Registrar of Companies in Ireland. The Issuer accepts responsibility for the information contained in this Issue Memorandum (save for the information in the section entitled “Description of the RBS Group”) and the Programme Memorandum.

To the best of the knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case) such information is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Royal Bank of Scotland plc (“RBS”) accepts responsibility for the information contained in the section entitled “Description of the RBS Group” in this Issue Memorandum. To the best of the knowledge and belief of RBS (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. This Issue Memorandum contains summaries of certain provisions of other documents executed in relation to the Notes. Such summaries are subject to, and are qualified in their entirety by, the actual provisions of each such document, copies of which are available to Noteholders for inspection at the principal office of the Trustee and at the specified office of the Agent.

Holders of the Notes to which this Issue Memorandum relates, and any other person into whose possession this Issue Memorandum comes, will be deemed to have notice of all provisions of the documents executed in relation to the Notes which may be relevant to a decision to acquire, hold or dispose of any of such Notes. Neither this Issue Memorandum nor any further information supplied pursuant to the terms of the Programme or the Notes (a) are intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation or as constituting an invitation or offer by or on behalf of any of the Issuer, the Arranger, the Dealer and the Trustee that any recipient of this Issue Memorandum or any further information supplied pursuant to the terms of the Programme or the Notes should subscribe for or purchase any of the Notes.

Each investor contemplating purchasing Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer.

The delivery of this Issue Memorandum does not at any time imply that the information contained herein concerning the Issuer is correct at any time subsequent to the date hereof or that any other financial statements or any further information supplied pursuant to the terms of the Programme or the Notes is correct as of any time subsequent to the date indicated in the document containing the same. The Arranger, and Dealer and the Trustee expressly do not undertake to review the financial condition or affairs of the Issuer, the Counterparty or any of its subsidiaries during the life of the Programme.

This Issue Memorandum does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any 2

person to whom it is unlawful to make such offer or solicitation, and no action is being taken to permit an offering of the Notes or the distribution of this Issue Memorandum in any jurisdiction where such action is required. Any investment in Notes does not have the status of a bank deposit and is not within the scope of the deposit protection scheme operated by IFSRA. The Issuer is not and will not be regulated by IFSRA as a result of issuing the Notes. Neither the Arranger nor the Dealer (i) stands behind the Issuer, the Programme or the Notes or (ii) will make good any losses incurred by the Issuer in respect of the Charged Property or otherwise.

The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and are subject to US tax law requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within the United States or to US persons. 3

Table of Contents RISK FACTORS . . 5 DOCUMENTS INCORPORATED BY REFERENCE . . 13 TERMS OF THE NOTES . . 14 USE OF PROCEEDS . . 33 DESCRIPTION OF THE REFERENCE ENTITY . . 34 DESCRIPTION OF THE SWAP AGREEMENT . . 35 DESCRIPTION OF THE RBS GROUP . . 36 GENERAL INFORMATION . . 37 FORM OF SWAP CONFIRMATION . . 39 4

RISK FACTORS An investment in the Notes involves certain risks. Prior to investing in the Notes, prospective purchasers should carefully consider the following factors. There can be no assurance that the Issuer’s investments will be successful, that its investment objective will be achieved, that the Noteholders will receive the full amounts payable by the Issuer under the Notes or that they will receive any return on their investment in the Notes.

The Issuer believes that the following factors may be relevant to it and its industry. Most of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring.

The Issuer believes that the factors described below represent the principal risks inherent in investing in Notes, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with any Notes may occur for other reasons and the Issuer does not represent that the statements below regarding the risks of holding any Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Issue Memorandum and reach their own views prior to making any investment decision.

Suitability Prospective purchasers of the Notes should ensure that they understand the nature of the Notes and the extent of their exposure to risk, that they have sufficient knowledge, experience and access to professional advisers to make their own legal, tax, accounting and financial evaluation of the merits and risks of investment in the Notes and that they consider the suitability of the Notes as an investment in light of their own circumstances and financial condition.

Possible Insufficiency of Payments under the Related Agreement to make Payments when due on the Notes There can be no assurance that the payments under the Related Agreement will be sufficient (after taking into account other assets available for such purpose and which are part of the Charged Property) to make payments on the Notes after making payments that rank senior to such payments. If payments under the Related Agreement are insufficient (after taking into account other assets available for such purpose which are part of the Charged Property) to make payments on the Notes, the Issuer will have no other assets available for payment of the deficiency.

Insufficiency of Enforcement Proceeds following an Event of Default Upon enforcement of security over the Charged Property following the occurrence of an Event of Default under the Conditions, it is likely that the net sums either derived from, or realised on, enforcement of such security will be insufficient to meet all amounts due to the Noteholders under the Notes. Certain Conflicts of Interest The Royal Bank of Scotland plc RBS is acting in a number of capacities (i.e. Counterparty, Account Bank, Arranger and Dealer and Deposit Bank) in connection with the transactions described in this Issue Memorandum.

RBS acting in 5

such capacities in connection with such transactions shall have only the duties and responsibilities expressly agreed to by it in its relevant capacity and shall not, by virtue of its acting in any other capacity, be deemed to have other duties or responsibilities or be deemed to hold a standard of care other than as expressly provided with respect to each such capacity. RBS in its various capacities in connection with the contemplated transactions may enter into business dealings, including the acquisition of investment securities as contemplated by the Transaction Documents, from which it may derive revenues and profits in addition to the fees, if any, stated in the various Transaction Documents, without any duty to account therefor.

RBS acts as the Dealer in respect of the issuance of the Notes. From time to time, RBS and/or its affiliates may own significant amounts of Notes. The ability of the Issuer to meet its obligations under the Notes will be dependent, to a significant extent, on its receipt of payments due under the Related Agreement. Consequently, the Issuer is relying not only on the creditworthiness of the Reference Entity but also on the creditworthiness of RBS. The insolvency of RBS and the occurrence of a default by it under the Related Agreement would adversely affect the ability of the Issuer to repay principal and pay interest when due under the Notes and could result in a withdrawal or downgrade of the ratings assigned to the Notes.

There is no limitation or restriction on RBS, or any of its respective affiliates, with regard to acting as advisor (or in a similar role) to other parties or persons. This and other future activities of RBS and/or its affiliates may give rise to additional conflicts of interest. The Swap Agreement does not place restrictions upon RBS’s ability to buy or sell or otherwise acquire or dispose of any interest in or exposure to obligations which might comprise the Reference Obligation. Accordingly, the Counterparty may invest for its own account in the Reference Obligation and if it so invests will administer any such acquired Reference Obligation in accordance with its usual business practices and may act with respect to such Reference Obligation in the same manner as it would if the Swap Agreement did not exist, regardless of whether any such action might have an adverse effect on the Issuer.

Neither RBS nor any of its affiliates shall be under any duty in making any such investments to act in a way which is favourable to the interests of the Issuer or the holders of the Notes. The Issuer does not hold the Reference Obligation and none of the Issuer, the Trustee or any Noteholder has any rights or recourse in respect thereof.

RBS and its affiliates may, in the conduct of their respective businesses, receive or become aware of price sensitive information or other information which is not generally available to the public or to either of Moody’s or S&P. Neither RBS nor any of its affiliates is required to act or not act on such information in relation to either of the Reference Entity or the Reference Obligation, and in particular neither RBS nor its affiliates is required to take into account the interests of the Issuer or holders of the Notes in relation to any such information.

Conflict of Interest between Secured Parties The interests of the Counterparty, the Noteholders and the other Secured Parties may differ in certain circumstances.

Condition 12, Condition 14 (and paragraph 74 of this Issue Memorandum) and the Trust Deed contain provisions setting out the basis on which the Trustee is required to exercise its discretion and the circumstances in which it can be directed to act by the Counterparty or the Noteholders. Limited recourse and non-petition The Notes are limited recourse obligations of the Issuer. Payments due in respect of the Notes prior to redemption or acceleration thereof will be made solely out of amounts received by or on behalf of the Issuer in respect of the Charged Property. In addition, payments on the Notes both prior to and following 6

enforcement of the security over the Charged Property will be subordinated to or rank pari passu with the prior payment of certain other amounts in accordance with the Pre-enforcement Waterfalls or the Order of Priority. The net proceeds of liquidation of the Charged Property (in the case of redemption of the Notes) or the realisation of the security thereover (in the case of enforcement thereof following an Event of Default) will depend on various factors and may be insufficient to pay all amounts due to the Noteholders after making payments to other creditors of the Issuer ranking prior to, or pari passu with, the Noteholders.

If the net proceeds of realisation of the security over the Charged Property constituted by the Trust Deed upon enforcement thereof are less than the aggregate amount payable in such circumstances by the Issuer in respect of the Notes and to the other Transaction Creditors (such negative amount being referred to herein as a “shortfall”), the obligations of the Issuer in respect of the Notes and its obligations to the other Transaction Creditors in such circumstances will be limited to such net proceeds which shall be applied in accordance with the Order of Priority. In such circumstances the other assets (if any) of the Issuer will not be available for payment of such shortfall which shall be borne by the Transaction Creditors in accordance with such order of priority (applied in reverse order), the rights of the Transaction Creditors to receive any further amounts in respect of such obligations shall be extinguished and none of the Noteholders or the other Transaction Creditors may take any further action to recover such amounts.

In addition, none of the Noteholders, the Trustee or other Transaction Creditors (nor any other person acting on behalf of any of them) shall be entitled at any time to institute against the Issuer, or join in any institution against the Issuer of, any bankruptcy, reorganisation, arrangement, insolvency, winding up or liquidation proceedings or other proceedings under any applicable bankruptcy or similar law in connection with any obligations of the Issuer relating to the Notes, the Trust Deed or otherwise owed to the Transaction Creditors, save for lodging a claim in the liquidation of the Issuer which is initiated by another party or taking proceedings to obtain a declaration or judgment as to the obligations of the Issuer.

Majority Noteholder consent In certain circumstances, a Majority of Noteholders can effect changes that bind all Noteholders without the requirement of an Extraordinary Resolution of Noteholders. In particular, a Majority of Noteholders can constitute an Instructing Creditor in accordance with paragraph 42 of this Issue Memorandum. Subordination of payments Payments on the Notes will be subordinated to payment of certain operating expenses of the Issuer, and associated liabilities and (except in certain circumstances) to payments due to the Counterparty under the Related Agreement.

Control If an Event of Default occurs for the purposes of the Notes, the Trustee may declare the principal of, and the accrued interest on, the Notes to be immediately due and payable.

The remedies exercisable on an Event of Default and actions taken pursuant thereto could be adverse to the interest of the holders of the Notes and the Trustee will have no obligation to consider the effect of such remedies or actions on individual holders of Notes. Mark-to-Market Close-Out of the Swap Transactions 7

An early termination of the Swap Transactions will result in a mark-to-market close-out under the Master Agreement. Changes in the credit spread applicable to the Reference Obligation could result in the Swap Transactions having a positive mark-to-market value to the Counterparty which, upon such early termination of the Swap Transactions, would lead to a Negative Swap Close-out Payment becoming due from the Issuer. There can be no assurance that, upon any redemption of the Notes, the proceeds of realisation of the Charged Property would permit payment on the Notes in full. Interest Payment The Issuer’s ability to make payments of interest in respect of the Notes will be constrained by (a) the effect of the Order of Priority and (b) the level of distributions and payments received in respect of the Related Agreement.

Average Life and Prepayment Considerations The actual average lives and actual maturities of the Notes will be affected by, amongst other things, the financial condition of the Reference Entity, the amortisation of the Reference Obligation and the frequency and timing of Credit Events and satisfaction of the applicable Conditions to Settlement under the Swap Agreement. The Notes will be redeemed early upon the termination of the Swap Transactions, at the option of the Noteholders for taxation reasons or at the option of the Issuer. See Conditions 8(c) and 8(d). Limited liquidity There is currently no active trading market for any of the Notes being offered hereby.

Neither RBS nor any of its affiliates will be obligated to make a market in the Notes or otherwise to buy and sell the Notes following the issue thereof. The Notes may be owned by a relatively small number of investors and it is highly unlikely that an active secondary market for the Notes will develop. Purchasers of the Notes may find it difficult or uneconomic to liquidate their investment at any particular time, and it may be difficult for the holders of the Notes to determine the value of the Notes at any particular time. Consequently, a purchaser must be prepared to hold the Notes until maturity.

Credit Ratings Credit ratings of debt securities represent the rating agencies’ opinions regarding their credit quality and are not a guarantee of quality. Rating agencies evaluate the safety of principal and interest payments and do not evaluate the risks of fluctuations in market value. Therefore, credit ratings may not fully reflect all the risks of an investment. Also, an issuer’s current financial condition may be better or worse than a rating indicates. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating agencies.

Security Although certain of the security constituted by the Trust Deed over the Charged Property will be expressed to take effect as a fixed charge under English law, it may take effect as a floating charge which will be subject to the items which are given priority over a floating charge by law, including prior charges, the claims of lien-holders relating to the assets which are the subject of the charge, the expenses of any winding up and the claims of certain preferred creditors. In addition, a floating charge 8

will rank after a subsequently created fixed charge and may be subject to avoidance or to the imposition of a moratorium on enforcement in certain circumstances. The Trust Deed is governed by English law. Some of the Charged Property may be governed by laws of jurisdictions other than England which may require different and/or additional procedures and/or documentation to create or perfect any security interest, and no such action has been taken. The obligations of the Issuer under the Notes are also secured under English law by an assignment by way of a first fixed charge granted in favour of the Trustee for itself and on behalf of the other Secured Parties over the Issuer’s rights in respect of the Cash Account and the Deposit Account pursuant to the Trust Deed on the Closing Date.

Although the security constituted by the Trust Deed over the Cash Account and the Deposit Account held from time to time is expressed to take effect as a fixed charge, it may (as a result of the payments to be made from the Cash Account and the Deposit Account in accordance with the Conditions and the Trust Deed) take effect as a floating charge which, in particular, would rank after a subsequently created fixed charge. However, the Issuer has covenanted not to create any such subsequent charges without the consent of the Trustee.

Credit Events Credit Events may occur under the Swap Agreement notwithstanding the fact that the occurrence of such Credit Event arises directly or indirectly from, inter alia, a lack of authority or capacity of the Reference Entity, an illegality or unenforceability of the Reference Obligation, any applicable law or change in interpretation thereof or the imposition of restrictions by any monetary or other authority.

Counterparty Risk Under the Related Agreement the Counterparty agrees to make payments to the Issuer as described therein. The Issuer will be exposed to the credit risk of the Counterparty with respect to such payments. If the Swap Transactions terminate early, a Negative Swap Close-out Payment may be payable by the Issuer to the Counterparty. Any such Negative Swap Close-out Payment may in certain circumstances reduce the amount available to the Issuer to make payments to the Noteholders. The Issuer’s ability to meet its obligations under the Notes and the Related Agreement will be dependent on payments received by it in connection with the Related Agreement.

The Issuer is therefore relying in part on the creditworthiness of the Counterparty with respect to the Counterparty’s performance of its obligations to make payments to the Issuer.

In order to mitigate the risk of the Issuer’s exposure to the credit risk of the Counterparty, in the event that the Counterparty is downgraded so that it has a short-term issuer credit rating of below “A-1” as assigned by S&P or below “P-1” as assigned by Moody’s or a long-term debt rating of below “A1” as assigned by Moody’s, the Counterparty will be required to take certain actions. No Legal or Beneficial Interest in the Reference Obligation Entering into the Swap Agreement presents risks in addition to those that would result from a direct purchase of the Reference Obligation. The Issuer will have a contractual relationship only with the Counterparty and not with the Reference Entity.

Under the Swap Agreement, none of the Issuer, the Trustee, the Noteholders or any other entity will have any rights to acquire from the Counterparty (or to require the Counterparty to transfer, assign or otherwise dispose of) any interest in the Reference 9

Obligation. Consequently, the Swap Agreement does not constitute a purchase or other acquisition or assignment of any interest in the Reference Obligation. The Issuer will therefore have rights solely against the Counterparty in accordance with the Swap Agreement and will have no recourse to the Reference Entity. None of the Issuer, the Trustee or the Noteholders will have any rights directly to enforce compliance by the Reference Entity in respect of the Reference Obligation, will have any rights of set-off against the Reference Entity, will have any voting rights with respect to the Reference Obligation, will directly benefit from any collateral supporting the Reference Obligation or will have the benefit of the remedies that would normally be available to a holder of such Reference Obligation.

The Counterparty will not, at any time, grant to the Issuer any security interests over the Reference Obligation. In addition, in the event of the insolvency of the Counterparty, the Issuer will be treated as a general creditor of the Counterparty and will not have any claim with respect to the Reference Obligation.

Nature of the CDS Transaction and the Reference Obligation The CDS Transaction will be a credit-default swap referencing a Reference Obligation that is a residential mortgage backed security. A mortgage backed security is a security or any obligation that is evidenced by a certificate that entitles the holder thereof to receive payments that depend primarily on, and are secured upon or derived from, the cash flow from, or the market value of, a specified pool of mortgages, that by its terms is expected to generate or convert into cash within a finite time period, together with rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of the securities or certificates.

Mortgage backed securities are often subject to extension and prepayment risks which may have a substantial impact on the timing and level of their cashflows. Structural features and general economic and financial conditions all have an impact on the weighted average life of mortgage backed securities. There can be no certainty as to the exact weighted average life of any mortgage backed security at a specific point in time, nor the level of impact of the above-mentioned structural features and changes to the general economic conditions. As a result, no assurance can be made as to the exact timing and/or level of cashflows from the Reference Obligation.

This uncertainty may substantially affect the returns on the Notes.

Residential mortgage backed securities (“RMBS”) represent interests in pools of residential mortgage loans secured by one- to multi-family residential mortgage loans. RMBS may be prepaid by their respective issuers at any time. Residential mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity. Residential mortgage loans in an issue of RMBS may be subject to various statutory legal requirements, public policies and various common law and equitable principles that protect consumers, which among other things may regulate interest rates and other charges, require certain disclosures, require licensing of originators, prohibit discriminatory lending practices, regulate the use of consumer credit information and regulate debt collection practices.

Violation of certain provisions of these laws, public policies and principles may limit the servicer’s ability to collect all or part of the principal of or interest on a residential mortgage loan, entitle the borrower to a refund of amounts previously paid by it, or subject the servicer to damages and sanctions. Any such violation could result also in cashflow delays and losses on the related issue of RMBS.

In addition, structural and legal risks of RMBS include the possibility that, in a bankruptcy or similar proceeding involving the originator or the servicer (often the same entity or an affiliate thereof), the assets of the issuer could be treated as never having been truly sold by the originator to the issuer and could be substantively consolidated with those of the originator, or the transfer of such assets to the 10

issuer could be voided as a fraudulent transfer. Challenges based on such doctrines could result also in cashflow delays and losses on the related issue of RMBS.

The rate of defaults and losses on residential mortgage loans will be affected by a number of factors, including general economic conditions and economic conditions specific to the area where the related mortgaged property is located, as well as the extent of the borrower’s equity in the mortgaged property and the financial circumstances of the borrower. If a residential mortgage loan is in default, foreclosure of such residential mortgage loan may be a lengthy and difficult process, and may involve significant expenses. Furthermore, the market for defaulted residential mortgage loans or foreclosed properties may be very limited.

Reliable sources of statistical information may not exist with respect to the defaults, prepayments or recovery rates for all types of obligations comprising the Reference Obligation. Actual default rates may exceed historical default rates or the default and other assumptions referenced herein. Actual recovery rates may be lower than historical recovery rates or the Rating Agencies’ assumed recovery rates and may be zero. In any event, past performance is not indicative of future performance. Retention of the Reference Obligation RBS is not required to retain any legal, equitable or economic interest in the Reference Obligation at any time and there is no restriction whatsoever on RBS’s ability to retain, hedge, sell or otherwise dispose of any legal, equitable or economic interest in the Reference Obligation.

As a result, any obligation of the Issuer to pay a Physical Settlement Amount and/or a Floating Amount exists regardless of whether RBS suffers a loss or is exposed to the risk of loss on the Reference Obligation upon the occurrence of a Credit Event or at any other time.

Risks relating to the Cash Account and the Deposit Account The obligation of the Issuer to make payments on the Notes is in part dependent on payments received by the Issuer in respect of the Cash Account and the Deposit Account. The Issuer will be exposed to the credit risk of the Account Bank and the Deposit Bank. Examiners, Preferred Creditors under Irish law and Floating Charges The Issuer has its registered office in Ireland. As a result there is a rebuttable presumption that its centre of main interest is in Ireland and consequently it is likely that any insolvency proceedings applicable to it would be governed by Irish law.

An examiner may be appointed to an Irish company in circumstances where it is unable, or likely to be unable, to pay its debts. One of the effects of such an appointment is that during the period of appointment, there is a prohibition on the taking of enforcement action by any creditors of the company. In an insolvency of the Issuer, the claims of certain preferential creditors (including the Irish Revenue Commissioners for certain unpaid taxes) will rank in priority to claims of unsecured creditors and claims of creditors holding floating charges. In addition, the claims of creditors holding fixed charges may rank behind other “super” preferential creditors (including expenses of any examiner appointed and certain capital gains tax liabilities) and, in the case of fixed charges over book debts, may rank behind claims of the Irish Revenue Commissioners.

In certain circumstances, a charge which purports to be taken as a fixed charge may take effect as a floating charge. Under Irish law, for a charge to be characterised as a fixed charge, the charge holder is 11

required to exercise the requisite level of control over the assets purported to be charged and the proceeds of such assets including any bank account into which such proceeds are paid. If the Issuer becomes subject to an insolvency proceeding and the Issuer has obligations to creditors that are treated under Irish law as creditors that are senior relative to the Noteholders, the Noteholders may suffer losses as a result of their subordinated status during such insolvency proceeding.

12

DOCUMENTS INCORPORATED BY REFERENCE This Issue Memorandum should be read and construed in conjunction with the Programme Memorandum and full information on the Issuer and the Notes is only available on the basis of the combination of the provisions set out within this Issue Memorandum and the Programme Memorandum. The Programme Memorandum has been previously published and approved by IFSRA and shall be deemed to be incorporated in, and form part of, this Issue Memorandum, save that any statement contained in the Programme Memorandum shall be deemed to be modified or superseded for the purpose of this Issue Memorandum to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise).

Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Issue Memorandum.

Terms used herein but not otherwise defined shall have the meanings given to them in the Programme Memorandum. 13

TERMS OF THE NOTES Series 2008-64 EUR 10,000,000 Limited Recourse Secured Floating Rate Credit-Linked Notes due 2051 The Terms of the Notes are as set out below (including Schedules 1 and 2 to this Issue Memorandum). Any provisions of the Conditions, details of which are required to be set out in the applicable Issue Memorandum which are not so specified herein, shall not apply to the Notes. Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Programme Memorandum dated 8 November 2007.

This Issue Memorandum must be read in conjunction with such Programme Memorandum.

No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999. The Notes will be governed by, and construed in accordance with, English law. A PRINCIPAL CHARACTERISTICS OF THE ISSUE 1 Issuer Lunar Funding V PLC 2 Relevant Dealer/Lead Manager The Royal Bank of Scotland plc 3 Placement Agent Not Applicable 4 Series No 2008-64 5 Tranche 1 6 Relevant Currency (or Currencies in the case of Dual Currency Notes) Euro (“EUR”) 7 Type of Notes Floating Rate Notes 8 Principal Amount EUR 10,000,000 9 Issue Date 14 May 2008 10 Issue Price 100 per cent.

11 Interest Commencement Date (if different from Issue Date) Issue Date 12 Maturity Date 14 Business Days following one calendar year after the earliest to occur of: (a) the Optional Step-up Early Termination Date; (b) the Final Amortization Date; and (c) 28 December 2051 subject to adjustment in accordance with the Following Business Day Convention (the “Scheduled Maturity Date”). 13 Calculation Agent The Royal Bank of Scotland plc Clause 2.6(a) of the Agency Agreement dated 8 November 2007 between among others, the Issuer, the Trustee and the Agent shall apply.

The determination by the Calculation Agent of any amount or of any state of affairs, circumstances, event or 14

other matter, or the formation of any opinion or the exercise of any discretion required or permitted to be determined, formed or exercised by the Calculation Agent shall (in the absence of manifest error) be final and binding on the Issuer, the Trustee, the Counterparty, the Agent and the Noteholders. In performing its duties pursuant to this Issue Memorandum and the Conditions, the Calculation Agent shall act in good faith and a commercially reasonable manner.

The Calculation Agent is not acting as a fiduciary for, or as an adviser to, the Noteholders in respect of its duties as Calculation Agent. 14 Custodian None 15 Sub-Custodian (if any) (Clause 3.4 of Custody Agreement) None 16 Asset Manager None 17 Related Agreement A swap entered into between the Issuer and the Counterparty evidenced by a confirmation dated 14 May 2008 (the “Swap Confirmation”) pursuant to an ISDA Master Agreement (1992 Multicurrency Cross-Border) (together with the schedule thereto) dated as of 16 December 2004 between the Issuer and the Counterparty (the “Master Agreement”) supplemented by a Credit Support Annex dated 16 December 2004 that forms part of the Master Agreement (the “Credit Support Annex” and, together with the Master Agreement and the Swap Confirmation, the “Swap Agreement”).

Counterparty The Royal Bank of Scotland plc Related Agreement Guarantor Not Applicable 18 Repurchase Agreement Not Applicable Repurchase Counterparty Not Applicable 19 Credit Support Document Not Applicable Credit Support Provider Not Applicable 20 Rating Yes. The Notes are expected to be rated “BBB” by S&P and “Baa1” by Moody’s on the Issue Date. It is not a condition to the issue of the Notes that such rating is given.

21 Listing Yes. Application will be made to list the Notes on the Official List of the Irish Stock Exchange and admit the Notes to trading on its regulated market. No assurance is given that such application will be successful. B DEFINITIONS 22 Additional jurisdictions for the purposes of the definition of Business Day (as used in the definition of Interest Determination Date, Condition 3(c), 7(g), 8(f) and 8(o)(i) London and TARGET Settlement Day 15

and in this Issue Memorandum) 23 Business Day Jurisdictions for the purposes of the definition of Presentation Business Day Not Applicable 24 Principal Financial Centre (euro- denominated Notes) Eurozone 25 Additional defined terms See Schedule 2 C FORM, DENOMINATION AND TITLE 26 Form of the Notes Bearer Notes 27 Authorised Denomination(s) EUR 100,000 D STATUS OF THE NOTES 28 Provisions relating to Prioritised Tranches of Notes Not Applicable 29 Pre-enforcement Waterfalls (Clause 6.19 of the Principal Trust Deed) Not Applicable E SECURITY 30 Underlying Assets Not Applicable 31 Additional Security Not Applicable 32 Security Documents No additional Security Documents 33 Additional Secured Parties Not Applicable 34 Underlying Assets not held by the Custodian Not Applicable 35 Circumstances in which Issuer is required to appoint replacement Custodian Not Applicable 36 Order of Priority The order of priority in which the net proceeds of enforcement of the security over the Charged Property, or of a realisation of the Charged Property upon redemption of the Notes (the “Enforcement Proceeds”), is to be applied as follows: 1.

to the payment of the fees, costs, charges, expenses and liabilities incurred by the Trustee or any receiver (insofar as they relate to the Notes); 2. to the payment of all amounts due but unpaid to the Trustee (insofar as they relate to the Notes); 3. to the payment of all taxes due and owing by the Issuer to any tax authority (insofar as they relate to the Notes); 4. to the payment of any due but unpaid Administrative Expenses (insofar as they relate to the Notes) on a pro rata and pari passu basis; 5. except where the Counterparty is the Defaulted 16

Counterparty, to the payment of all amounts (if any) (including any Negative Swap Close-out Payment following an Early Termination Date) due but unpaid to the Counterparty; 6. to the payment, on a pro rata and pari passu basis, of the Redemption Amount and any due but unpaid interest on the Notes; 7. where the Counterparty is the Defaulted Counterparty, to the payment of all amounts (if any) (including any Negative Swap Close-out Payment following an Early Termination Date) due but unpaid to the Counterparty to the extent not already paid under item 5 above; and 8. any remaining amounts to the payment to the Issuer.

37 Principal Terms of Related Agreement A summary of certain provisions of the Swap Agreement is set out in “Description of the Swap Agreement”. The form of Swap Confirmation is set out in the Issue Memorandum. The form of Swap Confirmation shall not be endorsed on the Notes but shall be available for inspection as part of the Issue Memorandum by Noteholders during normal business hours at the specified office of any Paying Agent. 38 Additional Transaction Creditors and Transaction Documents Not Applicable 39 Details of Asset Manager and Asset Management Agreement (if any) Not Applicable 40 Substitution of Underlying Assets Not Applicable 41 Person (if any) who may direct the Issuer as to exercise of rights in respect of Underlying Assets (Clause 6.6 of the Principal Trust Deed) Not Applicable 42 Instructing Creditors A Majority of Noteholders may constitute an Instructing Creditor Condition Instructing Creditor Condition 1(a) (Definitions) - Definition of Account Bank Not Applicable Condition 5(a) (Security) Counterparty and a Majority of Noteholders Condition 5(g) (Exercise of Rights in respect of Charged Property) Counterparty and a Majority of Noteholders Paragraph (vii) of Condition 6(a) (Covenants of the Issuer) Noteholders Condition 6(b) (Restrictions on the Issuer) Counterparty and a Majority of Noteholders 17

Condition 7(g) (Determination and Publication of Interest Rates, Interest Amounts, Redemption Amounts and Instalment Amounts) Not Applicable Condition 8(m) (Purchases) Counterparty and a Majority of Noteholders Condition 10 (Taxation) Counterparty and a Majority of Noteholders Condition 12(a) (Events of Default) (i) a Majority of Noteholders and (ii) the Counterparty unless an Event of Default (as defined in the Related Agreement) or a Termination Event (as defined in the Master Agreement) occurs and the Counterparty is the Defaulted Counterparty under the Related Agreement. Paragraph (ii) (Breach of Other Obligations) of Condition 12(a) (Events of Default) Counterparty and a Majority of Noteholders Paragraph (iv) (Insolvency Proceedings) of Condition 12(a) (Events of Default) Counterparty and a Majority of Noteholders Condition 13 (Enforcement) Counterparty and a Majority of Noteholders Condition 14(b) (Modification and Waiver) Counterparty Condition 14(c) (Substitution) Counterparty and a Majority of Noteholders For the purposes of the Custody Agreement the Issuer may not consent to a change in the identity of the Custodian without the approval of Not Applicable 43 Account Bank The Royal Bank of Scotland plc of 135 Bishopsgate, London EC2M 3UR or any successor in title or replacement entity to whom the rights and obligations of The Royal Bank of Scotland plc (or any previous successor or transferee of such rights and obligations) are transferred pursuant to the terms of the Agency Agreement.

44 Account: The Royal Bank of Scotland plc, in the name of Lunar Funding V PLC (the “Cash Account”). In the event that (i) (A) the short term senior, unsecured and unguaranteed indebtedness of The Royal Bank of Scotland plc (for so long as it is the Account Bank) is rated below “A-1” by S&P, or (B) any replacement Account Bank’s short term senior, unsecured and unguaranteed indebtedness is rated below “A-1” by S&P, or (ii) (A) the short term senior, unsecured and unguaranteed indebtedness of The Royal Bank of Scotland plc (for so long as it is the Account Bank) is rated below “P-1” by Moody’s or is withdrawn or its long term indebtedness rating by Moody’s falls below “A1” or is withdrawn, or (B) any replacement Account Bank’s short term senior, unsecured and unguaranteed 18

indebtedness is rated below “P-1” by Moody’s or is withdrawn or its long term indebtedness rating by Moody’s falls below “A1” or is withdrawn, the Account Bank being replaced shall use reasonable endeavours to procure that a replacement Account Bank is appointed within thirty days in accordance with the provisions of the Agency Agreement. The Account Bank being replaced shall be responsible for any costs incurred in connection with such appointment. Failure by Account Bank to so procure a replacement under the circumstances described above shall constitute an Additional Termination Event (as defined in the Related Agreement) under the Related Agreement.

Payments in and out of the Cash Account will be made in accordance with paragraph 45 of this Issue Memorandum. Identification: The Royal Bank of Scotland plc, in the name of Lunar Funding V PLC, Identification: RBOSGB2RTCM, Account number LUNFUNV EUR1 (Reference: Lunar V Series 2008-64 Cash Account) or such other account as may replace such account from time to time and be notified to the Trustee. 45 Regulation of Payment Flows in and out of the Accounts (A) Cash Account - Credits The Issuer shall procure that the following amounts are credited to the Cash Account promptly upon receipt thereof: (i) any amounts received from the Counterparty pursuant to the Swap Agreement; (ii) any amounts transferred from the Deposit Account in respect of amounts due and payable to the Counterparty pursuant to the Swap Agreement; (iii) any amounts transferred from the Deposit Account in respect of interest paid on the balance of the Deposit Account pursuant to the Deposit Agreement; and (iv) any amounts transferred from the Deposit Account in respect of any amounts due on each Redemption Date.

Any interest on amounts credited to the Cash Account will be retained by the Issuer in the Cash Account for payment as set out below. (B) Cash Account – Debits The Issuer shall procure payment of the following amounts (and shall ensure that no other payment is made) out of the Cash Account: (i) any amounts due and unpaid to the Trustee (insofar as they relate to the Notes); (ii) any amounts due and owing by the Issuer to any taxing authority (insofar as they relate to the Notes); (iii) any due and unpaid Administrative Expenses (insofar as they relate to the Notes); (iv) any amounts due and payable to the Counterparty pursuant to the Swap Agreement; (v) any amounts due to Noteholders on each Interest Payment Date or Redemption Date; and 19

(vi) any amounts transferred to the Deposit Account following the payment of all amounts due and unpaid to Noteholders. (C) Deposit Account – Credits The Issuer has established the Deposit Account with the Deposit Bank pursuant to the Deposit Agreement. In accordance with the Deposit Agreement, the Issuer will procure that the following amounts are credited to the Deposit Account promptly upon receipt thereof: (i) the proceeds from the issuance and sale of the Notes on the Issue Date; (ii) any amounts received from the Deposit Bank in respect of interest paid by the Deposit Bank on the balance of the Deposit Account pursuant to the Deposit Agreement; and (iii) any amounts transferred from the Cash Account following the payment of all amounts due and unpaid to Noteholders.

(D) Deposit Account – Debits In accordance with the Deposit Agreement, the Issuer will procure payment of the following amounts out of the Deposit Account: (i) any amounts transferred to the Cash Account in respect of amounts due and payable to the Counterparty pursuant to the Swap Agreement; (ii) any amounts transferred to the Cash Account in respect of interest paid on the balance of the Deposit Account pursuant to the Deposit Agreement; (iii) any amounts in respect of Interest Amounts due to Noteholders on an Interest Payment Date to the extent not payable from amounts standing to the credit of the Cash Account on such Interest Payment Date (disregarding any amounts standing to the credit of the Cash Account that represent Party A Interim Exchange Amounts received under the Swap Agreement); and (iv) any amounts transferred to the Cash Account in respect of amounts due to Noteholders on each Redemption Date; F COVENANTS AND RESTRICTIONS 46 Additional Covenants Not Applicable 47 Additional Restrictions Not Applicable G INTEREST AND OTHER CALCULATIONS 48 Fixed Rate Note Provisions Not Applicable 49 Floating Rate Note Provisions Applicable (a) Interest Payment Date(s) The ninth Business Day following each Interest Accrual Date.

(b) Additional Business Day Jurisdiction Not Applicable (c) Party responsible for calculating the Interest Rate and Interest Amount(s) (if not the Agent) Calculation Agent (d) Margin(s) + 4.25 per cent. per annum, provided that the Margin shall be increased by the number of basis points by which the Fixed Rate is increased under the Swap Agreement due to a Step-up, such increase to take effect as of the Interest Accrual Date on which such Fixed Rate is increased. (e) Minimum Interest Rate Not Applicable 20

(if applicable) (f) Maximum Interest Rate (if applicable) Not Applicable (g) Rate Multiplier (if applicable) Not Applicable (h) Interest Accrual Period (if different to each Interest Period) Not Applicable (i) Interest Determination Date (if applicable) In respect of each Interest Period, two TARGET Settlement Days prior to the Interest Accrual Date (or, in respect of the first Interest Period, the Interest Commencement Date) at the beginning of such Interest Period.

(j) Relevant Currency EUR (k) Relevant Time 11 a.m. Brussels time (l) Relevant Financial Centre London (m) Primary Source for Floating Rate Reuters EURIBOR01 Page (n) Benchmark EURIBOR (o) Representative Amount An amount determined on an Interest Determination Date by the Calculation Agent equal to the expected Interest Bearing Amount on the relevant Interest Accrual Date at the beginning of the relevant Interest Period.

(p) Specified Period Three months (q) Effective Date With respect to any Floating Rate to be determined on an Interest Determination Date, the first day of the Interest Period to which such Interest Determination Date relates. (r) Reference Banks The principal office of each of four major banks in the Relevant Financial Centre selected by the Calculation Agent. (s) Fall back provisions, rounding provisions, denominator and any other terms relating to the method of calculating interest on Floating Rate Notes, if different from those set out in the Conditions Not Applicable 50 Zero Coupon Note Provisions Not Applicable 51 Variable Coupon Amount Note Provisions Not Applicable 52 Calculation of Interest (a) Day Count Fraction Actual/360 (b) Business Day Convention Modified Following Business Day Convention H REDEMPTION, PURCHASE AND OPTIONS 53 (a) Final Redemption Amount The Final Redemption Amount in respect of each Note will be its pro rata share of the relevant Reference 21

Obligation Notional Amount at the Initial Redemption Reference Date, subject to Condition 8(a) as amended in Schedule 1. (b) Maximum /Minimum Redemption Amount (if applicable) Not Applicable 54 Redemption by Instalments Not Applicable 55 Mandatory Redemption Events Mandatory Redemption Events to apply: (a) Underlying Asset Payment Default Not Applicable (b) Underlying Asset Acceleration Not Applicable (c) Related Agreements Termination Applicable, provided that a Mandatory Redemption Event shall not occur as a result of the termination of the Related Agreement on or following the earliest of (i) the Optional Step-up Early Termination, (ii) the Final Amortization Date or (iii) the Scheduled Maturity Date.

(d) Repurchase Agreement Termination Not Applicable (e) Credit Event Not Applicable (f) Tax Event Applicable (g) Additional Mandatory Redemption Events Applicable. A Deposit Account Payment Default shall constitute an Additional Mandatory Redemption Event. (h) Notes to be redeemed in part Applicable. (i) On the Interest Payment Date following a date during the related Interest Period on which the Reference Obligation Notional Amount is decreased by a Principal Payment Amount in accordance with the terms of the Swap Agreement, the Issuer shall redeem each Note in an amount equal to its pro rata share of the relevant Principal Payment Amount.

(ii) Following the delivery of any Deliverable Obligation to the Issuer by the Counterparty pursuant to the terms of the Swap Agreement and following receipt of a Noteholder Physical Settlement Election Notice by the Issuer from the Controlling Noteholder, the Issuer shall Deliver the Deliverable Obligations to the Controlling Noteholder and the Notes shall be redeemed in part in accordance with Condition 8(p) (Redemption for Receipt of Deliverable Obligations). If no Controlling Noteholder delivers a valid Noteholder Physical Settlement Election Notice to the Issuer, the Issuer shall arrange for a sale of the Deliverable Obligations and the Notes shall be redeemed in part in accordance with Condition 8(p) (Redemption for Receipt of Deliverable Obligations).

(i) Early Redemption Date In accordance with Condition 8(c) (Mandatory 22

Redemption Events) 56 Redemption for Taxation Reasons (a) Redemption for Taxation Reasons Applicable (b) Redemption for Taxation Reasons permitted on days other than Interest Payment Dates Yes 57 Liquidation of Assets upon Redemption of Notes (a) Arrangements for liquidation of assets in addition to the provisions of Condition 8(e) (if any) None (b) Person responsible for liquidation of assets if other than Trustee Not Applicable 58 Forced Transfer or Redemption of Registered Notes Not Applicable 59 Early Redemption Amount (if other than as set out in the Conditions): The Early Redemption Amount in respect of each Note will be its pro rata share of: (a) the Reference Obligation Notional Amount as at the Early Redemption Date; (b) (i) less, except where the Counterparty is the Defaulted Counterparty, any Negative Swap Close-out Payment or (ii) plus any Positive Swap Close-out Payment; (c) plus (i) if the Transferor’s Credit Support Balance is greater than zero, (A) the sum of each Interest Shortfall Payment Amount paid by the Issuer to the Counterparty under the Swap Agreement from, but excluding, the date that is two calendar years prior to the Early Termination Date to, and including, such Early Termination Date minus (B) the sum of each Interest Shortfall Reimbursement Payment Amount paid by the Counterparty to the Issuer under the Swap Agreement from, but excluding, the date that is two calendar years prior to the Early Termination Date to, and including, such Early Termination Date, or (ii) if the Transferor’s Credit Support Balance is zero, zero.

60 Options in respect of the Notes Not Applicable 61 Exercise of Noteholders’ Option Not Applicable 62 Exercise of Issuer’s Option Not Applicable 63 Purchases Applicable 64 Exchange Not Applicable I PAYMENT AND TALONS 65 Pre-Payment Date The date on which the relevant payment is due. 23

66 Unmatured Coupons to become void upon early redemption Not Applicable 67 Talons to be attached to Notes and, if applicable, the number of Interest Payment Dates between the maturity of each Talon (Bearer Notes) No J EVENTS OF DEFAULT AND ENFORCEMENT 68 Amendment to grace period in paragraph (a)(i) of Condition 12 (Events of Default) Fifteen days 69 Additional Events of Default Not Applicable 70 Additional Provisions relating to enforcement of Prioritised Tranches Not Applicable 71 Circumstances in which security will become enforceable under paragraph (b) of Condition 13 (Enforcement) Not Applicable 72 Other circumstances in which security to become enforceable Not Applicable K MEETINGS OF NOTEHOLDERS 73 Steps requiring approval by an Extraordinary Resolution of Noteholders to which the special quorum provisions apply Not Applicable L CONFLICTS OF INTEREST AND PRIORITISED TRANCHES 74 Trustee to have regard to interests of a Secured Party in preference to the Noteholders in the event of any conflict Not Applicable 75 Additional provisions for Prioritised Tranches Not Applicable M FORM OF NOTES 76 Exchange (a) Notes to be represented on issue by Temporary Global Note/Permanent Global Note (b) Details of how Global Certificates to be held Global Notes to be deposited with a common depositary for Euroclear and Clearstream, Luxembourg (c) Applicable TEFRA exemption D Rules (d) Temporary Global Notes exchangeable for Definitive Bearer Notes No (e) Permanent Global Note exchangeable for Definitive Bearer Notes Yes, in the limited circumstances set out therein.

(f) Investment letter required upon purchase of Restricted Notes Not Applicable 24

N OTHER CONDITIONS 77 Details of any other additions or variations to the Conditions See Schedule 1 O PURCHASE AND SALE AND TRANSFER RESTRICTIONS 78 Details of additional selling restrictions Not Applicable P CLEARING AND SETTLEMENT 79 Method of Issue Individual Dealer 80 Dealer’s commission (if applicable) Not Applicable 81 Net price payable to Issuer EUR 10,000,000 82 Settlement Delivery free of payment 83 Applicable Clearing System(s) Euroclear and Clearstream, Luxembourg 84 Common Code 036125179 85 ISIN XS0361251795 86 CUSIP Number Not Applicable 87 CINS Number Not Applicable 88 PORTAL symbol (if any) Not Applicable 89 Intended to be held in a manner which would allow Eurosystem eligibility (in respect of Lunar Funding V PLC only) No Q RESPONSIBILITY The Issuer accepts responsibility for the information contained in these Terms of the Notes.

Signed on behalf of the Issuer: By . .

Duly authorised 25

SCHEDULE 1 ADDITIONAL CONDITIONS 1 Security (a) Condition 5(a)(vi) is hereby amended by replacing the words “the Agent” with the words “each Paying Agent”. (b) Condition 5(a)(x) is deleted in its entirety and replaced with the following: “(x) an assignment by way of security in favour of the Trustee of the Issuer’s rights under all other contracts deeds and documents, insofar as such rights relate to the Notes, to which the Issuer is or may become a party.” 2 Interest and Other Calculations (a) Condition 1(a) is hereby amended by deleting the definition of “Interest Period” and replacing it with the following: ““Interest Period” means the period beginning on and including the Interest Commencement Date and ending on but excluding the first Interest Accrual Date and each successive period beginning on and including an Interest Accrual Date and ending on but excluding the next succeeding Interest Accrual Date.” (b) Condition 7(a) is deleted in its entirety and replaced with the following: “(a) Interest Rate and Accrual (i) Each Note bears interest from, and including, the Interest Commencement Date.

(ii) Interest will cease to accrue on each Note on the due date for redemption therefor unless, upon due presentation, payment of principal is improperly withheld or refused, in which event interest will continue to accrue (both before and after judgment) at the applicable rate in the manner provided in this Condition 7 to the Relevant Date.

(iii) Interest is payable in arrear on each Interest Payment Date. (iv) The amount of interest payable in respect of each Note on each Interest Payment Date shall be determined in accordance with Condition 7(f) (Calculation of Interest).” (c) Condition 7(f) is deleted in its entirety and replaced with the following: “(f) Calculation of Interest Interest will accrue from time to time in respect of the Notes and the amount of interest due on the relevant Interest Payment Date in respect of the immediately prior Interest Period will be determined on the Interest Accrual Date immediately preceding such Interest Payment Date by the Calculation Agent as (i) the product of (a) the Interest Rate and (b) the Interest Bearing Amount and (c) the Day Count Fraction plus (ii) an amount equal to any and all Interest Shortfall Reimbursement Payment Amounts payable under the Swap Agreement during such Interest Period minus (iii) an amount equal to any and all Interest Shortfall Payment Amounts payable under the Swap Agreement during such Interest Period plus (iv) an amount equal to any and all Delayed Payments payable under the Swap Agreement during such Interest Period.” 26

(d) Condition 7(h) is hereby amended by replacing the words “the Interest Amount” with the words “any Interest Amount”. (e) Condition 7(i) is deleted in its entirety and replaced with the following: “(i) Calculation Agent and Reference Banks Where required in accordance with these Conditions, the Calculation Agent shall select four major banks with offices in the Relevant Financial Centre to act as Reference Banks. The Issuer shall procure that there shall at all times be a Calculation Agent for so long as any Notes are outstanding. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Interest Rate for any Interest Period or to calculate the Interest Amounts or fulfil any other requirements, the Issuer shall (with the prior approval of the Trustee) appoint the London office of a leading bank engaged in the London interbank market to act as such in its place.

The Calculation Agent may not resign its duties without a successor having been so appointed.” 3 Redemption (a) Condition 8(a) is deleted in its entirety and replaced with the following: “(a) Final Redemption Unless previously redeemed as provided below, each Note will be redeemed in accordance with the following provisions: (i) in part on the date that falls four Business Days following the Initial Redemption Reference Date at the Final Redemption Amount;.

(ii) in part on each date that falls four Business Days following the date on which an Additional Fixed Amount or a Delayed Payment is received by the Issuer pursuant to the terms of the Swap Agreement in the period from the Initial Redemption Reference Date to the Maturity Date at its pro rata share of an amount equal to such Additional Fixed Amount or Delayed Payment; and (iii) in full on the Maturity Date at its pro rata share of an amount equal to the sum of any Additional Fixed Amounts and Delayed Payments received by the Issuer pursuant to the terms of the Swap Agreement in the period from the Initial Redemption Reference Date to the Maturity Date that have not been paid under clause (a)(ii) above.” (b) Condition 8(d) is deleted in its entirety and replaced with the following: “(d) Optional Redemption for Taxation Reasons In the event that the Issuer is unable to arrange its substitution as principal obligor under the Notes or to change its residence for taxation purposes if and when required pursuant to Condition 10 upon the Issuer becoming required to withhold or account for tax or if it would suffer taxation in respect of its income as described in Condition 10 (provided such amounts exceed certain de minimus amounts of tax payable by the Issuer as contemplated at the Issue Date), within 20 days of such circumstances occurring, then the Issuer shall give notice thereof to the Noteholders in accordance with Condition 17 (together with a copy to the Trustee and the Counterparty) and shall, if so requested in writing by the holders of at least 66⅔ per cent.

of the aggregate principal balance of the Notes, redeem all (and not some only) of the Notes at their Early Redemption Amount on the next occurring Interest Payment Date falling not less than five Business Days after 27

the date of notice subject to the provisions of this Condition 8(d). If such redemption is so required, the Notes shall be redeemed, in whole, but not in part, from the proceeds of realisation of the Charged Property or enforcement of security over the Charged Property(but subject to the establishment of a reasonable reserve (as determined by the Trustee in its discretion) for all administrative and other fees and expenses and amounts payable in such circumstances and for any amounts payable under the Related Agreements), on the applicable Redemption Date. Notice of such redemption, including the applicable Redemption Date, shall be given to the Noteholders by the Issuer in accordance with Condition 17.

The Trustee shall have no liability to any person in connection with the establishment of any reserve pursuant to this Condition 8(d).” (c) Condition 8(j) is deleted in its entirety without any consequent amendments to the numbering of that Condition.

(d) A new Condition 8(p) shall be inserted as follows: “(p) Redemption for Receipt of Deliverable Obligations (i) Following the delivery of any Deliverable Obligation to the Issuer by the Counterparty pursuant to the terms of the Swap Agreement, notice of such delivery will be made to the Noteholders by the Issuer in accordance with Condition 17 (Notices) not more than five Business Days following such delivery (each such notice, a “Swap Physical Settlement Notice”). Within five Business Days following receipt of a Swap Physical Settlement Notice, the Controlling Noteholder may deliver to the Issuer a Noteholder Physical Settlement Election Notice.

Following the receipt of a valid Noteholder Physical Settlement Election Notice from a Controlling Noteholder, the Issuer shall redeem the Notes in part on or prior to the fifth Business Day following receipt of such Noteholder Physical Election Notice by using its reasonable endeavours to Deliver the Deliverable Obligations or procuring the Counterparty to use its reasonable endeavours to Deliver the Deliverable Obligations, subject to paragraphs (ii) and (iii) below, to the Controlling Noteholder. The relevant Note or, if the Notes are represented by a Global Note, such Global Note, shall be endorsed to reflect such partial redemption.

(ii) If the Issuer and/or the Counterparty is/are unable to Deliver the Deliverable Obligations on or prior to the fifth Business Day following receipt of the Noteholder Physical Settlement Election Notice due to a Potential Cash Settlement Event, rendering it impossible or unlawful for the Issuer or the Counterparty to Deliver the Deliverable Obligations by the fifth Business Day following receipt of the Noteholder Physical Settlement Election Notice (the “Noteholder Physical Settlement Date”), then on such date the Issuer shall: (A) continue to endeavour to Deliver the Deliverable Obligations or procure the Counterparty to Deliver the Deliverable Obligations, and (B) if any Deliverable Obligation has not been delivered within 30 calendar days following the Physical Settlement Date, then alternative cash settlement shall apply to such Deliverable Obligation.

In such event, the Issuer or Counterparty, acting on behalf of the Issuer, shall use reasonable endeavours to take such actions as are required, including, without limitation, arranging for the sale of the Deliverable Obligations held at such time in order to procure that the alternative cash settlement is (to the extent practical and appropriate) in immediately available funds by no later than 30 Business Days following the Noteholder Physical Settlement Date or, if not practicable as soon as is practicable thereafter. In connection with such realisation or liquidation, the 28

Issuer may appoint such agents and advisers as it thinks fit, including, without limitation, the Arranger. Neither the Issuer nor the Counterparty shall have any liability in respect of the price at which any sale or termination is effected or if any such person is unable, for any reason, to effect such sale or termination. The Calculation Agent shall determine the “Alternative Cash Settlement Amount” as an amount equal to the proceeds received from the sale of the Deliverable Obligations. The Issuer shall pay the Controlling Noteholder an amount equal to the Alternative Cash Settlement Amount on the date being 4 Business Days after the determination of the Alternative Cash Settlement Amount.

(iii) The Delivery of the Deliverable Obligations pursuant to the provisions of this Condition shall be made in such commercially reasonable manner as the Counterparty, on behalf of the Issuer shall, in its sole discretion, determine to be appropriate for such Delivery of the Deliverable Obligations. Any expenses (including Stamp Tax (as defined in the Credit Derivatives Definitions)) arising from the Delivery of the Deliverable Obligations shall be payable by the Issuer. Delivery of the Deliverable Obligations shall be delayed until all expenses relating to such Delivery of the Deliverable Obligations payable by the Controlling Noteholder have been paid to the satisfaction of the Issuer and the Counterparty.

(iv) If no Controlling Noteholder delivers a valid Noteholder Physical Settlement Election Notice to the Issuer, the Issuer shall redeem the Notes in part in accordance with the procedure described in Conditions 8(p)(ii) and (iii) above, and shall pay the Alternative Cash Settlement Amount to the Noteholders, such amount to be apportioned pro rata among the Noteholders.” 4 Other Amendments Paragraph (d) of the definition of “Secured Party” in Condition 1(a) is hereby amended by replacing the words “the Agents” with the words “the Agent and each Paying Agent”. 29

SCHEDULE 2 ADDITIONAL DEFINITIONS The following words and expressions shall have the following meanings when used in the Terms of the Notes: “Additional Fixed Payment” has the meaning given to that term in the Swap Agreement.

“CDS Transaction” means the credit default swap transaction between the Issuer and the Counterparty referencing a single underlying reference obligation and documented by the Swap Agreement. “Conditions to Settlement” has the meaning given to that term in the Swap Agreement. “Controlling Noteholder” means a Noteholder holding 100 per cent. of the Notes outstanding which provides (i) evidence of its holding satisfactory to the Issuer at the time it wishes to exercise any of its rights as the Controlling Noteholder and (ii) details of manner in which delivery may be effected and such Noteholder’s contact details.

For the avoidance of doubt, and without limitation, provision of a clearing system statement of holding by the Noteholder (or a statement of holding from the Noteholder’s custodian showing that it holds the Notes on behalf of the Noteholder in the Noteholder’s account) will be sufficient evidence of ownership of the Notes.

“Credit Derivatives Definitions” has the meaning given to that term in the Swap Agreement “Credit Event” has the meaning given to that term in the Swap Agreement. “Credit Support Balance” has the meaning given to that term in the Swap Agreement. “Defaulted Counterparty” means the Counterparty following the occurrence of either (i) a Swap Event of Default in respect of which the Counterparty is the Defaulting Party or (ii) an Early Termination Date designated pursuant to the occurrence of a Termination Event (as defined in the Master Agreement) (other than Illegality (as defined in the Master Agreement)) where the Counterparty is the sole Affected Party (as defined in the Master Agreement).

“Defaulting Party” has the meaning given to that term in the Master Agreement. “Delayed Payment” has the meaning given to that term in the Swap Agreement. “Deliver the Deliverable Obligations” means to deliver, novate, transfer, assign or sell, as appropriate, in the manner customary for the settlement of the applicable Deliverable Obligation (which shall include executing all necessary documentation and taking any other necessary actions), in order to convey all right, title and interest in the Deliverable Obligations specified in the Physical Settlement Election Notice to the Noteholders free and clear of any and all liens, charges, claims or encumbrances (including, without limitation, any counterclaim or defense (other than a counterclaim or defense based on the factors set forth in Section 4.1(a)-(d) of the Credit Derivatives Definitions).

“Delivery of the Deliverable Obligations” will be construed accordingly.

“Deliverable Obligations” has the meaning given to that term in the Swap Agreement. “Deposit Account” means the account currently held at the London office of the Deposit Bank with the following account details: The Royal Bank of Scotland plc, in the name of Lunar Funding V PLC, Identification: RBOSGB2RTCM, Account Number LUNFUNV EUR1 (Reference: Lunar V Series 2008-64 Deposit Account). Such expression shall include any renewal, replacement, substitution or redesignation of such account and whether or not the same continues to be held at its London office. 30

“Deposit Account Payment Default” means failure by the Deposit Bank to pay on the due date any amount required to be paid by it in accordance with the Deposit Agreement (after expiry of any grace period applicable to any such payment).

“Deposit Agreement” means the deposit agreement dated 14 May 2008 entered into between the Issuer and the Deposit Bank. “Deposit Bank” means The Royal Bank of Scotland plc, pursuant to the Deposit Agreement. “Early Termination Date” has the meaning given to such term in the Master Agreement. “Final Amortization Date” has the meaning given to such term in the Swap Agreement. “Final Interest Accrual Date” means the earliest of (i) the Optional Step-up Early Termination Date, (ii) the Final Amortization Date and (iii) the Scheduled Maturity Date.

“Fixed Amount” has the meaning given to it in the Swap Agreement. “Fixed Rate” has the meaning given to that term in the Swap Agreement. “Fixed Rate Payer Period End Date” has the meaning given to that term in the Swap Agreement. “Floating Amount” has the meaning given to that term in the Swap Agreement. “Initial Redemption Reference Date” means five Business Days following the earliest of (i) the Optional Step-up Early Termination Date, (ii) the Final Amortization Date and (iii) the Scheduled Maturity Date. “Interest Accrual Date” means (i) the first day of each Reference Obligation Calculation Period from but excluding the Interest Commencement Date to and including the first day of the Reference Obligation Calculation Period immediately prior to the Final Interest Accrual Date and (ii) the Final Interest Accrual Date.

(Under the terms and conditions of the Reference Obligation as set out in the Reference Obligation Prospectus, the first day of each Reference Obligation Calculation Period is the 28th day of each March, June, September and December, subject to non business day adjustments.) “Interest Bearing Amount” means for the purpose of calculating the Interest Amount, in respect of each Interest Period, the sum of the Reference Obligation Notional Amount for each day in such Interest Period divided by the number of calendar days in such Interest Period. “Interest Shortfall Payment Amount” has the meaning given to such term in the Swap Agreement.

“Interest Shortfall Reimbursement Payment Amount” has the meaning given to such term in the Swap Agreement.

“Majority of Noteholders” means the holders of at least 51 per cent. of the outstanding Notes. “Negative Swap Close-out Payment” means a Swap Close-out Payment due from the Issuer to the Counterparty. “Noteholder Physical Settlement Election Notice” means a notice from the Controlling Noteholder to the Issuer following receipt of a Swap Physical Settlement Notice, electing to receive Delivery of the Deliverable Obligations. Such notice will be valid if it is given by being delivered (so long as the Temporary Global Note or Permanent Global Note is held on behalf of Euroclear, Clearstream, Luxembourg or any other clearing system) to Euroclear, Clearstream, Luxembourg or such other clearing system, as the case may be, or given by fax or electronic mail (such fax number or electronic mail address to be notified by the Issuer, to the Noteholder from time to time) to the Issuer.

“Optional Step-up Early Termination Date” has the meaning given to that term in the Swap Agreement.

“Party A Interim Exchange Amount” has the meaning given to that term in the Swap Agreement. 31

“Physical Settlement Amount” has the meaning given to that term in the Swap Agreement. “Positive Swap Close-out Payment” means a Swap Close-out Payment due from the Counterparty to the Issuer. “Potential Cash Settlement Event” means an event beyond the control of the Issuer and/or the Counterparty (including, without limitation, failure of the relevant clearance system; or the non-receipt of any requisite consent from a Reference Entity, any agent or trustee; or due to any law, regulation or court orders or any contractual, statutory and/or regulatory restriction relating to the relevant Deliverable Obligation, or due to the failure of the Controlling Noteholder to give the Issuer details of accounts for settlement; or a failure of the Controlling Noteholder to open or procure the opening of such accounts or if the Controlling Noteholder is unable to accept Delivery of the Deliverable Obligations for any other reason).

“Principal Payment Amount” has the meaning given to that term in the Swap Agreement. “RBS” means The Royal Bank of Scotland plc. “Redemption Date” means each date specified for a redemption of the Notes pursuant to Condition 8(c) or 8(d) or paragraph 55(h) of the Terms of the Notes or the date on which the Notes are accelerated pursuant to Condition 12, or, in each case, if such day is not a Business Day, the next following Business Day. “Reference Entity” has the meaning given to that term in the Swap Agreement. “Reference Obligation” has the meaning given to that term in the Swap Agreement.

“Reference Obligation Calculation Period” has the meaning given to that term in the Swap Agreement. “Reference Obligation Notional Amount” has the meaning given to that term in the Swap Agreement. “Reference Obligation Prospectus” means the prospectus in respect of the Reference Obligation dated 27 September 2005.

“Step-up” has the meaning given to that term in the Swap Agreement. “Swap Close-out Payment” means the net amount due under Section 6(e) of the Master Agreement following the occurrence of any Early Termination Date calculated without regard to any amounts calculated in respect of the Credit Support Annex. “Swap Transactions” means the CDS Transaction and the asset swap transaction between the Issuer and the Counterparty relating to certain fees and expenses payable by the Issuer and documented by the Swap Agreement.

“TARGET Settlement Day” means a day on which the TARGET (Trans-European Automated Real-time Gross settlement Express Transfer) System is open.

“Transferor” has the meaning given to that term in the Swap Agreement. 32

USE OF PROCEEDS The net proceeds from the issuance and sale of the Notes on the Issue Date are expected to be EUR 10,000,000. Such proceeds will, on the Issue Date, be credited to the Deposit Account. 33

DESCRIPTION OF THE REFERENCE ENTITY The following description of the Reference Entity (Dutch Mortgage Portfolio Loans V B.V.) consists of a summary of certain disclosure in the Reference Obligation Prospectus and is qualified by reference to the detailed disclosure thereof. The following summary does not purport to be complete and prospective investors must refer to the Reference Obligation Prospectus for detailed information regarding the Reference Entity.

The Reference Entity was incorporated as a private company with limited liability (“besloten vennootschap met beperkte aansprakelijkheid”) under the laws of the Netherlands on 19 September 2005 under number B.V. 1336378. The corporate seat (“statutaire zetel”) of the Reference Entity is in Amsterdam, the Netherlands and its registered office is at Frederik Roeskestraat 123, 1076 EE Amsterdam and its telephone number is +31 20 5771 177. The Reference Entity is registered with the Commercial Register of the Chamber of Commerce of Amsterdam under number 34233431. The Reference Entity has securities listed on Eurolist by Euronext Amsterdam N.V.

The Reference Entity is a “special purpose vehicle” and its objectives are (a) to acquire, purchase, conduct the management of, dispose of and encumber receivables (“vorderingen op naam”) and to exercise any rights connected to such receivables, (b) to acquire monies to finance the acquisition of receivables mentioned under (a) by way of issue of securities or by entering into loan agreements, (c) to on-lend and invest any funds held by the Reference Entity, (d) to hedge interest rate and other financial risks amongst others by entering into derivative agreements, such as swaps and options, (e) if incidental to the foregoing, (i) to borrow funds among others to repay the principal sum of the securities mentioned under (b), and (ii) to grant security rights and (f) to perform all activities which are incidental to or which may be conducive to any of the foregoing.

34

DESCRIPTION OF THE SWAP AGREEMENT The following description of the Swap Agreement consists of a summary of certain provisions of the Swap Agreement and is qualified by reference to the detailed provisions thereof. The following summary does not purport to be complete and prospective investors must refer to the Swap Agreement for detailed information regarding such agreement. The Issuer has entered into the Master Agreement with RBS as the Counterparty. The Master Agreement and the Credit Support Annex thereto together with the Swap Confirmation, evidencing the Swap Transactions will form a single agreement.

The core provisions of the Swap Agreement are as follows: (a) The Swap Transactions will be capable of termination at the option of the Issuer upon the occurrence of any of the following events of default in relation to the Counterparty: Failure to Pay or Deliver, Breach of Agreement, Misrepresentation, Bankruptcy and Merger without Assumption (as such events of default are more particularly described in the Master Agreement) (each a “Swap Event of Default”). (b) The Swap Transactions will be capable of termination at the option of the Counterparty upon the occurrence of any of the following events of default in relation to the Issuer: Failure to Pay or Deliver and Bankruptcy (as amended) (as such events of default are more particularly described in the Master Agreement) (each also a “Swap Event of Default”).

(c) In the event that it becomes unlawful for either the Issuer or the Counterparty to perform its obligations under the Swap Agreement (a “Swap Termination Event”), both the Issuer and the Counterparty will have the right to terminate the Swap Transactions.

(d) In the event that the Counterparty or the Issuer will be obliged to receive payments net under the Master Agreement as a result of a withholding or deduction for or on account of tax (such event also a “Swap Termination Event”), such party will have the right to terminate the Swap Transactions. (e) The designation of an Early Termination Date will constitute a Mandatory Redemption Event in respect of the Notes, following which the Notes shall be redeemed in accordance with Condition 8(c).

(f) In the event that (i) the security constituted under the Trust Deed becomes enforceable; or (ii) the Notes are redeemed or required to be redeemed, repaid or cancelled at any time prior to the Maturity Date and all conditions thereto have been satisfied, the Swap Transactions will, in any such case, be deemed to terminate immediately pursuant to the terms of the Master Agreement.

(g) The Issuer’s obligations to the Counterparty under the Swap Agreement will be secured pursuant to the Trust Deed and such obligations will, in the event of the security thereunder being enforced, rank ahead of its obligations under the Notes (except where the Counterparty is the Defaulted Counterparty). The Counterparty will agree pursuant to the Master Agreement to accept payments under the Master Agreement on a limited recourse basis. The Counterparty will further agree, pursuant to the Master Agreement, to the Issuer assigning its rights under the Master Agreement to the Trustee pursuant to the Trust Deed.

The Master Agreement will provide that the obligations of the parties will not be subject to any set-off (but without prejudice to the contractual netting provisions contained in the Master Agreement).

(h) The Swap Agreement will be governed by English law. 35

DESCRIPTION OF THE RBS GROUP General The Royal Bank of Scotland Group plc ("RBSG") is the holding company of one of the world’s largest banking and financial services groups, with a market capitalisation of £44.4 billion at 31 December 2007. Headquartered in Edinburgh, RBSG operates in the UK, the US and internationally through its two principal subsidiaries, The Royal Bank of Scotland plc ("RBS") and National Westminster Bank Plc ("NatWest"). Both RBS and NatWest are major UK clearing banks whose origins go back over 275 years.

RBSG has a large and diversified customer base and provides a wide range of products and services to personal, commercial and large corporate and institutional customers. RBSG’s operations are conducted principally through RBS and its subsidiaries (including NatWest) other than ABN AMRO businesses (see below) and the general insurance business (primarily Direct Line Group and Churchill Insurance).

RBSG had total assets of £1,900.5 billion and total equity (including minority interests) of £91.4 billion at 31 December 2007. RBS had total assets of £1,115.7 billion and shareholders' equity of £47.7 billion at 31 December 2007. RBSG had a total capital ratio of 11.2 per cent. and tier 1 capital ratio of 7.3 per cent as at 31 December 2007. The short-term unsecured and unguaranteed debt obligations of RBS are currently rated A-1+ by S&P, P-1 by Moody's and F1+ by Fitch. The long-term senior unsecured and unguaranteed debt obligations of RBS are currently rated AA by S&P, Aaa by Moody's and AA by Fitch.

RBS currently has securities listed on the London Stock Exchange.

ABN AMRO On 17 October 2007, RFS Holdings B.V. ("RFS Holdings''), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV ("Fortis") and Banco Santander S.A. ("Santander") (together, the "Consortium Banks'') and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. ("ABN AMRO''). In due course, RFS Holdings will implement an orderly separation of the business units of ABN AMRO with RBS retaining the following ABN AMRO business units: • Continuing businesses of Business Unit North America; • Business Unit Global Clients and wholesale clients in the Netherlands (including former Dutch wholesale clients) and Latin America (excluding Brazil); • Business Unit Asia (excluding Saudi Hollandi); and • Business Unit Europe (excluding Antonveneta).

Certain other assets will continue to be shared by the Consortium Banks. Rights Issue On 22 April 2008 RBSG announced a proposed rights issue to increase its capital base. This is expected to raise proceeds of £12.0 billion, net of expenses. The issue is being made on the basis of 11 new shares for every 18 existing shares at an issue price of 200 pence per RBS share. This represents a 34.9% discount to the theoretical ex-rights price and 46.3% discount to the closing price of RBS shares of 372.5 pence per share on 21 April 2008.

36

GENERAL INFORMATION 1 Authorisations The issue of the Notes was authorised by a resolution of the Board of Directors of the Issuer on 7 May 2008. The Issuer has obtained all other consents, approvals and authorisations (if any) which are necessary in Ireland at the date of this Issue Memorandum in connection with the issue and performance of the Notes. 2 Litigation There are no legal, governmental litigation or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) which may have or have had during the 12 months prior to the date of this Issue Memorandum, a significant effect on the Issuer’s financial position.

3 Documents Available For Inspection From the date of the Programme Memorandum and so long as the Programme remains in effect or any Note remains outstanding, the following documents will be available, during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) in physical form for inspection at (and, in the case of the document referred to in paragraph (c), collection from) the registered office of the Issuer and the specified office of the Paying Agents for the time being in London and Ireland: (a) the Programme Memorandum; (b) the Issue Memorandum (which together with the Programme Memorandum constitutes the Prospectus for the Notes); (c) the Trust Deed; (d) the Agency Agreement; (e) the Dealer Agreement; (f) the Memorandum and Articles of Association of the Issuer; (g) the Management Agreement; and (h) any other documents referred to in the Programme Memorandum as being available for inspection.

4 Legend Each Temporary Global Note, Permanent Global Note and Definitive Bearer Note will bear a legend to the effect that any US person holding the same will be subject to limitations under the United States income tax laws including those under Sections 165(j) and 1287(a) of the United States Internal Revenue Code. 5 Material Adverse Change 37

There has been no material adverse change in the financial position or prospects of the Issuer since the date of its last audited financial statements being 31 December 2006. 6 Clearing Systems The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg.

The Common Code and ISIN for the Notes allocated by Euroclear and Clearstream, Luxembourg are specified in this Issue Memorandum. 7 Form of Notes The Notes will initially be represented by a Temporary Global Note which will be deposited with a common depositary, or as the case may be a Common Safekeeper, on the date hereof on behalf of Euroclear or Clearstream, Luxembourg and interests therein will be credited to the accounts of the Noteholders with Euroclear and/or Clearstream, Luxembourg. Interests in the Temporary Global Note will be exchangeable (a) for interests in a Permanent Global Note not earlier than 40 days after the completion of distribution of the Notes and upon certification as to non-US beneficial ownership and (b) for Definitive Bearer Notes in the limited circumstances set out therein.

8 Estimated Listing Expenses The estimated total expenses of admitting the Notes to the Official List and listing the Notes on the Irish Stock Exchange is EUR 2,532.

9 Post Issuance Reporting The Issuer does not intend to provide post-issuance transaction information. 10 Listing Agent A&L Listing Limited is acting solely in its capacity as listing agent for the Issuer in connection with the Notes and is not itself seeking admission of the Notes to the Official List of the Irish Stock Exchange or to trading on the Irish Stock Exchange for the purposes of the Prospectus Directive. 11 Irish Manager Deutsche International Corporate Services (Ireland) Limited (the “Manager”) acts as Manager of the Issuer pursuant to a Management Agreement (the “Management Agreement”) between the Issuer, the Trustee and the Manager dated 12 October 2004.

The registered office of the Manager is 5 Harbourmaster Place, International Financial Services Centre, Dublin 1, Ireland. Pursuant to Clause 6.1 of the Management Agreement, the Manager may retire its appointment without assigning any reason therefor by giving not less than 30 days’ prior written notice to the Issuer. Pursuant to Clause 6.3 of the Management Agreement the Issuer may require the Manager to retire on not less than 30 days’ prior written notice and shall require the Manager to so retire in certain circumstances. The retirement of the Manager shall not be effective until a replacement manager acceptable to the Issuer is appointed.

38

FORM OF SWAP CONFIRMATION 39

[Headed paper of Party A] Date: 14 May 2008 To: Lunar Funding V PLC From: The Royal Bank of Scotland plc Re: Swap Transactions in Respect of the EUR 10,000,000 Limited Recourse Secured Floating Rate Credit-Linked Notes due 2051. Dear Sirs The purpose of this communication (the “Confirmation”) is to confirm the terms and conditions of the Credit Derivative Transaction relating to a mortgage-backed security reference obligation (the “CDS Transaction”) and an asset swap Transaction relating to certain fees and expenses in respect of the Notes (as defined below) (the “Asset Swap Transaction” and together with the CDS Transaction, each a “Transaction”) entered into between you Lunar Funding V PLC (“Party B”) and us The Royal Bank of Scotland plc (“Party A”) on the Trade Date specified below.

This Confirmation constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

The definitions and provisions contained in the 2003 ISDA Credit Derivatives Definitions (the “Credit Derivatives Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) and the ISDA Standard Terms Supplement for use with Credit Derivatives Transaction on Mortgage-Backed Security with Pay-As-You-Go or Physical Settlement, as published by ISDA on 8 August 2007 (the “CDS on MBS Terms”), and, if Optional Early Termination is specified as being applicable, the Additional Provisions for Optional Early Termination published by ISDA on 8 December 2006, are incorporated into this Confirmation solely in respect of the CDS Transaction.

The definitions and provisions contained in the 2006 ISDA Definitions (the “2006 Definitions” and together with the Credit Derivatives Definitions the “Definitions”) as published by ISDA are incorporated herein solely in respect of the Asset Swap Transaction. In the event of any inconsistency between the Definitions or the CDS on MBS Terms and this Confirmation, this Confirmation will govern. In the event of any inconsistency between the CDS on MBS Terms and the Credit Derivatives Definitions, the CDS on MBS Terms will govern. This Confirmation supplements, forms a part of, and is subject to, the ISDA Master Agreement, dated as of 16 December 2004, as amended and supplemented from time to time (the “Agreement”), between you and us.

All provisions contained in the Agreement govern this Confirmation except as expressly modified below.

1 General Terms The general terms of each Transaction to which this Confirmation relates are as follows: Trade Date: 17 April 2008 Effective Date: 14 May 2008 Calculation Agent: Party A 40

Calculation Agent City: London Business Day: London and TARGET 2 General Terms of the CDS Transaction The additional terms of the CDS Transaction are set out below: Floating Rate Payer: Party B (the “Seller”) Fixed Rate Payer: Party A (the “Buyer”) Reference Entity: Dutch Mortgage Portfolio Loans V B.V. Reference Obligation: The obligation identified as follows: CUSIP/ISIN: XS0230786195 Bloomberg ID: DMPL V C Legal final maturity date: 28 December 2051 Original Principal Amount: EUR 26,300,000 Initial Factor: 1.0000 Issuer: The Reference Entity Reference Policy: None Reference Price: 100% Initial Face Amount: EUR 10,000,000 Initial Payment: Not Applicable Fixed Rate: 4.85% per annum Fixed Rate Payer Payment Dates: Not CMBS Convention Additional Credit Event: Distressed Ratings Downgrade Interest Shortfall Cap: Applicable WAC Cap Interest Provision: Not Applicable Step-up provisions: Applicable Interest Shortfall Cap Basis: Fixed Cap Interest Shortfall Compounding: Applicable Rate Source: EUR-EURIBOR-Reuters Optional Early Termination: Not Applicable 3 General Terms of the Asset Swap Transaction The additional terms of the Asset Swap Transaction are set out below: 41

Termination Date: The Maturity Date (as defined in the Notes Conditions). Interim Exchange: Interim Exchange Date: Four Business Days following the date that Party A receives notice from Party B that a related Party A Interim Exchange Amount is payable. Such notice may not be provided following the Termination Date. Party A Interim Exchange Amount: An amount equal to (i) any accrued periodic fees, costs, charges and expenses of the Trustee under the Principal Trust Deed, (ii) any due but unpaid Administrative Expenses (as defined in the Notes Conditions) and (iii) any expenses (including Stamp Tax) arising from the delivery of the deliverable obligations to Noteholders (as defined in the Notes Conditions) pursuant to Condition 8(p) of the Notes Conditions, in each case, in relation to the Notes and due on the relevant Interim Exchange Date.

4 Office, Notice and Account Details: The Office of Party A for these Transactions is: London The Office of Party B for these Transactions is: Dublin Telephone, Telex and/or Facsimile Numbers and Contact Details for Notices: Party A: The Royal Bank of Scotland plc 135 Bishopsgate London EC2M 3UR Telephone Number: 020 7085 3274 Facsimile Number: 020 7085 5397 Attention: SPV Middle Office – Matt Sykes Party B: Lunar Funding V PLC 5 Harbourmaster Place International Financial Services Centre Dublin 1 Ireland Telephone Number: +353 1 680 6000 Facsimile Number: +353 1 680 6050 Attention: The Directors Account Details: Account Details of Party A: BIC: RBOSGB2L Account Name: Royal Bank of Scotland, Correspondent Banking, 42

London Account Number: RBSFMLON EURC Reference: Lunar Funding V PLC Account Details of Party B: BIC: RBOSGB2L Account Name: Lunar 5 Account Number: LUNFUNVEUR1 Reference: Lunar Funding V PLC Series 2008-64 5 Unpaid Amounts: In circumstances where Party A constitutes a Defaulted Counterparty (as defined in the Notes Conditions), and notwithstanding any other provision of the Agreement, Relevant Unpaid Amounts (as defined below) shall not be taken into account when calculating any amount payable pursuant to Section 6(e) of the Agreement.

Notwithstanding Sections 6(c)(ii) and 2(a)(iii) of the Agreement, on the same date that the amount (if any) arising pursuant to Section 6(e) is due and payable an amount will be payable in addition to such amount equal to the result of (a) the sum of the Relevant Unpaid Amounts owing to Party B minus (b) the sum of the Relevant Unpaid Amounts owing to Party A.

If that amount is a positive number, Party A will pay it to Party B; if it is a negative number, Party B will pay the absolute value of that amount to Party A.

For purposes of this paragraph, “Relevant Unpaid Amounts” means all Unpaid Amounts (as defined in the Agreement) other than those arising pursuant to Paragraph 6 of the Credit Support Annex to the Schedule to the Agreement. 6 Additional Termination Events: (a) It shall constitute an Additional Termination Event in respect of the Asset Swap Transaction, and Party B shall be the sole Affected Party, if at any time an Early Termination Date occurs in respect of the CDS Transaction, provided that an Early Termination Date in respect of the Asset Swap Transaction shall automatically be deemed to occur on the same date as the Early Termination Date in respect of the CDS Transaction.

(b) It shall constitute an Additional Termination Event in respect of the CDS Transaction, and Party B shall be the sole Affected Party, if at any time an Early Termination Date occurs in respect of the Asset Swap Transaction, provided that an Early Termination Date in respect of the CDS Transaction shall automatically be deemed to occur on the same date as the Early Termination Date in respect of the Asset Swap Transaction. (c) It shall constitute an Additional Termination Event, in which Party A shall be the sole Affected Party and these Transactions shall be Affected Transactions, if Party A fails to comply with any of the provisions of paragraph 7(a) or 7(b), provided that an Early Termination Date in respect of these Transactions shall automatically be deemed to occur on the date that falls 15 Business Days following the date that Party A fails to comply with any such provision unless the non Affected Party has previously designated an Early 43

Termination Date or provided notice to the Affected Party that it intends not to designate an Early Termination Date. For the purposes of this Additional Termination Event, Party A shall determine any Settlement Amount under Section 6(e) of the Agreement. (d) It shall constitute an Additional Termination Event, in which Party A shall be the sole Affected Party and these Transactions shall be Affected Transactions, if a successor to the deposit bank has not been determined or appointed following a ratings downgrade, as set out in the deposit agreement between Party A and Party B dated 14 May 2008.

For the purposes of this Additional Termination Event, Party A shall determine any Settlement Amount under Section 6(e) of the Agreement.

(e) It shall constitute an Additional Termination Event, in which Party A shall be the sole Affected Party and these Transactions shall be Affected Transactions, if a replacement account bank has not been appointed in accordance with Clause 24.5 of the agency agreement between, inter alios, Party A and Party B dated 8 November 2007 as modified, in respect of the Notes, by the supplemental trust deed between, inter alios, Party A and Party B dated 14 May 2008. For the purposes of this Additional Termination Event, Party A shall determine any Settlement Amount under Section 6(e) of the Agreement.

7 Ratings Downgrade: (a) If the short-term senior, unsecured and unguaranteed indebtedness rating of Party A falls below “P-1” by Moody’s or “A-1” by Standard & Poor’s or the long-term indebtedness rating of Party A falls below “A1” by Moody’s or either such long-term indebtedness rating or such short-term senior, unsecured and unguaranteed indebtedness rating is withdrawn by Moody’s (a “First Ratings Downgrade Event”), Party A may, at its own cost, within 10 Business Days of such downgrade or withdrawal: (i) cause an entity with at least the Required Ratings to provide a guarantee or an indemnity (subject to Rating Agency Approval) in respect of all of Party A’s rights and obligations (including, for the avoidance of doubt, payment obligations) under these Transactions in form and substance reasonably satisfactory to Party B; or (ii) transfer all of its rights and obligations under these Transactions to another entity which has (or which is guaranteed by an entity which has) at least the Required Ratings.

(b) If the short-term senior, unsecured and unguaranteed indebtedness rating of Party A falls below “A-2” by Standard & Poor’s (a “Second Ratings Downgrade Event”), Party A shall within 5 calendar days of such downgrade (i) take one of the steps in paragraph 7(a)(i) or 7(a)(ii) or (ii) procure to provide to Standard & Poor’s an English law legal opinion in a form satisfactory to Standard & Poor’s, but containing standard qualifications and assumptions, in respect of the enforceability of the Credit Support Annex.

8 Amendments and Modifications to the Agreement (a) Notwithstanding Part 1(b) of the Schedule to the Agreement: (i) in relation to Party B and these Transactions only, Section 5(a)(vii) shall be amended as follows: (A) Section 5(a)(vii)(2) shall be amended by deleting the words “becomes insolvent or”; 44

(B) Section 5(a)(vii)(6) shall be deleted and replaced with the following: “(6) becomes subject to the appointment of an administrator, provisional liquidator, examiner, conservator, receiver or other similar official for it or for all or substantially all its assets other than any Charged Property;”; and (C) Section 5(a)(vii)(7) and Section 5(a)(vii)(9) shall be deleted in their entirety; and (ii) in relation to Party A and these Transactions only, Section 5(b)(iii) (Tax Event Upon Merger) shall be applicable; (b) In relation to these Transactions only, the Credit Support Annex shall be amended in accordance with the following: (i) the following shall be added as a new Paragraph 11(h)(vi): “(vi) This Annex pertains to the Notes.

Each reference to a Transaction under this Annex shall be to a Transaction relating to the Notes. Any reference to “Outstanding Notional Amount” shall be deemed to be a reference to the “Reference Obligation Notional Amount””; (ii) notwithstanding paragraph 11(b)(iii)(B)(a) of the Credit Support Annex, the Threshold with respect to Party A shall be infinity until Party A has not, in accordance with paragraph 7(a)(i), procured a guarantee or indemnity or, in accordance with paragraph 7(a)(ii), made a transfer of its rights and obligations under these Transactions, within (A) 10 Business Days of a First Ratings Downgrade Event or (B) 5 calendar days of a Second Ratings Downgrade Event (each, a “CSA Posting Event”).

On the occurrence of a CSA Posting Event, the Threshold with respect to Party A shall be deemed zero and, notwithstanding paragraph 11(h)(iv) of the Credit Support Annex, in respect of any subsequent Valuation Date on which Party A does not have the Required Ratings, the Exposure shall be equal to (w) the sum of each Floating Amount paid to Party A during the period from, but excluding, the date that is two calendar years prior to such Valuation Date to, and including, such Valuation Date, minus (x) the sum of each Additional Fixed Amount paid to Party B during the period from, but excluding, the date that is two calendar years prior to such Valuation Date to, and including, such Valuation Date, plus (y) the next two following Fixed Amounts payable by Party A (and for the purposes of such determination only, the Reference Obligation Notional Amount for each day falling in the relevant Fixed Rate Payer Calculation Period shall be deemed to be equal to the Reference Obligation Notional Amount determined on the Fixed Rate Payer Payment Date preceding such determination date), plus (z) an amount equal to the sum of all Party A Interim Exchange Amounts paid by Party A during the most recent Fixed Rate Payer Calculation Period; (iii) (A) paragraph 11(v) (Definitions) shall be amended by deleting the definition of “Moody’s Required Rating” and replacing it with the following: ““Moody’s Required Rating” means a short-term senior, unsecured and unguaranteed indebtedness rating of “P-1” by Moody’s (and not withdrawn by Moody’s) and a long-term indebtedness rating of “A1” by Moody’s (and not withdrawn by Moody’s).”; and 45

(B) paragraph 11(v) (Definitions) shall be amended by deleting the definition of “Standard & Poor’s Required Ratings” and replacing it with the following: ““Standard & Poor’s Required Ratings” means a short-term senior, unsecured and unguaranteed indebtedness rating of “A-1” by Standard & Poor’s.”; (iv) (A) paragraph 11(a)(i) shall be amended by deleting “USD” and replacing it with “EUR”; (B) paragraph 11(b)(iii)(D) shall be amended by deleting “USD 5,000” and replacing it with “EUR 5,000”; and (C) paragraph 11(f)(i) shall be deleted in its entirety and replaced with the following: “(i) Interest Rate.

The Interest Rate will be: Eligible Currency Interest Rate EUR The overnight rate fixed for such day, as calculated by the European Central Bank and appearing Reuters Screen EONIA Page in respect of that day.

For the avoidance of doubt, interest will be compounding.”; and (v) paragraph 11(g) shall be deleted in its entirety and replaced with the following: “(g) Addresses for Transfers. Party A: The Royal Bank of Scotland plc 135 Bishopsgate London EC2M 3UR Telephone Number: 020 7085 3274 Facsimile Number: 020 7085 5397 Attention: SPV Middle Office – Matt Sykes Party B: Lunar Funding V PLC 5 Harbourmaster Place International Financial Services Centre Dublin 1 Ireland Telephone Number: +353 1 680 6000 Facsimile Number: +353 1 680 6050 Attention: The Directors Account Details: Account Details of Party A: BIC: RBOSGB2L Account Name: Royal Bank of Scotland, Correspondent Banking, London 46

Account Number: RBSFMLON EURC Reference: Lunar Funding V PLC Account Details of Party B: BIC: RBOSGB2L Account Name: Lunar 5 Account Number: LUNFUNVEUR1 Reference: Lunar Funding V PLC Series 2008-64” (c) In relation to these Transactions only, Part 5(e) (Limited Recourse and Non Petition) of the Schedule to the Agreement shall be amended by deleting the words “one year” and replacing them with the words “two years” and by inserting “examination,” between “administration,” and “insolvency”.

(d) In relation to these Transactions only, notwithstanding Section 6(e) of the Agreement, (i) the Asset Swap Transaction shall not be taken into account for the calculation and determination of the Settlement Amount and any Unpaid Amounts and (ii) Interest Shortfall Reimbursements shall not be taken into account for the calculation and determination of the Settlement Amount so long as the Transferor’s Credit Support Balance is greater than zero.

9 Amendments to the CDS on MBS Terms (a) In relation to the CDS Transaction only, the definition of Writedown in paragraph 9(c) of the CDS on MBS Terms shall be amended by inserting after clause (iii) the following as a new paragraph: “Notwithstanding the foregoing, a change in the balance of the Class C Principal Deficiency Ledger (as defined in the terms and conditions of the Reference Obligation as set out in the prospectus in respect of the Reference Obligation dated 27 September 2005) of itself shall not constitute a Writedown.” (b) In relation to the CDS Transaction only, the definition of Distressed Ratings Downgrade in paragraph 9(c) of the CDS on MBS Terms shall be deleted and replaced with the following: ““Distressed Ratings Downgrade” means that the Reference Obligation: (i) (A) if publicly rated by Moody’s, is downgraded to “Ca” or below by Moody’s and not reinstated within six months of such downgrade; and (B) if publicly rated by Standard & Poor’s, is downgraded to “CCC-” or below by Standard & Poor’s and not reinstated within five Business Days of such downgrade; (iii) if publicly rated by Moody’s, (A) has the rating assigned to it by Moody’s withdrawn and not reinstated within six months of such withdrawal and (B) is downgraded to “CCC-“ or below by Standard & Poor’s and not reinstated within 5 Business Days of such downgrade; or (iv) if publicly rated by Standard & Poor’s, (A) has the rating assigned to it by Standard & Poor’s withdrawn and not reinstated within 5 Business Days of such withdrawal and (B) is downgraded to “Ca” or below by Moody’s and not reinstated within six months of such downgrade.” 47

10 Agreement of Parties For purposes of Section 1(c) of the Agreement as amended by Part 5(a) of the Schedule to the Agreement, Party B and Party A agree and acknowledge that these Transactions are entered into in connection with the Notes on the basis that the Agreement is incorporated by reference into this Confirmation such that the Agreement (including the Credit Support Annex thereto) and this Confirmation form a single agreement with respect to these Transactions only. All provisions of the Agreement referring to more than one Transaction shall be construed as referring only to these Transactions as well as the Credit Support Annex.

References to this “Agreement” mean, with respect to these Transactions, the Agreement together with this Confirmation. 11 Derivatives Contracts It is the intention of the parties that these Transactions be characterised as derivatives contracts (and not surety bonds, guarantees, insurance contracts or similar contracts) for all legal, regulatory and tax purposes. Further, each of the parties shall treat these Transactions accordingly for all legal, regulatory and tax reporting purposes and each party waives any right to assert any claim or defence that is inconsistent with this intention of the parties.

12 No Actual Loss Required The parties agree and acknowledge that the obligations of Party B exist regardless of whether Party A suffers a loss or is exposed to the risk of loss upon the occurrence of a Credit Event, and regardless of whether Party A has any legal or beneficial interest in the Reference Obligation. 13 Third Parties’ Rights A person who is not a party to this Confirmation has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any terms of this Confirmation, but this does not affect any right or remedy of a third party which exists or is available apart from this Act.

14 Definitions Any term used in this Confirmation that is not defined in this Confirmation or in the Agreement shall have the meaning given to such term in the Notes Conditions.

“Credit Support Annex” means the 1995 ISDA Credit Support Annex (Bilateral Form –Transfer) (English law) between Party B and Party A that is annexed to and forms part of the Agreement. “Moody’s” means Moody’s Investors Services Inc. “Notes” means the Series 2008-64 EUR 10,000,000 Limited Recourse Secured Floating Rate Credit-Linked Notes due 2051 issued by Party B pursuant to its USD 10,000,000,000 Secured Asset-Backed Medium Term Note Programme. “Notes Conditions” means the terms and conditions of the Notes. “Rating Agencies” means Moody’s and Standard & Poor’s. “Rating Agency Approval” means, with respect to any specified action or determination, receipt of written confirmation from the Rating Agencies that such specified action or determination will not have an adverse effect on, or result in a reduction of, its then current ratings of the Notes.

48

“Required Ratings” means a short-term senior, unsecured and unguaranteed indebtedness rating of “P-1” by Moody’s (and not on negative watch for downgrade by Moody’s) and “A-1” by Standard & Poor’s (and not withdrawn by Standard & Poor’s) and a long-term indebtedness rating of “A1” by Moody’s (and not on negative watch for downgrade by Moody’s). “Standard & Poor’s” means Standard & Poor’s Rating Services, a division of McGraw-Hill Companies, Inc.

49

Please confirm your agreement to be bound by the terms of the foregoing by executing a copy of this Confirmation and returning it to us.

Yours sincerely, THE ROYAL BANK OF SCOTLAND PLC By _ _ Name: Title: By _ _ Name: Title: Confirmed as of the date first above written: LUNAR FUNDING V PLC By _ _ Name: Title: 50

ISDA STANDARD TERMS SUPPLEMENT FOR USE WITH CREDIT DERIVATIVE TRANSACTIONS ON MORTGAGE-BACKED SECURITY WITH PAY-AS-YOU-GO OR PHYSICAL SETTLEMENT1 (published on August 8, 2007) This ISDA Standard Terms Supplement for use with Credit Derivative Transactions on Mortgage- Backed Security with Pay-As-You-Go or Physical Settlement (the “CDS on MBS Terms”) hereby incorporates by reference the definitions and provisions contained in the 2003 ISDA Credit Derivatives Definitions as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) (the “Credit Derivatives Definitions”).

In the event of any inconsistency between the Credit Derivatives Definitions and these CDS on MBS Terms, these CDS on MBS Terms will govern.2 References to the “Reference Obligation” in these CDS on MBS Terms or in the relevant Confirmation shall be to the terms of the Reference Obligation (as defined below) set out in the Underlying Instruments (as defined below) as amended from time to time unless otherwise specified below. 1. General Terms: Trade Date: As shown in the relevant Confirmation. Effective Date: As shown in the relevant Confirmation. Scheduled Termination Date: Subject to paragraph 6, the Legal Final Maturity Date of the Reference Obligation, subject to adjustment in accordance with the Following Business Day Convention.

THE FOOTNOTES TO THIS CDS ON MBS STANDARD TERMS SUPPLEMENT ARE PROVIDED FOR CLARIFICATION ONLY AND DO NOT CONSTITUTE ADVICE AS TO THE STRUCTURING OR DOCUMENTATION OF A CREDIT DERIVATIVE TRANSACTION. ISDA has not undertaken to review all applicable laws and regulations of any jurisdiction in which the Credit Derivatives Definitions or these CDS on MBS Terms may be used. Therefore, parties are advised to consider the application of any relevant jurisdiction’s regulatory, tax, accounting, exchange or other requirements that may exist in connection with the entering into and documenting of a privately negotiated credit derivative transaction.

1 The definitions and provisions in this ISDA Standard Terms Supplement for use with Credit Derivatives Transactions on Mortgage-Backed Security with Pay-As-You-Go or Physical Settlement may be incorporated into a Confirmation or other document (including in electronic form) (a “Confirmation”) by wording in the Confirmation indicating that, or the extent to which, the Confirmation is subject to this ISDA Standard Terms Supplement for use with Credit Derivatives Transactions on Mortgage-Backed Security with Pay-As-You-Go or Physical Settlement. All definitions and provisions so incorporated in a Confirmation will be applicable to that Confirmation unless otherwise provided in that Confirmation.

2 Parties who wish to novate a trade documented by way of a Confirmation incorporating these CDS on MBS Terms should consider using the Form of Novation Confirmation set out in the Schedule to this ISDA Standard Terms Supplement.

51

Termination Date: The last to occur of: (a) the fifth Business Day following the Effective Maturity Date; (b) the last Floating Rate Payer Payment Date; (c) the last Delivery Date; and (d) the last Additional Fixed Amount Payment Date. Floating Rate Payer: As shown in the relevant Confirmation (the “Seller”). Fixed Rate Payer: As shown in the relevant Confirmation (the “Buyer”). Calculation Agent: As shown in the relevant Confirmation. Calculation Agent City: As shown in the relevant Confirmation. Business Day: As shown in the relevant Confirmation.

Business Day Convention: Modified Following, unless the Reference Obligation Notional Amount is denominated in U.S. Dollars, in which case, Following (which, in either case, with the exception of the Effective Date, the Final Amortization Date, each Reference Obligation Payment Date and the period end date of each Reference Obligation Calculation Period, shall apply to any date referred to in these CDS on MBS Terms or in the relevant Confirmation that falls on a day that is not a Business Day).

Fixed Rate Day Count Fraction: Actual/360, unless the Reference Obligation Notional Amount is denominated in Pounds Sterling, in which case, Actual/365. Reference Entity: As shown in the relevant Confirmation. Reference Obligation: As shown in the relevant Confirmation (and, for the avoidance of doubt, any obligation which will have the same CUSIP as the Reference Obligation within 40 days of its issuance will also constitute a Reference Obligation). Section 2.30 of the Credit Derivatives Definitions shall not apply.

Reference Policy: As shown in the relevant Confirmation. Reference Price: As shown in the relevant Confirmation.

Applicable Percentage: On any day, a percentage equal to A divided by B. 52

“A” means the product of the Initial Face Amount and the Initial Factor as decreased on each Delivery Date by an amount equal to (a) the outstanding principal balance of Deliverable Obligations Delivered to Seller (as adjusted by the Relevant Amount, if any) divided by the Current Factor on such day multiplied by (b) the Initial Factor. “B” means the product of the Original Principal Amount and the Initial Factor; (a) as increased by the outstanding principal balance of any further issues by the Reference Entity that are fungible with and form part of the same legal series as the Reference Obligation; and (b) as decreased by any cancellations of some or all of the Outstanding Principal Amount resulting from purchases of the Reference Obligation by or on behalf of the Reference Entity.3 Initial Face Amount: As shown in the relevant Confirmation.

Reference Obligation Notional Amount: On the Effective Date, the product of: (a) the Original Principal Amount; (b) the Initial Factor; and (c) the Applicable Percentage. Following the Effective Date, the Reference Obligation Notional Amount will be: (i) decreased on each day on which a Principal Payment is made by the relevant Principal Payment Amount; (ii) decreased on the day, if any, on which a Failure to Pay Principal occurs by the relevant Principal Shortfall Amount; (iii) decreased on each day on which a Writedown occurs by the relevant Writedown Amount; (iv) increased on each day on which a Writedown Reimbursement occurs by any Writedown Reimbursement Amount in respect of a 3 This represents the percentage covered by the relevant Transaction of the Outstanding Principal Amount.

It may be more than 100%.

53

Writedown Reimbursement within paragraphs (ii) or (iii) of the definition of “Writedown Reimbursement”; and (v) decreased on each Delivery Date by an amount equal to the relevant Exercise Amount minus the amount determined pursuant to paragraph (b) of “Physical Settlement Amount” below, provided that if any Relevant Amount is applicable, the Exercise Amount will also be deemed to be decreased by such Relevant Amount (or increased by the absolute value of such Relevant Amount if such Relevant Amount is negative) with effect from such Delivery Date; provided that if the Reference Obligation Notional Amount would be less than zero, it shall be deemed to be zero.

For the avoidance of doubt, the Reference Obligation Notional Amount shall not be increased by any deferral or capitalization of interest that relates to the Term of this Transaction or decreased by payment of any portion of the principal balance of the Reference Obligation that is attributable to the deferral or capitalization of interest during the Term of this Transaction. Initial Payment: As shown in the relevant Confirmation. 2. Fixed Payments: Fixed Rate Payer: Buyer. Fixed Rate: As shown in the relevant Confirmation, subject to adjustment in accordance with paragraph 6 below. Fixed Rate Payer Period End Date: The first day of each Reference Obligation Calculation Period.

Fixed Rate Payer Payment Dates: In the relevant Confirmation, the parties shall specify either “Not CMBS Convention” or “CMBS Convention” as applicable. If “Not CMBS Convention” is specified in the relevant Confirmation, the Fixed Rate Payer Payment Dates shall be each day falling five Business Days after a Reference Obligation Payment Date; provided that the final Fixed Rate Payer Payment Date shall fall on the fifth Business Day following the Effective Maturity 54

Date. If “CMBS Convention” is specified in the relevant Confirmation, the Fixed Rate Payer Payment Dates shall be, after each Reference Obligation Payment Date, the next following 25th calendar day of the month, except that when a Reference Obligation Payment Date falls on or after 25th calendar day of a month, the Fixed Rate Payer Payment Date in respect of such Reference Obligation Payment Date shall be 25th calendar day of the next following month; provided that the final Fixed Rate Payer Payment Date shall fall on the fifth Business Day following the Effective Maturity Date.

Fixed Amount: With respect to any Fixed Rate Payer Payment Date, an amount equal to the product of: (a) the Fixed Rate; (b) an amount determined by the Calculation Agent equal to: (i) the sum of the Reference Obligation Notional Amount as at 5:00 p.m. in the Calculation Agent City on each day in the related Fixed Rate Payer Calculation Period (provided that, if the Reference Obligation is a Delayed Payment Reference Obligation, the Reference Obligation Notional Amount on each day from and including the first day of the related Reference Obligation Calculation Period to but excluding the relevant Reference Obligation Payment Date shall be deemed to be adjusted to take into account any adjustment to the Reference Obligation Notional Amount on such Reference Obligation Payment Date); divided by (ii) the actual number of days in the related Fixed Rate Payer Calculation Period; and (c) the Fixed Rate Day Count Fraction.

Additional Fixed Amount Payment Dates: (a) Each Fixed Rate Payer Payment Date; and (b) in relation to each Additional Fixed Payment Event occurring after the second Business Day prior to the last Fixed Rate Payer Payment Date, the fifth Business Day after Buyer has 55

received notification from Seller or the Calculation Agent of the occurrence of such Additional Fixed Payment Event. Additional Fixed Payments: Following the occurrence of an Additional Fixed Payment Event in respect of the Reference Obligation, Buyer shall pay the relevant Additional Fixed Amount to Seller on the first Additional Fixed Amount Payment Date falling at least two Business Days (or in the case of an Additional Fixed Payment Event that occurs after the second Business Day prior to the last Fixed Rate Payer Payment Date, five Business Days) after the delivery of a notice by the Calculation Agent to the parties or by Seller to Buyer stating that the related Additional Fixed Amount is due and showing in reasonable detail how such Additional Fixed Amount was determined; provided that any such notice must be given on or prior to the fifth Business Day following the day that is one calendar year after the Effective Maturity Date.

Additional Fixed Payment Event: The occurrence on or after the Effective Date and on or before the day that is one calendar year after the Effective Maturity Date of a Writedown Reimbursement, a Principal Shortfall Reimbursement or an Interest Shortfall Reimbursement. Additional Fixed Amount: With respect to each Additional Fixed Amount Payment Date, an amount equal to the sum of: (a) the Writedown Reimbursement Payment Amount (if any); (b) the Principal Shortfall Reimbursement Payment Amount (if any); and (c) the Interest Shortfall Reimbursement Payment Amount (if any).

For the avoidance of doubt, each Writedown Reimbursement Payment Amount, Principal Shortfall Reimbursement Payment Amount or Interest Shortfall Reimbursement Payment Amount (as applicable) shall be calculated using the Applicable Percentage which takes into account the aggregate adjustment made to the Applicable Percentage in respect of all Delivery Dates that have occurred prior to the date of such calculation.

56

3. Floating Payments: Floating Rate Payer: Seller. Floating Rate Payer Payment Dates: In relation to a Floating Amount Event, the first Fixed Rate Payer Payment Date falling at least two Business Days (or in the case of a Floating Amount Event that occurs on the Legal Final Maturity Date or the Final Amortization Date, the fifth Business Day) after delivery of a notice by the Calculation Agent to the parties or a notice by Buyer to Seller that the related Floating Amount is due and showing in reasonable detail how such Floating Amount was determined; provided that any such notice must be given on or prior to the fifth Business Day following the Effective Maturity Date.

Floating Payments: If a Floating Amount Event occurs, then on the relevant Floating Rate Payer Payment Date, Seller will pay the relevant Floating Amount to Buyer. For the avoidance of doubt, the Conditions to Settlement are not required to be satisfied in respect of a Floating Payment. Floating Amount Event: A Writedown, a Failure to Pay Principal or an Interest Shortfall. Floating Amount: With respect to each Floating Rate Payer Payment Date, an amount equal to the sum of: (a) the relevant Writedown Amount (if any); (b) the relevant Principal Shortfall Amount (if any); and (c) the relevant Interest Shortfall Payment Amount (if any).

For the avoidance of doubt, each Writedown Amount, Principal Shortfall Amount or Interest Shortfall Payment Amount (as applicable) shall be calculated using the Applicable Percentage which takes into account the aggregate adjustment made to the Applicable Percentage in respect of all Delivery Dates that have occurred prior to the date of such calculation. 4. Credit Events and Physical Settlement Conditions to Settlement: Credit Event Notice Notifying Party: Buyer 57

Notice of Physical Settlement Notice of Publicly Available Information: Applicable Public Sources: The public sources listed in Section 3.7 of the Credit Derivatives Definitions; provided that Servicer Reports in respect of the Reference Obligation and, in respect of a Distressed Ratings Downgrade Credit Event only, any public communications by any of the Rating Agencies in respect of the Reference Obligation shall also be deemed Public Sources.

Specified Number: one provided that if the Calculation Agent has previously delivered a notice to the parties or Buyer has previously delivered a notice to Seller pursuant to the definition of “Floating Rate Payer Payment Dates” above in respect of a Writedown or a Failure to Pay Principal, the only Condition to Settlement with respect to any Credit Event shall be a Notice of Physical Settlement.

The parties agree that with respect to the Transaction and notwithstanding anything to the contrary in the Credit Derivatives Definitions: (a) the Conditions to Settlement may be satisfied on more than one occasion; (b) multiple Physical Settlement Amounts may be payable by Seller; (c) Buyer, when providing a Notice of Physical Settlement, must specify an Exercise Amount and an Exercise Percentage; (d) if Buyer has delivered a Notice of Physical Settlement that specifies an Exercise Amount that is less than the Reference Obligation Notional Amount as of the date on which such Notice of Physical Settlement is delivered (calculated as though Physical Settlement in respect of all previously delivered Notices of Physical Settlement has occurred in full), the rights and obligations of the parties under the Transaction shall continue and Buyer may deliver additional Notices of Physical 58

Settlement with respect to the initial Credit Event or with respect to any additional Credit Event at any time thereafter; and (e) any Notice of Physical Settlement shall be delivered no later than 30 calendar days after the fifth Business Day following the earlier of the Effective Maturity Date and the Optional Step-up Early Termination Date. Section 3.2(d) of the Credit Derivatives Definitions is amended to delete the words “that is effective no later than thirty calendar days after the Event Determination Date”.

Section 3.3 of the Credit Derivatives Definitions is amended so that the following is added as sub-clause (d): “(d) the expiration of any applicable grace period for a Failure to Pay Principal Credit Event”.

Credit Events: The following Credit Events shall apply to the Transaction (and the first sentence of Section 4.1 of the Credit Derivatives Definitions shall be amended accordingly): Failure to Pay Principal Writedown Each Additional Credit Event specified in the relevant Confirmation. Obligation: Reference Obligation Only 5. Interest Shortfall Interest Shortfall Payment Amount: In respect of an Interest Shortfall, the relevant Interest Shortfall Amount; provided that, if Interest Shortfall Cap is specified as applicable in the relevant Confirmation and the Interest Shortfall Amount exceeds the Interest Shortfall Cap Amount, the Interest Shortfall Payment Amount in respect of such Interest Shortfall shall be the Interest Shortfall Cap Amount.

Interest Shortfall Cap: As shown in the relevant Confirmation. Interest Shortfall Cap Amount: As set out in the Interest Shortfall Cap Annex. Actual Interest Amount: With respect to any Reference Obligation Payment Date, payment by or on behalf of the Issuer of an amount in 59

respect of interest due under the Reference Obligation (including, without limitation, any deferred interest or default interest but excluding payments in respect of prepayment penalties, yield maintenance provisions or principal, except that the Actual Interest Amount shall include any payment of principal representing capitalized interest that relates to the Term of the Transaction) to the holder(s) of the Reference Obligation in respect of the Reference Obligation.

WAC Cap Interest Provision: As shown in the relevant Confirmation. For this purpose, “WAC Cap” means a weighted average coupon or weighted average rate cap provision (however defined in the Underlying Instruments) of the Underlying Instruments that limits, increases or decreases the interest rate or interest entitlement in circumstances where the Underlying Instruments as at the Trade Date and without regard to any subsequent amendments, do not provide for any interest shortfall arising as a result of such provision to be deferred, capitalized or otherwise compensated for at any future time.

Expected Interest Amount: With respect to any Reference Obligation Payment Date, the amount of current interest that would accrue during the related Reference Obligation Calculation Period calculated using the Reference Obligation Coupon on a principal balance of the Reference Obligation equal to: (a) the Outstanding Principal Amount taking into account any reductions due to a principal deficiency balance or realized loss amount (however described in the Underlying Instruments) that are attributable to the Reference Obligation; minus (b) the Aggregate Implied Writedown Amount (if any) and that will be payable on the related Reference Obligation Payment Date assuming for this purpose that sufficient funds are available therefor in accordance with the Underlying Instruments.

Except as provided in (a) in the previous sentence, the Expected Interest Amount shall be determined without regard to (i) unpaid amounts in respect of accrued interest on prior Reference Obligation Payment Dates, or (ii) any prepayment penalties or yield maintenance provisions.

The Expected Interest Amount shall be determined: (x) if WAC Cap Interest Provision is specified as applicable in the relevant Confirmation, after giving effect to any WAC Cap; and (y) if WAC Cap Interest Provision is specified as not applicable in the relevant Confirmation, without giving effect to any WAC Cap; and 60

in either case without regard to the effect of any provisions (however described) of such Underlying Instruments that otherwise permit the limitation of due payments to distributions of funds available from proceeds of the Underlying Assets, or that provide for the capitalization or deferral of interest on the Reference Obligation during the Term of the Transaction, or that provide for the extinguishing or reduction of such payments or distributions (each a “Limitation Provision”) (but, for the avoidance of doubt, taking account of any Writedown within paragraph (i) of the definition of “Writedown” occurring in accordance with the Underlying Instruments)4 .

For the purposes of calculating the Expected Interest Amount, and notwithstanding any other provision herein, the Reference Obligation Coupon shall be deemed to include any cap stated in the Underlying Instrument that is not a Limitation Provision and, where WAC Cap Interest Provision is specified as not applicable in the relevant Confirmation, is not a WAC Cap. Interest Shortfall: With respect to any Reference Obligation Payment Date, either (a) the non-payment of an Expected Interest Amount or (b) the payment of an Actual Interest Amount that is less than the Expected Interest Amount.

For the avoidance of doubt, the occurrence of an event within (a) or (b) shall be determined taking into account any payment made under the Reference Policy, if applicable.

Interest Shortfall Amount: With respect to any Reference Obligation Payment Date, an amount equal to the greater of: (a) zero; and (b) the amount equal to the product of: (i) (A) the Expected Interest Amount; minus (B) the Actual Interest Amount; and (ii) the Applicable Percentage; provided that, with respect to the first Reference Obligation Payment Date only, the Interest Shortfall Amount shall be the amount determined in accordance with (a) and (b) above 4 Note that this will not impact the determination of “Expected Interest Amount” in respect of a Reference Obligation that does not have a Limitation Provision.

61

multiplied by a fraction equal to: (x) the number of days in the first Fixed Rate Payer Calculation Period; over (y) the number of days in the first Reference Obligation Calculation Period. Interest Shortfall Reimbursement: With respect to any Reference Obligation Payment Date, the payment by or on behalf of the Issuer of an Actual Interest Amount in respect of the Reference Obligation that is greater than the Expected Interest Amount. Interest Shortfall Reimbursement Amount: With respect to any Reference Obligation Payment Date, the product of (a) the amount of any Interest Shortfall Reimbursement on such day and (b) the Applicable Percentage.

Interest Shortfall Reimbursement Payment Amount: If Interest Shortfall Cap is specified as not applicable in the relevant Confirmation, the relevant Interest Shortfall Reimbursement Amount. If Interest Shortfall Cap is specified as applicable in the relevant Confirmation, the amount determined pursuant to the Interest Shortfall Cap Annex. 6. Consequences of Step-up of the Reference Obligation Coupon Step-up provisions: As shown in the relevant Confirmation. If the Step-up provisions are applicable, then the following provisions of this paragraph 6 shall apply. Step-up: On any day, an increase in the Reference Obligation Coupon due to the failure of the Issuer or a third party to exercise, in accordance with the Underlying Instruments, a “clean-up call” or other right to purchase, redeem, cancel or terminate (however described in the Underlying Instruments) the Reference Obligation.

Non-Call Notification Date: The date of delivery by the Calculation Agent to the parties or by Buyer to Seller of a Non-Call Notice. Non-Call Notice: A notice given by the Calculation Agent to the parties or by Buyer to Seller that the Reference Obligation has not been purchased, redeemed, cancelled or terminated by the Issuer or a third party, in accordance with the Underlying Instruments, pursuant to a “clean-up call” or other right to purchase, redeem, cancel or terminate (however described in the Underlying Instruments) the Reference Obligation, which failure will result in the occurrence of a Step-up.

62

Increase of the Fixed Rate: Subject to “Optional Step-up Early Termination” below, upon the occurrence of a Step-up, the Fixed Rate will be increased by the number of basis points by which the Reference Obligation Coupon is increased due to the Step-up, such increase to take effect as of the Fixed Rate Payer Payment Date immediately following the fifth Business Day after the Non-Call Notification Date. Optional Step-up Early Termination: No later than five Business Days after the Non-Call Notification Date, Buyer shall notify Seller (such notification, a “Buyer Step-up Notice”) whether Buyer wishes to continue the Transaction at the increased Fixed Rate or to terminate the Transaction.

If Buyer elects to terminate the Transaction, the date of delivery of the Buyer Step-up Notice shall be the Scheduled Termination Date (such date, the “Optional Step-up Early Termination Date”) and in such case “Increase of the Fixed Rate” in this paragraph 6 shall not apply. No amount shall be payable by either party in respect of the Optional Step-up Early Termination Date other than any Fixed Amount, Additional Fixed Amount, Floating Amount or Physical Settlement Amount calculated in accordance with the terms hereof. For the avoidance of doubt, the obligation of a party to pay any amount that has become due and payable under the Transaction and remains unpaid as at the Optional Step-up Early Termination Date shall not be affected by the occurrence of the Optional Step-up Early Termination Date.

If Buyer fails to deliver the Buyer Step-up Notice by the fifth Business Day after the Non-Call Notification Date, Buyer shall be deemed to have elected to continue the Transaction at the increased Fixed Rate as described under “Increase of the Fixed Rate”. If Buyer elects, or is deemed to have elected, to continue the Transaction at the increased Fixed Rate, the Transaction shall continue. 7. Settlement Terms Settlement Method: Physical Settlement Terms Relating to Physical Settlement: Physical Settlement Period: Five Business Days Deliverable Obligations: Exclude Accrued Interest 63

Deliverable Obligations: Deliverable Obligation Category: Reference Obligation Only Physical Settlement Amount: An amount equal to: (a) the product of the Exercise Amount and the Reference Price; minus (b) the sum of: (i) if the Aggregate Implied Writedown Amount is greater than zero, the product of (A) the Aggregate Implied Writedown Amount, (B) the Applicable Percentage, each as determined immediately prior to the relevant Delivery and (C) the relevant Exercise Percentage; and (ii) the product of (A) the aggregate of all Writedown Amounts in respect of Writedowns within paragraph (i)(B) of the definition of “Writedown” minus the aggregate of all Writedown Reimbursement Amounts in respect of Writedown Reimbursements within paragraph (ii)(B) of the definition of “Writedown Reimbursement” and (B) the relevant Exercise Percentage, provided that if the Physical Settlement Amount would exceed the product of: (1) the Reference Obligation Notional Amount as of the date on which the relevant Notice of Physical Settlement is delivered calculated as though Physical Settlement in respect of all previously delivered Notices of Physical Settlement has occurred in full; and (2) the Exercise Percentage; then the Physical Settlement Amount shall be deemed to be equal to such product.

Delayed Payment: With respect to a Delivery Date, if a Servicer Report that describes a Delayed Payment is delivered to holders of the Reference Obligation or to the Calculation Agent on or after such Delivery Date, Buyer will pay the applicable Delayed Payment Amount to Seller no later than five Business Days following the later of (a) the day on which such Servicer Report is delivered and (b) the day on which such Delayed Payment is due and payable. 64

Escrow: Applicable Non-delivery by Buyer or occurrence of the Effective Maturity Date: If Buyer has delivered a Notice of Physical Settlement and: (a) Buyer does not Deliver in full the Deliverable Obligations specified in that Notice of Physical Settlement on or prior to the Physical Settlement Date; or (b) the Effective Maturity Date occurs after delivery of the Notice of Physical Settlement but before Buyer Delivers the Deliverable Obligations specified in that Notice of Physical Settlement; then such Notice of Physical Settlement shall be deemed not to have been delivered and any reference in these CDS on MBS Terms to a previously delivered Notice of Physical Settlement shall exclude any Notice of Physical Settlement that is deemed not to have been delivered.

Sections 9.2(c)(ii) (except for the first sentence thereof), 9.3, 9.4, 9.5, 9.6, 9.9 and 9.10 of the Credit Derivatives Definitions shall not apply.

8. Additional Provisions: (a) Delivery of Servicer Report If either party makes a request in writing, the Calculation Agent agrees to provide such party with a copy of the most recent Servicer Report promptly following receipt of such request, if and to the extent such Servicer Report is reasonably available to the Calculation Agent (whether or not the Calculation Agent is a holder of the Reference Obligation). In addition, if a Floating Payment or an Additional Fixed Payment is due hereunder, then the Calculation Agent or the party that notifies the other party that the relevant Floating Payment or Additional Fixed Payment is due, as applicable, (the “Notifying Party”) shall deliver a copy of any Servicer Report relevant to such payment that is requested by the party that is not the Notifying Party or by either party where the Notifying Party is the Calculation Agent, if and to the extent that such Servicer Report is reasonably available to the Notifying Party (whether or not the Notifying Party is a holder of the Reference Obligation).

(b) Calculation Agent and Buyer and Seller Determinations The Calculation Agent shall be responsible for determining and calculating (i) the Fixed Amount payable on each Fixed Rate Payer Payment Date; (ii) the occurrence of a Floating Amount Event and the related Floating Amount and (iii) the occurrence of an Additional Fixed Payment Event and the related Additional Fixed Amount; provided that notwithstanding the above, each of Buyer and Seller shall be entitled to determine and calculate the above amounts to the extent that Buyer or Seller, as applicable, has the right to deliver a notice to the other party demanding payment of such amount.

The Calculation Agent or Buyer or Seller, as applicable, shall make such determinations and calculations based solely on the basis of the Servicer Reports, to the extent such Servicer Reports are reasonably available to the Calculation Agent or such party. The Calculation Agent or Buyer or Seller, as applicable, shall, as soon as practicable after making any of the determinations or calculations specified in (i) and (ii) above, notify the parties 65

or the other party, as applicable, of such determinations and calculations. For the avoidance of doubt, if an Interest Shortfall Amount is not explicitly set out in the Servicer Report but the Calculation Agent determines that an Interest Shortfall has occurred on the basis of information in such Servicer Report, then the relevant Interest Shortfall Amount shall be calculated by the Calculation Agent on the basis of such information.5 (c) Adjustment of Calculation Agent Determinations To the extent that a Servicer furnishes any Servicer Reports correcting information contained in previously issued Servicer Reports, and such corrections impact calculations pursuant to the Transaction, the calculations relevant to the Transaction shall be adjusted retroactively by the Calculation Agent to reflect the corrected information (provided that, for the avoidance of doubt, no amounts in respect of interest shall be payable by either party and provided that the Calculation Agent in performing the calculations pursuant to this paragraph will assume that no interest has accrued on any adjusted amount), and the Calculation Agent shall promptly notify both parties of any corrected payments required by either party.

Any required corrected payments shall be made within five Business Days of the day on which such notification by the Calculation Agent is effective.

9. Additional Definitions and Amendments to the Credit Derivatives Definitions (a) References in Sections 4.1, 8.2, 9.1 and 9.2(a) of the Credit Derivatives Definitions as well as Section 3(a)(iv) of the form of Novation Agreement set forth in Exhibit E to the Credit Derivatives Definitions to the Reference Entity shall be deemed to be references to both the Reference Entity and the Insurer in respect of the Reference Policy, if applicable. (b) (i) The definition of “Publicly Available Information” in Section 3.5 of the Credit Derivatives Definitions shall be amended by (i) inserting the words “the Insurer in respect of the Reference Policy, if applicable” at the end of subparagraph (a)(ii)(A) thereof, (ii) inserting the words “, servicer, sub-servicer, master servicer” before the words “or paying agent” in subparagraph (a)(ii)(B) thereof and (iii) deleting the word “or” at the end of subparagraph (a)(iii) thereof and inserting at the end of subparagraph (a)(iv) thereof the following: “or (v) is information contained in a notice or on a website published by an internationally recognized rating agency that has at any time rated the Reference Obligation”.

(ii) The definition of “Physical Settlement” in Section 8.1 of the Credit Derivatives Definitions shall be amended by (i) deleting the words “Physical Settlement Amount” from the last line of the second paragraph thereof and (ii) inserting in lieu thereof the words “Exercise Amount”. (iii) The definition of “Physical Settlement Date” in Section 8.4 of the Credit Derivatives Definitions shall be amended by deleting the last sentence thereof. 5 This is intended to cover any situation in which the Servicer Report does not report on Interest Shortfalls. 66

(c) For the purposes of the Transaction only, the following terms have the meanings given below: “Actual Principal Amount” means, with respect to the Final Amortization Date or the Legal Final Maturity Date, an amount paid on such day by or on behalf of the Issuer in respect of principal (excluding any amount representing capitalized interest that relates to the Term of the Transaction) to the holder(s) of the Reference Obligation in respect of the Reference Obligation.

“Aggregate Implied Writedown Amount” means the greater of (i) zero and (ii) the aggregate of all Implied Writedown Amounts minus the aggregate of all Implied Writedown Reimbursement Amounts.

“Bankruptcy” means both (i) a Reference Entity (a) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (b) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (c) institutes or has instituted against it a proceeding seeking a judgment of insolvency of bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (1) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (2) is not dismissed, discharged, stayed or restrained in each case within thirty calendar days of the institution or presentation thereof; (d) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation amalgamation or merger); (e) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for its or for all or substantially all its assets (excluding, for the avoidance of doubt, the appointment by the Reference Entity of a trustee, custodian, fiscal agent or similar representative solely for the purposes of an issue of securities by the Reference Entity) (f) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession or any such process is not dismissed, discharged, stayed or restrained, in each case within thirty calendar days thereafter; or (g) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (a) to (f) (inclusive) and (ii) the occurrence of any of the events described in clauses (a) to (g) (inclusive) has given rise to an event of default (howsoever described) under the terms of the Reference Obligation.

“Current Factor” means the factor of the Reference Obligation as specified in the most recent Servicer Report; provided that if the factor is not specified in the most recent Servicer Report or the factor specified includes deferred or capitalized interest that relates to the Term of the Transaction, then the Current Factor shall be the ratio equal to (i) the Outstanding Principal Amount as of such date, determined in accordance with the most recent Servicer Report over (ii) the Original Principal Amount.

“Current Period Implied Writedown Amount” means, in respect of a Reference Obligation Calculation Period, an amount determined as of the last day of such Reference Obligation Calculation Period equal to the greater of: (i) zero; and (ii) the product of: (A) the Implied Writedown Percentage; and 67

(B) the greater of: (1) zero; and (2) the lesser of (x) the Pari Passu Amount and (y) the Pari Passu Amount plus the Senior Amount minus the aggregate outstanding asset pool balance securing the payment obligations on the Reference Obligation (all such outstanding asset pool balances as obtained by the Calculation Agent from the most recently dated Servicer Report available as of such day), calculated based on the face amount of the assets then in such pool, whether or not any such asset is performing.

“Delayed Payment” means, with respect to a Delivery Date, a Principal Payment, Principal Shortfall Reimbursement or a Writedown Reimbursement within paragraph (i) of the definition of “Writedown Reimbursement” that is described in a Servicer Report delivered to holders of the Reference Obligation or to the Calculation Agent on or after such Delivery Date. “Delayed Payment Amount” means, if persons who are holders of the Reference Obligation as of a date prior to a Delivery Date are paid a Delayed Payment on or after such Delivery Date, an amount equal to the product of (i) the sum of all such Delayed Payments, (ii) the Reference Price, (iii) the Applicable Percentage immediately prior to such Delivery Date and (iv) the Exercise Percentage.

“Delayed Payment Reference Obligation” means a Reference Obligation with Reference Obligation Payment Dates that fall after the final day of the related Reference Obligation Calculation Periods. “Distressed Ratings Downgrade” means that the Reference Obligation: (i) if publicly rated by Moody’s, (A) is downgraded to “Caa2” or below by Moody’s or (B) has the rating assigned to it by Moody’s withdrawn and, in either case, not reinstated within five Business Days of such downgrade or withdrawal; provided that if such Reference Obligation was assigned a public rating of “Baa3” or higher by Moody’s immediately prior to the occurrence of such withdrawal, it shall not constitute a Distressed Ratings Downgrade if such Reference Obligation is assigned a public rating of at least “Caa1” by Moody’s within three calendar months after such withdrawal; or (ii) if publicly rated by Standard & Poor’s, (A) is downgraded to “CCC” or below by Standard & Poor’s or (B) has the rating assigned to it by Standard & Poor’s withdrawn and, in either case, not reinstated within five Business Days of such downgrade or withdrawal; provided that if such Reference Obligation was assigned a public rating of “BBB-” or higher by Standard & Poor’s immediately prior to the occurrence of such withdrawal, it shall not constitute a Distressed Ratings Downgrade if such Reference Obligation is assigned a public rating of at least “CCC+” by Standard & Poor’s within three calendar months after such withdrawal; or (iii) if publicly rated by Fitch, (A) is downgraded to “CCC” or below by Fitch or (B) has the rating assigned to it by Fitch withdrawn and, in either case, not reinstated within five Business Days of such downgrade or withdrawal; provided that if such Reference Obligation was assigned a public rating of “BBB-” or higher by Fitch immediately prior to the occurrence of such withdrawal, it shall not constitute a Distressed Ratings Downgrade if such Reference Obligation is assigned a public rating of at least “CCC+” by Fitch within three calendar months after such withdrawal.

68

“Effective Maturity Date” means the earlier of (a) the Scheduled Termination Date and (b) the Final Amortization Date. “Exercise Amount” means, for purposes of the Transaction, an amount to which a Notice of Physical Settlement relates equal to the product of (i) the original face amount of the Reference Obligation to be Delivered by Buyer to Seller on the applicable Physical Settlement Date; and (ii) the Current Factor as of such date. The Exercise Amount to which a Notice of Physical Settlement relates shall (A) be equal to or less than the Reference Obligation Notional Amount (determined, for this purpose, without regard to the effect of any Writedown or Writedown Reimbursement within paragraphs (i)(B) or (iii) of the definition of “Writedown” or paragraphs (ii)(B) or (iii) of the definition of “Writedown Reimbursement”, respectively) as of the date on which the relevant Notice of Physical Settlement is delivered calculated as though the Physical Settlement of all previously delivered Notices of Physical Settlement has occurred in full and (B) not be less than the lesser of (1) the Reference Obligation Notional Amount as of the date on which the relevant Notice of Physical Settlement is delivered calculated as though Physical Settlement in respect of all previously delivered Notices of Physical Settlement has occurred in full and (2) USD100,000 or its equivalent in the relevant Obligation Currency.

The cumulative original face amount of Deliverable Obligations specified in all Notices of Physical Settlement shall not at any time exceed the Initial Face Amount. For the avoidance of doubt: (a) if any capitalization or deferral of interest in respect of the Reference Obligation has occurred during the Term of the Transaction and has not been recovered by holders of the Reference Obligation pursuant to the terms of the Underlying Instruments, then, for the purpose of determining the amount of Deliverable Obligations to be Delivered, the Exercise Amount (determined above by reference to the original face amount) will represent an outstanding principal balance of the Reference Obligation to be Delivered by Buyer that includes the proportion of unrecovered interest attributable to the Reference Obligation to be Delivered and (b) notwithstanding the foregoing, the Physical Settlement Amount payable by Seller in relation to such Exercise Amount shall not include any amount in respect of such unrecovered interest.

“Exercise Percentage” means, with respect to a Notice of Physical Settlement, a percentage equal to the original face amount of the Deliverable Obligations specified in such Notice of Physical Settlement divided by an amount equal to (i) the Initial Face Amount minus (ii) the aggregate of the original face amount of all Deliverable Obligations specified in all previously delivered Notices of Physical Settlement.

“Expected Principal Amount” means, with respect to the Final Amortization Date or the Legal Final Maturity Date, an amount equal to (i) the Outstanding Principal Amount of the Reference Obligation payable on such day (excluding any amount representing capitalized interest that relates to the Term of the Transaction) assuming for this purpose that sufficient funds are available for such payment, where such amount shall be determined in accordance with the Underlying Instruments, minus (ii) the sum of (A) the Aggregate Implied Writedown Amount (if any) and (B) the net aggregate principal deficiency balance or realized loss amounts (however described in the Underlying Instruments) that are attributable to the Reference Obligation.

The Expected Principal Amount shall be determined without regard to the effect of any provisions (however described) of the Underlying Instruments that permit the limitation of due payments or distributions of funds in accordance with the terms of such Reference Obligation or that provide for the extinguishing or reduction of such payments or distributions. “Failure to Pay Principal” means (i) a failure by the Reference Entity (or any Insurer) to pay an Expected Principal Amount on the Final Amortization Date or the Legal Final Maturity Date, as the case may be, or (ii) payment on any such day of an Actual Principal Amount that is less than the Expected Principal Amount; provided that the failure by the Reference Entity (or any Insurer) to pay any such amount in respect of principal in accordance with the foregoing shall 69

not constitute a Failure to Pay Principal if such failure has been remedied within any grace period applicable to such payment obligation under the Underlying Instruments or, if no such grace period is applicable, within three Business Days after the day on which the Expected Principal Amount was scheduled to be paid. “Final Amortization Date” means the first to occur of (i) the date on which the Reference Obligation Notional Amount is reduced to zero and (ii) the date on which the assets securing the Reference Obligation or designated to fund amounts due in respect of the Reference Obligation are liquidated, distributed or otherwise disposed of in full and the proceeds thereof are distributed or otherwise disposed of in full.

“Fitch” means Fitch Ratings or any successor to its rating business. “Implied Writedown Amount” means, (i) if the Underlying Instruments do not provide for writedowns, applied losses, principal deficiencies or realized losses as described in (i) of the definition of “Writedown” to occur in respect of the Reference Obligation, on any Reference Obligation Payment Date, an amount determined by the Calculation Agent equal to the excess, if any, of the Current Period Implied Writedown Amount over the Previous Period Implied Writedown Amount, in each case in respect of the Reference Obligation Calculation Period to which such Reference Obligation Payment Date relates, and (ii) in any other case, zero.

“Implied Writedown Percentage” means (i) the Outstanding Principal Amount divided by (ii) the Pari Passu Amount.

“Implied Writedown Reimbursement Amount” means, (i) if the Underlying Instruments do not provide for writedowns, applied losses, principal deficiencies or realized losses as described in (i) of the definition of “Writedown” to occur in respect of the Reference Obligation, on any Reference Obligation Payment Date, an amount determined by the Calculation Agent equal to the excess, if any, of the Previous Period Implied Writedown Amount over the Current Period Implied Writedown Amount, in each case in respect of the Reference Obligation Calculation Period to which such Reference Obligation Payment Date relates, and (ii) in any other case, zero, provided that the aggregate of all Implied Writedown Reimbursement Amounts at any time shall not exceed the Outstanding Principal Amount.

“Legal Final Maturity Date” means the date set out in paragraph 1 above (subject, for the avoidance of doubt, to any business day convention applicable to the legal final maturity date of the Reference Obligation), provided that if the legal final maturity date of the Reference Obligation is amended, the Legal Final Maturity Date shall be such date as amended. “Moody’s” means Moody’s Investors Service, Inc. or any successor to its rating business. “Outstanding Principal Amount” means, as of any date of determination with respect to the Reference Obligation, the outstanding principal balance of the Reference Obligation as of such date, which shall take into account: (i) all payments of principal; (ii) all writedowns or applied losses (however described in the Underlying Instruments) resulting in a reduction in the outstanding principal balance of the Reference Obligation (other than as a result of a scheduled or unscheduled payment of principal); 70

(iii) forgiveness of any amount by the holders of the Reference Obligation pursuant to an amendment to the Underlying Instruments resulting in a reduction in the outstanding principal balance of the Reference Obligation; (iv) any payments reducing the amount of any reductions described in (ii) and (iii) of this definition; and (v) any increase in the outstanding principal balance of the Reference Obligation that reflects a reversal of any prior reductions described in (ii) and (iii) of this definition; and (vi) any increase in the outstanding principal balance of the Reference Obligation that is attributable to the deferral or capitalization of interest prior to the Effective Date.

For the avoidance of doubt, the Outstanding Principal Amount shall not include any portion of the outstanding principal balance of the Reference Obligation that is attributable to the deferral or capitalization of interest during the Term of this Transaction.

“Pari Passu Amount” means, as of any date of determination, the aggregate of the Outstanding Principal Amount of the Reference Obligation and the aggregate outstanding principal balance of all obligations of the Reference Entity secured by the Underlying Assets and ranking pari passu in priority with the Reference Obligation. “Previous Period Implied Writedown Amount” means, in respect of a Reference Obligation Calculation Period, the Current Period Implied Writedown Amount as determined in relation to the last day of the immediately preceding Reference Obligation Calculation Period; provided that in respect of the first Reference Obligation Calculation Period only, the Previous Period Implied Writedown Amount shall be the Current Period Implied Writedown Amount determined in relation to the last day of the preceding interest accrual period of the Reference Obligation and each reference to “Reference Obligation Calculation Period” in the definition of Current Period Implied Writedown Amount shall be deemed to be a reference to that interest accrual period.

“Principal Payment” means, with respect to any Reference Obligation Payment Date, the occurrence of a payment of an amount to the holders of the Reference Obligation in respect of principal (scheduled or unscheduled) in respect of the Reference Obligation other than a payment in respect of principal representing capitalized interest that relates to the Term of the Transaction, excluding, for the avoidance of doubt, any Writedown Reimbursement or Interest Shortfall Reimbursement. “Principal Payment Amount” means, with respect to any Reference Obligation Payment Date, an amount equal to the product of (i) the amount of any Principal Payment on such date and (ii) the Applicable Percentage.

“Principal Shortfall Amount” means, in respect of a Failure to Pay Principal, an amount equal to the greater of: (i) zero; and (ii) the amount equal to the product of: (A) the Expected Principal Amount minus the Actual Principal Amount; (B) the Applicable Percentage; and 71

(C) the Reference Price. If the Principal Shortfall Amount would be greater than the Reference Obligation Notional Amount immediately prior to the occurrence of such Failure to Pay Principal, then the Principal Shortfall Amount shall be deemed to be equal to the Reference Obligation Notional Amount at such time.

“Principal Shortfall Reimbursement” means, with respect to any day, the payment by or on behalf of the Issuer of an amount in respect of the Reference Obligation in or toward the satisfaction of any deferral of or failure to pay principal arising from one or more prior occurrences of a Failure to Pay Principal.

“Principal Shortfall Reimbursement Amount” means, with respect to any day, the product of (i) the amount of any Principal Shortfall Reimbursement on such day, (ii) the Applicable Percentage and (iii) the Reference Price. “Principal Shortfall Reimbursement Payment Amount” means, with respect to an Additional Fixed Amount Payment Date, the sum of the Principal Shortfall Reimbursement Amounts in respect of all Principal Shortfall Reimbursements (if any) made during the Reference Obligation Calculation Period relating to such Additional Fixed Amount Payment Date, provided that the aggregate of all Principal Shortfall Reimbursement Payment Amounts at any time shall not exceed the aggregate of all Floating Amounts paid by Seller in respect of occurrences of Failure to Pay Principal prior to such Additional Fixed Amount Payment Date.

“Rating Agencies” means Fitch, Moody’s and Standard & Poor’s. “Reference Obligation Calculation Period” means, with respect to each Reference Obligation Payment Date, a period corresponding to the interest accrual period relating to such Reference Obligation Payment Date pursuant to the Underlying Instruments.

“Reference Obligation Coupon” means the periodic interest rate applied in relation to each Reference Obligation Calculation Period on the related Reference Obligation Payment Date, as determined in accordance with the terms of the Underlying Instruments as at the Effective Date, without regard to any subsequent amendment. “Reference Obligation Payment Date” means (i) each scheduled distribution date for the Reference Obligation occurring on or after the Effective Date and on or prior to the Scheduled Termination Date, determined in accordance with the Underlying Instruments and (ii) any day after the Effective Maturity Date on which a payment is made in respect of the Reference Obligation.

“Relevant Amount” means, if a Servicer Report that describes a Principal Payment, Writedown or Writedown Reimbursement (other than a Writedown Reimbursement within paragraph (i) of the definition of “Writedown Reimbursement”), in each case that has the effect of decreasing or increasing the interest-accruing principal balance of the Reference Obligation as of a date prior to a Delivery Date but such Servicer Report is delivered to holders of the Reference Obligation or to the Calculation Agent on or after such Delivery Date, an amount equal to the product of (i) the sum of any such Principal Payment (expressed as a positive amount), Writedown (expressed as a positive amount) or Writedown Reimbursement (expressed as a negative amount), as applicable; (ii) the Reference Price; (iii) the Applicable Percentage immediately prior to such Delivery Date; and (iv) the Exercise Percentage.

72

“Senior Amount” means, as of any day, the aggregate outstanding principal balance of all obligations of the Reference Entity secured by the Underlying Assets and ranking senior in priority to the Reference Obligation. “Servicer” means any trustee, servicer, sub-servicer, master servicer, fiscal agent, paying agent or other similar entity responsible for calculating payment amounts or providing reports pursuant to the Underlying Instruments. “Servicer Report” means a periodic statement or report regarding the Reference Obligation provided by the Servicer to holders of the Reference Obligation.

“Standard & Poor’s” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. or any successor to its rating business. “Underlying Assets” means the assets securing the Reference Obligation for the benefit of the holders of the Reference Obligation and which are expected to generate the cashflows required for the servicing and repayment (in whole or in part) of the Reference Obligation, or the assets to which a holder of such Reference Obligation is economically exposed where such exposure is created synthetically.

“Underlying Instruments” means the indenture, trust agreement, pooling and servicing agreement or other relevant agreement(s) setting forth the terms of the Reference Obligation.

“Writedown” means the occurrence at any time on or after the Effective Date of: (i) (A) a writedown or applied loss (however described in the Underlying Instruments) resulting in a reduction in the Outstanding Principal Amount (other than as a result of a scheduled or unscheduled payment of principal); or (B) the attribution of a principal deficiency or realized loss (however described in the Underlying Instruments) to the Reference Obligation resulting in a reduction or subordination of the current interest payable on the Reference Obligation; (ii) the forgiveness of any amount of principal by the holders of the Reference Obligation pursuant to an amendment to the Underlying Instruments resulting in a reduction in the Outstanding Principal Amount; or (iii) if the Underlying Instruments do not provide for writedowns, applied losses, principal deficiencies or realized losses as described in (i) above to occur in respect of the Reference Obligation, an Implied Writedown Amount being determined in respect of the Reference Obligation by the Calculation Agent.

“Writedown Amount” means, with respect to any day, the product of (i) the amount of any Writedown on such day, (ii) the Applicable Percentage and (iii) the Reference Price. “Writedown Reimbursement” means, with respect to any day, the occurrence of: (i) a payment by or on behalf of the Issuer of an amount in respect of the Reference Obligation in reduction of any prior Writedowns; (ii) (A) an increase by or on behalf of the Issuer of the Outstanding Principal Amount of the Reference Obligation to reflect the reversal of any prior Writedowns; or 73

(B) a decrease in the principal deficiency balance or realized loss amounts (however described in the Underlying Instruments) attributable to the Reference Obligation; or (iii) if the Underlying Instruments do not provide for writedowns, applied losses, principal deficiencies or realized losses as described in (ii) above to occur in respect of the Reference Obligation, an Implied Writedown Reimbursement Amount being determined in respect of the Reference Obligation by the Calculation Agent.

“Writedown Reimbursement Amount” means, with respect to any day, an amount equal to the product of: (i) the sum of all Writedown Reimbursements on that day; (ii) the Applicable Percentage; and (iii) the Reference Price. “Writedown Reimbursement Payment Amount” means, with respect to an Additional Fixed Amount Payment Date, the sum of the Writedown Reimbursement Amounts in respect of all Writedown Reimbursements (if any) made during the Reference Obligation Calculation Period relating to such Additional Fixed Amount Payment Date, provided that the aggregate of all Writedown Reimbursement Payment Amounts at any time shall not exceed the aggregate of all Floating Amounts paid by Seller in respect of Writedowns occurring prior to such Additional Fixed Amount Payment Date.

74

Interest Shortfall Cap Annex If Interest Shortfall Cap is specified as applicable in the relevant Confirmation, then the following provisions will apply: Interest Shortfall Cap Basis: As shown in the relevant Confirmation. Interest Shortfall Cap Amount: If the Interest Shortfall Cap Basis is Fixed Cap, the Interest Shortfall Cap Amount in respect of an Interest Shortfall shall be the Fixed Amount calculated in respect of the Fixed Rate Payer Payment Date immediately following the Reference Obligation Payment Date on which the relevant Interest Shortfall occurred.

If the Interest Shortfall Cap Basis is Variable Cap, the Interest Shortfall Cap Amount applicable in respect of a Floating Rate Payer Payment Date shall be an amount equal to the product of: (a) the sum of the Relevant Rate and the Fixed Rate applicable to the Fixed Rate Payer Calculation Period immediately preceding the Reference Obligation Payment Date on which the relevant Interest Shortfall occurs (or, in respect of the first Fixed Rate Payer Calculation Period, the Relevant Rate and the Fixed Rate as of the Effective Date); (b) the amount determined by the Calculation Agent under sub-clause (b) of the definition of “Fixed Amount” in relation to the relevant Fixed Rate Payer Payment Date; and (c) the Fixed Rate Day Count Fraction.

Interest Shortfall Compounding: As shown in the relevant Confirmation. Interest Shortfall Reimbursement Payment Amount: With respect to the first Additional Fixed Amount Payment Date, zero, and with respect to any subsequent Additional Fixed Amount Payment Date and calculated as of the Reference Obligation Payment Date immediately preceding such Additional Fixed Amount Payment Date, as specified by the Calculation Agent in its notice to the parties or by Seller in its notice to Buyer of the existence of an Interest Shortfall Reimbursement, an amount equal to the greater of: (a) zero; and (b) the amount equal to: (i) the product of: (A) the Cumulative Interest Shortfall 75

Payment Amount as of the Additional Fixed Amount Payment Date immediately preceding such Reference Obligation Payment Date; and (B) either: (1) if Interest Shortfall Compounding is specified as applicable in the relevant Confirmation, the relevant Cumulative Interest Shortfall Payment Compounding Factor for the Fixed Rate Payer Calculation Period immediately preceding such Additional Fixed Amount Payment Date (or one in respect of any Additional Fixed Amount Payment Date occurring after the final Fixed Rate Payer Payment Date); or (2) if Interest Shortfall Compounding is specified as not applicable in the relevant Confirmation, one; minus (ii) the Cumulative Interest Shortfall Amount as of such Reference Obligation Payment Date; provided that if the Interest Shortfall Reimbursement Payment Amount on an Additional Fixed Amount Payment Date would exceed the Interest Shortfall Reimbursement Amount in respect of the related Reference Obligation Payment Date, then such Interest Shortfall Reimbursement Payment Amount shall be deemed to be equal to such Interest Shortfall Reimbursement Amount.

Cumulative Interest Shortfall Amount: With respect to any Reference Obligation Payment Date, an amount equal to the greater of: (a) zero; and (b) an amount equal to: (i) the Cumulative Interest Shortfall Amount as 76

of the Reference Obligation Payment Date immediately preceding such Reference Obligation Payment Date or, in the case of the first Reference Obligation Payment Date, zero; plus (ii) the Interest Shortfall Amount (if any) in respect of such Reference Obligation Payment Date; plus (iii) either: (A) if Interest Shortfall Compounding is specified as applicable in the relevant Confirmation, an amount determined by the Calculation Agent as the amount of interest that would accrue on the Cumulative Interest Shortfall Amount immediately preceding such Reference Obligation Payment Date during the related Reference Obligation Calculation Period pursuant to the Underlying Instruments or, in the case of the first Reference Obligation Payment Date, zero; or (B) if Interest Shortfall Compounding is specified as not applicable in the relevant Confirmation, zero; minus (iv) the Interest Shortfall Reimbursement Amount (if any) in respect of such Reference Obligation Payment Date.

Upon the occurrence of each Delivery, the Cumulative Interest Shortfall Amount shall be multiplied by a fraction equal to (a) the Applicable Percentage immediately following such Delivery divided by (b) the Applicable Percentage immediately prior to such Delivery; provided, however, that if more than one Delivery is made during a Reference Obligation Calculation Period, the Cumulative Interest Shortfall Amount calculated as of the Reference Obligation Payment Date occurring immediately after such Reference Obligation Calculation Period shall be multiplied by a fraction equal to (a) the Applicable Percentage immediately following the final Delivery made during such Reference Obligation Calculation Period divided by (b) the Applicable Percentage immediately prior to the first Delivery made during such Reference Obligation Calculation Period.

77

Cumulative Interest Shortfall Payment Amount: The Cumulative Interest Shortfall Payment Amount with respect to any Fixed Rate Payer Payment Date and any Additional Fixed Amount Payment Date falling on such Fixed Rate Payer Payment Date shall be an amount equal to the greater of: (a) zero; and (b) the amount equal to: (i) the sum of: (A) the Interest Shortfall Payment Amount for the Reference Obligation Payment Date corresponding to such Fixed Rate Payer Payment Date; and (B) the product of: (1) the Cumulative Interest Shortfall Payment Amount as of the Fixed Rate Payer Payment Date immediately preceding such Fixed Rate Payer Payment Date (or zero in the case of the first Fixed Rate Payer Payment Date); and (2) either: (AA) if Interest Shortfall Compounding is specified as applicable in the relevant Confirmation, the relevant Cumulative Interest Shortfall Payment Compounding Factor; or (BB) if Interest Shortfall Compounding is specified as not applicable in the relevant Confirmation, one; minus (ii) any Interest Shortfall Reimbursement Payment Amount paid on such Fixed Rate Payer Payment Date.

With respect to any Additional Fixed Amount Payment Date falling after the final Fixed Rate Payer Payment Date, the 78

Cumulative Interest Shortfall Payment Amount shall be equal to: (x) the Cumulative Interest Shortfall Payment Amount as of the Additional Fixed Amount Payment Date immediately preceding such Additional Fixed Amount Payment Date (or as of the final Fixed Rate Payer Payment Date in the case of the first Additional Fixed Amount Payment Date occurring after the final Fixed Rate Payer Payment Date); minus (y) any Interest Shortfall Reimbursement Payment Amount paid on such Additional Fixed Amount Payment Date.

Upon the occurrence of each Delivery, the Cumulative Interest Shortfall Payment Amount shall be multiplied by a fraction equal to (a) the Applicable Percentage immediately following such Delivery divided by (b) the Applicable Percentage immediately prior to such Delivery; provided, however, that if more than one Delivery is made during a Reference Obligation Calculation Period, the Cumulative Interest Shortfall Payment Amount calculated as of the Reference Obligation Payment Date occurring immediately after such Reference Obligation Calculation Period shall be multiplied by a fraction equal to (a) the Applicable Percentage immediately following the final Delivery made during such Reference Obligation Calculation Period divided by (b) the Applicable Percentage immediately prior to the first Delivery made during such Reference Obligation Calculation Period.

Cumulative Interest Shortfall Payment Compounding Factor: With respect to any Fixed Rate Payer Calculation Period, an amount equal to the sum of: (a) one; plus (b) the product of: (i) the sum of (A) the Relevant Rate plus (B) the Fixed Rate; and (ii) the Fixed Rate Day Count Fraction; provided, however, that the Cumulative Interest Shortfall Payment Compounding Factor shall be deemed to be one during the period from but excluding the Effective Maturity Date to and including the Termination Date. 79

Relevant Rate: With respect to a Fixed Rate Payer Calculation Period, the Floating Rate, expressed as a decimal number with seven decimal places, that would be determined if: (a) the 2006 ISDA Definitions (and not the 2003 ISDA Credit Derivatives Definitions) applied to this paragraph; (b) the Fixed Rate Payer Calculation Period were a “Calculation Period” for purposes of such determination; and (c) the following terms applied: (i) the Floating Rate Option were the Rate Source; (ii) the Designated Maturity were the period that corresponds to the usual length of a Fixed Rate Payer Calculation Period; and (iii) the Reset Date were the first day of the Calculation Period; provided, however, that the Relevant Rate shall be deemed to be zero during the period from but excluding the Effective Maturity Date to and including the Termination Date.

Rate Source: As shown in the relevant Confirmation. 80

Schedule Form of Novation Confirmation [Headed paper of Party A] NOVATION CONFIRMATION for use with the ISDA Standard Terms Supplement for use with Credit Derivative Transaction on Mortgage-Backed Security with Pay-As-You-Go or Physical Settlement as published by the International Swaps and Derivatives Association, Inc. Date: To: [Name and Address or Facsimile Number of Party B and Party C] From: [Party A] Re: Novation Transaction _ _ Dear _ : The purpose of this [facsimile][letter] is to confirm the terms and conditions of the Novation Transaction entered into between the parties and effective from the Novation Date specified below.

This Novation Confirmation constitutes a “Confirmation” as referred to in the New Agreement specified below.

1. The definitions and provisions contained in the 2004 ISDA Novation Definitions (the “Definitions”), the terms and provisions of the 2003 ISDA Credit Derivatives Definitions (the “Credit Derivatives Definitions”), as published by the International Swaps and Derivatives Association, Inc. and amended from time to time and the Annex hereto are each incorporated in this Novation Confirmation. In the event of any inconsistency between (i) the Definitions (as amended by the Annex hereto), (ii) the Credit Derivatives Definitions and/or (iii) the Novation Agreement (as amended by the Annex hereto) and this Novation Confirmation, this Novation Confirmation will govern.

2. The terms of the Novation Transaction to which this Novation Confirmation relates are as follows: [Novation Trade Date:] Novation Date: Novated Amount: [Transferor][Transferor 1] (and notwithstanding Section 1.5 of the Definitions): [Transferor 2 (and notwithstanding Section 1.5 of the Definitions)]: [Transferee][Transferee 1] (and notwithstanding Section 1.6 of the Definitions): 81

[Remaining Party (and notwithstanding Section 1.6 of the Definitions)][Transferee 2 (and notwithstanding Section 1.6 of the Definitions)]: [New Agreement (between [Transferee 1 and Transferee ISDA Master Agreement [dated as 2][Transferee and Remaining Party])]: of ] [ as per Section 1.11 of the Definitions] subject to [English law][the laws of the State of New York] 3. The terms of each Old Transaction to which this Novation Confirmation relates[, for identification purposes, are as follows:][shall be specified in the copy of the Old Confirmation attached hereto as Exhibit A.] Reference Entity: Reference Obligation: Trade Date of Old Transaction: Effective Date of Old Transaction: Applicable Percentage of Old Transaction: Scheduled Termination Date of Old Transaction: 4.

The terms of each New Transaction to which this Novation Confirmation relates [are as follows:][shall be specified in Section[s _ _ and___] of the copy of the Old Confirmation attached hereto as Exhibit A.][shall be specified in the New Confirmation attached hereto as Exhibit [A][B]]. Full First Calculation Period: Applicable, [commencing on [ ]] [commencing on , with respect to any amounts to be paid by the Transferee, and , with respect to any amounts to be paid by the Remaining Party].

5. Other Provisions: [[Additional Provisions relating to the New Transaction][Credit Support Documents relating to the New Transaction]]: 6. Miscellaneous Provisions: [Non-Reliance][ ] 7. Notice Details: Telephone and/or Facsimile Numbers for Notices: Transferee: [ ] Remaining Party: [ ] 8. [The parties confirm their acceptance to be bound by this Novation Confirmation as of the Novation Date by executing a copy of this Novation Confirmation and returning it to us]. [The Transferor, by its execution of a copy of this Novation Confirmation, agrees to the terms of the Novation Confirmation as it relates to each Old Transaction.

The Transferee, by its execution of a copy of this 82

Novation Confirmation, agrees to the terms of the Novation Confirmation as it relates to each New Transaction.]. 9. The Remaining Party and the Transferee agree that, notwithstanding any provision in the Old Transaction to which this Novation Confirmation relates, all rights of the Remaining Party and the Transferor in respect of Floating Amounts and Additional Fixed Amounts that arose before the Novation Date shall be deemed to have been exercised and all obligations of such parties in respect of such events that have arisen or are deemed to have arisen shall be deemed to have been satisfied in full, in each case solely for the purposes of determining the rights and obligations of the Remaining Party and the Transferee under the New Transaction.

Nothing in this paragraph shall affect the rights or obligations of the Remaining Party or the Transferor under the Old Transaction. . .

(Name of Remaining Party) (Name of Transferor) By . By … … Name: Name: Title: Title: Date: Date: … … (Name of Transferee) By … . Name … … Title . . Date . . 83

Annex 1. Section 2(a) of the Novation Agreement shall be deemed to be amended as follows: (a) by the insertion of “(i) ” after the words “with respect to” in the fifth line thereof; and (b) by the addition of the following at the end thereof: “and (ii) any rights or obligations arising in respect of Floating Amount Events or Additional Fixed Amount Events, in each case in respect of which the Remaining Party or the Transferor (each an “Original Party”), as applicable, had the right to deliver a notice pursuant to the terms of the Old Transaction but such notice was not delivered by that party or the Calculation Agent prior to the Novation Date (each an “Excluded Event”) provided that the rights of the Original Parties to deliver a notice in respect of an Excluded Event pursuant to the Old Transaction shall expire on the 60th calendar day following the Novation Date.” 2.

Section 2(b) of the Novation Agreement shall be deemed to be amended by the addition of the following after the words “Novation Date,” in the last line thereof: “but excluding any rights or obligations in respect of Excluded Events,” Section 2.1(a)(iii)(D)(i) of the Definitions shall not apply 84

ISSUER LUNAR FUNDING V PLC 5 Harbourmaster Place International Financial Services Centre Dublin 1 TRUSTEE ISSUING AND PAYING AGENT DEUTSCHE TRUSTEE COMPANY LIMITED Winchester House 1 Great Winchester Street London EC2N 2DB DEUTSCHE BANK AG, LONDON BRANCH Winchester House 1 Great Winchester Street London EC2N 2DB COUNTERPARTY, ACCOUNT BANK AND CALCULATION AGENT THE ROYAL BANK OF SCOTLAND PLC 135 Bishopsgate London EC2M 3UR PAYING AGENT DEUTSCHE INTERNATIONAL CORPORATE SERVICES (IRELAND) LIMITED 5 Harbourmaster Place IFSC Dublin 1 Ireland LEGAL ADVISERS to the Dealer and the Trustee as to English law to the Issuer as to Irish law LINKLATERS LLP One Silk Street London EC2Y 8HQ A&L GOODBODY SOLICITORS International Financial Services Centre Dublin 1 Ireland IRISH LISTING AGENT A&L LISTING LIMITED International Financial Services Centre Dublin 1 Ireland DEALER THE ROYAL BANK OF SCOTLAND PLC 135 Bishopsgate London EC2M 3UR 85

You can also read