ANNEX II U.K. LIST OF CONDITIONS REFERRED TO IN ARTICLE 2

The restructuring phase is to end on 31 December 2014. The following conditions apply during the restructuring phase, provided the commitment in question does not state otherwise.

1.1. [Remuneration of the guarantee] The contract concluded between HSH Finanzfonds AöR and HSH on 2 June 2009 on the provision of a guarantee framework (the ‘guarantee provision contract’) will be amended as follows or supplemented with further documentation in order to bring the remuneration into line with the requirements of the Commission Communication on the treatment of impaired assets in the Community banking sector(1). U.K.

1.2. The premium of 400 bps p.a. on a second-loss tranche of EUR 10 billion (the ‘basic premium’) will be supplemented by an additional premium amounting to 385 bps. The guarantee provision contract will lay down that the basis for the calculation of the amount of the basic premium and the additional premium (EUR 10 billion) will be reduced by (partial) cancellation of the guarantee but not by drawing on the guarantee. In so far as HSH Finanzfonds AöR also remains liable for reference undertakings following a (partial) cancellation to zero (i.e. up to no more than the amount of the last nominal value of the guarantee before the partial cancellation to zero), the (partial) cancellation to zero will not have the effect of reducing the basis of assessment. U.K.

1.3. In addition to an ex nunc reduction of the basis for assessment of the basic premium and the additional premium in accordance with point 1.2 of this Annex, partial cancellations will also result in a repayment of the additional premium paid on the partially cancelled amount in the past. The repayment of the additional premium in the event of partial cancellations will be made regardless of the actual settlement dates with effect from the partial cancellation in question. Repayments will be effected firstly by reducing the debtor warrant (Besserungsschein) in line with point 1.7 of this Annex and then through the repayment from the account in line with paragraph 1.6 of this Annex. U.K.

1.4. (Partial) cancellations of the guarantee may be carried out only in so far as it is not to be expected, according to HSH’s planning at the time of notification of the (partial) cancellation in question, that as a result the share of HSH’s common equity capital will fall below [8,5–9,5] % as at 31 December 2011, [9–10] % as at 31 December 2012, [9,5–10,5] % as at 31 December 2013, and [10–11] % as at 31 December 2014 (calculated in each case in accordance with the binding regulatory requirements regarding credit institutions’ capital adequacy which are in force at the above-mentioned points in time). A partial cancellation may not take place if, although the above ratios are met at the time of the partial cancellation, they would no longer be so in the light of conservative estimates in the following years. The various stages of the decision-making process defined within HSH for a partial cancellation will incorporate that conservative approach, taking account of risk-bearing capacity as an important deciding factor, and will also include in the case of each partial cancellation the approval of BaFin. U.K.

1.5. The additional premium will be calculated retroactively from 1 April 2009 and on a pro rata basis for parts of financial years. It will be payable annually together with the basic premium. For the years 2009 and 2010, it will be payable four weeks after the amendment to the guarantee provision contract described in point 1.1 of this Annex comes into force. U.K.

1.6. The additional premium will be paid into an account to be set up by HSH Finanzfonds AöR with HSH. It will not affect HSH Finanzfonds AöR’s control over the additional premium. U.K.

1.7. In so far as the obligation to pay the additional premium would result in HSH’s ratio of common equity, calculated in accordance with the regulatory requirements in force at the time and including market price risks (common equity ratio), falling below 10 % (minimum common equity ratio) at the time the additional premium entitlement arises, or if an already existing shortfall increases further, HSH Finanzfonds AöR will waive that part of the entitlement which would lead to the common equity ratio falling below the minimum common equity ratio (deferred additional premium entitlement), with effect from the time the entitlement arises in return for the provision of a debtor warrant pursuant to the provisions of this point of this Annex: U.K.

(a)

The debtor warrant will take the following form: In so far as the common equity ratio at the end of one of HSH’s financial years following the provision of the debtor warrant and according to all expense and profit-related accounts, but without taking account of the entitlements under the debtor warrant, exceeds the minimum common equity ratio, the deferred additional premium entitlement will be restored in an amount ensuring that the minimum common equity ratio is met.

(b)

The deferred additional premium entitlement will be restored for the duration of the debtor warrant in each financial year in which the requirements pursuant to (a) are met, but only up to the amount of the completely restored additional premium entitlement.

(c)

The debtor warrant will mature on 31 December [2030–2050].

(d)

In so far as HSH applies for entitlement to the additional premium to be waived against provision of a debtor warrant due to the common equity ratio falling below the minimum common equity ratio, it will submit corresponding calculations, which will be subject to review by the statutory auditor of HSH.

1.8. The additional premium will be payable until [2015–2025] at the latest. Notwithstanding that requirement, the basic premium and the additional premium will be payable at the latest up to the time when the total from partial cancellations and claims on the guarantee amounts to EUR 10 billion. U.K.

1.9. HSH will in the framework of what is legally permissible make every reasonable effort to effect complete payment of the additional premium as quickly as possible. In particular, HSH and also the public-sector owners and HSH Finanzfonds AöR will, by exercising the voting rights to which they are entitled from shares in HSH, endeavour as far as legally possible to ensure that no reserves and retained earnings are liquidated which are intended to permit payments to profit-dependent equity capital instruments (such as hybrid financial instruments or profit participation certificates). Point 2 below is unaffected. U.K.

1.10. In the case of legal separation of the restructuring unit and the core bank, both banks will pay the basic premium of 400 bps in proportion to the distribution of the portfolio covered by the guarantee. The core bank moreover will continue to be jointly and severally liable for the remuneration of the guarantee on the portfolio of the restructuring unit. That liability of the core bank may be cancelled at the initiative of the public-sector owners. In the event of legal separation, only the core bank will be liable for payment of the additional premium. U.K.

1.11. [Lump-sum payment and capital increase] HSH Finanzfonds AöR and HSH will amend the contract concluded on 2 June 2009 on the provision of a guarantee framework, or supplement it with further documentation, so as to ensure that HSH Finanzfonds AöR has a claim against HSH to a lump-sum payment with a nominal value of EUR 500 million. HSH Finanzfonds AöR will further contribute the claim for such lump-sum payment to HSH by way of a contribution in kind. The amendment of the guarantee provision contract will be initiated without delay after the date of this Decision and no later two months after the date of its notification. U.K.

1.12. HSH and HSH Finanzfonds AöR will make every reasonable effort to bring about, within four months from the date of this Decision, a resolution of the general meeting of shareholders on a capital increase amounting to the net value of the lump sum payment claim (issue price and premium) and, within one month of the general meeting, the contribution to HSH’s capital of the claim for a lump-sum payment. The issue price will be calculated on the basis of the value of HSH as of the day of the resolution of the general meeting of shareholders on such capital increase and the value of the lump-sum payment claim. U.K.

1.13. The capital increase will take place either through ordinary contribution in kind, with no right of option for minority shareholders, or through a mixed capital increase by way of contribution in kind and cash, with a right of option regarding the cash portion for all shareholders other than HSH Finanzfonds AöR regarding the cash portion. HSH and HSH Finanzfonds AöR will make every reasonable effort to bring about the coming into effect of the capital increase within 18 months following the resolution of the general meeting of shareholders. HSH Finanzfonds AöR and HSH may choose the form of the capital increase which will guarantee speedier implementation and entry in the commercial register. U.K.

1.14. The claim to the lump-sum payment may not be converted into a debtor warrant if the minimum common equity ratio of 10 % is not met. U.K.

1.15. If there is a sale of shares by the public-sector owners, the amount of the additional premium can be reduced at their initiative in proportion to their direct and indirect share. U.K.

2. [Hybrids] Until 31 December 2014, HSH may not make any payments in respect of profit-related equity instruments (such as hybrid financial instruments and profit participation certificates (Genussscheine)), in so far as those payments are not owed on the basis of a contract or the law. If HSH’s balance sheet, before adjustment of reserves and retained earnings, shows a loss, those instruments will also participate in the loss. There will be no participation in losses brought forward from previous years. U.K.

3. [Dividend ban] HSH will not pay dividends in the period up to and including the financial year ending 31 December 2014. U.K.

4. [Protection of reserves] In the period from 1 January 2015 until 31 December 2016, dividend payments may not exceed 50 % of the annual surplus for the previous financial year. Furthermore, dividend payments may be made during that period only in so far as they do not jeopardise compliance with the Basel III provisions on the capital of credit institutions in the medium-term. U.K.

(1)

OJ C 72, 26.3.2009, p. 1.