Spirit Issuer plc (incorporated in England and Wales with limited liability under registered number 5266745)

£150,000,000 Floating Rate Class A1 Secured Debenture Bonds due 2028 £200,000,000 Floating Rate Class A2 Secured Debenture Bonds due 2031 Issue Price: 100 per cent. Issue Price: 100 per cent. £250,000,000 Fixed/Floating Rate Class A3 Secured Debenture Bonds £350,000,000 Fixed/Floating Rate Class A4 Secured Debenture Bonds due 2021 due 2027 Issue Price: 105 per cent. Issue Price: 105 per cent. £300,000,000 Fixed/Floating Rate Class A5 Secured Debenture Bonds due 2034 Issue Price: 105 per cent. Unconditionally and irrevocably guaranteed in relation to Scheduled Interest and Ultimate Principal of the Class A1 Debenture Bonds, of the Class A3 Debenture Bonds and of the Class A5 Debenture Bonds by Ambac Assurance UK Limited

It is expected that the £150,000,000 Floating Rate Class A1 Secured Debenture Bonds due 2028 (the Class A1 Debenture Bonds), the £200,000,000 Floating Rate Class A2 Secured Debenture Bonds due 2031 (the Class A2 Debenture Bonds), the £250,000,000 Fixed/Floating Rate Class A3 Secured Debenture Bonds due 2021 (the Class A3 Debenture Bonds), the £350,000,000 Fixed/Floating Rate Class A4 Secured Debenture Bonds due 2027 (the Class A4 Debenture Bonds) and the £300,000,000 Fixed/ Floating Rate Class A5 Debenture Bonds due 2034 (the Class A5 Debenture Bonds and, together with the Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds and the Class A4 Debenture Bonds, the Debenture Bonds) will be issued by Spirit Issuer plc (the Issuer) on 25 November, 2004 (the Closing Date). The Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds will be unconditionally guaranteed as to Scheduled Interest (which excludes Class A1 Step-Up Amounts, Class A3 Step-Up Amounts and Class A5 Step-Up Amounts) and Ultimate Principal (as defined below) pursuant to a financial guarantee (the Ambac Financial Guarantee) to be issued by Ambac Assurance UK Limited (Ambac). The form of the Financial Guarantee is set out in Form of Ambac Financial Guarantee below. The Class A1 Debenture Bonds will initially be represented by a temporary global bond in bearer form (the Class A1 Temporary Global Debenture Bond), the Class A2 Debenture Bonds will initially be represented by a temporary global bond in bearer form (the Class A2 Temporary Global Debenture Bond), the Class A3 Debenture Bonds will initially be represented by a temporary global bond in bearer form (the Class A3 Temporary Global Debenture Bond), the Class A4 Debenture Bonds will initially be represented by a temporary global bond in bearer form (the Class A4 Temporary Global Debenture Bond) and the Class A5 Debenture Bonds will initially be represented by a temporary global bond in bearer form (the Class A5 Temporary Global Debenture Bond and, together with the Class A1 Temporary Global Debenture Bond, the Class A2 Temporary Global Debenture Bond, the Class A3 Temporary Global Debenture Bond and the Class A4 Temporary Global Debenture Bond, the Temporary Global Debenture Bonds) in each case without interest coupons or talons attached and which will represent the aggregate principal amount outstanding of, respectively, the Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds. The Temporary Global Debenture Bonds will be deposited on behalf of subscribers of the Debenture Bonds with Deutsche Bank AG London, as common depositary (the Common Depositary) for Clearstream Banking, socie´te´ anonyme (Clearstream, Luxembourg) and Euroclear Bank S.A./N.V., as operator of the Euroclear System (Euroclear) on or about the Closing Date. Interests in the Class A1 Temporary Global Debenture Bond, the Class A2 Temporary Global Debenture Bond, the Class A3 Temporary Global Debenture Bond, the Class A4 Temporary Global Debenture Bond and the Class A5 Temporary Global Debenture Bond will be exchangeable on the Exchange Date (as defined below), upon certification of non-U.S. beneficial ownership by Euroclear or Clearstream, Luxembourg to the Issuer, for interests in a permanent global bond representing, respectively, the Class A1 Debenture Bonds (the Class A1 Permanent Global Debenture Bond), the Class A2 Debenture Bonds (the Class A2 Permanent Global Debenture Bond), the Class A3 Debenture Bonds (the Class A3 Permanent Global Debenture Bond), the Class A4 Debenture Bonds (the Class A4 Permanent Global Debenture Bond) and the Class A5 Debenture Bonds (the Class A5 Permanent Global Debenture Bond and, together with the Class A1 Permanent Global Debenture Bond, the Class A2 Permanent Global Debenture Bond, the Class A3 Permanent Global Debenture Bond and the Class A4 Permanent Global Debenture Bond, the Permanent Global Debenture Bonds), in each case in bearer form without coupons or talons attached, which will also be deposited with the Common Depositary. The Permanent Global Debenture Bonds will be exchangeable for definitive bonds issued in bearer form in the limited circumstances described in Global Debenture Bonds below. Application has been made to list the Debenture Bonds on the Luxembourg Stock Exchange. The Debenture Bonds are in bearer form for U.S. tax purposes and, therefore, are subject to U.S. tax law requirements. Accordingly, the Debenture Bonds may not be offered, sold or delivered within the United States and its possessions or to U.S. persons. Interest on the Debenture Bonds will be payable by reference to successive Interest Periods (as defined in the Conditions). Interest will be payable quarterly in arrear on 28 March, 28 June, 28 September and 28 December in each year subject to adjustment for non-business days (each, an Interest Payment Date). The first Interest Period, in respect of the Debenture Bonds, will commence on (and include) the Closing Date and end on (but exclude) 28 March, 2005. The rate of interest payable in respect of the Class A1 Debenture Bonds will be (i) up to (but excluding) the Interest Payment Date falling in December 2011 (the Class A1 Step-Up Date), the London Interbank Offered Rate for three-month Sterling deposits (LIBOR) (or, in the case of the first Interest Period, will be the annual rate obtained by the linear interpolation of LIBOR for four-month Sterling deposits and LIBOR for five-month Sterling deposits) plus a margin of 0.22 per cent. per annum (the Class A1 Margin) and (ii) from (and including) the Class A1 Step-Up Date, LIBOR plus the Class A1 Margin plus a further margin of 0.33 per cent. per annum (the Class A1 Step-Up Margin). The rate of interest payable in respect of the Class A2 Debenture Bonds will be (i) up to (but excluding) the Interest Payment Date falling in December 2011 (the Class A2 Step-Up Date), LIBOR (or, in the case of the first Interest Period, will be the annual rate obtained by the linear interpolation of LIBOR for four month Sterling deposits and LIBOR for five month Sterling deposits) plus a margin of 1.08 per cent. per annum (the Class A2 Margin) and (ii) from (and including) the Class A2 Step-Up Date, LIBOR plus the Class A2 Margin and a further margin of 1.62 per cent. per annum (the Class A2 Step-Up Margin). The rate of interest payable in respect of the Class A3 Debenture Bonds will be (i) up to (but excluding) the Interest Payment Date falling in December 2014 (the Class A3 Step-Up Date), 5.860 per cent, per annum and (ii) from (and including) the Class A3 Step-Up Date, LIBOR plus a margin of 0.22 per cent. per annum (the Class A3 Margin) and a further margin of 0.33 per cent. per annum (the Class A3 Step-Up Margin). The rate of interest payable in respect of the Class A4 Debenture Bonds will be (i) up to (but excluding) the Interest Payment Date falling in December 2018 (the Class A4 Spirit Issuer plc November 2004 Step-Up Date), 6.582 per cent. per annum and (ii) from (and including) the Class A4 Step-Up Date, LIBOR plus a margin of 1.11 per cent. per annum (the Class A4 Margin) and a further margin of 1.665 per cent. per annum (the Class A4 Step-Up Margin). The rate of interest payable in respect of the Class A5 Debenture Bonds will be (i) up to (but excluding) the Interest Payment Date falling in December 2028 (the Class A5 Step-Up Date and, together with the Class A1 Step-Up Date, the Class A2 Step-Up Date, the Class A3 Step-Up Date, and the Class A4 Step-Up Date, the Step-Up Dates), 5.472 per cent. per annum and (ii) from (and including) the Class A5 Step-Up Date, LIBOR plus a margin of 0.30 per cent. per annum (the Class A5 Margin) and a further margin of 0.45 per cent. per annum (the Class A5 Step-Up Margin). The Debenture Bonds will be subject to optional redemption and partial redemption before their stated maturity date in the specific circumstances described below. If any withholding or deduction for or on account of tax is applicable to the Debenture Bonds, payments of interest on, repayments of principal of, and payments of premium (if any) on the Debenture Bonds will be made subject to such withholding or deduction, without the Issuer or Ambac or any other party being obliged to pay any additional amount as a consequence (save that Ambac will be required to pay an additional amount pursuant to the Ambac Financial Guarantee to the extent necessary to ensure that the Debenture Bondholder receives from Ambac what would have been receivable from the Issuer in respect of any Guaranteed Obligations). The Debenture Bonds will be obligations of the Issuer only and will not be guaranteed by, or be the responsibility of, any other person (other than, in respect of Scheduled Interest on (which excludes Class A1 Step-Up Amounts, Class A3 Step-Up Amounts and Class A5 Step-Up Amounts (together with the Class A2 Step-Up Amounts and the Class A4 Step-Up Amounts, the Step-Up Amounts)) and Ultimate Principal of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds by Ambac). It should be noted, in particular, that the Debenture Bonds will not be obligations of, and will not be guaranteed by, the Debenture Bond Trustee, the Borrower Group Security Trustee, the Issuer Security Trustee, the Managers, the Liquidity Facility Provider, the Hedge Provider, the Account Bank, the Agent Bank, the Paying Agents, any Obligor (each as referred to herein) or any other company in Spirit Group (as referred to herein). It is expected that the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds will, when issued, be assigned an ‘‘AAA’’ rating by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (S&P) and by Fitch Ratings Limited (Fitch) and an ‘‘Aaa’’ rating by Moody’s Investors Service Ltd. (Moody’s and, together with S&P and Fitch, the Rating Agencies). The rating is based solely upon the financial strength of Ambac. It is expected that the Class A2 Debenture Bonds and the Class A4 Debenture Bonds will, when issued, be assigned a ‘‘BBB+’’ rating by S&P, a ‘‘BBB+’’ rating by Fitch and a ‘‘Baa2’’ rating by Moody’s. See also Investment Considerations – Rating below. Such ratings do not address the likelihood of payment of Step-Up Amounts or any redemption premium. The payment of Step-Up Amounts and redemption premia is subordinated to the payment of interest on and the repayment of principal of the Debenture Bonds. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation, and each security rating should be evaluated independently of any other rating. A security rating, among other things, will depend on certain underlying characteristics of the Borrower Group’s business from time to time. For a discussion of certain risks and other factors that should be considered in connection with an investment in the Debenture Bonds, see Investment Considerations below. This Offering Circular may only be used for the purposes for which it is published. Barclays Capital Citigroup Goldman Sachs International The Royal Bank of Scotland Joint Bookrunners and Lead Managers Merrill Lynch International Co-Lead Manager The date of this Offering Circular is 24 November, 2004. The Issuer accepts responsibility for all of the information contained in this Offering Circular other than the Ambac Information (as defined below). The Issuer, having made all reasonable enquiries, confirms that this Offering Circular contains or incorporates all information which is material in the context of the issuance and offering of the Debenture Bonds, that the information contained or incorporated in this Offering Circular is true and accurate in all material respects and is not misleading, that the opinions and intentions expressed in this Offering Circular are honestly held and that there are no other facts the omission of which would make this Offering Circular or any of such information or the expression of any such opinions or intentions misleading. Each member of the Borrower Group (as defined herein) severally accepts responsibility for all the information contained in this Offering Circular relating to each of its businesses and to the sections Business of Spirit Group, Summary Details of Member Companies of Spirit Group, Corporate Reorganisation, The SNR Acquisition, Information Regarding the Borrower Group Estate and Management and Ownership below and, to the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the accuracy of such information. The Issuer has not separately verified the Ambac Information contained herein and no representation, warranty or undertaking, express or implied, is made and no liability is accepted by the Issuer as to the accuracy or completeness of the Ambac Information. Each person receiving this Offering Circular acknowledges that such person has not relied on the Issuer in connection with its investigation of the Ambac Information contained herein.

Ambac accepts responsibility for the information contained in Ambac Assurance UK Limited, Ambac Assurance Corporation, Relationship Between Ambac Assurance UK Limited and Ambac Assurance Corporation, Form of Ambac Financial Guarantee, Appendix – Financial Statements of Ambac and paragraphs 7, 8 and 9 of General Information below (together, the Ambac Information). To the best of the knowledge and belief of Ambac (having taken all reasonable care to ensure that such is the case), the Ambac Information is in accordance with the facts and does not omit anything likely to affect the accuracy of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by Ambac as to the accuracy or completeness of any information contained in this Offering Circular (other than the Ambac Information) or of any other information supplied in connection with the Debenture Bonds or their distribution. Other than in respect of the Ambac Information, Ambac has not separately verified the information contained herein and no representation, warranty or undertaking, express or implied, is made and no liability accepted by Ambac as to the accuracy or completeness of such information. Each person receiving this Offering Circular acknowledges that such person has not relied on Ambac or any of its affiliates in connection with its investigation of the information contained herein (other than the Ambac Information).

No person is authorised to give any information or to make any representation in connection with the offering or sale of the Debenture Bonds other than those contained in this Offering Circular and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, the Borrower (as defined herein) or any other member of Spirit Group, the Debenture Bond Trustee, the Borrower Group Security Trustee, the Issuer Security Trustee, the Managers or Ambac or any of their respective affiliates or advisers. Neither the delivery of this Offering Circular nor any sale, allotment or solicitation made in connection with the offering of the Debenture Bonds shall, under any circumstances, create any implication or constitute a representation that there has been no change in the affairs of the Issuer, or in the other information contained herein since the date hereof.

The Debenture Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act), or any State securities laws. The Debenture Bonds may not be offered or sold within the United States or for the benefit or account of, or to, any U.S. persons (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable State securities laws.

No action has been or will be taken to permit a public offering of the Debenture Bonds or the distribution of this Offering Circular in any jurisdiction. The distribution of this Offering Circular and the offering of the Debenture Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular (or any part thereof) comes are required by the Issuer and the Managers to inform themselves about and to observe any such restrictions. For a description

2 of certain further restrictions on offers and sales of the Debenture Bonds and the distribution of this Offering Circular, see Subscription and Sale below. This Offering Circular may only be communicated or caused to be communicated to persons (i) who are outside the United Kingdom or (ii) who have professional experience in matters relating to investments or (iii) who fall within Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 or (iv) to whom this Offering Circular can be sent lawfully in accordance with applicable securities laws (all such persons being referred to as relevant persons). This Offering Circular must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this Offering Circular relates is available only to relevant persons and will be engaged in only with relevant persons. The risk characteristics of each class of Debenture Bonds differs from the other classes. In this respect and more generally, particular attention is drawn to Investment Considerations below. This Offering Circular does not constitute an offer by, or an invitation by or on behalf of, the Issuer, the Managers or any of them to subscribe or purchase any of the Debenture Bonds. In this Offering Circular all references to Pounds, Sterling or £ are references to the lawful currency for the time being of the United Kingdom; all references to euro or c are to the lawful currency introduced at the start of Stage III of the European Economic and Monetary Union pursuant to the Treaty or European Union; and all references to U.S. dollars, dollars,orU.S.$ or $ are to the lawful currency for the time being of the United States of America. In connection with the issue and distribution of any tranche of Debenture Bonds, Goldman Sachs International (GSI), in its capacity as stabilising agent, or any person acting for it, may over-allot or effect transactions with a view to supporting the market price of the class of Debenture Bonds of which such tranche forms part at a level higher than that which might otherwise prevail for a limited period after the issue date. However, there is no obligation on GSI or any person acting for GSI to do this. Such stabilising, if commenced, may be discontinued at any time and must be brought to an end after a limited period.

3 TABLE OF CONTENTS

SUMMARY OF THE ORGANISATIONAL STRUCTURE OF SPIRIT GROUP ...... 5 SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA OF THE BORROWER GROUP 12 SUMMARY OF THE TERMS AND CONDITIONS OF THE DEBENTURE BONDS AND RELATED MATTERS...... 13 INVESTMENT CONSIDERATIONS ...... 20 SUMMARY OF PRINCIPAL DOCUMENTS ...... 45 USE OF PROCEEDS...... 92 THE ISSUER ...... 93 ISSUER PARENT...... 95 THE BORROWER...... 97 SPL...... 99 BORROWER GROUP PARENT ...... 101 NEW PARENTCO ...... 103 AMBAC ASSURANCE UK LIMITED ...... 105 AMBAC ASSURANCE CORPORATION...... 107 RELATIONSHIP BETWEEN AMBAC ASSURANCE UK LIMITED AND AMBAC ASSURANCE CORPORATION ...... 112 FORM OF AMBAC FINANCIAL GUARANTEE ...... 113 VALUER’S REPORT ...... 122 THE UNITED KINGDOM PUB INDUSTRY ...... 181 BUSINESS OF SPIRIT GROUP ...... 187 SUMMARY DETAILS OF MEMBER COMPANIES OF SPIRIT GROUP...... 193 CORPORATE REORGANISATION...... 197 THE SNR ACQUISITION ...... 199 FURTHER INFORMATION REGARDING THE BORROWER GROUP ESTATE...... 200 MANAGEMENT AND OWNERSHIP ...... 203 EXPECTED AVERAGE LIFE OF THE DEBENTURE BONDS...... 205 TERMS AND CONDITIONS OF THE DEBENTURE BONDS...... 206 GLOBAL DEBENTURE BONDS ...... 259 SUBSCRIPTION AND SALE...... 262 TAXATION AND EU SAVINGS DIRECTIVE...... 265 GENERAL INFORMATION ...... 268 APPENDIX FINANCIAL STATEMENTS OF AMBAC...... 270 INDEX OF DEFINED TERMS ...... 291

4 SUMMARY OF THE ORGANISATIONAL STRUCTURE OF SPIRIT GROUP

This section contains a summary of the organisational structure of Spirit Group (as defined below). This summary does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by reference to, the more detailed information appearing elsewhere in this Offering Circular. Capitalised terms used in this Offering Circular but not otherwise defined herein are defined in the master definitions and construction schedule signed by Freshfields Bruckhaus Deringer and Slaughter and May for identification purposes and dated on or before the Closing Date (the Master Definitions and Construction Schedule) or the other Transaction Documents (as defined below). An index of defined terms is included in the section entitled Index of Defined Terms at the back of this Offering Circular. For the purposes of the Debenture Bonds and this Offering Circular, the term Borrower Group means Spirit Managed Pubs Limited (the Borrower), Spirit Pubs Holdings Limited (Borrower Group Parent), Spirit Pubs Parent Limited (New ParentCo), Spirit Group Limited (SGL) and its subsidiaries and the SNR Group (as defined below) and the term Borrower Group Entity means any one of such companies. The term Securitisation Group means Spirit Parent Limited (SPL), SGL, Spirit Funding Limited (SFL), Spirit (AKE Holdings) Limited, Spirit (Lodges Holdings) Limited and Tom Cobleigh Limited (TCL) and the term Securitisation Group Entity means any one of such companies. The SNR Group comprises Spirit Retail BidCo Limited (BidCo) and each of its subsidiaries. Spirit Group comprises Spirit Group Holdings Limited (Spirit Holdings) and each of its subsidiaries (including the Borrower Group) and, prior to August 2003, comprised Spirit Managed Holdings Limited (SMHL) (formerly Spirit Group Holdings Limited) and each of its subsidiaries and Spirit Group Entity means any one of such companies.

Spirit Group History Spirit Group owns and operates a managed pub estate which is the largest managed pub estate in the United Kingdom, comprising 2,398 managed pubs and restaurants. Spirit Group was formed as a result of a demerger of the managed pub business of Punch Group Limited (now Punch Taverns plc) and its subsidiaries (Punch Group) which was approved by the shareholders of Punch Group on 4 January, 2002 and took effect on 3 March, 2002 (Demerger). Financial separation of the managed and leased pub businesses of Punch Group took effect on 22 April, 2002 (Separation) at which time Spirit Group was the owner and operator of some 1,035 managed pubs. In February 2003, Spirit Group acquired Tom Cobleigh Holdings Limited, the parent company of TCL, the owner and operator of a chain of 75 managed pubs (the TC Properties) (such acquisition being referred to as the TCL Acquisition). In November 2003, the Equity Group (as defined below) established a new holding company structure, the ultimate parent company of which is Spirit Holdings. Spirit Holdings, through its subsidiary BidCo, acquired the various operating companies within the SNR Group from Scottish & Newcastle PLC (S&N) (such acquisition being referred to as the SNR Acquisition). The SNR Acquisition was financed by a secured loan facility dated 5 October, 2003 (the SNR Acquisition Facility) between Spirit Group Parent Limited (SGPL), The Royal Bank of Scotland plc (as Facility Agent) and a syndicate of banks. The SNR Group operated approximately 1,400 managed pubs, restaurants and budget hotels at the time of the SNR Acquisition. Further details of the SNR Acquisition are set out in The SNR Acquisition below. At the same time as the SNR Acquisition, Spirit Holdings (then known as Spirit Amber Holdings Limited), through its subsidiary SGPL, acquired all of the shares in SMHL (the then ultimate holding company of Spirit Group). Following the SNR Acquisition, the reversionary titles to some 220 of the SNR Group pubs were sold to Prestbury Wentworth Limited in March 2004. Although such pubs continue to be operated by companies within Spirit Group under a 30 year leaseback arrangement (Project Wentworth), they will not form part of the Borrower Group Estate. In July 2004, the Premier Lodge budget hotel chain (comprising 132 lodges and pipeline sites) and 19 co-located pubs were sold to Whitbread Group PLC (Project Star). In October 2004, the reversionary titles to 65 of the SNR Group pubs were sold to a subsidiary of British Land PLC. Such pubs are subject to 30 year leasebacks which were entered into in favour of Spirit Group companies (Project Wisley). The leaseback interests remain within Spirit Group but will not form part of the Borrower Group Estate.

5 Current Structure Spirit Group owns and operates a managed pub estate. Prior to the date of this Offering Circular, the corporate structure of Spirit Group was divided into two principal sub-groups: the Securitisation Group and the SNR Group. Spirit Holdings is the ultimate parent company of Spirit Group and approximately 89.5 per cent. of its shares are held by Texas Pacific Group, Blackstone International Group, CVC Capital Partners, Merrill Lynch Global Private Equity, Colony Capital and Morgan Stanley (the Equity Group). The balance of the shares in Spirit Holdings are held by certain other private equity investors, private individuals and certain trusts for the benefit of private individuals (see Summary Details of Member Companies of Spirit Group below).

The Securitisation Group Spirit Intermediate Holdings Limited (SIHL), SGPL, SMHL, Spirit Group Equity Limited (SGEL), Spirit Financial Holdings Limited (Old HoldCo) and SPL are intermediate holding companies for the Securitisation Group. The principal assets of the Securitisation Group prior to Completion (as defined below) comprise 1,041 managed pubs (the Securitised Estate). SGL is the operating company in respect of the Securitised Estate. Allied Kunick Entertainments Limited (AKE) is a joint venture with Gamestec Leisure Limited and operates retail outlets where amusement machines form a major part of the business. The Securitisation Group holds its interest in AKE through Spirit (AKE Holdings) Limited. Spirit Travel Inn Limited (TravelCo) is a joint venture with Whitbread Hotels Limited which develops and operates lodge accommodation on land adjacent to or adjoining managed pubs in the Securitised Estate. The Securitisation Group holds its interest in TravelCo through Spirit (Lodges Holdings) Limited. The Securitisation Group was formed in connection with the Demerger and is the subject of certain financing and security arrangements in connection with a securitisation (the Securitisation) involving the issue of a series of notes by SFL (the Original SFL Notes) described in an offering circular dated 22 April, 2002 relating thereto and the issue of additional notes (the Additional SFL Notes, and together with the Original SFL Notes, the SFL Notes) described in an offering circular dated 15 August, 2003 relating thereto in connection with the TCL Acquisition. The issue proceeds of the SFL Notes were advanced by SFL to SGL pursuant to the terms of a facility agreement between, inter alios, SGL, SFL, SPL, Spirit (AKE Holdings) Limited, Spirit (Lodges Holdings) Limited, TCL and Deutsche Trustee Company Limited (as the security trustee) entered into on 22 April, 2002 and amended and restated on 14 August, 2003 (the SFL Issuer/Borrower Facility Agreement). Security in the form of fixed and floating charges has been granted by SGL, TCL and other members of the Securitisation Group to Deutsche Trustee Company Limited, as security trustee for certain secured creditors under the Securitisation, over all their respective assets and undertakings, including the pubs comprising the Securitised Estate (as defined below) and SGL’s interests in certain joint venture companies. SFL granted security over substantially all of its assets and undertaking in favour of a security trustee for the benefit of its finance creditors, including the holders of the SFL Notes. In accordance with conditions 5(c) and 14 of the SFL Notes, SFL intends to give notice of its intention to redeem the SFL Notes by way of a notice to be published on or prior to 26 November, 2004 in the Luxemburger Wort and a notice to be delivered to Clearstream, Luxembourg and Euroclear. The funds required by SFL to effect the redemption of the SFL Notes will come from repayment of the term advances made under the SFL Issuer/Borrower Facility Agreement.

The SNR Group The main operating companies in the SNR Group are Spirit Group Retail Limited (SGRL, formerly Scottish & Newcastle Retail Limited), Aspect Ventures Limited, The Chef & Brewer Group Limited, Partstripe Limited, Springtarn Limited, AVL (Pubs) No.2 Limited, Spirit Group Retail (Pubs) No.2 Limited, Huggins & Company Limited, Freshwild Limited and CPH (R&L) No.2 Limited. Certain other companies within the SNR Group own legal and/or beneficial title to certain pubs. As part of the arrangements entered into in connection with Project Star, SGRL and other SNR Group operating companies entered into an operations agreement, with a term of 10 years, pursuant to which certain pubs retained by Spirit Group which are adjoining or adjacent to 82 of the Premier Lodges sold to Whitbread Group PLC agreed to provide certain food and beverage facilities,

6 including breakfast and function catering, to the co-located lodges. In addition, nine hotels retained by Spirit Group are subject to a ten year franchise arrangement with Whitbread Group PLC pursuant to which they are to be operated under the Premier Travel InnTM brand.

The Corporate Reorganisation As part of a corporate reorganisation (the Corporate Reorganisation), the business and assets of SGL and the SNR Group will be transferred to the Borrower and Spirit Managed Inns Limited (BankCo) (see Corporate Reorganisation below). In addition, 364 pubs are to be transferred to New Pubco (MC) Limited (PubCo ManagedCo) and will be owned and operated outside the Borrower Group Estate and the BankCo Estate (as defined below) (Project PubCo). Completion of the Corporate Reorganisation (Completion) is expected to take place on the Closing Date, contemporaneously with the closing of the Refinancing described below.

The Refinancing In connection with the Corporate Reorganisation, it is intended that on the Closing Date: (a) the SNR Acquisition Facility will be repaid (and the security in respect thereof will be released); (b) term advances made under the SFL Issuer/Borrower Facility Agreement will be repaid to SFL (and the security in respect thereof will be released); (c) the funds received by SFL in repayment of the term advances will be credited to a bank account charged in favour of the security trustee under the SFL Issuer Deed of Charge (and the security in respect of the SFL Notes other than in respect of such bank account will be released) and SFL will issue a redemption notice in respect of the SFL Notes; and (d) the existing subordinated loan between Spirit Finco Limited and SGL (the SGL Subordinated Loan) will be repaid ((a) to (d) together, the Refinancing). On the Closing Date, in order to implement the Refinancing, the Issuer will issue the Debenture Bonds (the Issue) as more particularly described in this Offering Circular and will use the proceeds of the Issue to make term advances to the Borrower pursuant to a loan facility agreement (the Issuer/Borrower Facility Agreement) (see Summary of Principal Documents – Issuer/Borrower Facility Agreement). The Borrower will, on the Closing Date, apply the proceeds of the term advances made to it by the Issuer under the Issuer/Borrower Facility Agreement as described in Use of Proceeds below. The Borrower will also enter into certain back-to-back hedging transactions pursuant to an agreement (the Issuer/Borrower Hedging Agreement) to be entered into between the Borrower and the Issuer on the Closing Date to hedge the Borrower’s exposure to fluctuations in interest rates during the life of the transaction. The Issuer will enter into corresponding hedging arrangements with a Hedge Provider as described herein. The obligations of the Borrower to the Issuer under the Issuer/Borrower Facility Agreement and under the Issuer/Borrower Hedging Agreement will be secured pursuant to the Borrower Group Deed of Charge. Pursuant to the Borrower Group Deed of Charge, the Borrower will also grant a separate second ranking security interest to secure the obligations of the Borrower to BankCo under the BankCo/Borrower Subordinated Loan (as defined below), the Issuer/Borrower Subordinated Loan Agreement, certain obligations of BankCo and LoanCo to the BankCo Banks and the LoanCo Banks (each as defined below) respectively and certain obligations of BankCo to the BankCo Hedge Providers, such obligations being subordinated to the payment of all amounts owing to the Issuer. For a more detailed description of the intercreditor arrangements between the Issuer, the BankCo Banks and the LoanCo Banks, see Summary of Principal Documents – Borrower Group Deed of Charge below. To effect the Refinancing, certain members of Spirit Group will enter into new financing arrangements comprising: (a) £600 million of bank debt (the BankCo Loan) lent directly to BankCo by a syndicate of banks (the BankCo Banks) under a syndicated credit facility agreement dated on or about the Closing Date (the BankCo Loan Agreement) comprising a £550 million term loan facility and

7 a £50 million revolving working capital facility (which will be made available to Spirit Administrative Services Limited (AdminCo) by BankCo pursuant to an intercompany revolving facility (the BankCo Working Capital Facility)); and (b) £275 million of bank debt (the LoanCo Loan) lent directly to Spirit Managed Funding Limited (LoanCo) by a syndicate of banks (the LoanCo Banks) under a loan agreement dated on or about the Closing Date (the LoanCo Loan Agreement). It should be noted that the Borrower will not have any right to restrict or prevent any Excluded Group Entity (whether BankCo, LoanCo or any other entity) from incurring at any time financial indebtedness in excess of the indebtedness described above. In addition to the new external funding pursuant to the Issue, the BankCo Loan and the LoanCo Loan, the intra-group funding arrangements of Spirit Group will also be restructured. Following an intra-group recapitalisation, subordinated debt will be lent to certain members of Spirit Group as follows: (a) £700 million of intra-group subordinated debt (the New FinCo/LoanCo Subordinated Loan) will be lent by Spirit Group Finco Limited (New FinCo) to LoanCo under a loan agreement dated on or about the Closing Date (the New FinCo/LoanCo Subordinated Loan Agreement) from the proceeds of a recapitalisation of Spirit Group as part of the Corporate Reorganisation; (b) £650 million of intra-group subordinated debt (the LoanCo/BankCo Subordinated Loan)will be lent by LoanCo to BankCo under a loan agreement dated on or about the Closing Date (the LoanCo/BankCo Subordinated Loan Agreement) from the proceeds of the New FinCo/ LoanCo Subordinated Loan; (c) £550 million of intra-group subordinated debt (the BankCo/Borrower Subordinated Loan) will be lent by BankCo to the Borrower under a loan agreement dated on or about the Closing Date (the BankCo/Borrower Subordinated Loan Agreement) from the proceeds of the LoanCo/BankCo Subordinated Loan; (d) £50 million of subordinated debt (the LoanCo/Issuer Subordinated Loan) will be lent by LoanCo to the Issuer under a loan agreement dated on or about the Closing Date (the LoanCo/Issuer Subordinated Loan Agreement) from the proceeds of the New FinCo/ LoanCo Subordinated Loan; and (e) £50 million of subordinated debt (the Issuer/Borrower Subordinated Loan) will be lent by the Issuer to the Borrower under a loan agreement dated on or about the Closing Date (the Issuer/Borrower Subordinated Loan Agreement) utilising the entire proceeds of the LoanCo/Issuer Subordinated Loan.

8 The first diagram below sets out in simplified form the structure of and cash flows in the transaction. The second diagram below sets out the organisational structure of the principal companies within Spirit Group as it will be on Completion.

Group Transaction Structure Diagram

BankCo IP Licence

Spirit Group Holdings Limited BankCo Spirit ASA Intermediate Holdings Limited

Spirit Group Parent Limited

$

NewFinCo/LoanCo Spirit Managed Spirit Group Spirit Administrative New Pubco Holdings Sub Loan Holdings Limited Finco Limited Services Limited Limited

Spirit Group Borrower Borrower Equity Limited IP ASA

// // $ Licence LoanCo Loan LoanCo Spirit Managed Spirit Financial Spirit Supply Banks Funding Limited Holdings Limited Company Limited LoanCo/ Issuer Sub Loan // Spirit FinCo Spirit Parent BankCo Borrower LoanCo/ Limited Limited SA SA BankCo Sub Loan // //

Spirit Managed BankCo/Borrower Spirit Pubs Inns Limited Sub Loan Holdings Limited

£

BankCo Spirit Pubs Loan Parent Limited

LoanCo/ £ £ BankCo £ Issuer Banks Sub Loan Spirit Managed + Spirit Group Spirit Retail Pubs Limited Limited BidCo Limited

Share Trustee Issuer/ Borrower £ £ £ Sub + SNR SNR SNR + Loan Group Group Group IBFA Subsidiary Subsidiary Subsidiary Spirit Issuer Parent Limited

+

Spirit Issuer plc

Debenture Liquidity Swaps Banks Facility Ambac

+

// Share Mortgage - Banks

Transfers of cash from existing SGL/SGRL Bank Accounts to new Borrower and BankCo + Bank Accounts during the interim period

£ Share Mortgage - Debenture Bonds only

$ Joint Share Mortgage BankCo SA = BankCo Supply Agreement Borrower SA = Borrower Supply Agreement BankCo ASA = BankCo Administrative Services Agreement Borrower ASA = Borrower Administrative Services Agreement

9 Spirit Group: Summary Group Structure at Completion

Spirit Group Holdings Limited

Spirit Intermediate Holdings Limited

Spirit Group Parent Limited

Spirit Managed Spirit Administrative Spirit Group Finco New Pubco Holdings Spirit Acquisitions Holdings Limited Services Limited Limited Limited Holdings Limited

Spirit Group New Pubco (TC) Spirit Acquisitions Pension Trustee Limited Guarantee Limited Limited

Spirit Group Equity Limited New Pubco (MC) Limited

Spirit Managed Spirit Financial Spirit Supply Funding Limited Holdings Limited Company Limited

Spirit Parent Spirit FinCo Limited Limited 10 Spirit Funding Spirit Pubs Holdings Spirit Managed Inns Limited Limited Limited

Spirit Pubs Parent Limited

Spirit Group Spirit Managed Pubs Spirit Retail Limited Limited BidCo Limited

Spirit Group Retail Faith @ Bar Room Spirit (AKE Tom Cobleigh Spirit (Lodges Dormant Cleveland Place Spirit Group Retail Pubs and Aspect Ventures Partstripe Spirit Group Bar Limited Holdings) Limited Limited Holdings) Limited Holdings plc Pensions Limited Restaurants Limited Limited Limited Retail Limited

51% 50% 90% 10% 1. 2.

Allied Kunick Spirit Group Retail Spirit Group Retail Spirit Travel Inn Huggins & Company CPH(R&L) The Chef & Brewer Narnain Aspect Leisure AVL (Pubs) No. 1 Readystripe Stickpad Dormants Entertainments Dormants (Pubs) No. 1 (Northampton) Limited Limited No. 1 Limited Group Limited 75% (unlimited Company) Activities Limited Limited Limited Limited Limited Limited Limited

25%

25% Spirit Group Retail CPH(R&L) AVL (Pubs) No. 2 Dearg Limited (Pubs) No. 2 No. 2 Limited Limited Limited

75% 0.9%

CPH Palladium Dormants Springtarn Limited Limited Key:

99.1% Trading Company

10% Borrower security sub-group Freshwild Limited BankCo and LoanCo security sub-group

90% 1. Scottish & Newcastle Retail Ltd holds 74 A ordinary shares and 155m non-redeemable preference shares in S&N Retail (Northampton) Limited Mountloop Limited 2. Spirit Retail BidCo Ltd holds 26 B ordinary shares in S&N Retail (Northampton) Limited The Pre-Reorganisation Managed Estate and the Managed Estate Since 15 August, 2003, the Securitised Estate has decreased by 30 pubs, from 1,071 pubs to 1,041 pubs, as a result of net disposals made by SGL during the intervening period. Since the SNR Acquisition, the total number of pubs within the SNR Group (the SNR Estate) has reduced as a result of net disposals made by members of the SNR Group in the intervening period from 1,413 pubs to 1,354 pubs. These 1,354 pubs include the 220 pubs held under 30 year leases granted pursuant to Project Wentworth and the 65 pubs held under 30 year leases granted pursuant to Project Wisley each of which will be operated within the BankCo Estate (as defined below) after the Closing Date. The Securitised Estate and the SNR Estate are together referred to as the Pre-Reorganisation Managed Estate in this Offering Circular. Following the Corporate Reorganisation (see Corporate Reorganisation below), the Borrower Group Estate and the BankCo Estate are together referred to in this Offering Circular as the Managed Estate.

The Borrower Group Estate A total of 1,080 freehold (or its Scottish equivalent) and long leasehold properties (the Borrower Group Estate) from both parts of the Pre-Reorganisation Managed Estate will be transferred to the Borrower pursuant to the Corporate Reorganisation (see Corporate Reorganisation below) and the obligations of, inter alios, the Borrower under the Issuer/Borrower Facility Agreement will be secured in favour of Deutsche Trustee Company Limited, as security trustee (the Borrower Group Security Trustee), by fixed and floating charges over, inter alia, the Borrower Group Estate. The properties comprising the Borrower Group Estate are listed in Appendix 1A (Borrower Group Estate) to the Valuer’s Report (see Valuer’s Report below).

The BankCo Estate A total of 951 freehold (or its Scottish equivalent) and long and short leasehold properties (the BankCo Estate) from both parts of the Pre-Reorganisation Managed Estate will be transferred to BankCo pursuant to the Corporate Reorganisation (see Corporate Reorganisation below). The properties comprising the BankCo Estate are listed in Appendix 1B (BankCo Estate) to the Valuer’s Report (see Valuer’s Report below). References to the Borrower Group Estate, the BankCo Estate and the Managed Estate shall, where the context requires, include any additional property acquired by the Borrower or BankCo (as the case may be) after the Closing Date and exclude any property disposed of by the Borrower or BankCo (as the case may be) after the Closing Date as permitted by the Transaction Documents (in the case of the Borrower) or the BankCo Loan Agreement (in the case of BankCo).

The PubCo Estate A total of 364 freehold (or its Scottish equivalent) and long and short leasehold properties (the PubCo Estate) from both parts of the Pre-Reorganisation Managed Estate will be transferred to PubCo ManagedCo pursuant to the Corporate Reorganisation (see Corporate Reorganisation below).

Valuation of the Borrower Group Estate and the Managed Estate A valuer’s report dated 22 November, 2004 (the Valuer’s Report) issued by DTZ Debenham Tie Leung Limited (DTZ) with respect to the Borrower Group Estate and the Managed Estate is reproduced in its entirety below (see Valuer’s Report below). In the view of DTZ and subject to the assumptions and qualifications set out in the Valuer’s Report, the Borrower Group Estate had a Market Value (as defined in the Valuer’s Report) of £2.265 billion and the Managed Estate (which excludes the PubCo Estate) had a Market Value of £3.145 billion, both as at 18 November, 2004, being the date of the valuation set out in the Valuer’s Report.

11 SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA OF THE BORROWER GROUP

Unaudited, Pro forma, Combined Financial Information for Spirit Managed Pubs Limited The following table sets forth certain historical financial information for the Borrower Group on a combined basis.

Unaudited, pro forma, combined financial information

2001 2002 2003 2004

£m £m £m £m Drink Sales...... 394.0 416.5 444.0 458.5 Food Sales...... 158.8 175.8 199.6 213.8 Other Sales ...... 40.3 43.7 45.2 45.6

Turnover...... 593.1 636.0 688.8 717.9 Operating expenses ...... (394.7) (422.4) (463.1) (476.8)

Operating profit ...... 198.4 213.6 225.7 241.1 Allocated central overheads...... (43.7) (42.9) (42.2) (38.8)

154.7 170.7 183.5 202.3

Purchasing synergies adjustment ...... 5.5 Beer price adjustment ...... 0.7 Overhead synergies adjustment ...... 5.8

Pro forma EBITDA ...... 214.3

Number of outlets...... 1,080 1,080 1,080 1,080

Notes 1. The unaudited, pro forma, combined financial information has been prepared by combining the relevant financial information in respect of the pubs to be transferred from the Pre-Reorganisation Managed Estate to the Borrower Group Estate. 2. For the years 2001, 2002 and 2003 the unaudited, pro forma, combined financial information has been extracted from the unaudited financial information of the Securitised Estate for each year ended 18 August, 2001, 17 August, 2002, and 23 August, 2003 respectively and from the unaudited financial information of the SNR Estate for each year ended 30 December, 2001, 29 December, 2002 and 28 December, 2003 respectively. 3. For the year 2004, the unaudited, pro forma combined financial information has been extracted from the unaudited financial information of the Securitised Estate and the SNR Estate each for the year ended 21 August, 2004. 4. Certain overheads are recorded centrally by both the Securitised Estate and the SNR Estate as they relate to the businesses as a whole rather than to individual pubs. These central overheads have been allocated on a pro rata basis relative to the total number of pubs (excluding those to be transferred to PubCo ManagedCo) in the Securitised Estate and the SNR Estate to the number of pubs to be transferred to the Borrower Group Estate. 5. Included in the 2004 operating profit is the financial benefit of certain revised supply arrangements entered into at various times following the SNR Acquisition. The purchasing synergies adjustment represents the estimated incremental full year impact on the Borrower Group Estate of the revised supply arrangements. These purchasing synergies have been allocated to the pubs to be transferred to the Borrower Group Estate on the basis of the level of turnover attributable to those pubs. 6. Included in the 2004 operating profit is the financial benefit of the revised supply agreement with Scottish Courage signed at the time of the SNR Acquisition. The beer price adjustment represents the estimated incremental full year impact on the Borrower Group of the revised supply agreement with Scottish Courage which was implemented from 3 November, 2003. This beer price adjustment has been allocated to the pubs to be transferred to the Borrower Group Estate on the basis of the level of barrelage attributable to those pubs. 7. Overhead synergies estimated to accrue for the Pre-Reorganisation Managed Estate have been allocated to the Borrower Group Estate on a pro rata basis relative to the total number of pubs (excluding those to be transferred to PubCo ManagedCo) in the Securitised Estate and the SNR Estate to be transferred to the Borrower Group Estate.

12 SUMMARY OF THE TERMS AND CONDITIONS OF THE DEBENTURE BONDS AND RELATED MATTERS

The following is only a summary of, and should be read in conjunction with, and is qualified in its entirety by reference to, the more detailed information which appears elsewhere in this Offering Circular. Key Characteristics of the Debenture Bonds

Class A1 Debenture Class A2 Debenture Class A3 Debenture Class A4 Debenture Class A5 Debenture Bonds1 Bonds Bonds1 Bonds Bonds1 Denomination of £1,000, £10,000 and £1,000, £10,000 and £1,000, £10,000 and £1,000, £10,000 and £1,000, £10,000 and Debenture Bonds2 £100,000 £100,000 £100,000 £100,000 £100,000 Total Nominal Amount £150,000,000 £200,000,000 £250,000,000 £350,000,000 £300,000,000 Issue Price 100 per cent. 100 per cent. 105 per cent. 105 per cent. 105 per cent. Interest Rate3 3-month LIBOR11 plus a 3-month LIBOR11 plus a 5.860 per cent. per 6.582 per cent. per 5.472 per cent. per margin of 0.22 per cent. margin of 1.08 per cent. annum up to (but annum up to (but annum up to (but per annum up to (but per annum up to (but excluding) the Interest excluding) the Interest excluding) the Interest excluding) the Interest excluding) the Interest Payment Date falling in Payment Date falling in Payment Date falling in Payment Date falling in Payment Date falling in December 2014 and December 2018 and December 2028 and December 2011 and December 2011 and thereafter 3-month thereafter 3-month thereafter 3-month thereafter 3-month thereafter 3-month LIBOR plus a margin of LIBOR plus a margin of LIBOR plus a margin of LIBOR plus a margin of LIBOR plus a margin of 0.22 per cent. per annum 1.11 per cent. per annum 0.30 per cent. per annum 0.22 per cent. per annum 1.08 per cent. per annum and a further margin of and a further margin of and a further margin of and a further margin of and a further margin of 0.33 per cent. per annum 1.665 per cent. per 0.45 per cent. per annum 0.33 per cent. per annum 1.62 per cent. per annum annum Frequency of Quarterly Quarterly Quarterly Quarterly Quarterly Payments of Interest Frequency of Quarterly, commencing Quarterly, commencing Quarterly, commencing Quarterly, commencing Quarterly, commencing Amortisation of Principal on the Interest Payment on the Interest Payment on the Interest Payment on the Interest Payment on the Interest Payment Date falling in March Date falling in September Date falling in March Date falling in September Date falling in June 2029 2014 2026 2015 2019 Early Redemption Price 101 per cent. of par up to 102 per cent. of par up to The greater of par and The greater of par and The greater of par and (but excluding) the (but excluding) the Spens to (but excluding) Spens to (but excluding) Spens to (but excluding) Interest Payment Date Interest Payment Date the Class A3 Step-Up the Class A4 Step-Up the Class A5 Step-Up falling in December 2005, falling in December 2005, Date and from (and Date, and from (and Date and from (and and thereafter par then 101 per cent. of par including) the Class A3 including) the Class A4 including) the Class A5 up to (but excluding) the Step-Up Date, par9 Step-Up Date, par9 Step-Up Date, par9 Interest Payment Date falling in December 2006, and thereafter par Payment Dates for Interest and 28 March, 28 June, 28 March, 28 June, 28 March, 28 June, 28 March, 28 June, 28 March, 28 June, Principal Payments4 28 September and 28 September and 28 September and 28 September and 28 September and 28 December of each 28 December of each 28 December of each 28 December of each 28 December of each year (subject to year (subject to year (subject to year (subject to year (subject to adjustment for non- adjustment for non- adjustment for non- adjustment for non- adjustment for non- business days), the first business days), the first business days), the first business days), the first business days), the first Interest Payment Date Interest Payment Date Interest Payment Date Interest Payment Date Interest Payment Date being 28 March, 2005 being 28 March, 2005 being 28 March, 2005 being 28 March, 2005 being 28 March, 2005 and the first Interest and the first Interest and the first Interest and the first Interest and the first Interest Period being from (and Period being from (and Period being from (and Period being from (and Period being from (and including) the Closing including) the Closing including) the Closing including) the Closing including) the Closing Date to (but excluding) Date to (but excluding) Date to (but excluding) Date to (but excluding) Date to (but excluding) 28 March, 2005 28 March, 2005 28 March, 2005 28 March, 2005 28 March, 2005 Expected Average Life5 7.1 years 7.1 years 10.1 years 14.1 years 24.1 years Expected Maturity Date6 December 2011 December 2011 December 2014 December 2018 December 2028 Final Maturity Date7 December 2028 December 2031 December 2021 December 2027 December 2034 Ambac Financial Guarantee Unconditionally and Not applicable Unconditionally and Not applicable Unconditionally and irrevocably guaranteed in irrevocably guaranteed in irrevocably guaranteed in relation to Scheduled relation to Scheduled relation to Scheduled Interest10 and Ultimate Interest10 and Ultimate Interest10 and Ultimate Principal by Ambac Principal by Ambac Principal by Ambac S&P Expected Rating8 ‘‘AAA’’ ‘‘BBB+’’ ‘‘AAA’’ ‘‘BBB+’’ ‘‘AAA’’ Fitch Expected Rating8 ‘‘AAA’’ ‘‘BBB+’’ ‘‘AAA’’ ‘‘BBB+’’ ‘‘AAA’’ Moody’s Expected Rating8 ‘‘Aaa’’ ‘‘Baa2’’ ‘‘Aaa’’ ‘‘Baa2’’ ‘‘Aaa’’ Form at issue2 Bearer Bearer Bearer Bearer Bearer Listing Application to list the Application to list the Application to list the Application to list the Application to list the Class A1 Debenture Class A2 Debenture Class A3 Debenture Class A4 Debenture Class A5 Debenture Bonds on the Bonds on the Bonds on the Bonds on the Bonds on the Luxembourg Stock Luxembourg Stock Luxembourg Stock Luxembourg Stock Luxembourg Stock Exchange has been Exchange has been Exchange has been Exchange has been Exchange has been made made made made made Clearing Clearstream, Clearstream, Clearstream, Clearstream, Clearstream, Luxembourg and Luxembourg and Luxembourg and Luxembourg and Luxembourg and Euroclear Euroclear Euroclear Euroclear Euroclear Common Code 020640413 020640472 020640707 020640774 020640928 ISIN XS0206404138 XS0206404724 XS0206407073 XS0206407743 XS0206409285

1 The Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds have the benefit of a financial guarantee as to Scheduled Interest and Ultimate Principal – see Summary of Principal Documents – Ambac Financial Guarantee. 2 See Terms and Conditions of the Debenture Bonds – Condition 2 (Form, Denomination and Title). 3 See Terms and Conditions of the Debenture Bonds – Condition 5(a) (Interest – Accrual of Interest). 4 See Terms and Conditions of the Debenture Bonds – Condition 5(b) (Interest – Interest Payment Dates and Interest Periods). 5 See Expected Average Life table in section entitled Expected Average Life of the Debenture Bonds. 6 See Expected Average Life of the Debenture Bonds. 7 See Terms and Conditions of the Debenture Bonds – Condition 6(a) (Redemption Purchase and Cancellation – Final Redemption). 8 No rating is given in respect of payments of Step-Up Amounts or any redemption premium. 9 See Terms and Conditions of the Debenture Bonds – Condition 6(c) (Redemption at the option of the Issuer) for details on the calculation of ‘‘Spens’’. 10 Scheduled Interest does not include Step-Up Amounts. 11 In the case of the first Interest Period, this will be the annual rate obtained by the linear interpolation of LIBOR for four month Sterling deposits and LIBOR for five month Sterling deposits.

13 Further Characteristics of the Debenture Bonds Ranking The obligations of the Issuer will rank pari passu in point of security and as to payments of interest and repayments of principal on the Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds. The Issuer’s obligations to make payments under, inter alia, the Liquidity Facility Agreement, the Hedging Agreement and amounts in respect of fees due to Ambac pursuant to the Ambac Guarantee and Reimbursement Agreement will (other than in certain limited circumstances) rank ahead of its obligations in respect of the Debenture Bonds.

Security for the On the Closing Date, the Issuer will create a first ranking security interest over, Debenture Bonds inter alia, all of its rights, title and interest in the Transaction Documents in favour of the Issuer Security Trustee for the benefit of, inter alios, the Debenture Bondholders, Ambac, the Hedge Provider and the Liquidity Facility Provider(s) pursuant to a deed of charge to be entered into on the Closing Date (the Issuer Deed of Charge) between, inter alios, the Issuer, the Issuer Security Trustee, the Debenture Bond Trustee (as trustee for itself and the Debenture Bondholders), the Hedge Provider, the Liquidity Facility Provider(s), Ambac, the Agent Bank, the Account Bank, the Servicer, SPV Management Limited (the Corporate Services Provider), the Principal Paying Agent and the Luxembourg Paying Agent (together, other than the Issuer, the Issuer Secured Creditors). Although the Debenture Bond Trustee (as trustee for the Debenture Bondholders) will have the benefit of a security interest over, inter alia, the rights created by the Issuer Deed of Charge, such security interest will (upon enforcement) rank behind the rights of the Liquidity Facility Provider(s) under the Liquidity Facility Agreement (other than in respect of Liquidity Subordinated Amounts), the rights of the Hedge Provider (other than in respect of Hedging Agreement Subordinated Amounts), the rights of Ambac to fees and certain other payments under the Ambac Guarantee and Reimbursement Agreement and certain other fees and expenses payable to other parties (see Summary of Principal Documents – Issuer Deed of Charge below). The Issuer Security Trustee will hold the benefit of the security created pursuant to the Issuer Deed of Charge on trust for the Issuer Secured Creditors.

Final Redemption Unless previously redeemed in full in accordance with their terms and conditions, each class of Debenture Bonds will be redeemed at their Principal Amount Outstanding on the relevant Final Maturity Date (as set out above).

Scheduled and Unless previously redeemed in full and cancelled, the Debenture Bonds will be other Mandatory subject to scheduled redemption (provided that the Issuer has sufficient Redemption available funds for such payment) in instalments pro rata within the relevant class on the Interest Payment Dates and in the amounts set out in Condition 6(b)(A). In addition, if the Term Advances have become immediately due and repayable following a Borrower Group Event of Default but the Debenture Bonds have not become immediately due and repayable pursuant to Condition 10, the Debenture Bonds will be subject to redemption pro rata within each class and in the amounts set out in Condition 6(b)(B).

Optional On giving not fewer than 5 Business Days’ prior written notice, one or more Redemption classes of the Debenture Bonds may, at the option of the Issuer, be redeemed in whole or in part subject to certain conditions (including the termination of the corresponding hedges, where applicable) and in the amounts more particularly described in Condition 6(c).

14 Debenture Bonds will be redeemed pro rata within each class of Debenture Bonds, but the Issuer shall be entitled to redeem separate classes of Debenture Bonds in any order provided that a corresponding prepayment of the equivalent Term Advance is made under the Issuer/Borrower Facility Agreement.

Substitution/ As more particularly described in Condition 6(d), in the event of: Redemption for (a) certain tax changes affecting the Debenture Bonds; Taxation or Other (b) it becoming unlawful for the Issuer to make or to continue to make Reasons advances available pursuant to the Issuer/Borrower Facility Agreement; or (c) certain tax changes affecting the amounts paid or to be paid to the Issuer under the Issuer/Borrower Facility Agreement,

the Issuer may, with the approval of the Debenture Bond Trustee and Ambac, arrange for the substitution of the Issuer by another entity in an alternative jurisdiction (subject to certain conditions). If the Issuer is unable to arrange a substitution, the Issuer may: (i) re-issue the Debenture Bonds in registered form; or (ii) redeem all (but not some or part only) of the Debenture Bonds at par, in the case of the Class A1 Debenture Bonds and the Class A2 Debenture Bonds, and at the higher of par and the Redemption Amount, in the case of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds, in each case together with accrued interest on their Principal Amount Outstanding. The Issuer may also take such other action as is appropriate in the circumstances in order to mitigate the effect of the relevant change, subject to the consent of the Debenture Bond Trustee and Ambac. No single class of Debenture Bonds may be redeemed in full in the circumstances referred to above unless all of the other classes of Debenture Bonds (or such of them as are then outstanding) are also redeemed in full at the same time. Any such redemption will not be guaranteed by Ambac.

Redemption As more particularly described in Condition 6(c)(iv), where payments on the required Class A1 Debenture Bonds, the Class A3 Debenture Bonds or the Class A5 by Ambac Debenture Bonds (as the case may be) are being made by Ambac, Ambac may require the Issuer to redeem all of the Debenture Bonds of the relevant class, having given not fewer than 2 Business Days’ notice of such requirement to the Issuer (the Ambac Notice). In such circumstances, the Issuer will give not fewer than 2 Business Days’ notice to the Class A1 Debenture Bondholders, the Class A3 Debenture Bondholders or the Class A5 Debenture Bondholders (as applicable) of its intention to redeem such Debenture Bonds on the Interest Payment Date next following the receipt of the Ambac Notice. The relevant Debenture Bonds will be redeemed in an amount equal to that which is set out in Condition 6(c)(iv).

Withholding tax Payments of interest, principal and premium (if any) on the Debenture Bonds will be made subject to any applicable withholding or deduction for, or on account of, any tax and none of the Issuer, Ambac, any Paying Agent or any other person will be obliged to pay any additional amount as a consequence thereof (save that Ambac will be required to pay an additional amount pursuant to the Ambac Financial Guarantee to the extent necessary to ensure that the Debenture Bondholder receives from Ambac what would have been receivable from the Issuer in respect of any of the Guaranteed Obligations).

15 Further Issues and The Issuer will be entitled (but not obliged), subject to certain conditions at its New Issues option from time to time on any date, without the consent of the Debenture Bondholders, to raise further funds by the creation and issue of: (i) further Class A1 Debenture Bonds and/or Class A2 Debenture Bonds and/or Class A3 Debenture Bonds and/or Class A4 Debenture Bonds and/or Class A5 Debenture Bonds which will be in bearer form and carry the same terms and conditions in all respects (save as regards the first Interest Period) as, and so that the same shall be consolidated and form a single series and rank pari passu with, the relevant Class of Debenture Bonds (Further Debenture Bonds); or (ii) new bonds of a new class which may rank pari passu with or junior to the Debenture Bonds (New Debenture Bonds). The issue of any Further Debenture Bonds and/or New Debenture Bonds shall be subject to certain conditions including those set out in Condition 17.

Purchases The Issuer is not permitted to purchase Debenture Bonds. The Borrower may, subject to the provisions of the Transaction Documents, at any time purchase Debenture Bonds of any class. Any Debenture Bonds so purchased shall, unless otherwise disposed of to a third party outside Spirit Group within two weeks of the date of purchase of such Debenture Bonds, be offered for cancellation to the Issuer for surrender against full discharge and satisfaction of an amount of the relevant Term Advance equal to the aggregate Principal Amount Outstanding of the Debenture Bonds so purchased and any unpaid accrued interest thereon (see Summary of Principal Documents – Issuer/ Borrower Facility Agreement – Purchase of Debenture Bonds below). Any Class A1 Debenture Bonds, Class A3 Debenture Bonds or Class A5 Debenture Bonds so purchased will not, for so long as they are held by the Borrower or a member of Spirit Group, have the benefit of the Ambac Financial Guarantee.

Governing Law The Debenture Bonds will be governed by English law.

16 Key Parties to the Transaction

Debenture Bond Deutsche Trustee Company Limited. The Debenture Bond Trustee will be Trustee appointed pursuant to the Trust Deed to represent the interests of the Debenture Bondholders.

Borrower Group Deutsche Trustee Company Limited. The Borrower Group Security Trustee will Security Trustee hold the security granted under the Borrower Group Deed of Charge for the benefit of the Borrower Group Secured Creditors. The Borrower Group Security Trustee will be entitled to enforce the security granted in its favour thereunder (and, in certain circumstances, can be directed to do so).

Issuer Security Deutsche Trustee Company Limited. The Issuer Security Trustee will hold the Trustee security granted under the Issuer Deed of Charge for the benefit of the Issuer Secured Creditors. The Issuer Security Trustee will be entitled to enforce the security granted in its favour thereunder (and, in certain circumstances, can be directed to do so).

Financial Guarantor Ambac Assurance UK Limited. A company incorporated in England and Wales, which is authorised to issue, inter alia, financial guarantees, and is licensed to offer insurance services in the United Kingdom. At the date of this Offering Circular, the financial strength of Ambac is rated ‘‘AAA’’/‘‘Aaa’’ by the Rating Agencies. Ambac will, upon issue of the Ambac Financial Guarantee, guarantee the payment of the Scheduled Interest (which excludes Class A1 Step-Up Amounts, Class A3 Step-Up Amounts and Class A5 Step-Up Amounts) on and repayment of Ultimate Principal of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds or, in the circumstances described in Condition 6(c)(iv), the amounts set forth therein.

Hedge Provider Banque AIG (as Initial Hedge Provider). If the rating assigned to the long- term unsecured, unsubordinated and unguaranteed debt obligations of the guarantor of the Initial Hedge Provider (the Initial Hedge Provider Guarantor) or of any replacement hedge provider (the Replacement Hedge Provider) or, of the guarantor of any Replacement Hedge Provider (if applicable), is downgraded below ‘‘A+’’ by S&P or Fitch or ‘‘A1’’ by Moody’s, or if the rating assigned to any short-term unsecured, unsubordinated and unguaranteed debt obligations of any Replacement Hedge Provider or, of its guarantor (if applicable), is downgraded below ‘‘A-1’’ by S&P, ‘‘F1’’ by Fitch or ‘‘P-1’’ by Moody’s (to the extent such Replacement Hedge Provider and/or, as the case may be, its guarantor, have been issued short-term ratings), the Initial Hedge Provider or the Replacement Hedge Provider (as the case may be) will be required to take certain remedial measures which may include the provision of collateral for its obligations under the Hedging Agreement. If the rating assigned to the long-term unsecured, unsubordinated and unguaranteed debt obligations of the Initial Hedge Provider Guarantor or of any Replacement Hedge Provider, or, of the guarantor of any such Replacement Hedge Provider (if applicable), is downgraded below ‘‘A-’’ by S&P or Fitch or ‘‘A3’’ by Moody’s or the rating assigned to any short-term unsecured, unsubordinated and unguaranteed debt obligations of any Replacement Hedge Provider or, of its guarantor (if applicable), is downgraded below ‘‘A-2’’ by S&P, ‘‘F2’’ by Fitch or ‘‘P-2’’ by Moody’s (to the extent that such Replacement Hedge Provider and/or, as the case may be, its guarantor, have been issued short-term ratings) (together, the Hedge Provider Requisite Rating), the relevant Hedge Provider will either transfer its obligations under the Hedging Agreement to a Replacement Hedge Provider or procure another person to guarantee those

17 obligations provided that such Replacement Hedge Provider or (as the case may be) its guarantor has the Hedge Provider Requisite Rating or take such other action as it may agree with the relevant Rating Agency and Ambac. The Initial Hedge Provider or (as the case may be) any Replacement Hedge Provider will be required to continue posting collateral until such time as the transfer has been completed or (as the case may be) the guarantee has been provided. A failure by the Initial Hedge Provider or any Replacement Hedge Provider (as the case may be) to take the required remedial action following a ratings downgrade will, subject to certain conditions, give the Issuer a right to terminate the transactions under the Hedging Agreement. Following the occurrence of an Issuer Payment Default (as defined in the Hedging Agreement), Ambac will have the right to require the transfer of the rights and obligations of the Hedge Provider under the Hedging Agreement to Ambac or Ambac’s designated affiliate or subsidiary (provided it, or as the case may be, its designated affiliate or subsidiary, has at that time a rating of at least the Hedge Provider Requisite Rating). (See further Summary of Principal Documents – Hedging Agreement – Ratings downgrade of Hedge Provider below.)

A failure by the Hedge Provider to take the required remedial action following a ratings downgrade will, subject to certain conditions, give the Issuer a right to terminate the transactions under the Hedging Agreement. Following the occurrence of an Issuer Payment Default (as defined in the Hedging Agreement), Ambac will have the right (provided it has at that time a rating of at least the Hedge Provider Requisite Rating) to require the transfer of the rights and obligations of the Hedge Provider under the Hedge Agreement to Ambac.

Liquidity Facility One or more banks, each of which has a rating assigned for its short-term Provider(s) unsecured, unsubordinated and unguaranteed debt obligations of at least ‘‘A-1’’/‘‘F1’’ (or its long-term equivalent) from S&P and Fitch and a rating assigned to its short-term unsecured, unsubordinated and unguaranteed debt obligations of at least ‘‘P-1’’ from Moody’s. At the Closing Date, the Liquidity Facility Provider will be Lloyds TSB Bank plc. Thereafter, each Liquidity Facility Provider must have a rating assigned to its short-term unsecured, unsubordinated and unguaranteed debt obligations of at least ‘‘A-1’’/‘‘F1’’ (or its long-term equivalent) from S&P and Fitch and a rating assigned to its short- term unsecured, unsubordinated and unguaranteed debt obligations of at least ‘‘P-1’’ from Moody’s (the Liquidity Facility Requisite Rating). Account Bank A bank which has a rating assigned to its short-term unsecured, unsubordinated and unguaranteed debt obligations of at least ‘‘A-1+’’/‘‘F1’’/ ‘‘P-1’’ (or its long-term equivalent) from S&P, Fitch and Moody’s respectively. The Account Bank will provide cash management services pursuant to the Bank Agreement. As at the Closing Date, the Account Bank will be Barclays Bank PLC.

Agent Bank Deutsche Bank AG London. The Agent Bank will provide interest calculation services pursuant to the Agency Agreement.

Principal Paying Deutsche Bank AG London. The Principal Paying Agent will provide payment Agent services in respect of the Debenture Bonds pursuant to the Agency Agreement.

Luxembourg Paying Dexia Banque Internationale a` Luxembourg. The Luxembourg Paying Agent Agent will provide payment services in respect of the Debenture Bonds pursuant to the Agency Agreement.

Bank Security The Royal Bank of Scotland plc. The Bank Security Agent will hold the security Agent granted by, inter alios, BankCo and LoanCo for their respective obligations

18 under the BankCo Loan Agreement and the LoanCo Loan Agreement on trust for the secured creditors under the security agreement relating thereto (the BankCo and LoanCo Security Agreement) (including the BankCo Banks, the LoanCo Banks and the hedge providers in respect of the BankCo Loan (the BankCo Hedge Providers)) and will be a beneficiary under the Borrower Group Deed of Charge. The Bank Security Agent will not be entitled to enforce the security granted in its favour under the Borrower Group Deed of Charge prior to the discharge of all amounts ranking in priority to amounts owed to the BankCo Banks, the LoanCo Banks and the BankCo Hedge Providers.

19 INVESTMENT CONSIDERATIONS

The following is a summary of certain aspects of the Debenture Bonds and the related transactions about which prospective Debenture Bondholders should be aware. This summary is not intended to be exhaustive and prospective Debenture Bondholders should also read the detailed information set out in this Offering Circular and reach their own views prior to making any investment decision.

Special Purpose Vehicle Issuer The Issuer is a special purpose financing entity with no business operations other than the issuance of the Debenture Bonds, the lending of the proceeds to the Borrower under the Issuer/ Borrower Facility Agreement and the entry into of certain ancillary arrangements. After the Closing Date, the Issuer’s principal source of funds will be payments made under or in connection with the Issuer/Borrower Facility Agreement and the related security from each of the Obligors (although there are certain additional sources of funding available to it including the Liquidity Facility). Therefore, the Issuer is subject to all risks to which the Borrower is subject, to the extent that such risks could limit funds available to the Borrower to enable it to satisfy in full and on a timely basis its obligations under the Issuer/Borrower Facility Agreement (see Risks Relating to Business Operations below for a further description of certain of these risks). The Debenture Bonds will be obligations of the Issuer only and will not be guaranteed by, or be the responsibility of, any other person (other than, in respect of Scheduled Interest (which excludes Class A1 Step-Up Amounts, Class A3 Step-Up Amounts and Class A5 Step-Up Amounts) and Ultimate Principal on the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds, Ambac, pursuant to the Ambac Financial Guarantee). In the event that the Issuer is unable on any Interest Payment Date to pay in full interest on the Debenture Bonds and all other payment obligations ranking in priority thereto (as specified in Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments below), the Issuer will be able (subject to satisfaction of the conditions for drawing) to draw funds available under the Liquidity Facility. The maximum amount available to be drawn under the Liquidity Facility is £125 million (as adjusted for prepayments and repayments as described in Summary of Principal Documents – Liquidity Facility Agreement below). The Liquidity Facility will not be available to meet any repayment of principal in respect of any class of Debenture Bonds or Step-Up Amounts. In addition, to the extent that the Issuer is unable on any Interest Payment Date to make payments of Scheduled Interest and, as applicable, Ultimate Principal on the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds and no amount is available to be drawn under the Liquidity Facility to make the relevant payment of Scheduled Interest and/or the Liquidity Facility Provider(s) fail to put the Issuer in funds on the relevant Interest Payment Date to make the relevant payment of Scheduled Interest, Ambac will be obliged to make a payment under the Ambac Financial Guarantee to ensure timely payment of Scheduled Interest on and, as applicable, repayment of Ultimate Principal of, the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds on the relevant Interest Payment Date. Other than pursuant to the Issuer/Borrower Facility Agreement, the Issuer/Borrower Hedging Agreement and the related security therefor, amounts available to be drawn under the Liquidity Facility Agreement, amounts receivable by the Issuer under the Hedging Agreement (other than certain amounts in respect of collateral) and interest on amounts standing to the credit of the Issuer’s bank accounts, the Issuer is not expected to have any other funds available to it to meet its obligations under the Debenture Bonds and/or any other payment obligations under the Issuer Deed of Charge ranking in priority to the Debenture Bonds.

Priority and Rights of Certain Other Transaction Parties Issuer Deed of Charge All amounts of interest, principal, commitment fees and mandatory costs to be paid under or in connection with the Liquidity Facility Agreement (other than Liquidity Subordinated Amounts), all amounts to be paid under the Hedging Agreement (other than Hedging Agreement Subordinated Amounts), all amounts in respect of fees to be paid to Ambac under the Ambac Guarantee and Reimbursement Agreement and fees and any payment of amounts to the Issuer Security Trustee and amounts owed under the Issuer Security Trustee’s indemnity (such indemnity being broadly in respect of any proceedings, claims, demands, costs, expenses, charges and liabilities incurred by the Issuer Security Trustee under the Transaction Documents) and certain other fees and

20 expenses of third parties will, in accordance with the Issuer Deed of Charge, be paid in priority to the payment of interest on and repayment of principal of the Debenture Bonds. In addition, unless it is satisfied at that time that it is adequately indemnified and/or secured, the Issuer Security Trustee has the absolute discretion to refrain from taking any action under the Issuer Deed of Charge.

Borrower Group Deed of Charge Other than liabilities owed to the Borrower Group Security Trustee (and any receiver appointed upon enforcement of the security created under the Borrower Group Deed of Charge) (including amounts owed under the Borrower Group Security Trustee’s indemnity (such indemnity being broadly in respect of any proceedings, claims, demands, costs, expenses, charges and liabilities incurred by the Borrower Group Security Trustee under the Transaction Documents)), amounts owed to the Issuer rank in priority to amounts owed to the other Borrower Group Secured Creditors under the Borrower Group Deed of Charge. The Borrower Group Deed of Charge contains provisions requiring the Borrower Group Security Trustee to act only in accordance with the directions of: (a) for so long as there is any amount outstanding under any of the Term Advances, the Issuer Security Trustee; and (b) if there are no amounts outstanding under any of the Term Advances, the person appearing highest in the order of priority of payments to whom any amounts are owed under the Borrower Group Deed of Charge. As described in Summary of Principal Documents – Issuer/Borrower Facility Agreement below, the Borrower is entitled to incur Additional Financial Indebtedness, subject to certain conditions, and the lender(s) thereof will be entitled to accede to the Borrower Group Deed of Charge as a Borrower Group Secured Creditor, ranking either senior to (in the case of a working capital facility) or pari passu with or after the Issuer both prior to and on enforcement of the security created thereunder. To the extent that the lender’s rights in respect of such Additional Financial Indebtedness rank senior to or pari passu with those of the Issuer under the Issuer/Borrower Facility Agreement, appropriate intercreditor provisions will be put in place in order to regulate the interests of the Issuer on the one hand and the interests of such lender on the other. There is no guarantee that if such debt ranks senior to or pari passu with the Issuer’s obligations under the Issuer/Borrower Facility Agreement the interests of the Debenture Bondholders will not be adversely affected.

Subordination of Step-Up Amounts and Redemption Premium Amounts Payments of the Step-Up Amounts and Redemption Premium Amounts will only be made to the extent that the Issuer has available funds after payment of all amounts to be paid in priority thereto (including all other payments of interest and principal on the Debenture Bonds). The payment of Step-Up Amounts and Redemption Premium Amounts is not rated by the Rating Agencies and the payment of Step-Up and Redemption Premium Amounts on the Guaranteed Bonds is not guaranteed under the Ambac Financial Guarantee. If, on any Interest Payment Date, the Issuer has insufficient funds to make payments of any Step- Up Amounts or Redemption Premium Amounts (as the case may be), then the Issuer’s liability to make such payments will be deferred until the next Interest Payment Date and there will be no event of default for failure to make such payments. There can be no assurance that, at maturity of the Debenture Bonds, the Issuer will have sufficient assets or income to pay in full any deferred payment of Step-Up Amounts or Redemption Premium Amounts (as the case may be). In addition, it should be noted that the amount of redemption premium payable to Debenture Bondholders is limited in certain circumstances (see Condition 6 (Redemption, Purchase and Cancellation) and Condition 10(c) (Acceleration)).

Conflicts of Interest Issuer Deed of Charge The Issuer Deed of Charge will contain provisions requiring the Issuer Security Trustee to act only in accordance with the directions of the Debenture Bond Trustee prior to redemption in full of all of the Debenture Bonds.

21 Following the redemption in full of all of the Debenture Bonds, the Issuer Security Trustee shall have regard to the interests of the person appearing highest in the order of priority of payments to whom any amount is owed under the Issuer Deed of Charge with respect to all powers, trusts, authorities, duties and discretions of the Issuer Security Trustee. In exercising its powers, trusts, authorities, duties and discretions as described above, the Issuer Security Trustee or, as the case may be, the Debenture Bond Trustee shall disregard any amount owing or payable in relation to Step-Up Amounts and/or Redemption Premium Amounts for the purposes of determining whether any particular class of Debenture Bonds is outstanding.

Trust Deed The Trust Deed will provide for the Debenture Bond Trustee: (i) whether or not there is any conflict of interest between two or more classes of Debenture Bondholders and/or any other Issuer Secured Creditor, to act only at the direction of Ambac if the aggregate Principal Amount Outstanding of Guaranteed Debenture Bonds is more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds and if no Ambac Termination Event has occurred; or (ii) if the aggregate Principal Amount Outstanding of the Guarantee Debenture Bonds is less than or equal to 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds and/or an Ambac Termination Event has occurred: (A) to act in such manner as it thinks fit, but subject to obtaining the consent of Ambac (provided that no Ambac Termination Event has occurred) where such action would, in the opinion of the Debenture Bond Trustee, affect the interests of the holders of the Guaranteed Debenture Bonds; and (B) to act at the direction of (1) where expressly permitted, the holders of at least 25 per cent. in Principal Amount Outstanding of all of the Debenture Bonds then outstanding or (2) an Extraordinary Resolution of the Debenture Bondholders (subject to provisions for determining whether any such Extraordinary Resolution (as defined in the Conditions) must be passed at a single Meeting (as defined in the Conditions) of all Debenture Bondholders or the affected Class (as the case may be) or at separate Meetings of each Class of Debenture Bondholders); but subject, in either case, to obtaining the consent of Ambac (except if an Ambac Termination Event has occurred), if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 25 per cent., but not more than 50 per cent., of the aggregate Principal Amount Outstanding of all of the Debenture Bonds, in the case of a direction to accelerate the Debenture Bonds or to enforce the Issuer Security, subject, in all cases, to provisions for indemnification of the Debenture Bond Trustee as provided in the Trust Deed. For the purposes of (ii)(B) above, Ambac shall be treated as the holder of all the then outstanding Guaranteed Debenture Bonds (except if an Ambac Termination Event has occurred). The foregoing provisions requiring the Debenture Bond Trustee to act at the direction of Ambac or only subject to obtaining Ambac’s consent or providing for Ambac to be treated as the holder of all the Guaranteed Debenture Bonds do not apply in relation to the taking of action against Ambac and certain other matters (together, Debenture Bondholder Reserved Matters) described in the Conditions of the Debenture Bonds. In the event that the Debenture Bond Trustee receives conflicting directions under paragraph (ii)(B)(1) above or otherwise considers there may be a conflict between the interests of two or more Classes of Debenture Bondholders in respect of any action which the Debenture Bond Trustee proposes to take under paragraph (ii)(A) above, the Debenture Bond Trustee shall not be required to follow such directions or take such action unless such conflict is resolved by each of the relevant Classes of Debenture Bondholders approving such direction or action at separate Meetings of each relevant Class, provided that where (a) one of the conflicting directions under paragraph (ii)(B)(1) above is from Ambac and (b) no Ambac Termination Event has occurred, the Debenture Bond Trustee shall act in accordance with such direction to the exclusion of any conflicting direction. The Trust Deed provides for Ambac to indemnify the Debenture Bond Trustee against any losses, claims, damages, costs, expenses or liabilities whatsoever suffered or incurred by the Debenture

22 Bond Trustee as a result of acting in accordance with the directions of Ambac (whether in its own right under (i) above or by virtue of it being treated as the holder of the Guaranteed Debenture Bonds under (ii)(B) above). Modifications of, waivers and authorisations of breaches or proposed breaches of, and consents under, any of the Transaction Documents may be sanctioned or given by the Debenture Bond Trustee (including by means of a direction to the Issuer Security Trustee and, through the Issuer Security Trustee, to the Borrower Group Security Trustee) if they are not, in the opinion of the Debenture Bond Trustee, materially prejudicial to the interests of: (i) the holders of the Debenture Bonds, other than the Guaranteed Debenture Bonds; and (ii) if an Ambac Termination Event has occurred or the modification, waiver, authorisation or consent constitutes a Bondholder Reserved Matter, the holders of the Guaranteed Debenture Bonds; and (where the interests of the holders of the Guaranteed Debenture Bonds would, in the opinion of the Debenture Bond Trustee, be affected) Ambac has consented to such modification, waiver, authorisation or consent (except if an Ambac Termination Event has occurred or the modification, waiver, authorisation or consent constitutes a Debenture Bondholder Reserved Matter). Where the Debenture Bond Trustee and/or the Issuer Security Trustee (as the case may be) is required to have regard to the interests of any Issuer Secured Creditor (other than the Debenture Bondholders, not being holders of the Guaranteed Debenture Bonds), the Debenture Bond Trustee and/or the Issuer Security Trustee (as the case may be) may consult with such Issuer Secured Creditor and may rely on the opinion of such Issuer Secured Creditor as to whether any act, matter or thing is or is not in the interests of, or materially prejudicial to the interests of, such Issuer Secured Creditor. For this purpose, the Debenture Bond Trustee and/or the Issuer Security Trustee (as the case may be) shall be entitled, in the absence of an Ambac Termination Event, to consult with and rely on the opinion of Ambac in relation to the interests of the holders of the Guaranteed Debenture Bonds. Neither the Debenture Bond Trustee nor the Issuer Security Trustee shall have any liability for relying on an Issuer Secured Creditor’s opinion in accordance with the above. No Issuer Secured Creditor shall have any claim against the Debenture Bond Trustee or the Issuer Security Trustee as a result of the application of the conflict provisions set out in the Trust Deed.

Changes to Covenants The covenants contained in the Issuer/Borrower Facility Agreement restrict the ability of each member of the Borrower Group to change the way in which it operates its business. However, the pub industry in Great Britain has undergone many changes in recent years and may undergo further changes in the future that could make the continued operation of the Borrower Group under these covenants more difficult or impractical. Changes to the covenants, including without limitation the financial covenants, may be required over time due to changes in the business of the Borrower Group, including as a result of an Equity Offering of the Borrower or any other company in Spirit Group. In particular, restrictive covenants may be amended in order to reflect, inter alia, the public nature of Spirit Group following such an Equity Offering, the need to be able to pay dividends to public shareholders and the need for the flexibility usually expected of a public company to make acquisitions and disposals and to make development expenditure which will be to the benefit of the Managed Estate and the public shareholders. The covenants may also be amended in connection with further bond issues by the Issuer. In connection with any modification of, waiver or authorisation of any breach or proposed breach of, or consent under, any Transaction Document requested by the Borrower or the Issuer (as referred to in – Issuer Deed of Charge and – Trust Deed above), where the Rating Agencies have confirmed in writing to the Issuer that an action under or in relation to the Transaction Documents or the Debenture Bonds will not result in the withdrawal, downgrade or any other adverse action with respect to the then current rating of the Debenture Bonds and (for so long as there are any Class A1 Debenture Bonds, Class A3 Debenture Bonds or Class A5 Debenture Bonds outstanding) the Underlying Rating (each a Rating Confirmation), the Issuer Security Trustee or the Debenture Bond Trustee, in considering whether such action is materially prejudicial to the interests of the Issuer Secured Creditors or, as the case may be, the Debenture Bondholders (the No Material Prejudice Test), shall (and, in relation to any Rating Confirmation by Fitch only, where the Issuer

23 Security Trustee or the Debenture Bond Trustee (as the case may be) considers that such Rating Confirmation is an appropriate test or the only appropriate test to apply in that circumstance) be entitled to take into account such Rating Confirmation provided that the Issuer Security Trustee and the Debenture Bond Trustee shall continue to be responsible for taking into account, for the purpose of the No Material Prejudice Test, all other matters which would be relevant to such No Material Prejudice Test.

Rating It is expected that the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds will, when issued, be assigned a ‘‘AAA’’/‘‘Aaa’’ rating by the Rating Agencies. The rating is based solely upon the rating of Ambac. It is expected that the Class A2 Debenture Bonds and the Class A4 Debenture Bonds will, when issued, be assigned a ‘‘BBB+’’/‘‘Baa2’’ rating by the Rating Agencies. Such ratings will not include a rating of the payment of Step-Up Amounts. Such ratings reflect timely payment of scheduled interest (excluding Step-Up Amounts and any redemption premium) and repayment of ultimate principal on the Debenture Bonds. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation, and each security rating should be evaluated independently of any other rating. A security rating, among other things, will depend on certain underlying characteristics of the Borrower Group’s business from time to time (see Risks Relating to Business Operations below). In addition, where a particular matter (including the determination of material prejudice by the Issuer Security Trustee and/or the Debenture Bond Trustee and changes to certain of the operational covenants) involves the Rating Agencies being requested to provide a Rating Confirmation, such Rating Confirmation may or may not be given at the sole discretion of the Rating Agencies in the particular circumstances. It should be noted that, depending on the timing of delivery of the request and any information needed to be provided as part of any such request, it may be the case that the Rating Agencies cannot provide their Rating Confirmations in the time available or at all, and they will not be responsible for the consequences thereof. There can, therefore, be no assurance that the Rating Agencies will provide a Rating Confirmation and, accordingly, the Borrower Group may not be able to make a modification to or obtain a consent or waiver in respect of a provision contained in a Transaction Document. Any Rating Confirmation given by a Rating Agency: (a) only addresses the effect of any relevant event, matter or circumstance on the current ratings assigned by the relevant Rating Agency to the Debenture Bonds; (b) does not address whether any relevant event, matter or circumstance is permitted by the Transaction Documents; and (c) does not address whether any relevant event, matter or circumstance is in the best interests of, or prejudicial to, some or all of the Debenture Bondholders, the other Issuer Secured Creditors or the Borrower Group Secured Creditors. A Rating Confirmation, if given, will be given on the basis of the facts and circumstances prevailing at the relevant time and in the context of cumulative changes to the transaction of which the Debenture Bonds form part after the Closing Date. A Rating Confirmation represents only a restatement of the opinions given at the Closing Date, and cannot be construed as advice for the benefit of any parties to the transaction. No assurance can be given that a requirement to seek a Rating Confirmation will not have a subsequent impact upon the business of the Borrower.

Monitoring of compliance with warranties, covenants and the occurrence of a Borrower Group Event of Default or Potential Borrower Group Event of Default or an Issuer Event Default or a Potential Issuer Event of Default Neither the Borrower Group Security Trustee nor the Issuer Security Trustee will itself monitor whether any Borrower Group Event of Default, Potential Borrower Group Event of Default, Issuer Event of Default or Potential Issuer Event of Default has occurred but will rely on compliance certificates delivered by the Borrower (or on its behalf by AdminCo) to determine whether a Borrower Group Event of Default, a Potential Borrower Group Event of Default, an Issuer Event of Default or a Potential Issuer Event of Default has occurred. Furthermore, as the Issuer is a special purpose company, it does not and will not possess the resources to monitor actively whether a

24 Borrower Group Event of Default, a Potential Borrower Group Event of Default, an Issuer Event of Default or a Potential Issuer Event of Default has occurred.

Accordingly, it will fall to the Obligors themselves (or the Borrower on their behalf) to make these determinations. In this context, a number of the representations, warranties, covenants, undertakings and Borrower Group Events of Default, Potential Borrower Group Events of Default, Issuer Events of Default and Potential Issuer Events of Default will be qualified by reference to a materiality threshold. While the criteria set out in the materiality test are prima facie objective, it will fall to the Obligors themselves (or the Borrower on their behalf) to determine whether or not the relevant fact, matter or circumstances falls within any of the criteria and, as such, the determination will be subjective for so long as such determination is made by the Obligors.

Liquidity Facility and Hedging If, at any time after the Closing Date, (a) the credit rating assigned by a Rating Agency in respect of the short-term and/or long-term unsecured, unsubordinated and unguaranteed debt obligations (as applicable) of any of the Liquidity Facility Providers and/or the Hedge Provider falls below the relevant Liquidity Facility Requisite Rating or Hedge Provider Requisite Rating (as the case may be); or (b)(i) a Liquidity Facility Provider fails or is unable to perform its obligations or exercises a termination right under the Liquidity Facility or (ii) the Hedge Provider fails or is unable to perform its obligations under or exercises a termination right under the Hedging Agreement resulting in a termination of any transaction thereunder, the Issuer will be obliged to enter into a replacement liquidity facility agreement or a replacement hedging agreement (as the case may be) with another appropriately rated entity (as described in Summary of Principal Documents – Liquidity Facility Agreement and – Hedging Agreement below). A failure on the part of the Borrower to make available sufficient resources to the Issuer to procure such replacement liquidity facility agreement or replacement hedging agreement may constitute an event of default under the Issuer/Borrower Facility Agreement. In such circumstances, there may also be a downgrading of the rating of the Debenture Bonds or any class of them.

If any transaction under the Hedging Agreement is terminated, whether in whole or in part, prior to its stated termination date, a termination amount may be payable by one party to the other. Any such termination amount may be substantial and, if payable to the Hedge Provider, will, other than in limited circumstances, rank in priority to amounts due to the Debenture Bondholders. Payment by the Issuer of such termination amount may, therefore, affect the ability of the Issuer to make full and timely payment of amounts due to the Debenture Bondholders.

Existing Hedging and New Hedging At the time that advances were made under the SNR Acquisition Facility and the SFL Issuer/ Borrower Facility Agreement, interest rate hedges (the Existing Hedges) were entered into by BidCo and SGL to hedge their respective interest rate exposures with respect to their related indebtedness. In connection with the Refinancing, all or part of the Existing Hedges will be terminated and new hedging arrangements will be entered into by the Issuer (pursuant to the Hedging Agreement) and BankCo. In either case, at the same time that the Issuer enters into the Hedging Agreement, the Issuer will enter into a back-to-back hedging arrangement with the Borrower pursuant to the Issuer/Borrower Hedging Agreement. On the Closing Date, the mark-to- market value of the transactions under the Hedging Agreement will be approximately £80 million in favour of the Initial Hedge Provider. The Issuer has not recorded that mark-to-market loss on its income statement, or the related liability on its balance sheet. The Issuer will record that loss over time through paying a higher amount under the Hedging Agreement of (i) approximately 6.70 per cent. per annum (subject to market conditions) in respect of the transactions relating to the Class A1 Debenture Bonds and the Class A2 Debenture Bonds prior to the Class A1 Step-Up Date and the Class A2 Step-Up Date and approximately 6.95 per cent. (subject to market conditions) following the Class A1 Step-Up Date and the Class A2 Step-Up Date and (ii) approximately 4.70 per cent. (subject to market conditions) in respect of the transactions relating to the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds following the Class A3 Step-Up Date, the Class A4 Step-Up Date and the Class A5 Step-Up Date. Amounts payable to the Hedge Provider rank (except in certain limited circumstances) senior to amounts payable to the Debenture Bondholders.

25 Lack of Public Market The Debenture Bonds will be new securities for which there is no established trading market. Application has been made to list the Debenture Bonds on the Luxembourg Stock Exchange. However, an active trading market for the Debenture Bonds may not develop or, if developed, may not be maintained.

Adoption of European Directive on the Taxation of Savings The EU has adopted a Directive regarding the taxation of savings income. Subject to a number of important conditions being met, it is proposed that Member States will be required from a date not earlier than 1 July, 2005 to provide to the tax authorities of other Member States details of payments of interest and other similar income paid by a person within its jurisdiction to or for the benefit of an individual in another Member State, except for Austria, Belgium and Luxembourg who will instead impose a withholding system for a transitional period unless during such period they elect otherwise. The transitional period will end after agreement on exchange of information is reached between the European Union and certain non-European Union States. No withholding will be required where the bondholder authorises the person making the payment to report the payment or presents a certificate from the relevant tax authority establishing exemption therefrom. The attention of Debenture Bondholders is drawn to Condition 8 (Taxation) of the Debenture Bonds.

Withholding Tax on the Debenture Bonds In the event that withholding tax is imposed in respect of payments to Debenture Bondholders of amounts due pursuant to the Debenture Bonds, none of the Issuer, Ambac, the Debenture Bond Trustee, the Borrower Group Security Trustee, the Issuer Security Trustee, any Paying Agent or any other person will be obliged to gross up or otherwise compensate Debenture Bondholders for the lesser amounts that the Debenture Bondholders will receive as a result of the imposition of withholding tax (save that Ambac will be required to pay an additional amount pursuant to the Ambac Financial Guarantee to the extent necessary to ensure that the relevant Debenture Bondholders receive from Ambac what would have been receivable from the Issuer in respect of any Guaranteed Obligations). The imposition of such withholding tax would entitle (but not oblige) the Issuer to redeem the Debenture Bonds (pursuant to Condition 6(d) (Redemption, Purchase and Cancellation – Substitution/Redemption for taxation or other reasons) at their Principal Amount Outstanding (plus accrued interest (but less any relevant withholding tax)), thereby shortening the average lives of the Debenture Bonds. Amounts payable on an early redemption pursuant to Condition 6(d) are not guaranteed by Ambac.

European Economic and Monetary Union It is possible that prior to the maturity of the Debenture Bonds, the United Kingdom may become a participating Member State in the European economic and monetary union and the euro may become the lawful currency of the United Kingdom. In that event: (a) all amounts payable in respect of the Debenture Bonds may become payable in euro; (b) applicable provisions of law may allow the Issuer to redenominate the Debenture Bonds into euro and take additional measures in respect of the Debenture Bonds; (c) all published or displayed rates for deposits in Sterling used to determine the rates of interest on the Debenture Bonds or changes in the way those rates are calculated, quoted and published or displayed may disappear; and (d) a volatile interest rate environment may be introduced which could adversely affect the Borrower’s ability to repay the Term Advances as well as adversely affect Debenture Bondholders. However, there is no certainty as to what effect, if any, adoption of the euro by the United Kingdom will have on investors in the Debenture Bonds.

EU Transparency Obligations Directive (the Transparency Directive) It is possible that the Transparency Directive may be implemented in Luxembourg in a manner which is unduly burdensome for the Issuer (as an issuer of securities listed on the Luxembourg Stock Exchange). In particular, the Issuer may be required to prepare its financial statements in accordance with International Financial Reporting Standards (IFRS) for accounting periods beginning on or after 1 January, 2005.

26 Where the Transparency Directive is implemented in a manner which the Issuer, in good faith, believes is unduly burdensome, the Debenture Bonds may be de-listed. The Issuer may seek an alternative listing for the Debenture Bonds on an alternative stock exchange. However, if such an alternative listing is not available or is, in the opinion of the Issuer, unduly burdensome for it, an alternative listing for the Debenture Bonds may not be obtained.

Degrouping issues The steps comprised in the Corporate Reorganisation involve, inter alia, a series of share-for-share exchanges followed by the transfer of certain of the business and assets of SGL and the SNR Group to the Borrower or BankCo. In principle, these intra-group transfers give rise to the possibility that any chargeable gain rolled over on the transfers could, in certain circumstances, be triggered in the relevant transferee if that transferee were to become degrouped from Spirit Group within six years of these transfers, for example, as a result of a disposal of its shares. However, the Corporate Reorganisation is structured in such a way that: (a) no gain would arise in the transferee on any deemed disposal of the acquired shares triggered by a degrouping; and (b) provided that the transferee company (i.e. the Borrower or BankCo) in each case remains a member of the same group as the transferor, no degrouping charge would be triggered in the transferee in respect of any chargeable gain rolled over on the transfer to it of the relevant business and assets. There is also the possibility that the relief to be obtained from stamp duty land tax in relation to UK land assets transferred or to be transferred pursuant to the Corporate Reorganisation would be clawed back if the transferee were to become degrouped from Spirit Group within three years of the effective date of the relevant transfers (or subsequently if pursuant to arrangements made within those three years). However, provided that the transferee remains a member of the same group as the transferor for the purposes of the relevant legislation, no clawback would be triggered. The Borrower and other relevant Spirit Group companies have covenanted in favour of the Borrower Group Security Trustee not to dispose of the shares in the relevant companies and have granted security over the shares of such companies in favour of the Borrower Group Security Trustee. It is possible that further asset transfers may take place within Spirit Group in the future, including between the Borrower and companies outside the Borrower Group (including BankCo). No tax on chargeable gains or stamp duty land tax would arise on such intra-group transfers, but a subsequent disposal by, or degrouping of, the transferee would in certain circumstances give rise to a charge to tax in the transferee, and the transferor would in certain circumstances be secondarily liable for that tax if the transferee failed to pay it. The Tax Deed of Covenant will include provisions to mitigate these potential liabilities.

After-tax position of the Borrower It is envisaged that the Borrower will fund the repayment of principal borrowed by it out of the income of its business. Since under current UK tax law and practice repayments of principal are not deductible but business income is taxable, the Borrower will suffer a tax mismatch which could adversely affect its ability to make payments under the Issuer/Borrower Facility Agreement unless the Borrower has available to it sufficient losses or other amounts which are allowable for tax purposes (including amounts surrendered by way of group relief) to minimise the tax payable by it. It is believed that, on the basis of activities planned for the Borrower (including, inter alia, its borrowings under the Issuer/Borrower Facility Agreement, the BankCo/Borrower Subordinated Loan Agreement and the Issuer/BankCo Subordinated Loan Agreement), it will have sufficient income after tax to enable full and timely payment of principal and interest due under the Issuer/Borrower Facility Agreement. Under recently introduced transfer pricing and thin capitalisation rules applying to UK transactions, the Borrower’s entitlement to tax relief in respect of interest payable under the BankCo/Borrower Subordinated Loan Agreement and the Issuer/Borrower Subordinated Loan Agreement may be subject to adjustment for tax purposes. In particular, if the provision that would have been made as between independent enterprises differs from the actual provision so that less (or no) interest would have been payable by an arm’s length borrower, the Borrower’s deductions for such interest would be by reference to the arm’s length interest. The new regime includes provisions that allow

27 the other party to the provision (here, BankCo and LoanCo or New FinCo) to elect to undertake sole responsibility for any tax liability of the Borrower which results from such an adjustment. The relevant companies have covenanted in favour of the Borrower Group Security Trustee to make such an election. The Inland Revenue has the power to refuse to accept such an election. However, in the light of published draft guidance, it is thought that the risk of such a refusal is remote. If appropriate elections are made and accepted, the Borrower should be in no worse a position as regards having sufficient income after tax to pay principal and interest under the Issuer/Borrower Facility Agreement if an adjustment is made to restrict the Borrower’s entitlement to tax relief in respect of the BankCo/Borrower Subordinated Loan Agreement and the Issuer/Borrower Subordinated Loan Agreement, than if no such adjustment were made.

Exposure of Spirit Group to funding risks in relation to its defined benefit pension schemes The Spirit Group Pension Scheme (SGPS), the occupational defined benefit pension scheme operated by SGL prior to Completion, was closed to new joiners on 31 May, 2000. The Spirit Group Retail Pension Plan (SGRPP), the occupational defined benefit pension scheme operated by SGRL prior to Completion, was closed to new joiners on 31 January, 2004. As part of the Corporate Reorganisation, with effect from Completion, SGL and SGRL will be replaced as the employers in the SGPS and the SGRPP respectively (each a Scheme and, together, the Schemes) by AdminCo. SMHL is proposing to enter into an agreement with the trustees of the Schemes to guarantee AdminCo’s liabilities to make payments under and in connection with the Schemes. Further information on the funding position of the Schemes, including the position under accounting standard FRS 17, is set out in Business of Spirit Group – Operations – Pension Schemes below. The primary liability for funding the Schemes will, from Completion, rest with AdminCo as the employer. There are risks to AdminCo as employer and, by virtue of the anticipated new legislation mentioned below, Spirit Group generally arising from the operation of the Schemes (many of which are generic risks associated with the operation of UK defined benefit pension schemes generally). In summary, the main risk factors are: * the trustees of the SGRPP have unilateral power to fix the employer contribution rate. In principle, therefore, they could require increased payments from AdminCo as employer in that scheme. In addition, in relation to both Schemes, changes to the current UK statutory minimum funding requirement are expected to be brought into effect in 2005 under the draft Pensions Bill 2004 (the Pensions Bill) and the requirements of a European directive. This is expected to result in more onerous funding requirements for employers and will introduce a residual power for the new UK Pensions Regulator to impose a scheme funding target and employer contribution rate if those matters cannot be agreed between the scheme trustees and the employers. This is likely to be of most relevance for the SGPS where the trustees do not currently have power to fix the employer contribution rate; * the trustees of both Schemes have the power to wind up the Schemes in certain circumstances (including, broadly, for the SGPS where it appears that on a winding-up of the relevant Scheme, its assets would be insufficient to meet its liabilities – as would be the case now, and for the SGRPP where the trustees receive advice that the contributions paid by the employers now and in the future are so low as to prejudice seriously the long term financial position of that Scheme). Before exercising this power, the trustees would have to form the opinion that their action was in the best interests of members of the relevant Scheme taken as a whole. As a result of recent changes in legislation, winding up the Schemes would result in an obligation on AdminCo to fund the Schemes by reference to a buy-out basis under section 75 of the Pensions Act 1995 (a s.75 debt). Previously, this statutory debt was calculated by reference to the minimum funding requirement, a basis on which recent actuarial calculations have identified that both Schemes are fully funded. However, the Schemes are (like many other UK defined benefit pension schemes) significantly underfunded on this newly applicable buy-out basis. Approximate actuarial calculations carried out by Hewitt Bacon & Woodrow for SGL identify that if the Schemes were to wind up as at 8 October, 2004, contributions on this basis would have been required of around £70 million to the SGPS and £102 million to the SGRPP (although these figures should only be taken as

28 a guide as no quotations have been obtained from insurance companies). Additionally, draft regulations (expected to come into force early in 2005) provide that a s.75 debt would be triggered if AdminCo went into liquidation; * the Pensions Bill (if enacted) would give new powers to the new UK Pensions Regulator to require funding or funding guarantees for defined benefit pension schemes from persons associated or connected with the participating employers. This could include any company within Spirit Group including BankCo and the Borrower. For example, if AdminCo was unable to meet a s.75 debt, the new UK Pensions Regulator could potentially require payment by other companies within Spirit Group (including SMHL, BankCo and the Borrower); * the Pensions Bill (if enacted) would give the new Pensions Regulator the power to require a person associated or connected with AdminCo to contribute to a pension scheme deficit if the Regulator considers that he or it has deliberately acted or failed to act or, with a main purpose of either avoiding a s.75 debt liability or, otherwise than in good faith, preventing such a debt becoming due, compromising or reducing the amount of such a debt; and * the trustees of each Scheme have control over the investment of the relevant Scheme’s assets and could (having taken appropriate investment advice and consulted with AdminCo as employer in the Scheme) increase the bond weighting of the Schemes. This would typically increase the employer funding obligations in relation to the Schemes because of the lower rate of return expected from lower risk bonds. As advised by the actuaries to the Schemes, the foregoing risks are linked to the funding level of the Schemes, which can be adversely affected by a number of factors including: (i) bond yields (low yields mean a pension obligation is assessed as having a high value); (ii) long and/or increasing life expectancy (which will make pensions payable for longer and, therefore, more expensive to provide, whether paid directly from the Schemes or secured by the purchase of annuities); (iii) poor investment performance of pension fund investments; (iv) actual and expected price inflation (many benefits are linked to price inflation and, ignoring any compensating change in the value of assets and future expected investment returns, an increase in inflation will result in higher benefits being paid); (v) increased funding volatility as a result of the mismatch in the nature of the assets held when compared to the liability of the Schemes; (vi) adverse annuity rates (which tend, in particular, to depend on prevailing interest rates and life expectancy) as these will make it more expensive to secure pensions with an insurance company; (vii) a larger than expected number of deaths of members before retirement (for example, due to a catastrophe); (viii) clarification of the law that might require guaranteed minimum pensions relating to periods of service after 17 May, 1990 and before 6 April, 1997 to be equalised as between men and women; and (ix) other events occurring which make past service benefits more expensive than predicted in the actuarial assumptions by reference to which Spirit Group’s past contributions were assessed, including the identification of any previously unidentified liabilities, which were not funded for in the last actuarial valuations of the Schemes, and unanticipated changes to legislation or tax rules. Employer obligations to their pension schemes (such as s.75 debts and amounts owing under the normal employer contribution rule of the scheme) generally rank as unsecured and non-preferential obligations of the employer with two limited exceptions: (i) employee contributions which an insolvent employer has deducted from employees’ pay in the four months before the start of the insolvency process but not yet paid to the schemes rank as preferential obligations of the employer; and (ii) a limited amount of unpaid employer contributions to a contracted-out scheme in the 12 months preceding the start of the insolvency process, which is linked to the national insurance rebate which applies to schemes contracted-out of the State Second Pension. The maximum preferential amount under this heading in the tax year 2003/04 would have been around £1,245 per employee (and less for employees earning below the State upper earnings limit of £30,940).

Risks Relating to Business Operations Concentration in Great Britain All of the pubs in the Borrower Group Estate are located in Great Britain and, therefore, the Borrower Group’s results of operations are substantially influenced by general economic conditions in Great Britain. Specifically, consumer confidence and personal disposable income are influenced, among other things, by macroeconomic factors such as inflation, interest rates, rates of taxation

29 imposed both directly and indirectly on consumers, wage rates, levels of employment and the availability of consumer credit. Adverse changes in the economic climate in Great Britain could have a negative impact on the Borrower Group’s performance (see Business of Spirit Group below).

Declining sales of beer in pubs in Great Britain A significant portion of the Borrower Group’s turnover is currently derived from the sale of beer to its customers. In recent years, sales of all beer (by volume) in pubs in Great Britain have decreased, principally as a result of pub customers showing increased demand for non-beer products such as wine and other alcoholic beverages, and increased expenditure on food along with a decline in the number/proportion of male pub visitors. Growing health and drink-driving concerns, as well as the ability to purchase canned or bottled beer at lower prices in many off- licences and supermarkets, have also contributed to the downward trend in beer sales at pubs. Accordingly, the Borrower Group’s pubs will continue to offer a broad selection of non-beer alcoholic drinks, as well as a wide range of food, to continue to attract customers. If the Borrower Group is not able to grow successfully its other income streams from other products, a continued decline in the British beer market could have an adverse effect on the Borrower Group’s turnover and overall financial performance.

Continued consolidation in the pub industry The pub industry in Great Britain is undergoing a period of active consolidation through joint ventures, mergers and acquisitions. In April 2003, Six Continents demerged and listed its managed pub division, Mitchells & Butlers plc (Mitchells & Butlers), which operates over 2,100 pubs, bars and restaurants. In November 2003, Scottish & Newcastle PLC’s managed retail business comprising some 1,400 properties including pubs, restaurants and budget hotels merged with Spirit Group (see The SNR Acquisition below). On 1 December, 2003 Punch Taverns PLC completed the acquisition of Pubmistress Limited, the holding company of the Pubmaster group comprising over 3,000 leased and tenanted pubs. In March 2004, Enterprise Inns plc acquired the outstanding equity in the Unique Pub Group not already owned by it, creating the largest UK pub company with over 9,000 pubs. In August 2004, Greene King plc acquired 432 managed pubs from the Laurel Pub Company. In September 2004, Punch Taverns PLC acquired approximately 1,000 leased pubs through the acquisition of InnSpired Group Limited. Continuing consolidation of the pub industry in Great Britain and a subsequent decrease in competition among Spirit Group’s suppliers may adversely affect the ability of the Borrower Group to obtain beer and other beverages on terms as favourable as those contained in its current and proposed supply contracts. Conversely, continued consolidation in the pub industry in Great Britain could lead to the emergence of several large competitors, each of which may have greater financial or operational resources than the Borrower Group. The Borrower Group may not be able to respond to pricing pressures that may result from continued consolidation of the pub industry in Great Britain and may not be able to compete successfully for prospective employees or acquisitions with large competitors. If Spirit Group does not continue to be a major participant in the British pub industry, its ability (and, therefore, the ability of the Borrower Group) to secure favourable pricing from suppliers and attract qualified employees could be adversely affected.

Varying consumer perceptions and public attitudes Food and drink businesses are often affected by changes in consumer tastes, national, regional and local conditions and demographic trends. In Great Britain, consumption of alcoholic beverages has become the subject of considerable social and political attention in recent years due to increasing public concern over alcohol-related social problems including drink-driving, underage drinking and adverse health consequences associated with the misuse of alcohol, including alcoholism. If beer consumption in Great Britain were to decrease significantly or if the beer industry were subjected to significant additional governmental regulation, the Borrower Group’s business and operations could be materially adversely affected. The Borrower Group’s success will depend in part on its ability to anticipate, identify and respond to these changing conditions.

Competition for customers The Borrower Group’s pubs compete for consumers with a wide variety of other pubs, pub companies and brewers, some of which may have better-known brands, be better situated or better

30 equipped and may have access to greater financial resources. The Borrower Group’s pubs must also compete for customers with off-licences and supermarkets where bottled beer and other beverages can increasingly be purchased more cheaply. In addition, pubs in general must compete with a wide range of alternative entertainment and leisure activities available to consumers in Great Britain, including sporting events, cinema, television, restaurants, cafes and health clubs. The Borrower Group’s pubs may not be successful in competing against any or all of these alternatives and a sustained loss of customers to other pubs, shops or activities could have a material adverse effect on the Borrower Group’s business operations and prospects.

Competition for high quality managers All of the Borrower Group’s pubs are operated by Spirit Group employees as managers. Spirit Group competes with other managed pub companies to attract high quality managers and some of these companies may have greater financial and other resources than Spirit Group. Spirit Group’s major competitors include Mitchells & Butlers, JD Wetherspoon, Wolverhampton & Dudley, Greene King and Whitbread. If Spirit Group is unsuccessful in convincing both existing and prospective employees that the overall combination of its properties, services and employment terms are more favourable than that of its competitors, existing managers may choose not to remain employed by Spirit Group and prospective employees may choose to work for other companies. In addition, individuals seeking to enter the pub operating business have several alternatives to being employed managing a pub, any of which may prove to be more attractive depending on personal circumstances. These include acquiring a pub freehold outright or joining one of numerous independent leased or tenanted pub companies as a lessee or tenant. Licensed restaurants, cafes and bars can also offer attractive business opportunities for the type of employee that Spirit Group would like to employ. Spirit Group may not be successful in convincing prospective employees of the benefits of managing its pubs and Spirit Group (and, accordingly, the Borrower Group) may lose high quality employees as a result.

Financial and accounting systems Spirit Group is in the process of moving to one integrated platform for financial and accounting systems (PeopleSoft) to maximise the benefits of the SNR Acquisition. The operation and management of the financial information technology platform of the Securitisation Group was formerly outsourced to Electronic Data Systems Limited (EDS) but this arrangement has now been terminated and the relevant services (including outlet systems, accounting, payroll, purchase ordering and various other applications and development services) together with technical support and maintenance were brought in-house with effect from 1 September, 2004. EDS will continue to run certain legacy mainframe systems until 30 November, 2004 at the latest, under a new contract, by which time all mainframe applications systems will have been replaced other than the payroll system which is hosted by Rebus IS in Basildon, UK. As part of the integration programme following the SNR Acquisition, many of the old systems running within the Securitisation Group are in the process of being replaced. The Borrower Group will, thereafter, utilise modern information systems, which will be continually reviewed to improve performance and services as the Borrower Group’s business changes. By running information systems in-house, many of the previous risks associated with outsourcing have disappeared. As a consequence of the Corporate Reorganisation, Spirit Group’s financial and accounting systems will be re-configured to accommodate the separation of the Borrower Group Estate and the BankCo Estate (see Business of Spirit Group – Cash Collection below). If the financial and accounting systems are not able to distinguish between amounts attributable to pubs within the Borrower Group Estate and those attributable to pubs within the BankCo Estate or otherwise, there is a risk that (i) such amounts will not be subject to the security interests created pursuant to the Borrower Group Deed of Charge and (ii) Spirit Group will experience difficulties in accurately reporting the financial position of the Borrower Group and BankCo.

Administrative Services Agreement As described in Summary of Principal Documents – Administrative Services Agreement below, the Borrower will enter into the Administrative Services Agreement on the Closing Date. In relation thereto, the following should be noted:

31 Employees All employees required to staff the pubs comprising the Borrower Group Estate and the BankCo Estate will be transferred to AdminCo on the Closing Date. The Borrower and BankCo do not have any staff and are, therefore, reliant on AdminCo to provide staff for their operations under the terms of the Administrative Services Agreement and the BankCo Administrative Services Agreement respectively, which will provide for AdminCo’s costs to be charged back to the Borrower and BankCo respectively in accordance with principles set out therein.

Appointment of Administrator to AdminCo The Administrative Services Agreement and the BankCo Administrative Services Agreement will contain provisions intended to ensure that the Borrower or, as the case may be, BankCo has an option to employ the staff engaged in their respective operations directly if AdminCo should enter into insolvency proceedings. It is intended that in these circumstances individual pub level staff would transfer automatically by operation of law but, should this not be possible, the ability of the Borrower or, as the case may be, BankCo to engage staff under these provisions depends on the willingness (which cannot be guaranteed) of individual employees to accept an offer of employment made by the Borrower or, as the case may be, BankCo. In addition, the allocation of certain staff who work above individual pub level (such as area managers or staff engaged in the provision of central services) as between the pubs making up the Borrower Group Estate and the BankCo Estate may not be clear. This could have an effect on the business of the Borrower Group Estate in the future (either because the Borrower may be unable to obtain the services of particular individuals above that level, or because the Borrower finds itself liable for termination costs in respect of such individuals). To the extent that the option to directly employ the relevant employees is not exercised, the Borrower or, as the case may be, BankCo may become liable for termination costs in respect of the relevant employees.

Insolvency of BankCo or the Borrower The fact that AdminCo is engaged in providing services to both BankCo and the Borrower also exposes the Borrower Group Estate to risks in respect of BankCo’s insolvency. These include the risks that (a) the cost of services to the Borrower from AdminCo increases (because BankCo is no longer paying for its share of the services provided under the BankCo Administrative Services Agreement) and (b) employees whose services are shared by the Borrower and BankCo (for example, business development managers (BDMs)) may need to be made redundant by AdminCo (leaving the Borrower Group Estate without the services of those employees). In relation to the risk referred to in (a), any increased cost element so arising will be subordinated in the priority of payments of the Borrower and, if not mitigaged to an acceptable extent after six months, would entitle the Borrower to terminate the Administrative Services Agreement. The Administrative Services Agreement will seek to mitigate the risk referred to in (b) by providing that AdminCo should not make such employees redundant without notifying the Borrower in advance (whereupon the Borrower may then decide whether it wishes to make the employee a direct offer of employment).

Sale of BankCo or Borrower business The Administrative Services Agreement and the BankCo Administrative Services Agreement will also contain provisions intended to ensure that, if BankCo or the Borrower (or their respective businesses) are sold (for example, on enforcement of security), then the employment of pub level staff engaged in the relevant business would transfer to the purchaser. In addition to the potential difficulty of deciding upon the proper allocation of staff who work above the individual pub level (for example, BDMs) as between the Borrower Group Estate and the BankCo Estate, it should also be noted that the effectiveness of these provisions in some circumstances will depend on the willingness (which cannot be guaranteed) of individual employees to accept an offer of employment with the purchaser.

Other Administrative Service Agreements AdminCo may enter into administrative services agreements with other members of Spirit Group (as constituted from time to time). However, the Administrative Services Agreement will provide that, if any such other agreement exceeds certain materiality thresholds, it will be required to be on substantially the same terms as the Administrative Services Agreement. AdminCo may also provide

32 administrative services to entities outside Spirit Group in certain circumstances. In order to limit AdminCo’s exposure to third party credit risk in respect of such entitities, it is only permitted to provide such services on a transitional basis for a limited period following disposal of Spirit Group businesses or companies, provided that (other than in respect of existing or proposed arrangements at the Closing Date) each of the relevant agreements does not exceed those same materiality thresholds or to provide such services to Spirit Group’s existing joint venture arrangements and to any future such joint ventures, provided that AdminCo may not itself be party to any such joint venture and that the relevant Spirit party has at least 50 per cent. of the economic and voting rights in relation to the joint venture.

Novation and outsourcing in relation to AdminCo In circumstances where Spirit Group has acquired, or been acquired by, certain approved entities (essentially large established operators of managed and/or tenanted pub estates) within a period of five years following the Closing Date, the rights and obligations of AdminCo under the Administrative Services Agreement may be novated, without the consent of the Borrower or the Borrower Group Security Trustee, from AdminCo to an alternative service provider within the enlarged group. The Administrative Services Agreement will impose various conditions to be satisfied prior to any such novation, including a credit rating-based analysis.

AdminCo may also effect a novation to an alternative provider at any time without the consent of the Borrower or the Borrower Group Security Trustee, subject to the satisfaction of certain conditions, including the receipt of confirmation from the Rating Agencies that the ratings in respect of the Class A2 and Class A4 Debenture Bonds or the Underlying Ratings in respect of the Class A1, Class A3 and Class A5 Debenture Bonds are not adversely affected.

Novation of the rights and obligations of AdminCo under the Administrative Services Agreement may adversely affect the quality and/or cost of services provided to the Borrower over time. Furthermore, following novation, the Borrower Group Security Trustee may no longer have the benefit of a share pledge over the shares in the entity providing the services under the Administrative Services Agreement.

Furthermore, subject to certain conditions, AdminCo will be permitted to outsource some or all of the services which it is contractually obliged to perform under the Administrative Services Agreement, subject to certain conditions, including that it shall remain liable to the full extent of its duties and obligations undertaken, notwithstanding any such outsourcing. There is no guarantee that any outsourcing by AdminCo would lead to cost savings or, following enforcement of security and termination of the Administrative Services Agreement, that the Borrower would have access to all the resources that it then needed to run its business.

Change to administration arrangements The administration arrangements being put in place between the Borrower and AdminCo and between AdminCo and certain other members of Spirit Group including BankCo, together with certain other aspects of the Corporate Reorganisation, represent a significant change to the way in which Spirit has been organised operationally prior to the Corporate Reorganisation. It is possible that, over time, these arrangements may be found to have become operationally restrictive or commercially undesirable for Spirit Group and/or may fail to address issues that arise out of changes in the nature of Spirit Group and/or the industry and/or environment in which it operates. In such circumstances, Spirit Group may seek to modify or unwind such structure in whole or in part, which modification or unwinding will be subject to the consent of the Borrower Group Security Trustee.

Seasonality and weather Attendance at pubs in Great Britain is generally higher during holiday periods, such as Christmas and New Year, and over bank holidays. Frequenting of pubs is slightly lower during the winter months than in summer. Attendance at pubs is also adversely affected by persistent rain or other inclement weather. A sustained period of cold or inclement weather, particularly during the peak summer months or over the holidays, could have a negative effect on turnover generated by the pubs comprising the Borrower Group Estate and, in turn, could have a negative effect on the results of the Borrower Group’s operations.

33 Change in gambling laws Proposed changes to the current UK gambling legislation applicable to amusement with prizes machines (AWPs) are under consideration by the Government which include, inter alia, making play of AWPs by under 18 year olds illegal (although Spirit Group already abides by a voluntary code to this effect, as will the Borrower following Completion) and passing the control of the number of AWPs from magistrates courts to local authorities. Under the proposed legislation, it is intended that existing licensed premises will be allowed to retain their current number of AWPs. New licensed premises are likely to be entitled to two AWPs (currently pubs do not have an automatic right to any AWPs) with discretion for local authorities to increase such entitlement, based on national guidance that is currently being considered by the Government in consultation with the pub industry. In addition, following lobbying by the pub and gambling industries and irrespective of any new overarching gambling legislation, reviews aimed at increasing the maximum levels of stakes, prizes and methods of payment will continue. The new legislation may increase the appeal (through payment deregulation and the number of machines on licensed premises) of gambling in pubs, including those in the Borrower Group Estate. However, the levels of income from AWPs within the Borrower Group Estate may be negatively affected if local authorities do not permit pubs to have more than two AWPs or do not grant grandfather rights in respect of existing machines.

EC Noise Directive The Physical Agents Directive 2001 (the Directive) is currently under discussion in the retail industry relating to the regulation of noise in the workplace. It is expected that the Government will need to put in place regulations in relation to the Directive within the next five years. It is possible that this may discourage certain customers from patronising those pubs whose present attraction is music or a less quiet environment and this could lead to a reduction in sales at some pubs and reduce the income received by the Borrower Group.

Complaints or Litigation from Pub Customers, Employees and Third Parties The Borrower Group, or the licensed retailing industry, could be the subject of complaints or litigation from individuals or groups of pub customers and/or employees and/or class actions alleging illness or injury (for example, passive smoking or alcohol abuse) or raising other food quality, health or operational concerns, and from other third parties in relation to nuisance and negligence. It may also incur additional liabilities as a freehold or heritable property owner (including environmental liability). These claims may also divert the Borrower Group’s financial resources from more beneficial uses. If the Borrower Group were to be found liable in respect of any complaint or litigation, this could adversely affect the Borrower Group’s results of operations and also adversely affect its reputation or that of its brands.

High proportion of Fixed Overheads and Variable Revenues A high proportion of operating overheads and certain other costs remain constant even if revenues decline. The expenses of owning and operating a managed pub or pub-restaurant are not significantly reduced when circumstances such as market and economic factors and competition cause a reduction in revenues. Owners of leased and tenanted estates generally have a lower risk to revenue exposure compared with the Borrower Group because the tenant is obliged to pay the negotiated rent. In addition, owners of leased and tenanted estates typically have lower fixed costs at operating level and at a head office level than owners of managed estates such as the Borrower Group. Accordingly, a significant decline in the Borrower Group’s revenues would have a disproportionately adverse effect on its cash flow and ability to make interest and principal payments under the Issuer/Borrower Facility Agreement.

Insurance The Issuer/Borrower Facility Agreement will require the Borrower Group to carry insurance with respect to the Borrower Group Estate in accordance with the terms set out therein, which the Borrower Group may fulfil under a Spirit Group policy. Following the effects of the 11 September, 2001 terrorist attacks on the World Trade Center in New York, companies generally are facing increased premia for reduced cover. Generally, the Borrower Group may indirectly have to pay

34 higher premia or in some cases accept less, or a lower quality of, cover. This could adversely affect the Borrower Group by increasing costs or increasing its exposure to certain risks. Other risks might become uninsurable (or not economically insurable) in the future. The Borrower’s ability to meet its obligations under the Issuer/Borrower Facility Agreement may be adversely affected if such an uninsured or uninsurable loss were to occur, which may adversely affect the ability of the Issuer to pay interest on and repay principal of the Debenture Bonds. The insurance arrangements for the Borrower Group will form part of the services to be provided by AdminCo under the Administrative Services Agreement. The Administrative Services Agreement will allocate the appropriate level of premia payable by the Borrower Group (on a fair and reasonable basis) and will also allocate appropriate sub-limits within the context of Spirit Group’s overall cover limits to each part of the Managed Estate (also on a fair and reasonable basis) (see Summary of Principal Documents – Administrative Services Agreement below).

Impact of future operations outside the Borrower Group Spirit Group as a whole does not have substantial business operations apart from those of the Borrower Group and BankCo. It should be noted, however, that the Borrower will not have any right to restrict or prevent any Excluded Group Entity (whether BankCo, LoanCo or any other entity) from conducting its affairs as such Excluded Group Entity sees fit (including in relation to incurring, at any time, financial indebtedness in excess of the indebtedness that exists on the Closing Date, or effecting acquisitions and disposals) and accordingly Spirit Group may have additional operations and financing arrangements in the future. Any current or future operations and financing arrangements outside the Borrower Group could be expected to be subject to some or all of the foregoing risks relating to business operations. There can be no assurance that these additional operations and/or financing arrangements will not have any adverse impact on the business and operations of the Borrower Group.

Regulation

General The pub industry in Great Britain is highly regulated at both national and local levels and pub operations require licences, permits and approvals. Delays and failures to obtain required licences or permits could negatively affect the Borrower Group’s operations. As such, a large part of the Borrower Group’s business is subject to national and local laws that affect its operations, including laws and regulations relating to employment, health, sanitation, alcoholic beverage control and safety standards. Difficulties or failures in obtaining required licences or approvals could delay or prohibit the opening of new pubs. These laws and regulations impose a significant administrative burden on the Borrower Group and its retailers and additional or more stringent requirements could be imposed in the future. By way of example, legislative changes being considered could place a greater onus on the managers of pubs to control drunkenness and under-age drinking. Alcoholic beverage control regulations require each of the Borrower Group’s pub managers to apply to a national authority and, in certain locations, local or municipal authorities for a licence to sell alcoholic beverages. These licences must generally be renewed every three years and may be suspended or revoked at any time for cause, including violation by a retailer or its employees of any law or regulation, such as those regulating the minimum age of patrons or employees, advertising and inventory control.

Licensing Reform – England and Wales The Government has recently introduced new legislation affecting the licensing regime in England and Wales. On 10 July, 2004 the Licensing Act 2003 (the Licensing Act 2003) received Royal Assent. The Act will not come into force before 7 November, 2005. Spirit Group believes that those changes to be introduced by the Act will not negatively impact upon its business. The principal changes introduced by the Act are: * the transfer of the liquor licensing system from local magistrates courts to local authorities, i.e. from the legal system to the local government system. However, licence holders will retain the right of appeal to the magistrates court. In theory, this change should have little impact on the

35 basic structure of pub licensing, but in practice this change means that any new pub, as well as all existing pubs, will have to submit details of its operating plan to the relevant local authority and will now face greater scrutiny from police and local residents; * greater flexibility with respect to pub opening hours under which it is likely that the current stringent limits on late-night trading will be relaxed. While longer opening hours will undoubtedly have cost implications, Spirit Group management believes that this change may benefit certain pubs where there is a demand for later hours drinking and expects to see an uplift in trading with a consequential increase in profits from those pubs; and * a dual system of longer-term premises licences and personal licences. In addition, each pub requires licences from local authorities and the development and construction of additional pubs or renovations of existing pubs may be subject to compliance with applicable planning, land use, environmental and health and safety regulations.

Licensing Reform – Scotland In parallel to the current reforms in England and Wales, the Scottish Parliament has initiated a review of licensing law under the auspices of the Nicholson Committee. The Nicholson Committee’s Report was published in August 2003 and contained a number of proposals for the reform of licensing law in Scotland. The Nicholson Committee’s Report was subject to a period of consultation which ran until 31 August, 2004. The Scottish Executive has meanwhile published a consultative draft Bill, which, if enacted in its present form, would substantially implement the recommendations of the Nicholson Committee. However, no legislative timetable has as yet been announced by the Scottish Executive. It is not known at this time if there would be any adverse effect on Spirit Group as a result of the implementation of the recommendations of the Nicholson Committee. See further The United Kingdom Pub Industry – Licensing Environment – Licensing Reform below.

Revocation of licence A small proportion of pubs have their licences revoked each year. A number of these revoked licences will have subsequently been reinstated. At present, each pub in the Managed Estate has the benefit of a full on-licence and no pub in the Managed Estate is trading which has had its licence revoked. In the event that circumstances arise leading to the revocation of a licence in respect of a pub, the profit of that pub may be reduced or extinguished. Although revocation of a licence or licences may not of itself lead to an event of default under the Issuer/Borrower Facility Agreement, such an occurrence may indirectly adversely affect the ability of the Issuer to meet its payments of interest on and principal of the Debenture Bonds. Spirit Group management has a certain degree of control over its pub managers and, therefore, does not consider that the risk of revocation is sufficient to warrant insurance.

Certain changes to regulations may affect the cost base of the Borrower The Borrower’s operations are subject to regulation and further changes in regulation could adversely affect results of operations, including through higher costs. More restrictive regulations could lead to increasing prices to consumers which, in turn, may adversely affect demand and therefore, revenues and profitability. In particular, some examples of the regulatory changes which may affect the Borrower’s cost base include: * additional European Union or United Kingdom employment legislation (in particular, the level of the national minimum wage which is under annual review by the Low Pay Commission and the maximum number of hours an employee may be permitted to work and the extent to which they may voluntarily opt out) which could further increase labour costs; * competition laws, consumer protection and environmental law which could adversely affect the Borrower’s operations; and * implementation of the Disability Discrimination Act 1995, which will require changes to certain pubs.

36 Potential change to drink-driving laws The Government has carried out a consultation exercise concerning, among other things, a possible review of the legal blood alcohol limit for drivers. On the basis of such exercise, the Government is examining whether it should lower the legal blood alcohol limit from its current level. The European Commission has recommended that all countries in the EU adopt the same drink and drive limit of 0.5mg/ml blood alcohol concentration. A lower level of 0.2mg/ml would be adopted for younger and inexperienced drivers. It is not known when the EU directive will come into force. The current legal limit in the United Kingdom is 0.8mg/ml and, as car drivers and passengers account for 40 per cent. of pub customers in the United Kingdom, this legislation could affect trading in the Borrower Group’s rural and suburban pubs and may result in customers drinking less. This could lead to a reduction in turnover at certain of the pubs in the Borrower Group Estate and lead to a decline in the Borrower Group’s overall income as a whole from alcoholic drink sales.

Legislation relating to smoking On 16 November, 2004, the UK Government published its White Paper on Public Health (the White Paper) which sets out the Department of Health’s proposals in relation to smoking in public places, including pubs, in England and Wales. It is proposed that restrictions on smoking are to be phased in over a period of four years including an outright ban on smoking in restaurants and pubs serving food (other than snacks such as crisps).

Pubs and bars not serving food will not be subject to the outright ban and pub owners will be able to choose whether to permit smoking on their premises.

There is currently a Public Places Charter (the Charter) on smoking in public places, such as restaurants and pubs, which has been agreed between the Department of Health and leading hospitality industry groups. This Charter, though not law, is supported by the Government which asked the licensed leisure industry to ensure that 50 per cent. of licensed premises were compliant with it by December 2002, and that 35 per cent. of those have either ‘‘no smoking’’ areas or adequate mechanical ventilation.

In Scotland, following a recent decision of the Scottish Executive, it is proposed that an outright ban on smoking in public places, including pubs, be introduced. If implemented, this ban may take effect in 2006.

Spirit Group policy on smoking Spirit Group, in common with other pub companies, is currently in the process of adopting a policy which complies with the Charter. As a result of the White Paper, Spirit Group will now review its policies in this area in order to manage compliance with the likely legislation as effectively as possible.

Spirit will be involved, as will other companies in the sector, in any consultation process with the Government in respect of the White Paper. At this moment, it is expected that any ban across England and Wales would come into effect in 2008.

The current restrictions, introduced pursuant to the Charter, together with the proposals set out in the White Paper may have the effect of discouraging smokers from using pubs, this may adversely affect the results of Spirit Group. In England and Wales, the effects of the proposed ban may be mitigated by the interim period of four years prior to introduction. Spirit Group will be able to use this time to properly assess and prepare for the impact the ban may have on its business.

In Scotland, where approximately 6 per cent. of the Managed Estate is located, the ban, if implemented as proposed, may have a greater adverse effect on the Spirit Group business, given its more restrictive nature and the shorter time period in which to implement the necessary arrangements.

Overall, it is expected that the adverse effects of the proposed smoking bans will be limited. Experience in other cities where smoking bans have been introduced suggests that volumes of turnover will recover to pre-ban levels relatively quickly and food oriented pubs, in particular, may benefit from the smoking ban.

37 The Borrower’s activities are affected by a number of fiscal-related matters The Borrower’s activities are affected by a number of fiscal-related matters, including duty on alcoholic beverages, value added tax, other business taxes and the availability of duty harmonisation to travellers between EU countries. Changes in legislation which affect all or any of these matters may adversely affect the financial performance of the Borrower Group.

The Borrower is reliant on the reputation of Spirit Group’s brands Failure to protect Spirit Group’s brands or an event which materially damaged the reputation of one or more of its brands and/or failure to sustain their appeal to its customers could have an adverse impact on subsequent revenues from that brand or to Spirit Group’s brands as a whole and, accordingly, on the revenues of the Borrower Group.

The Borrower’s ability to meet its obligations in respect of the Issuer/Borrower Facility Agreement The Borrower’s ability to meet its obligations under the Issuer/Borrower Facility Agreement depends upon the performance of its business and its general financial obligations other than under the Issuer/Borrower Facility Agreement. The performance of the business is influenced by, but is not necessarily limited to: (a) the future of the pub industry generally and the continuing diversification between outlets offering a wider range of beer and non-beer related products, food and catering; (b) general economic conditions in Great Britain by reason of all the pubs in the Borrower Group Estate being located there; and (c) the other issues mentioned elsewhere in this Offering Circular.

Impact of supply arrangements Spirit Group’s (and, accordingly, the Borrower Group’s) ability to supply and distribute beer and other non-beer products to pubs, and the terms on which it does so, is related to the supply arrangements established through Spirit Supply. Spirit Supply fulfils the procurement function of the operating companies (which, following completion of the Corporate Reorganisation, will be principally the Borrower and BankCo) within Spirit Group through negotiating with third party suppliers of food, beer and other products. Historically, Punch Group and Spirit Group had a joint procurement function, originally established when the two estates were part of the same corporate group and operated from Demerger until August 2003 through the Punch Supply Company Limited joint venture. The joint venture was terminated in August 2003 and replaced with a contractual collaborative arrangement between SGEL and Punch Group Equity Limited under which the two groups may elect to negotiate certain arrangements by reference to the joint purchasing power of the combined estates with a view to achieving better pricing and other terms than might be available individually. This historical arrangement has resulted in collaborative agreements for some supply contracts, in particular, those with Carlsberg UK Limited (Carlsberg UK) and Coors Brewers Limited (Coors). The emphasis on such arrangements has, however, reduced following the SNR Acquisition given Spirit’s increased purchasing power following that acquisition. In moving away from collaborative agreements with Punch Group, Spirit Group is confident of its ability to secure equally favourable terms elsewhere given the size of the Managed Estate. The main suppliers and distributors of beer to the Securitised Estate and the SNR Estate are Carlsberg UK and Scottish Courage Limited (Scottish Courage) respectively. As an independent pub retail company, Spirit Group operates a multi-sourcing policy and sources beer from other suppliers for example, Coors, Diageo and Interbrew UK Limited in addition to Carlsberg UK and Scottish Courage. Spirit Supply has a beer supply agreement with Carlsberg UK which runs until December 2007 and contains certain minimum volume obligations. Spirit Supply also has both beer and wine supply agreements with Scottish Courage, entered into at the time of the SNR Acquisition, with minimum volume commitments in the beer supply agreement, which runs until November 2010. Further details of these arrangements are set out in Business of Spirit Group – Beer Supply and Other Wet Goods Supplies below. If, for any reason, Carlsberg UK or Scottish Courage ceased to supply beer and non-beer products to Spirit Supply, the Borrower Group might be required to move to another supplier. Spirit Group management believes that this would not create undue difficulties for the operation of the Borrower Group Estate since there are alternative sources of supply in the market.

38 Upon Completion of the Corporate Reorganisation, the Borrower will enter into an intra-group back- to-back supply agreement with, inter alios, Spirit Supply pursuant to which it will purchase from Spirit Supply the majority of its food and beverage products and certain related services required for its business, including distribution and technical support services. Spirit Supply will itself source such goods and services direct through a network of outward facing third party supply contracts. The supply under the intra-group agreement to the Borrower will be made on a fair and non- discriminatory basis and such agreement will contain no minimum volume commitments, regardless of whether the relative outward facing third party contract to which Spirit Supply is party contains such commitments, as is the case, for example, with the Carlsberg UK and Scottish Courage beer supply agreements. Accordingly, if Spirit Supply were unable to meet any such commitments and, if applicable, failed to meet its obligation to pay any liquidated damages due, the relevant supplier might be entitled to terminate its respective agreement with Spirit Supply. In those circumstances, the Borrower Group would be required to source the relevant product(s) and/or service(s) elsewhere. Spirit Group management believe that this would not cause significant difficulties to the operation of the business of the Borrower Group, other than the potential short term disruption inherent in any change in a major supplier. However, no termination payment would be payable by the Borrower to Spirit Supply in these circumstances.

Appointment of Financial Adviser If an FA Appointment Event occurs, the Borrower will be required (at its own expense) promptly to appoint a Financial Adviser to prepare a report within 45 days of its appointment on behalf of the Borrower Group Security Trustee: (a) to outline the financial status of AdminCo; and (b) to undertake a detailed management and performance review of AdminCo’s management of the Borrower, to detail the circumstances surrounding such FA Appointment Event and to consider what steps might reasonably be taken in order to remedy such FA Appointment Event and, in light of its considerations, to recommend the taking of any such steps as it shall consider appropriate. The Borrower Group Security Trustee may also require the Financial Adviser to investigate whether the recharging of services to the Borrower under the Administrative Services Agreement has, as between the Borrower, BankCo and any other Spirit Group Entity to whom AdminCo provides its services, been done on a fair and reasonable basis (the Fair and Reasonable Principle). AdminCo is not, however, required to follow any recommendation or take any remedial action suggested or proposed by the Financial Adviser save that, where the Financial Adviser determines that there has been an overpayment by the Borrower of recharged amounts which have not been allocated in accordance with the Fair and Reasonable Principle, AdminCo will, in certain circumstances, be obliged to reimburse the Borrower accordingly. In the event that a decision is made by AdminCo not to follow any other such recommendations or take any such remedial action, AdminCo shall provide a detailed explanation to the Borrower Group Security Trustee and Ambac (if required) of why AdminCo considers it is not in its best interests to do so.

Introduction of International Financial Reporting Standards Under the terms of the Issuer/Borrower Facility Agreement, each Obligor has agreed that the conduct of the future operations and business of the Borrower Group will be subject to certain financial covenants (as described in Summary of Principal Documents – Issuer/Borrower Facility Agreement – Financial Covenants). In addition certain further provisions of the Transaction Documents contain conditions and/or triggers which are based upon assessments of the financial condition of the business of the Borrower Group calculated by reference to the financial statements produced in respect of the Borrower and the Borrower Group. These financial and other covenants have been set at levels which are based on the accounting principles, standards, conventions and practices generally accepted in the United Kingdom at the current time and which are adopted by the Borrower Group. It is possible that any future changes in these accounting principles, standards, conventions and practices which are adopted by the Borrower Group may result in significant changes in the reporting of its financial performance. This, in turn, may necessitate that the terms of the financial covenants are renegotiated. The Issuer/Borrower Facility Agreement will provide that should any such change to accounting principles, standards, conventions and practices occur, the Borrower Group Security Trustee will negotiate and agree such amendments to the financial covenants as

39 may be necessary to grant the Issuer protection comparable to that granted by the financial covenants on the Closing Date. To the extent that no agreement can be reached as to the required changes, the Borrower will be required to produce financial statements prepared on the basis of the accounting principles, standards, conventions and practices prevailing before such change for the purposes of the financial covenants. The European Union is in the process of introducing a new financial reporting framework for listed companies as part of a move towards a single European Capital Market. As matters currently stand, European law requires listed companies to apply IFRS in their consolidated accounts for accounting periods beginning on or after 1 January, 2005. The requirements for single company accounts and non-listed companies will be determined by United Kingdom law, and are yet to be finalised. As described above, the introduction of IFRS may be an event that will necessitate the renegotiation of the terms of the financial covenants.

Property Investigations

Borrower Group Estate Title to a representative sample of 272 of the 1,080 pubs in the Borrower Group Estate (approximately 25 per cent.) (252 situated in England and Wales and 20 situated in Scotland), being the sample produced by DTZ for the purposes of the Valuer’s Report (see Valuer’s Report below) together with a further 3 pubs, has been verified by way of a brief report for each pub prepared by TLT Solicitors (TLT) in respect of the pubs situated in England and Wales and by Burness L.L.P. (Burness) in respect of the pubs situated in Scotland. Such sample comprises freehold, heritable and leasehold pubs. The pubs which form the representative sample produced by DTZ for the purposes of the Valuer’s Report are listed in Appendix 2 (Borrower Group Estate Sample Properties) to the Valuer’s Report (see Valuer’s Report below). The reports take the form of reviews of the registered titles only (the Registered Title Reports). The Registered Title Reports address in respect of each sample pub, inter alia: (i) the registered proprietor; (ii) the quality of the title; and (iii) the existence of any registered financial charges or securities. Not all of the usual conveyancing searches and enquiries were made by the reporting solicitors, including, notably, searches of public authorities. These would reveal, for example, if the relevant pubs were subject to any orders or proposals for compulsory acquisition, whether or not nearby roads, drains and sewers are adopted and maintained at public expense and whether or not any statutory notices have been served, such as in relation to breach of planning or building regulation control, breach of public health acts or breach of fire regulations. In addition, in respect of all of the leasehold pubs in the Borrower Group Estate, a separate report on each such pub was provided by TLT (in respect of the pubs situated in England and Wales), and by Burness (in respect of the pubs situated in Scotland), providing details of the lease, rent and other material issues (the Leasehold Title Reports). TLT, Burness and Slaughter and May have also reported on certain other matters, such as: (i) the number of unregistered pubs; (ii) outstanding landlords’ consents to assign the leasehold pubs (in the Securitised Estate); and (iii) the status of first registrations. Slaughter and May have prepared a report on the pro forma form of lease which was entered into in connection with Project Star (the Project Star Lease). There are 74 properties, which are to form part of the Borrower Group Estate, where a pub and lodge exist on the same site (the Project Star Properties). Spirit Group retained the co-located pub and freehold reversion (or its Scottish equivalent) to the lodge in all such Project Star Properties which are to form part of the Borrower Group Estate and a long lease was granted to a subsidiary wholly owned by Whitbread Group Plc in respect of the co-located lodge. The term of lease was 999 years (or 175 years in Scotland) or a few days less than the relevant head leasehold interest, where necessary. The form of the Project Star Lease was substantially similar in respect of all co-located lodges to which the title of the relevant Spirit Group company is subject. Slaughter and May have, in addition, prepared a due diligence overview report in respect of their review of the above reports on the Borrower Group Estate (the reports prepared by Slaughter and May, TLT and Burness are together referred to as the Property Due Diligence Reports).

40 Issues raised from Property Investigations Borrower Group Estate The title to only 4 pubs within the Borrower Group Estate is unregistered, although in each case it is currently in the course of registration. In addition, following the SNR Acquisition, the freehold title to the whole of one pub and parts of 5 other pubs (for example, forecourts and gardens) within the Borrower Group Estate is not yet registered in the name of the relevant Spirit Group Entity, pending the resolution of title issues. Nevertheless, the beneficial interest in each case is held by such Spirit Group Entity and Spirit Group is currently progressing the transfer of the legal title to the relevant Spirit Group Entity. The titles to 8 pubs within the sample of 272 pubs in the Borrower Group Estate are affected by adverse restrictive covenants or title conditions affecting the whole or part of those pubs, including not to use the land as a pub or not to use the land otherwise than as a dwelling house. Such covenants or conditions are more than 25 years old, however, and one of the pubs has the benefit of title insurance in respect thereof. Certain security interests in connection with the Securitisation and the SNR Acquisition Facility, as appropriate, affect all and, in the main, are registered against the titles of the pubs in the Borrower Group Estate. However, upon Completion such security interests are to be released. Approximately 5 of the pubs in the Borrower Group Estate, which formed part of the due diligence exercise, are subject to other security interests (which may not be released upon Completion) and/or restrictions on dispositions (relating to, for example, shared access road and drainage costs, and profit share arrangements on the obtaining of a change of use of car parks). However, the Borrower will undertake to apply for and progress the obtaining of releases where appropriate and necessary consents. Pursuant to the terms of the Project Star Leases, the 74 Project Star Properties in the Borrower Group Estate are subject to rights in favour of the co-located lodges (for example, rights of way and entry for repair) and covenants (for example, to keep in good and substantial repair, not to carry out structural alterations which would have a material adverse effect on the value of the co- located lodge except with the tenant’s approval (not to be unreasonably withheld or delayed), and, for so long as the co-located lodge is used as a hotel, not to use the pub for the provision of overnight accommodation to paying customers). Such rights and covenants are reciprocal, mutatis mutandis, with regard to the co-located lodges, however.

Leasehold interests in pubs Borrower Group Estate Title to approximately 7 per cent. of the pubs in the Borrower Group Estate is leasehold, title to the remainder being freehold (or the Scottish equivalent). A small number of the pubs have adjoining leasehold interests (for example, a lease of an adjoining car park). 23 of the 71 leasehold pubs and 5 of the 14 adjoining leasehold interests in the Borrower Group Estate contain forfeiture provisions pursuant to which the landlord may terminate the lease upon the insolvency of the Borrower, as tenant. The termination of any such lease by a landlord could deprive the Borrower of any capital value in the relevant leasehold interest as well as the on-going income from the relevant pub. Of the 85 (which figure comprises the 71 leasehold pubs and 14 adjoining leasehold interests) leasehold interests within the Borrower Group Estate, approximately 10 leases have not yet been assigned to the relevant Spirit Group Entity following their acquisition by Spirit Group because the relevant landlords’ consents have not yet been obtained. Approximately 51 leasehold interests within the Borrower Group Estate will need to be assigned to the Borrower following Completion (as landlord’s consent is required) and the Borrower will undertake to assist in obtaining such consents. 5 of the 84 leasehold interests in the Borrower Group Estate require the consent of the landlord to charge the lease, which consent will need to be sought in connection with the charging of such leasehold interests by the Borrower pursuant to the Borrower Group Deed of Charge. In 2 cases, there is an absolute prohibition on charging. In the other 3 cases the landlord’s consent may not be unreasonably withheld. The Borrower will undertake to apply for and progress the obtaining of such consents. If consent is not obtained, any such charge would, in an extreme case, entitle the landlord to terminate the lease.

41 Of the 85 leasehold interests in the Borrower Group Estate, none is due to expire before 2034 (being the latest date on which any of the Debenture Bonds will mature).

Insolvency Considerations Receivership At any time after the security created pursuant to the Borrower Group Deed of Charge has become enforceable, the Borrower Group Security Trustee may, or in certain circumstances can be required to, pursue a number of different remedies (provided that it is indemnified and/or secured to its satisfaction). One such remedy is the appointment of a receiver over specific property, or over all, or part, of the Borrower Mortgaged Properties. Likewise at any time after the Issuer Security has become enforceable, the Issuer Security Trustee may, or in certain circumstances can be required, to pursue a number of different remedies (provided that it is indemnified and/or secured to its satisfaction). One such remedy is the appointment of a receiver over all or part of the assets and undertaking of the Issuer. It should be noted that the authority for a receiver of an English company exercising its powers in Scotland applies only to a charge created as a floating charge and there is no similar authority for the exercise by a receiver of an English company of the powers in relation to a charge created as a fixed charge (such as the standard securities granted pursuant to the Borrower Group Deed of Charge (the Borrower Group Standard Securities)). The floating charges granted pursuant to the Borrower Group Deed of Charge will, however, extend over the assets of the relevant Obligor situated in, or governed by, the law of Scotland (the Scottish Assets). The provisions of the Enterprise Act 2002 (the Enterprise Act) amending the corporate insolvency provisions of the Insolvency Act 1986 (the Insolvency Act) came into force on 15 September, 2003 and are discussed in further detail in Enterprise Act below. As a result of the amendments made to the Insolvency Act by the Enterprise Act, the holder of a qualifying floating charge created on or after 15 September, 2003 will be prohibited from appointing an administrative receiver (and consequently will be unable to prevent the chargor entering into administration), unless the qualifying floating charge falls within one of the exceptions set out in sections 72A to 72GA of the Insolvency Act. As the Borrower Group Deed of Charge and the Issuer Deed of Charge will be entered into after 15 September, 2003, the Borrower Group Security Trustee or, as the case may be, the Issuer Security Trustee will not be entitled to appoint an administrative receiver over the assets of any Obligor or the Issuer unless the floating charges in such documents fall within one of the exceptions. One such exception is in respect of, in certain circumstances, the appointment of an administrative receiver pursuant to an agreement which is or forms part of a ‘‘capital market arrangement’’ (which is broadly defined in the Insolvency Act). This exception will apply if a party incurs or, when the agreement in question was entered into was expected to incur, a debt of at least £50,000,000, and if the arrangement involves the issue of a ‘‘capital market investment’’ (also defined in the Insolvency Act but, generally, a rated, traded or listed debt instrument). Although there is as yet no case law on how this exception will be interpreted, the Issuer considers that the exception is likely to be applicable to the transactions described in this Offering Circular. However, the Secretary of State for Trade and Industry may, by secondary legislation, modify the exceptions to the prohibition on appointing an administrative receiver and/or provide that the exception shall cease to have effect. No assurance can be made that any such modification or provisions in respect of the capital market exception will not be detrimental to the interests of the Debenture Bondholders.

Small Companies Moratorium Certain ‘‘small companies’’, for the purposes of putting together proposals for a company voluntary arrangement, may seek court protection from their creditors by way of a ‘‘moratorium’’ for a period of up to 28 days, with the option for creditors to extend this protection for up to a further two months (although the Secretary of State for Trade and Industry may, by order, extend or reduce the duration of either period). A small company is defined for these purposes by reference to whether the company meets certain tests relating to its balance sheet, total turnover and average number of employees in a particular period (although the Secretary of State for Trade and Industry may, by order, modify the moratorium eligibility qualifications and the definition of ‘‘small company’’).

42 During the period for which a moratorium is in force in relation to a company, inter alia, no winding up may be commenced or administrator or administrative receiver appointed to that company, no security created by that company over its property may be enforced (except with the leave of the court), no other proceedings or legal process may be commenced or continued in relation to that company (except with the leave of the court) and the company’s ability to make payments in respect of debts and liabilities existing at the date of the filing for the moratorium is curtailed. Certain small companies may, however, be excluded from being eligible for a moratorium (although the Secretary of State for Trade and Industry may, by order, modify such exclusions), including those which, at the time of filing for the moratorium, are party to a capital market arrangement under which a party incurs or, when the agreement in question was entered into was expected to incur, a debt of at least £10,000,000 and which involves the issue of a capital market investment. The definitions of capital market arrangement and capital market investment are broadly equivalent to those used in the exception. The Issuer considers that the exclusion is likely to apply both in respect of the Issuer and the Obligors in the context of the transactions described in this Offering Circular.

Mortgagee in possession liability The Issuer Security Trustee or the Borrower Group Security Trustee (but only if the Borrower Group Security Trustee has taken enforcement action against the Borrower) may be deemed to be a mortgagee or (in the case of Scottish properties) a heritable creditor in possession if there is physical entry into possession of any pub or an act of control or influence which may amount to possession. A mortgagee or heritable creditor in possession may incur liabilities to third parties in nuisance and negligence and, under certain statutes (including environmental legislation), can incur the liabilities of a property owner. Save in respect of the appointment of an administrative receiver, the Borrower Group Security Trustee is not obliged to act (including becoming a mortgagee or heritable creditor in possession in respect of a pub) unless it is satisfied at that time that it is adequately indemnified. Under the terms of the Issuer Deed of Charge, the Issuer Security Trustee and the Debenture Bond Trustee rank first in point of priority of payments, both prior to and following service of a Debenture Bond Acceleration Notice, in respect of payment of any amounts owed to it under its indemnity.

Enterprise Act As described in – Receivership above, the provisions of the Enterprise Act amending the corporate insolvency provisions of the Insolvency Act came into force on 15 September, 2003. In addition to the introduction of a prohibition on the appointment of an administrative receiver, the amendments include: (a) the ring-fencing, on the commencement of insolvency proceedings in respect of a company, of a certain percentage of the realisations from assets secured by a floating charge (after the payment of preferential creditors), such realisations to be used to satisfy unsecured debts; (b) the abolition of the categories of preferential debt payable to the Crown, including debts due to the Inland Revenue in respect of PAYE, debts due to H.M. Customs and Excise in respect of VAT and social security contributions; and (c) the replacement of the existing administration regime in its entirety with a new, streamlined administration procedure. By virtue of the relevant prescribing order, the ring-fencing of a percentage of certain floating charge realisations for the benefit of unsecured creditors applies to floating charges which are created on or after 15 September, 2003. The amount available for unsecured creditors will depend upon the value of the chargor’s ‘‘net property’’, being the amount of the chargor’s property which would be available for satisfaction of debt due to the holder(s) of any debentures secured by a floating charge. The prescribing order provides for 50 per cent. of the net property under £10,000 and 20 per cent. of the net property over £10,000 to be made available for the satisfaction of the chargor’s unsecured debts, subject to an overall cap on the ring-fenced fund of £600,000. Accordingly, with respect to the floating charges granted under the Borrower Group Deed of Charge and the Issuer Deed of Charge, floating charge realisations upon the enforcement of the security created under the Borrower Group Deed of Charge and/or the Issuer Security, respectively, will be reduced by the operation of the ring-fencing provisions.

Forward-looking Statements Certain statements contained in this Offering Circular, including targets, forecasts, projections, descriptions or statements regarding the possible future results of operations, any statement

43 preceded by, followed by or that includes the words targets, believes, expects, aims, intends, will, may, anticipates or similar expressions, and other statements that are not historical facts, are or may constitute forward-looking statements. Because such statements are inherently subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: (a) risks and uncertainties relating to the United Kingdom economy, the United Kingdom pub industry, consumer demand, beer consumption levels and government regulation; and (b) such other risks and uncertainties detailed herein. All written and oral forward-looking statements attributable to Spirit Group or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements set forth in this paragraph. Prospective purchasers of the Debenture Bonds are cautioned not to put undue reliance on such forward-looking statements. Spirit Group will not undertake any obligation to publish any revision to these forward-looking statements to reflect circumstances or events occurring after the date of this Offering Circular.

44 SUMMARY OF PRINCIPAL DOCUMENTS

The following is a summary of certain provisions of the principal documents relating to the transactions described herein and is qualified in its entirety by reference to the detailed provisions of the Transaction Documents. Capitalised terms not otherwise defined in this summary shall have the meanings given to them in the Master Definitions and Construction Schedule.

Issuer/Borrower Facility Agreement Pursuant to the terms of the Issuer/Borrower Facility Agreement, the Issuer will, subject to the satisfaction of certain conditions precedent as to drawing, advance to the Borrower on the Closing Date the Term Advances.

The Term Facilities The Issuer/Borrower Facility Agreement will provide, subject as aforesaid, that the term loan facilities described in paragraphs (a), (b), (c), (d) and (e) below will be made available by the Issuer by way of cash advance to the Borrower on the Closing Date: (a) a term loan facility in a maximum aggregate principal amount of £150,000,000 (the Term A1 Facility and each advance thereunder a Term A1 Advance); (b) a term loan facility in a maximum aggregate principal amount of £200,000,000 (the Term A2 Facility and each advance thereunder a Term A2 Advance); (c) a term loan facility in a maximum aggregate principal amount of £250,000,000 (the Term A3 Facility and each advance thereunder a Term A3 Advance); (d) a term loan facility in a maximum aggregate principal amount of £350,000,000 (the Term A4 Facility and each advance thereunder a Term A4 Advance); and (e) a term loan facility in a maximum aggregate principal amount of £300,000,000 (the Term A5 Facility and each advance thereunder a Term A5 Advance). The Term A1 Facility, the Term A2 Facility, the Term A3 Facility, the Term A4 Facility and the Term A5 Facility are together referred to as the Term Facilities. The Term A1 Advances, the Term A2 Advances, the Term A3 Advances, the Term A4 Advances and the Term A5 Advances are together referred to as the Term Advances.

Use of Proceeds The Term Advances will be applied by the Borrower on the Closing Date as set forth under Use of Proceeds below.

Conditions Precedent to Drawdown The Issuer/Borrower Facility Agreement contains conditions precedent to the Issuer making any of the Term Facilities available to the Borrower on the Closing Date customary for transactions of this nature, including that the Borrower Group Security Trustee is satisfied in relation to the following matters: (a) the Debenture Bonds have been issued and the subscription proceeds received by or on behalf of the Issuer; (b) the Transaction Documents have been duly executed by the parties thereto; (c) delivery has been made of all relevant reports (including, without limitation, the Auditor’s Report, the Property Due Diligence Reports, the Insurance Letter, the Pensions Due Diligence Reports, the Material Contracts Report and the Valuer’s Report (each as defined in the Master Definitions and Construction Schedule)) to the Issuer and the Borrower Group Security Trustee and the legal opinions addressed to, inter alios, the Borrower Group Security Trustee and the Issuer; (d) delivery has been made of solvency certificates from each Obligor; and (e) all requisite tax clearances have been obtained.

Further Term Facilities and New Term Facilities The Issuer/Borrower Facility Agreement provides that the Borrower may also, at any time, by written notice to the Issuer (with a copy thereof provided to the Borrower Group Security Trustee)

45 request a further term facility (a Further Term Facility and each advance thereunder a Further Term Advance) or a new term facility (a New Term Facility and each advance thereunder a New Term Advance). A Further Term Facility is one which ranks pari passu with the existing Term Facilities, and a New Term Facility is one which will rank no higher than the existing Term Facilities but may rank pari passu with, or subordinate to, the Term A1 Facility, the Term A2 Facility, the Term A3 Facility, the Term A4 Facility and the Term A5 Facility. Further Term Facilities and New Term Facilities are together referred to as Additional Term Facilities and Further Term Advances and New Term Advances are together referred to as Additional Term Advances. Each Further Term Facility or New Term Facility will be financed by the issue of Further Debenture Bonds or New Debenture Bonds (as the case may be) by the Issuer, and will only be permitted if, inter alia, the following conditions precedent are satisfied: (a) the aggregate principal amount of each Additional Term Facility drawn at any one time is for a minimum aggregate principal amount of £5 million; (b) no Borrower Group Event of Default or Potential Borrower Group Event of Default (each as defined in the Borrower Group Deed of Charge) has occurred and is subsisting at the relevant drawdown date or would occur as a result of the Additional Term Advances; (c) in respect of a request for an Additional Term Facility ranking pari passu with the Term Facilities (which Additional Term Facility is not to be used solely to refinance Term Advances, Additional Term Advances or Additional Financial Indebtedness of the Borrower Group), the Loan-to-Value Ratio (expressed as a percentage) immediately after the date on which the Additional Term Advance is made does not exceed sixty (60) per cent. provided that, for the purposes of calculating the Loan-to-Value Ratio in such circumstances, the Borrower Group Estate value shall be adjusted to take into account the value attributable to pubs acquired pursuant to Permitted Acquisitions to be completed contemporaneously with, and using the net proceeds of, the relevant Additional Financial Indebtedness (but without double counting); (d) in respect of a request for an Additional Term Facility ranking pari passu with the Term Facilities (which Additional Term Facility is not to be used solely to refinance Term Advances, Additional Term Advances or Additional Financial Indebtedness of the Borrower Group), the DSCR (OpFlex) (to be calculated by reference to: (i) the Free Cash Flow arising in the four Financial Quarters ending on the Financial Quarter Date immediately prior to the date on which the Additional Term Facility is to be utilised (the Drawdown Date) and adjusting the same to take into account Attributable Pub-Level EBITDA from Permitted Acquisitions completed during the last 12 months and any Attributable Pub-Level EBITDA from the Permitted Acquisition to be completed contemporaneously with, and using the net proceeds of, the relevant Additional Term Facility (but without double counting); and (ii) the Debt Service (OpFlex) in respect of the 12 months immediately succeeding the Drawdown Date, taking into account the Debt Service (OpFlex) in respect of the Additional Term Facility over such immediately succeeding 12-month period following the Drawdown Date) is at least 1.65:1; (e) the Rating Agencies confirm that: (i) in respect of a request for an Additional Term Facility (which Additional Term Facility is not to be used solely to refinance Relevant Financial Indebtedness of the Borrower Group), the Rating Agencies confirm that the then outstanding classes of Debenture Bonds will each be assigned (A) in the case of the Class A2 Debenture Bonds and the Class A4 Debenture Bonds, a rating of at least ‘‘BBB+’’/‘‘BBB+’’/‘‘Baa2’’ and (B) in the case of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds, an Underlying Rating of at least ‘‘BBB+’’/‘‘BBB+’’/‘‘Baa2’’ notwithstanding the incurrence of the debt under such Additional Term Facility; and (ii) in respect of a request for an Additional Term Facility (which Additional Term Facility is to be used solely to refinance existing Relevant Financial Indebtedness of the Borrower Group), the Rating Agencies confirm that the then outstanding classes of Debenture Bonds will be assigned the same ratings as the then-current ratings of the Class A2 Debenture Bonds and the Class A4 Debenture Bonds and the same underlying ratings as the then-current Underlying Rating of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds notwithstanding the incurrence of the debt under such Additional Term Facility;

46 (f) in respect of a request for an Additional Term Facility, unless otherwise sanctioned by Ambac (if required), the aggregate amount of scheduled repayments in respect of (i) all such Relevant Financial Indebtedness which ranks pari passu with the existing Term Facilities; and (ii) the existing Term Facilities which will fall due in any two year period (calculated on a rolling eight Financial Quarter basis) after drawdown of such Additional Term Facility shall not exceed 20 per cent. of the value of the Borrower Group Estate, such value of the Borrower Group Estate being determined at the time of the drawdown of the Additional Term Facility by reference to the Professional Valuation most recently obtained by the Borrower (as adjusted to take into account acquisitions and disposals of Borrower Mortgaged Properties since such Professional Valuation was obtained) prior to the Drawdown Date of the Additional Term Facility; and (g) in respect of a request for an Additional Term Facility which is to rank pari passu with the existing Term Facilities and is to bear interest at a floating rate, the consent of Ambac (if required) is obtained where the proceeds thereof are not to be used solely for the purpose of refinancing the original Term Advances (or any subsequent refinancing thereof (capped at the aggregate principal amount of those original Term Advances)). In connection with the making of any Additional Term Advance, the provisions of the Borrower Group Deed of Charge (and other relevant Transaction Documents) will be amended to reflect, inter alia, revised priorities of payments, acceleration and enforcement rights and, where appropriate, subordination and non-petition provisions acceptable to, among others, the Borrower Group Security Trustee.

Interest The rate of interest in respect of the Term A1 Advance will be: (i) up to (but excluding) the Interest Payment Date falling in December 2011 (the Class A1 Step-Up Date) the London Interbank Offered Rate for three-month Sterling deposits (LIBOR) (or, in the case of the first Interest Period, will be the annual rate obtained by the linear interpolation of LIBOR for four-month Sterling deposits and LIBOR for five-month Sterling deposits) plus a margin of 0.22 per cent. per annum (the Term A1 Margin); and (ii) from (and including) the Class A1 Step-Up Date, LIBOR plus the Term A1 Margin and a further margin of 0.33 per cent. per annum (the Term A1 Step-Up Margin). The rate of interest in respect of the Term A2 Advance will be: (i) up to (but excluding) the Interest Payment Date falling in December 2011 (the Class A2 Step-Up Date) LIBOR (or, in the case of the first Interest Period, will be the annual rate obtained by the linear interpolation of LIBOR for four-month Sterling deposits and LIBOR for five-month Sterling deposits) plus a margin of 1.08 per cent. per annum (the Term A2 Margin); and (ii) from (and including) the Class A2 Step-Up Date, LIBOR plus the Term A2 Margin per annum and a further margin of 1.62 per cent. per annum (the Term A2 Step-Up Margin). The rate of interest in respect of the Term A3 Advance will be: (i) up to (but excluding) the Interest Payment Date falling in December 2014 (the Class A3 Step-Up Date) 5.860 per cent. per annum; and (ii) from (and including) the Class A3 Step-Up Date, LIBOR plus a margin of 0.22 per cent. per annum (the Term A3 Margin) and a further margin of 0.33 per cent. per annum (the Term A3 Step-Up Margin). The rate of interest in respect of the Term A4 Advance will be: (i) up to (but excluding) the Interest Payment Date falling in December 2018 (the Class A4 Step-Up Date) 6.582 per cent. per annum; and (ii) from (and including) the Class A4 Step-Up Date, LIBOR plus a margin of 1.11 per cent. per annum (the Term A4 Margin) and a further margin of 1.665 per cent. per annum (the Term A4 Step-Up Margin). The rate of interest in respect of the Term A5 Advance will be: (i) up to (but excluding) the Interest Payment Date falling in December 2028 (the Class A5 Step-Up Date) 5.472 per cent. per annum; and (ii) from (and including) the Class A5 Step-Up Date, LIBOR plus a margin of 0.30 per cent. per annum (the Term A5 Margin) and a further margin of 0.45 per cent. per annum (the Term A5 Step-Up Margin). Under the Issuer/Borrower Facility Agreement, the Borrower will agree to pay by way of a fee or otherwise (Periodic Fee) on each interest payment date in respect of the Term Facilities made available under the Issuer/Borrower Facility Agreement (each a Loan Interest Payment Date) such amounts as are necessary to enable the Issuer to pay or provide for all other amounts falling

47 due to be paid by the Issuer on that date as provided in Issuer Deed of Charge – Priority of Payments below. The Borrower will also agree to pay to the Issuer an initial fee (Initial Fee), being an amount approximately equal to the aggregate initial fees and expenses of the Issuer for the account of the Borrower incurred in connection with the issuance of the Debenture Bonds.

Repayment Final repayment: Unless previously repaid in full and cancelled, the Principal Amount Outstanding on each of the Term Advances will be repayable on the following dates: (i) in relation to the Term A1 Facility, the Loan Interest Payment Date falling in December 2028; (ii) in relation to the Term A2 Facility, the Loan Interest Payment Date falling in December 2031; (iii) in relation to the Term A3 Facility, the Loan Interest Payment Date falling in December 2021; (iv) in relation to the Term A4 Facility, the Loan Interest Payment Date falling in December 2027; and (v) in relation to the Term A5 Facility, the Loan Interest Payment Date falling in December 2034. Scheduled repayment: Unless previously repaid in full and cancelled, each of the Term Advances will be repayable in part on the Loan Interest Payment Dates and in the amounts specified for the corresponding Class of Debenture Bonds (each an Expected Amortisation Amount) set out opposite the applicable and corresponding Interest Payment Date in the columns headed Expected Amortisation Amount in Condition 6(b). Voluntary prepayment: On giving not fewer than 14 Business Days’ prior written notice of prepayment to the Issuer, the Borrower will be entitled to prepay, in whole or in part, any of the Term Facilities on a Loan Interest Payment Date. Any such prepayment must be in specified minimum amounts and multiples and shall be conditional on the Borrower providing evidence satisfactory to the Issuer and the Borrower Group Security Trustee that it has or will have the necessary funds available to make such prepayment (including a reasonable estimate of the breakage costs under the Hedging Agreement payable in connection with any such prepayment) on the relevant Loan Interest Payment Date. Any amount prepaid in respect of a Term Facility will reduce pro rata the principal amounts due on succeeding Loan Interest Payment Dates in respect of such Term Facility. In connection with any such voluntary prepayment, the Issuer will be required to either terminate or novate the transaction(s) under the Hedging Agreement in whole or in part (as the case may be) with respect to a particular Class or Classes of Debenture Bonds such that the notional amount (specified in the related confirmation) under the relevant transaction is reduced (by such termination or novation) to an amount equal to the aggregate Principal Amount Outstanding of the related Class of Debenture Bonds which remain outstanding following any such prepayment and the Borrower will be required to terminate (or novate) a corresponding notional amount (specified in the relevant confirmation) of the corresponding transaction(s) under the Issuer/Borrower Hedging Agreement. Any such termination or novation will be required to be done on the Interest Payment Date on which the voluntary prepayment is being made. Prepayment shall be made together with a prepayment fee which shall equate to the redemption premium (if any) payable in respect of the Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds or the Class A5 Debenture Bonds (as applicable) as determined in accordance with Condition 6(c) (see Terms and Conditions of the Debenture Bonds below). All prepayments will be used by the Issuer to redeem in whole or in part (as the case may be) on a pro rata basis the corresponding Class of Debenture Bonds which financed the relevant Term Facility.

Purchase of Debenture Bonds The Borrower may, subject to the provisions of the Issuer/Borrower Facility Agreement, purchase Debenture Bonds using Excess Cash or amounts standing to the credit of the Disposal Proceeds Account. Any purchase of Debenture Bonds will, unless otherwise disposed of to a third party outside Spirit Group within two weeks of the date of purchase of such Debenture Bonds, result in their cancellation by the Issuer and, to the extent of such purchase and cancellation, the Term Facility corresponding to the Debenture Bonds so purchased will be treated as having been prepaid. Such cancellation and prepayment may result in associated hedging termination costs

48 under the Issuer/Borrower Hedging Agreement and the Hedging Agreement. Where any Debenture Bonds are purchased using funds standing to the credit of the Disposal Proceeds Account, any sale by the Borrower or any other member of the Borrower Group of Debenture Bonds to a third party outside Spirit Group must be for a price at least equal to the price paid by the Borrower for such Debenture Bonds and the proceeds of such sale must be credited by the Borrower to the Disposal Proceeds Account to be applied as described in – Application of Disposal Proceeds below. There is no restriction on the Class or order of Debenture Bonds that may be so purchased. Any Class A1 Debenture Bonds, Class A3 Debenture Bonds and/or Class A5 Debenture Bonds so purchased will not, for so long as they are held by the Borrower or a member of Spirit Group, have the benefit of the Ambac Financial Guarantee. The purchase price of Debenture Bonds that are purchased by the Borrower using moneys standing to the credit of the Disposal Proceeds Account may not exceed the Early Redemption Price which would be payable in respect of such Debenture Bonds as determined in accordance with Condition 6(c) if the Issuer had exercised its optional redemption rights in respect of such Debenture Bonds on the date on which the Borrower purchased such Debenture Bonds (see Terms and Conditions of the Debenture Bonds below).

Representations and Warranties No independent investigation with respect to the matters represented and warranted in the Issuer/ Borrower Facility Agreement will be made by the Issuer or the Borrower Group Security Trustee, other than a search on the Closing Date, in respect of each Obligor, whereby a print out will be obtained from the online database maintained by Companies House and the Central Registry and a telephone search of the Central Registry of Winding Up Petitions and in the Register of Inhibitions and Adjudications in Scotland. In relation to such matters, the Issuer and the Borrower Group Security Trustee will, save as previously disclosed, rely entirely on the representations and warranties given by each Obligor on the Closing Date. The representations and warranties given by the Obligors will be customary for a loan facility of its type (and may be limited by a materiality and/or knowledge qualification in certain circumstances) including as to the following matters: (a) the Loan-to-Value Ratio as at the Closing Date is less than 60 per cent.; (b) no Encumbrances exist over all or any of its present or future revenues, undertakings or assets other than certain permitted Encumbrances and save as revealed in the Property Due Diligence Reports in relation to property matters to be delivered to the Borrower Group Security Trustee on or before the Closing Date; (c) no Borrower Group Event of Default or Potential Borrower Group Event of Default has occurred; (d) each security document to which it is a party creates the security interest which that security document purports to create and the claims of the Borrower Group Secured Creditors against it will rank at least pari passu with the claims of all of its other unsecured creditors, save those whose claims are preferred solely by any bankruptcy, insolvency, liquidation or other similar laws of general application, and senior to the claims of the Borrower Group Secured Creditors; (e) save to the extent disposed of as permitted by the Transaction Documents or as revealed in the Property Due Diligence Reports or where legal ownership remains held on trust for the Borrower, it is the absolute legal and beneficial owner of, and has a good and marketable title in its own name to, its interest in all of the Borrower Mortgaged Properties in respect of which it purports to create security under the Borrower Group Deed of Charge; (f) it is not aware of any event or circumstance which would require any adverse change to the Property Due Diligence Reports, the Material Contracts Report, the Pension Due Diligence Reports, the Insurance Letter and the Valuer’s Report if they were to be reissued at the Closing Date; (g) each of the pubs in the Borrower Group Estate has a liquor licence in full force and effect; (h) each of the Material Contracts is in full force and effect and constitutes a legal, valid and binding obligation of the parties thereto and is enforceable in accordance with its terms (subject to rights of creditors generally, to equitable principles of general application, to the time barring of claims, and to the laws of insolvency); (i) each insurance policy is in full force and effect and there are no outstanding claims under any such insurance policy which are not expected to be covered by insurance; and

49 (j) buildings insurance is maintained in respect of each Borrower Mortgaged Property in an amount at least equal to or not materially less than the aggregate full replacement cost as determined in accordance with the commercial property market generally of the relevant Borrower Mortgaged Property. Certain of the representations and warranties will also be repeated on the date on which any Term Advance or New Term Advance is made and on each Loan Interest Payment Date, by reference to the facts and circumstances then existing and subject in certain cases to being limited by reference to a materiality and/or knowledge qualification.

Information to be provided The Borrower will make available to the Borrower Group Security Trustee, the Issuer Security Trustee, the Issuer, the Debenture Bond Trustee, Ambac and the Rating Agencies (as applicable): (a) the audited consolidated annual financial statements and related auditor’s report of the Borrower Group within 180 days after the end of the first Financial Year after the Closing Date and within 120 days after the end of each of its subsequent Financial Years; (b) the audited annual financial statements and related auditor’s report of each of the Borrower and the Issuer within 180 days after the end of the first Financial Year after the Closing Date and within 120 days after the end of each of its subsequent Financial Years; (c) the unaudited aggregated quarterly interim management accounts of the Borrower Group in respect of the then current Financial Year on a year-to-date basis from the commencement of the then current Financial Year to the end of the relevant Financial Quarter within 45 days after the end of each of the first three Financial Quarters of each of its Financial Years and within 60 days after the end of the fourth Financial Quarter of each of its Financial Years and in the case of the DSCR (OpFlex) covenant on the date of (i) each Permitted Disposal, (ii) the date of each Permitted Acquisition and (iii) each date on which the Relevant Financial Indebtedness was incurred; (d) a quarterly compliance certificate from the Borrower in respect of the Obligors; and (e) from time to time such other information in respect of the business, operations, performance, prospects and financial condition of the Borrower Group or any Obligor as may be reasonably required by, among others, the Borrower Group Security Trustee, the Issuer Security Trustee, the Issuer, the Debenture Bond Trustee and, prior to an Ambac Termination Event, Ambac. All information referred to in paragraphs (a) and (b) above will be provided to the Debenture Bondholders through the Principal Paying Agent and may also be obtained during normal business hours at the specified offices of the Luxembourg Paying Agent at any time after the Closing Date. All information referred to in paragraphs (a) and (b) above will for the time being also be published on Bloomberg. In addition the Borrower will prepare a quarterly report in respect of, inter alia, the performance of the Borrower and the Borrower Group finances during the relevant Financial Quarter (the Quarterly Report). During the Interim Period (as defined in Business of Spirit Group – Cash Collection below) the reference to the ‘‘quarterly interim management accounts’’ in paragraph (c) above shall be deemed to be a reference to a quarterly interim profit and loss account. Upon the listing of the issued share capital of any member of Spirit Group on a recognised stock exchange (an Equity Offering), the Borrower will deliver to the Debenture Bondholders through the Principal Paying Agent such information as is required to be made publicly available by the relevant stock exchange or general law at the same time such information is made publicly available. The Borrower will be required, subject to applicable regulatory and/or stock exchange requirements, to give to the Rating Agencies, Ambac (if required), the Issuer, the Debenture Bond Trustee and the Borrower Group Security Trustee written notice of changes to the board of directors of any of the Obligors or AdminCo promptly following the change taking effect. The Borrower will consider updating the form and content of the Quarterly Report provided to Debenture Bondholders from time to time in the light of requests from Debenture Bondholders and changes to market practice, subject to the complexity and cost of providing additional information, as well as the potential risk to its operations from providing competitor-sensitive information.

50 Financial Covenants Under the terms of the Issuer/Borrower Facility Agreement, the Borrower Group has agreed to conduct its future operations and business subject to debt service cover ratio covenants (the DSCR (Default) Covenant and the Adjusted DSCR (Default) Covenant) and a loan to value covenant (the Loan-to-Value Covenant). These covenants provide as follows: (a) DSCR (Default) Covenant. The ratio of Free Cash Flow to Debt Service (Default) (the DSCR (Default)), calculated on a look-back rolling four Financial Quarter basis, shall be not less than 1.30:1. (b) Adjusted DSCR (Default) Covenant. The ratio of Adjusted Free Cash Flow to Debt Service (Default) (the Adjusted DSCR (Default)), calculated on a look-back rolling two Financial Quarter basis, shall be not less than 1.10:1. (c) Loan-to-Value Covenant. The ratio (expressed as a percentage) of the aggregate principal amount of the Relevant Financial Indebtedness then outstanding to the aggregate of: (i) most recent Borrower Group Estate value; and (ii) all amounts then standing to the credit of the Disposal Proceeds Account (the Loan-to-Value Ratio) (calculated as at each Financial Quarter Date by reference to the most recently obtained Professional Valuation in respect of the Borrower Group Estate as adjusted to take into account (i) acquisitions and disposals of Borrower Mortgaged Properties since the date of such Professional Valuation, (ii) cash standing to the credit of the Disposal Proceeds Account as at such Financial Quarter Date, and (iii) the Relevant Financial Indebtedness as at such Financial Quarter Date) shall not be greater than 67 per cent.. For the avoidance of doubt, a breach of the Loan-to-Value Covenant will not constitute a Borrower Group Event of Default unless on any Financial Quarter Date on which the Loan-to-Value Covenant has been breached (and has not been cured), the DSCR (Default) has also fallen below 1.50:1. Certificates of compliance with the DSCR (Default) Covenant, the Adjusted DSCR (Default) Covenant and the DSCR (OpFlex) level will be provided within 45 days after the end of the first three Financial Quarters in each Financial Year and within 60 days after the end of the fourth Financial Quarter in each Financial Year and in the case of the DSCR (OpFlex) covenant on the date of (i) each Permitted Disposal, (ii) each Permitted Acquisition, and (iii) each date on which Relevant Financial Indebtedness is incurred. Certificates of compliance with the Loan-to-Value Covenant will be provided within 45 days after the end of the first three Financial Quarters of the relevant Financial Year and within 60 days after the end of the fourth Financial Quarter of the relevant Financial Year and on (i) the date of each Permitted Disposal, (ii) the date of each Permitted Acquisition, and (iii) each date on which Relevant Financial Indebtedness is incurred. The DSCR (Default) Covenant and the Adjusted DSCR (Default) Covenant will be tested after each Financial Quarter on a look-back rolling four or two Financial Quarter basis (as applicable) (each two or four Financial Quarters (as applicable) a Relevant Period) by reference to the unaudited aggregated quarterly interim management accounts of the Borrower Group delivered in respect of the Relevant Period pursuant to the Issuer/Borrower Facility Agreement and also, with respect to the Financial Quarter ending on an Accounting Date, by reference to the audited consolidated financial statements of the Borrower Group for the immediately preceding Financial Year. In respect of the first three Financial Quarter Dates following the Closing Date, the DSCR (Default) Covenant and the Adjusted DSCR (Default) Covenant will be tested by reference to a combination of actual unaudited financial statements for the Borrower for the Financial Quarter(s) ending after the Closing Date with a pro rata allocation of Pro Forma EBITDA as shown in the pro forma unaudited financial statements of the Borrower Group for the year ended 21 August 2004 (as set out on page 12 of this Offering Circular) so as to be able to test the DSCR (Default) Covenant and the Adjusted DSCR (Default) Covenant on a look-back rolling two or four Financial Quarter basis (as applicable). Accounting Date means, in respect of the Financial Year current at the Closing Date, 20 August, 2005 and, in each year thereafter, such date falling at the end of the fourth Financial Quarter after the immediately preceding Accounting Date. Actual Principal means, in respect of any Financial Quarter, principal repayments which fall due, or which have fallen due, to be repaid by the Borrower Group Entities (whether or not paid) during

51 the Financial Quarter pursuant to the Issuer/Borrower Facility Agreement and/or the Borrower Group Deed of Charge and/or in respect of any other Relevant Financial Indebtedness. Adjusted Free Cash Flow means, for any Financial Quarter, Free Cash Flow adjusted to exclude that part of Free Cash Flow in such Financial Quarter attributable to properties which have been acquired by the Borrower for a value which is less than market value within a period of two years prior to the commencement of the relevant Financial Quarter.

Allocated Debt Amount means, in respect of a Borrower Mortgaged Property, the greater of: (a) the amount calculated at the Closing Date being the aggregate principal amount outstanding of the Relevant Financial Indebtedness as at the Closing Date, multiplied by a fraction being the proportion which the Pub-Level EBITDA referable to that Borrower Mortgaged Property for the Financial Year commencing immediately prior to the Closing Date bore to the total Pub- Level EBITDA of all of the Borrower Mortgaged Properties comprised in the Borrower Group Estate for the Financial Year commencing immediately prior to the Closing Date; and (b) if the relevant Permitted Disposal is made after the end of the sixth Financial Quarter following the Closing Date, the amount calculated on the date of the relevant Permitted Disposal being the aggregate principal amount outstanding of the Relevant Financial Indebtedness as at the date of the relevant Permitted Disposal less amounts standing to the credit of the Disposal Proceeds Account on that date, multiplied by a fraction being the proportion which the Pub-Level EBITDA referable to that Borrower Mortgaged Property for the six Financial Quarters immediately preceding the date of such Permitted Disposal bore to the total Pub-Level EBITDA of all of the Borrower Mortgaged Properties comprised in the Borrower Group Estate for the six Financial Quarters immediately preceding the date of such Permitted Disposal. Allocated Overheads means, in respect of any Financial Quarter, an amount equal to the higher of: (a) one quarter of £29,000 per pub; and (b) actual overheads (plus any Increased Costs (as defined in the Administration Services Agreement)) paid by the Borrower to AdminCo under the Administrative Services Agreement (less costs exclusively referable to the Borrower which are not recharged to the Borrower pursuant to the Administrative Services Agreement) during that Financial Quarter. Capex means, in respect of any Financial Quarter, an amount expended in the investment, development, refurbishment, repair, renewal and maintenance of the internal and external fabric of the Borrower Mortgaged Properties and their fixtures and fittings, and of the assets required to manage them, such expenditure including amounts expensed through the profit and loss account and amounts capitalised on the balance sheet of the Borrower (excluding any such amounts in excess of the greater of 5.5 per cent. of turnover of the Borrower Mortgaged Properties and one quarter of £27,500 on a Permitted Business for each Financial Quarter during the first six months following its acquisition) (but, for the avoidance of doubt, such exclusion shall not apply to those pubs comprising the Borrower Group Estate being acquired by the Borrower on the Closing Date). Capex Reserve Account means an account in the name of the Borrower and charged in favour of the Borrower Group Security Trustee to which the Unspent Capex Amount is to be credited by the Borrower. Debt Service (Default) means the aggregate of: (a) all Interest Charges; and (b) Actual Principal, in each case, for the Relevant Period.

Debt Service (OpFlex) means the higher of: (a) the aggregate of all Interest Charges and Actual Principal; and (b) Synthetic Debt Service, in each case, for the Relevant Period. DSCR (OpFlex) means the ratio of Free Cash Flow to Debt Service (OpFlex), to be tested (other than in the case of Permitted Acquisitions) at the end of each Financial Quarter on a look-back rolling last four Financial Quarter basis (or on such basis as is described elsewhere in this section).

52 Financial Indebtedness means, broadly, without limitation, in relation to any Obligor at any time any indebtedness incurred (other than between Obligors) in respect of money borrowed or raised, the principal and other amounts (if any) and interest in respect of any debenture or similar debt instrument, liabilities in respect of any letter of credit or similar debt instrument, rental or hire payments under any finance lease and hire purchase agreement, the deferred purchase price of assets or services, liabilities in respect of any foreign exchange agreement or similar arrangements and any other transactions which are accounted for in the financial statements of the Borrower as a borrowing entered into by such Obligor. Financial Quarter means each period from (and including) the day after a Financial Quarter Date to (and including) the next Financial Quarter Date and, in respect of the first Financial Quarter, the period from (and including) the Closing Date to (and including) 19 February, 2005. Financial Quarter Date means, in respect of the Financial Year current at the time of the Closing Date, 19 February, 2005, 21 May, 2005 and 20 August, 2005 and, thereafter, the dates notified by the Borrower for the accounting quarter in the relevant Financial Year but in any case being a period of not fewer than 12 weeks and not more than 13 weeks. Financial Year means: (a) the period beginning on (but excluding) 21 August, 2004 and ending on (and including) the next following Accounting Date; and (b) thereafter each year commencing on (but excluding) each Accounting Date and ending on (and including) the following Accounting Date. Free Cash Flow means (in each case, without double counting) in respect of any Financial Quarter, Pub-Level EBITDA after: (a) deducting: (i) the Synthetic Capex for the Financial Quarter (less any Capex expensed through the profit and loss account during such Financial Quarter); (ii) the Allocated Overheads for the Financial Quarter; (iii) any tax accrued and payable by the Borrower with respect to the Borrower; (iv) any costs exclusively referable to the Borrower which are not recharged to the Borrower pursuant to the Administrative Services Agreement; and (v) any payment required by law to be made by the Borrower during such Financial Quarter in order to meet shortfalls in (A) pension funds relating to employees of AdminCo whose services are provided to the Borrower under the Administrative Services Agreement, and (B) any other pension fund in respect of which the Borrower is required by law to make a payment and for which, in either case, the Borrower is chargeable in cash; (b) adding back an amount equal to 25 per cent. of any tax credits redeemable during the relevant Financial Year; and (c) adding back interest received in respect of cash balances standing to the credit of each of the Borrower’s bank accounts during the relevant Financial Quarter. Interest Charges means, in respect of any Financial Quarter or Financial Year, the aggregate amount of interest paid or which was payable during such period by the Obligors pursuant to the Issuer/Borrower Facility Agreement (including any payment of the Periodic Fee to the extent that it is in respect of amounts payable under paragraphs (a), (b) and (d) of the Issuer Pre-Acceleration Priority of Payments and the Issuer Post-Acceleration Priority of Payments) and/or the Borrower Group Deed of Charge or in respect of Financial Indebtedness (including any guarantee and any other commitment and similar fees in respect thereof (other than any arrangement or up front fees), amounts in the nature of interest, discount charges and the interest element of rental under finance leases) ranking pari passu with or junior to (to the extent that such interest payments on such subordinated indebtedness is not deferrable) the obligations of the Obligors under the Issuer/ Borrower Facility Agreement and/or the Borrower Group Deed of Charge plus any amounts paid under interest rate hedge arrangements (having set off or netted off all amounts paid or payable to any Obligor thereunder and provided that if, after such set-off or netting, an amount was paid to the relevant Obligor such amount will be deducted from the calculation of Interest Charges) during such period, but excluding amounts payable: (i) to any other Borrower Group Entity; and (ii) in respect of interest accruing on any subordinated Financial Indebtedness owed by the Borrower to any Excluded Group Entity. Pub-Level EBITDA means, in respect of any Financial Quarter for any relevant entity, the Pub- Level Operating Profit before: (a) any Interest Charges; and

53 (b) any amount attributable to amortisation of goodwill, or other intangible assets or the amortisation or writing off of acquisition or refinancing costs and any deduction for depreciation of assets, but after adjusting, where necessary, to exclude: (i) fair value adjustments or impairment charges (to the extent they involve no payment of cash) and non-cash items (except accruals, bad debt provisions and stock write-offs); (ii) items treated as extraordinary or non-operating exceptional income/charges under accounting principles generally accepted in the United Kingdom; (iii) any amount attributable to the writing up or writing down of any assets of such relevant entity after the Closing Date or, in the case of a company becoming a subsidiary of such relevant entity after the Closing Date, after the date of its becoming a subsidiary of such relevant entity; (iv) the amount of any profit of such relevant entity which is attributable to minority interests; and (v) any amounts attributable to the disposal of any Borrower Mortgaged Property or any other assets. Pub-Level Operating Profit means, in respect of any Financial Quarter, the aggregate outlet operating profit of the Borrower Mortgaged Properties from time to time shown in the most recent financial statements or the management accounts of the Borrower. Relevant Financial Indebtedness means, in relation to the Borrower at any time, any outstanding Financial Indebtedness of the Borrower from time to time (excluding indebtedness incurred under Intra-Group Subordinated Loans). Synthetic Capex means, in respect of any Financial Quarter, an amount equal to the higher of 5.5 per cent. of turnover of the Borrower Mortgaged Properties and one quarter of £27,500 per pub per annum during the relevant Financial Quarter. Synthetic Debt Service means, in respect of any Financial Quarter, approximately £24.7 million (the precise amount to be disclosed in the first Quarterly Report), being the constant amount (comprising principal and interest) that would, if paid on each Loan Interest Payment Date, permit the amortisation in full of the Relevant Financial Indebtedness over a period of 28 years from the Closing Date, such amount to be altered to reflect any: (a) increase arising as a result of the raising of any Additional Financial Indebtedness that has a scheduled maturity date that falls on or before the Loan Interest Payment Date falling in December 2032. Such increase to equal that constant amount (expressed as a number of Pounds per Financial Quarter) that would be sufficient to amortise such Additional Financial Indebtedness in full between the date on which such Additional Financial Indebtedness is incurred and the Loan Interest Payment Date falling in December 2032; (b) increase arising as a result of the raising of any Additional Financial Indebtedness that has a scheduled maturity date that falls after the Loan Interest Payment Date falling in December 2032. Such increase to equal that constant amount (expressed as a number of Pounds per Financial Quarter) that would be sufficient to amortise such Additional Financial Indebtedness in full between the date on which such Additional Financial Indebtedness is incurred and the scheduled maturity date of such Additional Financial Indebtedness; (c) reduction arising as a result of any prepayments of Relevant Financial Indebtedness that has a scheduled maturity date falling on or before the Loan Interest Payment Date falling in December 2032. Such reduction to equal that constant amount (expressed as number of Pounds per Financial Quarter) that would be sufficient to amortise an amount of Relevant Financial Indebtedness equal to the prepayment of such Relevant Financial Indebtedness in full between the date on which such prepayment of Relevant Financial Indebtedness is made and the Loan Interest Payment Date falling in December 2032; and (d) reduction arising as a result of any prepayments of Relevant Financial Indebtedness that has a scheduled maturity date falling after the Loan Interest Payment Date falling in December 2032. Such reduction to equal that constant amount (expressed as a number of Pounds per Financial Quarter) that would be sufficient to amortise an amount of Relevant Financial Indebtedness equal to the prepayment of such Relevant Financial Indebtedness in full

54 between the date on which such prepayment of Relevant Financial Indebtedness is made and the scheduled maturity date of such Relevant Financial Indebtedness to which such prepayment relates. For the avoidance of doubt, for so long as any of the Term Advances made on the Closing Date is outstanding and other than as a result of a prepayment thereof not resulting from a refinancing the Synthetic Debt Service will not be lower than the constant amount referred to above. Unspent Capex Amount means, in respect of any Financial Quarter, an amount, if positive, equal to Synthetic Capex less Capex (excluding Capex funded from amounts standing to the credit of the Capex Reserve Account) actually spent during the relevant Financial Quarter (including any Capex expensed through the profit and loss account during such Financial Quarter).

Capital Expenditure The Borrower will covenant in the Issuer/Borrower Facility Agreement to credit Unspent Capex Amounts to the Capex Reserve Account. Amounts standing to the credit of the Capex Reserve Account may not be withdrawn without the prior consent of the Borrower Group Security Trustee (such consent not to be unreasonably withheld or delayed) and may be applied only for the purpose of future Capex but amounts so applied shall not be included in any calculation of Capex for any relevant Financial Quarter. For the avoidance of doubt, amounts standing to the credit of the Capex Reserve Account shall be applied by the Borrower for the purposes of Capex before amounts standing to the credit of the Disposal Proceeds Account may be so applied.

Permitted Disposals Under the terms of the Issuer/Borrower Facility Agreement, the Borrower may (subject to the provisions of the Borrower Group Deed of Charge) dispose of all or part of a Borrower Mortgaged Property (for value) with the prior consent of the Borrower Group Security Trustee (each such disposal a Permitted Disposal), such consent not to be unreasonably withheld or delayed if the Borrower Group Security Trustee shall have received written confirmation from the Borrower that no Borrower Group Event of Default or Potential Borrower Group Event of Default has occurred and is subsisting at the date of the proposed disposal or would occur as a result of the proposed disposal and either the conditions set out in paragraph (a) (the Permitted Disposals (OpFlex) Conditions) or the conditions set out in paragraph (b) are satisfied: (a) immediately following such disposal: (i) the Loan-to-Value Ratio (expressed as a percentage) would not exceed sixty (60) per cent.; and (ii) the DSCR (OpFlex) immediately after the disposal would be at least 1.65:1 (calculated on the date of such disposal on a pro forma basis); or (b) if, immediately following such disposal, the Permitted Disposals (OpFlex) Conditions would not be satisfied, the value or (as the case may be) the number of such disposals since the first date on which the Permitted Disposals (OpFlex) Conditions were not satisfied with respect to a proposed disposal does not exceed, in aggregate since the later of the Closing Date and the most recent Cure Date (as the case may be), the lower of 5 per cent. of (as the case may be): (i) the value of the Borrower Mortgaged Properties at the date of the relevant Permitted Disposal; or (ii) the number of Borrower Mortgaged Properties at the date of the relevant Permitted Disposal, in each case determined by reference to the most recent Professional Valuation. With respect to a Permitted Disposal, DSCR (OpFlex) on a pro forma basis shall be determined by reference to Pub-Level EBITDA for the immediately preceding Relevant Period for the pubs in the Borrower Group Estate for the whole of such Relevant Period (excluding Pub-Level EBITDA attributable to the pub(s) or part thereof to be disposed of pursuant to the Permitted Disposal). For the purposes of paragraph (b) above, Cure Date means, with respect to a Financial Quarter in which the DCSR (OpFlex) was less than 1.65:1, the earlier to occur of (i) the first date after the date of completion of the relevant Permitted Disposal on which DSCR (OpFlex) is at least 1.80:1; and (ii) the fifth anniversary of any date after the date of completion of the relevant Permitted

55 Disposal on which DSCR (OpFlex) is at least 1.65:1 provided that it remains at least 1.65:1 throughout that five year period. The Release Price with respect to a Borrower Mortgaged Property is an amount equal to 115 per cent. of the Allocated Debt Amount of such Borrower Mortgaged Property. Save in respect of Permitted Disposals or as described in the following paragraph, the Borrower will not be permitted to make any disposal (other than a Permitted Disposal) of any single asset, other than to dispose of stock-in-trade and worn-out assets that are excess-to-requirements or obsolete. In addition, the Borrower will be permitted to let or sub-let parts of a Borrower Mortgaged Property (not including the parts thereof used exclusively or primarily for the running of the Permitted Business carried on thereat) for a period not exceeding twelve (12) months. In addition, the Borrower will be permitted, at any time, to dispose of any part of a Borrower Mortgaged Property (the Excluded Part) provided that the remaining part of the Borrower Mortgaged Property continues to be a viable Permitted Business and the Valuer confirms that the disposal of the Excluded Part would not adversely affect the valuation of the Borrower Group Estate. The proceeds of sale of any Excluded Part may be used by the Borrower for such purpose as it deems fit.

Application of Disposal Proceeds The Borrower will covenant in the Issuer/Borrower Facility Agreement to credit the Net Sales Proceeds of any disposal of a Borrower Mortgaged Property or part thereof to an account in the name of the Borrower charged in favour of the Borrower Group Security Trustee (the Disposal Proceeds Account) forthwith upon receipt provided that if, on the date of receipt of the Net Sales Proceeds arising from the relevant Permitted Disposal, the Borrower certifies to the Borrower Security Trustee that the Permitted Disposal (OpFlex) Conditions are satisfied, only an amount equal to the Release Price need be credited to the Disposal Proceeds Account. Net Sales Proceeds means the proceeds of the sale of any Borrower Mortgaged Property (or part thereof other than the Excluded Part) less required transaction costs including, without limitation, legal fees, agency fees and taxes relating to such sale. Amounts standing to the credit of the Disposal Proceeds Account may only be withdrawn by the Borrower with the prior consent of the Borrower Group Security Trustee (such consent not to be unreasonably withheld or delayed) provided that the Borrower certifies to the Borrower Group Security Trustee that no Borrower Group Event of Default or Potential Borrower Group Event of Default has occurred and is subsisting at that time and would not arise as a result of such withdrawal and provided further that such moneys are to be applied: (a) in or towards a Permitted Acquisition provided that at the time of completion of such acquisition the Borrower Group Security Trustee is granted security in a form and substance satisfactory to it over such Permitted Business thereby acquired; or (b) in or towards funding future Capex to be spent on any Permitted Business (but amounts so applied shall not be included in any calculation of Capex for any relevant Financial Quarter); or (c) in or towards making voluntary prepayment of the Term Advances (including premium and breakage costs under the Hedging Agreement) or purchasing Debenture Bonds. With respect to a Permitted Acquisition, the calculation of DSCR (OpFlex) ‘‘on a pro forma basis’’ shall be made by reference to Pub-Level EBITDA for the immediately preceding Relevant Period for the pubs in the Borrower Group Estate for the whole of such Relevant Period and Attributable Pub-Level EBITDA for the pub(s) acquired pursuant to the Permitted Acquisition for the immediately succeeding Relevant Period. Excess Net Sales Proceeds means an amount equal to the difference (if positive) between Net Sales Proceeds and the Release Price attributable to the related Borrower Mortgaged Property (which is the subject of a Permitted Disposal). Attributable Pub-Level EBITDA means, in respect of a pub acquired by way of Permitted Acquisition (i) the Pub Level EBITDA of that pub, based on the moving annual total (MAT), to the extent that such pub has been trading continuously over that 12 month period and the information is available to the Borrower, together with the benefit attributable to intra-group supply agreements in that period; or (ii) based on fair maintainable trade (FMT) as reported by a third party valuer

56 (such FMT to exclude, for the avoidance of doubt, the benefit of investment made or planned to be made in such pub by the Borrower in the immediately following 12 month period).

Permitted Acquisitions Applying amounts standing to the credit of the Disposal Proceeds Account The Borrower will be permitted to acquire a Permitted Business (a Permitted Acquisition) using funds standing to the credit of the Disposal Proceeds Account provided that no Borrower Group Event of Default or Potential Borrower Group Event of Default is subsisting and provided further that: (a) such acquisition is made for value on an arm’s length basis (other than in the case of Additional Properties) provided that in the case of such an acquisition from a member of Spirit Group which is not a Borrower Group Entity, such basis is determined in accordance with the Tax Deed of Covenant; and (b) the DSCR (OpFlex) immediately after the acquisition would be at least 1.80:1 (calculated on a pro forma basis). The Borrower will also be permitted to make a Permitted Acquisition using funds standing to the credit of the Disposal Proceeds Account provided that no Borrower Group Event of Default or Potential Borrower Group Event of Default is subsisting and provided further that: (a) such acquisition is made for value on an arm’s length basis (other than in the case of Additional Properties) provided that in the case of such an acquisition from a member of Spirit Group which is not a Borrower Group Entity, such basis is determined in accordance with the Tax Deed of Covenant; (b) where the DSCR (OpFlex) immediately after the relevant acquisition would be less than 1.80:1, the DSCR (OpFlex) immediately after the acquisition would be at least 1.65:1 (calculated on a pro forma basis); and (c) the Weighted Average Interest Rate Test is satisfied.

Other Permitted Acquisitions The Borrower will also be permitted to make a Permitted Acquisition provided that no Borrower Group Event of Default or Potential Borrower Group Event of Default is subsisting and provided further that such acquisition is made for value on arm’s length terms (other than in the case of Additional Properties) provided that in the case of such an acquisition from a member of Spirit Group which is not a Borrower Group Entity, such basis is determined in accordance with the Tax Deed of Covenant, and either: (a) the DSCR (OpFlex) immediately after the acquisition would be at least 1.80:1 (calculated on a pro forma basis); or (b) (i) the DSCR (OpFlex) immediately after the acquisition would be at least 1.65:1 (calculated on a pro forma basis); and (ii) the Weighted Average Interest Rate Test is satisfied. In the case of all Permitted Acquisitions, at the time of completion of such Permitted Acquisition, the Borrower is required to grant to the Borrower Group Security Trustee security in a form and substance satisfactory to it over such Permitted Business thereby acquired. Where a Permitted Acquisition is made for a price in excess of £1,000,000 the valuation of the related Permitted Business must be confirmed by the Professional Valuers. The Weighted Average Interest Rate Test will be satisfied if: (a) X is less than Y calculated as at completion of the relevant Permitted Acquisition; and (b) A is less than B calculated as at completion of the relevant Permitted Acquisition, where: X equals the Weighted Average Interest Rate plus 1.5 per cent.; C Y equals D (expressed as a percentage); A equals the Weighted Average Interest Rate plus 2.3 per cent.; E B equals F (expressed as a percentage); 57 C, in respect of the pubs to be acquired as part of a Permitted Acquisition, equals Attributable Pub-Level EBITDA; D equals the aggregate purchase price attributable to the pubs to be acquired as part of the Permitted Acquisition; E equals the historical last 12 months Pub-Level EBITDA with respect to all pubs that were acquired not more than 36 months and not fewer than 18 months prior to the date on which the Weighted Average Interest Rate Test is to be calculated (the Relevant Pubs); and F equals the aggregate purchase price attributable to the Relevant Pubs.

Weighted Average Interest Rate means, at any time, the average of the rates of interest applicable to each class of the Term Advances (excluding Term Advance Step-Up Amounts) weighted according to their respective principal amounts. When determining whether the Weighted Average Interest Rate Test has been satisfied, the Borrower shall be entitled to nominate for exclusion from the calculation a maximum of five pubs within the Borrower Group Estate. The Borrower may only fund a Permitted Acquisition, in whole or in part, from: (a) amounts standing to the credit of the Disposal Proceeds Account (as described above); (b) a Further Term Advance or a New Term Advance; (c) the proceeds of Additional Financial Indebtedness (except the proceeds of new debt applied exclusively to effect a refinancing); and (d) Excess Cash. Excess Cash means the cash available to the Borrower in the Operating Accounts after having paid or provided for amounts expressed to be due and payable as set out in paragraphs (a) to (o) (inclusive) in the section headed Borrower Group Deed of Charge – Priority of Payments – Pre- Enforcement below but does not include Unspent Capex Amounts. Permitted Business means a business or a pub or other real or heritable, freehold or long leasehold property centred around the ownership and/or operation of premises from which hospitality, catering and other incidental services (including accommodation) are to be provided in the United Kingdom, the primary activity of which is that of owning/operating public houses (which for the avoidance of doubt includes bars, nightclubs, restaurants, hotels or other premises licensed or otherwise authorised for the sale by retail of alcoholic liquor predominantly for consumption on the premises).

Substitution Where (A)(i) a Borrower Mortgaged Property is contractually committed to be disposed of by the Borrower; and (ii) the Borrower is contractually committed to acquire a Borrower Morgaged Property and the completion date for such disposal is set to occur no earlier than 30 days prior to such acquisition (the completion of such disposal and acquisition being a Substitution); and (B) both the Permitted Disposals (OpFlex) Conditions are satisfied immediately following the Substitution, all other financial conditions and financial tests specified above as being applicable to the disposal(s) (as Permitted Disposals) and the acquisitions (as Permitted Acquisitions) shall be deemed to have been satisfied.

Additional Properties If the annual valuation shows that (i) the Loan-to-Value Ratio (expressed as a percentage) exceeds 60 per cent.; or (ii) the DSCR (OpFlex) is less than 1.65:1, the Borrower or any third party will be entitled to charge within two months additional properties (whether or not acquired for value) (such properties being Additional Properties) to secure the obligations of the Borrower under the Issuer/ Borrower Facility Agreement to prevent the occurrence of a Borrower Group Event of Default provided always that the maximum value of such Additional Properties that may be charged by the Borrower or any third party during any two year period on a rolling basis will be £50,000,000.

Replacement Properties Save as disclosed in the Property Due Diligence Reports, if the Borrower becomes aware that it does not have a good and marketable title to any Borrower Mortgaged Property it shall, within two months of becoming aware of the same, charge in favour of the Borrower Group Security Trustee

58 either: (i) a substitute long leasehold or freehold (or Scottish equivalent) property having a value equal to the value attributed to the property to which the Borrower did not have good and marketable title; or (ii) cash to be credited to the Disposal Proceeds Account in an amount equal to the value attributed to the property to which the Borrower did not have good and marketable title.

Additional Financial Indebtedness The Borrower shall be permitted (without the prior consent of the Borrower Group Security Trustee) to incur or permit to subsist any financial indebtedness that ranks pari passu with or junior to the Term Facilities and/or any Additional Term Facilities (other than as may be provided by the Issuer by way of Further Term Facilities and New Term Facilities) (Additional Financial Indebtedness), provided that: (a) no Borrower Group Event of Default or Potential Borrower Group Event of Default has occurred and is subsisting at the relevant drawdown date or would occur as a result of the incurrence of additional indebtedness; (b) in respect of Additional Financial Indebtedness ranking pari passu with the existing Term Advances (which Additional Financial Indebtedness is not to be used solely to refinance Term Advances, Additional Term Advances or Additional Financial Indebtedness of the Borrower Group), the Loan-to-Value Ratio (expressed as a percentage) immediately after the date the Additional Financial Indebtedness is incurred does not exceed sixty (60) per cent. provided that, for the purposes of calculating the Loan-to-Value Ratio in such circumstances, the Borrower Group Estate value shall be adjusted to take into account the value attributable to pubs acquired pursuant to Permitted Acquisitions to be completed contemporaneously with, and using the net proceeds of, the relevant Additional Financial Indebtedness (but without double counting); (c) in respect of Additional Financial Indebtedness ranking pari passu with the existing Term Advances (which Additional Financial Indebtedness is not to be used solely to refinance Term Advances, Additional Term Advances or Additional Financial Indebtedness of the Borrower Group), the DSCR (OpFlex) (to be calculated by reference to: (i) Free Cash Flow arising in the four Financial Quarters ending on the Financial Quarter Date immediately prior to the date on which the Additional Financial Indebtedness is to be incurred (the AFI Drawdown Date) and adjusting the same to take into account Attributable Pub-Level EBITDA from Permitted Acquisitions completed during the last 12 months and any Attributable Pub-Level EBITDA from the Permitted Acquisitions to be completed contemporaneously with, and using the net proceeds of, the relevant Additional Financial Indebtedness (but without double counting) and (ii) the Debt Service (OpFlex) in respect of the 12 months immediately succeeding the AFI Drawdown Date, taking into account the Debt Service in respect of the Additional Financial Indebtedness over such immediately succeeding 12 month period following the AFI Drawdown Date) is at least 1.65:1; (d) the Rating Agencies confirm that: (i) where such Additional Financial Indebtedness is not to be used solely to refinance existing Relevant Financial Indebtedness of the Borrower Group, the then outstanding classes of Debenture Bonds will be assigned (A) in the case of the Class A2 Debenture Bonds and the Class A4 Debenture Bonds, ratings of at least ‘‘BBB+’’/‘‘BBB+’’/‘‘Baa2’’ and (B) in the case of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds, Underlying Ratings of at least ‘‘BBB+’’/‘‘BBB+’’/ ‘‘Baa2’’ notwithstanding the incurrence of such Additional Financial Indebtedness; and/or (ii) where such Additional Financial Indebtedness is to be used solely to refinance existing Relevant Financial Indebtedness of the Borrower Group, the then outstanding classes of Debenture Bonds will be assigned the same ratings as the then-current ratings of the Class A2 Debenture Bonds and the Class A4 Debenture Bonds and the same underlying ratings as the then-current Underlying Ratings outstanding of the Class A1 Debenture Bonds, Class A3 Debenture Bonds or Class A5 Debenture Bonds notwithstanding the incurrence of the proposed Additional Financial Indebtedness; (e) the provider of such Additional Financial Indebtedness, contemporaneously with the provision of such Additional Financial Indebtedness, accedes to the Borrower Group Deed of Charge on such terms as may be required by the Borrower Group Security Trustee to reflect, inter

59 alia, revised priorities of payments, acceleration and enforcement rights and, where appropriate, subordination and non-petition provisions in respect to such Additional Financial Indebtedness; (f) in respect of any Additional Financial Indebtedness, unless otherwise sanctioned by Ambac (if required), the aggregate amount of scheduled repayments in respect of (i) all such Relevant Financial Indebtedness which ranks pari passu with the existing Term Advances; and (ii) the existing Term Facilities which fall due in any two year period (calculated on a rolling eight Financial Quarter basis) after drawdown of such Additional Financial Indebtedness shall not exceed 20 per cent. of the value of the Borrower Group Estate, such value of the Borrower Group Estate being determined at the time of the drawdown of the Additional Financial Indebtedness by reference to the Professional Valuation (as adjusted to take into account acquisitions and disposals of Borrower Mortgaged Properties in the immediately preceding Financial Quarter) most recently obtained by the Borrower prior to the Drawdown Date of the Additional Financial Indebtedness; (g) in respect of a request for any Additional Financial Indebtedness which is to rank pari passu with the existing Term Facilities, and is to bear interest at a floating rate, the consent of Ambac (if required) is obtained where the proceeds thereof are not to be used solely for the purpose of refinancing the original Term Advances (or any subsequent refinancing thereof (capped at the aggregate principal amount of the original Term Advances)). In addition to the foregoing, the Borrower will have the right to obtain its own working capital facility which may be drawn to fund AdminCo’s working capital requirements (thereby reducing or eliminating the necessity to establish a liquidity reserve to the relevant extent) but only in any such case insofar as these relate solely to the Borrower’s business. Such a working capital facility would only be permissible while the original BankCo Loan was outstanding and if there was a drawstop on the BankCo Working Capital Facility. In that case, the Borrower would be permitted to obtain a working capital facility which ranked senior to the existing Term Facilities under the Issuer/Borrower Facility Agreement, subject to satisfying the conditions set out in paragraphs (a), (b), (c), (d)(ii) and (e) above. After repayment of the original BankCo Loan, the Borrower would be entitled at any time to establish such a working capital facility on a basis that it ranked pari passu with the existing Term Facilities under the Issuer/Borrower Facility Agreement, subject to satisfying all the conditions to raising Additional Further Indebtedness described above (but would only be entitled to establish such a facility on a senior ranking basis with the consent of Ambac (if required)).

Appointment of a Financial Adviser If any of the following shall occur: (a) the DSCR (OpFlex) is less than 1.50:1 as at the most recent Financial Quarter Date; (b) an acceleration by the BankCo Banks of the BankCo Loan in accordance with its terms; or (c) a material and unremedied default giving rise to a right of termination of any Material Contract (as defined in the Administrative Services Agreement) entered into by AdminCo, (any such event, a FA Appointment Event), then the Borrower shall (at its own expense) promptly appoint a professional financial adviser (the Financial Adviser) to prepare a report within 45 days of its appointment on behalf of the Borrower Group Security Trustee which: (i) outlines the financial status of AdminCo; and (ii) provides a detailed management and performance review of AdminCo’s management of the Borrower, detailing the circumstances surrounding such FA Appointment Event and considering what steps might reasonably be taken in order to remedy such FA Appointment Event and, in light of such issues, recommending the taking of any such steps as it shall consider appropriate. The Borrower Group Security Trustee may also require the Financial Adviser to investigate whether the recharging of services to the Borrower under the Administrative Services Agreement has, as between the Borrower, BankCo and any Spirit Group Entity to whom AdminCo provides its services, been done in accordance with the Fair and Reasonable Principle. AdminCo is not, however, required to follow any recommendation or take any remedial action suggested or proposed by the Financial Adviser save that, where the Financial Adviser determines that there has been an overpayment by the Borrower of recharged amounts which have not been allocated in accordance with the Fair and Reasonable Principle, AdminCo will, in certain circumstances, be

60 obliged to reimburse the Borrower accordingly. In the event that a decision is made by AdminCo not to follow any other such recommendation or take any such remedial action, AdminCo shall provide an explanation in reasonable detail to the Borrower Group Security Trustee and Ambac (if required) of why AdminCo considers that it is not in its best interests to do so. Where other counterparties to Material ASAs (as defined in the Administrative Services Agreement) have equivalent rights under such Material ASAs, the appointment of a Financial Adviser shall be made jointly and the costs shared accordingly.

Valuation of Borrower Mortgaged Properties Valuation Pursuant to the Issuer/Borrower Facility Agreement, the Borrower shall procure that: (i) a Professional Valuation shall be made as at the last day of each of its Financial Years (the Property Valuation Date) of all of the properties comprised in the First Fixed Charge Security as at the Property Valuation Date on the basis that: (A) during such Financial Year at least one-fifth of such properties (selected by the Valuers on the basis of a stratified sample of the Borrower Group Estate) shall be physically inspected by the Valuers making such Professional Valuation; and (B) during each period of five consecutive Financial Years of the Borrower ending with the Financial Year in which the Property Valuation Date falls, each of the properties comprised in the First Fixed Charge Security as at the Property Valuation Date shall be inspected by such Valuers at least once; and (ii) such Professional Valuations (which shall be regarded for the purposes of the Borrower Group Deed of Charge as a single Professional Valuation) shall be (A) dated the date of its production, (B) addressed to the Borrower Group Security Trustee and the Borrower and (C) produced to the Borrower Group Security Trustee not later than three months after the end of the Financial Year in which the Property Valuation Date falls. For the purposes of this Offering Circular: Professional Valuation means, in relation to property, a valuation addressed to the Borrower Group Security Trustee and the Borrower made by the Valuers on the basis of Market Value as defined by the Practice Statements contained in the Appraisal and Valuation Manual prepared by the Royal Institution of Chartered Surveyors (in effect for the time being) for the existing use of the property as a fully operational entity having regard to trade potential, or on such other basis as the Borrower Group Security Trustee may agree. value means in relation to a property, broadly the value ascribed thereto by the most recent Professional Valuation thereof or, if not included in such most recent Professional Valuation, by a separate Professional Valuation, provided that, in every such case as aforesaid, such Professional Valuation shall be as at a date not more than 3 months (or such longer period as the Borrower Group Security Trustee may agree) before the date at which such value falls to be relied upon. Valuers means DTZ, or such other reputable firm of professional valuers as the Borrower may nominate as is notified to the Rating Agencies and Ambac and approved by the Borrower Group Security Trustee.

Other Covenants – General The Borrower and each other Obligor has provided the Borrower Group Security Trustee with the benefit of certain other positive and negative covenants including, without limitation: (a) legal status; (b) maintenance of legal validity; (c) notification of events of default; (d) notification of all material litigation, arbitration or administrative proceedings against the relevant company; (e) repair and maintenance of all Borrower Group assets; (f) conduct of business and maintenance of business as a going concern; (g) keeping of all pubs in good order;

61 (h) maintenance of all necessary licences and consents; (i) no Financial Indebtedness, save for Permitted Financial Indebtedness; and (j) restrictions on engaging in an activity which is not a Permitted Business. The effect of a breach of certain of these and other covenants may be limited by reference to a materiality qualification. Each Obligor has also granted a negative pledge in favour of the Borrower Group Security Trustee not to create any Encumbrances or security ranking pari passu with or in priority to the security created under the Borrower Group Deed of Charge other than Permitted Encumbrances. Permitted Financial Indebtedness means, without limitation, indebtedness incurred with the consent of the Borrower Group Security Trustee, indebtedness incurred under the Issuer/Borrower Facility Agreement, Additional Financial Indebtedness incurred, indebtedness under material contracts and indebtedness incurred under Intra-Group Subordinated Loans. Intra-Group Subordinated Loans means any Financial Indebtedness incurred between the Borrower and any other member of Spirit Group on a fully subordinated, limited recourse basis with appropriate non-petition covenants.

Restrictions on Outside Payments The making of distributions and/or loans by Obligors to third parties or Excluded Group Entities (except as otherwise permitted by the Transaction Documents) and/or payments or prepayments under any subordinated debt from cash within the Borrower Group (Outside Payments) will be restricted save as set out below: (a) prior to the security under the Borrower Group Deed of Charge becoming enforceable and provided no Borrower Group Event of Default or Potential Borrower Group Event of Default has occurred and is subsisting or would occur as a result of such Outside Payments being made, the Obligors are permitted (subject always to the priority of payments set out in Summary of Principal Documents – Borrower Group Deed of Charge – Priority of Payments – Pre-Enforcement) to make Outside Payments (ignoring, for these purposes, the Outside Payments to be made as described in paragraph (b) below) on a Loan Interest Payment Date (such Outside Payments, together with Outside Payments permitted under paragraph (b) below, Permitted Outside Payments) provided that the DSCR (OpFlex) immediately after such Permitted Outside Payment is at least 1.30:1 (calculated on both a pro forma look-back rolling four Financial Quarter basis and a pro forma look-back immediately preceding Financial Quarter basis) and the Borrower has delivered a certificate with respect to the DSCR (OpFlex) as at the immediately preceding Financial Quarter Date (calculated on the same basis as aforesaid) certifying that the level of the DSCR (OpFlex) prior to and after the relevant Permitted Outside Payment being made was in excess of 1.30:1. In relation to the Loan Interest Payment Date falling in September of any year the Borrower will be permitted to make a Permitted Outside Payment either (x) if it delivers the certificate with respect to the DSCR (OpFlex) as described above, or (y) if the DSCR (OpFlex) (calculated on both a pro forma look-back rolling four Financial Quarter basis and a pro forma look-back rolling two Financial Quarter basis) was at least 1.65:1 as at the Loan Interest Payment Date falling in June of such year; and (b) notwithstanding paragraph (a) above, Outside Payments may be made, inter alia,: (i) by the Borrower of an amount equal to the amount chargeable to it under the Back-to- Back Supply Agreement with Spirit Supply referable to the amounts due from Spirit Supply to Carlsberg UK by way of compensation payments for termination of former contractual arrangements which related to the supply of beer to those pubs in the Borrower Group Estate which formed part of the Securitised Estate following Separation provided that such payments are made at the time that such payments are actually due to Carlsberg UK; and (ii) to any Excluded Group Entity in consideration for the surrender of any amounts which are available for surrender by that Excluded Group Entity by way of group relief where such payment is contemplated by the Tax Deed of Covenant at any time prior to the occurrence of a Borrower Group Event of Default.

62 Waivers; Changes to Covenants If any condition or limitation contained in the Issuer/Borrower Facility Agreement or any other Transaction Document cannot be satisfied and/or if the Borrower wishes to obtain a waiver in respect of an actual or potential breach thereof, the Borrower Group Security Trustee may permit or grant a waiver to the relevant Obligor to effect the relevant matter if the consent of Ambac is obtained (if required), and the Borrower Group Security Trustee (i) is directed to do so by the Issuer Security Trustee or (ii) is otherwise of the opinion that the interests of the Issuer Secured Creditors, including the Debenture Bondholders (other than, prior to the occurrence of an Ambac Termination Event, the holders of the Guaranteed Debenture Bonds), will not be materially prejudiced as a result of the waiver. In addition, if the Borrower wishes to modify any of the covenants in the Issuer/Borrower Facility Agreement, the Borrower Group Security Trustee may consent to such a modification if the Borrower Group Security Trustee (as directed by the Issuer Security Trustee) is of the opinion that the interests of the Issuer Secured Creditors, including the Debenture Bondholders, will not be materially prejudiced as a result of the waiver. Where the Rating Agencies have provided a Rating Confirmation, the Issuer Security Trustee, Debenture Bond Trustee or the Borrower Group Security Trustee, in considering the No Material Prejudice Test shall (and, in relation to any Rating Confirmation by Fitch only, where the Issuer Security Trustee, the Debenture Bond Trustee or the Borrower Group Security Trustee (as the case may be) considers that such Rating Confirmation is an appropriate test or the only appropriate test to apply in that circumstance) be entitled to take into account such Rating Confirmation provided that the Issuer Security Trustee, the Debenture Bond Trustee and the Borrower Group Security Trustee (as the case may be) shall continue to be responsible for taking into account, for the purpose of the No Material Prejudice Test, all other matters which would be relevant to such No Material Prejudice Test.

Events of Default The Issuer/Borrower Facility Agreement contains events customary for a full recourse facility that may lead to a default and acceleration of amounts outstanding (each a Borrower Group Event of Default). These include, inter alia: (a) the Borrower fails to pay amounts of principal and/or interest (other than Term Advance Step- Up Amounts) within two Business Days of the due date therefor; (b) any financial indebtedness of an Obligor in an amount in aggregate exceeding £500,000 is not paid when due or is declared to be or otherwise becomes due and payable prior to its specified maturity; (c) in any Financial Quarter, the most recent Loan-to-Value Ratio (expressed as a percentage) exceeds 67 per cent. and the DSCR (Default) falls below 1.50:1; (d) in respect of any Financial Quarter the DSCR (Default) falls below 1.30:1; (e) in respect of any Financial Quarter the Adjusted DSCR (Default) falls below 1.10:1; (f) any Obligor becomes subject to insolvency proceedings or is unable to pay its debts as they fall due; (g) any breach of covenant (other than a financial covenant or covenant to pay) by a member of the Borrower Group which is not cured to the satisfaction of the Borrower Group Security Trustee within 30 days of notice being given to the Borrower of such breach or actual or constructive knowledge by the Borrower of such breach; (h) an Issuer Event of Default occurs; or (i) any representation or statement made or repeated by an Obligor in any of the Transaction Documents proves incorrect or misleading in any material respect unless the underlying circumstances leading to the misrepresentation are remedied within 30 days after the earlier of the Obligor’s knowledge of the misrepresentation and the date of notice from the Borrower Group Security Trustee to remedy such breach. The effect of a Borrower Group Event of Default is, in certain circumstances, limited by a materiality provision. In respect of certain other events, the mere occurrence of the event will not in itself entitle the Borrower Group Security Trustee to accelerate the repayment obligations of the Borrower

63 immediately following the expiry of any applicable grace period. In particular, in the event of any failure by the Borrower to comply with the financial covenants, the Borrower Group shall have 30 days in which to remedy such breach: (i) through a reduction in the Term Facilities; (ii) through the subscription by an Excluded Group Entity (as defined in the Master Definitions and Construction Schedule) or a third party of a sufficient amount of new share capital in any relevant Borrower Group Entity or through the deposit of funds (in each case, on a subordinated basis); and (iii) through other remedial action provided that the Borrower Group Security Trustee (i) is directed to do so by the Issuer Security Trustee or (ii) is otherwise of the opinion that the Debenture Bondholders (other than, prior to the occurrence of an Ambac Termination Event, the holders of the Guaranteed Debenture Bonds) will not be materially prejudiced as a result of such action and the consent of Ambac (if required) is obtained. In the case of (ii) above, the subscription of new share capital in any relevant Borrower Group Entity and/or a deposit of funds will be deemed to cure: (A) a breach of the DSCR (Default) Covenant or the Adjusted DSCR (Default) Covenant if the subscription proceeds and/or deposit is in an amount which is sufficient to generate interest which, if available to the Borrower Group, at the time the relevant financial ratio compliance certificate and report was prepared, as earnings, would have meant that no such breach would have been reported; or (B) a breach of the Loan-to-Value Covenant if the amount of the subscription proceeds and/ or deposit (as the case may be) is sufficient such that no breach (as reported in the relevant financial ratio compliance certificate and report) would have occurred if the proceeds or deposit had been standing to the credit of the Disposal Proceeds Account. Any deposit may be withdrawn if, following any breach of the DSCR (Default) Covenant or the Adjusted DSCR (Default) Covenant or the Loan-to-Value Covenant (as the case may be), such covenant is not breached for four successive Financial Quarters without taking into account the benefit of the deposit or subscription and the Borrower has provided advice satisfactory to the Borrower Group Security Trustee as to the continued satisfaction of the DSCR (Default) Covenant or the Adjusted DSCR (Default) Covenant and Loan to Value Covenant on an ongoing basis notwithstanding the release of such deposit. If no subscription of equity share capital or deposit of funds is made or other remedial action taken within the aforesaid 30-day period, an event of default will occur under the Issuer/Borrower Facility Agreement; Upon acceleration of the Term Advances following a Borrower Group Event of Default, the Borrower will be required to repay the Term Advances (i) at par (together with accrued but unpaid interest on the aggregate principal amount of the relevant Term Advance to the date of repayment) in the case of the Term A1 Advances and the Term A2 Advances and from (and including) the relevant Step-Up Date, in the case of the Term A3 Advances, the Term A4 Advances and the Term A5 Advances and (ii) at the higher of par and an amount equal to the Redemption Amount (in the case of the Term A3 Advances, the Term A4 Advances and the Term A5 Advances in each case up to (but excluding) the relevant Step-Up Date including where Ambac has exercised its rights under Condition 6(c)(iv) (Redemption, Purchase and Cancellation – Redemption at the Option of the Issuer). The occurrence of a Potential Borrower Group Event of Default (or of any other event where the Borrower Group Security Trustee believes the security created by the Borrower Group Deed of Charge to be threatened or in jeopardy or prejudiced) will entitle the Borrower Group Security Trustee to serve a notice which will cause the floating charges contained in the Borrower Group Deed of Charge over the assets, property and undertaking of each Obligor to crystallise in whole or in part so as to become fixed charges (except in relation to Scottish Assets, in respect of which the relevant floating charges will crystallise only on the appointment of a receiver thereunder). The floating charges created by the Obligors under the Borrower Group Deed of Charge will automatically (except in relation to Scottish Assets as aforesaid) crystallise so as to become a fixed charge on the occurrence of, inter alia, an insolvency event in relation to any Obligor. Following crystallisation of any floating charge over any bank account, moneys standing to the credit of such account will not be capable of being withdrawn unless the prior written consent of the Borrower Group Security Trustee (as directed by the Issuer Security Trustee) to any such withdrawal is given.

64 In each of these circumstances, there will not be an automatic event of default under the Debenture Bonds. If a Borrower Group Event of Default occurs at a time when any Junior Debt is outstanding, the Borrower will not be entitled to pay to the lender thereof (whether the Issuer or another entity) any amount in respect of interest and (if applicable) principal in relation to the Junior Debt in excess of the amount of interest and (if applicable) principal that was paid on the Loan Interest Payment Date immediately prior to the date on which the Borrower Group Event of Default occurred, notwithstanding the terms of the relevant Junior Debt, until the earlier of: (i) the Borrower Group Event of Default being cured to the satisfaction of the Borrower Group Security Trustee or waived by the Borrower Group Security Trustee (the Event of Default Cure Date) (in which case the Borrower will be entitled to pay the amount falling due on subsequent Loan Interest Payment Dates commencing on the Loan Interest Payment Date immediately following the Cure Date together with any unpaid interest and/or principal that accrued but was not paid during the continuance of the Borrower Group Event of Default); and (ii) an acceleration of the Senior Debt at which point, all amounts payable in respect of the Junior Debt shall be entitled to be declared immediately due and payable in accordance with the Borrower Group Post-Acceleration Priority of Payments. Junior Debt means, at any time, all Relevant Financial Indebtedness at that time which is subordinate in point of priority of payment and security to the existing Term Advances. Senior Debt means, at any time, all Relevant Financial Indebtedness at that time other than Junior Debt.

Governing law The Issuer/Borrower Facility Agreement will be governed by English law.

Issuer/Borrower Hedging Agreement The Borrower will, on the Closing Date, enter into back-to-back hedging arrangements (the Issuer/ Borrower Hedging Agreement) with the Issuer. The terms of the Issuer/Borrower Hedging Agreement will, in all material respects, be similar to those of the Hedging Agreement (save that, inter alia, neither the Issuer nor the Borrower will be required to maintain minimum ratings). The obligations of the Borrower to the Issuer under the Issuer/Borrower Hedging Agreement will be secured pursuant to the Borrower Group Deed of Charge. The Issuer/Borrower Hedging Agreement will be governed by English law.

Borrower Group Deed of Charge The Borrower Group Deed of Charge will be entered into on the Closing Date by, inter alios, the Borrower, New ParentCo (each an Obligor), SGL and each relevant SNR Group entity (each a Charging Company), the Issuer, the Bank Security Agent and the Borrower Group Security Trustee. Under the terms of the Borrower Group Deed of Charge, the Borrower will provide the Borrower Group Security Trustee with the benefit of, inter alia, the security described in paragraphs (a) to (h) below (the Borrower Group Security) over its property, assets and undertaking: (a) a first fixed charge expressed by way of legal mortgage (or, in Scotland, a standard security (in the form of a Borrower Group Standard Security) or, as appropriate, assignation in security) over the pubs in the Borrower Group Estate legally and/or beneficially owned by it including all estates or interests in such property and all buildings, trade and other fixtures, fixed plant and machinery from time to time on such freehold, heritable or leasehold property (the assets subject to such first fixed charge being the Borrower Mortgaged Properties and the security created thereby being the First Fixed Charge Security); (b) a first fixed charge over the Disposal Proceeds Account and the Capex Reserve Account (which may take effect as a floating charge and thus rank behind the claims of certain preferential creditors and other creditors) and a floating charge over the other Operating Accounts of the Borrower;

65 (c) an assignment by way of first fixed security of all of its right, title, interest and benefit in and to the Transaction Documents and all rights in respect of and incidental thereto; (d) an assignment by way of first fixed security of all of its right, title, interest and benefit in and to the Back-to-Back Supply Agreement and the Administrative Services Agreement; (e) an assignment by way of first fixed security over all of its right, title, interest and benefit, present and future, in and to each of the Insurance Policies under which it is an insured party and to all claims payable and paid thereunder (which may take effect as a floating charge and thus rank behind the claims of certain preferential and other creditors); (f) an assignment by way of first fixed security of all intellectual property rights, statutory licences, consents and authorisations, present and future, held by it or otherwise used by it in connection with its business and all rights in and in respect of and incidental thereto (other than those governed by the law of Scotland) (which may take effect as a floating charge and thus rank behind the claims of certain preferential and other creditors); (g) a first fixed charge over all book debts and other debts (including the loans made to other members of Spirit Group but excluding amounts held by National Westminster Bank Plc on behalf of SGL in connection with certain planning consents), and all other moneys and liabilities whatsoever for the time being due, owing or payable to it (other than those governed by the law of Scotland) and all rights in and in respect of and incidental thereto (which may be subject to the obtaining of third party consents and may take effect as a floating charge and thus rank behind the claims of certain preferential and other creditors); and (h) a first floating charge by each Obligor over the whole of such Obligor’s assets and undertaking not effectively charged by the first ranking fixed security (but extending over the whole of such Obligor’s Scottish Assets) (the Floating Charge Assets). Under the terms of the Borrower Group Deed of Charge, each Obligor and each Charging Company will also provide the Borrower Group Security Trustee with the benefit of certain fixed charges over their respective property, assets and undertaking. The security created by the Borrower Group Deed of Charge referred to in paragraphs (a) to (h) will be held by the Borrower Group Security Trustee on trust for the benefit of itself, any receiver of any Obligor, the Issuer (other than in its capacity as provider of the loan under the Issuer/ Borrower Subordinated Loan Agreement) and any other entity that in due course becomes a creditor of the Obligors and accedes to the Borrower Group Deed of Charge (together the Borrower Group Secured Creditors), upon and subject to the terms thereof. The Borrower will also grant, on the Closing Date, second ranking security over the assets and other items referred to in paragraphs (a) to (h) above to the Borrower Group Security Trustee to be held by it for the benefit of the Bank Security Agent (on behalf of the BankCo Banks, the LoanCo Banks and the BankCo Hedge Providers) and for any other creditor that is advancing Junior Debt who accedes to the Borrower Group Deed of Charge (the Bank Security Agent and any such other creditor advancing Junior Debt being together the Junior Creditors and, together with the Borrower Group Secured Creditors, the Borrower Secured Parties). The interests of the BankCo Banks, the LoanCo Banks and the BankCo Hedge Providers will at all times be subordinate in point of priority of payment and enforcement of security to those of the Issuer under the Borrower Group Deed of Charge and the Bank Security Agent shall have no right to require the enforcement of such security until after the Borrower Group Secured Creditors have been repaid in full. The Charging Companies have covenanted that they will also grant specific security to the Bank Security Agent over those properties comprising the BankCo Estate in certain circumstances. The relevant holding company, in each case, will grant an equitable share mortgage over the shares of the Borrower, New ParentCo, SGL, BidCo, AdminCo, Spirit Supply and the relevant SNR Group transferor entities. These equitable share mortgages will be granted in favour of the Borrower Group Security Trustee and held on trust for the Borrower Group Secured Creditors under the Borrower Group Deed of Charge. Each Obligor and each Charging Company has agreed with the Borrower Group Security Trustee and the Borrower Group Secured Creditors that, broadly speaking, while any amount remains due and outstanding under the Issuer/Borrower Facility Agreement, it will not take any steps or pursue any action for the purpose of recovering any debts due or owing to it by any other Obligor or Charging Company or the Issuer or, as applicable, to petition or procure the petitioning for the

66 winding-up or administration of any Obligor or the Issuer or the appointment of an administrative receiver in respect of any such company or to take or omit to take any steps whatsoever that may otherwise threaten or prejudice the security created in favour of the Borrower Group Security Trustee under the Borrower Group Deed of Charge.

Each of the Borrower Group Secured Creditors has agreed and will agree that, unless an enforcement notice (a Borrower Group Enforcement Notice) has been served, it will not take any steps whatsoever to direct the Borrower Group Security Trustee to enforce the security created in its favour under the Borrower Group Deed of Charge nor will it take any steps or pursue any action whatsoever for the purpose of recovering any debts due or owing to it by any Obligor or Charging Company or to petition or procure the petitioning for the winding-up or administration of any Obligor or Charging Company or the appointment of an administrative receiver in respect of any such company.

The Issuer will not be entitled to proceed directly against any Obligor or Charging Company unless the Borrower Group Security Trustee, having become bound so to proceed, fails to do so within three days and such failure is continuing.

Upon the service of a Borrower Group Enforcement Notice pursuant to the terms of the Issuer/ Borrower Facility Agreement, all payments under or arising from the Issuer/Borrower Facility Agreement and/or the Borrower Group Deed of Charge (subject as provided below) will be required to be made to the Borrower Group Security Trustee or to its order. All rights or remedies provided for by the Borrower Group Deed of Charge or available at law or in equity will be exercisable by the Borrower Group Security Trustee (unless otherwise expressly provided in the Borrower Group Deed of Charge) as directed by the Issuer Security Trustee (except in the case of the appointment of an administrative receiver in the circumstances described in – Appointment of an administrative receiver below, where no direction will be required).

Appointment of an administrative receiver The Borrower Group Deed of Charge will provide that the Borrower Group Security Trustee shall enforce the Borrower Group Security in respect of any Obligor, by appointing an administrative receiver, if it has actual notice of either: (i) an application for the appointment of an administrator; or (ii) the giving of a notice of intention to appoint an administrator, in respect of such Obligor, such appointment to take effect upon the final day by which the appointment must be made in order to prevent an administration proceeding or (where an Obligor or the directors of an Obligor have initiated the administration) not later than that final day.

In addition, the Borrower Group Security Trustee will (subject to – Indemnity of the Borrower Group Security Trustee below), following the delivery of a Borrower Group Enforcement Notice by the Borrower Group Security Trustee, enforce the Borrower Group Security in respect of any Obligor by the appointment of an administrative receiver (if the Borrower Group Security Trustee has not already done so pursuant to the foregoing).

The Borrower Group Security Trustee shall not be liable for any failure to appoint an administrative receiver, save in the case of its own gross negligence, wilful default or fraud.

Indemnity of the Borrower Group Security Trustee The Borrower Group Security Trustee will not be obliged to appoint an administrative receiver unless it is indemnified and/or secured to its satisfaction. However, the Borrower Group Deed of Charge will provide that, in the event that the Borrower Group Security Trustee is required to enforce the Borrower Group Security by appointing an administrative receiver following receipt of actual notice of an application for the appointment of an administrator or actual notice of the giving of a notice of intention to appoint an administrator, then the Borrower Group Security Trustee will agree that it is adequately indemnified and secured in respect of such appointment by virtue of its rights against the Obligors under the Borrower Group Deed of Charge and the security which it has in respect of such rights. The Obligors will covenant in the Borrower Group Deed of Charge that, in the event that the Borrower Group Security Trustee appoints an administrative receiver by reason of having actual notice of an application for the appointment of an administrator or actual notice of the giving of a notice of intention to appoint an administrator, they waive any claim against the Borrower Group Security Trustee in respect of such appointment.

67 Priority of Payments Pre-Enforcement Prior to the occurrence of a Borrower Group Event of Default (which is subsisting), amounts standing to the credit of the Operating Accounts shall be applied, after meeting ongoing operating costs and expenses (including, for the avoidance of doubt, fees (other than the Service Fee and/or increased costs under the Administrative Services Agreement) payable by the Borrower to AdminCo pursuant to the Administrative Services Agreement and to Spirit Supply under the Back- to-Back Supply Agreement) except where any such costs and expenses are expressly dealt with in paragraphs (a) to (i) below, in the following order of priority (the Borrower Group Pre- Enforcement Priority of Payments) (including in each case any amount in respect of value added tax payable thereon): (a) first, to pay or provide for the amounts then due and payable to the Borrower Group Security Trustee and any Receiver appointed by the Borrower Group Security Trustee in respect of the fees or other remuneration and indemnity payments (if any) then payable to, and any costs, charges, liabilities and expenses then incurred by, the Borrower Group Security Trustee and any receiver appointed by the Borrower Group Security Trustee and any amounts payable to the Borrower Group Security Trustee and any receiver appointed by the Borrower Group Security Trustee under the Borrower Group Deed of Charge; (b) second, to pay or provide for the amounts then due and payable by the Borrower to the Issuer in respect of: (i) first, the Issuer’s obligations set out in paragraph (a) below under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Pre-Acceleration; and (ii) second, the Issuer’s obligations set out in paragraph (b) below under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Pre-Acceleration; (c) third, pro rata according to the respective amounts thereof, to pay or provide for all amounts due and payable (if any) to the Issuer pursuant to the Issuer/Borrower Hedging Agreement (other than any payment to be paid to the Issuer upon termination of a transaction under the Issuer/Borrower Hedging Agreement as a result of either (i) an insolvency event with respect to the Hedge Provider or (ii) a failure by the Hedge Provider to remedy, in accordance with the terms of the Hedging Agreement, a ratings downgrade below the required short-term and/ or long-term unsecured, unsubordinated and unguaranteed ratings of the Hedge Provider being rated lower than the Hedge Provider Requisite Rating ((i) and (ii) together the Issuer IB Hedging Subordinated Amounts)); (d) fourth, to pay or provide for the amounts then due and payable by the Borrower in respect of: (i) first, the Issuer’s obligations set out in paragraph (d) below under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Pre-Acceleration; and (ii) second, the Issuer’s obligations set out in paragraph (e) below under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Pre-Acceleration; (e) fifth, to pay into the Capex Reserve Account amounts in respect of the Unspent Capex Amount during the relevant Financial Quarter; (f) sixth, pro rata according to the respective amounts thereof, to pay or provide for the amounts then due and payable by the Borrower to the Issuer in respect of: (i) interest on the Term A1 Advance (other than that proportion of the interest referable to the Class A1 Step-Up Amounts and any interest accrued thereon (Term A1 Step-Up Amounts)); (ii) interest on the Term A2 Advance (other than that proportion of the interest referable to the Class A2 Step-Up Amounts and any interest accrued thereon (Term A2 Step-Up Amounts)); (iii) interest on the Term A3 Advance (other than that proportion of the interest referable to the Class A3 Step-Up Amounts and any interest accrued thereon (Term A3 Step-Up Amounts)); (iv) interest on the Term A4 Advance (other than that proportion of the interest referable to the Class A4 Step-Up Amounts and any interest accrued thereon (Term A4 Step-Up Amounts)); and

68 (v) interest on the Term A5 Advance (other than that proportion of the interest referable to the Class A5 Step-Up Amounts and any interest accrued thereon (Term A5 Step-Up Amounts and, together with the Term A1 Step-Up Amounts, Term A2 Step-Up Amounts, Term A3 Step-Up Amounts and Term A4 Step-Up Amounts, Term Advance Step-Up Amounts)); (g) seventh, pro rata according to the respective amounts thereof, to pay or provide for the amounts then due and payable by the Borrower to the Issuer in respect of: (i) principal of the Term A1 Advance; (ii) principal of the Term A2 Advance; (iii) principal of the Term A3 Advance; (iv) principal of the Term A4 Advance; and (v) principal of the Term A5 Advance; (h) eighth, to pay or provide for the amounts then due and payable or to be provided for in respect of the Borrower’s liability or possible liability for all amounts of tax arising out of the Borrower’s own activities payable by the Borrower; (i) ninth, to pay or provide for the amounts then required by the Issuer to satisfy the Issuer’s obligations set out in paragraph (i) under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Pre-Acceleration; (j) tenth, to pay or provide for Issuer IB Hedging Subordinated Amounts then due and payable to the Issuer; (k) eleventh, to pay or provide for amounts payable to AdminCo by way of Service Fee and increased costs under the Administrative Services Agreement; (l) twelfth, pro rata to pay or provide for amounts then due and payable by the Borrower to the Issuer in respect of: (i) an amount equal to the Ambac Subordinated Fees; (ii) Term A1 Step-Up Amounts; (iii) Term A2 Step-Up Amounts; (iv) Term A3 Step-Up Amounts; (v) Term A4 Step-Up Amounts; and (vi) Term A5 Step-Up Amounts; (m) thirteenth, pro rata according to the respective amounts thereof, to pay or provide for the amounts then due and payable in respect of the Borrower’s obligations to pay: (i) interest on the BankCo/Borrower Subordinated Loan; and (ii) interest on the Issuer/Borrower Subordinated Loan; (n) fourteenth, in or towards satisfaction of any liability of the Borrower in respect of tax not paid or provided for under paragraph (h) above; (o) fifteenth, pro rata according to the respective amounts thereof, to pay or provide for the amounts then due and payable in respect of the Borrower’s obligations to repay: (i) principal of the BankCo/Borrower Subordinated Loan; and (ii) principal of the Issuer/Borrower Subordinated Loan; (p) sixteenth, to make any prudent provisioning required in respect of contingent liabilities under the Administrative Services Agreement; and (q) seventeenth, to the Borrower for its own use (including to make Permitted Outside Payments). In addition to the foregoing, to the extent that the Borrower is required to make a balancing payment in respect of any transfer pricing or thin capitalisation adjustment in accordance with the terms of the Tax Deed of Covenant, the Borrower will be entitled to make such payment in accordance with those terms, and payment such amounts will be provided for at paragraph (m) on a pro rata basis of the Borrower Group Pre-Enforcement Priority of Payments. Furthermore, if the Inland Revenue opens an enquiry into any land transaction return relating to the acquisition by the Borrower of the Borrower Mortgaged Properties, the Borrower will be

69 required to create a reserve (the SDLT Reserve) for the amount of stamp duty land tax which the Borrower would be liable to pay (together with interest and penalties, an estimate of which shall be agreed with the Borrower Group Security Trustee) in the event of group relief being denied, unless leading tax counsel shall provide the Borrower with a written opinion that an appeal against any amended assessment to that effect would be successful. The Borrower will be required to provide for amounts in respect of the SDLT Reserve immediately senior to any sum payable or to be provided for at paragraph (m) of the Borrower Group Pre-Enforcement Priority of Payments but immediately junior to sums payable or to be provided for under paragraph (l) of the Borrower Group Pre-Enforcement Priority of Payments.

In the event that AdminCo is not permitted to make further drawings under the BankCo Working Capital Facility (a WCF Drawstop), the Borrower will be required to retain a reserve from the Service Fee and amounts that would otherwise have been paid out by way of dividend or subordinated loan service (after paying or providing for the items referred to in paragraphs (a) to (i) above) in an amount which will not exceed the amount of the BankCo Working Capital Facility available to AdminCo immediately prior to the WCF Drawstop or, if the original BankCo Loan is no longer outstanding, such other amount as the directors of AdminCo reasonably determine is necessary to meet the working capital needs of AdminCo from time to time (such amounts to be made available to AdminCo by way of an inter-company loan or otherwise).

Such reserves may be released if and to the extent that (i) AdminCo enters into a working capital facility certified by the directors of AdminCo as being sufficient to meet the working capital needs of AdminCo; (ii) a facility that has ceased temporarily to be available to AdminCo becomes available again; or (iii) the Borrower obtains its own Working Capital Facility which may be drawn to fund AdminCo’s working capital requirements but only insofar as they relate solely to the Borrower’s business.

In relation to any payment to be made by the Borrower under paragraphs (m), (o) and (q), it shall only be entitled to make the same if the relevant conditions pursuant to which an Outside Payment is rendered a Permitted Outside Payment (as described in Summary of Principal Documents – Issuer/Borrower Facility Agreement – Restrictions on Outside Payments) have been satisfied and, if applicable, pending delivery of the certificate referred to therein, any funds otherwise available to make any such payments shall be held in the relevant Operating Account of the Borrower.

Post-Enforcement Pre-Acceleration Upon the service of a Borrower Group Enforcement Notice, the Borrower Group Security Trustee may cancel the commitment of the Issuer to make Additional Term Advances, declare the Term Advances due and payable immediately or on demand, and/or otherwise exercise all rights available to it, including the enforcement of the security granted by the Obligors.

To the extent that the Borrower Group Security Trustee decides not to accelerate the Term Advances as described above, it may declare the security enforceable through the service of a Borrower Group Enforcement Notice, such notice to be given to, inter alios, the Borrower Group Secured Creditors. The effect of such service will be, inter alia, to crystallise the floating charges over the operating accounts of the Obligors and the Charging Companies (the Operating Accounts). At the same time, the Borrower Group Security Trustee may exercise its powers to appoint a receiver in respect of each Obligor and thereafter the Borrower Group Security Trustee will have control over the Operating Accounts and, to the extent of the funds available, will cause them to be applied in making payments to the Borrower Group Secured Creditors in the same manner as prior to the appointment of the receiver provided that no payment in respect of the items referred to in paragraphs (h) and (j) to (q) above may be made without the consent of the Borrower Group Security Trustee.

The Borrower Group Security Trustee may, at any time following the enforcement of the security under the Borrower Group Deed of Charge, discontinue such enforcement, provided that the circumstances that, inter alia, gave rise to the enforcement no longer apply and provided further that no other Borrower Group Event of Default has occurred and is continuing. Following the discontinuance of such enforcement, the Borrower shall make payments in accordance with the priority set forth under – Priority of Payments – Pre-Enforcement above.

70 Post-Acceleration All moneys received or recovered by the Borrower Group Security Trustee (or a receiver appointed on its behalf) (including amounts standing to the credit of the bank amounts of the Borrower) from (i) any Obligor following service of a Borrower Group Enforcement Notice; and (ii) the acceleration of the Term Advances, shall be applied in the following order (and in each case only and to the extent that payments or provisions of a higher priority have been made in full) (unless otherwise required by operation of law) (Borrower Group Post-Acceleration Priority of Payments) (including in each case any amount in respect of value added tax payable thereon): (a) first, pro rata, according to the respective amounts thereof, to pay or provide for the amounts then due and payable: (i) to the Borrower Group Security Trustee in respect of the fees or other remuneration and indemnity payments then payable to, and any costs, charges, liabilities and expenses then incurred by, the Borrower Group Security Trustee under the Borrower Group Deed of Charge; and (ii) to any receiver appointed by the Borrower Group Security Trustee in respect of the fees or other remuneration and indemnity payments then payable to, and any costs, charges, liabilities and expenses then incurred by, such Receiver under the Borrower Group Deed of Charge; (b) second, to pay or provide for the amounts then due and payable by the Borrower to the Issuer in respect of; (i) first, the Issuer’s obligations set out in paragraph (a) below under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Post-Acceleration; and (ii) second, the Issuer’s obligations set out in paragraph (b) below under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Post- Acceleration; (c) third, to pay or provide for amounts then due and payable to the Issuer under the Issuer/ Borrower Hedging Agreement (other than Issuer IB Hedging Subordinated Amounts); (d) fourth, to pay or provide for the amounts then due and payable by the Borrower to the Issuer in respect of: (i) first, the Issuer’s obligations set out in paragraph (d) below under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Post-Acceleration; and (ii) second, the Issuer’s obligations set out in paragraph (e) below under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Post- Acceleration; (e) fifth, to pay or provide for the amounts then due and payable by the Borrower to AdminCo pursuant to the Administrative Services Agreement (other than the Service Fee and/or increased costs under the Administrative Services Agreement); and (f) sixth, pro rata according to the respective amounts thereof, to pay or provide for the amounts then due and payable by the Borrower to the Issuer in respect of: (i) interest on the Term A1 Advance (other than Term A1 Step-Up Amounts); (ii) interest on the Term A2 Advance (other than Term A2 Step-Up Amounts); (iii) interest on the Term A3 Advance (other than Term A3 Step-Up Amounts); (iv) interest on the Term A4 Advance (other than Term A4 Step-Up Amounts); and (v) interest on the Term A5 Advance (other than Term A5 Step-Up Amounts); (g) seventh, pro rata according to the respective amounts thereof to pay or provide for the amounts then due and payable by the Borrower to the Issuer in respect of: (i) principal of the Term A1 Advance; (ii) principal of the Term A2 Advance; (iii) principal of the Term A3 Advance (other than an amount equal to the Redemption Premium Amount (if any) payable by the Issuer as set out in paragraph (j) of the Issuer Pre-Acceleration Priority of Payments and paragraph (i) of the Issuer Post-Acceleration Priority of Payments);

71 (iv) principal of the Term A4 Advance (other than an amount equal to the Redemption Premium Amount (if any) payable by the Issuer as set out in paragraph (j) of the Issuer Pre-Acceleration Priority of Payments and paragraph (i) of the Issuer Post-Acceleration Priority of Payments); and (v) principal of the Term A5 Advance (other than an amount equal to the Redemption Premium Amount (if any) payable by the Issuer as set out in paragraph (j) of the Issuer Pre-Acceleration Priority of Payments and paragraph (i) of the Issuer Post-Acceleration Priority of Payments); (h) eighth, to pay or provide for the amounts then required by the Issuer to satisfy the Issuer’s obligations set out in paragraph (h) under Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments – Post Acceleration; (i) ninth, pro rata according to the respective amounts thereof, to pay or provide for amounts then due and payable by the Borrower to the Issuer in respect of: (i) a redemption amount in respect of the Term A3 Advance equal to the Redemption Premium Amount (if any) in respect of the Class A3 Debenture Bonds; (ii) a redemption amount in respect of the Term A4 Advance equal to the Redemption Premium Amount (if any) in respect of the Class A4 Debenture Bonds; and (iii) a redemption amount in respect of the Term A5 Advance equal to the Redemption Premium Amount (if any) in respect of the Class A5 Debenture Bonds; (j) tenth, to pay or provide for IB Hedging Subordinated Amounts; (k) eleventh, pro rata according to the respective amounts thereof, to pay or provide for amounts then due and payable by the Borrower to the Issuer in respect of: (i) an amount equal to the Ambac Subordinated Fees; (ii) Term A1 Step-Up Amounts; (iii) Term A2 Step-Up Amounts; (iv) Term A3 Step-Up Amounts; (v) Term A4 Step-Up Amounts; and (vi) Term A5 Step-Up Amounts; (l) twelfth, pro rata according to the respective amounts thereof, to pay or provide for the amounts then due and payable in respect of the Borrower’s obligations to pay: (i) interest on the BankCo/Borrower Subordinated Loan; and (ii) interest on the Issuer/Borrower Subordinated Loan; (m) thirteenth, pro rata according to the respective amounts thereof, to pay or provide for the amounts then due and payable in respect of the Borrower’s obligations to repay: (i) principal of the BankCo/Borrower Subordinated Loan; and (ii) principal of the Issuer/Borrower Subordinated Loan; (n) fourteenth, to pay or provide for all amounts then due and payable to the Bank Security Agent in respect of all amounts due and payable by BankCo and/or LoanCo to the BankCo Banks and the LoanCo Banks and all amounts payable by BankCo to the BankCo Hedge Providers; and (o) fifteenth, the surplus (if any) to the Obligors. The Borrower Group Deed of Charge will be governed by English law (other than in respect of any fixed charge over Scottish Assets, which will be governed by Scots law).

Liquidity Facility Agreement Each Liquidity Facility Provider is required to be a bank which has a short-term rating of at least the Liquidity Facility Requisite Rating. On the Closing Date, the Issuer will enter into a liquidity facility agreement (the Liquidity Facility Agreement) with the Liquidity Facility Provider and the Issuer Security Trustee. Under the terms of the Liquidity Facility Agreement, the Liquidity Facility Provider(s) will provide a 364-day commitment to permit a drawing to be made of up to a maximum aggregate principal amount of £125 million in

72 circumstances where, subject as set out below, the Issuer has insufficient funds available on an Interest Payment Date falling within such 364 day period to pay in full any of the items specified in paragraphs (a) to (f) (inclusive) and (g)(i)(2), (g)(ii), (g)(iii)(2), (g)(iv) and (g)(v)(2) of the Issuer Deed of Charge – Priority of Payments – Pre-Acceleration below (such insufficiency being a Liquidity Shortfall). Upon any reduction in the aggregate Principal Amount Outstanding of the Debenture Bonds by virtue of any prepayment or repayment in accordance with Condition 6 (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer), the available Liquidity Facility Commitment shall be reduced by a percentage amount equal to the percentage reduction in the aggregate Principal Amount Outstanding of the Debenture Bonds as a result of any such prepayment or repayment. The Liquidity Facility shall not be available for the purpose of meeting any Liquidity Shortfall which arises only in respect of payments of principal in respect of the Debenture Bonds. The Liquidity Facility Agreement provides that, if at any time the rating of the short-term unsecured, unsubordinated and unguaranteed debt obligations of a Liquidity Facility Provider falls below the Liquidity Facility Requisite Rating or a Liquidity Facility Provider refuses to extend the term of the Liquidity Facility, the Issuer shall require the relevant Liquidity Facility Provider to pay into a designated bank account of the Issuer (the Liquidity Facility Reserve Account) maintained with an appropriately rated bank an amount equal to its undrawn commitment under the Liquidity Facility Agreement. Amounts standing to the credit of the Liquidity Facility Reserve Account will be available to the Issuer for drawing in the event of there being a Liquidity Shortfall and in the circumstances provided in the Liquidity Facility Agreement. The Issuer may also, at any time, replace such Liquidity Facility Provider, provided that such Liquidity Facility Provider is replaced by an appropriately rated bank and all amounts outstanding to such Liquidity Facility Provider are repaid in full. Any costs incurred by the Issuer in obtaining a replacement liquidity facility will be borne by the then-current Liquidity Facility Provider in accordance with the provisions of the existing Liquidity Facility Agreement. The Liquidity Facility Agreement contains certain events of default (each a Liquidity Facility Event of Default) including (a) non-payment by the Issuer of amounts due under the Liquidity Facility Agreement; (b) the service of an Issuer Enforcement Notice; (c) it becoming unlawful for the Issuer to perform any of its obligations under the Transaction Documents; (d) any unremedied breach by the Issuer of any material obligation contained in the Liquidity Facility Agreement; and (e) certain limited insolvency events affecting the Issuer. Following the occurrence of a Liquidity Facility Event of Default, the Liquidity Facility Provider(s) may (i) cancel the Liquidity Facility; and/or (ii) demand that, inter alia, all or part of the loans made under the Liquidity Facility Agreement be immediately due and payable. The Issuer may at any time, with the prior written consent of the Issuer Security Trustee, cancel the undrawn and uncancelled part of the Liquidity Facility provided that the Rating Agencies have confirmed that (a) neither the then-current ratings of the Debenture Bonds nor (for so long as any of the Class A1 Debenture Bonds, any of the Class A3 Debenture Bonds or any of the Class A5 Debenture Bonds is outstanding) the Underlying Rating will be adversely affected as a result of such cancellation; and (b) if the Debenture Bonds have previously been downgraded, that such cancellation will not prevent the restoration of such ratings. The Liquidity Facility Agreement will be governed by English law.

Hedging Agreement The Issuer will, on or before the Closing Date, enter into the Hedging Agreement with the Initial Hedge Provider in order to hedge the obligations of the Issuer with respect to (a) the floating rate component of interest payments under the Class A1 Debenture Bonds and the Class A2 Debenture Bonds; and (b) the floating rate component of interest payments under the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds after their respective Step-Up Dates. The transactions under the Hedging Agreement will take the form of fixed/floating interest rate swaps and/or other appropriate arrangements acceptable to the Rating Agencies from time to time. Pursuant to the terms of the Hedging Agreement, on each Interest Payment Date commencing in March 2005 (or, in the case of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds, the relevant Step-Up Date) and ending on the Final Maturity Date of the applicable class of Debenture Bonds, the Issuer will make fixed rate payments (the fixed

73 rate component of which in respect of Class A1 Debenture Bonds and the Class A2 Debenture Bonds will increase after the applicable Step-Up Date) to the Hedge Provider in Sterling which the Issuer will fund using interest payments which it receives from the Borrower under the Issuer/ Borrower Facility Agreement and/or payments received under the Issuer/Borrower Hedging Agreement. The Hedge Provider will, on the corresponding Payment Date, make floating rate payments in Sterling (calculated by reference to LIBOR) to the Issuer. The amounts payable by the Issuer and the Hedge Provider under the Hedging Agreement will be netted so that only a net amount will be due from the Issuer or the Hedge Provider (as the case may be) on a Payment Date. The swap rate for the Issuer (and, through the Issuer/Borrower Hedging Agreement, the Borrower) is expected to be (i) approximately 6.70 per cent. (subject to market conditions) in respect of the transactions relating to the Class A1 Debenture Bonds and the Class A2 Debenture Bonds prior to the Class A1 Step-Up Date and the Class A2 Step-Up Date and approximately 6.95 per cent. (subject to market conditions) following the Class A1 Step-Up Date and the Class A2 Step-Up Date and (ii) approximately 4.70 per cent. (subject to market conditions) in respect of the transactions relating to the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds following the Class A3 Step-Up Date, the Class A4 Step-Up Date and the Class A5 Step-Up Date.

Ratings downgrade of Hedge Provider Initial Hedge Provider Guarantor downgrade If the rating assigned to the long-term unsecured, unsubordinated and unguaranteed debt obligations of the Initial Hedge Provider Guarantor is downgraded below ‘‘A+’’ by S&P or Fitch or ‘‘A1’’ by Moody’s, the Initial Hedge Provider will be required to take certain remedial measures which may include the provision of collateral for its obligations under the Hedging Agreement or the taking of such other action as the Initial Hedge Provider may agree with the relevant Rating Agency and Ambac. If the rating assigned to the long-term unsecured, unsubordinated and unguaranteed debt obligations of the Initial Hedge Provider Guarantor is downgraded below the Hedge Provider Requisite Rating, the Initial Hedge Provider will either transfer its obligations under the Hedging Agreement to a Replacement Hedge Provider or procure another person to guarantee those obligations provided that such Replacement Hedge Provider or (as the case may be) its guarantor has the Hedge Provider Requisite Rating or take such other action as it may agree with the relevant Rating Agency and Ambac. The Initial Hedge Provider will be required to continue posting collateral until such time as the transfer has been completed or (as the case may be) the guarantee has been provided. In respect of the Initial Hedge Provider Guarantor, Hedge Provider Requisite Rating means a rating assigned to the long-term unsecured, unsubordinated and unguaranteed debt obligations of the Initial Hedge Provider Guarantor of at least ‘‘A-’’ by S&P and Fitch and ‘‘A3’’ by Moody’s. In respect of the Replacement Hedge Provider, Hedge Provider Requisite Rating has the meaning set out under – Replacement Hedge Provider downgrade below.

Replacement Hedge Provider downgrade If either: (a) the rating assigned to the long-term unsecured, unsubordinated and unguaranteed debt obligations of any Replacement Hedge Provider or, of the guarantor of any Replacement Hedge Provider (if applicable), is downgraded below ‘‘A+’’ by S&P or Fitch or ‘‘A1’’ by Moody’s; or (b) the rating assigned to any short-term unsecured, unsubordinated and unguaranteed debt obligations of any Replacement Hedge Provider or, of its guarantor (if applicable), is downgraded below ‘‘A-1’’ by S&P, ‘‘F1’’ by Fitch or ‘‘P-1’’ by Moody’s (to the extent such Replacement Hedge Provider and/or, as the case may be, its guarantor, have been issued short-term ratings), the Replacement Hedge Provider will be required to take certain remedial measures which may include the provision of collateral for its obligations under the Hedging Agreement or the taking of such other action as the Replacement Hedge Provider (as the case may be) may agree with the relevant Rating Agency and Ambac.

74 If the rating assigned to the long-term unsecured, unsubordinated and unguaranteed debt obligations or to the short-term unsecured, unsubordinated and unguaranteed debt obligations of any Replacement Hedge Provider, or of the guarantor of any such Replacement Hedge Provider (if applicable), is downgraded below the Hedge Provider Requisite Rating, such Hedge Provider will either transfer its obligations under the Hedging Agreement to a Replacement Hedge Provider or procure another person to guarantee those obligations provided that such Replacement Hedge Provider or (as the case may be) its guarantor has the Hedge Provider Requisite Rating, or take such action as it may agree with the relevant Rating Agency and Ambac. The Initial Hedge Provider or (as the case may be) any Replacement Hedge Provider will be required to continue posting collateral until such time as the transfer has been completed or (as the case may be) the guarantee has been provided. In respect of any Replacement Hedge Provider, Hedge Provider Requisite Rating means a rating assigned to: (a) the long-term unsecured, unsubordinated and unguaranteed debt obligations of the Replacement Hedge Provider, or, of the guarantor of any such Replacement Hedge Provider (if applicable) of at least ‘‘A-’’ by S&P and Fitch and ‘‘A3’’ by Moody’s; and (b) the short-term unsecured, unsubordinated and unguaranteed debt obligations of the Replacement Hedge Provider, or, of the guarantor of any such Replacement Hedge Provider (if applicable) of at least ‘‘A-2’’ by S&P, ‘‘F2’’ by Fitch or ‘‘P-2’’ by Moody’s (to the extent that such Replacement Hedge Provider and/or, as the case may be, its guarantor, have been issued short-term ratings).

Consequences of failure to take remedial action A failure by the Initial Hedge Provider or any Replacement Hedge Provider (as the case may be) to take the required remedial action following a ratings downgrade will, subject to certain conditions, give the Issuer a right to terminate the transactions under the Hedging Agreement.

Excess collateral Any collateral transferred by the Hedge Provider in accordance with the Hedging Agreement which (i) is in excess of the termination amount that it would otherwise be required to pay to the Issuer under the Hedging Agreement; or (ii) it is entitled to have returned to it under the Hedging Agreement will be returned to the Hedge Provider directly (and as a consequence, prior to the distribution of any amounts due to the Debenture Bondholders or the other Issuer Secured Creditors).

Termination rights Each transaction (or in certain circumstances, part thereof) entered into under the Hedging Agreement may be terminated by one party if (i) an applicable event of default (including a failure to pay or certain insolvency-related events) or termination event (including an illegality or certain tax events (each as specified in the Hedging Agreement) occurs) in relation to the other party; (ii) the relevant Class of Debenture Bonds is redeemed, repurchased or cancelled (in each case, in full and in certain circumstances, in part) prior to their stated maturity; or (iii) a Debenture Bond Acceleration Notice is served.

Termination payments If any transaction under the Hedging Agreement is terminated, whether in whole or in part, prior to its stated termination date, a termination amount may be payable by one party to the other. Any such termination amount may be substantial and if payable to the Hedge Provider, will, other than in limited circumstances, rank in priority to amounts due to the Debenture Bondholders. Payment by the Issuer of any such termination amount may, therefore, affect the ability of the Issuer to make full and timely payment of amounts due to the Debenture Bondholders.

Tax If the Issuer is required to withhold or deduct an amount in respect of tax from payments due from it to the Hedge Provider, the Issuer will not be required pursuant to the terms of the Hedging Agreement to pay to the Hedge Provider any additional amounts in respect of any such withholding or deduction.

75 If the Hedge Provider is required to withhold or deduct an amount in respect of tax from payments due from it to the Issuer, the Hedge Provider will be required, pursuant to the terms of the Hedging Agreement, to pay to the Issuer such additional amounts as are required to ensure that the Issuer receives the same amounts that it would have received had no such withholding or deduction been required. In either event, the Hedge Provider may, if it is unable to transfer its rights and obligations under the Hedging Agreement to a third party in accordance with the terms of the Hedging Agreement, have the right to terminate the transactions under such Hedging Agreement affected by such deduction or withholding.

Transfer The Hedge Provider may at its discretion and its own cost transfer all of its rights and obligations under the Hedging Agreement to a third party, provided that, inter alia, such third party has the Hedge Provider Requisite Rating. Additionally, following the occurrence of an Issuer Payment Default (as defined in the Hedging Agreement) Ambac will have the right (provided that it has at that time a rating of at least the Hedge Provider Requisite Rating) to require transfer of the rights and obligations of the Hedge Provider under the Hedging Agreement to Ambac. The Issuer’s obligations to the Hedge Provider under the Hedging Agreement will be secured pursuant to the Issuer Deed of Charge. Such obligations (other than in respect of Hedging Agreement Subordinated Amounts) will rank senior to the obligations of the Issuer to the Debenture Bondholders. The Hedging Agreement with be governed by English law.

Issuer Deed of Charge The Issuer Deed of Charge will be entered into on the Closing Date by, inter alios, the Issuer, Ambac, the Liquidity Facility Provider, the Hedge Provider, the Debenture Bond Trustee, the Borrower and the Issuer Security Trustee. Under the terms of the Issuer Deed of Charge, the Issuer will grant the following security in favour of the Issuer Security Trustee who will hold such security on trust for the benefit of itself and the other Issuer Secured Creditors: (a) an assignment by way of a first fixed security of its right, title, interest and benefit, present and future, in, to and under the Transaction Documents to which it is a party, including the security trusts created under the Borrower Group Deed of Charge; (b) a charge by way of a first fixed security over the amounts from time to time standing to the credit of the Issuer Transaction Account (as defined by reference in the Issuer/Borrower Facility Agreement) and the Liquidity Facility Reserve Account (which security interests may take effect as a floating charge and thus rank behind the claims of certain preferential and other creditors); (c) a first fixed charge over all investments in Eligible Investments permitted to be made pursuant to the Servicing Agreement (which security interests may take effect as a floating charge and thus rank behind the claims of certain preferential and other creditors); and (d) a first floating charge (ranking behind the claims of certain preferential and other creditors) over all of the property, assets and undertakings of the Issuer not already subject to fixed security (but extending over all of its Scottish Assets), all as more particularly set out in the Issuer Deed of Charge. In addition, the Issuer Parent will grant an equitable mortgage over the shares in the Issuer in favour of the Issuer Security Trustee to be held for the benefit of the Debenture Bondholders and the other Issuer Secured Creditors. The assets of the Issuer, which will constitute the security for the Debenture Bonds as described above (the Issuer Security), will also stand as security for amounts payable by the Issuer to, inter alios: (a) the Issuer Security Trustee and the Debenture Bond Trustee under the Issuer Deed of Charge, the Trust Deed and the Agency Agreement; (b) Ambac under the terms of the Ambac Guarantee and Reimbursement Agreement and the Issuer Deed of Charge;

76 (c) the Liquidity Facility Provider(s) under the Liquidity Facility Agreement and the Issuer Deed of Charge; (d) the Hedge Provider under the Hedging Agreement and the Issuer Deed of Charge; (e) the Agent Bank under the Agency Agreement and the Issuer Deed of Charge; (f) the Servicer under the Servicing Agreement and the Issuer Deed of Charge; (g) the Account Bank under the Bank Agreement and the Issuer Deed of Charge; (h) the Borrower under the Issuer/Borrower Hedging Agreement; and (i) the Corporate Services Provider under the Corporate Services Agreement.

Priority of Payments Pre-Acceleration Prior to the service of a Debenture Bond Acceleration Notice by the Debenture Bond Trustee, amounts standing to the credit of the Issuer Transaction Account (the Issuer Available Amounts) shall be applied in the following order of priority (the Issuer Pre-Acceleration Priority of Payments) (including in each case any amount in respect of value added tax payable thereon): (a) first, pro rata according to the respective amounts thereof, to pay or provide for payment of amounts then due or to be provided for, the fees or other remuneration and indemnity payments (if any) payable to: (i) the Issuer Security Trustee and any costs, charges, liabilities and expenses incurred by it under the provisions of the Issuer Deed of Charge and any of the other Transaction Documents, together with interest thereon as provided for therein; (ii) the Debenture Bond Trustee and any costs, charges, liabilities and expenses incurred by it under the provisions of the Trust Deed and any of the other Transaction Documents, together with interest thereon as provided for therein; and (iii) the Paying Agents and the Agent Bank and any costs, charges, liabilities and expenses incurred under the provisions of the Agency Agreement and any of the other Transaction Documents, together with interest thereon as provided for therein; (b) second, to pay or provide for payment (after application of all amounts standing to the credit of the Liquidity Facility Reserve Account (if any)) of all amounts of principal, interest, commitment fees and all other amounts due or accrued due but unpaid to the Liquidity Facility Agent and the Liquidity Facility Provider(s) under the terms of the Liquidity Facility Agreement other than the amounts (i) in respect of Mandatory Costs (as defined in the Master Definitions and Construction Schedule) in excess of 0.325 per cent. per annum of the maximum aggregate amount available to be drawn under the Liquidity Facility; and (ii) in respect of any increase in the commitment fee payable to the Liquidity Facility Provider(s) as a result of the imposition of increased costs arising from the implementation by the Liquidity Facility Provider(s) of the New Basel Capital Accord (as defined in the Master Definitions and Construction Schedule) in excess of 0.325 per cent. per annum of the maximum aggregate amount available to be drawn under the Liquidity Facility Agreement ((i) and (ii) together being the Liquidity Subordinated Amounts)); (c) third, pro rata according to the respective amounts thereof, to pay or provide for all amounts due and payable (if any) to: (i) the Hedge Provider pursuant to the Hedging Agreement (other than any payment to be paid to the Hedge Provider upon termination of transaction under the Issuer/Borrower Hedging Agreement as a result of either (A) an insolvency event with respect to the Hedge Provider or (B) a failure by the Hedge Provider to remedy, in accordance with the terms of the Hedging Agreement, a ratings downgrade below the short-term unsecured, unsubordinated and unguaranteed ratings of the Hedge Provider being rated lower than the Hedge Provider Requisite Rating (Hedging Agreement Subordinated Amounts)); and (ii) the Borrower pursuant to the Issuer/Borrower Hedging Agreement (other than any payment to be paid to the Borrower upon termination of transaction under the Issuer/ Borrower Hedging Agreement as a result of an insolvency event with respect to the Borrower (Borrower IB Hedging Subordinated Amounts));

77 (d) fourth, to pay or provide for amounts in respect of guarantee fees and all other amounts then due to Ambac pursuant to the terms of the Ambac Guarantee and Reimbursement Agreement (other than (i) amounts provided for in paragraphs (g)(i), (g)(iii), (g)(v), (h)(i), (h)(iii) and (h)(v) below and (ii) amounts payable to Ambac by way of increased fees under the Ambac Guarantee and Reimbursement Agreement (Ambac Subordinated Fees)); (e) fifth, pro rata according to the respective amounts thereof, to pay or provide for remuneration then payable to: (i) the Servicer together with all other costs, charges, liabilities, expenses, indemnity amounts and losses incurred under the provisions of the Servicing Agreement; (ii) the Account Bank incurred under the provisions of the Bank Agreement; and (iii) the Corporate Services Provider together with all other costs, charges, liabilities, expenses, indemnity amounts and losses incurred under the provisions of the Corporate Services Agreement; (f) sixth, to pay or provide for the amounts then due or to be provided for in respect of the Issuer’s liability or possible liability to third parties under obligations incurred in the course of the Issuer’s business (including any amounts due to the Rating Agencies, the Stock Exchange and the Luxembourg Listing Agent, and any amounts of corporation tax on profits due to the Inland Revenue or any successor tax authority), other than amounts paid under paragraphs (a), (b), (c), (d) or (e) above; (g) seventh, pro rata according to the respective amounts thereof, to pay or provide for: (i) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A1 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of interest due but unpaid in respect of the Class A1 Debenture Bonds (other than that proportion of the interest referable to the Class A1 Step-Up Margin on the Class A1 Debenture Bonds and any interest accrued thereon (the Class A1 Step-Up Amounts)), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A1 Debenture Bondholders the amounts described at (B) above; (ii) all amounts of interest due but unpaid in respect of the Class A2 Debenture Bonds (other than that proportion of the interest referable to the Class A2 Step-Up Margin on the Class A2 Debenture Bonds and any interest accrued thereon (Class A2 Step-Up Amounts)); (iii) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A3 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of interest due but unpaid in respect of the Class A3 Debenture Bonds (other than that proportion of the interest referable to the Class A3 Step-Up Margin on the Class A3 Debenture Bonds and any interest accrued thereon (Class A3 Step-Up Amounts)), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A3 Debenture Bondholders the amounts described at (B) above; (iv) all amounts of interest due or accrued due but unpaid in respect of the Class A4 Debenture Bonds (other than that proportion of the interest referable to the Class A4 Step-Up Margin on the Class A4 Debenture Bonds and any interest accrued thereon (Class A4 Step-Up Amounts)); and (v) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A5 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of interest due but unpaid in respect of the Class A5 Debenture Bonds (other than that proportion

78 of the interest referable to the Class A5 Step-Up Margin on the Class A5 Debenture Bonds and any interest accrued thereon (Class A5 Step-Up Amounts)), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A5 Debenture Bondholders the amounts described at (B) above; (h) eighth, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A1 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of principal payable in respect of the Class A1 Debenture Bonds in accordance with Condition 6(b)(A)(ii), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A1 Debenture Bondholders the amounts described at (B) above; (ii) all amounts of principal payable in respect of the Class A2 Debenture Bonds in accordance with Condition 6(b)(A)(iii); (iii) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A3 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A3 Debenture Bonds in accordance with Condition 6(b)(A)(iv), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A3 Debenture Bondholders the amounts described at (B) above; (iv) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A4 Debenture Bonds in accordance with Condition 6(b)(A)(v); and (v) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A5 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A5 Debenture Bonds in accordance with Condition 6(b)(A)(vi), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A5 Debenture Bondholders the amounts described at (B) above; (i) ninth, in or towards satisfaction of any other amounts (including the Liquidity Subordinated Amounts, but excluding any sums referred to in paragraph (b) above) due under the Liquidity Facility Agreement to the Liquidity Facility Agent and the Liquidity Facility Provider(s); (j) tenth, pro rata according to the respective amounts thereof, to pay or provide for amounts then due and payable by way of: (i) Redemption Premium Amount (if any) in respect of the Class A3 Debenture Bonds (including any accrued but unpaid interest thereon); (ii) Redemption Premium Amount (if any) in respect of the Class A4 Debenture Bonds (including any accrued but unpaid interest thereon); and (iii) Redemption Premium Amount (if any) in respect of the Class A5 Debenture Bonds (including any accrued but unpaid interest thereon);

79 (k) eleventh, pro rata, according to the respective amounts thereof, to pay or provide for payment of: (i) Hedging Agreement Subordinated Amounts due and payable to the Hedge Provider under the Hedging Agreement; and (ii) Borrower IB Hedging Subordinated Amounts due and payable to the Borrower under the Issuer/Borrower Hedging Agreement; (j) twelfth, in or towards satisfaction of any other amounts (but excluding any sums referred to in paragraph (f) above) due to any tax authority; (m) thirteenth, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) Ambac Subordinated Fees; (ii) Class A1 Step-Up Amounts; (iii) Class A2 Step-Up Amounts; (iv) Class A3 Step-Up Amounts; (v) Class A4 Step-Up Amounts; and (vi) Class A5 Step-Up Amounts, then due and payable; (n) fourteenth, to pay or provide for the amounts then due and payable in respect of the Issuer’s obligations to pay interest on the LoanCo/Issuer Subordinated Loan; (o) fifteenth, to pay or provide for the amounts then due and payable in respect of the Issuer’s obligations to repay principal of the LoanCo/Issuer Subordinated Loan; and (p) sixteenth, the surplus (if any) to the Issuer. Payments may not be made out of the Issuer Transaction Account on any day other than on an Interest Payment Date other than to satisfy liabilities set out in paragraph (f) above. In addition to the payments described above, on any Interest Payment Date after the Closing Date but prior to the service of a Debenture Bond Acceleration Notice, the Issuer will be entitled to pay a dividend to Issuer Parent until such time as it has paid dividends in an aggregate amount of £15,000 to Issuer Parent, which amount, together with the provision for corporation tax on the profits out of which any such amount is paid, will be provided for at paragraph (e) of the Issuer Pre-Acceleration Priority of Payments. Once the Issuer has paid dividends in an aggregate amount of £15,000 to Issuer Parent, the Issuer will not be entitled to pay any further amount by way of dividend to Issuer Parent other than out of the surplus described at paragraph (o) above. For the avoidance of doubt, the following amounts will not form part of the Issuer Available Amounts but will be payable directly to the Hedge Provider as set out below: (a) if the Hedging Agreement is terminated in circumstances where the Issuer enters into a replacement hedging arrangement (a Replacement Hedging Agreement) with a Replacement Hedge Provider: (i) any payment received from such Replacement Hedge Provider by the Issuer as part of doing so will be paid directly to the Hedge Provider being replaced until any termination payment to such Hedge Provider is made in full; and (ii) any payment paid by the existing Hedge Provider to such Replacement Hedge Provider will be paid directly to the replacement Hedge Provider until any termination payment payable by such existing Hedge Provider is made in full; (b) any Hedging Agreement Excluded Amounts payable by the Issuer will be payable directly by the Issuer to the existing Hedge Provider in accordance with the terms of the existing Hedging Agreement. Hedging Agreement Excluded Amounts means (i) an amount equal to the value of the collateral (or part thereof) transferred by the existing Hedge Provider to the Issuer under the existing Hedging Agreement which (a) is in excess of the termination amount that would, but for the transfer of such collateral, be payable by such existing Hedge Provider under such Hedging Agreement or (b) the Hedge Provider is entitled to have returned to it under such existing Hedging Agreement and (ii) an amount equal to the Cash Benefit of any Tax Credit.

80 Cash Benefit and Tax Credit have the meanings given in the Master Definitions and Construction Schedule. To the extent that the Issuer’s funds on the relevant Interest Payment Date are insufficient to make payments under paragraphs (a) to (f) (inclusive) and (g)(i)(2), (g)(ii), (g)(iii)(2), (g)(iv) and (g)(v)(2) above, the Issuer may make a drawing under the Liquidity Facility (subject to specified limits, as to which see Liquidity Facility Agreement above) or, to the extent credited thereto, the Liquidity Facility Reserve Account (see – Liquidity Facility Agreement above).

Post-Acceleration All moneys received or recovered by the Issuer Security Trustee or the Receiver following the service of a Debenture Bond Acceleration Notice by the Debenture Bond Trustee (including amounts standing to the credit of: (a) the Liquidity Facility Reserve Account to the Liquidity Facility Provider(s); and (b) the Issuer Transaction Account) shall be applied in the following order of priority (the Issuer Post-Acceleration Priority of Payments) (and in each case only and to the extent that payments or provisions of a higher priority have been made in full) (unless otherwise required by law) (including in each case any value added tax payable thereon) provided that no such payments shall be made unless and until (if in the sole discretion of the Issuer Security Trustee and/or the Debenture Bond Trustee it is expedient to do so) a reserve fund is first established in the amount of £750,000 (or such lesser or greater amount as the Issuer Security Trustee and/or the Debenture Bond Trustee may reasonably determine) on account of any contingent costs, charges, liabilities, indemnities and expenses which in the opinion of the Issuer Security Trustee and/or the Debenture Bond Trustee (as the case may be) may be incurred by the Issuer Security Trustee and/or the Debenture Bond Trustee under the Transaction Documents: (a) first, pro rata according to the respective amounts thereof, to pay or provide for payment of amounts then due or to be provided for, the fees or other remuneration and indemnity payments (if any) payable to: (i) the Issuer Security Trustee and any Receiver appointed by the Issuer Security Trustee and any costs, charges, liabilities and expenses incurred by the Issuer Security Trustee and any Receiver under the provisions of the Issuer Deed of Charge and any of the other Transaction Documents, together with interest thereon as provided for therein; (ii) the Debenture Bond Trustee and any costs, charges, liabilities and expenses incurred by it under the provisions of the Trust Deed and any of the other Transaction Documents, together with interest thereon as provided for therein; and (iii) the Paying Agents and the Agent Bank and any costs, charges, liabilities and expenses incurred under the provisions of the Agency Agreement and any of the other Transaction Documents, together with interest thereon as provided therein; (b) second, to pay or provide for (after application of all amounts standing to the credit of the Liquidity Facility Reserve Account (if any)) all amounts of principal, interest, commitment fees and all other amounts due or accrued due but unpaid to the Liquidity Facility Agent and the Liquidity Facility Provider(s) under the terms of the Liquidity Facility Agreement (but excluding any Liquidity Subordinated Amounts); (c) third, pro rata according to the respective amounts thereof, to pay or provide for all amounts due and payable (if any) to: (i) the Hedge Provider pursuant to the Hedging Agreement (other than Hedging Agreement Subordinated Amounts); and (ii) the Borrower pursuant to the Issuer/Borrower Hedging Agreement (other than Borrower IB Hedging Subordinated Amounts); (d) fourth, to pay or provide for amounts in respect of guarantee fees and all other amounts then due to Ambac pursuant to the terms of the Ambac Guarantee and Reimbursement Agreement (other than (i) amounts provided for in items (f)(i), (f)(iii), (f)(v), (g)(i), (g)(iii) and (g)(v) below and (ii) Ambac Subordinated Fees); (e) fifth, to pay or provide for: (i) any amounts then due or to be provided for, remuneration then payable to the Account Bank, together with all other costs, charges, liabilities, expenses, indemnity amounts and losses incurred under the provisions of the Bank Agreement; and

81 (ii) any amounts then due or to be provided for, remuneration then payable to the Corporate Services Provider, together with all other costs, charges, liabilities, expenses, indemnity amounts and losses incurred under the provisions of the Corporate Services Agreement; (f) sixth, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A1 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of interest due but unpaid in respect of the Class A1 Debenture Bonds (other than Class A1 Step- Up Amounts), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A1 Debenture Bondholders the amounts described at (B) above; (ii) all amounts of interest due but unpaid in respect of the Class A2 Debenture Bonds (other than Class A2 Step-Up Amounts); (iii) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A3 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of interest due but unpaid in respect of the Class A3 Debenture Bonds (other than Class A3 Step- Up Amounts), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A3 Debenture Bondholders the amounts described at (B) above; (iv) all amounts of interest due or accrued due but unpaid in respect of the Class A4 Debenture Bonds (other than Class A4 Step-Up Amounts); and (v) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A5 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of interest due but unpaid in respect of the Class A5 Debenture Bonds (other than Class A5 Step- Up Amounts), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A5 Debenture Bondholders the amounts described at (B) above; (g) seventh, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A1 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of principal payable in respect of the Class A1 Debenture Bonds, until redemption in full, such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A1 Debenture Bondholders the amounts described at (B) above; (ii) all amounts of principal payable in respect of Class A2 Debenture Bonds, until redemption in full; (iii) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A3 Debenture Bondholders together with any interest on such amounts and (B) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A3 Debenture Bonds, until redemption in full, such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A3 Debenture Bondholders the amounts described at (B) above;

82 (iv) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A4 Debenture Bonds, until redemption in full; and (v) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A5 Debenture Bondholders together with any interest on such amounts; and (B) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A5 Debenture Bonds, until redemption in full, such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A5 Debenture Bondholders the amounts described at (B) above; (h) eighth, to pay or provide for payment of any other amount (including the Liquidity Subordinated Amounts but excluding any sums referred to in paragraph (B) above) due under the Liquidity Facility Agreement to the Liquidity Facility Agent and the Liquidity Facility Provider(s); (i) ninth, pro rata according to the respective amounts thereof, to pay or provide for amounts then due and payable by way of: (i) Redemption Premium Amount (if any) in respect of the Class A3 Debenture Bonds (including any accrued but unpaid interest thereon); (ii) Redemption Premium Amount (if any) in respect of the Class A4 Debenture Bonds (including any accrued but unpaid interest thereon); and (iii) Redemption Premium Amount (if any) in respect of the Class A5 Debenture Bonds (including any accrued but unpaid interest thereon); (j) tenth, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) Hedging Agreement Subordinated Amounts due and payable to the Hedge Provider under the Hedging Agreement; and (ii) Borrower IB Hedging Subordinated Amounts due and payable to the Borrower under the Issuer/Borrower Hedging Agreement; (k) eleventh, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) Ambac Subordinated Fees; (ii) Class A1 Step-Up Amounts; (iii) Class A2 Step-Up Amounts; (iv) Class A3 Step-Up Amounts; (v) Class A4 Step-Up Amounts; and (vi) Class A5 Step-Up Amounts, then due and payable; (l) twelfth, to pay or provide for the amounts then due and payable in respect of the Issuer’s obligations to pay interest on the LoanCo/Issuer Subordinated Loan; (m) thirteenth, to pay or provide for the amounts then due and payable in respect of the Issuer’s obligations to repay principal of the LoanCo/Issuer Subordinated Loan; (n) fourteenth, to pay or provide for remuneration then payable to the Servicer together with all other costs, charges, liabilities and expenses incurred under the provisions of the Servicing Agreement; and (o) fifteenth, the surplus (if any) to the Issuer.

Direction of the Debenture Bond Trustee and consent of Ambac As described in Investment Considerations – Conflicts of Interest above, the Issuer Deed of Charge will contain provisions requiring the Issuer Security Trustee to act only in accordance with the directions of the Debenture Bond Trustee. The Trust Deed provides for the Debenture Bond Trustee:

83 (i) whether or not there is any conflict of interest between two or more Classes of Debenture Bondholders and/or any other Issuer Secured Creditors, to act only at the direction of Ambac if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds and if no Ambac Termination Event has occurred; or (ii) if the aggregate Principal Amount Outstanding of Guaranteed Debenture Bonds is less than or equal to 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds and/or an Ambac Termination Event has occurred: (A) to act in such manner as it thinks fit, but subject to obtaining the consent of Ambac (provided that no Ambac Termination Event has occurred) where such action would, in the opinion of the Debenture Bond Trustee, affect the interests of the holders of the Guaranteed Debenture Bonds; and (B) to act at the direction of (1) where expressly permitted, the holders of at least 25 per cent. in Principal Amount Outstanding of all of the Debenture Bonds then outstanding; or (2) an Extraordinary Resolution of the Debenture Bondholders (subject to provisions for determining whether any such Extraordinary Resolution must be passed at a single Meeting of all Debenture Bondholders or the affected Class (as the case may be) or at separate Meetings of each Class of Debenture Bondholders); but subject, in either case, to obtaining the consent of Ambac (except if an Ambac Termination Event has occurred), if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 25 per cent., but not more than 50 per cent., of the aggregate Principal Amount Outstanding of all of the Debenture Bonds, in the case of a direction to accelerate the Debenture Bonds or to enforce the Issuer Security, subject, in all cases, to provisions for indemnification of the Debenture Bond Trustee as provided in the Trust Deed. For the purposes of paragraph (ii)(B) above, Ambac shall be treated as the holder of all the Guaranteed Debenture Bonds (except if an Ambac Termination Event has occurred). The foregoing provisions requiring the Debenture Bond Trustee to act at the direction of Ambac or only to act subject to obtaining its consent or providing for Ambac to be treated as the holder of all the Guaranteed Debenture Bonds do not apply in relation to the taking of action against Ambac and certain other matters (together, Debenture Bondholder Reserved Matters) described in the Conditions of the Debenture Bonds. In addition, the Transaction Documents contain provisions requiring the Obligors to obtain the Issuer Security Trustee’s consent to certain actions of the Obligors including in respect of the variation or waiver of any provision of the Transaction Documents. The relevant Transaction Documents provide that in certain circumstances the consent of the Issuer Security Trustee shall be given if certain conditions are satisfied at the relevant time, including if the Rating Agencies issue Rating Confirmations in respect of the Debenture Bonds (including the Underlying Rating) and the consent of Ambac (other than in respect of a request for Additional Term Advances or the incurrence of Additional Financial Indebtedness) (if required) is obtained. Where the Rating Agencies have provided Rating Confirmations to the Issuer with respect to an action under or in relation to the Transaction Documents or the Debenture Bonds, the Debenture Bond Trustee, in considering the No Material Prejudice Test shall (and, in relation to any Rating Confirmation by Fitch only, where the Debenture Bond Trustee considers that such Rating Confirmation is an appropriate test or the only appropriate test to apply in that circumstance) be entitled to take into account such Rating Confirmation provided that the Debenture Bond Trustee shall continue to be responsible for taking into account, for the purpose of the No Material Prejudice Test, all other matters which would be relevant to such No Material Prejudice Test. Any reference in this Offering Circular or the Transaction Documents to the consent of Ambac being required, notice required to be given to Ambac or any person to have regard to the interests of Ambac, any person being acceptable to Ambac or any direction or request by Ambac, shall only apply if any Class A1 Debenture Bonds, Class A3 Debenture Bonds or Class A5 Debenture Bonds are outstanding and no Ambac Termination Event has occurred and a reference to ‘‘if required’’ in respect of Ambac shall be construed accordingly. Each of the Issuer Secured Creditors (other than the Debenture Bondholders) will agree in the Issuer Deed of Charge that only the Issuer Security Trustee may enforce the security created

84 pursuant to the Issuer Deed of Charge and that it will not take any steps or pursue any action whatsoever (other than in accordance with the terms of the relevant Transaction Document) for the purpose of recovering any debts due or owing to it by the Issuer or to petition or procure the petitioning for the winding-up of the Issuer or to apply to the court for an administration order, file documents with the court for the appointment of an administrator or serve notice of intention to appoint an administrator, in each case, in respect of the Issuer unless an Issuer Enforcement Notice shall have been served or the Debenture Bond Trustee, having become bound to serve an Issuer Enforcement Notice and/or the Issuer Security Trustee having become bound to take any steps or proceedings to enforce the said security pursuant to the Issuer Deed of Charge, fails to do so within a reasonable period of becoming so bound and such failure is continuing (in which case each of such Issuer Secured Creditors shall be entitled to take any such steps and proceedings as it shall deem necessary other than the presentation of a petition for the winding-up of the Issuer or to apply to the court for an administration order, file documents with the court for the appointment of an administrator or serve notice of intention to appoint an administrator). Unless it is satisfied at that time that it is adequately indemnified and/or secured, the Issuer Security Trustee has absolute discretion to refrain from taking any action under the Issuer Deed of Charge. The Issuer Security will become enforceable upon service of an Issuer Enforcement Notice (as defined in Condition 11 (Enforcement)), provided that, if the Issuer Security has become enforceable otherwise than by reason of a default in payment of any amount due on the Debenture Bonds, the Issuer Security Trustee will not be entitled to dispose of the assets comprised in the Issuer Security or any part thereof unless either a sufficient amount would be realised to allow discharge in full of all amounts owing to the Debenture Bondholders and all amounts payable in priority thereto as set out in Priority of Payments – Post-Enforcement above, or the Issuer Security Trustee is of the opinion, which shall be binding on the Issuer Secured Creditors, reached after considering at any time and from time to time the advice of such professional advisers as are at the time selected by the Issuer Security Trustee, that the cash flow prospectively receivable by the Issuer will not (or that there is a significant risk that it will not) be sufficient, having regard to any other relevant actual, contingent or prospective liabilities of the Issuer, to discharge in full in due course all amounts owing to the Debenture Bondholders and all amounts payable in priority thereto as set out in – Priority of Payments – Post-Enforcement above and that the shortfall will (or there is a significant risk that it will) exceed the shortfall resulting from disposal of the assets comprised in the Issuer Security. The Issuer Deed of Charge will be governed by English law (other than in respect of any fixed charge over Scottish assets, which will be governed by Scots law).

Bank Agreement The Bank Agreement will be entered into on the Closing Date by the Borrower, the Issuer, the Account Bank, the Borrower Group Security Trustee and the Issuer Security Trustee. The Issuer will establish at the Account Bank the accounts described in paragraphs (a) and (b) below (the Bank Accounts) pursuant to the Bank Agreement: (a) Issuer Transaction Account: The proceeds of the issue of the Debenture Bonds will be credited to the Issuer Transaction Account on the Closing Date pending the making of the Term Advances. Payments of principal, interest and fees received from the Borrower under the Issuer/Borrower Facility Agreement will be paid into the Issuer Transaction Account, and amounts standing to the credit of the Issuer Transaction Account will be applied, inter alia,in making payments of interest and repayments of principal on the Debenture Bonds and payments to the Liquidity Facility Provider(s) under the Liquidity Facility Agreement; and (b) Liquidity Facility Reserve Account: the proceeds of any drawing made by the Issuer under the Liquidity Facility Agreement upon the occurrence of certain specified events (see – Liquidity Facility Agreement above) will be credited to the Liquidity Facility Reserve Account and to the extent that funds are available, payments of any Liquidity Shortfall will be paid by the Issuer from the Liquidity Facility Reserve Account. Other than the unit-level collection accounts referred to below, all of the Operating Accounts of the Borrower are maintained with the Account Bank and are the subject of the Bank Agreement. Under the Bank Agreement, the Account Bank will agree to operate and the Borrower, the Issuer and the Account Bank are prohibited from amending the mandates in relation to such accounts without the consent of the Borrower Group Security Trustee or, as the case may be, the Issuer Security

85 Trustee. The unit-level collection accounts are currently held with Alliance and Leicester/Girobank. Funds received into these collection accounts will be swept into the Borrower Operating Account, which is held with the Account Bank, on a daily basis (see Business of Spirit Group – Cash Collection below). The Bank Agreement will be governed by English law.

Servicing Agreement Under the Servicing Agreement, to be entered into on the Closing Date, AdminCo, as servicer (the Servicer), will agree to provide certain corporate administrative services to and on behalf of the Issuer. In addition, the Servicer will agree, subject to the consent of the Issuer Security Trustee on behalf of the Issuer to invest certain sums standing to the credit of the Issuer Transaction Account and the Liquidity Facility Reserve Account in Eligible Investments. For these purposes, Eligible Investments means: (a) Sterling gilt-edged securities; and/or (b) Sterling demand or time deposits, certificates of deposit and short-term debt obligations (including commercial paper), provided that in all cases such investments have a maturity date falling no later than the next following Interest Payment Date (unless the person making the investment determines that such moneys may be required towards payment of an amount under the Transaction Documents prior to such date) and the short-term unsecured, unguaranteed and unsubordinated debt obligations of the issuing or guaranteeing entity or the entity with which the demand or time deposits are made (being an authorised bank under the Financial Services and Markets Act 2000 (FSMA)) are rated ‘‘A-1’’ and ‘‘F1’’ and ‘‘P-1’’ (or equivalent) or higher by the Rating Agencies or are otherwise acceptable to the Rating Agencies and Ambac. The Servicing Agreement will be governed by English law.

Tax Deed of Covenant On or before the Closing Date, Spirit Holdings and, inter alios, the Borrower Group, BankCo, the Issuer, Issuer Parent, the Borrower Group Security Trustee and the Issuer Security Trustee will enter into a tax deed of covenant (the Tax Deed of Covenant). Pursuant to the Tax Deed of Covenant, among other things, all of the parties thereto which are members of Spirit Group will make representations and give warranties and covenants with a view to protecting the Issuer and Issuer Parent, the Borrower Group and the obligors under the BankCo and LoanCo Security Agreement from various tax-related risks. Among the matters covered by such representations, warranties and covenants are the clearances obtained from the UK tax authorities in relation to the Corporate Reorganisation, secondary tax liabilities, VAT grouping, tax residency, group tax matters and degrouping charges and thin capitalisation issues. The Tax Deed of Covenant will be given in favour of the Security Agent in respect of the BankCo/ LoanCo security group as well as the Borrower Group Security Trustee and the Issuer Security Trustee. Appropriate provision will be made setting out the respective rights of the Bank Security Agent and the Borrower Group Security Trustee in relation to the Tax Deed of Covenant. The Tax Deed of Covenant will be governed by English law.

Administrative Services Agreement On the Closing Date, the Borrower, AdminCo, the Borrower Group Security Trustee and SGPL will enter into an administrative services agreement (the Administrative Services Agreement), pursuant to which AdminCo will agree to provide or procure the provision to the Borrower of certain administrative services in respect of the Borrower Group Estate. These services will include the provision of all unit level and, to the relevant extent, non-unit level employees and certain centrally procured or provided services (including employee management services, payroll, cash management, IT infrastructure and software supply and maintenance, car leasing and other group wide arrangements). AdminCo will recharge to the Borrower the costs of providing all such services, and will also charge a fee of 5 per cent. of all such costs (other than the employment costs of those staff working exclusively in the pubs comprising the Borrower Group Estate) (the Service Fee). The Service Fee element will be payable quarterly in arrear, whereas the costs recharge will be payable as and when the relevant costs fall due for payment by AdminCo.

86 AdminCo’s only financial resources, other than the Service Fee and cost recharges payable by the Borrower (and other such amounts paid by other members of Spirit Group to which AdminCo will also provide services – e.g. BankCo), will be pursuant to the BankCo Working Capital Facility, funded by BankCo in turn from the revolving facility under the BankCo Loan. The availability of the BankCo Working Capital Facility may in some circumstances be subject to a drawstop.

Payment of the Service Fee will be suspended if certain trigger events occur, including:

(i) the appointment of a Financial Adviser, as referred to below;

(ii) the DSCR (OpFlex) is less than 1.30:1; and

(iii) a drawstop event has occurred and is continuing unremedied and unwaived under the BankCo Working Capital Facility.

Following repayment of the LoanCo Loan, if any such trigger event occurs, the Borrower will be required to establish over time a liquidity reserve up to the appropriate level, by retaining the Service Fee and amounts that would otherwise have been paid out by way of dividend or subordinated loan service. At the time of occurrence of the trigger event, the appropriate level of reserve will equate to the working capital facility then in place and being utilised by AdminCo, to the extent that, in consequence of such trigger event, that working capital facility ceases to be available to AdminCo and no alternative source of liquidity is then made available to AdminCo directly by third parties or via the Borrower working capital facility as described below. The appropriate level will reduce or will fall away to the extent that an alternative liquidity source (e.g. a new revolving credit facility) is available (or a facility that has ceased temporarily to be available becomes available again). While any amount remains outstanding under the original BankCo Loan, the appropriate level of this liquidity reserve may not exceed £50,000,000, without the consent of the facility agent in respect of the BankCo Loan. Following repayment of the BankCo Loan, the appropriate level will vary if and to the extent that the total amount of liquidity which AdminCo requires over time (while the reserving regime is in place) is determined by the board of AdminCo, acting reasonably, to be less or more than the initial liquidity requirement at the time of the trigger event. The Borrower may lend the liquidity reserve to AdminCo to enable AdminCo to meet its costs generally (and not just the costs and overheads of the Borrower). Once the liquidity reserve has reached the appropriate level, determined as referred to above, the Borrower may again start paying out the Service Fee, paying dividends and servicing the subordinated loan.

In order to address the liquidity concerns referred to above, in certain circumstances the Borrower will be entitled to obtain its own working capital facility which may be drawn to fund AdminCo’s working capital requirements (thereby reducing or eliminating the necessity to establish a liquidity reserve to the relevant extent) but only in any such case insofar as these relate solely to the Borrower’s business (see further – Issuer/Borrower Facility Agreement above).

In certain circumstances, the Borrower Group Security Trustee will be entitled to appoint a financial adviser, who can investigate, among other things, whether the costs recharged to the Borrower have been allocated in accordance with the Fair and Reasonable Principle (see further – Issuer/ Borrower Facility Agreement above).

The sole activity of AdminCo will be to act as a group services company. AdminCo will be permitted to enter into substantially equivalent administrative services arrangements with other members of Spirit Group (including BankCo, with whom it is proposed to enter into such an arrangement on Closing) and also, subject to certain safeguards intended to minimise the exposure of AdminCo and the members of Spirit Group constituting its main service recipients to third party credit risk, to provide services to certain existing and future joint ventures of Spirit Group and, on a transitional basis, to the purchaser of any company or business disposed of by Spirit Group for a short period following such disposal.

AdminCo will be entitled to terminate the Administrative Services Agreement only in the event of an unremedied payment default by the Borrower. The Borrower will be entitled to terminate the Administrative Services Agreement in the event of:

(a) the material or persistent unremedied default by AdminCo or if AdminCo ceases to be a member of the same corporate group as those companies to whom it provides administrative services (other than pursuant to the permitted Transfer provisions referred to below);

87 (b) on notice if, following a six month work-out period, additional costs arising in AdminCo from the termination of any equivalent group services arrangement (such as the BankCo administrative services agreement (the BankCo Administrative Services Agreement)) and recharged to the Borrower are not reduced to a level acceptable to the Borrower; or (c) voluntarily by the Borrower upon payment of a termination fee to cover all direct costs arising in AdminCo from such termination. In the event of the termination of the Administrative Services Agreement, depending on the grounds for such termination (and subject, in the case of a voluntary termination by the Borrower, to payment by the Borrower of the termination payment referred to above), the Borrower will be entitled to call for a transfer of all unit level and certain non-unit level employees in order to ensure that it can continue to operate the Borrower Group Estate and to facilitate, if desired, the sale of the Borrower Group Estate as a going concern. To the extent that any such employee transfer would not in any event be effected pursuant to the provisions of the Transfer of Undertaking (Protection of Employment) Regulations 1981 (as amended) (TUPE), the Administrative Services Agreement will provide a contractual framework intended to achieve the same results in the event of a valid termination thereof. AdminCo (or its successor) may outsource some or all of its functions in accordance with Spirit Group’s policy on outsourcing as at the Closing Date and/or in the ordinary course of the business of Spirit Group or its successor and/or similar to the contemporaneous practice of at least one other major participant in the pub industry. If the outsourcing: (i) commences after any Transfer of AdminCo’s obligations, as described below, and no share security has been granted over the shares in the Alternative Servicer (as defined below); and (ii) relates to payroll, information technology, cash management, and employee management services required for the management of the Borrower Group Estate or constitutes a material outsourcing of the Borrower unit level employees by way of a single transaction or a series of linked transactions with the same or related counterparties, then AdminCo will be required to procure that the Borrower Group Security Trustee is granted step-in rights in respect of any material contracts with the outsourced service provider. In the event of a merger of Spirit Group with another group of companies (being one of a named list of approved merger partners) in the five years following the Closing Date, AdminCo shall have the right, provided that no Borrower Group Event of Default, Borrower Group Potential Event of Default or termination event has occurred which is continuing under the Administrative Services Agreement, without the consent of the Borrower or the Borrower Group Security Trustee, to novate (Transfer) the Administrative Services Agreement to another member of the enlarged group (an Alternative Servicer, as further defined below) provided that, inter alia: (i) the relevant merger partner has certain minimum credit ratings at the time of announcement of the merger; (ii) the Back-to-Back Supply Agreement is novated to the Alternative Servicer; and (iii) AdminCo procures that the Alternative Servicer’s immediate holding company grants an equitable share mortgage in respect of its holding of shares in the Alternative Servicer and a negative pledge covenant to the Borrower Group Security Trustee, unless the relevant holding company is restricted from granting any such share mortgage or negative pledge covenant by the terms of any existing contractual arrangement or, in the reasonable opinion of AdminCo, the granting of that share mortgage or negative pledge covenant would be commercially prejudicial to the business of any member of the enlarged group. In addition to the right of AdminCo set out above, AdminCo will also have the right to effect a Transfer, at any time after the Closing Date, to any entity (whether or not it is part of the then Spirit Group) (also an Alternative Servicer) without the consent of the Borrower or the Borrower Group Security Trustee provided that, inter alia, at the time of completion of the Transfer: (i) it obtains confirmation from the Rating Agencies that the then current ratings in respect of the Class A2 Debenture Bonds and the Class A4 Debenture Bonds and the current Underlying Ratings of the Class A1 Debenture Bonds, Class A3 Debenture Bonds and Class A5 Debenture Bonds, will not be adversely affected notwithstanding any such Transfer; and (ii) the conditions set out in paragraphs (ii) and (iii) above have been complied with; and

88 (iii) arrangements are put in place with respect to the unit level staff of the Borrower which reflect the effect of TUPE legislation so that if the Borrower Group Security Trustee effects the disposal of the Borrower and the Borrower Group pursuant to enforcement of the Borrower Security or if the Administrative Services Agreement is otherwise lawfully terminated by the Borrower for any reason, substantially all the unit level staff will (subject only to their own consent in that respect) continue to provide their services to their respective units at the time of, and following, the disposal or termination. The Borrower Group Security Trustee will have the right in certain circumstances, including a Borrower Group Event of Default, a Borrower Potential Event of Default or an uncured/unwaived termination event under the Administrative Services Agreement, to require AdminCo to undertake such a Transfer to an entity which need not be a member of the then Spirit Group. In such circumstances, AdminCo would itself be precluded from effecting such a Transfer. The Borrower Group Security Trustee is party to the Administrative Services Agreement for certain purposes and, in particular, to facilitate enforcement of the security created in connection with the Administrative Services Agreement, comprising an equitable mortgage over the shares in AdminCo held by SGPL (which is also party to the Administrative Services Agreement for certain limited purposes). The Bank Security Agent will also have the benefit of a pari passu ranking equitable mortgage over the shares in AdminCo, but the Bank Security Agent has agreed that any enforcement of, and any proceedings in relation to, such equitable share mortgage can be conducted by the Borrower Group Security Trustee alone. The Administrative Services Agreement will be governed by English law.

Back-to-Back Supply Agreement On the Closing Date, the Borrower, AdminCo and the Borrower Group Security Trustee will enter into a back-to-back supply agreement with Spirit Supply (the Back-to-Back Supply Agreement), pursuant to which Spirit Supply will agree to provide or procure the provision to the pubs comprising the Borrower Group Estate of certain products and services, primarily food, (alcoholic and non-alcoholic) beverages and related distribution and technical services, pursuant to the terms of certain third party contracts entered into by Spirit Supply (or to be entered into in the future) on a group-wide basis exploiting the purchasing power of the entire Managed Estate. The Back-to- Back Supply Agreement sets out the framework within which the benefit of the relevant third party contracts (and any amendment, renewal or agreed replacement thereof within the agreed scope of the products and services to which the relevant agreement applies) will be supplied to the Borrower Group Estate, effectively on a cost-pass through basis. This will include, in the case of beer and certain other wet supplies provided by Carlsberg UK under Spirit Supply’s long term beer supply agreement with Carlsberg UK (see Business of Spirit Group – Beer Supply and Other Wet Goods Supplies above) the relevant pro rata proportion attributable to the Borrower Group Estate of certain historic compensation payments in respect of previously terminated beer supply agreements with Carlsberg UK which form part of the overall pricing structure of Spirit Supply’s Carlsberg UK long-term beer supply arrangements. In addition the Borrower will pay to Spirit Supply a fixed fee of £5,000 per month for its services. Spirit Supply’s only source of income is under the Back-to-Back Supply Agreement and any equivalent back-to-back supply arrangements it enters into with other Spirit Group companies (including BankCo). Spirit Supply’s sole activity is to act as the internal supply company for managed pub businesses owned by other members of Spirit Group, subject to the same limited exceptions for joint ventures and transitional service arrangements as are permitted in relation to AdminCo under the Administrative Services Agreement (see above). It is envisaged that Spirit Supply will enter into an equivalent back-to-back supply agreement with BankCo at Completion. Notwithstanding that certain of the third party contracts to which Spirit Supply is party contain minimum purchasing levels, these are not passed on to or imposed upon the Borrower pursuant to the Back-to-Back Supply Agreement (see Business of Spirit Group – Beer Supply and Other Wet Goods Supplies). The Borrower and AdminCo may only terminate the Back-to-Back Supply Agreement as a result of breach or insolvency of the other party, it being intended that otherwise the Back-to-Back Supply Agreement will last for the life of the underlying third party contracts. The Borrower Group Security Trustee is party to the Back-to-Back Supply Agreement for certain purposes and, in particular, to facilitate enforcement of security created in connection with the Back-to-Back Supply Agreement, comprising an equitable mortgage over the shares in Spirit Supply held by SGEL. The Bank Security Agent will also have the benefit of a pari passu ranking

89 equitable mortgage over the shares in Spirit Supply, but the Bank Security Agent has agreed that any enforcement of, and any proceedings in relation to, the equitable share mortgage can be conducted by the Borrower Group Security Trustee alone. The Back-to-Back Supply Agreement will be governed by English law.

Ambac Financial Guarantee On or about the Closing Date, Ambac will issue in favour of the Debenture Bond Trustee (as trustee for itself and on behalf of the Class A1 Debenture Bondholders, the Class A3 Debenture Bondholders and the Class A5 Debenture Bondholders) an unconditional and irrevocable financial guarantee (the Ambac Financial Guarantee) in respect of Scheduled Interest and Ultimate Principal each as described below of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds (see Form of Ambac Financial Guarantee below) provided that, to the extent that amounts are available to be drawn under the Liquidity Facility to make payments of interest on the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds, the Issuer is obliged to first draw under the Liquidity Facility. Upon any early redemption of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds or the Class A5 Debenture Bonds or an Issuer Event of Default, if not cured, the obligations of Ambac will continue to be to pay the relevant Guaranteed Amounts as they fall Due for Payment on each Interest Payment Date. Ambac will not be obliged under any circumstances to accelerate payment under the Ambac Financial Guarantee. However, if Ambac does so, it may do so in whole or in part and the amount payable by Ambac will be determined in accordance with Condition 6(c)(iv) (and any amount due in excess thereof will not be guaranteed by Ambac under the Ambac Financial Guarantee). For these purposes: Scheduled Interest has the meaning given in the Ambac Financial Guarantee. Ultimate Principal has the meaning given in the Ambac Financial Guarantee. Ambac Event of Default means, with respect to Ambac under the Ambac Financial Guarantee: (i) any Guaranteed Amount which is Due for Payment by Ambac under the Ambac Financial Guarantee and is not paid by Ambac within 2 Business Days of the date stipulated in the Ambac Financial Guarantee; (ii) Ambac disclaims, disaffirms, repudiates and/or challenges the validity of any of its obligations under the Ambac Financial Guarantee or seeks to do so; (iii) a court of competent jurisdiction enters a final and non-appealable order, judgment or decree for the winding-up, or the appointment of an administrator or receiver (including an administrative receiver or manager) of Ambac (or, as the case may be, of a material part of its property or assets); or (iv) Ambac: (A) presents any petition or takes any proceedings for the winding-up or the appointment of an administrator or receiver (including an administrative receiver or manager) of Ambac (or, as the case may be, of a material part of its property or assets); or (B) makes or enters into any general assignment, composition, arrangement (including, without limitation, a voluntary arrangement under Part 1 of the Insolvency Act 1986) or compromise with or for the benefit of any of its creditors; or (C) becomes unable to pay its debts within the meaning of Section 123(2) or Section 123(1)(e) of the Insolvency Act 1986 or admits in writing its inability, or fails generally, to pay its debts as they become due. Due for Payment has the meaning given in the Ambac Financial Guarantee. Guaranteed Amount means the Guaranteed Amount as defined in the Ambac Financial Guarantee. See Form of Ambac Financial Guarantee for a full description of the terms of the Ambac Financial Guarantee. The Ambac Guarantee will be governed by English law.

90 Ambac Guarantee and Reimbursement Agreement On the Closing Date the Issuer will enter into a guarantee and reimbursement agreement with Ambac (the Ambac Guarantee and Reimbursement Agreement) and will be obliged, inter alia, (a) to reimburse Ambac in respect of any payment made by Ambac under the Ambac Financial Guarantee; and (b) to pay any fees and expenses of Ambac in respect of the provision of the Ambac Financial Guarantee.

Increase in Ambac fee on ratings downgrade If, in certain circumstances, including where, following the incurrence of Additional Financial Indebtedness by the Issuer, the Underlying Ratings of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds or the Class A5 Debenture Bonds is downgraded to below investment grade and the Issuer has not (i) provided reinsurance acceptable to Ambac; or (ii) restructured the transaction so as to re-attain investment grade Underlying Ratings from both S&P and Moody’s, the fee payable by the Issuer to Ambac will be increased. This would result in increased costs to the Issuer and, under the Issuer/Borrower Facility Agreement, to the Borrower. In so far as Ambac makes payment under the Ambac Financial Guarantee in respect of Guaranteed Amounts, it shall be subrogated to the rights of the Class A1 Debenture Bondholders, the Class A3 Debenture Bondholders or the Class A5 Debenture Bondholders (as the case may be) against the Issuer in respect of any payments made. The Ambac Guarantee and Reimbursement Agreement will be governed by English law.

Other Facilities and Loans Pursuant to the BankCo Loan Agreement: (a) a secured term loan facility in a maximum aggregate principal amount of £550,000,000; and (b) a secured revolving loan facility in a maximum aggregate principal amount of £50,000,000, will be made available to BankCo on the Closing Date. The LoanCo Banks will advance £275,000,000 to LoanCo on the Closing Date pursuant to the LoanCo Loan Agreement.

Subordinated Loans New FinCo/LoanCo Subordinated Loan Agreement On the Closing Date, New FinCo will advance a subordinated loan of £700,000,000 to LoanCo pursuant to the New FinCo/LoanCo Subordinated Loan Agreement from the proceeds of an intra- group recapitalisation of Spirit Group.

LoanCo/BankCo Subordinated Loan On the Closing Date, LoanCo will advance a subordinated loan of £650,000,000 to BankCo pursuant to the LoanCo/BankCo Subordinated Loan Agreement from the proceeds of the New FinCo/LoanCo Subordinated Loan.

BankCo/Borrower Subordinated Loan Agreement On the Closing Date, BankCo will advance a subordinated loan of £550,000,000 to the Borrower pursuant to the BankCo/Borrower Subordinated Loan Agreement from the proceeds of the LoanCo/ BankCo Subordinated Loan.

LoanCo/Issuer Subordinated Loan Agreement On the Closing Date, LoanCo will advance a subordinated loan of £50,000,000 to the Issuer pursuant to the LoanCo/Issuer Subordinated Loan Agreement.

Issuer/Borrower Subordinated Loan Agreement On the Closing Date, the Issuer will advance the proceeds of the LoanCo/Issuer Subordinated Loan to the Borrower pursuant to the Issuer/Borrower Subordinated Loan Agreement. Each of the New FinCo/LoanCo Subordinated Loan Agreement, the LoanCo/BankCo Subordinated Loan Agreement, the BankCo/Borrower Subordinated Loan Agreement, the LoanCo/Issuer Subordinated Loan Agent and the Issuer/Borrower Subordinated Loan Agreement will be governed by English law.

91 USE OF PROCEEDS

The gross proceeds from the issue of the Debenture Bonds will be £1,295,000,000 and the net proceeds net of the premium from the issue of the Debenture Bonds will be £1,250,000,000 and on the Closing Date, the Issuer will, upon satisfaction of certain conditions precedent (as described in Summary of Principal Documents – Conditions Precedent to Drawdown) subject to and in accordance with the Issuer/Borrower Facility Agreement, make the Term A1 Advance to the Borrower in a principal amount of £150,000,000, the Term A2 Advance to the Borrower in a principal amount of £200,000,000, the Term A3 Advance to the Borrower in a principal amount of £250,000,000, the Term A4 Advance to the Borrower in a principal amount of £350,000,000 and the Term A5 Advance to the Borrower in a principal amount of £300,000,000. On the Closing Date, upon receipt by the Borrower of Term Advances from the Issuer, the Borrower will apply the proceeds as follows: (a) in or towards discharging the consideration for the acquisition (Acquisition) by the Borrower of the assets and undertaking of certain pubs from SGL and certain SNR Group subsidiaries (see Corporate Reorganisation below); and/or (b) in or towards the payment of costs and expenses relating to the Acquisition and the Refinancing. The issue by Spirit Group through the Issuer of the Debenture Bonds will both directly provide external funds for the Refinancing and indirectly assist with other aspects of that Refinancing. For example, the premium generated through the issue of the classes of Debenture Bonds being issued at an Issue Price greater than par will be used to assist, indirectly, in the closing-out costs arising from the termination of certain of the Existing Hedges.

92 THE ISSUER

Introduction The Issuer was incorporated in England and Wales on 21 October, 2004 as a public company with limited liability under the name Spirit Issuer plc with registered number 5266745. The registered office of the Issuer is c/o SPV Management Limited, Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ. The authorised share capital of the Issuer is £50,000 divided into 50,000 ordinary shares of £1 each, 50,000 of which are issued. 49,999 of those shares are held by Spirit Issuer Parent Limited (Issuer Parent) and one is held by Robin Baker (on trust for Spirit Issuer Parent Limited).

Principal Activities The objects of the Issuer are set out in Clause 4 of its Memorandum of Association, pursuant to which the Issuer is permitted, inter alia, to issue the Debenture Bonds and to lend the proceeds thereof to the Borrower. The Issuer has not engaged, since its incorporation, in any activities other than those incidental to its incorporation, the authorisation and issue of the Debenture Bonds and of the other documents and matters referred to or contemplated in this Offering Circular to which it is or will be a party and any matters which are incidental or ancillary to the foregoing. There have been no recent developments (save for the transactions referred to or contemplated in this Offering Circular) with respect to the Issuer since 21 October, 2004 (being the date of its incorporation). There is no intention to accumulate surpluses in the Issuer except in the circumstances set out in Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments and Use of Proceeds above. The Issuer will covenant to continue to observe certain restrictions on its activities which are detailed in Condition 4 (Covenants) of the Debenture Bonds below.

Directors and Company Secretary The directors of the Issuer and their respective business addresses are:

Mark Filer c/o SPV Management Limited Tower 42 (Level 11) International Financial Centre 25 Old Broad Street London EC2N 1HQ

SPV Management Limited Tower 42 (Level 11) International Financial Centre 25 Old Broad Street London EC2N 1HQ

Karen Jones 6th Floor, Watson House 54 Baker Street, London W1U 7DA The company secretary of the Issuer is SPV Management Limited. As at the date hereof, the Issuer has no employees.

93 Capitalisation and indebtedness statement The capitalisation and indebtedness of the Issuer extracted from the unaudited records of the Issuer as at the date of this Offering Circular, as adjusted for the issue of the Debenture Bonds (net of the premium), is as follows:

Share capital

Authorised: £50,000 divided into 50,000 ordinary shares of £1 each...... £50,000

Issued: 50,000 ordinary shares of £1 each, 49,998 issued paid up as to £0.25 and 2 issued fully paid...... £12,501.50

Loan capital

£150,000,000 Floating Rate Class A1 Secured Debenture Bonds due 2028.. 150,000,000

£200,000,000 Floating Rate Class A2 Secured Debenture Bonds due 2031.. 200,000,000

£250,000,000 Fixed/Floating Rate Class A3 Secured Debenture Bonds due 2021 ...... 250,000,000

£350,000,000 Fixed/Floating Rate Class A4 Secured Debenture Bonds due 2027 ...... 350,000,000

£300,000,000 Fixed/Floating Rate Class A5 Secured Debenture Bonds due 2034 ...... 300,000,000

£50,000,000 subordinated loan from Spirit Managed Funding Limited ...... 50,000,000

Total capitalisation and indebtedness: £1,300,012,501.50

Save for the foregoing, as at the date of this Offering Circular, the Issuer has no borrowings or indebtedness in the nature of borrowings (including loan capital issued or created but unissued), term loans, liabilities under acceptances or acceptance credits, mortgages, charges, convertible debt securities, debt securities with warrants attached or guarantees or other contingent liabilities.

94 ISSUER PARENT

Introduction Issuer Parent was incorporated in England and Wales on 15 October, 2004 as a company with limited liability under the name Spirit Issuer Parent Limited with registered number 5260533. The registered office of Issuer Parent is c/o SPV Management Limited, Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ. The authorised share capital of Issuer Parent is £100 divided into 100 ordinary shares of £1 each, of which 100 are issued and held on behalf of charitable trusts by SPV Management Limited.

Principal Activities The objects of Issuer Parent are set out in Clause 3 of its Memorandum of Association, pursuant to which Issuer Parent is permitted, inter alia, to hold the shares in the Issuer. Issuer Parent has not engaged, since its incorporation, in any activities other than those incidental to its incorporation and those matters referred to or contemplated in this Offering Circular to which it is or will be a party and matters which are incidental or ancillary to the foregoing. There have been no recent developments (save for the transactions referred to or contemplated in this Offering Circular) with respect to Issuer Parent since 15 October, 2004 (being the date of its incorporation). There is no intention to accumulate surpluses in Issuer Parent except in the circumstances set out in Summary of Principal Documents – Issuer Deed of Charge – Priority of Payments and Use of Proceeds above.

Directors and Company Secretary The directors of the Issuer Parent and their respective business addresses are:

Mark Filer c/o SPV Management Limited Tower 42 (Level 11) International Financial Centre 25 Old Broad Street London EC2N 1HQ

SPV Management Limited Tower 42 (Level 11) International Financial Centre 25 Old Broad Street London EC2N 1HQ

Karen Jones 6th Floor, Watson House 54 Baker Street, London W1U 7DA The company secretary of Issuer Parent is SPV Management Limited. As at the date hereof the Issuer Parent has no employees.

95 Capitalisation and Indebtedness Statement The capitalisation and indebtedness of the Issuer Parent extracted from the unaudited records of the Issuer as at the date of this Offering Circular is as follows:

Share capital

Authorised: £100 divided into 100 ordinary shares of £1 each...... £100

Issued: 100 ordinary shares of £1, issued fully paid or credited as fully paid...... £100

Total capitalisation and indebtedness £100

Save for the foregoing, as at the date of this Offering Circular, Issuer Parent has no borrowings or indebtedness in the nature of borrowings (including loan capital issued or created but unissued), term loans, liabilities under acceptances or acceptance credits, mortgages, charges, convertible debt securities, debt securities with warrants attached or guarantees or other contingent liabilities.

96 THE BORROWER

Introduction The Borrower was incorporated in England and Wales on 25 October, 2004 as a private company with limited liability under the name Spirit Managed Pubs Limited (registered number 5269240). The registered office of the Borrower is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ. The authorised share capital of the Borrower is £100 divided into 100 ordinary shares of £1 each, of which 2 are issued and held by Spirit Pubs Parent Limited.

Principal Activities The principal objects of the Borrower are set out in Clause 3 of its Memorandum of Association and are, inter alia, to carry on the business of a property investment company and an investment holding company and a beer and other wet products supply company, to enter into loan arrangements and derivative contracts and to issue securities and financial instruments, and to raise or borrow money and to grant security over its assets for such purposes and to lend money with or without security. The Borrower has not engaged, since its incorporation, in any activities other than those incidental to its incorporation and those matters referred to or contemplated in this Offering Circular and any matters which are incidental or ancillary to the foregoing.

Directors and Company Secretary The directors of the Borrower and their respective business addresses are:

Karen Jones 6th Floor, Watson House 54 Baker Street London W1U 7DA Benedict Smith 6th Floor, Watson House 54 Baker Street London W1U 7DA Cornel Riklin Stirling Square 5-7 Carlton Gardens London SW1Y 5AD The company secretary of the Borrower is Derek Walmsley. As at the date hereof the Borrower has no employees.

97 Capitalisation and Indebtedness Statement The capitalisation and indebtedness of the Borrower extracted from the unaudited records of the Borrower as at the date of this Offering Circular, as adjusted for the Term Advances, is as follows:

Share capital

Authorised: £100 divided into 100 ordinary shares of £1 each...... £100

Issued: 2 ordinary shares of £1, issued fully paid or credited as fully paid...... £2

Loan capital

£150,000,000 Term A1 Facility ...... 150,000,000

£200,000,000 Term A2 Facility ...... 200,000,000

£250,000,000 Term A3 Facility ...... 250,000,000

£350,000,000 Term A4 Facility ...... 350,000,000

£300,000,000 Term A5 Facility ...... 300,000,000

£550,000,000 subordinated loan from Spirit Managed Inns Limited...... 550,000,000

£50,000,000 subordinated loan from Spirit Issuer plc...... 50,000,000

Total capitalisation and indebtedness 1,850,000,002

Save for the foregoing, at the date of this Offering Circular, the Borrower does not have any borrowings or indebtedness in the nature of borrowings apart from intra-group liabilities (including loan capital issued or created but unissued), term loans, liabilities under acceptances or acceptance credits, mortgages, charges, convertible debt securities, debt securities with warrants attached or guarantees or other contingent liabilities.

98 SPL

Introduction SPL was incorporated in England and Wales on 16 August, 2001 with registered number 4271748 as a private company with limited liability under the name of Trushelfco (No. 2848) Limited. The name was changed to PM Parent Limited on 7 December, 2001 and to SPL on 24 July, 2002. The registered office of SPL is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ. The authorised share capital of SPL is £100 divided into 100 ordinary shares of £1 each, of which 4 are issued and held by Spirit Financial Holdings Limited.

Principal Activities The principal objects of SPL are set out in Clause 3 of its Memorandum of Association and are, inter alia, to carry on the business of a property investment company and an investment holding company, to enter into loan arrangements and derivative contracts and to issue securities and financial instruments, and to raise or borrow money and to grant security over its assets for such purposes and to lend money with or without security. SPL has not engaged, since its incorporation, in any activities other than those incidental to its incorporation and those matters referred to or contemplated in this Offering Circular and any matters which are incidental or ancillary to the foregoing. There have been no recent developments with respect to SPL since 23 August, 2003 (being the date to which the most recent audited financial accounts were prepared) except as disclosed herein. SPL will covenant to observe certain restrictions on its activities which are further described in Summary of Principal Documents – Issuer/Borrower Facility Agreement above.

Directors and Company Secretary The directors of SPL and their respective business addresses are:

Stephen Peel Stirling Square 5-7 Carlton Gardens London SW1Y 5AD

Benedict Smith 6th Floor, Watson House 54 Baker Street, London W1U 7DA

Cornel Riklin Stirling Square 5-7 Carlton Gardens London SW1Y 5AD

Karen Jones 6th Floor, Watson House 54 Baker Street, London W1U 7DA

SPV Management Limited Tower 42 (Level 11) International Financial Centre 25 Old Broad Street London EC2N 1HQ The company secretary of SPL is Derek Walmsley. As at the date hereof SPL has no employees.

99 Capitalisation and Indebtedness Statement The capitalisation and indebtedness of SPL extracted from the unaudited records of SPL as at the date of this Offering Circular is as follows:

Share capital

Authorised: £100 divided into 100 ordinary shares of £1 each £100

Issued: 4 ordinary shares of £1, issued fully paid or credited as fully paid £4 Share premium account £39,995,999

Loan capital

Inter-company indebtedness £14,845

Total capitalisation and indebtedness £40,010,848

Note – SPL is, as at the date hereof, an obligor under a deed of charge between, inter alios, TCL and Deutsche Trustee Company Limited. However, the security granted under this deed of charge is expected to be released on the Closing Date. Save for the foregoing, at the date of this Offering Circular, SPL has no borrowings or indebtedness in the nature of borrowings (including loan capital issued or created but unissued), term loans, liabilities under acceptances or acceptance credits, mortgages, charges, convertible debt securities, debt securities with warrants attached or guarantees or other contingent liabilities.

100 BORROWER GROUP PARENT

Introduction Borrower Group Parent was incorporated in England and Wales on 21 October, 2004 as a private company with limited liability under the name of Spirit Pubs Holdings Limited with registered number 5266779. The registered office of Borrower Group Parent is at 107 Station Street, Burton- on-Trent, Staffordshire DE14 1BZ. The authorised share capital of Borrower Group Parent is £100 divided into 100 ordinary shares of £1 each, of which 2 are issued and held by SPL.

Principal Activities The principal objects of Borrower Group Parent are set out in Clause 3 of its Memorandum of Association and are, inter alia, to carry on the business of a property investment company and an investment holding company, to enter into loan arrangements and derivative contracts and to issue securities and financial instruments, and to raise or borrow money and to grant security over its assets for such purposes and to lend money with or without security. Borrower Group Parent has not engaged, since its incorporation, in any activities other than those incidental to its incorporation and those matters referred to or contemplated in this Offering Circular and any matters which are incidental or ancillary to the foregoing.

Directors and Company Secretary The directors of Borrower Group Parent and their respective business addresses are:

Karen Jones 6th Floor, Watson House 54 Baker Street London W1U 7DA Benedict Smith 6th Floor, Watson House 54 Baker Street London W1U 7DA Cornel Riklin Stirling Square 5-7 Carlton Gardens London SW1Y 5AD Stephen Peel Stirling Square 5-7 Carlton Gardens London SW1Y 5AD The company secretary of Borrower Group Parent is Derek Walmsley. As at the date hereof Borrower Group Parent has no employees.

101 Capitalisation and Indebtedness Statement The capitalisation and indebtedness of Borrower Group Parent extracted from the unaudited records of Borrower Group Parent as at the date of this Offering Circular is as follows:

Share capital

Authorised: £100 divided into 100 ordinary shares of £1 each...... £100

Issued: 2 ordinary shares of £1, issued fully paid or credited as fully paid...... £2

Total capitalisation and indebtedness £2

Save for the foregoing, at the date of this Offering Circular, Borrower Group Parent has no borrowings or indebtedness in the nature of borrowings (including loan capital issued or created but unissued), term loans, liabilities under acceptances or acceptance credits, mortgages, charges, convertible debt securities, debt securities with warrants attached or guarantees or other contingent liabilities.

102 NEW PARENTCO

Introduction New ParentCo was incorporated in England and Wales on 22 October, 2004 as a private company with limited liability under the name Spirit Pubs Parent Limited with registered number 5267589. The registered office of New ParentCo is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ. The authorised share capital of New ParentCo is £100 divided into 100 ordinary shares of £1 each, of which 2 are issued and held by Borrower Group Parent.

Principal Activities The principal objects of New ParentCo are set out in Clause 3 of its Memorandum of Association and are, inter alia, to carry on the business of a property investment company and an investment holding company, to enter into loan arrangements and derivative contracts and to issue securities and financial instruments, to raise or borrow money, to grant security over its assets for such purposes and to lend money with or without security. New ParentCo has not engaged, since its incorporation, in any activities other than those incidental to its incorporation and those matters referred to or contemplated in this Offering Circular and any matters which are incidental or ancillary to the foregoing.

Directors and Company Secretary The directors of New ParentCo and their respective business addresses are:

Karen Jones 6th Floor, Watson House 54 Baker Street London W1U 7DA Benedict Smith 6th Floor, Watson House 54 Baker Street London W1U 7DA Cornel Riklin Stirling Square 5-7 Carlton Gardens London SW1Y 5AD The company secretary of New ParentCo is Derek Walmsley. As at the date hereof New ParentCo has no employees.

103 Capitalisation and Indebtedness Statement The capitalisation and indebtedness of New ParentCo extracted from the unaudited records of New ParentCo as at the date of this Offering Circular is as follows:

Share capital

Authorised: £100 divided into 100 ordinary shares of £1 each...... £100

Issued: 2 ordinary shares of £1, issued fully paid or credited as fully paid...... £2

Total capitalisation and indebtedness £2

Save for the foregoing, at the date of this Offering Circular, New ParentCo has no borrowings or indebtedness in the nature of borrowings (including loan capital issued or created but unissued), term loans, liabilities under acceptances or acceptance credits, mortgages, charges, convertible debt securities, debt securities with warrants attached or guarantees or other contingent liabilities.

104 AMBAC ASSURANCE UK LIMITED

General Ambac is a direct wholly-owned subsidiary of Ambac Assurance Corporation (Ambac Assurance), a monoline insurance company incorporated under the laws of the State of Wisconsin, U.S.A. Ambac was incorporated with limited liability in England on 11 September, 1996 pursuant to the Companies Act 1985 with registered number 3248674. Ambac became authorised to transact a credit, suretyship and financial loss insurance business in the United Kingdom on 8 February, 1997. Ambac is also licensed to offer insurance services into 13 other European countries on a freedom of services basis. Ambac’s registered office is located at Hasilwood House, 60 Bishopsgate, London EC2N 4BE, United Kingdom. Ambac has no subsidiaries.

Ratings Ambac has obtained ‘‘AAA’’/‘‘Aaa’’/‘‘AAA’’ financial strength ratings from S&P, Moody’s, and Fitch.

Information Copies of the annual regulatory return filed by Ambac with the Financial Services Authority (FSA) and the annual financial statements filed with the Registrar of Companies in the United Kingdom are available upon request to Ambac at its registered office. Copies of the statutory quarterly and annual statements filed by Ambac Assurance in the United States are available upon request to Ambac Assurance at its principal place of business, One State Street Plaza, New York, NY 10004, USA.

Recent Developments Since 31 December, 2003, the date as at which its latest audited accounts were prepared, Ambac has continued to conduct its insurance business in the United Kingdom and the other European countries into which it is licensed to offer insurance services. There has been no material adverse change in its financial or trading position since 31 December, 2003.

Directors of Ambac The following sets forth a list of the directors of Ambac by name and principal activity:

Name Function Principal Activities

Robert John Genader Executive President and Chief Executive Officer, Ambac Assurance Corporation and Ambac Financial Group Inc. John Wyatt Uhlein III Executive Executive Vice President, Ambac Assurance Corporation and Ambac Financial Group, Inc. and Chairman, Ambac Assurance UK Limited Martin Roberts Non-Executive Independent Consultant Director, Financial Management Assurance Consultants Ltd. David William Wallis Executive Managing Director, Ambac Assurance Corporation David Ronald Larwood Executive Secretary and Financial Controller (part-time) Ambac Assurance UK Limited Director, Stonebridge International Insurance Co. Ltd. The business address of Messrs. Genader, Uhlein and Wallis is One State Street Plaza, New York, NY 10004, U.S.A. The business address of Messrs. Roberts and Larwood is Hasilwood House, 60 Bishopsgate, London EC2N 4BE, United Kingdom.

Insurance Regulation Ambac is subject to regulation by the FSA in the conduct of its insurance business in the United Kingdom. Under United Kingdom regulations, Ambac is subject to certain limits and requirements, including the maintenance of a minimum margin of solvency and the establishment of loss and unearned premium reserves. Other FSA requirements include regulation of transactions with connected persons and investments made by Ambac.

105 Financial Information The audited accounts of Ambac for the year ended 31 December, 2003 are annexed at the Appendix hereto. Ambac does not prepare quarterly accounts.

Capitalisation and Indebtedness The following table sets forth the audited capitalisation and indebtedness of Ambac prepared in accordance with the provisions of Section 255 of, and Schedule 9A to, the Companies Act 1985, and in accordance with applicable accounting standards and under the historical cost accounting rules, modified to include the revaluation of investments, and comply with the Statement of Recommended Practice issued by the Association of British Insurers as at 31 December, 2003.

As at 31 December, 2003 (£) Short-term debt(1) ...... 0 Long-term debt(1)...... 0

Total Issued and Paid up Share Capital(2) ...... 17,000,000 Profit and Loss Account ...... 4,539,000

Total Shareholders’ Equity...... 21,539,000

Notes: (1) On 31 December, 2003 Ambac did not have any reserves, loan capital outstanding or created but unissued, term loans or any other borrowings or indebtedness in the nature of a borrowing, including bank overdrafts and liabilities under acceptances or acceptance credits, mortgages, charges, finance lease commitments, hire purchase obligations or guarantees or contingent liabilities. (2) As at 31 December, 2003 the issued and paid up share capital of Ambac comprised 17,000,000 ordinary shares of £1 each. This was increased to 22,000,000 ordinary shares of £1 each on 29 March, 2004. The authorised share capital of Ambac is £60 million. There has been no material change in the authorised and issued share capital, capitalisation or indebtedness (including guarantees or contingent liabilities) of Ambac since 31 December, 2003.

Auditors Ambac’s auditors are KPMG Audit Plc, 8 Salisbury Square, London EC4Y 8BB. Their reports on the audited accounts of Ambac for the year ended 31 December, 2003 are included in Appendix – Financial Statements of Ambac for the year ended 31 December, 2003 below.

106 AMBAC ASSURANCE CORPORATION

General Ambac Assurance Corporation (Ambac Assurance) is a leading financial guarantee insurance company that is primarily engaged in insuring municipal and structured finance obligations and is the successor of the oldest municipal bond insurance company, which wrote the first municipal bond insurance policy in 1971. Ambac Assurance was incorporated in the State of Wisconsin, U.S.A. with limited liability on 25 February, 1970. Ambac Assurance maintains its principal executive offices at One State Street Plaza, New York, NY 10004, U.S.A. Ambac Assurance is a wholly-owned subsidiary of Ambac Financial Group, Inc., a holding company that provides financial guarantee insurance and financial services to both public and private clients around the world. Financial guarantee insurance written by Ambac Assurance in both the primary and secondary markets guarantees payment when due of the principal of and interest on the obligation insured. In the case of a default on the insured obligation, payments under the insurance policy may not be accelerated by the policyholder without Ambac Assurance’s consent. Ambac Assurance primarily insures newly issued obligations and seeks to maintain a diversified insurance portfolio which spreads its risk across a number of criteria, including issue size, type of bond, geographic area and issuer. At 30 September, 2004, Ambac Assurance’s net par outstanding and net insurance in force was U.S.$442.8 billion and U.S.$659.0 billion, respectively. Ambac Assurance has been assigned triple-A financial strength ratings by Moody’s, S&P, Fitch, Inc. and Rating and Investment Information, Inc. These ratings are an essential part of Ambac Assurance’s ability to provide credit enhancement. See – Rating Agencies below. Ambac Assurance has nine wholly-owned subsidiaries: Ambac Assurance UK Limited, a UK licensed insurance company, Ambac Credit Products, LLC, Ambac Capital Services, LLC, Ambac Credit Products Limited and Ambac Financial Services, LLC, derivatives companies, Ambac Private Holdings, LLC, a company that owns and invests in securities, Ambac Japan Co., Ltd., a Japanese services company which markets financial guarantees in Japan, and Connie Lee Holdings, Inc., a holding company for Connie Lee Insurance Company (Connie Lee). Ambac Assurance acquired Connie Lee in December 1997. Connie Lee, a triple-A rated financial guarantee insurance company, which guaranteed bonds issued primarily for college and hospital infrastructure projects, is not expected to write any new business.

Financial guarantee industry overview Financial guarantee insurance generally guarantees to the holder of the underlying obligation the timely payment of principal of and interest on such obligation in accordance with such obligation’s original payment schedule. Accordingly, in the case of an issuer default on the insured obligation, payments under the insurance policy may not be accelerated by the policyholder without Ambac Assurance’s consent. Financial guarantee insurance provides a form of credit enhancement that benefits both the issuer and the investor. Issuers benefit because their securities are generally sold with a higher credit rating than securities sold on a stand-alone basis, resulting in interest cost savings and greater marketability. In addition, for complex financings and obligations of issuers that are not well-known by investors, insured obligations receive greater market acceptance than uninsured obligations. Investor’s benefit from greater marketability and a reduction in the risk of loss associated with an issuer’s default.

Structured finance obligations Insurance on structured finance or asset-backed obligations is typically issued in connection with transactions in which the securities being issued are secured by or payable from a specific pool of assets having an ascertainable cash flow or market value and held by a special purpose issuing entity. While most structured finance obligations are secured by or represent an interest in pools of assets, monoline financial guarantors have also insured asset-backed obligations secured by one of a few assets.

Municipal obligations Municipal obligations and municipal bonds include taxable and tax-exempt bonds, notes and other evidences of indebtedness issued by states, political subdivisions (cities, counties, towns and villages), water, sewer and other utility districts, higher educational institutions, hospitals,

107 transportation and housing authorities and other similar agencies. Municipal obligations are supported by the taxing authority of the issuer or the issuer’s or underlying obligor’s ability to collect fees or assessments for certain projects or public services. References herein to municipal bonds and municipal obligations are to debt obligations of states and other political subdivisions in the United States.

International Finance Obligations Outside of the United States, structured and asset-backed issuers, utilities, sovereign and sub-sovereign issuers, and other issuers are increasingly using financial guarantee products, particularly in markets throughout Western Europe. A number of important trends in international markets have contributed to this expansion. In the United Kingdom, Australia and elsewhere, ongoing privatisation efforts have shifted the burden of funding from the government to the public and private capital markets, where investors may seek the security of financial guarantee products. In Europe, Australia, Japan and the emerging markets, there is also growing interest in asset- backed securitisations.

Insurance Written Ambac Assurance sells most of its insurance in the new issue U.S. bond market. During the nine months ended 30 September, 2004, Ambac Assurance insured gross par amount of U.S.$82.9 billion, of which U.S.$31.0 billion, or 37 per cent., was related to new issue and secondary market policies on municipal bonds. Approximately U.S.$38.0 billion, or 46 per cent. of gross par written during the nine months ended 30 September, 2004, represented domestic (U.S.) structured finance exposure. Approximately U.S.$13.9 billion, or 17 per cent. of gross par written during the nine months ended 30 September, 2004, represented international exposure.

Rating Agencies Moody’s, S&P, Fitch, Inc., and Rating and Investment Information, Inc. periodically review the business and financial condition of Ambac Assurance and other companies providing financial guarantee insurance. Rating agency reviews focus on the insurer’s underwriting policies and procedures and the quality of the obligations insured. The rating agencies frequently perform assessments of the credits insured by Ambac Assurance to confirm that Ambac Assurance continues to meet the capital allocation criteria considered necessary by the particular rating agency to maintain Ambac Assurance’s triple-A financial strength ratings. A rating by Moody’s, S&P, Fitch or Rating and Investment Information, Inc., however, is not a ‘‘market rating’’ or a recommendation to buy, hold or sell any security. Ambac Assurance’s ability to attract new business, or to compete with other triple-A rated financial guarantors, and its results of operations and financial condition, would be materially adversely affected by any reduction in its financial strength ratings.

Reinsurance U.S. State insurance laws and regulations (as well as the rating agencies) impose minimum capital requirements on financial guarantee insurance companies, limiting the aggregate amount of insurance which may be written and the maximum size of any single risk exposure which may be assumed. Such companies can use reinsurance to diversify risk, increase underwriting capacity, reduce additional capital needs, stabilise shareholder returns and strengthen financial ratios. See Insurance Regulatory Matters below. As a primary insurer, Ambac Assurance is required to honour its obligations to its policyholders whether or not its reinsurers perform their obligations under the various reinsurance agreements with Ambac Assurance. Ambac Assurance has surplus share treaties with various reinsurers, which provide for a program of reinsurance with respect to large risks underwritten by Ambac Assurance in the public finance and structured finance sectors. Ambac Assurance has entered into municipal bond and structured and international finance facultative reinsurance agreements. These agreements allow Ambac Assurance to reduce its large risks, to manage its portfolio of insurance by bond type and geographic distribution, and to provide additional capacity for frequent municipal bond issuers. Under these agreements, portions of Ambac Assurance’s interests and liabilities are ceded on an issue-by-issue basis. A ceding commission is withheld to defray Ambac Assurance’s underwriting expenses.

108 As of 30 September, 2004, Ambac Assurance had retained 90 per cent. of its gross insurance in force of U.S.$728.8 billion and had ceded approximately 10 per cent. to its treaty and facultative reinsurers.

Insurance Regulatory Matters General Law Ambac Assurance is licensed to do business as an insurance company in all 50 states of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the territory of Guam and the U.S. Virgin Islands. It is subject to the insurance laws and regulations of the State of Wisconsin, its state of incorporation, and the insurance laws and regulations of other states in which it is licensed to transact business, particularly the State of New York, which has a comprehensive financial guarantee insurance law. These laws and regulations, as well as the level of supervisory authority that may be exercised by the various state insurance departments, vary by jurisdiction, but generally require insurance companies to maintain minimum standards of business conduct and solvency, meet certain financial tests, including single risk limits and minimum policyholders’ surplus and reserve levels, file certain reports with regulatory authorities, including information concerning their capital structure, ownership and financial condition, and require prior approval of certain changes in control of domestic insurance companies and their direct and indirect parents and the payment of certain dividends and distributions. In addition, these laws and regulations require approval of certain intercorporate transfers of assets and certain transactions between insurance companies and their direct and indirect parents and affiliates, and generally require that all such transactions have terms no less favourable than terms that would result from transactions between parties negotiating at arm’s length. Ambac Assurance is required to file quarterly and annual statutory financial statements in each jurisdiction in which it is licensed, and is subject to single and aggregate risk limits and other statutory restrictions concerning the types and quality of investments and the filing and use of policy forms and premium rates. Additionally, Ambac Assurance’s accounts and operations are subject to periodic examination by the Wisconsin Insurance Commissioner and other state insurance regulatory authorities. Investments and Investment Policy As of 30 September, 2004, Ambac Assurance’s investment portfolio had an aggregate fair value of U.S.$8.5 billion and an aggregate amortised cost of U.S.$8.1 billion. The investment policy established by the board of directors for Ambac Assurance’s investments is designed to achieve diversification of the portfolio and generally to preclude investments in obligations insured by Ambac Assurance. Ambac Assurance’s investment policy only permits investment in investment grade fixed-income securities, consistent with its goal to achieve the highest after-tax, long-term return.

109 Capitalisation The following table sets forth Ambac Assurance’s consolidated capitalisation as of 31 December, 2002, 31 December, 2003 and 30 September, 2004, respectively, on the basis of accounting principles generally accepted in the United States of America. 31 December 30 September

2002 2003 2004 (unaudited)

(U.S. Dollars in Millions) Unearned Premiums...... $2,137 $2,553 $2,736 Other liabilities ...... 1,865 2,197 2,167 Long term debt ...... 60 12 13 Short term debt...... 51 72 0

Total liabilities ...... 4,113 4,834 4,916 Stockholders’ Equity Preferred stock par value $1,000 per share; Authorised shares – 285,000; issued and outstanding – none...... ——— Common Stock, par value $2.50 per share; Authorised shares – 40,000,000; issued and outstanding shares – 32,800,000 ...... 82 82 82 Additional paid-in capital...... 920 1,144 1,179 Accumulated other comprehensive income...... 231 243 234 Retained earnings...... 2,849 3,430 3,921

Total stockholders’ equity ...... 4,082 4,899 5,416

Total liabilities and stockholders equity ...... $8,195 $9,733 $10,332

Note: There has been no material adverse change in the capitalisation of Ambac Assurance and subsidiaries from 30 September, 2004 to the date of the Offering Circular.

Directors of Ambac Assurance The following information for each director of Ambac Assurance is set forth below – name, business or home address and description of principal activities performed outside the Ambac Financial Group, Inc. group but which are significant with respect to the Ambac Financial Group, Inc. group: Name Home or Business Address Principal Activities

Phillip B. Lassiter Ambac Financial Group, Inc. Chairman of the Board of Ambac One State Street Plaza Financial Group, Inc. and Ambac New York, NY 10004 Assurance; Director of Diebold, Inc. and Certegy Inc. Michael A. Callen Avalon Argus & Associates, LLC Non-executive director; President of 10901 Riverwood Drive Avalon Argus & Associates, LLC since Potomac, MD 20854 April 1996; Director of Intervest Corporation of New York and Intervest Bancshares Corporation. Renso L. Caporali 9376 Hunting Valley South Non-executive director; Director of Bank Clarence, NY 14031 of Akron. Jill M. Considine The Depository Trust & Clearing Non-executive director; Chairman and Corporation Chief Executive Officer of The 55 Water Street Depository Trust Company and The New York, NY 10041 Depository Trust & Clearing Corporation; Director of the Atlantic Mutual Insurance Companies, The Interpublic Group of Companies, Inc. and the Federal Reserve Bank of New York.

110 Name Home or Business Address Principal Activities

Richard Dulude P.O. Box 537 Non-executive director; Director of 1106 Lake Avenue Landec Corporation Inc. George Mills, NH 03751 Robert J. Genader Ambac Financial Group, Inc. President and Chief Executive Officer of One State Street Plaza Ambac Financial Group, Inc. and Ambac New York, NY 10004 Assurance. W. Grant Gregory Gregory & Hoenemeyer, Inc. Non-executive director; Chairman of Two Greenwich Plaza Gregory Hoenemeyer, Inc., Director of Greenwich, CT 06830 Double Click Inc. Thomas C. Theobold 8 Sand Shore Drive Non-executive director; Suite 285 Chairman of the Board of Columbia Greenwich, CT 06830 Mutual Funds; Director of Anixter International, Jones Lang La Salle Incorporated and Ventas, Inc. Laura S. Unger 3308 N Street, N.W. Non-executive director; former Acting Washington, D.C. 20007 Chairperson of the U.S. Securities and Exchange Commission; Director of Borland Sotftware Corporation and MBNA. Henry D.G. Wallace 15543 Monterosso Lane Non-executive director; former Group Unit 201 Vice President and Chief Financial Naples, Florida 34110 Officer of Ford Motor Company; Director of Diebold Inc. and Hayes Lemmerz International, Inc.

111 RELATIONSHIP BETWEEN AMBAC ASSURANCE UK LIMITED AND AMBAC ASSURANCE CORPORATION

General Ambac is a direct wholly-owned subsidiary of Ambac Assurance. Ambac does not have any subsidiaries.

Net Worth Maintenance Agreement Ambac and Ambac Assurance have entered into a net worth maintenance agreement dated as of 1 January, 1997 (the Net Worth Maintenance Agreement), which is governed by the laws of the State of Wisconsin. Pursuant to the Net Worth Maintenance Agreement, Ambac Assurance is required to cause Ambac to maintain free assets of £10,500,000 or such greater amount as may be required by the FSA provided that no contribution can be required to be made which would have the effect of reducing Ambac Assurance’s financial strength ratings from S&P, Moody’s or Fitch, Inc.

Reinsurance Agreement The obligations of Ambac under the Ambac Financial Guarantee will be reinsured with Ambac Assurance pursuant to a reinsurance agreement dated as of 1 January, 1997 (the Reinsurance Agreement) which is governed by the laws of the State of New York. Pursuant to the Reinsurance Agreement, a substantial portion of all liabilities on financial guarantees issued by Ambac are reinsured by Ambac Assurance. Such reinsurance is used as a risk management device and to comply with certain statutory and rating agency requirements; it does not alter or limit the obligations of Ambac under any financial guarantee. In addition, the Reinsurance Agreement also contains ‘‘stop loss’’ provisions that require Ambac Assurance to make payments to Ambac if Ambac’s losses exceed a certain amount. Under these provisions Ambac Assurance will reimburse Ambac for the amount by which annual net losses incurred by Ambac (paid losses plus any increase in loss reserves, net of reinsurance) exceed £500,000. Debenture Bondholders should note that the Net Worth Maintenance Agreement and the Reinsurance Agreement (together, the Ambac Assurance Agreements) are entered into for the benefit of Ambac and are not, and should not be regarded as, guarantees by Ambac Assurance of the payment of any indebtedness, liability or obligations of the Issuer or Ambac including the Debenture Bonds or the Ambac Financial Guarantee. Information in this Offering Circular concerning Ambac Assurance is provided for background purposes only in view of the importance to Ambac of the Ambac Assurance Agreements. It does not imply that the Ambac Assurance Agreements are guarantees for the benefit of Debenture Bondholders. Payment of principal of and interest on the Guaranteed Debenture Bonds (as defined in the Ambac Financial Guarantee) will be guaranteed by Ambac pursuant to the Ambac Financial Guarantee and will not be additionally guaranteed by Ambac Assurance. Debenture Bondholders should note that Ambac’s ability to perform its obligations under the Ambac Financial Guarantee and to maintain its current ratings substantially depends on the ability of Ambac Assurance to perform its obligations under the Ambac Assurance Agreements.

112 FORM OF AMBAC FINANCIAL GUARANTEE

FORM OF FINANCIAL GUARANTEE

Financial Guarantee Number UK 00112

Issued By

Ambac Assurance UK Limited

Hasilwood House 60 Bishopsgate London EC2N 4BE Telephone 020 7786 4300 Fax 020 7786 4343 Registered in England Registered Number 3248674

Effective Date of this Financial Guarantee: 25 November, 2004

Ambac Assurance UK Limited (‘‘Ambac’’), in consideration of the payment of the Guarantee Fee and subject to the terms of this Financial Guarantee, hereby agrees unconditionally and irrevocably to pay to the Beneficiary for the benefit of the Debenture Bondholders of the Guaranteed Obligations that portion of the Guaranteed Amounts which have become Due for Payment but are unpaid by reason of Non-payment and any Additional Amounts that may be payable hereunder.

Payments Save in respect of Accelerated Payments (which may be made at the election of Ambac only), Ambac will make payments which are due under this Financial Guarantee to the Beneficiary by 12:00 noon, London time, on the later of (a) the second Business Day following Receipt by Ambac of a duly completed Notice of Demand and Certificate from the Beneficiary and (b) the applicable Interest Payment Date. Payments due under this Financial Guarantee will be satisfied by payment in full by Ambac to the Account in the appropriate currency or currencies. Save as otherwise provided herein, payment in full to the Account shall discharge the obligations of Ambac under this Financial Guarantee to the extent of such payment, whether or not such payment is properly applied by or on behalf of the Beneficiary or any Paying Agent. Save as otherwise provided herein, once payment by Ambac of an amount in respect of any Guaranteed Obligation (whether on an Interest Payment Date or on an Accelerated Payment Date) has been made to the Account, Ambac shall have no further obligations under this Financial Guarantee in respect of such Guaranteed Obligation to the extent of such payment. The obligations of Ambac under this Financial Guarantee shall not be affected by any redenomination of the Guaranteed Obligations into euro pursuant to Condition 18(b) (Redenomination) save that following such redenomination payments hereunder shall be made in euro.

Insolvency In the event that the Beneficiary has notice that any payment of Guaranteed Amounts which have become Due for Payment and which have been made to the Beneficiary or to any Debenture Bondholder by or on behalf of the Issuer have been declared (in whole or in part) a Preference and recovered from the Beneficiary or such Debenture Bondholders pursuant to any Insolvency Law in accordance with a final non-appealable order of a court of competent jurisdiction, the Beneficiary on behalf of such Debenture Bondholders will be entitled under this Financial Guarantee to payment from Ambac upon receipt by Ambac from the Beneficiary of a duly completed Notice of Demand and Certificate to the extent of such recovery (such amounts being referred to herein as ‘‘Avoided Payment Amounts’’).

113 Subrogation Upon Ambac making any payment in respect of any Guaranteed Obligations, including, for the avoidance of doubt, any Accelerated Payments, to the Account hereunder and upon receipt by the Beneficiary of such payment pursuant to this Financial Guarantee, Ambac shall, to the extent of such payment, be fully and automatically subrogated pursuant to applicable law to all of the rights of the Debenture Bondholders of the Affected Guaranteed Obligations to payment of the Guaranteed Amounts and/or any Accelerated Payments (as the case may be) (including, without limitation, any rights and benefits attached to, and any security granted at law by contract or under the Issuer Deed of Charge or otherwise in respect of, the Affected Guaranteed Obligations) to the extent of such payment.

UK Withholding Tax All payments by Ambac under this Financial Guarantee shall be made without withholding or deduction for, or on account of, any taxes, duties, assessments or other governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the United Kingdom or any political subdivision or taxing authority therein or thereof unless such withholding or deduction is required by law. If any withholding or deduction is so required by law, Ambac shall account to the appropriate tax authority for the amount to be withheld or deducted and shall pay such amounts (‘‘Additional Amounts’’) for the account of each Debenture Bondholder in respect of which a withholding or deduction has been made as may be necessary in order that the net amounts receivable by the relevant Debenture Bondholder after such withholding or deduction shall equal the Guaranteed Amounts or the Accelerated Payment (as the case may be) which would have been receivable by such Debenture Bondholder from the Issuer in respect of the Affected Guaranteed Obligations in the absence of such withholding or deduction, provided, however, that no such Additional Amounts shall be payable in respect of any Guaranteed Obligations which will result from any payment by Ambac of Guaranteed Amounts or Accelerated Payments (as the case may be): (a) to or in respect of Debenture Bondholders who are liable or subject to such withholding or deduction by reason of them having some connection with the United Kingdom other than the mere holding or beneficial ownership of the Guaranteed Obligations; (b) to or in respect of Debenture Bondholders who would not be subject to such withholding or deduction if they had made a declaration of non-residence or other similar claim for exemption to the relevant tax authority; (c) to or in respect of Debenture Bondholders who have presented such Guaranteed Obligations for payment more than 30 days after the Relevant Date except to the extent that the relevant Debenture Bondholders would have been entitled to such Additional Amounts if they had presented the Guaranteed Obligations for payment on the last day of such period of 30 days; or (d) where such withholding or deduction is imposed on a payment to an individual Debenture Bondholder and is required to be made pursuant to (1) any European Union Directive on the taxation of savings implementing the conclusions of the ECOFIN Council Meeting of 26-27 November, 2000 and/or (2) any approval by the EU Council of Economic and Finance Ministers on 13 December, 2001, in connection with such Directive and/or (3) any law implementing or complying with, or introduced in order to conform to, such Directive.

Scope of Guarantee This Financial Guarantee is not cancellable by Ambac for any reason, including the failure of Ambac to receive payment of any Guarantee Fee due in respect of this Financial Guarantee. The Guarantee Fee is not refundable for any reason. This Financial Guarantee does not guarantee any accelerated payment (whether by way of prepayment of the Guaranteed Obligations or otherwise), other than at the sole option of Ambac as specified below, nor provide protection by way of guarantee or otherwise against any risk (including, without limitation, the risk of failure of the Beneficiary or any Paying Agent to make any payment due to Debenture Bondholders of any Guaranteed Amounts) other than Non-payment, withholding tax risk in relation to Additional Amounts and insolvency claw back risk in relation to Avoided Payment Amounts, in each case as provided herein.

114 Accelerated Payments There shall be no accelerated payment of any Guaranteed Amount due under this Financial Guarantee unless Ambac elects to make an Accelerated Payment of all or any part of the Guaranteed Obligations at its sole option. If Ambac elects to make an Accelerated Payment, it shall, not later than two (2) Business Days prior to the date on which it shall effect such payment, deliver to the Issuer and the Beneficiary, by fax or letter delivered by registered post or courier, a written notice duly executed by an authorised officer of Ambac, notifying the Issuer and the Beneficiary of the exercise of (1) its option hereunder and (2) the proposed Accelerated Payment Date for such Accelerated Payment. Ambac shall, unless otherwise directed by the Beneficiary, make such Accelerated Payment to the Paying Agent. Such notice shall be deemed to have been delivered when (a) in the case of a letter, delivered to the relevant addressee; or (b) in the case of a fax, when transmission of such fax communication has been received in a legible form and receipt has been confirmed.

Waiver of Defences The obligations of Ambac under this Financial Guarantee shall not be affected by any lack of validity or enforceability of or any modification or any amendment to the Guaranteed Obligations or the Trust Deed or the granting of any time, indulgence or concession by any party to the Issuer. Ambac acknowledges that there is no duty of disclosure by the Beneficiary under this Financial Guarantee but nonetheless, to the greatest extent permitted by applicable law, hereby waives for the benefit of the Beneficiary and each Debenture Bondholder and agrees not to assert any and all rights (whether by counterclaim, rescission, set-off or otherwise), equities and defences (including, without limitation (a) any defence of fraud by any Person (other than the Beneficiary itself) or (b) any defence based on misrepresentation, breach of warranty or non-disclosure of information by any Person), to the extent that such rights, equities and defences may be available to Ambac to avoid payment of its obligations under this Financial Guarantee in accordance with the express provisions hereof, but without prejudice to any subsequent recourse Ambac may have to or against any Person.

Definitions For all the purposes of this Financial Guarantee, the following terms shall have the following meanings: ‘‘Accelerated Payment’’ means any payment of any Guaranteed Amount in advance of the Interest Payment Date for such Guaranteed Amount (whether by way of prepayment of any Guaranteed Amount or otherwise) made by Ambac to the Account at Ambac’s sole option and in accordance with this Financial Guarantee, but subject to the Guaranteed Obligations having become due and payable by the Issuer pursuant to the Conditions; ‘‘Accelerated Payment Date’’ means any date on which Ambac makes an Accelerated Payment; ‘‘Account’’ means in respect of any payment made by Ambac on: (a) an Interest Payment Date, the bank account specified in the relevant Notice of Demand and Certificate; and (b) an Accelerated Payment Date, the bank account notified by the Beneficiary to Ambac in writing at least one Business Day prior to the Accelerated Payment Date; ‘‘Affected Guaranteed Obligations’’ means those Guaranteed Obligations (identified in the relevant duly completed Notice of Demand and Certificate) in respect of which a Non-payment has occurred or will occur, as specified in the relevant Notice of Demand and Certificate; ‘‘Beneficiary’’ means the Debenture Bond Trustee; ‘‘Borrower’’ means Spirit Managed Pubs Limited (a private company incorporated in England and Wales with registered number 5269240) whose registered office is at 107 Station Street, Burton-on- Trent, Staffordshire DE14 1BE; ‘‘Borrower Group Parent’’ means Spirit Pubs Holdings Limited (a private company with limited liability incorporated in England and Wales with registered number 5266779) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ;

115 ‘‘Business Day’’ means any day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London; ‘‘Class A1 Debenture Bonds’’ means the £150,000,000 Floating Rate Class A1 Secured Debenture Bonds due 2028; ‘‘Class A1 Step-Up Amounts’’ has the meaning given in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); ‘‘Class A2 Debenture Bonds’’ means the £200,000,000 Floating Rate Class A2 Secured Debenture Bonds due 2031; ‘‘Class A3 Debenture Bonds’’ means the £250,000,000 Fixed/Floating Rate Class A3 Secured Debenture Bonds due 2021; ‘‘Class A3 Step-Up Amounts’’ has the meaning given in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); ‘‘Class A4 Debenture Bonds’’ means the £350,000,000 Fixed/Floating Rate Class A4 Secured Debenture Bonds due 2027; ‘‘Class A5 Debenture Bonds’’ means the £300,000,000 Fixed/Floating Rate Class A5 Secured Debenture Bonds due 2034; ‘‘Class A5 Step-Up Amounts’’ has the meaning given in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); ‘‘Conditions’’ means the terms and conditions of the Debenture Bonds as set out in Schedule 2 of the Trust Deed as at the date of this Financial Guarantee, or as amended with (where required) Ambac’s consent (each being a ‘‘Condition’’); ‘‘Debenture Bondholders’’ has the meaning given in the Conditions; ‘‘Debenture Bond Trustee’’ means Deutsche Trustee Company Limited or any successor trustee, in each case as appointed pursuant to the terms of the Trust Deed, as trustee for the Debenture Bondholders of the Guaranteed Obligations and whose registered office is at Winchester House, 1 Great Winchester Street, London EC2N 2DB; ‘‘Debenture Bonds’’ means the Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds. ‘‘Default Interest’’ has the meaning given to it in Condition 5(i) (Interest – Default Interest); ‘‘Due for Payment’’ means, in relation to any Guaranteed Amounts, that the relevant due date for payment of such Guaranteed Amount in accordance with the Conditions has occurred (and, for the avoidance of doubt, does not refer to any earlier date upon which payment of any Guaranteed Amounts may become due in respect of the Guaranteed Debenture Bonds, by reason of prepayment, acceleration of maturity, mandatory or optional redemption (other than pursuant to Condition 6(c)(iv)) or otherwise); ‘‘Final Maturity Date’’ means: (i) in relation to the Class A1 Debenture Bonds, the Interest Payment Date falling in December 2028; (ii) in relation to the Class A3 Debenture Bonds, the Interest Payment Date falling in December 2021; and (iii) in relation to the Class A5 Debenture Bonds, the Interest Payment Date falling in December 2034, or, where Ambac has exercised its rights under Condition 6(c)(iv), the Interest Payment Date on which the Guaranteed Obligations are required to be redeemed under Condition 6(c)(iv). ‘‘Guarantee Excluded Amounts’’ means, in respect of the Guaranteed Obligations: (i) any principal or other sums payable on an accelerated basis by the Issuer in respect of any redemption of the Guaranteed Debenture Bonds pursuant to Condition 6 (Redemption, Purchase and Cancellation) (other than pursuant to Condition 6(c)(iv)) or Condition 10 (Issuer Events of Default); (ii) any default interest on any of the Guaranteed Obligations due pursuant to Condition 5(i) (Interest – Default Interest) or otherwise;

116 (iii) any amount which the Issuer would be obliged to gross up under Condition 8 (Taxation); and (iv) any amount payable relating to the Guaranteed Debenture Bonds which have been purchased by any member of Spirit Group; ‘‘Guarantee Fee’’ means the guarantee fee(s) payable by the Issuer in consideration of the issue of this Financial Guarantee, as specified in the Guarantee Fee Letter; ‘‘Guarantee Fee Letter’’ means the letter (described on its face as ‘‘Guarantee Fee Letter’’) dated on or about the date of this Financial Guarantee between Ambac and the Issuer; ‘‘Guaranteed Amounts’’ means the sum of (i) Scheduled Interest payable on each Interest Payment Date; and (ii) Ultimate Principal (if any) payable on the Final Maturity Date. ‘‘Guaranteed Amounts’’ excludes (a) any Scheduled Interest and Ultimate Principal in respect of which, in either case, Ambac has made an Accelerated Payment on an Accelerated Payment Date falling prior to such date and (b) any Guarantee Excluded Amounts; ‘‘Guaranteed Debenture Bonds’’ means, as the context may require, the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds for as long as they have the benefit of this Financial Guarantee; ‘‘Guaranteed Obligations’’ means the Guaranteed Debenture Bonds, and shall include, where the context so requires, the coupons relating to the Guaranteed Debenture Bonds but shall in all cases exclude all Guarantee Excluded Amounts; ‘‘Insolvency Law’’ means any applicable United Kingdom bankruptcy or insolvency law, including the Enterprise Act 2002, the Insolvency Act 2000, the Insolvency Act 1986, the Insolvency Rules 1986, the Insolvency Regulations 1994 or any legislation passed in substitution or replacement thereof or amendment thereof; ‘‘Interest Payment Date’’ has the meaning given in the Conditions; ‘‘Issuer’’ means Spirit Issuer plc (a public company with limited liability incorporated in England and Wales with registered number 5266745); ‘‘Non-payment’’ means, as of any Interest Payment Date, the failure of the Issuer to pay or to have paid all or any part of the Guaranteed Amounts which are Due for Payment on such Interest Payment Date (or which would have been due on such Interest Payment Date but for such Guaranteed Amounts having become due prior to such Interest Payment Date by reason of prepayment, acceleration of maturity, mandatory or optional redemption (other than pursuant to Condition 6(c)(iv)) or otherwise); ‘‘Notice of Demand and Certificate’’ means a notice of demand and certificate in the form attached hereto, duly executed by the Beneficiary; ‘‘Paying Agents’’ means the Principal Paying Agent together with the Luxembourg Paying Agent and any successor or additional paying agents appointed from time to time in connection with the Debenture Bonds under the Agency Agreement and ‘‘Paying Agent’’ means any one of them; ‘‘Person’’ means any person, firm, company or body corporate, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) or two or more of the foregoing; ‘‘Preference’’ means (i) a preference pursuant to section 239 of the Insolvency Act 1986 (as amended, varied or supplemented from time to time) (the ‘‘Insolvency Act’’); (ii) an avoidance of any property disposition pursuant to section 127 of the Insolvency Act; and (iii) a transaction at an undervalue pursuant to section 238 of the Insolvency Act; ‘‘Principal Amount Outstanding’’ has the meaning given in the Conditions; ‘‘Receipt’’ means actual delivery to Ambac at the address specified at the beginning of this Financial Guarantee (or such other address as Ambac may, from time to time, designate in writing to the Beneficiary) prior to 12:00 noon, London time, on a Business Day. Delivery either on a day that is not a Business Day or after 12:00 noon, London time, shall be deemed to be Receipt on the next succeeding Business Day; ‘‘Redemption Premium Amount’’ has the meaning given in the Conditions; ‘‘Relevant Date’’ means whichever is the later of (a) the date on which any Guaranteed Amount becomes Due for Payment; and (b) if the full amount payable has not been paid by Ambac on or prior to such date, the date on which the full amount payable has been paid by Ambac;

117 ‘‘Scheduled Interest’’ means interest payable in respect of the Guaranteed Debenture Bonds as specified in Condition 5 (Interest) but excluding any Class A1 Step-Up Amounts, any Class A3 Step-Up Amounts or any Class A5 Step-Up Amounts (as the case may be), any Default Interest and interest in respect of any Redemption Premium Amount and less any amount that the Issuer would be obliged to deduct which is payable pursuant to Condition 8 (Taxation); ‘‘Spirit Group’’ means Spirit Group Holdings Limited and each of its Subsidiaries; ‘‘Subsidiary’’ means, in relation to any Person: (i) a Person controlled, directly or indirectly, by the first mentioned Person; (ii) a Person where more than half its issued share capital (or equivalent right of ownership) of which is beneficially owned directly or indirectly by the first mentioned Person; or (iii) a Person that is a Subsidiary of another subsidiary of the first mentioned Person, and for these definitions a Person shall be treated as being controlled by the other if that other Person is able to direct its affairs and/or to control the composition of its board of directors or equivalent body; ‘‘Trust Deed’’ means the trust deed dated 25 November, 2004 between the Issuer, Ambac and the Debenture Bond Trustee in respect of the issue of the Debenture Bonds; and ‘‘Ultimate Principal’’ means the Principal Amount Outstanding of the Guaranteed Debenture Bonds payable in accordance with Condition 6(a) (Redemption, Purchase and Cancellation – Final Redemption) or, as the case may be, Condition 6(c)(iv) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer) on the Final Maturity Date, together with the amount of any Redemption Premium Amount remaining unpaid as at the Final Maturity Date, where such Redemption Premium Amount has become payable under Condition 6(b)(B)(ii), 6(c)(iv) or 10(c) and, for the avoidance of doubt, excludes principal or other sums payable in respect of (i) any redemption pursuant to Condition 6(b)(ii) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); (ii) any optional redemption pursuant to Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer) (other than pursuant to Condition 6(c)(iv)); and (iii) any redemption for tax or other reasons pursuant to Condition 6(d) (Redemption, Purchase and Cancellation – Substitution/Redemption for taxation or other reasons). Any capitalised terms used in this Financial Guarantee and not defined herein shall have the meaning given to them in the Conditions.

Miscellaneous This Financial Guarantee constitutes the entire agreement between Ambac and the Beneficiary in relation to Ambac’s obligation to make payments to the Beneficiary for the benefit of the Debenture Bondholders of the Guaranteed Obligations in respect of Guaranteed Amounts which become Due for Payment but shall have remained unpaid by reason of Non-payment and supersedes any previous agreement between Ambac and the Beneficiary in relation thereto and, save for the provision of a Notice of Demand and Certificate as provided for herein, nothing in this Financial Guarantee constitutes a warranty or a condition precedent to this Financial Guarantee. This Financial Guarantee shall terminate upon the earlier of: (i) the payment by Ambac of an amount equal to the aggregate amount of all Guaranteed Amounts payable hereunder; and (ii) two years and one day following the last Interest Payment Date provided that if the Issuer becomes subject to any proceedings pursuant to Insolvency Law (‘‘Insolvency Proceedings’’) during the period of two years following the last Interest Payment Date, then this Financial Guarantee shall terminate on the later of (a) the date of the conclusion or dismissal of the relevant Insolvency Proceedings without continuing jurisdiction by the court in such Insolvency Proceedings; and (b) if the Debenture Bondholder of any Guaranteed Obligation is required to return any payment (or portion thereof) in respect of such Guaranteed Obligation that is voided as a result of such Insolvency Proceedings, the date on which Ambac has made all payments required to be made under the terms of this Financial Guarantee to the Beneficiary in respect of all such voided payments. No Person shall have rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Financial Guarantee, but this shall not affect any such right any person may have otherwise than by virtue of such Act. This Financial Guarantee shall be governed by and construed in accordance with the laws of England and Wales. The courts of England and Wales shall have jurisdiction to hear and

118 determine any suits, actions or proceedings and to settle any disputes which may arise at or in connection with this Financial Guarantee and each of Ambac and the Beneficiary irrevocably submits to the jurisdiction of such courts. In witness whereof, this Financial Guarantee has been executed by (1) two duly authorised officers on behalf of Ambac and (2) the Beneficiary and duly delivered on the date inserted above.

Executed by: AMBAC ASSURANCE UK LIMITED

By: ...... By: ......

Name: ...... Name: ......

Title: ...... Title: ......

Executed by: DEUTSCHE TRUSTEE COMPANY LIMITED

By: ......

Name: ......

Title: ......

119 NOTICE OF DEMAND AND CERTIFICATE

Under Financial Guarantee Number UK 00112 Issued by

Ambac Assurance UK Limited Hasilwood House 60 Bishopsgate London EC2N 4BE Telephone 020 7786 4300 Fax 020 7786 4343 Registered in England Registered Number 3248674

Attention: Managing Director, Ambac Assurance UK Limited

The undersigned, a duly authorised officer of Deutsche Trustee Company Limited (the ‘‘Beneficiary’’), hereby certifies to Ambac Assurance UK Limited (‘‘Ambac’’), with reference to the Financial Guarantee No. UK 00112 dated 25 November, 2004 (the ‘‘Financial Guarantee’’) issued by Ambac in respect of the obligations of Spirit Issuer plc (the ‘‘Issuer’’), that (i) the Beneficiary is the Debenture Bond Trustee under the Trust Deed for the Debenture Bondholders; (ii) [the Beneficiary has calculated that the deficiency in respect of the Guaranteed Amounts which [are/were] Due for Payment on [insert Interest Payment Date] under the Bonds (the ‘‘Affected Guaranteed Obligations’’) [will be/was/is] [insert applicable currency and amount] (the ‘‘Shortfall’’). Of such Shortfall, [insert applicable currency and amount] is Scheduled Interest on the Affected Guaranteed Obligations; and [insert applicable currency and amount] is Ultimate Principal on the Affected Guaranteed Obligations;] OR [the Beneficiary or the Debenture Bondholders [has/have been] required to repay [insert applicable currency and amount] (the ‘‘Avoided Payment Amount’’) to the Issuer on [insert date] in connection with a Preference declared or recovered from the Beneficiary or such Debenture Bondholder(s) pursuant to any Insolvency Law in accordance with a final non- appealable order of a court of competent jurisdiction;] (iii) the Beneficiary is making a claim under the Financial Guarantee for the [Shortfall/Avoided Payment Amount] to be applied to the payment of the Guaranteed Amounts which [are Due for Payment/were paid but found to be a Preference]; (iv) the Beneficiary agrees that, following payment of funds by Ambac, it shall use reasonable endeavours to procure (a) that such amounts are applied directly to the payment of Guaranteed Amounts which [are Due for Payment/were paid but found to be a Preference]; (b) that such funds are not applied for any other purpose; and (c) the maintenance of an accurate record of such payments with respect to each Guaranteed Obligation and the corresponding claim on the Financial Guarantee and the proceeds thereof. For the purposes of (a) and (b) above, it shall be sufficient if the Beneficiary directs Ambac to make payment to the Principal Paying Agent; and (v) payment should be made by Ambac in [currency] by credit to an account in the name of [insert name of Beneficiary or Principal Paying Agent]with[insert name of bank], of [insert address of bank], Sort Code [*] Account Number [*]; The Beneficiary acknowledges that the Trust Deed and the Financial Guarantee provide that as of the date on which the Shortfall is credited to such account, Ambac shall, to the extent of such Shortfall, be fully and automatically subrogated, pursuant to applicable law to all of the rights of the Debenture Bondholders of the Affected Guaranteed Obligations to payment of any amounts in respect of such Affected Guaranteed Obligations and any corresponding reimbursement obligations under the Guarantee and Reimbursement Agreement (including, without limitation, any rights and benefits attached thereto and any security granted at law or by contract (whether under the Trust Deed or otherwise)) in respect of the Affected Guaranteed Obligations.

120 Unless the context otherwise requires, capitalised terms used in this Notice of Demand and Certificate and not defined herein shall have the meanings provided in the Financial Guarantee. No person, other than Ambac, shall have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Notice of Demand and Certificate but this shall not affect any such right any person may have otherwise than by virtue of such Act. This Notice of Demand and Certificate may be revoked by written notice by the Beneficiary to Ambac at any time prior to the date specified above on which Guaranteed Amounts are Due for Payment to the extent that moneys are actually received in respect of the Guaranteed Obligations prior to such date from a source other than Ambac. This Notice of Demand and Certificate shall be governed by and construed in accordance with the laws of England and Wales.

IN WITNESS WHEREOF, the Beneficiary has executed and delivered this Notice of Demand and Certificate on [*] 200[*].

DEUTSCHE TRUSTEE COMPANY LIMITED

By (sign):

Name (print):

Title:

Phone Number:

121 REPORT AND VALUATION FOR SPIRIT GROUP LIMITED

The Borrower Group Estate And The Managed Estate

22 November 2004

DTZ Debenham Tie Leung One Curzon Street LONDON W1A 5PZ

122 CONTENTS

Page

1. INTRODUCTION...... 125 2. BACKGROUND INFORMATION ...... 127 3. COMPLIANCE WITH APPRAISAL AND VALUATION STANDARDS ...... 127 3.1 Statement of Departure from the Red Book ...... 127 3.2 The Reasons for Departure from the Red Book...... 128 4. VALUATION AS A SINGLE PORTFOLIO ...... 128 5. SAMPLING PROCEDURE...... 128 6. INSPECTIONS...... 131 7. DEFINITION OF MARKET VALUE...... 131 8. STATUS OF VALUER AND CONFLICTS OF INTEREST...... 133 9. ADJUSTMENTS...... 133 10. ASSUMPTIONS AND SOURCES OF INFORMATION ...... 133 10.1 Title ...... 133 10.2 Condition of Structure and Services & Deleterious Materials ...... 133 10.3 Environmental Matters ...... 134 10.4 Plant and Machinery ...... 134 10.5 Floor Areas ...... 134 10.6 Goodwill ...... 134 10.7 EBITDA Levels/Barrelage/Direct Costs and Other Commercial Information ... 134 10.8 Statutory Requirements and Planning ...... 135 10.9 Leases ...... 135 10.10 Information...... 135 10.11 Taxation ...... 135 10.12 Landlord and Tenant Act 1987 ...... 135 11. DEVELOPMENT PROPERTY ...... 136 12. DIRECTORS’ INTERESTS ...... 136 13. EXPENDITURE AND REVENUE...... 136 14. NON-RECOVERABLE EXPENDITURE...... 136 15. VALUATION OF THE BORROWER GROUP ESTATE AND THE MANAGED ESTATE 136 16. VALUATION...... 137 17. CONFIDENTIALITY AND DISCLOSURE ...... 137 Appendices 1 Schedule of Properties...... 138 2 Borrower Group Estate Sample Properties...... 174 3 BankCo Estate Sample Properties...... 179

123 OUR REF: DIRECT TEL: 020 7643 6300 DIRECT FAX: 020 7643 6345 EMAIL: [email protected] Spirit Group Limited 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ

Parties in respect of the Debenture Bonds (the capitalised terms in respect of the addressees below shall have the same meanings given to them in the Offering Circular)

Spirit Group Holdings Limited, Deutsche Trustee Company Limited (as Issuer 107 Station Street, Burton-on-Trent, Staffordshire Security Trustee for the benefit of the Issuer DE14 1BZ Secured Creditors, as Borrower Group Security Trustee for the benefit of the Borrower Secured Spirit Pubs Holdings Limited, Parties, and as Debenture Bond Trustee for the 107 Station Street, Burton-on-Trent, Staffordshire benefit of the Debenture Bond Holders), DE14 1BZ Winchester House, 1 Great Winchester Street, London EC2N 2DB Spirit Issuer plc (as Issuer), c/o SPV Management Barclays Bank PLC, 5 The North Colonnade, Tower 42 (Level 11) Canary Wharf, London E14 4BB; Citigroup Global International Financial Centre Markets Limited, Citigroup Centre, 33 Canada 25 Old Broad Street, London EC2N 1HQ Square, Canary Wharf, London E14 5LB; Goldman Sachs International, Peterborough Court, 133 Spirit Managed Pubs Limited (as Borrower), Fleet Street, London EC4A 2BB; and The Royal 107 Station Street, Burton-on-Trent, Staffordshire Bank of Scotland plc, 135 Bishopsgate, London DE14 1BZ EC2M 3UR (as Lead Managers)

Ambac Assurance UK Limited, Merrill Lynch International (as Co-Lead Hasilwood House, 60 Bishopsgate, London Manager), Merrill Lynch Financial Centre, 2 King EC2N 4BE Edward Street, London EC1A 1HQ

Deutsche Bank AG London, Winchester House, 1 Great Winchester Street, London EC2N 2DB (as Agent Bank and Principal Paying Agent) Parties to the BankCo Loan Agreement (the capitalised terms in respect of the addressees below shall have the same meanings given to them in the BankCo Loan Agreement)

Spirit Managed Inns Limited (as Borrower), Barclays Bank PLC, 5 The North Colonnade, 107 Station Street, Burton-on-Trent, Staffordshire Canary Wharf, London E14 4BB; Citibank N.A., DE14 1BZ 399 Park Avenue, New York, New York 10043, USA; Goldman Sachs Credit Partners L.P., Spirit Financial Holdings Limited (as Peterborough Court, 133 Fleet Street, London Guarantor), 107 Station Street, Burton-on-Trent, EC4A 2BB; Merrill Lynch Commercial Finance Staffordshire DE14 1BZ Corporation, Merrill Lynch Financial Centre, 2 King Edward Street, London EC1A 1HQ; and Spirit Parent Limited (as Guarantor), The Royal Bank of Scotland plc, 135 107 Station Street, Burton-on-Trent, Bishopsgate, London EC2M 3UR (as Original Staffordshire DE14 1BZ Lenders)

Barclays Capital, the investment banking The Royal Bank of Scotland plc (as Facility division of Barclays Bank PLC, 5 The North Agent for and on behalf of the Senior Finance Colonnade, Canary Wharf, London E14 4BB; Parties), 135 Bishopsgate, London EC2M 3UR Citigroup Global Markets Limited, Citigroup Centre, 33 Canada Square, Canary Wharf, The Royal Bank of Scotland plc (as Security London E14 5LB; Goldman Sachs International, Agent), 135 Bishopsgate, London EC2M 3UR Peterborough Court, 133 Fleet Street, London EC4A 2BB; and The Royal Bank of Scotland plc, 135 Bishopsgate, London EC2M 3UR (as mandated lead arrangers (whether acting individually or collectively, as Arranger))

124 Parties to the LoanCo Loan Agreement (the capitalised terms in respect of the addressees below shall have the same meanings given to them in the LoanCo Loan Agreement)

Spirit Managed Funding Limited (as Borrower), Barclays Capital, the investment banking 107 Station Street, Burton-on-Trent, Staffordshire division of Barclays Bank PLC, 5 The North DE14 1BZ Colonnade, Canary Wharf, London E14 4BB; Citigroup Global Markets Limited, Citigroup Spirit Managed Inns Limited Centre, 33 Canada Square, Canary Wharf, (as Original Guarantor), 107 Station Street, London E14 5LB; Goldman Sachs International, Burton-on-Trent, Staffordshire DE14 1BZ Peterborough Court, 133 Fleet Street, London EC4A 2BB; and The Royal Bank of Scotland plc, Spirit Financial Holdings Limited 135 Bishopsgate, London EC2M 3UR (as (as Acceding Guarantor), 107 Station Street, mandated lead arrangers (whether acting Burton-on-Trent, Staffordshire DE14 1BZ individually or collectively, as Arranger))

Spirit Parent Limited (as Acceding Guarantor), Barclays Bank PLC, 5 The North Colonnade, 107 Station Street, Burton-on-Trent, Staffordshire Canary Wharf, London E14 4BB; Citibank N.A., DE14 1BZ 399 Park Avenue, New York, New York 10043, USA; Goldman Sachs Credit Partners L.P., Barclays Bank PLC (as Facility Agent for and on Peterborough Court, 133 Fleet Street, London behalf of the Finance Parties), 54 Lombard St, EC4A 2BB; Merrill Lynch Commercial Finance London EC3P 3AH Corporation, Merrill Lynch Financial Centre, 2 King Edward Street, London EC1A 1HQ; and The The Royal Bank of Scotland plc (as Security Royal Bank of Scotland plc, 135 Bishopsgate, Agent), 135 Bishopsgate, London EC2M 3UR London EC2M 3UR (as Original Lenders)

22 November 2004 Gentlemen,

THE BORROWER GROUP ESTATE AND THE MANAGED ESTATE 1. INTRODUCTION In accordance with the instructions received from Spirit Group Limited (the ‘‘Company’’ or ‘‘Spirit’’) in connection with the proposed (i) issue by Spirit Issuer plc of £150 million Class A1 Secured Debenture Bonds due 2028, £200 million Class A2 Secured Debenture Bonds due 2031, £250 million Class A3 Secured Debenture Bonds due 2021, £350 million Class A4 Secured Debenture Bonds due 2027 and £300 million Class A5 Secured Debenture Bonds due 2034 (together the ‘‘Debenture Bonds’’) and the issue by Ambac Assurance UK Limited of a financial guarantee in respect of the Debenture Bonds as described in an offering circular dated on or about the date hereof (the ‘‘Offering Circular’’); (ii) the BankCo Loan Agreement dated 13 November 2004 between (1) Spirit Managed Inns Limited (as Borrower), (2) Barclays Capital, Citigroup Global Markets Limited, Goldman Sachs International and The Royal Bank of Scotland plc (as mandated lead arrangers (whether acting individually or collectively, as Arranger)), (3) Barclays Bank PLC, Citibank, N.A., Goldman Sachs Credit Partners L.P., Merrill Lynch Commercial Finance Corporation and The Royal Bank of Scotland plc (as Original Lenders), (4) The Royal Bank of Scotland plc (as Facility Agent for and on behalf of the Senior Finance Parties) and (5) The Royal Bank of Scotland plc (as Security Agent) (all as defined in the BankCo Loan Agreement); and (iii) the LoanCo Loan Agreement dated 13 November 2004 between (1) Spirit Managed Funding Limited (as Borrower), (2) Spirit Managed Inns Limited (as Guarantor), (3) Barclays Capital, Citigroup Global Markets Limited, Goldman Sachs International and The Royal Bank of Scotland plc (as mandated lead arrangers (whether acting individually or collectively, as Arranger)), (4) Barclays Bank PLC, Citibank, N.A., Goldman Sachs Credit Partners L.P., Merrill Lynch Commercial Finance Corporation and The Royal Bank of Scotland plc (as Original Lenders), (5) Barclays Bank PLC (as Facility Agent for and on behalf of the Finance Parties) and (6) The Royal Bank of Scotland plc (as Security Agent) (all as defined in the LoanCo Loan Agreement), (together the ‘‘Transaction’’),

125 secured by, inter alia, the Borrower’s and BankCo’s respective freehold, feuhold, heritable long and short leasehold interests, as the case may be, in a portfolio of 2,031 pubs to be owned and operated by the Borrower and BankCo, we report herein our opinion of the Market Value of the Borrower Group Estate and the Managed Estate as at 18 November 2004 (the ‘‘Valuation Date’’). The portfolio is divided into two elements, the ‘‘Borrower Group Estate’’ and the ‘‘BankCo Estate’’, which are collectively known as the ‘‘Managed Estate’’. The list of properties comprising the Managed Estate is attached at Appendix 1. It is understood that the valuation is required in connection with the Transaction and will be included in the Offering Circular provided to investors in connection with the Transaction. Therefore, in accordance with UKPS (as defined below) 5.4, we have made certain disclosures (set out below) in connection with this valuation instruction and our relationship with the Company. We provided a report dated 28 June 2000 which was included in the offering circular dated 28 June 2000 in respect of the Punch Funding II Limited securitisation. In addition a desktop valuation report was included in the offering circular dated 22 April 2002 for the Spirit Funding Limited securitisation in connection with the issue of the Original SFL Notes. Further, we provided a valuation report dated 13 August 2003 in respect of the tap issue following the acquisition of the Tom Cobleigh estate, the TC Properties. We also, on the instructions of Scottish & Newcastle plc, prepared a valuation report dated 28 July 2003 in respect of their retail division, which included the pub portfolio acquired by the Spirit Group, the SNR Estate. DTZ Debenham Tie Leung is a wholly owned subsidiary of DTZ Holdings plc (the ‘‘Group’’). In the Group’s financial year to 30 April 2004, the proportion of total fees payable by the Company to the total fee income of the Group was less than 5%. Capitalised terms used in this report which are not defined herein shall have the meaning given to them in the Offering Circular. As referred to in section 3.1, in accordance with our instructions we have qualified the definition of Market Value by assuming in the case of our valuation that each property may be used only for its existing use for the foreseeable future. No regard has been had to potential alternative uses. The properties comprising the Managed Estate have been valued with reference to their trading potential and as such have been valued as a fully operational business and our valuation therefore reflects the income/earnings derived from the operation of the existing business units. To this extent the valuation of the properties comprising the Managed Estate reflects the value derived from a portfolio of properties on the basis of the existing use of the properties, i.e. as managed public houses within a portfolio. None of the properties in the Managed Estate have been valued on the basis of possible development potential for an alternative use, since the value of the properties comprising the Managed Estate has regard to their existing uses. We have had regard only to the existing use since this reflects the approach that purchasers of a portfolio of this type adopt when formulating bids. The property assets of the Managed Estate are of a nature normally sold as a fully equipped and operational entity and as such have been valued by reference to their trading potential to include: (a) the land and the buildings; (b) trade fixtures, fittings, furniture, furnishings and equipment; and (c) the market’s perception of the trading potential of the properties excluding personal goodwill and any other intangibles, with an assumed ability to renew existing licences, consents, registrations, permits and certificates. Consumable stocks, vehicles and loose tools have been excluded. The Market Value reported herein, as stated above, is on the basis of trading potential and as such it is assumed that: (a) the businesses will at all times be effectively and competently managed, operated and promoted; and (b) the businesses will be properly staffed, stocked and capitalised. The underlying assumption when valuing properties of this nature is that there is a competent operator available to manage the properties. In undertaking a valuation by reference to trading performance, we have been provided with and reviewed the financial data for the current and previous years which have been extracted without

126 material adjustment from information provided by the Company. Particular regard has been had to the historic and current sales, earnings before interest, tax, depreciation and amortisation (‘‘EBITDA’’).

The properties comprising the Managed Estate are integral to the business and therefore, as with all classes of property valued by reference to trading potential, the underlying value of the property asset can fluctuate to a greater degree when that trading potential is altered, either up or down than is normally the case with most other types of commercial property. Consequently, if the EBITDA were to fall substantially short of current levels, then this would have a detrimental effect on future value, conversely if the EBITDA were to rise substantially this would have a positive effect.

2. BACKGROUND INFORMATION The Company has provided us with the information set out below. The valuation is reliant on the accuracy of the information provided. At the Valuation Date, the Managed Estate comprised 2,031 freehold, feuhold, heritable long and short leasehold pubs which are owned by Spirit Group companies.

The Managed Estate comprises pubs that are managed directly by Spirit Group companies, with none of the pubs being let to tenants.

3. COMPLIANCE WITH APPRAISAL AND VALUATION STANDARDS Subject to our comments in section 3.1 below, we confirm that the valuations have been made in accordance with the appropriate sections of the current Practice Statements and United Kingdom Practice Statements contained within the RICS Appraisal and Valuation Standards, 5th Edition (the ‘‘Red Book’’), and that the valuation has been undertaken by valuers, acting as external valuers, qualified for the purpose of the valuation.

The Managed Estate has been valued as a fully operational business and our valuations therefore reflect the income derived from the operation of the existing business units. The income includes that which is the product of the beer discount which has been negotiated separately in respect of the entirety of the Spirit Group with breweries for the supply of beer. To this extent the valuation of the Managed Estate reflects the value derived from the most valuable use of the properties, which is in this case believed to be equivalent to the existing use of the properties, i.e. as public houses within a portfolio. As such we have undertaken no investigation as to potential alternative use of any of the properties.

The Managed Estate has been valued on the basis of market value but qualified by assuming only its existing use, i.e. as a portfolio of public houses. We have set out below the definition of market value as contained in Practice Statement (‘‘PS’’) 3.2 of the RICS Appraisal and Valuations Standards, but qualified by existing use. Under PS3.2, the term ‘‘Market Value’’ means:

‘‘The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.’’

3.1 Statement of Departure from the Red Book In accordance with our instructions, our valuation departs (the ‘‘Departure’’) from the procedure set out in the Red Book in that the definition of Market Value has been qualified by assuming that the Managed Estate properties may be used only for their existing use for the foreseeable future, in order to reflect the market practice of valuing such a portfolio as a single entity.

Although only a sample of the Managed Estate has been inspected it is considered that the number of properties inspected is professionally adequate as set out in the Red Book and therefore does not represent a departure from the Red Book.

It should be noted that the area of Departure from the Red Book is the same as that included in other valuation reports in respect of large pub portfolios. Where the valuation reports have formed part of stock exchange offering circulars they have been approved by the United Kingdom Listing Authority and the Luxembourg Stock Exchange.

127 3.2 The Reasons for Departure from the Red Book The qualification of the definition of Market Value represents a departure from PS 3.2 of the Red Book but, in our view, in light of the nature and size of the Managed Estate, we believe such a deviation to be reasonable in order to provide a valuation of the Borrower Group Estate and Managed Estate.

The definition of Market Value has been qualified by assuming existing use only in order to reflect the market practice of purchasing large numbers of public house assets as part of a property portfolio in their existing use. No regard has been had to potential alternative use. Purchasers of pub portfolios assess the cash flow generated by such assets and do not place any specific reliance on potential alternative uses. They do however expect that within a portfolio of so many assets there will inevitably be some instances where there is a higher alternative use value.

4. VALUATION AS A SINGLE PORTFOLIO The aggregate of the individual property values in respect of a portfolio of pubs of this size does not reflect the value of the portfolio as a whole. Management costs, the risk of income voids, the potential for sales to special purchasers and any possible development/alternative use value can be spread across a number of sites. A willing purchaser of such a portfolio will take a more favourable attitude towards these issues than that which is likely to be taken by a willing purchaser of a single property asset. In addition the ownership of a portfolio provides enhanced purchasing power for goods and services as compared to a single property. This is evidenced, for example, by the level of beer discount that is available on a portfolio compared to the level that can be negotiated on a single asset.

The nature of the purchaser of an individual property asset is different to that of the purchaser of a portfolio. The individual purchaser would have different costs of capital, risk profiles and potential exit routes and therefore the price it would be prepared to bid on a unit by unit basis would be different to that of a purchaser of a portfolio.

As a result, generally the individual capital value of each property within a portfolio, if sold separately, will be less than the capital value achievable as part of a portfolio due to factors such as the enhanced purchasing power for goods and services, as set out above. Reporting such values (either individually or in aggregate) is not a requirement of those parties for whom this estimated assessment of value has been prepared. Accordingly, such valuations have not been undertaken because they would place too great an emphasis on individual capital values, which are neither appropriate nor relevant in the context of how such assets are traded in the market. In addition, in our opinion, were the property assets forming the Managed Estate to be marketed for sale they would most likely be lotted together to form a single portfolio.

5. SAMPLING PROCEDURE As mentioned above, the Managed Estate comprises the Borrower Group Estate (1,080 properties) and the BankCo Estate (951 properties) and in accordance with our instructions each was sampled separately.

A list of properties which comprised the Managed Estate was provided by the Company.

In respect of the sampling procedure undertaken on the Borrower Group Estate we took into account the following key factors:

(a) Tenure. A sample of freehold and leasehold tenure properties was identified. The leasehold tenure classification included mixed tenure and other leasehold properties.

(b) Geographical Regions. 7 geographic regions were identified for the freehold properties, based on a grouping of economic regions. Leasehold properties did not have a geographical classification due to a shortage of numbers.

128 (c) EBITDA 03/04 MAT as at June 20 2004. (d) Barrelage. For pubs originally from the former S&N portfolio, the MAT volume of beer and cider barrelage measure was used. However, barrelage data relating to pubs originally from the Burton portfolio consisted of Year to Date (48 weeks to July 20 2004). Therefore, this was adjusted by a correction factor of 13/12 to correct to the equivalent of 52 weeks. The valuation of the public houses is principally driven by tenure type, the earnings and the barrelage. Both of these latter two factors are themselves affected by location. All of the above mentioned key inputs/drivers represent the most significant valuation variables and therefore referring to them in the sampling procedure results in a robust sample. The sampling technique incorporates the key valuation inputs/drivers. The reason that the various characteristics are compelling in any valuation of a public house is that it is vital that any sample needs to include the full range, or variability, of each characteristic to ensure that the effect of these factors on the total value of the Borrower Group Estate is fully reflected in the sample chosen. The sampling technique employed endeavours to ensure that there is no imbalance or incorrect weighting being applied. There are a number of other techniques available for use in selecting a sample, including simple random sampling, systematic sampling, for example choosing every tenth property and, cluster sampling, choosing properties in, say, the South East as being representative of other properties in the UK. We do not believe these are appropriate to the Borrower Group Estate. In terms of valuation, the advantage of the sampling technique we have chosen is that the procedure ensures inclusion of properties which have characteristics from across the spectrum of tenure, geography, earnings and barrelage. A sample drawn using other techniques as described above, can run the risk of selecting by chance and therefore could exclude characteristics which should form part of the sample ‘pool’. The inclusion of the full range of the valuation key drivers is fundamental since the information derived from the sample forms the basis for extrapolating a value throughout the Borrower Group Estate. It is our opinion that it is possible to calculate the value of the Borrower Group Estate with the benefit of the inspection and analysis at an individual property level of a representative sample together with the trading records and tenure information of the whole Borrower Group Estate. At the date of sampling the Borrower Group Estate comprised 1,080 properties. For the purpose of undertaking the sampling exercise, all those properties that were closed (4) were excluded. The Borrower Group Estate comprised 1,076 properties having made the above mentioned exclusions from the sample pool. The sample was assembled by taking approximately 25 percent of the net total of 1,076 public houses from the Borrower Group Estate (the ‘‘Borrower Group Estate Sample’’). The Borrower Group Estate Sample was chosen by reference to key factors set out above. The details of the methodology are set out in detail below. The Borrower Group Estate was first divided between 984 freehold and 92 long leasehold properties. The number of properties taken from the freehold and leasehold lists amounted to approximately 25 percent of each tenure type. The proportion of freehold versus leasehold properties was calculated on a pro rata basis, dependent on the proportion of each tenure type within the overall Borrower Group Estate.

129 Borrower Group Estate

Proportion of Borrower Number of Group Number of Pubs in Estate in Pubs within Borrower Borrower Borrower Group Group Group Estate Estate Tenure Estate Sample Sample

Number Freehold Properties...... 984 246 25.0% Number Leasehold Properties ...... 92 23 25.0%

Total ...... 1076 269 25.0%

The Borrower Group Estate was then divided by geographical region whilst retaining the division of freehold and leasehold properties.

BORROWER GROUP ESTATE SAMPLE SORTED BY REGION – FREEHOLD

Borrower Group Estate Number of Number of Sample as a Pubs in As a Sample Percentage Borrower Percentage Pubs of the Group of Total Manually Regional Regional Area Estate Freehold Rounded Total

Scotland, North East...... 106 10.8% 27 25.5% Yorkshire & Humberside ...... 112 11.4% 28 25.0% North West...... 176 17.9% 44 25.0% East, East Midlands ...... 137 13.9% 35 25.5% West Midlands, Wales, South West... 146 14.8% 36 24.7% London ...... 189 19.2% 47 24.9% South East ...... 118 12.0% 29 24.6%

TOTAL ...... 984 100.00% 246 25.0%

To prepare the freehold sample, within each geographical region a sample was identified by calculating the number of pubs within the region as a percentage of the total number of pubs to be sampled. For example there are a total of 118 pubs in the South East region. This represented approximately 12 percent of the total number of freehold properties to be sampled. Approximately 25 percent of the freehold pubs in the South East region were sampled and consequently 29 pubs in the region were identified for inspection. The pubs, having been divided by region and the appropriate quantum of sample identified, were sorted by reference to the annual EBITDA, and the beer and cider barrelage. The final selection was made by calculating the number of pubs needed as a proportion of the total in the region, and of the total EBITDA and barrelage, and then making a random selection of pubs whose aggregate EBITDA and barrelage matched the target for each category. This process was then repeated for the other six geographical regions for the freehold sample.

130 Borrower Group Estate Sample – Leasehold

Borrower Group Estate Number of Number of Sample as a Pubs in As a Sample Percentage Borrower Percentage Pubs of the Group of Total Manually Regional Regional Area Estate Freehold Rounded Total

TOTAL ...... 92 0.00% 23 25.0%

Due to the small number of leasehold pubs in this analysis the geographical region classification was not used. Instead, a sample was identified by calculating the number of pubs within the leasehold group as a percentage of the total number of pubs to be sampled. The pubs, having been divided by region and the appropriate quantum of sample identified, were sorted by reference to the annual EBITDA, and the beer and cider barrelage. The final selection was made by calculating the number of pubs needed as a proportion of the total in the leasehold group, and of the total EBITDA and barrelage, and then making a random selection of pubs whose aggregate EBITDA and barrelage matched the target for each category. The total EBITDA and beer and cider barrelage of the pubs in the Borrower Group Estate Sample were then tested by reference to the total EBITDA and the total beer and cider barrelage within the whole Borrower Group Estate. The Borrower Group Estate Sample falls within 0.5 per cent of the total of the Borrower Group Estate. A list of the properties comprising the Borrower Group Estate Sample is attached at Appendix 2. A list of properties which comprised the BankCo Estate was provided by the Company. This comprised 951 pubs. In respect of the BankCo Estate and in accordance with our instructions, we undertook a random sample (the ‘‘BankCo Estate Sample’’) of the 951 properties (that comprised the BankCo Estate at the date of sampling) so as to bring the total amount of properties being inspected up to 370 (the ‘‘Spirit Estate Sample’’). This meant that out of the 951 properties that now comprise the BankCo Estate 101 were inspected. A list of the properties comprising the BankCo Estate Sample is attached at Appendix 3.

6. INSPECTIONS Fleurets of 18 Bloomsbury Square, London WC1A 2NS, who are specialist property advisers within the public house sector, have inspected the 370 properties comprising the Spirit Estate Sample. Fleurets have provided us with their report dated 20 September 2004, which includes their opinions of separate Market Rents of the freehold and long leasehold properties based on a ‘standard tenanted pub lease’; the Fair Maintainable Barrelage, Turnover, Unit EBITDA and gross income from machines (i.e. AWP income); the likely estimated level of repairs and maintenance which are the responsibility of the Spirit Group and an assessment of the future potential of each property. The inspections were undertaken by Fleurets between 28 August and 20 September 2004.

7. DEFINITION OF MARKET VALUE We have assessed Market Value in accordance with UKPS 3.2. Under these provisions, the term ‘‘Market Value’’ means: ‘‘The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.’’ In undertaking our valuation on the basis of Market Value we have applied the interpretative commentary and standards (‘‘Standards’’) which have been settled by the International Valuation Standards Committee (IVSC). The commentary is included in UKPS 3.2. The commentary is reproduced below:

131 The term ‘property’ is used because the focus of these Standards is the valuation of property. As these Standards encompass financial reporting, the term ‘‘asset’’ may be substituted for general application of the definition. Each element of the definition has its own conceptual framework. ‘The estimated amount ...’ Refers to a price expressed in terms of money (normally in the local currency) payable for the property in an arm’s-length market transaction. Market Value is measured as the most probable price reasonably obtainable in the market at the date of valuation in keeping with the Market Value definition. It is the best price reasonably obtainable by the seller and the most advantageous price reasonably obtainable by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as a typical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of Special Value (defined in IVSC Standard 2, para. 3.11). ‘... a property should exchange ...’ Refers to the fact that the value of an asset is an estimated amount rather than a predetermined or actual sale price. It is the price at which the market expects a transaction that meets all other elements of the Market Value definition should be completed on the date of valuation. ‘... on the date of valuation ...’ Requires that the estimated Market Value is time-specific as of a given date. As markets and market conditions may change, the estimated value may be incorrect or inappropriate at another time. The valuation amount will reflect the actual market state and circumstances as of the effective valuation date, not as of either a past or future date. The definition also assumes simultaneous exchange and completion of the contract for sale without any variation in price that might otherwise be made. ‘... between a willing buyer ...’ Refers to one who is motivated, but not compelled to buy. This buyer is neither over-eager nor determined to buy at any price. This buyer is also one who purchases in accordance with the realities of the current market and with current market expectations, rather than in an imaginary or hypothetical market which cannot be demonstrated or anticipated to exist. The assumed buyer would not pay a higher price than the market requires. The present property owner is included among those who constitute ‘the market’. A valuer must not make unrealistic assumptions about market conditions or assume a level of Market Value above that which is reasonably obtainable. ‘... a willing seller ...’ Is neither an over-eager nor a forced seller prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. The willing seller is motivated to sell the property at market terms for the best price attainable in the (open) market after proper marketing, whatever that price may be. The factual circumstances of the actual property owner are not a part of this consideration because the ‘willing seller’ is a hypothetical owner. ‘... in an arm’s-length transaction ...’ Is one between parties who do not have a particular or special relationship (for example, parent and subsidiary companies or landlord and tenant) which may make the price level uncharacteristic of the market or inflated because of an element of Special Value, (defined in IVSC Standard 2, para. 3.11). The Market Value transaction is presumed to be between unrelated parties each acting independently. ‘... after proper marketing ...’ Means that the property would be exposed to the market in the most appropriate manner to effect its disposal at the best price reasonably obtainable in accordance with the Market Value definition. The length of exposure time may vary with market conditions, but must be sufficient to allow the property to be brought to the attention of an adequate number of potential purchasers. The exposure period occurs prior to the valuation date. ‘... wherein the parties had each acted knowledgeably, prudently ...’ Presumes that both the willing buyer and the willing seller are reasonably informed about the nature and characteristics of the property, its actual and potential uses and the state of the market as of the date of valuation. Each is further presumed to act for self-interest with that knowledge and prudently to seek the best price for their respective positions in the transaction. Prudence is assessed by referring to the state of the market at the date of valuation, not with the benefit of hindsight at some later date. It is not necessarily imprudent for a seller to sell property in a market with falling prices at a price which is lower than previous market levels. In such cases, as is true for other purchase and sale situations in markets with changing prices, the prudent buyer or seller will act in accordance with the best market information available at the time.

132 ‘... and without compulsion ...’ Establishes that each party is motivated to undertake the transaction, but neither is forced or unduly coerced to complete it. Market Value is understood as the value of a property estimated without regard to costs of sale or purchase and without offset of any associated taxes. The RICS considers the application of the Market Value definition provides the same result as Open Market Value, a basis of value supported by previous editions of the Red Book. As referred to in Section 3.1, we have qualified the above definition by assuming in the case of our estimated assessment of value that each property may be used only for its existing use for the foreseeable future. No regard has been had to potential alternative uses.

8. STATUS OF VALUER AND CONFLICTS OF INTEREST We confirm that we have undertaken the valuation of the Managed Estate acting as External Valuers as defined in the Red Book, qualified for the purposes of the valuation. As stated above DTZ Debenham Tie Leung Limited undertook a valuation of the Spirit estate in June 2000, April 2002 and August 2003 in respect of the initial securitisation and subsequent refinancings. We do not consider that any conflict arises in preparing the advice herein as requested by Spirit and they have confirmed this in the letter of instruction.

9. ADJUSTMENTS We have made no adjustments to reflect any liability to taxation that may arise on a disposal, nor for any costs associated with a disposal incurred by the owner. No allowance has been made to reflect any liability to repay any government or other grants, taxation allowance or lottery funding or VAT that may arise on a disposal. The valuation in this report is net of VAT at the prevailing rate. We have made a deduction to reflect purchasers’ normal acquisition costs. We believe the market would adopt, in respect of this, a figure of 5.75 percent

10. ASSUMPTIONS AND SOURCES OF INFORMATION An assumption (‘‘Assumption’’) is defined in the Glossary to the Red Book as a ‘‘supposition taken to be true’’. Assumptions are facts, conditions or situations affecting the subject of, or approach to, a valuation that, by agreement, need not be verified by a valuer as part of the valuation process. In undertaking our valuations, we have made a number of Assumptions and have relied on certain sources of information. Where appropriate, the Company has confirmed that our Assumptions are correct so far as they are aware. In the event that any of these Assumptions prove to be incorrect then our valuation(s) should be reviewed. The Assumptions we have made for the purposes of our valuation(s) are referred to below:

10.1 Title We have not been given access to the title deeds of any of the properties and have been instructed to assume that the Company has possession of good and marketable freehold, feuhold and leasehold title in each case and that the properties are free from rights of way or easements, restrictive covenants, disputes or onerous or unusual outgoings. We have been instructed to assume that any title or other issues that would be revealed by the Property Due Diligence Reports, certificates of title, or otherwise in respect of the Managed Estate are not materially worse than would ordinarily be expected in a portfolio of public houses of this size, age and diversity. We have also been instructed to assume that any title or other issues that there may be are capable of being resolved in such a way that they will not materially adversely affect the marketability of the Managed Estate as a whole or its acceptability as suitable security. Furthermore, we have been instructed to assume that the properties comprising the Managed Estate are free from mortgages, charges or other encumbrances.

10.2 Condition of Structure and Services & Deleterious Materials Due regard was paid to the state of repair and condition of each property inspected and, as instructed, condition surveys were not undertaken, nor were woodwork or other parts of the

133 structure which were covered, unexposed or inaccessible, inspected. Therefore, we are unable to report that any of the properties are structurally sound or are free from any defects. We have assumed that all the properties are free from any rot, infestation, adverse toxic chemical treatments, and structural or design defects. As instructed, we have not arranged for investigations to be made to determine whether high alumina cement concrete, calcium chloride additive or any other deleterious material have been used in construction or any alterations, and therefore we cannot confirm that the properties are free from risk in this regard. For the purposes of this valuation, it has been assumed that any investigation would not reveal the presence of such materials in any adverse condition. No mining, geological or other investigations have been undertaken to certify that the site is free from any defect as to foundations. Where relevant, we have assumed that the load bearing qualities of the sites of the properties are sufficient to support the buildings constructed, or to be constructed thereon. We have also assumed that there are no abnormal ground conditions, nor archaeological remains present, which might adversely affect the present or future occupation, development or value of the properties comprising the Managed Estate. No tests have been carried out as to electrical, heating or any other services nor have the drains been tested. However, we have assumed all services to be functioning satisfactorily. It is a condition of DTZ Debenham Tie Leung Limited or any related company, or any qualified employee, providing advice and opinions as to value, that the client and/or third parties (whether notified to us or not) accept that this report in no way relates to, or gives warranties as to, the condition of the structure, foundations, soil and services.

10.3 Environmental Matters We have been instructed not to make any investigations in relation to environmental matters and to make enquiries of the Company. The Company has confirmed to us that it is not aware of any environmental issues that would impact on the valuations reported. Therefore in accordance with our instructions we have assumed that no contamination or other adverse environmental matters exist in relation to the Managed Estate sufficient to affect value. We have no basis upon which to assess the reasonableness of this assumption. If it were to prove invalid then the value would fall by an unspecified amount. Other than as referred to above, we have not made any investigations to establish whether there is any contamination or potential for contamination to the subject properties. A purchaser in the market might, in practice, undertake further investigations than those undertaken by us. If it is subsequently established that contamination exists at the properties or on any neighbouring land, or that the premises have been or are being put to any contaminative use then this might reduce the estimated assessment of value now reported. Commensurate with our assumptions set out above we have not made any allowance in this estimated assessment of value for any effect in respect of actual or potential contamination of land or buildings.

10.4 Plant and Machinery In undertaking our valuation (qualified by the existing use of the Managed Estate) as a fully equipped and operational entity, we have included in this report reference to trade fixtures, fittings, furniture and furnishings and equipment necessary to sustain the business carried out. We have excluded vehicles, stock and loose tools.

10.5 Floor Areas None of the properties in the Managed Estate have been measured.

10.6 Goodwill No reflection has been made in our estimated assessment of value of any goodwill that may arise from the present occupation of any of the properties in the Managed Estate.

10.7 EBITDA Levels/Barrelage/Direct Costs and Other Commercial Information Details of historic and current EBITDA levels, barrelage, direct costs and other commercial information have been supplied to us by the Company. We have relied on all such information,

134 which we have assumed is full, up-to-date and correct and understand that this information corresponds with that which has been made available to all the advisers.

10.8 Statutory Requirements and Planning In accordance with your instructions we have made no enquiries of the local planning authorities. We have assumed that each of the public houses and all ancillary buildings have been constructed and are currently being used in full compliance with valid town planning and building regulations approvals, that where relevant, each has the benefit of a current fire certificate, and that none of them is subject to any statutory notice as to their construction, use or occupation, unless we are aware of information to the contrary. It has been assumed that each building has been constructed in full compliance with valid town planning and building regulations approvals. It has been further assumed that the existing use of each building is duly authorised and established, that relevant and valid Justices’ Full On Licences (or Scottish equivalent) are held for all buildings or parts thereof where alcoholic beverages are sold or consumed and that no material adverse planning restrictions apply unless we are aware of information to the contrary. We have assumed that, if you should need to rely upon information given about town planning matters, your solicitors should be instructed to institute formal searches. It is a requirement of the Food Safety Act 1990 that all premises involved in cooking, preparing, handling, storing, selling or transporting food should be registered. Failure to do so can mean the imposition of penalties by the authorities. Where appropriate, we have assumed that each property within the Managed Estate has been registered and either complies with, or the necessary steps will be taken to comply with, the regulations. No account of the cost of compliance has been allowed for within the estimated assessment of value. As instructed, no allowance has been made for rights, obligations or liabilities arising under the Defective Premises Act 1972, the Disability Discrimination Act 1995 as amended or the Control of Asbestos at Work Regulations 2002.

10.9 Leases In undertaking the valuation of the Managed Estate, we have relied on and have reflected the lease details which are contained in a schedule which has been sent to us by the Company. As instructed, we have assumed that whenever rent reviews or lease renewals are pending with anticipated reversionary increases, all notices and where appropriate counter notices have been served validly and within the appropriate time.

10.10 Information We have assumed that all information provided to us by the Company and their professional advisers in respect of the Managed Estate is both full and correct and corresponds with that which has been made available to all the advisers. It follows that we have assumed that details of all matters likely to affect value within the Company’s knowledge have been made available to us and that the information is up to date.

10.11 Taxation No adjustment has been made to reflect any liability to taxation that may arise on disposal, nor for any costs associated with disposal incurred by the owner. Furthermore, no allowance has been made to reflect any liability to repay any government or other grants, or taxation allowances that may arise on disposal.

10.12 Landlord and Tenant Act 1987 The Landlord and Tenant Act 1987 (the ‘‘Act’’) gives certain rights to defined residential tenants to acquire the freehold/head leasehold interest in a building where more than 50% of the floor space is in residential use. Where this is applicable, we have assumed that necessary notices have been given to the residential tenants under the provisions of the Act, and that such tenants have elected not to acquire the freehold/head leasehold interest, and therefore disposal into the open market is unrestricted.

135 11. DEVELOPMENT PROPERTY None of the properties within the Managed Estate have been valued on the basis of development potential since we have assumed that their collective value, having regard to their existing use as public houses forming part of a portfolio of public house assets, exceeds any value derived from individual development for another use.

12. DIRECTORS’ INTERESTS The Directors of the Company have confirmed to us that they have not at any time had any interest in any acquisitions or disposals of any buildings or property within the Managed Estate other than in respect of the following properties: Bar Room Bar, Rosslyn Hill, Hampstead; Bar Room Bar, Battersea Park Road, Battersea; and Bar Room Bar, Kennington Road, Kennington.

13. EXPENDITURE AND REVENUE The Company has provided us with historic maintenance costs as well as future forecasts/budgets in respect of the Managed Estate. These items, as well as detail on additional income that is receivable by the Spirit Group companies such as income from gaming machines, have been relied upon and taken into account in this valuation.

14. NON-RECOVERABLE EXPENDITURE In addition to the Company’s predicted annual expenditure by Spirit Group companies on maintenance and repairs we have also made an allowance to reflect the additional cost of managing/supervising the Managed Estate. The additional cost of employing management staff appropriate to the Managed Estate has been allowed against the income receivable. This deduction does not reflect ‘head office’ costs.

15. VALUATION OF THE BORROWER GROUP ESTATE AND THE MANAGED ESTATE The valuations have attributed a single figure to the each of the Borrower Group Estate and the Managed Estate rather than individual values for each of the properties. In our opinion, the Borrower Group Estate and the Managed Estate would be marketed as portfolios and sold as a whole rather than as individual units. The valuation reflects the most likely manner in which the Borrower Group Estate and the Managed Estate would be sold/offered for sale in the market. We have deducted purchaser’s costs of 5.75% from the estimated assessment of value of the Borrower Group Estate and the Managed Estate. It is acknowledged that in practice large portfolios of pubs are purchased by way of a corporate acquisition and therefore stamp duty at 4.00% would not be payable. However, a deduction of purchaser’s costs at 5.75% reflects the fact that a valuation of property is being undertaken and not of a corporate entity. The valuation is based on the information provided to us on the the Managed Estate by the Company particularly in respect of sales, EBITDA and the barrelage volume. The Company has provided details in respect of these matters which for reasons of commercial sensitivity are not reproduced here. The basis of the estimated assessment of value is to identify the various income streams that form the EBITDA figure. This is necessary since the capitalisation rates applied to the income streams will vary. There are four main definable sources of income. Firstly the affordable rent, secondly the AWP income, thirdly the ‘profit’ element and fourthly the level of beer discount. From the information provided we have made an assessment of the affordable rent. This represents an estimate of the amount of rent which would be generated were the Borrower Group Estate and the Managed Estate to be leased. In addition there is the balance of the adjusted EBITDA which can be determined as the ‘profit’, which is generated by the Borrower Group Estate and the Managed Estate. Since the Borrower Group Estate and the Managed Estate are directly controlled this income is also valued, whereas it would not be if this were a leased estate since the income would be limited to the rents received from the tenants and the beer discount income. The adjusted EBITDA reflects deductions made from the EBITDA in order to reflect the beer discount achieved and the proportion of EBITDA which is made up by AWP profit. This enables an analysis to be made in order to arrive at the affordable rent.

136 Therefore, by adjusting the EBITDA and setting out the hypothetical beer discount figure it is possible to see the four defined sources of income. Firstly, the affordable rent, secondly the AWP income, thirdly the ‘profit’ element and fourthly the level of beer discount. In terms of capitalisation rates the affordable rent is considered the most secure form of income and is therefore capitalised at a lower yield/higher multiplier than the profit element of the income. The profit element is layered in 25 percent tranches with the lowest yield/highest multiplier on the first 25 per cent and the highest yield/lowest multiplier being on the last 25 percent tranche, that being the income stream most at risk. The AWP income is also capitalised at a higher yield/lower multiplier than the affordable rent, again to reflect that it is also less secure than the hypothetical affordable rent. The estimated beer discount is also capitalised at a higher yield/lower multiplier than the hypothetical affordable rent. From the total of these four capitalised income sources various deductions are made such as an allowance for annual repairs and maintenance, and also an estimated annual management cost. Both of these annual deductions are capitalised at the blended yield rate and deducted from the gross value. The valuation of the Borrower Group Estate is also checked by reference to value generated from a hypothetical sale and leaseback with the rent set as percentage of EBITDA and capitalised at an investment yield with residual EBITDA capitalised at a lower rate to reflect risk.

16. VALUATION We are of the opinion that the Market Value for the Borrower Group Estate in its existing use, at the Valuation Date, subject to the assumptions and comments in this valuation report, is: £2,265,000,000 (Two Billion Two Hundred and Sixty Five Million Pounds) We are of the opinion that the Market Value for the Managed Estate in its existing use, at the Valuation Date, subject to the assumptions and comments in this valuation report, is: £3,145,000,000 (Three Billion One Hundred and Forty Five Million Pounds)

17. CONFIDENTIALITY AND DISCLOSURE The contents of this valuation report and appendices may be relied upon only by the addressees in connection with the Transaction. No reliance may be placed upon the contents of this valuation report by any party who is not an addressee of this valuation report or by an addressee of this valuation report for any purpose other than in connection with the Transaction. Neither this valuation report, nor any part thereof, may be reproduced or referred to, in any document, circular or statement, nor may its contents, or any part thereof, be disclosed orally, or otherwise to a third party, without the valuer’s written approval as to the form and context of such publication or disclosure. Such publication or disclosure will not be permitted unless, where relevant, it incorporates the departures from the Red Book referred to herein. For the avoidance of doubt such approval is required whether or not DTZ Debenham Tie Leung Limited are referred to by name and whether or not the contents of this valuation report are combined with others. In so far as this valuation report is addressed to named addressees where the addressees are referred to generically, no reliance may be placed upon this report, until such time as we are informed in writing as to the identity of the party(ies) concerned. We confirm that we have given our consent for this valuation report to be reproduced in full in the Offering Circular.

Yours faithfully

PAUL WOLFENDEN CHARTERED SURVEYOR DIRECTOR FOR AND ON BEHALF OF DTZ DEBENHAM TIE LEUNG LIMITED

137 Appendix 1A – Borrower Group Estate

Outlet Number Outlet name Town Post Code

1. C0015 Plough Inn Brackley NN13 7DW 2. C0058 Grosvenor Nottingham NG5 2BY 3. C0080 Britannia Northampton NN4 7AA 4. C0086 Fish Inn Northampton NN1 2AA 5. C0101 Trumpet Northampton NN3 3JB 6. C0102 Bunch Of Grapes London SW3 1LA 7. C0104 White Elephant Northampton NN2 7HG 8. C0105 Whitehills Northampton NN2 8EW 9. C0124 Swan London WC1N 3AP 10. C0154 Queen Eleanor Northampton NN4 0JN 11. C0155 Yeoman Of England Northampton NN4 6LP 12. C0191 Red Lion Northampton NN7 1BP 13. C0205 Imperial London WC2H 7BL 14. C0208 White House Leicester LE7 9SE 15. C0210 Robin Hood Nr Huntingdon PE27 5AL 16. C0218 Squirrels Northampton NN6 6JF 17. C0255 Gade & Goose Hemel Hempstead HP 1 3LB 18. C0279 Horseshoe Warlingham CR6 9EG 19. C0347 White Horse Shere GU 5 9HS 20. C0348 Barley Mow Walton KT12 4RS 21. C0350 Prince Of Wales Esher KT10 8LA 22. C0356 FW – Victoria London SW1P 2HP 23. C0359 Ye Olde Anthropologist West Wickham BR4 0LU 24. C0393 Duck London SW11 1EJ 25. C0421 Crabtree London W6 9HA 26. C0431 Durell London SW6 5SB 27. C0441 George London W6 7AB 28. C0443 Jovial Sailor Woking GU23 6EZ 29. C0459 Prince Of Wales London SW6 1TU 30. C0487 Winning Post Twickenham TW2 6LS 31. C0504 Goldsmiths Arms London W3 7ER 32. C0505 Egerton Arms Chelford SK11 9BB 33. C0519 Ailsa Twickenham TW1 1NJ 34. C0563 Duke Of York Hounslow TW4 5NP 35. C0573 Goat Shepperton TW17 8RX 36. C0600 Adam & Eve London SW1H 9EX 37. C0612 Courtfield London SW5 9AN 38. C0630 Greencoat Boy London SW1P 1PJ 39. C0631 Green Man London NW1 3AU 40. C0634 Hog In The Pound London W1K 5RF 41. C0650 R & P – Holland Park London W11 3QY 42. C0656 Old Swan London W8 4DP 43. C0657 Wellesley Arms London SW3 6NJ 44. C0664 Scarsdale London W8 6HE 45. C0674 Tattersalls Tavern London SW1X 7QA 46. C0693 Colonies London SW1E 6PR 47. C0695 Fitzrovia London W1T 2QF 48. C0734 Prince Albert London SW11 4PF 49. C0736 Fountains Abbey London W2 1RL 50. C0737 St James Taverns London W1D 7LU 51. C0751 Queens Head London W6 7BL 52. C0753 Greenman London W2 1DY 53. C0774 R & P – W Hampstead London NW6 2LU 54. C0805 Jeremy Bentham London WC1E 6JL 55. C0809 Horse & Jockey Manchester M21 9HS

138 Outlet Number Outlet name Town Post Code

56. C0820 Lyric London W1D 7LU 57. C0824 Barley Mow Public House London W4 4JE 58. C0828 Shakespeare London SW1W0RP 59. C0830 Duke Of York London W1S 1AA 60. C0833 Shaw Farm Chelmsford CM3 5QS 61. C0834 St Margarets Twickenham TW1 2LJ 62. C1018 Globe London NW1 5JY 63. C1033 College Arms Reading RG 6 1JL 64. C1039 Jolly Waggoner Hounslow TW5 9TL 65. C1054 Queen Elizabeth Chingford E4 6BA 66. C1099 Victoria Waltham Cross EN8 9BH 67. C1100 Cold Harbour Swindon SN26 8DJ 68. C1104 Poachers Stevenage SG 1 1NA 69. C1121 Shipley Bridge Horley RH 6 9TE 70. C1124 George Gravesend DA12 5UQ 71. C1125 Gravesend Boat Gravesend DA12 4NQ 72. C1127 Leather Bottle Cobham DA12 3BZ 73. C1141 Graces London SE20 7YA 74. C1142 Elmer Lodge Beckenham BR 3 3RG 75. C1147 Coach House Bexleyheath DA 6 7QG 76. C1151 Pickhurst West Wickham BR 4 0HH 77. C1164 Kings Arms London EC2M 1RP 78. C1198 Prince Of Wales London W8 4EP 79. C1203 Little B Sale M33 3ND 80. C1207 Royal Oak London W2 5AA 81. C1208 Shakespeare London W2 4UJ 82. C1211 Cock London SW6 1LY 83. C1215 Kings Head London SW17 7PB 84. C1249 Yew Tree Colchester CO 6 4EG 85. C1276 Essex Yeoman Upminster RM14 2TD 86. C1278 Griffin Chelmsford CM3 4DH 87. C1286 Sun Romford RM7 9QA 88. C1293 Crown Inn Penn HP10 8PG 89. C1311 Moor Top Stockport SK 4 4DU 90. C1313 Moss Trooper Timperley WA15 6JU 91. C1372 Ram Kingston Upon Thames KT 1 1HL 92. C1384 Sherwood Oak Chatham ME5 9NT 93. C1387 Red Lion Haywards Heath RH17 6BP 94. C1408 Nags Head Huddersfield HD2 2EA 95. C1467 Ye Olde Valentine Ilford IG 2 6BX 96. C1575 Old Surrey Hounds Caterham CR 3 6QA 97. C1586 City Barge London W4 3PH 98. C1617 Blue Anchor Bexley DA 5 1JE 99. C1701 Quadrant Manchester M32 8GR 100. C1723 Travellers Rest Hartlepool TS25 1LB 101. C1731 Ye Olde Starre Inn York YO 1 8AN 102. C1733 Golden Lion York YO 1 8AN 103. C1734 Cross Keys York YO24 1LQ 104. C1737 Grosvenor Felixstowe IP11 7HA 105. C1741 Shepherd & Dog Ipswich IP10 0DF 106. C1748 Station Hotel Ipswich IP 2 8AJ 107. C1754 Golden Hind Cambridge CB 4 1SP 108. C1765 Jolly Maltster London SW6 1AY 109. C1779 Lord Raglan London EC1A 4ER 110. C1800 John Baird London N10 3HN 111. C1813 Kings Arms London SE10 9JH 112. C1833 Crown London SE3 0BS

139 Outlet Number Outlet name Town Post Code

113. C1916 Swan Warrington WA 2 8LF 114. C1925 Sawyers Arms Manchester M3 2RP 115. C1927 Sale Hotel Sale M33 3NW 116. C2030 Blackbrook Inn Taunton TA 3 5LU 117. C2229 Tilgate Crawley RH10 5EJ 118. C2269 Imperial Crawley RH11 9BA 119. C2294 Windmill Crawley RH11 8HQ 120. C2352 Mulberry Worthing BN12 4NX 121. C2394 Crown & Anchor Chichester PO20 7EB 122. C2510 Crab Apple Inn Clevedon BS21 7UL 123. C2513 Wooden Bridge Guildford GU 2 9AA 124. C2741 Henry’S Cafe Bar – Norwich Norwich NR 2 1QD 125. C2758 Red Lion Egham TW20 8UE 126. C2822 Green Man Bracknell RG12 7DL 127. C2828 Stoke Guildford GU 1 4JN 128. C2885 Anchor Woking GU23 6QW 129. C3006 Packhorse & Talbot London W4 2DT 130. C3013 FW – Ealing London W5 5QX 131. C3016 Rose & Crown Coventry CV 2 4BN 132. C3061 Maple Leaf London WC2E 7LJ 133. C3070 Molly Miller Wokingham RG40 2AD 134. C3089 Crown Inn Worcester WR 2 6LB 135. C3108 Glassblower London W1B 5BL 136. C3113 Spread Eagle London W1C 2AB 137. C3128 Pig & Whistle London SW14 8LP 138. C3144 Grace Arms Ellesmere Port CH65 9AH 139. C3150 Boot Inn Sutton Coldfield B75 7RU 140. C3152 Harrow Erith DA 8 3PZ 141. C3204 Cock O’ The North Bristol BS 9 4HP 142. C3207 Marquis Of Granby London WC2H 8HJ 143. C3223 Iron Bridge Bristol BS 9 2PR 144. C3322 Swiss Cottage Brighton BN43 5TD 145. C3342 Station Hove BN3 3RU 146. C3381 Horseshoe Bristol BS16 6BA 147. C3399 White Hart Bristol BS 4 5BD 148. C3425 Chequers Nr Hook RG27 0NS 149. C3455 Bath Arms Warminster BA12 9AZ 150. C3487 Station Southampton SO18 1GT 151. C3514 Beaufort Arms Birmingham B42 1NP 152. C3557 Bellemoor Southampton SO15 7NU 153. C3603 Beehive London W1U 6BF 154. C3624 Bricklayers Newbury RG14 5HB 155. C3641 Kings Arms London W1F 8QL 156. C3657 Phoenix London SW1E 5JA 157. C3714 Cambridge London W1P 3PA 158. C3721 Swan London W2 3PH 159. C3813 Coopers Arms Romford RM6 6PR 160. C3834 Halfway House Southend On Sea SS 1 3AD 161. C3847 Headley Brentwood CM13 3HS 162. C3849 Carpenters Arms Wickford SS11 8TZ 163. C3852 Moby Dick Romford RM6 6QU 164. C3873 Golden Fleece London E12 5DB 165. C3880 Horse & Groom Chelmsford CM1 3RU 166. C3893 Peterboat Leigh On Sea SS 9 2EN 167. C3894 Royal Oak South Ockendon RM15 6SD 168. C4057 Burnbrae Glasgow G61 2TX 169. C4129 Gatwick Manor Hotel Nr Crawley RH10 2ST

140 Outlet Number Outlet name Town Post Code

170. C4141 Hutt Nottingham NG15 9HJ 171. C4163 Ethorpe Hotel Gerrards Cross SL 9 8HX 172. C4190 Victoria Canterbury CT 2 8JY 173. C4333 Harte & Garter Hotel Windsor SL 4 1LR 174. C4407 Shepherds House Bracknell RG42 6ER 175. C4437 Fox & Hounds Southampton SO31 8DE 176. C4529 Croft Tavern Southampton SO45 5GS 177. C4619 Rushcutters Arms Norwich NR 7 0HE 178. C4666 Himley House Nr Dudley DY 3 4LD 179. C5026 Talbot London SW1X 7AL 180. C5035 Jaw Bone Bootle L 20 3BZ 181. C5051 Cedar Tree Caerphilly CF83 3HX 182. C5602 Coach & Horses Hounslow TW3 1PG 183. C5648 Court House Caerphilly CF83 1FN 184. C5681 Ostler Uxbridge UB 8 1QS 185. C5957 George Inn Bath BA 2 6TR 186. C6106 Axe & Cleaver Altrincham WA14 4JE 187. C6206 Rodmill Eastbourne BN21 2QP 188. C6210 Blue Cap Northwich CW8 2DN 189. C6226 Bulls Head Wilmslow SK 9 3EW 190. C6701 Curtains Up London W14 9HR 191. C6708 Chelsea Potter London SW3 4PL 192. C6718 Rat & Parrot – Bayswater London W2 4QH 193. C6721 Bull London EC2M 4RH 194. C6723 Earls Court Tavern London SW5 9RL 195. C6724 Dickens London W2 1HH 196. C6729 Redan London W2 4UA 197. C6734 Tea Clipper London SW7 1HF 198. C6735 Kensington London W14 8EZ 199. C6736 Red Lion London W1J 5QN 200. C6737 Albert London SW1H 0NP 201. C6742 Kings Arms London SW1W 0QJ 202. C6749 Rising Sun London W1T 2ED 203. C6761 Greenman & French Horn London WC2N 4EA 204. C6783 Two Brewers London WC2H 9EP 205. C6789 Bulls Head London W4 3PQ 206. C6917 Guy Earl Of Warwick Welling DA16 1TB 207. C7010 Abington Northampton NN1 4EY 208. C7090 Crossroads Shepperton TW17 8EQ 209. C7175 Royal Victoria & Bull Dartford DA 1 1DU 210. C7177 Devereux London WC2R 3JJ 211. C7291 Bell East Molesey KT 8 0SS 212. C7292 Woolpack Banstead SM7 2NZ 213. C7303 Essex Serpent London WC2E 8HN 214. C7503 Bath Arms Brighton BN1 1HB 215. C7509 Downsman Crawley RH10 6DH 216. C7511 Belmont Sutton SM2 5SU 217. C7524 Worcester Park Worcester Park KT 4 7NG 218. C7531 Bullfinch Sevenoaks TN13 2DR 219. C7541 Sussex Yeoman Goring By Sea BN12 6JN 220. C7553 Royal Standard London SE3 7JQ 221. C7554 Queen Adelaide Ewell KT19 0SH 222. C7560 Rosendale London SE21 8EZ 223. C7727 Beehive Hotel London SE9 2DR 224. C8108 Allsop Arms London NW1 5AL 225. C8154 North Star London NW3 5JJ 226. C8196 Artichoke Rickmansworth WD3 3HN

141 Outlet Number Outlet name Town Post Code

227. C8290 Pied Piper London SW15 1RS 228. C8302 Old Orleans – Brighton Brighton BN1 1HE 229. M2050 Bridge Inn Derby DE1 3QY 230. M2059 New Road Inn Leicester LE2 6BH 231. M2061 Lodge Derby DE24 0JW 232. M2067 Trent Valley Lichfield WS13 6HB 233. M2071 Wardwick Tavern Derby DE1 1HA 234. M2074 Lynton Tavern Stafford ST17 0EA 235. M2076 Westway Stafford ST17 9YF 236. M2082 Royal Oak Huntingdon PE27 5EB 237. M2083 Pig & Truffle Lichfield WS13 6JP 238. M2085 Seven Stars Brocton ST17 0SU 239. M2089 Wulstan Newcastle ST 5 8BU 240. M2105 White Hart Hotel Uttoxeter ST14 8EU 241. M2107 White Swan Derby DE23 6GA 242. M2123 Lightwood Tavern Stoke-On-Trent ST 3 7EL 243. M2125 Darlaston Inn Nr.Stone ST15 0PX 244. M2133 Gatehouse Newcastle ST 5 3HR 245. M2138 Victoria Hotel Newcastle ST 5 0SJ 246. M2139 Alsager Arms Stoke-On-Trent ST 7 2LU 247. M2157 Bear Tavern Smethwick B66 4BX 248. M2160 Beggars Bush Sutton Coldfield B73 5BA 249. M2161 Black Horse Halesowen B62 0HJ 250. M2163 Black Horse Halesowen B62 8RJ 251. M2164 Broadway Willenhall WV12 5UJ 252. M2165 Church Tavern Birmingham B42 2LA 253. M2167 Cleveland Arms Wolverhampton WV 1 2QN 254. M2168 Coach & Horses Castle Bromwich B36 9AR 255. M2169 Cat & Fiddle Birmingham B43 7BY 256. M2171 Camp Inn Kings Norton B38 8SP 257. M2172 Clock Hotel Bickenhill B92 0EA 258. M2173 Cross Hotel Kingswinford DY 6 8AA 259. M2186 Four Oaks Sutton Coldfield B74 4TR 260. M2188 Fox & Dogs Sutton Coldfield B75 6QB 261. M2192 The Greswolde Hotel Solihull B93 0LL 262. M2193 George & Fox Penkridge ST19 5AF 263. M2194 Greyhound Burntwood WS 7 9AL 264. M2195 Hare & Hounds Birmingham B14 7JZ 265. M2197 Hare & Hounds Sutton Coldfield B76 9DD 266. M2198 Harrows Inn Wolverhampton WV 9 5AW 267. M2208 Horseshoe Birmingham B28 9BH 268. M2209 Highwood Solihull B92 8SX 269. M2210 Holly Bush Lichfield WS14 0QA 270. M2216 Lodge (Shirley) Solihull B90 1JU 271. M2225 Mount Tavern Wolverhampton WV 4 5SF 272. M2253 New Billesley Hotel Birmingham B13 0AB 273. M2257 Asbury Tavern Birmingham B43 6QU 274. M2264 Olton Tavern Solihull B92 8NA 275. M2265 Park Tavern Brierley Hill DY 6 9QG 276. M2266 Perdiswell Worcester WR 3 7JU 277. M2267 Pheasant Inn Smethwick B67 5NQ 278. M2270 Pheasant Inn Wolverhampton WV11 1YQ 279. M2279 Raven Birmingham B34 7DR 280. M2284 Rose & Crown Halesowen B63 4JP 281. M2286 Rugby Tavern Cubbington CV32 7HZ 282. M2296 Saracens Head Solihull B90 3AG 283. M2297 Sheldon Inn Birmingham B26 3SJ

142 Outlet Number Outlet name Town Post Code

284. M2298 Chase Gate Cannock WS11 1SY 285. M2300 St.Bernards Grange Birmingham B26 2NP 286. M2301 Swan Hotel Wolverhampton WV 6 9AA 287. M2305 New Tardebigge Redditch B97 6QL 288. M2306 Cabin Sedgley DY 3 3QY 289. M2311 The Lion Kenilworth CV 8 1HN 290. M2314 Woodman Inn Wolverhampton WV 8 1HZ 291. M2316 Wheatsheaf Walsall WS 6 6HX 292. M2318 White Horse Coventry CV 7 7DT 293. M2319 Scireborne Tavern Coventry CV 5 7LN 294. M2322 Sunnyside Inn Nuneaton CV10 8ER 295. M2323 Newdigate Arms Nuneaton CV12 8EF 296. M2335 Black Horse Inn Rugby CV22 7LZ 297. M2336 Boat Penkridge ST19 5DT 298. M2346 Court House Hotel Dudley DY 3 3LD 299. M2348 Olde Bull Inn Caerleon NP18 1AE 300. M2349 Bryn-Y-Mor Hotel Swansea SA 1 4JQ 301. M2355 Hand Post Hotel Newport NP20 4HX 302. M2357 New Inn Cardiff CF14 4AE 303. M2359 New Inn Motel Newport NP18 2JN 304. M2365 Six Bells Newport NP20 4ED 305. M2372 Halfway House Gwynedd LL56 4JQ 306. M2376 Three Blackbirds Inn Cwmbran NP44 3AY 307. M2381 White Horse Shrewsbury SY 2 6JJ 308. M2382 Beacon Hotel Shrewsbury SY 3 8LP 309. M2383 Grapes Inn Shrewsbury SY 3 8BH 310. M2384 Jolly Sailor Glan-Y-Morfa LL19 9SG 311. M2385 Cross Keys Buckley CH 7 3AQ 312. M2399 Heath Farm Congleton CW12 4LR 313. M2403 Chesterfield Arms Burton-On-Trent DE15 0QA 314. M2406 Park Tavern Walsall WS 1 2QG 315. M2408 Squire Yorke Wrexham LL13 7EN 316. M2409 Mary Rose Walsall WS 6 7AY 317. M2411 Westbury Tavern Newcastle ST 5 4JW 318. M2414 BRB Stratford Stratford-On-Avon CV37 6QY 319. M2416 Priors Lodge Telford TF 2 9SW 320. M2422 Heron Marsh Cardiff CF 3 2UZ 321. M2431 Fortesque Hotel Plymouth PL 4 6JQ 322. M2435 Hyde Park Hotel Plymouth PL 4 6LG 323. M2438 Manor Inn Brixham TQ 5 0NL 324. M2441 Red Lion Hotel Portsmouth PO 6 3EE 325. M2448 Flotilla & Firkin Dover CT16 1JH 326. M2449 Claremont West Byfleet KT14 6DR 327. M2461 Onslow Arms Cranleigh GU 6 8AU 328. M2469 Bedford Tavern East Croydon CR 0 2EF 329. M2472 Mook Notting Hill Gate W11 3HP 330. M2473 Fox & Hounds Carshalton SM5 3AG 331. M2483 Mitre Hotel Tooting SW17 9NH 332. M2488 Rose & Crown Wallington SM6 7HF 333. M2491 King William IV Ewell KT17 1SB 334. M2493 Blue Anchor Portsmouth PO 2 0LH 335. M2497 De Burgh Arms West Drayton UB 7 7DQ 336. M2498 Snooty Fox Crawley RH10 1LY 337. M2500 Owens Southsea PO 5 3PP 338. M2504 Star Inn East Grinstead RH19 2QR 339. M2505 Star Inn Guildford GU 1 3TY 340. M2507 Thatched House Southsea PO 4 9LT

143 Outlet Number Outlet name Town Post Code

341. M2508 Wheatsheaf Inn Banstead SM7 1BS 342. M2509 Wheatsheaf Bognor Regis PO21 2BE 343. M2511 George & Dragon Gosport PO12 1ES 344. M2512 Half Moon Crawley RH10 6SZ 345. M2515 Park Tavern Portsmouth PO 1 1DE 346. M2519 Chequers Inn Hornchurch RM11 1ST 347. M2520 Chequers Harlow CM18 7EZ 348. M2524 Captain Cook Barking IG11 7LX 349. M2526 Durham Arms Romford RM1 2EH 350. M2529 Horse & Well Woodford Green IG 8 0PS 351. M2531 King Harold Harold Wood RM3 0BS 352. M2533 Lamb Inn Romford RM1 3AB 353. M2537 Leather Bottle Colchester CO 3 4RH 354. M2538 Lord Napier Ilford IG 3 9RH 355. M2550 Spencers Arms Hornchurch RM11 2SH 356. M2551 Spread Eagle Hotel Witham CM8 2BD 357. M2555 White Hart Haverhill CB 9 8AR 358. M2558 White Hart Woodford Bridge IG 8 8AL 359. M2559 White Horse Chadwell Heath RM6 6NU 360. M2562 Adam & Eve Homerton E9 6AS 361. M2563 BRB The Askew Shepherds Bush W12 9DS 362. M2572 Bald Faced Stag East Finchley N2 8AB 363. M2574 Baring Hall Hotel Lee SE12 0DU 364. M2575 Barley Mow Westminster W1U 6QW 365. M2577 Boleyn Tavern Upton Park E6 1PW 366. M2580 Denmark Arms East Ham E6 1LA 367. M2581 Dudley Arms Paddington W2 1JP 368. M2582 The Duke Acton Green W4 5LF 369. M2583 The Elgin Notting Hill W11 1PY 370. M2590 Enkel Arms Holloway N7 6AA 371. M2599 Mortimer Arms London W1T 7NU 372. M2603 Ox And Gate Cricklewood NW2 7HS 373. M2605 Plough London WC1A 1LH 374. M2606 Fettler & Firkin Paddington W2 3QU 375. M2608 Royal Oak Hotel Golders Green NW11 0QB 376. M2610 Shortlands Tavern Bromley BR 2 0EY 377. M2612 Sussex Hotel Paddington W2 1HL 378. M2614 BRB The Gate Wood Green N22 7SS 379. M2615 Swan & Mitre Bromley BR 1 1PG 380. M2616 Sun & Woolpack Enfield EN3 6LZ 381. M2617 Tabard Chiswick W4 1LN 382. M2618 The Compass Bromley BR 1 1RY 383. M2619 BRB The Hart Hammersmith W6 9NJ 384. M2627 Windmill Cricklewood NW2 3JX 385. M2629 Mill Hill Hotel Acton W3 8ED 386. M2630 Apollo North Harrow HA 1 4HF 387. M2632 Baton St Albans AL 4 9TU 388. M2635 Bell Ruislip HA 4 6LS 389. M2638 Ballot Box North Greenford UB 6 7QL 390. M2646 Middlesex Arms South Ruislip HA 4 0HG 391. M2650 Goodwill To All Wealdstone HA 1 4UW 392. M2654 Green Man Hotel Wembley HA 9 8AF 393. M2657 Green Man Potters Bar EN6 5DB 394. M2658 George Kingsbury NW9 8SN 395. M2659 George Harpenden AL 5 2TB 396. M2663 Masons Arms Edgware HA 8 7DD 397. M2664 Merryhills Southgate N14 4EY

144 Outlet Number Outlet name Town Post Code

398. M2667 Cat & Fiddle Hatfield AL10 0SR 399. M2670 Pheasant Amersham HP 6 6HL 400. M2674 Three Tuns Uxbridge UB 8 1JN 401. M2676 Three Blackbirds Hemel Hempstead HP 1 1NR 402. M2677 BRB The Victory Pinner HA 5 5PW 403. M2678 Verulam Arms Watford WD24 5BJ 404. M2679 White Hart Hotel St.Albans AL 1 1EZ 405. M2680 Royal Stag Hemel Hempstead HP 2 5SE 406. M2684 White Swan Hoddesdon EN11 8TN 407. M2686 Ye Olde Mitre Charterhouse EC1N 6SJ 408. M2693 Red Lion Oxford OX 5 2BP 409. M2695 Downham Arms Wickford SS12 0AR 410. M2701 Arrow Boyatt Wood SO50 4QP 411. M2703 Buccaneer Eastbourne BN21 4BW 412. M2704 One Bell Crayford DA 1 4DY 413. M2711 Beaconsfield Arms High Wycombe HP13 5PB 414. M2712 Bell Maidenhead SL 6 1DP 415. M2713 White Hart Basingstoke RG22 5EQ 416. M2715 Rising Sun Staines TW19 7LB 417. M2717 North Camp Farnboro’ GU14 6ET 418. M2719 Wheatsheaf Camberley GU15 1AX 419. M2725 Kings Arms Hotel Bicester OX26 6AH 420. M2728 Town Crier Chelmsford CM3 5TB 421. M2729 Haywain St Ives PE27 3EP 422. M2740 Links Hotel Fleet GU51 3QL 423. M2742 Plough & Horses Farnboro’ GU14 9RG 424. M2744 Red Lion Egham TW20 9EW 425. M2747 Wyvern Church Crookham GU52 8JY 426. M2748 The Britannia Guildford GU 2 4BE 427. M2752 Goldsworth Arms Woking GU21 6LQ 428. M2753 The Weyside Guildford GU 1 3XJ 429. M2756 Parsons Pig Crawley RH10 3NL 430. M2759 Bull Inn Limpsfield RH 8 0DR 431. M2761 Broadway East Grinstead RH19 1EP 432. M2762 Greyhound Crawley RH10 3NS 433. M2768 Assembly (Worthing) Worthing BN11 1BJ 434. M2770 Malt House Dorking RH 4 1DX 435. M2771 White Hart Hotel Hook RG27 9DZ 436. M2772 Change Of Hart Edgware HA 8 7EE 437. M2773 Fallow Buck Enfield EN2 9JD 438. M2778 Queens Head Pinner HA 5 5PJ 439. M2784 Mitre Inn Barnet EN5 5SJ 440. M2786 Salisbury Arms Hoddesdon EN11 8TN 441. M2787 Green Dragon Cheshunt EN8 9NF 442. M2800 Three Horseshoes Nr Watford WD25 8ER 443. M2807 Halfway House Hemel Hempstead HP 3 0HP 444. M2813 Old Bell Hemel Hempstead HP 1 3AF 445. M2814 Vine Inn Hillingdon UB10 0JQ 446. M2816 Leather Bottle Leverstock Green HP 3 8QQ 447. M2818 Bell Tring HP23 5AA 448. M2820 Three Horseshoes Hemel Hempstead HP 1 2RZ 449. M2823 Swan Wheathampstead AL 4 8AR 450. M2825 Blackbirds Hertford SG14 1EX 451. M2826 Bull & Butcher Whetstone N20 9HS 452. M2827 White Hart Bicester OX26 6TB 453. M2830 Star Oxford OX20 1TA 454. M2848 Royal Oak Reading RG31 5NW

145 Outlet Number Outlet name Town Post Code

455. M2855 Three Crutches Rochester ME2 3HG 456. M2872 Chequers Sevenoaks TN13 1LD 457. M2874 The Fire Stables Wimbledon SW19 5DQ 458. M2889 Dukes Head Croydon CR 0 1DL 459. M2906 Duke Of York Richmond TW9 2NQ 460. M2907 Dukes Head Leatherhead KT22 8AG 461. M2911 Australian Chelsea SW3 2QD 462. M2915 Huntsmans Hall Worcester Park KT 4 8DR 463. M2920 Shirley Inn Croydon CR 0 8BF 464. M2921 Waddon Hotel Croydon CR 0 4NL 465. M2924 Beehive Edmonton N9 9JZ 466. M2926 Newton Arms Holborn WC2B 5EL 467. M2927 Marylebone Marylebone W1H 1DP 468. M2929 Bird In Hand Bickley BR 1 2NF 469. M2931 BRB The Grove Camberwell SE5 8RE 470. M3499 White Hart Orpington BR 6 0JY 471. M3923 Railway Hotel Dartford DA 1 1BP 472. M3924 Old Wheatsheaf Enfield EN2 6SE 473. M3925 Osidge Arms Southgate N14 5DS 474. M3927 Southbury Hotel Enfield EN1 1RG 475. M3935 Crown London WC2H 9DD 476. M3938 Chelsfield Orpington BR 6 6EY 477. M3942 Prince Alfred Maida Vale W9 1EE 478. M3950 Royal Oak New Malden KT 3 4RD 479. M3952 Red Lion London SW1A 2NH 480. M3953 Fatling & Firkin Hornchurch RM11 1TX 481. M3955 Castle Brentwood CM15 9AU 482. M3956 Duke Of Edinburgh Wanstead E11 2EY 483. M3957 Green Man Brentwood CM13 3PZ 484. M3959 Maypole Chigwell Row IG 7 6DD 485. M3965 Royal Oak Woodford Green IG 8 9LN 486. M3967 Spa Hockley SS 5 4QH 487. M3969 Wharf Hotel Grays RM17 5YX 488. M3970 Wheatsheaf Chelmsford CM1 1NT 489. M3972 White Hart Chelmsford CM2 6PG 490. M3973 Rose & Crown Colchester CO 7 9BX 491. M3975 Marquis Of Granby Harlow CM17 0AA 492. M3976 Star Bishops Stortford CM23 2JU 493. M3977 Cross Keys Hotel Saffron Walden CB10 1AX 494. M3982 Two Brewers Dartford DA 1 1EW 495. M3985 Black Lion Leighton Buzzard LU 7 1EA 496. M3986 Rose & Crown Wendover HP22 6NZ 497. M3988 Tudor Arms Watford WD24 7TR 498. M3990 Richmond Arms Hammersmith W6 7LU 499. M3992 Buckinghamshire Yeoman Aylesbury HP21 7UD 500. M3994 Golden Bell Leighton Buzzard LU 7 1AE 501. M3997 BRB Marlow Marlow SL 7 2LS 502. M3999 Wishing Well Bletchley MK 3 7DJ 503. M5941 Mulberry Bush Dunstable LU 6 1AZ 504. M5942 Clocktower Milton Keynes MK 4 2AS 505. M5943 Dove Newport Pagnell MK16 8SB 506. M5944 Horse & Jockey Aylesbury HP19 9QL 507. M5945 Nags Head Great Linford MK14 5AX 508. M5946 Lakeside Milton Keynes MK15 9HQ 509. M5949 Frogshole Farm Maidenbower Village RH10 7QF 510. M5950 Rogano Glasgow G1 3AN 511. M5952 Abbot’S Inch Renfrew PA 4 0RA

146 Outlet Number Outlet name Town Post Code

512. M5962 Westwood East Kilbride G75 8EQ 513. M5963 Abbey Edinburgh EH 8 9PP 514. M5968 Tickled Trout Edinburgh EH14 1TG 515. M5971 Festival Alehouse Edinburgh EH 3 8BJ 516. M5995 Scotts Edinburgh EH 2 4AZ 517. M5999 Ye Olde Inn Edinburgh EH 4 5BZ 518. M6002 Livingston Inn Livingston EH54 7AF 519. M6019 Auld Hoose Perth PH 2 8PA 520. M6021 Central Bar Aberdeen AB24 2EU 521. M6169 Old Chequers Thatcham RG19 3HP 522. M6176 Ty Glas Llanishen CF14 5DX 523. M6189 Hen & Chickens Bedminster BS 3 1JF 524. M6190 Northway Public House Tewkesbury GL20 8HQ 525. M6191 Harvester Swindon SN5 7DL 526. M6193 Rotunda Tavern Cheltenham GL50 1SX 527. M6197 Quakerwood York YO24 3XN 528. M6198 Blue Lion Newton Le Willows WA12 9SL 529. M6199 Three Pigeons Bolton BL 3 4RD 530. M6200 Crofters Arms Bolton BL 2 3EW 531. M6201 Ainsworth Arms Radcliffe M26 4LJ 532. M6203 Red Lion Worsley M28 1ER 533. M6204 Hare & Hounds Lowton WA 3 2DP 534. M6208 Avenue Leigh WN7 1QR 535. M6209 White Horse Harwood BL 2 4HT 536. M6211 City Arms Manchester M2 4BQ 537. M6215 Stags Head Hotel Bolton BL 3 4EB 538. M6216 Cherry Tree Culcheth WA 3 4EY 539. M6222 Oak Tree Inn Newton-Le-Willows WA12 9UY 540. M6223 Plough Stockport SK 4 4NZ 541. M6224 Stonemasons Arms Timperley WA15 7UR 542. M6225 Bay Horse East Ardsley WF 3 2HQ 543. M6233 Regent Chapel Allerton LS 7 4PE 544. M6235 Crown & Anchor Leeds LS13 1HP 545. M6307 Black Bull Huddersfield HD3 3JT 546. M6308 Squinting Cat Pannal Ash HG 3 1QF 547. M6311 Clothiers Yeadon LS19 7PP 548. M6314 Crown Inn Knaresborough HG 5 0HB 549. M6316 New Inn Wetherby LS22 6LL 550. M6318 Station Guiseley LS20 8BH 551. M6320 Black-A-Moor Head Selby YO 8 4DT 552. M6328 Craven Heifer Bradford BD5 8DH 553. M6329 Crown Bradford BD7 4AH 554. M6340 White Swan Bradford BD6 1JU 555. M6341 Fleece Bradford BD14 6RE 556. M6343 Blackmoor Head Pontefract WF 8 1AN 557. M6345 New Inn Wakefield WF 4 3AX 558. M6346 Union Inn Wakefield WF 2 8UB 559. M6348 Sun Wakefield WF 3 3HF 560. M6357 William Iv Inn Halifax HX 1 3JZ 561. M6358 Angel Baildon BD17 6LX 562. M6359 Fleece Leeds LS28 5LF 563. M6360 Great Northern Bradford BD10 9TD 564. M6361 Greyhound Bradford BD4 0RR 565. M6364 Halfway House Shipley BD17 7PY 566. M6366 Midland Hotel Bingley BD16 2HZ 567. M6367 Travellers Inn Sheffield S35 9WP 568. M6368 Scandals Sheffield S35 2UU

147 Outlet Number Outlet name Town Post Code

569. M6369 Effingham Arms Rotherham S61 2AD 570. M6370 Abbey Sheffield S8 0SH 571. M6376 Bay Horse Thornton Cleveleys FY 5 5HY 572. M6377 Bradley Widnes WA 8 6JT 573. M6378 Barley Mow Runcorn WA 7 1LD 574. M6379 Red House Liverpool L 31 3EW 575. M6381 Woodlands Hotel St Helens WA11 9BS 576. M6382 Tavern Widnes WA 8 9AF 577. M6383 Buck-I’Th’Vine Ormskirk L 39 2EG 578. M6384 Great Mogul Liverpool L 31 3DE 579. M6386 Kicking Donkey Ormskirk L 40 8HY 580. M6387 Victoria Hotel Skelmersdale WN8 8LA 581. M6389 Red Lion Wirral CH64 6SB 582. M6390 Travellers Rest Wirral CH66 4QQ 583. M6393 White Rose Middlesbrough TS 4 2HF 584. M6399 Horse & Jockey Hotel Stockton TS19 8HH 585. M6404 Criterion Hotel South Shields NE33 2HZ 586. M6406 Sunderland Flying Boat Sunderland SR 6 9EE 587. M6409 Bold Arms Southport PR 9 7NE 588. M6414 Fenton Hotel Leeds LS 2 3ED 589. M6415 Haddon Hall Hotel Leeds LS 4 2JT 590. M6419 Woolpack Inn Leeds LS19 7SE 591. M6420 Three Horse Shoes Hotel Leeds LS16 5JJ 592. M6421 Old Kings Arms Leeds LS18 4AP 593. M6422 The Wellington Leeds LS 1 4LT 594. M6425 Claro Beagle Harrogate HG 1 2JJ 595. M6426 Old Ball Leeds LS18 5SB 596. M6427 Eldon Leeds LS 2 9DX 597. M6429 Punch Bowl Hotel Sheffield S10 1TH 598. M6430 Podger Hotel Leeds LS25 1NT 599. M6432 Manston Hotel Leeds LS15 8EH 600. M6435 Regent Inn Leeds LS 1 6BY 601. M6436 Station Hotel Leeds LS15 7JY 602. M6438 Three Legs Hotel Leeds LS 1 6LR 603. M6440 Templar Hotel Leeds LS 2 7NU 604. M6442 Fox & Hounds Leeds LS16 9AX 605. M6443 Green Man Inn Bradford BD2 4QF 606. M6444 Royal Oak Leeds LS25 7JP 607. M6456 Daisy Inn Leeds LS13 3AD 608. M6458 Bridge Inn Keighley BD21 4EB 609. M6459 Fox & Hounds Batley WF17 6DB 610. M6460 Brass Cat Halifax HX 1 1TQ 611. M6461 Park Bradford BD9 4JR 612. M6462 BRB Sheffield Sheffield S1 4ET 613. M6468 Gascoigne Arms Barwick-In-Elmet LS15 4JQ 614. M6470 Upper George Hotel Halifax HX 1 1TT 615. M6472 Ring O’Bells Hotel Shipley BD18 3PR 616. M6474 Branch Hotel Shipley BD18 3BX 617. M6477 Ball Inn Sheffield S12 2AG 618. M6478 Banner Cross Hotel Sheffield S11 8TN 619. M6479 Broomhill Tavern Sheffield S10 2QA 620. M6482 Salutation Hotel Doncaster DN1 2DR 621. M6484 Hadfield Hotel Sheffield S10 1ED 622. M6485 Red Lion Inn Sheffield S12 2LL 623. M6527 Boars Head Blackpool FY 3 9PL 624. M6529 Carters Arms Liverpool L 32 2AD 625. M6530 Edinburgh Inn Liverpool L 23 3AS

148 Outlet Number Outlet name Town Post Code

626. M6531 Golden Ball Hotel Poulton-Le-Fylde FY 6 7BA 627. M6533 Golden Lion Ormskirk L 39 2AA 628. M6534 Scruffy Murphy’S (Blackpool) Blackpool FY 1 1EJ 629. M6536 Kings Arms Morecambe LA 4 4BJ 630. M6537 Priory Liverpool L 21 7PQ 631. M6538 Hill Top Bootle L 20 9NZ 632. M6540 St George Stoneycroft L 13 7BB 633. M6543 Stag Inn Wigan WN5 8QU 634. M6545 Warbreck Liverpool L 9 8BN 635. M6546 Windsor Liverpool L 9 4RE 636. M6549 Freemasons Arms Wigan WN3 6RN 637. M6550 Springfield Hotel Wigan WN6 7BB 638. M6551 Beehive Liverpool L 1 3BL 639. M6554 Coach And Horses Liverpool L 25 8RP 640. M6557 Falstaff Liverpool L 25 1PG 641. M6561 Queens Arms Liverpool L 36 5XE 642. M6562 Red Admiral Runcorn WA 7 5JQ 643. M6564 Rose Of Mossley Liverpool L 18 5EA 644. M6566 Willow Bank Liverpool L 15 3JA 645. M6567 Bulldog Liverpool L 12 9HB 646. M6568 Drysalters Leeds LS11 8AX 647. M6571 Cross Keys Hull HU16 4EH 648. M6572 Marine Hornsea HU18 1NJ 649. M6575 Ship Inn Sutton-On-Hull HU 7 4TG 650. M6577 Liver Liverpool L 22 0LT 651. M6579 Queens Head Ormskirk L 39 2AQ 652. M6580 Fox Inn York YO32 9UF 653. M6582 Wellington Whitby YO21 1DY 654. M6586 White Lion Knutsford WA16 6ED 655. M6590 Cricketers Grimsby DN34 4PS 656. M6592 Dow’S Glasgow G1 2AH 657. M6594 Rose Street Brewery Edinburgh EH 2 2NH 658. M6595 Elizabethan Dunfermline KY12 7LX 659. M6596 Abergeldie Bar Aberdeen AB10 7LY 660. M6598 Gordon Hotel Aberdeen AB12 3GH 661. M6599 Ardencaple Hotel Helensburgh G84 8LA 662. M6600 Bonnie Prince Charlie East Kilbride G74 2AU 663. M6601 Greenhills Bar East Kilbride G75 8TT 664. M6602 Partick Tavern Glasgow G11 6AA 665. M6610 Junction Bar Edinburgh EH 8 9PZ 666. M6616 Auld Hundred Edinburgh EH 2 3DT 667. M6618 Carrick Knowe Edinburgh EH12 7JB 668. M6619 Elm Bar Edinburgh EH 7 4AA 669. M6629 Berts Bar (2) Edinburgh EH 4 1HN 670. M6632 Kingfisher Cumbernauld G67 1LA 671. M6635 Samuel Dow Glasgow G41 2PZ 672. M6636 Cairns Bar Glasgow G1 1EA 673. M6638 Grampian Bar Aberdeen AB11 9LS 674. M6639 Times Square Glasgow G1 4DH 675. M6642 Jolly Falstaff Warrington WA 2 0SW 676. M6643 Turf & Feather Warrington WA 3 7HH 677. M6644 Black Lion Stockton TS21 2AJ 678. M6646 Pendas Arms Leeds LS14 2DF 679. M6652 Colonel Prior Sunderland SR 3 2SW 680. M6662 Woodlands Warrington WA 5 1RU 681. M6669 Blue Bell Hotel Pontefract WF 8 3JP 682. M6677 Ship Stockton-On-Tees TS21 1EP

149 Outlet Number Outlet name Town Post Code

683. M6680 Poacher Warrington WA 3 6TS 684. M6683 Rosies Bar Newcastle-Upon-Tyne NE1 4XQ 685. M6684 Royal Arms North Shields NE29 0BB 686. M6685 Ship Inn Cleveland TS12 1HF 687. M6688 Bull Welwyn Garden City AL 8 7TB 688. M6689 Myllet Arms Hotel Greenford UB 6 8TE 689. M6691 Poachers Chalfont St Peter SL 9 9SR 690. M6693 Brown Cow Leeds LS15 7AY 691. M6695 Farmers Leeds LS28 8AE 692. M6696 George & Dragon Bradford BD10 0PU 693. M6698 Hare & Hounds Menston LS29 6BU 694. M6699 Lawnswood Arms Leeds LS16 7PH 695. M6706 Three Nuns Mirfield WF14 0BY 696. M6715 Walnut Tree Wakefield WF 2 6BH 697. M6716 Woodside Leeds LS18 4DD 698. M6717 Weld Blundell Arms Formby L 38 1QA 699. M6720 Red Lion Bolton BL 5 1BJ 700. M6722 Robin Hood Swinton M27 6PE 701. M6727 Old England Blackpool FY 2 0HJ 702. M6731 Eagle & Child Liverpool L 26 6LB 703. M6738 Bee Hive Bolton BL 6 4BA 704. M6744 Legh Arms Macclesfield SK10 4NA 705. M6747 Red Lion Warrington WA 5 2LZ 706. M6752 Highfield Restaurant Preston PR26 9JB 707. M6757 Derby Arms Prescot L 34 9EA 708. M6767 BRB The Arc London EC1V 1NQ 709. M6768 Mill Hull HU 9 3EU 710. M6774 Flying Legends York YO30 4XZ 711. M6782 Greyhound Bridlington YO15 2QE 712. M6784 Knavesmire York YO23 1ER 713. M6791 Fox Cambridge CB 3 8DZ 714. M6792 Heathlands Hotel Ipswich IP 3 8LJ 715. M6793 Norfolk Terrier Thetford IP24 1TA 716. M6807 Scruffy Murphys (2) Edinburgh EH 3 7PR 717. M6823 Cherry Orchard Wirral CH49 5LW 718. M6825 Bradley Stoke Bristol BS32 9DA 719. M6830 Highlands Inn Uckfield TN22 5SP 720. M6831 Coulby Farm Middlesborough TS 8 9DX 721. M6832 Ancient Oak Preston PR 4 0NZ 722. M6833 County Hotel Alderley Edge SK 9 7QN 723. M6834 Wheatlands Farm Marske-By-The-Sea TS10 2TB 724. M6835 Five Ways Ormskirk L 39 1LU 725. M6836 Gretna Green Hotel Newton Aycliffe DL 5 6JG 726. M6837 Station Promenade Morecambe LA 4 4DB 727. M6842 Priory Wellingborough NN8 2LF 728. M6844 Pentre Gwilym House Cardiff CF14 9UA 729. M6847 George Stephenson Walsall WS 2 7EU 730. M6848 Highwayman Doncaster DN6 7HX 731. M6853 Lakeside Northampton NN4 7YD 732. M6861 Game Keeper Lincoln LN6 9NW 733. M6863 Bucket & Spade Weston-Superp-Mare BS22 8PD 734. M6865 Toy Box Moston M9 7HW 735. M6867 Bobbin Mill Paisley PA 1 2BH 736. M6868 Merry Go Round Hartlepool TS24 9AL 737. M6874 Air Balloon Blackpool FY 4 2QF 738. M6877 Lock Keeper Radcliffe M26 1AJ 739. M6879 New Florence Stoke-On-Trent ST 3 4JS

150 Outlet Number Outlet name Town Post Code

740. M6886 Band Stand Gorton M18 7LJ 741. M6888 Red Lion Chesham HP 5 1ET 742. M6903 Great Western Swindon SN5 7DN 743. M6906 Angel Inn Rothwell LS26 0SF 744. M6907 Ashby Lodge Scunthorpe DN16 3RL 745. M6923 Catch Corner Stafford ST17 4AH 746. M6927 Donkey Derby Whittington Moor S41 8LS 747. M6930 Gamekeeper Scotter DN21 3TW 748. M6931 Generous Pioneer Burley In Wharfdale LS29 7BT 749. M6932 Gingerbread Man Cattlemarket TF 9 3SW 750. M6934 Half Moon Witwall Common S80 3EE 751. M6935 Hobby Horse Syston LE7 1BA 752. M6936 Hayride North Easton Bypass HU17 9GP 753. M6946 Larch Farm Ravenshead NG15 9HA 754. M6949 Lord Ted Newark NG24 4SW 755. M6955 Manor Toton NG 9 6EF 756. M6956 Marquis Low Stubbin S62 7RX 757. M6957 Marr Lodge Marr DN5 7AX 758. M6958 Mascrat Manor Warrington WA 3 6DR 759. M6961 Muddle Go Nowhere Grantham NG31 8SR 760. M6962 Needle & Awl Rushden NN10 6AQ 761. M6964 Noble Comb Shipley BD17 7JR 762. M6965 Nosey Parker Lincon LN6 7AS 763. M6967 Old Farmhouse Gunness DN15 8TE 764. M6968 Old Grey Mare Hull HU 5 2EG 765. M6969 Old Zoological Hull HU 5 3DL 766. M6970 One & Two Halves Oldbury B69 2AQ 767. M6971 Owston Park Lodge Owston DN6 9JG 768. M6972 Phantom Winger Broughton PR 3 5JE 769. M6976 Porridge Pot Longbridge CV34 6RA 770. M6977 Pride Of Lincoln Lincoln LN6 3QZ 771. M6988 Smithy Pond Wingerford S42 6LN 772. M6990 Spirit Of Endeavour Boston PE21 7QS 773. M6991 Spode Cottage Lower Lodge WS15 4AT 774. M6995 Tumbledown Farm Hatherton WS11 1RU 775. M6996 Waggon & Horses Millhouses S7 2QQ 776. M7797 Widecombe Fair Mansfield NG18 4LE 777. M7799 Globe Inn Chichester PO19 8DH 778. M7806 George & Dragon Warrington WA 3 5LF 779. M7808 Aunt Sally Sheffield S10 2LA 780. M7893 Mill Eastbourne BN23 8AL 781. P0098 Dublin Packet Chester CH 1 2HA 782. P0113 Pied Bull Chester CH 1 2HQ 783. P0143 Derby Mills Liverpool L 11 1ER 784. P0148 Farmers Arms Liverpool L 9 0EN 785. P0150 Halton Castle Liverpool L 12 7JD 786. P0151 Hare & Hounds Liverpool L 12 5HJ 787. P0160 Park Liverpool L 6 4BW 788. P0178 Dunes Hotel Blackpool FY 4 1SA 789. P0179 Golden Eagle Blackpool FY 5 3TG 790. P0183 King Edward Vii Hotel Blackpool FY 1 5QE 791. P0204 Thatched House Poulton-Le-Fylde FY 6 7BG 792. P0225 Clifton Arms Blackpool FY 4 4UT 793. P0260 Summit Inn Oldham OL 2 6XF 794. P0270 Bird In The Hand Prescot WA10 3HE 795. P0273 Childe Of Hale Liverpool L 24 4AX 796. P0274 Coach & Horses Hotel Liverpool L 31 2HP

151 Outlet Number Outlet name Town Post Code

797. P0277 Grange Moreton CH46 6DQ 798. P0278 Hammer & Pincers Widnes WA 8 7XU 799. P0287 Railway Hotel Runcorn WA 7 5TR 800. P0298 Blue Bell Warrington WA 1 1TS 801. P0311 George & Dragon Leigh WN7 4LP 802. P0319 Jolly Miller West Derby L 12 7JF 803. P0336 Farmers Arms Hotel Wallasey CH45 3LR 804. P0341 Moreton Arms Wirral CH46 7TQ 805. P0342 Nelson Hotel Wallasey CH45 3HE 806. P0343 Norton Arms Hotel Runcorn WA 7 2AD 807. P0354 Rocket Liverpool L 14 3PA 808. P0364 Commercial Hotel Rainhill L 35 0LP 809. P0365 Deanes House Hotel Prescot L 34 3LA 810. P0368 Fusilier Prescot L 34 5QX 811. P0381 Sefton Arms St Helens WA10 2RS 812. P0397 London Bridge Inn Appleton WA 4 5BG 813. P0398 Maltings Warrington WA 5 5PB 814. P0399 Mulberry Tree Inn Stockton Heath WA 4 2AF 815. P0404 Red Lion Inn Stockton Heath WA 4 6HN 816. P0413 Rope & Anchor Woolston WA 1 3AP 817. P0417 Fiveways Hotel Stockport SK 7 6BE 818. P0424 Broken Cross Rudheath CW9 7EB 819. P0485 Lane Ends Hotel Preston PR 2 1HX 820. P0497 Crown Inn Stockport SK 4 4NZ 821. P0498 Elizabethan Stockport SK 4 4NX 822. P0516 Robin Hood Hotel Manchester M32 9AF 823. P0525 Stamford Arms Bowdon WA14 2TW 824. P0529 White Horse Swinton M27 0FH 825. P0532 Dog & Partridge Didsbury M20 6RA 826. P0551 Pippins Carlisle CA 3 8EQ 827. P0554 Snipe Inn Oldham OL 1 1NH 828. P0556 Windmill Inn York YO24 1AJ 829. P0562 Famous Three Kings Fulham W14 9NL 830. P0566 Highbury Barn Tavern London N5 2AB 831. P0572 Station Woking GU21 5AB 832. P0576 Southern Cross Watford WD17 4PP 833. P0577 Steam Passage London N1 0PN 834. P0585 Chequers Peterborough PE2 6XN 835. P0588 Crown St Albans AL 1 4JA 836. P0684 Belfry Sheffield S20 1EQ 837. P0691 Cross Keys Arnold NG 5 7EJ 838. P0700 Hayloft Giltbrook NG16 2GB 839. P0701 Inn For A Penny Carlton NG 4 3GP 840. P0732 Bell Inn Coleshill B46 1AA 841. P0754 Navigation Inn Birmingham B30 3LS 842. P0756 Olde Black Bear Tewkesbury GL20 5BJ 843. P0764 Three Horse Shoes Stirchley B30 2YT 844. P0775 Black Dog Weymouth DT 4 8PB 845. P0777 Butlers Exeter EX 4 3AZ 846. P0782 Famous Ship Exmouth EX 8 1NP 847. P0788 Railwayman Polsloe Bridge EX 4 7JQ 848. P0789 Rendezvous Weymouth DT 4 8AW 849. P0798 Red Lion (Dorset Ale House) Weymouth DT 4 8TR 850. P0831 Chainlocker & Shipwrights Falmouth TR11 3HH 851. P0860 Pub On The Pond Swansea SA 2 8PY 852. P0882 White Horse Inn Nantwich CW5 5BD 853. P0883 Woodside Crewe CW2 8JU

152 Outlet Number Outlet name Town Post Code

854. P0894 Henry’S Cafe Bar – Bromley Bromley BR 1 1HT 855. P0899 Heron On The Lake Fleet GU13 8TN 856. P0909 Quinceys – Sunderland Sunderland SR 5 3XG 857. P0916 Cherry Tree Inn Runcorn WA 7 5EJ 858. P0918 Kingfisher South Poynton SK12 1NJ 859. P0921 Off The Wall Chester CH 1 1DA 860. P0925 Temple Bar Chester CH 1 3JL 861. P0932 Drawbridge Inn Shirley B90 1DD 862. P0933 Half Moon Hucknall NG15 7AW 863. P0943 Bar Vin Bournemouth BH 1 1JU 864. P0945 Bear Maidenhead SL 6 1QJ 865. P0953 Red Lion Newquay TR 7 1HE 866. P0957 Sugar Loaf Dunstable LU 6 1LA 867. P0958 Village London N10 3SH 868. P0963 Square – Leicester Leicester LE1 5AT 869. P0966 Square – Nottingham Nottingham NG 1 2HW 870. P0971 Square – Leeds Leeds LS 1 6HW 871. P0975 Via Fossa – Manchester Manchester M1 3EZ 872. P0977 Southwark – Anchor Bankside London SE1 9DN 873. P0989 Borough Arms Bodmin PL31 2RD 874. P0996 Old Inn Mullion TR12 7HN 875. P1068 Boathouse Wirral CH64 6RN 876. P1069 Bottle & Glass Inn St Helens WA11 7QT 877. P1081 Grapes Hotel Preston PR 4 2PH 878. P1089 Jolly Crofters Horwich BL 6 6RE 879. P1097 Ring O’Bells Daresbury WA 4 4AJ 880. P1144 White Lion Inn Alvanley WA 6 9DD 881. P1153 Bells Of Peover Knutsford WA16 9PZ 882. P1159 Bulls Head Davenham CW9 8NA 883. P1163 Cock & Pheasant Nr Macclesfield SK10 5EJ 884. P1171 De Trafford Alderley Edge SK 9 7AA 885. P1175 Fairfield Arms Audenshaw M34 5PZ 886. P1178 Rising Sun Inn Wistaston CW2 8SB 887. P1185 Fox Inn Oxford OX 1 5DQ 888. P1189 Shoulder Of Mutton Wendover HP22 6EJ 889. P1192 White Lion Radford Semele CV31 1TE 890. P1193 Berkshire Arms Nr Newbury RG 7 5UX 891. P1206 Fairmile Cobham KT11 1BW 892. P1216 Quays – Basildon Basildon SS14 3WB 893. P1230 Robin Hood Bogner Regis PO22 9PA 894. P1234 Vauxhall Inn Tonbridge TN11 0NA 895. P1235 Vine Inn Southampton SO51 6ZJ 896. P1240 Wateringbury Maidstone ME18 5NS 897. P1241 Wheatsheaf Hotel Nr Basingstoke RG25 2BB 898. P1242 Bay Horse Wigan WN4 9PJ 899. P1243 Boddington Arms Blackburn BB 2 7LB 900. P1244 Charnley Arms Nr Wigan WN6 0SS 901. P1248 County Hotel Lytham St Annes FY 8 5LH 902. P1264 Fairfield Arms Kirkham PR 4 3HE 903. P1265 Gosling Bridge Inn Carlisle CA 3 0AT 904. P1267 Hartwood Hall Hotel Chorley PR 6 7AX 905. P1268 Henry Boddington Salford M27 8TG 906. P1282 New Ellesmere Manchester M27 0AA 907. P1284 Ship Inn Rainhill L 35 6PE 908. P1287 Waterside St Helens WA11 7LX 909. P1289 Wilton Arms Hotel Middleton M24 4RF 910. P1292 Millers – Chorley Chorley PR 7 4AB

153 Outlet Number Outlet name Town Post Code

911. P1299 Caldecotte Arms Milton Keynes MK 7 8HP 912. P1304 Cross Roads Hotel Weedon NN7 4PX 913. P1312 Furzton Lake Milton Keynes MK 4 1GA 914. P1319 Nutwell Lodge Hotel Exeter EX 8 5AJ 915. P1339 Swan Inn Bromsgrove B61 7ET 916. P1343 Wobbly Wheel Banbury OX17 1JJ 917. P1344 Boddington Arms Wilmslow SK 9 5LR 918. P1345 Bowman Nottingham NG15 7PY 919. P1346 Cat & Lion Warrington WA 4 4NB 920. P1347 Egerton Arms Bache CH 2 1AU 921. P1349 Kilton Inn Knutsford WA16 0QD 922. P1353 Peacock Hotel Nantwich CW5 6NE 923. P1354 Pelican Inn Altrincham WA14 5NH 924. P1357 Millers – Macclesfield Macclesfield SK11 7XD 925. P1373 Twelfth Man Wirral CH49 2PP 926. P1377 Fradley Arms Hotel Lichfield WS13 8RD 927. P1378 Gynsills Leicester LE3 8HB 928. P1385 Horse & Hounds Oadby LE2 4RG 929. P1389 Millers – Sutton Coldfield Sutton Coldfield B75 6HD 930. P1405 Green Man Inn Syresham Brackley NN13 5TX 931. P1420 Quays – Camberley Camberley GU16 6DS 932. P1421 Seabrights Chelmsford CM2 8NB 933. P1425 Antelope Inn Bangor LL57 2HZ 934. P1432 Dylan Thomas Swansea SA 7 9AQ 935. P1433 Harvest Mouse Wirral CH60 7RQ 936. P1444 Red Lion Shrewsbury SY 1 4AB 937. P1456 Woodman Swansea SA 3 5AS 938. P1461 Castle Hotel Droitwich WR 9 8AQ 939. P1476 Spyglass Inn Weymouth DT 3 6PN 940. P1483 Woodpecker Waterlooville PO 2 9AE 941. P1487 Charlton Arms Chilwell NG 9 5EA 942. P1499 Reservoir Solihull B94 5SL 943. P1507 White House Leeds LS 8 2JU 944. P1508 Willoughby Arms Wollaton NG 8 1GR 945. P1521 Allerton Hall Liverpool L 25 7UN 946. P1525 Black Horse Inn Prescot L 35 4PF 947. P1585 Butchers Arms Great Sankey WA 5 3NB 948. P1589 Hare & Hounds Inn Werneth Low SK14 3AA 949. P1591 Little Manor Warrington WA 4 2SX 950. P1597 Plough Houghton Green WA 2 0SU 951. P1606 Walton Arms Warrington WA 4 6TB 952. S0014 R & P – Bath Bath BA 1 1EL 953. S0469 Peacock Inn Kings Norton B38 0EH 954. S0621 Travellers Rest Nottingham NG 3 5RT 955. S1008 Aragon Bar Glasgow G12 8TT 956. S1020 Auchinairn Bishopbriggs G64 1NF 957. S1028 Corona Bar Glasgow G41 3YF 958. S1306 Centurion Edinburgh EH12 7XD 959. S1462 Merlin Roadhouse Edinburgh EH10 4PU 960. S1466 Middletons Edinburgh EH 7 5PW 961. S1484 Oak Inn Edinburgh EH12 8AX 962. S1512 Rutland Hotel Edinburgh EH 1 2AE 963. S1544 Downfield Hotel Dundee DD3 9BR 964. S1550 Queens Arms Edinburgh EH 2 1EP 965. S1557 Jekyll & Hyde Edinburgh EH 2 1DR 966. S1650 Village Inn Kilbride G74 4NG 967. S1657 Cafe Royal Circle Bar Edinburgh EH 2 2AA

154 Outlet Number Outlet name Town Post Code

968. S1671 Brecks Edinburgh EH 2 3JF 969. S1672 FW – Edinburgh Edinburgh EH 1 2HE 970. S1771 Corstorphine Inn Edinburgh EH12 7SU 971. S1783 Scaramouche Perth PH 2 8PA 972. S1797 Scotties Edinburgh EH 8 7RU 973. S1874 Central Bar St Andrews KY16 9NU 974. S2018 Anson Wallsend NE28 8QS 975. S2090 Blue Bell Stockton On Tees TS16 0JF 976. S2196 Corner House Hotel Newcastle Upon Tyne NE6 5RP 977. S2331 Griffin Carlisle CA 1 1QX 978. S2378 Grenadier Middlesbrough TS 5 8SB 979. S2457 Jubilee Newcastle Upon Tyne NE3 3PN 980. S2458 Jolly Bowman Wallsend NE28 9UR 981. S2467 Kings Arms Billingham TS22 5JP 982. S2495 Lonsdale Hotel Newcastle Upontyne NE2 3HQ 983. S2539 Monkseaton Arms Whitley Bay NE25 8DP 984. S2557 Prince Of Wales Jarrow – Tyne & Wear NE32 4SX 985. S2699 Ravensworth Arms Gateshead NE11 0EG 986. S2709 Red Lion Whitley Bay NE25 9JU 987. S2730 Ye Olde Lang Jack Newcastle Upon Tyne NE16 4DT 988. S2858 Waggon Team Gateshead NE11 9NA 989. S2860 Wavendon Hotel Sunderland SR 4 8LW 990. S2865 Wellington Hotel Riding Mill NE44 6DQ 991. S2886 Turks Head North Shields NE30 4DZ 992. S3363 Crown Inn Nr St Neots PE19 8EN 993. S3421 George & Dragon Canterbury CT 2 0DB 994. S3446 Five Horseshoes Little Berkhamstead SG13 8LS 995. S3928 Grange Chelmsford CM3 3HJ 996. S3929 Bakers Arms Waltham Abbey EN9 3QF 997. S3932 Shire Horse Stafford ST16 1HA 998. S4170 Cross Keys Middlesborough TS14 6RW 999. S4191 Millers – Pontefract Pontefract WF 8 3BL 1000. S4223 Fox Hunters North Shields NE29 9QA 1001. S4301 Hollow Tree Warrington WA 4 4LX 1002. S4500 Millers – Kings Langley Kings Langley WD4 8BR 1003. S4554 Millers – Nottingham Nottingham NG11 6LS 1004. S4606 Bell Tree Dundee DD5 1DJ 1005. S4617 Old Mill Berkhamsted HP 4 2NB 1006. S4636 Old Orleans – Derby Derby DE24 8SQ 1007. S4684 Castle Hotel Kirby Muxloe LE9 2AP 1008. S4694 Balmwell Edinburgh EH16 6PG 1009. S4789 Outside Inn – Dundee Dundee DD2 3SQ 1010. S4796 Outside Inn – Larbert Falkirk FK 5 4EG 1011. S4879 Outside Inn – Mottram Nr Hyde SK14 3AU 1012. S5004 Admiral Duncan London W1D 4UA 1013. S5007 Admiral Rodney Nottingham NG 8 2AF 1014. S5047 Heathley Park Leicester LE3 9QE 1015. S5089 Anchor Inn Nottingham NG14 7EU 1016. S5135 Chesterfield Arms Nottingham NG 4 3HL 1017. S5153 Duke Of Wellington London W1D 6QB 1018. S5190 Crown Hotel Nottingham NG 2 1JT 1019. S5306 R & P – Hampstead London NW3 2AE 1020. S5368 Hemlockstone Nottingham NG 8 2QQ 1021. S5419 Larwood & Voce Nottingham NG 2 6AG 1022. S5455 Magpie Nottingham NG 9 7JD 1023. S5499 Mail Coach London EC3A 7BH 1024. S5528 Pint Pot London W1T 7PD

155 Outlet Number Outlet name Town Post Code

1025. S5564 Oak Tree Mansfield NG18 4LA 1026. S5575 Old Spot Nottingham NG 5 6BH 1027. S5617 Pillars Of Hercules London W1D 4DF 1028. S5619 Red Lion Hucknall NG15 7AX 1029. S5629 Round House London WC2E 9AR 1030. S5665 Ring O Bells Loughborough LE11 5JU 1031. S5670 Robin Hood Hotel Nottingham NG 5 2FR 1032. S5673 Rose Inn Nottingham NG 8 6NH 1033. S5699 Shepherds Rest Westhill Aberdeen AB32 6HD 1034. S5709 Watermill Inn Dorking RH 4 1NN 1035. S5725 Starting Gate Nottingham NG 2 4BE 1036. S5773 Mundy Arms Ashbourne DE22 4LZ 1037. S5776 Bridge Winchester SO21 2BP 1038. S5779 Welby Hotel Melton Mowbray LE13 0NP 1039. S5807 Woodstock London W1C 2AB 1040. S5903 Wheatstone Inn Gloucester GL 4 3HR 1041. S6006 R & P – Harrogate Harrogate HG 1 1LB 1042. S6012 Ainsty York YO26 5SQ 1043. S6038 Outside Inn – Blackpool Blackpool FY 4 5NZ 1044. S6047 Black Horse Skipton BD23 1JZ 1045. S6116 Crown Carlisle CA 3 9HS 1046. S6335 The Bridge Cambridge CB 5 9HZ 1047. S6395 Kings Head Masham HG 4 4EF 1048. S6508 Merchants Lancaster LA 1 1YN 1049. S6563 Park Hotel Southport PR 8 2DT 1050. S6624 Roebuck Bilsborrow PR 3 0RN 1051. S6645 Scotts Arms Wetherby LS22 4BD 1052. S6725 Venture Wigan WN3 6BL 1053. S6758 Malthouse Farm Whittle-Le-Woods PR 6 8AB 1054. S6764 Cuddie Brae Newcraighall Edinburgh EH21 8RX 1055. S6773 Withy Trees Preston PR 2 8JE 1056. S6818 Old Mill Huddersfield HD6 4HA 1057. S8158 Old Orleans – Broad Street Birmingham B15 1AU 1058. S9002 Bourgognes Newcastle Upon Tyne NE1 5RQ 1059. S9090 Burgh Bar Paisley PA 1 3PN 1060. S9127 Hubbards Glasgow G12 8EL 1061. S9162 Cross Keys Glasgow G62 6ET 1062. S9256 Ben Nevis Fort William PH33 6DG 1063. S9274 Mare & Colt Nr Kidderminster DY11 7RF 1064. S9278 Marmion Edinburgh EH16 6RS 1065. S9279 Clermiston Edinburgh EH 4 7EG 1066. S9301 Cocket Hat Aberdeen AB15 6DW 1067. S9469 Doctors Edinburgh EH 1 2QN 1068. S9502 Museum Carlisle CA 2 7QJ 1069. S9503 Lambton Arms Chester Le Street DH 3 3BJ 1070. S9544 Nags Head Derby DE3 5GF 1071. S9554 Spiers Bar Edinburgh EH 3 5QY 1072. S9593 Telford Arms Edinburgh EH 4 2NF 1073. S9655 Black Bull Edinburgh EH 1 2JU 1074. S9691 Maltman Glasgow G2 1LF 1075. S9704 Whitelocks Leeds LS 1 6HB 1076. S9709 Mathers Bar Edinburgh EH 1 3JU 1077. S9710 Pandora Glasgow G42 7SA 1078. S9712 Peel Park Glasgow G75 8LW 1079. S9750 Fluke Inverness IV 2 3XQ 1080. S9752 Stables Larbert FK 5 4XA

156 Appendix 1B – BankCo Estate

Outlet Number Outlet name Town Post Code

1. C0001 Greyhound Brewery London SW16 5NJ 2. C0049 Rifle Butt Northampton NN 5 6NU 3. C0051 Travellers Tavern London SW1W 9RB 4. C0053 Wharf Tavern Solihull B 94 6QT 5. C0054 Falcon Huntingdon PE29 3NR 6. C0066 White Swan London SW1V 2SA 7. C0069 Talbot Milton Keynes MK 5 8AB 8. C0075 Greyhound Northampton NN 7 3AP 9. C0092 Lumbertubs Northampton NN 3 6JR 10. C0094 Star Luton LU 4 9UJ 11. C0097 Spinney Hill Northampton NN 3 6LR 12. C0099 Sunnyside Northampton NN 2 7AG 13. C0109 Leicester Arms London W 1B 5DP 14. C0136 Broadgate Exchange London EC2M 2QT 15. C0142 Rose & Crown Stratford-Upon-Avon CV37 6EF 16. C0156 Ye Olde Swan Milton Keynes MK 6 3BS 17. C0174 Wheatsheaf Peterborough PE 1 4RA 18. C0189 Spencer Arms Northampton NN 6 8AE 19. C0202 Old Mill Hotel Nr Coventry CV 8 3AH 20. C0203 Bear Inn Coventry CV 7 7BB 21. C0209 Sussex London WC2H 9DL 22. C0254 Old Bell Harpenden AL 5 3BN 23. C0271 Fox & Hounds Peterborough PE 3 6NB 24. C0282 Philharmonic Cardiff CF10 1FA 25. C0289 Hand & Racquet London WC2H 7DS 26. C0300 Old House At Home Hersham KT12 4SG 27. C0303 Carousel Stockport SK 5 7HR 28. C0322 Marquis Of Granby Esher KT10 9AL 29. C0346 Cedar Tree London SW15 2PU 30. C0372 Cadogan Arms London SW 3 5UG 31. C0392 Ye Olde Windsor Castle Leatherhead KT23 3AA 32. C0411 Black Prince Weybridge KT15 3NT 33. C0422 Crane Hayes UB 3 4QT 34. C0425 Bulstrode Hounslow TW 3 1JG 35. C0426 Crown & Sceptre Feltham TW14 0JS 36. C0432 Earl Haig Hounslow TW 4 7DN 37. C0444 Grange London W 5 3XH 38. C0445 Green Man Bedfont TW14 0PZ 39. C0451 Horse & Groom Hanworth TW13 6AR 40. C0462 Barmy Arms Twickenham TW 1 3DU 41. C0464 Red Lion Greenford UB 6 9BE 42. C0468 Royal Hart Ashford TW15 2UT 43. C0475 Three Magpies Hounslow TW 6 2AU 44. C0509 Railway Hotel Greenford UB 6 0AP 45. C0514 Cottage London SW 6 5EF 46. C0518 London Apprentice Isleworth TW 7 6BG 47. C0574 Telegraph London SW15 3TU 48. C0582 Ship London SW14 7QW 49. C0586 Waldegrave Arms Teddington TW11 8LX 50. C0594 Rutland London W 6 9DJ 51. C0622 Duke Of York London SW1E 5LA 52. C0626 FW – Glouc Road London SW 7 4RB 53. C0627 Gloucester London SW1X 9QR 54. C0628 Goat Tavern London W 1S 4RP 55. C0659 Prince Of Wales London WC2B 5TB

157 Outlet Number Outlet name Town Post Code

56. C0669 Stag London SW1E 5DD 57. C0670 Stage Door London SW1E 5EB 58. C0671 Stanhope London SW 7 4SS 59. C0677 Two Chairmen Public House London SW1H 9BP 60. C0685 Plumbers Arms London SW1W 0LN 61. C0694 Silver Cross London SW1A 2BX 62. C0696 Barley Mow London W 1K 5RF 63. C0697 Running Footman London W 1J 5DE 64. C0702 Compleat Angler Norwich NR 1 1NS 65. C0703 Cahoots London SW 3 3NS 66. C0714 Griffin Altrincham WA14 2TP 67. C0718 Clarence London SW1A 2HP 68. C0726 Bar Oz – Bayswater London W 2 4AL 69. C0728 Three Tuns London W 1H 6HR 70. C0729 Greyhound London W 8 5EP 71. C0730 Daniel Gooch London W 2 6ES 72. C0738 Cock & Lion London W 1U 2SB 73. C0742 Shepherds Tavern London W 1J 7ST 74. C0745 Fox & Pheasant Slough SL 2 4EZ 75. C0747 Museum Tavern London WC1B 3BA 76. C0800 Grenadier London SW1X 7NR 77. C0801 Hare & Hounds Bury BL 0 9RY 78. C0814 Hope Manchester M 6 8AG 79. C0835 Queens Head Uxbridge UB 8 1AB 80. C0837 Red Lion London EC2M 7LS 81. C0840 Albion London N 1 1HW 82. C1025 Royal George London NW 1 1DG 83. C1027 Sols Arms London NW 1 2PN 84. C1032 Chequers Reading RG 5 3JH 85. C1045 R & P – Harrow Harrow HA 1 1JP 86. C1047 Windsor Castle Maidenhead SL 6 4JT 87. C1051 Chequers Inn St Albans AL 3 7AD 88. C1056 Rayners Hotel Harrow HA 2 7LX 89. C1066 County Arms London E 4 9PB 90. C1086 Enfield Arms Enfield EN 1 2AA 91. C1087 Five Bells London N2 0LZ 92. C1098 Rye House Public House Hoddesdon EN11 0EH 93. C1113 Railway Tavern London NW 7 3SB 94. C1128 Old Ash Tree Chatham ME 5 7EN 95. C1133 Ship Inn Gravesend DA12 3BN 96. C1155 Who’D A Thought It London SE18 2SB 97. C1165 London Stone London EC4N 5AD 98. C1168 Peacock London EC3N 1DY 99. C1188 Ye Olde Cock Tavern London EC4Y 1AA 100. C1196 Kings Head London W 2 4AH 101. C1197 Bromptons London SW 5 9JF 102. C1205 Lupset Hotel Wakefield WF 2 8JF 103. C1209 Sawyers Arms London W 2 1HL 104. C1221 Birdcage London W 4 1PU 105. C1223 Stoneleigh Stoneleigh KT17 2JA 106. C1228 Leather Bottle London SW19 3NW 107. C1233 Friar Colchester CO 4 4NE 108. C1256 Haystack Canvey Island SS 8 7AJ 109. C1261 Rayleigh Lodge Rayleigh SS 6 8RW 110. C1270 Bay Horse Chelmsford CM 2 0LG 111. C1277 Fleece Chelmsford CM 1 1JP 112. C1288 Zach Willsher Benfleet SS 7 4PL

158 Outlet Number Outlet name Town Post Code

113. C1294 Rovers Tye Colchester CO 4 4BA 114. C1295 Midland Hotel Hemel Hempstead HP 2 5BH 115. C1298 Victory Inn Rochford SS 4 3EU 116. C1303 Old Bell Old Oxted RH 8 9LP 117. C1314 Moss Vale Manchester M 41 0TA 118. C1317 Spanish Lady Brighton BN 2 8LH 119. C1323 Ferry Norwich NR12 8PS 120. C1329 R & P – Surbiton Surbiton KT 6 4DT 121. C1331 Barley Mow Nr Abingdon OX14 3EH 122. C1333 Hatchet Newbury RG14 5BD 123. C1334 Franklin Tavern Brighton BN 2 3LF 124. C1335 Wallingford Arms Didcot OX11 8QJ 125. C1336 Druids Head Brighton BN 1 1HJ 126. C1416 Crown London NW10 2JT 127. C1430 Horse & Groom London SW16 1DA 128. C1486 Distillers Arms London W 6 9PH 129. C1511 Ship Inn Wilmslow SK 9 4JE 130. C1516 Fountain New Malden KT 3 6DD 131. C1518 Dr Johnson Ilford IG 5 0EN 132. C1564 Windsor Castle London SW11 1SA 133. C1598 Hutton Brentwood CM13 1AB 134. C1622 White Lion Manchester M 20 3BG 135. C1638 Black Widow London SW 7 4PL 136. C1691 Woodman Sidcup DA15 8PR 137. C1699 Maxwell Hotel Orpington BR 6 0RZ 138. C1704 Huntsman Rochester ME 1 2RA 139. C1716 Red Lion Stockton On Tees TS20 1AL 140. C1727 Longship Hebburn NE31 2YA 141. C1740 Golf Hotel Ipswich IP 4 5TR 142. C1774 Queens Head London SW 3 3LG 143. C1788 Star Gillingham ME 7 2AA 144. C1790 Rose & Crown Richmond TW 9 3AH 145. C1794 Kings Arms London W 1J 7QB 146. C1799 Grove Park Hotel London W 4 3SG 147. C1819 Florence Nightingale London SE 1 7UT 148. C1823 LIIT – Sutton Sutton SM 1 1DJ 149. C1824 Henrys – St Martins Lane London WC2N 4JS 150. C1840 Tiger Moth Chatham ME 5 9UJ 151. C1853 Heartsease Norwich NR 1 4JZ 152. C1858 Copperfield London SE 6 4RE 153. C1864 Tigers Head Chislehurst BR 7 5PJ 154. C1865 Railway Bell London E 18 1JJ 155. C1884 Yacht Bexleyheath DA 7 5AR 156. C1904 Shakespeare Manchester M 2 2AA 157. C1910 Smithy Cheadle Hulme SK 8 7NB 158. C1920 Sylvan Inn Timperley WA15 6AD 159. C1934 Smiths Arms Harrogate HG 3 1QW 160. C2111 Hatch Basingstoke RG24 7NH 161. C2119 Rose & Crown Egham TW20 8QL 162. C2121 Foresters Maidenhead SL 6 3EW 163. C2126 Golden Lion Basingstoke RG22 4BS 164. C2151 Ye Olde Leathern Bottel Wokingham RG41 4BY 165. C2187 Swan Aldershot GU12 5ET 166. C2190 George Reading RG 6 7EN 167. C2204 Vine Sale M 33 7UD 168. C2224 Tumbledown Dick Farnborough GU14 7JT 169. C2243 Barley Mow Basingstoke RG23 7JZ

159 Outlet Number Outlet name Town Post Code

170. C2245 Martlets Bognor Regis PO21 3AD 171. C2263 Refectory Godalming GU 8 5HJ 172. C2276 Palmeira Hove BN 3 3ES 173. C2292 Three Tuns Reading RG 6 1LT 174. C2317 Burlington Blackpool FY 4 1JE 175. C2361 Good Companions Reading RG 5 4AG 176. C2388 Old Cross Chichester PO19 1LP 177. C2390 Ship Plymouth PL 1 2JZ 178. C2398 Thatched Cottage Farnborough GU14 8NU 179. C2445 Boot & Slipper Amersham HP 6 5JN 180. C2528 Griffin Reading RG 4 7AD 181. C2543 Kings Head Hotel Norwich NR12 8UR 182. C2609 Three Tuns Windsor SL 4 1PB 183. C2621 Ye Olde Aviator Oxford OX18 3HQ 184. C2636 Kings Arms Oxford OX 4 4YB 185. C2641 Thatched Cottage Maidenhead SL 6 3PE 186. C2763 Prince Of Wales Fleet GU13 9SY 187. C2765 Long Barn Slough SL 1 5AH 188. C2788 Three Tuns Slough SL 1 3XL 189. C2811 Prince Crowthorne RG45 7AZ 190. C2831 Bear Reading RG31 4DU 191. C2833 Bull & Chequers Reading RG 5 4QP 192. C2840 Soldiers Return Uxbridge UB10 8LG 193. C2852 Shire Horse Maidenhead SL 6 3QA 194. C2863 White Hart Heathrow TW 6 2AA 195. C2887 Fox & Hounds Basingstoke RG26 3JG 196. C2905 Bull Worthing BN12 5AR 197. C2928 Torch Wembley HA 9 9AB 198. C2943 Maltsters Norwich NR13 6AB 199. C3001 Bull Inn Hockley SS 5 4RN 200. C3003 Audley London W 1K 5RF 201. C3010 Anchor Bristol BS 7 8PE 202. C3020 Bear Bath BA 2 3AQ 203. C3022 Jolly Fenman Sidcup DA15 8SW 204. C3044 Pilgrim Billericay CM12 0EH 205. C3052 Goat London W 8 5NP 206. C3053 Shakespeares Head London W 1F 7HZ 207. C3054 Masons Arms London W 1S 1PD 208. C3067 Hoop & Toy London SW 7 2HQ 209. C3071 Orange Brewery Pub London SW1W 8NE 210. C3073 LIIT – London London WC2H 9EA 211. C3074 Tattershall Castle London SW1A 2HR 212. C3083 Narborough Arms Leicester LE 9 5GB 213. C3086 Pit & Pendulum Nottingham NG 1 2EW 214. C3097 Grosvenor Arms London W 1K 4PU 215. C3101 New Inn Kings Lynn PE30 3AZ 216. C3111 Salisbury London WC2N 4AP 217. C3138 LIIT – Nottingham Nottingham NG 1 6HW 218. C3142 Britannia Newcastle-Under-Lyme ST 5 8JR 219. C3145 Huxters – Grimsby Grimsby DN31 1LY 220. C3168 Ye Olde Cross Keys Oxford OX26 6AG 221. C3201 Alma Tavern Bristol BS 8 2HY 222. C3203 Devonshire Arms London W 1D 7HW 223. C3205 Cotham Hill Bristol BS 6 6JY 224. C3217 Mill House Bristol BS 9 2DS 225. C3253 Prince Of Wales London SW19 3TA 226. C3308 Stiles Southampton SO17 1TS

160 Outlet Number Outlet name Town Post Code

227. C3320 Rose & Crown Greenwich SE10 8ER 228. C3324 Gloucester Arms Bristol BS 7 0BJ 229. C3325 Standard Brighton BN 1 2RA 230. C3333 Woodman London SW19 8DR 231. C3343 Crown & Cushion Bristol BS 1 3AW 232. C3350 Waterwitch Odiham RG29 1AL 233. C3379 Griffin Bristol BS30 5JN 234. C3394 Rose & Crown Bristol BS30 5QH 235. C3428 Waterside Paignton TQ 4 6ND 236. C3433 Golden Hind Plymouth PL 3 5RJ 237. C3441 Man Of Gwent Newport NP19 9EZ 238. C3445 Royal Oak Bristol BS48 1AS 239. C3452 Red Lion Iver SL 0 0JZ 240. C3453 Five Ways Nottingham NG 5 3HU 241. C3475 Grapes Hotel Bath BA 1 1EQ 242. C3476 Albion Rainham RM13 8SS 243. C3477 Ye Olde Rising Sun London N 14 5BP 244. C3484 Talbot Inn Bristol BS31 1NP 245. C3486 Tamar Plymouth PL 6 5AD 246. C3523 Black Lion Trent Vale ST 4 5NZ 247. C3537 Highfield Southampton SO17 1QD 248. C3555 Ye Olde White Hart Frimley GU16 7HU 249. C3602 Pickerel Cambridge CB 3 0AF 250. C3606 Black Lion London W 2 3JH 251. C3635 Hereford London SW 7 4TE 252. C3681 Victoria London SW1W 0NR 253. C3725 Zetland Arms London SW 7 3EX 254. C3801 Golden Lion Romford RM 1 1HR 255. C3810 Rose & Crown London W 1K 1QN 256. C3817 Ye Olde Crown Rayleigh SS 6 7EA 257. C3830 Anchor Nr Hockley SS 5 6ND 258. C3832 Good Intent Hornchurch RM12 5NU 259. C3835 Cock Inn Rochford SS 4 1PD 260. C3836 Boars Head Brentwood CM13 3PS 261. C3837 Hoy & Helmet Benfleet SS 7 2PB 262. C3848 Ye Olde Kings Head Chigwell IG 7 6QA 263. C3850 Ship Grays RM17 6ES 264. C3855 Rose Inn Southend On Sea SS 3 0PY 265. C3865 Ye Olde Smack Leigh On Sea SS 9 2EN 266. C3877 Squirrels Romford RM 2 6DH 267. C3892 White Horse Southend On Sea SS 2 4XA 268. C3897 Talbot Worcester WR 1 1HT 269. C3905 Greystoke London W 5 3HU 270. C3906 Station London SE13 5NB 271. C3912 Herne Tavern East Dulwich SE22 0RR 272. C3915 Plough Inn Southampton SO31 8BT 273. C4110 Old Cock Inn Harpenden AL 5 2SP 274. C4306 Wheatsheaf Virginia Water GU25 4QF 275. C4331 Red Lion Norwich NR 9 5SE 276. C4337 Garden House Birmingham B 16 9NX 277. C4403 Red Lion Woodbridge IP12 4RN 278. C4404 Bede’S Lea Southampton SO52 9LW 279. C4412 Carpenters Arms Camberley GU15 3PE 280. C4510 White Swan Southampton SO18 3HW 281. C4522 Bold Forester Southampton SO40 4UQ 282. C4591 Malvern Tavern Southampton SO16 6TU 283. C4628 Swan & Bottle Uxbridge UB 8 1LZ

161 Outlet Number Outlet name Town Post Code

284. C4629 Old Mill Bexley DA 5 1JY 285. C4638 Didsbury Manchester M 20 2RQ 286. C4814 Hop Poles London W 6 9HW 287. C4834 Ship Romford RM 2 5EL 288. C5208 Blue Bell Manchester M 30 9LL 289. C5576 Bucks Head London NW 1 8QR 290. C5635 Kings Head Bristol BS13 8AE 291. C5674 Surrey Woking GU21 1TX 292. C5680 Cross Keys Taunton TA 2 6NR 293. C5684 Three Fishes Sunbury On Thames TW16 6RE 294. C5702 Garricks Head Manchester M 41 5SH 295. C6005 Jolly Sailor Stockport SK 3 8TE 296. C6185 Grand Hotel Leigh On Sea SS 9 1PJ 297. C6188 Chiltern Hundreds Maidstone ME14 2DG 298. C6221 Brocklehurst Macclesfield SK10 2HA 299. C6227 Bulls Head Stockport SK 7 4PS 300. C6269 Queens London N 8 9DE 301. C6305 Dewdrop Oxford OX 2 7DX 302. C6306 Ye Olde Stationmaster Chislehurst BR 7 5NP 303. C6313 Cricketers Gillingham ME 7 2JR 304. C6332 Clock Tower Manchester M 20 2DN 305. C6372 Woolpack Norwich NR 1 3EH 306. C6398 We-Anchor-In-Hope Welling DA16 3RW 307. C6410 Ye Olde Bristol Hotel Clevedon BS21 7NL 308. C6489 Saracens Head Bath BA 1 5LP 309. C6500 Captains Cabin London SW1Y 4RJ 310. C6512 Flying Saucer Gillingham ME 7 3RH 311. C6513 Punch & Judy London WC2E 8RF 312. C6707 Blue Posts London SW1A 1RP 313. C6710 Marlborough Head London W 1K 6WD 314. C6713 Friend At Hand London WC1N 1HX 315. C6743 Swan London SW19 4SU 316. C6753 Northcote London SW11 1NT 317. C6756 Raynes Park London SW20 0LA 318. C6762 Richmond Arms Richmond TW 9 1DZ 319. C6912 Cavalier London N 20 0BB 320. C6922 King George V Ilford IG 2 6SX 321. C7050 Playhouse Grantham NG31 6NS 322. C7060 Parsons Barn Southend On Sea SS 3 8UT 323. C7070 Watermead Inn Aylesbury HP20 1AB 324. C7108 Airedale Heifer Keighley BD20 5LY 325. C7201 Millers – Rochdale Rochdale OL15 0DD 326. C7219 Crispin London EC2M 7BP 327. C7233 Ye Olde Highwayman Pontefract WF 8 1LW 328. C7266 Bull Greenhithe DA 9 9DA 329. C7285 Parkview London W 5 5DB 330. C7320 Malt Shovel Hotel Shipley BD17 6JZ 331. C7440 Marlborough Arms London WC1E 7HJ 332. C7501 Earl Beatty New Malden KT 3 6JF 333. C7505 Beverley Morden SM 4 4SS 334. C7507 Royal Oak Slough SL 2 3HS 335. C7508 Three Tuns Canterbury CT 1 2UD 336. C7510 Top House Burgess Hill RH15 0AD 337. C7517 Burrell Arms Haywards Heath RH16 1EA 338. C7522 Ye Olde King & Queen Brighton BN 1 1UB 339. C7527 Sussex Brighton BN 1 1HL 340. C7533 Stanmer Park Brighton BN 1 6JG

162 Outlet Number Outlet name Town Post Code

341. C7540 Lamb Inn Littlehampton BN16 3NU 342. C7559 Rose & Crown London SW16 3JG 343. C7583 Old Bear Cobham KT11 3DX 344. C7591 Yacht London SE10 9NP 345. C7672 Gamecock Worcester Park KT 4 7ED 346. C7736 Crown Bromley BR 1 3PA 347. C7757 Prince Of Wales London SW15 2SP 348. C7761 Bull Sevenoaks TN14 5PG 349. C7762 Ye Olde Black Horse Sidcup DA15 8LH 350. C8123 Sir Winston Churchill Loughton IG10 3SP 351. C8134 Rat & Parrot – Camden London NW 1 7PG 352. C8166 Prospect Of Whitby London E 1W 3SJ 353. C8202 Old Orleans – Cambridge Cambridge CB 2 1RQ 354. C8203 British Queen Orpington BR 6 8NL 355. C8204 Old Orleans – Epping Epping CM16 5HW 356. C8206 Lass O Richmond Hill Richmond TW10 6JJ 357. C8207 Old Orleans – Cardiff Cardiff CF10 1BG 358. C8208 Old Orleans – York York YO 1 9QX 359. C8304 Old Orleans – Chester Chester CH 1 1SD 360. C8306 Old Orleans – Ealing Ealing W 5 5AA 361. C8309 Old Orleans – Oxford Oxford OX 1 2BJ 362. C8310 Old Orleans – Thurrock Grays RM20 2ZS 363. C8503 Lamb & Flag London W 1U 1EQ 364. C9172 Larkshall London E 4 6NT 365. M2044 Wentworth Arms Earl Shilton LE 9 7SD 366. M2081 Red Lion Inn Rothley LE 7 7NJ 367. M2086 North Star Northampton NN 2 8BN 368. M2088 Redhouse Inn Newport TF10 9EW 369. M2115 Sneyd Arms Stoke-On-Trent ST 1 6DB 370. M2132 Bulls Head Stoke-On-Trent ST 4 8EN 371. M2135 Queens Hotel Stoke-On-Trent ST 4 6JJ 372. M2137 Windmill Inn Stoke-On-Trent ST 9 0DT 373. M2155 Plough Inn Stoke-On-Trent ST 7 2JN 374. M2170 Chase Hotel Nuneaton CV11 6AG 375. M2174 Costermonger Birmingham B 4 7LB 376. M2177 Digby Hotel Birmingham B 46 1SH 377. M2207 Horse & Jockey Birmingham B 47 6DB 378. M2214 Lyndon Solihull B 92 7LY 379. M2218 Flapper & Firkin Birmingham B 1 2NU 380. M2246 Marksman West Bromwich B 70 9QP 381. M2260 Old House At Home Birmingham B 17 8QP 382. M2278 Prince Of Wales Birmingham B 13 8EE 383. M2283 Rock Hotel Wolverhampton WV 6 8QB 384. M2299 Station Birmingham B 14 7BB 385. M2309 White Horse Birmingham B 17 0HG 386. M2325 Flanker & Firkin Coventry CV 1 2GY 387. M2351 Carpenters Arms Cardiff CF 3 4AJ 388. M2353 Fairwater House Cwmbran NP44 4TA 389. M2363 Parc-Y-Prior Inn Newport NP20 6LD 390. M2412 Cask & Bottle Stratford On Avon CV37 6QT 391. M2418 BRB Nottingham Nottingham NG 1 3DR 392. M2428 Old Club House Buxton SK17 6BD 393. M2429 Cane West Hampstead NW 6 1RD 394. M2442 Railway Tavern Gravesend DA12 4QT 395. M2443 Airport Bowl Harlington UB 3 5AL 396. M2489 William IV Beckenham BR 3 4DF 397. M2522 Cliff Hotel Southend-On-Sea SS 1 1HH

163 Outlet Number Outlet name Town Post Code

398. M2546 Royal Oak Barking IG11 8TG 399. M2570 The Apollo London W 1U 5QW 400. M2578 Broomwood Orpington BR 5 3AE 401. M2604 Dusk Marylebone W 1U 5JY 402. M2623 Conservatory London WC2H 8LN 403. M2628 Cricketers Gravesend DA13 0QA 404. M2639 Case Is Altered Pinner HA 5 2EW 405. M2643 Star South Harrow HA 2 0NG 406. M2649 Eastcote Arms South Harrow HA 2 8SE 407. M2662 Great Western Hayes UB 3 1NF 408. M2672 Robert Peel Watford WD18 0BW 409. M2673 Swan Ruislip HA 4 7AW 410. M2685 Railway Engineer Mill Hill East NW 7 1BJ 411. M2687 The Shakespeare London EC1Y 0SJ 412. M2689 Gloucester Arms Oxford OX 1 2BY 413. M2691 Nelson Oxford OX 4 3LR 414. M2723 Silver Jubilee Canvey Island SS 8 9QA 415. M2724 Fisherman Stevenage SG 1 2JA 416. M2760 Air Balloon Horley RH 6 7HE 417. M2767 Wellington Inn Waterlooville PO 7 7EL 418. M2779 Strafford Arms Potters Bar EN 6 3BA 419. M2793 Force & Firkin Cheshunt EN 8 9BD 420. M2805 Three Compasses Watford WD25 8DR 421. M2806 Feathers Rickmansworth WD 3 1DJ 422. M2884 Prince Regent Sutton SM 1 1PR 423. M2916 Burn Bullock Mitcham CR 4 4BE 424. M2917 Paxton Arms Anerley SE19 2AE 425. M3900 The Coach Greenwich SE10 9HZ 426. M3936 George London W 1F 8DL 427. M3937 Gloucester Arms Regents Park NW 1 6DY 428. M3945 Grapes Limehouse E 14 8BP 429. M3948 Paxtons Head Knightsbridge SW1X 7PA 430. M3951 Angel London EC1Y 1BD 431. M3954 Barge Inn Battlesbridge SS11 7RE 432. M3961 Prince Of Wales Basildon SS15 4BP 433. M3978 Eight Bells Saffron Walden CB10 1BU 434. M3979 Nags Head Bishops Stortford CM23 5HP 435. M3981 BRB The Cow Cambridge CB 2 3QF 436. M3984 Narrow Street London E 14 8DP 437. M3989 Blue Boar Abingdon OX14 3QH 438. M3991 Beacon Bletchley MK 1 1PA 439. M3995 The Harrow Aylesbury HP20 1RS 440. M5947 Weavers Aylesbury HP20 1BX 441. M5948 Sussex Barn Horsham RH12 5PJ 442. M5953 Beechwood Glasgow G 44 4PP 443. M5956 Stags Head Dumbarton G 82 1JN 444. M5964 Berts Bar 1 Edinburgh EH 3 7NG 445. M5965 Uluru Edinburgh EH 3 9AB 446. M5994 Northern Bar Edinburgh EH 3 5JZ 447. M6009 Woodcutter Cumbernauld G 67 3AZ 448. M6164 Firkins Falkirk FK 1 1LL 449. M6171 Bell Stoke Mandeville HP22 5XA 450. M6174 Abbot Morden SM 4 5LJ 451. M6179 Cartwheel Bristol BS14 0RS 452. M6184 Cherry Tree Oldlands Common BS30 9QR 453. M6187 Assembly Inn Bath BA 1 2QU 454. M6194 Royal Oak Bishops Cleeve GL52 8LR

164 Outlet Number Outlet name Town Post Code

455. M6195 Wigmore Arms Luton LU 2 8AD 456. M6213 Fir Tree Stockport SK 5 6LL 457. M6218 Bedroom (Ashton-Under-Lyne) Ashton-Under-Lyne OL 6 6LB 458. M6229 Old White Hart Leeds LS11 8BZ 459. M6232 Queen Hotel Leeds LS 3 1JP 460. M6284 Gardeners Arms Leeds LS27 8SU 461. M6317 Red Lion Wetherby LS22 6LR 462. M6371 Market Chesterfield S 40 1AH 463. M6373 Porter Cottage Sheffield S 11 8ZL 464. M6375 Red Lion Hotel Burley-In-Wharfedale LS29 7BT 465. M6401 Bedroom (Whitley Bay) Whitley Bay NE26 2TE 466. M6411 Junction Inn Bradford BD 3 7DD 467. M6412 Spencers Leeds LS 1 5DQ 468. M6413 Cardigan Arms Leeds LS 4 2HQ 469. M6417 Ship Hotel Leeds LS 1 6LH 470. M6423 Eyrie Leeds LS16 7RX 471. M6424 Barwork Leeds LS 1 2DE 472. M6437 BRB Leeds Leeds LS 1 6DT 473. M6464 Lane Ends Bradford BD 2 2AR 474. M6466 Deramore York YO10 5EA 475. M6473 Swing Gate Inn Bradford BD 2 2AH 476. M6535 Imperial Hotel Southport PR 9 0LN 477. M6553 Central Hotel Liverpool L 1 1JP 478. M6558 Gardeners Arms Liverpool L 13 5SF 479. M6560 Midland Liverpool L 1 1JP 480. M6573 Minerva Hotel Hull HU 1 1XE 481. M6576 Wildfowler Hotel Hull HU 5 5JW 482. M6597 Lauders Inverness IV 1 1EB 483. M6634 Pentland Inn Livingston EH54 8PT 484. M6641 Bulls Head Hotel Macclesfield SK10 1EB 485. M6650 Christies Harrogate HG 1 5JW 486. M6651 Bridge Inn Wirral CH62 4UQ 487. M6659 Duke Of Wellington Newcastle NE 1 1EN 488. M6665 Lloyds Arms Grimsby DN31 1BN 489. M6672 Pumphrey’S No.1 Bar Newcastle-Upon-Tyne NE 1 1EE 490. M6673 Bedroom (Wakefield) Wakefield WF 1 1BW 491. M6674 Elliots Rotherham S 60 1AP 492. M6676 Assembly (St Helens) St.Helens WA10 1RE 493. M6679 Bedroom (Hull) Hull HU 1 2PA 494. M6681 Ship & Royal South Shields NE33 2HT 495. M6686 BRB Wanstead Wanstead E 11 2AA 496. M6690 Assembly (Barnsley) Barnsley S 70 2AH 497. M6694 Chequers Sheffield S 18 3AT 498. M6705 Sitwell Arms Rotherham S 60 4HQ 499. M6770 Bedroom (Shrewsbury) Shrewsbury SY 1 1PU 500. M6775 The Railway Richmond TW 9 3PZ 501. M6776 The Beaconsfield London W 14 0HA 502. M6777 Lots Road London SW10 0RJ 503. M6778 Fox & Firkin Lewisham SE13 6JZ 504. M6795 Weavers Cheadle SK 8 1PY 505. M6796 Assembly (Preston) Preston PR 1 2NN 506. M6797 Pavillion Restaurant Torquay TQ 2 5EQ 507. M6799 Warren Lodge Scunthorpe DN15 8DA 508. M6801 O’Henry’S Glasgow G 2 5AA 509. M6805 Raphaels Birmingham B 3 3HJ 510. M6806 Bedroom (Sheffield) Sheffield S 1 4EP 511. M6810 Crown & Cushion Camberley GU17 9UA

165 Outlet Number Outlet name Town Post Code

512. M6811 Hobby Horse Chesterfield S 40 2UR 513. M6824 BRB Sutton Sutton SM 1 1DT 514. M6826 Carpe Diem Leeds LS 1 1BA 515. M6839 Red Robin Wigan WN 5 9SB 516. M6840 Ferryman & Firkin Southampton SO14 2NS 517. M6845 The Hill Birmingham B 2 5QP 518. M6846 Evolution (Leeds) Leeds LS 4 2DG 519. M6849 Hollywood Star Burnley BB11 2EG 520. M6851 Sandcastle Sunderland SR 2 7RE 521. M6857 Bedroom (Swindon) Swindon SN 1 1BP 522. M6859 Evolution (Cardiff) Cardiff CF10 4JY 523. M6862 Bermuda Park Nuneaton CV10 7PJ 524. M6864 Rocking Horse Aintree L 9 5AS 525. M6866 Toy Soldier Preston PR 1 6QY 526. M6869 Evolution (Bristol) Bristol BS 1 5UH 527. M6871 Harbour Lights Bournmouth BH 1 2BY 528. M6872 Punch & Judy Ipswich IP 1 1UZ 529. M6873 Oyster Catcher Hull HU 7 3DB 530. M6875 Sovereigns Portsmouth PO 2 8AL 531. M6876 Owl & Pussycat Barrow-In-Furness LA14 2PD 532. M6878 Fort Jester Castle Bromwich B 35 7AG 533. M6881 Wishing Well Bristol BS15 9LA 534. M6882 Bell Fountain Leicester LE18 1AD 535. M6883 Story Book Boldon NE35 9PE 536. M6884 Magic Lantern North Shields NE29 9DN 537. M6885 Story Teller Rotherham S 60 1TG 538. M6887 Paper Mill Bury BL 9 8RP 539. M6891 Flagship Paignton TQ 4 6BN 540. M6892 Bullingdon Arms Oxford OX 4 1UE 541. M6893 BRB Hampstead Hampstead NW 3 1NH 542. M6894 Dovedale House Battersea SW11 4LR 543. M6895 BRB Kennington Kennington SE11 6SF 544. M6896 BRB Gerrard Street Soho W 1D 6JA 545. M6897 BRB Birmingham Birmingham B 1 1AA 546. M6898 Plume Of Feathers Stoke On Trent ST12 9DH 547. M6900 Bellhousepar Manchester M 20 5PG 548. M6902 BRB The Shed Bristol BS 1 5UH 549. M6904 Pavillion Oxhey WD19 4LT 550. M6905 Aire Of The Dog Leeds LS 4 2DG 551. M6911 Bakers Dozen Nertherton L 30 6TG 552. M6913 Beaten Track Shrewsbury SY 3 7TE 553. M6914 Bees Knees Brownstone LE 3 3AH 554. M6915 Bill Brewer Burton-upon-Trent DE14 2WF 555. M6918 Bostin Fittle Dudley DY 1 4TA 556. M6919 Bridge Builder Arleston TF 1 2DE 557. M6926 Cotton Kier Bolton BL 1 8TS 558. M6928 Fair Maid Cottingham HU16 5AB 559. M6929 Festival Inn Trowell NG 9 3PX 560. M6933 Gipsy Moth Croydon CR 0 4RJ 561. M6937 Hobsons Choice Kettering NN15 6XS 562. M6938 Homestead Bracebridge Heath LN 4 2RS 563. M6939 Hop House Tunbridge Wells TN 2 3UW 564. M6940 Kiss Me Hardy London SW19 2PP 565. M6947 Lillibets Liversedge WF15 6HX 566. M6948 Local Hero Leicester LE 2 7LB 567. M6959 Master Locksmith Derby DE21 4SY 568. M6960 Memphis Belle Westbrook WA 5 5TN

166 Outlet Number Outlet name Town Post Code

569. M6963 Nickleodeon Wednesfield WV11 1BP 570. M6966 Old Colonial West Bridgeford NG 2 7RS 571. M6973 Plank & Leggit Sawley NG10 3AD 572. M6975 Polite Vicar Bosford ST 5 0TG 573. M6978 Quayside Southampton SO15 1RE 574. M6979 Queen B Chelmsford CM 2 9PB 575. M6980 Ridgeway Arms Mosborough S 20 5AZ 576. M6981 Riverside Farm Skelton YO30 1XJ 577. M6982 Rookery Wood Crewe CW 1 6NE 578. M6983 Rope Walk Huddersfield HD 1 6PG 579. M6984 Salt Cellar Middlewich CW10 0JB 580. M6985 Shooting Star Yardley B 26 1DS 581. M6986 Singing Chocker Glasshoughton WF10 4RS 582. M6987 Sir Jack Bramley S 66 1YZ 583. M6992 Strawberry Field Evesham WR11 2UT 584. M6993 Swift Hound Blackpool FY 1 5EP 585. M6994 Treble Bob Barlborough S 43 4XA 586. M7795 Whistling Goose Sutton Fields HU 7 0XF 587. M7813 Finsbury Park Hotel Finsbury Park N 4 1BY 588. P0046 Bears Paw Cheshire WA 6 7AF 589. P0060 Bromfield Arms Chester CH 2 3BD 590. P0071 Coach & Horses Chester CH 1 2HQ 591. P0073 Custom House Hotel Clwyd CH 5 4DF 592. P0107 Halfway House Clwyd CH 5 4AS 593. P0110 Offas Dyke Hotel Chester CH 4 0QN 594. P0112 Peacock Hotel Chester CH 3 5TD 595. P0168 Royal Standard Liverpool L 12 9EY 596. P0171 Admiral St Annes FY 8 1RG 597. P0177 Dog & Partridge Blackpool FY 1 6ET 598. P0197 Ship & Royal Lytham St Annes FY 8 5EH 599. P0216 Victoria Hotel Lytham St Annes FY 8 3NE 600. P0223 Bridge Inn Sale M 33 7BH 601. P0229 Dog & Partridge Hotel Warrington WA 1 3TZ 602. P0230 Hayrick Leyland PR 5 2RY 603. P0235 Kenilworth Hotel Cheadle SK 8 5DX 604. P0238 Mount Hotel Fleetwood FY 7 6QE 605. P0253 Parrswood Hotel Manchester M 20 6JD 606. P0261 Sumners Hotel Preston PR 2 8AE 607. P0264 Three Horses Keighley BD22 6BZ 608. P0280 Hare & Hounds Prescot L 35 1QJ 609. P0281 Mersey Clipper Birkenhead CH42 9PY 610. P0283 Pear Tree Inn Melling L 31 1AP 611. P0285 Piper Chester CH 2 3LS 612. P0292 Ship Inn St Helens WA11 0AB 613. P0309 Queens Liverpool L 1 1EE 614. P0310 Feathers Hotel Warrington WA 1 2HQ 615. P0323 Pinewoods Formby L 37 1PR 616. P0330 Childwall Fiveways Hotel Liverpool L 15 6XS 617. P0355 Shrewsbury Arms Wirral CH43 5TQ 618. P0362 Carr Mill St Helens WA11 9AD 619. P0370 Gerard Arms St Helens WA10 6SD 620. P0387 Albion Hotel Widnes WA 2 7EG 621. P0390 Famous King & Queen Hotel Warrington WA 1 3SN 622. P0418 Gardeners Arms Stockport SK 2 5AB 623. P0436 Farmers Arms Manchester M 22 4JR 624. P0440 Golden Fleece Lymm WA13 0HR 625. P0454 Swan Hotel Wilmslow SK 9 1HE

167 Outlet Number Outlet name Town Post Code

626. P0470 Boat House Manchester M 44 6DN 627. P0474 Church Inn Flixton M 41 9BU 628. P0480 Greenwood Arms Bolton BL 6 6JZ 629. P0489 Old Black Bull Preston PR 1 2AT 630. P0495 Church Inn Oldham OL 1 2RR 631. P0502 George & Dragon Hotel Stockport SK 4 5DH 632. P0526 Stocks Hotel Manchester M 28 3JX 633. P0528 Trevor Arms Chorlton Cum Hardy M 21 9EQ 634. P0534 F J Nicholls Blackburn BB 2 1AA 635. P0536 Famous Crown Didsbury M 20 2DR 636. P0539 George Stockport SK 4 1AF 637. P0541 George & Dragon Hotel Cheadle SK 8 1AY 638. P0552 Robin Hood Ashton In Makerfield WN 4 8AA 639. P0564 George Twickenham TW 1 3SN 640. P0579 Woods Borehamwood WD 6 1DR 641. P0583 Beehive St Albans AL 1 1QL 642. P0598 Owl & Pussycat Leicester LE 4 7SL 643. P0648 Bell Inn Sawley NG10 3GR 644. P0662 Moon & Sixpence Ilkeston DE 7 5QB 645. P0667 Old Dog & Partridge Nottingham NG 1 3DA 646. P0676 Tap & Tumbler Nottingham NG 1 5FW 647. P0707 Ram Inn Red Hill NG 5 8JY 648. P0715 Rose & Crown Lenton NG 7 2GW 649. P0722 Talbot Inn Nottingham NG18 4AJ 650. P0724 Bar Edge Level Street DY 5 1XG 651. P0725 Bay Horse Bristol BS 1 2LJ 652. P0733 Black Horse Northfield B 31 2QT 653. P0740 Channings Hotel Clifton BS 8 3BB 654. P0744 Crown Inn Catshill B 61 9LE 655. P0783 Golden Lion Hotel Weymouth DT 4 8AR 656. P0785 Market House Taunton TA 1 1JD 657. P0791 Longbrook Exeter EX 4 1AA 658. P0793 White Hart Hotel Weymouth DT 4 8LY 659. P0795 Chambers Southampton SO15 2AJ 660. P0799 Excise House Weymouth DT 4 8TR 661. P0815 Malt & Hops + Cool Bar Bournemouth BH 5 2BW 662. P0818 Old Rooms Inn Weymouth DT 4 8TT 663. P0819 Porthouse Winchester SO23 8AL 664. P0823 Steam Railway Co Swindon SN 1 3DX 665. P0847 Quayside Inn Falmouth TR11 3JQ 666. P0863 Roo Bar Bristol BS 8 2PN 667. P0872 Earl Crewe CW 2 6BP 668. P0875 Pear & Partridge Perton WV 6 7XZ 669. P0880 Steam Wagon Inn Shrewsbury SY 1 3EP 670. P0885 Henry’S Cafe Bar – Blomfield St London EC2M 5NT 671. P0886 Henry’S Cafe Bar – Cambridge Cambridge CB 5 8AB 672. P0887 Henry’S Cafe Bar – Covent Garden London WC2E 8PS 673. P0888 Henry’S Cafe Bar – Leeds Leeds LS 1 5RN 674. P0890 Henry’S Cafe Bar – Piccadilly London W 1J 8HY 675. P0891 Henrys Cafe Bar – Richmond Richmond TW 9 1EH 676. P0895 Henry’S Cafe Bar – Cardiff Cardiff CF10 3DN 677. P0902 Quinceys – Bristol North Filton Bristol BS34 7AA 678. P0910 Quinceys – Surrey Quays Surrey Quays SE16 7LL 679. P0911 Quinceys – Watford Watford WD25 8HH 680. P0915 Bridgewater Worsley M 28 2PD 681. P0917 Counting House Blackpool FY 1 1NG 682. P0923 Station Hotel Blackpool FY 1 1LL

168 Outlet Number Outlet name Town Post Code

683. P0926 Watergates Wine Bar Chester CH 1 2LB 684. P0928 Baja Beach Club – Gateshead Gateshead NE 8 2BJ 685. P0929 Chevy’S – Washington Washington NE37 1LE 686. P0930 Chevy’S – Northampton Northampton NN 5 5QJ 687. P0937 Malt House Brindley Place B 1 2NX 688. P0939 Watermill Kidderminster DY11 6TL 689. P0942 Bar Vin Horsham RH12 1EU 690. P0948 Comedy London SW1Y 4EE 691. P0949 Green House Bristol BS 1 5SP 692. P0950 Horn & Trumpet Bristol BS 1 4UT 693. P0951 Newquay Arms Newquay TR 7 1AY 694. P0954 Royal Bell Hotel Bromley BR 1 1NN 695. P0955 Sailors Arms Newquay TR 7 1HB 696. P0964 Square – Manchester Manchester M 2 5QR 697. P0969 Square Balloon – Southampton Southampton SO14 7FH 698. P0973 Square – Preston Preston PR 1 3NN 699. P0976 Via Fossa – Nottingham Nottingham NG 1 7EH 700. P0979 Battle Axes Elstree WD 6 3AD 701. P0980 Blue Boar Abridge Nr Romford RM 4 1UA 702. P0981 Crown Henlow SG16 6BS 703. P0983 Feathers Burnham SL 1 8NS 704. P0986 Red Lion Hemel Hempstead HP 1 3BD 705. P0987 Ring O’Bells Littlewick Green SL 6 3RX 706. P0998 On The Waterfront Restaurant Exeter EX 2 4AN 707. P1061 Stocks Inn Wimborne BH21 4HT 708. P1080 Fleece Inn Penwortham PR 1 9XD 709. P1088 Hinderton Arms Wirral CH64 7TA 710. P1115 Thorn Inn Appleton WA 4 4QX 711. P1145 Ye Olde Kings Head Chester CH 1 1RS 712. P1148 Barbridge Inn Barbridge CW 5 6AY 713. P1161 Butley Ash Butley SK10 4EA 714. P1179 Romper Altrincham WA15 8XJ 715. P1182 Spread Eagle Hotel Romiley SK 6 3DR 716. P1183 Unicorn Wilmslow SK 9 2LN 717. P1184 Ferry Inn Wilford NG11 7AA 718. P1224 Kings Arms Hotel Dorchester DT 1 1HF 719. P1227 Old Bell Reading RG 7 1LS 720. P1231 Spyglass & Kettle Southbourne BH 6 3PW 721. P1326 Quays – Northampton Northampton NN 3 9DA 722. P1328 Ship Inn Bristol BS35 3LL 723. P1352 Old Rectory Stockport SK 1 1YG 724. P1397 Dick Turpin Wickford SS12 9HZ 725. P1399 Millers – Farnham Farnham GU10 4LA 726. P1403 Grange Wallington SM 6 7BT 727. P1407 New Chimneys Ashford TN23 3JJ 728. P1409 Newnham Court Inn Weavering ME14 5LH 729. P1411 Old Rectory Leybourne ME19 5PU 730. P1412 Overstone Manor Northampton NN 6 0BD 731. P1413 Peacock Lodge Newchapel RH 7 6HL 732. P1414 Millers – Bletchingley Nr Redhill RH 1 4PE 733. P1422 Three Horse Shoes Bishops Stortford CM22 7SE 734. P1424 Woodman Sevenoaks TN14 6BU 735. P1427 Cheshire Cheese Crewe CW 2 5AF 736. P1434 Merlin Hotel Leighton CW 1 3RH 737. P1435 Moby Dick Wirral CH48 3JN 738. P1451 Wheatsheaf Warrington WA 6 0LL 739. P1455 Winnington Lodge Northwich CW 8 4DA

169 Outlet Number Outlet name Town Post Code

740. P1457 Yacht Inn Woodbank CH 1 6EY 741. P1458 Black Castle Bristol BS 4 3BD 742. P1464 Cocked Hat Gosport PO12 3TR 743. P1465 Corn Exchange Brierley Hill DY 5 2YJ 744. P1468 Drum & Monkey Solihull B 93 8ND 745. P1472 Fox Inn Worcester WR 6 5JL 746. P1473 Rose & Crown Birmingham B 48 7JD 747. P1474 Running Horse Inn Bewdley DY12 2QP 748. P1479 Tap & Railway West Moors BH22 0HX 749. P1482 Washford Mill Studley B 80 7BD 750. P1485 Boat Inn Solihull B 91 2TJ 751. P1488 Chesterfield Bingham NG13 8AL 752. P1494 Fenay Bridge Huddersfield HD 8 0LF 753. P1495 Ferry Boat Inn Nottingham NG14 5HX 754. P1502 Sherwin Arms Bramcote NG 9 3JN 755. P1519 Wolds Nottingham NG 2 7HZ 756. P1524 Bear & Staff Liverpool L 25 3PB 757. P1527 Blundell Arms Bolton BL 6 6PY 758. P1528 Church View Inn Widnes WA 8 5AZ 759. P1540 Grapes Hotel Prescott L 34 2QH 760. P1541 Griffin Inn Widnes WA 8 3XT 761. P1542 Old Cobblers Inn Rossendale BB 4 6HL 762. P1543 Royal Oak St Helens WA10 5QN 763. P1545 Stanley Gate Hotel Ormskirk L 39 9EN 764. P1570 Thornton Lodge Cleveleys FY 5 5LD 765. P1571 Wellington Liverpool L 34 2RH 766. P1578 Ashlea Cheadle SK 8 2NP 767. P1579 Blacksmiths Arms Nr Macclesfield SK11 9PG 768. P1587 Cock Hotel Manchester M 28 2RZ 769. P1588 Fair View Inn Burnedge OL16 4QQ 770. P1590 Ladybrook Hotel Bramhall SK 7 2NP 771. P1595 Millers – Worsley Worsley M 28 1YB 772. P1596 Noggin Inn Risley WA 3 6AY 773. P1600 Saracens Head Lymm WA13 9TH 774. P1602 Millers – Handforth Wilmslow SK 9 3JZ 775. P1684 Via Fossa – Canary Wharf West India Quay E 14 4QT 776. P6606 Square – Norwich Norwich NR 1 1WX 777. S0006 Dog & Gun Keswick CA12 5BT 778. S0036 Old Orleans – Plymouth Plymouth PL 4 0LG 779. S0050 R & P – Woking Woking GU21 5AJ 780. S0083 R & P – Milton Keynes Milton Keynes MK 9 3PU 781. S0084 R & P – Cambridge Cambridge CB 2 3DS 782. S1015 Bar 38 – Edinburgh Edinburgh EH 2 4HH 783. S1043 Barrachnie Glasgow G 69 6EU 784. S1093 Slains Castle Aberdeen AB10 1JE 785. S1094 Mccowans Brewhouse Edinburgh EH11 1DQ 786. S1095 Bar Censsa – Leeds Leeds LS 1 5DF 787. S1139 Tower East Kilbride G 74 1LT 788. S1201 Edinburgh CC Premier Lodge Edinburgh EH 1 2JU 789. S1222 Barony Edinburgh EH 1 3RJ 790. S1364 Bar Oz – Glasgow Glasgow G 12 8HN 791. S1391 Grays Inn Aberdeen AB16 5PY 792. S1436 Bar 38 – Pavillion, Manchester Manchester M 2 5GP 793. S1453 Milnes Edinburgh EH 2 2PJ 794. S1515 Ryries Edinburgh EH12 5EZ 795. S1531 Crofters Edinburgh EH11 4BW 796. S1560 Bar Oz – Edinburgh Edinburgh EH 1 2QN

170 Outlet Number Outlet name Town Post Code

797. S1563 Biddy Mulligans Edinburgh EH 1 2JR 798. S1565 Malt Shovel Inn Edinburgh EH 1 1BP 799. S1673 Rainbow Edinburgh EH12 8HG 800. S1762 Eagle Lodge Glasgow G 64 2PN 801. S1772 Calderwood East Kilbride G 74 3DX 802. S1775 Langdykes Aberdeen AB12 3HE 803. S1776 Mathers Bar Edinburgh EH 2 4PA 804. S1781 Justinlees Inn Dalkeith EH22 3AT 805. S1878 Crow Tavern Bishopbriggs G 64 2AB 806. S2004 Brewers Arms Berwick TD15 1BH 807. S2033 Hunters – East Kilbride East Kilbride G 74 4US 808. S2034 De: Alto – Fountain Park Edinburgh EH11 1AF 809. S2045 Bay Horse Newcastle Upon Tyne NE16 4EF 810. S2062 Blackbird Newcastle Upon Tyne NE20 9UH 811. S2063 Black Bull Newcastle Upon Tyne NE12 8AE 812. S2077 Brinkburn Darlington DL 3 0YR 813. S2078 Black Bull Morpeth NE61 1PE 814. S2102 City Limits – Romford Romford RM 5 2BH 815. S2103 City Limits – Milton Keynes Central Milton Keynes MK 9 3XS 816. S2104 City Limits – Croydon Croydon CR 0 4RJ 817. S2181 Coach & Horses Gateshead NE 9 7JR 818. S2199 County Hotel Newcastle Upon Tyne NE 3 1HB 819. S2221 Bar Oz – Newcastle Newcastle Upon Tyne NE 1 7RY 820. S2227 Cross Keys Washington Village NE38 7AB 821. S2273 Duke Of Wellington Newcastle Upon Tyne NE 3 3BQ 822. S2326 Fox & Hounds Newcastle Upon Tyne NE 5 2ER 823. S2377 Gunner North Shields NE30 2DH 824. S2386 Brandling Villa South Gosforth NE 3 1QL 825. S2393 Cumberland Arms Tynemouth NE30 4DX 826. S2405 Greens Sunderland SR 1 3PY 827. S2426 Hotspur Hotel Newcastle Upon Tyne NE 1 7RY 828. S2492 Lochside Newcastle Upon Tyne NE 7 7LJ 829. S2521 Market Hotel Durham DH 1 3NJ 830. S2589 Northumberland Arms Newcastle Upon Tyne NE 1 7AT 831. S2597 Norman Conquest Middlesbrough TS 6 0QA 832. S2683 Ye Olde Jockey Newcastle Upon Tyne NE 3 1HD 833. S2808 Southern Cross Middlesbrough TS 7 8NX 834. S2809 Sportsmans Belmont DH 1 1BJ 835. S2862 Telstar Hotel Billingham TS23 3DF 836. S2880 Travellers Rest Newcastle Upon Tyne NE13 6LN 837. S2891 Willow Pond Inn Sunderland SR 4 7YF 838. S3039 Old Orleans – Fountain Park Edinburgh EH11 1AF 839. S3040 Old Orleans – Coventry Coventry CV 1 3AZ 840. S3236 Old Orleans – Star City Nechells B 7 5SA 841. S3444 Green Man Great Offley SG 5 3AR 842. S4086 Two Brewers Kings Langley WD 4 9BS 843. S4087 Old Orleans – Cardiff A.W. Cardiff CF10 4JY 844. S4608 Old Orleans – Northampton Northampton NN 5 5QL 845. S4609 Old Orleans – Reading Reading RG 1 2AG 846. S4610 Millers – Preston Preston PR 5 6BA 847. S4620 Old Orleans – Finchley Finchley NW 3 6LU 848. S4622 White Cart Glasgow G 76 8HX 849. S4631 Old Orleans – Ipswich Ipswich IP 1 1UP 850. S4632 Old Orleans – Norwich Norwich NR 1 1WX 851. S4633 Old Orleans – Sheffield Sheffield S 9 2EP 852. S4634 Yews Great Glen LE 8 9FL 853. S4759 Millers – Woolsington Newcastle Upon Tyne NE13 8DF

171 Outlet Number Outlet name Town Post Code

854. S4762 Bar 38 – India Quay London E 14 4AX 855. S4780 Woodmans Arms Newcastle Upon Tyne NE16 5BB 856. S5008 Friar Tuck Nottingham NG 5 6NW 857. S5011 R & P – Crawley Crawley RH10 1BA 858. S5046 Bag O Nails London SW1W 0QP 859. S5048 Towngate Basildon SS14 1DZ 860. S5095 Bridge Inn Nottingham NG10 5LW 861. S5097 Broxtowe Inn Nottingham NG 8 6AX 862. S5101 Camden Head London N 1 8DY 863. S5102 Bar 38 – Long Acre London WC2E 9LH 864. S5103 R & P – Bexleyheath Bexley Heath DA 6 7ES 865. S5104 Bar 38 – Hammersmith London W 6 9DT 866. S5155 Coach & Horses London W 1J 6PT 867. S5160 Coopers Arms Nottingham NG 6 8JY 868. S5252 Chambers Gloucester GL 1 1RP 869. S5255 Eagle Nottingham NG 5 8AA 870. S5274 Red Arrow Lutterworth LE17 4QF 871. S5296 Fox Nottingham NG 5 1HY 872. S5297 Fox & Crown Skegby NG17 3AA 873. S5307 Golden Lion London W 1D 5BL 874. S5348 Griffins Head Nottingham NG15 8EN 875. S5355 Grove Hotel Castle Nottingham NG 7 1HA 876. S5358 Ben Crouch London W 1T 3QQ 877. S5477 Bar 38 – Reading Reading RG 1 2AG 878. S5497 Maenllwyd Inn Nr.caerphilly CF83 3EB 879. S5568 Bell Book & Candle London EC4M 7DE 880. S5628 Roebuck Richmond TW10 6RN 881. S5630 Bar 38 – Maidenhead Grenfell Island SL 6 1DY 882. S5640 Bar 38 – Portsmouth Portsmouth PO 1 3TS 883. S5676 Royal Oak Nottingham NG 6 8EW 884. S5682 Round Table London WC2N 4AL 885. S5694 Old Orleans – Manchester Manchester M 4 2BS 886. S5708 Three Crowns London SW1Y 6HD 887. S5731 Peacock Sheffield S 17 3BQ 888. S5753 White Hart Cardiff CF 3 5UW 889. S5754 Tun Edinburgh EH 8 8AE 890. S5758 Bar 38 – Minories London EC3N 1PD 891. S5760 Bar 38 – Newcastle Newcastle Upon Tyne NE 1 3AE 892. S5763 R & P – Northampton Northampton NN 1 1JA 893. S5770 Vale Hotel Nottingham NG 5 3GG 894. S5783 Wheatsheaf Inn Nottingham NG14 5GB 895. S5792 Old Orleans – Enfield Enfield EN 1 1UY 896. S5800 Bar Censsa – Solihull Solihull B 91 3AD 897. S5810 Woolcomber Kettering NN15 5AZ 898. S5990 George Inn Nr Huntingdon PE28 0TD 899. S6007 Anchor Preston PR 4 5SL 900. S6025 Old Orleans – Kingston Kingston Upon Thames KT 2 5AA 901. S6043 Beehive Carlisle CA 1 1LH 902. S6053 Board & Elbow Penrith CA11 7HS 903. S6054 Boathouse Chester CH 1 1SD 904. S6064 R & P – Queens Sq, Liverpool Liverpool L 1 1RH 905. S6072 Black Bull Ripon HG 4 1EQ 906. S6155 Old Leyland Gates Leyland PR 5 2PG 907. S6515 Mount Pleasant Southport PR 9 9BD 908. S6585 Pomona Sheffield S 11 8NX 909. S6604 Railway Southport PR 8 3NA 910. S6605 Norwegian Blue – Manchester Manchester M 4 2BS

172 Outlet Number Outlet name Town Post Code

911. S6607 Norwegian Blue – Norwich Norwich NR 1 1WX 912. S6608 Bar 38 – York York YO 1 9QL 913. S6609 Bar Censsa – Preston Preston PR 1 2NQ 914. S6622 Rockingham Rotherham S 62 7TL 915. S6627 Royal Oak Ambleside LA22 9BU 916. S6653 Ship Inn Preston PR 1 2XQ 917. S6656 Ship Milnthorpe LA 7 7HW 918. S6658 Shovels Blackpool FY 4 5DH 919. S6661 Strawberry Gardens Morecambe LA 3 2NZ 920. S6700 Hoagy’S Bar Leeds LS 2 7JL 921. S6788 Baja – Leeds Leeds LS 2 8PL 922. S6803 Ye Olde Golden Lion Keswick CA12 5JD 923. S6819 Dog & Partridge Tutbury DE13 9LS 924. S7216 Grape Edinburgh EH 2 2BH 925. S8161 Old Orleans – Guildford Guildford GU 1 4SG 926. S8256 Fleece Kendal LA 9 4SX 927. S8324 Fox Inn Guisborough TS14 6BP 928. S8751 Little Mester Sheffield S 25 4BU 929. S9003 Adam & Eve Prudhoe NE42 6NP 930. S9014 Argosy Glasgow G 52 3SJ 931. S9030 Arrow Nottingham NG 5 6NY 932. S9128 Lincoln Inn Glasgow G 13 2XX 933. S9135 Rock Glasgow G 12 9HE 934. S9270 Fairham Hotel Nottingham NG11 8LT 935. S9313 Old Orleans – Newcastle Newcastle Upon Tyne NE 1 7PF 936. S9321 Fountain South Shields NE34 6JL 937. S9339 Shakespeare Edinburgh EH 1 2DJ 938. S9376 Grosvenor Edinburgh EH 2 4RT 939. S9406 Old Orleans – Cheshire Oaks Ellesmere Port CH65 9HD 940. S9475 Nine Maidens Dundee DD 3 9QU 941. S9552 Old Orleans – Maidstone Maidstone ME16 8LY 942. S9641 Peregrine Newcastle Upon Tyne NE 5 1AA 943. S9713 Quo Vadis Glasgow G 52 3TN 944. S9736 Paraffin Lamp Livingston EH54 6NB 945. S9784 Mccowans Brewhouse (Brewery) Edinburgh EH11 1DQ 946. S9794 Huxters Dundee Dundee DD 1 1RH 947. S9796 Hopetoun Inn Edinburgh EH 7 4LZ 948. S9799 Oban Inn Oban PA34 5NJ 949. S9834 Swan Inn Newcastle Upon Tyne NE15 0DR 950. S9884 Beehive Inn Edinburgh EH 1 2JU 951. S9887 Union Arms Yarm TS15 9BH

173 Appendix 2 – Borrower Group Estate Sample Properties

Outlet Number Outlet name Town Post Code

1. C0101 Trumpet Northampton NN 3 3JB 2. C0102 Bunch Of Grapes London SW 3 1LA 3. C0105 Whitehills Northampton NN 2 8EW 4. C0155 Yeoman Of England Northampton NN 4 6LP 5. C0191 Red Lion Northampton NN 7 1BP 6. C0210 Robin Hood Nr Huntingdon PE27 5AL 7. C0218 Squirrels Northampton NN 6 6JF 8. C0348 Barley Mow Walton KT12 4RS 9. C0350 Prince Of Wales Esher KT10 8LA 10. C0356 FW – Victoria London SW1P 2HP 11. C0359 Ye Olde Anthropologist West Wickham BR 4 0LU 12. C0441 George London W 6 7AB 13. C0612 Courtfield London SW 5 9AN 14. C0657 Wellesley Arms London SW 3 6NJ 15. C0674 Tattersalls Tavern London SW1X 7QA 16. C0736 Fountains Abbey London W 2 1RL 17. C0753 Greenman London W 2 1DY 18. C0834 St Margarets Twickenham TW 1 2LJ 19. C1039 Jolly Waggoner Hounslow TW 5 9TL 20. C1104 Poachers Stevenage SG 1 1NA 21. C1121 Shipley Bridge Horley RH 6 9TE 22. C1127 Leather Bottle Cobham DA12 3BZ 23. C1142 Elmer Lodge Beckenham BR 3 3RG 24. C1203 Little B Sale M 33 3ND 25. C1211 Cock London SW 6 1LY 26. C1276 Essex Yeoman Upminster RM14 2TD 27. C1313 Moss Trooper Timperley WA15 6JU 28. C1408 Nags Head Huddersfield HD 2 2EA 29. C1733 Golden Lion York YO 1 8AN 30. C1748 Station Hotel Ipswich IP 2 8AJ 31. C1833 Crown London SE 3 0BS 32. C2030 Blackbrook Inn Taunton TA 3 5LU 33. C2229 Tilgate Crawley RH10 5EJ 34. C2294 Windmill Crawley RH11 8HQ 35. C2513 Wooden Bridge Guildford GU 2 9AA 36. C2885 Anchor Woking GU23 6QW 37. C3144 Grace Arms Ellesmere Port CH65 9AH 38. C3150 Boot Inn Sutton Coldfield B 75 7RU 39. C3152 Harrow Erith DA 8 3PZ 40. C3207 Marquis Of Granby London WC2H 8HJ 41. C3425 Chequers Nr Hook RG27 0NS 42. C3624 Bricklayers Newbury RG14 5HB 43. C3847 Headley Brentwood CM13 3HS 44. C3873 Golden Fleece London E 12 5DB 45. C4619 Rushcutters Arms Norwich NR 7 0HE 46. C5026 Talbot London SW1X 7AL 47. C5602 Coach & Horses Hounslow TW 3 1PG 48. C5648 Court House Caerphilly CF83 1FN 49. C6106 Axe & Cleaver Altrincham WA14 4JE 50. C6226 Bulls Head Wilmslow SK 9 3EW 51. C6701 Curtains Up London W 14 9HR 52. C6708 Chelsea Potter London SW 3 4PL 53. C6735 Kensington London W 14 8EZ 54. C6737 Albert London SW1H 0NP 55. C6761 Greenman & French Horn London WC2N 4EA

174 Outlet Number Outlet name Town Post Code

56. C7010 Abington Northampton NN 1 4EY 57. C7090 Crossroads Shepperton TW17 8EQ 58. C7303 Essex Serpent London WC2E 8HN 59. C8154 North Star London NW 3 5JJ 60. C8302 Old Orleans – Brighton Brighton BN 1 1HE 61. M2050 Bridge Inn Derby DE 1 3QY 62. M2061 Lodge Derby DE24 0JW 63. M2071 Wardwick Tavern Derby DE 1 1HA 64. M2074 Lynton Tavern Stafford ST17 0EA 65. M2089 Wulstan Newcastle ST 5 8BU 66. M2107 White Swan Derby DE23 6GA 67. M2123 Lightwood Tavern Stoke-On-Trent ST 3 7EL 68. M2133 Gatehouse Newcastle ST 5 3HR 69. M2139 Alsager Arms Stoke-On-Trent ST 7 2LU 70. M2160 Beggars Bush Sutton Coldfield B 73 5BA 71. M2164 Broadway Willenhall WV12 5UJ 72. M2194 Greyhound Burntwood WS 7 9AL 73. M2197 Hare & Hounds Sutton Coldfield B 76 9DD 74. M2253 New Billesley Hotel Birmingham B 13 0AB 75. M2267 Pheasant Inn Smethwick B 67 5NQ 76. M2279 Raven Birmingham B 34 7DR 77. M2296 Saracens Head Solihull B 90 3AG 78. M2305 New Tardebigge Redditch B 97 6QL 79. M2306 Cabin Sedgley DY 3 3QY 80. M2318 White Horse Coventry CV 7 7DT 81. M2319 Scireborne Tavern Coventry CV 5 7LN 82. M2365 Six Bells Newport NP20 4ED 83. M2376 Three Blackbirds Inn Cwmbran NP44 3AY 84. M2381 White Horse Shrewsbury SY 2 6JJ 85. M2385 Cross Keys Buckley CH 7 3AQ 86. M2406 Park Tavern Walsall WS 1 2QG 87. M2416 Priors Lodge Telford TF 2 9SW 88. M2435 Hyde Park Hotel Plymouth PL 4 6LG 89. M2461 Onslow Arms Cranleigh GU 6 8AU 90. M2488 Rose & Crown Wallington SM 6 7HF 91. M2491 King William IV Ewell KT17 1SB 92. M2497 De Burgh Arms West Drayton UB 7 7DQ 93. M2509 Wheatsheaf Bognor Regis PO21 2BE 94. M2511 George & Dragon Gosport PO12 1ES 95. M2526 Durham Arms Romford RM 1 2EH 96. M2581 Dudley Arms Paddington W 2 1JP 97. M2582 The Duke Acton Green W 4 5LF 98. M2583 The Elgin Notting Hill W 11 1PY 99. M2599 Mortimer Arms London W 1T 7NU 100. M2605 Plough London WC1A 1LH 101. M2608 Royal Oak Hotel Golders Green NW11 0QB 102. M2610 Shortlands Tavern Bromley BR 2 0EY 103. M2619 BRB The Hart Hammersmith W 6 9NJ 104. M2667 Cat & Fiddle Hatfield AL10 0SR 105. M2674 Three Tuns Uxbridge UB 8 1JN 106. M2676 Three Blackbirds Hemel Hempstead HP 1 1NR 107. M2677 BRB The Victory Pinner HA 5 5PW 108. M2679 White Hart Hotel St.Albans AL 1 1EZ 109. M2680 Royal Stag Hemel Hempstead HP 2 5SE 110. M2711 Beaconsfield Arms High Wycombe HP13 5PB 111. M2717 North Camp Farnboro’ GU14 6ET 112. M2725 Kings Arms Hotel Bicester OX26 6AH

175 Outlet Number Outlet name Town Post Code

113. M2742 Plough & Horses Farnboro’ GU14 9RG 114. M2772 Change Of Hart Edgware HA 8 7EE 115. M2823 Swan Wheathampstead AL 4 8AR 116. M2826 Bull & Butcher Whetstone N 20 9HS 117. M2827 White Hart Bicester OX26 6TB 118. M2848 Royal Oak Reading RG31 5NW 119. M2911 Australian Chelsea SW 3 2QD 120. M2915 Huntsmans Hall Worcester Park KT 4 8DR 121. M2926 Newton Arms Holborn WC2B 5EL 122. M3927 Southbury Hotel Enfield EN 1 1RG 123. M3952 Red Lion London SW1A 2NH 124. M3956 Duke Of Edinburgh Wanstead E 11 2EY 125. M3957 Green Man Brentwood CM13 3PZ 126. M3970 Wheatsheaf Chelmsford CM 1 1NT 127. M3972 White Hart Chelmsford CM 2 6PG 128. M3988 Tudor Arms Watford WD24 7TR 129. M3992 Buckinghamshire Yeoman Aylesbury HP21 7UD 130. M3999 Wishing Well Bletchley MK 3 7DJ 131. M5946 Lakeside Milton Keynes MK15 9HQ 132. M5949 Frogshole Farm Crawley RH10 7QF 133. M5971 Festival Alehouse Edinburgh EH 3 8BJ 134. M6002 Livingston Inn Livingston EH54 7AF 135. M6169 Old Chequers Thatcham RG19 3HP 136. M6197 Quakerwood York YO24 3XN 137. M6198 Blue Lion Newton Le Willows WA12 9SL 138. M6209 White Horse Harwood BL 2 4HT 139. M6222 Oak Tree Inn Newton-Le-Willows WA12 9UY 140. M6223 Plough Stockport SK 4 4NZ 141. M6316 New Inn Wetherby LS22 6LL 142. M6328 Craven Heifer Bradford BD 5 8DH 143. M6329 Crown Bradford BD 7 4AH 144. M6345 New Inn Wakefield WF 4 3AX 145. M6357 William Iv Inn Halifax HX 1 3JZ 146. M6368 Scandals Sheffield S 35 2UU 147. M6383 Buck-I’Th’Vine Ormskirk L 39 2EG 148. M6386 Kicking Donkey Ormskirk L 40 8HY 149. M6393 White Rose Middlesbrough TS 4 2HF 150. M6409 Bold Arms Southport PR 9 7NE 151. M6414 Fenton Hotel Leeds LS 2 3ED 152. M6420 Three Horse Shoes Hotel Leeds LS16 5JJ 153. M6426 Old Ball Leeds LS18 5SB 154. M6429 Punch Bowl Hotel Sheffield S 10 1TH 155. M6440 Templar Hotel Leeds LS 2 7NU 156. M6444 Royal Oak Leeds LS25 7JP 157. M6456 Daisy Inn Leeds LS13 3AD 158. M6458 Bridge Inn Keighley BD21 4EB 159. M6527 Boars Head Blackpool FY 3 9PL 160. M6529 Carters Arms Liverpool L 32 2AD 161. M6534 Scruffy Murphy’s (Blackpool) Blackpool FY 1 1EJ 162. M6540 St George Stoneycroft L 13 7BB 163. M6557 Falstaff Liverpool L 25 1PG 164. M6561 Queens Arms Liverpool L 36 5XE 165. M6562 Red Admiral Runcorn WA 7 5JQ 166. M6590 Cricketers Grimsby DN34 4PS 167. M6599 Ardencaple Hotel Helensburgh G 84 8LA 168. M6600 Bonnie Prince Charlie East Kilbride G 74 2AU 169. M6602 Partick Tavern Glasgow G 11 6AA

176 Outlet Number Outlet name Town Post Code

170. M6635 Samuel Dow Glasgow G 41 2PZ 171. M6639 Times Square Glasgow G 1 4DH 172. M6646 Pendas Arms Leeds LS14 2DF 173. M6683 Rosies Bar Newcastle-Upon-Tyne NE 1 4XQ 174. M6685 Ship Inn Cleveland TS12 1HF 175. M6689 Myllet Arms Hotel Greenford UB 6 8TE 176. M6695 Farmers Leeds LS28 8AE 177. M6717 Weld Blundell Arms Formby L 38 1QA 178. M6792 Heathlands Hotel Ipswich IP 3 8LJ 179. M6807 Scruffy Murphys (2) Edinburgh EH 3 7PR 180. M6823 Cherry Orchard Wirral CH49 5LW 181. M6831 Coulby Farm Middlesborough TS 8 9DX 182. M6833 County Hotel Alderley Edge SK 9 7QN 183. M6867 Bobbin Mill Paisley PA 1 2BH 184. M6903 Great Western Swindon SN 5 7DN 185. M6906 Angel Inn Rothwell LS26 0SF 186. M6930 Gamekeeper Scotter DN21 3TW 187. M6931 Generous Pioneer Burley In Wharfdale LS29 7BT 188. M6956 Marquis Low Stubbin S 62 7RX 189. M6961 Muddle Go Nowhere Grantham NG31 8SR 190. M6968 Old Grey Mare Hull HU 5 2EG 191. M6969 Old Zoological Hull HU 5 3DL 192. M6976 Porridge Pot Longbridge CV34 6RA 193. M6995 Tumbledown Farm Hatherton WS11 1RU 194. M6996 Waggon & Horses Millhouses S 7 2QQ 195. M7799 Globe Inn Chichester PO19 8DH 196. P0113 Pied Bull Chester CH 1 2HQ 197. P0143 Derby Mills Liverpool L 11 1ER 198. P0148 Farmers Arms Liverpool L 9 0EN 199. P0273 Childe Of Hale Liverpool L 24 4AX 200. P0311 George & Dragon Leigh WN 7 4LP 201. P0319 Jolly Miller West Derby L 12 7JF 202. P0341 Moreton Arms Wirral CH46 7TQ 203. P0399 Mulberry Tree Inn Stockton Heath WA 4 2AF 204. P0417 Fiveways Hotel Stockport SK 7 6BE 205. P0424 Broken Cross Rudheath CW 9 7EB 206. P0498 Elizabethan Stockport SK 4 4NX 207. P0516 Robin Hood Hotel Manchester M 32 9AF 208. P0554 Snipe Inn Oldham OL 1 1NH 209. P0556 Windmill Inn York YO24 1AJ 210. P0585 Chequers Peterborough PE 2 6XN 211. P0777 Butlers Exeter EX 4 3AZ 212. P0782 Famous Ship Exmouth EX 8 1NP 213. P0788 Railwayman Polsloe Bridge EX 4 7JQ 214. P0883 Woodside Crewe CW 2 8JU 215. P0918 Kingfisher South Poynton SK12 1NJ 216. P0932 Drawbridge Inn Shirley B 90 1DD 217. P0945 Bear Maidenhead SL 6 1QJ 218. P0958 Village London N 10 3SH 219. P0975 Via Fossa – Manchester Manchester M 1 3EZ 220. P0977 Southwark – Anchor Bankside London SE 1 9DN 221. P1185 Fox Inn Oxford OX 1 5DQ 222. P1206 Fairmile Cobham KT11 1BW 223. P1234 Vauxhall Inn Tonbridge TN11 0NA 224. P1235 Vine Inn Southampton SO51 6ZJ 225. P1241 Wheatsheaf Hotel Nr Basingstoke RG25 2BB 226. P1243 Boddington Arms Blackburn BB 2 7LB

177 Outlet Number Outlet name Town Post Code

227. P1244 Charnley Arms Nr Wigan WN 6 0SS 228. P1282 New Ellesmere Manchester M 27 0AA 229. P1292 Millers – Chorley Chorley PR 7 4AB 230. P1347 Egerton Arms Bache CH 2 1AU 231. P1421 Seabrights Chelmsford CM 2 8NB 232. P1425 Antelope Inn Bangor LL57 2HZ 233. P1456 Woodman Swansea SA 3 5AS 234. P1499 Reservoir Solihull B 94 5SL 235. P1507 White House Leeds LS 8 2JU 236. P1521 Allerton Hall Liverpool L 25 7UN 237. P1525 Black Horse Inn Prescot L 35 4PF 238. P1585 Butchers Arms Great Sankey WA 5 3NB 239. P1591 Little Manor Warrington WA 4 2SX 240. S0621 Travellers Rest Nottingham NG 3 5RT 241. S1020 Auchinairn Bishopbriggs G 64 1NF 242. S1512 Rutland Hotel Edinburgh EH 1 2AE 243. S1557 Jekyll & Hyde Edinburgh EH 2 1DR 244. S1671 Brecks Edinburgh EH 2 3JF 245. S1874 Central Bar St Andrews KY16 9NU 246. S2018 Anson Wallsend NE28 8QS 247. S2457 Jubilee Newcastle Upon Tyne NE 3 3PN 248. S2709 Red Lion Whitley Bay NE25 9JU 249. S2886 Turks Head North Shields NE30 4DZ 250. S3446 Five Horseshoes Little Berkhamstead SG13 8LS 251. S3929 Bakers Arms Waltham Abbey EN 9 3QF 252. S4684 Castle Hotel Kirby Muxloe LE 9 2AP 253. S4694 Balmwell Edinburgh EH16 6PG 254. S4789 Outside Inn – Dundee Dundee DD 2 3SQ 255. S4879 Outside Inn – Mottram Nr Hyde SK14 3AU 256. S5306 R & P – Hampstead London NW 3 2AE 257. S5575 Old Spot Nottingham NG 5 6BH 258. S5617 Pillars Of Hercules London W 1D 4DF 259. S5665 Ring O Bells Loughborough LE11 5JU 260. S5670 Robin Hood Hotel Nottingham NG 5 2FR 261. S5773 Mundy Arms Ashbourne DE22 4LZ 262. S5903 Wheatstone Inn Gloucester GL 4 3HR 263. S6006 R & P – Harrogate Harrogate HG 1 1LB 264. S6038 Outside Inn – Blackpool Blackpool FY 4 5NZ 265. S6818 Old Mill Huddersfield HD 6 4HA 266. S9127 Hubbards Glasgow G 12 8EL 267. S9162 Cross Keys Glasgow G 62 6ET 268. S9301 Cocket Hat Aberdeen AB15 6DW 269. S9691 Maltman Glasgow G 2 1LF

178 Appendix 3 – BankCo Estate Sample Properties

Outlet Number Outlet name Town Post Code

1. C0094 Star Luton LU 4 9UJ 2. C0142 Rose & Crown Stratford-Upon-Avon CV37 6EF 3. C0432 Earl Haig Hounslow TW 4 7DN 4. C0514 Cottage London SW 6 5EF 5. C0622 Duke Of York London SW1E 5LA 6. C0659 Prince Of Wales London WC2B 5TB 7. C0730 Daniel Gooch London W 2 6ES 8. C0814 Hope Manchester M 6 8AG 9. C1168 Peacock London EC3N 1DY 10. C1221 Birdcage London W 4 1PU 11. C1233 Friar Colchester CO 4 4NE 12. C1430 Horse & Groom London SW16 1DA 13. C1516 Fountain New Malden KT 3 6DD 14. C1638 Black Widow London SW 7 4PL 15. C1727 Longship Hebburn NE31 2YA 16. C1864 Tigers Head Chislehurst BR 7 5PJ 17. C2224 Tumbledown Dick Farnborough GU14 7JT 18. C2445 Boot & Slipper Amersham HP 6 5JN 19. C2928 Torch Wembley HA 9 9AB 20. C3001 Bull Inn Hockley SS 5 4RN 21. C3074 Tattershall Castle London SW1A 2HR 22. C3379 Griffin Bristol BS30 5JN 23. C3445 Royal Oak Bristol BS48 1AS 24. C3537 Highfield Southampton SO17 1QD 25. C3681 Victoria London SW1W 0NR 26. C3877 Squirrels Romford RM 2 6DH 27. C4638 Didsbury Manchester M 20 2RQ 28. C4834 Ship Romford RM 2 5EL 29. C5680 Cross Keys Taunton TA 2 6NR 30. C7108 Airedale Heifer Keighley BD20 5LY 31. C7501 Earl Beatty New Malden KT 3 6JF 32. C7672 Gamecock Worcester Park KT 4 7ED 33. C7736 Crown Bromley BR 1 3PA 34. C8202 Old Orleans – Cambridge Cambridge CB 2 1RQ 35. C8204 Old Orleans – Epping Epping CM16 5HW 36. C8304 Old Orleans – Chester Chester CH 1 1SD 37. C8503 Lamb & Flag London W 1U 1EQ 38. M2135 Queens Hotel Stoke-On-Trent ST 4 6JJ 39. M2351 Carpenters Arms Cardiff CF 3 4AJ 40. M2353 Fairwater House Cwmbran NP44 4TA 41. M2412 Cask & Bottle Stratford On Avon CV37 6QT 42. M2429 Cane West Hampstead NW 6 1RD 43. M2687 The Shakespeare Goswell Road EC1Y 0SJ 44. M2689 Gloucester Arms Oxford OX 1 2BY 45. M3961 Prince Of Wales Basildon SS15 4BP 46. M3978 Eight Bells Saffron Walden CB10 1BU 47. M3991 Beacon Bletchley MK 1 1PA 48. M5953 Beechwood Glasgow G 44 4PP 49. M6009 Woodcutter Cumbernauld G 67 3AZ 50. M6174 Abbot Morden SM 4 5LJ 51. M6187 Assembly Inn Bath BA 1 2QU 52. M6284 Gardeners Arms Leeds LS27 8SU 53. M6437 BRB Leeds Leeds LS 1 6DT 54. M6466 Deramore York YO10 5EA 55. M6672 Pumphrey’S No.1 Bar Newcastle-Upon-Tyne NE 1 1EE

179 Outlet Number Outlet name Town Post Code

56. M6673 Bedroom (Wakefield) Wakefield WF 1 1BW 57. M6679 Bedroom (Hull) Hull HU 1 2PA 58. M6776 The Beaconsfield London W 14 0HA 59. M6778 Fox & Firkin Lewisham SE13 6JZ 60. M6799 Warren Lodge Scunthorpe DN15 8DA 61. M6826 Carpe Diem Leeds LS 1 1BA 62. M6840 Ferryman & Firkin Southampton SO14 2NS 63. M6857 Bedroom (Swindon) Swindon SN 1 1BP 64. M6892 Bullingdon Arms Oxford OX 4 1UE 65. M6894 Dovedale House Battersea SW11 4LR 66. M6895 BRB Kennington Kennington SE11 6SF 67. M6898 Plume Of Feathers Stoke On Trent ST12 9DH 68. M6900 Bellhousepar Manchester M 20 5PG 69. M6919 Bridge Builder Arleston TF 1 2DE 70. M6940 Kiss Me Hardy London SW19 2PP 71. M6984 Salt Cellar Poachin Way CW10 0JB 72. P0261 Sumners Hotel Preston PR 2 8AE 73. P0283 Pear Tree Inn Melling L 31 1AP 74. P0526 Stocks Hotel Manchester M 28 3JX 75. P0528 Trevor Arms Chorlton Cum Hardy M 21 9EQ 76. P0579 Woods Borehamwood WD 6 1DR 77. P0785 Market House Taunton TA 1 1JD 78. P0793 White Hart Hotel Weymouth DT 4 8LY 79. P0847 Quayside Inn Falmouth TR11 3JQ 80. P0895 Henry’S Cafe Bar – Cardiff Cardiff CF10 3DN 81. P0902 Quinceys – Bristol North Filton Bristol BS34 7AA 82. P0949 Green House Bristol BS 1 5SP 83. P0976 Via Fossa – Nottingham Nottingham NG 1 7EH 84. P1427 Cheshire Cheese Crewe CW 2 5AF 85. P1473 Rose & Crown Birmingham B 48 7JD 86. P1479 Tap & Railway West Moors BH22 0HX 87. P1527 Blundell Arms Bolton BL 6 6PY 88. P1545 Stanley Gate Hotel Ormskirk L 39 9EN 89. S1094 Mccowans Brewhouse Edinburgh EH11 1DQ 90. S1222 Barony Edinburgh EH 1 3RJ 91. S2377 Gunner North Shields NE30 2DH 92. S3039 Old Orleans Fountain Park Edinburgh EH11 1AF 93. S4087 Old Orleans – Cardiff A.W. Cardiff CF10 4JY 94. S5102 Bar 38 – Long Acre London WC2E 9LH 95. S5252 Chambers Gloucester GL 1 1RP 96. S5307 Golden Lion London W 1D 5BL 97. S5731 Peacock Sheffield S 17 3BQ 98. S6609 Bar Censsa – Preston Preston PR 1 2NQ 99. S6788 Baja – Leeds Leeds LS 2 8PL 100. S8324 Fox Inn Guisborough TS14 6BP 101. S9376 Grosvenor Edinburgh EH 2 4RT

180 THE UNITED KINGDOM PUB INDUSTRY

General Introduction The public house, or pub, is a distinctly British institution which continues to play a major role in British society. Currently there are approximately 60,000 licensed public houses (pubs) in the United Kingdom. Recent figures suggest that the pub industry accounted for approximately 60 per cent. of the alcoholic drinks market and 61.4 per cent. of the beer market in the United Kingdom. It is estimated that approximately 74 per cent. of adults living in the United Kingdom regularly go to pubs. In addition, pubs have grown in importance as dining and food establishments, with an estimated 51 per cent. of adults using pubs at least once a month for meals in 2003. The United Kingdom pub industry has experienced significant changes in the last 14 years. The 1989 report by the then Monopolies and Mergers Commission, entitled ‘‘The Supply of Beer’’ (the 1989 Report) and the subsequent issuance of the Supply of Beer (Tied Estate) Order 1989 (SI 1989/2390) and the Supply of Beer (Loan Ties, Licensed Premises and Wholesale Prices) Order 1989 (SI 1989/2258) (collectively, the Beer Orders) forced the large United Kingdom brewers to divest themselves of many of their pubs. Despite a decline in the overall demand for beer, there has been a concurrent increase in demand for premium beers, packaged beers, wine and food. United Kingdom pub consumers have shown increased demand for pubs offering a wider choice of drinks and food. The combination of these factors has accelerated the development of new independent pub companies willing to cater for changing consumer demands.

Regulatory Environment Prior to 1989, the estates of large brewers accounted for over half of all United Kingdom pubs. Of these, approximately one-third were managed by national brewers while the remaining two-thirds were let to lessees under leases which included a beer tie arrangement (the Tie). Under the Tie, a lessee was generally obliged to purchase all beer from the pub owner, usually a brewer, in return for paying below market rents and receiving other services from the owner, such as training, marketing and administrative support. The 1989 Report contained a number of adverse findings related to the vertical links between brewing and pub retailing, and made recommendations aimed at loosening the Tie between pub retailing and brewing to facilitate easier entry by, and increasing competition between, competing brewers, wholesalers and pub retailers. Most of the recommendations were implemented by the Beer Orders. The requirements of the Beer Orders forced the large brewers to sell or free themselves from their Tie arrangements, with Scottish & Newcastle being the most recent to dispose of its managed pub business, with its disposal of SNR in November 2003. These disposals of pubs by the national brewers led to the emergence of increased competition in the beer supply market and the pub retailing market. The emergence of independent pubs and pub chains has caused increased price competitiveness in the beer supply market. This is the result of large brewers competing to supply the estates of independent pub companies and other non-tied retail outlets. Following a review by the Office of Fair Trading, the Beer Orders were revoked on 17 January, 2003, having outlived their usefulness. In May 2004, the Trade and Industry Select Committee announced that it was launching an inquiry into the relationship between pub companies and their tenants. The Committee, which will report later this year, is expected to focus on the exclusive purchasing obligations imposed by tenanted pub companies on their tenants.

Licensing Environment UK licensing laws The retail sale of alcohol in the United Kingdom is a highly regulated industry governed by a licensing system set out for England and Wales in the Licensing Act 1964 and for Scotland in the Licensing (Scotland) Act 1976. Licensing covers pubs, as well as all other premises where alcohol is sold by retail, such as restaurants and supermarkets. Pubs – the ‘‘on-trade’’ business – require a full on-licence in order to sell alcohol on the premises. The licence is generally held by the retailer rather than the owner of the premises. That retailer has to satisfy the licensing authorities, inter alia, that he is a fit and proper individual to hold such a licence.

181 There are other classes of licence, for example the off-licence in respect of the sale of alcoholic beverages in supermarkets and specialist alcohol retailers – ‘‘off-trade’’. Other types of licence which may be required include gaming machine permits in respect of installing and operating AWP machines, ‘‘supper hours’’ certificates to extend the permitted hours for selling alcohol by one hour where the sale of alcohol is ancillary to a substantial meal, and entertainments licences for organised dances and organised singing.

Revocation of licence On-licences may be revoked at any time for serious cause, including violation by a retailer or his employees of any law or regulation, such as those regulating the minimum age of patrons or employees, advertising and inventory control. A small proportion of pubs have their licences revoked each year. A number of these revoked licences will subsequently be reinstated. At present, each pub in the Managed Estate has the benefit of a full on-licence and there are no pubs which are trading in respect of which a licence has been revoked. In the event that circumstances arise leading to the revocation of a licence in respect of a pub, the profit of that pub may be reduced or extinguished. The development and construction of additional pubs or renovations of existing pubs may be subject to compliance with applicable planning, land use and environmental health legislation. Changes to trading area or access also require the consent of the licensing authorities.

Licensing reform On 13 November, 2002 the Government presented a new liquor licensing bill for England and Wales, which received Royal Assent on 10 July, 2003 and is not expected to come into force before November 2005 (the Licensing Act 2003). The Licensing Act 2003 will incorporate, inter alia, the following key changes: * flexible opening hours, with the potential for 24 hour opening, subject to consideration of impact on local residents; * a single scheme for licensing premises, bringing together six existing licences – alcohol, public entertainment, cinemas, theatres, late night refreshment houses and night cafes; * a new personal licence system, allowing holders to sell and serve alcohol for consumption on or off any licensed premises; and * longer-term personal and premises licences to be issued by local authorities and not local magistrates’ courts. It is believed that the initial costs of transferring to the new system will be more expensive than under the current system, however there will be a capping of fees in place. Operationally, the process may become slower due to increased consultation periods for local residents and police (see also Investment Considerations – Regulation above). In Scotland, the Scottish Parliament initiated a review of Scottish licensing laws under the auspices of the Nicholson Committee. The Report of the Nicholson Committee was published in August 2003 and contains proposals for the reform of licensing laws in Scotland. The key proposals included are: * in line with the English reforms, the introduction of a dual system of premises licences and personal licences; * the continuation of premises licences for an unlimited period of time until the premises cease to be used for the purpose for which the licence was granted; * the abolition of the present system of statutory permitted licensing hours, to be replaced by a system under which there will be no statutorily prohibited hours, the actual opening hours being authorised by the relevant licensing board based on individual circumstances and prescribed ‘‘licensing principles"; * the introduction of a condition attached to all premises licences to prohibit promotional advertising or discounted pricing of alcohol aimed at encouraging excessive consumption of alcohol; and * the introduction of a statutory presumption that persons under the age of 18 shall have full right of entry into licensed premises, although this may be subject to specific restrictions in the premises licence or the applicant opting out of the statutory presumption to prohibit

182 persons under the age of 18 from accessing the premises (coupled with a recommendation that the Scottish Executive should introduce national proof of age identity cards to facilitate enforcement of any relevant licence conditions). Following on from the Nicholson Report a consultation period has taken place, originally running to 31 December, 2003 and subsequently extended to 31 August, 2004. A consultative draft Bill was in the meantime published by the Scottish Executive in May 2004 which, if enacted in its present form, would substantially implement the recommendations of the Nicholson Committee. It is expected, however, that, following the completion of the consultation period, a revised Bill will be brought forward by the Scottish Executive at some point. No further legislative timetable has as yet been announced. (See also Investment Considerations – Regulation above).

Legislation relating to smoking On 16 November, 2004, the UK Government published its White Paper which set out the Department of Health’s proposals in relation to smoking in public places, including pubs, in England and Wales. It is proposed that restrictions on smoking are to be phased in over a period of four years including an outright ban on smoking in restaurants and pubs serving food (other than snacks such as crisps). Pubs and bars not serving food will not be subject to the outright ban and pub owners will be able to choose whether to permit smoking on their premises. There is currently a Charter on smoking in public places, such as restaurants and pubs, which has been agreed between the Department of Health and leading hospitality industry groups (the Charter). This Charter, though not law, is supported by the Government which asked the licensed leisure industry to ensure that 50 per cent. of licensed premises were compliant with it by December 2002, and that 35 per cent. of those have either ‘‘no smoking’’ areas or adequate mechanical ventilation. In Scotland, following a recent decision of the Scottish Executive, it is proposed that an outright ban on smoking in public places, including pubs, be introduced. If implemented, this ban may take effect in 2006.

Spirit Group policy on smoking Spirit Group, in common with other pub companies, is currently in the process of adopting a policy which complies with the Charter. As a result of the White Paper, Spirit Group will now review its policies in this area in order to manage compliance with the likely legislation as effectively as possible. Spirit will be involved, as will other companies in the sector, in any consultation process with the Government in respect of the White Paper. At this moment, it is expected that any ban across England and Wales would come into effect in 2008. The current restrictions, introduced pursuant to the Charter, together with the proposals set out in the White Paper may have the effect of discouraging smokers from using pubs, this may adversely affect the results of Spirit Group. In England and Wales, the effects of the proposed ban may be mitigated by the interim period of four years prior to introduction. Spirit Group will be able to use this time to properly assess and prepare for the impact the ban may have on its business. In Scotland, where approximately 6 per cent. of the Managed Estate is located, the ban, if implemented as proposed, may have a greater adverse effect on the Spirit Group business, given its more restrictive nature and the shorter time period in which to implement the necessary arrangements. Overall, it is expected that the adverse effects of the proposed smoking bans will be limited. Experience in other cities where smoking bans have been introduced suggests that volumes of turnover will recover to pre-ban levels relatively quickly and food oriented pubs, in particular, may benefit from the smoking ban.

Sales Trends By volume, sales of all beer in the United Kingdom rose by 1.9 per cent. from 1993 to 2003. However, on-trade saw its share of sales fall from approximately 76.8 per cent. in 1993 to 61.4 per cent. in 2003. However, a 40 per cent. increase in the on-trade price of beer (due to general price

183 increases as well as the increasing popularity of premium beers) and a rise in the proportion of non-beer sales in pubs led to an increase in average sales per pub (inclusive of VAT) from approximately £5,480 per week in 1996 to approximately £6,350 per week in 2004. One important aspect of the broadening appeal of pubs has been the industry’s marketing of pubs to wider social groups, including families, women and older people. Such marketing often includes providing entertainment or aiming ‘‘theme’’ and ‘‘concept’’ pubs at those groups. Industry surveys revealed that in the view of those surveyed, the most important factor in pub choice was proximate location, followed by staff, atmosphere, clientele and lunchtime food. Food range was as important as the selection of beer offered as a determinant of pub choice. One of the major growth areas in the pub industry is the sale of food. Pub catering comprises a range of outlets from traditional pubs selling bar snacks to pub-restaurants offering haute cuisine. Food sales in pubs were estimated to account for 24 per cent. of average pub turnover in 2003 compared with 21 per cent. in 1999.

Beer Supply The United Kingdom currently has four national brewers: Scottish & Newcastle, Coors, Carlsberg UK and Interbrew. With the decline in the brewers’ historic tied and/or managed estates, the brewers increasingly have to compete to supply the remainder of the market through individual agreements with free houses and supply agreements with independent pub chains and other brewers. Spirit Group management believes that this competition takes place mainly on price and brand strength, although the brewers also try to gain sales by offering other benefits such as promotional support.

Pub Categorisation Pubs in the United Kingdom can be broadly categorised into one of three types: freehouses, leased and tenanted pubs and managed pubs. Freehouses are independently owned and operated pubs. There are approximately 17,000 pubs of this type currently operating in the United Kingdom. They are owned, in general, by private individuals. The owner has full operational and managerial control of the pub (subject to licensing restrictions) and is free to decide the products which are stocked. The owner also decides staffing levels, opening times, the style of the outlet, the provision of other services (e.g. food, beer garden, etc.) and pricing. The owner is responsible for all maintenance and upkeep of the premises. A freehouse owner purchases stock (beers, wines, spirits and soft drinks) on the open market from independent wholesalers or directly from breweries, having negotiated all supply arrangements and any discounts. The attraction of freehouses, from an owner’s point of view, is that the owner is running his or her own business. The owner has full profit and loss responsibility. Freehouses are bought and sold in a very similar way to purchasing other retail businesses, although the majority of transactions are handled by a small number of specialised chartered surveyors (including Fleurets and Christie & Co.). Leased and tenanted pubs are run and managed by an operator who does not ultimately own the premises. The pub operator is commonly known as a ‘‘lessee’’. The lessee takes full day-to-day operational control for running the pub in a very similar way to the owner of a freehouse pub. However, decisions regarding major operational changes or changes to the fabric of the building are made in partnership with the ultimate owner of the premises. There are approximately 31,000 leased and tenanted pubs operating in the United Kingdom. In taking on the lease, the lessee is obliged to pay the pub owner rent for the term of the lease, typically 10 years. This rent is normally derived from an assessment of the profitability of each pub based on its fair maintainable trade, and taking into account the prices that the lessee is required to pay for his beer and other tied products from the pub owner (see below). In addition to paying rent, the lessee is often obliged to purchase all of his alcoholic beverages (and often non-alcoholic beverages, depending on the ultimate owner of the premises), from the owner of the premises in accordance with the Tie. The prices paid by lessees for ‘‘tied’’ products are normally higher than those that could be obtained from independent wholesalers. The owner would typically retain a proportion of any discounts that he negotiates on purchasing the beer for his lessees, in part to cover the support services provided to them. This income stream is known as Beer Discount Income (BDI) and is the second major source of income to the pub owner.

184 The lessee pays all of the operating expenses of running the pub, including staff and general maintenance, and keeps all pub profits after these expenses. Any significant capital expenditure made on the pub will often be made in partnership with the pub owner who will share the cost and gain a return on his investment through increased rent and higher BDI. Managed Pubs now form part of the estates of a number of independent pub operating companies. The owner of a managed pub employs all of the staff, including a manager, is responsible for all of the operating expenses and retains all of the income of the pub. There are approximately 12,000 managed pubs currently operating in the United Kingdom.

Economics of Managed and Leased Pubs From the perspective of the operating company, the underlying pub industry trends and dynamics affect both a leased estate and managed estate in the same way. However, the economics of owning and operating managed and leased pubs are different. Managed estates have higher fixed operating costs at both the pub level and at a head office level versus leased estates. The owner is responsible for paying the salary of the manager and all of the other operating expenses of the pub. The owner typically has a direct management role in the pub operations and must also maintain a significant head office staff to oversee the running of the estate. The owner typically takes all the revenue generated by the pub but also takes all the risk on revenue. Managed pubs must necessarily be significantly higher-turnover (and consequently, on average, larger) pubs to cover the higher level of operating expenses experienced at the pub level as well as head office costs. Consequently, in general, only pubs above a certain size (measured in number of barrels of beer sold per year (known as barrelage)) are economically more profitable to be run as managed outlets versus leased outlets. The owner would retain the full retail margin of the products sold in the managed pub. Above a certain scale, a managed pub is more profitable than a leased pub, because once the fixed operating costs have been covered the owner captures the entire retail margin. For this reason, managed pubs are typically larger, and therefore are less likely to become unprofitable due to small changes in margins or beer volume. Leased estates have lower fixed costs both at a pub operating level and at a head office level. The owner plays no direct managerial role in a leased estate and the lessee has full responsibility for the day-to-day operations of the pub. Leased estates generate revenue for the owner in the form of rent and BDI, as mentioned above. The owner can afford to maintain a much smaller head office staff due to its lower level of direct managerial responsibility. The owner’s major responsibilities are setting and collecting rent, agreeing terms with suppliers, ensuring that the lessee does not purchase beer outside the Tie and assessing investment opportunities alongside their lessees. Over the short term, the owner has lower risk to its revenues in owning a leased estate compared with a managed estate. This is because the lessee is obligated to pay rent irrespective of the trading performance of the pub (although in exchange for assuming this obligation a proportion of the pub’s revenues are retained by the lessee). It is important to note, however, that over time the key factors remain the overall trends and dynamics in the pub industry which impact the managed and leased pub in the same way – so that over a long horizon the two types of estates perform similarly. For example, if the industry declines sharply, leased pubs may turn unprofitable and lessees will no longer be able to afford to pay the level of rent required and will default under leases, or refuse to renew leases. In general, above a certain size leased pubs are less profitable than managed pubs. This is because the owner does not leverage the fixed operating costs of running the pub and gives away a larger proportion of the retail margin to the lessee. There is, therefore, a ‘‘natural’’ upper limit to the size of a pub above which it becomes more profitable (from the owner’s perspective) to run it as a managed outlet. Nonetheless, there are a number of distinct advantages to running managed pubs over leased pubs. Managed pub operators are able to transfer and develop best practice and apply retail skills and disciplines to a business. Over the long term, this should enable managed operators to outperform leased pubs.

Industry Trends A number of trends have changed the landscape of the United Kingdom pubs industry during recent years.

185 Significant disposals of estates by the major brewers, as a direct result of the Beer Orders, have led to the emergence of a number of independent pub groups. These pub groups, often supported by financial investors, have accumulated often significant portfolios of leased and managed pubs. This trend has continued in excess of the requirements of the Beer Orders. Brewers have continued to dispose of their leased and managed pubs to focus activities on developing their other business activities. Most recently, in November 2003, Spirit Group acquired the SNR Estate comprising approximately 1,400 licensed premises. A number of regional brewers have been expanding their estates. A recent example of this is Greene King’s acquisition of 432 pubs from the Laurel Pub Company in August 2004. The second trend could be seen as a direct result of this and as a result of changing consumer tastes and demands. In the managed sector Mitchells & Butlers and JD Wetherspoon are the largest managed-only estates, after Spirit Group. Branded pubs have emerged across the country and include chains such as ‘‘All Bar One’’, ‘‘Two For One’’, ‘‘Pitcher and Piano’’, ‘‘Chef and Brewer’’ and ‘‘JD Wetherspoon’’. These are managed pubs often found in city centre (or central) locations and have a common ‘‘brand’’. Each of the pubs within a chain will be decorated in the same (or a very similar) style, will have the same theme and will attempt to maintain a similar atmosphere and identity. The brands are often designed to target a particular segment of the drinking population, for example 18-25 year olds, and a number of the brands have been specifically designed to appeal to females (a segment that has not historically been well catered for by the leased/tenanted pub industry). Branded managed pubs are designed to take advantage of the scale economies and higher levels of profitability delivered by larger pubs. They are also designed to deliver the increasingly high and consistent levels of customer service demanded by consumers. The third key trend observed during recent years is the emergence of the ‘‘superpub’’ and superpub chains. A superpub is a very large managed outlet, often warehouse-sized and found in both high street (city centre) and suburban areas (where suitable premises can be found). Examples of superpub chains are ‘‘JD Wetherspoon’’ and ‘‘Yates’ Wine Lodges’’. Superpubs often target a specific segment of the drinking population in a similar way to branded managed pubs, although on a significantly larger scale. Superpubs again exploit the scale economies of managed pubs at the pub level to deliver higher levels of profitability. There has also been consolidation in the brewing sector in recent years. In 2001 Interbrew acquired Bass Brewers. Following the Competition Commission report into the acquisition, Interbrew sold Carling Brewers to Coors.

Conclusion A certain degree of activity will continue to be seen as both brewers and pub-operating companies continue to restructure and focus both their managed and leased estates in the light of changing consumer tastes and any further government-initiated regulatory changes.

186 BUSINESS OF SPIRIT GROUP

Introduction Spirit Group’s business consists of a managed pub estate. Spirit Group Holdings Limited (Spirit Holdings) is the ultimate holding company of Spirit Group and is held as to approximately 89.5 per cent. by the Equity Group with the balance held by private individuals. All the members of the Borrower Group are members of Spirit Group. However, Spirit Group also comprises companies which are outside of the Borrower Group. Further details of the companies which form part of Spirit Group and the Borrower Group are contained at the end of this section of the Offering Circular under the heading Summary Details of Member Companies of Spirit Group.

History The formation of Spirit Group was the result of Demerger and Separation. Prior to Demerger and Separation, the Punch Group principally consisted of companies which owned a managed pub estate and a leased pub estate, both acquired in September 1999 from Allied Domecq. Following Separation, the estate of managed pubs, which on Demerger was renamed Spirit Group, was the subject of the Securitisation. During 2003 Spirit Group undertook two acquisitions: in February, the acquisition of Tom Cobleigh Holdings Limited, the parent company of TCL which was the owner and operator of a chain of 75 managed pubs, and in November, the acquisition of the various operating companies comprising SNR from Scottish & Newcastle PLC. SNR operated some 1,400 managed pubs, restaurants and budget hotels at the time of the SNR Acquisition. At the same time as the SNR Acquisition, Spirit Holdings (then known as Spirit Amber Holdings Limited) acquired all the shares in the then top company of Spirit Group, Spirit Managed Holdings Limited (formerly Spirit Group Holdings Limited). Further details of the SNR Acquisition are set out in Description of SNR Acquisition. Following the SNR Acquisition, the reversionary titles to some 220 of the SNR pubs were sold to Prestbury Wentworth Limited in March 2004, although such pubs continue to be operated by companies within the SNR Group under a 30-year leaseback arrangement. In July 2004, the Premier Lodge budget hotel chain (comprising 132 lodges and pipeline sites) and 19 co-located pubs were sold to Whitbread Group PLC. On 15 October, 2004 the reversionary titles to a further 65 of the SNR pubs were sold to Caymall Limited, a subsidiary of British Land PLC, although such pubs continue to be operated by companies within the SNR Group under a 30 year leaseback arrangement, leaving 1,354 managed pubs within the SNR Group (the SNR Estate).

Operations The Managed Estate The Managed Estate comprises 2,031 managed pubs in England, Wales and Scotland, with approximately 23 per cent. in London.

Organisational structure Overall the responsibility for the day-to-day supervision of the pubs in the Managed Estate is through four Managing Directors who report to the Chief Executive Officer of Spirit Group. The Managing Director of Spirit Food is responsible for 565 managed pubs, the Managing Director of Locals is responsible for 830 pubs and the Managing Director of CitySpirit is responsible for 583 pubs, all of which trade in mainstream markets, while the Managing Director of Development (DevCo) supervises 53 pubs in the Managed Estate which are in markets driven by design and specialist food. The Locals, CitySpirit and Spirit Food divisions consist of 13 sub-divisions each headed up by an Operations Director who manages a team of Business Development Managers (BDMs). Each BDM is responsible for approximately 16 pubs in the Managed Estate. Spirit Group has a central support function based at offices in Burton-on-Trent, which also houses some operational staff. The Head Office function located at Lakeside House, the former head office of SNR Group in Northampton, has been wound down following completion of the integration of the SNR Group and will formally cease operating in February 2005, when vacant possession will be granted to the new owner of the building. Other operational staff use hot-desking facilities at small satellite offices above pubs in the Managed Estate in key geographical locations. There are approximately 850 head office management and staff, approximately 2,900 managers and approximately 41,000 staff who work in the pubs in the Managed Estate, all of whom will be employed by AdminCo following the Corporate Reorganisation, save for the approximately 4,000

187 employees (comprising BDMs, managers and unit level staff) who will be employed by PubCo ManagedCo.

Revenue The Borrower derives its turnover from three principal sources: sales of drink, sales of food and amusement machine and other income. Spirit Group views food sales within the business as an area for significant future growth. An analysis of relative size of these income streams (excluding management fees) for the last financial year is set out in the table below. % of Turnover at year ended August 2004

Beer and Beverages ...... 64% Food...... 30% Amusement machine and other income ...... 6%

100% Operational Services * Commercial – The commercial function is responsible for developing retail offers across the estate involving all aspects of the business, including: food, pricing, amusement machines, category management, customer service, market planning and research. * Finance – The central finance team provides financial support to the business including information on, amongst other things, performance, ratio analysis, budgeting and forecasting. * Human Resources – The human resources function is responsible for supporting the business to recruit, train and develop the highest quality management and staff. * The Hub – The call centre based in Burton-on-Trent is designed to provide a fast and effective service to pub managers and staff and is the link between functional departments and front-line staff. * Supply of Machines – The Borrower is supplied with approximately 7,000 machines by 13 suppliers. The vast majority of these machines are provided by two suppliers, Leisure Link Limited and Gamestec Leisure Limited.

Information System Services From 1 September, 2004 the information system services for Spirit Group became provided in- house, following the termination of the outsourcing contract with EDS (see Investment Considerations – Financial and accounting systems). The in-house service includes the maintenance, support and development of all hardware, software and communications, although some third party contracts exist where this is more cost-effective. In addition to core systems delivery, contracts are in place for on-going field support for point-of- sale and other outlet based systems for Spirit Group. A contract is also in place for the hosting of the payroll application, although application support for payroll is provided in-house. Where applicable, AdminCo will continue to hold the intellectual property rights in Spirit Group’s own applications and systems, although many of these are in fact packaged software. Following the SNR Acquisition, Spirit Group is in the process of completing a major information systems integration programme to move to one set of systems to support the whole of Spirit Group. Additionally, a new Electronic Point of Sale (EpoS) system is being rolled out over the next 18 months to all pubs. Spirit Group, therefore, operates modern information systems on recognised platforms. There is a continual focus on growing sales and profit and increasing efficiency through the appropriate use of advanced technology.

Spirit Travel Inn Limited Spirit Travel Inn Limited is a 50 per cent. joint venture with Whitbread Hotels Limited which develops and operates lodge accommodation adjacent to certain pubs within Spirit Group. At present, there are thirteen hotels within this joint venture. The adjacent pubs owned by SGL form part of the Securitised Estate.

188 Beer supply and other goods and related services supplies Although Scottish-Courage and Carlsberg UK are the main suppliers of beer to the Managed Estate, Spirit Group, as an independent pub retail company, maintains a multi-sourcing policy and, therefore, also has key commercial relationships with the other main United Kingdom brewing companies (such as Coors, Interbrew UK Limited and Diageo GB). In line with current industry practice, the primary supplier of beer products supplies certain ancillary services necessary to the smooth running of the estate, such as distribution and, in some cases, cellar technical services. Spirit Group has established Spirit Supply which centralises the main purchasing operations of Spirit Group. Spirit Supply is the contracting counterparty to the long term beer supply agreements with Carlsberg UK and Scottish-Courage, each of which contain minimum volume obligations. In the case of Carlsberg UK this obligation was inherited from previous agreements which related to both the Punch Group and Spirit Group. Punch Group also has supply arrangements with Coors which were jointly negotiated with those between Spirit Supply and Coors. Upon Completion of the Corporate Reorganisation, the Borrower will enter into a back-to-back supply agreement (the Back-to-Back Supply Agreement) with, inter alios, Spirit Supply, pursuant to which Spirit Supply will agree to provide or procure the provision to the pubs comprising the Borrower Group Estate certain products and services, primarily food, (alcoholic and non-alcoholic) beverages and related distribution and technical services, pursuant to the terms of certain third party contracts entered into by Spirit Supply (or to be entered into in the future) on a group-wide basis exploiting the purchasing power of the entire Managed Estate. The supply under the Back-to- Back Supply Agreement to the Borrower will be made on a fair and non discriminatory basis and such agreement will contain no minimum volume commitments, regardless of whether the relative outward facing third party contract to which Spirit Supply is party contains such commitments, as is the case, for example, with the Carlsberg UK and Scottish Courage beer supply agreements. Accordingly, if Spirit Supply were unable to meet any such commitments and, if applicable, failed to meet its obligation to pay any liquidated damages due, the relevant supplier might be entitled to terminate its respective supply agreement with Spirit Supply. In those circumstances, the Borrower Group would be required to source the relevant product(s) and/or service(s) elsewhere. Spirit Group management believe that this would not cause significant difficulties to the operation of the business of the Borrower Group, other than the potential short term disruption inherent in any change in a major supplier. However, no termination payment would be payable by the Borrower to Spirit Supply in these circumstances. Spirit Supply makes a series of monthly payments to Carlsberg UK as compensation in respect of the termination of a former contractual obligation which related in part to the supply of beer to the Managed Estate. No such arrangement is in place with Scottish Courage.

Distribution Carlsberg UK is the preferred distributor of beer to the Securitised Estate and Scottish Courage is the exclusive distributor of beer, wine and spirits to the SNR Estate. Wincanton Group is the principal food distributor to the SNR Group and Woodwards Food Service is the exclusive food distributor to the Securitised Estate.

Customer Technical Services (CTS) CTS is the procurement, supply, installation, delivery and maintenance of dispense equipment. CTS is normally provided by a ‘‘CTS provider’’ in one of the following ways: * by the supplier of the draught beer in question (for a charge). The CTS provider either includes the CTS charge in the product price or levies a separate charge; * where more than one draught beer is supplied to a particular outlet, by the main supplier of draught beer to that outlet (who therefore services dispense equipment relating to other suppliers’ beer and recovers from the other suppliers in accordance with industry practice); or * by someone providing a totally separate CTS service. In May 2004, Serviced Dispense Equipment Limited (SDEL) was formed by the merger of the technical services functions of Scottish Courage and Carlsberg UK. In August 2004, Coors announced the proposed disposal to SDEL of its technical services function. On 29 September, 2004, the Office of Fair Trading referred the anticipated acquisition by SDEL of the Coors’ technical services function to the Competition Commission on the basis that such acquisition would create a situation which may result in a substantial lessening of competition within the market for

189 technical services equipment and technical services in Great Britain. The Competition Commission is expected to report by 15 March, 2005.

CTS provided to the Managed Estate City Technical Services (UK) Limited is the CTS provider to the Securitised Estate. Scottish Courage is the CTS provider to the SNR Estate pursuant to the Beer Supply Agreement between Scottish Courage and Spirit Supply. CTS for the Borrower Group Estate will be provided pursuant to the Back-to-Back Supply Agreement (see Summary of Principal Documents – Back-to-Back Supply Agreement above).

Supply of machines to the Managed Estate Spirit Group is provided with machines by 13 suppliers. There are over 14,000 machines in Spirit Group of which by far the majority of machinery is provided by two suppliers: Gamestec Leisure Limited and Leisure Link Limited. The remaining 11 suppliers account for a small number of machines which are supplied without any formal agreement and are terminable on short notice. In terms both of number of machines and their importance for profit purposes, fruit machines or Amusement with Prizes (AWP) are the most important, accounting for some 68 per cent. of the profit generated by machines in the Managed Estate. There is also a wide variety of other machines within the Managed Estate, albeit of a lesser importance in terms of profitability.

Cash collection As part of the cash collection process, the Borrower has agreed to maintain certain bank accounts in accordance with the provisions of the Bank Agreement (see Summary of Principal Documents – Bank Agreement above). The separation of the Borrower Group Estate and the BankCo Estate will require Spirit Group to implement a new cash collection system to reflect this separation (the New Cash Collection System). There will be a transitional period following the Closing Date (the Interim Period), while steps are taken to implement the New Cash Collection System, during which the Borrower will be subject to an interim cash collection system. Following the Closing Date, each pub within the Borrower Group Estate will continue to make payments into the cash collection accounts into which it made payments prior to completion of the Corporate Reoganisation (the Existing Collection Accounts). Balances on the Existing Collection Accounts will continue to be swept into the existing main operating accounts of Spirit Group (the Existing Sweep Accounts). On or prior to the Closing Date, the Borrower will open a new operating account (the Borrower Operating Account). During the Interim Period, amounts in the Existing Sweep Accounts attributable to pubs within the Borrower Group Estate will be swept, on a weekly basis, into the Borrower Operating Account. Spirit Group’s internal accounting system will be able to identify and separate amounts attributable to pubs within the Borrower Group Estate and the BankCo Estate. As soon as practicable after the Closing Date, additional collection accounts will be opened in the name of the Borrower (the Borrower Collection Accounts). Upon receipt by each pub within the Borrower Group Estate of a paying-in book in respect of a designated Borrower Collection Account, that pub will make payment into that Borrower Collection Account. Balances on the Borrower Collection Accounts will be swept into the Borrower Operating Account on a daily basis. The Spirit Group accounting systems will be restructured to accurately process transaction information and payments made in each pub within the Borrower Group Estate during the Interim Period and following full implementation of the New Cash Collection System. Amounts standing to the credit of the Borrower Collection Accounts and the Borrower Operating Account will be available to the Borrower to meet its on-going operating costs and expenses (including tax and amounts payable under the Administrative Services Agreement in accordance with the terms thereof and the Transaction Documents) and to pay for capital expenditure.

Strategy The cornerstone of Spirit Group’s customer strategy is ensuring that ‘‘every customer leaves wanting to return’’. There are three key elements which build that strategy – creating the best customer offer in each pub, delivering exceptional customer service both internally and externally and attracting and retaining the best people. Spirit Group’s business strategy is to focus on

190 profitable sales growth by developing the uninvested estate and by sustaining industry leading growth in investments.

Environmental Spirit Group management is not aware of any potential environmental liability relating generally to any pubs in the Managed Estate (or any other property in which Spirit Group has or had an interest) that management believes would either singularly or in the aggregate have a material adverse effect on Spirit Group’s results or operations. Members of Spirit Group own certain properties that contain hazardous materials (including asbestos). Management believes that the presence of these materials does not violate any applicable laws. Asbestos-containing materials, where they exist, are normally removed, encapsulated or marked accordingly on site, as appropriate.

Regulation Various aspects of Spirit Group’s businesses are subject to governmental regulation, including competition law and licensing requirements relating to the sale of alcoholic beverages and the operation of AWP machines, as well as employment regulation and general health and safety laws and regulations. Although management believes that it is operating in substantial compliance with these laws and regulations, such laws and regulations are subject to change. Additional or more stringent requirements could be imposed on Spirit Group’s operations in the future.

Property Taxes Non-domestic rates and water rates are payable in respect of properties in the Managed Estate. Council tax in respect of the manager’s accommodation is the responsibility of the manager with certain limited exceptions, e.g. relief managers or empty properties. In those cases, council tax is payable by Spirit Group.

Insurance Management believes that the properties owned or used by Spirit Group are adequately covered by insurance placed with reputable insurers and with commercially reasonable deductibles and limits. Insurance policies held or maintained for the benefit of the Borrower cover such risks as material damage, business interruption, fire, loss of rent and third party liability. However, certain types of risk are not insured fully, either because such insurance is not available or because management believes that the premium costs are disproportionate to the risks in question. The insurance arrangements for the Borrower Group will form part of the services to be provided by AdminCo under the Administrative Services Agreement. The Administrative Services Agreement will allocate the appropriate level of premia payable by the Borrower Group (on a fair and reasonable basis) and will also allocate appropriate sub-limits within the context of Spirit Group’s overall cover limits to each part of the Managed Estate (also on a fair and reasonable basis) (see Summary of Principal Documents – Administrative Services Agreement above).

Pension Schemes Spirit Group operates four pension schemes, namely: * the Spirit Group Retail Pension Plan (the SGRPP, a defined benefit pension plan); * the Spirit Group Pension Scheme (the SGPS, a defined benefit pension plan); * the Spirit 2000 Pension Scheme (a defined contribution group personal pension plan); and * the Spirit Group Retail Retirement Savings Plan (SGRRSP, a defined contribution plan with a defined benefit underpin). The SGRPP was closed to new entrants on 31 January, 2004. The most recent actuarial valuation was carried out as at 31 October, 2003; the provisional results of this valuation showed that, on the basis of the method and assumptions used by the scheme actuary, there was an ongoing past service deficit as at 31 October, 2003 of £7.7 million (equating to a funding level of 96 per cent.). The final valuation results may differ from this, although the scheme actuary does not expect them to do so. The scheme actuary has estimated that the ongoing funding level of the SGRPP on 8 October, 2004 would have been around 89 per cent. (equivalent to a deficit of around £21 million).

191 The SGPS was closed to new entrants on 31 May, 2000. An actuarial valuation of the SGPS was recently completed as at 5 April, 2004. The provisional results of that valuation (which may differ from the final results – in particular, it was prepared on the basis of unaudited asset figures) showed that, on the basis of the method and assumptions used by the scheme actuary, there was an ongoing past service deficit as at 5 April, 2004 of £19 million (equating to a funding level of 74 per cent.). The scheme actuary estimated that the ongoing funding level of the SGPS on 8 October, 2004 would have been around 73 per cent. (equivalent to a deficit of around £20 million). The scheme actuary has stated that the ongoing assumptions used in the valuations of both the SGRPP and the SGPS are, in the actuary’s opinion, at the optimistic end of the range of assumptions acceptable for funding purposes, and noted that a less optimistic basis would reveal a larger deficit. As a result of the funding deficits in the Schemes identified in the 2003 and 2004 valuations, certain benefit changes to the Schemes are proposed (subject to trustee agreement). It is also proposed that additional employer deficit recovery contributions to the Schemes will be paid from April 2005 at the rate of £1.6 million per annum (to remedy the deficiency over 12 years) in respect of the SGPS and (subject to trustee agreement) £1.5 million per annum for a period in respect of the SGRPP. These deficit contributions are additional to and separate from the employer contributions in respect of future benefit accrual, which currently stand at: * for the SGPS, 11.6 per cent. of defined benefit pensionable pay (but from April 2005 8.5 per cent.) – this will increase as employees get older; and * for the SGRPP 14.8 per cent. of pensionable salary (although the employer is in discussions with the trustee about reducing this rate from April 2005 if benefit changes are agreed. The reduced rates proposed are 6 per cent. or 9 per cent. of pensionable salary plus about £200,000 per annum for death and disability benefits). These contribution rates could increase as well as decrease in the future. The SGRRSP is a small closed defined contribution scheme. However, members who joined the SGRRSP before April 1997 were contracted out of the state scheme on a guaranteed minimum pension basis for service to April 1997 and so there is a defined benefit element to it. No further benefits are being built up in the SGRRSP. An actuarial valuation was carried out as at 31 October, 2003. The provisional results of that valuation (which may differ from the final results) show a funding deficit of approximately £20,000. Spirit Group has adopted the transitional arrangements of Financial Reporting Standard FRS17 (Retirement Benefits) (FRS17). The actuarial assumptions used for the purposes of the ongoing funding of a pension scheme are different from the assumptions used for UK accounting purposes under FRS17. Approximate calculations carried out by Hewitt Bacon & Woodrow identify that as at 21 August, 2004 (the financial year end for SGL and SGRL), the FRS17 deficits in the SGPS and SGRPP, before any deferred tax liability, were estimated to be £27.4 million and £54.5 million respectively. These figures will appear in due course in the notes to the accounts for SGL and SGRL but have not yet been audited. The main financial assumptions underlying these figures are a discount rate of 5.5 per cent. per annum, future price inflation of 2.9 per cent. per annum, pay increases (where applicable) of 4.4 per cent. per annum and pension increases of 2.8 per cent. per annum (LPI)/3.7 per cent. per annum (LPI with a minimum of 3 per cent.). (The pension accounting position may change when new accounting standard IAS19 is adopted.)

192 SUMMARY DETAILS OF MEMBER COMPANIES OF SPIRIT GROUP

Key companies outside the Borrower Group Spirit Group Holdings Limited (Spirit Holdings) is a private limited company incorporated in England and Wales with registered number 04872028. It is the holding company of all other companies which form Spirit Group. Spirit Holdings is not a member of the Borrower Group nor is it a party to any of the Transaction Documents (other than the Tax Deed of Covenant). The issued share capital of Spirit Holdings is £1,000. Spirit Holdings is owned as to approximately 89.5 per cent. by the Equity Group with the balance held by certain other private equity investors, private individuals and trusts for the benefit of certain individuals. Spirit Intermediate Holdings Limited (SIHL) is a private limited company incorporated in England and Wales with registered number 04914762. Its issued share capital is divided into 4 ordinary shares of £1 each, which are 100 per cent. legally and beneficially owned by Spirit Holdings. SIHL is the penultimate holding company of Spirit Group and the issuer of certain unsecured subordinated loan notes held by the shareholders in Spirit Holdings pro rata to their proportionate shareholding in that company, which guarantees the repayment of principal, interest and any redemption premium payable on such notes. Spirit Group Parent Limited (SGPL) is a private limited company incorporated in England and Wales with registered number 04872039. Its issued share capital is divided into 100 ordinary shares of £1 each which are 100 per cent. legally and beneficially owned by SIHL. It is the company in the chain of holding companies at the top of the group which, prior to the Corporate Reorganisation, held the intermediate holding companies at the top of each of the groups formerly comprising, prior to the SNR Acquisition, the Securitisation Group and the SNR Group. Spirit Managed Holdings Limited (SMHL) is a private limited company incorporated in England and Wales with registered number 04721973. Its issued share capital is divided into 36,340,596 ordinary shares of £1 each, which are 100 per cent. legally and beneficially owned by SGPL. SMHL is the company which was formerly the top company in Spirit Group prior to the SNR Acquisition. Spirit Group FinCo Limited (New FinCo) is a private limited company incorporated in England and Wales with registered number 5266799. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by SGPL. New FinCo is not a member of the Borrower Group nor is it a party to any of the Transaction Documents other than the Tax Deed of Covenant. Accordingly, New FinCo is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents other than the Tax Deed of Covenant and has not provided any security in favour of the Borrower Group Security Trustee. Following the Corporate Reorganisation, New FinCo will be the new internal financing company to the Borrower Group. New FinCo will lend money to LoanCo under the New FinCo/ LoanCo Subordinated Loan, the proceeds of which will be ultimately on-lent to the Borrower under the BankCo/Borrower Subordinated Loan. Spirit Administrative Services Limited (AdminCo) is a private limited company incorporated in England and Wales with registered number 5266811. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by SGPL. AdminCo is not a member of the Borrower Group nor is it a party to any of the Transaction Documents (other than the Administrative Services Agreement and the Tax Deed of Covenant). Accordingly, AdminCo is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents (other than the Tax Deed of Covenant) and has not provided any security in favour of the Borrower Group Security Trustee. AdminCo will be the new group services company to the entire Spirit Group, including the Borrower Group, following the Corporate Reorganisation, providing, inter alia, the services of the relevant group employees and licensing all group intellectual property rights to, inter alios, the Borrower, to enable it to conduct its operations. New PubCo Holdings Limited (PubCo HoldCo) is a private limited company incorporated in England and Wales with registered number 5266810. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by SGPL. PubCo HoldCo is not a member of the Borrower Group nor is it a party to any of the Transaction Documents (other than the Tax Deed of Covenant). Accordingly, PubCo HoldCo is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents other than the Tax Deed of Covenant and has not provided any security in favour of the Borrower Group Security Trustee.

193 PubCo HoldCo will be the holding company of the PubCo sub-group of companies following the Corporate Reorganisation, being a group of smaller pubs owned and operated outside the Borrower security group and BankCo security group. Spirit Group Equity Limited (SGEL) is a private limited company incorporated in England and Wales with registered number 04271971. Its issued share capital is divided into redeemable and non-redeemable shares of £0.05 each, which are legally and beneficially owned as to 100 per cent. by SMHL. SGEL is not a member of the Borrower Group nor is it a party to any of the Transaction Documents (other than the Tax Deed of Covenant). Accordingly, SGEL is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents (other than pursuant to the Tax Deed of Covenant). SGEL is the intermediate holding company of Borrower Group Parent, Spirit Supply and LoanCo. Spirit Group Pension Trustee Limited (SGPTL) is a private limited company incorporated in England and Wales with registered number 3888706. Its issued share capital is £2 divided into 2 ordinary shares of £1 each, which are legally and beneficially owned as to 100 per cent. by SMHL. SGPTL is not a member of the Borrower Group nor is it a party to any of the Transaction Documents. Accordingly, SGPTL is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents. Spirit Managed Funding Limited (LoanCo) is a private company incorporated in England and Wales with registered number 5266806. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by SGEL. LoanCo is not a member of the Borrower Group, nor is it a party of any of the Transaction Documents (other than the Tax Deed of Covenant). Accordingly, LoanCo is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents (other than pursuant to the Tax Deed of Covenant). Spirit Financial Holdings Limited (Old HoldCo) is a private limited company incorporated in England and Wales with registered number 4320672. Its issued share capital is £110.31 divided into 11,031 shares of £0.01 each, which are legally and beneficially owned as to 100 per cent. by SGEL. Old HoldCo is not a member of the Borrower Group nor is it a party to any of the Transaction Documents (other than the Tax Deed of Covenant). Accordingly, Old HoldCo is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents (other than pursuant to the Tax Deed of Covenant). Old HoldCo is the intermediate holding company of SPL and Old FinCo. It is a special purpose vehicle whose sole purpose is to hold shares in the above mentioned companies. Spirit Supply Company Limited (Spirit Supply) is a private limited company incorporated in England and Wales with registered number 4341771. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by SGEL. Spirit Supply is not a member of the Borrower Group nor is it a party to any of the Transaction Documents (other than the Tax Deed of Covenant). Accordingly, Spirit Supply is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents (other than pursuant to the Tax Deed of Covenant) has not provided any security in favour of the Borrower Group Security Trustee. Spirit Supply is a special purpose vehicle whose sole purpose is to enter into supply agreements relating to the supply of drink and non-drink products and certain related services to the Managed Estate while ringfencing any contractual obligations to third parties outside of the Borrower Group. Spirit FinCo Limited (Old FinCo) is an exempted limited company incorporated in the Cayman Islands with registered number 114500. Its issued share capital is £2 divided into 2 shares of £1, which are legally and beneficially owned as to 100 per cent. by Old HoldCo. Old FinCo is currently the internal financing company of the Securitisation Group and lender under the Existing Borrower Subordinated Loan. Following repayment of such loan at Completion, Old FinCo will cease to perform this role. Faith @ Bar Room Bar Limited (Faith) is a private limited company incorporated in England and Wales with registered number 03724077. Its issued share capital is £1,099,994 divided into 2,199,988 shares of £0.50 each, which are legally and beneficially held as to 100 per cent. by SGL. Faith is not a member of the Borrower Group, nor is it a party to any of the Transaction Documents (other than as a party to the Tax Deed of Covenant). Accordingly, Faith is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents (other

194 than pursuant to the Tax Deed of Covenant). Faith holds Spirit Group’s interests in certain other dormant companies and a range of other properties and interests. Allied Kunick Entertainments Limited (AKE) is a private limited company incorporated in England and Wales with registered number 2911600. Its issued share capital is £100,000 divided into 51,000 ‘A’ ordinary shares and 49,000 ‘B’ ordinary shares of £1 each, which are legally and beneficially owned as to 51,000 ‘A’ ordinary shares by Spirit (AKE Holdings) Limited and as to 49,000 ‘B’ ordinary shares by Gamestec Leisure Limited. AKE is a joint venture company which formerly operated licensed premises from three sites at which amusement machines formed a significant part of the attraction. AKE is not a member of the Borrower Group, nor is it a party to any of the Transaction Documents. Accordingly, AKE is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents. Spirit Travel Inn Limited (TravelCo) is a private limited company incorporated in England and Wales with registered number 01739344. Its issued share capital is £6,251,796 divided into 2 ‘A’ ordinary shares of £1 each, 2 ‘B’ ordinary shares of £1 each, 3,125,896 ‘A’ preference shares of £1 each and 3,125,896 ‘B’ preference shares of £1 each. The preference shares are legally and beneficially owned as to 50 per cent. by SGL and 50 per cent. by Whitbread Hotels Limited and the ordinary shares are legally and beneficially owned as to 50 per cent. by Spirit (Lodges Holdings) Limited and 50 per cent. by Whitbread Hotels Limited. TravelCo was established as a joint venture company which owns and operates lodge accommodation near to or adjoining pubs within the Securitised Estate. TravelCo is not a member of the Borrower Group, nor is it a party to any of the Transaction Documents. Accordingly, TravelCo is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents. Spirit Managed Inns Limited (BankCo) is a private limited company incorporated in England and Wales with registered number 5266815. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by SPL. BankCo is not a member of the Borrower Group. BankCo is the special purpose vehicle established to acquire 951 pubs comprised in the Pre-Reorganisation Managed Estate not transferred to the Borrower or PubCo ManagedCo pursuant to the Corporate Reorganisation and will be the borrower under the BankCo Loan, the borrower under the BankCo/Borrower Subordinated Loan and the lender under the BankCo/Borrower Subordinated Loan and the BankCo Working Capital Facility. New PubCo (TC) Limited (PubCo TenantedCo) is a private limited company incorporated in England and Wales with registered number 5267571. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by PubCo HoldCo. PubCo TenantedCo is not a member of the Borrower Group nor is it a party to any of the Transaction Documents (other than the Tax Deed of Covenant). Accordingly, PubCo TenantedCo is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents (other than pursuant to the Tax Deed of Covenant) and has not provided any security in favour of the Borrower Group Security Trustee. PubCo Tenanted Co is a newly formed special purpose vehicle company within the PubCo sub-group, and it is the parent of PubCo ManagedCo. New PubCo (MC) Limited (PubCo ManagedCo) is a private limited company incorporated in England and Wales with registered number 05269223. Its issued share capital is £100 divided into 100 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by New PubCo (TC) Limited. PubCo ManagedCo is not a member of the Borrower Group nor is it a party to any of the Transaction Documents (other than the Tax Deed of Covenant). Accordingly, PubCo ManagedCo is not subject to any of the covenants imposed on the Borrower Group under the Transaction Documents (other than pursuant to the Tax Deed of Covenant) and has not provided any security in favour of the Borrower Group Security Trustee. PubCo ManagedCo is the special purpose vehicle established to acquire 364 smaller pubs pursuant to the Corporate Reorganisation to be owned and operated outside the Borrower security group and the BankCo security group.

The Borrower Group Spirit Parent Limited (SPL) is a private limited company incorporated in England and Wales with registered number 04271748. Its issued share capital is £4 divided into 4 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by SFHL. SPL is the immediate holding company of the Borrower Group. It is a special purpose vehicle whose sole purpose was initially to hold the shares in two direct subsidiary companies, namely, SFL, the issuer under the Securitisation, and SGL, the borrower under the Securitisation. Following the Corporate

195 Reorganisation it will be the holder of the entire issued share capital of Borrower Group Parent and BankCo. Spirit Pubs Holdings Limited (Borrower Group Parent) is a private limited company incorporated in England and Wales with registered number 5266779. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by SPL. Borrower Group Parent is the special purpose company established to be the holder of the shares in New ParentCo following completion of the Corporate Reorganisation. Spirit Pubs Parent Limited (New ParentCo) is a private limited company incorporated in England and Wales with registered number 5267589. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by Borrower Group Parent. New ParentCo is the special purpose company established to be the direct holding company of the Borrower, SGL and BidCo following completion of the Corporate Reorganisation. Spirit Managed Pubs Limited (Borrower) is a private limited company incorporated in England and Wales with registered number 05269240. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which are legally and beneficially owned as to 100 per cent. by New ParentCo. The Borrower is the special purpose vehicle established to acquire 1,080 freehold (or its Scottish equivalent) and long leasehold pubs comprised in the Managed Estate pursuant to the Corporate Reorganisation and will be the borrower under the Issuer/Borrower Facility Agreement and the BankCo/Borrower Subordinated Loan. Spirit Retail BidCo Limited (BidCo) is a private limited company incorporated in England and Wales with registered number 04872046. Its issued share capital is £2 divided into 2 ordinary shares of £1 each which, following the Corporate Reorganisation, will be held by New ParentCo. BidCo is the holding company of the SNR Group and was incorporated to acquire the SNR Group from S&N at the time of the SNR Acquisition (see Description of the SNR Acquisition). Following the Corporate Reorganisation, BidCo will be a direct subsidiary of New ParentCo and sister subsidiary to the Borrower. Spirit Group Retail Limited (SGRL) is a private limited company incorporated in England and Wales with registered number 03794854. Its issued share capital is £101,000,426 dividend into 101,000,426 ordinary shares of £1 each which are held legally and beneficially by BidCo and 1,000,000 additional redeemable preference shares of £1 each which are held by Cleveland Place Holdings Limited. SGRL is the principal operating company within the SNR Group and together with certain other members of that group will transfer all of the outlets comprising the business of that group to either the Borrower, BankCo or PubCo ManagedCo pursuant to the Corporate Reorganisation. Spirit Group Limited (SGL) is a private limited company incorporated in England and Wales with registered number 3982443. Its issued share capital is £3 divided into 3 ordinary shares of £1 each, which are legally and beneficially owned as to 100 per cent. by SPL. SGL is the Borrower under the Securitisation and the sole operating company within the Securitisation Group, which will transfer all of its 1,041 outlets to either the Borrower, BankCo or PubCo ManagedCo pursuant to the Corporate Reorganisation. Following the Corporate Reorganisation SGL will be a direct subsidiary of New ParentCo and sister subsidiary to the Borrower. Spirit (AKE Holdings) Limited is a private limited company incorporated in England and Wales with registered number 3982423. Its issued share capital is £3 divided into 3 ordinary shares of £1 each, which are legally and beneficially owned as to 100 per cent. by SGL. It is a special purpose vehicle whose sole purpose is to hold the shares in AKE. Spirit (Lodges Holdings) Limited is a private limited company incorporated in England and Wales with registered number 3982439. Its issued share capital is £2 divided into 2 ordinary shares of £1 each, which are legally and beneficially owned as to 100 per cent. by SGL. Spirit (Lodges Holdings) Limited is a special purpose vehicle whose sole purpose is to hold the shares in TravelCo. Tom Cobleigh Limited (TCL) is a private limited company incorporated in England and Wales with registered number 2673413. Its issued share capital is £3,984,839.70 divided into 39,848,397 ordinary shares of 10p each, which are legally and beneficially owned by SGL.

196 CORPORATE REORGANISATION

On or prior to the Closing Date, Spirit Group intends to undergo a reorganisation (the Corporate Reorganisation) to facilitate the Refinancing. In summary, the proposed Corporate Reorganisation will involve the following steps: (a) the transfer from the SNR Group and SGL of the existing trade, assets and employees of 364 smaller pubs to be owned and operated outside the Borrower Group Estate and the BankCo Estate to PubCo ManagedCo; (b) the creation of the sub-group forming the Borrower Group comprising the Borrower Group Parent, New ParentCo, the Borrower, SGL, BidCo and the SNR Group; (c) the transfer of the trade, assets and associated operations (other than employees, certain contracts and intellectual property) of certain pubs by SGL and various of the SNR Group operating entities to the Borrower; (d) the establishment of AdminCo (to which certain employees and intellectual property will be transferred) and which will provide management and employment services and licence intellectual property rights to the Borrower and BankCo; (e) the creation of BankCo and the transfer of the trade, assets and associated operations (other than employees, certain contracts and intellectual property) of certain pubs by SGL and various of the SNR Group operating entities to BankCo; (f) the provision of intra-group subordinated funding by New FinCo to LoanCo and the ultimate on-lending of part of the proceeds of that loan to the Borrower; and (g) the repayment of intra-group borrowings by SGL and BidCo, and the repayment of external debt by SGPL and the issuance of a redemption notice in respect of the SFL Notes by SFL. The first stage of the Corporate Reorganisation will involve the interposition of a number of new companies within the group and the intra-group transfer of the shares in BidCo and SGL to New ParentCo. These share transfers will be structured as a series of share for share exchanges. The purpose of these steps is to ensure that, prior to the transfer of certain trade, assets and operations to the Borrower, each of SGL and BidCo (with its respective subsidiaries beneath it) will be sister companies of the Borrower in the new Borrower Group. Following the share for share transfers, the goodwill, trade, assets and associated operations of those pubs comprising the Borrower Group Estate will be transferred from SGL and the relevant SNR Group operating entities to the Borrower pursuant to a business transfer agreement (the Borrower Acquisition Agreement). At the same time, certain intellectual property, business information, employees and certain contracts entered into by the transferor entities in relation to the operation of those pubs to be comprised in the Borrower Group Estate and those to be comprised in the BankCo Estate will be transferred to AdminCo. Certain other third party supply contracts held within the transferor entities will be transferred to Spirit Supply. AdminCo will enter into the Administrative Services Agreement with the Borrower which will govern the terms on which AdminCo will make available to the Borrower, following Completion, management services, the services of the employees working at unit level in the Borrower Group Estate and, to the relevant extent, those employees working above unit level, a licence of intellectual property rights and business information required for the operation of the Borrower’s business and an internal service arrangement in respect of certain central services such as information technology and car leasing. At the same time the Back-to-Back Supply Agreement will also be entered into between Spirit Supply and the Borrower governing the terms on which certain goods and services purchased by Spirit Supply from third parties are passed on to the Borrower for use in the operation of its business. Further details of the Administrative Services Agreement and the Back-to-Back Supply Agreement are set out below. The goodwill, trade, assets and associated operations of those pubs comprising the BankCo Estate will be transferred to BankCo pursuant to a business transfer agreement similar to the Borrower Acquisition Agreement and an administrative services agreement and back-to-back supply agreement will also be entered into between BankCo and AdminCo and Spirit Supply respectively. At the same time similar arrangements will be entered into in respect of the transfer of the relevant pubs to PubCo ManagedCo.

197 The security over the shares and assets to be transferred pursuant to the Corporate Reorganisation created in respect of the Securitisation and the SNR Acquisition Facility will be released upon Completion and the relevant consents of the security trustee under the Securitisation and Facility Agent under the SNR Acquisition Facility respectively will be obtained in each case to permit the Corporate Reorganisation and the Refinancing.

Spirit Travel Inn Joint Venture SGL is the main contracting party to the Spirit Travel Inn joint venture arrangements between Spirit Group and Whitbread Group plc (Whitbread) (as described in Business of Spirit Group). The transfer of pubs comprising its business and assets by SGL to the Borrower and BankCo would, in the absence of Whitbread’s prior consent (such consent not to be unreasonably withheld or delayed), entitle Whitbread to serve notice on SGL requiring it to sell to Whitbread, at a price below market value price, Spirit’s stake in the joint venture and all of the 13 pubs adjoining the lodges the subject of the joint venture (12 of which will form part of the Borrower Group Estate, with the remaining pub forming part of the BankCo Estate). In addition, following the transfer of the pubs to the Borrower and BankCo, SGL will be incapable of performing certain of its obligations under the joint venture arrangements, which may constitute a breach of the terms thereof. In order to resolve these issues, Whitbread’s prior consent to the transfer is, therefore, required. Spirit Group management has been in discussions with Whitbread in respect of this issue. As a result of these discussions, Whitbread has given, in principle, consent to the transfer of pubs by SGL to the Borrower and BankCo. Spirit Group management believes that Whitbread will provide formal written consent prior to the Corporate Reorganisation.

198 THE SNR ACQUISITION

Description of SNR Acquisition On 3 November, 2003, BidCo completed the SNR Acquisition. BidCo was a new company formed as part of a new holding company structure put in place by the Equity Group through which they acquired the existing Spirit Group at the same time as BidCo completed the SNR Acquisition. The ultimate parent company in this holding company structure is Spirit Holdings in which the Equity Group hold ordinary shares. Spirit Holdings is also guarantor of the unsecured subordinated shareholder loan notes issued to the members of the Equity Group by Spirit Holdings’ direct subsidiary, SIHL. Further details of the companies comprised in the holding company structure are set out in Summary Details of Member Companies of Spirit Group. The SNR Acquisition was structured as an acquisition by BidCo of the shares of the principal trading companies comprising the SNR Group from S&N, with BidCo also required to procure at completion the repayment of certain intra-group debt and the redemption of certain preference shares in one of the principal trading companies being acquired. Customary acquisition documentation, including a sale and purchase agreement dated 5 October, 2003 between BidCo, S&N and Spirit Holdings (as BidCo’s guarantor), was entered into in order to effect the SNR Acquisition. The consideration paid by BidCo for the SNR Acquisition was £2,510 million (on a cash-free, debt-free basis). Of this amount, approximately £55 million was paid into an escrow account by BidCo pending consents being received from the relevant landlords for the assignment to the SNR Group of certain leasehold properties comprised in the SNR Group. The consideration paid by BidCo for the SNR Acquisition was subject to adjustment on a pound for pound basis to reflect the actual cash or external debt (including capital accruals) which remained in the SNR Group on completion of the SNR Acquisition and to the extent that the working capital of the SNR Group at completion was greater or less than the parties’ estimate of the normalised working capital position of the SNR Group on completion. The consideration was also subject to a further pound for pound adjustment (which is not material) to the extent that the maintenance and development capital expenditure of the SNR Group for the period from 24 August, 2003 to completion of the SNR Acquisition fell below agreed budgeted amounts.

199 FURTHER INFORMATION REGARDING THE BORROWER GROUP ESTATE

Introduction The Estate The Borrower will earn revenues by actively managing the pubs in the Borrower Group Estate, which will include selling beer and other products to retail customers through these outlets.

Ownership of the pubs On the Closing Date, the Borrower will be entitled to and shall apply to be registered as the owner of the legal title to the freehold pubs (or the Scottish equivalent) (save in the case of a small number of freehold pubs subject to restrictions on dispositions where consents are needed) and those of the leasehold pubs in respect of which reversioners’ consents to assign are not needed, in the Borrower Group Estate. The legal title to those freehold and leasehold pubs where consents are needed will be held by the current legal owners on trust for the Borrower until the requisite consents have been obtained. Upon the obtaining of such consents, the legal title to the relevant pubs will be transferred to the Borrower. Approximately 51 such consents in respect of the leasehold pubs and a small number in respect of the freehold pubs are needed.

General The 1,080 pubs in the Borrower Group Estate comprise 1,005 pubs located in England and Wales and 75 pubs located in Scotland. The pubs comprising the Borrower Group Estate are listed in Appendix 1A (Borrower Group Estate) to the Valuer’s Report (see Valuer’s Report above). There have been pubs on many of the sites that constitute the Borrower Group Estate since before 1900, and some for over 300 years. The principal assets to be charged by way of security for the Debenture Bonds are the Borrower’s interests in the pubs in the Borrower Group Estate. Approximately 93 per cent. of the pubs in the Borrower Group Estate are freehold (or the Scottish equivalent) and approximately 7 per cent. are leasehold. The details of the terms of and rents due in respect of the leases of the leasehold properties are as follows:

Leasehold Properties The following table sets out certain information in respect of the leasehold properties in the Borrower Group Estate.

No. of Average Remaining Term in Years Properties Rents p.a.1

0-19...... 0— 20-49...... 0— 50-99...... 31 £19,854 >100 ...... 15 £3,192

The Borrower Group Estate pubs The Borrower Group Estate is categorised according to type of pub. Each pub has been identified as belonging to one of 25 segments. The segments have been developed to group together pubs with similar customers and locations, thus allowing more customer-focused offers to be developed and to allow the spread of best practice more effectively throughout the Borrower Group Estate.

1 For the purposes of this table, leasehold properties where only a peppercorn rent is payable have been excluded.

200 The profile of the Borrower Group Estate is as follows:

Segment

Town Centre City Night...... 43 City Pub...... 68 City Tavern ...... 91 Firkin...... 6 Bar Room Bar...... 9

Locals Barras ...... 56 Classic Local ...... 59 Great Local ...... 184 Mr Q’s...... 55 Q.’s ...... 72 Young Local...... 34

Destination Food Segment Adult Dining ...... 39 All Day Family Feast ...... 13 Chef & Brewer ...... 78 Country Carvery...... 28 Miller’s Kitchen...... 20 Miller’s...... 11 Tom Cobleigh ...... 16 Two For One ...... 87 Gastro...... 8 Oak Inns ...... 6 Henry’s Table ...... 9 Bar and Kitchen...... 8 Old Orleans ...... 3 Other...... 77

Total ...... 1,080

Split of Operations by geographic region2: East Anglia ...... 45 East Midlands ...... 67 London...... 228 North East...... 37 North West...... 202 Scotland...... 75 South East...... 156 South West ...... 31 Wales...... 23 West Midlands ...... 96 Yorks & Humberside...... 120

Total ...... 1,080

2 Terms used to describe geographic regions in this section may differ from those used in the Valuer’s Report prepared by DTZ.

201 Insurance The Borrower will warrant that as at the Closing Date each pub which it owns is covered by buildings insurance maintained by it or by another person with an interest in the relevant property in an amount at least equal to its full replacement cost as determined in accordance with commercial property market practice generally. As at the Closing Date or as soon as possible thereafter, the Borrower Group Security Trustee’s interest under each relevant insurance policy will be recorded by the Borrower and, in the event of a claim, such an interest will be notified to the relevant insurers under an ‘‘automatic additional interest’’ provision in the relevant policy. The Borrower will also warrant that at the Closing Date such buildings insurance will cover those risks usually covered by a reasonably prudent owner of commercial property of the same nature as the pubs in comparable locations. The Borrower will also warrant that it is the named insured under an employers’ liability insurance policy in the amount of £50,000,000 and public and products liability in the amount of £50,000,000. The Borrower will also warrant that the policy and any additional insurance policy covers such other risks usually covered by a reasonably prudent owner of pubs and related permitted businesses in the United Kingdom. The interests of the Borrower in the Insurance Policies referred to above will be charged to the Borrower Group Security Trustee for the benefit of, inter alios, the Issuer pursuant to the Borrower Group Deed of Charge. The Issuer will in turn charge its interest to the Issuer Security Trustee for the benefit of, inter alios, the Debenture Bondholders pursuant to the Issuer Deed of Charge. The insurance arrangements for the Borrower Group will form part of the services to be provided by AdminCo under the Administrative Services Agreement. The Administrative Services Agreement will allocate the appropriate level of premia payable by the Borrower Group (on a fair and reasonable basis) and will also allocate appropriate sub-limits within the context of Spirit Group’s overall cover limits to each part of the Managed Estate (also on a fair and reasonable basis) (see Summary of Principal Documents – Administrative Services Agreement above).

202 MANAGEMENT AND OWNERSHIP

Management The management of Spirit Group includes well known and experienced names in the themed restaurant and bar industry, all with proven track records. Brief backgrounds of management are set out below: Tony Campbell is the Chairman of Spirit Group. He is one of the United Kingdom’s most experienced retail business executives with 15 years as a director of a top 100 FTSE company and a total of 30 years in retailing. He was one of the four key executives who were responsible for turning Asda Stores around from near bankruptcy through to its acquisition by Wal-Mart in 1999. With a depth of experience encompassing J. Sainsbury plc and Asda Stores as well as other food retailers, Tony joined Spirit in September 2001, bringing valuable experience of buying and marketing as well as distribution, systems and facilities management. Karen Jones is the Chief Executive Officer of Spirit Group. She has a proven track record as an entrepreneur, founding, developing and rolling out successful cafe´, bar and restaurant chains which began when she started as general manager of Peppermint Park, Coconut Grove and Fatso’s Pasta Joint. Subsequently, Karen co-founded the Cafe´ Rouge Group and became Managing Director of the Pelican Group (which owned Cafe´ Rouge, Dome and various other concepts). Whitbread Hotels Limited subsequently bought the Pelican Group and Karen remained as Managing Director for a further two years. Following the acquisition by Punch Group of the retail pub estate of Allied Domecq, Karen took over as Chief Executive Officer of what became Spirit which now comprises a managed estate of some 2,400 pubs. Karen is also a non-executive director of Emap plc and Royal National Theatre Enterprises Limited. Cornel Riklin is a non-executive director of Spirit Holdings. Since 1999 he has held the position of Managing Director of Texas Pacific Group, the private equity group. He was previously Group Managing Director at Trinity Mirror plc, where he worked from 1993 to 1999, and Chief Executive Officer of Borthwicks plc. Prior to that he worked for Bain & Co. in London and San Fransisco. He currently also holds non-executive directorships at Findexa, Debenhams, Grohe, Gate Gourmet and Bally. Benedict Smith is the Chief Financial Officer of Spirit Group. A chartered accountant by profession, he joined Texas Pacific Group, the largest shareholder of Spirit Holdings, in June 2000 from Price Waterhouse. From January 2002 to July 2002 he was the interim Chief Financial Officer of Spirit and led it through its demerger from Punch Group and negotiated the terms of the subsequent financial separation. He continued to work closely with Spirit and rejoined Spirit in January 2003 as permanent Chief Financial Officer. Andrew Knight is the Commercial Director of Spirit Group. He started his career with Courage Ltd, before joining Allied Breweries as a Graduate Trainee. After two years, he moved into the role of Retail Area Manager with Joshua Tetley & Son. After various operational roles including General Manager, Andrew accepted the position of Retail Marketing Executive for Allied Domecq Inns and moved to Burton on Trent. In 1999 Andrew was appointed Commercial Director for Punch Retail (now Spirit Group). Paul Symonds is the Managing Director of Locals Business. He has spent his entire career building a knowledge of the food service industry, operating in the United Kingdom as well as Australia and New Zealand. He has progressed through the operations of McDonalds, Pizza Hut, Bright Reasons Restaurants (where he became joint Managing Director) and Pizzaland (where he was the Managing Director). He moved to Managing Director of Burger King in the United Kingdom and Ireland during its toughest time immediately following the BSE crisis, growing the chain from 410 to 592 restaurants. Paul then took over as Managing Director of Burger King in Australia and New Zealand operating two brands, Burger King and Hungry Jacks and focusing on an aggressive growth programme. His background experience has developed skills to set high standards, motivate and drive a large multi-sited retail business. Paul joined Spirit in 2001. Stephen Richards is the Managing Director of the CitySpirit Business. Steve began his career with Allied Lyons plc as a marketing and sales graduate in 1989. He then held various positions in marketing, area management, acquisitions and investment before becoming Operations Director (Family Dining) with Allied Domecq in 1996. In 1998 Steve joined Greenalls plc as Managing

203 Director (South) before moving across to SNR following its acquisition of the Greenalls business. His first position at SNR was Managing Director for the 500 outlet Southern business before becoming Managing Director for the 800 outlet national Pub Business in 2001. Following the SNR Acquisition in 2003, Steve joined Spirit Group board as Managing Director of CitySpirit in November 2003. Frank Hayes is the Managing Director for Spirit Food. Frank was educated at Trinity College, Dublin where he gained a BA in Economics and was awarded the prestigious Trinity Foundation Scholarship for outstanding academic performance. Frank spent two years as an Associate Consultant at Bain and Company and then joined the Restaurants Division of Pepsico International (which later became Tricon Restaurants International and then Yum! Restaurants International) at the end of 1991 as part of a start-up team developing and applying leading edge supply chain management practices for its Pizza Hut, KFC and Taco Bell brands. He held a variety of Supply Chain Management positions in Europe and moved to Australia in 1996 as Senior Director for SCM for Australia and New Zealand to roll out the same approach. In 1999, he returned to Europe as General Manager of Yum! Spain and achieved a significant turnaround of its KFC business in Spain. In late 2003, he took on the role of General Manager for Pizza Hut France. Frank was appointed as Managing Director for Spirit Food in August 2004. Jo Cumming is the Managing Director of DevCo and Investments of Spirit Group. Jo joined Spirit from Cafe´ Rouge where she held the position of Managing Director, and before that she was Group Operations Director for the Pelican Group. Jo joined Spirit Group in April 2000 and is responsible for the overall investment strategy for Spirit. She also heads up DevCo, the concept development arm of the company that has been responsible for successful concepts such as Bar Room Bar, Firkin Beer Co. and Spirit Group’s Gastro pubs. Stephen Peel is a Managing Director of Texas Pacific Group and a non-executive director of Spirit Holdings. Prior to joining Texas Pacific Group, Mr. Peel was an Executive Director of Goldman Sachs International in Europe. From 1989 to 1993, he was in the Investment Banking Division of Goldman Sachs in London. From 1994 to 1997, he was in Goldman Sachs’ Principal Investment Area based in London and in Frankfurt. He received his Masters from Cambridge University in the UK in 1987. Mr. Peel serves on the boards of Spirit Group, Findexa Limited, Grohe, and Differentis. Mr. Peel is a UK national and currently lives in London, England. Derek Walmsley qualified as a Chartered Accountant with Price Waterhouse in 1972 and worked with them in London, USA, and France. Derek was Chief Accountant of the Foods division of Imperial Group from 1983-1986, Financial Controller of Emap plc from 1986-1995 and Company Secretary of Emap plc from 1991-2001. He has been Company Secretary of Spirit Group since 2001.

Ownership of Spirit Group The principal shareholders in Spirit Group are the Equity Group.

204 EXPECTED AVERAGE LIFE OF THE DEBENTURE BONDS

The average lives of the Debenture Bonds cannot be predicted, as the actual rate at which the Term Advances will be repaid and a number of other relevant factors are unknown. Calculations of the possible average life of the Debenture Bonds can be made based on certain assumptions. For example, based on the assumptions that: (a) no optional prepayment is made on the Debenture Bonds; and (b) the Issuer exercises its right to redeem each Class of Debenture Bonds in full on the relevant Step-Up Date, the following would be the case:

Notional Estimated Expected Expected Legal Maturity Class Amount Average Life(1) Average Life(2) Maturity (2) Date

A1 £150,000,000 17.4 years 7.1 years 2011 2028 A2 £200,000,000 23.2 years 7.1 years 2011 2031 A3 £250,000,000 12.6 years 10.1 years 2014 2021 A4 £350,000,000 17.7 years 14.1 years 2018 2027 A5 £300,000,000 26.3 years 24.1 years 2028 2034 (1) Based on the assumption referred to in paragraph (a) above. (2) Based on the assumption referred to in paragraph (b) above. No assurance can be given that the estimates above will prove in any way to be realistic and they must, therefore, be viewed with considerable caution.

205 TERMS AND CONDITIONS OF THE DEBENTURE BONDS

The following are the terms and conditions of the Debenture Bonds in the form (subject to completion and amendment) in which they will be set out in the Trust Deed. They will be incorporated by reference into the Debenture Bonds in global form and will be endorsed on the Debenture Bonds in definitive form (if any) issued in exchange for the Permanent Global Debenture Bonds. These terms and conditions are subject to the provisions of the Trust Deed, the Issuer Deed of Charge and the other Transaction Documents (each as defined below). The £150,000,000 Floating Rate Class A1 Secured Debenture Bonds due 2028 (the Class A1 Debenture Bonds), the £200,000,000 Floating Rate Class A2 Secured Debenture Bonds due 2031 (the Class A2 Debenture Bonds), the £250,000,000 Fixed/Floating Rate Class A3 Secured Debenture Bonds due 2021 (the Class A3 Debenture Bonds), the £350,000,000 Fixed/Floating Rate Class A4 Secured Debenture Bonds due 2027 (the Class A4 Debenture Bonds) and the £300,000,000 Fixed/Floating Rate Class A5 Secured Debenture Bonds due 2034 (the Class A5 Debenture Bonds and, together with the Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds and the Class A4 Debenture Bonds, the Debenture Bonds) in each case of Spirit Issuer plc (the Issuer) will be constituted by a trust deed expected to be dated on or about the Closing Date (the Trust Deed) and made between the Issuer and Deutsche Trustee Company Limited (the Debenture Bond Trustee) as trustee for the holders for the time being of the Class A1 Debenture Bonds (the Class A1 Debenture Bondholders), the holders for the time being of the Class A2 Debenture Bonds (the Class A2 Debenture Bondholders), the holders for the time being of the Class A3 Debenture Bonds (the Class A3 Debenture Bondholders), the holders for the time being of the Class A4 Debenture Bonds (the Class A4 Debenture Bondholders) and the holders for the time being of the Class A5 Debenture Bonds (the Class A5 Debenture Bondholders and, together with the Class A1 Debenture Bondholders, the Class A2 Debenture Bondholders, the Class A3 Debenture Bondholders and the Class A4 Debenture Bondholders, the Debenture Bondholders). Any reference below to a Class of Debenture Bonds or of Debenture Bondholders shall be a reference to the Class A1 Debenture Bonds or the Class A2 Debenture Bonds or the Class A3 Debenture Bonds or the Class A4 Debenture Bonds or the Class A5 Debenture Bonds, as the case may be, or to the respective holders thereof. The Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds will be issued with the benefit of a financial guarantee (the Ambac Financial Guarantee) by Ambac Assurance UK Limited (Ambac) that will be issued pursuant to and in accordance with the terms of a guarantee and reimbursement agreement (the Ambac Guarantee and Reimbursement Agreement) expected to be dated on or about the Closing Date between, inter alios, the Issuer and Ambac. By an agency agreement expected to be dated on or about the Closing Date (the Agency Agreement) and made between the Issuer, the Debenture Bond Trustee, the Principal Paying Agent, the Agent Bank and the Luxembourg Paying Agent, provision is made for, inter alia, the payment of interest and repayment of principal in respect of the Debenture Bonds of each Class. Security for the Debenture Bonds is created pursuant to, and on the terms set out in, a deed of charge expected to be dated on or about the Closing Date (the Issuer Deed of Charge) between, inter alios, the Issuer, the Debenture Bond Trustee, Ambac, the Liquidity Facility Provider, the Hedge Provider and the Issuer Security Trustee. Any reference in these Conditions to the Trust Deed, the Issuer Deed of Charge, the Ambac Financial Guarantee, the Agency Agreement or to any other Transaction Document is to such document as from time to time amended, varied, supplemented or novated in accordance with its provisions and any deed or other document expressed to be supplemental to it, as from time to time so modified. Any reference to the Debenture Bond Trustee, the Issuer Security Trustee, the Borrower Group Security Trustee and any Paying Agent includes references to its successors and, in the case of the Debenture Bond Trustee, the Issuer Security Trustee and the Borrower Group Security Trustee, to any additional trustee appointed under the Trust Deed or, as the case may be, the Issuer Deed of Charge. Copies of the Transaction Documents are available for inspection during normal business hours at the offices of the Luxembourg Paying Agent, being at the date hereof at 69 route d’Esch L-2953 Luxembourg.

206 The issuance of the Debenture Bonds was authorised by a resolution of the Board of Directors of the Issuer passed on 22 November, 2004. The statements in these Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed, the Agency Agreement and the Issuer Deed of Charge.

1. Definitions In these Conditions (including the recitals hereto): Account Bank means, as at the Closing Date, Barclays Bank PLC, acting through its office at 15 Colmore Row, Birmingham B3 2WN; Accounting Date means in respect of the Financial Year current at the Closing Date, 20 August, 2005 and, in each year thereafter, such date falling at the end of the fourth Financial Quarter after the immediately preceding Accounting Date; Additional Term Advances means further or new term advances made available to the Borrower pursuant to the Issuer/Borrower Facility Agreement; Additional Financial Indebtedness means additional financial indebtedness which the Borrower is permitted to raise in accordance with the Issuer/Borrower Facility Agreement; AdminCo means Spirit Administrative Services Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 5266811) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; Administrative Services Agreement means the agreement dated on or about the Closing Date between, inter alios, the Borrower, the Borrower Group Security Trustee and AdminCo pursuant to which AdminCo, inter alia, provides certain services to the Borrower; Agency Agreement has the meaning given to it in the recitals to these Conditions; Agent Bank means, as at the Closing Date, Deutsche Bank AG London acting through its office at Winchester House, 1 Great Winchester Street, London EC2N 2DB; Ambac Event of Default means, with respect to Ambac under the Ambac Financial Guarantee: (i) any Guaranteed Amount which is Due for Payment by Ambac under the Ambac Financial Guarantee is not paid by Ambac within 2 Business Days of the date stipulated in the Ambac Financial Guarantee; (ii) Ambac disclaims, disaffirms, repudiates and/or challenges the validity of any of its obligations under the Ambac Financial Guarantee or seeks to do so; (iii) a court of competent jurisdiction enters a final and non-appealable order, judgment or decree for the winding-up, or the appointment of an administrator or receiver (including an administrative receiver or manager) of Ambac (or, as the case may be, of a material part of its property or assets); or (iv) Ambac: (A) presents any petition or takes any proceedings for the winding-up or the appointment of an administrator or receiver (including an administrative receiver or manager) of Ambac (or, as the case may be, of a material part of its property or assets); or (B) makes or enters into any general assignment, composition, arrangement (including, without limitation, a voluntary arrangement under Part 1 of the Insolvency Act 1986) or compromise with or for the benefit of any of its creditors; or (C) becomes unable to pay its debts within the meaning of Section 123(2) or Section 123(1)(e) of the Insolvency Act 1986 or admits in writing its inability, or fails generally, to pay its debts as they become due. Ambac Financial Guarantee has the meaning given to it in the recitals to these Conditions; Ambac Guarantee and Reimbursement Agreement has the meaning given to it in the recitals to these Conditions;

207 Ambac Reserved Rights means: (i) any of the matters referred to in the Transaction Documents as requiring the consent of Ambac (if required); and (ii) any amendment to modify or vary the terms of Conditions 5 (Interest) and 6 (Redemption, Purchase and Cancellation) in so far as such relate to payment of principal or interest on the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds; Ambac Subordinated Fees has the meaning given to it in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); Ambac Termination Event means (A) an Ambac Event of Default has occurred and is continuing or (B) Ambac has no further obligations, actual or contingent, under the Ambac Financial Guarantee and no amount is then owing to Ambac under the Ambac Guarantee and Reimbursement Agreement or (C) both of the events set out in (A) and (B) have occurred. BankCo means Spirit Managed Inns Limited, a private company with limited liability incorporated in England and Wales (registered number 5266815) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; BankCo/Borrower Subordinated Loan Agreement means a loan agreement dated on or about the Closing Date between, inter alios, BankCo and the Borrower, pursuant to which BankCo will lend £550,000,000 of subordinated debt to the Borrower; Bank Agreement means the agreement dated on or about the Closing Date between the Issuer, the Borrower, the Account Bank, the Borrower Group Security Trustee and the Issuer Security Trustee relating to the maintenance and operation of the bank accounts of the Borrower and the Issuer; Basic Terms Modification means: (i) any modification which would have the effect of (A) postponing or altering any day for payment of interest on and repayment of principal of any particular Class of Debenture Bonds, (B) reducing, cancelling or rescheduling the amount of principal or the rate of interest payable in respect of any particular Class of Debenture Bonds, (C) altering the priority of payment of interest or principal on any particular Class of Debenture Bonds, (D) altering the currency of payment of any particular Class of Debenture Bonds (other than pursuant to Condition 7(j) (Payments – Change in Currency) or (E) altering the Final Maturity Date of any particular Class of Debenture Bonds; (ii) removing or replacing the Debenture Bond Trustee or the Issuer Security Trustee; or (iii) an alteration of (A) the definition of Basic Terms Modification, (B) the majority required to effect a Basic Terms Modification or (C) the majority required to pass an Extraordinary Resolution; BidCo means Spirit Retail BidCo Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 04872046) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; Borrower means Spirit Managed Pubs Limited, a private company with limited liability incorporated in England and Wales (registered number 5269240) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; Borrower Group means the Borrower, New ParentCo, Borrower Group Parent, SGL and the SNR Group Companies; Borrower Group Deed of Charge means the deed of charge expected to be dated on or about the Closing Date between, inter alios, the Borrower, the Issuer, and the Borrower Group Security Trustee; Borrower Group Entity means any member of the Borrower Group; Borrower Group Estate means the 1,080 properties acquired by the Borrower on the Closing Date and references to the Borrower Group Estate shall where the context requires include properties which have been acquired by the Borrower since the Closing Date and exclude such properties as have been disposed of by the Borrower since the Closing Date, in each case in accordance with the provisions of the Transaction Documents;

208 Borrower Group Parent means Spirit Pubs Holdings Limited, a private company with limited liability incorporated in England and Wales (registered number 5266779) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; Borrower Group Standard Securities means the standard securities granted over the Borrower Scottish Properties or any other heritable or leasehold property in Scotland pursuant to the Borrower Group Deed of Charge in the form set out in the Borrower Group Deed of Charge and Borrower Group Standard Security shall be construed accordingly; Borrower Group Security Trustee means, as at the Closing Date, Deutsche Trustee Company Limited, whose registered office is at Winchester House, 1 Great Winchester Street, London EC2N 2DB; Borrower IB Hedging Subordinated Amounts has the meaning given to it in Condition 3(c) (Status, Priority and Security — Issuer Pre-Acceleration Priority of Payments); Borrower Mortgaged Properties means the freehold and leasehold properties situated in England and Wales and the heritable and leasehold properties situated in Scotland; details of which are set out in the Borrower Group Deed of Charge and Borrower Mortgaged Property shall be construed accordingly; Borrower Scottish Properties means the Borrower Mortgaged Properties situated in Scotland and Borrower Scottish Property shall be construed accordingly; Business Day means any day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London; Calculation Date means, in relation to any Interest Payment Date, the day falling on the fifth Business Day prior to such Interest Payment Date; Class A1 Debenture Bondholders has the meaning given to it in the recitals to these Conditions; Class A1 Debenture Bonds has the meaning given to it in the recitals to these Conditions; Class A1 Expected Amortisation Amount has the meaning given to it in Condition 6(b) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); Class A1 Final Maturity Date means the Interest Payment Date falling in December 2028; Class A1 Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A1 Rate of Interest has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A1 Step-Up Amounts has the meaning given to it in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); Class A1 Step-Up Date means the Interest Payment Date falling in December 2011; Class A1 Step-Up Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A2 Debenture Bondholders has the meaning given to it in the recitals to these Conditions; Class A2 Debenture Bonds has the meaning given to it in the recitals to these Conditions; Class A2 Expected Amortisation Amount has the meaning given to it in Condition 6(b) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); Class A2 Final Maturity Date means the Interest Payment Date falling in December 2031; Class A2 Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A2 Rate of Interest has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A2 Step-Up Amounts has the meaning given to it in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); Class A2 Step-Up Date means the Interest Payment Date falling in December 2011;

209 Class A2 Step-Up Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A3 Debenture Bondholders has the meaning given to it in the recitals to these Conditions; Class A3 Debenture Bonds has the meaning given to it in the recitals to these Conditions; Class A3 Expected Amortisation Amount has the meaning given to it in Condition 6(b) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); Class A3 Final Maturity Date means the Interest Payment Date falling in December 2021; Class A3 Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A3 Rate of Interest has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A3 Step-Up Amounts has the meaning given to it in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); Class A3 Step-Up Date means the Interest Payment Date falling in December 2014; Class A3 Step-Up Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A4 Debenture Bondholders has the meaning given to it in the recitals to these Conditions; Class A4 Debenture Bonds has the meaning given to it in the recitals to these Conditions; Class A4 Final Maturity Date means the Interest Payment Date falling in December 2027; Class A4 Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A4 Rate of Interest has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A4 Expected Amortisation Amount has the meaning given to it in Condition 6(b) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); Class A4 Step-Up Amounts has the meaning given to it in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); Class A4 Step-Up Date means the Interest Payment Date falling in December 2018; Class A4 Step-Up Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A5 Debenture Bondholders has the meaning given to it in the recitals to these Conditions; Class A5 Debenture Bonds has the meaning given to it in the recitals to these Conditions; Class A5 Expected Amortisation Amount has the meaning given to it in Condition 6(b) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); Class A5 Final Maturity Date means the Interest Payment Date falling in December 2034; Class A5 Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A5 Rate of Interest has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Class A5 Step-Up Amounts has the meaning given to it in Condition 3(c) (Status, Priority and Security – Issuer Pre Acceleration Priority of Payments); Class A5 Step-Up Date means the Interest Payment Date falling in December 2028; Class A5 Step-Up Margin has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Clearstream, Luxembourg means Clearstream Banking, socie´te´ anonyme; Closing Date means 25 November, 2004 or such later date as may be agreed between the Issuer and the Lead Managers; Co-Lead Manager means Merrill Lynch International (having its office at Merrill Lynch Financial Centre, 2 King Edward Street, London EC1A 1HQ);

210 Conditions means these terms and conditions; Corporate Services Agreement means the agreement dated on or about the Closing Date between, inter alios, the Issuer and the Corporate Services Provider; Corporate Services Provider means, as at the Closing Date, SPV Management Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 2548079) whose registered office is at Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ; Couponholders means the holders from time to time of the Coupons; Coupons means the bearer interest coupons in, or substantially in, the form set out in Schedule 1 Part D (Form of Coupon) to the Trust Deed and for the time being outstanding or, where the context so requires, a specific number of them and includes (where applicable) the Talons in respect of such Coupons; Day Count Fractions has the meaning given to it in Condition 5(b) (Interest – Interest Payment Dates; Interest Periods; Day Count Fractions); Debenture Bond Acceleration Notice has the meaning given to it in Condition 10(a) (Issuer Events of Default – Determination of an Issuer Event of Default); Debenture Bondholder means: (i) in relation to any Debenture Bond represented by a Global Debenture Bond, each person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or Clearstream, Luxembourg as the holder of a particular Principal Amount Outstanding of those Debenture Bonds, for which purpose any certificate or letter of confirmation (or any other form of record made by any of them) as to the Principal Amount Outstanding of Debenture Bonds standing to the account of any person shall be conclusive and binding on the basis that such person shall be treated by the Issuer, the Debenture Bond Trustee, the Issuer Security Trustee, the Paying Agents and all other persons as the holder of that Principal Amount Outstanding of those Debenture Bonds for all purposes other than the right to payments in respect of those Debenture Bonds which shall be vested, as against the Issuer, solely in the bearer of the relevant Global Debenture Bond, who shall be regarded as the Debenture Bondholder for that purpose; and (ii) in relation to any Definitive Debenture Bond issued under Condition 2(d) (Form, Denomination and Title – Issue of Definitive Debenture Bonds), the bearer of such Definitive Debenture Bonds, and related expressions shall be construed accordingly; Debenture Bondholder Reserved Matters means any of the following: (i) any modification of the obligations or liabilities of Ambac set forth in, or waiver or authorisation of any breach or proposed breach by Ambac of, any provision of the Trust Deed applicable to Ambac, the Ambac Financial Guarantee, the Ambac Guarantee and Reimbursement Agreement or any other Transaction Document to which Ambac is or will be a party and which is applicable to Ambac; (ii) the release or termination of the Ambac Financial Guarantee (other than pursuant to the Trust Deed or the Ambac Financial Guarantee) or the substitution of another entity in place of Ambac as financial guarantor thereunder (other than in accordance with the Trust Deed and the Ambac Guarantee and Reimbursement Agreement); (iii) any modification of, or waiver or authorisation of any breach or proposed breach by Ambac of, any provision in any Transaction Document the effect of which would result in the obligations or liabilities of Ambac under the Ambac Financial Guarantee being in any way modified, waived, authorised, reduced, altered or varied; (iv) any determination contemplated or required under the Trust Deed as to the occurrence or otherwise of an Ambac Event of Default and/or Ambac Termination Event; and (v) any claim under, or enforcement against Ambac of any provision of, the Ambac Financial Guarantee or any other obligations of Ambac under any other Transaction Document;

211 Debenture Bond Principal Payment has the meaning given to it in Condition 6(e) (Redemption, Purchase and Cancellation – Debenture Bond Principal Payments and Principal Amount Outstanding); Debenture Bond Trustee means, as at the Closing Date, Deutsche Trustee Company Limited, whose registered office is at Winchester House, 1 Great Winchester Street, London EC2N 2DB; Debenture Bonds means the Definitive Debenture Bonds and the Global Debenture Bonds or, where the context so requires, any of them; Default Interest has the meaning given to it in Condition 5(i) (Interest – Default Interest);

Definitive Debenture Bond means in respect of each Class of Debenture Bonds, each bearer Debenture Bond issued or to be issued in definitive form for that Class of Debenture Bond in or substantially in the form set out in Schedule 1 Part C (Form of Definitive Debenture Bond) to the Trust Deed; DTZ means DTZ Debenham Tie Leung Limited a private company with limited liability incorporated under the laws of England and Wales (registered number 2757768) having its registered office at One Curzon Street, London W1A 5PZ;

Due for Payment means in relation to any Guaranteed Amount that the relevant due date for payment of such Guaranteed Amount in accordance with the Conditions has occurred (and, for the avoidance of doubt, does not refer to any earlier date upon which payment of any Guaranteed Amount may become due in respect of the Guaranteed Debenture Bonds, by reason of prepayment, acceleration of maturity or otherwise); Early Redemption Price has the meaning given to it in Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer);

Eligible Investments means: (i) Sterling gilt-edged securities; and/or (ii) Sterling demand or time deposits, certificates of deposit and short-term debt obligations (including commercial paper), provided that in all cases such investments have a maturity date falling no later than the next following Interest Payment Date (unless the person making the investment determines that such moneys may be required to be applied towards payment of an amount under the Transaction Documents prior to such date) and the short-term unsecured, unguaranteed and unsubordinated debt obligations of the issuing or guaranteeing entity or the entity with which the demand or time deposits are made (being an authorised bank under the Financial Services and Markets Act 2000) are rated ‘‘A-1’’ and ‘‘F1’’ and ‘‘P-1’’ (or equivalent) or higher by the Rating Agencies or are otherwise acceptable to the Rating Agencies and Ambac;

EMU means European Economic and Monetary Union; ER Amount has the meaning given to it in Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer); Euro means the single currency introduced at the start of the third stage of EMU pursuant to the Treaty; Euroclear means Euroclear Bank S.A./N.V., as operator of the Euroclear System;

Euro Exchange Date means the date on which the Issuer gives notice (the Euro Exchange Notice) to the Debenture Bondholders and the Debenture Bond Trustee that replacement Debenture Bonds denominated in Euro are available for exchange; Excess Amount has the meaning given to it in Condition 6(b)(B) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); Exchange Date means with respect to a Debenture Bond the first day following the expiry of 40 days after the date of issue of such Debenture Bond;

212 Exchange Event means: (i) the Class A1 Debenture Bonds become due and repayable pursuant to Condition 10 (Issuer Events of Default); (ii) the Class A2 Debenture Bonds become due and repayable pursuant to Condition 10 (Issuer Events of Default); (iii) the Class A3 Debenture Bonds become due and repayable pursuant to Condition 10 (Issuer Events of Default); (iv) the Class A4 Debenture Bonds become due and repayable pursuant to Condition 10 (Issuer Events of Default); (v) the Class A5 Debenture Bonds become due and repayable pursuant to Condition 10 (Issuer Events of Default); (vi) both Euroclear and Clearstream, Luxembourg are closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announce an intention permanently to cease business and in fact do so cease business and no other clearing system satisfactory to the Debenture Bond Trustee is available; or (vii) as a result of any amendment to, or change in the laws or regulation of the United Kingdom (or any political sub-division thereof) or of any authority therein or thereof having power to tax or in the interpretation by a revenue authority or a court or in the administration of such laws or regulations which becomes effective on or after the Closing Date, the Issuer or any Paying Agent is or will be required to make any withholding or deduction from any payment in respect of the Debenture Bonds which would not be required if the Debenture Bonds were in definitive form; Excluded Group Entity means any member of Spirit Group that is not a member of the Borrower Group and any affiliates thereof; Expert means a leading broker, primary dealer or other expert operating in the gilt market or index linked gilt market, as the case may be, in each case selected by the Issuer and approved by the Debenture Bond Trustee; Extraordinary Resolution means a resolution passed at a Meeting duly convened and held in accordance with the Provisions for Meetings of Debenture Bondholders by a majority of not less than 75 per cent. of the votes cast, whether on a show of hands or a poll; Final Maturity Date means the Class A1 Final Maturity Date, the Class A2 Final Maturity Date, the Class A3 Final Maturity Date, the Class A4 Final Maturity Date or the Class A5 Final Maturity Date, as appropriate; Financial Indebtedness means, broadly, without limitation, in relation to any Obligor at any time any indebtedness incurred (other than between Obligors) in respect of money borrowed or raised, the principal and other amounts (if any) and interest in respect of any debenture or similar debt instrument, liabilities in respect of any letter of credit or similar debt instrument, rental or hire payments under any finance lease and hire purchase agreement, the deferred purchase price of assets or services, liabilities in respect of any foreign exchange agreement or similar arrangements and any other transactions which are accounted for in the financial statements of the Borrower as a borrowing entered into by such Obligor; Financial Quarter means each period from (and including) the day after a Financial Quarter Date to (and including) the next Financial Quarter Date and, in respect of the first Financial Quarter, the period from (and including) the Closing Date to (and including) 19 February, 2005; Financial Quarter Date means, in respect of the Financial Year current at the time of the Closing Date, 19 February, 2005, 21 May, 2005 and 20 August, 2005 and, thereafter, the dates notified by the Borrower for the accounting quarter in the relevant Financial Year but in any case being a period of not fewer than 12 weeks and not more than 13 weeks; Financial Year means: (a) the period beginning on (but excluding) 21 August, 2004 and ending on (and including) the next following Accounting Date; and (b) thereafter each year commencing on (but excluding) each Accounting Date and ending on (and including) the following Accounting Date; Fitch means Fitch Ratings Ltd. or any successor to its rating business;

213 Further Debenture Bonds means any Further Class A1 Debenture Bonds, any Further Class A2 Debenture Bonds, any Further Class A3 Debenture Bonds, any Further Class A4 Debenture Bonds and any Further Class A5 Debenture Bonds issued pursuant to Condition 17(a) (Further Issues – Further Debenture Bonds) or, where the context so requires, any of them; Global Debenture Bonds means the Temporary Global Debenture Bonds and the Permanent Global Debenture Bonds for each Class of Debenture Bonds or, where the context so requires, any of them; Gross Redemption Yield means a yield calculated in accordance with principles consistent with those used in the United Kingdom Debt Management Office notice ‘‘Formula for Calculating Gilt Prices from Yields’’ page 4, Section One: Price/Yield Formulae ‘‘Conventional Gilts; Double-dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date’’ published on 8 June 1998 and updated on 15 January 2002 (and as further updated, supplemented, amended or replaced from time to time); Guaranteed Amounts means the sum of (i) Scheduled Interest payable on each Interest Payment Date and (ii) Ultimate Principal (if any) payable on the Final Maturity Date. Guaranteed Amounts excludes (a) any Scheduled Interest and Ultimate Principal in respect of which, in either case, Ambac has made an Accelerated Payment on an Accelerated Payment Date falling prior to such Interest Payment Date and (b) any Guarantee Excluded Amounts; Guarantee Excluded Amounts means, in respect of the Guaranteed Obligations: (i) any principal or other sums payable on an accelerated basis by the Issuer in respect of any redemption of the Guaranteed Debenture Bonds pursuant to Condition 6 (Redemption, Purchase and Cancellation) (other than pursuant to Condition 6(c)(iv)) or Condition 10 (Issuer Events of Default); (ii) any default interest on any of the Guaranteed Obligations due pursuant to Condition 5(i) (Default Interest) or otherwise; (iii) any amount which the Issuer would be obliged to gross up under Condition 8 (Taxation); and (iv) any amount payable relating to any Guaranteed Debenture Bonds which have been purchased by any member of Spirit Group. Guaranteed Debenture Bonds means, as the context may require, the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds and any New Debenture bonds ranking pari passu with them and guaranteed by Ambac, in each case for as long as they have the benefit of the Ambac Financial Guarantee; Guaranteed Obligations means the Guaranteed Debenture Bonds, and shall include, where the context so requires, the coupons and receipts to the Guaranteed Debenture Bonds (other than any Guaranteed Debenture Bonds which have been purchased by the Issuer or any member of Spirit Group), but shall in all cases exclude all Guarantee Excluded Amounts; Hedge Provider means the Initial Hedge Provider or any Replacement Hedge Provider;

Hedge Provider Requisite Rating means: (i) in respect of the Initial Hedge Provider Guarantor, a rating assigned to the long-term unsecured, unsubordinated and unguaranteed debt obligations of the Initial Hedge Provider Guarantor of at least ‘‘A-’’ by S&P and Fitch and ‘‘A3’’ by Moody’s; and (ii) in respect of any Replacement Hedge Provider, a rating assigned to: (A) the long-term unsecured, unsubordinated and unguaranteed debt obligations of the Replacement Hedge Provider, or, of the guarantor of any such Replacement Hedge Provider (if applicable) of at least ‘‘A-’’ by S&P and Fitch and ‘‘A3’’ by Moody’s; and (B) the short-term unsecured, unsubordinated and unguaranteed debt obligations of the Replacement Hedge Provider, or, of the guarantor of any such Replacement Hedge Provider (if applicable) of at least ‘‘A-2’’ by S&P, ‘‘F2’’ by Fitch or ‘‘P-2’’ by Moody’s (to the extent that such Replacement Hedge Provider and/or, as the case may be, its guarantor, have been issued short-term ratings);

214 Hedging Agreement means the hedging arrangements entered into by the Issuer with the Hedge Provider on the Closing Date; Hedging Agreement Subordinated Amounts has the meaning given to it in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); Initial Hedge Provider means Banque AIG, acting through its office at 5th Floor, One Curzon Street, London W1J 5RT; Initial Hedge Provider Guarantor means the guarantor of the obligations of the Initial Hedge Provider under the Hedging Agreement; Insolvency Official means, in respect of any company, a liquidator, provisional liquidator, administrator (whether appointed by the court or otherwise), administrative receiver, receiver or manager, nominee, supervisor, trustee in bankruptcy, conservator, guardian or other similar official in respect of such company or in respect of all (or substantially all) of the company’s assets or in respect of any arrangement or composition with creditors; Insolvency Proceedings means the winding-up, dissolution, company voluntary arrangement or administration of a company or corporation and shall be construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such company or corporation is incorporated or of any jurisdiction in which such company or corporation carries on business including the seeking of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief from creditors or the appointment of an Insolvency Official; Interest Amount has the meaning given to it in Condition 5(d) (Interest – Calculation of Interest Amounts); Interest Determination Date has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Interest Payment Date means the 28th day of March, the 28th day of June, the 28th day of September and the 28th day of December in each year, except if such day is not a Business Day, in which case it shall be the next succeeding Business Day unless such day falls in the next month, in which case it shall be the preceding Business Day; Interest Period means each period from (and including) an Interest Payment Date and ending on (but excluding) the next Interest Payment Date (provided that the first Interest Period shall be the period from (and including) the Closing Date to (but excluding) the Interest Payment Date falling on 28 March, 2005; Intra-Group Subordinated Loans means any Financial Indebtedness incurred between the Borrower and any other member of Spirit Group on a fully subordinated, limited recourse basis with appropriate non-petition covenants; Issue Price means,in respect of the Class A1 Debenture Bonds and the Class A2 Debenture Bonds, par, and, in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds, 105 per cent. of par; Issuer has the meaning given in the recitals to these Conditions; Issuer Available Amounts has the meaning given to it in Condition 3 (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); Issuer/Borrower Facility Agreement means the facility agreement dated on or about the Closing Date between, inter alios, the Issuer and the Obligors; Issuer/Borrower Hedging Agreement means the back-to-back hedging agreement entered into between the Issuer and the Borrower dated on or about the Closing Date; Issuer/Borrower Subordinated Loan Agreement means a loan agreement dated on or around the Closing Date between, inter alios, the Issuer and the Borrower, pursuant to which the Issuer will lend £50,000,000 of subordinated debt to the Borrower; Issuer Charged Property means the whole of the right, title, benefit and interest of the Issuer in the property, assets and rights of the Issuer described in Condition 3(b) (Status, Priority and Security – Security) and all other property, assets and rights whatsoever of the Issuer and wheresoever situated, present and future of the Issuer;

215 Issuer Deed of Charge means the deed of charge dated on or about the Closing Date between, inter alios, the Issuer and the Issuer Security Trustee; Issuer Enforcement Notice has the meaning given to it in Condition 11 (Enforcement); Issuer Event of Default has the meaning given to it in Condition 10(b) (Issuer Events of Default – Events); Issuer Parent means Spirit Issuer Parent Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 5260533) whose registered office is c/o SPV Management Limited, Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ; Issuer Post-Acceleration Priority of Payments has the meaning given to it in Condition 3(d) (Status, Priority and Security – Issuer Post-Acceleration Priority of Payments); Issuer Pre-Acceleration Priority of Payments has the meaning given to it in Condition 3(c) (Status, Priority and Security – Issuer Pre-Acceleration Priority of Payments); Issuer Secured Creditors means the Debenture Bondholders, the Couponholders, the Debenture Bond Trustee, the Issuer Security Trustee, Ambac, the Paying Agents, the Agent Bank, the Servicer, the Account Bank, the Corporate Services Provider, the Liquidity Facility Provider, the Hedge Provider, the Borrower, the Corporate Services Provider and any Receiver; Issuer Secured Obligations means all moneys, liabilities and obligations whatsoever, present and future and whether actual or contingent, which from time to time become due, owing or payable by the Issuer: Issuer Security means the security created by or pursuant to the Issuer Deed of Charge and the other Issuer Security Documents over the Issuer Charged Property as more fully described in Condition 3(b) (Status, Priority and Security – Security); Issuer Security Documents means the Issuer Deed of Charge and the Security Powers of Attorney and, where the context so requires, any of them; Issuer Security Trustee means, as at the Closing Date, Deutsche Trustee Company Limited, whose registered office is at Winchester House, 1 Great Winchester Street, London EC2N 2DB; Issuer Transaction Account means the account held in the name of the Issuer with the Account Bank designated ‘‘Issuer Transaction Account’’; Lead Managers means Goldman Sachs International (having its offices at Peterborough Court, 133 Fleet Street, London EC4A 2BB), Barclays Bank PLC (having its offices at 5 The North Colonnade, Canary Wharf, London E14 4BB), Citigroup Global Markets Limited (having its offices at Citigroup Centre, 33 Canada Square, Canary Wharf, London E14 5LB) and The Royal Bank of Scotland plc (having its offices at 135 Bishopsgate, London EC2M 3UR); LIBOR means: (a) the arithmetic mean of the offered quotations to leading banks (rounded to four decimal places with the mid-point rounded up) for three month Sterling deposits (or three month deposits for such other currency or currency unit as may replace Sterling as the lawful currency of the United Kingdom) in the London interbank market which appear on Telerate Screen Page No. 3750 (or (i) such other page as may replace Telerate Screen Page No. 3750 on that service for the purpose of displaying such information or (ii) if that service ceases to display such information, such page as displays such information on such equivalent service (or, if more than one, that one which is approved by the Debenture Bond Trustee) as may replace the Telerate Monitor) (the Screen Rate) (rounded to five decimal places with the mid-point rounded upwards) calculated on the basis of the number of days in such Interest Period and the Screen Rate at or about 11.00 a.m. (London time) on such date calculated on the basis of the actual number of days in excess of one month in such Interest Period and, in the case of the first Interest Period following the Closing Date only, the rate obtained by the linear interpolation of the rate for 4 month and 5 month Sterling deposits in the market calculated on the basis of the actual number of days in excess of four months in such Interest Period; or

216 (b) if the Screen Rate is not then available for three months (or, where required, four or five months Sterling deposits) then the rate for the relevant Interest Period shall be, the arithmetic mean (rounded to four decimal places with the mid-point rounded up) of the rates notified to the Agent Bank at its request by each of the Reference Banks (referred to in Condition 5(h)) as the rate at which three month Sterling deposits (or, in the case of the first Interest Period following the Closing Date only, four and five month Sterling deposits) in an amount of £10,000,000 are offered for the same period as that Interest Period by that Reference Bank to leading banks in the London Interbank market at or about 11.00 a.m. (London time) on that date. If on any such Interest Determination Date, two only of the Reference Banks provide such offered quotations to the Agent Bank, the relevant rate shall be determined, as aforesaid, on the basis of the offered quotations of those Reference Banks providing such quotations. If, on any such Interest Determination Date, only one of the Reference Banks provides the Agent Bank with such an offered quotation, the Agent Bank shall forthwith consult with the Debenture Bond Trustee and the Issuer for the purposes of agreeing one additional bank to provide such a quotation or quotations to the Agent Bank (which bank is in the opinion of the Debenture Bond Trustee suitable for such purpose) and the rate for the Interest Period in question shall be determined, as aforesaid, on the basis of the offered quotations of such banks as so agreed. If no such bank or banks is or are so agreed or such bank or banks as so agreed does or do not provide such a quotation or quotations, then the rate for the relevant Interest Period shall be the rate in effect for the last preceding Interest Period to which sub-paragraph (a) above shall have applied and, in respect of the first Interest Period following the Closing Date only, shall be the arithmetic mean of the rates quoted by such other leading banks in the London Interbank Market Selected by the Agent Bank and approved by the Debenture Bond Trustee on the relevant Interest Determination Date; Liquidity Facility means the liquidity facility provided by the Liquidity Facility Provider to the Issuer pursuant to the Liquidity Facility Agreement; Liquidity Facility Agreement means the liquidity facility agreement dated on or about the Closing Date between, inter alios, the Issuer and the Liquidity Facility Provider(s); Liquidity Facility Provider means, as at the Closing Date, Lloyds TSB Bank plc; Liquidity Facility Reserve Account means the Sterling denominated account held in the name of the Issuer with the Account Bank, for the deposit of Liquidity Facility Standby Drawings (if any); Liquidity Facility Standby Drawings means a drawing made under clause 4.4 of the Liquidity Facility Agreement; Liquidity Subordinated Amounts has the meaning given to it in Condition 3(c) (Status, Priority, Security – Issuer Pre-Acceleration Priority of Payments); LoanCo means Spirit Managed Funding Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 5266806) whose registered office is 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; LoanCo/Issuer Subordinated Loan means the £50,000,000 of subordinated debt lent by LoanCo to the Issuer under the LoanCo/Issuer Subordinated Loan Agreement; LoanCo/Issuer Subordinated Loan Agreement means the subordinated loan agreement dated on or about the Closing Date between LoanCo and the Issuer; Luxembourg Paying Agent means, as at the Closing Date, Dexia Banque Internationale a` Luxembourg, acting through its office at 69 route d’Esch, L-2953 Luxembourg; Managers means the Lead Managers and the Co-Lead Manager; Mandatory Costs has the meaning given to it in Schedule 2 of the Liquidity Facility Agreement; Master Definitions and Construction Schedule means the master definitions and construction schedule signed by Freshfields Bruckhaus Deringer and Slaughter and May for the purposes of identification on or about the Closing Date;

217 Meeting means a meeting of the Class A1 Debenture Bondholders and/or the Class A2 Debenture Bondholders and/or the Class A3 Debenture Bondholders and/or the Class A4 Debenture Bondholders and/or the Class A5 Debenture Bondholders (as applicable) (whether originally convened or resumed following an adjournment); Moody’s means Moody’s Investors Service Limited or any successor to its rating business; New Basel Capital Accord means the new capital adequacy framework set out in the ‘‘International Convergence of Capital Measurement and Capital Standards: a Revised Framework’’, published by the Basel Committee on Banking Supervision on 26 June, 2004; New Debenture Bonds means any new bonds issued pursuant to Condition 17(b) (Further Issues – New Debenture Bonds) or, where the context so requires, any of them; New ParentCo means Spirit Pubs Parent Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 5267589) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; Nominee has the meaning given to it in Condition 19 (Assignment of Rights to Ambac); Obligors means the Borrower, Borrower Group Parent and New ParentCo; outstanding means, in relation to the Debenture Bonds, all the Debenture Bonds other than: (i) those which have been redeemed in full in accordance with these Conditions; (ii) those in respect of which the date for redemption in accordance with the provisions of these Conditions has occurred and for which the redemption moneys (including all interest and other amounts (if any) accrued thereon to such date for redemption) have been duly paid to the Principal Paying Agent or the Debenture Bond Trustee in the manner provided for in the Agency Agreement or the Trust Deed (as applicable) (and, where appropriate, notice to that effect has been given to the Debenture Bondholders in accordance with Condition 16 (Notices to Debenture Bondholders)) and remain available for payment in accordance with these Conditions; (iii) those which have become void under Condition 9 (Prescription); (iv) those mutilated or defaced Debenture Bonds which have been surrendered or cancelled and in respect of which replacement Debenture Bonds have been issued pursuant to Condition 15 (Replacement of Definitive Debenture Bonds and Coupons); (v) the Temporary Global Debenture Bond of any Class, to the extent that it shall have been exchanged for the Permanent Global Debenture Bond of such Class, or the Permanent Global Debenture Bond of any Class, to the extent that it shall have been exchanged for Definitive Debenture Bonds of such Class; and (vi) (for the purpose only of ascertaining the Principal Amount Outstanding of the Debenture Bonds and without prejudice to the status for any other purpose of the relevant Debenture Bonds) those Debenture Bonds which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 15 (Replacement of Definitive Debenture Bonds and Coupons); provided that for each of the following purposes: (A) the right to attend and vote at any Meeting of Debenture Bondholders or for the purpose of any Written Resolution; (B) the determination of how many and which Debenture Bonds are for the time being outstanding for the purposes of Clauses 6.2 (Debenture Bond Trustee’s right to give a Debenture Bond Acceleration Notice), 6.3 (Debenture Bond Trustee’s right to direct Issuer Security Trustee to give an Issuer Enforcement Notice), 6.5 (Limit on Debenture Bondholder Action) and 12 (Waiver of Breach and Determination)] of the Trust Deed and Conditions 10 (Issuer Events of Default), 11 (Enforcement) and 12 (Meetings of Debenture Bondholders) and Schedule 4 (Provisions for Meetings of Debenture Bondholders) to the Trust Deed; and (C) the exercise by the Debenture Bond Trustee of any trusts, powers, authorities, duties, discretions and obligations, whether contained in the Trust Deed or provided by law in, or by reference to, the interests of the Debenture Bondholders or any of them,

218 those Debenture Bonds (if any) which are for the time being held by, or for the benefit of, the Issuer or any member of Spirit Group shall (unless and until ceasing to be so held) be deemed not to remain outstanding; Participating Member State means a Member State of the European Communities which adopts the Euro as its lawful currency in accordance with the Treaty; Paying Agents means the Principal Paying Agent together with the Luxembourg Paying Agent and any successor or additional paying agents appointed from time to time in connection with the Debenture Bonds under the Agency Agreement and Paying Agent means any one of them; Permanent Global Debenture Bond means, in respect of each Class of Debenture Bonds, the bearer permanent global bond for that Class of Debenture Bond in or substantially in the form set out in Schedule 1 Part B (Form of Permanent Global Debenture Bond) to the Trust Deed; Potential Issuer Event of Default means the occurrence of any event which, with the giving of notice, any relevant certificate, lapse of time, determination of materiality (provided that the test of materiality upon which any such determination is made must already be satisfied or be reasonably likely to be satisfied) or fulfilment of any other condition (or any combination of the foregoing) might reasonably be expected to become an Issuer Event of Default; Principal Amount Outstanding means, on any date in relation to a Debenture Bond, the principal amount outstanding of that Debenture Bond as at the Closing Date less the aggregate of all Debenture Bond Principal Payments that have been paid by the Issuer in respect of that Debenture Bond on or prior to that date; Principal Paying Agent means, as at the Closing Date, Deutsche Bank AG, acting through its London Branch (Deutsche Bank AG London) at Winchester House, 1 Great Winchester Street, London EC2N 2DB; Priorities of Payments means the Issuer Pre-Acceleration Priority of Payments and the Issuer Post-Acceleration Priority of Payments; Provisions for Meetings of Debenture Bondholders means the provisions contained in Schedule 4 (Provisions for Meetings of Debenture Bondholders) to the Trust Deed; Quarterly Report has the meaning given to it in Condition 6(i) (Redemption, Purchase and Cancellation – Other Information); Rate of Interest has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Rating Agencies means Fitch, Moody’s and S&P or, where the context so requires, any of them. If at any time Fitch, Moody’s or S&P is replaced as a Rating Agency, then references to the rating categories of the relevant entity in these terms and conditions shall be deemed instead to be references to the equivalent categories of the entity which replaces it as a Rating Agency; Receiver means any person (being a licensed insolvency practitioner), who is appointed by the Issuer Security Trustee to be a receiver or an administrative receiver (as the case may be) of the Issuer Charged Property or any part thereof to act jointly, or jointly and severally, as the Issuer Security Trustee shall determine; Redemption Amount has the meaning given to it in Condition 6(b)(B)(ii)(C) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); Redemption Premium Amount means, in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and/or the Class A5 Debenture Bonds, as the case may be, the relevant Redemption Amount less the relevant par amount in respect of the relevant Class; Redenomination Date has the meaning given to it in Condition 18 (European Economic and Monetary Union); Reference Banks means the principal London office of each of Barclays Bank PLC, Lloyds TSB Bank plc and HSBC Bank plc; Reference Date means the date which is two Business Days prior to the date specified for redemption in the notice given by the Issuer;

219 Reference Gilt means that Sterling obligation of the United Kingdom Government listed on the Official List maintained by the UK Listing Authority and traded on the London Stock Exchange PLC whose duration and liquidity most closely matches that of the Step-Up Date of the relevant Class of Debenture Bonds on the Reference Date as the Debenture Bond Trustee, with the advice of the Expert, may determine to be most appropriate; Relevant Date means, in respect of any payment in relation to the Debenture Bonds, whichever is the later of: (i) the date on which the payment in question first becomes due; and (ii) if the full amount payable has not been received by the Principal Paying Agent or the Debenture Bond Trustee on or prior to such date, the date on which (the full amount having been so received) notice to that effect has been given to the Debenture Bondholders in accordance with Condition 16 (Notices to Debenture Bondholders); Relevant Financial Indebtedness means in relation to the Borrower at any time any outstanding Financial Indebtedness of the Borrower from time to time (excluding indebtedness incurred under Intra-Group Subordinated Loans); relevant Rate of Interest has the meaning given to it in Condition 5(c) (Interest – Rates of Interest); Replacement Hedge Provider means any replacement hedge provider to which the rights and obligations of the Initial Hedge Provider (or, as the case may be, any previous Replacement Hedge Provider) under the Hedging Agreement are transferred; RP Amount means, in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds, the aggregate Principal Amount Outstanding of the relevant Class on the Reference Date multiplied by the lesser of (x) 105 per cent. and (y) the Issue Price in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds or the Class A5 Debenture Bonds, as applicable. S&P means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies Inc. or any successor to its rating business; Scheduled Interest means interest payable in respect of the Guaranteed Debenture Bonds, as specified in Condition 5 (Interest) but excluding any Class A1 Step-Up Amounts, any Class A3 Step-Up Amounts or any Class A5 Step-Up Amounts (as the case may be), any Default Interest and interest in respect of any Redemption Premium Amount and less any amount that the Issuer would be obliged to deduct which is payable pursuant to Condition 8 (Taxation); Security Interest means any mortgage, sub-mortgage, security assignment, standard security, charge, sub-charge, pledge, lien, right of set-off or other encumbrance or security interest of any kind, however created or arising; (i) to the Issuer Security Trustee and/or any Receiver under the Issuer Deed of Charge or any other documents evidencing or securing any such liabilities; (ii) to, or to the order of, the Debenture Bond Trustee under the Trust Deed; (iii) to the Debenture Bondholders and the Couponholders under or in respect of the Debenture Bonds and Coupons; and (iv) to each of the other Issuer Secured Creditors in accordance with each of the other Transaction Documents to which it is a party; Security Powers of Attorney means the security powers of attorney in the form set out in the Borrower Group Deed of Charge and the Issuer Deed of Charge; Servicer means, as at the Closing Date, AdminCo; Servicing Agreement means the servicing and cash management agreement dated on or about the Closing Date between the Issuer and the Servicer; SGL means Spirit Group Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 3982443) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; SGL Group Companies means SGL and its subsidiaries; SNR Group Companies means Bidco and its subsidiaries;

220 Spirit Group means Spirit Group Holdings Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 04872028) whose registered office is 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ, and each of its subsidiaries; SPL means Spirit Parent Limited, a private company with limited liability incorporated under the laws of England and Wales (registered number 04271748) whose registered office is at 107 Station Street, Burton-on-Trent, Staffordshire DE14 1BZ; specified office means with respect to the Paying Agents the offices listed at the end of these Conditions or such other offices as may from time to time be duly notified pursuant to Condition 16 (Notices to Debenture Bondholders); Step-Up Amounts means any or all (as the context may require) of Class A1 Step-Up Amounts, Class A2 Step-Up Amounts, Class A3 Step-Up Amounts, Class A4 Step-Up Amounts and Class A5 Step-Up Amounts; Step-Up Dates means the Class A1 Step-Up Date, the Class A2 Step-Up Date, the Class A3 Step-Up Date, the Class A4 Step-Up Date and the Class A5 Step-Up Date; Sterling means the lawful currency of the United Kingdom; Stock Exchange means the Luxembourg Stock Exchange or any other stock exchange on which the Debenture Bonds may be listed from time to time; Subscription Agreement means the subscription agreement dated 24 November, 2004 between, inter alios, the Issuer, Ambac and the Managers; Talonholders means the holders from time to time of the Talons; Talons means the bearer talons in or substantially in the form set out in Schedule 1 Part E (Form of Talon) to the Trust Deed and exchangeable in accordance with the Conditions for further Coupons and/or talons or, where the context so requires, a specific number of them; TARGET system means the Trans-European Automated Real-time Gross Settlement Express Transfer system; tax means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature whatsoever (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same) imposed or levied by or on behalf of the United Kingdom or any sub-division of it or by any authority in it having power to tax, and taxes, taxation and comparable expressions shall be construed accordingly; Tax Deed of Covenant means the tax deed of covenant entered into by, inter alios, most of the members of Spirit Group, the Issuer and Issuer Parent on or about the Closing Date; Temporary Global Debenture Bond means, in respect of each Class of Debenture Bonds, the bearer temporary global bond for that Class of Debenture Bond in or substantially in the form set out in Schedule 1 Part A (Form of Temporary Global Debenture Bond) to the Trust Deed; Term Advances means the term advances made available to the Borrower pursuant to the Issuer/Borrower Facility Agreement; Transaction Documents means the Trust Deed, the Debenture Bonds, the Agency Agreement, the Servicing Agreement, the Issuer Deed of Charge, the Security Powers of Attorney, the Subscription Agreement, the Master Definitions and Construction Schedule, the Liquidity Facility Agreement, the Hedging Agreement, the Bank Agreement, the Issuer/ Borrower Facility Agreement, the Borrower Group Deed of Charge, the Borrower Group Standard Securities, the Tax Deed of Covenant, the Ambac Financial Guarantee, the Ambac Guarantee and Reimbursement Agreement, the Issuer/Borrower Hedging Agreement, the Corporate Services Agreement, the BankCo Borrower Subordinated Loan Agreement, the LoanCo/Issuer Subordinated Loan Agreement and the Issuer/Borrower Subordinated Loan Agreement; Treaty means the Treaty establishing the European Communities, as amended by the Treaty on European Union; Trust Deed has the meaning given to it in the recitals to these Conditions;

221 Ultimate Principal means the Principal Amount Outstanding of the Guaranteed Debenture Bonds payable in accordance with Condition 6(a) (Redemption, Purchase and Cancellation – Final Redemption) or, as the case may be, Condition 6(c)(iv) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer) on the Final Maturity Date, together with the amount of any Redemption Premium Amount remaining unpaid as at the Final Maturity Date, where such Redemption Premium Amount has become payable under Conditions 6(b)(B)(ii), 6(c)(iv) or 10(c) and, for the avoidance of doubt, excludes principal or other sums payable in respect of (i) any redemption pursuant to Condition 6(b)(ii) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption); (ii) any optional redemption pursuant to Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer) (other than pursuant to Condition 6(c)(iv)); and (iii) any redemption for tax or other reasons pursuant to Condition 6(d) (Redemption, Purchase and Cancellation – Substitution/Redemption for taxation or other reasons); Underlying Rating means the ratings of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds disregarding the benefit of the Ambac Financial Guarantee; Valuers means DTZ, or such other reputable firm of professional valuers as the Borrower may nominate as is notified to the Rating Agencies and Ambac and is approved by the Borrower Group Security Trustee; VAT shall be construed as a reference to value added tax or any other tax of a similar fiscal nature imposed by the laws of any jurisdiction; and Written Resolution means a resolution in writing signed by or on behalf of all holders of Debenture Bonds or any class thereof who for the time being are entitled to receive notice of a Meeting in accordance with the Provisions for Meetings of Debenture Bondholders, whether contained in one document or several documents in the same form, each signed by or on behalf of one or more such holders of the Debenture Bonds.

2. Form, Denomination and Title (a) Form and Denomination of Temporary Global Debenture Bonds (i) Each Class of Debenture Bonds will be issued in bearer form and will initially be represented by a Temporary Global Debenture Bond, without Coupons or Talons attached, in the aggregate principal amount on issue of £150,000,000 for the Class A1 Debenture Bonds, £200,000,000 for the Class A2 Debenture Bonds, £250,000,000 for the Class A3 Debenture Bonds, £350,000,000 for the Class A4 Debenture Bonds and £300,000,000 for the Class A5 Debenture Bonds. (ii) Each Class of Debenture Bonds will be issued in denominations of £1,000, £10,000 and £100,000.

(b) Exchange for Permanent Global Debenture Bonds Interests in each Temporary Global Debenture Bond are exchangeable on and after the Exchange Date, upon receipt of certification by the Issuer of non-US beneficial ownership from Euroclear or Clearstream, Luxembourg, for interests in a Permanent Global Debenture Bond, without Coupons or Talons attached, representing the same Class of Debenture Bonds.

(c) Title to Global Debenture Bonds Title to the Global Debenture Bonds will pass by delivery. Interests in Debenture Bonds represented by a Global Debenture Bond will be transferable only in accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg, as appropriate. The holder of any Global Debenture Bond may (except as ordered by a court of competent jurisdiction or otherwise required by law) be treated at all times by the Issuer, the Debenture Bond Trustee, the Issuer Security Trustee and the Paying Agents as the absolute owner of that Global Debenture Bond for the purposes of making payments thereon (regardless of any notice of ownership, trust or other interest therein, any writing thereon or any notice of any previous loss or theft thereof) and none of the Issuer, the Debenture Bond Trustee, the Issuer Security Trustee and the Paying Agents shall be liable for so treating such holder.

222 (d) Issue of Definitive Debenture Bonds If, while any of the Debenture Bonds is represented by a Permanent Global Debenture Bond, an Exchange Event occurs, the Issuer will deliver Definitive Debenture Bonds with, where applicable, Coupons and Talons attached on issue.

(e) Form and Denomination of Definitive Debenture Bonds Definitive Debenture Bonds, if issued, will be in the denominations of £1,000, £10,000 and £100,000, each serially numbered and in bearer form with, at the date of issue, Coupons falling due after the date of issue and Talons for further Coupons in each case attached. The Definitive Debenture Bonds, Coupons and Talons will be security printed in accordance with applicable legal and stock exchange requirements and shall be endorsed with these Conditions.

(f) Title to Definitive Debenture Bonds Title to the Definitive Debenture Bonds, Coupons and Talons will pass by delivery. The holder of any Definitive Debenture Bond, Coupon or Talon may (except as ordered by a court of competent jurisdiction or otherwise required by law) be treated at all times, by all persons and for all purposes, including the making of any payments in respect of the Debenture Bonds, as the absolute owner of that Definitive Debenture Bond, Coupon or Talon (regardless of any notice of ownership, trust or other interest therein, any writing thereon or any notice of any previous loss or theft thereof and no person shall be liable for so treating such holder). Each Couponholder and Talonholder (whether or not the Coupon or Talon is attached to the relevant Definitive Debenture Bond) in his capacity as such shall be subject to and bound by all the provisions contained in the relevant Definitive Debenture Bond.

3. Status, Priority and Security (a) Status and Relationship between the Debenture Bonds (i) The Debenture Bonds and Coupons constitute direct and, upon issue, unconditional and unsubordinated (except in relation to Step-Up Amounts) obligations of the Issuer and are secured over substantially all of the assets of the Issuer pursuant to and as described in the Issuer Deed of Charge. The Debenture Bonds rank pari passu without preference or priority among themselves. The Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds have the benefit of the Ambac Financial Guarantee, which has been issued pursuant to the Ambac Guarantee and Reimbursement Agreement under which Ambac has unconditionally and irrevocably agreed to pay to the Class A1 Debenture Bondholders, the Class A3 Debenture Bondholders and the Class A5 Debenture Bondholders, subject to the next paragraph, all sums due and payable but unpaid by the Issuer in respect of Scheduled Interest and Ultimate Principal of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds, all as more particularly described in the Ambac Financial Guarantee. Under the terms of the Ambac Financial Guarantee, Ambac does not guarantee any amount in respect of Class A1 Step-Up Amounts, Class A3 Step-Up Amounts and Class A5 Step-Up Amounts. Ambac does not guarantee any amount payable by the Issuer upon an early redemption of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds or the Class A5 Debenture Bonds pursuant to Condition 6(b) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption), Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer) (other than pursuant to Condition 6(c)(iv)) or Condition 6(d) (Substitution/Redemption for taxation or other reasons). Upon any such early redemption, if such amount is not paid, Ambac’s obligations will continue to be to pay the Guaranteed Amount as it falls Due for Payment on each Interest Payment Date. Ambac will not be obliged under any circumstances to accelerate payment under the Ambac Financial Guarantee. However, if it does so, it may do so in whole or in part and the amount payable will be determined in accordance with Condition 6(c)(iv) (and any amount due in excess thereof will not be guaranteed by Ambac under the Ambac Financial Guarantee).

223 The Ambac Financial Guarantee in respect of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds constitutes a direct, unsecured obligation of Ambac which will rank at least pari passu with all other unsecured obligations of Ambac. (ii) The rights of the holders of each Class of Debenture Bonds in respect of payments of interest and principal are set out in Conditions 5 (Interest) and 6 (Redemption, Purchase and Cancellation). (iii) All Step-Up Amounts are subordinated both prior to and on enforcement of the Issuer Security to repayments of principal and payments of interest (other than Step-Up Amounts) in respect of the Debenture Bonds as well as payments to the Liquidity Facility Provider, the Hedge Provider, Ambac and others as described above. (iv) The Trust Deed contains provisions requiring the Debenture Bond Trustee (except where expressly provided otherwise) to have regard to the interests of the Debenture Bondholders as a whole as regards the performance of all powers, trusts, authorities, duties and discretions of the Debenture Bond Trustee. (v) The Issuer Deed of Charge contains provisions requiring the Issuer Security Trustee to act only in accordance with the directions of the Debenture Bond Trustee prior to the redemption in full of all of the Debenture Bonds: Following the redemption in full of all of the Debenture Bonds and provided that no amounts are owed by the Issuer to Ambac under the Ambac Guarantee and Reimbursement Agreement the Issuer Security Trustee shall have regard to the interests of the person appearing highest in the order of priority of payments to whom any amount is owed under the Issuer Deed of Charge with respect to all trusts, powers, authorities, duties and discretions of the Issuer Security Trustee. The Trust Deed provides for the Debenture Bond Trustee: (A) whether or not there is any conflict of interest between two or more Classes of Debenture Bondholders and/or any other Issuer Secured Creditors, to act only at the direction of Ambac if the aggregate Principal Amount Outstanding of Guaranteed Debenture Bonds is more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds and if no Ambac Termination Event has occurred; or (B) if the aggregate Principal Amount Outstanding of Guaranteed Debenture Bonds is less than or equal to 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds and/or an Ambac Termination Event has occurred: (I) to act in such manner as it thinks fit, but subject to obtaining the consent of Ambac (provided that no Ambac Termination Event has occurred) where such action would, in the opinion of the Debenture Bond Trustee, affect the interests of the holders of the Guaranteed Debenture Bonds; and (II) to act at the direction of (1) where expressly permitted, the holders of at least 25 per cent. in Principal Amount Outstanding of all of the Debenture Bonds then outstanding or (2) an Extraordinary Resolution of the Debenture Bondholders (subject to provisions for determining whether any such Extraordinary Resolution must be passed at a single Meeting of all Debenture Bondholders or the affected Class (as the case may be) or at separate Meetings of each Class of Debenture Bondholders); but subject, in either case, to obtaining the consent of Ambac, (provided that no Ambac Termination Event has occurred) if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 25 per cent., but not more than 50 per cent., of the aggregate Principal Amount Outstanding of all of the Debenture Bonds, in the case of a direction to accelerate the Debenture Bonds or to enforce the Issuer Security, subject, in all cases, to provisions for indemnification of the Debenture Bond Trustee as provided in the Trust Deed. For the purposes of (B)(II) above, Ambac shall be treated as the holder of all the Guaranteed Debenture Bonds (except if an Ambac Termination Event has occurred). The foregoing provisions requiring the Debenture Bond Trustee to act at the direction of Ambac or only subject to obtaining its consent or providing for Ambac to be treated as the holder of all the Guaranteed Debenture Bonds do not apply in relation to Debenture Bondholder Reserved Matters.

224 In the event that the Debenture Bond Trustee receives conflicting directions under (B)(II) above or otherwise considers there may be a conflict between the interests of two or more Classes of Debenture Bondholders in respect of any action which the Debenture Bond Trustee proposes to take under (B)(I) above, the Debenture Bond Trustee shall not be required to follow such directions or take such action unless such conflict is resolved by each of the relevant Classes of Debenture Bondholders approving such direction or action at separate meetings of each relevant Class, provided that where (a) one of the conflicting directions under paragraph (B)(II)(1) above is from Ambac and (b) no Ambac Termination Event has occurred, the Debenture Bond Trustee shall act in accordance with such direction to the exclusion of any conflicting direction. The Trust Deed provides for Ambac to indemnify the Debenture Bond Trustee against any losses, claims, damages, costs, expenses or liabilities whatsoever suffered or incurred by the Debenture Bond Trustee as a result of acting in accordance with the directions of Ambac (whether in its own right under (I) above or by virtue of it being treated as the holder of the Guaranteed Debenture Bonds under (B)(II) above). Modifications of, waivers and authorisations of breaches or proposed breaches of, and consents under, any of the Transaction Documents may be sanctioned or given by the Debenture Bond Trustee (including by means of a direction to the Issuer Security Trustee and, through the Issuer Security Trustee, to the Borrower Group Security Trustee) if they are not, in the opinion of the Debenture Bond Trustee, materially prejudicial to the interests of: (aa) the holders of the Debenture Bonds, other than the Guaranteed Debenture Bonds; and (bb) if an Ambac Termination Event has occurred or if the modification, waiver, authorisation or consent constitutes a Bondholder Reserved Matter, the holders of the Guaranteed Debenture Bonds; and (where the interests of the holders of the Guaranteed Debenture Bonds would, in the opinion of the Debenture Bond Trustee, be affected) Ambac has consented to such modification, waiver, authorisation or consent (except if an Ambac Termination Event has occurred or the modification, waiver, authorisation or consent constitutes a Debenture Bondholder Reserved Matter). Where the Debenture Bond Trustee and/or the Issuer Security Trustee (as the case may be) is required to have regard to the interests of any Issuer Secured Creditor (other than the Debenture Bondholders, not being holders of the Guaranteed Debenture Bonds), the Debenture Bond Trustee and/or the Issuer Security Trustee (as the case may be) may consult with such Issuer Secured Creditor and may rely on the opinion of such Issuer Secured Creditor as to whether any act, matter or thing is or is not in the interests of, or materially prejudicial to the interests of, such Issuer Secured Creditor. For this purpose, the Debenture Bond Trustee and/or the Issuer Security Trustee (as the case may be) shall be entitled, in the absence of an Ambac Termination Event, to consult with and rely on the opinion of Ambac in relation to the interests of the holders of the Guaranteed Debenture Bonds. Neither the Debenture Bond Trustee nor the Issuer Security Trustee shall have any liability for relying on an Issuer Secured Creditor’s opinion in accordance with the above. No Issuer Secured Creditor shall have any claim against the Debenture Bond Trustee or the Issuer Security Trustee as a result of the application of the conflict provisions set out in the Trust Deed. (vi) In exercising its powers, trusts, authorities, duties and discretions in accordance with Condition 3(a)(iv) or Condition 3(a)(v) above, the Debenture Bond Trustee and the Issuer Security Trustee (as the case may be) shall disregard any Step-Up Amounts for the purposes of determining whether there is any particular class of Debenture Bonds outstanding. (vii) All classes of Debenture Bonds are subject to the provisions of the Transaction Documents. (viii) The Debenture Bondholders will share in the benefit of the security created by the Issuer Deed of Charge upon and subject to the terms thereof.

(b) Security Pursuant to the Issuer Deed of Charge, the Issuer will grant the following security in favour of the Issuer Security Trustee who will hold such security on trust for the benefit of the Debenture Bondholders and the other Issuer Secured Creditors:

225 (i) an assignment by way of a first fixed security of its right, title, interest and benefit, present and future, in, to and under the Transaction Documents to which it is a party including the security trusts created under the Borrower Group Deed of Charge; (ii) a charge by way of a first fixed security over the amounts from time to time standing to the credit of the Issuer Transaction Account and the Liquidity Facility Reserve Account (which Security Interests may take effect as a floating charge and thus rank behind the claims of certain preferential and other creditors); (iii) a first fixed charge over all investments in Eligible Investments permitted to be made pursuant to the Servicing Agreement (which Security Interests may take effect as a floating charge and thus rank behind the claims of certain preferential and other creditors); and (iv) a first floating charge (ranking behind the claims of certain preferential and other creditors) over all of the property, assets and undertakings of the Issuer not already subject to fixed security (but extending over all of its assets situated in or governed by the law of Scotland), all as more particularly set out in the Issuer Deed of Charge. In addition, the Issuer Parent will grant an equitable mortgage over the shares in the Issuer in favour of the Issuer Security Trustee to be held for the benefit of the Debenture Bondholders and the other Issuer Secured Creditors. The Issuer Security will also stand as security for the obligations of the Issuer to the Issuer Security Trustee, the Debenture Bond Trustee, Ambac, LoanCo, the Liquidity Facility Provider, the Hedge Provider, the Servicer, the Borrower (under the Issuer/Borrower Hedging Agreement) and the Account Bank.

(c) Issuer Pre-Acceleration Priority of Payments Prior to the delivery of a Debenture Bond Acceleration Notice by the Debenture Bond Trustee, the Servicer (as agent for the Issuer Security) shall instruct the Account Bank to apply amounts standing to the credit of the Issuer Transaction Account (Issuer Available Amounts) in the following order of priority (the Issuer Pre-Acceleration Priority of Payments) (including in each case any amount in respect of VAT payable thereon): (A) first, pro rata according to the respective amounts thereof, to pay or provide for payment of amounts then due or to be provided for, the fees or other remuneration and indemnity payments (if any) payable to: (i) the Issuer Security Trustee and any costs, charges, liabilities and expenses incurred by it under the provisions of the Issuer Deed of Charge and any of the other Transaction Documents, together with interest thereon as provided for therein; (ii) the Debenture Bond Trustee and any costs, charges, liabilities and expenses incurred by it under the provisions of the Trust Deed and any of the other Transaction Documents, together with interest thereon as provided for therein; and (iii) the Paying Agents and the Agent Bank and any costs, charges, liabilities and expenses incurred under the provisions of the Agency Agreement and any of the other Transaction Documents, together with interest thereon as provided for therein; (B) second, to pay or provide for payment (after application of all amounts standing to the credit of the Liquidity Facility Reserve Account (if any)) of all amounts of principal, interest, commitment fees and all other amounts due or accrued due but unpaid to the Liquidity Facility Agent and the Liquidity Facility Provider(s) under the terms of the Liquidity Facility Agreement other than the amounts (i) in respect of Mandatory Costs (as defined in the Master Definitions and Construction Schedule) in excess of 0.325 per cent. per annum of the maximum aggregate amount available to be drawn under the Liquidity Facility and (ii) in respect of any increase in the commitment fee payable to the Liquidity Facility Provider(s) as a result of the imposition of increased costs arising from the implementation by the Liquidity Facility Provider(s) of the New Basel Capital Accord (as defined in the Master Definitions and Construction Schedule) in excess of 0.325 per cent. per annum of the maximum aggregate amount available to be drawn under the Liquidity Facility Agreement ((i) and (ii) together being the Liquidity Subordinated Amounts);

226 (C) third, pro rata according to the respective amounts thereof, to pay or provide for all amounts due and payable (if any) to: (i) the Hedge Provider pursuant to the Hedging Agreement (other than any payment to be paid to the Hedge Provider upon termination of transactions under the Issuer/ Borrower Hedging Agreement as a result of either (a) an insolvency event with respect to the Hedge Provider or (b) a failure by the Hedge Provider to take the required remedial action in accordance with the terms of the Hedging Agreement following a ratings downgrade of the Hedge Provider below the Hedge Provider Requisite Rating (Hedging Agreement Subordinated Amounts)); and (ii) to the Borrower pursuant to the Issuer/Borrower Hedging Agreement (other than any payment to be paid to the Borrower upon termination of transactions under the Issuer/Borrower Hedging Agreement as a result of an insolvency event with respect to the Borrower (Borrower IB Hedging Subordinated Amounts) (D) fourth, to pay or provide for amounts in respect of guarantee fees and all other amounts then due to Ambac pursuant to the terms of the Ambac Guarantee and Reimbursement Agreement (other than (i) amounts provided for in paragraphs (G)(i), (G)(iii), (G)(v), (H)(i), (H)(iii) and (H)(v) below and (ii) amounts payable to Ambac by way of increased fees under the Guarantee and Reimbursement Agreement (Ambac Subordinated Fees)); (E) fifth, pro rata according to the respective amounts thereof, to pay or provide for remuneration then payable to: (i) the Servicer together with all other costs, charges, liabilities, expenses, indemnity amounts and losses incurred under the provisions of the Servicing Agreement; (ii) the Account Bank incurred under the provisions of the Bank Agreement; and (iii) the Corporate Services Provider together with all other costs, charges, liabilities, expenses, indemnity amounts and losses incurred under the provisions of the Corporate Services Agreement; (F) sixth, to pay or provide for payment of the amounts then due or to be provided for in respect of the Issuer’s liability or possible liability to third parties under obligations incurred in the course of the Issuer’s business (including any amounts due to the Rating Agencies, the Stock Exchange and the listing agent, and any amounts of corporation tax on profits due to the Inland Revenue or any successor tax authority), other than amounts paid under paragraphs (A), (B), (C), (D) or (E) above; (G) seventh, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A1 Debenture Bondholders together with any interest on such amounts and (B) all amounts of interest due but unpaid in respect of the Class A1 Debenture Bonds (other than that proportion of the interest referable to the Class A1 Step-Up Margin on the Class A1 Debenture Bonds and any interest accrued thereon (Class A1 Step-Up Amounts)), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A1 Debenture Bondholders the amounts described at (B) above; (ii) all amounts of interest due but unpaid in respect of the Class A2 Debenture Bonds (other than that proportion of the interest referable to the Class A2 Step-Up Margin on the Class A2 Debenture Bonds and any interest accrued thereon (Class A2 Step-Up Amounts)): (iii) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A3 Debenture Bondholders together with any interest on such amounts and (B) all amounts of interest due but unpaid in respect of the Class A3 Debenture Bonds

227 (other than that proportion of the interest referable to the Class A3 Step-Up Margin on the Class A3 Debenture Bonds and any interest accrued thereon (Class A3 Step-Up Amounts)), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A3 Debenture Bondholders the amounts described at (B) above; (iv) all amounts of interest due or accrued due but unpaid in respect of the Class A4 Debenture Bonds (other than that proportion of the interest referable to the Class A4 Step-Up Margin on the Class A4 Debenture Bonds and any interest accrued thereon (Class A4 Step-Up Amounts)); and (v) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A5 Debenture Bondholders together with any interest on such amounts and (B) all amounts of interest due but unpaid in respect of the Class A5 Debenture Bonds (other than that proportion of the interest referable to the Class A5 Step-Up Margin on the Class A5 Debenture Bonds and any interest accrued thereon (Class A5 Step-Up Amounts)), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A5 Debenture Bondholders the amounts described at (B) above; (H) eighth, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A1 Debenture Bondholders together with any interest on such amounts and (B) all amounts of principal payable in respect of the Class A1 Debenture Bonds in accordance with Condition 6(b)(A)(ii), such amounts to be applied in the following order of priority: (1) first, to pay Ambac the amounts described at (A) above; and (2) second, to pay to the Class A1 Debenture Bondholders the amounts described at (B) above; (ii) all amounts of principal payable in respect of the Class A2 Debenture Bonds in accordance with Condition 6(b)(A)(iii); (iii) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A3 Debenture Bondholders together with any interest on such amounts and (B) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A3 Debenture Bonds in accordance with Condition 6(b)(A)(iv), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A3 Debenture Bondholders the amounts described at (B) above; (iv) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A4 Debenture Bonds in accordance with Condition 6(b)(A)(v); (v) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A5 Debenture Bondholders together with any interest on such amounts and (B) all amounts of principal payable (other than any Redemption Premium Amount) in respect of Class A5 Debenture Bonds in accordance with Condition 6(b)(A)(vi), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A5 Debenture Bondholders the amounts described at (B) above;

228 (I) ninth, in or towards satisfaction of any other amounts (including the Liquidity Subordinated Amounts, but excluding any sums referred to in paragraph (B) above) due under the Liquidity Facility Agreement to the Liquidity Facility Agent and the Liquidity Facility Provider(s); (J) tenth, pro rata according to the respective amounts thereof, to pay or provide for amounts then due and payable by way of: (i) Redemption Premium Amount (if any) in respect of the Class A3 Debenture Bonds (including any accrued but unpaid interest thereon); (ii) Redemption Premium Amount (if any) in respect of the Class A4 Debenture Bonds (including any accrued but unpaid interest thereon); and (iii) Redemption Premium Amount (if any) in respect of the Class A5 Debenture Bonds (including any accrued but unpaid interest thereon); (K) eleventh, pro rata according to the requisite amounts thereof, to pay or provide for payment of: (i) Hedging Agreement Subordinated Amounts due and payable under the Hedging Agreement to the Hedge Provider; and (ii) Borrower IB Hedging Subordinated Amounts due and payable to the Borrower under the Issuer/Borrower Hedging Agreement; (L) twelfth, in or towards satisfaction of any other amounts (but excluding any sums referred to in paragraph (F) above) due to any tax authority; (M) thirteenth, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) Ambac Subordinated Fees; (ii) Class A1 Step-Up Amounts; (iii) Class A2 Step-Up Amounts; (iv) Class A3 Step-Up Amounts; (v) Class A4 Step-Up Amounts; and (vi) Class A5 Step-Up Amounts, then due and payable; (N) fourteenth, to pay or provide for payment of the amounts then due and payable in respect of the Issuer’s obligations to pay interest on the LoanCo/Issuer Subordinated Loan; (O) fifteenth, to pay or provide for the amounts then due and payable in respect of the Issuer’s obligations to repay principal of the LoanCo/Issuer Subordinated Loan; and (P) sixteenth, the surplus (if any) to the Issuer. Payments may not be made from the Issuer Transaction Account on any day other than on an Interest Payment Date other than to satisfy liabilities set out in paragraph (F) above. In addition to the payments described above, on any Interest Payment Date after the Closing Date but prior to the service of a Debenture Bond Acceleration Notice, the Issuer will be entitled to pay a dividend to Issuer Parent until such time as it has paid dividends in an aggregate amount of £15,000 to Issuer Parent, which amount, together with the provision for corporation tax on the profits out of which any such amount is paid, will be provided for at paragraph (F) of the Issuer Pre-Acceleration Priority of Payments. Once the Issuer has paid dividends in an aggregate amount of £15,000 to Issuer Parent, the Issuer will not be entitled to pay any further amount by way of dividend to Issuer Parent other than out of the surplus described in paragraph (P) above. For the avoidance of doubt, the following amounts will not form part of the Issuer Available Amounts but will be payable directly to the Hedge Provider as set out below: (a) if the Hedging Agreement is terminated in circumstances where the Issuer enters into a replacement hedging arrangement with a replacement hedge provider:

229 (i) any payment received from such Replacement Hedge Provider by the Issuer as part of doing so will be paid directly to the Hedge Provider being replaced until any termination payment to such Hedge Provider is made in full; and

(ii) any payment payable by the existing Hedge Provider to such replacement Hedge Provider will be paid directly to the Replacement Hedge Provider until any termination payment payable by such existing Hedge Provider has been made in full; and

(b) any Hedging Agreement Excluded Amounts payable by the Issuer will be payable directly by the Issuer to the Hedge Provider in accordance with the terms of the existing Hedging Agreement.

Hedging Agreement Excluded Amounts means (i) an amount equal to the value of the collateral (or part thereof) transferred by the Hedge Provider to the Issuer under the Hedging Agreement which (a) is in excess of the termination amount that would, but for the transfer of such collateral, be payable by such Hedge Provider under such Hedging Agreement or (b) the Hedge Provider is entitled to have returned to it under such Hedging Agreement and (ii) an amount equal to the Cash Benefit of any Tax Credit.

Cash Benefit and Tax Credit have the meanings given in the Master Definitions and Construction Schedule.

To the extent that the Issuer’s funds on the relevant Interest Payment Date are insufficient to make payments under paragraphs (A) to (F) (inclusive) and (G)(i)(2), (G)(ii), G(iii)(2), G(iv) and (G)(v)(2) above, the Issuer may make a drawing under the Liquidity Facility Agreement or, to the extent credited thereto, the Liquidity Facility Reserve Account.

(d) Issuer Post-Acceleration Priority of Payments All moneys received or recovered by the Issuer Security Trustee or the Receiver in respect of the Issuer Secured Obligations following the service of a Debenture Bond Acceleration Notice by the Debenture Bond Trustee shall be applied in or towards the satisfaction of the following amounts in the following order of priority (the Issuer Post-Acceleration Priority of Payments) (and in each case only and to the extent that payments or provisions of a higher priority have been made in full) (unless otherwise required by law) (including in each case any VAT payable thereon) provided that no such payment shall be made unless and until (if in the sole discretion of the Issuer Security Trustee and/or the Debenture Bond Trustee it is expedient to do so) a reserve fund is first established in the amount of £750,000 (or such lesser or greater amount as the Issuer Security Trustee and/or the Debenture Bond Trustee may reasonably determine) on account of any contingent costs, charges, liabilities and expenses which in the opinion of the Issuer Security Trustee and/or the Debenture Bond Trustee (as the case may be) may be incurred by the Issuer Security Trustee and/or the Debenture Bond Trustee under the Transaction Documents:

(A) first, pro rata according to the respective amounts thereof to pay or provide for payment of amounts then due or to be provided for, the fees or other remuneration and indemnity payments (if any) payable to:

(i) the Issuer Security Trustee and any Receiver appointed by the Issuer Security Trustee and any costs, charges, liabilities and expenses incurred by the Issuer Security Trustee and any Receiver under the provisions of the Issuer Deed of Charge and any of the other Transaction Documents, together with interest thereon as provided for therein;

(ii) the Debenture Bond Trustee and any costs, charges, liabilities and expenses incurred by it under the provisions of the Trust Deed and any of the other Transaction Documents, together with interest thereon as provided for therein; and

(iii) the Paying Agents and the Agent Bank and any costs, charges, liabilities and expenses incurred under the provisions of the Agency Agreement and any of the other Transaction Documents, together with interest thereon as provided therein;

230 (B) second, to pay or provide for (after application of all amounts standing to the credit of the Liquidity Facility Reserve Account (if any)) all amounts of principal, interest, commitment fees and all other amounts due or accrued due but unpaid to the Liquidity Facility Agent and the Liquidity Facility Provider(s) under the terms of the Liquidity Facility Agreement (but excluding any Liquidity Subordinated Amounts); (C) third, pro rata, according to the respective amounts thereof, to pay or provide for payment of all amounts due and payable (if any) to: (i) the Hedge Provider pursuant to the Hedging Agreement (other than Hedging Agreement Subordinated Amounts); and (ii) the Borrower pursuant to the Issuer/Borrower Hedging Agreement (other than Borrower IB Hedging Subordinated Amounts); (D) fourth, to pay or provide for the amounts in respect of guarantee fees and all other amounts then due to Ambac pursuant to the terms of the Ambac Guarantee and Reimbursement Agreement (other than amounts (i) provided for in paragraphs (F)(i), (F)(iii), (F)(v), (G)(i), (G)(iii) and (G)(v) below) and (ii) Ambac Subordinated Fees); (E) fifth, to pay or provide for: (i) any amounts then due or to be provided for, remuneration then payable to the Account Bank, together with all other costs, charges, liabilities, expenses, indemnity amounts and losses incurred under the provisions of the Bank Agreement; and (ii) any amounts then due or to be provided, remuneration then payable to the Corporate Services Provider, together with all other costs, charges, liabilities, expenses, indemnity amounts and losses incurred under the provisions of the Corporate Services Agreement; (F) sixth, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A1 Debenture Bondholders together with any interest on such amounts and (B) all amounts of interest due but unpaid in respect of the Class A1 Debenture Bonds (other than Class A1 Step-Up Amounts), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A1 Debenture Bondholders the amounts described at (B) above; (ii) all amounts of interest due but unpaid in respect of the Class A2 Debenture Bonds (other than Class A2 Step-Up Amounts); (iii) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A3 Debenture Bondholders together with any interest on such amounts and (B) all amounts of interest due but unpaid in respect of the Class A3 Debenture Bonds (other than Class A3 Step-Up Amounts), such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A3 Debenture Bondholders the amounts described at (B) above; (iv) all amounts of interest due or accrued due but unpaid in respect of the Class A4 Debenture Bonds (other than Class A4 Step-Up Amounts); and (v) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of amounts of Scheduled Interest paid by Ambac to the Class A5 Debenture Bondholders, together with any interest on such amounts and (B) all amounts of interest due but unpaid in respect of the Class A5 Debenture Bonds (other than Class A5 Step-Up Amounts), such amounts to be applied in the following order of priority:

231 (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A5 Debenture Bondholders the amounts described at (B) above; (G) seventh, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A1 Debenture Bondholders together with any interest on such amounts and (B) all amounts of principal payable in respect of the Class A1 Debenture Bonds, until redemption in full, such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second to pay to the Class A1 Debenture Bondholders the amounts described at (B) above; (ii) all amounts of principal payable in respect of the Class A2 Debenture Bonds, until redemption in full; (iii) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A3 Debenture Bondholders together with any interest on such amounts and (B) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A3 Debenture Bonds, until redemption in full, such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second to pay to the Class A3 Debenture Bondholders the amounts described at (B) above; (iv) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A4 Debenture Bonds, until redemption in full; and (v) (A) all amounts due under the Ambac Guarantee and Reimbursement Agreement in respect of Ultimate Principal paid by Ambac to the Class A5 Debenture Bondholders together with any interest on such amounts and (B) all amounts of principal payable (other than any Redemption Premium Amount) in respect of the Class A5 Debenture Bonds, until redemption in full, such amounts to be applied in the following order of priority: (1) first, to pay to Ambac the amounts described at (A) above; and (2) second, to pay to the Class A5 Debenture Bondholders the amounts described at (B) above; (H) eighth, to pay for or provide for payment of any other amount (including the Liquidity Subordinated Amounts but excluding any sums referred to in paragraph (B) above) due under the Liquidity Facility Agreement to the Liquidity Facility Agent and the Liquidity Facility Provider(s); (I) ninth, pro rata according to the respective amounts thereof, to pay or provide for amounts then due and payable by way of: (i) Redemption Premium Amount (if any) in respect of the Class A3 Debenture Bonds (including any accrued but unpaid interest thereon); (ii) Redemption Premium Amount (if any) in respect of the Class A4 Debenture Bonds (including any accrued but unpaid interest thereon); and (iii) Redemption Premium Amount (if any) in respect of the Class A5 Debenture Bonds (including any accrued but unpaid interest thereon); (J) tenth, pro rata according to the respective amounts thereof, to pay or provide for payment of: (i) Hedging Agreement Subordinated Amounts due and payable under the Hedging Agreement to the Hedge Provider; and

232 (ii) Borrower IB Hedging Subordinated Amounts due and payable to the Borrower under the Issuer/Borrower Hedging Agreement; (K) eleventh, pro rata according to the respective amounts thereof to pay or provide for payment of: (i) Ambac Subordinated Fees; (ii) Class A1 Step-Up Amounts; (iii) Class A2 Step-Up Amounts; (iv) Class A3 Step-Up Amounts; (v) Class A4 Step-Up Amounts; and (vi) Class A5 Step-Up Amounts, then due and payable; (L) twelfth, to pay or provide for the amounts then due and payable in respect of the Issuer’s obligations to pay interest on the LoanCo/Issuer Subordinated Loan; (M) thirteenth, to pay or provide for the amounts then due and payable in respect of the Issuer’s obligations to repay principal of the LoanCo/Issuer Subordinated Loan; (N) fourteeenth, to pay or provide for remuneration then payable to the Servicer together with all other costs, charges, liabilities and expenses incurred under the provisions of the Servicing Agreement; and (O) fifteenth, the surplus (if any) to the Issuer.

4. Covenants Save with the prior written consent of the Debenture Bond Trustee and the Issuer Security Trustee or as provided in or envisaged by any of the Transaction Documents and these Conditions, the Issuer shall not, so long as any Debenture Bond remains outstanding:

(a) Negative pledge create or permit to subsist any Security Interest (unless arising by operation of law) whatsoever over any of its assets or use, invest, sell or otherwise dispose of any part of its assets (including any uncalled capital) or its undertaking, present or future, or the Issuer Charged Property;

(b) Restrictions on activities (i) engage in any activity whatsoever which is not incidental to or necessary in connection with any of the activities which the Transaction Documents provide or envisage that the Issuer will engage in; or (ii) have any subsidiaries, any subsidiary undertaking (as defined in the Companies Act 1985 (as amended)) or any employees or premises;

(c) Disposal of assets transfer, sell, lend, part with or otherwise dispose of, or deal with, or grant any option or present or future right to acquire any of its assets or undertakings or any interest, estate, right, title or benefit therein;

(d) Dividends or distributions pay any dividend or make any other distribution to its shareholders or issue any further shares which are redeemable, other than in accordance with the Issuer Deed of Charge;

(e) Borrowings incur any indebtedness in respect of borrowed money whatsoever or give any guarantee in respect of indebtedness or of any obligation of any person except as contemplated by the Transaction Documents;

233 (f) Merger consolidate or merge with any other person or convey or transfer its properties or assets substantially as an entirety to any other person;

(g) No variation or waiver permit the validity or effectiveness of any of the Transaction Documents to which it is a party, or the priority of the Security Interests created thereby, to be amended, terminated or discharged, or consent to any variation of, or exercise any powers of consent or waiver pursuant to the terms of, the Trust Deed, these Conditions, the Issuer Deed of Charge or any of the other Transaction Documents to which it is a party, or permit any part of any of the Transaction Documents to which it is a party, or the relevant Issuer Charged Property or any other person whose obligations form part of the relevant Issuer Charged Property, to be released from such obligations, or dispose of the relevant Issuer Charged Property, save as envisaged in the Transaction Documents to which it is a party;

(h) VAT apply to become part of any group with any other company or group of companies for the purposes of Section 43 of the Value Added Tax Act 1994 or any such act, regulation, order, statutory instrument or directive which may from time to time re-enact, replace, amend, vary, codify, consolidate or repeal the Value Added Tax Act 1994;

(i) Bank accounts have an interest in any bank account other than the Issuer Transaction Account and the Liquidity Facility Reserve Account and any other account where it has an interest pursuant to the Issuer Deed of Charge, unless such account or interest therein is charged to the Issuer Security Trustee on terms acceptable to it;

(j) Surrender of group relief offer to surrender or surrender to any company any amounts which are available for surrender by way of group relief within Chapter IV of Part X of the Income and Corporation Taxes Act 1988; and

(k) Separate books, accounts, etc. (i) permit or consent to any of the following occurring: (A) its books and records being maintained with or co-mingled with those of any other person or entity; (B) its bank accounts and the debts represented thereby being co-mingled with those of any other person or entity; (C) its assets or revenues being co-mingled with those of any other person or entity; or (D) its business being conducted other than in its own name; and, in addition and without limitation to the above, the Issuer shall or shall procure that, with respect to itself: (I) separate financial statements in relation to its financial affairs are maintained; (II) all corporate formalities with respect to its affairs are observed; (III) separate stationery, invoices and cheques are used; and (IV) any known misunderstandings regarding its separate identity are corrected as soon as possible.

5. Interest (a) Accrual of interest Interest will accrue from (and including) the Closing Date on the Principal Amount Outstanding for the time being of each Class of Debenture Bonds. Each Debenture Bond (or in the case of the redemption of part only of a Debenture Bond, that part only of that Debenture Bond) shall cease to bear interest from and including its due date for redemption, unless, upon due presentation of the Debenture Bond, payment of the relevant amount of

234 principal or any part of it is improperly withheld or refused. In such event, interest will continue to accrue on that unpaid amount (before and after the date of any judgment) at the rate from time to time applicable to that Debenture Bond up to (but excluding) the date on which, on further presentation of that Debenture Bond, payment of the relevant amount of principal is made in full or (if earlier) the seventh day after notice is duly given by the Principal Paying Agent to the relevant Debenture Bondholder in accordance with Condition 16 (Notice to Debenture Bondholders) that, upon presentation thereof being duly made, such payment will be made (except to the extent that there is failure in the subsequent payment to the relevant holders under these Conditions). The first Interest Payment Date will be 28 March, 2005 in respect of the period from (and including) the Closing Date to (but excluding) 28 March, 2005.

(b) Interest Payment Dates; Interest Periods; Day Count Fractions Interest on each Debenture Bond is payable quarterly in arrear on the Interest Payment Date in respect of the Interest Period ending on (but excluding) that Interest Payment Date. Whenever it is necessary to compute an amount of interest in respect of any Debenture Bond for any period (including any Interest Period), such interest shall be calculated using the following day count fractions (each a Day Count Fraction): (i) in respect of the Class A1 Debenture Bonds and the Class A2 Debenture Bonds, the Class A3 Debenture Bonds after the Class A3 Step-Up Date, the Class A4 Debenture Bonds after the Class A4 Step-Up Date and the Class A5 Debenture Bonds after the Class A5 Step-Up Date, on the basis of the actual days elapsed and a year of 365 days; (ii) in respect of the Class A3 Debenture Bonds, up to (and including) the Interest Payment Date falling in December 2014, on the basis of the actual number of days elapsed and a 365 day year, or a 366 day year if the last day of such period falls in a leap year; (iii) in respect of the Class A4 Debenture Bonds, up to (and including) the Interest Payment Date falling in December 2018, on the basis of the actual number of days elapsed and a 365 day year, or a 366 day year if the last day of such period falls in a leap year; (iv) in respect of the Class A5 Debenture Bonds, up to (and including) the Interest Payment Date falling in December 2028, on the basis of the actual number of days elapsed and a 365 day year, or a 366 day year if the last day of such period falls in a leap year.

(c) Rates of Interest (i) General The rates of interest (each a Rate of Interest and references to the relevant Rate of Interest being construed accordingly) payable from time to time in respect of: (A) the Class A1 Debenture Bonds (both prior to and following the Class A1 Step-Up Date); (B) the Class A2 Debenture Bonds (both prior to and following the Class A2 Step-Up Date); (C) the Class A3 Debenture Bonds (following the Class A3 Step-Up Date); (D) the Class A4 Debenture Bonds (following the Class A4 Step-Up Date); and (E) the Class A5 Debenture Bonds (following the Class A5 Step-Up Date), will be determined by the Agent Bank on each Interest Payment Date in respect of the Interest Period commencing on that date (save in respect of the First Interest Period commencing on the Closing Date, where the Rate of Interest will be determined by the Agent Bank on the day preceeding the Closing Date) (each an Interest Determination Date).

(ii) Class A1 Debenture Bonds The Rate of Interest in respect of the Class A1 Debenture Bonds for each Interest Period (the Class A1 Rate of Interest) shall be the aggregate of: (A) LIBOR; and

235 (B) (i) a margin of 0.22 per cent. per annum up to (and including) the Interest Payment Date falling in December 2011 (the Class A1 Margin) and (ii) thereafter until the date on which the Class A1 Debenture Bonds have been redeemed in full, the Class A1 Margin plus an additional margin of 0.33 per cent. per annum (the Class A1 Step-Up Margin). (iii) Class A2 Debenture Bonds The Rate of Interest in respect of the Class A2 Debenture Bonds for each Interest Period (the Class A2 Rate of Interest) shall be the aggregate of: (A) LIBOR; and (B) (i) a margin of 1.08 per cent. per annum up to (and including) the Interest Payment Date falling in December 2011 (the Class A2 Margin) and (ii) thereafter until the date on which the Class A2 Debenture Bonds have been redeemed in full, the Class A2 Margin plus an additional margin of 1.62 per cent. per annum (the Class A2 Step-Up Margin). (iv) Class A3 Debenture Bonds The Rate of Interest in respect of the Class A3 Debenture Bonds for each Interest Period (the Class A3 Rate of Interest) shall be: (A) 5.860 per cent. per annum up to (and including) the Interest Payment Date falling in December 2014; and thereafter until the date on which the Class A3 Debenture Bonds have been redeemed in full, (B) LIBOR; and (C) a margin of 0.22 per cent. per annum (the Class A3 Margin) and a further margin of 0.33 per cent. per annum (the Class A3 Step-Up Margin). (v) Class A4 Debenture Bonds The Rate of Interest in respect of the Class A4 Debenture Bonds for each Interest Period (the Class A4 Rate of Interest) shall be: (A) 6.582 per cent. per annum up to (and including) the Interest Payment Date falling in December 2018; and thereafter until the date on which the Class A4 Debenture Bonds have been redeemed in full, (B) LIBOR; and (C) a margin of 1.11 per cent. per annum (the Class A4 Margin) and a further margin of 1.665 per cent. per annum (the Class A4 Step-Up Margin). (vi) Class A5 Debenture Bonds The Rate of Interest in respect of the Class A5 Debenture Bonds for each Interest Period (the Class A5 Rate of Interest) shall be: (A) 5.472 per cent. per annum up to (and including) the Interest Payment Date falling in December 2028; and thereafter until the date on which the Class A5 Debenture Bonds have been redeemed in full, (B) LIBOR; and (C) a margin of 0.30 per cent. per annum (the Class A5 Margin) and a further margin of 0.45 per cent. per annum (the Class A5 Step-Up Margin).

(d) Determination of Rates of Interest and Calculation of Interest Amounts The Agent Bank shall, on each Interest Determination Date, in respect of each Class of Debenture Bonds, on or as soon as practicable after 11.00 a.m. (London time), determine and notify the Issuer, the Debenture Bond Trustee and the Paying Agents (i) of the relevant Rates of Interest and (ii) of the Sterling amount payable in respect of such Interest Period in respect of the Principal Amount Outstanding of each such Debenture Bond (each an Interest Amount).

236 The Interest Amount in respect of the Class A1 Debenture Bonds, the Class A2 Debenture Bonds and, after the respective Step-Up Dates, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds shall be calculated by applying the relevant Rate of Interest to the then Principal Amount Outstanding of each Debenture Bond of the relevant Class on the relevant Interest Payment Date and multiplying the sum thereof by the relevant Day Count Fraction. Prior to the respective Step-Up Dates, the Interest Amount in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds shall be calculated by applying the relevant Rate of Interest to the then Principal Amount Outstanding of each Debenture Bond of the relevant Class on the relevant Interest Payment Date and (except in relation to the Interest Amount which is payable on the first Interest Payment Date following the Closing Date or any subsequent Interest Amount which falls to be paid in relation to any period which is longer or shorter than an Interest Period) dividing the resultant figure by four or (in relation to the first Interest Amount or any subsequent Interest Amount which falls to be paid in relation to a period that is longer or shorter than an Interest Period) multiplying the resultant figure by the number of days in the relevant Interest Period.

(e) Publication of Rates of Interest, Interest Amounts and Interest Payment Dates Forthwith upon the making of the determination pursuant to Condition 5(d) (Interest – Calculation of Interest Amounts) above, the Agent Bank (or the Principal Paying Agent on its behalf) will cause the Rate of Interest, the Interest Payment Date and the Interest Amount applicable to each Class of Debenture Bonds for the relevant Interest Period and the immediately succeeding Interest Payment Date to be notified to the Stock Exchange not later than the first day of the Interest Period (for so long as the Debenture Bonds are listed on the Stock Exchange) and will cause notice thereof to be given to the relevant Debenture Bondholders in accordance with Condition 16 (Notice to Debenture Bondholders). The Interest Amounts and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) by the Agent Bank without prior notice in the event of any extension or shortening of the relevant Interest Period. Any such amendment will be promptly notified to the Stock Exchange (for so long as the Debenture Bonds are listed on the Stock Exchange) and to the Debenture Bondholders in accordance with Condition 16 (Notice to Debenture Bondholders).

(f) Calculation by the Debenture Bond Trustee If the Agent Bank or the Issuer, as the case may be, does not at any time for any reason determine the Rates of Interest and/or calculate the Interest Amount for the Debenture Bonds in accordance with these Conditions, the Debenture Bond Trustee shall determine the Rates of Interest and/or (as the case may be) calculate the Interest Amount in respect of each Class of Debenture Bonds in the manner specified in Condition 5(d) (Determination of Rates of Interest and Calculation of Interest Amounts) and any such calculation shall be deemed to have been made by the Agent Bank, but without liability on the part of the Debenture Bond Trustee in respect of such calculation.

(g) Notifications to be final All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition 5, whether by the Reference Banks (or any of them) or the Agent Bank or the Issuer or the Debenture Bond Trustee shall (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Reference Banks, the Agent Bank, the Debenture Bond Trustee and all of the relevant Debenture Bondholders and (in such absence as aforesaid) no liability to the Debenture Bondholders shall attach to the Issuer, the Reference Banks, the Agent Bank or the Debenture Bond Trustee in connection with the exercise or non-exercise by them or any of them of their powers, duties and discretions hereunder.

(h) Reference Banks and Agent Bank The Issuer shall ensure that, so long as any of the Debenture Bonds remain outstanding, there shall at all times be three Reference Banks and an Agent Bank. The initial Reference Banks shall be the principal London office of each of Barclays Bank PLC, Lloyds TSB Bank

237 plc and HSBC Bank plc. In the event of the principal London office of any such bank being unable or unwilling to continue to act as a Reference Bank, the Issuer shall appoint such other bank as may have been previously approved in writing by the Debenture Bond Trustee to act as such in its place. The Agent Bank may not resign until a successor so approved by the Debenture Bond Trustee has been appointed.

(i) Default Interest Amounts of principal in respect of each Debenture Bond will cease to bear interest from and including the Interest Payment Date for the payment of such principal amount unless, upon due presentation of the Debenture Bond, payment of such principal amount is improperly withheld or refused, in which case the unpaid amount will bear default interest (Default Interest) at the relevant Rate of Interest (after as well as before judgment) until whichever is the earlier of: (i) the day on which all principal sums due in respect of that Debenture Bond up to that day are received by or on behalf of the relevant Debenture Bondholder; and (ii) the day which is seven days after the Principal Paying Agent has notified the Debenture Bondholders that it has received all principal sums due in respect of the Debenture Bonds up to such seventh day (except to the extent that there is any subsequent default in payment). The payment of Default Interest is not guaranteed by Ambac under the Ambac Financial Guarantee. The amount of Default Interest payable in respect of each Debenture Bond for any period shall be calculated on the same day count basis as the relevant Rate of Interest. Default Interest does not accrue on Default Interest.

6. Redemption, Purchase and Cancellation (a) Final redemption Unless previously redeemed in full and cancelled, the Issuer will redeem each Class of Debenture Bonds at their respective Principal Amount Outstanding on the following dates: (i) for the Class A1 Debenture Bonds the Class A1 Final Maturity Date; (ii) for the Class A2 Debenture Bonds the Class A2 Final Maturity Date; (iii) for the Class A3 Debenture Bonds the Class A3 Final Maturity Date; (iv) for the Class A4 Debenture Bonds the Class A4 Final Maturity Date; and (v) for the Class A5 Debenture Bonds the Class A5 Final Maturity Date.

(b) Scheduled and Mandatory Redemption Unless previously redeemed in full and cancelled, the Issuer will redeem each Class of Debenture Bonds as set out below.

(A) Scheduled Redemption (i) The Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds will be redeemed in the aggregate principal amount (respectively a Class A1 Expected Amortisation Amount, a Class A2 Expected Amortisation Amount,aClass A3 Expected Amortisation Amount, a Class A4 Expected Amortisation Amount and a Class A5 Expected Amortisation Amount, and each an Expected Amortisation Amount) set out opposite the month of each Interest Payment Date below on the Interest Payment Date falling in such month. The figures set out below show the Class A1 Expected Amortisation Amount, the Class A2 Expected Amortisation Amount, the Class A3 Expected Amortisation Amount, the Class A4 Expected Amortisation Amount and the Class A5 Expected Amortisation Amount per £100,000 of each Debenture Bond:

238 (ii) Class A1 Debenture Bonds Class A1 Expected Amortisation Amounts Interest Payment Date per £100,000

March 2014 8,000.00 June 2014 8,000.00 September 2014 8,000.00 December 2014 8,000.00

March 2025 5,000.00 June 2025 11,666.67 September 2025 11,666.67 December 2025 11,666.66 March 2026 12,000.00 June 2026 12,000.00 September 2026 4,000.00

(iii) Class A2 Debenture Bonds Class A2 Expected Amortisation Amounts Interest Payment Date per £100,000

September 2026 6,000.00 December 2026 9,000.00 March 2027 9,250.00 June 2027 9,250.00 September 2027 9,250.00 December 2027 9,250.00 March 2028 9,500.00 June 2028 9,500.00 September 2028 9,500.00 December 2028 9,500.00 March 2029 9,750.00 June 2029 250.00

(iv) Class A3 Debenture Bonds Class A3 Expected Amortisation Amounts Interest Payment Date per £100,000

March 2015 5,000.00 June 2015 5,000.00 September 2015 5,000.00 December 2015 5,000.00 March 2016 5,200.00 June 2016 5,200.00 September 2016 5,200.00 December 2016 5,200.00 March 2017 5,400.00 June 2017 5,400.00 September 2017 5,400.00 December 2017 5,400.00 March 2018 5,600.00 June 2018 5,600.00 September 2018 5,600.00 December 2018 5,600.00 March 2019 5,800.00 June 2019 5,800.00 September 2019 3,600.00

239 (v) Class A4 Debenture Bonds Class A4 Expected Amortisation Amounts Interest Payment Date per £100,000

September 2019 1,571.43 December 2019 4,142.86 March 2020 4,285.71 June 2020 4,285.71 September 2020 4,285.71 December 2020 4,285.71 March 2021 4,428.57 June 2021 4,428.57 September 2021 4,428.57 December 2021 4,428.57 March 2022 4,571.43 June 2022 4,571.43 September 2022 4,571.43 December 2022 4,571.43 March 2023 4,714.29 June 2023 4,714.29 September 2023 4,714.29 December 2023 4,714.29 March 2024 4,857.14 June 2024 4,857.14 September 2024 4,857.14 December 2024 4,857.14 March 2025 2,857.15

(vi) Class A5 Debenture Bonds Class A5 Expected Amortisation Amounts Interest Payment Date per £100,000

June 2029 6,333.33 September 2029 6,500.00 December 2029 6,500.00 March 2030 6,666.67 June 2030 6,666.67 September 2030 6,666.67 December 2030 6,666.67 March 2031 6,833.33 June 2031 6,833.33 September 2031 6,833.33 December 2031 6,833.33 March 2032 7,000.00 June 2032 7,000.00 September 2032 7,000.00 December 2032 5,666.67

(B) Mandatory Redemption (i) If the Term Advances have become immediately due and repayable following a Borrower Group Event of Default, but the Debenture Bonds have not become immediately due and repayable pursuant to Condition 10 (Issuer Event of Default) and any amount of principal in respect of any Term Advance in excess of the amount of principal which would, but for any such Term Advance having become immediately due and repayable, otherwise have been scheduled to be paid in respect of such Term Advance is paid to the Issuer (such amount being an Excess Amount), the Issuer shall be obliged to apply such Excess Amount pro rata to the aggregate Principal Amount Outstanding in respect of each Class of Debenture Bonds in the partial redemption of the Debenture Bonds as described in Condition 6(b)(B)(ii) on the

240 Interest Payment Date next following receipt of such Excess Amount but subject to giving to the relevant Debenture Bondholders not fewer than 5 Business Days’ notice of such redemption (such notice to expire on such Interest Payment Date). (ii) At any time when there is an Excess Amount, the Issuer will be required to redeem the Debenture Bonds pro rata on the Interest Payment Date next following the giving of the notice required by Condition 6(b)(B)(i) at a price equal to: (A) in respect of the Class A1 Debenture Bonds and the Class A2 Debenture Bonds, par together with accrued but unpaid interest on the aggregate Principal Amount Outstanding of the Class A1 Debenture Bonds and the Class A2 Debenture Bonds to be redeemed up to (but excluding) the date of redemption; (B) in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds from (and including) the relevant Step-Up Date par together with accrued but unpaid interest on the aggregate Principal Amount Outstanding on the relevant Debenture Bonds to be redeemed up to (but excluding) the date of redemption; (C) in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds (up to (but excluding) the relevant Step-Up Date) an amount (the Redemption Amount) equal to the lesser of (x) the ER Amount (as defined in Condition 6(c)(iii) below) together with the amounts referred to in Condition 6(c)(iii)(C)(1) and (2) and (y) the RP Amount plus the amounts referred to in Condition 6(c)(iii)(C)(1) and (2).

(c) Redemption at the option of the Issuer (i) The Issuer may, on any Interest Payment Date, having given not fewer than 5 Business Days’ notice of redemption to the holders of the relevant Class of Debenture Bonds in accordance with Condition 16 (Notice to Debenture Bondholders) (which notice shall be irrevocable) and to the Debenture Bond Trustee, the Hedge Provider and Ambac and provided that (A) on the Interest Payment Date on which such notice expires, no Debenture Bond Acceleration Notice has been served and (B) the Issuer has, prior to giving such notice, certified to the Debenture Bond Trustee and Ambac (for so long as the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds are outstanding) that no Ambac Termination Event has occurred if the optional redemption is of the Class A1 Debenture Bonds and/or the Class A3 Debenture Bonds and/or the Class A5 Debenture Bonds (as the case may be) and (C) the Issuer delivers to the Debenture Bond Trustee and Ambac a certificate signed by two directors of the Issuer to the effect that it will have the necessary funds for the purpose and to discharge any other amounts required under the Issuer Deed of Charge to be paid on that date, redeem the Debenture Bonds of any Class or Classes, in whole or in part (provided that the minimum amount of any such redemption will be £1,000,000 in principal amount of a Class of Debenture Bonds and thereafter in multiples of £100,000 in principal amount) on any Interest Payment Date in accordance with and subject to the provisions of Conditions 6(c)(ii) and (iii). The aggregate payment to be made in respect of the Debenture Bonds (as set forth in paragraphs (iii)(A), (B) or, as the case may be, (C)) to be redeemed is hereafter referred to as the Early Redemption Price. (ii) The Issuer shall, on exercise of its option to redeem pursuant to Condition 6(c)(i), redeem Debenture Bonds of the relevant Class pro rata on the date specified for redemption in the related notice of redemption. (iii) Any Debenture Bonds redeemed pursuant to Condition 6(c)(i) will be redeemed: (A) (1) in respect of the Class A1 Debenture Bonds (x) if redemption occurs prior to the Interest Payment Date falling in December 2005, in an amount equal to 101 per cent. of their aggregate Principal Amount Outstanding on the relevant Interest Payment Date or (y) if redemption occurs on or after the Interest Payment Date falling in December 2005, at par, in each case, together with accrued but unpaid interest on the Principal Amount Outstanding of the Class A1 Debenture Bonds to be redeemed up to (but excluding) the date of redemption;

241 (2) in respect of the Class A2 Debenture Bonds (x) if redemption occurs prior to the Interest Payment Date falling in December 2005, in an amount equal to 102 per cent. of their aggregate Principal Amount Outstanding on the relevant Interest Payment Date or (y) if redemption occurs on the Interest Payment Date falling in December 2005 and prior to the Interest Payment Date falling in December 2006, in an amount equal to 101 per cent. of their aggregate Principal Amount Outstanding on the relevant Interest Payment Date or (z) if redemption occurs on or after the Interest Payment Date falling in December 2006, at par, in each case, together with accrued but unpaid interest on the Principal Amount Outstanding of the Class A2 Debenture Bonds to be redeemed up to (but excluding) the date of redemption.

(B) in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds (from (and including) the relevant Step-Up Date), at par together with accrued but unpaid interest on the Principal Amount Outstanding of the relevant Class of Debenture Bonds to be redeemed up to but excluding the date of redemption; and

(C) in respect of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds (up to (but excluding) the relevant Step-Up Date) in an amount (the ER Amount) equal to the greater of (x) par and (y) their Principal Amount Outstanding or part thereof (less any amount of outstanding principal which has fallen due for payment prior to such date but remains unpaid) multiplied by the price expressed as a percentage and rounded to five decimal places (0.000005 being rounded upward) determined by the Expert as being the price which results in the Gross Redemption Yield on the relevant Class of Debenture Bonds, (if the relevant Class of Debenture Bonds were to remain outstanding to their respective Step-Up Dates) on the Reference Date being equal to the Gross Redemption Yield at 3.00 p.m. (London time) on that date of the Reference Gilt, together with in each case:

(1) any payment of principal and interest due but unpaid on or prior to the Redemption Date (other than the Early Redemption Price itself); and

(2) any interest (other than under (1)) accrued up to and including the date of redemption.

(iv) In circumstances where payments on the Class A1 Debenture Bonds and/or the Class A3 Debenture Bonds and/or the Class A5 Debenture Bonds are being made by Ambac under the Ambac Financial Guarantee, Ambac will have the right to require the Issuer, on any Interest Payment Date, subject to Ambac certifying to the Debenture Bond Trustee and the Issuer that the Issuer will be put into sufficient funds (other than funds received from the Borrower under the Issuer/Borrower Facility Agreement) for the purpose of and to discharge the amounts set out in paragraphs (A), (B) and (C) below and having given not fewer than 2 Business Days’ notice of redemption to the holders of the relevant Class(es), to redeem all of the Debenture Bonds of the relevant Class on the Interest Payment Date next following the giving of the aforesaid notice at a price equal to:

(A) in respect of the Class A1 Debenture Bonds, par together with accrued but unpaid interest on the aggregate Principal Amount Outstanding of the Class A1 Debenture Bonds to be redeemed up to (but excluding) the date of redemption;

(B) in respect of the Class A3 Debenture Bonds and the Class A5 Debenture Bonds from (and including) the relevant Step-Up-Date) par together with accrued but unpaid interest on the aggregate Principal Amount Outstanding of the relevant Debenture Bonds to be redeemed up to (but excluding) the date of redemption;

(C) in respect of the Class A3 Debenture Bonds and the Class A5 Debenture Bonds (up to (but excluding) the relevant Step-Up-Date) an amount equal to the greater of par and Redemption Amount in respect of the relevant Class(es) of Debenture Bonds to be redeemed.

242 The Principal Amount Outstanding of any Debenture Bond redeemed pursuant to Condition 6(c)(i) (excluding the Expected Amortisation Amount (if any) due to be applied by way of redemption in respect of such Debenture Bond on the date of redemption pursuant to Condition 6(c)(i)) shall be applied to reduce the remaining Expected Amortisation Amounts in respect of such Debenture Bond on a pro rata basis; and the reduced Expected Amortisation Amounts shall, if necessary, be rounded upwards or downwards to the nearest penny at the discretion of the Issuer, but so that the sum of the reduced Expected Amortisation Amounts, as so rounded, is equal to the Principal Amount Outstanding of the relevant Debenture Bond following its redemption pursuant to Condition 6(c)(i).

(d) Substitution/Redemption for taxation or other reasons If the Issuer at any time satisfies the Debenture Bond Trustee (and, prior to the occurrence of an Ambac Termination Event, Ambac) immediately prior to the giving of the notice referred to below, that: (i) by reason of a change in tax law (or the application or official interpretation thereof) taking effect on or before the next Interest Payment Date, the Issuer would be required to deduct or withhold from any payment of principal or interest on any Class of Debenture Bonds (other than where the relevant holder has some connection with the United Kingdom other than the holding of the relevant Class of Debenture Bonds) any amount for or on account of any present or future Taxes; or (ii) due to a change in law it has become or will become unlawful for the Issuer to make, fund or allow to remain outstanding all or any advances made or to be made by it under the Issuer/Borrower Facility Agreement; or (iii) by reason of a change in tax law (or the application or official interpretation thereof) taking effect on or before the next Interest Payment Date, under the Issuer/Borrower Facility Agreement, the Borrower would be required to deduct or withhold from any payment of principal, interest or other sum due and payable thereunder any amount for or on account of any present or future taxes, then the Issuer may, in order to avoid the relevant event described in paragraphs (i), (ii) or (iii) above, arrange the substitution of a company incorporated in another jurisdiction as principal debtor under the Debenture Bonds and as lender under the Issuer/Borrower Facility Agreement, provided that such substitution is approved by the Debenture Bond Trustee (and prior to the occurrence of an Ambac Termination Event, Ambac) and provided further that the Debenture Bond Trustee is satisfied that such substitution will not be materially prejudicial to the interests of the Debenture Bondholders (other than, prior to the occurrence of an Ambac Termination Event, the holders of the Guaranteed Debenture Bonds) and that the position of the other Issuer Secured Creditors will not thereby be adversely affected. If the Issuer is unable to arrange a substitution as described above and, as a result, one or more of the events described in paragraphs (i), (ii) or (iii) above (as the case may be) is continuing, then the Issuer may, on any date and having given not fewer than 5 Business Days’ written notice (or, in the case of an event described in (ii) above, such shorter period expiring on or before the latest date permitted by relevant law) to the Debenture Bond Trustee, the Hedge Provider and the Debenture Bondholders in accordance with Condition 16 (Notice to Debenture Bondholders) and having provided to the Debenture Bond Trustee and, prior to the occurrence of an Ambac Termination Event, Ambac, a certificate signed by two directors of the Issuer to the effect that it will have funds, not subject to the interest of any other persons, available for the purpose (including the payment of any associated hedging unwind costs), issue Debenture Bonds in registered form in accordance with Condition 15 (Replacement of Definitive Debenture Bonds and Coupons) or redeem all but not some only of the relevant Class of Debenture Bonds. Such redemption in respect of any Debenture Bond shall be in an amount equal to the greater of its Principal Amount Outstanding and the Redemption Amount (if any) in respect of the relevant Class up to (and including) the date of repayment, provided that any Debenture Bond which is redeemed in accordance with this Condition 6(d) (Redemption, Purchase and Cancellation – Substitution/Redemption for taxation and other reasons) otherwise than on an Interest Payment Date shall be redeemed in an amount determined in accordance with Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer).

243 Without limitation to the prior provisions of this Condition 6(d) (Redemption, Purchase and Cancellation – Substitution/Redemption for taxation or other reasons), if one or more of the events described in paragraphs (i), (ii) or (iii) above has occurred and is continuing, the Issuer may take such other action as is appropriate in the circumstances subject to obtaining the approval of the Debenture Bond Trustee and, prior to the occurrence of an Ambac Termination Event, Ambac in order to mitigate the effect of the relevant occurrence.

(e) Debenture Bond Principal Payments, Principal Amount Outstanding and Redemption Amount (i) The Principal Amount Outstanding to be redeemed in respect of each Debenture Bond (the Debenture Bond Principal Payment) on any Interest Payment Date under Condition 6(b)(B) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption) or Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer), in relation to the Debenture Bonds of a particular Class, shall be a pro rata share of the aggregate amount required to be applied in redemption of Debenture Bonds of a particular Class on such Interest Payment Date, as the case may be (rounded down to the nearest penny), provided always that no such Debenture Bond Principal Payment may exceed the Principal Amount Outstanding of the relevant Debenture Bond.

(ii) On the Calculation Date, the Issuer shall determine or shall cause to be determined:

(A) if there is to be a redemption of the Debenture Bonds pursuant to Condition 6(b)(B) (Redemption, Purchase and Cancellation – Scheduled and Mandatory Redemption) or Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer), the amount of any Debenture Bond Principal Payment due on the next following Interest Payment Date; and

(B) the Principal Amount Outstanding on each Debenture Bond on the next following Interest Payment Date (after deducting any Debenture Bond Principal Payment due to be made on that Interest Payment Date).

Each determination by or on behalf of the Issuer of any Debenture Bond Principal Payment and the Principal Amount Outstanding of a Debenture Bond shall in each case (in the absence of wilful default, bad faith or manifest error) be final and binding on all persons.

The Issuer will, on each Calculation Date, cause each determination of a Debenture Bond Principal Payment (if any) and Principal Amount Outstanding to be notified forthwith to the Debenture Bond Trustee which will then forthwith notify the Paying Agents and (for so long as the Debenture Bonds are listed on the Stock Exchange) the Stock Exchange thereof and will cause notice of each determination of a Debenture Bond Principal Payment and Principal Amount Outstanding to be given in accordance with Condition 16 (Notice to Debenture Bondholders).

If the Issuer does not at any time for any reason determine a Debenture Bond Principal Payment or the Principal Amount Outstanding in accordance with the preceding provisions of this paragraph, such Debenture Bond Principal Payment and Principal Amount Outstanding may be determined by the Debenture Bond Trustee in accordance with this paragraph and each such determination or calculation shall be deemed to have been made by the Issuer, provided that the Debenture Bond Trustee shall have no liability in respect of such determination or calculation.

(f) Notice of Redemption Any notice of redemption referred to in Condition 6(c) (Redemption, Purchase and Cancellation – Redemption at the option of the Issuer) and Condition 6(d) (Redemption, Purchase and Cancellation – Substitution/Redemption for taxation or other reasons) shall be irrevocable and, upon the expiry of such notice, the Issuer shall be bound to redeem the relevant Debenture Bonds on the expiry of the relevant notice.

244 (g) Purchase of Debenture Bonds The Issuer will not be permitted to purchase any of the Debenture Bonds. The Borrower or any member of the Borrower Group may at any time purchase Debenture Bonds, subject to the provisions of the Issuer/Borrower Facility Agreement.

(h) Cancellation All Debenture Bonds redeemed in full or surrendered under Condition 17 (Further Issues) will be cancelled upon redemption or surrender, together with any unmatured Coupons and any Talons relating to them which are attached to them or surrendered with them, and may not be resold or re-issued.

(i) Other Information Until such time as the issued share capital of any member of Spirit Group, or any parent thereof, is listed on a recognised stock exchange, the Principal Paying Agent and the Luxembourg Paying Agent will be provided by the Issuer with: (i) the audited consolidated annual financial statements and related auditor’s report of the Borrower Group within 180 days after the end of the first Financial Year after the Closing Date and within 120 days after the end of each of its subsequent Financial Years; and (ii) the audited annual financial statements and related auditor’s report of each of the Issuer and the Borrower within 180 days after the end of the first Financial Year after the Closing Date and within 120 days after the end of each of its subsequent Financial Years. The financial statements will be available to the Debenture Bondholders at the office of the Luxembourg Paying Agent. Further information in respect of the Borrower and the Borrower Group Estate will be made available to Debenture Bondholders in the form of a quarterly report prepared by or on behalf of the Borrower (the Quarterly Report). Upon the listing of the issued share capital of any member of Spirit Group on a recognised stock exchange, the Principal Paying Agent and the Luxembourg Paying Agent will be provided by the Issuer with such information as is required to be made publicly available by the relevant stock exchange or in accordance with general law at the same time as such information is required to be made publicly available. Such information will be available, free of charge, at the Luxembourg office of the Luxembourg Paying Agent and, in respect of the information set out in paragraphs (i) and (ii) above, on Bloomberg. The Issuer will consider updating the form and content of the Quarterly Report provided to Debenture Bondholders from time to time in the light of requests from Debenture Bondholders and changes to market practice, subject to the complexity and cost of providing additional information and the potential risk to its operations from providing competitor-sensitive information.

7. Payments (a) Payments in respect of Global Debenture Bonds Payments of principal and interest in respect of the Global Debenture Bonds will be made against presentation, and (in the case of any payment which will result in a Global Debenture Bond being redeemed in full) surrender, of the relevant Global Debenture Bond at the specified office of any Paying Agent, provided that no Paying Agent shall make payments on the Global Debenture Bonds from within the United States or its possessions.

(b) Payments in respect of Definitive Debenture Bonds Payments of principal in respect of the Definitive Debenture Bonds (if issued) will be made against presentation of the relevant Definitive Debenture Bond (except where, after such surrender, the unpaid principal amount of a Debenture Bond would be reduced to zero in which case that payment of principal will be made against presentation and surrender of such Debenture Bond and all unmatured Coupons and Talons) at the specified office of any Paying Agent. Payments of interest in respect of the Definitive Debenture Bonds will be made only

245 against presentation and surrender of the relevant Coupons at the specified office of any Paying Agent. No Paying Agent shall make payments on the Definitive Debenture Bonds from within the United States or its possessions.

(c) Currency of payment Payments in respect of the Debenture Bonds will, subject to Condition 7(j) (Payments – Change in currency), be made in Sterling at the specified office of any Paying Agent by pounds Sterling cheque drawn on, or, at the option of the holder, by transfer to a Sterling account maintained by the payee with a bank in London.

(d) Payments subject to all fiscal laws Payments of principal and interest in respect of the Debenture Bonds are subject in all cases to any fiscal or other laws and regulations applicable to those payments.

(e) Unmatured Coupons and Talons void On the date upon which any definitive Debenture Bond becomes due and payable in full, unmatured Coupons and Talons (if any) relating to that Debenture Bond (whether or not attached to it) shall become void and no payment shall be made in respect of them. If the due date for redemption of any definitive Debenture Bond is not an Interest Payment Date, accrued interest will be paid only against presentation and surrender of the relevant Debenture Bond.

(f) Payment of interest on withheld amounts If any amount of principal due is improperly withheld or refused on or in respect of any Debenture Bond or part of a Debenture Bond, the interest which continues to accrue in respect of that Debenture Bond will be calculated at the rate and in the manner contemplated in Condition 5(h) (Interest – Default Interest) and will be paid against presentation of that Debenture Bond at the specified office of any Paying Agent.

(g) Paying Agents The initial Principal Paying Agent is Deutsche Bank AG London and its initial specified office is Winchester House, 1 Great Winchester Street, London EC2N 2DB. The Issuer reserves the right, subject to the prior written approval of the Debenture Bond Trustee, at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents provided that, so long as any of the Debenture Bonds remain outstanding, there will at all times be a Principal Paying Agent. So long as the Debenture Bonds are listed on the Stock Exchange and that stock exchange so requires, the Issuer will at all times maintain a Paying Agent with a specified office in Luxembourg. The Issuer will arrange for notice of any change in or addition to the Paying Agents or their specified offices to be given to Debenture Bondholders within 14 days of the relevant event in accordance with Condition 16 (Notice to Debenture Bondholders). For so long as any Debenture Bond is outstanding, the Issuer undertakes that there will at all times be a Paying Agent located in an EU Member State that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law (whether of a Member State of the European Union or a non-Member State) implementing or complying with, or introduced in order to conform to, such Directive.

(h) Payments on Business Days If any payment under a Coupon or a Debenture Bond is due and payable and the Coupon or the Debenture Bond is presented for payment on a day which is not a Business Day in the place of presentation (and, in the case of any payment by transfer to a Sterling account, in London), payment will be made on the next following Business Day in such place or places and no additional amounts by way of interest, principal or otherwise shall be due in respect of such Coupon or, as the case may be, of such Debenture Bond in respect of any delay.

(i) Exchange of Talons On or after the relevant Interest Payment Date on which the final Coupon forming part of a Coupon sheet is surrendered, the Talon forming part of that Coupon sheet may be surrendered at the specified office of any Paying Agent for a further Coupon sheet (including

246 a further Talon). Upon the due date for redemption in full of any Definitive Debenture Bond, any unmatured Talon relating to it shall become void and no Coupons will be delivered in respect of such Talon.

(j) Change in currency (i) If at any time there is a change in the currency of the United Kingdom such that the Bank of England recognises a different currency or currency unit or more than one currency or currency unit as the lawful currency of the United Kingdom, then references in, and obligations arising under, the Debenture Bonds outstanding at the time of any such change and which are expressed in Sterling shall be translated into, and/or any amount becoming payable under the Debenture Bonds thereafter as specified in these Conditions shall be paid in the currency or currency unit of the United Kingdom and in the manner designated by the Principal Paying Agent. Any such translation shall be made at the official rate of exchange recognised for that purpose by the Bank of England. (ii) Where such a change in currency occurs, the Global Debenture Bonds (if any) in respect of the Debenture Bonds then outstanding and the Conditions relating to such Debenture Bonds shall be amended in the manner agreed by the Issuer and the Debenture Bond Trustee so as to reflect that change and, so far as practicable, to place the Issuer, the Debenture Bond Trustee and the Debenture Bondholders in the same position each would have been in had no change in currency occurred (such amendments to include, without limitation, changes required to reflect any modification to business day or other conventions arising in connection with such change in currency). All amendments made pursuant to this Condition 7(j) (Payments – Change in currency) will be binding upon holders of such Debenture Bonds. (iii) Notification of the amendments made to Debenture Bonds pursuant to this Condition 7(j) (Payments – Change in currency) will be made in accordance with Condition 16 (Notice to Debenture Bondholders) and will state, inter alia, the date on which such amendments are to take or took effect, as the case may be.

(k) Fractions Each amount of principal and interest payable on any date in respect of a Debenture Bond shall be rounded down to the nearest penny per £100 denomination of that Debenture Bond.

8. Taxation All payments in respect of the Debenture Bonds will be made without withholding or deduction for, or on account of, any present or future taxes of whatsoever nature unless the Issuer or any Paying Agent through whom the Issuer makes payments is required by applicable law to make any payment in respect of the Debenture Bonds subject to any such withholding or deduction. In that event, the Issuer, or such Paying Agent (as the case may be) shall make such payment after such withholding or deduction has been made and shall account to the relevant authorities for the amount so required to be withheld or deducted. None of the Issuer, any Paying Agent and Ambac or any other person will be obliged to make any additional payment to holders of Debenture Bonds in respect of amounts so withheld or deducted.

9. Prescription Debenture Bonds shall become void unless presented for payment within a period of 10 years from the Relevant Date in respect thereof. Coupons shall become void unless presented for payment within a period of 5 years from the Relevant Date in respect thereof. After the date on which a Debenture Bond or a Coupon becomes void in its entirety, no claim may be made in respect thereof.

10. Issuer Events of Default (a) Determination of an Issuer Event of Default The Debenture Bond Trustee:

247 (i) shall, whether or not there is any conflict between two or more Classes of Debenture Bondholders and/or any other Issuer Secured Creditor, prior to the occurrence of an Ambac Termination Event, if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds, only if it has been directed to do so in writing by Ambac and not otherwise (and subject to being indemnified and/or secured to its satisfaction in accordance with the Trust Deed); or (ii) if the aggregate Principal Amount Outstanding of Guaranteed Debenture Bonds is less than or equal to 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds and/or an Ambac Termination Event has occurred: (A) may, in its absolute discretion, but subject to obtaining the consent of Ambac (except if an Ambac Termination Event has occurred); and (B) shall, if it has been directed to do so in writing by the holders of at least 25 per cent. of the aggregate Principal Amount Outstanding of the Debenture Bonds then outstanding or if so directed by an Extraordinary Resolution or Extraordinary Resolutions, as the case may be, of the Debenture Bondholders (and subject to being indemnified and/or secured to its satisfaction in accordance with the Trust Deed) (but subject, in either case, to obtaining the consent of Ambac (except if an Ambac Termination Event has occurred), if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 25 per cent. but not more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds), give a notice (a Debenture Bond Acceleration Notice) to the Issuer declaring the Debenture Bonds to be due and repayable at any time after the occurrence of any of the events specified in Condition 10(b) (Issuer Events of Default – Events).

(b) Events The occurrence of any of the following events shall constitute an Issuer Event of Default: (i) default is made in the payment of interest or repayment of principal (other than in respect of Step-Up Amounts or any Redemption Premium Amount) with respect to any Debenture Bond when and as the same ought to be paid in accordance with these Conditions; or (ii) default is made by the Issuer in the performance or observance of any obligation binding upon it under the Debenture Bonds, the Trust Deed or the Issuer Deed of Charge or any other Transaction Document and, in any such case (except where the Debenture Bond Trustee (or, in the case of the Issuer Deed of Charge, the Issuer Security Trustee) certifies that, in its opinion, such default is incapable of remedy when no notice will be required) such default continues for a period of 14 days following the service by the Debenture Bond Trustee (or, in the case of the Issuer Deed of Charge, the Issuer Security Trustee) on the Issuer of notice requiring the same to be remedied; or (iii) the Issuer, otherwise than for the purposes of such amalgamation or reconstruction as is referred to in Condition 10(b)(v) below, ceases or, through an authorised action of the board of directors of the Issuer, threatens to cease to carry on business or a substantial part of its business or any of the following occurs in respect of the Issuer: (a) it is, or is deemed for the purposes of any law to be, unable to pay its debts as and when they fall due or insolvent (for the avoidance of doubt taking into account the availability of the Liquidity Facility under the Liquidity Facility Agreement); (b) it admits its inability to pay its debts as they fall due; (c) the value of its assets is less than its liabilities (taking into account contingent and prospective liabilities); (d) it suspends making payments on any of its debts or announces an intention to do so; (e) by reason of actual or anticipated financial difficulties, it commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness; or (f) a moratorium is declared in respect of any of its indebtedness; or (iv) an order is made or an effective resolution is passed for the winding-up, dissolution, administration (whether out of court or otherwise) or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of the Issuer except a winding-up or

248 reorganisation for the purposes of or pursuant to an amalgamation or reconstruction the terms of which have previously been approved by the Issuer Security Trustee and the Debenture Bond Trustee in writing; or (v) (A) any steps being taken (whether out of court or otherwise) against the Issuer under any applicable liquidation, insolvency, composition, reorganisation or other similar laws (including, but not limited to, application for an administration order) and such proceedings not, in the opinion of the Debenture Bond Trustee, being disputed in good faith with a reasonable prospect of success, or (B) an administration order being granted or an administrative receiver or other receiver, administrator, liquidator or other similar official being appointed (in each case, whether out of court or otherwise) in relation to the Issuer or in relation to the whole or any substantial part of the undertaking or assets of the Issuer, or (C) an encumbrancer taking possession of the whole or any substantial part of the undertaking or assets of the Issuer, or (D) a distress, execution, diligence or other process being levied or enforced upon or sued out against the whole or any substantial part of the undertaking or assets of the Issuer and such possession or process (as the case may be) not being discharged or not otherwise ceasing to apply within 14 days, or (E) the Issuer initiating or consenting to judicial proceedings relating to itself under applicable liquidation, insolvency, composition, reorganisation or other similar laws or making a conveyance or assignment for the benefit of its creditors, generally; or (vi) any event occurs which under any applicable laws has an analogous effect to any of the events referred to in paragraphs (iii), (iv) and (v) above; or (vii) the Issuer Security (or any part thereof) is terminated or is or becomes void, illegal, invalid or unenforceable or any person is entitled to terminate, rescind or avoid all of or any material provision of any Transaction Document and alternative arrangements approved by an Extraordinary Resolution of the holders of each Class of Debenture Bonds are not made within 60 days of the date of the Debenture Bond Trustee requiring alternative arrangements to be made or of such an event or of a person becoming so entitled.

(c) Acceleration (i) Upon delivery of a Debenture Bond Acceleration Notice, the Debenture Bonds shall immediately become due and repayable at their Principal Amount Outstanding, in the case of the Class A1 Debenture Bonds, the Class A2 Debenture Bonds and, where the Debenture Bond Acceleration Notice is delivered, from (and including) the relevant Step- Up Date, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds, and at the greater of par and the Redemption Amount, where the Debenture Bond Acceleration Notice is delivered up to (but excluding) the relevant Step- Up Date, in the case of the Class A3 Debenture Bonds, the Class A4 Debenture Bonds and the Class A5 Debenture Bonds together with accrued interest up to (but excluding) the earlier of (i) the date on which all principal, interest and other amounts (if any) are paid in full and (ii) the seventh day after notice has been given to the Debenture Bondholders in accordance with Condition 16 (Notice to Debenture Bondholders) that the full amount has been received by the Principal Paying Agent or the Debenture Bond Trustee. (ii) No Couponholder or Talonholder shall be entitled to take any proceedings or other action directly against the Issuer, provided that if the Debenture Bond Trustee, having become bound to give a Debenture Bond Acceleration Notice, fails to do so within a reasonable time and that failure is continuing, the holders of not less than 25 per cent. in aggregate of the Principal Amount Outstanding of the Debenture Bonds then outstanding may (subject to obtaining the consent of Ambac (except if an Ambac Termination Event has occurred), if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 25 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds) sign and give a Debenture Bond Acceleration Notice in accordance with Condition 10 (Issuer Events of Default) and direct the Debenture Bond Trustee to instruct the Issuer Security Trustee to give an Issuer Enforcement Notice in accordance with Condition 11 (Enforcement).

249 The Issuer will be required to notify the Debenture Bond Trustee immediately upon becoming aware of the occurrence of an Issuer Event of Default and provide further information to the Debenture Bond Trustee in accordance with the provisions of the Trust Deed. The Debenture Bond Trustee shall be entitled to serve a Debenture Bond Acceleration Notice in reliance upon, and shall have no duty or responsibility to make any investigation in relation to, such notification by the Issuer.

11. Enforcement At any time after a Debenture Bond Acceleration Notice has been delivered, the Debenture Bond Trustee: (a) shall, whether or not there is any conflict between two or more Classes of Debenture Bondholders and/or any other Issuer Secured Creditor, prior to the occurrence of an Ambac Termination Event, if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds, only if it has been directed to do so in writing by Ambac and not otherwise (and subject to being indemnified and/or secured to its satisfaction in accordance with the Trust Deed); or (b) if the aggregate Principal Amount Outstanding of Guaranteed Debenture Bonds is less than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds and/or an Ambac Termination Event has occurred: (i) may, in its absolute discretion, but subject to obtaining the consent of Ambac (except if an Ambac Termination Event has occurred); and (ii) shall, if it has been directed to do so in writing by the holders of at least 25 per cent. of the aggregate Principal Amount Outstanding of the Debenture Bonds then outstanding or if so directed by an Extraordinary Resolution or Extraordinary Resolutions, as the case may be, of the Debenture Bondholders (and subject to being indemnified and/or secured to its satisfaction in accordance with the Trust Deed) (but subject, in either case, to obtaining the consent of Ambac (except if an Ambac Termination Event has occurred), if the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 25 per cent. but not more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds), direct the Issuer Security Trustee to give a notice (an Issuer Enforcement Notice) to the Issuer declaring the whole of the Issuer Security to be enforceable and to take such steps against the Issuer to enforce the Issuer Security as it thinks fit, or as is specified in the relevant direction, in the case of paragraphs (a) or (b)(ii) above. No Debenture Bondholder or Issuer Secured Creditor shall be entitled to proceed directly against the Issuer unless the Debenture Bond Trustee, having become bound so to do, fails to do so within a reasonable period and such failure shall be continuing, subject to the terms of the Trust Deed.

12. Meetings of Debenture Bondholders (a) The Trust Deed contains provisions for convening Meetings of the Debenture Bondholders and, in the circumstances set out in the Trust Deed, separate Meetings of each Class of Debenture Bondholders to consider any matter affecting their interests, including proposals by Extraordinary Resolution of Debenture Bondholders or the relevant Class thereof, as the case may be, to modify, or to sanction the modification of, the Debenture Bonds, or the relevant Class thereof (including these Conditions), or the provisions of any of the Transaction Documents. These Conditions are subject to the detailed meetings provisions set out in the Trust Deed. (b) The Trust Deed provides that: (i) an Extraordinary Resolution which in the opinion of the Debenture Bond Trustee affects the interest of the holders of one Class only of the Debenture Bonds shall be deemed to have been duly passed, if passed at a separate meeting of the holders of such Class of Debenture Bonds;

250 (ii) an Extraordinary Resolution which in the opinion of the Debenture Bond Trustee affects the interests of the holders of two or more Classes of Debenture Bonds but does not give rise to a conflict of interest between the holders of such Classes of Debenture Bonds shall be deemed to have been duly passed if passed at a single Meeting of the holders of such Classes of Debenture Bonds;

(iii) an Extraordinary Resolution which in the opinion of the Debenture Bond Trustee affects the interests of the holders of two or more Classes of Debenture Bonds and gives or may give rise to a conflict of interest between the holders of such Classes of Debenture Bonds shall be deemed to have been duly passed only if, in lieu of being passed at a single Meeting of the holders of each of such Classes of the Debenture Bonds it shall be duly passed at separate Meetings of the holders of each of such Classes of Debenture Bonds; (iv) the Debenture Bond Trustee shall be entitled to consult with Ambac and rely upon the opinion of Ambac as to whether any conflict of interest arises between the holders of the Guaranteed Debenture Bonds (as between any Class of Guaranteed Debenture Bonds) or between the holders of one or more Classes of Guaranteed Debenture Bonds and any other Class of Debenture Bonds.

(c) A Written Resolution shall take effect as if it were an Extraordinary Resolution. (d) Subject as provided below, the quorum at any Meeting of Debenture Bondholders or holders of the relevant Class of Debenture Bonds, as the case may be, for passing an Extraordinary Resolution will be one or more persons holding or representing not less than 50 per cent. of the aggregate Principal Amount Outstanding of the Debenture Bonds or, as the case may be, relevant Class of Debenture Bonds or, at any adjourned Meeting, one or more persons being or representing Debenture Bondholders, whatever the aggregate Principal Amount Outstanding so held or represented. (e) The quorum at any Meeting of Debenture Bondholders or the relevant Class of Debenture Bondholders, as the case may be, for passing an Extraordinary Resolution in respect of a Basic Terms Modification shall be one or more persons holding or representing not less than 75 per cent. or, at any adjourned Meeting, one or more persons representing not less than 25 per cent. of the aggregate Principal Amount Outstanding of the Debenture Bonds or, as the case may be, the relevant Class of Debenture Bonds for the time being outstanding. (f) The majority required for an Extraordinary Resolution shall be a majority of not less than 75 per cent. of the votes cast on that resolution, whether by a show of hands or a poll. (g) Subject to paragraph (h) below, and provided that no Ambac Termination Event has occurred: (i) Ambac shall have the right to give requests or directions to the Debenture Bond Trustee and to vote at Meetings of the holders of the Guaranteed Debenture Bonds as if it were the holder of 100 per cent. of the then aggregate Principal Amount Outstanding of each Class of the Guaranteed Debenture Bonds to the exclusion of any right which the holders of the Guaranteed Debenture Bonds would otherwise have to vote or to direct the Debenture Bond Trustee. For so long as such provisions apply, for the purposes of determining whether or not a request or direction has been given by a holder of not less than the required percentage in aggregate Principal Amount Outstanding of the relevant Debenture Bonds or whether any Meeting of the Debenture Bondholders is quorate and for counting votes cast at any such Meeting of Debenture Bondholders, Ambac shall be treated as the holder of 100 per cent. of the then aggregate Principal Amount Outstanding of each Class of the Guaranteed Debenture Bonds. (ii) In respect of a separate Meeting of the holders of any Class of the Guaranteed Debenture Bonds, Ambac shall not be required to attend such Meeting but may instead deliver written instructions to the Debenture Bond Trustee as to its vote on each of the items in the relevant notice within 10 Business Days of receipt of notice of such Meeting.

251 (iii) If a single Meeting of the holders of any Class of the Guaranteed Debenture Bonds and one or more other classes of the Debenture Bonds has been convened, Ambac may attend and vote at such Meeting in respect of 100 per cent. of the then aggregate Principal Amount Outstanding of each Class of the Guaranteed Debenture Bonds or, not fewer than 5 Business Days prior to such meeting, give written instructions to the Debenture Bond Trustee of its vote to be counted at such Meeting.

(h) Ambac will not be entitled to give requests or directions to the Debenture Bond Trustee or to vote at a Meeting of the Debenture Bondholders as if it were the holder of 100 per cent. of the then aggregate Principal Amount Outstanding of each Class of the Guaranteed Debenture Bonds pursuant to paragraph (g) above to the extent that such request, direction or, as the case may be, vote relates to any Debenture Bondholder Reserved Matter.

13. Modification and Waiver; Determination

(a) Modification The Debenture Bond Trustee may, without the consent of the Debenture Bondholders, the Couponholders or the Talonholders but subject (where the interest of the holders of the Guaranteed Debenture Bonds would in the opinion of the Debenture Bond Trustee, be affected) to obtaining the consent of Ambac (prior to the occurrence of an Ambac Termination Event and for so long as the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds) and except where the subject matter is a Debenture Bondholder Reserved Matter agree or cause any other party to agree to any modification (other than a Basic Terms Modification) or to any waiver or authorisation of any breach or proposed breach of the Trust Deed, the Debenture Bonds or any of the other Transaction Documents which, in the opinion of the Debenture Bond Trustee, is not materially prejudicial to the interests of the holders of the Debenture Bonds other than (except where an Ambac Termination Event has occurred or the subject matter is a Debenture Bondholder Reserved Matter) the Guaranteed Debenture Bonds or to any modification which, in the opinion of the Debenture Bond Trustee, is to correct a manifest error or is of a formal, minor or technical nature. Where the consent of Ambac is required for any modification to a Transaction Document where the modification arises by reason of (i) incurrence by the Borrower of Relevant Financial Indebtedness and/or (ii) the issuance by the Issuer of Further Debenture Bonds or New Debenture Bonds, Ambac shall be required to give its consent where conditions to the issuance of such Relevant Financial Indebtedness or issuance of Further Debenture Bonds or New Debenture Bonds have been satisfied.

(b) Determination The Debenture Bond Trustee may also, without the consent of the Debenture Bondholders, the Couponholders or the Talonholders but subject to obtaining the consent of Ambac (prior to the occurrence of an Ambac Termination Event and for so long as the aggregate Principal Amount Outstanding of the Guaranteed Debenture Bonds is more than 50 per cent. of the aggregate Principal Amount Outstanding of all of the Debenture Bonds) determine that an Issuer Event of Default shall not, or shall not subject to specified conditions, be treated as such.

(c) Binding Nature and Notice Any such notification, waiver, authorisation or determination shall be binding on the Debenture Bond Trustee, the Issuer, Ambac, Debenture Bondholders, the Couponholders and the Talonholders and unless the Debenture Bond Trustee agrees otherwise, any such modification shall be notified to the Debenture Bondholders as soon as practicable thereafter in accordance with Condition 16 (Notice to Debenture Bondholders).

252 14. Indemnification, Exoneration and Replacement of the Debenture Bond Trustee (a) Indemnification and Exoneration of the Debenture Bond Trustee The Trust Deed and the Issuer Deed of Charge contain provisions governing the responsibility (and relief from responsibility) of the Debenture Bond Trustee and the Issuer Security Trustee, respectively, and providing for their indemnification in certain circumstances, including provisions relieving them from taking enforcement proceedings or, in the case of the Issuer Security Trustee, enforcing the Issuer Security unless indemnified and/or secured to its satisfaction. The Debenture Bond Trustee and the Issuer Security Trustee and their related companies are entitled to enter into business transactions with the Issuer and any affiliate of the Issuer without accounting for any profit resulting therefrom. The Issuer Security Trustee will not be responsible for any loss, expense or liability which may be suffered as a result of any assets comprised in the Issuer Security, or any deeds or document of title thereto, being uninsured or inadequately insured or being held by or to the order of clearing organisations or their operators or by intermediaries such as banks, brokers or other similar persons on behalf of the Debenture Bond Trustee.

(b) Replacement of Debenture Bond Trustee The Trust Deed contains provisions by which the Issuer has the power to appoint a new Debenture Bond Trustee, subject to the prior approval of such person in writing by an Extraordinary Resolution of the holders of each Class of Debenture Bonds. Any appointment of a new Debenture Bond Trustee or new Debenture Bond Trustees and any retirement or removal of an existing Debenture Bond Trustee under the Trust Deed shall as soon as practicable afterwards be notified by the Issuer to the Paying Agents, the Agent Bank, all Debenture Bondholders, the Issuer Security Trustee and the Rating Agencies.

15. Replacement of Definitive Debenture Bonds and Coupons If any Debenture Bond, Coupon or Talon is mutilated, defaced, lost, stolen or destroyed, it may be replaced at the specified office of any Paying Agent. Replacement of any mutilated, defaced, lost, stolen or destroyed Debenture Bond, Coupon or Talon will only be made on payment of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Debenture Bonds, Coupons or Talons must be surrendered before new ones will be issued.

16. Notice to Debenture Bondholders Any notice regarding the Debenture Bonds to Debenture Bondholders shall be deemed to have been duly given to the relevant Debenture Bondholders if published in a leading daily newspaper printed in the English language and with general circulation in London (which is expected to be the Financial Times) and (so long as the Debenture Bonds are listed on the Stock Exchange and the rules of that exchange so require) in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or, if this is not practicable in the opinion of the Debenture Bond Trustee, in another appropriate newspaper having general circulation in Luxembourg previously approved in writing by the Debenture Bond Trustee. Any such notice shall be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the first date on which publication is made in the manner required in one of the newspapers referred to above. A copy of each notice given in accordance with this Condition 16 (Notice to Debenture Bondholders) shall be provided to each of the Rating Agencies and to Ambac (prior to the occurrence of an Ambac Termination Event). The Debenture Bond Trustee may approve some other method of giving notice to the Debenture Bondholders or any category of them if, in its opinion, such other method is reasonable having regard to market practice then prevailing and to the requirements of the stock exchange on which the Debenture Bonds are then listed and provided that notice of such other method is given to the Debenture Bondholders in such manner as the Debenture Bond Trustee shall require, and further provided that so long as the Debenture Bonds are listed on the Stock Exchange and the rules of that exchange so require, such notices shall always be published in a leading newspaper having general circulation in Luxembourg (which

253 is expected to be the Luxemburger Wort) or, if this is not practicable in the opinion of the Debenture Bond Trustee in another appropriate newspaper having general circulation in Luxembourg previously approved in writing by the Debenture Bond Trustee. The Couponholders will be deemed for all purposes to have notice of the contents of any notice given to the relevant Class of Debenture Bondholders in accordance with this Condition 16 (Notice to Debenture Bondholders). Whilst the Debenture Bonds are represented by Global Debenture Bonds, notice to Debenture Bondholders will be valid if published as described above, for so long as the rules of the Stock Exchange so require and, at the option of the Issuer, if delivered to Clearstream, Luxembourg and/or Euroclear for communication by them to Debenture Bondholders. Any notice so delivered to Clearstream, Luxembourg and/or Euroclear shall be deemed to have been given on the day of such delivery.

17. Further Issues (a) Further Debenture Bonds The Issuer shall be at liberty, without the consent of the Debenture Bondholders, but subject always to the provisions of these Conditions and the Trust Deed, to raise further funds, from time to time, on any date by the creation and issue of further Class A1 Debenture Bonds (the Further Class A1 Debenture Bonds) in bearer form carrying the same terms and conditions in all respects (except in relation to the first Interest Period) as, and so that the same shall be consolidated and form a single series and rank pari passu with, the Class A1 Debenture Bonds, and/or the creation and issue of further Class A2 Debenture Bonds (the Further Class A2 Debenture Bonds) in bearer form carrying the same terms and conditions in all respects (except in relation to the first Interest Period) as, and so that the same shall be consolidated and form a single series and rank pari passu with, the Class A2 Debenture Bonds and/or the creation and issue of further Class A3 Debenture Bonds (the Further Class A3 Debenture Bonds in bearer form carrying the same terms and conditions in all respects (except in relation to the first Interest Period) as, and so that the same shall be consolidated and form a single series and rank pari passu with, the Class A3 Debenture Bonds and/or the creation and issue of further Class A4 Debenture Bonds (the Further Class A4 Debenture Bonds) in bearer form carrying the same terms and conditions in all respects (except in relation to the first Interest Period) and so that the same shall be consolidated and form a single series and rank pari passu with the Class A4 Debenture Bonds and/or the creation and issue of further Class A5 Debenture Bonds (the Further Class A5 Debenture Bonds and, together with the Further Class A1 Debenture Bonds, the Further Class A2 Debenture Bonds, the Further Class A3 Debenture Bonds and the Further Class A4 Debenture Bonds, the Further Debenture Bonds) in bearer form carrying the same terms and conditions in all respects (except in relation to the first Interest Period) as, and so that the same shall be consolidated and form a single series and rank pari passu with, the Class A5 Debenture Bonds provided that: (i) the aggregate principal amount of all Further Debenture Bonds to be issued on such date is not less than £5 million; (ii) no Issuer Event of Default or Potential Issuer Event of Default has occurred and is subsisting on such date or would occur as a result of the further issue; (iii) if the proceeds of issue of the Further Debenture Bonds are not to be used solely to refinance existing indebtedness of the Issuer or any Relevant Financial Indebtedness, the Rating Agencies confirm that the then outstanding classes of Debenture Bonds will each be assigned (A) in the case of the Class A2 Debenture Bonds and the Class A4 Debenture Bonds, a rating of at least ‘‘BBB+’’/‘‘BBB+’’/‘‘Baa2’’, and (B) in the case of the the Guaranteed Debenture Bonds, an Underlying Rating, of at least ‘‘BBB+’’/‘‘BBB+’’/ ‘‘Baa2’’ nothwithstanding the completion of the proposed issuance of such Further Debenture Bonds; (iv) if the proceeds of issue of the Further Debenture Bonds are to be used solely to refinance existing indebtedness of the Issue or any Relevant Financial Indebtedness, the Rating Agencies confirm that the then outstanding Classes of Debenture Bonds will be assigned the same ratings as the then-current ratings of the Class A2 Debenture Bonds

254 and the Class A4 Debenture Bonds and the same underlying ratings as the then-current Underlying Ratings of the Guaranteed Debenture Bonds nothwithstanding the completion of the proposed issuance of such Further Debenture Bonds; and

(v) in respect of Further Debenture Bonds which are to rank pari passu with the existing Debenture Bonds and are to bear interest at a floating rate, the consent of Ambac (if required) is obtained where the proceeds thereof are not to be used solely for the purpose of refinancing original Classes of Debenture Bonds (or any subsequent refinancing thereof (capped at the aggregate principal amount of those original Debenture Bonds)).

(b) New Debenture Bonds The Issuer shall be at liberty, without the consent of the Debenture Bondholders (but subject always to the provisions of the Trust Deed) to raise further funds from time to time and on any date by the creation and issue of new Debenture Bonds (the New Debenture Bonds)in bearer form which may rank pari passu with the Debenture Bonds carrying terms which differ from any Class of Debenture Bonds and which do not form a single series with any Class of Debenture Bonds or which rank junior to any Class of Debenture Bonds provided that the conditions to the issue of Further Debenture Bonds as set out in Condition 17(a) are met in respect of the issue of such New Debenture Bonds and, additionally, where the New Debenture Bonds are to rank junior to Debenture Bonds then outstanding, the then-current ratings of the existing Classes of Debenture Bonds (including, for so long as any of the Guaranteed Debenture Bonds is outstanding, the Underlying Ratings) would not be adversely affected notwithstanding the completion of the proposed issuance of New Debenture Bonds.

(c) Supplemental Trust Deeds and Security Any such Further Debenture Bonds or New Debenture Bonds will be constituted by a further deed or deeds supplemental to the Trust Deed and have the benefit of security pursuant to a further deed or deeds supplemental to the Issuer Deed of Charge containing revised Priorities of Payment, acceleration and enforcement rights and, where appropriate, subordination and non-petition provisions acceptable to, inter alios, the Issuer Security Trustee and the Debenture Bond Trustee as described in Condition 3 (Status, Priority and Security).

18. European Economic and Monetary Union (a) Notice of redenomination

The Issuer may, without the consent of the Debenture Bondholders, on giving at least 30 days’ prior notice to the Debenture Bondholders, the Debenture Bond Trustee and the Paying Agent, designate a date (the Redenomination Date), being an Interest Payment Date under the Debenture Bonds falling on or after the date on which the United Kingdom becomes a Participating Member State.

(b) Redenomination

Notwithstanding the other provisions of these Conditions, with effect from the Redenomination Date:

(i) the Debenture Bonds shall be deemed to be redenominated into Euro in the denomination of Euro 0.01 with a principal amount for each Debenture Bond equal to the principal amount of that Debenture Bond in pounds Sterling, converted into Euro at the rate for conversion of such currency into Euro established by the Council of the European Union pursuant to the Treaty (including compliance with rules relating to rounding in accordance with European Community regulations) provided, however, that, if the Issuer determines, with the agreement of the Debenture Bond Trustee, that the then market practice in respect of the redenomination into Euro 0.01 of internationally offered securities is different from that specified above, such provisions shall be deemed to be amended so as to comply with such market practice and the Issuer shall promptly notify the Debenture Bondholders, each stock exchange (if any) on which the Debenture Bonds are then listed and the Paying Agents of such deemed amendments;

255 (ii) if Debenture Bonds have been issued in definitive form: (A) the payment obligations contained in all Debenture Bonds denominated in pounds Sterling will become void on the Euro Exchange Date but all other obligations of the Issuer thereunder (including the obligation to exchange such Debenture Bonds in accordance with this Condition 18 (European Economic and Monetary Union)) shall remain in full force and effect; and (B) new Debenture Bonds denominated in Euro will be issued in exchange for Debenture Bonds denominated in pounds Sterling in such manner as the Paying Agent may specify and as shall be notified to the Debenture Bondholders in the Euro Exchange Notice; (iii) all payments in respect of the Debenture Bonds (other than, unless the Redenomination Date is on or after such date as the pound Sterling ceases to be a sub-division of the Euro, payments of interest in respect of periods commencing before the Redenomination Date) will be made solely in Euro by cheque drawn on, or by credit or transfer to a Euro account (or any other account to which Euro may be credited or transferred) maintained by the payee with a bank in the principal financial centre of any Participating Member State; and (iv) a Debenture Bond may only be presented for payment on a day which is a Business Day in the place of presentation. In this Condition 18 (European Economic and Monetary Union), Business Day means, in respect of any place of presentation, any day which is a day on which commercial banks are open for general business in such place of presentation and which is also a day on which the TARGET system is operating. (c) Interest Following redenomination of the Debenture Bonds pursuant to this Condition 18 (European Economic and Monetary Union): (i) where Debenture Bonds have been issued in definitive form, the amount of interest due in respect of the Debenture Bonds will be calculated by reference to the aggregate principal amount of the Debenture Bonds presented for payment by the relevant holder and the amount of such payment shall be rounded down to the nearest Euro 0.01; and (ii) the amount of interest payable in respect of each Debenture Bond for any Interest Period shall be calculated by applying the relevant Rate of Interest for such Interest Period to the principal amount of such Debenture Bond during such Interest Period, multiplying the product by the actual number of days in such Interest Period divided by 360 and rounding the resulting figure down to the nearest Euro 0.01.

19. Assignment of Rights to Ambac (a) If Ambac makes a payment to or on behalf of holders of the Debenture Bonds pursuant to the Ambac Financial Guarantee in respect of Scheduled Interest and/or Ultimate Principal, the rights of the holders of the Class A1 Debenture Bonds and/or, as the case may be, the Class A3 Debenture Bonds and/or, as the case may be, the Class A5 Debenture Bonds to claim payment from the Issuer of amounts due in respect of which payment has been made under the Ambac Financial Guarantee will be automatically assigned to Ambac or such other person specified by Ambac to the Debenture Bond Trustee from time to time on or prior to payment by Ambac under the Ambac Financial Guarantee (the Nominee) upon and to the extent of receipt of such payments by the holders of the Class A1 Debenture Bonds and/or, as the case may be, the Class A3 Debenture Bonds and/or, as the case may be, the Class A5 Debenture Bonds. (b) If the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds are not held by or on behalf of a clearing system at the time that a payment of Scheduled Interest and/or Ultimate Principal (as the case may be) is due, the Debenture Bond Trustee is authorised by the holders of the Class A1 Debenture Bonds and the Class A3 Debenture Bonds and the Class A5 Debenture Bonds to assign to Ambac or the Nominee on behalf of the relevant holders all rights of such holders to claim payment from the Issuer in respect of amounts due under the Class A1 Debenture Bonds and/or, as

256 the case may be, the Class A3 Debenture Bonds and/or, as the case may be, the Class A5 Debenture Bonds and in respect of which payment has been made under the Ambac Financial Guarantee.

20. Substitution of Principal Debtor The Trust Deed contains provisions permitting the Debenture Bond Trustee to agree, subject to such amendment of the Trust Deed and such other conditions as the Debenture Bond Trustee may require and with the consent of Ambac (provided that no Ambac Termination Event has occurred) but without the consent of any Debenture Bondholder or Couponholder, to the substitution (including, without limitation, pursuant to Condition 6(d) (Redemption, Purchase and Cancellation – Substitution/Redemption for taxation or other reasons) of another body corporate in place of the Issuer (or of any previous substitute) as principal debtor in respect of the Trust Deed, the Debenture Bonds, the Coupons and the Talons. Any such body corporate shall be a newly formed special purpose entity and will be required to undertake to be bound by provisions corresponding to those set out in the Trust Deed, the Debenture Bonds, the Coupons and the Talons. In the case of a substitution pursuant to this Condition 20 (Substitution of Principal Debtor), the Debenture Bond Trustee may in its absolute discretion and without the consent of the Debenture Bondholders or the Couponholders, agree to a change of the law governing the Debenture Bonds, the Coupons, the Talons, the Trust Deed and/or any of the other Transaction Documents provided that such change, in the opinion of the Debenture Bond Trustee, would not be materially prejudicial to the interests of the Debenture Bondholders (other than prior to the occurrence of an Ambac Termination Event, the Guaranteed Debenture Bondholders, in respect of which Ambac shall confirm whether or not such change would be materially prejudicial) and each Rating Agency has confirmed in writing to the Debenture Bond Trustee that such change will not result in the withdrawal, reduction or other adverse action with respect to the then current rating of the Debenture Bonds and for so long as any of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds and the Class A5 Debenture Bonds is outstanding the Underlying Rating will not be adversely affected as a result of the substitution.

Where the Rating Agencies have confirmed in writing to the Debenture Bond Trustee that an action under or in relation to the Transaction Documents or the Debenture Bonds will not result in the withdrawal, reduction or any other adverse action with respect to the then current rating of the Debenture Bonds and (for so long as there are any Class A1 Debenture Bonds, Class A3 Debenture Bonds or Class A5 Debenture Bonds outstanding) the Underlying Rating (a Rating Confirmation), the Debenture Bond Trustee, in considering whether such action is materially prejudicial to the interests of the Issuer Secured Creditors or, as the case may be, the Debenture Bondholders (the No Material Prejudice Test) shall (and, in relation to any Rating Confirmation by Fitch only, where the Debenture Bond Trustee considers that such Rating Confirmation is an appropriate test or the only appropriate test to apply in that circumstance) be entitled to take into account such Rating Confirmation provided that the Debenture Bond Trustee shall continue to be responsible for taking into account, for the purpose of the No Material Prejudice Test, all other matters which would be relevant to such No Material Prejudice Test.

The Debenture Bond Trustee must notify the Stock Exchange and the Debenture Bondholders of any substitution as soon as practicable after agreeing to that substitution in accordance with this Condition 20.

21. Determinations Conclusive All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained, by the Debenture Bond Trustee shall (in the absence of breach of trust, wilful default, gross negligence or fraud) be binding on the Debenture Bond Trusteee, the Issuer, Ambac, Debenture Bondholders the Couponholders and the Talonholders and (in the absence of breach of trust, wilful default, gross negligence or fraud) no liability to the Debenture Bondholders or Couponholders shall attach to the Debenture Bond Trustee in connection with the exercise or non-exercise by it of its powers, duties and discretions hereunder.

257 22. Non-Petition Except as expressly permitted to do so by Condition 11 (Enforcement), the Debenture Bondholders shall not be entitled to take any steps: (a) to direct the Debenture Bond Trustee to instruct the Issuer Security Trustee to enforce the Issuer Security; or (b) to take or join any person in taking steps against the Issuer for the purpose of obtaining payment of any amount due from the Issuer to it; or (c) to initiate or join any person in initiating any Insolvency Proceedings in relation to the Issuer or the appointment of an Insolvency Official in relation to the Issuer or in relation to the whole or any substantial part of the undertakings or assets of the Issuer; or (d) to take any steps or proceedings that would result in the Priorities of Payments in the Issuer Deed of Charge not being observed.

23. Subordination In the event that, on any Interest Payment Date, the cash standing to the credit of the Issuer Transaction Account (the Issuer Available Amounts), after deducting the amounts ranking in priority to the payment of any Step-Up Amounts and/or any Redemption Premium Amounts, are not sufficient to satisfy in full the aggregate amount of the Step-Up Amounts and/or any Redemption Premium Amounts due and, subject to this Condition 22 payable on the relevant Class of Debenture Bonds on such Interest Payment Date, there shall instead be payable on such Interest Payment Date, by way of payment of such Step-Up Amount and/or Redemption Premium Amount only, a pro rata share (calculated by reference to the aggregate Principal Amount Outstanding of the relevant Class(es) of Debenture Bonds then outstanding in respect of which Step-Up Amounts and/or Redemption Premium Amounts are then payable) of the Issuer Available Amounts then remaining on such Interest Payment Date. In such event, the Issuer shall create a provision in its accounts for the shortfall equal to the amount by which the aggregate amount of the Step-Up Amounts and/or Redemption Premium Amounts paid on each relevant Class of Debenture Bonds on any Interest Payment Date in accordance with this Condition 22 falls short of the aggregate amount of Step-Up Amounts and/or Redemption Premium Amounts on such Class(es) on that date. Any such shortfall arising in respect of the relevant Class(es) of Debenture Bonds shall itself accrue interest at the same rate as that payable in respect of the relevant Class(es) of Debenture Bonds and shall be payable together with such accrued Step-Up Amounts and/or Redemption Premium Amounts on any succeeding Interest Payment Date only if and to the extent that, on such Interest Payment Date, the Issuer Available Amounts, after deducting the amounts ranking in priority to the payment of any Step-Up Amounts and/or Redemption Premium Amounts (as applicable) in respect of the relevant Class(es) of Debenture Bonds are sufficient to make such payment.

24. Contracts (Rights of Third Parties) Act 1999 No person shall have any right to enforce any term or condition of the Debenture Bonds under the Contracts (Rights of Third Parties) Act 1999.

25. Governing Law The Trust Deed, the Issuer Deed of Charge, the Agency Agreement, the other Transaction Documents and the Debenture Bonds are governed by, and shall be construed in accordance with, English law (other than certain aspects of the Transaction Documents specifically relating to Borrower Scottish Properties, which are governed by, and shall be construed in accordance with, Scots law).

258 GLOBAL DEBENTURE BONDS

The Debenture Bonds shall be initially represented by (i) in the case of the Class A1 Debenture Bonds, a temporary global bond in the principal amount of £150,000,000 (the Class A1 Temporary Global Debenture Bond), (ii) in the case of the Class A2 Debenture Bonds, a temporary global bond in the principal amount of £200,000,000 (the Class A2 Temporary Global Debenture Bond), (iii) in the case of the Class A3 Debenture Bonds, a temporary global debenture bond in the principal amount of £250,000,000 (the Class A3 Temporary Global Debenture Bond), (iv) in the case of the Class A4 Debenture Bonds, a temporary global debenture bond in the principal amount of £350,000,000 (the Class A4 Temporary Global Debenture Bond) and (v) in the case of the Class A5 Debenture Bonds, a temporary global debenture bond in the principal amount of £300,000,000 (the Class A5 Temporary Global Debenture Bond) and together with the Class A1 Temporary Global Debenture Bond, the Class A2 Temporary Global Debenture Bond, the Class A3 Temporary Global Debenture Bond and the Class A4 Temporary Global Debenture Bond, the Temporary Global Debenture Bonds), in each case without Coupons or Talons attached. Each Temporary Global Debenture Bond will be deposited on behalf of the relevant subscribers of each class of Debenture Bonds with Deutsche Bank AG, as the common depositary (the Common Depositary) for Euroclear Bank S.A./N.V., as operator of the Euroclear system (Euroclear) and Clearstream, Luxembourg Banking, socie´te´ anonyme (Clearstream, Luxembourg), on the Closing Date. Upon deposit of each such Temporary Global Debenture Bond, Euroclear or Clearstream, Luxembourg will credit each subscriber of Debenture Bonds represented by such Temporary Global Debenture Bond with the principal amount of the relevant Debenture Bonds equal to the principal amount thereof for which it has subscribed and paid. Interests in the Temporary Global Debenture Bonds will be exchangeable from and including the date which is 40 days after the Closing Date (the Exchange Date), upon receipt of certification of non-U.S. beneficial ownership by the Issuer from Euroclear or Clearstream, Luxembourg, for interests in permanent global bonds of the relevant class (the Permanent Global Debenture Bonds and together with the Temporary Global Debenture Bonds, the Global Debenture Bonds). On exchange of the Temporary Global Debenture Bond for the Permanent Global Debenture Bond, the Permanent Global Debenture Bond will remain deposited with the Common Depositary. Title to the Global Debenture Bonds will pass by delivery. Interest and principal on the Global Debenture Bonds will be payable against presentation of the Global Debenture Bonds by the Common Depositary to the Principal Paying Agent provided that certification of non-U.S. beneficial ownership has been received by the Issuer from Euroclear or Clearstream, Luxembourg. A record of each payment made on the Global Debenture Bonds, distinguishing between any payment of principal and payment of interest, will be endorsed on the relevant schedule to that Global Debenture Bond by the Paying Agents (or the Paying Agents shall procure that such endorsement be made) and such record shall be prima facie evidence that the payment in question has been made. Each Global Debenture Bond will only be exchangeable for definitive Debenture Bonds in the limited circumstances described below. Each of the persons appearing from time to time in the records of Euroclear or Clearstream, Luxembourg as the holder of a Debenture Bond other than Clearstream, Luxembourg, in the case of Euroclear, and Euroclear, in the case of Clearstream, Luxembourg, will be entitled to receive any payment so made in respect of that Debenture Bond in accordance with the respective rules and procedures of Euroclear or Clearstream, Luxembourg, as appropriate. Such persons shall have no claim directly against the Issuer in respect of payments due on a Debenture Bond, which must be made to the holder of the relevant Global Debenture Bond, for so long as such Debenture Bond is outstanding. Each such person must give a certificate as to non-U.S. beneficial ownership as of the earlier of (i) the date on which the Issuer is obliged to exchange the relevant Temporary Global Debenture Bond for the relevant Debenture Bond, which date shall be no earlier than the Exchange Date, or (ii) the first Interest Payment Date, in order to obtain any payment due on the Debenture Bonds. For so long as any of the Debenture Bonds is represented by a Global Debenture Bond such Debenture Bonds will be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg, as appropriate.

259 For so long as any of the Debenture Bonds is represented by Global Debenture Bonds, each person who is for the time being shown in the records of Euroclear, or of Clearstream, Luxembourg, as the holder of a particular Principal Amount Outstanding of a particular class of Debenture Bonds (other than Clearstream, Luxembourg or Euroclear) will be entitled to be treated by the Issuer and the Debenture Bond Trustee as a holder of such Principal Amount Outstanding of such Debenture Bonds. For so long as any of the Debenture Bonds is represented by a Global Debenture Bond and such Global Debenture Bond is held on behalf of a clearing system, notices to those Debenture Bondholders whose Debenture Bonds are represented by a Global Debenture Bond may be given by delivery of the relevant notice to the clearing system for communication by it to entitled accountholders in substitution for publication as required by the Conditions, provided that for so long as the Debenture Bonds are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices will also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort). Each Temporary Global Debenture Bond, Global Debenture Bond and definitive Debenture Bond, and any Coupons and Talons attached, will bear the following legend: ‘‘Any United States Person (as defined in the Internal Revenue Code of the United States of America) who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code of the United States of America.’’ Debenture Bondholders means, in relation to any Debenture Bond represented by a Global Debenture Bond, each person (other than Clearstream, Luxembourg or Euroclear) who is for the time being shown in the records of Clearstream, Luxembourg or Euroclear as the holder of a particular Principal Amount Outstanding of those Debenture Bonds, for which purpose any certificate or letter of confirmation (or any other form of record made by any of them) as to the Principal Amount Outstanding of Debenture Bonds standing to the account of any person shall be conclusive and binding on the basis that such person shall be treated by the Issuer, the Debenture Bond Trustee and all other persons as the holder of such Principal Amount Outstanding of those Debenture Bonds for all purposes, other than for the purpose of payments in respect of those Debenture Bonds, the right to which shall be vested, as against the Issuer, solely in the bearer of the relevant Global Debenture Bond in accordance with and subject to its terms, and for such purpose, Debenture Bondholders means the bearer of the relevant Global Debenture Bond. If, after the Exchange Date: (a) the Class A1 Debenture Bonds become due and repayable pursuant to Condition 10; (b) the Class A2 Debenture Bonds become due and repayable pursuant to Condition 10; (c) the Class A3 Debenture Bonds become due and repayable pursuant to Condition 10; (d) the Class A4 Debenture Bonds become due and repayable pursuant to Condition 10; (e) the Class A5 Debenture Bonds become due and repayable pursuant to Condition 10; (f) either Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business; or (g) as a result of any amendment to, or change in, the laws or regulations of the United Kingdom (or of any political sub-division thereof) or of any authority therein or thereof having power to tax, or in the interpretation or administration of such laws or regulations which become effective on or after the Closing Date, the Issuer is or the Paying Agents are or will be required to make any deduction or withholding from any payment in respect of the Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds or the Class A5 Debenture Bonds, as the case may be, which would not be required were the Class A1 Debenture Bonds, the Class A2 Debenture Bonds, the Class A3 Debenture Bonds, the Class A4 Debenture Bonds or the Class A5 Debenture Bonds, as the case may be, in definitive form, then the Issuer will, at its sole cost and expense, issue: (i) Class A1 Debenture Bonds in definitive form in exchange for the whole outstanding interest in the Class A1 Permanent Global Debenture Bond; and/or

260 (ii) Class A2 Debenture Bonds in definitive form in exchange for the whole outstanding interest in the Class A2 Permanent Global Debenture Bond; and/or (iii) Class A3 Debenture Bonds in definitive form in exchange for the whole outstanding interest in the Class A3 Permanent Global Debenture Bond; and/or (iv) Class A4 Debenture Bonds in definitive form in exchange for the whole outstanding interest in the Class A4 Permanent Global Debenture Bond; and/or (v) Class A5 Debenture Bonds in definitive form in exchange for the whole outstanding interest in the Class A5 Permanent Global Debenture Bond, in each case within 30 days of the occurrence of the relevant event.

261 SUBSCRIPTION AND SALE

Goldman Sachs International, Barclays Bank PLC, Citigroup Global Markets Limited and The Royal Bank of Scotland plc (the Lead Managers), and Merrill Lynch International (the Co-Lead Manager and together with the Lead Manager, the Managers) have, pursuant to a subscription agreement dated the date of this Offering Circular between the Managers, Ambac, the Issuer, SPL, the Borrower and the other Obligors (as defined therein) (as the same may be amended and/or supplemented from time to time, the Subscription Agreement), agreed to subscribe and pay for each class of Debenture Bonds as follows: (i) the Class A1 Debenture Bonds at an issue price of 100 per cent. of their initial principal amount; (ii) the Class A2 Debenture Bonds at an issue price of 100 per cent. of their initial principal amount; (iii) the Class A3 Debenture Bonds at an issue price of 105 per cent. of their initial principal amount; (iv) the Class A4 Debenture Bonds at an issue price of 105 per cent. of their initial principal amount; and (v) the Class A5 Debenture Bonds at an issue price of 105 per cent. of their initial principal amount, on the terms and conditions set forth therein. The Issuer will pay or will procure a payment to the Managers of an aggregate management and underwriting commission of 0.60 per cent. of the aggregate principal amount of the Debenture Bonds plus the premium payable on the issue thereof. The Subscription Agreement is subject to a number of conditions and may be terminated by the Managers, in certain circumstances prior to payment for the Debenture Bonds to the Issuer. The Issuer, SPL and the Obligors have agreed to indemnify the Managers against certain liabilities in connection with the issue of the Class A1 Debenture Bonds and/or the Class A2 Debenture Bonds and/or the Class A3 Debenture Bonds and/or the Class A4 Debenture Bonds and/or the Class A5 Debenture Bonds. In connection with the distribution of the Debenture Bonds, Goldman Sachs International (as stabilising agent) may over-allot or effect transactions which stabilise or maintain the market price of a particular class of Debenture Bonds at a level which might not otherwise prevail. Such stabilising, if commenced, shall be in compliance with all applicable laws and regulations may be discontinued at any time and must be brought to on and after a limited period.

United Kingdom Each of the Managers has represented to and agreed, inter alios, with the Issuer and the Obligors that: (a) it has not offered or sold and, prior to the expiry of the period of six months from the Closing Date, will not offer or sell any Debenture Bonds to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business 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; (b) 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 FSMA received by it in connection with the issue or sale of any Debenture Bonds in circumstances in which section 21(1) of FSMA does not apply to the Issuer and Ambac; and (c) it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Debenture Bonds in, from or otherwise involving the United Kingdom.

United States of America The Debenture Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended, (the Securities Act) and may not be offered, sold or delivered within

262 the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Each of the Managers has represented and agreed that within the United States it has not offered or sold, and will not offer or sell the Debenture Bonds (i) as part of their distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering of the Debenture Bonds and the Closing Date except in accordance with Rule 903 of Regulation S under the Securities Act and, accordingly, that neither the relevant Manager nor any of its affiliates (including any person acting on its behalf or any of its affiliates) has engaged or will engage in any directed selling efforts with respect to the Debenture Bonds. Terms used in this section have the meaning given to them by Regulation S under the Securities Act. The Debenture Bonds are in bearer form for U.S. federal income tax purposes and therefore subject to U.S. tax law requirements, and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by the U.S. tax regulations.

In addition: (a) each of the Managers has represented and agreed that except to the extent permitted under United States Treasury Regulation Section 1.163-5(c)(2)(i)(D) (the D Rules), (A) it has not offered or sold, and during the restricted period it will not offer or sell, any Debenture Bonds to a person who is within the United States or its possessions or to a United States person, and (B) it has not delivered and will not deliver in definitive form within the United States or its possessions any Debenture Bonds that are sold during the restricted period; (b) each of the Managers has further represented and agreed that it has, and throughout the restricted period it will have, in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling Debenture Bonds are aware that the Debenture Bonds may not be offered or sold during the restricted period to a person who is within the United States or its possessions or to a United States person, except as permitted by the D Rules; (c) if it is a United States person, each of the Managers has represented that it is acquiring the Debenture Bonds for purposes of resale in connection with their original issuance and if it retains Debenture Bonds for its own account, it will only do so in accordance with the requirements of United States Treasury Regulation Section 1.163-5(c)(2)(i)(D)(6); (d) with respect to each affiliate of each of the Managers that acquires from it Debenture Bonds for the purpose of offering or selling such Debenture Bonds during the restricted period, each of the Managers has either (i) repeated and confirmed the representations and agreements contained in paragraphs (a), (b) and (c) on its behalf or (ii) agreed that it will obtain from such affiliate for the benefit of the Issuer the representations and agreements contained in paragraph (a), (b) and (c); and (e) terms used in this paragraph have the meaning given to them by the United States Internal Revenue Code of 1986, as amended, and regulations thereunder, including D Rules.

Luxembourg No action has or will be taken by the Managers that would permit a public offer of the Debenture Bonds in the Grand-Duchy of Luxembourg. Accordingly, the Debenture Bonds must not be offered or sold, directly or indirectly, and neither this Offering Circular nor any other circular, prospectus, form of application, advertisement or other material may be distributed in or from or published in the Grand-Duchy of Luxembourg, except for the sole purposes of the listing of the Debenture Bonds on the Luxembourg Stock Exchange and except in circumstances which do not constitute a public offer.

The Netherlands The Debenture Bonds may not be offered, sold, transferred or delivered in or from The Netherlands, as part of their initial distribution, or at any time thereafter, directly or indirectly, other than to individuals or legal entities who or which trade or invest in securities in the conduct of a

263 profession or trade within the meaning of section 2 of the exemption regulation to The Netherlands Securities Market Supervision Act 1995, as amended from time to time, (Vrijstellingsregeling Wet toezicht effectenverkeer 1995), which includes banks, securities firms, insurance companies, pension funds, investment institutions, central governments, large international and supranational organisations, other institutional investors and other parties, including treasury departments of commercial enterprises, which are regularly active in the financial markets in a professional manner.

General Reference should be made to the Subscription Agreement for a complete description of the restrictions on offers and sales of the Debenture Bonds and on distribution of documents. Attention is also drawn to the information set forth on pages 2 and 3 of this Offering Circular.

264 TAXATION AND EU SAVINGS DIRECTIVE

UNITED KINGDOM TAXATION The following, which applies only to persons who are the absolute beneficial owners of the Debenture Bonds, is general in nature and is based on the Issuer’s understanding of current law and Inland Revenue practice in the United Kingdom as at the date of this Offering Circular relating to certain aspects of the United Kingdom taxation of the Debenture Bonds. Special rules may apply to certain classes of taxpayer (such as dealers or persons who are connected with the Issuer otherwise than by virtue of holding Debenture Bonds). Prospective Debenture Bondholders who are in any doubt about their tax position or who may be subject to tax in a jurisdiction other than the United Kingdom should seek their own professional advice.

Interest on the Debenture Bonds Payment of interest on the Debenture Bonds Provided that the Debenture Bonds are and remain listed on a recognised stock exchange,as defined in section 841 of the Income and Corporation Taxes Act 1988 (ICTA) (the Luxembourg Stock Exchange is such a recognised exchange) interest on the Debenture Bonds will be payable without withholding or deduction for or on account of United Kingdom tax. Interest on the Debenture Bonds may also be payable without withholding or deduction for or on account of United Kingdom tax where interest on the Debenture Bonds is paid to a person who belongs in the United Kingdom and the Issuer reasonably believes (and any person by or through whom interest on the Debenture Bonds is paid reasonably believes) that the beneficial owner is within the charge to United Kingdom corporation tax as regards the payment of interest at the time the payment is made or the payment is made to one of the classes of exempt bodies or persons set out in section 349B of ICTA, provided that the Inland Revenue has not given a direction (in circumstances where it has reasonable grounds to believe that it is likely that the beneficial owner is not within the charge to United Kingdom corporation tax in respect of such payment at the time the payment is made or, as the case may be, is not one of the classes of exempt bodies or persons set out in section 349B of ICTA) that the payment should be made under deduction of United Kingdom tax. In all other cases, interest on the Debenture Bonds may be paid after deduction for or on account of United Kingdom income tax at the lower rate (currently 20 per cent.) subject to such relief as may be available under the provisions of any applicable double taxation treaty. If interest is paid under deduction of United Kingdom tax the Issuer will not be obliged to pay any additional amount in respect of the Debenture Bonds. Where interest has been paid under deduction of United Kingdom income tax, Debenture Bondholders who are not resident in the United Kingdom may be able to recover all or part of the tax deducted if there is an appropriate provision in an applicable double taxation treaty.

EU Savings Directive The EU has adopted a Directive regarding the taxation of savings income. Subject to a number of important conditions being met, it is proposed that Member States will be required from a date not earlier than 1 July, 2005 to provide to the tax authorities of other Member States details of payments of interest and other similar income paid by a person within its jurisdiction to or for the benefit of an individual in another Member State, except that Austria, Belgium and Luxembourg will instead impose a withholding system, for a transitional period unless during such period they elect otherwise. The transitional period will end after agreement on exchange of information is reached between the European Union and certain non-European Union states. No withholding will be required where the bondholder authorises the person making the payment to report the payment or presents a certificate from the relevant tax authority establishing exemption therefrom. The attention of Debenture Bondholders is drawn to Condition 8 of the Terms and Conditions of the Debenture Bonds.

Further United Kingdom Income Tax Issues for Non-United Kingdom Resident Debenture Bondholders Interest on the Debenture Bonds constitutes United Kingdom-source income and, as such, may be subject to income tax by direct assessment even where paid without withholding or deduction.

265 However, interest with a United Kingdom source received without deduction or withholding for or on account of United Kingdom tax will generally not be chargeable to United Kingdom tax by direct assessment in the hands of a Debenture Bondholder (other than certain trustees) who is not resident for tax purposes in the United Kingdom unless that Debenture Bondholder carries on a trade, profession or vocation in the United Kingdom through a United Kingdom branch or agency (or for Debenture Bondholders who are companies through a United Kingdom permanent establishment) in connection with which the interest is received or to which the Debenture Bonds are attributable. There are further exemptions for interest received by certain categories of agent (such as some brokers and investment managers). The provisions of an applicable double taxation treaty may also be relevant for such Debenture Bondholders.

United Kingdom Corporation Tax Payers In general, Debenture Bondholders which are within the charge to United Kingdom corporation tax are obliged to bring all profits or losses (whether attributable to currency fluctuations or otherwise) in respect of their holding of the Debenture Bonds (and amounts payable thereunder) into charge for United Kingdom corporation tax purposes generally following the statutory accounting treatment applicable to such Debenture Bondholders. Debenture Bondholders that are authorised unit trusts or open ended investment companies will be subject to the same taxation treatment in respect of the Debenture Bonds as other Debenture Bondholders that are within the charge to United Kingdom corporation tax, other than (in each case) with respect to profits and losses of a capital nature in respect of the Debenture Bonds.

Other United Kingdom Tax Payers Taxation of Chargeable Gains It is the Inland Revenue’s view that the Debenture Bonds will not be treated as qualifying corporate bonds within the meaning of section 117 of the Taxation of Chargeable Gains Act 1992 because there is a provision for the Debenture Bonds to be redeemed in or redenominated in euros. Therefore a disposal (including a redemption) of a Debenture Bond by a Debenture Bondholder who is not subject to United Kingdom corporation tax in respect of the Debenture Bond may give rise to a chargeable gain or an allowable loss for the purposes of United Kingdom capital gains tax depending on the particular circumstances of the Debenture Bondholder. Accrued Income Scheme A transfer of a Debenture Bond by a Debenture Bondholder who is not within the charge to United Kingdom corporation tax and is resident or ordinarily resident in the United Kingdom or carrying on a trade in the United Kingdom through a branch or agency with which the ownership of the Debenture Bonds is connected may give rise to a charge to United Kingdom tax on income in respect of an amount treated (under rules known as ‘‘the accrued income scheme’’ contained in Chapter II of Part XVII of ICTA) as representing interest accrued on the Debenture Bond at the time of transfer. The Debenture Bonds constitute variable interest rate securities for the purposes of the accrued income scheme. Accordingly, any charge to taxation in respect of a transfer of Debenture Bonds will be computed on the basis that such amount as is just and reasonable will be treated as accrued income. However, the transferee of a Debenture Bond will not be entitled to any relief for such amount. Any acquirer of a Debenture Bond on issue will similarly not be entitled to any relief for any premium paid in respect of accrued interest.

Provision of Information The Inland Revenue has powers to require the Issuer or any person by or through whom any interest is paid or any paying or collecting agent to provide certain information, including the names and addresses of recipients of interest paid under the Debenture Bonds. The Inland Revenue may require such recipients to provide further information, including names and addresses of persons who are beneficially entitled to interest paid under the Debenture Bonds and, in certain circumstances, such information may be exchanged with tax authorities in other countries.

Individual Savings Accounts (ISA) The Debenture Bonds are eligible for inclusion in an ISA and will remain so eligible until the date immediately following that which is five years before the first date on which principal falls to be repaid. For ISA purposes eligibility is determined at the date upon which the Debenture Bonds are purchased by the account managers for inclusion in an account.

266 Stamp Duty and Stamp Duty Reserve Tax (SDRT) No United Kingdom stamp duty or SDRT is payable on the issue of the Debenture Bonds or on the issue or transfer by delivery of a Debenture Bond.

Ambac Financial Guarantee Debenture Bondholders should note that the United Kingdom tax treatment of any payment under the Ambac Financial Guarantee of Guaranteed Amounts (as defined in the Ambac Financial Guarantee) in respect of interest due on the Debenture Bonds made by Ambac to the Debenture Bond Trustee for the benefit of the Class A1 Debenture Bondholders, the Class A3 Debenture Bondholders or the Class A5 Debenture Bondholders is technically unclear. In particular, it is uncertain whether a payment of Guaranteed Amounts in respect of interest payable under the terms of the Class A1 Debenture Bonds, the Class A3 Debenture Bonds or the Class A5 Debenture Bonds would be regarded as interest, an annual payment or some other form of United Kingdom source income for the purposes of United Kingdom taxation. (i) If the payments of Guaranteed Amounts are regarded as interest, their tax treatment should be as set out above (see Interest on the Debenture Bonds). However, it should be noted that the exemption which entitles the Issuer to pay interest on the Debenture Bonds without deduction of tax because the Debenture Bonds are listed on a recognised stock exchange may not apply to payments by Ambac under the Ambac Financial Guarantee which are treated as interest for United Kingdom tax purposes. (ii) If the payments of Guaranteed Amounts are regarded as ‘‘annual payments’’, tax may be required to be withheld on account of United Kingdom income tax at the basic rate (currently 22 per cent.) unless the payments are made to a person who belongs in the United Kingdom and Ambac reasonably believes (and any person by or through whom the payments are made reasonably believes) that the beneficial owner is within the charge to United Kingdom corporation tax as regards the payments at the time the payments are made, or the payments are made to one of the classes of exempt bodies or persons set out in section 349B of ICTA, provided that the Inland Revenue has not given a direction (in circumstances where it has reasonable grounds to believe that it is likely that the beneficial owner is not within the charge to United Kingdom corporation tax in respect of such payments at the time the payments are made or, as the case may be, is not one of the classes of exempt bodies or persons set out in section 349B of ICTA) that the payments should be made under deduction of United Kingdom tax. (iii) If the payments of Guaranteed Amounts are regarded as some other form of United Kingdom source income, there should be no withholding or deduction of United Kingdom tax. In all cases, taxation of Guaranteed Amounts may be subject to such relief as may be available under the provisions of an applicable double taxation treaty. Under the terms of the Ambac Financial Guarantee, in the event that any payments by Ambac are made under deduction of United Kingdom tax, Ambac will be obliged (subject to certain exceptions) to pay such additional amounts to the Debenture Bond Trustee or any Class A1 Debenture Bondholder, Class A3 Debenture Bondholder or Class A5 Debenture Bondholder as may be necessary so that the net amounts receivable by the Debenture Bond Trustee or the relevant Class A1 Debenture Bondholder, Class A3 Debenture Bondholder or Class A5 Debenture Bondholder shall equal the amounts which would have been receivable had the payment instead been made by the Issuer.

267 GENERAL INFORMATION

1. The issue of the Debenture Bonds has been authorised by a resolution of the Board of Directors of the Issuer passed on 22 November, 2004 2. The issue of the Ambac Financial Guarantee by Ambac has been duly authorised by a resolution of the Board of Directors of Ambac, passed on 14 September, 2004. 3. Application has been made to list the Debenture Bonds on the Luxembourg Stock Exchange. In connection with the listing application, the Memorandum and Articles of Association of the Issuer and legal notice in relation to the issue of the Debenture Bonds have been deposited with the Registrar of the Trade and Companies’ Register Luxembourg (Registre de Commerce et de Socie´te´s a` Luxembourg), where such documents are available for inspection and where copies of such documents may be obtained upon request. 4. The Debenture Bonds have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The Common Code and the ISIN for each class of Debenture Bonds is as follows:

Common Code ISIN Class A1 Debenture Bonds 020640413 XS0206404138 Class A2 Debenture Bonds 020640472 XS0206404724 Class A3 Debenture Bonds 020640707 XS0206407073 Class A4 Debenture Bonds 020640774 XS0206407743 Class A5 Debenture Bonds 020640928 XS0206409285 5. The Issuer is not involved in any legal or arbitration proceedings which may have, or have had, during the 12 months preceding the date of this Offering Circular, a significant effect on its financial position, nor is the Issuer aware that any such proceedings are pending or threatened. The Borrower Group is not involved in any legal or arbitration proceedings which may have, or have had during the 12 months preceding the date of this Offering Circular, a significant effect on the Borrower Group’s financial position, nor is the Issuer or any member of the Borrower Group aware that any such proceedings are pending or threatened. 6. Since the date of its incorporation, the Issuer has not entered into any contract or arrangement not being in its ordinary course of business other than any documents and/or arrangements with respect to, inter alia, the issue of the Debenture Bonds described in this Offering Circular. 7. The auditors of Ambac are KPMG Audit Plc chartered accountants. Audited accounts have been prepared in relation to Ambac for the year ended 31 December, 2003. KPMG Audit Plc have given, and have not withdrawn, their consent to the inclusion of their reports to the audited financial statements of Ambac for the year ended 31 December, 2003 in this Offering Circular. 8. The annual accounts for Ambac for the years ended 31 December, 2002 and 31 December, 2003 have been audited without qualification. 9. Ambac is not, and has not been, involved in any litigation or arbitration proceedings which may have, or have had, during the 12 months preceding the date of this Offering Circular, a significant effect on its financial position nor is Ambac aware that any such proceedings are pending or threatened. 10. Save as disclosed in this Offering Circular, since 21 October, 2004 (being the date of its incorporation) there has been no material adverse change in the financial position or prospects of the Issuer and no significant change in the trading or financial position of the Issuer. Save as disclosed herein, since 25 October, 2004 (being the date of its incorporation) there has been no material adverse change in the financial or trading position of the Borrower. 11. Save as disclosed in this Offering Circular, the Issuer has no outstanding loan capital, borrowings, indebtedness or contingent liabilities, nor has the Issuer created any mortgage or charge or given any guarantee. 12. No member of the Borrower Group will publish interim accounts. The Accounting Date of each of the Borrower and the Issuer is 24 August. The Issuer and the Borrower will each produce and publish non-consolidated audited annual financial statements.

268 13. The Valuer has given, and has not withdrawn, its consent to the inclusion of its Valuation Report dated 22 November, 2004 in this Offering Circular. 14. Hewitt, Bacon & Woodrow has given, and has not withdrawn, its consent to the inclusion of references to its report and calculations in this Offering Circular. 15. Copies of the following documents may be obtained (including, without limitation, the future financial information of the Issuer, the Borrower Group and Ambac) during usual business hours at the specified offices of the Luxembourg Paying Agent at any time after the date of this Offering Circular (or, in the case of the documents referred to in paragraphs (e) to (w), at any time after the Closing Date): (a) the Memorandum and Articles of Association of the Issuer and each other member of the Borrower Group; (b) the annual audited financial statements of the Issuer, the Borrower and the annual consolidated audited financial statements of Spirit Group Holdings Limited; (c) the annual non-consolidated audited financial statements of Ambac; (d) the Valuer’s Report and the future valuation reports prepared every year from the Closing Date in respect of the Borrower Mortgaged Properties and in accordance with the Issuer/Borrower Facility Agreement; (e) the Quarterly Report; (f) the Trust Deed; (g) the Agency Agreement; (h) the Issuer Deed of Charge; (i) the Master Definitions and Construction Schedule; (j) the Liquidity Facility Agreement; (k) the Issuer/Borrower Facility Agreement; (l) the Borrower Group Deed of Charge; (m) the Servicing Agreement; (n) the Bank Agreement; (o) the Tax Deed of Covenant; (p) the Ambac Financial Guarantee; (q) the Ambac Guarantee and Reimbursement Agreement; (r) the Borrower Group Standard Securities; (s) the Corporate Services Agreement; (t) the Issuer/Borrower Hedging Agreement; (u) the Hedging Agreement; (v) the BankCo/Borrower Subordinated Loan Agreement; (w) the LoanCo/Issuer Subordinated Loan Agreement; (x) the Issuer/Borrower Subordinated Loan Agreement; and (y) the Administrative Services Agreement.

269 APPENDIX

FINANCIAL STATEMENTS OF AMBAC for the Year Ended 31 December, 2003

270 271 270273

271274

273276

275278

276279

276279

276279

277280

278281

272 273 The results for the year are set out in the profit and loss account on pages 278 and 279.

The directors who held office during the year are shown on page 273.

274 275 WeWe have have audited audited the the financial financial statements statements on onpages pages 278 278 to 290. to 290.

TheThis directorsreport is made are responsible solely to the for Company’s preparing the members, directors’ as reporta body, and, in accordance as described with on section page 274, 235 theof the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors are responsible forfor preparingpreparing thethe directors’directors’ report report and,and, asas descridescribedbed onon page 271,274, the financial statements inin accordance with appliapplicablecable United Kingdom law and accounting standards. Our responsibilities, asas independent auditors,auditors, areare estestablishedablished inin thethe United Kingdom byby statute, the Auditing PracticesPractices Board Board and and by by our our profession’s profession’s ethical ethical guidance. guidance.

276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 INDEX OF DEFINED TERMS

There follows an index of the defined terms used in this Offering Circular, together with details of the page(s) on which such term is or are defined.

Page Defined Term Number £...... 3 $...... 3 c...... 3 1989 Report ...... 180 Accelerated Payment...... 115 Accelerated Payment Date ...... 115 Account...... 115 Account Bank...... 207 Accounting Date...... 51, 207 Acquisition...... 92 Actual Principal ...... 51 Additional Amounts ...... 114 Additional Financial Indebtedness ...... 59, 207 Additional Properties...... 58 Additional Term Advances ...... 46, 207 Additional Term Facilities...... 46 Additional SFL Notes ...... 6 Adjusted DSCR (Default) ...... 51 Adjusted DSCR (Default) Covenant...... 51 Adjusted Free Cash Flow ...... 52 AdminCo ...... 8, 193, 207 Administrative Services Agreement ...... 86, 207 Affected Guaranteed Obligations...... 115, 120 AFI Drawdown Date...... 59 Agency Agreement ...... 206, 207 Agent Bank ...... 18, 207 AKE...... 6, 195 Allocated Debt Amount ...... 52 Allocated Overheads...... 52 Alternative Servicer...... 88 Ambac...... 1, 113, 120, 206 Ambac Assurance...... 105, 107 Ambac Assurance Agreements ...... 112 Ambac Event of Default...... 90, 207 Ambac Financial Guarantee ...... 1, 90, 206, 207 Ambac Guarantee and Reimbursement Agreement ...... 91, 206, 207 Ambac Information...... 2 Ambac Notice ...... 15 Ambac Reserved Rights ...... 208 Ambac Subordinated Fees ...... 78, 208, 227 Ambac Termination Event...... 208 Attributable Pub-Level EBITDA...... 56 Avoided Payment Amounts...... 113, 120 AWPs...... 34, 190 Back-to-Back Supply Agreement ...... 89, 189 Bank Accounts...... 85 Bank Agreement ...... 208 BankCo ...... 7, 195, 208 BankCo Administrative Services Agreement ...... 88 BankCo and LoanCo Security Agreement ...... 19 BankCo Banks ...... 7 BankCo/Borrower Subordinated Loan...... 8 BankCo/Borrower Subordinated Loan Agreement ...... 8, 208

291 Page Defined Term Number BankCo Estate...... 11 BankCo Estate Sample...... 131 BankCo Hedge Providers ...... 19 BankCo Loan ...... 7 BankCo Loan Agreement...... 7 BankCo Working Capital Facility...... 8 Bank Security Agent ...... 19 barrelage...... 185 Basic Terms Modification...... 208 BDI...... 184 BDMs ...... 32, 187 Beer Orders ...... 181 Beneficiary ...... 114, 120 BidCo ...... 5, 196, 208 Borrower ...... 5, 115, 196, 208 Borrower Acquisition Agreement...... 197 Borrower Collection Accounts...... 190 Borrower Group ...... 5, 208 Borrower Group Deed of Charge...... 208 Borrower Group Enforcement Notice...... 67 Borrower Group Entity ...... 5, 208 Borrower Group Estate ...... 11, 208 Borrower Group Estate Sample...... 129 Borrower Group Event of Default...... 46, 63 Borrower Group Parent...... 5, 115, 196, 209 Borrower Group Post-Acceleration Priority of Payments ...... 71 Borrower Group Pre-Enforcement Priority of Payments ...... 68 Borrower Group Secured Creditors ...... 66 Borrower Group Security ...... 65 Borrower Group Security Trustee ...... 11, 209 Borrower Group Standard Securities ...... 42, 209 Borrower Group Standard Security...... 209 Borrower IB Hedging Subordinated Amounts ...... 76, 209, 227 Borrower Mortgaged Property(ies)...... 66, 209 Borrower Operating Account...... 190 Borrower Scottish Property(ies) ...... 209 Borrower Secured Parties...... 66 Burness...... 40 Business Day...... 115, 209, 256 Calculation Date...... 209 Capex...... 52 Capex Reserve Account ...... 52 capital market arrangement ...... 43 capital market investment ...... 43 Carlsberg UK ...... 38 Cash Benefit ...... 81, 230 Charging Companies ...... 65 Charter...... 183 Class...... 206 Class A1 Debenture Bondholders...... 206, 209 Class A1 Debenture Bonds ...... 1, 115, 206, 209 Class A1 Expected Amortisation Amount ...... 209, 238 Class A1 Final Maturity Date ...... 209 Class A1 Margin ...... 1, 209, 235 Class A1 Permanent Global Debenture Bond ...... 1 Class A1 Rate of Interest...... 209, 235 Class A1 Step-Up Amounts ...... 78, 116, 209, 227

292 Page Defined Term Number Class A1 Step-Up Date...... 1, 47, 209 Class A1 Step-Up Margin ...... 1, 236 Class A1 Temporary Global Debenture Bond ...... 1, 259 Class A2 Debenture Bondholders...... 206, 209 Class A2 Debenture Bonds ...... 1, 116, 206, 209 Class A2 Expected Amortisation Amount ...... 209, 238 Class A2 Final Maturity Date ...... 209 Class A2 Margin ...... 1, 209, 236 Class A2 Permanent Global Debenture Bond ...... 1 Class A2 Rate of Interest...... 209, 236 Class A2 Step-Up Amounts ...... 78, 209, 227 Class A2 Step-Up Date...... 1, 47, 209 Class A2 Step-Up Margin ...... 1, 210, 236 Class A2 Temporary Global Debenture Bond ...... 1, 259 Class A3 Debenture Bondholders...... 206, 210 Class A3 Debenture Bonds ...... 1, 116, 206, 210 Class A3 Expected Amortisation Amount ...... 210, 238 Class A3 Final Maturity Date ...... 210 Class A3 Margin ...... 1, 210, 236 Class A3 Permanent Global Debenture Bond ...... 1 Class A3 Rate of Interest...... 210, 236 Class A3 Step-Up Amounts ...... 78, 116, 210, 228 Class A3 Step-Up Date...... 1, 47, 210 Class A3 Step-Up Margin ...... 1, 210, 236 Class A3 Temporary Global Debenture Bond ...... 1, 259 Class A4 Debenture Bondholders...... 206, 210 Class A4 Debenture Bonds ...... 1, 116, 206, 210 Class A4 Expected Amortisation Amount ...... 210, 238 Class A4 Final Maturity Date ...... 210 Class A4 Margin ...... 1, 210 Class A4 Permanent Global Debenture Bond ...... 1 Class A4 Rate of Interest...... 210, 236 Class A4 Step-Up Amounts ...... 78, 210, 228 Class A4 Step-Up Date...... 1, 47, 210 Class A4 Step-Up Margin ...... 1, 210, 236 Class A4 Temporary Global Debenture Bond ...... 1, 259 Class A5 Debenture Bondholders...... 206, 210 Class A5 Debenture Bonds ...... 1, 116, 206, 210 Class A5 Expected Amortisation Amount ...... 210, 238 Class A5 Final Maturity Date ...... 210 Class A5 Margin ...... 1, 210, 236 Class A5 Permanent Global Debenture Bond ...... 1 Class A5 Rate of Interest...... 210, 236 Class A5 Step-Up Amounts ...... 79, 116, 210, 228 Class A5 Step-Up Date...... 1, 47, 210 Class A5 Step-Up Margin ...... 1, 210, 236 Class A5 Temporary Global Debenture Bond ...... 1, 259 Clearstream, Luxembourg...... 1, 210, 259 Closing Date ...... 1, 210 Co-Lead Manager ...... 210, 262 Common Depositary ...... 1, 259 Completion...... 7 Conditions ...... 116, 211 Connie Lee ...... 107 Coors ...... 38 Corporate Services Agreement...... 211 Corporate Services Provider...... 14, 211

293 Page Defined Term Number Corporate Reorganisation ...... 7, 197 Couponholders...... 211 Coupons...... 211 CTS...... 189 Cure Date ...... 55 Day Count Fraction...... 211, 235 D Rules...... 263 Debenture Bond Acceleration Notice...... 211, 248 Debenture Bondholder Reserved Matters...... 22, 84, 211 Debenture Bondholders ...... 116, 206, 211 Debenture Bond Principal Payment...... 212, 244 Debenture Bonds ...... 1, 116, 125 206, 212 Debenture Bond Trustee...... 116, 206, 212 Debt Service (Default) ...... 52 Debt Service (OpFlex) ...... 52 Default Interest ...... 116, 212, 238 Definitive Debenture Bond ...... 212 Demerger ...... 5 DevCo...... 187 Directive...... 34 Disposal Proceeds Account ...... 56 Dollars...... 3 Drawdown Date ...... 46 DSCR (Default)...... 51 DSCR (Default) Covenant...... 51 DSCR (OpFlex)...... 52 DTZ...... 11, 212 Due for Payment...... 90, 116, 212 Early Redemption Price ...... 212, 241 EBITDA...... 127 EDS ...... 31 Eligible Investments ...... 86, 212 EMU...... 212 Enterprise Act ...... 42 Epos...... 188 Equity Group...... 6 Equity Offering ...... 50 ER Amount ...... 212, 242 Euro ...... 3, 212 Euro Exchange Date...... 212 Euro Exchange Notice ...... 212 Euroclear...... 1, 212, 259 Event of Default Cure Date...... 65 Excess Amounts ...... 212 Excess Cash...... 58 Excess Net Sales Proceeds ...... 56 Exchange Date ...... 212, 259 Exchange Event...... 213 Excluded Group Entity ...... 213 Excluded Part ...... 56 Existing Collection Accounts...... 190 Existing Hedges ...... 25 Existing Sweep Accounts...... 190 Expected Amortisation Amount...... 48, 238 Expert ...... 213 Extraordinary Resolution...... 213 FA Appointment Event...... 60

294 Page Defined Term Number Facility Agent ...... 5 Fair and Reasonable Principle...... 39 Faith...... 194 Final Maturity Date...... 116, 213 Financial Adviser...... 60 Financial Guarantee...... 120 Financial Indebtedness ...... 53, 213 Financial Quarter ...... 53, 213 Financial Quarter Date...... 53, 213 Financial Year...... 53, 213 First Fixed Charge Security ...... 65 Fitch ...... 1, 213 Floating Charge Assets...... 66 FMT ...... 56 forward-looking statements ...... 44 Free Cash Flow ...... 53 FRS17...... 192 FSA...... 105 FSMA...... 86 Further Class A1 Debenture Bonds...... 254 Further Class A2 Debenture Bonds...... 254 Further Class A3 Debenture Bonds...... 254 Further Class A4 Debenture Bonds...... 254 Further Class A5 Debenture Bonds...... 254 Further Debenture Bonds ...... 16, 214, 254 Further Term Advance...... 46 Further Term Facility...... 46 Global Debenture Bonds...... 214, 259 Gross Redemption Yield ...... 214 GSI...... 3 Guarantee Fee...... 117 Guarantee Fee Letter ...... 117 Guaranteed Amounts...... 117, 214 Guaranteed Debenture Bonds ...... 117, 214 Guarantee Excluded Amounts ...... 116, 214 Guaranteed Obligations ...... 117, 214 Hedge Provider ...... 214 Hedge Provider Requisite Rating...... 17, 74, 75, 215 Hedging Agreement ...... 215 Hedging Agreement Excluded Amounts ...... 80, 230 Hedging Agreement Subordinated Amounts...... 77, 215, 227 ICTA...... 265 IFRS...... 26 Initial Fee ...... 48 Initial Hedge Provider...... 17 Initial Hedge Provider Guarantor 17, 215 Insolvency Act...... 42, 117, 215 Insolvency Law ...... 117 Insolvency Official ...... 215 Insolvency Proceedings ...... 118, 215 Interest Amount ...... 215, 236 Interest Charges ...... 53 Interest Determination Date ...... 215, 235 Interest Payment Date ...... 1, 117, 215 Interest Period ...... 1, 215 Interim Period ...... 190 Intra-Group Subordinated Loans...... 62, 215

295 Page Defined Term Number ISA ...... 266 Issue ...... 7 Issue Price ...... 215 Issuer ...... 1, 117, 206, 215 Issuer Available Amounts ...... 77, 215, 226 Issuer/Borrower Facility Agreement ...... 7, 215 Issuer/Borrower Hedging Agreement...... 7, 65, 215 Issuer/Borrower Subordinated Loan ...... 8 Issuer/Borrower Subordinated Loan Agreement...... 8, 215 Issuer Charged Property...... 215 Issuer Deed of Charge...... 14, 206, 216 Issuer Enforcement Notice...... 216, 250 Issuer Event of Default ...... 216, 248 Issuer IB Hedging Subordinated Amounts...... 68 Issuer Parent ...... 93, 216 Issuer Post-Acceleration Priority of Payments...... 81, 216, 230 Issuer Pre-Acceleration Priority of Payments ...... 77, 216, 226 Issuer Secured Creditors ...... 14, 216 Issuer Secured Obligations...... 216 Issuer Security ...... 216 Issuer Security Documents ...... 216 Issuer Security Trustee...... 216 Issuer Transaction Account ...... 216 Junior Creditors...... 66 Junior Debt ...... 65 Lead Managers...... 216, 262 Leasehold Title Reports ...... 40 LIBOR ...... 1, 47, 216 Licensing Act 2003 ...... 35, 182 Liquidity Facility...... 217 Liquidity Facility Agreement ...... 72, 217 Liquidity Facility Event of Default...... 73 Liquidity Facility Provider ...... 217 Liquidity Facility Requisite Rating ...... 17 Liquidity Facility Reserve Account ...... 73, 217 Liquidity Facility Standby Drawings ...... 217 Liquidity Shortfall...... 73 Liquidity Subordinated Amounts ...... 77, 217, 226 LoanCo ...... 8, 194, 217 LoanCo/BankCo Subordinated Loan...... 8 LoanCo/BankCo Subordinated Loan Agreement ...... 8 LoanCo Banks ...... 8 LoanCo Loan ...... 8 LoanCo Loan Agreement...... 8 LoanCo/Issuer Subordinated Loan ...... 8, 217 LoanCo/Issuer Subordinated Loan Agreement...... 8, 217 Loan Interest Payment Date ...... 47 Loan-to-Value Covenant ...... 51 Loan-to-Value Ratio ...... 51 Luxembourg Paying Agent...... 217 Managed Estate...... 11 Managers ...... 217, 262 Mandatory Costs...... 217 Market Value...... 61 Master Definitions and Construction Schedule ...... 5, 217 MAT ...... 56 Meeting ...... 218

296 Page Defined Term Number Mitchells & Butlers ...... 30 Moody’s...... 1, 218 municipal bonds ...... 108 municipal obligations...... 108 Net Sales Proceeds ...... 56 Net Worth Maintenance Agreement...... 112 New Basel Capital Accord ...... 218 New Cash Collection System ...... 190 New Debenture Bonds...... 16, 218, 255 New FinCo ...... 8, 193 New FinCo/LoanCo Subordinated Loan ...... 8 New FinCo/LoanCo Subordinated Loan Agreement...... 8 New ParentCo...... 5, 196, 218 New Term Advance ...... 46 New Term Facility ...... 46 No Material Prejudice Test ...... 23, 257 Nominee...... 218, 256 Non-payment ...... 117 Notice of Demand and Certificate...... 117 Obligors...... 65, 218 Old FinCo...... 194 Old HoldCo ...... 6, 194 Operating Accounts ...... 70 Original SFL Notes ...... 6 Outside Payments...... 62 outstanding ...... 218 Participating Member State...... 218 Paying Agents...... 219 Pensions Bill ...... 28 Peoplesoft ...... 31 Periodic Fee...... 47 Permanent Global Debenture Bonds ...... 219, 259 Permitted Acquisition ...... 57 Permitted Business ...... 58 Permitted Disposal...... 55 Permitted Disposals (OpFlex Conditions) ...... 55 Permitted Financial Indebtedness...... 62 Permitted Outside Payments ...... 62 Person...... 117 Potential Borrower Group Event of Default...... 46 Potential Issuer Event of Default ...... 219 Pounds...... 3 Preference ...... 117 Pre-Reorganisation Managed Estate ...... 11 Principal Amount Outstanding ...... 219 Principal Paying Agent...... 219 Priorities of Payments...... 219 Professional Valuation ...... 61 Project PubCo...... 7 Project Star ...... 5 Project Star Lease ...... 40 Project Star Properties...... 40 Project Wentworth...... 5 Project Wisley ...... 5 Property Due Diligence Reports ...... 40 Property Valuation Date...... 61 Provisions for Meetings of Debenture Bondholders...... 219

297 Page Defined Term Number PubCo Estate...... 11 PubCo HoldCo...... 193 PubCo ManagedCo ...... 7, 195 PubCo TenantedCo ...... 195 Pub-Level EBITDA...... 53 Pub-Level Operating Profit...... 54 pubs ...... 181 Punch Group...... 5 Quarterly Report ...... 50, 219, 245 Rate of Interest ...... 219, 235 Rating Agencies...... 1, 219 Rating Confirmation ...... 23, 257 Receipt...... 117 Receiver...... 219 recognised stock exchange ...... 265 Red Book ...... 127 Redemption Amount ...... 241 Redemption Premium Amount...... 219 Redenomination Date ...... 219, 255 Reference Banks ...... 219 Reference Date...... 219 Reference Gilt...... 220 Refinancing ...... 7 Registered Title Reports ...... 40 Reinsurance Agreement ...... 112 Release Price...... 56 Relevant Date ...... 116, 220 Relevant Financial Indebtedness ...... 54, 220 Relevant Period ...... 51 relevant persons ...... 3 Relevant Pubs...... 58 relevant Rate of Interest ...... 220, 235 Replacement Hedge Provider...... 17, 220 Replacement Hedging Agreement ...... 80 RP Amount ...... 220 s.75 debt...... 28 S&N ...... 5 S&P...... 1, 220 Scheduled Interest ...... 90, 118, 220 Schemes...... 28 Scottish Assets ...... 42 Scottish Courage ...... 38 Screen Rate...... 216 SDEL ...... 189 SDRT ...... 267 Securities Act...... 2, 262 Securitisation ...... 6 Securitisation Group ...... 5 Securitisation Group Entity ...... 5 Securitised Estate...... 6 Security Interest...... 220 Security Powers of Attorney ...... 220 Senior Debt...... 65 Separation...... 5 Service Fee...... 86 Servicer...... 220 Servicing Agreement...... 220

298 Page Defined Term Number SFL ...... 5 SFL Issuer/Borrower Facility Agreement ...... 6 SFL Notes...... 6 SGEL ...... 6, 194 SGL...... 5, 196, 220 SGL Group Companies...... 220 SGL Subordinated Loan ...... 7 SGPL ...... 5, 193 SGPS...... 28, 191 SGPTL ...... 194 SGRL ...... 6, 196 SGRPP ...... 28, 191 SGRRSP...... 191 Shortfall...... 120 SIHL...... 6, 193 small company...... 42 SMHL...... 5, 193 SNR Acquisition ...... 5 SNR Acquisition Facility...... 5 SNR Group ...... 5 SNR Group Companies ...... 220 SNR Estate ...... 11, 187 specified office ...... 221 Spirit Estate Sample ...... 131 Spirit Group...... 5, 118, 221 Spirit Holdings...... 5, 187, 193 Spirit Group Entity...... 5 Spirit Supply...... 194 SPL ...... 5, 99, 194, 221 Step-Up Amounts...... 1, 221 Step-Up Dates ...... 1, 221 Sterling...... 3, 221 Stock Exchange...... 221 Subscription Agreement...... 221, 262 Subsidiary ...... 118 Substitution ...... 58 Synthetic Capex...... 54 Synthetic Debt Service ...... 54 Talonholders ...... 221 Talons ...... 221 TARGET System ...... 221 tax ...... 221 Tax Credit ...... 81, 230 Tax Deed of Covenant...... 86, 221 TC Properties...... 5 TCL ...... 5, 196 TCL Acquisition...... 5 Temporary Global Debenture Bonds ...... 1, 221, 259 Term A1 Advance...... 45 Term A1 Facility...... 45 Term A1 Margin...... 47 Term A1 Step-Up Amounts...... 68 Term A1 Step-Up Margin...... 47 Term A2 Advance...... 45 Term A2 Facility...... 45 Term A2 Margin...... 47 Term A2 Step-Up Amounts...... 68

299 Page Defined Term Number Term A2 Step-Up Margin...... 47 Term A3 Advance...... 45 Term A3 Facility...... 45 Term A3 Margin...... 47 Term A3 Step-Up Amounts...... 68 Term A3 Step-Up Margin...... 47 Term A4 Advance...... 45 Term A4 Facility...... 45 Term A4 Margin...... 47 Term A4 Step-Up Amounts...... 68 Term A4 Step-Up Margin...... 47 Term A5 Advance...... 45 Term A5 Facility...... 45 Term A5 Margin...... 47 Term A5 Step-Up Amounts...... 69 Term A5 Step-Up Margin...... 47 Term Advances...... 45, 221 Term Advance Step-Up Amounts ...... 69 Term Facilities ...... 45 Tie...... 181 TLT ...... 40 Transaction Documents ...... 221 Transfer...... 88 Transparency Directive ...... 26 TravelCo ...... 6, 195 Treaty...... 221 Trust Deed ...... 118, 206, 221 TUPE ...... 88 Ultimate Principal ...... 90, 118, 222 Underlying Rating ...... 222 Unspent Capex Amount...... 55 U.S. Dollars...... 3 U.S. $...... 3 value ...... 61 Valuers...... 61, 222 Valuer’s Report ...... 11 VAT...... 222 WCF Drawstop ...... 70 Weighted Average Interest Rate...... 58 Weighted Average Interest Rate Test...... 57 Whitbread...... 198 White Paper ...... 37 Written Resolution...... 222

300 REGISTERED AND HEAD OFFICE OF THE ISSUER Spirit Issuer plc c/o SPV Management Limited Tower 42 (Level 11) International Financial Centre 25 Old Broad Street London EC2N 1HQ

BORROWER GROUP SECURITY TRUSTEE, ISSUER SECURITY TRUSTEE AND DEBENTURE BOND TRUSTEE Deutsche Trustee Company Limited Winchester House 1 Great Winchester Street London EC2N 2DB

FINANCIAL GUARANTEE PROVIDER Ambac Assurance UK Limited Hasilwood House 60 Bishopsgate London EC2N 4BE

LEGAL ADVISERS

To the Issuer and the Borrower To the Managers, the Borrower as to English law Group Security Trustee, the Slaughter and May Issuer Security Trustee and the One Bunhill Row Debenture Bond Trustee London EC1Y 8YY as to English law Freshfields Bruckhaus Deringer 65 Fleet Street London EC4Y 1HS

To the Managers, To Ambac the Borrower Group Security Trustee, Allen & Overy LLP the Issuer Security Trustee and One New Change the Debenture Bond Trustee London EC4M 9QQ as to Scots law Tods Murray LLP 66 Queen Street Edinburgh EH2 4NE

AGENT BANK AND LUXEMBOURG LISTING AGENT PRINCIPAL PAYING AGENT PAYING AGENT Dexia Banque Deutsche Bank AG London Dexia Banque Internationale a` Winchester House Internationale a` Luxembourg 1 Great Winchester Street Luxembourg 69 route d’Esch London EC2N 2DB 69 route d’Esch L-2953 Luxembourg L-2953 Luxembourg

AUDITORS TO THE ISSUER TAX ADVISERS TO SPIRIT Ernst & Young L.L.P GROUP No.1 Colmore Square Deloitte & Touche L.L.P. Birmingham B4 6HQ 180 Strand London WC2R 1BL

imprima de bussy — C90258