Document:

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                                                                     EXHIBIT 4.3

                                                                  EXECUTION COPY

                         GOLDCOSMOS INVESTMENTS LIMITED

        US$182,678,000 ZERO COUPON GUARANTEED CONVERTIBLE BONDS DUE 2011

                               PURCHASE AGREEMENT

                                                                     May 8, 2006

Citigroup Global Markets Limited
Citigroup Centre
33 Canada Square
Canary Wharf
London E14 5LB England

As Representatives of the Initial Purchasers

Ladies and Gentlemen:

          Goldcosmos Investments Limited (to be renamed as Brilliance China
Finance Limited), a corporation organized under the laws of the British Virgin
Islands (the "Issuer"), proposes to issue and sell to the several parties named
in Schedule I hereto (the "Initial Purchasers"), for whom you (the
"Representatives") are acting as representatives, US$182,678,000 principal
amount of its Zero Coupon Guaranteed Convertible Bonds Due 2011 to be guaranteed
(the "Guarantee") by Brilliance China Automotive Holdings Limited (the
"Company") (the "Firm Securities"). The Issuer also proposes to grant to the
Initial Purchasers an option to purchase up to US$30,000,000 additional
principal amount of such Bonds (the "Option Securities" and, together with the
Firm Securities, the "Securities"). The Securities are convertible into ordinary
shares, par value US$0.01 per share (the "Shares"), of the Company at the
conversion price set forth in the terms and conditions of the Securities (the
"Terms and Conditions"), which are attached hereto as Exhibit A. The Securities
will be constituted by a trust deed (the "Trust Deed"), expected to be dated as
of the Closing Date, between the Issuer, the Company and The Bank of New York,
as trustee (the "Trustee"), which will reflect the Terms and Conditions set
forth in Exhibit A. Payments under the Securities will be made on behalf of the
Issuer by paying agents appointed under a paying and conversion agency agreement
(the "Agency Agreement") expected to be dated as of the Closing Date between the
Issuer, the Company, trustee and the agents named therein (the "Agents"). To the
extent there are no additional parties listed on Schedule I other than you, the
term Representatives as used herein shall mean you as the Initial Purchasers,
and the terms Representatives and Initial Purchasers shall mean either the
singular or plural as the context requires. The use of the neuter in this
Agreement shall include the feminine and masculine wherever appropriate. Certain
terms used herein are defined in Section 21 hereof.

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          The sale of the Securities to the Initial Purchasers will be made
without registration of the Securities or the Shares issuable upon conversion
thereof under the Act in an offshore transaction in reliance upon Regulation S
of the Act.

          In connection with the sale of the Securities, each of the Issuer and
the Company undertakes to prepare an offering memorandum in a form required by
the Representatives, on behalf of the Initial Purchasers (the "Offering
Memorandum"), to be dated not later than three (3) business days prior to the
Closing Date or such other date as may be agreed between the Company and the
Representatives, on behalf of the Initial Purchasers (the "Publication Date"),
for use in connection with the issue of the Securities and the listing of the
Securities on the Singapore Exchange Securities Trading Limited (the "SGX-ST")
and hereby authorize you to distribute copies of the Offering Memorandum and the
Terms and Conditions in connection with the offering and sale of the Securities.
The Company confirms that the Offering Memorandum will include or incorporate by
reference a description of the terms of the Securities, the terms of the
offering and a description of the Company and such other information, including
financial information, in relation to the Company as is customary for offerings
of securities such as the Securities by issuers doing business in The People's
Republic of China (the "PRC") and as the Initial Purchasers may require. Each of
the Issuer and the Company hereby confirms that it has authorized the use of the
Offering Memorandum, and any amendment or supplement thereto, in connection with
the offer and sale of the Securities by the Initial Purchasers. Unless stated to
the contrary, any references herein to the terms "amend", "amendment" or
"supplement" with respect to the Offering Memorandum shall be deemed to refer to
and include any information filed under the Exchange Act subsequent to the
Execution Time that is incorporated by reference therein.

          Citigroup may, to the extent permitted by applicable laws, over-allot
and effect transactions in the Securities with a view to supporting the market
price of the Securities and the Shares at a level higher than that which might
otherwise prevail in the open market but in doing so Citigroup shall act as
principal and not as agent of the Issuer and any loss resulting from
over-allotment or stabilization shall be borne, and any profit arising therefrom
shall be beneficially retained, by Citigroup. Nothing contained in this
paragraph shall be construed so as to require the Issuer to issue in excess of
US$212,678,000 aggregate principal amount of Securities (being the maximum total
amount of the Securities comprising the Firm Securities and the Option
Securities).

          1. Representations and Warranties. The Issuer and the Company jointly
and severally represent and warrant to each Initial Purchaser as set forth below
in this Section 1, subject to disclosures made in press announcements published
by the Company in Hong Kong and annual reports and other documents filed by the
Company with the relevant stock exchange or regulatory authority.

          (a) On the Closing Date (as defined herein) and on any settlement
date, the Offering Memorandum will not (and any amendment or supplement thereto,
at the date thereof, at the Closing Date and on any settlement date, will not)
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no representation or warranty as to the information contained in or
omitted from the Offering Memorandum, or any amendment or supplement thereto, in
reliance upon and in

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conformity with information furnished in writing to the Company by or on behalf
of the Initial Purchasers through the Representatives specifically for inclusion
therein.

          (b) Neither the Issuer, the Company, nor any of their respective
Affiliates, or any person acting on its or their behalf has directly or
indirectly, made offers or sales of any security, or solicited offers to buy,
any security under circumstances that would require the registration of the
Securities or the Shares issuable upon conversion thereof under the Act.

          (c) Neither the Issuer, the Company, nor any of their respective
Affiliates, or any person acting on its or their behalf has engaged in any
directed selling efforts (within the meaning of Regulation S) with respect to
the Securities or the Shares issuable upon conversion thereof; and each of the
Issuer, the Company, their respective Affiliates and each person acting on its
or their behalf has complied with the offering restrictions requirement of
Regulation S.

          (d) Each of the Issuer and the Company is a "foreign issuer" (as
defined in Regulation S) which reasonably believes that there is no substantial
U.S. market interest (as defined in Regulation S) in the Issuer's or the
Company's debt securities or in the Shares or any securities of the same class
or series as the Shares.

          (e) No registration of the Securities or the Shares issuable upon
conversion thereof is required under the Act for the offer and sale of the
Securities to or by the Initial Purchasers in the manner contemplated herein and
in the Offering Memorandum.

          (f) Each of the Issuer and the Company is not, and after giving effect
to the offering and sale of the Securities and the application of the proceeds
thereof as described in the Offering Memorandum will not be, an "investment
company" as defined in the Investment Company Act, without taking account of any
exemption arising out of the number of holders of the Issuer's and the Company's
securities.

          (g) The Company is subject to and in full compliance with the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act.

          (h) Each of the Issuer and the Company has not paid or agreed to pay
to any person any compensation for soliciting another to purchase any securities
of the Issuer or of the Company (except as contemplated in this Agreement).

          (i) Each of the Issuer and the Company has not taken, directly or
indirectly, any action designed to or that has constituted or that might
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of the Issuer or
of the Company to facilitate the sale or resale of the Securities.

          (j) Each of the Issuer, the Company and their respective subsidiaries
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as the case
may be, and to operate its properties and conduct its business, and is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction that requires such qualification.

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          (k) All the outstanding shares of capital stock of each subsidiary of
the Issuer and the Company have been duly authorized and validly issued and are
fully paid and nonassessable, and all outstanding shares of capital stock of the
subsidiaries are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any security interest, claim, lien or
encumbrance.

          (l) The Company's authorized equity capitalization will be as set
forth in the Offering Memorandum; the capital stock of the Company will conform
to the description thereof to be contained in the Offering Memorandum; the
outstanding Shares have been duly authorized and validly issued and are fully
paid and nonassessable; the Shares initially issuable upon conversion of the
Firm Securities have been (and the Shares initially issuable upon conversion of
the Option Securities, as at the Closing Date, will be) duly authorized and,
when issued upon conversion of the Securities against payment of the conversion
price, will be validly issued, fully paid and nonassessable; the Board of
Directors of the Company has duly and validly adopted resolutions reserving such
Shares for issuance upon conversion of the Securities; the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities or the Shares
issuable upon conversion thereof; and, save as disclosed in press announcements
published by the Company in Hong Kong, and annual reports and other documents
filed by the Company with the relevant stock exchange or regulatory authority,
no options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership interests in the Company
are outstanding.

          (m) The statements to be set out in the Offering Memorandum under the
headings "Taxation", "Terms and Conditions of the Bonds", "Description of the
Shares" and "Description of the ADSs" will fairly summarize the matters therein
described.

          (n) This Agreement has been duly authorized, executed and delivered by
each of the Issuer and the Company and constitutes a legal, valid, binding
instrument enforceable against each of the Issuer and the Company in accordance
with its terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity); each of the Trust Deed and the Agency Agreement has been
duly authorized and, assuming due authorization, execution and delivery thereof
by the Trustee and the Agents, as applicable, when executed and delivered by
each of the Issuer and the Company, will constitute a legal, valid, binding
instrument enforceable against the Issuer and the Company in accordance with its
terms (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity); and
the Securities have been duly authorized, and, when executed and authenticated
in accordance with the provisions of the Trust Deed, the Agency Agreement and
this Agreement and delivered to and paid for by the Initial Purchasers, will
have been duly executed and delivered by the Issuer and will constitute the
legal, valid and binding obligations of the Issuer entitled to the benefits of
the Trust Deed (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity) and will be convertible into Shares in accordance with
their terms.

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          (o) Other than The Stock Exchange of Hong Kong Limited ("Hong Kong
Stock Exchange") having agreed to list the Shares to be issued upon the
conversion of the Securities (the "New Shares") and the shareholders of the
Company having approved the issue of the Shares initially issuable upon
conversion of the Option Securities, no consent, approval, authorization, filing
with or order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, in the Trust Deed or in
the Agency Agreement or by the issuance of the Securities or the Shares upon
conversion thereof.

          (p) Subject to the provisions of paragraph (o) above, none of the
execution and delivery of the Trust Deed, this Agreement or the Agency
Agreement, the issuance and sale of the Securities or the issuance of the Shares
upon conversion thereof, or the consummation of any other of the transactions
herein or therein contemplated, nor the fulfillment of the terms hereof or
thereof will conflict with, result in a breach or violation or imposition of any
lien, charge or encumbrance upon any property or assets of the Issuer or the
Company or any of their respective subsidiaries pursuant to, (i) the charter or
by-laws or comparable constituting documents of the Issuer or the Company or any
of their respective subsidiaries; (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the Issuer or
the Company or any of their respective subsidiaries is a party or bound or to
which its or their property is subject, the violation of which would,
individually or in the aggregate, have a Material Adverse Effect; or (iii) any
statute, law, rule, regulation, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Issuer, the Company or any of their
respective subsidiaries or any of its or their properties, the violation of
which would, individually or in the aggregate, have a Material Adverse Effect.

          (q) The consolidated financial statements of the Company as of and for
the years ended December 31, 2003, 2004 and 2005 present fairly the financial
condition, results of operations and cash flows of the Company as of the dates
and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles in Hong Kong applied on a consistent
basis throughout the periods involved (except as otherwise noted therein); the
selected financial data to be set forth under the caption "Selected Consolidated
Financial Information" in the Offering Memorandum fairly present, on the basis
to be stated in the Offering Memorandum, the information included or
incorporated by reference therein.

          (r) The Company has not entered into any material contract or
commitment (including capital commitments) that, in the context of consummating
the transactions contemplated herein, might be material for disclosure and the
Company has carried on its business in the ordinary and usual course.

          (s) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Issuer,
the Company or any of their respective subsidiaries or its or their property is
pending or, to the best knowledge of the Issuer and the Company, threatened that
(i) could reasonably be expected to have a material adverse effect on the
performance of this Agreement, the Trust Deed or the Agency Agreement, or the
consummation of any of the transactions contemplated hereby or thereby or (ii)
could reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or

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properties of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business (a "Material
Adverse Effect").

          (t) Each of the Issuer, the Company and their respective subsidiaries
owns or leases all such properties as are necessary to the conduct of its
operations as presently conducted.

          (u) Neither the Issuer, the Company nor any of their respective
subsidiaries is in violation or default of (i) any provision of its charter or
bylaws or comparable constituting documents; (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which it is a
party or bound or to which its property is subject, the violation of which
would, individually or in the aggregate, have a Material Adverse Effect; or
(iii) any statute, law, rule, regulation, judgment, order or decree applicable
to the Issuer, the Company or any of their respective subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Issuer, the Company or such subsidiary or
any of its properties, as applicable, the violation of which would, individually
or in the aggregate, have a Material Adverse Effect.

          (v) Moores Rowland Mazars, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules to be included or incorporated by reference in the Offering
Memorandum, are independent public accountants with respect to the Company
within the meaning of the Hong Kong Society of Accountants.

          (w) There are no stamp or other issuance or transfer taxes or duties
or other similar fees or charges required to be paid in connection with the
execution and delivery of this Agreement, the Trust Deed, the Agency Agreement
or the issuance or sale by the Issuer of the Securities or upon the issuance of
Shares by the Company upon the conversion thereof.

          (x) Each of the Issuer and the Company has filed all tax returns that
are required to be filed or has requested extensions thereof (except in any case
in which the failure so to file would not have a Material Adverse Effect) and
has paid all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a Material Adverse Effect.

          (y) No labor problem or dispute with the employees of the Issuer or
the Company or any of their respective subsidiaries exists or is threatened or
imminent, and neither the Issuer nor the Company is aware of any existing or
imminent labor disturbance by the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers, except as would not have a
Material Adverse Effect.

          (z) The Issuer, the Company and each of their respective subsidiaries
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of insurance and fidelity or
surety bonds insuring the Issuer, the Company or any of their respective
subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect;

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the Issuer, the Company and their respective subsidiaries are in compliance with
the terms of such policies and instruments; there are no claims by the Issuer,
the Company or any of their respective subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause; neither the Issuer, the Company nor any of
their respective subsidiaries has been refused any insurance coverage sought or
applied for; and neither the Issuer, the Company nor any of their respective
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.

          (aa) No subsidiary of the Issuer or the Company is currently
prohibited, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company.

          (bb) The Issuer, the Company and their respective subsidiaries possess
all licenses, certificates, permits and other authorizations issued by the
appropriate regulatory authorities necessary to conduct their respective
businesses, and neither the Issuer, the Company nor any of their respective
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect.

          (cc) The Issuer, the Company and each of their respective subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles in Hong Kong and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

          (dd) The Issuer, the Company and their respective subsidiaries are (i)
in compliance with any and all applicable laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"); (ii)
have received and are in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses; and (iii) have not received notice of any actual or
potential liability under any Environmental Law, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect.

          (ee) In the ordinary course of its business, each of the Issuer and
the Company periodically reviews the effect of Environmental Laws on the
business, operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required

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for clean-up, closure of properties or compliance with Environmental Laws, or
any permit, license or approval, any related constraints on operating activities
and any potential liabilities to third parties); on the basis of such review,
each of the Issuer and the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a Material
Adverse Effect.

          (ff) Each of the Issuer and the Company has not taken any action or
omitted to take any action (such as issuing any press release relating to any
Securities without an appropriate legend) which may result in the loss by any of
the Initial Purchasers of the ability to rely on any stabilization safe harbor
provided by the Financial Services Authority under the Financial Services and
Markets Act 2000 (the "FSMA"). The Issuer has been informed of the guidance
relating to stabilization provided by the Financial Services Authority, in
particular in Section MAR 2 Annex 2G of the Financial Services Handbook.

          (gg) None of the Issuer, the Company, their respective subsidiaries
or, to the knowledge of the Issuer or the Company, any director, officer, agent,
employee or Affiliate of the Issuer, the Company or any of their respective
subsidiaries is aware of or has taken any action, directly or indirectly, that
would result in a violation by such Persons of Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder (the "FCPA"),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of
value to any "foreign official" (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA; and the Issuer, the Company,
their respective subsidiaries and, to the knowledge of the Issuer, the Company,
their respective Affiliates have conducted their businesses in compliance with
the FCPA and have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith.

          (hh) None of the Issuer, the Company, any of their respective
subsidiaries or, to the knowledge of the Issuer or the Company, any director,
officer, agent, employee or Affiliate of the Issuer or the Company or any of
their respective subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Department of
the Treasury ("OFAC"); and the Company will not directly or indirectly use the
proceeds of the offering of the Securities hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.

          (ii) Prior to the date hereof, each of the Issuer and the Company has
furnished to the Representatives letters, each substantially in the form of
Exhibit B hereto, duly executed by each director of the Company and addressed to
the Representatives.

          (jj) No event has occurred or circumstance arisen which, had the
Securities already been issued, could reasonably be expected to (whether or not
with the giving of notice and/or the passage of time and/or the fulfillment of
any other requirement) constitute an event described under "Events of Default"
in the Terms and Conditions.

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          (kk) All public announcements made by the Company to its shareholders,
including any release of financial information or results of operations by the
Company after December 31, 2005, were, as of the date made, true and accurate in
all material respects.

          (ll) Each of the Issuer and the Company is in compliance in all
material respects with (with respect to the Shares) and will comply in all
material respects with (with respect to the Shares and the Securities) all
applicable laws and the applicable requirements of the Hong Kong Stock Exchange
Listing Rules and the SGX-ST in connection with the issue of the Securities.

          (mm) The Securities (when issued) will constitute direct,
unconditional, unsecured and unsubordinated obligations of the Issuer and will
at all times rank pari passu without any preference among themselves and with
all other present and future unconditional, unsecured and unsubordinated
obligations of the Issuer other than those preferred by statute or applicable
law.

          (nn) There are no restrictions applicable to the Shares generally upon
the voting or transfer of any of the Shares pursuant to the Company's
constitutional documents or pursuant to any agreement or other instrument to
which the Company is a party or by which the Company may be bound.

          (oo) The Guarantee will be duly authorized by the Company prior to the
Closing Date and when the Trust Deed has been duly executed and delivered on the
Closing Date, the Guarantee will constitute valid and legally binding
obligations of the Guarantor.

          (pp) The payment obligations of the Guarantor under the Guarantee
(when issued) will at all times rank pari passu with all other present and
future, unconditional, unsecured and unsubordinated obligations of the Company
other than those preferred by statute or applicable law.

          (qq) The Issuer is a wholly-owned subsidiary of the Company.

          (rr) All information supplied or disclosed in writing or orally
including, without limitation, the answers and documents provided at due
diligence meetings (and any new or additional information serving to update or
amend such information supplied or disclosed by the Issuer or the Company to the
Representatives or the legal and other professional advisers to the
Representatives) and any bank statements and other evidence of cash and/or cash
equivalents, is true and accurate in all material respects and not misleading in
any material respect. In addition, the cash and cash equivalents set forth in
Exhibit C are in immediately available form (which, in respect of any marketable
securities, means in the form of cash generated from the liquidation of such
securities) and free and clear of any lien, pledge, charge, mortgage, option,
right to acquire or other form of security or encumbrance.

     The representations and warranties contained in, or given pursuant to,
Section 1 shall be deemed to have been repeated at the Publication Date, the
Closing Date and on any settlement date taking into account facts and
circumstances subsisting at such date.

     Any certificate signed by any officer of the Issuer or the Company and
delivered to the Representatives or counsel for the Initial Purchasers in
connection with the offering of the

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Securities shall be deemed a representation and warranty by the Issuer or, as
the case may be, the Company, as to matters covered thereby, to each Initial
Purchaser.

          2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Issuer
agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Issuer, at a purchase price (the
"Purchase Price") of 98.0% of the principal amount thereof (which reflects an
issue price of 100% of the principal amount thereof less an underwriting
commission of 2.0% of the principal amount thereof), the principal amount of
Firm Securities set forth opposite such Initial Purchaser's name in Schedule I
hereto.

          (b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Issuer hereby grants an
option to the several Initial Purchasers to purchase, severally and not jointly,
the Option Securities at the same Purchase Price as the Initial Purchasers shall
pay for the Firm Securities; provided, however, that in the event that the
Initial Purchasers exercise the option in whole, then the Purchase Price for the
Option Securities shall be 97.5% of the principal amount thereof (which reflects
an issue price of 100% of the principal amount thereof less an underwriting
commission of 2.5% of the principal amount thereof). The option may be exercised
in whole or in part at any time (but not more than once) on or before the 30th
day after the date hereof upon written or telegraphic notice by the
Representatives to the Issuer setting forth the principal amount of Option
Securities as to which the several Initial Purchasers are exercising the option
and the settlement date. Delivery of the Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof. The principal amount of
Option Securities to be purchased by each Initial Purchaser shall be the same
percentage of the total principal amount of Option Securities to be purchased by
the several Initial Purchasers as such Initial Purchaser is purchasing of the
Firm Securities, subject to such adjustments as you in your absolute discretion
shall make to eliminate any fractional Securities.

          3. Delivery and Payment. (a) Delivery of and payment for the Firm
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 10:00 A.M., London time, on June 7, 2006, or
at such time on such later date not more than three Business Days after the
foregoing date as the Representatives shall designate, which date and time may
be postponed by agreement between the Representatives and the Issuer and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the Securities being herein called the "Closing Date"). Delivery of
the Securities shall be made by the Issuer delivering a global bond (the "Global
Bond") evidencing the Securities in respect of the Firm Securities, duly
executed on behalf of the Issuer and authenticated in accordance with the Trust
Deed, to a common depositary designated for the purpose by Euroclear S.A./N.V.,
as operator of the Euroclear System ("Euroclear") and Clearstream Banking,
societe anonyme ("Clearstream, Luxembourg") for credit on or about the Closing
Date to the accounts of Euroclear and Clearstream, Luxembourg with such common
depositary as directed by the Representatives for the respective accounts of the
several Initial Purchasers against payment by the several Initial Purchasers
through the Representatives of the purchase price thereof to or upon the order
of the Issuer by wire transfer payable in same-day funds to the account
specified by the Issuer. Delivery of the Securities shall be made through the
facilities of Euroclear and Clearstream Luxembourg.

                                                                              10

<PAGE>

          (b) If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Issuer will deliver
the Option Securities (at the expense of the Issuer) to the Representatives on
the date specified by the Representatives (which shall be within three Business
Days after exercise of said option) for the respective accounts of the several
Initial Purchasers, against payment by the several Initial Purchasers through
the Representatives of the purchase price thereof to or upon the order of the
Issuer by wire transfer payable in same-day funds to the account specified by
the Issuer. If settlement for the Option Securities occurs after the Closing
Date, the Issuer will deliver to the Representatives on the settlement date for
the Option Securities, and the obligation of the Initial Purchasers to purchase
the Option Securities shall be conditional upon receipt of, supplemental
opinions, certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant to Section 6
hereof.

          4. Offering by Initial Purchasers. (a) Each Initial Purchaser
acknowledges that the Securities and the Shares issuable upon conversion thereof
have not been and will not be registered under the Act and may not be offered or
sold within the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Act.

          (b) Each Initial Purchaser, severally and not jointly, represents and
warrants to and agrees with the Company that:

               (i) the Securities have not been and will not be registered under
          the Act and may not be offered or sold within the United States except
          pursuant to an exemption from, or in a transaction not subject to, the
          registration requirements of the Act;

               (ii) it has not offered or sold, and agrees that it will not
          offer or sell, any Securities constituting part of its allotment
          within the United States except in accordance with Rule 903 of
          Regulation S under the Act. Accordingly, neither it, its affiliates
          nor any persons acting on its or their behalf have engaged or will
          engage in any directed selling efforts with respect to the Securities.
          Terms used in this paragraph have the meaning given to them by
          Regulation S under the Act;

               (iii) it nor any of its affiliates (as defined in Rule 501(b) of
          Regulation D), nor any person acting on its or their behalf has
          engaged or will engage in any form of general solicitation or general
          advertising (within the meaning of Regulation D) in connection with
          any offer and sale of the Securities in the United States;

               (iv) it has not entered and agrees that it will not enter into
          any contractual arrangement with any distributor (as that term is
          defined in Regulation S) with respect to the distribution or delivery
          of the Securities, except with its affiliates or with the prior
          written consent of the Company;

               (v) it has not offered or sold and, prior to the expiry of a
          period of six months from the date of issuance of the Securities, will
          not offer or sell any Securities to persons in the United Kingdom
          except to persons whose ordinary

                                                                              11

<PAGE>

          activities involve them in acquiring, holding, managing or disposing
          of investments (as principal or as agent) for the purposes of their
          businesses or otherwise in circumstances which have not resulted and
          will not result in an offer to the public in the United Kingdom within
          the meaning of the Public Offers of Securities Regulations 1995;

               (vi) it has complied and will comply with all applicable
          provisions of the FSMA with respect to anything done by it in relation
          to the Securities in, from or otherwise involving the United Kingdom;
          and

               (vii) it has only communicated or caused to be communicated and
          will only communicate or cause to be communicated any invitation or
          inducement to engage in investment activity (within the meaning of
          section 21 of the FSMA) received by it in connection with the issue or
          sale of any Securities, in circumstances in which section 21(1) of the
          FSMA does not apply to the Company.

          5. Agreements. Each of the Issuer and the Company severally and
jointly agrees with each Initial Purchaser that:

          (a) Each of the Issuer and the Company will furnish to each Initial
Purchaser and to counsel for the Initial Purchasers, without charge, on the
Publication Date and during the period referred to in paragraph (c) below, as
many copies of the Offering Memorandum and any amendments and supplements
thereto as they may reasonably request.

          (b) Each of the Issuer and the Company will not amend or supplement
the Offering Memorandum, other than by filing documents under the Exchange Act
that are incorporated by reference therein, without the prior written consent of
the Representatives; provided, however, that, prior to the completion of the
distribution of the Securities by the Initial Purchasers (as determined by the
Initial Purchasers), the Issuer and the Company will not file any document under
the Exchange Act that is incorporated by reference in the Offering Memorandum
unless, prior to such proposed filing, each of the Issuer and the Company has
furnished the Representatives with a copy of such document for their review and
the Representatives have not reasonably objected to the filing of such document.
The Issuer and the Company will promptly advise the Representatives when any
document filed under the Exchange Act that is incorporated by reference in the
Offering Memorandum shall have been filed with the Commission.

          (c) If at any time prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by the Representatives), any
event occurs as a result of which the Offering Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it should
be necessary to amend or supplement the Offering Memorandum to comply with
applicable law, the Issuer and the Company will promptly (i) notify the
Representatives of any such event; (ii) subject to the requirements of paragraph
(b) of this Section 5, prepare an amendment or supplement that will correct such
statement or omission or effect such compliance; and (iii) supply any
supplemented or amended Offering Memorandum to the several Initial Purchasers
and counsel for the Initial Purchasers without charge in such quantities as they
may reasonably request.

                                                                              12
<PAGE>

          (d) The Issuer and the Company will arrange, if necessary, for the
qualification of the Securities for sale by the Initial Purchasers under the
laws of such jurisdictions as the Representatives may designate (including, but
not limited to, Japan, Singapore, the Netherlands and certain provinces of
Canada) and will maintain such qualifications in effect so long as required for
the sale of the Securities; provided, however, that in no event shall either the
Issuer or the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Securities, in any jurisdiction where it is not now so subject. The
Issuer and the Company will promptly advise the Representatives of the receipt
by the Issuer or the Company of any notification with respect to the suspension
of the qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.

          (e) Each of the Issuer and the Company will not, and will not permit
any of their respective Affiliates to, resell any Securities or Shares issued
upon conversion thereof that have been acquired by any of them.

          (f) None of the Issuer, the Company, their respective Affiliates, or
any person acting on its or their behalf will, directly or indirectly, make
offers or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities or Shares
issuable upon conversion thereof under the Act.

          (g) The Issuer and the Company will take all steps as the Initial
Purchasers may reasonably require to finalize the Terms and Conditions, the
terms of the Trust Deed and the Agency Agreement and the Offering Memorandum
(including the incorporation of the comments of the Initial Purchasers in the
Offering Memorandum), as soon as practicable hereafter and in addition publish
any information that the Representatives believe is necessary to be published in
order to enable investors and their investment advisors to make an informed
assessment of (i) the assets and liabilities, financial position, profits and
losses and prospects of the Company and its subsidiaries and (ii) the merits of
an investment in the Securities.

          (h) The Issuer and the Company will arrange to deliver to you three
copies of the Offering Memorandum and listing particulars, and of any amendment
or supplement thereto, signed by an authorized officer of each of the Issuer and
the Company, which are required for the purpose of making the application to
list the SGX-ST (the "SGX-ST Particulars"), and will deliver to you without
charge such number of copies of the SGX-ST Particulars as you may reasonably
request. Each of the Issuer and the Company agrees to take such other reasonable
steps as may be required for the purpose of obtaining a listing of the
Securities on the SGX-ST on or prior to the Closing Date, provided that if such
listing has not been obtained by the Closing Date, each of the Issuer and the
Company agrees that it shall use its best endeavours to obtain a listing of the
Securities on the SGX-ST or other stock exchange mutually acceptable to the
Representatives and the Company as soon as practicable following the Closing
Date.

          (i) None of the Issuer, the Company, their respective Affiliates, or
any person acting on its or their behalf will engage in any directed selling
efforts with respect to the Securities; and each of them will comply with the
offering restrictions requirement of Regulation S. Terms used in this paragraph
have the meanings given to them by Regulation S.

                                                                              13

<PAGE>

          (j) The Company will reserve and keep available at all times, free of
pre-emptive rights, the full number of Shares issuable upon conversion of the
Securities.

          (k) Each of the Issuer and the Company will not for a period of 180
days following the Execution Time, without the prior written consent of
Citigroup, directly or indirectly, offer, sell, contract to sell, pledge,
otherwise dispose of, enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Issuer, the Company or any of their respective Affiliates or
any person in privity with the Issuer or the Company or any of their respective
Affiliates, file (or participate in the filing of) a registration statement with
the Commission in respect of, or establish or increase a put equivalent position
or liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act in respect of, any shares of capital stock of the
Company or any securities convertible into, or exercisable or exchangeable for,
shares of capital stock of the Company (other than the Securities and any
exercise or assignment of options granted by Huachen Automotive Group Holdings
Company Limited to certain directors of the Company), or publicly announce an
intention to effect any such transaction; provided, however, that the Company
may issue and sell Shares or securities convertible into or exchangeable for
Shares pursuant to any employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company described in the Offering Memorandum
and in effect at the Execution Time, and the Company may issue Shares issuable
upon the conversion of securities or the exercise of warrants outstanding at the
Execution Time and described in the Offering Memorandum.

          (l) The Issuer and the Company will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.

          (m) Between the date hereof and the Closing Date, the Issuer and the
Company will not do or authorize any act or thing that would result in an
adjustment of the conversion price.

          (n) The Issuer, failing whom the Company, agrees to pay the costs and
expenses relating to the following matters: (i) the preparation of the Trust
Deed and the Agency Agreement, the issuance of the Securities, the fees of the
Trustee and Agents and the issuance of the Shares upon conversion of the
Securities; (ii) the preparation, printing or reproduction of the Offering
Memorandum and each amendment or supplement to either of them; (iii) the
printing (or reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of such copies of the Offering
Memorandum, and all amendments or supplements to either of them, as may, in each
case, be reasonably requested for use in connection with the offering and sale
of the Securities; (iv) the preparation, printing, authentication, issuance and
delivery of certificates for the Securities; (v) any stamp or transfer taxes in
connection with the original issuance and sale of the Securities; (vi) the
printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (vii) any
registration or qualification of the Securities for offer and sale under the
securities or blue sky laws of the several states, Japan, Singapore, the
Netherlands, the provinces of Canada and any other jurisdictions specified
pursuant to Section 5(d) (including filing fees and the reasonable fees and

                                                                              14

<PAGE>

expenses of counsel for the Initial Purchasers relating to such registration and
qualification); (viii) the fees and expenses of the Company's accountants and
the fees and expenses of counsel (including local and special counsel) for the
Issuer and the Company; and (ix) all other costs and expenses incident to the
performance by the Issuer and the Company of their obligations hereunder.

          (o) Each of the Issuer and the Company will, for a period of twelve
months following the Execution Time, furnish to the Representatives (i) all
reports or other communications (financial or other) generally made available to
stockholders, and deliver such reports and communications to the Representatives
as soon as they are available, unless such documents are furnished to or filed
with the Commission or any securities exchange on which any class of securities
of the Company is listed and generally made available to the public and (ii)
such additional information concerning the business and financial condition of
the Company as the Representatives may from time to time reasonably request
(such statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to
stockholders).

          (p) Each of the Issuer and the Company will not take any action or
omit to take any action (such as issuing any press release relating to any
Securities without an appropriate legend) which may result in the loss by any of
the Initial Purchases of the ability to rely on any stabilization safe harbor
provided by the Financial Services Authority under the FSMA.

          (q) Each of the Issuer and the Company confirms that it has authorized
the Representatives to make or cause to be made an application on its behalf for
the Securities to be listed on the SGX-ST.

          (r) Each of the Issuer and the Company will use its best endeavours to
maintain such listing on the SGX-ST for as long as any Security is outstanding.
If, however, it is unable to do so, having used such endeavours, or if the
maintenance of such listing is unduly onerous, each of the Issuer and the
Company will instead use its best endeavours promptly to obtain and thereafter
to maintain a listing for the Securities on such other stock exchange as it may
(with the approval of the Representatives or, after the Closing Date, the
Trustee) decide or, failing such decision, as the Representatives or, after the
Closing Date, the Trustee may reasonably determine.

          (s) Each of the Issuer and the Company will use the net proceeds from
the issue of the Securities in the manner as will be specified in the Offering
Memorandum, which shall include the refinancing and general corporate and
working capital purposes of the Company and its subsidiaries. Each of the Issuer
and the Company shall offer Citigroup and/or its affiliates the right to act in
such transaction as dealer manager, solicitation agent or financial advisor, as
applicable, in the case of any liability management undertaken by the Issuer
and/or the Company, including, but not limited to, any exchange or tender offer,
open market repurchases and/or consent solicitations. If Citigroup and/or any of
its affiliates agree to act in such capacity, the Issuer, the Company and
Citigroup and/or its affiliates, as the case may be, will enter into an
appropriate form of placement agency, engagement, dealer manager or other
agreement relating to the type of transaction involved and containing customary
terms and conditions.

                                                                              15

<PAGE>

          (t) Each of the Issuer and the Company will notify the Initial
Purchasers promptly of any changes affecting any of the Issuer's and/or the
Company's representations, warranties, agreements and indemnities herein at any
time prior to payment being made to or for the account of the Issuer on the
Closing Date and each settlement date.

          6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase the Firm Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties of the Issuer and the Company contained herein at
the Execution Time, the Publication Date, the Closing Date and any settlement
date pursuant to Section 3 hereof, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Issuer and the Company of their obligations hereunder and to
the following additional conditions:

          (a) The Representatives, on behalf of the Initial Purchasers, shall
have been, in their reasonable judgment, satisfied with the results of their due
diligence investigations on the Issuer, the Company and their subsidiaries for
purposes of preparation of the Offering Memorandum and the Offering Memorandum
shall be prepared in form and content similar to that prepared in connection
with offerings of similar types of securities.

          (b) There shall not have come to the notice of the Initial Purchasers
any matter or event showing any of the representations, warranties and/or
undertakings of the Issuer or the Company under this Agreement to be untrue or
misleading in any material respect or there shall have not been any material
breach on the Company's part of any provision of this Agreement.

          (c) The Issuer and the Company shall have requested and caused Appleby
Spurling & Kempe, Bermuda counsel for the Issuer and the Company, to furnish to
the Representatives its opinion, in a form reasonably satisfactory to the
Representatives, dated the Closing Date and addressed to the Representatives.

          (d) The Issuer and the Company shall have requested and caused Baker &
McKenzie, English and Hong Kong counsel for the Issuer and the Company, to
furnish to the Representatives its opinion, in a form reasonably satisfactory to
the Representatives, dated the Closing Date and addressed to the
Representatives.

          (e) The Representatives shall have received from Herbert Smith,
English, Hong Kong and U.S. counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date and addressed to the Representatives, with
respect to the issuance and sale of the Securities, the Trust Deed, the Agency
Agreement, the Offering Memorandum (as amended or supplemented at the Closing
Date) and other related matters as the Representatives may reasonably require,
and the Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such matters.

          (f) Each of the Issuer and the Company shall have furnished to the
Representatives a certificate signed by (x) the Chairman of the Board and (y)
the principal financial or accounting officer of the Issuer and the Company,
dated the Closing Date, to the effect that the signers of such certificate have
carefully examined the Offering Memorandum, any amendment or supplement to the
Offering Memorandum and this Agreement and that:

                                                                              16

<PAGE>

               (i) the representations and warranties in this Agreement are true
          and correct on and as of the Closing Date with the same effect as if
          made on the Closing Date, and the Issuer and the Company has complied
          with all the agreements and satisfied all the conditions on its part
          to be performed or satisfied hereunder at or prior to the Closing
          Date; and

               (ii) since the date of the most recent financial statements
          included or incorporated by reference in the Offering Memorandum
          (exclusive of any amendment or supplement thereto), there has been no
          material adverse change in the condition (financial or otherwise),
          prospects, earnings, business or properties of the Company and its
          subsidiaries, taken as a whole, whether or not arising from
          transactions in the ordinary course of business.

          (g) At the Publication Date and at the Closing Date, the Issuer and
the Company shall have requested and caused Moore Rowland Mazars to furnish to
the Representatives letters, dated respectively as of the Execution Time and as
of the Closing Date, in form and substance satisfactory to the Representatives.

          (h) Subsequent to the Execution Time or the Publication Date or, if
earlier, the dates as of which information is given in the Offering Memorandum
(exclusive of any amendment or supplement thereto), there shall not have been
(i) any change or decrease specified in the letter or letters referred to in
paragraph (h) of this Section 6; or (ii) any change, or any development
involving a prospective change, in or affecting the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the Securities as contemplated in the Offering
Memorandum (exclusive of any amendment or supplement thereto).

          (i) Prior to the Execution Time, each of the Issuer and the Company
shall have furnished to the Representatives a letter substantially in the form
of Exhibit B hereto from each director of the Company addressed to the
Representatives.

          (j) The Company shall have caused the Shares initially issuable upon
conversion of the Securities to be approved for listing, subject to issuance and
to conditions imposed by the Hong Kong Stock Exchange which the Company does not
unreasonably object, on the Hong Kong Stock Exchange.

          (k) The SGX-ST having agreed to list the Securities, subject only to
the issue of the Global Bond, or the Representatives (on behalf of the Initial
Purchasers) being satisfied that such listing will be granted.

          (l) With respect to any Closing Date for the Option Securities, the
shareholders of the Company having approved the issue of the Shares initially
issuable upon conversion of the Option Securities.

                                                                              17

<PAGE>

          (m) Prior to the Closing Date, each of the Issuer and the Company
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.

          If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representatives and counsel
for the Initial Purchasers, this Agreement and all obligations of the Initial
Purchasers hereunder may be cancelled at, or at any time prior to, the Closing
Date by the Representatives. Notice of such cancellation shall be given to the
Issuer and the Company in writing or by telephone or facsimile confirmed in
writing.

          The documents required to be delivered by this Section 6 will be
delivered at the office of counsel for the Initial Purchasers on the Closing
Date.

          If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Initial Purchasers set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part of
the Issuer or the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the Initial
Purchasers, the Issuer, failing whom the Company, will reimburse the Initial
Purchasers severally through Citigroup on demand for all expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.

          7. Indemnification. (a) Each of the Issuer and the Company jointly and
severally agrees to indemnify and hold harmless each Initial Purchaser, the
directors, officers, employees, Affiliates and agents of each Initial Purchaser
and each person who controls any Initial Purchaser within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other U.S. federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any breach or alleged breach by the Issuer or the Company of the
representations, warranties or covenants given by the Issuer or the Company
herein or (ii) any untrue statement or alleged untrue statement of a material
fact to be contained in the Offering Memorandum or in any amendment or
supplement thereto or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Issuer and the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission to be made
in the Offering Memorandum, or in any amendment thereof or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Issuer and the Company by or on behalf of any Initial Purchaser through the
Representatives specifically for inclusion therein. This indemnity agreement
will be in addition to any liability that the Issuer or the Company may
otherwise have.

                                                                              18

<PAGE>

          (b) Each Initial Purchaser severally, and not jointly, agrees to
indemnify and hold harmless the Issuer, the Company, each of its directors, each
of its officers, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Issuer and the Company to each Initial Purchaser, but only
with reference to written information relating to such Initial Purchaser
furnished to the Issuer and the Company by or on behalf of such Initial
Purchaser through the Representatives specifically for inclusion in the Offering
Memorandum or in any amendment or supplement thereto. This indemnity agreement
will be in addition to any liability that any Initial Purchaser may otherwise
have. The Issuer and the Company acknowledge that only such information
furnished by the Initial Purchasers to the Issuer and the Company in writing
expressly for inclusion in the Offering Memorandum or in any amendment or
supplement thereto will be so included.

          (c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel (including
local counsel) of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel,
other than local counsel if not appointed by the indemnifying party, retained by
the indemnified party or parties except as set forth below); provided, however,
that such counsel shall be satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel (including
local counsel) to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.

                                                                              19

<PAGE>

          8. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities set
forth in Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such nondefaulting Initial Purchasers do not purchase all
the Securities, this Agreement will terminate without liability to any
nondefaulting Initial Purchaser, the Issuer or the Company. In the event of a
default by any Initial Purchaser as set forth in this Section 8, the Closing
Date shall be postponed for such period, not exceeding five Business Days, as
the Representatives shall determine in order that the required changes in the
Offering Memorandum or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Initial
Purchaser of its liability, if any, to the Issuer or the Company or any
nondefaulting Initial Purchaser for damages occasioned by its default hereunder.

          9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Issuer prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) there shall come to the notice of the Initial Purchasers any matter or event
showing any of the representations, warranties and/or undertakings of the Issuer
or the Company under this Agreement to be untrue or misleading in any material
respect or there shall have been any breach on the Issuer's or the Company's
part of any provision of this Agreement; (ii) trading in the Company's Shares
shall have been suspended by the U.S. Securities and Exchange Commission or the
Hong Kong Stock Exchange so as to make it impractical to proceed with the
offering or the delivery of the Securities or; (iii) trading in securities
generally on the New York Stock Exchange or the Hong Kong Stock Exchange shall
have been suspended or limited or minimum prices shall have been established on
either of such exchanges ; (iv) a banking moratorium shall have been declared
either by U.S. federal or New York State authorities; (v) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the sole judgment of the
Representatives, impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated in the Offering Memorandum (exclusive
of any amendment or supplement thereto); or (vi) there shall have occurred a
change in U.S., Hong Kong, PRC or international financial political or economic
conditions or currency exchange rates or exchange controls as would, in the
judgment of the Representatives after consultation with the Company be likely to
prejudice materially the success of the proposed issue, sale or distribution of
the Securities, whether in the primary market or in respect of dealings in the
secondary market.

          10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Issuer, the Company or their respective officers and of the Initial Purchasers
set forth in or made pursuant to this Agreement

                                                                              20

<PAGE>

will remain in full force and effect, regardless of any investigation made by or
on behalf of the Initial Purchasers or the Issuer or the Company or any of the
indemnified persons referred to in Sections 7 hereof, and will survive delivery
of and payment for the Securities. The provisions of Section 7 hereof shall
survive the termination or cancellation of this Agreement.

          11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Citigroup General Counsel and confirmed to
Citigroup at Citigroup Centre, 33 Canada Square, Canary Wharf, London E14 5LB,
England, Attention: General Counsel; or, if sent to the Issuer, or, if sent to
the Company, will be mailed, delivered or telefaxed to +852-2526-8472 and
confirmed to it at Suites 1602-05, Chater House, 8 Connaught Road Central, Hong
Kong, attention of Mr. Wu Xiao An.

          12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
indemnified persons referred to in Section 8 hereof and their respective
successors, and, except as expressly set forth in Section 5(h) hereof, no other
person will have any right or obligation hereunder. The Contracts (Rights of
Third Parties) Act 1999 applies to this Section 12 and Section 7.

          13. Jurisdiction. Each of the Issuer and the Company agrees that any
suit, action or proceeding against the Issuer or the Company brought by any
Initial Purchaser, the directors, officers, employees and agents of any Initial
Purchaser, or by any person who controls any Initial Purchaser, arising out of
or based upon this Agreement or the transactions contemplated hereby may be
instituted in the courts of England, and waives any objection which it may now
or hereafter have to the laying of venue of any such proceeding, and irrevocably
submits to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding. Each of the Issuer and the Company hereby appoints Baker & McKenzie,
London, now at 100 New Bridge Street, London EC4V 6JA, England as its authorized
agent (the "Authorized Agent") upon whom process may be served in any suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated herein that may be instituted in the courts of
England, by any Initial Purchaser, the directors, officers, employees,
Affiliates and agents of any Initial Purchaser, or by any person who controls
any Initial Purchaser, and expressly accepts the non-exclusive jurisdiction of
any such court in respect of any such suit, action or proceeding. Each of the
Issuer and the Company hereby represents and warrants that the Authorized Agent
has accepted such appointment and has agreed to act as said agent for service of
process, and each of the Issuer and the Company agrees to take any and all
action, including the filing of any and all documents that may be necessary to
continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent shall be deemed, in every respect, effective
service of process upon the Issuer or, as the case may be, the Company.
Notwithstanding the foregoing, any action arising out of or based upon this
Agreement may be instituted by any Initial Purchaser, the directors, officers,
employees, Affiliates and agents of any Initial Purchaser, or by any person who
controls any Initial Purchaser, in any court of competent jurisdiction in
Bermuda. The parties hereto each hereby waive any right to trial by jury in any
action, proceeding or counterclaim arising out of or relating to this Agreement.

          14. Applicable Law. This Agreement, as to which time shall be of the
essence, will be governed by and construed in accordance with the laws of
England.

                                                                              21

<PAGE>

          15. Currency. Each reference in this Agreement to U.S. dollars (the
"relevant currency"), including by use of the symbol "$", is of the essence. To
the fullest extent permitted by law, the obligation of the Issuer and the
Company in respect of any amount due under this Agreement will, notwithstanding
any payment in any other currency (whether pursuant to a judgment or otherwise),
be discharged only to the extent of the amount in the relevant currency that the
party entitled to receive such payment may, in accordance with its normal
procedures, purchase with the sum paid in such other currency (after any premium
and costs of exchange) on the Business Day immediately following the day on
which such party receives such payment. If the amount in the relevant currency
that may be so purchased for any reason falls short of the amount originally
due, the Issuer and the Company will pay such additional amounts, in the
relevant currency, as may be necessary to compensate for the shortfall. Any
obligation of the Issuer or, as the case may be, the Company not discharged by
such payment will, to the fullest extent permitted by applicable law, be due as
a separate and independent obligation and, until discharged as provided herein,
will continue in full force and effect.

          16. Waiver of Immunity. To the extent that the Issuer or the Company
has or hereafter may acquire any immunity (sovereign or otherwise) from any
legal action, suit or proceeding, from jurisdiction of any court or from set-off
or any legal process (whether service or notice, attachment in aid or otherwise)
with respect to itself or any of its property, each of the Issuer and the
Company hereby irrevocably waives and agrees not to plead or claim such immunity
in respect of its obligations under this Agreement.

          17. Waiver of Tax Confidentiality. Notwithstanding anything herein to
the contrary, purchasers of the Securities (and each employee, representative or
other agent of the Issuer and the Company) may disclose to any and all persons,
without limitation of any kind, the U.S. tax treatment and U.S. tax structure of
any transaction contemplated herein and all materials of any kind (including
opinions or other tax analyses) that are provided to the purchasers of the
Securities relating to such U.S. tax treatment and U.S. tax structure, other
than any information for which nondisclosure is reasonably necessary in order to
comply with applicable securities laws.

          18. Contracts (Rights of Third Parties) Act 1999. A person who is not
a party to this Agreement has no right under the Contracts (Rights of Third
Parties) Act 1999 to enforce any term of this Agreement except and to the extent
(if any) that this Agreement expressly provides for such Act to apply to any of
its terms.

          19. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.

          20. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.

          21. Definitions. The terms that follow, when used in this Agreement,
shall have the meanings indicated.

          "Act" shall mean the U.S. Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

                                                                              22

<PAGE>

          "Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.

          "Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in London or Hong Kong.

          "Citigroup" shall mean Citigroup Global Markets Limited.

          "Commission" shall mean the Securities and Exchange Commission.

          "Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

          "Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.

                                                                              23
<PAGE>

          If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Issuer, the Company and the several Initial Purchasers.

                                        Very truly yours,

                                        GOLDCOSMOS INVESTMENTS LIMITED

                                        By: /s/ Ng Siu On
                                            ------------------------------------
                                        Name: Ng Siu On
                                        Title: Director

                                        BRILLIANCE CHINA AUTOMOTIVE
                                           HOLDINGS LIMITED

                                        By: /s/ Wu Xiao An
                                            ------------------------------------
                                        Name: Wu Xiao An
                                              (also known as Ng Siu On)
                                        Title: Director

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

CITIGROUP GLOBAL MARKETS LIMITED

By: /s/ David Fung
    ---------------------------------
Name: David Fung
Title: Director

                                                                              24

<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>
                                      PRINCIPAL AMOUNT
                                           OF FIRM
                                      SECURITIES TO BE
         INITIAL PURCHASERS               PURCHASED
         ------------------           ----------------
<S>                                   <C>
Citigroup Global Markets Limited...    US$182,678,000
   Total...........................    US$182,678,000
</TABLE>

<PAGE>

                                                                       EXHIBIT A

                              TERMS AND CONDITIONS

<TABLE>
<S>                        <C>
ISSUER                     Goldcosmos Investments Limited ("Issuer")

GUARANTOR                  Brilliance China Automotive Holdings Limited
                           ("Brilliance" or the "Company")

SALES RESTRICTIONS         Reg-S only

STATUS                     Direct, unconditional, unsubordinated and unsecured

RATING                     No International Rating

OFFERING SIZE              US$182,678,000, convertible into approximately 734
                           million fully paid ordinary shares of the Company
                           with a par value of US$0.01 (the "Ordinary Shares")

INCREASE OPTION            Manager's option to increase deal size by US$30
                           million

DENOMINATION               US$1,000 and integral multiples thereof

MATURITY                   June 7, 2011 (5 years)

COUPON                     0.00%

ISSUE PRICE                100.00%

CONVERSION PREMIUM         36% premium to HK$1.42, being the closing price per
                           Ordinary Share as quoted on the Stock Exchange of
                           Hong Kong Limited (the "Stock Exchange") on May 4,
                           2006

CONVERSION PRICE           HK$1.93 per Ordinary Share

YIELD TO PUT / MATURITY    7.00%

PUT PRICE                  122.926%

REDEMPTION PRICE           141.060% on June 7, 2011

ISSUER CALL OPTION         On or at any time after June 7, 2008 and prior to
                           June 7, 2009, the Issuer may redeem the Bonds in
                           whole but not in part at the Early Redemption Amount
                           together with accrued and unpaid interest if the
                           closing price of the Shares as quoted on the Stock
                           Exchange for each of 30 consecutive days on which the
                           Stock Exchange is opened for trading ("Trading
                           Days"), the last of which occurs not more than 5
                           Trading Days prior to the date upon which notice of
                           such redemption is given, is greater than 145% of the
                           applicable Early Redemption Amount divided by the
                           number of Ordinary Shares to which the Bonds in whole
                           are converted upon Conversion

                           On or at any time after June 7, 2009 and prior to
                           May 8, 2011 (30 days prior to the Maturity Date), the
                           Issuer may redeem the Bonds in whole but not in part
                           at the Early Redemption Amount together with accrued
                           and unpaid interest if the closing price of the
                           Shares as quoted on the Stock Exchange for each of 30
                           consecutive Trading Days, the last of which occurs
                           not more than 5 Trading Days prior to the date upon
                           which notice of such redemption is given, is greater
                           than 130% of the applicable Early Redemption Amount
                           divided by the number of Ordinary Shares to which the
                           Bonds in whole are converted upon Conversion

PUT FEATURE                On the 3rd Anniversary of the Closing Date, each
                           holder of the Bonds will have the right, at such
                           holder's option, to require the Issuer to redeem in
                           whole but not in part of such holder's Bonds at
                           122.926%

CONVERSION RIGHTS          Convertible into Ordinary Shares listed on the Stock
                           Exchange

CONVERSION PERIOD          Convertible into Ordinary Shares, at the election of
                           the bondholders at any time from July 6, 2006 (30
                           days after closing) up to the close of business on
                           May 8, 2011 or, if the Bonds shall have been called
                           for redemption before May 8, 2011, up to a date no
                           later than 7 business days prior to the date fixed
                           for redemption thereof

RESET FEATURE              The Conversion Price shall be adjusted on March 10,
                           2007 (the first Reset Date), to the Average Market
                           Price, if the Average Market Price per Ordinary Share
                           is less than the Conversion Price, provided that the
                           adjusted Conversion Price shall not be less than 68%
                           of the Conversion Price prevailing on the first Reset
                           Date

                           The Conversion Price shall be adjusted on March 10,
                           2008 (the second Reset Date), to the Average Market
                           Price, if the Average Market Price per Ordinary Share
                           is less than the Conversion Price, provided that the
                           adjusted Conversion Price shall not be less than 75%
                           of the Conversion Price prevailing on the second
                           Reset Date

ANTI-DILUTION PROTECTION   Conversion price will be subject to adjustment for,
                           among other things, division or consolidation of
                           shares, rights issues at a discount, cash dividends,
                           share dividends, and other standard dilutive events

CASH SETTLEMENT OPTION     The Issuer shall have the option to pay to the
                           relevant holder of the Bonds an amount of cash in
                           Hong Kong dollars equal to the Cash Settlement Amount
                           in order to satisfy such Conversion Right in full or
                           in part. The Issuer shall provide notice of the
                           exercise of the Cash Settlement Option (the Cash
                           Settlement Notice) to the relevant holder of the
                           Bonds as soon as practicable but no later than the
                           Trading Day following the date of receipt of the
                           Conversion Notice by the Issuer. The Issuer shall pay
                           the Cash Settlement Amount not less than 10 Trading
                           Days but no later than 13 Trading Days following the
                           Cash Settlement Notice Date

EARLY REDEMPTION AMOUNT    An amount equal to 100 per cent. of the principal
                           amount of the Bonds redeemed plus the Redemption
                           Premium at the relevant date fixed for redemption.
                           "Redemption Premium" represents a gross yield of
                           7.00% per annum (which is identical to the gross
                           yield for the Bonds in the case of redemption at
                           maturity), calculated on a semi-annual basis

CLEAN UP CALL              If at any time the aggregate principal amount of the
                           Bonds outstanding is less than 10% of the aggregate
                           principal amount originally issued, the Issuer shall
                           have the option to redeem such outstanding Bonds in
                           whole but not in part at the Early Redemption Amount

CHANGE OF CONTROL PUT      Yes

DELISTING PUT              Yes

TAX                        Standard euro grossing up provisions, with an Issuer
                           tax call at Early Redemption Amount in whole

NEGATIVE PLEDGE            Yes, for the Company and its Material Subsidiaries

EVENTS OF DEFAULT          Standard events of default clauses

LOCK-UP                    90 days for the Company

USE OF PROCEEDS            Refinancing and general working capital requirements

PRICING & TRADE DATE       May 8, 2006

EXPECTED SETTLEMENT        June 7, 2006
</TABLE>

<PAGE>

<TABLE>
<S>                        <C>
EXPECTED CLOSING DATE      June 7, 2006

GOVERNING LAW              English Law

LISTING                    Application will be made to list the Bonds on the
                           Singapore Stock Exchange

SOLE BOOKRUNNER            Citigroup Global Markets Limited

STABILISATION /
SETTLEMENT AGENT           Citigroup

TRUSTEE                    [Bank of New York]

ISIN                       XS0254267890

COMMON CODE                025426789

SEDOL                      B14RJ39
</TABLE>

<PAGE>

                                                                       EXHIBIT B

                  [LETTERHEAD OF EACH DIRECTOR OF THE COMPANY]

                                                                 ___________, __

Citigroup Global Markets Limited
As Representative of the Initial Purchasers
Citigroup Centre
33 Canada Square
Canary Wharf
London E14 5LB England

Ladies and Gentlemen:

          This letter is being delivered to you in connection with a proposed
Purchase Agreement (the "Purchase Agreement") between Goldcosmos Investments
Limited, a British Virgin Islands corporation (the "Issuer"), Brilliance China
Automotive Holdings Limited, a Bermudan corporation (the "Company") and you as
representatives of a group of Initial Purchasers named therein, relating to an
offering of Zero Coupon Guaranteed Convertible Bonds Due 2011, which will be
convertible into ordinary shares, US$0.01 par value (the "Shares"), of the
Company.

          In order to induce you and the other Initial Purchasers to enter into
the Purchase Agreement, the undersigned will not, without the prior written
consent of Citigroup Global Markets Limited, directly or indirectly, offer,
sell, contract to sell, pledge or otherwise dispose of, enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition
due to cash settlement or otherwise) by the undersigned or any affiliate of the
undersigned or any person in privity with the undersigned or any affiliate of
the undersigned of, file (or participate in the filing of) a registration
statement with the U.S. Securities and Exchange Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the U.S. Securities
and Exchange Commission promulgated thereunder with respect to, any shares of
capital stock of the Company or any securities convertible into, or exercisable
or exchangeable for such capital stock, or publicly announce an intention to
effect any such transaction, for a period of 180 days after the date of the
Purchase Agreement, other than Shares disposed of as bona fide gifts approved by
Citigroup Global Markets Limited and any exercise or assignment of options
granted by Huachen Automotive Group Holdings Company Limited to certain
directors of the Company.

<PAGE>

          If for any reason the Purchase Agreement shall be terminated prior to
the Closing Date (as defined in the Purchase Agreement), the agreement set forth
above shall likewise be terminated.

                                        Very truly yours,

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

<PAGE>

                                                                       EXHIBIT C

                           CASH AND CASH EQUIVALENTS*

<TABLE>
<S>                                                      <C>
Shenyang Brilliance JinBei Automobile Co., Ltd........   RMB813,000,000
Shenyang XingYuanDong Automobile Component Co., Ltd...   RMB287,000,000
</TABLE>

*    "RMB" shall mean Renminbi, the lawful currency of the People's Republic of
     China.ex-4.1

 

Exhibit 4.1

Dated 7th June 2006

ABBEY NATIONAL PLC

and

RESOLUTION LIFE LIMITED

and

RESOLUTION PLC

 

SALE AND PURCHASE AGREEMENT

 

Slaughter and May

One Bunhill Row

London EC1Y 8YY

(WSMR/RAC/CEZD)

CD061020007

 

 

CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.

	 	INTERPRETATION
	 	 	1	 
	 
	 	 	 	 	 	 
	2.

	 	SALE AND PURCHASE
	 	 	22	 
	 
	 	 	 	 	 	 
	3.

	 	CONDITIONS; STEPS TO COMPLETION
	 	 	23	 
	 
	 	 	 	 	 	 
	4.

	 	OVERSEAS REGULATORY CONSENTS
	 	 	26	 
	 
	 	 	 	 	 	 
	5.

	 	CONDUCT OF BUSINESS BEFORE COMPLETION
	 	 	27	 
	 
	 	 	 	 	 	 
	6.

	 	CONSIDERATION
	 	 	30	 
	 
	 	 	 	 	 	 
	7.

	 	COMPLETION
	 	 	31	 
	 
	 	 	 	 	 	 
	8.

	 	GROUP AND RETAINED GROUP GUARANTEES
	 	 	32	 
	 
	 	 	 	 	 	 
	9.

	 	INTER-COMPANY BALANCES
	 	 	33	 
	 
	 	 	 	 	 	 
	10.

	 	SELLER’S WARRANTIES AND UNDERTAKINGS
	 	 	36	 
	 
	 	 	 	 	 	 
	11.

	 	PURCHASER’S AND GUARANTOR’S WARRANTIES
	 	 	40	 
	 
	 	 	 	 	 	 
	12.

	 	PURCHASER’S REMEDIES AND SELLER’S LIMITATIONS ON LIABILITY
	 	 	41	 
	 
	 	 	 	 	 	 
	13.

	 	WRONG POCKET — ASSETS
	 	 	41	 
	 
	 	 	 	 	 	 
	14.

	 	WRONG POCKET — CONTRACTS
	 	 	43	 
	 
	 	 	 	 	 	 
	15.

	 	INTELLECTUAL PROPERTY
	 	 	44	 
	 
	 	 	 	 	 	 
	16.

	 	ABBEY MARKS
	 	 	45	 
	 
	 	 	 	 	 	 
	17.

	 	PENSIONS
	 	 	46	 
	 
	 	 	 	 	 	 
	18.

	 	EMPLOYMENT
	 	 	49	 
	 
	 	 	 	 	 	 
	19.

	 	SHARE SCHEMES
	 	 	52	 
	 
	 	 	 	 	 	 
	20.

	 	INSURANCE
	 	 	53	 
	 
	 	 	 	 	 	 
	21.

	 	PROPERTY
	 	 	54	 
	 
	 	 	 	 	 	 
	22.

	 	THE DEMUTUALISATION SCHEMES
	 	 	54	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	23.

	 	COMMUNICATIONS
	 	 	56	 
	 
	 	 	 	 	 	 
	24.

	 	GUARANTEE
	 	 	56	 
	 
	 	 	 	 	 	 
	25.

	 	ACCESS
	 	 	58	 
	 
	 	 	 	 	 	 
	26.

	 	EFFECT OF COMPLETION AND PART VII TRANSFER
	 	 	59	 
	 
	 	 	 	 	 	 
	27.

	 	REMEDIES AND WAIVERS
	 	 	59	 
	 
	 	 	 	 	 	 
	28.

	 	ASSIGNMENT
	 	 	60	 
	 
	 	 	 	 	 	 
	29.

	 	FURTHER ASSURANCE
	 	 	61	 
	 
	 	 	 	 	 	 
	30.

	 	ENTIRE AGREEMENT
	 	 	61	 
	 
	 	 	 	 	 	 
	31.

	 	NOTICES
	 	 	61	 
	 
	 	 	 	 	 	 
	32.

	 	ANNOUNCEMENTS
	 	 	62	 
	 
	 	 	 	 	 	 
	33.

	 	CONFIDENTIALITY
	 	 	63	 
	 
	 	 	 	 	 	 
	34.

	 	COSTS AND EXPENSES
	 	 	65	 
	 
	 	 	 	 	 	 
	35.

	 	COUNTERPARTS
	 	 	65	 
	 
	 	 	 	 	 	 
	36.

	 	INVALIDITY
	 	 	66	 
	 
	 	 	 	 	 	 
	37.

	 	CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
	 	 	66	 
	 
	 	 	 	 	 	 
	38.

	 	CHOICE OF GOVERNING LAW
	 	 	66	 
	 
	 	 	 	 	 	 
	39.

	 	JURISDICTION
	 	 	66	 

 

 

SCHEDULES

	 	 	 	 	 
	 	 	Page	 
	Schedule 1 (Conditions)
	 	 	67	 
	 
	 	 	 	 
	Schedule 2 (Steps to Completion)
	 	 	70	 
	 
	 	 	 	 
	Schedule 3 (Conduct of Group’s business before Completion)
	 	 	75	 
	 
	 	 	 	 
	Schedule 4 (Apportionment of Consideration)
	 	 	79	 
	 
	 	 	 	 
	Schedule 5 (Completion arrangements)
	 	 	80	 
	 
	 	 	 	 
	Schedule 6 (Warranties)
	 	 	84	 
	 
	 	 	 	 
	Schedule 7 (Limitations)
	 	 	123	 
	 
	 	 	 	 
	Schedule 8 (Basic information about the Companies)
	 	 	134	 
	 
	 	 	 	 
	Schedule 9 (Basic information about the Subsidiaries)
	 	 	142	 
	 
	 	 	 	 
	Schedule 10 (Group and Retained Group Guarantees)
	 	 	171	 
	 
	 	 	 	 
	Schedule 11 (Key Intermediaries)
	 	 	172	 
	 
	 	 	 	 
	Schedule 12 (Senior Employees)
	 	 	173	 
	 
	 	 	 	 
	Schedule 13 (Relevant Properties)
	 	 	178	 
	 
	 	 	 	 
	Schedule 14 (Property matters)
	 	 	185	 
	 
	 	 	 	 
	Schedule 15 (Flame and Umbrella Logos)
	 	 	189	 

 

 

AGREED FORM DOCUMENTS

Abbey Announcement

Actuarial Reports

Agreement for Lease

ANFIS Separation Agreement

ANSMAH Confirmation Letter

Brand Licence

BSCH Announcement

Business Plan

Cash Management Agreement

Communications Plan

Draft Notices of Control to each Regulatory Authority

Fund Separation Agreement

Guarantor Recommendation

Guarantor Resolution

Hedge Waiver Letter

Introducer Appointed Representative Agreement

List of Employees

List of Listed Employees

List of Retained Employees

Relationship Deed

Resignation letters of directors and secretaries

Resolution Announcement

Tax Covenant

Underwriting Agreement

Voting powers of attorney

 

 

	 	 	 	 	 	 	 
	THIS AGREEMENT is made on 7th June 2006 between:
	 
	 	 	 	 	 	 
	1.	 	ABBEY NATIONAL PLC, a company registered in England and Wales under registered number
02294747 with its registered office at Abbey National House, 2 Triton Square, Regent’s Place,
London NW1 3AN (the “Seller”);
	 
	 	 	 	 	 	 
	2.	 	RESOLUTION LIFE LIMITED, a company registered in England and Wales under registered number
04560778 with its registered office at Edward Pavillion, Albert Dock, Liverpool, Merseyside L3
4SL (the “Purchaser”); and
	 
	 	 	 	 	 	 
	3.	 	RESOLUTION PLC, a company registered in England and Wales under registered number 03524909
with its registered office at Juxon House, 100 St Paul’s Churchyard, London EC4M 8BU (the
“Guarantor”).
	 
	 	 	 	 	 	 
	WHEREAS:
	 
	 	 	 	 	 	 
	(A)	 	The Seller is the beneficial owner of the entire issued share capital of each of the
Companies.
	 
	 	 	 	 	 	 
	(B)	 	The Companies directly or indirectly beneficially own the entire issued share capital of each
of the Subsidiaries.
	 
	 	 	 	 	 	 
	(C)	 	The Seller has agreed to sell, and the Purchaser has agreed to purchase and pay for, the
Shares in each case on the terms and subject to the conditions of this agreement.
	 
	 	 	 	 	 	 
	(D)	 	The Guarantor has agreed to guarantee the obligations of the Purchaser under the Transaction
Documents.
	 
	 	 	 	 	 	 
	IT IS AGREED as follows:
	 
	 	 	 	 	 	 
	1.

	 	INTERPRETATION	 	 	 	 
	 
	 	 	 	 	 	 
	1.1

	 	In this agreement:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	“Abbey Announcement”	 	means the announcement to be made by Abbey following signing of this agreement concerning the
transactions contemplated by this agreement and the other Transaction Documents, in the
agreed form;
	 
	 	 	 	 	 	 
	 	 	“Abbey Marks”	 	means the names and marks “Abbey” and “Abbey National”, any name or mark which incorporates
any of the foregoing and any symbol, logo or device associated with any of the foregoing
including the Flame Logo and the Umbrella Logo;

 

2

	 	 	 	 	 	 	 
	 	 	“Accounts”	 	means the audited unconsolidated financial statements (comprising in each case a balance
sheet and a profit and loss account) of each Group Member (other than SPILA Marketing (in
liq)) for the accounting reference period ended on the Accounts Date, a copy of each of which
is delivered with the Disclosure Letter;
	 
	 	 	 	 	 	 
	 	 	“Accounts Date”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	in respect of SPI – 31 July 2005;
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	in respect of Cityfourinc – 30 August 2005; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(C)
	 	otherwise – 31 December 2005;
	 
	 	 	 	 	 	 
	 	 	“Actual Case I Basis”	 	means, in relation to the United Kingdom tax regime, the taxation of the profits of an
Insurance Company in accordance with Case I of Schedule D under section 18 ICTA 1988;
	 
	 	 	 	 	 	 
	 	 	“Actuarial Reports”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	the actuarial report together with any supplementary
reports thereto;
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	the new business letter;
	 
	 	 	 	 	 	 
	 

	 	 	 	(C)
	 	the note on errors in the realistic balance sheet; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(D)
	 	the report on burn-through costs,
	 
	 	 	 	 	 	 
	 	 	 	 	each in the agreed form and as produced by the Seller’s Actuaries in relation to the
Insurance Companies as at 31 December 2005
	 
	 	 	 	 	 	 
	 	 	“Agreement for Lease”	 	has the meaning given to it in paragraph 4.3 of Schedule 14;
	 
	 	 	 	 	 	 
	 	 	“ANFIS”	 	means Abbey National Financial and Investment Services plc, a Company whose details are set
out in Schedule 8;
	 
	 	 	 	 	 	 
	 	 	“ANFIS FE (in liq)”	 	means Abbey National Financial and Investment Services (Far East) Limited (in liquidation);
	 
	 	 	 	 	 	 
	 	 	“ANFIS IoM”	 	means Abbey National Financial and Investment Services Isle of Man Limited, a Company whose
details are set out in Schedule 8;

 

3

	 	 	 	 	 	 	 
	 	 	“ANFIS Letter”	 	means the letter agreement between the Seller, the Purchaser and the Guarantor dated the same
date as this agreement relating to the ANFIS Separation Agreement;
	 
	 	 	 	 	 	 
	 	 	“ANFIS Separation

Agreement”	 	means the separation
agreement relating to, inter alia, ANFIS, referred to in Schedule 5 in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“ANL”	 	means Abbey National Life plc, a Company whose details are set out in Schedule 8;
	 
	 	 	 	 	 	 
	 	 	“ANSMAH”	 	means Abbey National SMA Holdings Limited whose details are set out in Schedule 8;
	 
	 	 	 	 	 	 
	 	 	“ANSMAH Confirmation

Letter”	 	means the letter from the Seller to ANSMAH confirming the termination of the letter of
support from the Seller to ANSMAH with effect from Completion, in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Books and Records”	 	has its common law meaning and includes, without limitation, all notices, correspondence,
orders, inquiries, drawings, plans, books of account, computer disks or tapes containing data
and documents (excluding, for the avoidance of doubt, software) on which Business Information
is recorded;
	 
	 	 	 	 	 	 
	 	 	“Brand Licence”	 	means the brand licence between Banco Santander Central Hispano, S.A., the Seller and the
Purchaser which is referred to in Schedule 5 in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“BSCH Announcement”	 	means the announcement to be made by Banco Santander Central Hispano, S.A following signing
of this agreement concerning the transactions contemplated by this agreement and the other
Transaction Documents, in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Business Day”	 	means a day (other than a Saturday or a Sunday) on which banks are open for business in
London;
	 
	 	 	 	 	 	 
	 	 	“Business Information”	 	means all information (whether or not confidential and in whatever form held) including
(without limitation) all:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	formulas, designs, specifications, drawings, data and
instructions;
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	customer lists, sales, marketing and promotional
information;
	 
	 	 	 	 	 	 
	 

	 	 	 	(C)
	 	business plans and forecasts; and

 

4

	 	 	 	 	 	 	 
	 

	 	 	 	(D)
	 	technical or other expertise or know-how;
	 
	 	 	 	 	 	 
	 	 	“Business Plan”	 	means the Purchaser’s business plan in respect of the Group in the agreed form, which will
form part of the Purchaser’s change of control submission to the FSA;
	 
	 	 	 	 	 	 
	 	 	“Business Property”	 	means the Properties referred to in Schedule 13;
	 
	 	 	 	 	 	 
	 	 	“Cash Management

Agreement”	 	means the cash management agreement referred to in Schedule 5 in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Cater Tyndall Loan”	 	means the loan of £90,000,000 from ANL to Cater Tyndall Limited under a loan agreement dated
22 December 2005;
	 
	 	 	 	 	 	 
	 	 	“Communications Plan”	 	means the plan in respect of announcements and communications from the date of this agreement
until the Completion Date with third parties including employees, policyholders,
Intermediaries, reinsurers and suppliers of the Insurance Companies, and the Intermediaries
and material customers, suppliers and other contractual counterparties of each Group Member
in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Companies”	 	means the companies being sold pursuant to this agreement, basic information concerning each
of which is set out in Schedule 8;
	 
	 	 	 	 	 	 
	 	 	“Companies Acts”	 	means the Companies Act 1985, the Companies Consolidation (Consequential Provisions) Act
1985, the Companies Act 1989 and Part V of the Criminal Justice Act 1993;
	 
	 	 	 	 	 	 
	 	 	“Completion”	 	means completion, subject to clause 4, of the sale and purchase of the Shares under this
agreement;
	 
	 	 	 	 	 	 
	 	 	“Completion Date”	 	means the fifth Business Day following the day on which the last in time of the Conditions
relevant to Completion shall have been:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	fulfilled in accordance with this agreement;
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	in the case of the Conditions in paragraphs 4, 5 or 6
of Schedule 1 – waived in accordance with clauses
3.3, 3.4 or 3.5, or
	 
	 	 	 	 	 	 
	 

	 	 	 	(C)
	 	the subject of a notice from the Seller or the
Purchaser in accordance with clause 4,

 

5

	 	 	 	 	 	 	 
	 	 	 	 	or such other date as the parties may agree;
	 
	 	 	 	 	 	 
	 	 	“Conditions”	 	means the conditions set out in Schedule 1;
	 
	 	 	 	 	 	 
	 	 	“Consideration”	 	means the amount determined in accordance with clause 6.2;
	 
	 	 	 	 	 	 
	 	 	“Core Conditions”	 	means the Conditions in paragraphs 1, 2, 3(A), 3(B), 4, 5 and 6 of Schedule 1;
	 
	 	 	 	 	 	 
	 	 	“Current Employees”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	Listed Employees; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	individuals who are assigned to the business carried
on by any Group Member at the date of this agreement
and employed by any Retained Group Member and who
were appointed to their position in the ordinary
course of business between the close of business on
26 May 2006 and the date of this agreement;
	 
	 	 	 	 	 	 
	 	 	“Current SMI Litigation”	 	means the following litigation:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	Complaint for Rescission of Purchase of Securities
due to Fraud, Kal Brar, an individual, and Imelda
Brar, an individual -v- Scottish Mutual International
plc and others (BC334233, Superior Court of
California); and
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	Complaint for Rescission of Purchase of Securities
due to Fraud James Pepper, an individual; James
Pepper as Settlor and Beneficiary of the Maximillian
Trust; and James Pepper as Beneficiary of the
Maximillian Trust 2 -v- Scottish Mutual International
plc and others (BC338489, Superior Court of
California);
	 
	 	 	 	 	 	 
	 	 	“Data Protection
Legislation”	 	means the Data Protection Act 1998 and all secondary legislation made thereunder (including
the Privacy and Electronic Communications Regulations (EC Directive) 2003) and equivalent
legislation in any other jurisdiction in which the Group Members carry on their business;

 

6

	 	 	 	 	 	 	 
	 	 	“Data Room”	 	means each of the documents listed in the data room index and supplementary indices (other
than those documents which are identified on any such index as being missing and other than
to the extent that any of those documents are identified on any such index which were made
available as being incomplete or illegible), copies of which indices have for the purposes of
identification only been signed by or on behalf of the Seller and the Purchaser;
	 
	 	 	 	 	 	 
	 	 	“Deliverables”	 	means the Retail Deliverables (as defined in the Retail Distribution Agreement) and the
Intermediary Deliverables (as defined in the Intermediary Distribution Agreement);
	 
	 	 	 	 	 	 
	 	 	“Demutualisation Schemes”	 	means the SMA Demutualisation Scheme and the SPL Demutualisation Scheme;
	 
	 	 	 	 	 	 
	 	 	“Disclosure Letter”	 	means the letter dated the same date as this agreement written by the Seller to the Purchaser
for the purposes of clause 12.2 and delivered to the Purchaser’s Solicitors before the
execution of this agreement;
	 
	 	 	 	 	 	 
	 	 	“Draft Notices of Control”	 	means substantially completed draft Notices of Control in the agreed form to each Regulatory
Authority from the Purchaser and each relevant member of the Purchaser’s Group in respect of
their acquisition of control of the Group for the purposes of fulfilling the Conditions in
paragraphs 2 and 3 of Schedule 1 (each a “Draft Notice of Control”);
	 
	 	 	 	 	 	 
	 	 	“Employee Liability

Information”	 	means the information which the Seller is required to give to the Purchaser in respect of the
Current Employees under the Regulations;
	 
	 	 	 	 	 	 
	 	 	“Employees”	 	means those employees employed by any Group Member, whose names are in a list prepared for
this purpose and in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Estimated Consideration”	 	means £3,600,000,000;
	 
	 	 	 	 	 	 
	 	 	“Estimated Inter-Company
Payables”	 	means the amounts estimated in good faith by the Seller as the amounts of Inter-Company
Payables which are set out in the written statement provided by the Seller to the Purchaser
no later than five Business Days prior to Completion pursuant to clause 9.3;

 

7

	 	 	 	 	 	 	 
	 	 	“Estimated Inter-Company
Receivables”	 	means the amounts estimated in good faith by the Seller as the amounts of Inter-Company
Receivables which are set out in the written statement provided by the Seller to the
Purchaser no later than five Business Days prior to Completion pursuant to clause 9.3;
	 
	 	 	 	 	 	 
	 	 	“Extended Long Stop Date”	 	means 31 December 2006;
	 
	 	 	 	 	 	 
	 	 	“Flame Logo”	 	means flame symbol set out Part A of Schedule 15;
	 
	 	 	 	 	 	 
	 	 	“FSA”	 	means the Financial Services Authority of the United Kingdom (or any successor authority
carrying out insurance regulatory functions in the United Kingdom from time to time);
	 
	 	 	 	 	 	 
	 	 	“FSA Returns”	 	means the returns filed by the Insurance Companies and Abbey National SMA Holdings Limited
with the FSA pursuant to IPRU(INS) in respect of the year ended 31 December 2005;
	 
	 	 	 	 	 	 
	 	 	“FSMA”	 	means the Financial Services and Markets Act 2000;
	 
	 	 	 	 	 	 
	 	 	“Fund Separation

Agreement”	 	means the fund separation agreement relating to Abbey National Asset Managers Limited
referred to in Schedule 5 in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Future SMI Litigation

Claim”	 	has the meaning given to that term in clause 10.9;
	 
	 	 	 	 	 	 
	 	 	“Group”	 	means the Companies and the Subsidiaries;
	 
	 	 	 	 	 	 
	 	 	“Group Guarantee”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	each of the guarantees, indemnities and other security obligations listed in Part B of
Schedule 10; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	any other guarantee, indemnity or other security obligation entered into or granted by
any Group Member in relation to or arising out of any obligations or liabilities of any
Retained Group Member;
	 
	 	 	 	 	 	 
	 	 	“Group Member”	 	means (subject to clause 26.3) a member of the Group;
	 
	 	 	 	 	 	 
	 	 	“Guarantor Recommendation”	 	means the unanimous recommendation of the directors of the Guarantor, in the agreed form, to
be included within the circular to be sent to the Guarantor’s shareholders pursuant to this
agreement;

 

8

	 	 	 	 	 	 	 
	 	 	“Guarantor Resolution”	 	means a resolution of the Guarantor’s shareholders in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Hedge Waiver Letter”	 	means the waiver letter in respect of the Opal Hedges, in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“HMRC”	 	means Her Majesty’s Revenue and Customs;
	 
	 	 	 	 	 	 
	 	 	“IAM Control Programme”	 	means the items evidenced in the PwC Control Programme Reports;
	 
	 	 	 	 	 	 
	 	 	“ICTA 1988”	 	means the Income and Corporation Taxes Act 1988;
	 
	 	 	 	 	 	 
	 	 	“IFR”	 	means the Irish Financial Services Regulatory Authority, a competent body of the Central Bank
and Financial Services Authority of the Republic of Ireland;
	 
	 	 	 	 	 	 
	 	 	“In-Force Policies”	 	means those contracts of insurance falling within classes of long-term insurance business and
set out in Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated
Activities) Order 2001 which are material to the business of the Group taken as a whole, are
in-force as at the date of this agreement, and were written by an Insurance Company or a
predecessor of, or transferor of business to, an Insurance Company;
	 
	 	 	 	 	 	 
	 	 	“Instalment Payments

Regulations”	 	means The Corporation Tax (Instalment Payments) Regulations 1998 (SI 1998 No. 3175);
	 
	 	 	 	 	 	 
	 	 	“Insurance Act 1986”	 	means the Insurance Act 1986 of the Isle of Man;
	 
	 	 	 	 	 	 
	 	 	“Insurance Authority”	 	means the public officer appointed under section 4(1) of the Insurance Companies Ordinance;
	 
	 	 	 	 	 	 
	 	 	“Insurance Companies”	 	means (subject to clause 26.3) ANL, SMA, SPL, SMI and SPILA (each an “Insurance Company”);
	 
	 	 	 	 	 	 
	 	 	“Insurance Companies

Ordinance”	 	means the Insurance Companies Ordinance (Cap. 41 of the Laws of Hong Kong);
	 
	 	 	 	 	 	 
	 	 	“Insurance Fund”	 	means a long-term insurance fund as defined in PRU 7.6.22R, or (where applicable) as defined
in the Insurance Act 1986 or the Insurance Act Regulations 1986 of the Isle of Man or a life
assurance fund as defined by section 62 of the Irish Insurance, 1989 as inserted by Schedule
1, part of the Central Bank and Financial Services Authority of Ireland Act, 2003;

 

9

	 	 	 	 	 	 	 
	 	 	“Intellectual Property”	 	means patents, trade marks, rights in designs, copyrights (including rights in computer
software) and database rights (whether or not any of these is registered and including
applications for registration of any such thing), and all rights or forms of protection of a
similar nature or having equivalent or similar effect to any of these which may subsist
anywhere in the world;
	 
	 	 	 	 	 	 
	 	 	“Inter-Company Payables”	 	means the aggregate of the amounts owing, including in respect of interest accrued on all
such amounts, as at Completion from Group Members to Retained Group Members (including any
distribution declared by any Group Member in favour of or payable to any Retained Group
Member), excluding (a) the Ordinary Trading Payables, and (b) any amounts payable to or from
any Insurance Fund;
	 
	 	 	 	 	 	 
	 	 	“Inter-Company
Receivables”	 	means the aggregate of the amounts owing, including in respect of interest accrued on all
such amounts, as at Completion from Retained Group Members to Group Members, excluding (a)
the Ordinary Trading Receivables, and (b) any amounts payable to or from any Insurance Fund;
	 
	 	 	 	 	 	 
	 	 	“Intermediaries”	 	means brokers, intermediaries, independent financial advisers and distributors, in each case
involved in the entry by an Insurance Company into new insurance policies;
	 
	 	 	 	 	 	 
	 	 	“Intermediary Distribution

Agreement”	 	means the intermediary distribution agreement between the Seller and the Purchaser dated the
same date as this agreement;
	 
	 	 	 	 	 	 
	 	 	“Introducer Appointed
Representative Agreement”	 	means the agreement defined as such in the Retail Banking Distribution Agreement, in the
agreed form;
	 
	 	 	 	 	 	 
	 	 	“Investment Assets”	 	means any assets of whatever nature that are held by, or to the order of, or by a nominee,
custodian or other third party for:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	any Group Member in connection with an asset
management business; or
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	any Insurance Fund maintained by any of the Insurance
Companies in connection with their insurance
business;
	 
	 	 	 	 	 	 
	 	 	“IPA”	 	means the Insurance and Pensions Authority, Isle of Man;

 

10

	 	 	 	 	 	 	 
	 	 	“IPRU(INS)”	 	means the Interim Prudential Sourcebook for Insurers forming part of the FSA’s handbook of
rules and guidance (as amended);
	 
	 	 	 	 	 	 
	 	 	“Irish Representative

Member”	 	means the remitter of the Irish VAT Group;
	 
	 	 	 	 	 	 
	 	 	“Irish Schemes”	 	means the Scottish Mutual International plc Staff Pension Scheme and The Scottish Provident
Institution Staff Pension Scheme for Employees in the Republic of Ireland;
	 
	 	 	 	 	 	 
	 	 	“Irish Target VAT Group

Member”	 	means each of Abbey National Financial and Investment Services plc (Irish branch), Abbey
National Financial and Investment Services Ireland plc, SMI, SMIFM and SPL (Irish branch);
	 
	 	 	 	 	 	 
	 	 	“Irish VAT Group”	 	means the group of companies of which SMI is a member for the purposes of section 8(8) VATA
1972;
	 
	 	 	 	 	 	 
	 	 	“Isle of Man
Schemes”	 	means the ANFIS IoM Expatriate Staff Retirement Benefits Scheme and the Group Personal
Pension Plan provided by Norwich Union;
	 
	 	 	 	 	 	 
	 	 	“IT Systems”	 	means all computer network and telecommunications systems used by a Group Member in
connection with the operation of the business of the Group including all hardware and
software but excluding networks or telecommunications systems generally available to the
public;
	 
	 	 	 	 	 	 
	 	 	“Key Intermediary”	 	means those Intermediary groups or networks listed in Schedule 11;
	 
	 	 	 	 	 	 
	 	 	“Liabilities”	 	means all liabilities, losses, damages, payments, charges, claims, actions, penalties, fines,
demands, proceedings, expenses and costs;
	 
	 	 	 	 	 	 
	 	 	“LIBOR”	 	means the British Bankers Association Interest Settlement Rate for sterling for a six month
period displayed on the appropriate Telerate screen page at or about 11.00 a.m. on the date
on which the rate is to be determined or, if that date is not a Business Day, the next
following Business Day;

 

11

	 	 	 	 	 	 	 
	 	 	“Listed Employees”	 	means those individuals who were employed by any Retained Group Member and assigned wholly or
mainly to the business of any Group Member at the close of business on 26 May 2006 and whose
names are in a list prepared for this purpose and in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Local Conditions”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	in respect of SPILA – the Conditions in paragraphs
3(C) and 3(D) of Schedule 1 (to the extent those
Conditions relate to SPILA);
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	in respect of SMI – the Condition in paragraph 3(C)
of Schedule 1 (to the extent that Condition relates
to SMI); and
	 
	 	 	 	 	 	 
	 

	 	 	 	(C)
	 	in respect of ANFIS IoM – the Condition in paragraph
3(D) of Schedule 1 (to the extent that Condition
relates to ANFIS IoM);
	 
	 	 	 	 	 	 
	 	 	“Long Stop Date”	 	means 24 October 2006;
	 
	 	 	 	 	 	 
	 	 	“Material Adverse Effect”	 	means a material adverse effect on the results of operations or financial condition of the
Group taken as a whole, other than any adverse effect arising out of, resulting from or
attributable to:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	changes in conditions in the United Kingdom or global
economy or capital or financial markets generally,
including changes in interest or exchange rates;
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	changes (whether in law, regulation, practice or
otherwise) or events affecting generally any or all
of the sectors in which the Group conducts its
business;
	 
	 	 	 	 	 	 
	 

	 	 	 	(C)
	 	the negotiation, execution, announcement or
performance of this agreement, any other Transaction
Document or any of the transactions or arrangements
contemplated by this agreement or such Transaction
Document;
	 
	 	 	 	 	 	 
	 

	 	 	 	(D)
	 	actions specifically permitted to be taken or omitted
pursuant to this agreement or with the Purchaser’s
consent; or

 

12

	 	 	 	 	 	 	 
	 

	 	 	 	(E)
	 	any of the matters fairly disclosed in the Disclosure
Letter or pursuant to the Disclosure Letter;
	 
	 	 	 	 	 	 
	 	 	“Material Contract”	 	means any contract of any Group Member calling for payments by any party thereto in excess of
£1,000,000 in any one year, other than (a) any reinsurance or reassurance contract, (b) any
contract in relation to debt securities listed on any securities exchange, or (c) any
contract to which the only parties are Group Members;
	 
	 	 	 	 	 	 
	 	 	“Mis-Selling Claim”	 	means any claim in respect of any advice, statement, act, omission or practice of, given or
made by or on behalf of the Insurance Company concerned in connection with the sale of any
products manufactured by the Insurance Company concerned which have been sold by any Group
Member that was either:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	negligent; or
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	in breach of or in contravention of any applicable
law, rule or regulation or any applicable
requirement, rule or standard of a Regulatory
Authority (including any applicable guidance,
direction or written request of any Regulatory
Authority) which was in force at the time when the
relevant product was sold,
	 
	 	 	 	 	 	 
	 	 	 	 	and for the purposes of this definition, an Insurance Company shall be deemed to include any
entity which is a predecessor of, or transferor of assets, liabilities or business to, an
Insurance Company;
	 
	 	 	 	 	 	 
	 	 	“Nominee Shares”	 	means any issued shares in the capital of any of the Subsidiaries in respect of which one of
the Companies or one of the other Subsidiaries is not the registered owner;
	 
	 	 	 	 	 	 
	 	 	“Non-Business Property”	 	means any Property in which the Group Members have an interest, other than the Business
Properties, referred to in Schedule 13;
	 
	 	 	 	 	 	 
	 

	 	“Notice of Control”
	 	(A)
	 	in respect of the FSA, has the meaning given to it in
Part XII of FSMA; and

 

13

	 	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	in respect of each Regulatory Authority other than
the FSA, means such notices, applications and/or
submissions as may be required under any applicable
laws, regulations, rules and guidance to be submitted
to such Regulatory Authority from the Purchaser and
each relevant member of the Purchaser’s Group in
respect of their acquisition of control of the Group
for the purposes of fulfilling the Conditions in
paragraph 3 of Schedule 1,
	 
	 	 	 	 	 	 
	 	 	 	 	(each a “Notice of Control”);
	 
	 	 	 	 	 	 
	 	 	“Opal Hedges”	 	means the United Kingdom over the counter derivative contracts between Abbey National
Treasury Services plc and SMA or SPL which were entered into in order to provide financial
protection against a range of embedded policy guarantees;
	 
	 	 	 	 	 	 
	 	 	“Open Period”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	so far as the matter in question relates to Tax on
the Income, Profits or Gains (as defined in the Tax
Covenant) of a Group Member, an accounting period in
respect of which the return of the relevant Group
Member relating to such Tax has not been agreed with
relevant Tax Authority (or, in relation to accounting
periods to which self-assessment applies, an enquiry
has been opened or could yet be opened within the
permitted time limits by the relevant Tax Authority
and, where an enquiry has been opened, has not yet
closed in relation to such return); and
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	so far as relates to other Tax, is any period of time
in respect of which an audit has not been completed
by the relevant Tax Authority in relation to the
matter in question,
	 
	 	 	 	 	 	 
	 	 	 	 	in each case as at the date of this agreement;
	 
	 	 	 	 	 	 
	 	 	“Ordinary Trading
Payables”	 	means Trade Indebtedness outstanding at Completion and relating to the period up to
Completion only, owing from Group Members to Retained Group Members including an amount equal
to all amounts owed to Group Members in relation to loans advanced by Retained Group Members
to Intermediaries on behalf of such Group Members;

 

14

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	“Ordinary Trading

Receivables”	 	means Trade Indebtedness outstanding at Completion and relating to the period up to
Completion only, owing from Retained Group Members to Group Members;
	 
	 	 	 	 	 	 
	 	 	“Pre-Sale Transfers”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	the transfer of the shares in Abbey National PEP and
ISA Managers Limited and Abbey National Unit Trust
Managers Limited from ANL to the Seller by way of
dividend in specie on 13 April 2006;
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	the substitution of Abbey National Treasury Services
plc in place of SPL (Holdings 1) Limited as principal
debtor under the Deed constituting Floating Rate
Unsecured Guaranteed Loan Notes 2012 dated 28
February 2002 and the Loan Notes (as defined in such
Deed) in accordance with clause 13 of such Deed; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(C)
	 	the transfers effected by the ANFIS Separation
Agreement;
	 
	 	 	 	 	 	 
	 	 	“Proceedings”	 	means any proceeding, suit or action arising out of or in connection with this agreement;
	 
	 	 	 	 	 	 
	 	 	“Property”	 	means freehold, leasehold or other immovable property in any part of the world;
	 
	 	 	 	 	 	 
	 	 	“Property Owner”	 	means, in relation to any Business Property, the person referred to as owner in Schedule 13;
	 
	 	 	 	 	 	 
	 	 	“PRU”	 	means the Integrated Prudential Sourcebook forming part of the FSA’s handbook of rules and
guidance (as amended) or its successor publication from time to time;
	 
	 	 	 	 	 	 
	 	 	“Purchaser’s Group”	 	means the Purchaser, the Guarantor, each of their respective subsidiaries and subsidiary
undertakings, any holding company of the Purchaser or the Guarantor and all other
subsidiaries and subsidiary undertakings of any such holding company from time to time
(including, after Completion, all Group Members);
	 
	 	 	 	 	 	 
	 	 	“Purchaser’s Solicitors”	 	means Herbert Smith LLP;
	 
	 	 	 	 	 	 
	 	 	“PwC Control Programme
Reports”	 	means the PwC Control Programme Review Reports contained in the Data Room with document
references 1.1 to 1.3 in the Restricted Access Documents Index of PwC Control Programme
Review Reports;

 

15

	 	 	 	 	 	 	 
	 	 	“Regulated Entities”	 	means the UK Regulated Entities, SMI, SMIFM, ANFIS IoM and SPILA;
	 
	 	 	 	 	 	 
	 	 	“Regulations”	 	means the Transfer of Undertakings (Protection of Employment) Regulations 2006;
	 
	 	 	 	 	 	 
	 	 	“Regulatory Authorities”	 	means the FSA and, where the context so requires, its predecessors including without
limitation, LAUTRO, the Personal Investment Authority, the Government Actuary’s Department
and HM Treasury – Insurance Division and any other similar entities outside the United
Kingdom (including the IFR, the Insurance Authority and the IPA) to the extent that those
entities regulate the conduct of insurance businesses or companies and/or financial services
businesses or firms or the sale or marketing of insurance contracts, and “Regulatory
Authority” means any of them;
	 
	 	 	 	 	 	 
	 	 	“Relationship Deed”	 	means the relationship deed referred to in Schedule 5 in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Relevant Group Policy”	 	has the meaning given in clause 20.1;
	 
	 	 	 	 	 	 
	 	 	“Relevant Property”	 	means the Property or Properties referred to in Schedule 13;
	 
	 	 	 	 	 	 
	 	 	“Reserves”	 	has the meaning given in paragraph 2.10(B) of Schedule 7;
	 
	 	 	 	 	 	 
	 	 	“Resolution Announcement”	 	means the announcement to be made by the Guarantor following signing of this agreement
concerning the transactions contemplated by this agreement and the other Transaction
Documents, in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Retail Banking

Distribution Agreement”	 	means the retail banking distribution agreement between the Seller and the Purchaser dated
the same date as this agreement;
	 
	 	 	 	 	 	 
	 	 	“Retail Distribution

Agreement”	 	means the retail distribution agreement between the Seller and the Purchaser dated the same
date as this agreement;
	 
	 	 	 	 	 	 
	 	 	“Retained Employees”	 	means those individuals employed by any Group Member who will be employed by a Retained Group
Member with effect from Completion whose names are in a list prepared for this purpose and in
the agreed form;

 

16

	 	 	 	 	 	 	 
	 	 	“Retained Group”	 	means the Seller, its subsidiaries and subsidiary undertakings from time to time, any holding
company of the Seller and all other subsidiaries or subsidiary undertakings of any such
holding company (except for the Group Members);
	 
	 	 	 	 	 	 
	 	 	“Retained Group Guarantee”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	each of the guarantees, indemnities and other
security obligations listed in Part A of Schedule 10;
and
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	any other guarantee, indemnity or other security
obligation entered into or granted by any Retained
Group Member in relation to or arising out of any
obligations or liabilities of any Group Member;
	 
	 	 	 	 	 	 
	 	 	“Retained Group Member”	 	means a member of the Retained Group;
	 
	 	 	 	 	 	 
	 	 	“Rights Issue”	 	means the proposed offer by the Guarantor by way of rights to qualifying shareholders of the
Guarantor on the terms and subject to the conditions referred to in the prospectus to be
issued by the Guarantor on or around 30 June 2006;
	 
	 	 	 	 	 	 
	 	 	“RMS”	 	means Resolution Management Services Limited of 1 Wythall Green Way, Wythall, Birmingham,
West Midlands B47 6WG;
	 
	 	 	 	 	 	 
	 	 	“SDCA 1999”	 	means the Ireland Stamp Duties Consolidation Act 1999;
	 
	 	 	 	 	 	 
	 	 	“Seller’s Actuaries”	 	means Towers Perrin Tillinghast of 71 High Holborn, London WC1V 6TH;
	 
	 	 	 	 	 	 
	 	 	“Seller’s Schemes”	 	means the Abbey National Group Pension Scheme, the National and Provincial Building Society
Pension Fund, The Scottish Mutual Assurance plc Staff Pension Scheme, The Scottish Provident
Institution Staff Pension Fund, the Abbey National Building Society (Associated Bodies)
Pension Fund and the Abbey Staff Stakeholder Pension Scheme;
	 
	 	 	 	 	 	 
	 	 	“Seller’s Solicitors”	 	means Slaughter and May;
	 
	 	 	 	 	 	 
	 	 	“Senior Employees”	 	means those Employees and Current Employees listed in Schedule 12;
	 
	 	 	 	 	 	 
	 	 	“Shares”	 	means all the issued shares in the capital of each of the Companies;

 

17

	 	 	 	 	 	 	 
	 	 	“SMA”	 	means Scottish Mutual Assurance plc, a Subsidiary whose details are set out in Schedule 9;
	 
	 	 	 	 	 	 
	 	 	“SMA Demutualisation
Scheme”	 	means the scheme for the transfer of the long term insurance business of the Scottish Mutual
Assurance Society to SMA pursuant to section 49 of the Insurance Companies Act 1982 as
sanctioned by the Court of Session, Scotland on 12 December 1991;
	 
	 	 	 	 	 	 
	 	 	“SMI”	 	means Scottish Mutual International plc, a Subsidiary whose details are set out in Schedule 9;
	 
	 	 	 	 	 	 
	 	 	“SMIFM”	 	means Scottish Mutual International Fund Managers Limited, a Company whose details are set
out in Schedule 8;
	 
	 	 	 	 	 	 
	 	 	“SMIH”	 	means Scottish Mutual International Holdings, a Company whose details are set out in Schedule 8;
	 
	 	 	 	 	 	 
	 	 	“SMIM”	 	means Scottish Mutual Investment Managers Limited, a Subsidiary whose details are set out in
Schedule 9;
	 
	 	 	 	 	 	 
	 	 	“SMPIM”	 	means Scottish Mutual PEP and ISA Managers Limited, a Subsidiary whose details are set out in
Schedule 9;
	 
	 	 	 	 	 	 
	 	 	“SPI Fund Supervisory

Committee”	 	means the committee constituted under the terms of the SPL Demutualisation Scheme;
	 
	 	 	 	 	 	 
	 	 	“SPILA”	 	means Scottish Provident International Life Assurance Limited, a Subsidiary whose details are
set out in Schedule 9;
	 
	 	 	 	 	 	 
	 	 	“SPILA Marketing (in liq)”	 	means SPILA Marketing Services (Pty) Limited (in liquidation), a Subsidiary whose details are
set out in Schedule 9;
	 
	 	 	 	 	 	 
	 	 	“SPL”	 	means Scottish Provident Limited, a Subsidiary whose details are set out in Schedule 9;
	 
	 	 	 	 	 	 
	 	 	“SPL Demutualisation
Scheme”	 	means the scheme for the transfer of the insurance business of The Scottish Provident
Institution to SPL pursuant to section 49 and Part I of Schedule 2C to the Insurance
Companies Act 1982 as sanctioned by the Court of Session, Scotland on 13 July 2001;
	 
	 	 	 	 	 	 
	 	 	“State Schemes”	 	means any relevant state, statutory, mandatory and/or industry schemes (including the UK
state pension scheme and statutory sick pay scheme);

 

18

	 	 	 	 	 	 	 
	 	 	“Subsidiaries”	 	means at any relevant time any then subsidiary undertaking of the Companies, basic
information concerning each current subsidiary undertaking of any of the Companies being set
out in Schedule 9;
	 
	 	 	 	 	 	 
	 	 	“Tax/tax” or “Taxation”	 	has the meaning given to “Tax” in the Tax Covenant;
	 
	 	 	 	 	 	 
	 	 	“Tax Authority”	 	means any taxing, revenue or other authority (whether within or outside the United Kingdom
and Ireland) competent to impose any liability to, or assess or collect, any Tax;
	 
	 	 	 	 	 	 
	 	 	“Tax Covenant”	 	means the deed of tax covenant referred to in Schedule 5 in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“Tax Warranties”	 	means the Warranties set out in paragraphs 28 to 51 of Schedule 6 and “Tax Warranty” shall be
construed accordingly;
	 
	 	 	 	 	 	 
	 	 	“TCA 1997”	 	means the Ireland Taxes Consolidation Act 1997;
	 
	 	 	 	 	 	 
	 	 	“TCGA 1992”	 	means the Taxation of Chargeable Gains Act 1992;
	 
	 	 	 	 	 	 
	 	 	“Trade Indebtedness”	 	means ordinary trade indebtedness including usual management charges and other administrative
charges, amounts outstanding in respect of group plan health insurance subscriptions,
insurance recharges, employee recharges, pension or group value added tax arrangements,
charges for software and information technology support and licences, all amounts owing in
respect of rent, rates, telephone charges, postal charges, administration support, insurance
and asset management services, all indebtedness in relation to balances arising from banking
arrangements (including current accounts, deposits and placements), investment assets and
related collateral balances, and any indebtedness in respect of any such arrangements, assets
or balances;
	 
	 	 	 	 	 	 
	 	 	“Transaction Documents”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	this agreement;
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	the Agreement for Lease;
	 
	 	 	 	 	 	 
	 

	 	 	 	(C)
	 	the ANFIS Letter;
	 
	 	 	 	 	 	 
	 

	 	 	 	(D)
	 	the ANFIS Separation Agreement;

 

19

	 	 	 	 	 	 	 
	 

	 	 	 	(E)
	 	the Brand Licence;
	 
	 	 	 	 	 	 
	 

	 	 	 	(F)
	 	the Cash Management Agreement;
	 
	 	 	 	 	 	 
	 

	 	 	 	(G)
	 	the Disclosure Letter;
	 
	 	 	 	 	 	 
	 

	 	 	 	(H)
	 	the Fund Separation Agreement;
	 
	 	 	 	 	 	 
	 

	 	 	 	(I)
	 	the Hedge Waiver Letter;
	 
	 	 	 	 	 	 
	 

	 	 	 	(J)
	 	the Intermediary Distribution Agreement;
	 
	 	 	 	 	 	 
	 

	 	 	 	(K)
	 	the Introducer Appointed Representative Agreement;
	 
	 	 	 	 	 	 
	 

	 	 	 	(L)
	 	the Relationship Deed;
	 
	 	 	 	 	 	 
	 

	 	 	 	(M)
	 	the Retail Banking Distribution Agreement;
	 
	 	 	 	 	 	 
	 

	 	 	 	(N)
	 	the Retail Distribution Agreement;
	 
	 	 	 	 	 	 
	 

	 	 	 	(O)
	 	the Tax Covenant; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(P)
	 	the Transitional Services Agreement,
	 
	 	 	 	 	 	 
	 	 	 	 	and any other agreements entered into under or pursuant to any of them and any other
agreements which are designated as Transaction Documents by agreement between the Seller and
the Purchaser;
	 
	 	 	 	 	 	 
	 	 	“Transferring Employees”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(A)
	 	Current Employees; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(B)
	 	individuals employed by the Seller or any Retained
Group Member to work in the business carried on by
any Group Member between the date of this agreement
and Completion otherwise than in breach of clause 4
and Schedule 3,
	 
	 	 	 	 	 	 
	 	 	 	 	whose contracts of employment have effect after Completion as if originally made with RMS;
	 
	 	 	 	 	 	 
	 	 	“Transitional Services

Agreement”	 	means the transitional services agreement between the Seller and RMS dated the same date as
this agreement;

 

20

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	“UK Regulated Entities”	 	means ANL, SMA, SMIM, SMPIM and SPL, being those Group
Members which are “UK authorised persons” within the
meaning of section 178(4) of FSMA (each, a “UK
Regulated Entity”);
	 
	 	 	 	 	 	 
	 	 	“UK Target VAT Group
Member”	 	means each of ANL, ANFIS, ANFIS IoM, ANSMAH, Business
OutSourcing Services Limited, Cityfourinc, Prolific
Holdings Limited, Prolific Property Development (Kent)
Limited, SMPIM, Scottish Mutual Pension Funds
Investment Limited, SMA, SMIM, South Glasgow Retail
Park Limited, The Scottish Provident Institution,
Scottish Provident (Holdings) Limited, SPILA, Scottish
Provident Pension Trustees Limited and SPL;
	 
	 	 	 	 	 	 
	 	 	“UK VAT Group”	 	has the meaning given in paragraph 33.1 of Schedule 6;
	 
	 	 	 	 	 	 
	 	 	“Umbrella Logo”	 	means umbrella symbol set out Part B of Schedule 15;
	 
	 	 	 	 	 	 
	 	 	“Underwriters”	 	means Citigroup Global Markets UK Equity Limited and
Goldman Sachs International;
	 
	 	 	 	 	 	 
	 	 	“Underwriting Agreement”	 	means the underwriting agreement dated the same date as
this agreement entered into between the Guarantor, the
Underwriters and Citigroup Global Markets Limited
relating to the Rights Issue, in the agreed form;
	 
	 	 	 	 	 	 
	 	 	“VAT”	 	means value added tax implemented in the European Union
pursuant to Directive 77/388/EEC and legislation
supplemental thereto and any other Tax of a similar
nature in any jurisdiction outside the European Union;
	 
	 	 	 	 	 	 
	 	 	“VATA 1972”	 	means the Ireland Value Added Tax Act 1972 (as amended);
	 
	 	 	 	 	 	 
	 	 	“VATA 1994”	 	means the Value Added Tax Act 1994;
	 
	 	 	 	 	 	 
	 	 	“VIF”	 	has the meaning given to that term in the Tax Covenant;
	 
	 	 	 	 	 	 
	 	 	“Warranties”	 	means, unless otherwise specified, the warranties set
out in Schedule 6 given by the Seller; and
	 
	 	 	 	 	 	 
	 	 	“Working Hours”	 	means 9.00 a.m. to 5.00 p.m. on a Business Day.

	1.2	 	In this agreement, unless otherwise specified:

	 	(A)	 	references to clauses, paragraphs, Schedules are to clauses and paragraphs of,
and Schedules to, this agreement;

 

21

	 	(B)	 	a reference to any statute or statutory provision shall be construed as a
reference to the same as it may have been, or may from time to time be, amended,
modified or re-enacted except to the extent that any amendment or modification made
after the date of this agreement would increase or alter the liability of the Seller
under this agreement;
	 
	 	(C)	 	references to a “company” shall be construed so as to include any company,
corporation or other body corporate, wherever and however incorporated or established;
	 
	 	(D)	 	references to a “person” shall be construed so as to include any individual,
firm, company, government, state or agency of a state or any joint venture, association
or partnership (whether or not having separate legal personality);
	 
	 	(E)	 	use of any gender includes the other genders;
	 
	 	(F)	 	the expressions “accounting reference date”, “accounting reference period”,
“allotment”, “body corporate”, “current assets”, “debentures”, “holding company”, “paid
up”, “profit and loss account”, “subsidiary”, “subsidiary undertaking” and
“wholly-owned subsidiary” shall have the meaning given in the Companies Acts;
	 
	 	(G)	 	a person shall be deemed to be connected with another if that person is
connected with another within the meaning of section 839 ICTA 1988;
	 
	 	(H)	 	references to writing shall include any modes of reproducing words in a legible
and non-transitory form;
	 
	 	(I)	 	references to times of the day are to London time;
	 
	 	(J)	 	the words “include”, “includes” and “including” shall be construed as if they
were followed by the words “without limitation”;
	 
	 	(K)	 	headings to clauses, paragraphs and Schedules are for convenience only and do
not affect the interpretation of this agreement;
	 
	 	(L)	 	the Schedules (but not any other Transaction Document) form part of this
agreement and shall have the same force and effect as if expressly set out in the body
of this agreement, and any reference to this agreement shall include the Schedules;
	 
	 	(M)	 	“agreed form” means in a form agreed by the parties to this agreement and
signed (for the purposes of identification only) by or on behalf of the Seller and the
Purchaser prior to the execution of this agreement, as such form may be amended by
agreement between the Seller and the Purchaser prior to Completion;
	 
	 	(N)	 	references to the knowledge, belief or awareness of the Seller (or to any
similar phrases) shall be limited to the actual knowledge of Jorge Moran, Javier
Maldonado Trinchant, Nathan Bostock, Martin Moule, Kerr Luscombe, Toby Rougier, Vim
Maru,

 

22

	 	 	 	Bruno Geiringer and Heather Logan (reasonable enquiries having been made of James
Bevan regarding investment management matters, Ignacio Izquierdo and Gary
Hockey-Morley regarding sales and marketing matters, and Paul Ryan in respect of
information technology matters) and the knowledge those persons would have if they
had made reasonable enquiries of persons who directly report to them and who have
relevant responsibility for the matters relating to the statement to which the
relevant reference is made;
	 
	 	(O)	 	references to any English legal term for any action, remedy, method of judicial
proceeding, legal document, legal status, court, official, or any legal concept or
thing and references to any statute or statutory provision shall in respect of any
jurisdiction other than England be deemed to include what most nearly approximates in
that jurisdiction to the English legal term, statute or statutory provision;
	 
	 	(P)	 	any warranty, indemnity or covenant to pay (the “Payment Obligation”) being
given on an “after-Tax basis” or expressed to be “calculated on an after-Tax basis”
means that to the extent that the amount payable pursuant to such Payment Obligation
(the “Payment”) is subject to a deduction or withholding required by law in respect of
Tax or is chargeable to any Tax in the hands of the recipient or any Tax credit,
repayment or other Tax benefit is available as set out in clause 1.2(P)(ii)
below then the Payment shall be adjusted so as to ensure that, after taking into
account:

	 	(i)	 	the amount of Tax required to be deducted or withheld from, and
the Tax chargeable on such amount (including on the increased amount); and
	 
	 	(ii)	 	any Tax credit, repayment or other Tax benefit which is
available to the indemnified party or the recipient of the Payment solely as a
result of the matter giving rise to the Payment Obligation or as a result of
receiving the Payment,
	 
	 	(which amount of Tax and Tax credit, repayment or other Tax benefit is to be
determined taking into account its value, certainty of availability and timing of
its utilisation by the recipient in its absolute discretion but acting in good faith
at the shared expense of both parties and is to be certified as such to the party
making the Payment), the recipient of the Payment is in the same position as it
would have been in if there had been no such deduction, withholding, Tax charge or
Tax credit, repayment or other Tax benefit; and

	 	(Q)	 	references to “costs” and/or “expenses” incurred by a person shall not include
any amount in respect of VAT comprised in such costs or expenses for which either that
person or, if relevant, any other member of the VAT group to which that person belongs
is entitled to credit as input tax.

	2.	 	SALE AND PURCHASE
	 
	2.1	 	On and with effect from Completion, subject to clause 4, the Seller shall sell or (as
the case may be) procure the sale with full title guarantee and the Purchaser shall purchase
the Shares

 

 

 23 

	 	 	and the Nominee Shares free from all charges and encumbrances and from all other
rights exercisable by third parties, together with all rights attached or accruing to them at
Completion. The provisions of clause 4 apply in relation to the sale of the Shares in
Scotprov Limited, SMIH and ANFIS IoM.
	 
	2.2	 	The Seller waives or (as the case may be) will procure the waiver of all rights of
pre-emption over any of the Shares conferred upon it by the articles of association or
equivalent constitutional documents of any of the Companies or in any other way and undertakes
to take all reasonable steps necessary to ensure that any rights of pre-emption over any of
the Shares are waived at the cost and expense of the Seller.
	 
	3.	 	CONDITIONS; STEPS TO COMPLETION
	 
	3.1	 	The sale and purchase of:

	 	(A)	 	all the Shares (other than the Shares in SMIH and ANFIS IoM) pursuant to this
agreement are in all respects conditional upon (i) fulfilment or (where applicable)
waiver of the Core Conditions, and (ii) fulfilment of the Local Conditions in respect
of SPILA or the giving of a notice in accordance with clause 4.2;
	 
	 	(B)	 	the Shares in SMIH are in all respects conditional upon (i) fulfilment or
(where applicable) waiver of the Core Conditions, and (ii) fulfilment of the Local
Conditions in respect of SMI or the giving of a notice in respect of SMIH in accordance
with clause 4.1; and
	 
	 	(C)	 	the Shares in ANFIS IoM are in all respects conditional upon (i) fulfilment or
(where applicable) waiver of the Core Conditions, and (ii) fulfilment of the Local
Conditions in respect of ANFIS IoM or the giving of a notice in respect of ANFIS IoM in
accordance with clause 4.1.

	3.2	 	The parties agree to each perform their respective obligations set out in Schedule 2
during the period from the date of this agreement until Completion.
	 
	3.3	 	The Purchaser and the Seller may agree in writing to extend the period in which all or part
of any of the Conditions are to be satisfied. The Purchaser may by written notice to the
Seller waive in whole or in part all or any of the Conditions in paragraph 4 of
Schedule 1. The Purchaser and the Seller may agree in writing to waive in whole or in
part all or any of the Condition in paragraph 5 of Schedule 1. The Purchaser
may by written notice to the Seller waive the Condition in paragraph 6 of Schedule
1 that the Underwriting Agreement is not terminated by the Underwriters (but cannot waive
the requirement that the Guarantor should not consent, agree or acquiesce to the termination
of the Underwriting Agreement by the Underwriters). Without limiting clause 4, the
Conditions in paragraphs 1 to 3 of Schedule 1 may not be waived by any
party.

 

24

	3.4	 	If:

	 	(A)	 	anything occurs which would prevent any of the Conditions in paragraphs
1, 2, and 3 of Schedule 1 from being fulfilled on or before
5.00 p.m. on the Long Stop Date;
	 
	 	(B)	 	any of the Conditions in paragraphs 1, 2, 3(A) and
3(B) of Schedule 1 are not fulfilled by the Purchaser and/or the
Seller, as the case may be, on or before 5.00 p.m. on the Long Stop Date;
	 
	 	(C)	 	any of the Conditions in paragraphs 3(C) and 3(D) of
Schedule 1 have not been either:

	 	(i)	 	fulfilled by the Purchaser and/or the Seller, as the case may
be; or
	 
	 	(ii)	 	the subject of a notice from the Seller or the Purchaser in
accordance with clause 4,
	 
	 	on or before 5.00 p.m. on the Long Stop Date; or

	 	(D)	 	any of the Conditions in paragraph 4 of Schedule 1 are not
fulfilled or waived by the Purchaser on or before 5.00 p.m. on the Long Stop Date; or
	 
	 	(E)	 	the Underwriting Agreement is terminated by the Underwriters as result of any
of the events set out in paragraph 6 of Schedule 1 (except where the
Underwriting Agreement is terminated with the consent, agreement or acquiescence of the
Guarantor) and the non-fulfilment of the Condition in paragraph 6 of
Schedule 1 has not been waived by the Purchaser,

	 	 	then, subject to clause 3.5 and clause 3.6, this agreement shall immediately
terminate.
	 
	3.5	 	If the Condition in paragraph 5 of Schedule 1 has not been fulfilled on or
before 5.00 p.m. on the Long Stop Date then the period in which that Condition is to be
satisfied shall be extended to the Extended Long Stop Date and the Seller and the Purchaser
shall use their best endeavours to ensure the Deliverables have been achieved by that date.
If the Condition in paragraph 5 of Schedule 1 has not been fulfilled or waived
by the Purchaser and the Seller on
or before 5.00 p.m. on the Extended Long Stop Date then, subject to clause 3.6, this
agreement shall immediately terminate.
	 
	3.6	 	If this agreement terminates in accordance with clause 3.4 or 3.5 then all
obligations of the parties under this agreement shall end (except for the provisions of
clauses 1, 3.7, 27 and 28, and clauses 30 to
39 inclusive) but (for the avoidance of doubt) all rights and liabilities of the
parties which have accrued before termination shall continue to exist.
	 
	3.7	 	If the Condition in paragraph 1 of Schedule 1 is not fulfilled and this
agreement is not terminated in accordance with clause 3.4 prior to the date of the
general meeting as a result of non-fulfilment of any of the Conditions in paragraphs 2 to
6 of Schedule 1 then:

 

25

	 	(A)	 	by way of compensation for costs, expenses and other liabilities incurred, the
Purchaser shall pay the Seller an amount equal to the lesser of (i) £36 million and
(ii) one per cent. of the Guarantor’s market capitalisation at the time of payment (the
“Compensation Payment”);
	 
	 	(B)	 	the Purchaser shall make the Compensation Payment on the fifth Business Day
following such termination and shall pay it to the Seller by way of telegraphic
transfer (using the CHAPS system) to the bank account notified by the Seller to the
Purchaser prior to such payment being made;
	 
	 	(C)	 	the parties intend and shall use all reasonable endeavours to secure that the
Compensation Payment is not treated for VAT purposes as consideration for a taxable
supply. If, however, the Compensation Payment is treated for VAT purposes in whole or
part as consideration for a taxable supply by any Tax Authority in respect of which the
Seller is liable to account for VAT, then the Seller shall issue a VAT invoice to the
Purchaser and, to the extent that such VAT is recoverable by the Purchaser (or the
representative member of the group of which it is a member), the amount of the
Compensation Payment (inclusive of amounts in respect of VAT) shall be increased by an
amount equal to such VAT that is recoverable by the Purchaser (or the representative
member of the group of which it is a member); and
	 
	 	(D)	 	then save in respect of any claim for any breach of clause 3.2 in so
far as the same relates to fulfilment of the Condition in paragraph 1 of
Schedule 1, the Seller shall have no remedy against either the Purchaser, the
Guarantor or any other member of the Purchaser’s Group in respect of the Condition in
paragraph 1 of Schedule 1 not being fulfilled or anything occurring
which would prevent such fulfilment.

	3.8	 	The Seller undertakes that, save with the prior written consent of the Purchaser, it shall
not, and shall procure that no Retained Group Member or Group Member shall, prior to the Long
Stop Date (or if the period in which the Condition in paragraph 5 of Schedule
1 is to be satisfied is extended pursuant to clause 3.5, the Extended Long Stop
Date), provide any person other than the Purchaser with any information relating to the Group
which might lead to or assist that person (or any other person) in making an offer to acquire
all or a material proportion of the Shares or the whole or a material part of the business of
the Group. The Seller undertakes to use its reasonable endeavours to recover, or procure the
recovery or
destruction of, any such information provided to a person other than the Purchaser in the 6
months prior to the date of this agreement.
	 
	3.9	 	Between the date of this agreement and Completion the Seller and the Purchaser shall work
together (in good faith) to determine the average standard to which each of the key services
set out in Part C of Schedule 1 to the Relationship Deed was performed over the 6 months prior
to the date of this agreement (the “Actual Service Level”). If the Actual Service Level for
any key service is lower than the service level specified in Part C of Schedule 1 to the
Relationship Deed in the agreed form of that document as at the date of this agreement (the
“Initial Target Service Level”) then:

 

26

	 	(A)	 	the Seller and the Purchaser agree that the Actual Service Level shall replace
the Initial Target Service Level as the “Key Service Level” for the relevant key
service in Part C of Schedule 1 to the Relationship Deed and, for the avoidance of
doubt, the Actual Service Level shall be the relevant “Key Service Level” for the
purposes of determining if any compensation payment is payable by the Purchaser to the
Seller pursuant to clause 2.5 of the Relationship Deed; and
	 
	 	(B)	 	notwithstanding clause 3.9(A), Resolution shall from Completion use
reasonable endeavours to perform such key service to the Initial Target Service Level.

	 	 	The Seller and the Purchaser shall enter into such amending deeds or agreements as shall be
necessary to give effect to this clause 3.9. (For the avoidance of doubt, this
clause 3.9 shall terminate when the Retail Distribution Agreement terminates.) Any
dispute which arises between the Seller and the Purchaser as to the standard to which a key
service was performed prior to the date of this agreement may be escalated by either the
Seller or the Purchaser for resolution in accordance with clause 37 of the Retail
Distribution Agreement.
	 
	4.	 	OVERSEAS REGULATORY CONSENTS
	 
	4.1	 	At any time after the Core Conditions have been fulfilled or (where applicable) waived but
prior to the Local Conditions in respect of SMI and/or ANFIS IoM, as the case may be,
(“Relevant Regulated Entity”) being fulfilled, the Seller or the Purchaser may in its
discretion give notice to the other that Completion in respect of the Shares in SMIH (where
SMI is the Relevant Regulated Entity) and/or ANFIS IoM (where ANFIS IoM is the Relevant
Regulated Entity) (“Relevant Company”) shall be deferred, in which case:

	 	(A)	 	completion of the sale and purchase of the Shares in the Relevant Company shall
take place on the fifth Business Day following the day on which the last in time of the
Local Conditions in respect of the Relevant Regulated Entity shall have been fulfilled,
and not on the Completion Date;
	 
	 	(B)	 	the Purchaser’s obligation under paragraph 8(A) of Schedule 5
to pay that portion of the Consideration relating to the Shares in the Relevant Company
(as determined in accordance with Schedule 4) will be deferred from the
Completion Date to the date of completion of the sale and purchase of such Shares; and
	 
	 	(C)	 	to the extent to which they relate to such Shares, to the Relevant Company
and/or to the Relevant Regulated Entity, this agreement and the rights and obligations
of the parties under it (including under clauses 2 and 7 and Schedule
5) shall be construed as if such completion was Completion and the date of such
completion was the Completion Date, mutatis mutandis.

	4.2	 	At any time after the Core Conditions have been fulfilled or (where applicable) waived but
prior to the Local Conditions in respect of SPILA being fulfilled, the Seller may in its
discretion:

	 	(A)	 	procure the transfer of all the shares in Scotprov Limited to the Seller,
having first given such notifications and obtained such consents and approvals as may
be required

 

27

	 	 	 	for this purpose from those Regulatory Authorities with jurisdiction in
relation to SPILA; and
	 
	 	(B)	 	give notice to the Purchaser that completion of the sale of the shares in
Scotprov Limited shall take place on a later date to be determined,

	 	 	in which case:

	 	(C)	 	completion of the sale and purchase of the shares in Scotprov Limited shall
take place on the fifth Business Day following the day on which the last in time of the
Local Conditions in respect of SPILA shall have been fulfilled, and not on the
Completion Date;
	 
	 	(D)	 	the Purchaser’s obligation under paragraph 8(A) of Schedule 5
to pay a portion of the Consideration equal to £95 million will be deferred from the
Completion Date to the date of completion of the sale and purchase of the shares in
Scotprov Limited; and
	 
	 	(E)	 	to the extent to which they relate to such shares, Scotprov Limited, SPILA,
SPILA Marketing (in liq) and/or to ANFIS FE (in liq), this agreement and the rights and
obligations of the parties under it (including under clauses 2 and 7 and
Schedule 5) shall be construed as if Scotprov Limited was a Company, the shares
in Scotprov Limited were Shares, such completion was Completion and the date of such
completion was the Completion Date, mutatis mutandis.

	4.3	 	If the Seller or the Purchaser gives a notice under clause 4.1 or the Seller gives a
notice under clause 4.2, then the Seller and the Purchaser will each use its best
endeavours, acting reasonably and in good faith, between the date of such notice and the date
of completion of the sale and purchase of the shares to which the notice relates, to work
together, develop, agree and implement such proposals as they may consider necessary to
address any transitional matters arising out of the temporary separation from the Group of the
companies the subject of such notice.
	 
	4.4	 	For the avoidance of doubt, no completion referred to in clauses 4.1 or 4.2 can take
place unless and until Completion has occurred in respect of all companies other than the
Companies referred to in clauses 4.1 and 4.2.
	 
	5.	 	CONDUCT OF BUSINESS BEFORE COMPLETION
	 
	5.1	 	Between the date of this agreement and Completion or this agreement being terminated in
accordance with clause 3.4 or clause 3.5, the Seller shall:

	 	(A)	 	procure that no Group Member shall undertake any act or course of conduct which
is outside the ordinary course of business of such Group Member in any material respect
except (i) with the prior written consent of the Purchaser (such consent not to be
unreasonably withheld or delayed), (ii) if and to the extent required by law or
regulation (and in respect of which the Purchaser shall be notified and reasonably
consulted as

 

28

	 	 	 	far in advance as is practicable in the circumstances), or (iii) if and to
the extent expressly permitted by this agreement or any of the Transaction Documents;
	 
	 	(B)	 	procure that no Group Member or any Insurance Company or any Company (as
applicable) shall undertake any of the acts or matters listed in Schedule 3
except (i) with the prior written consent of the Purchaser (such consent not to be
unreasonably withheld or delayed), (ii) if and to the extent required by law or
regulation (and in respect of which the Purchaser shall be notified and reasonably
consulted as far in advance as is practicable in the circumstances), or (iii) if and to
the extent expressly permitted by this agreement or any of the Transaction Documents;
	 
	 	(C)	 	procure that the Group Members shall, so far as reasonably practicable and
subject to obtaining the consent of any relevant Regulatory Authorities where required,
consult with the Purchaser in advance of any material communications with any relevant
Regulatory Authorities and take into account the reasonable comments of the Purchaser
in relation thereto;
	 
	 	(D)	 	without prejudice to paragraph (C), procure that the Group Members shall inform
the Purchaser (subject to obtaining the consent of any relevant Regulatory Authorities
where required) of the details of any material communications with any relevant
Regulatory Authorities and provide a written copy of all written communications in
relation thereto;
	 
	 	(E)	 	not itself, and shall procure that no Group Member or Retained Group Member
shall, take any action or omit to take any action which action or omission causes or
increases the likelihood of an assessment on the Actual Case I Basis (other than such
action or omission in the ordinary course of trade or, as the case may be, business of
an Insurance Company and the repayment of the Cater Tyndall Loan on or prior to
Completion), and such an action or omission shall include but not be limited to the
failure to seek to resist a relevant notice from a Tax Authority to the extent
practicable;
	 
	 	(F)	 	notify the Purchaser of any matter, circumstance, act or omission which is or
may be a breach of this clause 5 or Schedule 3 as soon as reasonably
practicable after the Seller becomes aware of any such matter, circumstance, act or
omission;
	 
	 	(G)	 	procure that no Group Member shall take any action or actions or omit to take
any action or actions which might constitute a major change in the nature or conduct of
the trade of any Group Member or which might cause the activities of the trade of a
Group Member to become small or negligible, in each case within the meaning of section
768 ICTA 1988 or section 401 TCA 1997; and
	 
	 	(H)	 	procure that each Group Member (i) shall reasonably pursue and comply with the
IAM Control Programme, and (ii) shall not act in a way which materially contravenes or
which is materially inconsistent with the requirements of the IAM Control Programme.

 

29

	5.2	 	Clause 5.1 shall not operate so as to restrict or prevent:

	 	(A)	 	any matter reasonably undertaken by any Group Member in an emergency or
disaster situation with the intention of minimising any adverse effect thereof (and of
which the Purchaser will be promptly notified);
	 
	 	(B)	 	the completion or performance of any obligations required to be undertaken
pursuant to any agreement entered into by any Group Member prior to the date of this
agreement (and, in respect of any such obligations which would prevent or have
prevented compliance with clause 5.1, the Purchaser will be promptly notified
where reasonably practicable);
	 
	 	(C)	 	any matter undertaken by any Group Member pursuant to any requirement of the
SPI Fund Supervisory Committee in accordance with the terms of the SPL Demutualisation
Scheme as at the date of this agreement (and in respect of which the Purchaser shall be
consulted as far in advance as is practicable in the circumstances);
	 
	 	(D)	 	any action necessary (in the reasonable belief of the Seller or the relevant
Group Member acting in good faith) in order to comply with any requirement of
applicable law or regulation (including any rules or requirements of any Regulatory
Authority) or in order to ensure the compliance of the Insurance Company with any laws
relating to prudential matters, or any regulations or rules of a Regulatory Authority
(including PRU) (and in respect of any such material matter the Purchaser shall be
consulted as far in advance as is practicable in the circumstances);
	 
	 	(E)	 	any matter contemplated in this agreement or the other Transaction Documents or
reasonably necessary to give effect to any of them, including in relation to the
Pre-Sale Transfers and any activities of Group Members which may be necessary for the
purposes of or in connection with progressing or achieving the Deliverables (and in
respect of any such material matter the Purchaser shall be consulted as far in advance
as is practicable in the circumstances);
	 
	 	(F)	 	any matter undertaken at the written request of the Purchaser; or
	 
	 	(G)	 	any payments or contributions made by any Group Member into any of the Seller’s
Schemes or the Irish Schemes and any other arrangements implemented in respect of any
Group Member arising:

	 	(i)	 	in connection with the substitution of a member of the Retained
Group as the Principal Employer for any of the Seller’s Schemes; or
	 
	 	(ii)	 	in relation to settlement or otherwise of any debt arising from
the cessation of participation of a Group Member in any of the Seller’s
Schemes, including without limitation the cessation of participation by ANFIS,
whether arising under section 75 of the Pensions Act 1995 or otherwise; or
	 
	 	(iii)	 	in connection with the winding up of the Irish Schemes.

 

30

	5.3	 	Subject to applicable legal and regulatory requirements, before Completion and upon
reasonable notice being given by the Purchaser, the Seller shall, and shall procure that the
Group Members shall, consult with the Purchaser on a reasonably regular basis (and the Seller
shall procure that representatives of the Group Members shall make themselves reasonably
available to the Purchaser and its representatives at least once a week) during Working Hours
with respect to material matters concerning the conduct and operation of the business of the
Group Members and shall (subject to any obligations they may have under existing agreements,
and subject to clause 33) allow the Purchaser and its representatives reasonable
access during Working Hours to the Business Properties, the Group’s directors and senior
executives and the Group’s Books and Records and such other reasonable information as shall
allow them to make a reasonably detailed assessment of the conduct and operation of the
business of the Group Members. The Seller and the Purchaser shall establish a liaison
committee which shall be responsible for monitoring compliance with this clause 5 (the
“Liaison Committee”). The membership of the Liaison Committee shall be agreed between the
Seller and the Purchaser from time to time. The Liaison Committee shall meet on a weekly
basis during the period between the date of this agreement and the Completion Date. The
Seller shall be deemed to have complied with any requirements under this clause 5 to
consult with or notify the Purchaser in respect of any matter if the Seller consults with or
notifies any of the Purchaser’s representatives on the Liaison Committee. If a matter
requiring the prior written consent of the Purchaser under this clause 5 is discussed
with and agreed to in writing by any of the Purchaser’s representatives on the Liaison
Committee then the Purchaser shall be deemed to have given its prior written consent to such
matter for the purposes of this clause 5.

	5.4	 	Subject as otherwise expressly provided in the ANFIS Separation Agreement, the Seller
undertakes to hold and keep the Purchaser for itself and as trustee for each Group Member
indemnified on an after-Tax basis from and against all actions, claims, proceedings, loss,
damage, and all payments, costs and expenses (excluding such matters in respect of Tax, but
without prejudice to the Tax Covenant) incurred by the Purchaser or such Group Members as a
result of the Pre-Sale Transfers.

	6.	 	CONSIDERATION

	6.1	 	The total consideration for the sale of the Shares shall, subject to clause 4, be the
payment by the Purchaser of the Consideration as apportioned in accordance with Schedule
4.

	6.2	 	Unless this agreement terminates prior to Completion under clause 3.4 or 3.5,
then subject to clause 4:

	 	(A)	 	if Completion occurs before 1 September 2006, the Consideration will be an
amount determined in accordance with the following formula:

	 	 	 	where:

 

31

	 	“C” is the Consideration;
	 
	 	“d” is the number of days from (and including) the Completion Date to
(but excluding) 1 September 2006; and
	 
	 	“EC” is the Estimated Consideration;

	 	(B)	 	if Completion occurs on 1 September 2006, the Consideration will be an amount
equal to the Estimated Consideration; and
	 
	 	(C)	 	if Completion occurs after 1 September 2006, the Consideration will be an
amount determined in accordance with the following formula:

	 	 	 	where:
	 
	 	“C” is the Consideration;
	 
	 	“d” is the number of days from (but excluding) 1 September 2006 to (and
including) the Completion Date; and
	 
	 	“EC” is the Estimated Consideration.

	6.3	 	Any payment made by the Seller or the Purchaser under this agreement shall (so far as
possible) to the extent of the payment be treated as an adjustment to the Consideration for
the Shares of:

	 	(A)	 	to the extent that the adjustment relates to any Company – that Company;
	 
	 	(B)	 	to the extent that the adjustment relates to any Subsidiary – the Company of
which that Subsidiary is a subsidiary undertaking; and
	 
	 	(C)	 	to the extent that the adjustment does not relate to any particular Group
Members – all of the Companies on a pro rata basis (according to the apportionment in
Schedule 4).

	7.	 	COMPLETION

	7.1	 	Subject to clause 4, completion shall take place no later than 11.00 a.m. on the
Completion Date. Completion under this clause, and any completion under clause 4,
will take place at the offices of the Seller’s Solicitors at One Bunhill Row, London, EC1Y
8YY.

	7.2	 	Subject to clause 4, at Completion the Seller shall do those things listed in
Part A of Schedule 5 and the Purchaser shall do those things listed in
Part B of Schedule 5.

 

32

	7.3	 	Subject to clause 4, neither the Purchaser nor the Seller shall be obliged to
complete the sale and purchase of any of the Shares unless the sale and purchase of all of the
Shares is completed simultaneously.

	7.4	 	If the respective obligations of the Seller and/or the Purchaser under clause 7.2 and
Schedule 5 are not complied with on the Completion Date the Purchaser or, as the case
may be, the Seller may:

	 	(A)	 	defer Completion (so that the provisions of this clause 7 shall apply
to Completion as so deferred); or
	 
	 	(B)	 	proceed to Completion as far as practicable (without limiting its rights under
this agreement); or
	 
	 	(C)	 	terminate this agreement by notice in writing to the other party.

	 	 	For the avoidance of doubt but without limiting clause 27, any party’s right to
terminate this agreement in accordance with this clause is not exclusive of any of the
rights, powers and remedies provided by law.
	 
	7.5	 	If this agreement is terminated in accordance with clause 7.4 (and without limiting
any party’s right to claim damages), all obligations of the Seller and the Purchaser under
this agreement shall end (except for the provisions of clauses 32, 33 and
34 but (for the avoidance of doubt) all rights and liabilities of the parties which
have accrued before termination shall continue to exist.
	 
	8.	 	GROUP AND RETAINED GROUP GUARANTEES
	 
	8.1	 	Following Completion the Purchaser shall use reasonable endeavours to procure that, as soon
as reasonably practicable (i) in respect of each Retained Group Guarantee listed in Part
A of Schedule 10, and (ii) after becoming aware of any Retained Group Guarantee
which is
not listed in Part A of Schedule 10, the relevant Retained Group Members are
released and discharged in full from each such Retained Group Guarantee and, pending the
release of each such Retained Group Guarantee, the Purchaser undertakes:

	 	(A)	 	to hold and keep the Seller, for itself and as trustee for each Retained Group
Member, indemnified on an after-Tax basis from and against all actions, claims,
proceedings, loss, damage, and all payments, costs or expenses incurred by the Seller
or such Retained Group Members in relation to or arising out of such Retained Group
Guarantee; and
	 
	 	(B)	 	not to enter into any variation of any agreement which may have the effect of
varying such Retained Group Guarantee without the prior written consent of the Seller.

	8.2	 	Following Completion the Seller shall use reasonable endeavours to procure that, as soon as
reasonably practicable (i) in respect of each Group Guarantee listed in Part B of
Schedule 10, and (ii) after becoming aware of the existence of any Group Guarantee
which is not listed in

 

33

	 	 	Part B of Schedule 10, the relevant Group Members are
released and discharged in full from each such Group Guarantee and pending the release of each
such Group Guarantee, the Seller undertakes:

	 	(A)	 	to hold and keep the Purchaser, for itself and as trustee for each Group
Member, indemnified on an after-Tax basis from and against all actions, claims,
proceedings, loss, damage, and all payments, costs or expenses incurred by the
Purchaser or such Group Members in relation to or arising out of such Group Guarantee;
and
	 
	 	(B)	 	not to enter into any variation of any agreement which may have the effect of
varying such Group Guarantee without the prior written consent of the Purchaser.

	9.	 	INTER-COMPANY BALANCES

	9.1	 	The Seller shall procure that the Cater Tyndall Loan is repaid at or prior to Completion.
The Seller shall use all reasonable endeavours to procure that the other Ordinary Trading
Payables and the other Ordinary Trading Receivables are settled prior to Completion. The
Purchaser shall procure that a new loan made by ANL to a member of the Purchaser’s Group
before the end of the financial year ended 31 December 2006 to replace the Cater Tyndall Loan,
such replacement loan to have a similar effect on the regulatory capital position of ANL as
the Cater Tyndall Loan.

	9.2	 	Following Completion the Seller and the Purchaser agree to procure that any outstanding
Ordinary Trading Payables and any outstanding Ordinary Trading Receivables will be settled on
30 day payment terms and otherwise in accordance with the normal terms of trading between the
companies concerned. After Completion, except as otherwise provided herein or in any
Transaction Documents (or as otherwise already agreed or agreed between the relevant Group
Member or Retained Group Member after Completion), all trading or dealings between Group
Members and Retained Group Members shall be on arms length terms and payment or reimbursement
therefor shall be made on 30 day payment terms.

	9.3	 	By no later than five Business Days prior to the date anticipated by the parties to be the
Completion Date, the Seller shall provide the Purchaser with a schedule setting out the
Estimated Inter-Company Payables and the Estimated Inter-Company Receivables.

	9.4	 	The Purchaser shall, immediately after Completion in relation to the Estimated Inter-Company
Payables, acting solely on behalf of and as the agent for any Group Member that owes an
Inter-Company Payable and on the terms which achieve the effect specified in clause
9.12, settle by way of set off with the Seller (to the extent possible) or pay to the
Seller, in each case acting solely on behalf of and as the agent for each Retained Group
Member to which such debt is owed, amounts equal to such relevant Estimated Inter-Company
Payable owing by way of discharge of such debt.

	9.5	 	The Seller shall, immediately after Completion, in relation to the Estimated Inter-Company
Receivables, acting solely on behalf of and as the agent for the relevant Retained Group
Member that owes an Inter-Company Receivable and on the terms which achieve the effect
specified in clause 9.12, settle by way of set off with the Purchaser (to the extent
possible) or

 

34

	 	 	pay to the Purchaser, in each case acting solely on behalf of and as the agent
for the relevant Group Member to which such debt is owed, amounts equal to such Estimated
Inter-Company Receivables owing by way of discharge of such debt.

	9.6	 	As soon as practicable following Completion (and in any event by no later than 30 Business
Days following Completion (or such later date as the parties may agree in writing)), the
Seller and the Purchaser shall determine the Inter-Company Payables as at Completion (the
“Completion Inter-Company Payables”) and the Inter-Company Receivables as at Completion (the
“Completion Inter-Company Receivables”), in each case by extracting the relevant information
from the inter-company accounts of the relevant Retained Group Members and Group Members.
	 
	9.7	 	If the Seller and the Purchaser cannot agree the amounts of the Completion Inter-Company
Payables and the Completion Inter-Company Receivables within 30 Business Days of Completion
(or such later date as they both agree in writing) Independent Accountants (acting as experts
and not as arbitrators) shall be engaged jointly by the Seller and the Purchaser to determine
such amounts. “Independent Accountants”, for the purposes of this clause 9, means an
independent firm of chartered accountants appointed by (i) the Seller and the Purchaser
jointly, or (ii) in default of agreement as to such appointment within five Business Days of
one of them notifying the other of its wish to appoint an independent firm, the President from
time to time of the Institute of Chartered Accountants in England and Wales on the application
of either of them.
	 
	9.8	 	The Independent Accountants shall make and communicate the determination referred to in
clause 9.7 to the Seller and the Purchaser within 15 Business Days of appointment (or
such later date as the parties may agree in writing) and such decision shall be final and
binding on the parties in the absence of manifest error.
	 
	9.9	 	Subject to receiving reasonable notice, the Seller and the Purchaser shall each give the
other (and their respective representatives and/or accountants from time to time) or the
Independent Accountants, as the case may be, full access during Working Hours to those
books of account, documents, files and papers which the requesting party or firm may
reasonably require to review and determine the amounts of the Completion Inter-Company
Payables and the Completion Inter-Company Receivables as the case may be. The fees of the
Independent Accountants shall be borne as to half by the Purchaser and as to half by the
Seller unless the Independent Accountants shall determine otherwise.
	 
	9.10	 	Within three Business Days (or such later date as the parties may agree in writing) following
the determination of the Completion Inter-Company Payables and the Completion Inter-Company
Receivables:

	 	(A)	 	if any amount in respect of any of the Completion Inter-Company Payables is
greater than the corresponding amount in respect of the Estimated Inter-Company
Payables then the Purchaser, acting solely on behalf of and as the agent for the Group
Member that owes the relevant Inter-Company Payable, shall pay (on terms which achieve
the effect specified in clause 9.12) the amount of the difference to the
Seller, acting solely

 

35

	 	 	 	on behalf of and as the agent for the relevant Retained Group
Member to which such difference is owed, by way of discharge of the relevant debt;
	 
	 	(B)	 	if any amount in respect of any of the Completion Inter-Company Payables is
less than the corresponding amount in respect of the Estimated Inter-Company Payables
then the Seller, acting solely on behalf of and as the agent for the relevant Retained
Group Member, shall pay the amount of the difference to the Purchaser, acting as the
agent for the relevant Group Member to which such difference is owed, by way of
discharge of the relevant debt;
	 
	 	(C)	 	if any amount in respect of any of the Completion Inter-Company Receivables is
greater than the corresponding amount in respect of the Estimated Inter-Company
Receivables then the Seller, acting solely on behalf of and as the agent for the
relevant Retained Group Member, shall pay (on terms which achieve the effect specified
in clause 9.12) the amount of the difference to the Purchaser, acting as the
agent for the Group Member to which such difference is owed, by way of discharge of the
relevant debt; and
	 
	 	(D)	 	if any amount in respect of any of the Completion Inter-Company Receivables is
less than the corresponding amount in respect of the Estimated Inter-Company
Receivables then the Purchaser, acting solely on behalf of and as the agent for the
relevant Group Member, shall pay the amount of the difference to the Seller, acting
solely on behalf of and as the agent for the relevant Retained Group Member to which
such difference is owed, by way of discharge of the relevant debt.

	9.11	 	Any amount payable under clause 9.10 shall be paid together with an amount equivalent
to interest thereon (at the LIBOR rate prevailing at the Completion Date) from (and including)
the Completion Date until (but excluding) the date of payment whether before or after
judgment.
	 
	9.12	 	To the extent such liabilities have not been satisfied and extinguished by way of set off
pursuant to clauses 9.4 and 9.5, the Seller (on behalf of each relevant
Retained Group
Member) and the Purchaser (on behalf of each relevant Group Member) undertake to each other
that payment of the amounts due under clauses 9.4, 9.5 and 9.10
(including any such payment made by way of set off) shall satisfy and extinguish all those
liabilities of the Group and of the Retained Group in respect of the Inter-Company Payables
and the Inter-Company Receivables. The party receiving payment of such amounts shall
receive them on behalf of the relevant Group Members (in the case of receipt by the
Purchaser) or on behalf of the relevant Retained Group Member(s) (in the case of receipt by
the Seller). The effect of clauses 9.4, 9.5 and 9.10 and this
clause 9.12 shall be that as from the date of payment under the relevant clause:

	 	(A)	 	each Retained Group Member which owed to a Group Member an amount included
within the Estimated Inter-Company Receivables or Inter-Company Receivables in respect
of which the relevant payment was made shall owe that amount instead to the Seller
(which will have paid that amount on behalf of that Retained Group Member to the
Purchaser, which will have received that amount on behalf of that Group Member)

 

36

	 	 	 	and,
correspondingly, the Purchaser shall owe that amount to the Group Member on whose
behalf the Purchaser received such amount; and
	 
	 	(B)	 	each Group Member which owed to a Retained Group Member an amount included
within the Estimated Inter-Company Payables or Inter-Company Payables in respect of
which the relevant payment was made shall owe that amount instead to the Purchaser
(which will have paid that amount on behalf of that Group Member to the Seller, which
will have received that amount on behalf of that Retained Group Member) and,
correspondingly, the Seller shall owe that amount to the Retained Group Member on whose
behalf the Seller received such amount.

	9.13	 	The Seller shall procure that prior to Completion Abbey National Treasury Services plc is
substituted in place of SPL (Holdings 1) Limited as principal debtor under the Deed
constituting Floating Rate Unsecured Guaranteed Loan Notes 2012 dated 28 February 2002 and the
Loan Notes (as defined in such Deed) in accordance with clause 13 of such Deed.
	 
	10.	 	SELLER’S WARRANTIES AND UNDERTAKINGS
	 
	10.1	 	Subject to clause 12 and Schedule 7, the Seller warrants to the Purchaser on
an after-Tax basis in the terms of the Warranties at the date of this agreement.
	 
	10.2	 	The Purchaser acknowledges that it does not rely on and has not been induced to enter into
this agreement on the basis of any warranties, representations, covenants, undertakings,
indemnities or other statements whatsoever, other than those expressly set out in this
agreement or the Tax Covenant and acknowledges that none of the Seller, any Retained Group
Member, any Group Member or any of their agents, officers or employees have given any such
warranties, representations, covenants, undertakings, indemnities or other statements. The
Purchaser accordingly agrees and undertakes that it has no rights against and shall not make
any claim against any such person in respect of any such matter.
	 
	10.3	 	Each of the Warranties shall be construed as a separate and independent warranty and (except
where expressly provided to the contrary) shall not be limited or restricted by reference to
or inference from the terms of any other Warranty.
	 
	10.4	 	The Seller (in the absence of fraud or dishonest concealment, dishonest withholding or
dishonest mis-statement of information by or on behalf of the director or employee in question
of any Group Member) waives, and undertakes not to make, any claim against any Group Member or
any director or employee of any Group Member on whom it may have relied, in respect of any
error, omission or misrepresentation in or from any information or opinion which that person
may have provided in connection with the Seller agreeing to any term of this agreement or of
the Tax Covenant or authorising any statement in the Disclosure Letter.
	 
	10.5	 	The Seller agrees to waive and to procure the waiver, of any right pursuant to which it or
any other Retained Group Member can terminate the Opal Hedges by reason of the change of
control of any Group Member as a result of the sale and purchase of the Shares or any other
transaction contemplated by this agreement. The Purchaser agrees to procure SMA and, to use
reasonable endeavours to procure that SPL, waive any rights pursuant to which SMA or

 

37

	 	 	SPL
(respectively) can terminate the Opal Hedges by reason of the change of control of any Group
Member as a result of the sale and purchase of the Shares or any other transaction
contemplated by this agreement.
	 
	10.6	 	The Seller hereby undertakes to indemnify and keep indemnified the Purchaser after Completion
on an after-Tax basis from and against all Liabilities suffered or incurred by any Group
Member at any time after the date of this agreement or after Completion by the Purchaser or
any other member of the Purchaser’s Group as a result of or arising from the Current SMI
Litigation (after taking appropriate account of the value of the relevant policies that are
the subject of the Current SMI Litigation) provided that the Seller shall not be liable to the
Purchaser for any matter referred to in this clause 10.6 to the extent that a
provision or reserve has been made in the Accounts in respect of such matter.
	 
	10.7	 	The Seller shall have sole conduct of the Current SMI Litigation and after Completion the
Purchaser shall and shall procure that the appropriate member of the Purchaser’s Group shall:

	 	(A)	 	subject to the Seller agreeing to pay the reasonable expenses of the Purchaser
and/or the relevant member of the Purchaser’s Group, take such action and give such
information and access during Working Hours to personnel, premises, chattels, documents
and records to the Seller and its professional advisers as the Seller may reasonably
request in connection with the Current SMI Litigation;
	 
	 	(B)	 	subject to the Seller agreeing to pay the reasonable expenses of the Purchaser
and/or the relevant member of the Purchaser’s Group, at the request of the Seller,
allow the Seller to take conduct of the Current SMI Litigation in the name of the
appropriate member of the Purchaser’s Group and in that connection the Purchaser shall
(at the cost of the Seller) give or cause to be given to the Seller all such assistance
as the Seller may reasonably require in avoiding, disputing, resisting, settling,
compromising, defending or appealing the Current SMI Litigation and shall instruct
such solicitors or other professional advisers as the Seller may (with the
Purchaser’s consent, such consent not to be unreasonably withheld or delayed)
nominate to act on behalf of the appropriate member of the Purchaser’s Group, as
appropriate, but to act in accordance with the Seller’s sole instructions provided
always that the Seller keeps the Purchaser reasonably informed as to the progress of
the Current SMI Litigation and provided always that if the Current SMI Litigation
will or is likely to, in the reasonable opinion of the Purchaser, significantly
prejudice the Purchaser’s or any member of the Purchaser’s Group’s relations with
any Regulatory Authority or any Tax Authority the Seller shall consult with the
Purchaser and will comply with any reasonable requirements of the Purchaser in
relation to such claim (and where in so complying the Seller requires any consent of
the Purchaser, such consent shall not be unreasonably withheld or delayed by the
Purchaser); and
	 
	 	(C)	 	make no admission of liability, agreement, settlement or compromise with any
third party in relation to the Current SMI Litigation without the prior written consent
of the Seller.

 

38

	10.8	 	In any event, the Seller shall be entitled at any stage and at its sole discretion to settle
the Current SMI Litigation provided that the Seller shall, where practicable, notify the
Purchaser in advance of such settlement of its decision so to settle such Current SMI
Litigation provided that where such Current SMI Litigation will or is likely to, in the
reasonable opinion of the Purchaser, significantly prejudice the Purchaser’s or any member of
the Purchaser’s Group’s relations with any Regulatory Authority or any Tax Authority the
Seller shall consult with the Purchaser and will comply with any reasonable requirements of
the Purchaser in relation to such Current SMI Litigation (and where in so complying the Seller
requires any consent of the Purchaser, such consent shall not be unreasonably withheld or
delayed by the Purchaser).
	 
	10.9	 	The Seller hereby undertakes to indemnify and keep indemnified the Purchaser after Completion
on an after-Tax basis from and against all Liabilities suffered or incurred by any Group
Member at any time after the date of this agreement or after Completion by the Purchaser or
any other member of the Purchaser’s Group as a result of or arising from any actions or
proceedings issued and served against SMI on or before the second anniversary of the date of
this agreement arising from the same or substantially the same facts and circumstances
(whether or not in the same jurisdictions) to those facts and circumstances that were the
subject matter of the Current SMI Litigation (after taking appropriate account of the value of
the relevant policies that are the subject of any such claims, actions or proceedings) (a
“Future SMI Litigation Claim”) provided that the maximum aggregate liability of the Seller in
respect of claims made under this indemnity is £10,000,000.
	 
	10.10	 	If after Completion the Purchaser or any member of the Purchaser’s Group becomes aware of
any claim, action, or demand against it or matter likely to give rise to any of these in
respect of which a claim may be made under the indemnity in clause 10.9, the Purchaser
shall or shall procure that the appropriate member of the Purchaser’s Group shall give notice
in writing to the Seller as soon as reasonably practicable of the matter. The notice shall
set out such reasonable details of the relevant Future SMI Litigation Claim as are known to
the Purchaser (including, to the extent known, the grounds on which such claim is based and
the
amount claimed to be payable in respect thereof). The Purchaser shall consult with the
Seller with respect to the Future SMI Litigation Claim.
	 
	10.11	 	The Seller hereby undertakes to indemnify and keep indemnified the Purchaser after
Completion on an after-Tax basis from and against all Liabilities suffered or incurred by any
Group Member at any time after the date of this agreement or after Completion by the Purchaser
or any other member of the Purchaser’s Group as a result of or arising from any claims,
actions or proceedings arising after the date of this agreement in respect of the issues
identified in the unit pricing error project in the control programme as described in the PwC
Control Programme Reports. The maximum aggregate liability of the Seller in respect of all
claims made under the indemnity in this clause 10.11 is £2,000,000.
	 
	10.12	 	The Seller hereby undertakes to indemnify and keep indemnified SMA or SPL prior to
Completion and after Completion the Purchaser on an after-Tax basis from and against all
Liabilities to the extent suffered or incurred by the Purchaser or SMA or SPL as a result of
or in connection with:

 

39

	 	(A)	 	any decision or direction made by the FSA which the Seller and Purchaser agree
in writing should be complied with; or
	 
	 	(B)	 	any final liability or obligation pursuant to any applicable law or regulation,

	 	 	that funds be contributed or payments be made to the with profits funds of SMA or SPL by the
shareholder or non-profit funds of SMA or SPL or by any member of the Purchaser’s Group by
reason of or arising from an inappropriate level of return or profit earned prior to
Completion by a member of the Retained Group on the purchase or rebalancing of the Opal
Hedges purchased and held by such with profits funds (and taken out as part of the
stabilisation project known as Project Opal) (“Opal Hedges Liability”) provided that the
Seller shall only be liable hereunder for an amount in aggregate equal to 70 per cent. of
the amount of any Opal Hedges Liability and 70 per cent. of any reasonable third party costs
and expenses incurred by any member of the Purchaser’s Group or SMA or SPL in taking any
action in relation to any matter likely to give rise to a claim under the indemnity in this
clause 10.12 as requested by the Seller in accordance with clause 10.13.
	 
	10.13	 	Upon the Purchaser or any member of the Purchaser’s Group becoming aware at any time after
Completion of any matter likely to give rise to a claim under the indemnity in clause
10.12 the Purchaser shall, and shall procure that the relevant member of the Purchaser’s
Group shall:

	 	(A)	 	as soon as reasonably practicable give notice in writing to the Seller of the
matter;
	 
	 	(B)	 	take such action and give such information and access during Working Hours to
personnel, premises, chattels, documents and records to the Seller and its professional
advisers as the Seller and it professional advisers may reasonably request;
	 
	 	(C)	 	at the request of the Seller, allow the Seller to take sole conduct of such
actions as the Seller may deem appropriate in relation to the matter in the name of the
Purchaser and/or relevant member of the Purchaser’s Group and the Purchaser shall:

	 	(i)	 	take such action and institute such proceedings and give or
cause to be given to the Seller all such information and assistance as the
Seller may reasonably require in relation to the matter (including in avoiding,
disputing, resisting, settling, compromising, defending or appealing any claim
or demand arising in relation to or in connection with the matter); and
	 
	 	(ii)	 	in connection with any action or proceedings related to the
matter instruct such solicitors or other professional advisers as the Seller
may (with the Purchaser’s consent, such consent not to be unreasonably withheld
or delayed) nominate to act on behalf of the appropriate member of the
Purchaser’s Group, as appropriate, but to act in accordance with the Seller’s
sole instructions provided always that the Seller keeps the Purchaser
reasonably informed as to the progress of the proceedings,

 

40

	 	 	 	provided always that if any action or proceeding will or is likely to, in the
reasonable opinion of the Purchaser, significantly prejudice the Purchaser’s or any
member of the Purchaser’s Group’s relations with the FSA the Seller shall consult
with the Purchaser and will comply with any reasonable requirements of the Purchaser
in relation to such action or proceeding (and where in so complying the Seller
requires any consent of the Purchaser, such consent shall not be unreasonably
withheld or delayed by the Purchaser) save that if a decision or determination of
the FSA or any tribunal or any court in relation to the matters referred to in
clause 10.12 is capable of appeal and the Seller wishes to pursue such
appeal the Purchaser shall appeal or procure the relevant member of the Purchaser’s
Group to appeal such decision or determination if directed to do so by the Seller;
	 
	 	(D)	 	make no admission of liability, agreement, settlement or compromise with any
third party in relation to any action or proceeding in relation to the matters referred
to in clause 10.12 without the prior written consent of the Seller; and
	 
	 	(E)	 	use best endeavours to minimise the amount of any Liabilities suffered or
incurred by the Purchaser or any Group Member which could be the subject of a claim
under the indemnity in clause 10.12 provided that it is agreed that in taking
any action or making any omission in accordance with the requirements of the Seller
under this clause 10.13 the Purchaser shall be deemed for the purpose of this
clause 10.13(E) to be in compliance with the best endeavours obligation in this
clause 10.13(E) in relation to such action or omission.

	10.14	 	In any event, the Seller shall be entitled at any stage and at its sole discretion to settle
any matter referred to in clause 10.12 provided that the Seller shall, where
practicable, notify the Purchaser in advance of such settlement of its decision so to settle
such matter provided that where such matter will or is likely to, in the reasonable opinion of
the Purchaser, significantly prejudice the Purchaser’s or any member of the Purchaser’s
Group’s relations with any the
FSA the Seller shall consult with the Purchaser and will comply with any reasonable
requirements of the Purchaser in relation to such matter (and where in so complying the
Seller requires any consent of the Purchaser, such consent shall not be unreasonably
withheld or delayed by the Purchaser).
	 
	11.	 	PURCHASER’S AND GUARANTOR’S WARRANTIES
	 
	 	 	Each of the Purchaser and the Guarantor warrants to the Seller on an after-Tax basis at the
date of this agreement as follows:

	 	(A)	 	it is a company validly existing under the laws of England and Wales;
	 
	 	(B)	 	it has the requisite power and authority to enter into and perform this
agreement and the other Transaction Documents to which it is a party;
	 
	 	(C)	 	its obligations under this agreement constitute, and its obligations under the
other Transaction Documents to which it is a party will when executed and delivered
constitute, binding obligations of it in accordance with their respective terms;

 

41

	 	(D)	 	subject to the fulfilment or (where applicable) waiver of the Conditions, the
execution and delivery of, and the performance by it of its obligations under, this
agreement and the other Transaction Documents to which it is a party will not:

	 	(i)	 	result in a material breach of any provision of the memorandum
or articles of association of it;
	 
	 	(ii)	 	result in a material breach of, or constitute a default under,
any agreement or instrument to which it is a party or by which it is bound;
	 
	 	(iii)	 	result in a breach of any order, judgment or decree of any
court or governmental agency to which it is a party or by which it is bound; or
	 
	 	(iv)	 	require the consent of its shareholders, except in the case of
the Guarantor; and

	 	(E)	 	it is resident for UK tax purposes in the UK.

	12.	 	PURCHASER’S REMEDIES AND SELLER’S LIMITATIONS ON LIABILITY
	 
	12.1	 	The Purchaser’s right to recover if a Warranty has been breached and under the Tax Covenant
and any other provision of this agreement shall be limited as set out in clauses 12.2
and 12.3 and in Schedule 7 and no liability shall attach to the Seller in
respect of claims under the Warranties or the Tax Covenant or any other provision of this
agreement if and to the extent that such limitations apply save in the case of fraud by the
Seller in the giving of the Warranties.
	 
	12.2	 	The Purchaser shall not be entitled to claim that any fact, matter or circumstance causes any
of the Warranties to be breached if fairly disclosed in the Disclosure Letter or pursuant to
the Disclosure Letter.
	 
	12.3	 	If the Purchaser becomes aware, at any time, that there has been any breach of the Warranties
or any other term of this agreement, the Purchaser shall not be entitled to terminate or
rescind this agreement, but shall, subject to clause 12.2 and Schedule 7 and
applicable law, be entitled to claim damages under this agreement.
	 
	12.4	 	The Seller shall not be liable to make any payment under this agreement nor shall the
Purchaser exercise any right of set-off or counter-claim against or otherwise withhold payment
of any sums stated to be payable by the Purchaser to the Seller under this agreement or under
any other agreement subsisting between them unless and until such liability has been agreed or
adjudged payable in legal or arbitration proceedings.
	 
	13.	 	WRONG POCKET — ASSETS
	 
	13.1	 	In the event that the Seller or the Purchaser discovers after Completion that:

 

42

	 	(A)	 	any assets, property or rights of the Group (other than contracts or
Intellectual Property and excluding the Shares) had prior to Completion been used by or
are required in the course of the business of the Retained Group as at Completion; or
	 
	 	(B)	 	any assets, property or rights of the Retained Group (other than contracts or
Intellectual Property) had prior to Completion been used by or are required in the
course of the business of the Group as at Completion,

	 	 	then, subject to clauses 13.2 and 13.3, the Seller and the Purchaser will
use their reasonable endeavours to agree a means and reasonable commercial terms by which
such use or benefit by the Group or the Retained Group, as the case may be, may continue
with respect to the relevant assets, property or rights as long as reasonably necessary and
practicable or by which such assets, property or rights may be transferred to or by the
Retained Group by or to the Group (as appropriate).
	 
	13.2	 	If any Group Member owns any assets or rights (other than contracts or assets or rights which
are Intellectual Property) which immediately prior to Completion had been exclusively or
predominantly used by or were required exclusively or predominantly in the course of the
business of the Retained Group the Purchaser shall procure that such Group Member immediately
informs the Seller. Thereafter, at the request of the Seller and subject (save where
otherwise expressly provided in any of the other Transaction Documents) to the Seller
indemnifying the Purchaser on an after-Tax basis against all losses, liabilities, damages,
costs, claims and expenses incurred thereby or otherwise in relation to such asset or right,
the Purchaser undertakes to execute or procure the execution of such documents as may be
reasonably necessary to procure the transfer of any such assets or rights to a Retained Group
Member nominated by the Seller and thereafter, if applicable, the provisions of clause
13.1(B) shall apply. Where the book value of such asset, property or right exceeds
£50,000, the
Seller shall pay the relevant book value to the transferring Group Member within 10 Business
Days of the date of transfer.
	 
	13.3	 	If any Retained Group Member owns any assets or rights (other than contracts or assets or
rights which are Intellectual Property) which immediately prior to Completion had been
exclusively or predominantly used by or were required exclusively or predominantly in the
course of the business of the Group the Seller shall procure that such Retained Group Member
immediately informs the Purchaser. Thereafter, at the request of the Purchaser and subject
(save where otherwise expressly provided in any of the other Transaction Documents) to the
Purchaser indemnifying the Seller on an after-Tax basis against all losses, liabilities,
damages, costs, claims and expenses incurred thereby or otherwise in relation to such asset or
right, the Seller undertakes to execute or procure the execution of such documents as may be
reasonably necessary to procure the transfer of any such assets or rights to a Group Member
nominated by the Purchaser and thereafter, if applicable, the provisions of clause
13.1(A) shall apply. Where the book value of such asset, property or right exceeds
£50,000, the Purchaser shall pay the relevant book value to the Seller within 10 Business Days
of the date of transfer.
	 
	13.4	 	The provisions of this clause 13 shall not apply to those assets, property and rights
the use or benefit of which is provided by the Seller to the Purchaser pursuant to the terms
of the Transitional Services Agreement.

 

43

	14.	 	WRONG POCKET – CONTRACTS
	 
	14.1	 	In the event that the Seller or the Purchaser discovers after Completion that a Group Member
is a party to any contract which relates exclusively to the business of the Retained Group or
relates in part to the business of the Retained Group the Purchaser or the Seller, as the case
may be, shall as soon as reasonably practicable inform the other and thereafter at the request
of the Seller:

	 	(A)	 	the Purchaser undertakes to execute or procure the execution of such documents
as may be reasonably necessary to assign the benefit of such contract to the extent
that it relates to the business of the Retained Group to a Retained Group Member
nominated by the Seller; and
	 
	 	(B)	 	the Seller shall (save where otherwise expressly provided in any of the other
Transaction Documents) indemnify the Purchaser on an after-Tax basis against all
losses, liabilities, damages, costs, claims and expenses incurred in the fulfilment of
its obligations pursuant to clause 14.1(A) (including any costs paid by the
Purchaser to third parties in order that the Purchaser fulfils its obligations pursuant
to clause 14.2) or otherwise in relation to such assigned contract,

	 	 	except to the extent that such an assignment or attempted assignment would constitute a
breach of such contract, in which case clause 14.2 will apply.
	 
	14.2	 	Where a consent, approval, authorisation or waiver is required from any third party to the
assignment of the benefit of any contract under clause 14.1(A), the Purchaser shall
use all
reasonable endeavours to obtain any such consent, approval, authorisation or waiver.
Neither the Purchaser nor the Seller shall have any further obligation in respect of such
contract (including under clauses 14.1(A) or 14.1(B)) unless and until such consent,
approval, authorisation or waiver is obtained.

	14.3	 	In the event that the Seller or the Purchaser discovers after Completion that a Retained
Group Member is a party to any contract which relates exclusively to the business of the Group
or which relates in part to the business of the Group the Purchaser or the Seller, as the case
may be, shall as soon as reasonably practicable inform the other and thereafter at the request
of the Purchaser:

	 	(A)	 	the Seller undertakes to execute or procure the execution of such documents as
may be reasonably necessary to assign the benefit of any such contract to the extent
that it relates to the business of the Group to a Group Member nominated by the
Purchaser; and
	 
	 	(B)	 	the Purchaser shall (save where otherwise expressly provided in any of the
other Transaction Documents) indemnify the Seller on an after-Tax basis against all
losses, liabilities, damages, costs, claims and expenses incurred in the fulfilment of
its obligations pursuant to clause 14.3(A) (including any costs paid by the
Seller to third parties in order that the Seller fulfils its obligations pursuant to
clause 14.4) or otherwise in relation to such assigned contract,

 

44

	 	 	except to the extent that such an assignment or attempted assignment would constitute a
breach of such contract, in which case clause 14.4 will apply.
	 
	14.4	 	Where a consent, approval, authorisation or waiver is required from any third party to the
assignment of the benefit of any contract under clause 14.3(A), the Seller shall use
all reasonable endeavours to obtain any such consent, approval, authorisation or waiver.
Neither the Seller nor the Purchaser shall have any further obligation in respect of such
contract (including under clauses 14.3(A) or 14.3(B)) unless and until such consent,
approval, authorisation or waiver is obtained.
	 
	14.5	 	The provisions of this clause 14 shall not apply to any contract the benefit of which
is provided by the Seller to the Purchaser pursuant to the terms of any of the other
Transaction Documents.
	 
	15.	 	INTELLECTUAL PROPERTY
	 
	15.1	 	In the event that the Seller or the Purchaser discovers after Completion that a Group Member
owns any Intellectual Property (other than trade marks) or rights in Business Information
which have in the twelve months prior to Completion been used exclusively or predominantly in
relation to any business of the Retained Group, the Purchaser shall use reasonable endeavours
to procure that such Intellectual Property or rights in Business Information are transferred
to the Seller or a company nominated by the Seller as soon as reasonably practicable for
nominal consideration.
	 
	15.2	 	The Purchaser shall, with effect from Completion, procure the grant to the Retained Group of
a non-exclusive, perpetual, worldwide, assignable, irrevocable, royalty-free licence (with the
right to sub-license) to use any Intellectual Property (other than trade marks) or rights in
Business Information owned by a Group Member which have been used (but not exclusively or
predominantly) in the twelve months prior to Completion in relation to any business of the
Retained Group.
	 
	15.3	 	The Seller shall, and shall procure that, as of Completion, each Retained Group Member shall,
assign, to the Purchaser or its nominee, all right, title and interest it has in any
Intellectual Property (other than trade marks) or rights in Business Information, that has in
the twelve months prior to Completion been used exclusively or predominantly in the business
carried on by the Group.
	 
	15.4	 	The Seller shall, with effect from Completion, grant or procure the grant to the Group of a
non-exclusive, perpetual, worldwide, assignable, irrevocable, royalty-free licence (with the
right to sub-license) to use any Intellectual Property (other than trade marks) or rights in
Business Information owned by a Retained Group Member which have been used (but not
exclusively or predominantly, such rights having been assigned to the Purchaser or its nominee
under clause 15.3) in the twelve months prior to Completion in relation to any
business of the Group.
	 
	15.5	 	The Purchaser and the Seller agree that, and the Seller shall procure that, all licences of
any Intellectual Property or rights in Business Information owned by any member of
respectively:

 

45

	 	(A)	 	the Group or to be owned by the Purchaser or its nominee pursuant to any
Transaction Documents; or
	 
	 	(B)	 	the Retained Group or to be owned by the Seller or its nominee pursuant to any
Transaction Documents,

	 	 	granted to any Retained Group Member or any Group Member respectively (other than licences
granted pursuant to any Transaction Document) terminate at Completion.
	 
	15.6	 	To the extent that any Books and Records which relate exclusively or predominantly to any
business of the Group are not already in the possession of a member of the Group at
Completion, the Seller shall procure the physical and/or electronic transfer of the Books and
Records to the Purchaser or its nominee, except where such Books and Records are subject to
storage arrangements with third parties pursuant to the Transitional Services Agreement or the
Relationship Deed (provided that the Purchaser shall be permitted access to any such Books and
Records which are the subject of storage arrangements with third parties upon reasonable
notice by the Purchaser to the Seller).
	 
	16.	 	ABBEY MARKS
	 
	16.1	 	The Purchaser acknowledges and agrees that nothing in this agreement shall transfer or
licence, or shall operate as an agreement to transfer or licence any right, title or interest
in or to any of the Abbey Marks or any similar name or mark. Following Completion, save as
expressly provided in the Transaction Documents, the Purchaser shall not, and shall procure
that no member of the Purchaser’s Group shall, hold itself out as being part of or in any
way connected with the Retained Group.
	 
	16.2	 	Without prejudice to clause 16.1 or the trade mark rights of the Retained Group but
subject to the Brand Licence, following Completion the Purchaser shall procure that for:

	 	(A)	 	five years following Completion; and
	 
	 	(B)	 	thereafter for so long as any Retained Group Member continues to use, or retain
an interest in, any Abbey Mark,

	 	 	no Group Member or the Purchaser’s Group shall use any Abbey Mark or any confusingly similar
name or mark in relation to the business carried on by any Group Member, any extensions or
developments thereto, or any business which competes with the business of the Retained
Group, except to the extent permitted by clause 16.3.
	 
	16.3	 	Subject to the terms of the Brand Licence, the Purchaser shall procure that, as soon as
practicable after Completion and in any event within the period of one year following
Completion, each Group Member shall re-label, destroy or exhaust all materials held by it that
bear any Abbey Mark, including signage, advertising, promotional and sales materials, product
literature, software, stationery, business cards, websites and any other materials. The
Purchaser agrees to take all reasonable steps to ensure that where, during the period of one
year following Completion, any existing stocks of marketing or sales materials bearing any

 

46

	 	 	Abbey Mark are used in the course of the Group’s business, the recipients of those materials
are made aware (in writing wherever practicable) that the Group no longer forms part of the
Retained Group and has ceased to have any association with the Retained Group and that the
Group is not therefore carrying on business for or representing any Retained Group Member.
	 
	16.4	 	The Purchaser shall procure that each Group Member whose corporate name contains any Abbey
Mark shall, as soon as reasonably practicable following Completion and in any event by the
date falling three months after Completion, pass all required resolutions to change its
corporate name to a name which does not include any Abbey Mark or any confusingly similar name
and shall procure the prompt registration of the new name with the appropriate court, registry
or authority (including any appropriate companies registry or Regulatory Authority). Upon
receipt of confirmation from the appropriate court, registry or authority that such name
change has been effected, the Purchaser shall provide the Seller with written proof that such
name change has been effected.
	 
	16.5	 	Without prejudice to the terms of the other Transaction Documents, the Seller shall, and
shall procure that the Retained Group Members shall, afford the Purchaser and its professional
advisers such access to the Books and Records and management of the Group Members as the
Purchaser may reasonably require in preparation for the re-registrations of SMA, ANL and ANFIS
after Completion as private companies pursuant Section 53 of the Companies Act 1985 and the
transfer of the Group as contemplated by this agreement.
	 
	17.	 	PENSIONS
	 
	17.1	 	The Seller confirms that a Retained Group Member is, or will become prior to Completion, the
principal employer of each of the Seller’s Schemes and is, or will become prior to Completion,
responsible for all obligations and liabilities of the principal employer in respect of the
Seller’s Schemes. A letter between the Seller and the trustees of each of the Scottish Mutual
Assurance plc Staff Pension Scheme and the Scottish Provident Institution Staff Pension Fund
confirming their agreement to a member of the Retained Group becoming the principal employer
for each scheme has been provided to the Purchaser.
	 
	17.2	 	The Seller hereby covenants with the Purchaser to:

	 	(A)	 	pay to the Purchaser an amount equal (subject to clause 17.2(C) below)
to any payment any Group Member is liable to make in respect of or in connection with
its participation in any of the Seller’s Schemes prior to Completion where such
liability (i) arises after the date of this agreement or (ii) arose prior to that date
but is unpaid at the date of this agreement (except for contributions properly payable
in the ordinary course for which the Group Member will remain liable) including but not
limited to any payment pursuant to clause 17.2(C) below which is required to be
made pursuant to Section 75 or Section 75A of the Pensions Act 1995 (or any regulations
made under or in connection with those sections as modified or re-enacted from time to
time) to any of the Seller’s Schemes at or after Completion. The Seller will be given
full and complete responsibility and power to discuss any payment which any Group
Member becomes liable to make pursuant to Section 75 or Section 75A of the Pensions Act
1995 (or any regulations made under or in connection with those sections as modified

 

47

	 	 	 	or
re-enacted from time to time) with the trustee bodies of the Seller’s Schemes, but for
the avoidance of doubt, the Purchaser and/or Group Member shall be entitled to make any
such payment for which the Group Member is liable within a reasonable period of such
liability arising; and
	 
	 	(B)	 	notwithstanding any of the provisions contained in (A) above, pay to the
Purchaser an amount equal to:

	 	(i)	 	any payment the Purchaser and/or any Group Member becomes
liable to make pursuant to any contribution notice issued under Section 38 of
the Pensions Act 2004 in relation to any act or omission of any Group Member
prior to and including Completion;
	 
	 	(ii)	 	any payment the Purchaser and/or any Group Member becomes
liable to make pursuant to any contribution notice issued under Section 47 of
the Pensions Act 2004 as a result of any failure by any Group Member to comply
with a financial support direction issued under Section 43 of the Pension Act
2004;
	 
	 	(iii)	 	any payment the Purchaser and/or any Group Member becomes
liable to make pursuant to any financial support direction issued under Section
43 of the Pensions Act 2004; and
	 
	 	(iv)	 	any payment the Purchaser and/or any Group Member becomes
liable to make pursuant to any restoration order issued under Section 52 of the
Pensions Act 2004,

	 	 	 	at or after the date of this agreement by the Pensions Regulator in relation to the
Seller’s Schemes or any other scheme operated by a Retained Group Member to which
Sections 38, 43, 47 and 53 of the Pensions Act 2004 apply. The Seller will be given
full and complete responsibility and power to discuss any such contribution notice,
financial support direction or restoration order with the Pensions Regulator and the
trustees of the Seller’s Schemes (or, as appropriate, the trustees of any other
scheme) but, for the avoidance of doubt, the Purchaser and/or the Group Member shall
be entitled to make any such payment for which it is liable within a reasonable
period of such liability arising.
	 
	 	(C)	 	The Seller and the Purchaser shall each use their reasonable endeavours to
ensure that the scheme actuaries for each of the Seller’s Schemes, where appropriate,
calculate as soon as possible after Completion any debt required to be paid as a result
of the cessation of participation of ANFIS (or any other Group Member) pursuant to
Section 75 or Section 75A of the Pensions Act 1995 (or any regulations made under or in
connection with those sections as modified or re-enacted from time to time) to each of
the Seller’s Schemes. For each Seller’s Scheme, when the relevant debt is calculated
(i) the Seller shall within 3 days of the calculation pay to the Purchaser the amount
of such debt, provided that (a) to the extent the aggregate debts payable under this
clause exceed £80 million, the Seller shall only pay 70% of such excess where

 

48

	 	 	 	such
excess is less than £20 million (b) to the extent that the aggregate debts are or
exceed £100 million the Seller and the Purchaser shall agree the percentage of the sum
in excess of £100 million that shall be payable taking into account the marginal tax
rate of those companies in the Purchaser’s Group to which the excess is recharged by
ANFIS and/or the relevant Group Member and (c) if such debts are not calculated by 31
December 2006 then the Seller and the Purchaser shall also agree the percentage of the
sum that shall be payable in respect of the excess over both £80 million and £100
million taking into account the marginal tax rate of those companies in the Purchaser’s
Group to which the excess is recharged by ANFIS and/or the relevant Group Member (for
the purposes of this clause neither the Seller’s nor the Purchaser’s agreement shall be
unreasonably withheld or delayed and in the absence of agreement such rate shall be
determined by a suitable independent tax practitioner with 10 years’ experience of the
taxation of life assurance companies (such person to be selected by the President of
the Chartered Institute of Taxation if the Seller and the Purchaser are unable to
agree)); and (ii) within 3 days of receipt of the relevant amount in respect of the
debt pursuant to (i) above the Purchaser shall procure that ANFIS (or, if applicable,
the other relevant Group Member) shall pay an amount equal to the debt to the relevant
Seller’s Scheme.
	 
	 	(D)	 	All sums payable by the Seller to the Purchaser shall be paid as an adjustment
to the Consideration calculated on an after-Tax basis except for sums payable pursuant
to clause 17.2(C) which shall be calculated on an after-Tax basis as if there
were no reference to any Tax credit, repayment or other Tax benefit in clause
1.2(P).

	17.3	(A)	 	 The Seller agrees that it shall between the date of this agreement and Completion procure
that in respect of the Irish Schemes:

	 	(i)	 	one month’s written notice is given to wind up the SMI Staff
Pension Scheme; and
	 
	 	(ii)	 	it uses all reasonable endeavours to agree with the SP
Institution Staff Pension Scheme for Employees in the Republic of Ireland (the
“SPL Scheme”) trustees the commencement of winding up of the SPL Scheme.

	 	(B)	 	In respect of the SMI Staff Pension Scheme and, if it has commenced winding up
before Completion, the SPL Scheme the Purchaser undertakes that it shall, and will
procure that each Group Member shall:

	 	(i)	 	give the Seller all reasonable co-operation, assistance and
information which may be relevant to the winding up processes of the Irish
Schemes;
	 
	 	(ii)	 	not take any action which would increase the liabilities of the
employers and the Seller under the Irish Schemes nor exercise any power, right
or discretion conferred on any Group Member in relation to the Irish Schemes
except with the prior consent of the Seller;

 

49

	 	(iii)	 	appoint the Seller to act on behalf of the Group Members in
relation to the Irish Schemes for the purposes of dealing with the trustees of
the Irish Schemes in all matters relating to the administration of the Irish
Schemes, including in particular their winding up and authorise the Seller to
do all such acts and execute and/or sign all such documents on their behalf as
the Seller may reasonably consider necessary or desirable in connection
therewith; and
	 
	 	(iv)	 	allow the Seller to have conduct of all matters relating to the
winding up of the Irish Schemes and pay to the Seller an amount equivalent to
any payments of surplus which any Group Member receives as a result of such
winding up on an after Tax basis, within 21 days of such receipt.

	 	 	 	Subject to the Purchaser and each Group Member’s compliance with the above (to the
extent applicable), the Seller hereby covenants with the Purchaser to pay to the
Purchaser by way of adjustment of the Consideration on an after Tax basis an amount
equal to any payment any Group Member is liable to make in respect of or in
connection with its participation in the SMI Staff Pension Scheme and the SPL Scheme
as applicable (including for the avoidance of doubt all costs and expenses) where
such liability (i) arises after the date of this agreement or (ii) arose prior to
that date but is unpaid at the date of this agreement (except in the case of (ii)
for
contributions properly payable in the ordinary course for which the Group Member
will remain liable).
	 
	 	(C)	 	If the SPL Scheme has not commenced winding up prior to Completion then the
Purchaser and the relevant Group Member shall retain full responsibility for the SPL
Scheme. However the Seller undertakes to pay to the Purchaser by way of adjustment of
the Consideration on an after Tax basis an amount equal to the deficit of the SPL
Scheme as at Completion calculated under IAS19 (using the assumptions adopted in the
Accounts as at 31 December 2005).

	18.	 	EMPLOYMENT
	 
	18.1	 	The Regulations will apply so that the contracts of employment of the Transferring Employees
(except in respect of terms relating to occupational pension arrangements, but without
prejudice to the Purchaser’s obligations in respect of the Transferring Employees under
section 258 Pensions Act 2004,) will have effect from the Completion Date as if originally
made between RMS and the Transferring Employees.

	18.2	(A)	 	 If for any reason the contract of employment of any person who is not a Transferring
Employee is found or alleged to have effect after the date of this agreement as if originally
made with RMS, the Seller in consultation with the Purchaser, will, within 14 days of being so
requested by the Purchaser, make to that person an offer in writing to employ him under a new
contract of employment, to take effect upon the termination referred to in clause
18.2(B), identical in all respects to that person’s contract of employment immediately
before the date of this agreement. However, the Purchaser must make the request no later than
21 days after becoming aware of the finding or allegation.

 

50

	 	(B)	 	Once that offer has been made (or after the expiry of 14 days after it has been
requested), the Purchaser will procure that RMS shall terminate the employment of the
person concerned and, so long as that termination is effected within three months after
the Completion Date, the Seller will indemnify the Purchaser (for itself and on behalf
of RMS) against the costs of that Transferring Employee’s employment, the termination
of that employment and any liabilities, or costs relating to that individual which
transfer to RMS under Regulation 4 of the Regulations.

	18.3	(A)	 	 If the contract of employment of any Transferring Employee is found or alleged not
to have effect after the date of this agreement as if originally made with RMS, other than by
virtue of Regulation 4(7) and 4(9) of the Regulations, the Purchaser, in
consultation with the Seller, will, within 14 days of being so requested by the
Seller, make, or will procure that RMS makes, to that Transferring Employee an offer
in writing to employ him under a new contract of employment, to take effect upon the
termination referred to in clause 18.3(B), on terms and conditions which
(other than the identity of the employer and any terms and conditions relating to an
occupational pension scheme) will not differ from the corresponding provisions of
the Transferring Employee’s contract of employment immediately before the date of
this agreement. However the Seller must make the request no later than 21 days
after it becomes aware of such finding or allegation.

	 	(B)	 	Once that offer has been made (or after the expiry of 14 days after it has been
requested), the Seller shall terminate, or shall procure the termination by the
relevant Retained Group Member of, the employment of the Transferring Employee
concerned and, so long as that termination is effected within three months after the
Completion Date, the Purchaser shall indemnify the Seller (for itself and on behalf of
each Retained Group Member) on an after-Tax basis against the costs of that
Transferring Employee’s employment after Completion and its termination.

	18.4	 	All wages, salaries, liabilities in respect of the Pay As You Earn System and National
Insurance Contributions, Irish Pay Related Social Security Insurance and Health Levy and other
periodic outgoings in respect of the Transferring Employees which relate to a period:

	 	(A)	 	after the Completion Date shall be borne by RMS (save in respect of any
Transferring Employee whose contract of employment does not transfer to RMS in the
circumstances set out in clause 18.3(A), in which case RMS shall assume
liability in respect of the outgoings listed above on the date on which such
Transferring Employee commences employment with RMS); and
	 
	 	(B)	 	on or before the Completion Date (subject to clause 18.4(A) above)
shall be borne by the Retained Group Member which employed that Transferring Employee
prior to the Completion Date.

	18.5	 	The Seller shall indemnify the Purchaser (for itself and on behalf of RMS) on an after-Tax
basis against any claim in respect of:

 

51

	 	(A)	 	the employment of any of the Transferring Employees relating to the period up
to and including the Completion Date (save in respect of any Transferring Employee
whose contract of employment does not transfer to RMS in the circumstances set out in
clause 18.3(A), in which case the Seller shall continue to indemnify the
Purchaser (for itself and on behalf of RMS) on an after-Tax basis against any such
claims up to the date on which such Transferring Employee commences employment with
RMS) by any Retained Group Member;
	 
	 	(B)	 	subject to clause 18.6(E) the termination of the employment prior to
the Completion Date of any person who was formerly assigned to the business carried on
by any Group Member;
	 
	 	(C)	 	subject to clause 18.6 any failure by any Retained Group Member to
comply with its obligations under Regulation 13 of the Regulations;
	 
	 	(D)	 	any claim by any Transferring Employee resulting from the change of his
employer, where such change occurs prior to the date of this agreement, including any
change which is a substantial change to his material detriment pursuant to Regulation
4(9) of the Regulations; and
	 
	 	(E)	 	any breach of clause 18.4(B).

	18.6	 	The Purchaser shall indemnify the Seller (for itself and on behalf of each Retained Group
Member) on an after-Tax basis against any claim in respect of:

	 	(A)	 	the employment of any Transferring Employee during the period after the
Completion Date including any changes to terms and conditions of employment by the
Purchaser or by RMS (save in respect of any Transferring Employee whose contract of
employment does not transfer to RMS in the circumstances set out in clause
18.3(A), in which case RMS shall assume liability in respect of such claims on the
date on which such Transferring Employee commences employment with RMS);
	 
	 	(B)	 	any termination of the employment of any Transferring Employee by RMS after the
Completion Date (save in respect of any Transferring Employee whose contract of
employment does not transfer to RMS in the circumstances set out in clause
18.3(A), in which case RMS shall assume liability in respect of such claims on the
date on which such Transferring Employee commences employment with RMS);
	 
	 	(C)	 	subject to clause 18.5(C), any failure by the Purchaser or RMS to
comply with its respective obligations under Regulation 13(4) of the Regulations;
	 
	 	(D)	 	any breach of clause 18.4(A); and
	 
	 	(E)	 	subject to clause 18.5(D), any resignation by a Transferring Employee,
or individual who would have been a Transferring Employee but for the termination of
his employment before Completion, in the circumstances specified in Regulation 4(9) and
4(11) of the Regulations.

 

52

	18.7	 	Employee Liability Information in respect of each Transferring Employee shall be provided by
the Seller to the Purchaser no later than 14 days in advance of Completion.
	 
	18.8	 	The Purchaser (for itself and on behalf of RMS) and the Seller (for itself and on behalf of
each Retained Group Member), having taken independent legal advice, acknowledge the duties
imposed by Regulation 11 of the Regulations in respect of the provision of Employee Liability
Information. Given the large number of Transferring Employees and the disclosures made in
respect of the Transferring Employees pursuant to paragraph 26.3 of Schedule
6, the Purchaser (for itself and on behalf of RMS) agrees that it would not be just and
equitable to pursue any future claim in respect of the Employee Liability Information in the
Employment Tribunal, it undertakes not to bring such a claim and agrees that if it should
bring such a claim
it will indemnify the Seller (for itself and on behalf of each Retained Group Member) on an
after Tax basis fully in respect of all losses, liabilities, damages, costs, claims and
expenses arising from or in connection with such a claim.
	 
	18.9	 	Within 20 Business Days following Completion the Seller shall deliver to the Purchaser PAYE
certificates relating to each of the Transferring Employees duly completed up to the
Completion Date.
	 
	18.10	 	Prior to Completion, the Seller will use its best endeavours to procure that each Retained
Employee is employed by a Retained Group Member.
	 
	19.	 	SHARE SCHEMES
	 
	19.1	 	This clause 19 shall apply in circumstances where the Purchaser and any member of the
Purchaser’s Group is responsible for withholding tax and/or Pay As You Earn and/or social
security liabilities incurred in the United Kingdom or elsewhere resulting from, or otherwise
in connection with, the participation at Completion of any of the employees, or former
employees of the Group (which shall for these purposes include any employees whose employment
is transferred, whether before Completion or otherwise, to a member of the Group) in any share
incentive or share option scheme operated by the Seller (together, “the Schemes”).

	19.2	(A)	 	  The Seller undertakes to notify the Purchaser if any employee or former employee
shall seek to exercise any option or shall have an award which vests under the Schemes and
shall provide sufficient and timely information, in order for the Purchaser to undertake the
calculation provided for in (B) below, relating to the identity of the employee or former
employee, the number of shares involved, the exercise price (if any) and the date of vesting
or exercise.

	 	(B)	 	The Purchaser shall then provide the Seller with sufficient and timely
information to indicate the relevant amount of its liability to account for any payment
of tax and/or social security liabilities due as a result of, or otherwise in
connection with, the exercise of the options or vesting of the award by any of the
employees or former employees of the Group.
	 
	 	(C)	 	Subject to receipt of the information from the Purchaser under (B) above where
authorised to do so by the relevant employee or the rules of the relevant Scheme and

 

53

	 	 	 	where applicable, the Seller shall arrange for the sale of sufficient of the shares
acquired pursuant to any Scheme to produce net cash proceeds to meet the amount of any
employee taxation (including employee’s National Insurance Contributions) which is
required to be accounted for by the Purchaser, or any member of the Purchaser’s Group,
and will remit the proceeds of sale to the Purchaser; and
	 
	 	(D)	 	The Purchaser (or the relevant member of the Purchaser’s Group) will apply the
proceeds of sale received from the Seller to fully discharge the employee taxation
liability and account for the same to the relevant tax authorities.

	19.3	 	In circumstances where this clause applies the Seller shall pay to the Purchaser by way of an
adjustment of the Consideration on an After-Tax basis an amount equal to any employer’s
national insurance contributions for which any Group Member becomes liable as a result of the
exercise of any option or the vesting of any award granted under the Schemes by any of the
employees, or former employees of the Group (which shall for these purposes include any
employees whose employment is transferred, whether before Completion or otherwise, to a member
of the Group) after Completion.
	 
	20.	 	INSURANCE
	 
	20.1	 	With effect from Completion, each Group Member shall (subject to clause 20.3) cease
to be insured by the insurance policies of the Retained Group, other than policies exclusively
for the benefit of one or more Group Members for which one or more Group Members are the
policyholder(s). With respect to events or circumstances relating to a Group Member that
occurred or existed prior to Completion that are covered by an insurance policy issued by a
third party and in the name of a Retained Group Member (a “Relevant Group Policy”), the
Purchaser or a Group Member may following Completion make a claim under such policy. The
Purchaser covenants to pay to the Seller on an after-Tax basis within 10 Business Days of
demand an amount equal to any increased costs incurred by the relevant Retained Group Member
as a result of such claims, including any retrospective or prospective premium adjustments
associated with such cover, as such amounts are determined in accordance with those policies
generally applicable from time to time to the Retained Group, provided that the claim is not
one to which paragraph 2.4 of Schedule 7 applies and that (subject to the
Seller being in possession of or reasonably able to obtain such information) the basis upon
which they have been calculated and, where reasonably practicable, the terms of the Relevant
Group Policy to which they relate, have been disclosed to the Purchaser.
	 
	20.2	 	Subject to clause 20.3, the Purchaser’s right under clause 20.1 shall
terminate on the first anniversary of Completion from which time neither the Purchaser nor any
Group Member shall have access to any Relevant Group Policy and, except as otherwise provided
in this agreement or the Transaction Documents, the Purchaser shall assume full responsibility
for, and release (and procure the release by all Group Members of) all relevant Retained Group
Members from all liability for claims, known or unknown, resulting from events, circumstances
or occurrences prior to Completion which would be capable of being the subject of a claim
under a Relevant Group Policy.

 

54

	20.3	 	With respect to any open claims under a Relevant Group Policy reported by a Group Member
prior to Completion or any other claims under a Relevant Group Policy which the Purchaser or a
Group Member is expressly permitted by clause 20.1 to make:

	 	(A)	 	the Seller shall procure that the relevant Retained Group Member shall continue
to pursue, to the extent reasonable (bearing in mind the prospect of success), the
claim
for the benefit of the Group Member concerned and in doing so consult with and act
upon the reasonable instructions of the relevant Group Member;
	 
	 	(B)	 	the Purchaser shall provide such information and assistance as the Seller may
reasonably request in connection with any such claims; and
	 
	 	(C)	 	the Seller covenants to pay to the Purchaser on an after-Tax basis an amount
equal to any net proceeds realised from such claims upon full and final settlement of
such claims, provided that the Purchaser complies with its obligations under
clauses 20.1 and 20.2, and in the event that the Purchaser is in breach
of those obligations, the Seller shall be entitled not to pay such amount to the
Purchaser until such breach or breaches has or have been fully remedied to the Seller’s
satisfaction (acting reasonably and in good faith).

	21.	 	PROPERTY
	 
	 	 	Each of the Seller and the Purchaser shall comply with its obligations in Schedule
14.
	 
	22.	 	THE DEMUTUALISATION SCHEMES
	 
	22.1	 	The Purchaser shall procure that, after the Completion Date, no member of the Purchaser’s
Group shall modify (or attempt to modify) the provisions of either Demutualisation Scheme
without the prior written consent of the Seller where such modification has or would have the
direct or indirect effect or consequence of either removing or adversely affecting any
protection, right or advantageous provision in favour of any Retained Group Member or
increasing any existing or imposing any new obligation or requirement on any Retained Group
Member.
	 
	22.2	 	In the event that the Purchaser (or any member of the Purchaser’s Group) applies to the Court
of Session (or any other court of competent jurisdiction) to transfer all or part of the
business of SMA and/or SPL pursuant to an insurance business transfer scheme in accordance
with Part VII of the FSMA, the Purchaser undertakes to use its best efforts to ensure that the
provisions of the relevant Demutualisation Schemes imposing obligations on any Retained Group
Member shall be extinguished as of the effective date of such insurance business transfer
scheme (excluding any obligations under or in respect of the Deed constituting Floating Rate
Unsecured Guaranteed Loan Notes 2012 as referred to in the definition of “Pre-Sale Transfers”)
and to the extent that the same cannot be extinguished (as regards the relevant Retained Group
Member) without replacing or replicating such liabilities or obligations the Purchaser will
use its best efforts to agree and put into place provisions binding on the Purchaser or a
member of the Purchaser’s Group which replicate and/or replace such provisions.

 

55

	22.3	 	Unless the Purchaser (or any member of the Purchaser’s Group) shall have applied to transfer
all or part of the business of SMA and/or SPL pursuant to the terms of clause 22.2 and
such transfer or transfers are being actively pursued or have been completed, the Purchaser
shall apply to the Court of Session within 18 months of the Completion Date, to amend the
terms of the Demutualisation Schemes (or the Demutualisation Scheme which is
not the subject of any transfer pursuant to clause 22.2 as the case may be) to
remove the provisions of the Demutualisation Schemes (or Demutualisation Scheme as the case
may be) imposing obligations or liabilities on any Retained Group Member (excluding any
obligations or liabilities under or in respect of the Deed constituting Floating Rate
Unsecured Guaranteed Loan Notes 2012 as referred to in the definition of “Pre-Sale
Transfers”) and to the extent that the same cannot be removed (as regards the relevant
Retained Group Member) without replacing or replicating the same will use its best efforts
to agree and put in to place provisions in the amended Demutualisation Schemes binding on
the Purchaser or a member of the Purchaser’s Group which replicate and/or replace such
obligations or liabilities. The terms of such amended Demutualisation Schemes (as they
affect any Retained Group Member) shall be subject to the prior written consent of the
Seller.
	 
	22.4	 	The Purchaser undertakes to assume and perform (or to procure that a member of the
Purchaser’s Group assumes and performs) any obligations or liabilities of or imposed on any
Retained Group Member (other than the obligations in paragraph 16.3 of the SPL Demutualisation
Scheme in so far as they relate to crediting members’ accounts with the proceeds of loan
notes) arising, falling due or requiring performance (including those set out in paragraphs
5.4 and 6.6 of the SPL Demutualisation Scheme) under the Demutualisation Schemes after the
Completion Date and, to the extent that any Retained Group Member incurs or suffers any
liability, cost or expense (including pursuant to the provisions in paragraphs 5.4 and 6.6 of
the SPL Demutualisation Scheme) arising or falling due after the Completion Date in respect of
such obligations or liabilities, the Purchaser covenants to pay to the Seller on an after-Tax
basis an amount equal to such liability, cost or expense.
	 
	22.5	 	The Purchaser undertakes to procure that neither SPL nor SMA shall take or omit to take any
act to prevent or inhibit any Retained Group Member from exercising all of its rights, powers
and advantages under the Demutualisation Schemes and shall provide, and shall procure that SPL
and SMA shall provide, the Seller and any Retained Group Member with all such assistance as it
or they shall reasonably require in order for such rights, powers and advantages to be so
exercised.
	 
	22.6	 	The Purchaser undertakes to procure that neither SPL nor SMA shall:

	 	(A)	 	exercise any discretion they may have under the terms of the Demutualisation
Schemes in a manner which increases any obligation or liability of any Retained Group
Member under the Demutualisation Schemes provided always that this shall not prevent or
restrict the exercise by SPL or SMA of any right or power granted to SPL or SMA under
the Demutualisation Schemes; and
	 
	 	(B)	 	subject to the provisions of clauses 22.1, 22.2 and 22.4 take
or omit to take any act to prevent or inhibit any Retained Group Member from
discharging any of its obligations under the Demutualisation Schemes and shall provide
the Seller and any Retained

 

56

	 	 	Group Member with all such assistance as it or they shall
reasonably require in order to discharge such obligations, including co-operating with
the Seller in relation to the maintenance of the Members’ Account (as defined by the
SPL Demutualisation Scheme) in accordance with the provisions of the SPL
Demutualisation Scheme.
	 
	22.7	The Seller undertakes to procure that neither it nor any Retained Group Member shall:

	 	(A)	 	exercise any discretion it or any Retained Group Member (or any successor
company of any of them) may have under the terms of the Demutualisation Schemes in a
manner which increases any obligation or liability of any member of the Purchaser’s
Group under the Demutualisation Schemes provided always that this shall not prevent or
restrict the exercise by the Seller or any Retained Group Member of any right or power
granted to the Seller or any Retained Group Member under the Demutualisation Schemes;
and
	 
	 	(B)	 	take or omit to take any act to prevent or inhibit SPL or SMA (or any successor
company of either of them) from discharging any of their respective obligations under
the Demutualisation Schemes and shall provide the Purchaser and any such person with
all such assistance as it shall reasonably require in order to discharge such
obligations.

	23.	 	COMMUNICATIONS
	 
	 	 	From the date of this agreement until the Completion Date, the Purchaser shall procure that
each member of the Purchaser’s Group, and the Seller shall procure that each Retained Group
Member, conducts all communications (written or otherwise) with Employees, policyholders,
customers, reinsurers, Intermediaries, suppliers and other contractual counterparties of any
Group Member relating to:

	 	(A)	 	the Purchaser’s acquisition of the Group; and
	 
	 	(B)	 	such other relevant matters as may be specified in the Communications Plan,

	 	 	in accordance with the Communications Plan. The Communications Plan shall attach copies of
such communications in the agreed form, or provide for the Purchaser and the Seller to agree
the contents and format of any such communications in advance, in which case no such
communication shall be sent until such agreement has been reached. The Purchaser shall be
responsible for the costs of the preparation, printing and distribution of letters and other
communications to policyholders in accordance with the Communications Plan informing them of
the transactions contemplated by this agreement and the other Transaction Documents.
	 
	24.	 	GUARANTEE
	 
	24.1	 	In consideration of the Seller agreeing to sell the Shares on the terms set out in this
agreement and agreeing to give the Warranties to the Purchaser, the Guarantor covenants with
and hereby unconditionally and irrevocably guarantees to the Seller the timely performance and
observance by the Purchaser and each member of the Purchaser’s Group of all of their

 

57

	 	 	respective obligations, commitments and undertakings under or pursuant to any of the
Transaction Documents (excluding the Agreement for Lease) and agrees to indemnify and keep
indemnified the Seller from and against all liabilities, damages, costs, claims, losses and
expenses incurred or suffered by the Seller in connection with any failure by the
Purchaser or any member of the Purchaser’s Group to so perform and observe any such
obligation, commitment or undertaking. The liability of the Guarantor under any of the
Transaction Documents (excluding the Agreement for Lease) shall not be released or
diminished by any variation of the terms of any of the Transaction Documents (excluding the
Agreement for Lease) (whether or not agreed by the Guarantor), any forbearance, neglect or
delay in seeking performance of the obligations hereby imposed or any granting of time for
such performance.
	 
	24.2	 	If and whenever the Purchaser or any member of the Purchaser’s Group defaults for any reason
whatsoever in the timely performance or observance of any obligation, commitment or
undertaking undertaken or expressed to be undertaken under or pursuant to any of the
Transaction Documents (excluding the Agreement for Lease), the Guarantor shall forthwith upon
demand unconditionally perform (or procure performance of) and satisfy (or procure
satisfaction of) the obligation, commitment or undertaking in regard to which such default has
been made in the manner prescribed by any of the Transaction Documents (excluding the
Agreement for Lease) and so that the same benefits shall be conferred on the Seller as would
have been received if such obligation, commitment or undertaking had been duly performed and
satisfied by the Purchaser or the relevant member of the Purchaser’s Group in a timely manner.
	 
	24.3	 	This guarantee is to be a continuing guarantee and accordingly is to remain in force until
all the obligations of the Purchaser and each member of the Purchaser’s Group under the
Transaction Documents (excluding the Agreement for Lease) shall have been performed or
satisfied regardless of the legality, validity or enforceability of any provisions of the
Transaction Documents (excluding the Agreement for Lease) and notwithstanding the winding-up,
liquidation, dissolution or other incapacity of the Purchaser or any member of the Purchaser’s
Group or any change in the status, control or ownership of the Purchaser or any member of the
Purchaser’s Group. This guarantee is in addition to, without limiting and not in substitution
for, any rights or security which the Seller may now or after the date of this agreement have
or hold for the performance and observance of the obligations, commitments and undertakings of
the Purchaser or any member of the Purchaser’s Group under or in connection with any of the
Transaction Documents (excluding the Agreement for Lease).
	 
	24.4	 	As a separate and independent stipulation, the Guarantor agrees that any obligation,
commitment or undertaking expressed to be undertaken by the Purchaser or any member of the
Purchaser’s Group (including, without limitation, any monies expressed to be payable under any
of the Transaction Documents (excluding the Agreement for Lease)) which may not be enforceable
against or recoverable from the Purchaser or such member of the Purchaser’s Group by reason of
any legal limitation, disability or incapacity on or of the Purchaser or any member of the
Purchaser’s Group or any fact or circumstance (other than any limitation imposed by any of the
Transaction Documents (excluding the Agreement for Lease)) shall nevertheless be enforceable
against and recoverable from the Guarantor as though the same had been incurred by the
Guarantor and the Guarantor were the sole or principal obligor in respect thereof and shall be
performed or paid by the Guarantor on demand.

 

58

	24.5	 	Notwithstanding clauses 24.1 to 24.4, the Seller agrees that it shall first
make a claim against the Purchaser (or any relevant member of the Purchaser’s Group) and that
it shall not make a
demand for payment or performance or observance of any obligation for which the Purchaser
(or any relevant member of the Purchaser’s Group) is liable or otherwise exercise any right,
power or remedy against the Guarantor under this guarantee unless it has first made a demand
in writing for performance against the Purchaser (or any relevant member of the Purchaser’s
Group), and the Purchaser (or any relevant member of the Purchaser’s Group) has not complied
with such demand within 10 Business Days of the Purchaser (or any relevant member of the
Purchaser’s Group) having received such demand for payment or performance from the Seller.
	 
	25.	 	ACCESS
	 
	25.1	 	The Purchaser shall make available to the Seller (including to any internal or external
auditors) any Books and Records of any Group Member (or, if practicable, the relevant parts of
those Books and Records) which are required by the Seller or any other Retained Group Member
for the purpose of dealing with its or their Tax or accounting affairs or regulatory affairs
and, accordingly, the Purchaser shall, upon being given reasonable notice by the Seller or
such other Retained Group Member and subject to the Seller or such other Retained Group Member
giving such undertaking as to confidentiality as the Purchaser shall reasonably require,
procure that such Books and Records are made available to the Seller or such other Retained
Group Member for inspection (during Working Hours) and copying (at the expense of the Seller
or such other Retained Group Member) for and only to the extent necessary for such purpose and
for a period of seven years from Completion (or, if later, until any applicable Tax matters
are settled).
	 
	25.2	 	The Seller shall make available to the Purchaser (including to any internal or external
auditors) any Books and Records of any Retained Group Member (or, if practicable, the relevant
parts of those Books and Records) which are required by the Purchaser or any Group Member for
the purpose of dealing with its or their Tax or accounting affairs or regulatory affairs and,
accordingly, the Seller shall, upon being given reasonable notice by the Purchaser or such
Group Member and subject to the Purchaser or such Group Member giving such undertaking as to
confidentiality as the Seller shall reasonably require, procure that such Books and Records
are made available to the Purchaser or such Group Member for inspection (during Working Hours)
and copying (at the expense of the Purchaser or such Group Member) for and only to the extent
necessary for such purpose and for a period of seven years from Completion (or, if later,
until any applicable Tax matters are settled).
	 
	25.3	 	With effect from the date of this agreement the Seller shall procure that the Purchaser
(including its professional advisers in connection with the transaction contemplated by this
agreement and its internal and external auditors) has reasonable access to the Books and
Records and management of each relevant Retained Group Member and the relevant Group Members
for the purposes of enabling a reasonable assessment by the Purchaser as to ability of the
directors of SMA, ANL, SPL, SPL (Holdings) Limited, SPL (Holdings 1) Limited and ANSMAH
following Completion to reach an informed opinion as soon as practicable following Completion
as to the ability of each such company of which they are a director to pay its debts for the
purpose of Section 156(2) of the Companies Act 1985 and to enable the auditors of

 

59

	 	 	each such
company (at the cost of the Purchaser) to provide an informed view at the same time as to the
reasonableness of the directors’ opinions for the purposes of Section 156(4) of
the Companies Act 1985 and otherwise provide reasonable assistance (at the cost of the
Purchaser) to the Purchaser (including its professional advisers in connection with the
transaction contemplated by this agreement and its internal and external auditors) with the
preparation by the Purchaser of proposals for SMA, ANL, SPL, SPL (Holdings) Limited, SPL
(Holdings 1) Limited and ANSMAH to utilise the provisions of Section 155 et seq of the
Companies Act 1985, provided that, for the avoidance of doubt, the Seller gives no
representation, warranty or assurance that the then directors will be able to reach such
opinion or the auditors will be able to provide such view or that such proposals will be
able to be carried into effect in accordance with the applicable requirements.
	 
	26.	 	EFFECT OF COMPLETION AND PART VII TRANSFER
	 
	26.1	 	Any provision of this agreement and any other documents referred to in it which is capable of
being performed after but which has not been performed at or before Completion and all
Warranties and covenants and other undertakings contained in or entered into pursuant to this
agreement or any other Transaction Document shall remain in full force and effect
notwithstanding Completion.
	 
	26.2	 	The Warranties and all other provisions of this agreement and the Transaction Documents
insofar as the same shall not have been performed shall not be affected, nor shall the amount
which may be claimed thereunder be affected, by any transfer of assets, liabilities or
business of any of the Group Members to any member of the Purchaser’s Group under a scheme
pursuant to Part VII of the FSMA or equivalent overseas
legislation (a “Part VII Transfer”)
provided always that the liabilities and obligations of the Seller under this agreement and
the Transaction Documents following such transfer of assets, liabilities or business shall be
no greater than what the liabilities and obligations of the Seller would have been had the
transfer not occurred.
	 
	26.3	 	Following any Part VII Transfer, any reference in this agreement or any other Transaction
Document to any Group Member or any Insurance Company shall (to the extent appropriate to
ensure that this agreement and the Transaction Documents have the same meaning and effect
following such Part VII Transfer) be deemed to include a reference to the member of the
Purchaser’s Group to which such assets, liabilities or business were transferred provided
always that the liabilities and obligations of the Seller under this agreement and the
Transaction Documents following such transfer of assets, liabilities or business shall be no
greater than what the liabilities and obligations of the Seller would have been had the
transfer not occurred.
	 
	27.	 	REMEDIES AND WAIVERS
	 
	27.1	 	Except as provided in Schedule 7, no delay or omission by any party to this agreement
in exercising any right, power or remedy provided by law or under this agreement or any other
documents referred to in it shall:

	 	(A)	 	affect that right, power or remedy; or

 

60

	 	(B)	 	operate as a waiver thereof.

	27.2	 	Except as provided in Schedule 7, the single or partial exercise of any right, power
or remedy provided by law or under this agreement shall not preclude any other or further
exercise of it or the exercise of any other right, power or remedy.
	 
	27.3	 	Except as otherwise expressly provided in this agreement, the rights, powers and remedies
provided in this agreement are cumulative and not exclusive of any rights, powers and remedies
provided by law.
	 
	28.	 	ASSIGNMENT
	 
	28.1	 	The Purchaser shall not assign, or purport to assign, all or any part of the benefit of, or
its rights or benefits under, this agreement (including, without limitation, the Warranties)
or the other Transaction Documents (together with any causes of action arising in connection
with any of them) (unless otherwise expressly provided therein) other than:

	 	(A)	 	by way of security to a bank providing finance to the Purchaser’s Group in
connection with the purchase of the Shares (or any security trustee holding the benefit
of security for such entities); or
	 
	 	(B)	 	to another member of the Purchaser’s Group provided, however, that (i) the
Purchaser shall notify the Seller in writing prior to any such assignment, and (ii) the
Purchaser shall procure that any such assignee shall assign such benefits and rights
back to the Purchaser or another member of the Purchaser’s Group before such assignee
ceases to be a member of the Purchaser’s Group,

	 	 	provided in either case that the liabilities of the Seller to any such assignee (including
under clause 1.2(P)) shall be no greater than its liabilities to the Purchaser prior
to such assignment.
	 
	28.2	 	The Purchaser shall not make a declaration of trust in respect of or enter into any
arrangement whereby it agrees to hold in trust for any other person all or any part of the
benefit of, or its rights or benefits under, this agreement (including, without limitation,
the Warranties) or the other Transaction Documents (unless otherwise expressly provided
therein) other than:

	 	(A)	 	by way of security to a bank providing finance to the Purchaser’s Group in
connection with the purchase of the Shares (or any security trustee holding the benefit
of security for such entities); or
	 
	 	(B)	 	to another member of the Purchaser’s Group provided, however, that (i) the
Purchaser shall notify the Seller in writing prior to making any such declaration or
entering into any such arrangement, and (ii) the Purchaser shall procure that any such
beneficiary shall cancel such trust and shall transfer such benefits and rights back to
the Purchaser or another member of the Purchaser’s Group before such beneficiary ceases
to be a member of the Purchaser’s Group,

 

61

	 	 	provided in either case that the liabilities of the Seller to any such beneficiary
(including under clause 1.2(P)) shall be no greater than its liabilities to the
Purchaser prior to such declaration of trust or arrangement.

	28.3	 	The Purchaser shall not sub-contract or enter into any arrangement whereby another person is
to perform any or all of its obligations under this agreement.
	 
	29.	 	FURTHER ASSURANCE
	 
	 	 	Each of the parties shall, from time to time, on being required to do so by any of the other
parties, do or procure the doing of all such acts and/or execute or procure the execution of
such documents in a form satisfactory to the party concerned, as the party concerned may
consider necessary for giving full effect to this agreement and securing to each party the
full benefit of the rights, powers and remedies conferred upon it in this agreement.
	 
	30.	 	ENTIRE AGREEMENT
	 
	30.1	 	The Transaction Documents constitute the whole and only agreement between the parties
relating to the subject matter of the Transaction Documents. In entering into the Transaction
Documents, each party to this agreement acknowledges that it is not relying upon any
pre-contractual statement which is not expressly set out in them.
	 
	30.2	 	Except in the case of fraud, no party shall have any right of action against any other party
to this agreement arising out of or in connection with any pre-contractual statement except to
the extent that it is repeated in the Transaction Documents.
	 
	30.3	 	This agreement may only be varied in writing signed by each of the parties.
	 
	30.4	 	For the purposes of this clause 30, “pre-contractual statement” means any draft,
agreement, undertaking, representation, warranty, promise, assurance or arrangement of any
nature whatsoever, whether or not in writing, relating to the subject matter of the
Transaction Documents made or given by any person at any time prior to the date of this
agreement.
	 
	31.	 	NOTICES
	 
	31.1	 	A notice under this agreement shall only be effective if it is in writing (other than writing
on the screen of a visual display unit and e-mail which shall not be treated as writing for
the purposes of this clause).
	 
	31.2	 	Notices under this agreement shall be sent to a party to this agreement at its address or
facsimile number and for the attention of the individual set out below:

	 	 	 	 	 
	Party and title of individual	 	Address	 	Facsimile No.
	Abbey
National plc

FAO: Company Secretary

	 	Its registered
office from time to
time
	 	+44 (0)20 7756 5627

 

62

	 	 	 	 	 
	Party and title of individual	 	Address	 	Facsimile No.
	Resolution
Life Limited

FAO: Group Legal Director

	 	Its registered
office from time to
time
	 	+44 (0)20 7489 4860
	 
	 	 	 	 
	Resolution
plc

FAO: Group Legal Director

	 	Its registered
office from time to
time
	 	+44 (0)20 7489 4860

	 	 	provided that a party may change its notice details on giving notice to the other party of
the change in accordance with this clause.
	 
	31.3	 	Any notice given under this agreement shall be deemed to have been duly given as follows:

	 	(A)	 	if delivered personally, on delivery;
	 
	 	(B)	 	if sent by first class inland post, two clear Business Days after the date of
posting; and
	 
	 	(C)	 	if sent by facsimile, when despatched.

	31.4	 	Any notice given under this agreement outside Working Hours in the place to which it is
addressed shall be deemed not to have been given until the start of the next period of Working
Hours in such place.
	 
	31.5	 	The provisions of this clause 31 shall not apply in relation to the service of any
claim form, application notice, order or judgment or other document relating to any
Proceedings.
	 
	32.	 	ANNOUNCEMENTS
	 
	32.1	 	No announcement concerning the sale of the Shares or the subject matter of any of the
Transaction Documents shall be made by the Seller on the one hand or the Purchaser or the
Guarantor on the other hand without the prior written approval of the Purchaser or the Seller
(respectively), such approval not to be unreasonably withheld or delayed. This clause does
not apply in the circumstances described in clause 32.2.
	 
	32.2	 	Any party may make an announcement concerning the sale of the Shares or any ancillary matter
if required by:

	 	(A)	 	law; or
	 
	 	(B)	 	any securities exchange or regulatory or governmental body or any Tax Authority
to which that party is subject, wherever situated, whether or not the requirement has
the force of law,

 

63

	 	 	in which case that party concerned shall take all such steps as may be reasonable and
practicable in the circumstances to agree the contents of such announcement with the other
before making such announcement.
	 
	32.3	 	Clause 32.1 does not apply to any agreed form press announcement announcing the
signing of this agreement and prepared in accordance with clause 23.
	 
	32.4	 	The restrictions contained in this clause 32 shall continue to apply after Completion
or termination of this agreement without limit in time.
	 
	33.	 	CONFIDENTIALITY
	 
	33.1	 	Each party to this agreement shall treat as confidential all information obtained as a result
of entering into or performing this agreement which relates to:

	 	(A)	 	the provisions of this agreement;
	 
	 	(B)	 	the negotiations relating to this agreement;
	 
	 	(C)	 	the subject matter of this agreement;
	 
	 	(D)	 	in the case of the Purchaser and the Guarantor — the Retained Group; or
	 
	 	(E)	 	in the case of the Seller — the Purchaser, the Guarantor and the Group,

	 	 	and the Purchaser and the Guarantor shall, and the Purchaser shall procure that each Group
Member shall, also treat as confidential all information received or obtained as a result of
entering into or performing this agreement which relates to any Retained Group Member and
the Seller shall treat as confidential all information obtained as a result of entering into
or performing this agreement which relates to any of the Purchaser, the Guarantor and the
Group.
	 
	33.2	 	The Purchaser shall, and shall procure that the Group Members shall, (i) treat as
confidential and (ii) not disclose or use for any marketing purposes all information regarding
customers and policyholders of Retained Group Members who are not customers or policyholders
of Group Members, to the extent that such information was obtained prior to Completion in
connection with:

	 	(A)	 	any Group Member being a member of the same group of companies as the Seller
and its subsidiary undertakings; or
	 
	 	(B)	 	any Group Member having access to any Books and Records, personnel or
information technology systems of any Retained Group Member.

	 	 	Each undertaking contained in this clause 33.2 shall be construed as a separate
undertaking and if one or more of the undertakings is held to be against the public interest
or unlawful or
in

 

64

	 	 	any way an unreasonable restraint of trade, the remaining undertakings shall continue to
bind the Purchaser.
	 
	33.3	 	Notwithstanding the other provisions of this clause 33, any party may disclose
confidential information:

	 	(A)	 	if and to the extent required by the law of any relevant jurisdiction;
	 
	 	(B)	 	if and to the extent required by any securities exchange or regulatory or
governmental body or any Tax Authority to which that party is subject, wherever
situated, whether or not the requirement has the force of law;
	 
	 	(C)	 	if and to the extent required to vest the full benefit of this agreement in
that party;
	 
	 	(D)	 	to its professional advisers, auditors, actuaries and bankers;
	 
	 	(E)	 	to any Group Member (in the case of any disclosure by the Purchaser or the
Guarantor) or to any Retained Group Member (in the case of any disclosure by the
Seller);
	 
	 	(F)	 	to the SPI Fund Supervisory Committee and its lawyers and actuaries;
	 
	 	(G)	 	if and to the extent necessary to carry out shared service arrangements with
third parties which any Retained Group Member may enter into from time to time with any
Group Member;
	 
	 	(H)	 	if and to the extent necessary to perform its obligations under any of the
Transaction Documents;
	 
	 	(I)	 	to a credit rating agency;
	 
	 	(J)	 	if and to the extent the information has come into the public domain through no
fault of that party; or
	 
	 	(K)	 	if and to the extent (in the case of any disclosure by the Seller) the
Purchaser or (in the case of any disclosure by the Purchaser or the Guarantor) the
Seller has given prior written consent to the disclosure.

	 	 	Any information to be disclosed pursuant to clauses 33.3(A) or 33.3(B)
shall, where practicable in the circumstances and not otherwise prohibited, be disclosed
only after notice to the Purchaser (in the case of any disclosure by the Seller) or the
Seller (in the case of any disclosure by the Purchaser or the Guarantor).
	 
	33.4	 	Notwithstanding the other provisions of this clause 33, the parties acknowledge that
the Guarantor and its bankers shall be entitled to disclose confidential information to
potential syndicate banks pursuant to a syndication exercise carried out at any date after the
date of this agreement, subject to the Purchaser procuring that each of those persons to whom
the

 

65

	 	 	Purchaser’s bankers disclose confidential information agrees to keep such information
confidential in accordance with the provisions of this clause 33.
	 
	33.5	 	The restrictions contained in this clause 33 shall continue to apply after Completion
or termination of this agreement without limit in time.
	 
	34.	 	COSTS AND EXPENSES
	 
	34.1	 	The Purchaser shall bear and pay the cost of all stamp duty, stamp duty reserve tax and any
other similar duty, levy or Tax and all notarial or registration fees which may result in any
jurisdiction from the execution and performance of this agreement and the other Transaction
Documents, the transactions contemplated by any of them (other than the Pre-Sale Transfers)
and/or the transfer of the Shares to the Purchaser (without prejudice to clauses 13.2,
13.3, 14.1 and 14.3 which clauses shall prevail in the event of conflict with
this clause 34.1).
	 
	34.2	 	Save as provided in clauses 3.7 and 34.1 or were expressly provided otherwise
in any of the Transaction Documents, each party to this agreement shall pay its own costs and
expenses in relation to the negotiations leading up to the sale and purchase of the Shares and
the preparation, execution and carrying into effect of this agreement, the Transaction
Documents and all other documents referred to in any of them. Without prejudice to the
generality of the foregoing, the Seller shall bear the costs and disbursements of all of its
external advisers, including without limitation:

	 	(A)	 	Lehman Brothers;
	 
	 	(B)	 	PricewaterhouseCoopers;
	 
	 	(C)	 	Slaughter and May;
	 
	 	(D)	 	Towers Perrin Tillinghast;
	 
	 	(E)	 	A&L Goodbody;
	 
	 	(F)	 	Dickinson Cruickshank;
	 
	 	(G)	 	Mourant du Feu & Jeune;
	 
	 	(H)	 	Webber Wentzel Bowens,

	 	 	in relation to the sale of the Shares and the preparation of the Transaction Documents save
to the extent reserved as provided for in the Accounts.
	 
	35.	 	COUNTERPARTS
	 
	35.1	 	This agreement may be executed in any number of counterparts, and by the parties to it on
separate counterparts, but shall not be effective until each party has executed at least one
counterpart.

 

 

66

	35.2	 	Each counterpart shall constitute an original of this agreement, but all the counterparts
shall together constitute but one and the same instrument.
	 
	36.	 	INVALIDITY
	 
	 	 	If at any time any provision of this agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, that shall not affect or
impair:

	 	(A)	 	the legality, validity or enforceability in that jurisdiction of any other
provision of this agreement; or
	 
	 	(B)	 	the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this agreement.

	37.	 	CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
	 
	37.1	 	The parties to this agreement do not intend that any term of this agreement should be
enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who
is not a party to this agreement.
	 
	37.2	 	All benefits conferred by this agreement on any Retained Group Member shall be enforceable by
the Seller as trustee for and on behalf of the relevant Retained Group Member.
	 
	37.3	 	Any benefits conferred by this agreement on any Group Member shall be enforceable by the
Purchaser as trustee for and on behalf of the relevant Group Member.
	 
	38.	 	CHOICE OF GOVERNING LAW
	 
	 	 	This agreement shall be governed by and construed in accordance with English law.
	 
	39.	 	JURISDICTION
	 
	39.1	 	The courts of England are to have exclusive jurisdiction to settle any dispute arising out of
or in connection with this agreement. Any Proceedings shall be brought in the English courts.
This clause 39 is not concluded for the benefit of any particular party or parties to
this agreement.
	 
	39.2	 	Each party waives (and agrees not to raise) any objection, on the ground of forum non
conveniens or on any other ground, to the taking of proceedings in the English courts. Each
party also agrees that a judgment against it in Proceedings brought in England shall be
conclusive and binding upon it and may be enforced in any other jurisdiction.
	 
	39.3	 	Each party irrevocably submits and agrees to submit to the jurisdiction of the English
courts.

 

67

Schedule 1

(Conditions)

	1.	 	SHAREHOLDER CONSENT
	 
	 	 	The passing at a duly convened and held general meeting of the Guarantor of the Guarantor
Resolution.
	 
	2.	 	FSA CONSENT
	 
	 	 	Either:

	 	(A)	 	the FSA giving written notice in terms reasonably satisfactory to the Seller
and the Purchaser (each acting reasonably and in good faith) that the FSA approves or
has no objection to the Purchaser and each other relevant member of the Purchaser’s
Group becoming a controller (within the meaning of section 422 of FSMA) of the UK
Regulated Entities; or
	 
	 	(B)	 	if such notice has not been given, the period for the FSA giving a
corresponding notice of objection having elapsed without the FSA having given any such
notice of objection.

	 	 	The Purchaser and the Seller agree that the written notice given by the FSA referred to in
paragraph 2(A) shall be deemed to be in terms reasonably satisfactory to the Seller save
insofar as that notice would materially affect (from the point of view of any Retained Group
Member which is a party to a Transaction Document) whether or not Completion occurs or any
of the arrangements between the Seller (or another Retained Group Member) and the Purchaser
(or another member of the Purchaser’s Group) as contemplated in this agreement or any of the
other Transaction Documents.
	 
	3.	 	OVERSEAS CONSENTS
	 
	 	 	Regulatory Consent (Republic of Ireland)

	 	(A)	 	Either:

	 	(i)	 	the IFR under the relevant provisions of the European
Communities (Life Assurance) Framework Regulations 1994 of the Republic of
Ireland (the “Life Regulations”) having given written notification that it does
not intend to oppose the proposed acquisition of the Shares of SMI by the
Purchaser; or
	 
	 	(ii)	 	the applicable period referred to in Regulation 40(2) of the
Life Regulations having elapsed without the IFR having given written notice of
its opposition to such proposed acquisition.

	 	(B)	 	The IFR under the relevant provisions of IFR UCITS Notice 2.1 of the Republic
of Ireland (the “UCITS Notice”) having given written notification that it does not
intend to oppose the proposed acquisition of the Shares in SMIFM by the Purchaser.

 

68

	 	 	Regulatory Consent (Hong Kong)

	 	(C)	 	Either:

	 	(i)	 	the Insurance Authority under the relevant provisions of the
Insurance Companies Ordinance having given written notification that it has no
objection to the person(s) nominated by the Purchaser becoming a controller
(within the meaning of section 13A(1) of the Insurance Companies Ordinance) of
SMI and SPILA; or
	 
	 	(ii)	 	if such notice has not been given, the period for the Insurance
Authority giving a corresponding notice of objection having elapsed without the
Insurance Authority having given any such notice of objection.

	 	 	Regulatory Consent (Isle of Man)

	 	(D)	 	Either:

	 	(i)	 	the IPA under the relevant provisions of the Insurance Act 1986
having given written notification of no objection to the change in control of
SPILA and ANFIS IoM; or
	 
	 	(ii)	 	the applicable period referred to in section 20 of the
Insurance Act 1986 having elapsed without the IPA having given written
notification of its opposition to such proposed change in control.

	4.	 	COMPETITION
	 
	 	 	Merger Clearance (UK)

	 	(A)	 	A decision having been issued which in form and in substance is satisfactory to
the Purchaser (acting reasonably and in good faith) by the Office of Fair Trading that
the purchase of the Group by the Purchaser will not be referred to the Competition
Commission pursuant to the Enterprise Act 2002, and the time limit for any party to
appeal that decision to the Competition Appeal Tribunal having expired without any
party having lodged any such appeal.

	 	 	Merger Clearance (Republic of Ireland)

	 	(B)	 	Upon the first to occur of the following:

	 	(i)	 	the Competition Authority of the Republic of Ireland (the
“TCA”) informing the Seller and the Purchaser in writing in form and in
substance satisfactory to
the Purchaser (acting reasonably and in good faith) that it has determined
under section 21(2)(a) of the Ireland Competition Act 2002 (“CA 2002”) that
the acquisition of the Shares by the Purchaser may be put into effect; or

 

69

	 	(ii)	 	the period specified in section 21(2) of CA 2002 having elapsed
without the TCA having informed the Seller and the Purchaser in writing of any
determination which it has made under section 21(2) of CA 2002.

	5.	 	DISTRIBUTION DELIVERABLES
	 
	 	 	The Deliverables have all been achieved in accordance with the terms of the Distribution
Agreements.
	 
	6.	 	TERMINATION OF UNDERWRITING AGREEMENT
	 
	 	 	The Underwriting Agreement is not terminated by the Underwriters (except where the
Underwriting Agreement is terminated with the consent, agreement or acquiescence of the
Guarantor) as a result of any of the following occurring: (i) a suspension or material
limitation in trading in securities generally on the London Stock Exchange or the New York
Stock Exchange or NASDAQ; (ii) a general moratorium on commercial banking activities in
London or New York declared by the relevant authorities, or a material disruption in
commercial banking or securities settlement or clearance services in the European Union or
New York; (iii) the outbreak of war or an act of terrorism involving the United Kingdom, a
member of the European Union or the USA or the declaration of a national emergency or war by
any of them; or (iv) the occurrence of any other calamity or crisis materially and adversely
affecting the financial, political or economic conditions or currency exchange rates or
controls in the United Kingdom, a member of the European Union or the USA, where the effect
of any such event specified in clauses (i) to (iv) in the judgment of both of the
Underwriters, acting reasonably, will make it impracticable to proceed with the Rights Issue
or will materially prejudice dealings in the nil paid rights or in the shares in the
Guarantor in the secondary market.

 

70

Schedule 2

(Steps to Completion)

	1.	 	The Seller and the Purchaser shall each:

	 	(A)	 	use their reasonable endeavours and to act in good faith to fulfil or procure
the fulfilment of the Conditions as soon as practicable and in any event before the
Long Stop Date or the Extended Long Stop Date, as the case may be;
	 
	 	(B)	 	keep the other informed about any material developments regarding the
fulfilment of any Condition of which it becomes aware, and shall notify the other
promptly upon it becoming aware of the fulfilment of any Condition;
	 
	 	(C)	 	disclose in writing to the other:

	 	(i)	 	anything which will or may prevent any of the Conditions from
being fulfilled on or before 5.00 p.m. on the Long Stop Date or the Extended
Long Stop Date, as the case may be, immediately upon it coming to its notice;
	 
	 	(ii)	 	any indication that any Regulatory Authority may intend to
withhold its approval of, or raise an objection to, the acquisition of the
Group by the Purchaser and each relevant member of the Purchaser’s Group; or
	 
	 	(iii)	 	any indication that the FSA is considering issuing a warning
notice under section 183(3) of FSMA; and

	 	(D)	 	for the purposes of assisting the fulfilment of the Condition set out in
paragraph 5 of Schedule 1, use their best endeavours, acting reasonably
and in good faith, between the date of this agreement and Completion to progress and
agree the Deliverables and to work together for the purposes thereof.

	2.	 	The Purchaser shall:

	 	(A)	 	keep the Seller informed as to:

	 	(i)	 	progress towards fulfilment of each of the Conditions; and
	 
	 	(ii)	 	the status of all debt and equity funding arrangements
necessary to facilitate Completion by the Purchaser (“Funding Arrangements”),

	 	 	 	including procuring that its representatives consult with the Seller’s
representatives at the Seller’s reasonable request with respect to progress made
towards fulfilment of the Conditions and finalisation of all Funding Arrangements,
and, if requested by the Seller, procuring that its advisers are available upon
reasonable notice to consult with the Seller’s representatives and advisers from
time to time in relation to the same;
	 
	 	(B)	 	as promptly as reasonably practicable following the signing of this agreement:

 

71

	 	(i)	 	prepare and submit all requisite applications and notifications
relating to the Conditions; and
	 
	 	(ii)	 	procure the preparation of all documents necessary to put in
place all Funding Arrangements, progress all such documents and Funding
Arrangements and use all reasonable endeavours to finalise them so that the
Consideration moneys are available for unconditional drawdown as soon as
practicable;

	 	(C)	 	notify the Seller and provide copies of any material communications from any
governmental or regulatory body or other person (including any Regulatory Authority or
securities exchange) which relate (or, as applicable, to the extent to which they
relate) to the status or timing of any Relevant Consent where such communications have
not been independently or simultaneously supplied to the Seller;
	 
	 	(D)	 	provide the Seller with all information which the Seller or its advisers may
reasonably require to assist them to make an informed and reasonably detailed
assessment of:

	 	(i)	 	the progress towards fulfilment of the Conditions;
	 
	 	(ii)	 	the status and conduct of all applications and negotiations
relating to any of the Conditions and the Funding Arrangements; and
	 
	 	(iii)	 	the likely date on which Completion will occur or whether
there is a possibility that Completion will not occur;

	 	(E)	 	deal and communicate with, and prepare all submissions and communications to,
governmental and regulatory bodies and other persons (including any Regulatory
Authority or securities exchange) in relation to obtaining any consent, approval or
action on a basis which is at all times consistent with the Business Plan;
	 
	 	(F)	 	where reasonably requested by the Seller, provide the Seller (and, if
requested, its advisers) with draft copies of all material submissions and
communications to governmental or regulatory bodies or other person (including any
Regulatory Authority or securities exchange) which relate (or, as applicable, to the
extent to which they relate) to the status or timing of any Relevant Consent at such
time as will allow the Seller a reasonable opportunity to provide comments on such
submissions and communications before they are submitted or sent (and, in completing
such submissions or communications, the Purchaser agrees to have regard to, but shall
not be bound to accept, any comments of the Seller in relation thereto) and provide the
Seller (and, if requested, its advisers) with copies of all such submissions and
communications in the form submitted or sent;
	 
	 	(G)	 	inform the Seller in advance of all proposed meetings or telephone calls which
are arranged in advance with governmental or regulatory bodies or other persons
(including any Regulatory Authority or securities exchange) in relation to the
Conditions;

 

72

	 	(H)	 	where reasonably requested by the Seller and where permitted by the
governmental or regulatory body or other person concerned, allow persons nominated by
the Seller to attend all meetings, and participate in all telephone calls, with
governmental or regulatory bodies or other persons (including any Regulatory Authority
or securities exchange) and, where appropriate, to make oral submissions at such
meetings or during such telephone calls provided that, in any such case, the meeting or
telephone call is arranged in advance and such entitlement shall apply to such part of
the meeting or telephone call as relates (or, as applicable, to the extent to which
they relate) to the status or timing of any consent, approval or action necessary for
Completion to take place;
	 
	 	(I)	 	for the purpose of assisting the fulfilment of the Condition set out in
paragraph 1 of Schedule 1:

	 	(i)	 	procure the dispatch of a circular to the Guarantor’s
shareholders (with any reference to Abbey, the Retained Group or the Group or
the terms of any of the Transaction Documents in such circular to be agreed
with the Purchaser) on or prior to 30 June 2006 which includes:

	 	(a)	 	the Guarantor Recommendation; and
	 
	 	(b)	 	notice of an extraordinary general meeting of
the Guarantor’s shareholders at which the Guarantor Resolution will be
proposed;

	 	(ii)	 	procure that the Guarantor Recommendation is not withdrawn or
adversely modified or qualified unless the directors of the Guarantor resolve
in good faith (having regard to appropriate legal and financial advice) that it
is not consistent with their fiduciary duties as directors of the Guarantor to
continue to make such recommendation; and
	 
	 	(iii)	 	procure that the extraordinary general meeting of the
Guarantor’s shareholders referred to in the circular is duly convened and held
on the date specified in the circular, and that the Guarantor Resolution is put
to the Guarantor’s shareholders at that meeting or at any adjournment thereof
if the meeting is adjourned as a result of events outside the Guarantor’s
control;

	 	(J)	 	for the purpose of assisting the fulfilment of the Conditions set out in
paragraphs 2 and 3 of Schedule 1:

	 	(i)	 	within 10 Business Days of the date of this agreement submit to
each Regulatory Authority a signed Notice of Control (attaching, in the case of
the Notice of Control submitted to the FSA, the Business Plan) from the
Purchaser and each relevant member of the Purchaser’s Group in respect of their
proposed acquisition of control of the Group, which is prepared based on the
relevant Draft Notice of Control and which the Purchaser acting reasonably and
in good faith regards as duly completed in accordance with applicable laws and
regulations (including, in the case of the Notice of Control
submitted

 

73

	 	 	 	to the FSA, FSMA) and any rules of and guidance given by the
relevant Regulatory Authority;
	 
	 	(ii)	 	without limiting paragraph 2(J)(i), for the purpose of
assisting the fulfillment of the Condition set out in paragraph 3(C) of
Schedule 1, deliver to the Insurance Authority:

	 	(a)	 	a written notice in the prescribed form, pursuant to section
13A of the Insurance Companies Ordinance informing the Insurance Authority of
the proposal to appoint a controller (within the meaning of section 13A of the
Insurance Companies Ordinance) of SMI and SPILA; and
	 
	 	(b)	 	a draft written notice in the prescribed form, pursuant to
section 14(2) of the Insurance Companies Ordinance, informing the Insurance
Authority that:

	 	(I)	 	the Purchaser and any other
persons as are nominated will be controllers of SMI and SPILA
immediately after Completion; and
	 
	 	(II)	 	each of the persons nominated
by the Purchaser pursuant to paragraph 4(B) of
Schedule 5 will be a director of SMI and SPILA
immediately after Completion; and

	 	(iii)	 	promptly provide such information to each Regulatory Authority
in relation to itself and the Purchaser’s Group, and any explanation or
clarification of or further information in relation to any aspect of the
relevant Notice of Control to be submitted in accordance with paragraph
2(J)(i) of this Schedule as such Regulatory Authority may require in
connection therewith, and shall procure the provision of such information
relating to the Group as the Purchaser may reasonably require in connection
with the fulfilment of the Conditions set out in paragraph 2 and
3 of Schedule 1 and as soon as reasonably practicable following
a request of the Purchaser for such information.

	 	 	 	For the purposes of this paragraph, “Relevant Consent” means any consent, approval
or action necessary for Completion to take place or which could otherwise materially
affect (from the point of view of any member of the Retained Group which is a party
to a Transaction Document) whether or not Completion occurs or any of the
arrangements between the Seller (or another member of the Retained Group) and the
Purchaser (or a member of the Purchaser’s Group) as contemplated in this agreement
or any of the other Transaction Documents (including FSA consent).

	3.	 	The Seller shall provide the Purchaser with such information and assistance as the Purchaser
may reasonably require for the purpose of complying with its obligations in paragraphs 2(B),
2(E), 2(I) and 2(J) of this Schedule in fulfilling the Conditions in paragraphs 2, 3
and 4 of Schedule 1. The Seller will provide reasonable information and
assistance to the Purchaser for the purposes of the preparation of the circular and prospectus
to be despatched by the

 

74

	 	 	Guarantor on or prior to 30 June 2006 provided that in providing such information and
assistance it is agreed and confirmed that the Seller assumes no liability or obligations to
the Purchaser or any member of the Purchaser’s Group or any other person in relation thereto
and the Purchaser shall indemnify the Seller on an after-Tax basis against all losses,
liabilities, damages, costs, claims and expenses incurred or suffered by the Seller in
relation thereto but excluding the costs and expense which are for the Seller’s account
pursuant to clause 34.2.
	 
	4.	 	If it is agreed that if the Seller submits a notification to the FSA or any other Regulatory
Authority in respect of the proposed acquisition of control of the Group by the Purchaser
which is separate to the Notice of Control submitted to the FSA or such other Regulatory
Authority by the Purchaser then the Purchaser shall provide the Seller with such information
and assistance as the Seller may reasonably require for the purpose of completion of such
notification.

 

75

Schedule 3

(Conduct of Group’s business before Completion)

The acts and matters referred to in clause 5.1(B) are each of the following:

	(A)	 	Sell or dispose of, grant, terminate or modify any options or rights in respect of, or
attaching to, any shares or loan capital in any Group Member or the whole or any material part
of the undertaking of any Group Member.
	 
	(B)	 	Create, allot, issue, repay or redeem any shares or loan capital in any Group Member (other
than any issue of fully paid shares by any Group Member to another Group Member or the Seller
for cash funds immediately available to the relevant company on allotment of such shares).
	 
	(C)	 	Grant any option over or other right to subscribe for or purchase any shares or any uncalled
capital in any Group Member, or issue any security convertible into shares of any Group
Member.
	 
	(D)	 	Reduce any uncalled or unpaid liability in respect of its share capital, or any capital
redemption reserve or share premium account.
	 
	(E)	 	Alter the provisions of its memorandum or articles of association or equivalent
constitutional documents.
	 
	(F)	 	Pass any resolution by its members in general meeting except resolutions passed in respect of
ordinary business at an annual general meeting.
	 
	(G)	 	Purchase any shares, or conduct any reorganisation or reduction of the share capital, of any
Group Member.
	 
	(H)	 	Except in the ordinary course of business in relation to an Investment Asset, enter into any
material partnership or joint venture (other than arrangements with Intermediaries in the
ordinary course of business).
	 
	(I)	 	In the case of any of the Group Members – declare, pay or otherwise make any dividend (in
cash or in specie) or other distribution.
	 
	(J)	 	Except in the ordinary course of business in relation to an Investment Asset, acquire or
agree to acquire an interest in a corporate body, or merge or consolidate with a corporate
body or any other person, or participate in any kind of corporate reconstruction.
	 
	(K)	 	Sell or dispose of any material assets, businesses or undertakings or any material revenues
(other than as or in relation to an Investment Asset) with a book value in excess of
£1,000,000 other than any sale or disposal (i) to any Group Member, or (ii) in the ordinary
course of business and on arm’s length terms.

 

76

	(L)	 	Except in the ordinary course of business, assume or incur, any material liability,
obligation or expense (actual or contingent) in excess of £1,000,000 (other than an Investment
Asset);
	 
	(M)	 	Repay (except in the ordinary course of business or as or in relation to an Investment Asset)
or incur any borrowings or other indebtedness or obligation in the nature of borrowings
(including obligations pursuant to any debenture, bond, note, loan stock or other security of
the Group Member and obligations pursuant to finance leases) in excess of £1,000,000, other
than pursuant to (i) existing financing arrangements; or (ii) arrangements with Retained Group
Members or Group Members in the ordinary course of business.
	 
	(N)	 	Make any advance, loan, deposit or gift of money in excess of £1,000,000 other than in the
ordinary course of business or cancel, release or assign any indebtedness in excess of
£1,000,000 owed to it other than in the ordinary course of business.
	 
	(O)	 	Except in the ordinary course of business or as or in relation to an Investment Asset, create
or grant any mortgage, pledge, lien, charge, assignment or hypothecation or other security
interest or encumbrance on, over or affecting any material part of its assets or the assets of
another Group Member.
	 
	(P)	 	Except in the ordinary course of business or as or in relation to an Investment Asset, give
any guarantee or indemnity.
	 
	(Q)	 	Enter into any Material Contract with any person (other than contracts entered into with a
Retained Group Member consistent with practice prior to the date of this agreement) otherwise
than at arms length and for full value.
	 
	(R)	 	Change its investment policies in respect of its assets comprised in the shareholder funds of
SMA, SPL and ANL which are not Investment Assets, (and, without prejudice to such provision,
the Seller shall consult with the Purchaser in respect of the investment of such assets and
use all reasonable endeavours to procure that relevant Retained Group Members comply with the
Purchaser’s reasonable requirements in respect thereof).
	 
	(S)	 	Make any capital commitment or expenditure (other than a capital commitment or expenditure
entered into as or in relation to an Investment Asset) with an individual contract value of
£1,000,000 or more.
	 
	(T)	 	Except in the ordinary course of business or in relation to Investment Assets, enter into,
materially vary or terminate any Material Contract.
	 
	(U)	 	Except in the ordinary course of business or as or in relation to an Investment Asset, lease,
license or part with or share possession or occupation (other than with a Retained Group
Member) of any real property held or occupied or which may be acquired by any Group Member.
	 
	(V)	 	Enter into, materially vary or terminate any reinsurance or reassurance contract which is
material to the business of the Group.

 

77

	(W)	 	Alter the terms of either of the Demutualisation Schemes.
	 
	(X)	 	Make any proposal for the winding-up or liquidation of its own business or the business of
its Subsidiaries other than ANFIS(FE) (in liq) and SPILA Marketing (in liq).
	 
	(Y)	 	Propose any compromise or arrangement within the meaning of section 425 of the Companies Act
1985 or any arrangement pursuant to which it is to make a distribution of the kind described
in section 213 of the Taxes Act 1988.
	 
	(Z)	 	Change its residence for Taxation purposes.
	 
	(AA)	 	Change its accounting reference date.
	 
	(BB)	 	Change its auditors or make any material change to its accounting or actuarial practices or
policies, except where such change is recommended by its auditors as a consequence of a change
in generally accepted accounting practices or policies applicable to companies carrying on
businesses of a similar nature, or as a consequence of a change in law.
	 
	(CC)	 	Discontinue or cease to operate all or a material part of its business.
	 
	(DD)	 	Launch any new range of products or policies, other than new tranches of existing products or
policies.
	 
	(EE)	 	Make any material changes to the terms and conditions of any existing policy or other product
issued by it other than in the ordinary course of business and except for changes made in
connection with the adoption of or changes to management actions and consequential changes to
Principles and Practices of Financial Management or Consumer Friendly Principles and Practices
of Financial Management.
	 
	(FF)	 	In the case of each of the Insurance Companies – except in the ordinary course of business or
to comply with the underwriting standards agreed under reinsurance or reassurance contracts,
alter its current underwriting standards for the assessment of new business or its current
procedures for the investigation and admission of claims.
	 
	(GG)	 	Except in the ordinary course of business or as may be necessary to maintain historical
levels of market competitiveness, alter the pricing of or service standards applicable to self
assurance protection products.
	 
	(HH)	 	Materially increase the rates of commission paid or materially improve the terms upon which
it is paid (i) to any of the Key Intermediaries in respect of life insurance products, or (ii)
to the Seller in respect of sale of products to customers sourced through the Seller’s retail
bank branch network.
	 
	(II)	 	Alter the Group’s usual practice regarding the treatment of premium arrears and policy
cancellations from that existing at the date of this agreement.

 

78

	(JJ)	 	Commence, settle, abandon or compromise any litigation or arbitration proceedings involving a
claim or liability in excess of £1,000,000, except for any such proceedings in relation to (i)
any matter relating to this agreement, (ii) any complaints made or claims brought by
policyholders in respect of policies sold or issued by the Group (iii) to the extent required
by the rules of or any guidance issued by any Regulatory Authority, or (iv) any matter within
the scope of a current accounting provision provided it is within the amount of such
provision.
	 
	(KK)	 	Employ, engage or dismiss (otherwise than for cause) any Senior Employee or make any material
change to the terms of employment (including any material increase in remuneration or other
emoluments) of any Senior Employee other than in the ordinary course of business or to
increase remuneration or other emoluments in accordance with the normal practice of the
Retained Group.
	 
	(LL)	 	Materially vary any terms of any of its policies of insurance taken out by it (excluding, for
the avoidance of doubt, policies taken out by Retained Group Members in which the relevant
Group Member may participate and excluding reinsurance or reassurance), knowingly take any
action which may invalidate any of such policies of insurance or take out any additional or
replacement policies of insurance (other than renewals of its policies of insurance on
substantially the same terms (subject to any increases in premiums) as those in force at the
date of this agreement and other than any variations imposed by the relevant insurer in
respect of such policies of insurance).
	 
	(MM)	 	Cease using its business name registered as at the date of this agreement.
	 
	(NN)	 	Except in the ordinary course of business, enter into any agreement or arrangement to license
(on an exclusive basis) or assign any Intellectual Property owned by a Group Member.
	 
	(OO)	 	Except in the ordinary course of business, and without prejudice to paragraph (RR) below,
disclose or agree to disclose any technical or confidential information of any Group Member.
	 
	(PP)	 	Create or amend any employee share scheme and/or grant or issue any options under any such
scheme other than under any employee share scheme which applies to employees within both the
Retained Group and the Group.
	 
	(QQ)	 	Adopt or participate in any pension scheme (other than its existing pension schemes or any
pension schemes that will not be transferred to the Purchaser) or amend any of its existing
pension schemes.
	 
	(RR)	 	Disclose details of any material litigation or arbitration, which is outstanding, pending or
threatened against any Group Member or make public (whether or not in breach of the terms of
any confidentiality provisions) the terms of any settlement or compromise agreement in respect
thereof which is reached with any person in connection therewith.
	 
	(SS)	 	Enter into any agreement, arrangement or undertaking (conditional or otherwise) to do any of
the foregoing.

 

79

Schedule 4

(Apportionment of Consideration)

Of the Consideration:

£2 shall be allocated to the Shares in Abbey National Financial and Investments Services (Hong
Kong) Limited;

£1,040,000 shall be allocated to the Shares in Abbey National Financial and Investments Services
Ireland Holdings;

£100,000 shall be allocated to the Shares in ANFIS IoM;

£37,000,000 shall be allocated to the Shares in ANFIS;

£500,000,000 shall be allocated to the Shares in ANL;

£2,886,009,998 shall be allocated to the Shares in ANSMAH;

£850,000 shall be allocated to the Shares in SMIFM; and

£175,000,000 shall be allocated to the Shares in SMIH,

(Aggregate Total: £3,600,000,000)

with such amounts being adjusted to reflect any adjustments made to (a) the Estimated Consideration
in accordance with clause 6.2, or (b) the Consideration in accordance with 6.3.

It is acknowledged and agreed by the Seller and the Purchaser that no part of the Consideration
relates to entry into the Retail Distribution Agreement, Intermediary Distribution Agreement or the
Retail Banking Distribution Agreement.

 

80

Schedule 5

(Completion arrangements)

Part A (Seller’s obligations)

At Completion, the Seller shall:

	1.	 	deliver to the Purchaser or the Purchaser’s Solicitors, or (in respect of each Company which
is incorporated outside England and Wales) the Seller shall on the Completion Date deliver to
a representative of the Purchaser or the Purchaser’s Solicitors located in such Company’s
jurisdiction of incorporation:

	 	(A)	 	duly executed transfers in respect of the Shares and the Nominee Shares in
favour of the Purchaser and (where a second shareholder is necessary) its nominee and
share certificates (or an indemnity in a form acceptable to the Purchaser acting
reasonably) for the Shares in the name of the Seller and the Nominee Shares in the name
of the relevant registered holder;
	 
	 	(B)	 	in respect of the Shares in Abbey National Financial and Investment Services
(Hong Kong) Limited a sold note in a form complying with the Stamp Duty Ordinance (Cap.
117 of the Laws of Hong Kong);
	 
	 	(C)	 	such waivers or consents as are necessary to enable the Purchaser or its
nominees to be registered as holders of the Shares; and
	 
	 	(D)	 	a voting power of attorney in the agreed form in respect of the Shares and the
Nominee Shares;

	2.	 	deliver to the Purchaser or the Purchaser’s Solicitors:

	 	(A)	 	the ANFIS Separation Agreement, duly executed by the Seller, Abbey National
Financial and Investment Services Ireland Holdings, Abbey National Financial and
Investment Services Ireland plc, ANFIS, ANFIS IoM, Abbey National Financial and
Investment Services (Hong Kong) Limited and Business OutSourcing Services Limited;
	 
	 	(B)	 	the Brand Licence, duly executed by the Seller and Banco Santander Central
Hispano, S.A.;
	 
	 	(C)	 	the Cash Management Agreement, duly executed by Abbey National Treasury
Services plc;
	 
	 	(D)	 	the Fund Separation Agreement, duly executed by the Seller and Abbey National
Asset Management Limited;
	 
	 	(E)	 	the Relationship Deed, duly executed by the Seller and ANL;

 

81

	 	(F)	 	the Agreement for Lease, duly executed by the Seller;
	 
	 	(G)	 	the Tax Covenant, duly executed by the Seller; and
	 
	 	(H)	 	the Hedge Waiver Letter duly executed by Abbey National Treasury Services plc;

	3.	 	make available to the Purchaser at the registered office or usual place of business of the
relevant Group Member:

	 	(A)	 	the statutory books (which shall be written up to but not including the
Completion Date), the certificate of incorporation (and any certificate of
incorporation on change of name), the business registration certificate (if any) and
common seal (if any) of each Group Member and share certificates in respect of all the
issued share capital of each Subsidiary which is owned directly or indirectly by any of
the Companies, insofar as they are not held by or to the order of the relevant Group
Member;
	 
	 	(B)	 	in respect of each Group Member, executed copies of the resignation letters in
the agreed form of such directors and/or secretary of such Group Member as are notified
by the Purchaser to the Seller at least 5 Business Days prior to Completion;
	 
	 	(C)	 	a copy (certified as correct by the secretary of the Seller or relevant
Retained Group Member or relevant Group Member (as the case may be) or by the Seller’s
Solicitors) of the authority under which each of the Transaction Documents have been
executed by the Seller or relevant Retained Group Member or relevant Group Member (as
applicable); and
	 
	 	(D)	 	a notice of resignation of the existing auditors of each Group Member
containing a statement that there are no circumstances connected with such resignation
which the auditors consider should be brought to the attention of the members or
creditors of that Group Member, in accordance with section 394 of the Companies Act
1985;

	4.	 	procure board meetings of each of the Companies to be held at which:

	 	(A)	 	it shall be resolved that the transfers to take effect as at the Completion
Date relating to the Shares in that Company shall be approved for registration and
(subject only to the relevant transfer being duly stamped) each transferee registered
as the holder of those Shares in the register of members;
	 
	 	(B)	 	provided that they may be lawfully so appointed, each of the persons nominated
by the Purchaser shall be appointed directors and/or secretary, as the Purchaser shall
direct, such appointments to take effect immediately after Completion;
	 
	 	(C)	 	the resignations referred to in paragraph 3(B) and 3(D) of this
Schedule shall be tendered and accepted so as to take effect at the close of the
meeting; and
	 
	 	(D)	 	any powers of attorney or authorities granted by that Company in favour of the
Seller or any Retained Group Member be terminated;

 

82

	5.	 	procure board meetings of each of the Insurance Companies to be held at which it shall be
resolved that the Seller be replaced by the Purchaser as the governing body of that Insurance
Company;
	 
	6.	 	procure a board meeting of the Seller to be held at which it shall be resolved that the
Policyholder Review Committee appointed by the Seller be terminated; and
	 
	7.	 	procure that the ANSMAH Confirmation Letter is signed by the Seller and ANSMAH.

Part B (Purchaser’s obligations)

	8.	 	At Completion, the Purchaser shall:

	 	(A)	 	pay the Consideration to the Seller by no later than 12 noon by way of
telegraphic transfer (using the CHAPS system) to the bank account notified by the
Seller to the Purchaser not later than the Business Day prior to Completion;
	 
	 	(B)	 	deliver to the Seller or the Seller’s Solicitors, counterpart originals of:

	 	(i)	 	the ANFIS Separation Agreement, duly executed by the Purchaser;
	 
	 	(ii)	 	the Brand Licence, duly executed by the Purchaser;
	 
	 	(iii)	 	the Cash Management Agreement, duly executed by Resolution
Asset Management Limited;
	 
	 	(iv)	 	the Fund Separation Agreement, duly executed by the Guarantor
and Resolution Asset Management Limited;
	 
	 	(v)	 	the Relationship Deed, duly executed by the Purchaser;
	 
	 	(vi)	 	the Agreement for Lease, duly executed by the Purchaser;
	 
	 	(vii)	 	the Tax Covenant, duly executed by the Purchaser; and
	 
	 	(viii)	 	a certified copy of a duly executed transfer and bought note in respect of
the Shares in Abbey National Financial and Investment Services (Hong Kong)
Limited;

	 	(C)	 	deliver to the Seller a copy (certified as correct by the secretary of the
Purchaser or the Guarantor or Resolution Asset Management Limited (as the case may be)
or the Purchaser’s Solicitors) of the authority under which each of the Transaction
Documents to which it is a party have been executed by the Purchaser or the Guarantor
or Resolution Asset Management Limited (as applicable); and
	 
	 	(D)	 	deliver to the Seller a copy (certified as correct by the secretary of the
Guarantor or the Purchaser’s Solicitors) of the minutes of a duly held meeting of the
board of directors

 

83

	 	 	 	of the Guarantor authorising the execution by the Guarantor of each of the
Transaction Documents to which it is a party.

 

84

Schedule 6

(Warranties)

	1.	 	Ownership of the Shares
	 
	1.1	 	The Seller is the sole beneficial owner of the Shares.
	 
	1.2	 	There is no mortgage, charge, pledge, lien or other form of security interest or encumbrance
on, over or affecting the Shares or any of them or any shares of any Group Member and there is
no agreement or commitment to give or create any.
	 
	1.3	 	The Seller is entitled to sell and transfer the full beneficial ownership in the Shares to
the Purchaser on the terms and subject to the conditions set out in this agreement.
	 
	2.	 	Capacity
	 
	2.1	 	The Seller is a company validly existing under the laws of England and Wales.
	 
	2.2	 	The Seller has the requisite power and authority to enter into and perform this agreement and
the other Transaction Documents to which it is a party.
	 
	2.3	 	The obligations of the Seller under this agreement constitute, and the obligations of the
Seller under the other Transaction Documents will when executed and delivered constitute,
binding obligations of the Seller in accordance with their respective terms.
	 
	2.4	 	Subject to the fulfilment or (where applicable) waiver of the Conditions, the execution and
delivery of, and the performance by the Seller of its obligations under, this agreement and
the other Transaction Documents to which it is a party will not:

	 	(A)	 	result in a material breach of any provision of the memorandum or articles of
association of the Seller;
	 
	 	(B)	 	result in a material breach of, or constitute a default under, any agreement or
instrument to which the Seller is a party or by which the Seller is bound;
	 
	 	(C)	 	result in a breach of any order, judgment or decree of any court or
governmental agency to which the Seller is a party or by which the Seller is bound;
	 
	 	(D)	 	require the consent of the shareholders of (i) the Seller, or (ii) any of the
Companies; or
	 
	 	(E)	 	require the Seller to obtain any consent or approval of, or give any notice to
or make any registration with, any governmental or other authority which has not been
obtained or made at the date hereof, in any such case on an unconditional basis which
cannot be revoked (save pursuant to any legal or regulatory entitlement to revoke the
same other than by reason of any misrepresentation or misstatement).

 

85

	2.5	 	Neither the City Code on Takeovers and Mergers nor any analogous code or regime in any
jurisdiction outside England (whether imposed by statute or otherwise) applies to offers for
the Shares or to the obtaining or consolidation of control of any Group Member.
	 
	3.	 	Group structure and corporate matters
	 
	3.1	 	The Shares constitute the whole of the allotted and issued share capital of the Companies and
have been validly issued and allotted and are fully paid up.
	 
	3.2	 	Other than this agreement, there is no agreement or commitment outstanding which calls for
the allotment, issue or transfer of, or accords to any person the right to call for the
allotment, issue or transfer of, any shares (including the Shares) or any debentures in or
securities of any Group Member.
	 
	3.3	 	None of the Shares are subject to any rights of pre-emption or restrictions on transfer.
	 
	3.4	 	Schedule 9 lists all the Subsidiaries of the Companies and no Group Member has any
interest in any other body corporate or undertaking which is not a Group Member and so listed
(other than interests held as Investment Assets).
	 
	3.5	 	The information given in Schedule 8 and Schedule 9 is true and accurate save
with respect to any non-material administrative errors.
	 
	3.6	 	The copies of the articles of association and memorandum of association or equivalent
constitutional documents of each Group Member which are delivered with the Disclosure Letter
are complete and accurate, have attached to them copies of all shareholders’ resolutions
required so to be attached and fully set out the rights and restrictions attaching to each
class of share capital of the Group Member to which they relate.
	 
	3.7	 	Within the last two years:

	 	(A)	 	the statutory books (including all registers but excluding the minute books
and, for the avoidance of doubt, the accounting records) of each Group Member have been
properly kept and contain a record which is accurate and complete in all material
respects of the matters required to be kept in such books in respect of such period
and, so far as the Seller is aware, there has been no material failure to record in the
minute books of each Group Member such matters as are required to be recorded in such
minute books in respect of such period;
	 
	 	(B)	 	no notice or allegation that any of the statutory books is incorrect or that
any of them should be rectified has been received; and
	 
	 	(C)	 	all documents which should have been delivered by any Group Member to a
companies registry have been so delivered.

 

86

	3.8	 	The business of each Group Member is being conducted in accordance with its memorandum and
articles of association or other constitutional documents and so far as the Seller is aware no
Group Member has entered into any ultra vires transactions.
	 
	3.9	 	No Group Member currently has any branch, agency, place of business or permanent
establishment outside the jurisdiction of its place of incorporation listed in Schedule
8 or Schedule 9 (as the case may be).
	 
	3.10	 	Each Group Member is a company validly existing under the laws of the jurisdiction within
which it is incorporated and has the power and authority under its constitutional documents to
conduct its business as conducted as at the date of this agreement.
	 
	3.11	 	There has been no failure by any Group Member or their respective officers to comply with the
provisions of the Companies Acts or equivalent legislation in respect of the jurisdiction
within which they are incorporated, including the provisions as to filing of returns,
particulars, resolutions and other documents with the Registrar of Companies (or equivalent
body in respect of those Group Members which are incorporated outside the United Kingdom) or
to comply with all legal requirements in connection with the formation of the Group Members
and with issues of shares and other securities that has had a Material Adverse Effect.
	 
	3.12	 	None of the Group Members has at any time given any financial assistance in contravention of
section 151 of the Companies Act 1985 (or, in respect of those Group Members which are
incorporated outside the United Kingdom, any equivalent laws of the jurisdiction in which they
are incorporated).
	 
	4.	 	Accounts and FSA Returns
	 
	4.1	 	The Accounts:

	 	(A)	 	were prepared in accordance with applicable law and accounting standards in the
respective place of incorporation of each Group Member at the time they were audited;
and
	 
	 	(B)	 	taken together, show a true and fair view of the state of affairs of the
companies to which they relate at the Accounts Date and of the profits or losses of the
companies to which they relate for the accounting period ended on the Accounts Date.

	4.2	 	Neither the profits nor the financial position of any Group Member has been adversely
affected during the past three years by any contract or arrangement with a company other than
a Retained Group Member which called for payments by any party in excess of £1,000,000 in any
one year and which was not of an entirely arm’s length nature.
	 
	4.3	 	No financial statements have been prepared for SPILA Marketing (in liq) for the accounting
reference period ended on the Accounts Date.
	 
	4.4	 	Since the Accounts Date:

 

87

	 	(A)	 	there has been no adverse change in the financial position of the Group taken
as a whole that has had or would reasonably be expected to have a Material Adverse
Effect;
	 
	 	(B)	 	there has been no material adverse change in the financial position of any
Insurance Company;
	 
	 	(C)	 	the business of each Insurance Company and of ANFIS has been carried on, in all
material respects, in the normal course and so as to maintain it as a going concern;
	 
	 	(D)	 	no Group Member has acquired or disposed of, or agreed to acquire or dispose
of, on capital account any fixed asset (other than an Investment Asset) with a book
value in excess of £1,000,000 other than (i) to or from any Group Member, or (ii) in
the ordinary course of business and on arm’s length terms;
	 
	 	(E)	 	no debts of any Group Member have been factored or sold;
	 
	 	(F)	 	no Group Member has committed to make expenditure on capital account (other
than such a commitment entered into in relation to Investment Assets) with an
individual contract value of £1,000,000 or more;
	 
	 	(G)	 	no resolution in general meeting or written resolution of the shareholders of
any Group Member has been passed other than resolutions relating to the routine
business of annual general meetings;
	 
	 	(H)	 	no change in the accounting reference period of any Group Member has been made;
	 
	 	(I)	 	no interim or final dividend or other distribution has been declared, paid or
otherwise made by any Group Member since the Accounts Date other than as provided for
in their Accounts;
	 
	 	(J)	 	no Group Member has created, allotted, issued, acquired, repaid, repurchased or
redeemed share or loan capital (whether conditionally or not) or made an agreement or
undertaken an obligation to do any of those things;
	 
	 	(K)	 	the aggregate value of any assets written off the balance sheet of any Group
Member is no greater than £1,000,000;
	 
	 	(L)	 	all claims arising under policies of assurance issued by any Insurance Company
have been processed in the ordinary course, and otherwise consistently with the manner
in which such processing has been operated in the twelve months prior to the Accounts
Date;
	 
	 	(M)	 	other than in the ordinary course of business or in relation to an Investment
Asset, no Group Member (i) has during the twelve month period ending on the date of
this agreement, lent any money which is overdue to be repaid, and as at the date of
this agreement, has not been repaid; or (ii) owns the benefit of any debt; and

 

88

	 	(N)	 	except in the ordinary course of business no debtor has been released by any
Group Member on terms that he pays less than the book value of any debt and no debt has
been written off or has proved to be irrecoverable to any extent.

	4.5	 	The FSA Returns and any other returns filed by the Insurance Companies and Abbey National SMA
Holdings Limited with the FSA pursuant to IPRU(INS) since 31 December 2005:

	 	(A)	 	were made in compliance with FSMA save as disclosed or otherwise provided for
in the FSA Returns or certificates provided in connection thereto;
	 
	 	(B)	 	so far as the Seller is aware, did not omit any information required to be
included therein; and
	 
	 	(C)	 	are not the subject of any outstanding queries or issues raised by the FSA.

	4.6	 	So far as the Seller is aware, the returns filed by the Insurance Companies with each
competent Regulatory Authority other than the FSA pursuant to any law relating to prudential
matters, or any regulation or rule of such Regulatory Authority relating to prudential
matters, in respect of the year ended 31 December 2005 were made in compliance in all respects
which are material to the business of the Group taken as a whole with all such laws,
regulations and rules.
	 
	5.	 	Actuarial matters
	 
	5.1	 	So far as the Seller is aware, the material historical factual information which was provided
by the Seller and the Insurance Companies to the Seller’s Actuaries for the purpose of
compiling the Actuarial Reports and used for such purpose was, when provided, accurate in all
material respects in the context to which it relates.
	 
	5.2	 	So far as the Seller is aware and subject to any qualifications set out in the Actuarial
Reports, the Actuarial Reports have been prepared with due skill and care by the Seller’s
Actuaries.
	 
	6.	 	Contracts and commitments
	 
	6.1	 	No Group Member is a party to:

	 	(A)	 	any contract which materially restricts its freedom to carry on the whole of
its business, or a material part of its business in any part of the world in such
manner as it may think fit;
	 
	 	(B)	 	other than in relation to any Investment Assets, any material joint venture,
partnership or consortium (other than a bona fide trade association);
	 
	 	(C)	 	other than in relation to real estate Investment Assets or other commitments
relating to Investment Assets or any insurance, assurance, reinsurance or reassurance
contract, any Material Contract which is expressed to be of two years or greater
duration;

 

89

	 	(D)	 	any Material Contract which can be terminated in the event of a change in the
underlying ownership or control of that Group Member (other than a Material Contract
identified as such in a list which is included in the Data Room);
	 
	 	(E)	 	and/or is liable under, other than in relation to any Investment Assets, any
guarantee, indemnity, mortgage, charge, pledge, lien or letter of credit which is a
Material Contract and secures any obligation of, or otherwise for the benefit of, any
person other than a Group Member;
	 
	 	(F)	 	other than in relation to any Investment Assets, any Material Contract for
rent, lease, hire, hire purchase, credit sale or conditional sale;
	 
	 	(G)	 	any contract with any Retained Group Member (excluding any other Group Member)
which is material to the business of the Group taken as a whole; or
	 
	 	(H)	 	any Material Contract which was entered into other than in the ordinary course
of business or other than on arm’s length terms (excluding contracts with any Retained
Group Member).

	6.2	 	True and complete copies of each Material Contract are contained in the Data Room.
	 
	6.3	 	No Group Member has within the last two years received written notice of any breach or
termination of any Material Contract to which any Group Member is a party.
	 
	6.4	 	So far as the Seller is aware, no other party to any Material Contract is in default of its
obligations where this has resulted, or is likely to result, in a Material Adverse Effect.
	 
	6.5	 	No Group Member (except in the ordinary course of business or to its professional advisers or
as required by law or any Regulatory Authority or subject to a binding confidentiality
undertaking) during the three year period ended on the date of this agreement disclosed to any
person other than the Purchaser (and its professional advisers) any secret or confidential
information relating to its business, which is material in the context of that Group Member’s
business.
	 
	6.6	 	True and accurate details of each of the guarantees, indemnities or other security
obligations of which the Seller is aware and which were entered into or granted by any Group
Member in relation to or arising out of any obligations or liabilities of any Retained Group
Member are set out in Part B of Schedule 10.
	 
	6.7	 	True and accurate details of each of the guarantees, indemnities or other security
obligations of which the Seller is aware and which were entered into or granted by any
Retained Group Member in relation to or arising out of any obligations or liabilities of any
Group Member are set out in Part A of Schedule 10.
	 
	6.8	 	True and complete copies of each appointed representative agreement to which a Group Member
is or has any time in the last 5 years been a party and under which any Group

 

90

	 	 	Member currently retains any material liability or responsibility have been disclosed in the
Data Room.

	7.	 	Powers of attorney
	 
	 	 	No Group Member has given any power of attorney or other authority (express, implied or
ostensible) which is still outstanding or effective to any person to enter into any contract
or commitment on its or any other Group Member’s behalf other than to its directors,
officers and employees to enter into routine trading contracts in the normal course of their
duties.
	 
	8.	 	Grants
	 
	 	 	No Group Member has received any grant from any supranational, national or local authority
or government agency during the last two years.
	 
	9.	 	Insurances
	 
	9.1	 	Each Group Member has effected all insurance required by statute to be effected by it.
	 
	9.2	 	Other than in respect of policies which have been issued by a Group Member or which relate to
such policies, a summary of the insurance policies which are material to the business of the
Group taken as a whole and are held by or for the benefit of any Group Member and under which
a Group Member is a named insured (other than any policies under which a Group Member will
cease to be a beneficiary at Completion and any insurance policies in respect of any
Investment Assets) is contained in the Data Room and as at the date of this agreement all such
policies are in full force and effect and are not void or voidable.
	 
	9.3	 	A summary of all claims in excess of £1,000,000 pursuant to insurance policies (other than
reinsurance or reassurance policies) held by or for the benefit of the Group, submitted in the
two years before the date of this agreement and which remain outstanding as at the date of
this agreement, is contained in or referenced in the Disclosure Letter.
	 
	10.	 	Borrowings
	 
	10.1	 	The total amount borrowed by each Group Member from its bankers does not exceed its financial
facilities and the total amount borrowed from whatsoever source does not exceed any limitation
on its borrowing contained in the relevant Group Member’s articles of association or
equivalent constitutional documents.
	 
	10.2	 	No Group Member has received written notice of an event which is an event of default under,
or a material breach of, any of the terms of any loan capital, overdraft, borrowing, debenture
or financial facility of any Group Member which is material to the business of the Group taken
as a whole, or which would entitle any third party to call for repayment prior to normal
maturity and, so far as the Seller is aware, no such event has been alleged.
	 
	10.3	 	Details of all loan, overdraft and other financial facilities available to each Group Member
and the amounts outstanding under them as at 30 April 2006 are set out in the Disclosure
Letter or

 

91

	 	 	contained in the Data Room and neither the Seller nor any Group Member has received written
notice that any of such facilities have been withdrawn.
	 
	10.4	 	Details of all debentures, charges, guarantees, indemnities and other forms of security given
to secure those facilities are referred to in the Disclosure Letter.
	 
	10.5	 	Other than in the ordinary course of business or as an Investment Asset, no Group Member has
lent or agreed to lend any money which has not been repaid to it nor does it own the benefit
of any debt.
	 
	11.	 	Hedging
	 
	 	 	The Data Room contains copies of all relevant contracts in relation to each outstanding
material derivative agreement, including any stock lending and repurchase agreements entered
into by any Insurance Company.
	 
	12.	 	Policies
	 
	12.1	 	The Data Room contains copies of standard terms and conditions of In-Force Policies which
have been supplied to the Seller by the Insurance Companies in response to requests from the
Seller to the Insurance Companies to supply copies of all standard terms and conditions of
In-Force Policies for the purposes of compiling the Data Room along with samples of marketing
material in respect of such policies and marketing materials relating to products which are
proposed will be launched between the date of this agreement and Completion.
	 
	12.2	 	All In-Force Policies are (subject to such rights of cancellation as are set out therein or
implied by law into policies of assurance), so far as the Seller is aware, valid and binding
under the relevant law and take effect in accordance with their terms.
	 
	12.3	 	Within the last two years, there has been no failure to administer any In-Force Policies in
accordance with their terms which taken individually or collectively has resulted or is likely
to result in a Material Adverse Effect.
	 
	12.4	 	The policyholder records of the Insurance Companies are within their possession or control
and have during the last two years been maintained in a manner which enables the Insurance
Companies’ business to be carried on substantially in the manner in which it has been carried
on in the twelve months prior to the date of this agreement.
	 
	12.5	 	Each Insurance Company has in the last two years complied with applicable Regulatory
Requirements with respect to the recording on the relevant Insurance Company’s complaints
register of any written notice, written claim or written complaint received from the holder of
any In-Force Policy alleging any material breach of the terms of that policy.
	 
	12.6	 	The Seller is not aware of any circumstance where an Insurance Company has accepted a valid
claim under an In-Force Policy and then failed to pay out such claim save in respect of claims
notified as at the date of this agreement but not yet paid.

 

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	13.	 	Intermediaries
	 
	13.1	 	The Key Intermediaries are all in the top fifteen largest independent financial advisers or
independent financial adviser groups measured in terms of calendar 2005 sales of self
assurance policies written by the Group on an annual premium equivalent basis (being
1/10th of single premiums plus regular premiums).
	 
	13.2	 	The range of commissions payable to Key Intermediaries in respect of self assurance policies
during the year ending 31 December 2005 is disclosed in the Disclosure Letter and except in
the ordinary course of business there has been no material variation in such range of
commissions since 31 December 2005.
	 
	13.3	 	None of the Insurance Companies is involved in a material dispute with a Key Intermediary.
	 
	13.4	 	Within the last twelve months, no Key Intermediary has ceased to deal with an Insurance
Company or has expressed in writing an intention to cease to deal with an Insurance Company,
whether completely or to an extent that is material to the Insurance Company.
	 
	13.5	 	All commissions and expenses in relation to the sale of life insurance products paid in
advance to Key Intermediaries between the Accounts Date and the date of this agreement have,
in all material respects, been correctly recorded in the books of account of the relevant
Group Member.
	 
	13.6	 	As at 30 April 2006, amounts due but not paid to Key Intermediaries by way of commission in
relation to the sale of life insurance products do not exceed £1,000,000 in aggregate except
in relation to clearing differences arising in the ordinary course of business.
	 
	14.	 	Reinsurance
	 
	14.1	 	True and complete copies of all of the in-force reinsurance contracts to which an Insurance
Company is party and which are material to the business of each individual Insurance Company
are contained in the Data Room. The Seller is not aware of any material breach of, or any
invalidity or grounds for determination, rescission, avoidance or repudiation of any such
contact.
	 
	14.2	 	There are no outstanding claims by any Insurance Company under any of the reinsurance
contracts referred to in paragraph 14.1 which are disputed in writing and are of an
amount in excess of £1,000,000 for a single event or series of similar events.
	 
	14.3	 	So far as the Seller is aware, no circumstances exist which would render any of the
reinsurance contracts referred to in paragraph 14.1 unenforceable by reason of
non-disclosure or any notified claim made thereunder irrecoverable owing to non-compliance by
the Insurance Company with the terms thereof.
	 
	14.4	 	Since the Accounts Date, there has been no single claim (over £1,000,000) against any party
to any reinsurance contract referred to in paragraph 14.1 outstanding or made by the
Insurance Company which such other party has refused in writing to meet in part or which such

 

93

	 	 	other party has provided written notice to the relevant Insurance Company of dispute of
such claim.
	 
	15.	 	Schemes and PPFMs
	 
	15.1	 	SMA and SPL are being, and have within the last three years been run in compliance with their
respective Demutualisation Scheme in all respects which are material to the business of SMA
and SPL respectively.
	 
	15.2	 	The with-profits funds of SMA and SPL are being, and have at all times since 30 April 2004
been run, in all respects which are material to the business of the SMA and SPL respectively,
in accordance with the relevant Principles and Practices of Financial Management in force at
the relevant time.
	 
	15.3	 	So far as the Seller is aware, no Insurance Company is declaring lower terminal bonuses to
the holders of policies with a guaranteed annuity option in order to negate the effect of such
option in whole or part.
	 
	16.	 	Regulatory and compliance
	 
	16.1	 	All material authorisations, licences, consents, permissions and approvals required for or in
connection with the carrying on of the business now being carried on by any Group Member are
in full force and effect in each country where such business is being carried on.
	 
	16.2	 	There have been disclosed to the Purchaser copies of all material correspondence during the
twelve months ending on the date of this agreement between each Group Member and the FSA (or
equivalent Regulatory Authority as appropriate) and copies of all material correspondence
relating to the stabilisation project known as Project Opal during the period from 31 December
2003 until the date of this agreement between each Group Member and the FSA (or equivalent
Regulatory Authority as appropriate).
	 
	16.3	 	So far as the Seller is aware, there are no circumstances which indicate that any
authorisations, licences, consents, permissions or approvals referred to in paragraph
16.1 may be revoked, suspended, cancelled, not renewed, materially varied or made subject
to any material restriction or condition (in whole or in part).
	 
	16.4	 	During the two years prior to the date of this agreement, there has been no written
notification from any Regulatory Authority that any Regulated Entity is or has been the
subject of any inquiry, investigation, injunction or restitution order by a Regulatory
Authority which has had or is likely to have a Material Adverse Effect.
	 
	16.5	 	No Regulated Entity has received in the last two years any written notice from any Regulatory
Authority or other governmental agency alleging any non-compliance with any statute,
regulation, decree or judgment of a court which is likely to have a Material Adverse Effect.
	 
	16.6	 	So far as the Seller is aware, during the two years prior to the date of this agreement, each
Regulated Entity has in all material respects carried on its business and operations in
material

 

94

	 	 	compliance with the relevant rules (including but not limited to anti-money laundering
rules) of each Regulatory Authority from which it has received an authorisation, licence,
consent, permission or approval and has in all material respects during the two year period
carried on its business and operations in compliance with all applicable laws (including
FSMA and regulations under it in relation to UK Regulated Entities) relating to its conduct
of regulated business.
	 
	16.7	 	Each Regulated Entity has filed all material reports, data and other information,
applications and notices required to be filed with or otherwise provided to the relevant
Regulatory Authority during the two years prior to the date of this agreement.
	 
	16.8	 	No Regulated Entity is a claimant or defendant in or otherwise a party to any material
litigation, arbitration, regulatory or disciplinary proceedings with any Regulatory Authority
which are in progress and which is in relation to the relevant Regulated Entity’s business
nor, so far as the Seller is aware, have any such proceedings been threatened by or against
any Regulated Entity, in each case where those proceedings would have a Material Adverse
Effect.
	 
	16.9	 	During the two years prior to the date of this agreement, no Regulated Entity nor any of its
directors or employees has, so far as the Seller is aware, been investigated or audited (in
the case of any employee, in connection with any act or omission in the course of his
employment), resulting in the Regulatory Authority imposing any material fines or penalties or
exercising any other form of disciplinary measure under sections 205, 206 or 207 of FSMA or
equivalent measures in any jurisdictions outside the United Kingdom.
	 
	16.10	 	No Group Member other than the Insurance Companies carries on insurance business as at the
date of this agreement.
	 
	16.11	 	Details of all FSA and all other material current regulatory authorisations, licences,
permissions, registrations, certificates, approvals or consents held by any Group Members are
in the Data Room.
	 
	16.12	 	All levies required under the FSA Handbook and equivalent regulations in respect of relevant
jurisdictions outside of the United Kingdom have been paid to: (i) the Financial Ombudsman and
the Financial Services Compensation Scheme; or (ii) equivalent overseas bodies as appropriate.
	 
	16.13	 	The Investment Assets of each Insurance Fund consist in all material respects of securities
and investments in which the Insurance Company is permitted to invest under FSMA, the
regulations thereunder and the FSA rules (or equivalent applicable legislation, regulations
and supporting rules in jurisdictions outside of the United Kingdom in the case of those
Insurance Companies incorporated outside of the United Kingdom).
	 
	16.14	 	No Group Member has, in the two years ended on the date of this agreement, been refused
entry to any relevant professional body or trade association concerned with insurance or
investment business or other financial activities. No Group Member has in the three years
ended on the date of this agreement been refused authorisation or permission by any relevant
Regulatory Authority.

 

95

	16.15	 	True and accurate copies of any “skilled persons” reports under Section 166 of the FSMA in
respect of Group Members have been disclosed in the Data Room.
	 
	17.	 	Competition
	 
	17.1	 	So far as the Seller is aware, no Group Member is, or has been at any time during the last
five years, a party to any agreement which:

	 	(A)	 	infringes Article 81 or 82 of the EC Treaty; or
	 
	 	(B)	 	infringes section 2 or section 18 of the Competition Act 1998 or any
corresponding provision under the national laws of any other jurisdiction in which any
Group Member currently carries on business.

	17.2	 	So far as the Seller is aware, no Group Member has given an undertaking to, or is subject to
any order of or current or pending investigation by, or has received any request for
information from the Office of Fair Trading, the Competition Commission, the Commission of the
European Community or any corresponding body in any other jurisdiction referred to in
paragraph 17.1(B) under any relevant national or EC competition legislation.
	 
	18.	 	Litigation
	 
	18.1	 	No Group Member is (otherwise than as claimant in the collection of debts arising in the
ordinary course of business) engaged in any litigation, arbitration or other dispute
resolution process, or administrative or criminal proceedings, whether as claimant, defendant
or otherwise, which has a value on its own (or when aggregated with matters of the same
underlying cause) of £1,000,000 or more.
	 
	18.2	 	So far as the Seller is aware, there is not threatened any litigation, arbitration or other
dispute resolution process, or administrative or criminal proceedings by or against any Group
Member, which has a value on its own (or when aggregated with matters of the same underlying
cause) of £1,000,000 or more.
	 
	18.3	 	No unsatisfied judgment for an amount of £250,000 or more is outstanding against any Group
Member.
	 
	19.	 	Past sales practices
	 
	19.1	 	In the two years before the date of this agreement, ANL, SMA and SPL have together paid out
(either directly or by way of amounts recharged by a Retained Group Member which has itself
paid out such amounts) no more than £1,000,000 per annum in compensation in relation to
Mis-Selling Claims.
	 
	19.2	 	In the two years before the date of this agreement, SMI and SPILA have together paid out
(either directly or by way of amounts recharged by a Retained Group Member which has itself
paid out such amounts) no more than £1,000,000 per annum in compensation in relation to
Mis-Selling Claims.

 

96

	19.3	 	In the two years before the date of this agreement, no Retained Group Member has paid out
(other than as agent for an Insurance Company, where the amount paid has been recharged to an
Insurance Company) any amounts in compensation in relation to Mis-Selling Claims save for
amounts paid out in compensation in relation to claims in respect of any advice, statement,
act or omission or practice of, given or made by such Retained Group Member or any other
Retained Group Member or any of their respective employees which was negligent or in breach of
or in contravention of any applicable law, rule or applicable regulation or requirement, rule
or standard of any relevant Regulatory Authority.
	 
	20.	 	Insolvency and winding up
	 
	20.1	 	Save as disclosed in Schedule 9, no order has been made and no resolution has been
passed for the winding up of any Group Member and no petition has been presented for the
purpose of winding up any Group Member or for a provisional liquidator or examiner to be
appointed in respect of any Group Member.
	 
	20.2	 	No action is being taken by the Registrar of Companies to strike any Group Member off the
register under section 652 of the Companies Act 1985.
	 
	20.3	 	No administration order has been made and no petition or application for such an order has
been made or presented and no administrator has been appointed and no procedure has been
commenced with a view to the appointment of an administrator in respect of any Group Member.
	 
	20.4	 	No receiver (which expression shall include an administrative receiver or deemed official
receiver) has been appointed in respect of any Group Member or all or any of its or their
assets.
	 
	20.5	 	No composition or similar arrangement with creditors (including a voluntary arrangement) has
been proposed under any relevant insolvency legislation in respect of any Group Member.
	 
	20.6	 	No moratorium under any relevant insolvency legislation is in force in respect of any Group
Member.
	 
	20.7	 	No Group Member is insolvent, or unable to pay its debts as they fall due, within the meaning
of any relevant insolvency legislation, or has stopped paying its debts as they fall due.
	 
	20.8	 	No application has been made in respect of any Group Member for an interim order under
section 253 of the Insolvency Act 1986.
	 
	20.9	 	No person has been appointed by the court to prepare a report in respect of any Group Member
under section 273 of the Insolvency Act 1986
	 
	20.10	 	So far as the Seller is aware, no event analogous to any of the foregoing has occurred in
relation to any Group Member in any jurisdiction outside England.

 

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	21.	 	Data protection
	 
	21.1	 	Copies of the registrations of each Group Member pursuant to the Data Protection Legislation
in the respective jurisdictions in which they each carry on their business are delivered with
the Disclosure Letter.
	 
	21.2	 	No Group Member has received a notice (including any information or enforcement notice),
letter or complaint from any competent data protection authority alleging breach by such
member of any applicable Data Protection Legislation or requesting information relating to its
data protection policies or practices or has been ordered to pay any administrative or other
fine by any competent data protection authority relating to breach by such member of any
applicable Data Protection Legislation and the Seller is not aware of any matter which is
likely to give rise to any such notice, letter or complaint or fine being served, given, made
or levied.
	 
	21.3	 	No individual has been awarded or paid compensation from any Group Member under any
applicable Data Protection Legislation nor to the Seller’s knowledge is such award or payment
of compensation likely to be made.
	 
	21.4	 	No order has been made against any Group Member for the rectification, blocking, erasure or
destruction of any data under any applicable Data Protection Legislation nor to the Seller’s
knowledge is such order likely to be made.
	 
	21.5	 	No warrant has been issued under any applicable Data Protection Legislation authorising any
competent data protection authority (or any of its officers or servants) to enter any of the
premises of any Group Member nor to the Seller’s knowledge is such warrant likely to be
issued.
	 
	21.6	 	Within the last two years:

	 	(A)	 	no prosecutions have been brought under applicable Data Protection Legislation
against any Group Member; and
	 
	 	(B)	 	so far as the Seller is aware, no prosecutions have been brought under
applicable Data Protection Legislation against any current or former officer of any
Group Member or any current or former employee of any Group Member relating to conduct
by such officer or employee at a time when such person was an officer or employee of
the relevant Group Member and in the context of the performance of his or her duties as
an officer or employee of the relevant Group Member.

	22.	 	Ownership of operating assets
	 
	22.1	 	Save in respect of any Property and any Investment Assets, and so far as the Seller is aware,
each of the assets used by any Group Member for the purposes of carrying on its business and
which are material to the business of the Group Member is owned beneficially by the
relevant Group Member or the relevant Group Member is entitled to use that asset
substantially as used as at the date of this agreement.

 

98

	22.2	 	Save in respect of any Property and any Investment Assets, and so far as the Seller is aware,
no option, right to acquire, mortgage, charge, pledge, lien (other than a lien arising by
operation of law in the ordinary course of trading) or other form of security interest or
encumbrance or equity on, over or affecting the whole or any material part of the undertaking
or assets of any Group Member (including any investment in any other Group Member) is
outstanding and there is no agreement or commitment to give or create any and no claim has
been made by any person to be entitled to any.
	 
	23.	 	Intellectual Property and IT Systems
	 
	23.1	 	Details of all registered trade marks, and any applications for registration therefor, which
are legally and beneficially owned by a Group Member are set out in the Disclosure Letter.
	 
	23.2	 	Details of the domain names which are registered in the name of a Group Member are set out in
the Disclosure Letter.
	 
	23.3	 	There are no registered trade marks, applications for registration thereof or domain names
owned by the Retained Group which are exclusively or predominantly used in the business of the
Group in the 12 months prior to the date of this agreement.
	 
	23.4	 	All renewal fees due as at the date of this agreement in respect of the rights disclosed
pursuant to paragraphs 23.1 and 23.2 of this Schedule 7 have been
paid.
	 
	23.5	 	Copies of all licences of Intellectual Property or know how granted to, or by, any Group
Member which are material to the business of the Group taken as a whole are contained in the
Data Room.
	 
	23.6	 	No Group Member has within the last two years received written notice of any breach or
termination of any of the licences disclosed pursuant to paragraph 23.5 of this
Schedule 7.
	 
	23.7	 	So far as the Seller is aware, no third party is infringing:

	 	(A)	 	any Intellectual Property or rights in Business Information owned by any Group
Member which is material to the business of the Group taken as a whole; or
	 
	 	(B)	 	any Intellectual Property or rights in Business Information to be assigned or
licensed under clause 15 of this agreement which is used in any business of
the Group and which is material to the business of the Group taken as a whole.

	23.8	 	So far as the Seller is aware, the activities of the Group Members do not infringe the
Intellectual Property of any third party where such infringement would adversely affect the
business of the Group taken as a whole.
	 
	23.9	 	Save as in the ordinary course of business, to its employees or as otherwise required by
applicable law, no Group Member or Retained Group Member has disclosed any Business
Information or any Books and Records, which are material to the business of the Group taken as
a whole, to any third party other than under an obligation of confidentiality.

 

99

	23.10	 	The Intellectual Property (other than trade marks) and Business Information owned by the
Group Members or which is to be assigned or licensed (assuming that such assignment is
effected or such licence continues following Completion) to the Group Members pursuant to
clause 15 of this agreement or the Transitional Services Agreement, the Intellectual
Property licensed to the Group Members and the Intellectual Property licensed to a Retained
Group member pursuant to a contract which is (either in whole or in part) to be assigned to
the Purchaser pursuant to clause 14.3 of this agreement is all of the Intellectual
Property (other than trade marks) and Business Information used by the Group on the date of
this agreement provided that nothing in this paragraph 23.10 of Schedule 6
shall operate, or be deemed to operate, as a warranty as to the infringement or otherwise of
any Intellectual Property of any third party.
	 
	23.11	 	There has been no disruption to the commercial or operational activities of the Group which
has adversely affected the business of the Group taken as a whole in the nine months prior to
the date of this agreement which has been caused by any failure, error, security breach or
breakdown of any material IT Systems.
	 
	23.12	 	Copies of all agreements relating to the IT Systems to which a Group Member is a party and
which are material to the business of the Group taken as a whole are contained in the Data
Room.
	 
	23.13	 	The material IT Systems are either owned by, or validly licensed or leased to, a Group
Member (or to the Retained Group for on-licensing to the Group).
	 
	23.14	 	No member of the Retained Group nor any Group Member has received written notice of any
claim within the last 12 months that the operation of the IT Systems infringes the
Intellectual Property rights of any third party.
	 
	23.15	 	There are disaster recovery arrangements and hardware and software support and maintenance
agreements with third parties in respect of the material IT Systems and the material IT
Systems are in satisfactory working order, having regard to the manner in which such material
IT Systems have operated in the 9 months prior to the date of this agreement.
	 
	23.16	 	The IT Systems transferred, owned and licensed to the Group together with the IT related
services provided by the Retained Group under the Transitional Services Agreement are all the
IT Systems used to operate the business of the Group in the 9 months prior to the date of this
agreement excluding any such IT Systems which either (i) the Group has replaced during that 9
month period with new IT Systems or (ii) the Group has permanently ceased to use, provided
that nothing in this paragraph 23.16 of Schedule 6 shall operate, or be deemed
to operate, as a warranty as to the infringement or otherwise of any Intellectual Property of
any third party.
	 
	23.17	 	The source code for all software material to the business of the Group and which is owned by
the Group or which is used by the Group pursuant to an agreement to which a Group Member is a
party (other than in relation to off-the-shelf products or shrinkwrap software), is either
held by the relevant Group Member Company or in escrow on behalf of the Group Member.

 

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	24.	 	Property
	 
	24.1	 	The Business Properties, the Non-Business Properties and the Properties listed in the annex
to the Disclosure Letter that constitute Investment Assets are the only properties owned by
any Group Member or in respect of which any Group Member has any estate, interest, right or
liability (actual or contingent).
	 
	24.2	 	The Business Properties are the only properties used or occupied by any Group Member for the
purpose of operating its business.
	 
	24.3	 	The documents in the Data Room are the only documents in relation to which any Group Member
has any right or liability (contingent or otherwise) in relation to the Business Properties.
	 
	24.4	 	The relevant Group Member is the legal and beneficial owner of each Business Property.
	 
	24.5	 	The information contained in Schedule 14 as to the principal terms of the leases of
the Business Properties is true and accurate in all respects.
	 
	24.6	 	There are no mortgages or charges affecting any of the Business Properties or the proceeds of
sale of any of the Business Properties.
	 
	24.7	 	So far as the Seller is aware the Group Members do not by their use or occupation of the
Business Properties contravene any requirement or restriction having the force of law and have
complied with all covenants, conditions, restrictions, limitations and other matters binding
on them.
	 
	24.8	 	No notice, order, proposal, application, request or schedule of dilapidations affecting or
relating to any of the Business Properties has been served or made by any authority or other
person or by the relevant Group Member and, so far as the Seller is aware, there are no
circumstances which are likely to result in any being served or made.
	 
	24.9	 	So far as the Seller is aware there has been no breach of any requirement of any current
statutes, any previous legislation or any regulations, bye-laws, orders, notices or directions
made or issued thereunder which are capable of enforcement and which affect the Business
Properties and, so far as the Seller is aware, there are no circumstances which are likely to
result in any being made.
	 
	24.10	 	So far as the Seller is aware no action, claim, proceeding, demand, dispute (contingent or
otherwise) in respect of any of the Business Properties is outstanding or anticipated.
	 
	24.10	 	The actual use to which each of the Business Properties is put is a lawful use under town
and country planning law and the authorised use of each of the Business Properties authorises
the use of the Business Properties for the purposes of the business carried on by the relevant
Group Member at the Business Properties.

 

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	24.11	 	None of the Group Members is expecting to have to expend any substantial sum of money in
respect of any of the Business Properties within the next 12 months.
	 
	24.12	 	In relation to those of the Business Properties that are leasehold:

	 	(A)	 	the relevant Group Member has paid the rent and all other sums payable under
the lease on the due dates for payment;
	 
	 	(B)	 	the relevant Group Member has observed and performed the covenants and the
conditions contained in the lease in all material respects, and has received no
complaint regarding any alleged breach of any such covenants and conditions; and
	 
	 	(C)	 	where title to a lease is not registered at the Land Registry, the lease was
not subject to compulsory registration when it was granted and any subsequent
disposition of the leasehold interest was not subject to compulsory registration at the
relevant time.

	25.	 	The Environment
	 
	25.1	 	In this paragraph 25:

	 	 	 	 	 	 	 
	 	 	“Environment”	 	means all or any part of the air (including air
inside buildings and other natural and man- made
structures above or below ground), water and land;
	 
	 	 	 	 	 	 
	 	 	“Environmental Laws”	 	means all applicable statutes and other laws which
relate to Environmental Matters and are in force
and binding on the relevant Group Member at the
date of this Agreement and excluding, for the
avoidance of doubt, any of the foregoing relating
to worker health and safety or town and country
planning;
	 
	 	 	 	 	 	 
	 	 	“Environmental Matters”	 	means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	the release, spillage, deposit,
escape, discharge, leak, emission
or presence of Hazardous Material
or Waste; or
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	the creation of noise, vibration,
radiation, common law or statutory
nuisance; or
	 
	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	worker health and safety; or
	 
	 	 	 	 	 	 
	 

	 	 	 	(iv)
	 	other matters relating to the
protection of the Environment
arising out of the manufacturing,
processing, treatment, keeping,
handling, use (including as a
building material), possession,
supply, receipt, sale, purchase,
import, export or

 

102

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	transportation
of Hazardous Material or Waste;
	 
	 	 	 	 	 	 
	 	 	“Environmental Permits”	 	means any permit, licence, consent or
authorisation required by Environmental Laws as at
the date of this agreement in relation to the
operation of the business of any Group Member;
	 
	 	 	 	 	 	 
	 	 	“Hazardous Material”	 	means anything which alone or in combination with
other things is capable of causing harm to man or
to the Environment or any other organism supported
by the Environment; and
	 
	 	 	 	 	 	 
	 	 	“Waste”	 	means any waste including anything which is
abandoned, unwanted or surplus irrespective of
whether it is capable of being recovered or
recycled or has any value.

	25.2	 	All Environmental Permits which are material to the business of the Group taken as a whole
(other than any Environmental Permits relating to Investment Assets) have been obtained and
are in full force and effect and each Group Member has within the last two years complied in
all material respects with all such Environmental Permits.
	 
	25.3	 	No Group Member has within the last two years received any written notice from any relevant
authority under Environmental Laws that such Group Member has any material liability under
Environmental Laws in respect of Environmental Matters arising or existing as at or prior to
the date of this agreement which do not relate to Investment Assets.
	 
	25.4	 	So far as the Seller is aware the Group Members have complied with all applicable
Environmental Laws.
	 
	26.	 	Employment
	 
	26.1	 	The schedule of employees set out in or delivered with the Disclosure Letter is an accurate
list of all Employees and Current Employees as at 26 May 2006.
	 
	26.2	 	For every Senior Employee there are set out in or delivered with the Disclosure Letter:

	 	(A)	 	full details of the terms of employment (including the emoluments and any
restrictive covenants);
	 
	 	(B)	 	the number of years of continuous service for redundancy purposes of that
Senior Employee;
	 
	 	(C)	 	full details of any benefit granted to any Senior Employee otherwise than in
cash including details of any bonus schemes, share incentive schemes, share options
schemes or profit share schemes and entitlements under those schemes and any agreement,
arrangement or practice under which any Senior Employee may receive

 

103

	 	 	 	shares, share
options, payment or other benefit by reference to performance (whether individual or
collective) or otherwise;
	 
	 	(D)	 	full details of any benefit granted to any Senior Employee in cash which is
related to sales, profits, turnover or performance, or which is otherwise variable
(other than normal overtime); and
	 
	 	(E)	 	full details of any employment benefits or insurance policies relating to any
Senior Employee to the extent not covered by paragraphs (A) to (D) above,

	 	 	as at 26 May 2006.
	 
	26.3	 	Employee Liability Information in respect of each Current Employee is disclosed in or
delivered with the Disclosure Letter.
	 
	26.4	 	A copy of the various standard terms and conditions of employment applicable to the Employees
and Current Employees are disclosed in or delivered with the Disclosure Letter.
	 
	26.5	 	All Employees and Current Employees have written contracts of employment.
	 
	26.6	 	The contract of employment of each Employee and Current Employee may be terminated by the
relevant employer without damages or compensation (other than that payable by statute) by
giving at any time no more than 6 months notice.
	 
	26.7	 	No Employee or Current Employee has any entitlement conditional upon a change in the control
(howsoever defined and to include, without limitation, a disposal of all or substantially all
of the business and assets or shares of the relevant company) of any company within the Group
entitling the Employee or Current Employee to resign without notice or treat himself as
dismissed or released from any obligation or to receive any payment, additional period of
notice or other benefit whatsoever as a consequence of the change of control.
	 
	26.8	 	No Senior Employee has given notice terminating his contract of employment or is under notice
of dismissal as at 2 June 2006.
	 
	26.9	 	There is no agreement, arrangement or practice in relation to the secondment of personnel
from a third party to any Group Member or from any Group Member to a third party.
	 
	26.10	 	There is no agreement, arrangement or practice for the provision directly or indirectly to
any Group Member or Retained Group Member in return for remuneration, of the services of any
consultant, contractor or other individual(s) to work in the business carried on by any Group
Member other than an employee of the Group or an employee of the Retained Group who works in
the business carried on by any Group Member.
	 
	26.11	 	There is no former employee of any Group Member or Retained Group Member who worked in the
business carried on by any Group Member who has a statutory or contractual right to return to
work for such Group Member or Retained Group Member.

 

104

	26.12	 	No Employee or Current Employee has made or threatened in writing (or is expected to do so)
any disciplinary appeal, grievance, grievance appeal, employment tribunal claim or other
litigation, arbitration or mediation, administration or criminal proceeding in connection with
or arising from his employment and the Seller is not aware of any circumstances which might
give rise to any such proceedings.
	 
	26.13	 	There is no obligation or amount due to or in respect of any Employee or Current Employee in
connection with or arising from his employment which is in arrear or unsatisfied other than
his normal salary or expenses incurred in the normal course for part of the month current at
the date of this agreement.
	 
	26.14	 	No trade union, works council, staff association or other body representing employees is
recognised in any way for bargaining, information or consultation purposes in relation to the
Employees or Current Employees.
	 
	26.15	 	There are no agreements (whether legally binding or not) with any representative body
referred to in paragraph 26.14 in relation to the Employees or Current Employees and
there is no dispute with any such representative body, and no dispute is threatened or
expected, in relation to the Employees or Current Employees.
	 
	26.16	 	No request has been made or is expected from Employees or Current Employees in respect of
trade union recognition or information and consultation rights.
	 
	26.17	 	Since the Accounts Date, no material change has been made to the emoluments or other terms
of employment or engagement of any Employee or Current Employee and no change is due or
expected within six months of the date of this agreement except in each case for increases in
emoluments made in accordance with normal Group practice.
	 
	26.18	 	So far as the Seller is aware, each Group Member and Retained Group Member have, in relation
to each of the Employees and Current Employees and each of their former employees who worked
in the business carried on by any Group Member whose employment has ceased within the 6 month
period prior to the date of this Agreement (“Former Employee”), in all material respects:

	 	(A)	 	complied with its obligations under Article 141 EC Treaty (ex Article 119), the
Equal Treatment Directive, the Equal Pay Act 1970, the Sex Discrimination Act 1975, the
Race Relations Act 1976, the Trade Union and Labour Relations (Consolidation) Act 1992,
the Disability Discrimination Act 1995, the Employment Rights Act 1996, the Data
Protection Act 1998, the Working Time Regulations 1998, the National Minimum Wage Act
1998, the Employment Relations Act 1999, the Transnational Information
and Consultation of Employees Regulations 1999, the Part-time Workers (Prevention of
Less Favourable Treatment) Regulations 2000, the Fixed-term Employees (Prevention of
Less Favourable Treatment) Regulations 2002, the Employment Act 2002, the Employment
Equality (Sexual Orientation) Regulations 2003, the Employment Equality (Religion or
Belief) Regulations 2003, the Employment Act 2002 (Dispute Resolution) Regulations
2004, the Information and Consultation of Employees Regulations 2004 and all other
relevant and applicable legislation and regulations

 

105

	 	 	 	(whether applicable in England
or in any other relevant jurisdiction) relevant to its relations with:

	 	(1)	 	any Employee or Current Employee and any such Former Employee; or
	 
	 	(2)	 	any recognised trade union, staff association, European Works
Council or other Works Council, employee representatives or other body
representing or seeking to represent any Employee or Current Employee or any
such Former Employee,

	 	 	 	and with all orders and awards made under such legislation and with all collective
and other agreements from time to time in force relating to such relations or the
terms and conditions of employment or any Employee or Current Employee or any such
Former Employee;
	 
	 	(B)	 	discharged fully its obligations to pay all salaries, wages, commissions,
bonuses (where due to be paid), overtime pay, holiday pay, sick pay, insurance
premiums, accrued entitlement under incentive schemes, tax (including PAYE and other
withholding tax where appropriate), national insurance contributions or other social
security deductions or credits and other benefits of or connected with employment up to
the date of this agreement;
	 
	 	(C)	 	without prejudice to paragraph 26.18(A) above, complied in all material
respects with all its obligations under statute and otherwise concerning health and
safety at work (including, without limitation, conducting all appropriate risk
assessments) and has not incurred any liability to any Employee or Current Employee or
any such Former Employee in respect of any accident or injury which is not fully
covered by insurance; and
	 
	 	(D)	 	without prejudice to paragraph 26.18(A) above, made all reasonable adjustments
required under Section 6 of the Disability Discrimination Act 1995 in relation to any
Employee or Current Employee who is known by the Group or any relevant Retained Group
Member to have an impairment reasonably likely to amount to a disability for the
purposes of the Disability Discrimination Act 1995.

	27.	 	Pensions
	 
	27.1	 	Other than the Seller’s Schemes, the Irish Schemes, the Isle of Man Schemes and the State
Schemes, there is no arrangement to which the Group or the Retained Group contributes, is
bound to contribute or could be required to contribute or make any payment to, either now or
in the future under which benefits of any kind are payable to or in respect of any of the
Employees or Current Employees or any former employees of the Group or any dependant of any
Employee or Current Employee or any former employee of the Group on retirement, death or
disability or on the attainment of a specified age or on the completion of a specified
number of years of service nor has any legally binding proposal been announced (or any
legally binding promise made) to establish any such legally binding agreement or arrangement
and to the

 

106

	 	 	extent that any such agreement or arrangement existed in the past, none of the
Group Members have any subsisting liability in respect of it.
	 
	27.2	 	All contributions and costs due from any Group Member to the Seller’s Schemes, the Isle of
Man Schemes and the Irish Schemes in respect of any period prior to the date of this agreement
have been paid to the extent they have fallen due for payment.

	27.3	 	The Seller’s Schemes are registered pension schemes and the relevant defined benefit sections
of the Seller’s Schemes are contracted out, and the Irish Schemes are registered with the
Pensions Board of Ireland and are approved by the Irish Revenue Commissioners under Chapter 1
of Part 30 of the Ireland Taxes Consolidation Act 1997.
	 
	27.4	 	No Employee or Current Employee nor any former employee of the Group has made or threatened
any material claim or complaint against the Group or, so far as the Seller is aware, against
any of the Seller’s Schemes , the Isle of Man Schemes or the Irish Schemes (including without
limitation any complaints made under any internal disputes procedure maintained in respect of
the Seller’s Schemes, the ANFIS IoM Expatriate Staff Retirement Benefits Scheme or the Irish
Schemes and any references made to the Pensions Ombudsman or the Pensions Advisory Service)
or, so far as the Seller is aware, made any complaint or report to the Pensions Regulator or,
as the case may be, to the Pensions Board of Ireland in respect of any act, event or omission
arising out of or in connection with the participation of any Group Member in the Seller’s
Schemes, the ANFIS IoM Expatriate Staff Retirement Benefits Scheme and the Irish Schemes and,
so far as the Seller is aware, there are no circumstances which may give rise to any such
claim, complaint or report being made.
	 
	27.5	 	So far as the Seller is aware, no Employee or Current Employee nor any former employee of the
Group has been denied access to or excluded from membership of the Seller’s Scheme, the Isle
of Man Schemes or the Irish Schemes or from benefits under the Seller’s Scheme, the Isle of
Man Schemes or the Irish Schemes in contravention of Article 141 of the EC Treaty, the
Pensions Act 1995 (or any supervening legislation) or the provisions of the Seller’s Schemes,
the Isle of Man Schemes or the Irish Schemes or otherwise.
	 
	27.6	 	The Seller has disclosed:

	 	(a)	 	true and complete copies of the current trust deed and rules containing the
provisions currently governing the Irish Schemes and the ANFIS IoM Expatriate Staff
Retirement Benefits Scheme;
	 
	 	(b)	 	true and complete copies of the current explanatory booklet provided for
members of the Irish Schemes;
	 
	 	(c)	 	full particulars of the current rates of contributions payable to the Seller’s
Schemes, the Irish Schemes and the Isle of Man Schemes;
	 
	 	(d)	 	The Scottish Mutual Association Definitive Trust Deed and Rules dated 18
November 2003;

 

107

	 	(e)	 	The Scottish Provident Institution Staff Pension Fund Rules dated 12 September
2002,

	 	 	 	and there is no legally binding obligation to provide benefits under the above schemes other
than as revealed in such documents and particulars.

	27.7	 	The Seller has disclosed a materially complete and accurate list as at 26 May 2006 of the
Listed Employees who are members of each of the Seller’s Schemes, the Irish Schemes and the
Isle of Man Schemes.
	 
	27.8	 	The Group Members and/or the Retained Group Members are not providing or promised to provide
ex gratia pensions or other similar pension benefits in respect of any of the Employees or
Current Employees.
	 
	27.9	 	No Transferring Employees are or could become entitled to the early payment of any pension
benefits under or in connection with any of the Seller’s Schemes, the Irish Schemes or the
Isle of Man Schemes.
	 
	27.10	 	The Group Members have complied in all material respects with the stakeholder requirements
contained in sections 1 to 8 of the Welfare Reform and Pensions Act 1999 and, in relation to
Ireland, with section 121 of the Pensions’ Act 1990.
	 
	27.11	 	No Contribution Notice, Financial Support Direction or Restoration Order has been made by
the Pensions Regulator under section 38, 43 or 52 of the Pensions Act 2004 respectively
against or involving the Group Members or any of their directors.
	 
	27.12	 	None of the following communications from the Pensions Regulator have been received by a
Group Members in connection with the Pensions Regulator’s regulatory functions:

	 	(f)	 	warning notices or determination notices issued under section 96(2) of the
Pensions Act 2004;
	 
	 	(g)	 	improvement notices issued under section 13 of the Pensions Act 2004;
	 
	 	(h)	 	third party notices issued under section 14 of the Pensions Act 2004;
	 
	 	(i)	 	any clearance statements issued under section 42 or section 46 of the Pensions
Act 2004.

	27.13	 	So far as the Seller is aware the Group Members have complied in all material respects with
their notification obligations under section 69 and section 70 of the Pensions Act 2004 and
the regulations made under those sections. The Seller is not aware of any circumstances which
may give rise to an obligation to make such a report or notification.
	 
	27.14	 	So far as the Seller is aware, the Irish Schemes and the ANFIS IoM Expatriate Staff
Retirement Benefits Scheme have been administered in accordance with the trust powers and
provisions of the Irish Schemes and the ANFIS IoM Expatriate Staff Retirement Benefits Scheme
and the requirements of legislation and of the Irish Revenue Commissioners and the

 

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	 	 	Isle of Man Assessor of Income Tax and with due regard to the general requirements of trust
law.

	27.15	 	The ANFIS IoM Expatriate Staff Retirement Benefits Scheme is a money purchase scheme under
which all the benefits that may be provided are benefits the rate or amount of which is
calculated by reference to a payment or payments made by the member or by any other person in
respect of the member and which are not average salary benefits and no guarantee or promise
has been given that any of the benefits provided under the ANFIS IoM Expatriate Staff
Retirement Benefits Scheme other than life assurance benefits shall relate to earnings in any
way.
	 
	27.16	 	Copies of the actuarial valuation reports for the Scottish Provident Staff Pension Scheme
for Employees in the Republic of Ireland dated 31 December, 2003, and for the Scottish Mutual
International Plc Staff Pension Scheme dated 31 December, 2001 have been provided to the
Purchaser. Copies of the Scottish Provident Staff Pension Scheme for Employees in the Republic
of Ireland Trustees’ Report dated 31 December, 2004 and of the Scottish Mutual International
Plc Staff Pension Scheme Annual Report dated 31 December, 2005 have been provided to the
Purchaser. So far as the Seller is aware the information provided to the scheme actuaries when
preparing the above valuation was materially complete and accurate and so far as the Seller is
aware there has been no material change to the circumstances of the Irish Schemes since the
effective dates of such valuation reports.
	 
	27.17	 	All death in service benefits under the Irish Schemes are fully insured.
	 
	27.18	 	So far as the Seller is aware, save as disclosed no indemnities have been provided by any
Group Member to the trustees of the Irish Schemes or the ANFIS IoM Expatriate Staff Retirement
Benefits Scheme or to any other person in relation to the Irish Schemes and the ANFIS IoM
Expatriate Staff Retirement Benefits Scheme.
	 
	27.19	 	No company or employer other than the Group Members participates in or, so far as the Seller
is aware, has participated in and has any undischarged liability in respect of the Irish
Schemes.
	 
	28.	 	The Accounts and Tax
	 
	28.1	 	No Group Member has any liability in respect of Tax (whether actual or contingent):

	 	(A)	 	in any part of the world assessable or payable by reference to profits, gains,
income or distributions earned, received or paid or arising or deemed to arise on or at
any time prior to the Accounts Date or in respect of any period starting before the
Accounts Date; or
	 
	 	(B)	 	referable to transactions effected or deemed to have been effected on or before
the Accounts Date,

	 	 	 	that is not provided for in full in the Accounts.

 

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	28.2	 	The amount of the provision for deferred Tax in respect of each Group Member contained in the
Accounts, the FSA Returns and the VIF was, in each case at the Accounts Date, adequate and
fully in accordance with applicable generally accepted accounting practices and commonly
adopted by companies carrying on businesses similar to those carried on by that Group Member.
	 
	28.3	 	If all facts and circumstances which are now known to each Group Member or the Seller had
been known at the time the Accounts, FSA Returns and the VIF respectively were drawn up, the
provision for deferred Tax that would be contained in the Accounts, the FSA Returns and the
VIF respectively would be no greater than the provision which is so contained.
	 
	29.	 	Tax events since the Accounts Date
	 
	 	 	Since the Accounts Date:

	 	(A)	 	no Group Member has declared, made or paid any distribution within the meaning
of ICTA 1988 or (in relation to a Group Member which is resident for Tax purposes in
the Republic of Ireland) TCA 1997;
	 
	 	(B)	 	no accounting period of any Group Member has ended;
	 
	 	(C)	 	there has been no disposal of any asset (including trading stock) or supply of
any service or business facility of any kind (including a loan of money or the letting,
hiring or licensing of any property whether tangible or intangible) in circumstances
where the consideration actually received or receivable for such disposal or supply was
materially less than the consideration which could be deemed to have been received for
Tax purposes;
	 
	 	(D)	 	so far as the Seller is aware, no event has occurred (other than in the
ordinary course of business of the relevant Group Member) which has given or may give
rise to a Tax liability on any Group Member calculated by reference to deemed (as
opposed to actual) income, profits or gains or would have given or might give rise to
such a liability but for the availability or any relief, allowance, deduction or credit
or which will result in any Group Member becoming liable to pay or bear a Tax liability
directly or primarily chargeable against or attributable to another person, firm or
company (other than any other Group Member);
	 
	 	(E)	 	no disposal has taken place or other event occurred which will or may have the
effect of crystallising a liability to Tax which should have been included in the
provision for deferred Tax contained in the Accounts if such disposal or other event
had been planned or predicted at the Accounts Date;
	 
	 	(F)	 	no Group Member has made any payment or incurred any obligation to make a
payment (in either case in excess of £100,000 or in the case of a series of payments in
relation to the same matter or obligation which has exceeded £100,000 in aggregate)
which will not be deductible (other than as capital expenditure) for Tax purposes
either

 

110

	 	 	 	in computing the profits of the Group Member or in computing the corporation tax
chargeable on the Group Member; and

	 	(G)	 	no Group Member has paid or become liable to pay any interest or penalty in
connection with any Tax and no Group Member is liable to pay any Tax the due date for
payment of which has passed nor will any Group Member become liable to pay any Tax the
due date for payment of which will arise in the 30 days after the date of this
agreement nor are there any circumstances by reason of which it is likely to become
liable to make such a payment.

	30.	 	Tax returns, disputes, records and claims, etc.
	 
	30.1	 	Each Group Member has within the last six years obtained and preserved all records and given
all notices required to be obtained, preserved or given for Tax purposes, made or caused to be
made all proper returns required to be made, duly paid all Tax required to be paid in
accordance with those returns and has supplied or caused to be supplied all material
information required to be supplied to any Tax Authority, in each case within the time limits
prescribed by the relevant legislation and, so far as the Seller is aware, all such returns
and notices were and remain complete and accurate in all material respects and were made on a
proper basis and all such information was and remains complete and accurate in all material
respects.
	 
	30.2	 	There is no dispute or disagreement outstanding nor so far as the Seller is aware is any
contemplated at the date of this agreement with any Tax Authority regarding liability or
potential liability to any Tax recoverable from any Group Member or regarding the availability
of any relief from Tax to any Group Member nor has any Group Member within the two years ended
on the date of this agreement received any notice of enquiry or suffered any investigation,
enquiry, audit or visit by a Tax Authority nor is any investigation, enquiry, audit or visit
planned, so far as the Seller is aware, for the next twelve months.
	 
	30.3	 	All returns relating to Tax on Income, Profits or Gains (as defined in the Tax Covenant) made
by a Group Member are agreed with the appropriate Tax Authority (or, in relation to
accounting periods to which self-assessment applies, no enquiry has been opened that has not
yet been closed in relation to such returns).
	 
	30.4	 	The Group Members have in their possession or power sufficient records and information
relating to past events to calculate the Tax liability which would arise on any disposal or on
the realisation of any asset owned at the Accounts Date by any Group Member or acquired by any
such member since that date but before Completion.
	 
	30.5	 	Each Group Member has duly submitted all elections, claims and disclaimers or withdrawals of
claims which have been assumed to have been made for the purposes of the Accounts.
	 
	30.6	 	The amount of Tax chargeable on any Group Member during any accounting period ending on or
within six years before the Accounts Date has not, to any material extent, depended on any
concession, agreement or other formal or informal arrangement with any Tax Authority and all
material concessions, agreements, formal or informal arrangements between any Group

 

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	 	 	Member and a Tax Authority have been disclosed in the Disclosure Letter and, so far as the
Seller is aware, no Tax Authority is contemplating the withdrawal of such an arrangement and
no such arrangement would be liable to be withdrawn under its terms by reason of the
transactions to be carried out pursuant to this agreement.

	30.7	 	No Group Member has been party to any transaction forming part of notifiable arrangements (as
defined for the purposes of Part 7 Finance Act 2004 (Disclosure of Tax Avoidance Schemes)) or
section 811A TCA 1997 or section 58A and Schedule 11A VATA (Disclosure of Value Added Tax
Avoidance Schemes) or has received a notice under section 811(6) TCA 1997 nor has any Group
Member between the Accounts Date and Completion been party, nor will it be party between the
Accounts Date and Completion, to any transaction forming part of notifiable arrangements on
the basis of the published changes to the tax disclosure rules not in force at the date of
this agreement.
	 
	30.8	 	No Group Member has in the last six years either been a party to or otherwise involved in any
transaction, scheme or arrangement the main purpose or object or one of the purposes or
objects of which was the avoid or reduce a liability to Tax or to secure a tax advantage
(within the meaning of section 709 of ICTA 1988) which would be liable to counteraction under
section 703 ICTA 1988 or been involved in a tax avoidance transaction (within the meaning of
section 811 TCA 1997).
	 
	30.9	 	No transaction or arrangements involving any Group Member will bind it after Completion which
are such that any of the provisions of sections 770-773 and Schedule 28AA to ICTA 1988 could
be applied to them or that a direction could be made under Schedule 6 to the VATA.
	 
	30.10	 	No Group Member has received any notice from any Tax Authority which required or will or may
require such member to withhold Tax from any payment made since the Accounts Date or which
will or may be made after the date of this agreement. Each Group Member has duly complied
with all requirements to deduct or withhold Tax from any payments it has made and has
accounted in full to the appropriate Tax Authority for all amounts so deducted or withheld.
	 
	30.11	 	All clearances obtained by any Group Member in the last six years have been properly
obtained and, so far as the Seller is aware, all information supplied to the relevant Tax
Authority in connection with such clearances was complete and accurate in all respects and any
transaction for which such clearance was obtained has been carried out only in accordance with
the terms of the clearance given therefore and the application on which the clearance was
based.
	 
	30.12	 	No Group Member has in the last six years carried out or caused or permitted to be carried
out any of the transactions specified at the relevant time in section 765(1) of ICTA 1988 (in
relation to such transactions carried out or caused or permitted to be carried out by a Group
Member before the date on which it became a Group Member or Retained Group Member, so far as
the Seller is aware) otherwise than with the prior consent of H. M. Treasury and (in the case
of a special as opposed to general consent) full particulars of which are contained in the
Disclosure Letter or carried out any transactions to which section 765A could apply without
having duly provided the required information to the relevant Tax Authority.

 

112

	30.13	 	No Group Member has made any election under paragraph 6 of the Loan Relationships and
Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations
2004.
	 
	31.	 	Non-deductible revenue outgoings
	 
	31.1	 	All sums payable in excess of £100,000 under any obligation incurred by any of the Group
Members prior to the Accounts Date and which will continue to bind the Group Member after the
Accounts Date are under current Tax law and practice deductible in full for Tax purposes
(other than amounts falling within section 74(1)(f) ICTA 1988).
	 
	32.	 	Stamp Taxes
	 
	32.1	 	All documents in the possession or under the control of any Group Member or to the production
of which any Group Member is entitled which are necessary to establish the title of any Group
Member to any material asset or to effect registration in respect of the holding of a material
asset or to be produced as evidence in civil proceedings and which, in the jurisdiction
relevant to establishing such title, such registration or such proceedings, attract either
stamp duty or transfer Tax or require to be stamped with a particular stamp denoting that no
duty is chargeable or that the document has been produced to the appropriate authority, in any
such case, in order for the relevant document to be used for such purposes, have been duly
stamped or the transfer Tax duly paid; and no such documents which are outside the United
Kingdom would attract stamp duty if they were brought into the United Kingdom.
	 
	32.2	 	Since the Accounts Date, each Group Member and any nominee of the Group Member has fulfilled
its obligations in respect of stamp duty reserve tax.
	 
	32.3	 	Since the Accounts Date, each Group Member has fulfilled its obligations in respect of stamp
duty land tax.
	 
	32.4	 	There are no circumstances in which any Group Member will or may after Completion be liable
to pay an amount of stamp duty land tax, submit a stamp duty land transaction return or a
stamp duty land tax self-certificate in respect of any transaction entered into or action
taken prior to Completion.
	 
	32.5	 	No Group Member has obtained relief from stamp duty or stamp duty land tax under section 76
Finance Act 1986, section 42 Finance Act 1930, section 151 Finance Act 1995 or Schedule 7
Finance Act 2003 which will or may be withdrawn after the date of this agreement pursuant to
sections 111 or 113 Finance Act 2002 or Schedule 7 Finance Act 2003.
	 
	32.6	 	No Group Member has been involved in any transaction in the last six years involving a
statement which is deliverable to the registrar of companies (as defined in the Ireland
Companies Act 1963) which statement has, in accordance with Part 8 SDCA 1999, attracted a
reduced rate of stamp duty.
	 
	32.7	 	No Group Member has been involved in any transaction involving any instrument in relation to
which a claim for exemption from stamp duty was made in accordance with sections 79 SDCA

 

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	 	 	1999 or section 80 SDCA 1999 and which exemption will or may be withdrawn after the date of
this agreement.

	32.8	 	Any policy of insurance written by a Group Member to which the “Policy of Insurance” or
“Policy of Life Insurance” heads of charge within the meaning of Schedule 1 Ireland SDCA 1999
is or was applicable has been duly stamped.
	 
	32.9	 	Any statement required to be delivered to the Irish Revenue Commissioners written by a Group
Member to which section 125 Ireland SDCA 1999 is applicable has been duly stamped.
	 
	32.10	 	Any document to which a Group Member is a party which falls within “the conveyance or
transfer on sale of a policy of insurance or a policy of life insurance where the risk to
which the policy relates is located in Ireland” head of charge within the meaning of Schedule
1 Ireland SDCA 1999 has been duly stamped.
	 
	33.	 	Value Added Tax
	 
	33.1	 	Each UK Target VAT Group Member has, since the date falling six years prior to the date of
this agreement or, if later, the date of its incorporation, been treated for the purposes of
section 43 VATA 1994 as a member of a group of companies (the “UK VAT Group”) of which the
representative member is the Seller.
	 
	33.2	 	Each Irish Target VAT Group Member has, since the date falling six years prior to the date of
this agreement or, if later, the date of its incorporation, been treated for the purposes of
section 8(8) VATA 1972 as a member of the Irish VAT Group, and no other person is a member of
the Irish VAT Group.
	 
	33.3	 	Within the last six years, no Group Member other than the UK VAT Group Members and the Irish
VAT Group Members has been registered, or liable to be registered, for the purposes of VAT.
	 
	33.4	 	The Seller and the Irish Representative Member and, in relation to documentary obligations,
each member of the Irish VAT Group have, in all material respects, made, given, obtained and
kept complete, correct and up to date returns, records, invoices and other documents
appropriate or required for the purposes of VATA 1994 and VATA 1972 respectively, have
complied in all material respects with all other applicable VAT legislation, are not in
arrears with any payments or returns due and has not been required by any Tax Authority to
give security under paragraph 4 of Schedule 11 VATA 1994 or section 23A VATA 1972
respectively.
	 
	33.5	 	The Seller has not, since the date 12 months before the Accounts Date, been in default in
respect of any prescribed accounting period as mentioned in section 59 or section 59A VATA
1994 or any taxable period as mentioned in VATA 1972.
	 
	33.6	 	Set out in or delivered with the Disclosure Letter are details of any assets of each UK
Target VAT Group Member to which the provisions of Part XV Value Added Tax Regulations 1995
(the Capital Goods Scheme) apply and in particular:

 

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	 	(A)	 	the identity (including, in the case of leasehold property, the term of years),
date of acquisition and cost of the asset; and
	 
	 	(B)	 	the proportion of input Tax for which credit has been claimed (either
provisionally or finally in a Tax year and stating which).

	33.7	 	So far as the Seller is aware, no agreement or arrangements have been made or are in place
under which any UK Target VAT Group Member or Irish Target VAT Group Member is or could become
liable (except as provided for in the Accounts) to make any payment to the Seller (or any
other past or present member of the UK VAT Group or Irish VAT Group) in respect of some or all
of the Seller’s liability to account to H.M. Customs and Excise or the Irish Revenue
Commissioners or HMRC for VAT.
	 
	33.8	 	No Group Member holds any interest in any buildings or land in respect of which that Group
Member or any of its relevant associates (within the meaning of paragraph 3(7) of Schedule 10
to the VATA 1994) has made an election to waive the exemption to VAT in accordance with the
provisions of paragraph 2 of Schedule 10 to the VATA 1994 or section 7(1) VATA 1972 except as
disclosed in the Disclosure Letter.
	 
	33.9	 	For the purposes of this paragraph 33, the Irish branches of ANFIS and SPL shall each
be treated as separate entities.

	34.	 	Duties, etc.
	 
	 	 	All VAT, import duty and other Taxes or charges payable to any Tax Authority upon the
importation of goods and all excise duties payable to any Tax Authority in respect of any
assets (including trading stock) imported, owned or used by any Group Member have been paid
in full.

	35.	 	Tax on disposal of assets
	 
	 	 	On a disposal of all its assets by any Group Member for:

	 	(A)	 	in the case of each asset owned by that Group Member at the Accounts Date, a
consideration equal to the value attributed to that asset in preparing the Accounts; or
	 
	 	(B)	 	in the case of each asset acquired since the Accounts Date, a consideration
equal to the consideration given for the acquisition

	 	then either:

	 	(i)	 	in respect of any asset falling within (A) above, the liability to Tax
(if any) which would be incurred by that Group Member in respect of that asset would
not exceed the amount taken into account in respect of that asset in computing the
maximum liability to deferred Tax as stated in the Accounts; or
	 
	 	(ii)	 	in respect of any asset within (B) above, no Tax liability would, so
far as the Seller is aware, be incurred by that Group Member in respect of that asset.

 

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	35.2	 	The quantum of capital losses taken into account in determining the deferred Tax as stated in
the Accounts are set out in the Disclosure Letter.
	 
	35.3	 	In the case of any Group Member the capital losses taken into account in determining the
deferred Tax as stated in the Accounts do not include any capital losses made available to
that Group Member by virtue of section 171A of the TCGA.
	 
	36.	 	Instalment payments
	 
	36.1	 	The Disclosure Letter gives full details of all instalment payments made by or on behalf of
any Group Member under the Corporation Tax (Instalment Payment) Regulations 1998 or Part 41
TCA 1997 and all repayments claimed by or on behalf of any Group Member since the Accounts
Date, and the computation of each such payment or claim for repayment took proper account of
all relevant estimates and other information available to that Group Member at the time when
any such payment was made (or as the case may be) at the time when any such claim for
repayment was submitted to the relevant Tax Authority.
	 
	37.	 	Capital gains, goodwill and other intangibles
	 
	37.1	 	The Disclosure Letter sets out full particulars of all the material intangible fixed assets
of a Group Member to which Schedule 29 Finance Act 2002 applies.
	 
	37.2	 	On the basis of the facts and circumstances as at the date of this agreement, no loss which
might accrue on the disposal by any Group Member of any shares in, or securities of, a company
held by it at the date of this agreement is liable to be materially reduced by virtue of a
depreciatory transaction, as defined in section 176 of the TCGA (including a distribution
treated as a depreciatory transaction by virtue of section 177 of the TCGA) or section 621 TCA
1997.
	 
	37.3	 	Nothing has been done in circumstances such that section 30 of the TCGA (value shifting) has
or may or will have material effect in relation to the disposal of an asset held by it at the
date of this agreement by any Group Member.
	 
	38.	 	Capital expenditure
	 
	38.1	 	The Disclosure Letter gives full details of all claims for and disclaimers of capital
allowances as have been made by each Group Member in the last six years (including book values
and tax written down values) and the manner in which such allowances have been given.
	 
	39.	 	Employee taxation
	 
	39.1	 	Each Group Member has properly operated the Pay As You Earn (“PAYE”) system in respect of its
employees and directors and has accounted to the appropriate Tax Authority for all Tax so
deducted and all Tax chargeable on benefits provided to its employees and all returns required
by section 203 of ICTA 1988 and Part 11 of the Income Tax (Earnings and Pensions) Act 2003 and
regulations made thereunder have been punctually made in respect of its employees and
directors and are accurate and complete in all respects and no Group Member

 

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	 	 	has been subject to a PAYE audit in respect of its employees and directors in the last six
years.

	39.2	 	No Group Member has paid or agreed to pay any remuneration (including bonuses) or other
emoluments or provided any benefit to any director, other officer or employee of it other than
such payments as were or will be allowable as a deduction in computing the profits of the
Group Member for the purposes of corporation Tax.
	 
	39.3	 	Since the Accounts Date, no Group Member has made any ex gratia payments to a director or
employee or to a former director or employee.
	 
	39.4	 	Each Group Member has paid to the relevant Tax Authority all National Insurance Contributions
and Graduated Pension Contributions for which it is liable to account (whether as primary
contributor, secondary contributor or otherwise) and has maintained proper books and records
relating thereto and has not been a party to any scheme or arrangement to avoid any liability
to account for primary or secondary national insurance contributions.
	 
	39.5	 	Each Group Member has properly operated the Irish PAYE and social welfare contribution system
(including levies), by making such deductions as are required by law from all payments made or
deemed to be made or treated as made by it or on its behalf or for which it is otherwise
required to account and by duly accounting to the Irish Revenue Commissioners and the
Department of Social and Family Affairs as appropriate for all sums so deducted and no Group
Member has suffered any PAYE audit by the Irish Revenue Commissioners, nor has any Group
Member been notified that any such audit will or is expected to be made.
	 
	40.	 	Loan relationships and derivatives
	 
	40.1	 	No material liability to Tax or non-trading deficit would arise for any Group Member from the
loan relationships to which it is party being repaid to the extent of the amounts shown in
respect of such loan relationships in the books of the Group Member at the date hereof.
	 
	40.2	 	No material amounts claimed as a loan relationship debit or a debit by virtue of Schedule 26
to the Finance Act 2002 by any Group Member, save where they relate to unpaid amounts, are
prevented from being deducted in computing the taxable profits of the Group Member for
whatever reason, including, without limitation because a relationship is for an unallowable
purpose as defined in paragraph 13 of Schedule 9 to the Finance Act 1996 or paragraph 24 of
Schedule 26 to the Finance Act 2002.
	 
	41.	 	Distributions
	 
	41.1	 	Since the date falling six years prior to the Accounts Date, no Group Member which is
resident in the United Kingdom or the Republic of Ireland for Tax purposes has made any
repayment of share capital to which section 210(1) ICTA 1988 or section 131(2) TCA 1997
respectively applies or issued any share capital or other security as paid up otherwise than
by the receipt of new consideration within the meaning of Part VI ICTA 1988 or Part 6 TCA 1997
respectively.

 

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	41.2	 	No Group Member has issued any debentures, securities or other form of loan capital
outstanding at the date of this agreement in circumstances such that any interest or other
payment payable in respect of such debentures, securities or other form of loan capital will
be deemed to be a distribution of profits to shareholders and/or will not, for the purposes of
Tax, be wholly allowable as a deduction or a charge in computing the income, profits or gains
of the Group Member.
	 
	41.3	 	No part of the amount payable on redemption of any share capital or security at par by a
Group Member which is resident in the United Kingdom or the Republic of Ireland for Tax
purposes will be a distribution, as defined in ICTA 1988 or TCA 1997 respectively.
	 
	42.	 	Close company
	 
	 	 	Immediately prior to the entering into of the Agreement, no Group Member was a close company
as defined in ICTA 1988 or TCA 1997. Within the last six years, no Group Member has been a
close company as defined in ICTA 1988 or TCA 1997 or a close investment-holding company as
defined in ICTA 1988.
	 
	43.	 	Intra group transactions
	 
	 	 	No Group Member has, at any time within the last six years, acquired any asset (other than
as trading stock) from any other company (including another Group Member) which was, at the
time of the acquisition, a member of the same group of companies as that Group Member for
the purposes of any Tax.
	 
	44.	 	Controlled foreign companies
	 
	 	 	No Group Member has had nor had it had within the six year period ending on Completion an
interest in a controlled foreign company as defined in Chapter IV of Part XVII of ICTA 1988
where an apportionment of the chargeable profits of the controlled foreign company has been
made or is due to be made to that Group Member pursuant to section 747(3) of ICTA 1988.
	 
	45.	 	Residence
	 
	 	 	So far as the Seller is aware, the country which is given in Schedule 8 or
Schedule 9 as the Tax residence of each Company and Subsidiary is the only country
whose Tax Authorities seek to charge Tax on the worldwide profits or gains of that Company
or Subsidiary and no Group Member has, since the date falling six years prior to the
Accounts Date, paid or been liable to pay Tax on income, profits or gains to any Tax
Authority in any other country except that mentioned in Schedule 8 or Schedule
9 and, where the country of Tax residence of a Group Member given in the relevant
Schedule is outside the United Kingdom, such Group Member does not have and is not likely
prior to Completion to have a permanent establishment in the United Kingdom.

 

118

	46.	 	Tax sharing and secondary liability
	 
	46.1	 	No Group Member has any liability at the date of this agreement to make payment pursuant to
an indemnity, guarantee or covenant entered into before Completion under which that Group
Member has agreed to meet or pay a sum equivalent to or by reference to another person’s
liability to Tax
	 
	46.2	 	No transaction, act, omission or event has occurred (excluding the execution or
implementation of this agreement) in consequence of which any Group Member is or may be held
liable for any Tax or may otherwise be held liable for or to indemnify any person in respect
of any Tax which is primarily or directly chargeable against or attributable to any person
other than the Group Member.
	 
	47.	 	Group arrangements
	 
	47.1	 	All the shares in each Subsidiary are beneficially owned by Group Members and no such shares
are held such that any profit on the sale of those shares would be a trading receipt.
	 
	47.2	 	So far as the Seller is aware, there are no circumstances by virtue of which section 410 or
413 ICTA 1988 would prevent each Group Member which is resident in the United Kingdom for Tax
purposes being treated as a member of the same group of companies as each other such member
for the purposes of Chapter IV Part X ICTA 1988 for any accounting period commencing on or
before the date of this agreement.
	 
	47.3	 	No Group Member has entered into any arrangements with the Inland Revenue or HMRC within the
meaning of section 36 Finance Act 1998.
	 
	47.4	 	So far as the Seller is aware, there are no circumstances by virtue of which sections 410 to
419 and section 424 TCA 1997 would prevent each Group Member which is resident in Ireland for
Irish tax purposes being treated as a member of the same group of companies as each other such
member for the purposes of Chapter 5 Part 12 TCA 1997 for any accounting period commencing on
or before the date of this agreement.
	 
	48.	 	Demerger
	 
	 	 	So far as the Seller is aware, since the date falling six years prior to the Accounts Date
no Group Member which is resident in the United Kingdom for Tax purposes has been concerned
in an exempt distribution (as defined in section 214(4) ICTA 1988).
	 
	49.	 	Policyholder Taxation
	 
	 	 	So far as the Seller is aware:

	 	(A)	 	all Tax refunds obtained by each Group Member in respect of any Open Period in
respect of Tax withheld from premia paid on personal pension policies have been validly
claimed;

 

119

	 	(B)	 	each Group Member has properly deducted Tax from all payments made under or in
relation to pension policies and FSAVC pension policies and properly accounted for such
Tax to the relevant Tax Authority;
	 
	 	(C)	 	no Group Member has incurred or received notice of any penalty, liability
notice or scheme surcharge or scheme sanction in relation to Tax in respect of any of
the pension policies and FSAVC pension policies;
	 
	 	(D)	 	all qualifying policies (as defined by section 267 ICTA 1988) which relate to
Open Periods and which have been sold or purchased by any Group Member, and all
variations of such qualifying policies have been certified by the Inland Revenue or
HMRC as qualifying policies as contemplated by Part II of Schedule 15 ICTA 1988;
	 
	 	(E)	 	no Group Member has sold any policies which contain provisions or terms
claiming to provide benefits which would be qualifying policy benefits if certified as
such by the Inland Revenue or HMRC as contemplated by Part II of Schedule 15 ICTA 1988,
which have not been so certified;
	 
	 	(F)	 	no Group Member has done nor will it prior to Completion do anything to
prejudice the availability of life assurance premium relief in respect of any
policyholder or former policyholder of the Group Member. All regulations have been
complied with and the appropriate records kept to determine eligibility for life
assurance premium relief;
	 
	 	(G)	 	where any policy has been written by any Group Member in connection with a
personal pension scheme (as such schemes are defined in section 630 ICTA 1988) in an
Open Period, either such scheme has received full approval of the Inland Revenue or
HMRC in accordance with section 631 ICTA 1988 or is a registered scheme (within the
meaning of section 153 Finance Act 2004) or an application has been duly made for it to
be so registered;
	 
	 	(H)	 	each policy written by any Group Member as part of its pension business (as
such business is defined in section 431B ICTA 1988) and in an Open Period has been
written in connection with a scheme (as such term is used for the purposes of Chapter
IV of Part XIV of ICTA 1988 or Part IV to Finance Act 2004) which has received or is
intended to receive approval of the Inland Revenue or HMRC as described in section 431B
ICTA 1988 or which is a registered scheme (within the meaning of section 153 Finance
Act 2004) or where an application has been duly made for such scheme to be so
registered and from 6 April 2006 each Group Member has complied with its duties and
obligations under Chapter 7 to Part IV of the Finance Act 2004;
	 
	 	(I)	 	all policies written in connection with personal pension schemes and
occupational pension schemes in an Open Period and which are relevant for the purposes
of TCA 1997 have received full approval from the Irish Tax Authorities in accordance
with Part 30 TCA 1997;

 

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	 	(J)	 	each Group Member has provided information required to be provided by that
Group Member under section 552 ICTA 1988 (information in respect of life assurance
policies) in relation to Open Periods;
	 
	 	(K)	 	each Group Member has paid to HMRC all sums payable by such Group Member under
sections 268 and 269 ICTA 1988 (surrenders of life policies) and has complied with the
procedures required by section 272 ICTA 1988 in respect thereof, in each case in
relation to Open Periods;
	 
	 	(L)	 	each Group Company within the charge to Tax under section 730G TCA 1997 has
paid to the Irish Tax Authorities all sums payable under that section in respect of
appropriate Tax relating to life assurance policies and has complied with the
procedures laid down in Chapter 5 of Part 26 TCA 1997, in each respect in relation to
Open Periods; and
	 
	 	(M)	 	each Group Company has complied with its tax obligations in relation to
individual savings account business.

	50.	 	Insurance taxation
	 
	50.1	 	No Group Member has entered into any reinsurance contract the terms of which are the subject
of any outstanding dispute with any Tax Authority nor is any Group Member party to a contract
of reinsurance to which section 442A ICTA 1988 or section 594(4) TCA 1997 might apply.
	 
	50.2	 	No Group Member has on or before the Accounts Date made any transfers of assets to which
section 440 of ICTA 1988 might apply because the asset immediately before the transfer or (as
the case may be) immediately after the transfer was within one of the categories set out in
section 440(4)(a) to (e) of ICTA 1988 other than in respect of which Tax has been provided in
the Accounts nor has any Group Member made any such transfers between the Accounts Date and
Completion.
	 
	50.3	 	In the last six years, no additions have been made to the long term insurance fund of any
Group Member to which the provisions of section 83(3), section 83AA or section 83AB of Finance
Act 1989 may apply.
	 
	50.4	 	No Group Member is party to any contingent loan or financial reinsurance transactions to
which section 83(2B), section 83(ZA) or section 82C of Finance Act 1989 or section 444AC of
ICTA 1988 may apply.
	 
	50.5	 	So far as the Seller is aware, each Group Member which is an Insurance Company has correctly
classified its policies and long-term business liabilities into the following categories (to
the extent relevant) for the purposes of Tax:

	 	(A)	 	Basic life and general annuity business as defined in section 431F of ICTA
1988;
	 
	 	(B)	 	Pension Business as defined in section 431B of ICTA 1988;

 

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	 	(C)	 	Life Reinsurance Business as defined in section 431C of ICTA 1988;
	 
	 	(D)	 	Overseas Life Assurance Business as defined in section 431D of ICTA 1988;
	 
	 	(E)	 	Individual Savings Account Business as defined in the Individual Savings
Account (Insurance Companies) Regulations 1998 (1998/1871);
	 
	 	(F)	 	Capital Redemption Business as defined in section 458 of ICTA 1988;
	 
	 	(G)	 	Child Trust Fund Business as defined in the Child Trust Funds (Insurance
Companies) Regulations (2004/2680); and
	 
	 	(H)	 	Permanent Health Insurance as defined in Part II of Schedule 1 to the Finance
Services and Markets Act 2000 (Regulated Activities) Order 2001 (2001/544)

	50.6	 	So far as the Seller is aware, each Group Member which is an Insurance Company has correctly
classified its long term liabilities or long term business (as the case may be) in respect of
policies or contracts under which policyholders are eligible to participate in surplus as
with-profits liabilities or business (as the case may be) for the purposes of ICTA 1988.
	 
	50.7	 	So far as the Seller is aware, each Group Member which is an Insurance Company has correctly
identified as defined in ICTA 1988 its linked or mixed-linked business, assets and
liabilities.
	 
	50.8	 	HMRC and/or the Irish Revenue Commissioners have not sought to exercise their option to tax
any Group Member which is an Insurance Company on a Schedule D Case I basis, nor have HMRC
and/or the Irish Revenue Commissioners expressed an indication that it is likely to exercise
this option in relation to the long-term insurance business of any Group Member. Since the
Accounts Date, no Group Member has taken nor will any Group Member on or prior to Competion
take any action or omit to take any action which action or omission would cause or increase
the likelihood of an assessment on an Actual Case I basis (other than such action or omission
in the ordinary course of trade, or as the case may be, business of an Insurance Company), and
such an action or omission shall include but not be limited to the failure to seek to resist a
relevant notice from a Tax Authority to the extent practicable.
	 
	50.9	 	No Group Member has any unit trust holdings or relevant holdings in offshore funds to which
Chapter V of Part XVII of ICTA 1988 (offshore funds) or Schedule 10 of Finance Act 1996
(collective investment schemes and loan relationships) would apply.
	 
	50.10	 	So far as the Seller is aware, there are no circumstances occurring since the Accounts Date
which would cause the apportionment percentages of any Group Member carrying on long-term
insurance business calculated in accordance with section 432A and sections 432C and 432D of
ICTA 1988 to change materially from those indicated in the draft tax computations of such
Group Member for the period ending on the Accounts Date.
	 
	50.11	 	No Group Member has any assets to which the Insurance Companies (Corporation Tax Acts)
(Amendment Order) 2005 (SI 3465) might apply.

 

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	50.12	 	No Group Member has undistributed demutualisation surplus as defined in section 444AG of
ICTA 1988 (Paragraph 5 to Schedule 11 of Finance Bill 2006) except as set out in the
Disclosure Letter.
	 
	50.13	 	No Group Member, so far as the Seller is aware, has claimed or intends to claim, in respect
of any period ending before Completion, a deduction under section 83(2) Finance Act 1989 in
respect of which the Seller considers that HMRC may dispute the obtaining of that deduction.
	 
	50.14	 	No Group Member has made any transfer of assets from the long-term insurance fund to the
shareholder fund where the admissible value brought into account as part of total expenditure
in the regulatory return was materially less than the fair value at the date of the transfer.
	 
	50.15	 	No Group Member has within the last six years been required to restrict expenses of
management in accordance with section 76 of ICTA 1988 or section 707 TCA 1997.
	 
	50.16	 	Each Group Member which carries on long-term insurance business has complied with all
obligations and requirements imposed by the tax legislation in relation to overseas life
assurance business within the meaning of section 431D of ICTA 1988 and Chapter 3 Part 26 TCA
1997 (to the extent that it writes this business).
	 
	50.17	 	No Group Member has identified any mistakes or errors in the tax assumptions or tax
calculations within the unit pricing of unit-linked policies in the three year period ending
on the date of this agreement and no losses or reliefs have been assumed in the pricing which
were made available or assumed to be available from a member of the Retained Group but will
not be available except for payment from the date of this agreement.
	 
	50.18	 	So far as the Seller is aware, no action, transaction or omission has been carried out by
any Group Member or any member of the Retained Group, or is likely be carried out on or before
Completion which in combination with a transfer of the business of any of the Insurance
Companies from that Insurance Company to another member of the Purchaser’s Group under a
scheme pursuant to Part VII of the FSMA, or the equivalent overseas legislation, in a form
consistent with the scheme set out in the Summary dated 23 March 2006 relating to the transfer
of the whole of the business of SMA and SPL to ANL attached as exhibit 1 to the Tax Covenant
would be likely to cause a material liability to Tax, or the loss of a Tax relief, of that
Insurance Company.
	 
	51.	 	Irish Withholding
	 
	 	 	The Shares of each Company incorporated in Ireland, or which has an Irish branch, do not
derive their value or the greater part of their value directly or indirectly from assets
specified in paragraph (a), (b) or (c) of section 980(2) TCA 1997.

 

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Schedule 7

(Limitations)

	1.	 	Warranties, Covenants and Indemnities
	 
	1.1	 	Notwithstanding anything in this agreement to the contrary, the provisions of this Schedule
shall operate to limit the liability of the Seller in respect of any claim by the Purchaser
for any breach of or inaccuracy in the Warranties and, to the extent specifically indicated
herein, pursuant to the Tax Covenant and any other provision of this agreement.
	 
	1.2	 	The only Warranties given:

	 	(A)	 	in respect of the Accounts, the FSA Returns and the financial statements of
SPILA Marketing (in liq) are those contained in paragraph 4 (Accounts and FSA
Returns) of Schedule 6; none of the other Warranties shall or shall be deemed
to be, whether directly or indirectly, a Warranty in respect of the Accounts, the FSA
Returns or the financial statements of SPILA Marketing (in liq) and the Purchaser
acknowledges and agrees that the Seller makes no other representation or warranty as to
the Accounts, the FSA Returns or and the financial statements of SPILA Marketing (in
liq);
	 
	 	(B)	 	in respect of the Actuarial Reports are those contained in paragraph 5
(Actuarial matters) of Schedule 6; none of the other Warranties shall or shall
be deemed to be, whether directly or indirectly, a Warranty in respect of the Actuarial
Reports and the Purchaser acknowledges and agrees that the Seller makes no other
representation or warranty as to the Actuarial Reports;
	 
	 	(C)	 	in respect of competition matters, anti-restrictive trade practices and
anti-trust legislation are those contained in paragraph 17 (Competition) of
Schedule 6; none of the other Warranties shall or shall be deemed to be,
whether directly or indirectly, a Warranty in respect of competition matters,
anti-restrictive trade practices or anti-trust legislation and the Purchaser
acknowledges and agrees that the Seller makes no other representation or warranty as to
competition matters, anti-restrictive trade practices or anti-trust legislation;
	 
	 	(D)	 	in respect of Mis-Selling Claims are those contained in paragraph 19
(Past sales practices) of Schedule 6; none of the other Warranties shall or
shall be deemed to be, whether directly or indirectly, a Warranty in respect of
Mis-Selling Claims and the Purchaser acknowledges and agrees that the Seller makes no
other representation or warranty as to Mis-Selling Claims;
	 
	 	(E)	 	in respect of Intellectual Property, rights in Business Information and IT
Systems (or any agreement relating to any of them) are those contained in paragraph
4 (Accounts and FSA Returns) and paragraph 23 (Intellectual Property and IT
Systems) of Schedule 6; none of the other Warranties shall or shall be deemed
to be, whether directly or indirectly, a Warranty in respect of Intellectual Property,
rights in Business Information or IT Systems (or any agreement relating to any of them)
and the Purchaser acknowledges and agrees that the Seller makes no other representation
or

 

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	 	 	 	warranty as to Intellectual Property, rights in Business Information or IT Systems
(or any agreement relating to any of them);

	 	(F)	 	in respect of Property matters are those contained in paragraph 4
(Accounts and FSA Returns) and paragraph 24 (Property) of Schedule 6;
none of the other Warranties shall or shall be deemed to be, whether directly or
indirectly, a Warranty in respect of Property matters and the Purchaser acknowledges
and agrees that the Seller makes no other representation or warranty as to Property
matters;
	 
	 	(G)	 	in respect of the environment and environmental matters are those contained in
paragraph 4 (Accounts and FSA Returns) and paragraph 25 (Environment)
of Schedule 6; none of the other Warranties shall or shall be deemed to be,
whether directly or indirectly, a Warranty in respect of the environment or
environmental matters and the Purchaser acknowledges and agrees that the Seller makes
no other representation or warranty as to the environment or environmental matters;
	 
	 	(H)	 	in respect of employment matters are those contained in paragraph 4
(Accounts and FSA Returns) and paragraph 26 (Employment) of Schedule 6;
none of the other Warranties shall or shall be deemed to be, whether directly or
indirectly, a Warranty in respect of employment matters and the Purchaser acknowledges
and agrees that the Seller makes no other representation or warranty as to employment
matters;
	 
	 	(I)	 	in respect of pensions matters are those contained in paragraph 4
(Accounts and FSA Returns) and paragraph 27 (Pensions) of Schedule 6;
none of the other Warranties shall or shall be deemed to be, whether directly or
indirectly, a Warranty in respect of pensions matters and the Purchaser acknowledges
and agrees that the Seller makes no other representation or warranty as to pensions
matters; and
	 
	 	(J)	 	in respect of Tax are the Tax Warranties and paragraphs 26.18(B)
(Employment), 27.3 and 27.14 (Pensions) of Schedule 6; none of the
other Warranties shall or shall be deemed to be, whether directly or indirectly, a
Warranty in respect of Tax and the Purchaser acknowledges and agrees that the Seller
makes no other representation or warranty as to Tax.

	2.	 	Limitations on liability under Warranties, Covenants and Indemnities
	 
	2.1	 	Limitation on amount

	 	(A)	 	Subject to paragraphs 2.1(B) and (C) of this Schedule, the
Purchaser shall not be entitled in any event to damages or other amount in respect of
any claim or claims under any of the Warranties unless and until the aggregate amount
of all such substantiated claims exceeds £36,000,000 (in which event the Seller shall
be liable only for the excess of such aggregate amount over that amount).
	 
	 	(B)	 	The Purchaser shall not be entitled in any event to damages or other amount in
respect of any claim under any of the Warranties unless the amount of the substantiated
claim (or series of related substantiated claims with respect to related

 

125

	 	 	 	facts and circumstances) shall exceed £2,000,000. The Purchaser shall not be
entitled in any event to damages or other amount in respect of any claim under the
Tax Covenant unless the amount of the claim (or series of related claims with
respect to related facts and circumstances) shall exceed £500,000.

	 	(C)	 	For the purposes of establishing whether any claim falls to be notified under
paragraph 2.2 below all amounts available for set off or otherwise liable to be
deducted from the amount of such claim by virtue of the operation of the subsequent
paragraphs of this Schedule shall first be taken into account in order to determine
whether the amount of the claim exceeds the thresholds in paragraphs 2.1(A) or
(B).
	 
	 	(D)	 	Save in relation to the indemnities and covenants in clauses 5.4,
8.2, 17.2, 18.2(B), 18.5 and 20.3 in respect of
each of which the Seller’s liability shall be uncapped, the total aggregate liability
of the Seller in respect of any claim or claims under this agreement or the Tax
Covenant shall not in any event exceed £2,200,000,000.
	 
	 	(E)	 	The Seller’s maximum aggregate liability under the Warranty in paragraph
5.2 (Actuarial matters) of Schedule 6 shall be no more than the Seller,
acting on behalf of, and subject to the reasonable instructions of, the Purchaser, has
recovered from the Seller’s Actuaries for breach of any contractual duty of skill and
care or negligence in the context to which that Warranty relates. The Purchaser shall
pay to the Seller any costs or expenses reasonably incurred by the Seller in taking any
such action against the Seller’s Actuaries in accordance with the instructions of the
Purchaser.
	 
	 	(F)	 	Without prejudice to paragraphs 2.1(A) to 2.1(D) of this Schedule
7, the Seller’s maximum aggregate liability in respect of any claim or claims under
the Warranties in paragraphs 32.8 to 32.10 of Schedule 6 shall be
£3,000,000.
	 
	 	(G)	 	For the purposes of this paragraph “substantiated” means a claim for which the
Seller may be liable and which is admitted or proved in a court of competent
jurisdiction such that all appeals have been waived or exhausted provided that in the
case of a claim for breach of the Tax Warranties or a claim under the Tax Covenant
“substantiated claim” in this paragraph shall be read as “claim”.

	2.2	 	Time limits for bringing claim

	 	(A)	 	Subject to paragraph 2.2(B) of this Schedule no claim shall be brought
against the Seller in respect of any breach of the Warranties or under the Tax Covenant
unless the Purchaser shall have given to the Seller written notice of such claim
specifying (in reasonable detail) the matter giving rise to the breach or claim, the
nature of the breach or claim and, to the extent capable of calculation at the time,
the amount claimed in respect thereof (detailing the Purchaser’s calculation of the
loss thereby alleged to have been suffered by it or the relevant Group Member):

	 	(i)	 	in respect of claims under the Tax Warranties or the Tax
Covenant, not later than six months after the expiry of the period specified by
statute during which an assessment of that liability to Tax may be issued by
the relevant Tax

 

126

	 	 	 	Authority, or if there is no such period or if such period is longer than
seven (7) years, on or before the seventh anniversary of the Accounts Date;
or

	 	(ii)	 	on or before 31 December 2007 in respect of any other matters
pursuant to the Warranties.

	 	(B)	 	The liability of the Seller in respect of the Warranties or the Tax Covenant
shall absolutely determine (if the claim has not been previously satisfied, settled or
withdrawn) if legal proceedings in respect of a claim shall not have been commenced

	 	(i)	 	where paragraph 2.4(D) of this Schedule applies, within
nine months of the date of determination of the claim by the insurers;
	 
	 	(ii)	 	where paragraph 2.13 of this Schedule applies (or would
apply if the Tax Warranties and the Tax Covenant fell within its terms), within
nine months of the date when the liability in question ceases to be contingent
or unquantifiable or (if earlier and the claim is not in respect of a Tax
Warranty or under the Tax Covenant) the date falling six years and three months
after the Accounts Date; or
	 
	 	(iii)	 	otherwise, within nine months of the service of notice of that
claim in accordance with paragraph 2.2(A) of this Schedule,

	 	and for this purpose proceedings shall not be deemed to have been commenced unless
they shall have been properly issued and validly served upon the Seller.

	2.3	 	Conduct of litigation

	 	(A)	 	Upon the Purchaser or any member of the Purchaser’s Group becoming aware of any
claim, action or demand against it or matter likely to give rise to any of these in
respect of which a claim in excess of £2 million may be made under the Warranties
(other than the Tax Warranties) or under any of the covenants or indemnities in this
agreement (and excluding, for the avoidance of doubt, the Tax Covenant), the Purchaser
shall and shall procure that the appropriate member of the Purchaser’s Group shall:

	 	(i)	 	as soon as practicable notify the Seller by written notice of
the particular matter;
	 
	 	(ii)	 	subject to the Seller agreeing to pay the reasonable
out-of-pocket expenses of the Purchaser and/or the relevant member of the
Purchaser’s Group, take such action and give such information and access during
Working Hours to personnel, premises, chattels, documents and records to the
Seller and its professional advisers as the Seller may reasonably request;
	 
	 	(iii)	 	subject to the Seller agreeing to pay the reasonable
out-of-pocket expenses of the Purchaser and/or the relevant member of the
Purchaser’s Group, at the request of the Seller, allow the Seller to take the
sole conduct of such actions

 

127

	 	 	 	as the Seller may deem appropriate in connection with any such assessment or
claim in the name of the Purchaser or the appropriate member of the
Purchaser’s Group and in that connection the Purchaser shall (at the cost of
the Seller) give or cause to be given to the Seller all such assistance as
the Seller may reasonably require in avoiding, disputing, resisting,
settling, compromising, defending or appealing any such claim and shall
instruct such solicitors or other professional advisers as the Seller may
(with the Purchaser’s consent, such consent not to be unreasonably withheld
or delayed) nominate to act on behalf of the Purchaser or the appropriate
member of the Purchaser’s Group, as appropriate, but to act in accordance
with the Seller’s sole instructions provided always that the Seller keeps
the Purchaser reasonably informed as to the progress of such claims or
actions and provided always that where a claim will or is likely to, in the
reasonable opinion of the Purchaser, significantly prejudice the Purchaser’s
or any member of the Purchaser’s Group’s relations with any Regulatory
Authority or any Tax Authority the Seller shall consult with the Purchaser
and will comply with any reasonable requirements of the Purchaser in
relation to such claim (and where in so complying the Seller requires any
consent of the Purchaser, such consent shall not be unreasonably withheld or
delayed by the Purchaser); and

	 	(iv)	 	make no admission of liability, agreement, settlement or
compromise with any third party in relation to any such claim or adjudication
without the prior written consent of the Seller.

	 	(B)	 	Except in relation to claims under the Tax Warranties and the Tax Covenant, in
any event, the Seller shall be entitled at any stage and at its sole discretion to
settle any such third party assessment or claim provided that the Seller shall, where
practicable, notify the Purchaser in advance of such settlement of its decision so to
settle such assessment or claim provided that where such third party assessment or
claim will or is likely to, in the reasonable opinion of the Purchaser, significantly
prejudice the Purchaser’s or any member of the Purchaser’s Group’s relations with any
Regulatory Authority or any Tax Authority the Seller shall consult with the Purchaser
and will comply with any reasonable requirements of the Purchaser in relation to such
assessment or claim (and where in so complying the Seller requires any consent of the
Purchaser, such consent shall not be unreasonably withheld or delayed by the
Purchaser).

	2.4	 	No liability if loss is otherwise compensated for
	 
	 	 	Purchaser can only claim once

	 	(A)	 	The Purchaser and those deriving title from the Purchaser on or after
Completion shall not be entitled to recover damages or otherwise obtain reimbursement
or restitution more than once between them in respect of any individual loss arising
from breach of the Warranties or any individual liability giving rise to a claim under
the Tax Covenant or any of the covenants or indemnities in this agreement.

 

128

	 	(B)	 	No damages, reimbursement or restitution shall be due from the Seller by reason
of any breach of the Warranties to the extent that the same loss occasioned to the
Purchaser or the relevant member of the Purchaser’s Group by reason of such breach has
been recovered under the Tax Covenant or under any of the covenants or indemnities in
this agreement or any of the other Transaction Documents and no damages, reimbursement
or restitution shall be due from the Seller under the Tax Covenant or under any of the
covenants or indemnities in this agreement to the extent that the same loss has been
recovered by a claim under the Warranties.
	 
	 	(C)	 	No damages, reimbursement or restitution shall be due from the Seller by reason
of any breach of any of the Warranties nor under the Tax Covenant nor under any of the
covenants or indemnities in this agreement to the extent that the subject of the claim
has been or is made good or is otherwise compensated for without cost to the Purchaser
or to any member of the Purchaser’s Group.

	 	Insurances

	 	(D)	 	If, in respect of any matter which would give rise to a breach of the
Warranties or a claim under any of the covenants or indemnities in this agreement
(other than, for the avoidance of doubt, the Tax Covenant), any Group Member is
entitled to claim under any policy of insurance, then no damages, reimbursement or
restitution shall be due from the Seller under the Warranties or any of the covenants
or indemnities in this agreement unless and until the appropriate Group Member shall
have made a claim against its insurers and to the extent reasonable (bearing in mind
the prospect of success) taken all necessary steps to pursue such claim (provided that
that this shall not apply where the Purchaser is prevented from taking all necessary
steps to pursue such claim as a result of failure by the Seller to comply with the
Seller’s obligations under clause 20.3(A)) and any such insurance claim shall
then reduce by the amount recovered (less the reasonable costs, charges and expenses of
such recovery) any such claims for breach of the Warranties or under any of the
covenants or indemnities in this agreement provided that the Seller covenants to pay to
the Purchaser on an after-Tax basis within 10 Business Days of demand an amount equal
to any increased costs incurred by the relevant Group Member as a result of such
claims, including any retrospective or prospective premium adjustments associated with
such cover, as such amounts are determined in accordance with those policies generally
applicable from time to time to the Group, provided that (subject to the Purchaser
being in possession of or reasonably able to obtain such information) the basis upon
which they have been calculated and, where reasonably practicable, the terms of the
policy to which they relate, have been disclosed to the Seller.

	 	Recovery from third parties

	 	(E)	 	Subject to the Seller agreeing to pay reasonable costs and out-of-pocket
expenses of the Purchaser and any member of the Purchaser’s Group which are incurred by
reason of such action, and provided that if legal proceedings are commenced or are
requested to be commenced, the Purchaser is indemnified in respect of any liabilities,

 

129

	 	 	 	losses, costs (including legal and other professional costs) or expenses which the
Purchaser or any member of the Purchaser’s Group may suffer or properly incur:

	 	(i)	 	where the Purchaser and/or any member of the Purchaser’s Group
are at any time entitled to recover from some other person (other than an
insurer) any sum in respect of any matter giving rise to a claim under the
Warranties (other than the Tax Warranties) or any of the covenants or
indemnities in this agreement the Purchaser shall, and shall procure that the
relevant member of the Purchaser’s Group shall undertake all reasonable steps
to enforce such recovery prior to taking action against the Seller (other than
to notify the Seller of the claim against the Seller) provided that
paragraph 2.2(B) of this Schedule shall be amended such that the nine
month time period therein shall commence on the date that the claim against
that other person is settled or determined without leave to appeal being
granted;
	 
	 	(ii)	 	other than in relation to the Tax Warranties and the Tax
Covenant, in the event that the Purchaser or the relevant member of the
Purchaser’s Group shall recover any amount from such other person, the amount
of the claim against the Seller shall be reduced by the amount recovered, less
any Tax thereon and all reasonable costs, charges and expenses incurred by the
Purchaser or the relevant member of the Purchaser’s Group recovering that sum
from such other person; and
	 
	 	(iii)	 	if the Seller pays at any time to the Purchaser or to the
relevant member of the Purchaser’s Group an amount pursuant to a claim in
respect of the Warranties (other than the Tax Warranties) or any of the
covenants or indemnities in this agreement (other than, for the avoidance of
doubt, the Tax Covenant) and the Purchaser or the relevant member of the
Purchaser’s Group subsequently becomes entitled to recover from some other
person any sum in respect of any matter giving rise to such claim, the
Purchaser shall and shall procure that the relevant member of the Purchaser’s
Group shall take all reasonable steps to enforce such recovery, and shall
forthwith repay to the Seller so much of the amount paid by the Seller to the
Purchaser or the relevant member of the Purchaser’s Group as does not exceed
the sum recovered from such other person less any Tax thereon and all
reasonable costs, charges and expenses incurred by the Purchaser or the
relevant member of the Purchaser’s Group recovering that sum from such other
person.

	2.5	 	Acts of the Purchaser

	 	(A)	 	No claim shall lie against the Seller under the Warranties (other than the Tax
Warranties) or any of the covenants or indemnities in this agreement (other than, for
the avoidance of doubt, the Tax Covenant) to the extent that such claim is attributable
to:

	 	(i)	 	any voluntary act, action, omission, transaction or arrangement
carried out or effected before Completion (but excluding the Pre-Sale
Transfers) at the

 

130

	 	 	 	request of or with the written consent of the Purchaser or any member of the
Purchaser’s Group, or under the terms of any of the Transaction Documents;
or

	 	(ii)	 	any voluntary act, action, omission, transaction or arrangement
carried out or effected by the Purchaser, any Group Member or any member of the
Purchaser’s Group or on behalf of any of them or by, or on behalf of, persons
deriving title from any of them (each a “Relevant Person”) on or after
Completion or any change of residence of any member of the Purchaser’s Group on
or after Completion, but excluding any act:

	 	(a)	 	carried out pursuant to a legally binding
obligation of the Relevant Person incurred prior to Completion;
	 
	 	(b)	 	pursuant to an obligation imposed by any law,
regulation or requirement having the force of law, subject to
paragraph 2.7 of this Schedule 7; or
	 
	 	(c)	 	taking place with the written approval of the
Seller or pursuant to, and in accordance with, any of the Transaction
Documents.

	 	(B)	 	No liability shall arise in respect of any breach of any of the Warranties
(other than the Tax Warranties) or under any of the covenants or indemnities in this
agreement (other than, for the avoidance of doubt, the Tax Covenant) if and to the
extent that liability for such breach is increased as a result of any admission of
liability made without the prior written consent of the Seller, after the date hereof
by the Purchaser, any Group Member or any member of the Purchaser’s Group or any person
otherwise associated with the Purchaser or on behalf of any of them or by, or on behalf
of, persons deriving title from any of them after Completion
	 
	 	(C)	 	The Seller shall not be liable for any breach of the Warranties (other than the
Tax Warranties) or claims under any of the covenants or indemnities in this agreement
(other than, for the avoidance of doubt, the Tax Covenant) which would not have arisen
but for any reorganisation (including a cessation of the whole or part of any trade) or
change in ownership of any member of the Purchaser’s Group after Completion or any
changes in the accounting basis on which any member of the Purchaser’s Group values its
assets or any other change in accounting policy or practice of any member of the
Purchaser’s Group after Completion. For the avoidance of doubt, the provisions of
clauses 26.2 and 26.3 shall apply as described therein.

 

131

	2.6	 	Allowance, provision or reserve in the Accounts
	 
	 	 	No liability shall arise in respect of any breach of any of the Warranties (other than the
Tax Warranties) to the extent that allowance, provision or reserve in respect of such matter
shall have been made in the Accounts or is reflected in the Accounts as a Tax liability to
be borne or discharged by a Retained Group Member (and is so borne or discharged) or has
otherwise been taken account of or reflected in the Accounts.
	 
	2.7	 	Future legislation
	 
	 	 	No liability shall arise in respect of any breach of any of the Warranties (other than the
Tax Warranties) or under any of the covenants or indemnities in this agreement (other than,
for the avoidance of doubt, the Tax Covenant) if and to the extent that liability for such
breach occurs or is increased as a result of (a) any legislation, treaties, constitutions,
laws, administrative actions, rules (including rules of any Regulatory Authority), orders,
administrative practices or guidance or any amendments thereto not in force at the date of
this agreement, or (b) any change after the date of this agreement of any interpretation or
application by any governmental or regulatory body of any of the foregoing, or (c) the
withdrawal of any extra-statutory concession or other agreement or arrangement currently
granted by or made with any governmental or regulatory body or any Tax Authority (whether or
not having the force of law).
	 
	2.8	 	Taxation
	 
	 	 	The Seller shall not be liable to the Purchaser in respect of any breach of the Tax
Warranties to the extent that any of the circumstances set out in clause 3 of the
Tax Covenant would have applied in respect of that liability had it been a Relevant
Liability (as defined in the Tax Covenant).
	 
	2.9	 	Purchaser’s knowledge
	 
	 	 	The Purchaser confirms that as at the date of this agreement, it has no current intention of
making a claim under the Warranties.
	 
	2.10	 	Actuarial assumptions and reserves

	 	(A)	 	The Purchaser acknowledges and agrees with the Seller that the Purchaser is
responsible for assessing the extent to which it requires appropriate independent
actuarial advice relating to the purchase of the Shares and the terms of the
Transaction Documents and any other agreement or document to be executed pursuant to
them.
	 
	 	(B)	 	None of the Warranties nor any other provision of this agreement nor any other
document to be executed pursuant to this agreement shall be construed as a
representation or warranty as to any judgement based on actuarial principles, practices
or analyses by whomsoever made or as to the future fulfilment of any assumption. In
particular, and without prejudice to the generality of the foregoing no representation
or warranty is made by the Seller or any Retained Group Member as to the adequacy of

 

132

	 	 	 	the amount of the reserves of the Insurance Companies (the “Reserves”) (whether as
represented in the Accounts, the Actuarial Reports, the FSA Returns, the Data Room
or otherwise) or as to the collectibility of any amounts due from reinsurers of an
Insurance Company, provided that this paragraph 2.10 shall not apply so as
to nullify the Warranties in paragraph 4 (Accounts and FSA Returns) and
paragraph 5 (Actuarial matters) of Schedule 6.
	 
	 	 	 	If there is any conflict between the provisions of this paragraph 2.10 and
any other provision of this agreement or of any document to be executed pursuant to
this agreement, the provisions of this paragraph shall prevail.

	2.11	 	Allocation to with-profits fund
	 
	 	 	The Seller shall not be liable to the Purchaser in respect of any breach of the Warranties;

	 	(A)	 	to the extent that (having regard to any relevant provisions of the
Demutualisation Schemes, any relevant law or regulation in force at the date of this
agreement and the relevant Principles and Practices of Financial Management in their
form immediately prior to the date of this agreement) the amount of the Purchaser’s
loss or damage as a result of any such breach is capable of being reduced (up to the
amount that would not result in any consequential burn through cost for the shareholder
of the Insurance Company in relation to the with profits fund referred to below)
because such claim or such loss or damage giving rise to such claim is capable of being
charged or allocated to a with-profits fund of an Insurance Company; or
	 
	 	(B)	 	to the extent that any amount claimed in respect of breach of those Warranties:

	 	(i)	 	has been recovered under the terms of the Relationship Deed; or
	 
	 	(ii)	 	could have been recovered under the terms of the Relationship
Deed but for a breach of that Deed by, or other act or omission of, the
Purchaser or other member of the Purchaser’s Group.

	2.12	 	Forecasts
	 
	 	 	Without prejudice to clause 30, the Purchaser acknowledges and agrees that the
Seller does not give or make any warranty as to the accuracy of any forecasts, assumptions,
estimates (including estimates of value, whether in the Actuarial Reports or otherwise),
projections, statements of intent or statements of honestly expressed opinion provided to
the Purchaser, including in the Disclosure Letter (or any document delivered with it), in
relation to the Actuarial Reports, or the information supplied to or made available to the
Purchaser during its due diligence exercise, provided that this paragraph 2.12 shall
not apply so as to nullify the Warranties in paragraph 5 (Actuarial matters) of
Schedule 6.

	2.13	 	Contingent or non-quantifiable claims

 

133

	 	 	If any breach of the Warranties (other than the Tax Warranties) or under any of the
covenants or indemnities in this agreement (other than, for the avoidance of doubt, the Tax
Covenant) arises by reason of some liability of any Group Member which, at the time such
breach or claim is notified to the Seller, is contingent only or otherwise not capable of
being quantified, then the Seller shall not be under any obligation to make any payment in
respect of such breach or claim unless and until such liability ceases to be contingent or
becomes capable of being quantified (a “contingent claim”), as the case may be, provided
that:

	 	(A)	 	this paragraph shall only operate to postpone the liability of the Seller and
shall not operate to avoid a claim which is made in reasonable detail and within the
applicable time limits specified in paragraph 2.2; and
	 
	 	(B)	 	if an Insurance Company is required by any applicable law or regulation to
create a reserve in respect of a contingent claim, in assessing the level of loss or
damage in respect of such contingent claim (when it ceases to be a contingent claim and
becomes a substantiated claim) there shall be included an amount equal to 8 per cent.
per annum (since the date of creation of such reserve) of the amount of any such
reserve which is so required by such law or regulation to be so created.

	2.14	 	Mitigation
	 
	 	 	Nothing in this agreement shall or shall be deemed to relieve or abrogate the Purchaser of
any common law or other duty to mitigate any loss or damage.

	2.15	 	No Rescission
	 
	 	 	Except as expressly provided in this agreement the Purchaser shall not be entitled to
rescind this agreement including for breach of Warranty.

 

 

134

Schedule 8

(Basic information about the Companies)

Abbey National Financial and Investment Services (Hong Kong) Limited

	 	 	 
	Registered number

	 	784901
	 
	 	 
	Date of incorporation

	 	01/02/2002
	 
	 	 
	Place of incorporation

	 	Hong Kong
	 
	 	 
	Address of registered office

	 	Alexandra House, 16-20 Chater Road, Central, Hong Kong
	 
	 	 
	Authorised share capital

	 	HKD 10,000 divided into ordinary shares of HKD 1 each
	 
	 	 
	Issued share capital

	 	2 ordinary shares of HKD 1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National Nominees Limited
	 	1 ordinary share of HKD 1
	 
	 	 	 	 
	 

	 	Abbey National plc
	 	1 ordinary share of HKD 1
	 
	 	 	 	 
	Directors

	 	Lillian Boyle	 	 
	 
	 	 	 	 
	 

	 	Arthur Mark Wearmouth	 	 
	 
	 	 	 	 
	 

	 	David White	 	 
	 
	 	 	 	 
	Secretary	 	Deacons, Consec Services Limited

 

135

Abbey National Financial and Investment Services Ireland Holdings

	 	 	 
	Registered number

	 	341950
	 
	 	 
	Date of incorporation

	 	18/04/2001
	 
	 	 
	Place of incorporation

	 	Ireland
	 
	 	 
	Address of registered office

	 	Goodbody Secretarial Limited, International Financial Services
Centre, 25/28 North Wall Quay, Dublin 1, Ireland
	 
	 	 
	Authorised share capital

	 	£500,000,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	1,250,002 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National Nominees
Limited
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Abbey National plc
	 	1,250,001 ordinary shares
of £1 each
	 
	 	 	 	 
	Directors

	 	John Finnegan	 	 
	 
	 	 	 	 
	 

	 	Anthony David Haynes	 	 
	 
	 	 	 	 
	Secretary:	 	Goodbody Secretarial Limited

 

136

Abbey National Financial and Investment Services Isle of Man Limited

	 	 	 
	Registered number

	 	103514C
	 
	 	 
	Date of incorporation

	 	18/07/2001
	 
	 	 
	Place of incorporation

	 	Isle of Man
	 
	 	 
	Address of registered office

	 	Abbey Secretariat, Provident House, Ballacottier
Business Park, Cooil Road, Douglas, IM2 2SP, Isle
of Man
	 
	 	 
	Authorised share capital

	 	£2,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	2 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National
Nominees Limited
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Abbey National plc
	 	1 ordinary share of £1
	 
	 	 	 	 
	Directors:

	 	Lillian Boyle	 	 
	 
	 	 	 	 
	 

	 	David John Cessford Cameron	 	 
	 
	 	 	 	 
	 

	 	Duncan Jeremy Jude	 	 
	 
	 	 	 	 
	 

	 	Simon Jeremy Michael Lodge	 	 
	 
	 	 	 	 
	 

	 	David White	 	 
	 
	 	 	 	 
	Secretary

	 	Lesley Crossley	 	 
	 
	 	 	 	 
	 	 	(Assistant Secretary Elaine Quine)

 

137

Abbey National Financial and Investment Services plc

	 	 	 
	Registered number

	 	SC159852
	 
	 	 
	Date of incorporation

	 	18/08/1995
	 
	 	 
	Place of incorporation

	 	Scotland
	 
	 	 
	Address of registered office

	 	Abbey National House, 287 St. Vincent Street, Glasgow G2 5NB,
Scotland
	 
	 	 
	Authorised share capital

	 	£25,000,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	5,000,000 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National Nominees Limited
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Abbey National plc
	 	4,999,999 ordinary shares of
£1 each
	 
	 	 	 	 
	Directors

	 	Christopher John Ball	 	 
	 
	 	 	 	 
	 

	 	Lillian Boyle	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited (joint secretary)
	 
	 	 	 	 
	 

	 	Lesley Crossley (joint secretary)	 	 

 

138

Abbey National Life plc

	 	 	 
	Registered number

	 	SC 134205
	 
	 	 
	Date of incorporation

	 	23/09/1991
	 
	 	 
	Place of incorporation

	 	Scotland
	 
	 	 
	Address of registered office

	 	Abbey National House, 287 St. Vincent Street, Glasgow G2
5NB, Scotland
	 
	 	 
	Authorised share capital

	 	£500,000,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	149,062,335 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National Nominees Limited
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Abbey National plc
	 	149,062,334 ordinary
shares of £1 each
	 
	 	 	 	 
	Directors

	 	Heather MacDonald Logan	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	 

	 	Javier Maldonado Trinchant	 	 
	 
	 	 	 	 
	 

	 	Martin David Moule	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

139

Abbey National SMA Holdings Limited

	 	 	 
	Registered number

	 	SC 133636
	 
	 	 
	Date of incorporation

	 	26/08/1991
	 
	 	 
	Place of incorporation

	 	Scotland
	 
	 	 
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2 5HN,
Scotland
	 
	 	 
	Authorised share capital

	 	£4,368,000,000 divided into ordinary shares of £0.10 each
	 
	 	 
	Issued share capital

	 	31,010,996,000 ordinary shares of £0.10 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National plc
	 	31,010,996,000 ordinary
shares of £0.10 each
	 
	 	 	 	 
	Directors

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	 

	 	Heather MacDonald Logan	 	 
	 
	 	 	 	 
	 

	 	Martin David Moule	 	 
	 
	 	 	 	 
	 

	 	Javier Maldonado Trinchant	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

140

Scottish Mutual International Fund Managers Limited

	 	 	 
	Registered number

	 	243485
	 
	 	 
	Date of incorporation

	 	18/01/1996
	 
	 	 
	Place of incorporation

	 	Ireland
	 
	 	 
	Address of registered office

	 	International Financial Services Centre, 25/28 North
Wall Quay, Dublin 1, Ireland
	 
	 	 
	Authorised share capital

	 	£1,000,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	815,000 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National plc
	 	815,000 ordinary shares
of £1 each
	 
	 	 	 	 
	Directors

	 	John Finnegan	 	 
	 
	 	 	 	 
	 

	 	Anthony David Haynes	 	 
	 
	 	 	 	 
	 

	 	John Dennis Kelly	 	 
	 
	 	 	 	 
	 

	 	Barry McGrath	 	 
	 
	 	 	 	 
	 	 	James Edward Briscoe Bevan (alternate)
	 
	 	 	 	 
	Secretary	 	Goodbody Secretarial Limited

 

141

Scottish Mutual International Holdings

	 	 	 
	Registered number

	 	318919
	 
	 	 
	Date of incorporation

	 	20/01/2000
	 
	 	 
	Place of incorporation

	 	Ireland
	 
	 	 
	Address of registered office

	 	25/28 North Wall Quay, Dublin 1, Eire
	 
	 	 
	Authorised share capital

	 	£500,000,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	261,367,000 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National Nominees
Limited
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Abbey National plc
	 	261,366,999 ordinary
shares of £1 each
	 
	 	 	 	 
	Directors

	 	John Finnegan	 	 
	 
	 	 	 	 
	 

	 	Anthony David Haynes	 	 
	 
	 	 	 	 
	Secretary	 	Goodbody Secretarial Limited

 

142

Schedule 9

(Basic information about the Subsidiaries)

Abbey National Financial and Investment Services (Far East) Limited (in liquidation)

	 	 	 
	Registered number

	 	466313
	 
	 	 
	Date of incorporation

	 	22/02/1994
	 
	 	 
	Place of incorporation

	 	Hong Kong
	 
	 	 
	Address of registered office

	 	7th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong
	 
	 	 
	Authorised share capital

	 	HKD 1,200,000 divided into ordinary shares of HKD 10 each
	 
	 	 
	Issued share capital

	 	120,000 ordinary shares of HKD 10 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Scottish Provident International
Life Assurance Limited
	 	119,999 ordinary shares of HKD 10
each
	 
	 	 	 	 
	 

	 	David White
	 	1 ordinary share of HKD 10
	 
	 	 	 	 
	Directors

	 	Lillian Boyle	 	 
	 
	 	 	 	 
	 

	 	David White	 	 
	 
	 	 	 	 
	Secretary:	 	Deacons, Consec Services Limited

 

143

Abbey National Financial and Investment Services Ireland plc

	 	 	 
	Registered number

	 	342705
	 
	 	 
	Date of incorporation

	 	04/05/2001
	 
	 	 
	Place of incorporation

	 	Ireland
	 
	 	 
	Address of registered office

	 	Goodbody Secretarial Limited, International Financial
Services Centre, 25/28 North Wall Quay, Dublin 1, Ireland
	 
	 	 
	Authorised share capital

	 	£25,000,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	50,008 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National Financial
and Investment Services
Ireland Holdings
	 	50,001 ordinary shares of
£1 each
	 
	 	 	 	 
	 

	 	Abbey National Nominees
Limited
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Abbey National plc
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Lillian Boyle
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Lesley Crossley
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Simon Jeremy Michael Lodge
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	Elaine Mary Quine
	 	1 ordinary share of £1
	 
	 	 	 	 
	 

	 	David White
	 	1 ordinary share of £1
	 
	 	 	 	 
	Directors

	 	John Finnegan	 	 
	 
	 	 	 	 
	 

	 	Anthony David Haynes	 	 
	 
	 	 	 	 
	Secretary	 	Goodbody Secretarial Limited

 

144

Business OutSourcing Services Limited

	 	 	 
	Registered number

	 	SC207312
	 
	 	 
	Date of incorporation

	 	19/05/2000
	 
	 	 
	Place of incorporation

	 	Scotland
	 
	 	 
	Address of registered office

	 	Abbey National House, 287 St. Vincent Street, Glasgow G2
5NB, Scotland
	 
	 	 
	Authorised share capital

	 	£500,000 divided into ordinary ‘A’ shares of £1 each
	 
	 	 
	 

	 	£500,000 divided into ordinary ‘B’ shares of £1 each
	 
	 	 
	Issued share capital

	 	250,000 ordinary ‘A’ shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National Financial
and Investment Services
PLC
	 	250,000 ordinary ‘A’
shares of £1 each
	 
	 	 	 	 
	Directors

	 	Rosalie Elizabeth Clark	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	Secretary:	 	Abbey National Secretariat Services Limited

 

145

Cityfourinc

	 	 	 
	Registered number

	 	03871807
	 
	 	 
	Date of incorporation

	 	01/11/1999
	 
	 	 
	Place of incorporation

	 	England and Wales
	 
	 	 
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s Place, London
NW1 3AN, England
	 
	 	 
	Authorised share capital

	 	£12,001,000 divided into ordinary shares of £1 each
	 
	 	 
	 

	 	£11,000,000 divided into preference shares of £1 each
	 
	 	 
	Issued share capital

	 	£17,905,614 (see below for further details)

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Prolific Property
Development (Kent) Limited
	 	9,342,541 ordinary shares
of £1 each
	 
	 	 	 	 
	 

	 	Scottish Mutual Assurance plc
	 	8,563,073 preference
shares of £1 each
	 
	 	 	 	 
	Directors

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	 

	 	Javier Maldonado Trinchant	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

146

Hedge End Park No.3 Limited

	 	 	 
	Registered number

	 	4376898
	 
	 	 
	Date of incorporation

	 	19/02/2002
	 
	 	 
	Place of incorporation

	 	England and Wales
	 
	 	 
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s
Place, London NW1 3AN, England
	 
	 	 
	Authorised share capital

	 	£10,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	1 ordinary share of £1

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National SMA
Holdings Limited
	 	1 ordinary share of £1
	 
	 	 	 	 
	Directors

	 	James Edward Briscoe Bevan	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

147

Hedge End Park No.4 Limited

	 	 	 
	Registered number

	 	4396086
	 
	 	 
	Date of incorporation

	 	15/03/2002
	 
	 	 
	Place of incorporation

	 	England and Wales
	 
	 	 
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s
Place, London NW1 3AN, England
	 
	 	 
	Authorised share capital

	 	£10,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	1 ordinary share of £1

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National SMA
Holdings Limited
	 	1 ordinary share of £1
	 
	 	 	 	 
	Directors

	 	James Edward Briscoe Bevan	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

148

Prolific Holdings Limited

	 	 	 
	Registered number

	 	2754421
	 
	 	 
	Date of incorporation

	 	09/10/1992
	 
	 	 
	Place of incorporation

	 	England and Wales
	 
	 	 
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s Place,
London NW1 3AN, England
	 
	 	 
	Authorised share capital

	 	£22,400,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	22,337,500 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Scottish Provident
(Holdings) Limited
	 	22,337,500 ordinary
shares of £1 each
	 
	 	 	 	 
	Directors

	 	Shaun Patrick Coles	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	 

	 	Jason Leslie Wright	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

149

Prolific Property Development (Kent) Limited

	 	 	 
	Registered number

	 	2421634
	 
	 	 
	Date of incorporation

	 	11/09/1989
	 
	 	 
	Place of incorporation

	 	England and Wales
	 
	 	 
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s Place, London
NW1 3AN, England
	 
	 	 
	Authorised share capital

	 	£1,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	2 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Scottish Mutual Assurance plc
	 	2 ordinary shares of £1 each
	 
	 	 	 	 
	Directors

	 	Shaun Patrick Coles	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	 

	 	Jason Leslie Wright	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

150

Scotprov Limited

	 	 	 
	Registered number

	 	4013361
	 
	 	 
	Date of incorporation

	 	13/06/2000
	 
	 	 
	Place of incorporation

	 	England and Wales
	 
	 	 
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s Place,
London NW1 3AN, England
	 
	 	 
	Authorised share capital

	 	£150,000,100 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	150,000,001 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National SMA
Holdings Limited
	 	150,000,001 ordinary
shares of £1 each
	 
	 	 	 	 
	Directors

	 	Shaun Patrick Coles	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	 

	 	Jason Leslie Wright	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

151

Scottish Mutual Assurance plc

	 	 	 
	Registered number

	 	SC133846
	 
	 	 
	Date of incorporation

	 	04/09/1991
	 
	 	 
	Place of incorporation

	 	Scotland
	 
	 	 
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2 5HN,
Scotland
	 
	 	 
	Authorised share capital

	 	£2,000,000,000 divided into ordinary shares of £0.10 each
	 
	 	 
	Issued share capital

	 	16,085,000,000 ordinary shares of £0.10 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Abbey National plc
	 	6,675 ordinary shares of
£0.10 each
	 
	 	 	 	 
	 

	 	Abbey National SMA Holdings
Limited
	 	16,084,993,325 ordinary
shares of £0.10 each
	 
	 	 	 	 
	Directors

	 	Heather MacDonald Logan	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	 

	 	Javier Maldonado Trinchant	 	 
	 
	 	 	 	 
	 

	 	Martin David Moule	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

152

Scottish Mutual International Fund Managers (South Africa) Limited

	 	 	 
	Registered number

	 	99 01923 06
	 
	 	 
	Date of incorporation

	 	29/01/1999
	 
	 	 
	Place of incorporation

	 	South Africa
	 
	 	 
	Address of registered office

	 	2 Eglin Road, Sunninghill 2157
	 
	 	 
	 

	 	Private Bag X36, Sunninghill 2157, South Africa
	 
	 	 
	Authorised share capital

	 	ZAR 2,000,000 divided into shares of ZAR 1 each
	 
	 	 
	Issued share capital

	 	200,000 shares of ZAR 1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Scottish Mutual
International Fund
Managers Limited
	 	200,000 shares of ZAR 1 each
	 
	 	 	 	 
	Directors

	 	John Finnegan	 	 
	 
	 	 	 	 
	 

	 	Anthony David Haynes	 	 
	 
	 	 	 	 
	Secretary

	 	Caroline Ramsay	 	 

 

153

Scottish Mutual International plc

	 	 	 
	Registered number

	 	242244
	 
	 	 
	Date of incorporation

	 	14/12/1995
	 
	 	 
	Place of incorporation

	 	Ireland
	 
	 	 
	Address of registered office

	 	25-28 North Wall Quay, Dublin 1, Eire
	 
	 	 
	Authorised share capital

	 	€37,500 divided into euro shares of €1.25 each
	 
	 	 
	 

	 	£44,500,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	30,000 euro shares of €1.25 each
	 
	 	 
	 

	 	25,048,000 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Lillian Boyle
	 	1 euro share of €1.25
	 
	 	 	 	 
	 

	 	David John Cessford Cameron
	 	1 euro share of €1.25
	 
	 	 	 	 
	 

	 	Lesley Crossley
	 	1 euro share of €1.25
	 
	 	 	 	 
	 

	 	Simon Jeremy Michael Lodge
	 	1 euro share of €1.25
	 
	 	 	 	 
	 

	 	Elaine Mary Quine
	 	1 euro share of €1.25
	 
	 	 	 	 
	 

	 	Scottish Mutual
International Holdings
	 	29,994 euro shares of €1.25
	 
	 	 	 	 
	 

	 	 	 	25,048,000 ordinary shares
of £1 each
	 
	 	 	 	 
	 

	 	White, David
	 	1 euro share of €1.25
	 
	 	 	 	 
	Directors

	 	John Finnegan	 	 
	 
	 	 	 	 
	 

	 	Niall Gallagher	 	 
	 
	 	 	 	 
	 

	 	Anthony David Haynes	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	Secretary	 	Goodbody Secretarial Limited

 

154

Scottish Mutual Investment Managers Limited

	 	 	 
	Registered number

	 	SC88674
	 
	 	 
	Date of incorporation

	 	29/06/1984
	 
	 	 
	Place of incorporation

	 	Scotland
	 
	 	 
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2
5HN, Scotland
	 
	 	 
	Authorised share capital

	 	£1,000,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	1,000,000 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Scottish Mutual Assurance plc
	 	1,000,000 ordinary
shares of £1 each
	 
	 	 	 	 
	Directors

	 	James Edward Briscoe Bevan	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	 

	 	Javier Maldonado Trinchant	 	 
	 
	 	 	 	 
	 

	 	Martin David Moule	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

155

Scottish Mutual Nominees Limited

	 	 	 
	Registered number

	 	SC78057
	 
	 	 
	Date of incorporation

	 	24/03/1982
	 
	 	 
	Place of incorporation

	 	Scotland
	 
	 	 
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2 5HN,
Scotland
	 
	 	 
	Authorised share capital

	 	£100 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	100 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Scottish Mutual Assurance plc
	 	100 ordinary shares of £1 each
	 
	 	 	 	 
	Directors

	 	Shaun Patrick Coles	 	 
	 
	 	 	 	 
	 

	 	Philip Andrew Ramsell	 	 
	 
	 	 	 	 
	 

	 	Jason Leslie Wright	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

156

Scottish Mutual Pension Funds Investment Limited

	 	 	 
	Registered number

	 	SC061343
	 
	 	 
	Date of incorporation

	 	16/12/1976
	 
	 	 
	Place of incorporation

	 	Scotland
	 
	 	 
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2
5HN, Scotland
	 
	 	 
	Authorised share capital

	 	£750,000 divided into ordinary shares of £1 each
	 
	 	 
	Issued share capital

	 	750,000 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Full Name	 	Number of Shares held
	Members

	 	Scottish Mutual Assurance plc
	 	750,000 ordinary shares
of £1 each
	 
	 	 	 	 
	Directors

	 	Rosalie Elizabeth Clark	 	 
	 
	 	 	 	 
	 

	 	Kerr Luscombe	 	 
	 
	 	 	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

157

Scottish Mutual PEP and ISA Managers Limited

	 	 	 
	Registered number

	 	971504
	Date of incorporation

	 	02/02/1970
	Place of incorporation

	 	England and Wales
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s Place, London
NW1 3AN, England
	Authorised share capital

	 	£75,075 divided into deferred shares of £1 each
	 

	 	£99,924,925 divided into ordinary shares of £1 each
	Issued share capital

	 	75,075 deferred shares of £1 each
	 

	 	30,124,925 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of Shares held
	Members

	 	Scottish Mutual Assurance plc
	 	75,075 deferred shares of
£1 each
	 

	 	 	 	30,124,925 ordinary
shares of £1 each
	Directors

	 	Kerr Luscombe	 	 
	 

	 	Javier Maldonado Trinchant	 	 
	 

	 	Martin David Moule	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

158

Scottish Provident (Holdings) Limited

	 	 	 
	Registered number

	 	2735747
	Date of incorporation

	 	30/07/1992
	Place of incorporation

	 	England and Wales
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s Place, London
NW1 3AN, England
	Authorised share capital

	 	£67,901,000 divided into ordinary shares of £1 each
	Issued share capital

	 	67,900,099 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	Scottish Provident Limited
	 	67,900,099 ordinary
shares of £1 each
	Directors

	 	Shaun Patrick Coles	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Jason Leslie Wright	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

159

The Scottish Provident Institution

	 	 	 
	Registered number

	 	SZ000005
	Date of incorporation

	 	12/05/1837
	Place of incorporation

	 	Scotland
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow
G2 5HN, Scotland
	Authorised share capital

	 	Private company limited by guarantee (no share capital)
	Issued share capital

	 	Not Applicable

	 	 	 
	 	 	Name
	Members

	 	SPL (Holdings 1) Limited
	 

	 	SPL (Holdings 2) Limited
	Directors

	 	Kerr Luscombe
	 

	 	Donald Ramsay
	Secretary

	 	Abbey National Secretariat Services Limited

 

160

Scottish Provident International Life Assurance Limited

	 	 	 
	Registered number

	 	53002C
	Date of incorporation

	 	19/02/1991
	Place of incorporation

	 	Isle of Man
	Address of registered office

	 	Provident House, Ballacottier Business Park, Cooil Road,
Douglas, Isle of Man IM2 2SP
	Authorised share capital

	 	£75,000,000 divided into ordinary shares of £1 each
	Issued share capital

	 	54,900,000 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	Scotprov Limited
	 	54,900,000 ordinary
shares of £1 each
	Directors

	 	Lillian Boyle	 	 
	 

	 	Garret Graham 7th Earl Cowley	 	 
	 

	 	Jose Ignacio Izquierdo Saugar	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Ronald Edgar Thomas	 	 
	Secretary

	 	Lesley Crossley	 	 
	 	 	(Assistant Secretary Elaine Quine)

 

161

Scottish Provident Limited

	 	 	 
	Registered number

	 	SC212709
	Date of incorporation

	 	3/11/2000
	Place of incorporation

	 	Scotland
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2 5HN,
Scotland
	Authorised share capital

	 	(i)   £4,335,000,000 divided into ordinary shares of £1 each

	 

	 	(ii)   £1,600,000,000 divided into redeemable shares of £1 each

	Issued share capital

	 	1,765,000,002 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	SPL (Holdings 1) Limited
	 	1,747,350,002 ordinary
shares of £1 each
	 

	 	SPL (Holdings 2) Limited
	 	17,650,000 ordinary shares
of £1 each
	Directors

	 	Heather MacDonald Logan	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Javier Maldonado Trinchant	 	 
	 

	 	Martin David Moule	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

162

Scottish Provident Pension Trustees Limited

	 	 	 
	Registered number

	 	2404622
	Date of incorporation

	 	14/07/1989
	Place of incorporation

	 	England and Wales
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s Place, London NW1
3AN, England
	Authorised share capital

	 	£100 divided into ordinary shares of £1 each
	Issued share capital

	 	100 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	Scottish Provident Limited
	 	100 ordinary shares of £1 each
	Directors

	 	Rosalie Elizabeth Clark	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Donald Ramsay	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

163

Scottish Provident Trustees Limited

	 	 	 
	Registered number

	 	SC108046
	Date of incorporation

	 	02/12/1987
	Place of incorporation

	 	Scotland
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2 5HN,
Scotland
	Authorised share capital

	 	£100 divided into ordinary shares of £1 each
	Issued share capital

	 	100 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	Scottish Provident Limited
	 	100 ordinary shares of £1 each
	Directors

	 	Rosalie Elizabeth Clark	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Donald Ramsay	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

164

South Glasgow Retail Park Limited

	 	 	 
	Registered number

	 	SC172022
	Date of incorporation

	 	04/02/1997
	Place of incorporation

	 	Scotland
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2
5HN, Scotland
	Authorised share capital

	 	£1,100,000 divided into ‘A’ ordinary shares of £1 each
	 

	 	£15,000 divided into ‘B’ ordinary shares of £1 each
	Issued share capital

	 	1,085,000 ‘A’ ordinary shares of £1 each
	 

	 	15,000 ‘B’ ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	Scottish Provident Limited
	 	1,085,000 ‘A’ ordinary
shares of £1 each
	 

	 	Scottish Provident Limited
	 	15,000 ‘B’ ordinary shares
of £1 each
	Directors

	 	Shaun Patrick Coles	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Jason Leslie Wright	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

165

SPI Finance Plc

	 	 	 
	Registered number

	 	3359786
	Date of incorporation

	 	21/04/1997
	Place of incorporation

	 	England and Wales
	Address of registered office

	 	Abbey National House, 2 Triton Square, Regent’s Place, London
NW1 3AN, England
	Authorised share capital

	 	£50,000 divided into ordinary shares of £1 each
	Issued share capital

	 	50,000 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	Scottish Provident Limited
	 	49,999 ordinary shares
of £1 each
	 

	 	Scottish Mutual Nominees

Limited
	 	1 ordinary share of £1
	Directors

	 	Kerr Luscombe	 	 
	 

	 	Donald Ramsay	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

166

SPILA Marketing Services (Pty) Limited (in liquidation)

	 	 	 
	Registered number

	 	97/05536/07
	Date of incorporation

	 	25/03/1997
	Place of incorporation

	 	South Africa
	Address of registered office

	 	11th Floor, The Terraces, 34 Bree Street, Cape Town
8000, PO BOX 2799, Cape Town, South Africa
	Authorised share capital

	 	ZAR 1,000 divided into ordinary shares of ZAR 1 each
	Issued share capital

	 	100 ordinary shares of ZAR 1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	Scottish Provident International
Life Assurance
Limited
	 	100 ordinary shares of
ZAR 1 each
	Directors

	 	Lillian Boyle	 	 
	Secretary	 	PricewaterhouseCoopers Inc

 

167

SPL (Holdings) Limited

	 	 	 
	Registered number

	 	SC214931
	Date of incorporation

	 	19/01/2001
	Place of incorporation

	 	Scotland
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2
5HN, Scotland
	Authorised share capital

	 	£4,335,000,000 divided into ordinary shares of £1 each
	Issued share capital

	 	2,163,100,002 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	Abbey National SMA Holdings
Limited
	 	2,163,100,002 ordinary
shares of £1 each
	Directors

	 	Shaun Patrick Coles	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Jason Leslie Wright	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

168

SPL (Holdings 1) Limited

	 	 	 
	Registered number

	 	SC214932
	Date of incorporation

	 	19/01/2001
	Place of incorporation

	 	Scotland
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2
5HN, Scotland
	Authorised share capital

	 	£4,335,000,000 divided into ordinary shares of £1 each
	Issued share capital

	 	1,737,450,002 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	SPL (Holdings) Limited
	 	1,737,450,002 ordinary
shares of £1 each
	Directors

	 	Shaun Patrick Coles	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Jason Leslie Wright	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

169

SPL (Holdings 2) Limited

	 	 	 
	Registered number

	 	SC214933
	Date of incorporation

	 	19/01/2001
	Place of incorporation

	 	Scotland
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow G2
5HN, Scotland
	Authorised share capital

	 	£4,335,000,000 divided into ordinary shares of £1 each
	Issued share capital

	 	17,550,002 ordinary shares of £1 each

	 	 	 	 	 
	 	 	Name	 	Number of shares held
	Members

	 	SPL (Holdings) Limited
	 	17,550,002 ordinary shares
of £1 each
	Directors

	 	Shaun Patrick Coles	 	 
	 

	 	Kerr Luscombe	 	 
	 

	 	Jason Leslie Wright	 	 
	Secretary	 	Abbey National Secretariat Services Limited

 

170

The Scottish Mutual Assurance Society

	 	 	 
	Registered number

	 	SZ000015
	Date of incorporation

	 	01/08/1952
	Place of incorporation

	 	Scotland
	Address of registered office

	 	Abbey National House, 301 St. Vincent Street, Glasgow
G2 5HN, Scotland
	Authorised share capital

	 	Private company limited by guarantee (no share capital)
	Issued share capital

	 	Not Applicable

	 	 	 
	 	 	Name
	Members

	 	Abbey National plc
	 

	 	Scottish Mutual Assurance plc
	Directors

	 	Shaun Patrick Coles
	 

	 	Kerr Luscombe
	 

	 	Donald Ramsay
	 

	 	Jason Leslie Wright
	Secretary

	 	Abbey National Secretariat Services Limited

 

171

Schedule 10

(Group and Retained Group Guarantees)

Part A (Retained Group Guarantees)

	 	 	 	 	 	 	 	 	 
	 	 	Guarantor	 	Debtor	 	Beneficiary	 	Date on which
 guarantee given
	1.

	 	The Seller
	 	SPL (Holdings 1)

Limited
	 	Holders of Floating
Rate Unsecured
Guaranteed Loan
Notes 2012 issued
by SPL (Holdings 1)
Limited
	 	28 February 2002
	 
	 	 	 	 	 	 	 	 
	2.

	 	The Seller
	 	ANL
	 	Holders of ANL
	 	1995
	 

	 	 	 	 	 	Guaranteed Bonds	 	 

Part B (Group Guarantees)

None

 

172

Schedule 11

(Key Intermediaries)

Bankhall Group

Berkeley Group

Burns Anderson Ind Network plc

Millfield Partnership Ltd

Mortgage Support Network

Park Row

Personal Touch

Positive Solutions

Sesame Limited

Simply Biz

Skipton Group

St. James’ Place Partnership

Tenet Group

Thinc Destini

Threesixty LLP

 

173

Schedule 12

(Senior Employees)

	 	 	 
	Name	 	Job Title
	Simon Harrall

	 	Regional Sales Manager — Hong Kong
	Jonathon Wayne Crossley

	 	Investment Administrator Manager
	Craig Allen

	 	Operations Manager
	Mark Arthur Wearmouth

	 	General Manager HK & Far East
	Cameron Christie

	 	IT Manager
	David White

	 	International Sales Director
	Simon Jeremy Mich Lodge

	 	Actuarial & Investments Director
	David John Cess Cameron

	 	Operations & IT Director
	Duncan Jeremy Jude

	 	Finance Director
	Lillian Boyle

	 	Managing Director
	Seamus Hiney

	 	Business development Manager
	John Finnegan

	 	Director of Finance
	John McGrath

	 	IT Supervisor
	Niall Gallagher

	 	Managing Director SMI
	Mairead Ruane

	 	Head of Legal and Compliance
	Claire McKenna

	 	HR Manager
	Mary MacInnes

	 	Lawyer
	Malcolm James MacKenzie

	 	Finance Manager
	Robert Christopher Greig

	 	Senior Manager IT
	James C Banford

	 	Senior Manager IT

 

174

	 	 	 
	Name	 	Job Title
	Tim Thornton

	 	Regional Sales Manager Intermediaries
	Eddie Glancy

	 	Project Manager
	Claire Louise McKay

	 	Finance Manager
	Richard Greenhalgh

	 	Finance Manager
	Alexandra Mary Flynn

	 	Finance Manager
	Craig Houps

	 	Finance Manager
	Keith Jennings

	 	Finance Manager
	David Hughes

	 	Finance Manager
	Geraldine Elizabeth Mogridge

	 	Operations Manager
	Philip Stafford

	 	Underwriting Manager
	Brian Alner

	 	Manager Internal Audit
	Christopher Dodd,

	 	Finance Manager
	Eleanor Mary Freckleton

	 	Manager Internal Audit
	Stuart Gallagher

	 	Actuary — Technical Services
	John McLachlan

	 	Senior Manager IT
	Grant Jaffrey-Smith

	 	ANAM 3
	Christoph Woell

	 	Business Manager
	Graeme Robertson,

	 	Actuary — Technical Services
	Duncan Lockley

	 	Lawyer
	Pauline Brown

	 	Finance Manager
	Paul McNulty

	 	Manager Compliance
	Anne Marie Sharkey

	 	Senior Manager
	Stephen Darke

	 	Business Manager

 

175

	 	 	 
	Name	 	Job Title
	Alan McBride

	 	Senior Functional Specialist
	Susan Morgan

	 	Senior Functional Specialist
	Robert Kerr

	 	Senior Functional Specialist
	Keith Williams,

	 	Operations Manager
	Iain Nicol

	 	Senior Functional Specialist
	Anthony Pfaff,

	 	Senior Functional Specialist
	Kevin James Ennis

	 	Senior Manager
	Niall Mckay

	 	Senior Manager IT
	Allard Walker

	 	Senior Manager
	Stephen French

	 	Senior Manager
	Diana Devereaux Graham

	 	Senior Manager
	Colin Rankin

	 	Senior Manager
	Hamish J A Scott

	 	Senior Functional Specialist
	Robin William Pagett

	 	Senior Functional Specialist
	Christopher Ball,

	 	Head of HR
	Rosalie Clark

	 	Actuary — Technical Services
	David Michael Smith

	 	Senior Functional Specialist
	George Cairns

	 	Senior Manager
	Derrick McKenna

	 	Senior Manager
	Lee Walker

	 	Manager Internal Audit
	Farrokh Shahmir

	 	Head of Internal Audit
	Paul Ryan

	 	Abbey Staff
	Daniel Rembrandt de Bruin

	 	Senior Functional Specialist

 

176

	 	 	 
	Name	 	Job Title
	Craig Morton

	 	Senior Manager
	Robert Marshall,

	 	Business Manager (4)
	Don Ramsay

	 	Director Group Member
	Gordon Craig Wood

	 	Abbey Staff
	Heather Logan

	 	Director Group Member
	Kerr Luscombe

	 	Director Group Member
	Lynn McKirkle,

	 	Finance Manager
	Nicol Taylor,

	 	Senior Manager IT
	David Campbell,

	 	Senior Manager IT
	Jim McGinnis,

	 	Senior Manager IT
	Iain Jamieson

	 	Business Manager
	Denise Calderwood Gibson

	 	Business Manager
	Nicola Allen

	 	Finance Manager
	Darren Edward Carroll

	 	Finance Professional
	Elizabeth Lockie Zarzana

	 	Senior Manager
	Lesley Williamson

	 	Senior Manager IT
	Jack Smith

	 	Finance Manager
	Craig Murray

	 	Technical Business Manager
	Ian Stringer

	 	Business Consultant
	Gary Blues

	 	Finance Professional
	Joan Robertson,

	 	Senior Manager
	Gillian McLachlan

	 	Project Manager
	Allan Gibson

	 	Senior Manager IT

 

177

	 	 	 
	Name	 	Job Title
	Aris Roushias

	 	Finance Professional
	Ian Neilson

	 	Business Manager
	Simon Harrall

	 	Regional Sales Manager Intermediaries
	Janice Jamieson

	 	Business Manager
	Paul O’Donnell

	 	Senior Manager IT
	James Wilson

	 	Finance Professional
	Anna Elizabeth Taylor

	 	HR Business Partner
	Robert Sinclair

	 	Team Leader IT
	Gail Paxton

	 	Finance Professional
	Paul Martin Sweeny

	 	Finance Professional
	Charlie Ryan

	 	Head of Operations

 

178

Schedule 13

(Relevant Properties)

Business Properties

Mapeley Properties

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Current Rent
	Property Name	 	Address	 	Entity	 	Landlord on Lease	 	Term	 	Hold Date	 	/annum
	Glasgow SVS

	 	301 St Vincent
Street,
 Glasgow, G2
5NB
	 	SMA
	 	Mapeley Columbus Limited
	 	24 October 2000 -
31 December 2020
	 	31 December 2020
	 	£5,386,284

Non-Mapeley Properties

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Current
	Property Name	 	Address	 	Entity	 	Landlord on Lease	 	Term	 	Rent/annum
	Dublin

	 	Styne House, Dublin
	 	ANFIS
	 	Green Property Plc
	 	15 February 2000 -
14 February 2025
	 	€595,000
	 
	 	 	 	 	 	 	 	 	 	 
	Isle of Man

	 	Provident House,
	 	SPILA
	 	Northern Trust Fiduciary Svsc
	 	23 November 1995 -
	 	£590,176
	 

	 	Ballacottier Park,
	 	 	
 	(Guernsey) Limited	 	22 November 2016	 	 
	 

	 	Cooil Road,
Douglas, Isle of
Man
	 	 	 	as trustee for ING
(UK) Listed Real
Estate	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Hong Kong

	 	2319-2320 Jardine House,
	 	SPILA
	 	The Hong Kong Land
	 	1 July 2003 - 30
	 	HK$1,531,311.60
	 

	 	 1 Connaught Road, Central,
	 	 	 	Property Company
	 	June 2006	 	 
	 

	 	 Hong
Kong
	 	 	 	Limited	 	 	 	 

 

179

Non-Business Properties

Mapeley Properties

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property Name	 	Address	 	Entity	 	Landlord	 	External Landlord	 	Term	 	Hold Date
	NORTHERN IRELAND
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Belfast NH

	 	Norwood House, 96-102
	 	SMA
	 	Mapeley Columbus Limited
	 	James Stephen Neeson
	 	1 March 1991 - 29
	 	31 August 2006
	 

	 	Great Victoria
Street, 	 	 	 	 	 	 	 	February 2016	 	 
	 

	 	
Belfast, BT2
7BE
	 	 	 	 	 	 	 	
To be surrendered
in August 2006	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SCOTLAND
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Edinburgh AC

	 	1/4 Atholl Crescent,

Edinburgh, EH3 8AZ
	 	SMA
	 	Mapeley Columbus Limited
	 	General Accident and
Life Assurance
Corporation plc
	 	Surrendered on 30
June 2004
	 	Not applicable
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ENGLAND
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Birmingham CS

	 	3rd Floor, 1 Cornwall

Street, Birmingham B3
2DT
	 	SMA
	 	Mapeley Columbus Limited
	 	Lloyds Bank
	 	25 December 1988 -
28 September 2011
	 	1 July 2008
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Bristol GS

	 	5th Floor, 31 Great

George Street,

Bristol, BS1 5YE
	 	SMA
	 	Mapeley Columbus Limited
	 	PW & Co
	 	24 June 1989 - 23
June 2014
	 	1 July 2008
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Leeds BH

	 	1st Floor, Bond
House,
Boar Lane,

Leeds, LS1 5DE
	 	SMA
	 	Mapeley Columbus Limited
	 	Guardian Assurance plc
	 	27 July 1994 - 26
July 2009
	 	1 July 2008

 

180

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property Name	 	Address	 	Entity	 	Landlord	 	External Landlord	 	Term	 	Hold Date
	Leeds BH Car Park

	 	The Bourse, Swinegate

Station Street,
Leeds.

Also known as Car
Park for
1st Floor,
Bond House, Boar
Lane, Leeds, LS1 5DE
	 	SMA
	 	Mapeley Columbus Limited
	 	Not Known
	 	Expires on 26 July

2009
	 	31 December 2008
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Manchester PS

	 	4th & 5th Floor,

Peter Street,

Manchester, M2 5RA
	 	SMA
	 	Mapeley Columbus Limited
	 	Not Known
	 	Lease expired March

2004

Surrendered in August 2002
	 	Not applicable
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Reading Grey Friars

	 	Priory Court
	 	SMA
	 	Mapeley Columbus Limited
	 	Not known
	 	Notice of
	 	Not applicable
	 

	 	35-43 Grey Friars Road

Reading
	 	 	 	 	 	 	 	extraordinary
flexibility has
been served and all
moneys paid to pass
liability to
Mapeley Columbus
Limited. Mapeley is
in the process of
surrendering the
lease.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Redhill QH

	 	Quadrant House,

Princess Way,
	 	SMA
	 	Mapeley Columbus Limited
	 	The Norwich Union

Life Insurance
	 	Assigned to PSA in
2004
	 	Not applicable
	 

	 	Redhill, RH1 1NA
	 	 	 	 	 	Society	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Southampton BH

	 	Beresford House, Town
	 	SMA
	 	Mapeley Columbus Limited
	 	ABP Property
	 	Surrendered on 31
	 	Not applicable
	 

	 	Quay, Southampton,

SO1 0AQ
	 	 	 	 	 	Investment Limited
	 	December 2004	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	St Albans

	 	5th Floor, The
	 	SMA
	 	Mapeley Columbus Limited
	 	Bafin Holdings Limited
	 	28 May 1993 - 27
	 	1 July 2008
	 

	 	Ziggurat, Grosvenor

Road, St Albans, AL1

3AD
	 	 	 	 	 	 	 	May 2008	 	 

 

181

Non-Mapeley Properties

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Property Name	 	Address	 	Entity	 	Landlord	 	Term
	IRELAND
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Limerick

	 	64 O’Connell Street, Limerick
	 	SPL
	 	Prudential Life of Ireland
Limited (head landlord is DDD
Dublin Document Delivery Limited)
	 	20 November 2003 - 19
August 2008
	 
	 	 	 	 	 	 	 	 
	SCOTLAND
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Edinburgh AP

	 	8 Albyn Place, Edinburgh, EH2 4NG
	 	SPL
	 	James Hay Pension Trustees
	 	Surrendered in
February 2006
	 
	 	 	 	 	 	 	 	 
	Edinburgh AS

	 	Part 1st Floor, 1/2 St Andrew Square,

16-22 South Street, Edinburgh, EH2

2BD
	 	SPL
	 	The Tonstate Group
	 	1 January 1992 - 11
November 2015
	 
	 	 	 	 	 	 	 	 
	Edinburgh GS

	 	Basement & 2nd Floor, 10 George

Street, Edinburgh, EH2 2DZ
	 	SPL
	 	Ernst & Young
	 	Surrendered on 21
December 2005
	 
	 	 	 	 	 	 	 	 
	Edinburgh Gyle

	 	The Cornerstone, 60 South Gyle

Crescent, Edinburgh, EH12 9WF
	 	SPL
	 	Britel Fund Trustees Limited
	 	26 November 1998 - 25
November 2013
	 
	 	 	 	 	 	 	 	 
	Glasgow WGS

	 	Part 2nd Floor, 144/146 West George

Street, Glasgow, G2 4HG
	 	SPL
	 	G E Capital Corporation

(Investment Prop) Limited
	 	15 August 1986 - 25
March 2007
	 
	 	 	 	 	 	 	 	 
	ENGLAND
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Birmingham CR

	 	Colmore Gate, 3 Colmore Row,

Birmingham, B3 2QD
	 	SPL
	 	DEKA-IMMOBILIEN EUROPA
	 	17 July 1992 - 24
June 2017

 

182

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Property Name	 	Address	 	Entity	 	Landlord	 	Term
	Bristol KH

	 	5th Floor, Kings House, Bond Street,

Bristol, BS1 3AE
	 	SPL
	 	Norwich Union Life & Pensions
Limited
	 	Expires 23 June 2014
	 
	 	 	 	 	 	 	 	 
	Bristol QS

	 	2nd Floor, 40 Queens Street, Bristol,

BS15 8AZ
	 	SPL
	 	Lattice Group Pension Scheme
	 	Expires 28 August 2011
	 
	 	 	 	 	 	 	 	 
	Harrow PR

	 	3rd Floor, 21 Pinner Road, Harrow,

HA1 4BB
	 	SPL
	 	R D Keeler Properties
	 	16 November 2000 - 15
November 2012
	 
	 	 	 	 	 	 	 	 
	Kendal AH

	 	1st & 2nd Floors, Avenue House,

Sandes Avenue, Kendal, LA9 6EJ
	 	SPL
	 	Russell Armer Limited
	 	Surrendered on 2
December 2005
	 
	 	 	 	 	 	 	 	 
	Kendal LH

	 	Leck House, Sandes Avenue, Kendal,

LA9 6EJ
	 	SPL
	 	Leck Construction Limited
	 	30 September 1998 -
29 September 2009
	 
	 	 	 	 	 	 	 	 
	Leatherhead BS

	 	5 Bridge Street, Leatherhead,

KT22 8BL
	 	SPL
	 	Oakhanger Properties Limited
	 	25 March 1984 - 4
March 2009
	 
	 	 	 	 	 	 	 	 
	Leatherhead GH

	 	2nd Floor, Grantham House,

Leatherhead, KT22 7AX
	 	SPL
	 	William M Mercer Fraser Limited
	 	29 September 1990 -
23 December 2010
	 
	 	 	 	 	 	 	 	 
	Liverpool

	 	2 Moorfields, Liverpool, L2 2BS
	 	SPL
	 	Clarendon Property Company Limited
	 	1 March 1987 - 28
February 2012
	 
	 	 	 	 	 	 	 	 
	London LS

	 	3rd Floor, 1-6 Lombard Street,

London, EC3V 9AA
	 	SPL
	 	Oakland Investments Limited
	 	17 May 1999 - 24
December 2011
	 
	 	 	 	 	 	 	 	 
	Maidstone KR

	 	Unit 1, Kings Row, Maidstone, ME15 6HQ
	 	SPL
	 	ADP Properties
	 	25 December 1900 - 24
December 2015
	 
	 	 	 	 	 	 	 	 
	Manchester FS

	 	1st Floor, 50 Fountain Street,

Manchester, M2 2AS
	 	SPL
	 	Hill Dickinson Solicitors
	 	Expires 2 May 2006
	 
	 	 	 	 	 	 	 	 
	Reading SGC

	 	Unit 4, St Giles Court, Reading,

RG1 2QL
	 	SPL
	 	R A De Souza
	 	10 January 1989 - 9
January 2013

 

183

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Property Name	 	Address	 	Entity	 	Landlord	 	Term
	Romford SJH

	 	Part 2nd Floor, North Wing, St James

House, Eastern Road, Romford,

RM1 3NH
	 	SPL
	 	Co-operative Insurance
Society Limited
	 	Expires 23 June 2011
	 
	 	 	 	 	 	 	 	 
	Solihull SC

	 	1st Floor, Sapphire Court, Brooke

Street, Solihull B91 1QY
	 	SPL
	 	Dominion Corporate Trustees
	 	29 September 1988 -
28 September 2013
	 
	 	 	 	 	 	 	 	 
	Waltham Cross

	 	33/35 Eleanor Cross Road, Waltham

Cross, EN8 7LE
	 	SPL
	 	Antler Securities Twenty Limited
	 	25 December 1986 - 24
March 2009

 

184

Key

In this Schedule:

	 	 	 
	“Mapeley”

	 	means Properties that are within the scope of the
Project Columbus Master Agreement between Abbey National
plc and Mapeley Columbus Limited dated 18 October 2000;
and
	 
	 	 
	“Non-Mapeley“

	 	means Properties that are not within the scope of the
Project Columbus Master Agreement between Abbey National
plc and Mapeley Columbus Limited dated 18 October 2000.

Abbey National House, 301 St Vincent St, Glasgow

The areas to be sub-let by the Seller to the Purchaser, as referred to in Schedule 15, are
floors 2, 3, and 4, the printing facility on L1, a post room on L2, the store room on L2 and a
training facility on floor 1, as shown in yellow on the plans contained in the Agreement for Lease
(as defined in Schedule 15).

 

185

Schedule 14

(Property matters)

	1.	 	DEFINITIONS
	 
	 	 	In this Schedule:

	 	 	 	 	 
	 

	 	“ANH”
	 	means Abbey National House the
property at 301 St. Vincent St,
Glasgow G2 5NB;
	 
	 	 	 	 
	 

	 	“Expiry Date”
	 	means the expiry date set out in
Schedule 13 in respect of the Relevant
Property;
	 
	 	 	 	 
	 

	 	“Hold Date”
	 	means the hold date set out in
Schedule 13 in respect of the Relevant
Property;
	 
	 	 	 	 
	 

	 	“Mapeley”
	 	means Mapeley Columbus Limited (a
company registered in the British
Virgin Islands under registration
number 409501) or any authorised
assignee or successors in title to the
benefit and burdens of Mapeley under
the Master Agreement;
	 
	 	 	 	 
	 

	 	“Master Agreement”
	 	means the Agreement dated 18 October
2000 made between the Seller (1) and
Mapeley (2);
	 
	 	 	 	 
	 

	 	“Occupancy Regulations”
	 	means the occupancy regulations as set
out in Schedules 11 or 12 of the
Master Agreement (whichever is
applicable);
	 
	 	 	 	 
	 

	 	“Property Completion Date”
	 	means the later of:
	 	 	 
	 

	 	 	 	(A) the Completion Date; and

(B) 5 working days after the last
Relevant Consent is obtained; and
	 
	 	 	 	 
	 

	 	“Requisite Consent”
	 	means in relation to each Property the
consent of Mapeley (if applicable) and
any consent of a landlord or other
third party to the assignment,
transfer, lease or sub-lease of the
relevant lease to the Seller or the
Purchaser, as the case may be, or the
continued use by the Seller of the
Relevant Property including any
consent applied for in connection with
an absolute prohibition.

	2.	 	RECITALS
	 
	2.1	 	The Seller and the Purchaser intend that the following shall take place subject to the
Requisite Consents:

 

186

	 	(A)	 	the Purchaser shall assign to the Seller its interests in the Non-Business
Properties;
	 
	 	(B)	 	the Seller shall use all reasonable endeavours to procure the assignment of the
head lease for ANH to the Seller prior to the Completion Date. If this has not occurred
by the Completion Date the Purchaser shall procure the assignment of the head lease for
ANH to the Seller; and
	 
	 	(C)	 	the Seller shall grant to the Purchaser a sub-lease of part of ANH.

	3.	 	REQUISITE CONSENTS
	 
	3.1	 	The Seller and the Purchaser shall each use their respective best endeavours to obtain the
Requisite Consents and if the Purchaser or relevant Group Member is required by the landlord
to give an authorised guarantee agreement (“AGA”) and the landlord is entitled under the
relevant lease to require the same, then the Purchaser or relevant Group Member shall join in
as a party to the licence which shall include an AGA and an indemnity from the Seller to the
Purchaser in respect of the covenants and conditions contained in the relevant lease.
	 
	3.2	 	Where the transfer is to the Seller the Seller shall provide such guarantees, rental deposits
or other form of security as the landlord may require and shall use all reasonable endeavours
to procure that no AGA or equivalent covenant or guarantee is required to be given by the
Purchaser or relevant Group Member.
	 
	3.3	 	Where the Agreement for Lease is granted to the Purchaser the Purchaser shall provide such
guarantees, rental deposits or other form of security as the landlord may require.
	 
	3.4	 	The Seller shall supply to the landlord or the Purchaser, as necessary, such references
information and assistance as reasonably required by any landlord in accordance with the
relevant lease in order to obtain the Requisite Consents.
	 
	3.5	 	The Seller shall pay the proper and reasonable professional fees (being solicitors and
surveyors only) of the Purchaser and Mapeley and any landlord incurred in connection with all
applications for Requisite Consents.
	 
	3.6	 	If any landlord shall lawfully and reasonably require any works of repair and/or decoration
to be carried out pursuant to the terms of the relevant lease prior to the issue of the
relevant Requisite Consent then the Seller shall procure that such works are carried out at
the expense of the Seller as expeditiously as possible.
	 
	3.7	 	If any Requisite Consent shall not have been obtained in respect of any of the Relevant
Properties by 6 months following the Completion Date:

	 	(A)	 	the Seller shall make and pursue an application to the Court for a declaration
that the Requisite Consent is being withheld unreasonably (where the relevant landlord
is not entitled to withhold in such a manner); and

 

187

	 	(B)	 	the Seller shall apply to the relevant landlord for its consent to an
underlease of the Relevant Property to the Seller for a term up to and expiring on the
Hold Date or the Expiry Date (whichever is applicable) of the relevant lease and
otherwise on the same terms of such lease in which case the expression “Requisite
Consent” shall for the purpose of this agreement be deemed to include such application.

	3.8	 	Without limiting the obligations of the Seller under this clause (including without prejudice
to the generality of the foregoing clause 2.2) the Purchaser will not object to the completion
of the transfer of a Non-Business Property by a nominee of the Seller whether or not a
Retained Group Member if so directed by the Seller and such transfer shall be to the Seller’s
nominee and not the Seller provided always that notwithstanding the transfer being in the name
of the Seller’s nominee the covenants and obligations in this agreement and in any transfer
shall continue to be given by the Seller.
	 
	4.	 	ANH
	 
	4.1	 	The Seller shall use all reasonable endeavours to procure the assignment of the head lease
for ANH to the Seller prior to the Completion Date.
	 
	4.2	 	If the assignment of the head lease for ANH referred to in the foregoing clause 4.1 has not
occurred at the Completion Date the Purchaser shall procure the assignment of the head lease
for ANH to the Seller in the agreed form.
	 
	4.3	 	At the Completion Date the Seller and the Purchaser shall enter into an agreement for lease
of the part of ANH referred to in Schedule 4 (the “Specified Area”) in the agreed form
(the “Agreement for Lease”).
	 
	4.4	 	Pending legal completion of the Sub-Lease and with effect from the Completion Date the Seller
shall procure that the Purchaser is permitted the unrestricted use and occupation of the
Specified Area. In relation to this use of the Specified Area the Purchaser shall observe and
perform the covenants and conditions contained in the Sub-Lease as if it had been completed at
Completion.
	 
	5.	 	NON-BUSINESS PROPERTIES
	 
	5.1	 	To the extent that any of the Companies holds any interest in any Non-Business Property the
Purchaser shall procure that the relevant Company will at the Property Completion Date
transfer to the Seller or to its nominee for nominal consideration those interests so held.
	 
	5.2	 	Save as provided otherwise in either of the Transitional Services Agreement or this agreement
the Seller hereby indemnifies and covenants to pay on an after-Tax basis to the Purchaser on
demand an amount equal to any and all liabilities, losses, damages, charges, claims, actions,
demands, proceedings, expenses and costs (including legal costs) (together “Liabilities”)
which are suffered or incurred by the Purchaser, any member of the Purchaser’s Group or any of
the Companies arising from any interest in the Non-Business Properties pending completion of
the transfer of that interest to the Seller (or as the Seller may direct).

 

188

	5.3	 	Pending legal completion of the transfer of each Non-Business Property and with effect from
Completion the Purchaser will procure that in relation to the relevant Non-Business Property:

	 	(A)	 	the Property is held on trust for the Seller;
	 
	 	(B)	 	the Seller is permitted by the Purchaser (with all persons lawfully authorised
by it) to have the unrestricted use and occupation of the whole of the Property;
	 
	 	(C)	 	no contract is entered into disposing of any interest held by the Purchaser in
the Property;
	 
	 	(D)	 	subject to receipt of necessary funds from the Seller, the rents, services
charges and other sums reserved by a relevant lease are paid and the covenants and
conditions contained in the relevant lease are observed and performed;
	 
	 	(E)	 	all notices received in respect of the Property are promptly produced to the
Seller;
	 
	 	(F)	 	it will not deal with the Property other than in accordance with the relevant
Occupancy Regulations and the Master Agreement; and
	 
	 	(G)	 	the Seller is accounted to forthwith for any income received from the Property
attributable to any period after Completion.

	5.4	 	Pending legal completion of the transfer of each Non-Business Property the Seller (i) will
pay the Purchaser a licence fee equivalent to all rents, service charges and other outgoings
properly payable by the Purchaser in respect of the Property where applicable, (ii) will
observe and perform the covenants and conditions of the part of the lessee in the relevant
lease where applicable, other than payment of rents and without limiting the obligations of
the Purchaser under paragraph 3.1, and (iii) will not infringe any statutory
requirement relating to the property.
	 
	5.5	 	The Seller will indemnify the Purchaser on an after Tax basis in respect of any Liabilities
howsoever incurred by the Purchaser, any member of the Purchaser’s Group or any of the
Companies in respect of the Non-Business Properties.

 

189

Schedule 15

(Flame and Umbrella Logos)

Part A (Flame Logo)

 

190

Part B (Umbrella Logo)

 

191

	 	 	 	 	 	 	 	 
	Signed by JAVIER MALDONADO

	 	 	)	 	 	 	 
	under power of attorney

	 	 	)	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 	 
	ABBEY NATIONAL PLC

	 	 	)	 	 	/s/ JAVIER MALDONADO	 
	 
	 	 	 	 	 	 	 
	Signed by PAUL THOMPSON

	 	 	)	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 	 
	RESOLUTION LIFE LIMITED

	 	 	)	 	 	/s/ PAUL THOMPSON	 
	 
	 	 	 	 	 	 	 
	Signed by CLIVE COWDERY

	 	 	)	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 	 
	RESOLUTION PLC

	 	 	)	 	 	/s/ CLIVE COWDERY

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]