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.

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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

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