Document:

Exhibit 10.41

 

IN THE HIGH COURT OF
JUSTICE

CHANCERY DIVISION

COMPANIES COURT

 

 

IN THE MATTER of Financial Assurance
Company Limited

 

and

 

IN THE MATTER of Financial New Life Company Limited

 

and

 

IN THE MATTER of the Financial Services and Markets Act 2000

 

 

 

 

SCHEME

 

for the
transfer to Financial New Life Company Limited of 

the long-term insurance business of Financial Assurance Company Limited 

(pursuant to Part VII of the Financial Services and Markets Act 2000)

 

 

 

 

Slaughter and May

One Bunhill Row

London EC1Y 8YY

(GWJ/RJZS)

 

 

CONTENTS

 

	
  1.

  	
  DEFINITIONS AND
  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  INTRODUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  TRANSFER OF
  TRANSFERRING INSURANCES

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  TRANSFER OF
  TRANSFERRING BUSINESS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  TRANSFER OF
  TRANSFERRING ASSETS, TRANSFERRING CONTRACTS, REINSURANCE CONTRACTS AND
  RESIDUAL ASSETS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  TRANSFER
  OF TRANSFERRING LIABILITIES AND RESIDUAL LIABILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  AVAILABILITY
  OF ASSETS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  ALLOCATION OF
  TRANSFERRING INSURANCES

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  ALLOCATION
  OF TRANSFERRING ASSETS, CIGL SHAREHOLDING AND GOODWILL

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  ALLOCATION OF
  TRANSFERRING LIABILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  TRANSFERRING
  INSURANCES, TRANSFERRING CONTRACTS AND REINSURANCE CONTRACTS

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  RETAINED
  INSURANCES

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  VIKING
  REINSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  CONTINUITY OF PROCEEDINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  MANDATES AND OTHER
  INSTRUCTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  DECLARATION OF TRUST BY
  FACL

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  INDEMNITIES IN FAVOUR OF
  FACL

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  CONSTRUCTION OF
  TRANSFERRING INSURANCES

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  ADMINISTRATION

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  TRANSFER DATE

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  MODIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  COSTS AND
  EXPENSES

  	
   

  

 

2

 

	
  23.

  	
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 2

  	
   

  

 

3

 

1.                                     DEFINITIONS AND
INTERPRETATION

 

1.1                                In this Scheme:

 

	
  “Act”

  	
   

  	
  means the
  Financial Services and Markets Act 2000;

  
	
   

  	
   

  	
   

  
	
  “Admissible
  Value”

  	
   

  	
  means the
  value determined in accordance with Chapter 4 of IPRU (INS);

  
	
   

  	
   

  	
   

  
	
  “Bond
  Portfolio”

  	
   

  	
  means the
  products known as the guaranteed equity bonds, the guaranteed bonds, the
  flexible term guaranteed bonds, the investment bonds, the flexible access
  bonds, the individual non-creditor term assurances and the structured
  settlements, issued by FACL to certain policyholders in the United Kingdom
  and under which any liability of FACL remains unsatisfied or outstanding on
  the Transfer Date and including any and all rights, obligations and
  liabilities of FACL under all contracts entered into with any policyholders
  of FACL in respect of such products;

  
	
   

  	
   

  	
   

  
	
  “CIGL”

  	
   

  	
  means
  Consolidated Insurance Group Limited, a company incorporated in England and
  Wales with registered number 1870149 and whose registered office is at
  Vantage West, Great West Road, Brentford, Middlesex, TW8 9AG;

  
	
   

  	
   

  	
   

  
	
  “CIGL
  Shareholding”

  	
   

  	
  means all of
  the rights of FACL in those shares in the issued share capital of CIGL that
  are owned by FACL as at the Transfer Date;

  
	
   

  	
   

  	
   

  
	
  “Court”

  	
   

  	
  means the
  High Court of Justice in England;

  
	
   

  	
   

  	
   

  
	
  “EEA State”

  	
   

  	
  has the
  meaning given to that phrase in paragraph 8 of Schedule 3 of the Act;

  
	
   

  	
   

  	
   

  
	
  “Encumbrance”

  	
   

  	
  means any
  mortgage, charge, pledge, assignation in security, lien, option, restriction,
  right of first refusal, right of pre-emption, third party right or interest,
  any other encumbrance or security interest of any kind and any other type of
  preferential arrangement (including title transfer and retention agreements)
  having a similar effect;

  
	
   

  	
   

  	
   

  
	
  “FACL”

  	
   

  	
  means
  Financial Assurance Company Limited, a company incorporated in England and
  Wales with registered number 1044679 and whose registered office is at
  Vantage West, Great West Road, Brentford, Middlesex, TW8 9AG;

  

 

4

 

	
  “FACL
  Capital Amount”

  	
   

  	
  means, if
  there are any Retained Insurances, the amount of the Minimum Guarantee Fund
  required for FACL and such further amount as FACL’s Actuary shall determine
  is required under the provisions of IPRU (INS) to satisfy any capital or
  solvency requirements that FACL may have in respect of any Retained
  Insurances, provided that the FACL Capital Amount shall from time to time
  reduce by such amount as FACL’s Actuary shall determine will leave FACL with
  such amount as is necessary under such provisions to satisfy such capital or
  solvency requirements having regard to any Retained Insurances that are
  transferred to FINCL or are otherwise discharged;

  
	
   

  	
   

  	
   

  
	
  “FACL’s
  Actuary”

  	
   

  	
  means the
  individual responsible for providing actuarial advice to the board of
  directors of FACL at the relevant time;

  
	
   

  	
   

  	
   

  
	
  “FACL
  Long-Term Insurance Fund”

  	
   

  	
  means the
  fund maintained by FACL pursuant to rule 3.1 of IPRU (INS);

  
	
   

  	
   

  	
   

  
	
  “FACL
  Shareholder Fund”

  	
   

  	
  means the
  fund maintained by FACL which is not part of the FACL Long-Term Insurance
  Fund;

  
	
   

  	
   

  	
   

  
	
  “FINCL”

  	
   

  	
  means
  Financial New Life Company Limited, a company incorporated in England and
  Wales with registered number 4873014 and whose registered office is at
  Vantage West, Great West Road, Brentford, Middlesex TW8 9AG;

  
	
   

  	
   

  	
   

  
	
  “FINCL
  Long-Term Insurance Fund”

  	
   

  	
  means the
  fund maintained by FINCL pursuant to rule 3.1 of IPRU (INS);

  
	
   

  	
   

  	
   

  
	
  “FINCL
  Shareholder Fund”

  	
   

  	
  means the
  fund maintained by FINCL which is not part of the FINCL Long-Term Insurance
  Fund;

  
	
   

  	
   

  	
   

  
	
  “FINCL’s
  Actuary”

  	
   

  	
  means the
  individual responsible for providing actuarial advice to the board of
  directors of FINCL at the relevant time;

  
	
   

  	
   

  	
   

  
	
  “FSA”

  	
   

  	
  means the
  Financial Services Authority of the United Kingdom;

  
	
   

  	
   

  	
   

  
	
  “GMT”

  	
   

  	
  means
  Greenwich Mean Time;

  
	
   

  	
   

  	
   

  
	
  “Goodwill”

  	
   

  	
  means the
  goodwill of the Transferring Business;

  
	
   

  	
   

  	
   

  
	
  “Independent
  Expert”

  	
   

  	
  means
  Michael Arnold of Milliman UK who has been approved by the FSA to make the
  scheme report required by section 109 of the Act;

  

 

5

 

	
  “Insurances”

  	
   

  	
  means, in
  respect of every contract of insurance or reinsurance under which the whole
  or any part of the insurance or reinsurance risk in respect of that contract
  is written or assumed by FACL and which is in force at the Transfer Date or
  under which any liability in respect of the whole or, as the case may be,
  such part of the insurance or reinsurance risk written by FACL remains
  unsatisfied or outstanding at the Transfer Date, the whole or, as the case
  may be, such part of the long-term insurance or reinsurance risk under that
  contract of insurance or reinsurance which is assumed by FACL, together with
  all liabilities whatsoever in respect of long-term risks for which FACL is responsible
  under or by virtue of such contract, and includes:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  the whole
  or, as the case may be, such part of the long-term insurance or reinsurance
  risk which FACL would have assumed, together with all liabilities in respect
  of long-term risks for which FACL would have been liable as a result, under
  all proposals for insurance or reinsurance received or issued by or on behalf
  of FACL before the Transfer Date and which have not at the Transfer Date been
  accepted but which FINCL, on FACL’s behalf, subsequently accepts and which,
  but for the provisions of the Scheme, FACL would have been able to accept or,
  as applicable, by which FACL would have been bound;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  all
  obligations of FACL in respect of any third party rights to reinstatement of
  any contract of insurance or reinsurance under which the whole or, as the
  case may be, the relevant part of the long-term insurance or reinsurance risk
  in respect of that contract is written by FACL; and

  

 

6

 

	
   

  	
   

  	
  (c)

  	
  all
  liability of FACL for damages (including compensatory, consequential,
  exemplary, punitive, bad faith or similar or other damages) which relate to
  the marketing, sale, underwriting, issuance, delivery, cancellation or
  administration of such contract of insurance or reinsurance, including
  liability arising out of or relating to any alleged or actual act, error or
  omission by FACL or its agents, whether intentional or otherwise, with
  respect to any such contracts, including (i) any alleged or actual reckless
  conduct or bad faith in connection with the handling of any claim arising out
  of or under such contract, or (ii) the marketing, sale, underwriting,
  issuance, delivery, cancellation or administration of such contract, but, in
  respect of any liability within this paragraph (c), only in so far as any
  such liability arises in connection with long-term insurance risks assumed by
  FACL under the relevant contract of insurance or reinsurance, each such
  contract, proposal, right (including all amendments and other modifications
  thereto) and liability being an “Insurance”;

  
	
   

  	
   

  	
   

  
	
  “IPRU (INS)”

  	
   

  	
  means the
  Interim Prudential Sourcebook for Insurers issued by the FSA (or such
  successor rules as may apply from time to time);

  
	
   

  	
   

  	
   

  
	
  “Jersey
  Scheme”

  	
   

  	
  means the
  proposed scheme pursuant to Article 26 and the Second Schedule of
  the Insurance Business (Jersey) Law 1996 (as amended) for the transfer to
  FINCL of the whole of the long-term insurance business of FACL carried on in
  or from within Jersey;

  
	
   

  	
   

  	
   

  
	
  “liabilities”

  	
   

  	
  means all
  liabilities, obligations and duties whatsoever (whether present or future,
  actual or contingent), including any cost, expense, liability, damage or loss
  of any kind;

  
	
   

  	
   

  	
   

  
	
  “Mathematical
  Reserves”

  	
   

  	
  has the
  meaning given to that phrase in IPRU (INS);

  
	
   

  	
   

  	
   

  
	
  “Minimum
  Guarantee Fund”

  	
   

  	
  has the
  meaning given to that phrase in rule 2.9 of IPRU (INS);

  
	
   

  	
   

  	
   

  
	
  “Order”

  	
   

  	
  means the
  order of the Court sanctioning the Scheme pursuant to Section 111(1) of
  the Act and any order of the Court making provision under Section 112 of
  the Act;

  

 

7

 

	
  “property”

  	
   

  	
  means
  (without limitation) property assets, rights and powers of every description
  (whether present or future, actual or contingent) and includes property held
  on trust and any interest in any of the foregoing and, for the avoidance of
  doubt, real, heritable, immovable, moveable and personal property and any
  interest as proprietor, landlord, tenant, mortgagee, chargee or heritable
  creditor;

  
	
   

  	
   

  	
   

  
	
  “Reinsurance
  Contracts”

  	
   

  	
  means all of
  FACL’s rights, obligations and liabilities under all reinsurance contracts or
  treaties subsisting at the Transfer Date entered into by FACL pursuant to
  which FACL reinsures any of its risk or liabilities to another party, to the
  extent such rights, obligations and liabilities relate to the reinsurance of
  FACL’s risk or liabilities arising under or in respect of the Transferring
  Business, and includes, without prejudice to the generality of the foregoing
  and for the avoidance of doubt, the Viking Reinsurance;

  
	
   

  	
   

  	
   

  
	
  “Residual
  Assets”

  	
   

  	
  means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  any property
  of FACL in respect of which an impediment exists such that the Court does not
  transfer, or declines to sanction the transfer of, that property by way of
  the Order;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  any other
  interest of FACL in any property which FACL and FINCL determine prior to the
  Transfer Date is more conveniently to be transferred pursuant to this Scheme
  at a date other than the Transfer Date;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  any rights,
  proceeds of sale, income or other accrual or return, whether or not in any
  case in the form of cash, from time to time after the Transfer Date received
  by FACL in respect of, or earned on, any such property as is referred to in
  (a), (b) or (d) of this definition; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  any sum
  which FACL’s Actuary may determine be transferred to FINCL by way of a
  reduction in the FACL Capital Amount after the Transfer Date;

  
	
   

  	
   

  	
   

  
	
  “Residual
  Liability”

  	
   

  	
  means any
  liability whatsoever of FACL arising in connection with or in relation to the
  carrying on of long-term insurance business as at the Transfer Date (other
  than any liability of FACL under a Retained Insurance):

  

 

8

 

	
   

  	
   

  	
  (a)

  	
  which is
  attributable to, or connected with, a Residual Asset and arises at any time
  before the Subsequent Transfer Date applicable to that Residual Asset; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  which is not
  transferred by this Scheme or by the Order;

  
	
   

  	
   

  	
   

  
	
  “Retained
  Insurances”

  	
   

  	
  means any
  Insurance in respect of which:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  (i)

  	
  the
  establishment of FACL which has written that Insurance is in an EEA State
  other than the United Kingdom; and 
  (ii)the FSA has not prior to the making of the Order provided the
  certificate referred to in paragraph 3 of Part 1 of Schedule 12 to the
  Act; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  (i)

  	
  an EEA State
  other than the United Kingdom is the State of the commitment; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)

  	
  the FSA has
  not prior to the making of the Order provided the certificate referred to in
  paragraph 4 of Part 1 of Schedule 12 to the Act; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  the transfer
  of such Insurance would contravene the legal or regulatory requirements to
  which FACL is subject in any jurisdiction which is not an EEA State,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and for
  these purposes “State of the commitment” shall have the
  meaning given in paragraph 6(1) of Part 1 of Schedule 12 of the Act;

  
	
   

  	
   

  	
   

  
	
  “Scheme”

  	
   

  	
  means this
  Scheme, including any schedules to it, in its original form or with, or
  subject to, any modification, addition or condition which may be approved
  pursuant to paragraph 21 or imposed by the Court;

  
	
   

  	
   

  	
   

  
	
  “Subsequent
  Transfer Date”

  	
   

  	
  means, in
  relation to any Residual Asset or Residual Liability, the date (after the
  Transfer Date) on which that Residual Asset or Residual Liability is or is to
  be transferred to FINCL, namely:

  

 

9

 

	
   

  	
   

  	
  (a)

  	
  in respect
  of any Residual Asset falling within paragraph (a) of the definition thereof
  and of any Residual Liability which is attributable to, or connected with,
  that Residual Asset, the date on which the relevant impediment to the
  transfer of such Residual Asset or Residual Liability no longer exists;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  in respect
  of any Residual Asset falling within (b) of the definition thereof and of any
  Residual Liability which is attributable to, or connected with, that Residual
  Asset, the Subsequent Transfer Date shall be the date on which FACL and FINCL
  mutually agree that the interest is to be transferred;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  in the case
  of any Residual Asset falling within paragraph (c) of the definition thereof,
  the date on which such Residual Asset is received or earned by FACL, provided
  that where such Residual Asset is subject to an impediment on transfer which
  falls within paragraph (a) of the definition of Residual Asset, the
  Subsequent Transfer Date shall then be the date on which the relevant impediment
  no longer exists;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  in the case
  of any Residual Asset falling within paragraph (d) of the definition thereof,
  the Subsequent Transfer Date shall be the date on which the determination is
  made by FACL’s Actuary to release the relevant sum from the FACL Capital
  Amount; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  in the case
  of a Residual Liability falling within paragraph (a) of the definition
  thereof, provided that it can be so transferred on that date, the Subsequent
  Transfer Date for the relevant Residual Asset or, if it cannot be transferred
  on that date, as promptly as practicable thereafter;

  
	
   

  	
   

  	
   

  
	
  “Taxes Act”

  	
   

  	
  means the
  Income and Corporation Taxes Act 1988;

  
	
   

  	
   

  	
   

  
	
  “Transfer
  Date”

  	
   

  	
  means the
  date and time as determined in accordance with paragraph 20.1;

  
	
   

  	
   

  	
   

  
	
  “Transferring
  Assets”

  	
   

  	
  means any
  and all of the property of FACL as at the Transfer Date (other than the
  Residual Assets, the FACL Capital Amount and the rights of FACL under the
  Retained Insurances), including:

  

 

10

 

	
   

  	
   

  	
  (a)

  	
  the rights
  of FACL under or by virtue of the Transferring Insurances;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  all rights
  of FACL to all client lists in relation to the Transferring Business;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  all rights
  of FACL under the Reinsurance Contracts and the Transferring Contracts;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  all rights
  that FACL has in any investments entered into in connection with the Bond
  Portfolio or to which any of the products comprising the Bond Portfolio are
  linked in any way; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  all rights
  and claims (present or future, actual or contingent) against any third party
  in relation to the Transferring Business or arising as a result of FACL
  having carried on the Transferring Business, 
  and, for the avoidance of doubt, any rights of FACL which comprise
  such property shall include any rights of FACL which relate to, and arose
  during, any period prior to the Transfer Date;

  
	
   

  	
   

  	
   

  
	
  “Transferring
  Business”

  	
   

  	
  means the
  whole of the long-term insurance business of FACL (including the business of
  FACL relating to the Bond Portfolio) carried on as at the Transfer Date
  (including effecting or carrying out the Transferring Insurances, all
  activities carried on in connection with or for the purposes of FACL’s
  long-term insurance business, and any proposals for insurance not yet
  accepted) save to the extent that such business relates to the Retained
  Insurances or to the carrying on of insurance business in any jurisdiction to
  the extent that, if carried on prior to the Transfer Date, it would have
  resulted in the issue of further Retained Insurances;

  
	
   

  	
   

  	
   

  
	
  “Transferring
  Contracts”

  	
   

  	
  means any
  and all rights, obligations and liabilities of FACL under all contracts
  entered into by FACL to the extent that such rights, obligations and
  liabilities arise in connection with or in relation to the carrying on of the
  Transferring Business other than any rights, obligations and liabilities
  under the Reinsurance Contracts;

  
	
   

  	
   

  	
   

  
	
  “Transferring
  Insurances”

  	
   

  	
  means any
  Insurances (excluding, for the avoidance of doubt, the Retained Insurances),
  and the expression “Transferring Insurance” shall be
  construed accordingly;

  

 

11

 

	
  “Transferring
  Liabilities”

  	
   

  	
  means any
  and all liabilities whatsoever of FACL (other than to the extent discharged
  prior to the Transfer Date) arising in connection with or in relation to the
  carrying on of the Transferring Business including (for the avoidance of
  doubt) all liabilities of FACL under the Transferring Contracts and the
  Reinsurance Contracts and all liabilities of FACL which remain outstanding at
  the Transfer Date or may thereafter arise and relate to, or arose during, any
  period prior to the Transfer Date in so far as those liabilities relate to
  the carrying on by FACL of the Transferring Business (but excluding the
  Residual Liabilities and liabilities under, or relating to, the Retained
  Insurances); and

  
	
   

  	
   

  	
   

  
	
  “Viking
  Reinsurance”

  	
   

  	
  means the
  reinsurance agreement dated 21 April 2004 entered into between FACL and
  Viking Insurance Company, Limited, of Craig Appin House, 8 Wesley Street, Hamilton,
  Bermuda.

  

 

1.2                                In this Scheme, any reference, express or implied, to an enactment
includes references to:

 

(A)                              that enactment as re-enacted, amended, extended or applied by or
under any other enactment (before or after the Transfer Date);

 

(B)                                any enactment which that enactment re-enacts (with or without
modification); and

 

(C)                                any subordinate legislation made (before or after the Order) under
that enactment, as re-enacted, amended, extended or applied as described in
paragraph (A) above, or under any enactment referred to in paragraph (B) above,

 

except for any such amendment, extension, application or re-enactment
made after the date on which the application is made to the Court by FACL and
FINCL for an Order in respect of this Scheme, if and to the extent that it
would (but for this provision) create or increase any liability of any party
hereto, and “enactment” includes any legislation (whether primary or
subordinate) in any jurisdiction.

 

1.3                                Where any obligation is expressed to be undertaken or assumed by any
person, that obligation shall be interpreted as including a requirement on that
person to exercise all rights and powers of control over the affairs of any
other person which that person is properly able to exercise (whether directly
or indirectly) in order to secure performance of those obligations.

 

1.4                                Words denoting persons shall include any body corporate,
unincorporated association of persons, government, state or agency of a state
(whether or not having separate legal personality).

 

12

 

1.5                                The words “include”, “includes” and “including” shall be construed
as if they were followed by the words “without limitation”.

 

1.6                                In this Scheme, a reference to:

 

(A)                              an agreement or document is to the same as amended from time to
time;

 

(B)                                a paragraph is to a paragraph of this Scheme;

 

(C)                                a party to this Scheme includes references to the successors or
assignors (immediate or otherwise) of that party;

 

(D)                               “this Scheme” includes the schedules to this Scheme;

 

(E)                                 the singular includes the plural and vice versa; and

 

(F)                                 any one gender includes the other.

 

1.7                                Except as the context otherwise requires, words and expressions used
in the Act or in any regulations or rules made under it shall have the same
meanings in this Scheme.

 

1.8                                Headings in this Scheme are inserted for convenience only and shall
not affect its construction.

 

1.9                                Paragraphs 1.2 to 1.8 above apply unless the context otherwise
requires.

 

2.                                     INTRODUCTION

 

2.1                                Each of FACL and FINCL is an insurance company authorised for the
purposes of the Act with permission to (amongst other things) effect or carry
out contracts of insurance comprising long-term insurance business of the same
classes as the Transferring Insurances.

 

2.2                                It is proposed that the Transferring Insurances shall be transferred
to FINCL on the Transfer Date by Order of the Court in accordance with Part VII
of the Act and be dealt with in accordance with this Scheme.

 

2.3                                Each of FACL and FINCL shall execute all such documents and do all
such acts and things as may be necessary or expedient to be executed or done by
it for the purposes of giving effect to this Scheme.

 

3.                                     TRANSFER OF TRANSFERRING
INSURANCES

 

3.1                                Subject to the provisions of this Scheme, on and with effect from the
Transfer Date, each Transferring Insurance and all the interest of FACL in it
shall, by the Order and without any further act or instrument, be transferred
to and vested in FINCL and dealt with in accordance with this Scheme.

 

13

 

3.2                                The Retained Insurances shall be reinsured, administered and dealt
with in accordance with this Scheme.

 

3.3                                FINCL shall accept without investigation such title as FACL shall
have at the Transfer Date to each Transferring Insurance.

 

3.4                                Without prejudice to any other provision of this Scheme, FACL and
FINCL shall each take all such steps and do all such things (including the
execution and delivery of any document) as may be required to effect or perfect
the transfer to and vesting in FINCL of each Transferring Insurance in
accordance with the terms of this Scheme.

 

4.                                     TRANSFER OF TRANSFERRING
BUSINESS

 

4.1                                Subject to the provisions of this Scheme, on and with effect from
the Transfer Date, the Transferring Business and all of the interest of FACL in
it shall, by the Order and without any further act or instrument, be
transferred to and vested in FINCL and dealt with in accordance with this
Scheme.

 

4.2                                On and with effect from the Transfer Date, FACL shall cease
effecting contracts of insurance or reinsurance in any jurisdiction (including
any jurisdiction in which it shall have effected any Retained Insurances) and
on and with effect from such date FINCL will be entitled to commence doing so
in succession to FACL, subject to its having received the requisite regulatory
licences and consents for it to be able to do so in such jurisdiction.  To the extent that FACL incurs any cost or
liability as a result of such discontinuation, such cost or liability shall be
borne or promptly reimbursed by FINCL.

 

5.                                     TRANSFER OF TRANSFERRING
ASSETS, TRANSFERRING CONTRACTS, REINSURANCE
CONTRACTS AND RESIDUAL ASSETS

 

5.1                                Subject to the provisions of this Scheme, on and with effect from
the Transfer Date, the Transferring Assets shall, by the Order and without any
further act or instrument, be transferred to and vested in FINCL subject to all
Encumbrances (if any) affecting those assets.

 

5.2                                Subject to the provisions of this Scheme, on and with effect from
the Transfer Date, the Transferring Contracts and the Reinsurance Contracts
shall, by the Order and without any further act or instrument, be transferred
to and vested in FINCL subject to all Encumbrances (if any) affecting them.

 

5.3                                Subject to paragraph 16.1, on and with effect from each
Subsequent Transfer Date, each Residual Asset to which such Subsequent Transfer
Date applies shall (subject to the terms of this Scheme), by the Order and
without any further act or instrument, be transferred to and vested in FINCL
subject to all Encumbrances (if any) affecting that asset.

 

5.4                                FINCL shall accept without investigation such title as FACL shall
have:

 

(A)                              to the Transferring Assets at the Transfer Date; and

 

14

 

(B)                                to the Residual Assets then transferred on each relevant Subsequent
Transfer Date.

 

5.5                                Without prejudice to any other provision of this Scheme, FACL and
FINCL shall each take all such steps and do all such things (including the
execution and delivery of any document) as may be required to effect or perfect
the transfer to and vesting in FINCL of all Transferring Assets, Transferring
Contracts, Reinsurance Contracts and Residual Assets in accordance with the
terms of this Scheme.

 

6.                                     TRANSFER OF
TRANSFERRING LIABILITIES AND RESIDUAL LIABILITIES

 

6.1                                Subject to the provisions of this Scheme, on and with effect from
the Transfer Date, the Transferring Liabilities shall, by the Order and without
any further act or instrument, be transferred to, and become the liabilities
of, FINCL, and FACL shall then be released from those liabilities.

 

6.2                                On and with effect from each Subsequent Transfer Date, each Residual
Liability to which such Subsequent Transfer Date applies shall (subject to the
terms of this Scheme), by the Order and without any further act or instrument,
be transferred to, and become a liability of, FINCL, and FACL shall then be
released from that liability.

 

6.3                                Without prejudice to any other provision of this Scheme, FACL and
FINCL shall each take all such steps and do all such things (including the
execution and delivery of any document) as may be required promptly to effect
the transfer to and assumption by FINCL of all Transferring Liabilities,
Residual Liabilities and Retained Insurances, once such Transferring
Liabilities, Residual Liabilities and Retained Insurances become capable of
being transferred.

 

7.                                     AVAILABILITY OF ASSETS

 

Any
allocation of property or attribution of liabilities, and any re-allocation or
re-attribution of the same, which is made under the terms of this Scheme is for
the purpose of establishing or recognising respective policyholder and
shareholder entitlements from time to time and shall not be taken to limit the
availability of all the property from time to time of FINCL to meet the
liabilities which it is obliged by law to meet.

 

8.                                     ALLOCATION OF
TRANSFERRING INSURANCES

 

On and
with effect from the Transfer Date, all of the Transferring Insurances shall be
allocated to the FINCL Long-Term Insurance Fund.

 

9.                                     ALLOCATION OF
TRANSFERRING ASSETS, CIGL SHAREHOLDING AND GOODWILL

 

9.1                                Subject to paragraph 9.3, on and with effect from the
Transfer Date, all of the Transferring Assets allocated to the FACL Long-Term
Insurance Fund immediately prior to the Transfer Date shall be allocated to the
FINCL Long-Term Insurance Fund.

 

15

 

9.2                                On and with effect from the Transfer Date, all of the Transferring
Assets allocated to the FACL Shareholder Fund (including the Goodwill)
immediately prior to the Transfer Date shall be allocated to the FINCL
Shareholder Fund.

 

9.3                                On and with effect from the Transfer Date, and notwithstanding paragraph
9.1, the CIGL Shareholding shall be allocated to the FINCL Shareholder
Fund.

 

9.4                                Where any Transferring Assets are linked to any Transferring
Insurances immediately prior to the Transfer Date, those Transferring Assets
shall continue to be so linked immediately after the Transfer Date.

 

9.5                                On and with effect from the relevant Subsequent Transfer Date, all
of the Residual Assets to which that Subsequent Transfer Date relates shall be
allocated to the FINCL Long-Term Insurance Fund if they were allocated to the
FACL Long-Term Insurance Fund immediately prior to such date and shall be
allocated to the FINCL Shareholder Fund if they were allocated to the FACL
Shareholder Fund immediately prior to such date.

 

10.                              ALLOCATION OF
TRANSFERRING LIABILITIES

 

10.1                          Subject to paragraph 10.3, on and with effect from the
Transfer Date, all of the Transferring Liabilities shall be allocated to the
FINCL Long-Term Insurance Fund.

 

10.2                          Subject to paragraph 10.3, on and with effect from the
relevant Subsequent Transfer Date, all of the Residual Liabilities to which
that Subsequent Transfer Date relates shall be allocated to the FINCL Long-Term
Insurance Fund.

 

10.3                          Any Transferring Liabilities or Residual Liabilities which are,
immediately prior to the Transfer Date or the relevant Subsequent Transfer Date
(as the case may be), allocated to the FACL Shareholder Fund shall be allocated
to the FINCL Shareholder Fund on and with effect from that Transfer Date or
Subsequent Transfer Date.

 

11.                              TRANSFERRING
INSURANCES, TRANSFERRING CONTRACTS AND REINSURANCE CONTRACTS

 

11.1                          On and with effect from the Transfer Date, FINCL shall:

 

(A)                              assume, succeed and become entitled to all the rights, discretions,
authorities, benefits and powers of FACL whatsoever subsisting on the Transfer
Date under or by virtue of each Transferring Insurance;

 

(B)                                assume, succeed and become subject to all liabilities of FACL
whatsoever subsisting on the Transfer Date under or by virtue of each
Transferring Insurance, in each case as if FINCL had originally issued each
such Transferring Insurance directly; and

 

16

 

(C)                                be entitled to any and all defences, claims, counterclaims and
rights of set-off under or in respect of each Transferring Insurance which
would have been available to FACL.

 

11.2                          Subject to any other provision of this Scheme, every person who is a
holder of a Transferring Insurance shall, on and with effect from the Transfer
Date, continue to be entitled, to the exclusion of any rights which he may have
had against FACL in respect of the Transferring Insurance concerned, to the
same rights against FINCL as were available to him against FACL in respect of
that Transferring Insurance and (as regards any Transferring Insurance under
which premiums or other sums attributable or referable thereto continue to be
payable by him) FINCL shall, on and with effect from the Transfer Date, be
entitled to any such premiums or other sums and any further or additional
premiums or other sums attributable or referable thereto as and when the same
become due and payable.

 

11.3                          If any person entitled to do so with respect to a Transferring
Insurance exercises any option granted under the terms of that Transferring
Insurance and the option provides for a new, additional or replacement policy
to be issued or amendments to be made to an existing Transferring Insurance,
the obligation thereby arising shall be satisfied by the issue by FINCL of a
policy that complies with the terms of such option but if FINCL is not at the
time of the exercise of such option writing policies complying exactly with the
policy to which the option refers, FINCL shall be entitled to offer in lieu
thereof a policy offered by FINCL at such time that FINCL considers to be the
nearest equivalent policy.

 

11.4                          The transfer of any rights, benefits, liabilities and obligations
under or in connection with any Reinsurance Contract, Transferring Contract,
Transferring Insurance, Transferring Asset or Transferring Liability pursuant
to this Scheme shall take effect and shall be valid and binding on all parties
having any interest in the same notwithstanding any restriction on assigning or
otherwise dealing with the same and such transfer shall be deemed to take
effect on the basis that it does not contravene any such restriction and does
not give rise to any right of termination or other right which might otherwise
arise in respect of such transfer.

 

12.                              RETAINED INSURANCES

 

12.1                          The Retained Insurances shall not be transferred to FINCL and shall
remain liabilities of FACL but shall at all times after the Transfer Date be
reinsured in their entirety into FINCL in accordance with this paragraph 12.

 

12.2                          On and with effect from the Transfer Date, all the liabilities of
FACL arising under or otherwise attributable to the Retained Insurances and all
other amounts paid or payable by FACL in respect of or as a result of the
Retained Insurances, including insolvency fund and similar assessments,
commission payments and amounts paid or payable in relation to the surrender or
termination of any Retained Insurance, shall be reinsured in their entirety
into FINCL in accordance with the terms of this paragraph 12 for no
further consideration beyond that set forth in paragraph 12.3.  FINCL shall pay when due all such
liabilities and other amounts on behalf of FACL.

 

17

 

12.3                          The premiums payable under the reinsurance arrangements described in
this paragraph 12 shall be:

 

(A)                              an initial premium comprising assets with an Admissible Value equal
to the Mathematical Reserves attributable to the Retained Insurances as at the
Transfer Date, which premium shall pass from FACL to FINCL under the terms of
this Scheme; and

 

(B)                                all premium payments and all other amounts received by FACL (if any)
in respect of Retained Insurances at any time after the Transfer Date, which
amounts shall be paid by FACL to FINCL as soon as practicable after they are
received by FACL.

 

12.4                          The liability of FINCL in respect of the reinsurance arrangements
described in this paragraph 12 shall be calculated so as to ensure that
benefits are provided to policyholders holding Retained Insurances which are no
less favourable than the benefits that would have been provided to those
policyholders if those Retained Insurances had been Transferring Insurances.

 

12.5                          On and with effect from the Transfer Date, FINCL shall be
responsible for all aspects of the management and the administration of the
Retained Insurances. FINCL shall procure that the Retained Insurances are
administered in compliance with the applicable law or regulations, in good
faith and with the care, skill, prudence, and diligence of a person experienced
in administering payment protection insurance business.  FINCL shall not settle any dispute or
litigation involving any Retained Insurance without the prior consent of FACL,
which consent shall not be unreasonably withheld or delayed.  For these purposes, FINCL shall be entitled
to represent itself as managing and administering the Retained Insurances as
agent for FACL, and shall be entitled to represent itself in that capacity
directly to the holders of Retained Insurances following the Transfer Date.

 

12.6                          If FINCL, with the consent of FACL, procures the novation of any
Retained Insurance to FINCL, the assets and liabilities relating to that
Retained Insurance shall, to the extent not previously transferred, be
transferred to FINCL and such Retained Insurance shall thereafter be dealt with
by FINCL under the provisions of the Scheme in all respects as if that Retained
Insurance were a Transferring Insurance, and the reinsurance arrangements set
out in this paragraph 12 shall, on and with effect from that transfer,
cease to apply to that Retained Insurance (provided however that FINCL shall
continue to indemnify FACL against any liability of FACL arising under or
otherwise attributable to such Retained Insurances).

 

12.7                          FACL shall retain an amount equal to the FACL Capital Amount for
such time as there are any Retained Insurances.  Any amount by which the FACL Capital Amount is reduced from time
to time shall be promptly transferred to FINCL and allocated to the FINCL
Long-Term Insurance Fund or the FINCL Shareholder Fund (as the case may be) in
accordance with the principles set out in paragraphs 9.1 and 9.2
as if the reference to “Transfer Date” in those paragraphs was a reference to
the date on which such amount is to be transferred under this paragraph 12.7.

 

18

 

12.8                          FINCL shall procure that accurate and complete records, files and
accounts of all transactions and matters with respect to the Retained
Insurances continue to be kept in accordance with the arrangements in force
immediately prior to the Transfer Date with such changes as may be required
from time to time by applicable law. 
FACL or its designated representative (or any person or entity appointed
or charged with the duty to examine or investigate FACL under the applicable
law or regulations) may upon reasonable notice inspect and copy (and take away
such copies), at the offices where such records are located, the papers and any
and all other books or documents reasonably relating to the Retained Insurances
and the administration thereof during normal business hours for such period as
FACL reasonably needs access to such records for regulatory, tax or similar
purposes.  FINCL shall procure that
relevant personnel are made available for interview and meetings with any
person or entity appointed or charged with the duty to examine or investigate
FACL under the applicable law or regulations and furnish any additional
assistance, information and documents as may be reasonably requested by FACL from
time to time.

 

12.9                          FACL may upon written notice to FINCL terminate the reinsurance
contemplated under this paragraph 12 and recapture the Retained
Insurances from FINCL (together with all related assets and liabilities) in the
event of (i) the commencement of insolvency or similar proceedings with respect
to FINCL or (ii) material breach by FINCL of its obligations under this paragraph
12, where such breach has not been remedied within 45 days after written
notice of such breach has been received by FINCL.

 

12.10                    Notwithstanding any other provisions of this Scheme, to the extent
that any Residual Assets, Residual Liabilities or Retained Insurances are
transferred to FINCL pursuant to the provisions of the Jersey Scheme, then such
Residual Assets, Residual  Liabilities
or Retained Insurances (as the case may be) shall, with effect from the date of
such transfer under the Jersey Scheme, cease to be dealt with and treated in
accordance with this Scheme and shall instead by dealt with and treated under
and in accordance with the terms of the Jersey Scheme.

 

13.                              VIKING REINSURANCE

 

For the avoidance of doubt, on and with effect from the Transfer Date,
all of the rights and obligations of FACL under the Viking Reinsurance shall,
by the Order and without any further act or instrument, be transferred to and
vested in FINCL and FINCL shall be able to exercise any of its rights under the
terms of the Viking Reinsurance.

 

14.                              CONTINUITY OF PROCEEDINGS

 

On and with effect from the Transfer Date, any
judicial, quasi-judicial, administrative or arbitration proceedings in any
country which are pending by or against FACL by virtue of the Transferring
Insurances, Transferring Contracts or Reinsurance Contracts or any of them
shall be continued in lieu thereof by or against FINCL and FINCL shall be
entitled to all defences, claims, counterclaims and rights of set-off that
would have been available to FACL in relation to such proceedings.  FINCL shall succeed to and assume any
liability under such proceedings to which FACL would have been exposed.

 

19

 

15.                              MANDATES AND OTHER
INSTRUCTIONS

 

Any mandate or other instruction in force on the Transfer Date
(including any instruction given to a bank by its customer in the form of a
direct debit or standing order) and providing for the payment by a banker or
other intermediary of premiums payable under or in respect of any Transferring
Insurance to FACL shall, on and with effect from the Transfer Date, take effect
as if it had provided for and authorised such payment to FINCL.

 

16.                              DECLARATION OF TRUST BY FACL

 

16.1                          If:

 

(A)                              any property of FACL attributable to the long-term insurance
business of FACL carried on as at the Transfer Date (other than the rights of
FACL under the Retained Insurances) is not, or is not capable of being,
immediately transferred to, and vested in, FINCL on the Transfer Date by the
Order by reason of:

 

(i)                                    that
property being a Residual Asset;

 

(ii)                                 that
property being outside the jurisdiction of the Court; or

 

(iii)                              for any
other reason; or

 

(B)                                any Residual Asset is not, or is not capable of being, transferred
to, and vested in, FINCL, by the Order on the Subsequent Transfer Date
applicable thereto; or

 

(C)                                the transfer of any property of FACL attributable to any of the
Transferring Business outside the jurisdiction of the Court is not recognised
by the laws of the jurisdiction in which that property is situated; or

 

(D)                               in any circumstances FINCL and FACL shall mutually decide before the
Transfer Date (or, in the case of any Residual Asset, before the Subsequent
Transfer Date applicable thereto) that it is not expedient to effect a transfer
of any property of FACL to FINCL pursuant to this Scheme,

 

FACL shall, from the Transfer Date or from the relevant Subsequent Transfer
Date, as the case may be, hold that property as trustee for FINCL absolutely
and shall be subject to FINCL’s directions in respect thereof until the
relevant property is transferred to, or otherwise vested in, FINCL or is
disposed of (whereupon FACL shall account to FINCL for the net proceeds of the
disposal thereof received by FACL) and FINCL shall have irrevocable authority
to act as the attorney of FACL in respect of such property for all such
purposes.

 

16.2                          In the event of any payment being made to, property being received
by or right being conferred upon FACL after the Transfer Date in respect of the
Transferring Business or any of the Transferring Assets, or after the relevant
Subsequent Transfer Date in respect of any of the Residual Assets, FACL shall,
as soon as is reasonably practicable

 

20

 

after its receipt, pay the full amount of that payment
or (to the extent that it is able to do so) transfer such property or right to,
or in accordance with the directions of, FINCL.  FINCL shall indemnify FACL on demand against any liability
incurred by FACL in making any such payment or transfer.

 

17.                              INDEMNITIES IN FAVOUR OF FACL

 

17.1                          On and with effect from the Transfer Date, FINCL shall discharge on
behalf of FACL, or failing that shall indemnify FACL against, all Transferring
Liabilities and Residual Liabilities and all liabilities arising under or
relating to the Transferring Business or any Transferring Contracts,
Transferring Insurances, Reinsurance Contracts, Retained Insurances, Residual
Assets or Transferring Assets.  FINCL
shall also bear and indemnify FACL against all costs and expenses of performing
any obligation hereunder.

 

17.2                          If FACL becomes aware of any matter which might give rise to FACL’s
right of indemnity in paragraph 17.1, FACL and FINCL agree that the
following provisions shall apply:

 

(A)                              FACL shall promptly give written notice to FINCL of the matter
(stating in reasonable detail the nature of the matter and, so far as
practicable, the amount claimed) and shall consult with FINCL with respect to
the matter;

 

(B)                                subject to paragraph 17.2(C), FACL will not make any
admission as to liability in relation to, or agree to any settlement of or
compromise in respect of, the matter giving rise to FACL’s right of indemnity
in paragraph 17.1 without the prior written consent of FINCL which shall
not be unreasonably withheld or delayed;

 

(C)                                FINCL shall be entitled to conduct negotiations and litigation or
settle all litigation arising from any matter that gives rise to FACL’s right
of indemnity in paragraph 17.1 and, in such case, FACL will, at the
request and expense of FINCL, give FINCL reasonable assistance in connection
with those negotiations and litigation. 
FACL shall provide FINCL and its professional advisers reasonable access
to its premises and personnel and to any relevant assets, documents and records
within its possession or control for the purposes of investigating the matter
and enabling FINCL to take such action as is referred to in this paragraph
17.2.  FINCL shall not settle any
matter calling for an admission of wrongdoing or similar imposition on FACL
without the prior consent of FACL, which consent shall not be unreasonably
withheld or delayed; and

 

(D)                               FINCL shall be entitled to take copies of any of the documents or
records, and photograph any premises or assets, referred to in paragraph
17.2(C) above.

 

17.3                          Where FACL is entitled to receive an amount pursuant to the
indemnity contained in paragraph 17.1 it shall be entitled to receive
such amount as, after payment of any liability to taxation in respect of the
amount receivable, will result in the receipt of an amount equal to the
liability indemnified against.

 

21

 

18.                              CONSTRUCTION OF
TRANSFERRING INSURANCES

 

18.1                          In any contract or other document constituting or relating to a
Transferring Insurance, all references to FACL (in its capacity as issuer of
such Transferring Insurance), its directors, its board of directors, FACL’s
Actuary or any of its other officers or employees shall be read as references
to FINCL, its directors, its board of directors, FINCL’s Actuary or other
officers or employees of FINCL (as the case may be) from and after the Transfer
Date.

 

18.2                          All rights and/or duties exercisable or expressed to be exercisable
or responsibilities to be performed by FACL, its directors or board of
directors, FACL’s Actuary or any other officers or employees of FACL in
relation to any of the Transferring Insurances shall be exercisable or required
to be performed by, respectively, FINCL, its directors, its board of directors,
FINCL’s Actuary or other officers or employees of FINCL (as the case may be)
from and after the Transfer Date.

 

18.3                          In any contract or other document constituting or relating to a
Transferring Insurance, all references to FACL shall be read and construed,
from and after the Transfer Date, as references to FINCL.  In any contract or other document
constituting or relating to a Transferring Insurance, all references to the
group of companies of which FACL is or has been a member shall be read and
construed, from and after the Transfer Date, as references to the group of
companies of which FINCL is from time to time a member.  In any contract or other document
constituting or relating to a Transferring Insurance, all references to
associated companies of FACL shall be read and construed from and after the
Transfer Date as references to associated companies of FINCL.

 

18.4                          Where the benefits of any Transferring Insurance are held under the
terms of a trust, such terms shall operate and be construed on and from the
relevant Transfer Date on a basis which is consistent with the transfer of such
Transferring Insurance in accordance with the provisions of this Scheme and,
for the avoidance of doubt:

 

(A)                              where the consent of FACL is required under any such terms, the
consent of FINCL shall, on and with effect from the Transfer Date, instead be
treated as required; and

 

(B)                                where a power to appoint trustees under such terms is conferred on
FACL, that power shall, on and with effect from the Transfer Date, instead be
treated as conferred on FINCL.

 

19.                              ADMINISTRATION

 

On and with effect from the Transfer Date, FINCL
shall, as principal, take over from FACL the administration and negotiation of
proposals for insurance which would have been Transferring Insurances had FACL
determined to accept them (but whether or not FINCL does so determine) and
FINCL shall bear all expenses and liabilities in relation thereto but nothing
contained herein shall oblige FINCL to accept any such proposal for insurance
received by or on behalf of FACL before the Transfer Date but not accepted by
FACL by that date.

 

22

 

20.                              TRANSFER DATE

 

20.1                          Subject to paragraphs 20.2, 20.3 and 20.4
below, the Scheme shall become effective in relation to the Transferring
Business and each Transferring Insurance, Transferring Asset and Transferring
Liability at the time and on the date which the respective boards of FACL and
FINCL shall have agreed in advance with the Independent Expert and appointed in
writing for the Scheme to become effective. 
Such date shall be as soon as is reasonably practicable following the
making of the Order and, in any event, no later than 31 December 2004.

 

20.2                          The Scheme shall not become effective unless:

 

(A)                              the Order shall have been made;

 

(B)                                the tax confirmations or clearances listed in Schedule 1 to
this Scheme have been received in each case in the form and in the substance satisfactory
to FACL and FINCL, both parties acting reasonably in deciding whether or not
the form and substance of such tax confirmation or clearance is satisfactory;

 

(C)                                FINCL is authorised by the FSA for the purposes of the Act with
permission to (amongst other things) effect or carry out contracts of insurance
comprising long term insurance business of the same classes as the Transferring
Insurances;

 

(D)                               the conditions set out in paragraph 19 of Schedule 3 of the Act
are satisfied in respect of each of the branches listed in Schedule 2 to
this Scheme which FINCL seeks to establish in any EEA State (other than the
United Kingdom) once FINCL is authorised by the FSA for the purposes of the
Act, provided that this paragraph (D) shall not apply in respect of any
proposed branch of FINCL for which FINCL withdraws its notice of intention
given to the FSA under paragraph 19(2) of Schedule 3 of the Act; and

 

(E)                                 the FSA has directed (in response to the relevant application from
FINCL) that all relevant rules for which FACL had been granted a waiver or a
modification under section 148 of the Act that was in force immediately
prior to the Transfer Date shall be waived or modified in respect of FINCL in
the same way as for FACL.

 

20.3                          In circumstances where any tax confirmation or clearance is received
in a form and/or substance not satisfactory to either FACL or FINCL or is not
received at all, then FACL and FINCL may jointly agree that such tax
confirmation or clearance be deemed to have been received in a form and in
substance satisfactory for the purposes of paragraph 20.2(B).

 

20.4                          Unless the Scheme shall have become effective on or before 23.59 GMT
on 28 December 2004 or such later date and/or time, if any, as FACL and
FINCL may approve and the Court may allow, this Scheme shall lapse.

 

23

 

21.                              MODIFICATION

 

FINCL and FACL may at any time agree on behalf of themselves and all
other persons concerned to any modification of or addition to this Scheme or to
any further condition or provision affecting the same that the Court may
approve or impose.

 

22.                              COSTS AND EXPENSES

 

To the
extent not already borne or discharged by FACL, FINCL shall bear all
professional fees, costs of advertising and any required mailing and any other
expenses incurred in the preparation and carrying into effect of this Scheme
and those fees, costs and expenses shall be attributed to the FINCL Shareholder
Fund (but so that this provision shall be without prejudice to any obligation
of any person to reimburse such costs).

 

23.                              GOVERNING LAW

 

This
Scheme shall be governed by and construed in accordance with English law.

 

24

 

Schedule 1

 

TAX CONFIRMATIONS

 

FACL and FINCL
will seek tax clearances and confirmations in respect of the transfer of FACL’s
business to FINCL that:

 

1.                                       the transfers effected pursuant to the Scheme, including those of
any Residual Assets, will not by virtue of sections 139 and 211 of the Taxation
of Chargeable Gains Act 1992 and to the extent provided by those sections give
rise to chargeable gains;

 

2.                                       unrelieved management expenses (including acquisition expenses
unrelieved by virtue of section 86(6) of the Finance Act 1989) and
Schedule Case VI losses carried or spread forward in FACL at the Transfer
Date may be carried or spread forward and set against the appropriate taxable
income of FINCL under Section 444A of the Taxes Act;

 

3.                                       relevant unused losses in FACL at the Transfer Date are treated as
BLAGAB allowable losses accruing to FINCL in the accounting period of FINCL in
which the Transfer takes place, under Section 211ZA of the Taxation of
Chargeable Gains Act 1992;

 

4.                                       the UK taxation consequences of the exercise after the Transfer Date
of any option to vary a policy or contract or to effect an additional or
substituted policy on favourable terms conferred by policies or contracts
issued or granted by FACL will not by virtue of the Scheme be different from
the UK taxation consequences which would have ensued from such an exercise
before the Transfer Date;

 

5.                                       the Scheme will not constitute a breach of a qualifying policy or a
variation in any of the terms of any qualifying policy for the purposes of
Chapter II of Part XIII of the Taxes Act;

 

6.                                       the transactions contemplated under the Scheme are such that no
notice under section 703(3) of the Taxes Act ought to be given in respect
of any of them or that the Inland Revenue are of the view that section 703
does not apply to such transactions; and

 

7.                                      the
transfer of the Goodwill does not result in any change in categorisation within
section 440 of the Taxes Act.

 

25

 

Schedule 2

 

EEA BRANCHES LIST

 

1.                                      Ireland

 

2.                                      Norway

 

3.                                      Denmark

 

4.                                      Germany

 

5.                                      Italy

 

6.                                      Portugal

 

7.                                      Finland

 

8.                                      Sweden

 

26

 

Version
(18): 13.05.04

 

	
   

  	
  IN THE HIGH COURT OF
  JUSTICE

  
	
   

  	
  CHANCERY DIVISION

  
	
   

  	
  COMPANIES COURT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IN THE MATTER of

  
	
   

  	
  Financial Assurance Company Limited

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  IN THE MATTER of

  
	
   

  	
  Financial New Life Company Limited

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  IN THE MATTER of

  
	
   

  	
  the Financial Services and Markets Act 2000

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SCHEME

  
	
   

  	
   

  
	
   

  	
  for the transfer to Financial New Life
  Company

  Limited of the long-term insurance business of

  Financial Assurance Company Limited

  (pursuant to Part VII of the Financial Services

  and Markets Act 2000)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Slaughter and May

  
	
   

  	
  One Bunhill Row

  
	
   

  	
  London EC1Y 8YY

  
	
   

  	
  (GWJ/RJZS)

  
	
   

  	
  CA032700001Exhibit 10.42

 

• 2004

 

 

DEED

 

for the sale and purchase of shares in

 

FINANCIAL ASSURANCE COMPANY LIMITED

 

between

 

GE INSURANCE HOLDINGS LIMITED

 

and

 

GEFA UK HOLDINGS LIMITED

 

and

 

GEFA INTERNATIONAL
HOLDINGS, INC.

 

 

 

WEIL, GOTSHAL & MANGES

 

One
South Place   London   EC2M 2WG

Tel:
+44 (0) 20 7903 1000   Fax: +44 (0) 20
7903 0990

 

www.weil.com

 

 

THIS DEED is made on • 2004 between
the following parties:

 

(1)                                  GE INSURANCE HOLDINGS LIMITED, a  company
incorporated in England and Wales (registered number 02221244), whose
registered office is at Vantage West, Great West Road, Brentford, Middlesex TW8
9AG (the “Seller”);

 

(2)                                  GEFA UK HOLDINGS LIMITED, a company
incorporated in England and Wales (registered number 4914933), whose registered
office is at Vantage West, Great West Road, Brentford, Middlesex TW8 9AG (the “Buyer”);
and

 

(3)                                  GEFA INTERNATIONAL HOLDINGS, INC., a
company incorporated under the laws of the State of Delaware, U.S.A. whose
registered office is at 2711 Centerville Road, Suite 400, City of Wilmington,
County of Newcastle, Delaware 19808, U.S.A. (“GEFA International”).

 

RECITALS

 

(A)                                Financial Assurance Company Limited (the “Company”) was incorporated in
England and Wales on 2 March 1972 under the Companies Act 1948 with
registered number 01044679 and is a private company limited by shares.

 

(B)                                The Company has an issued share capital of [           ] ordinary shares of £1 each (the “Shares”).

 

(C)                                The Seller has agreed to sell and the Buyer has agreed to buy the
Shares upon the terms and subject to the conditions of this Deed in
consideration for the UK Holdings Debt Release and the GEFA International Debt
Release.  GEFA International has agreed
to effect the GEFA International Debt Release in return for the transfer of the
Shares by the Seller to the Buyer.  The
Buyer is an indirect wholly-owned subsidiary of GEFA International.

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

In this Deed, the following expressions shall have the
following meanings:

 

(A)                              the “Completion Date” means the date of this Deed;

 

(B)                                the “GEFA International Debt” means the principal amount of £[              ] owed by the Seller to GEFA
International under the GEFA International Loan;

 

(C)                                the “GEFA International Debt Release” has the meaning given to that
expression in clause 3 of this Deed;

 

(D)                               the “GEFA International Debt Release Deed” means the deed of debt
release entered into between the Seller and GEFA International dated 

[20 May] 2004;

 

(E)                                 the “GEFA International Loan” means the loan agreement dated [19
May 2004], originally entered into between the Seller and General Electric
Capital Corporation (“GECC”) but in respect of which all of the
rights and benefits of

 

 

GECC in the GEFA International Debt owed thereunder
(as previously sold by GECC to GEI, Inc. and contributed by GEI, Inc. to GE
Financial Assurance Holdings, Inc.) were contributed to GEFA International by
way of a contribution letter from GE Financial Assurance Holdings, Inc. to GEFA
International dated [                        
];

 

(F)                                 the “UK Holdings Debt” means the principal amount of £[              ] owed by the Seller to the
Buyer under the UK Holdings Loan;

 

(G)                                the “UK Holdings Debt Release” has the meaning given to that
expression in clause 3 of this Deed;

 

(H)                               the “UK Holdings Debt Release Deed” means the deed of debt release
entered into between the Seller and the Buyer dated [20 May] 2004; and

 

(I)                                    the “UK Holdings Loan” means the loan agreement dated [19 May 2004]
originally entered into between the Seller and General Electric Capital Corporation
(“GECC”)
but in respect of which all of the rights and benefits of GECC in the UK
Holdings Debt owed thereunder (as previously assigned to UK Group Holding
Company Limited following a sale of the UK Holdings Debt by GECC to GEI, Inc.,
a contribution of the UK Holdings Debt by GEI, Inc. to GE Financial Assurance
Holdings, Inc. and a contribution of the UK Holdings Debt by GE Financial
Assurance Holdings, Inc. to GEFA International Holdings, Inc.) were assigned to
the Buyer pursuant to an assignment entered into between the Buyer and UK Group
Holding Company Limited dated [                         ].

 

2                                         SALE AND PURCHASE

 

The Seller shall sell and the Buyer shall buy the
Shares on the date of this Deed, together with all rights attaching to the
Shares as at or after the date of this Deed.

 

3                                         CONSIDERATION

 

The total consideration for the purchase of the Shares
by the Buyer shall be satisfied by:

 

(A)                              the Buyer fully and irrevocably releasing and discharging the Seller
from any and all obligations or liabilities that the Seller has, or may have,
under the UK Holdings Loan to pay the UK Holdings Debt to the Buyer, such
release and discharge to become effective, in accordance with the terms of the
UK Holdings Debt Release Deed, on the Completion Date (the “UK Holdings
Debt Release”); and

 

(B)                                GEFA International fully and irrevocably releasing and discharging
the Seller from any and all obligations or liabilities that the Seller has, or
may have, under the GEFA International Loan to pay the GEFA International Debt
to GEFA International, such release and discharge to become effective, in
accordance with the terms of the GEFA International Debt Release Deed, on the
Completion Date (the “GEFA International Debt Release”).

 

3

 

4                                         COMPLETION

 

4.1                               Completion shall take place on the Completion Date.

 

4.2                               On the Completion Date, the Seller shall deliver or procure the
delivery to the Buyer of duly executed stock transfer form(s) in respect of the
Shares and the relevant share certificate(s).

 

4.3                               On the Completion Date, the Seller shall procure that the directors
of the Company shall hold a board meeting at which the transfer of the Shares
(subject to stamping) to the Buyer or its nominee(s) shall be approved for
registration in the Company’s books.

 

4.4                               The UK Holdings Debt Release and the GEFA International Debt Release
shall become effective, in accordance with (respectively) the UK Holdings Debt
Release Deed and the GEFA International Debt Release Deed, on the Completion
Date.

 

5                                         RIGHTS OF THIRD PARTIES

 

A person who is not a party to this Deed has no rights
under the Contracts (Rights of Third Parties) Act 1999 or otherwise to enforce
any term of this Deed but this does not affect any right or remedy of a third
party which exists or is available apart from the Act.

 

6                                         VARIATION

 

Any variation of this Deed must be in writing and
signed by each party or, in the case of a body corporate, a duly authorised
officer or representative of such party.

 

7                                         COUNTERPARTS

 

This Deed may be executed in any number of
counterparts, each of which when executed and delivered constitutes an original
of this Deed, but all the counterparts shall together constitute one and the
same Deed.  No counterpart shall be
effective until each party has executed at least one counterpart.

 

8                                         WHOLE AGREEMENT

 

This Deed (and any other document referred to herein)
contains the whole agreement between the parties relating to the subject matter
of this Deed to the exclusion of any terms implied by law which may be excluded
by contract. The Buyer acknowledges that it has not been induced to enter into
this Deed by, and so far as permitted by law and except in the case of fraud,
hereby waives any remedy in respect of, any warranties, representations,
undertakings, promises or assurances not incorporated into this Deed.

 

9                                         GOVERNING LAW

 

This Deed is governed by, and shall be construed in
accordance with, English law.

 

4

 

10                                  JURISDICTION

 

The parties irrevocably agree that the courts of
England have non-exclusive jurisdiction to decide and to settle any dispute or
claim arising out of or in connection with this Deed.

 

IN WITNESS WHEREOF THIS
DEED HAS BEEN EXECUTED AND DELIVERED AS A DEED ON THE DATE SET OUT ON PAGE 2.

 

	
  Executed
  as a deed by

  	
  )

  
	
  GE INSURANCE HOLDINGS

  	
  )

  
	
  LIMITED acting by

  	
  )

  
	
  a
  director and its secretary / two

  	
  )

  
	
  directors

  	
  )

  
	
   

  	
   

  
	
  Executed
  as a deed by

  	
  )

  
	
  GEFA UK HOLDINGS

  	
  )

  
	
  LIMITED acting by

  	
  )

  
	
  [a
  director and its secretary / two

  	
  )

  
	
  directors]

  	
  )

  
	
   

  	
   

  
	
  EXECUTED
  AS A DEED

  	
  )

  
	
  BY GEFA
  INTERNATIONAL

  	
  )

  
	
  HOLDINGS, INC. acting by

  	
  )

  
	
  [name of
  authorised signatory(ies)]

  	
  )

  
	
  who,
  in accordance with the laws

  	
  )

  
	
  of
  the territory in which GEFA

  	
  )

  
	
  International
  Holdings, Inc. is

  	
  )

  
	
  incorporated,
  is/are acting under the

  	
  )

  
	
  authority
  of GEFA International

  	
  )

  
	
  Holdings,
  Inc.

  	
  )

  

 

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}]]