Tuesday, September 20, 2015 at 9:49:01 AM British Summer Time Subject: Recent Meeting Date: Monday, 9 June 2008 at 10:40:15 British Summer Time From: Robinson, John F. To: kenn Priority: High I would thank both you and -for taking the time to meet with me in Aberdeen last week, following the relationship being passed to Specialised Lending Services. In this respect, I can confirm that have assumed the relationship manager role for the Aberdeen Commercial team. As we discussed, the level of debt has increased significantly over recent years following the acquisition of farms and development sites. Whilst this has placed debt service pressure on the two trading businesses (Grampian and Farms), the historic and anticipated trading profit was anticipated to accommodate the higher level of interest and loan repayments. However, both overdrafts have shown an increasing trend over the past year, with the recently submitted revised cashflows for Grampian and Farms highlighting an additional combined funding requirement of above current approved levels. This goes against the expected underlying cash profitability of both businesses, which you will appreciate is of significant concern to the Bank. This concern is heightened by the now advised fact that the Bon Accord development requires another 20.1 to complete (50% over budget for a flatted conversion). During our discussion, I think there was broad agreement that we all need to understand the level of sustainable debt which both businesses can carry, upon which we can layer a strategy to degear to the necessary level from the property development portfolio. For this, the Bank need an external assessment of the businesses, the developments (Grampian and Farms) and asset values. In this regard, I have proposed the following 1. A business consultant from our panel --will be engaged to review the Grampian Construction business i.e. management, operations, overheads, working capital and strategy, as well as assist management in preparing a revised business plan and integrated projections (profit, cashflow and balance sheet) for the remainder of the 2008 financial year and also 2009. 2. Your auditors, will be re-engaged to report on current trading of the Farms, as well as assist management in preparing a revised business plan and integrated projections (profit, cashflow and balance sheet) for the remainder of the 2008 financial year and also 2009. In this respect, you advised that the partnership between yourself and Grampian trade the "four" farms. 3. A OS from out panel -- will be engaged to review the costing and development plans for all projects, including the various steading/dwelling projects within the farms. The immediate project will be to review the remaining costs to complete the Bon Accord flats. 4. Graham Sibbald will be engaged to review the valuation of the whole asset portfolio of Grampian Construction Ltd, Kenneth Fliddoch and the Firm of Corskellie Farm. This will include, where applicable, planning premiums and value/market for completed properties under the various develo ment schemes. 5. hwill oversee the diligence project and work with Page 1 of 3 management to draw up a plan tor the strategic alternatives going torward. The immediate locus, however, is the current additional cash requirement and how this can be mitigated during the diligence window. I would anticipate the key diligence areas to be completed by early July 2008, lollowing on trom which we will require to review the options and agree a way lorward, which will take the interim project up to the end of that month. On this basis, the cashtlows lor both Grampian and Farms will require to be reworked on a weekly basis over the next two months to cover only essential payments to minimise the interim lunding requirement The cost to complete Bon Accord will be reviewed separately by . I would ask that this is done as soon as possible, with to review the ligures betore these are submitted to the Bank during this week (il possible). Thereafter, I would look to agree the interim tunding levels during the diligence window tor both Grampian and Farms, including funding the completion 01 Bon Accord, as well as rolling on the various loans, many of which are in detault. The costs of the parties undertaking the diligence will require to be borne by the customer (Grampian and Farms), which will be agreed up lront with each party. You have today verbally provided your conlirmation that we can proceed as I proposed, with items reviewed on a da to da basis until interim tunding limits are agreed -- I will contactHaccordingly. A further point we discussed was pricing 01 our perceived risk. In this respect, the total borrowing of Grampian, yourself personally and the Firm will now attract an interest rate 01 2.5% over base rate, which reflects current commercial pricing parameters. Above this, we consider that we may presently lace a security shortlall ot c?0.45m and to retlect such risk, an interim tee oi ?10k per month will be payable during the diligence window ol June and July, although this will be increased to retlect any additional tunding above the existing agreed limits 012100k(Grampian) and ?350k (Firm), including additional tunding to complete Bon Accord. have asked-and_to contact you to set up an initial meeting with yo and I will also contact to start this part of the process. ll you have any lunher questions, please do not hesitate to contact me and have also detailed below additional inlormation which I will require. I look forward to hearing lrorn you. Regards Specialised Lending Services Gemini Building 24-25 St Andrew Square Edinburgh EH2 Additional lntormation Page 2 or 3 1. Copy of the farming Partnership Agreement(s) between Kenneth Riddoch and Grampian Construction Ltd. 2. Personal asset / liability statement from Kenneth Riddoch (include copies of most recent valuations for property owned outwith RBS security). 3. Individual farming Statement of Affairs for each of the "four" farms. The Royal Bank of Scotland plc, Registered in Scotland No. 90312. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB Authorised and regulated by the Financial Services Authority. This e-mail message is confidential and for use by the addressee only. If the message is received by anyone other than the addressee, please return the message to the sender by replying to it and then delete the message from your computer. Internet e-mails are not necessarily secure. The Royal Bank of Scotland plc does not accept responsibility for changes made to this message after it was sent. 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