Efecto de la gestación sobre la ingestión

1 Exchange Offer

(a) LBG Capital No.1 invites all Holders (subject to certain offer restrictions set out in ‘‘Offer Restrictions’’) to Offer to Exchange for the relevant ECNs or the Exchange Consideration any or all of their Existing Securities that are outstanding upon the terms and subject to the conditions of the Exchange Offer, as further described below. Each series or class of New Securities will be issued and cash will be paid up to a maximum aggregate amount equal to the relevant New Issue Amount, as further described below.

(i) Holders who wish to participate in the Exchange Offer should submit an Offer to Exchange their Existing Securities in accordance with one of the following options.1 (a) Exchange Option 1 – Exchange into ECNs only

Holders are entitled to Offer to Exchange their Existing Securities for the relevant series of ECNs as set out in Part III (‘‘Summary Offering Table and Exchange Options Overview’’) of this Exchange Offer Memorandum. In the event that the relevant ECN Issuer or Lloyds Banking Group (as the case may be) accepts Offers to Exchange for ECNs, such ECNs will be delivered on the Early Settlement Date. In the event that an Offer to Exchange for ECNs is not accepted, the relevant Holders will not have the opportunity to participate in the ECA Priority.

Holders who wish to Offer to Exchange their Existing Securities in accordance with this Exchange Option 1, should specify ‘‘Exchange Option 1’’ in the relevant Exchange Instruction.

(b) Exchange Option 2 – Exchange for the relevant Exchange Consideration only Holders are entitled to Offer to Exchange their Existing Securities for a consideration calculated by reference to the relevant Exchange Consideration Amount set out in Part III (‘‘Summary Offering Table and Exchange Options Overview’’) of this Exchange Offer Memorandum, which will be delivered to Holders in the form of New Shares and/or cash, (each at the sole discretion of LBG Capital No.1) and/or, in the limited circumstances described below, Additional ECNs. In the event that the relevant ECN Issuer or Lloyds Banking Group (as the case may be) accepts Offers to Exchange made pursuant to this Exchange Option 2, Lloyds Banking Group, acting on behalf of itself and the ECN Issuers, will announce on 12 February 2010 whether the relevant Holders of each series of Existing Securities will receive New Shares and/or cash, and/or in the limited circumstances described below, Additional ECNs. The relevant Exchange Consideration will be delivered approximately 90 days after the Expiration Deadline on the Late Settlement Date. In the event that an Offer to Exchange made pursuant to this Exchange Option 2 is not accepted, the relevant Holder will not have the opportunity to participate in the ECN Priority.

Holders who wish to Offer to Exchange their Existing Securities in accordance with this Exchange Option 2, should specify ‘‘Exchange Option 2’’ in the relevant Exchange Instruction.

(c) Exchange Option 3 – Exchange into ECNs or, failing which, the relevant Exchange Consideration

Holders are entitled to Offer to Exchange their Existing Securities for the relevant series of ECNs as set out in Part III (‘‘Summary Offering Table and Exchange Options Overview’’) of this Exchange Offer Memorandum. In the event that the relevant ECN Issuer or Lloyds Banking Group (as the case may be) has accepted other Offers to Exchange in accordance with the ECN Priority, such that the aggregate principal amount of ECNs to be issued in exchange would exceed the Maximum ECN New Issue Amount, the Offers to Exchange which have not been 1

A Holder may elect to Offer to Exchange part of its holding of Existing Securities on the basis of one Exchange Option and another part of its holding of Existing Securities on the basis of another Exchange Option, in which case such Holder should specify the principal amount/liquidation preference of its holding which it Offers to Exchange for each Exchange Option elected (and each such principal amount/liquidation preference specified must be at least the minimum specified denomination/liquidation preference of such Existing Security).

so accepted will, in the circumstances described in Appendix 3, be treated as an Offer to Exchange for the relevant Exchange Consideration Amount. The relevant ECN Issuer or Lloyds Banking Group (as the case may be) may then accept such Offers to Exchange in accordance with the ECA Priority, in the circumstances described in Appendix 3. Holders will, if their Offers to Exchange are accepted, receive the relevant New Securities or cash on the relevant Settlement Date, as described herein.

Holders who wish to Offer to Exchange their Existing Securities in accordance with this Exchange Option 3, should specify ‘‘Exchange Option 3’’ in the relevant Exchange Instruction.

(d) Exchange Option 4 – Exchange for the relevant Exchange Consideration or, failing which, ECNs

Holders are entitled to Offer to Exchange their Existing Securities for a consideration calculated by reference to the relevant Exchange Consideration Amount as set out in Part III (‘‘Summary Offering Table and Exchange Options Overview’’) of this Exchange Offer Memorandum which will be delivered to Holders in the form of New Shares and/or cash (each at the sole discretion of LBG Capital No.1) and/or, in the limited circumstances described below, Additional ECNs. In the event that the relevant ECN Issuer or Lloyds Banking Group (as the case may be) has accepted other Offers to Exchange in accordance with the ECA Priority, such that the aggregate value of Exchange Consideration to be issued and paid in exchange would exceed the Maximum Exchange Consideration Amount, the Offer to Exchange will, in the circumstances described in Appendix 3, be treated as an Offer to Exchange into ECNs. The relevant ECN Issuer or Lloyds Banking Group (as the case may be) may then accept such Offers to Exchange in accordance with the ECN Priority, in the circumstances described in Appendix 3. Holders will, if their Offers to Exchange are accepted, receive the relevant New Securities or cash on the relevant Settlement Date, as described herein.

Holders who wish to Offer to Exchange their Existing Securities in accordance with this Exchange Option 4, should specify ‘‘Exchange Option 4’’ in the relevant Exchange Instruction.

(ii) The ECN Issuers and Lloyds Banking Group will, if they accept any Offers to Exchange, accept Offers to Exchange in accordance with the relevant Exchange Priority as further detailed below (see ‘‘Acceptance of Offers to Exchange’’) and as set out in Appendices 1 and 2 to this Exchange Offer Memorandum. The interaction between the Exchange Options and the Exchange Priorities is described in Appendix 3 (‘‘Interaction of Exchange Priorities and Exchange Options’’) of this document.

(iii) Holders whose Offers to Exchange their Existing Securities have been accepted by the relevant ECN Issuer or Lloyds Banking Group (as the case may be) and who will, following such acceptance, be entitled to ECNs or, in the limited circumstances described below, Additional ECNs, will receive such ECNs or Additional ECNs (as the case may be) of the relevant series specified in Part III (‘‘Summary Offering Table and Exchange Options Overview’’) of this Exchange Offer Memorandum, in an aggregate principal amount equal to the aggregate principal amount/liquidation preference of the corresponding series of Existing Securities which have been accepted for exchange. Such Holders will also receive any applicable Accrued Interest Payment or Accrued Dividends Payment (as the case may be) on the Early Settlement Date, in the case of Holders who receive ECNs other than Additional ECNs, or the Late Settlement Date, for those who receive Additional ECNs.

(iv) Holders whose Offers to Exchange their Existing Securities have been accepted by the relevant ECN Issuer or Lloyds Banking Group (as the case may be) and who will, following such acceptance, be entitled to New Shares, will receive such number of New Shares per £1,000, c1,000, U.S.$1,000 or ¥1,000 (as applicable) in principal amount/ liquidation preference of Existing Securities which are accepted for exchange, equal to the relevant Exchange Consideration Amount divided by the product of the New Shares Price and the relevant FX Rate. If a Holder would be entitled to receive a number of New Shares which is not a whole number, any fractional entitlements will be rounded

down to the nearest whole number and Holders will not receive any such fractional entitlements. For the purposes of such calculation, the number of New Shares to be issued shall be calculated on the basis of the aggregate principal amount/liquidation preference of the Existing Securities which have been accepted for exchange by the relevant ECN Issuer or Lloyds Banking Group (as the case may be). Such Holders will also receive any applicable Accrued Interest Payment or Accrued Dividends Payment (as the case may be) on the Late Settlement Date.

(v) Holders whose Offers to Exchange their Existing Securities have been accepted by the relevant ECN Issuer or Lloyds Banking Group (as the case may be) and who will, following such acceptance, be entitled to cash, will receive a cash amount equal to the relevant Exchange Consideration Amount per £1,000, c1,000, U.S.$1,000 or ¥1,000 (as applicable) in principal amount/liquidation preference of Existing Securities which are accepted for exchange, payable in the same currency as the relevant series or class of Existing Securities which has been accepted for exchange. Such Holders will also receive any applicable Accrued Interest Payment or Accrued Dividends Payment (as the case may be) on the Late Settlement Date.

(vi) The Exchange Offer Period will start on 3 November 2009 and end at the Expiration Deadline, unless extended or earlier closed by LBG Capital No.1 with the prior consent of the Dealer Managers (such consent not to be unreasonably withheld or delayed). Subject thereto, Holders are invited to Offer to Exchange any or all of their Existing Securities that are outstanding from 3 November 2009 up to 4.00 p.m., London time, on 20 November 2009 subject to any earlier deadlines set by the Clearing Systems or other Intermediaries.

(vii) Offers to Exchange the Existing Preference Shares and the Saphir Existing Securities will be made to, and (if applicable) accepted by, Lloyds Banking Group. Offers to Exchange Holdco Existing Securities, other than the Existing Preference Shares, will be made to, and (if applicable) accepted by, LBG Capital No.1. Offers to Exchange Opco Existing Securities will be made to, and (if applicable) accepted by, LBG Capital No.2. An Offer to Exchange will only be considered eligible for acceptance by the relevant ECN Issuer or Lloyds Banking Group (as the case may be) if the Exchange Offer Conditions have been satisfied and, in the case of Non-Clearing System Existing Securities only, such Offer to Exchange is in respect of a principal amount/liquidation preference at least equal to the Minimum Existing Holding. Neither ECN Issuer nor Lloyds Banking Group is under any obligation to Holders to accept any or all Offers to Exchange, and each of them may decide not to accept Offers to Exchange for any reason.

(viii) Holders of Holdco Existing Securities who offer to exchange such Existing Securities for ECNs will, if their Offer to Exchange is accepted, receive ECNs issued by LBG Capital No.1 and guaranteed by Lloyds Banking Group in consideration of their agreement to transfer the relevant Holdco Existing Securities to LBG Capital No.1. Holders of Opco Existing Securities who offer to exchange such Existing Securities for ECNs will, if their Offer to Exchange is accepted, receive ECNs issued by LBG Capital No.2 and guaranteed by Lloyds TSB Bank in consideration of their agreement to transfer the relevant Opco Existing Securities to LBG Capital No.2. Any New Shares issued in connection with the Exchange Offer will be issued by Lloyds Banking Group.

(ix) Where an Offer to Exchange Existing Preference Shares for ECNs is made to Lloyds Banking Group, and such Offer to Exchange is accepted, Lloyds Banking Group will procure that the relevant ECN Issuer will issue the corresponding amount of ECNs and will pay or agree to pay the relevant ECN Issuer an amount equal to the value of the Existing Preference Shares (disregarding Accrued Dividends) as at the Early Settlement Date plus any additional amount as described in (t) below in paying up those ECNs. Where an Offer to Exchange Existing Securities (other than Existing Preference Shares) for the Exchange Consideration Amount is made to either ECN Issuer, and such Offer to Exchange is accepted in exchange for New Shares, the relevant ECN Issuer will procure that Lloyds Banking Group will issue the relevant number of New Shares and will pay or agree to pay Lloyds Banking Group an amount equal to the Exchange Consideration Amount in paying up the New Shares.

(x) An Offer to Exchange Non-Clearing System Existing Securities will only be considered eligible for acceptance by the relevant ECN Issuer or Lloyds Banking Group (as the case may be) if it relates to a principal amount/liquidation preference at least equal to the relevant Minimum Existing Holding. Subject thereto, Holders may only Offer to Exchange a principal amount/liquidation preference of Existing Securities which is equal to, or an integral multiple of, the specified denomination(s) or liquidation preference (as the case may be) of the relevant series of Existing Securities.

(xi) Lloyds Banking Group, acting on behalf of itself and the ECN Issuers, intends to announce, inter alia, whether it, LBG Capital No.1 or LBG Capital No.2 (as the case may be) accepts Offers to Exchange on the Results Announcement Date.

Acceptance of Offers to Exchange and scaling

(b) Upon expiration of the Exchange Offer Period, the relevant ECN Issuer or Lloyds Banking Group (as the case may be) will, if it accepts any Offers to Exchange, accept Offers to Exchange in accordance with the ECA Priority (as set out in Appendix 1 (‘‘ECA Priority’’) to this Exchange Offer Memorandum) when accepting Offers to Exchange for the relevant Exchange Consideration Amount, and in accordance with the ECN Priority (as set out in Appendix 2 (‘‘ECN Priority’’) to this Exchange Offer Memorandum) when accepting Offers to Exchange into ECNs.

(c) The relevant ECN Issuer or Lloyds Banking Group will accept Offers to Exchange in accordance with the relevant Exchange Priority (and pursuant to the operation of the Exchange Priorities as described in Appendix 3) as set out above until either (i) in the case of each Exchange Priority, it has accepted all of the Existing Securities validly offered and eligible for exchange; (ii) in the case of the ECN Priority, the aggregate principal amount of all series of ECNs to be issued in exchange for Existing Securities is the maximum such amount that can be issued without exceeding the Maximum ECN New Issue Amount; or (iii) in the case of the ECA Priority, the aggregate value of Exchange Consideration to be issued and paid in exchange for Existing Securities is the maximum such amount that can be issued and paid without exceeding the Maximum Exchange Consideration Amount. Where the acceptance in accordance with the relevant Exchange Priority of all valid Offers to Exchange of a particular series or class of Existing Securities (being the lowest priority series or class of Existing Securities being accepted in accordance with the relevant Exchange Priority) would require a greater aggregate amount of the relevant series or class of New Securities to be issued, or cash to be paid, than the Maximum ECN New Issue Amount or the Maximum Exchange Consideration Amount, as the case may be, in the case of that particular series or class of Existing Securities, the relevant ECN Issuer or Lloyds Banking Group (as the case may be) will accept such Offers to Exchange on a pro rata basis, as described below, and the Issuers will not accept any Offers to Exchange in respect of any series or class of Existing Securities ranking after such series or class in accordance with the relevant Exchange Priority.

(d) Holders whose Existing Securities Offered for Exchange are not accepted, or who do not participate in the Exchange Offer, will not be eligible to receive New Securities or cash in exchange for such Existing Securities and shall continue to hold such Existing Securities subject to their terms and conditions.

Scaling of Offers to Exchange

(e) Where, in the circumstances set out above, Offers to Exchange in respect of a particular series or class of Existing Securities are to be accepted by the relevant ECN Issuer or Lloyds Banking Group (as the case may be) on a pro rata basis, for the purposes of such acceptance each such Offer to Exchange will be scaled by a factor equal to (i) the maximum aggregate principal amount/liquidation preference of the Existing Securities of such series or class that can be accepted by the relevant ECN Issuer or Lloyds Banking Group (as the case may be) for exchange (after taking into account the Existing Securities of the other relevant series or classes that are to be accepted for exchange first in accordance with the relevant Exchange Priority) without the aggregate principal amount of the ECNs or Exchange Consideration Amount exceeding the Maximum ECN New Issue Amount or Maximum Exchange Consideration Amount respectively, divided by (ii) the aggregate principal amount/ liquidation preference of all of the Existing Securities of such series or class that have been validly Offered for Exchange.

(f) In the event of such scaling of Offers to Exchange, the relevant ECN Issuer or Lloyds Banking Group (as the case may be) will only accept Offers to Exchange subject to scaling to the extent such scaling would not result in the relevant Holder Offering to Exchange Non- Clearing System Existing Securities of less than the Minimum Existing Holding. A Holder whose Existing Securities are accepted for exchange in the Exchange Offer (including after any scaling) and who, following the exchange of such Existing Securities on the relevant Settlement Date, will, where relevant, continue to hold in its account with the relevant Clearing System a principal amount/liquidation preference of Existing Securities which is less than the minimum denomination for such series or class (whether by virtue of such scaling or otherwise), would need to purchase a principal amount/liquidation preference of Existing Securities of such series or class such that its holding amounts to at least the amount of such minimum denomination. Otherwise such residual holding may not be tradeable in the Clearing Systems.

Exchange for ECNs

(g) On the Early Settlement Date, subject to the satisfaction or waiver (if permitted) of the Exchange Offer Conditions, LBG Capital No.1 will deliver, or procure that ECNs will be delivered, to the Holders in respect of the Existing Securities of such Holders validly Offered for Exchange under the Exchange Offer pursuant to the terms set out in this Exchange Offer Memorandum and accepted for exchange pursuant to the ECN Priority by the relevant ECN Issuer or Lloyds Banking Group (as the case may be). In addition, on the Early Settlement Date, the relevant ECN Issuer or Lloyds Banking Group (as the case may be) will pay, or procure that there is paid, to Holders in respect of the Existing Securities of such Holders validly Offered for Exchange and accepted for exchange pursuant to the ECN Priority by the relevant ECN Issuer or Lloyds Banking Group (as the case may be) a cash amount equal to the Accrued Interest Payment or Accrued Dividends Payment (as the case may be) on such