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Terms and Conditions

Additional Special Terms and Conditions for the AA 2 Year Trigger Guaranteed Equity Bond (Issue 5)


These AA 2 Year Trigger Guaranteed Equity Bond (Issue 5) Terms and Conditions are in addition to and supplemental to the General Investment Terms and Conditions and where there are any contradictions, these conditions shall prevail. In these terms, the Account (as defined in clause 1 below) is operated by Birmingham Midshires.

1. Definitions
'Bond' means the AA 2 Year Trigger Guaranteed Equity Bond (Issue 5), opened by an Investor.
'Issue' means the AA 2 Year Trigger Guaranteed Equity Bond (Issue 5).
'Investor' means a person(s) who has opened a Bond including the administrators, executors or assigns of that person.
'Offer Period' means the period up to and including 1 September 2008. This Issue will close earlier if fully subscribed.
'FTSE 100 Index' means the index of 100 leading stocks listed on The London Stock Exchange.
'Initial Index Level' means the average value of the FTSE 100 Index measured at normal FTSE 100 Index closing time on each day between 15 September 2008 and 29 September 2008.
'Maturity Index Level' means the average value of the FTSE 100 Index measured at normal FTSE 100 Index closing time on each day between 29 July 2010 and 26 August 2010.
'Maturity Date' means 1 September 2010. The Bond will be available for re-investment or withdrawal on the next banking day after maturity.
'Issue Date' means 15 September 2008, being the day nominated by Birmingham Midshires on which the Bond will be issued.

2. Investment Levels
The minimum investment is £500. The maximum for any Investor is £1 million. Additional investments are permitted during the Offer Period, providing that this issue has not been fully subscribed.

3. Terms and Conditions
This investment is subject to the enclosed General Investment Terms and Conditions.
In case of conflict, these Special Terms and Conditions prevail.

4. Interest

  1. The interest payment will be made based upon the performance of the FTSE 100 Index. In order for the interest payment to be made, the FTSE 100 Index must show growth of 0% or greater (ie the Maturity Index Level must at least equal the Initial Index Level). If this is the case the following interest payment will apply: 1 September 2010 – 18.27% gross (8.75% AER*)†. If the Maturity Index Level is lower than the Initial Index Level, then the capital will be returned.
  2. After the Maturity Date, in the absence of any written instruction being received, the proceeds will be transferred into an AA account selected at Birmingham Midshires' discretion.
  3. If you invest funds in this account, we will pay you an interest rate†† from the investment date until the issue date. This interest will then be added to the balance invested in the account on the issue date.
  4. In the unlikely event of an error in the calculation of the FTSE 100 Index and if as a result of such error there is either an overpayment or underpayment to the Investor, it is agreed (a) that Birmingham Midshires will pay to the Investor any underpayment immediately on becoming aware of it or (b) that the Investor will repay any overpayment within seven banking days of receiving written notice from Birmingham Midshires.This is without prejudice to paragraph E in the General Investment Terms and Conditions.
  5. The Bond does not involve any equity investment. The Investor will not therefore receive the benefit of any dividends.

5. Early Closure/Part Withdrawal
You may choose to close or make a part withdrawal from the bond and we will do this for you without notice. If you choose to close or make a part withdrawal, a 5% charge on the amount withdrawn will apply and you will not earn interest on the funds withdrawn.

6. Death
If an Investor dies, Birmingham Midshires will, if requested to do so by either their executor/administrator or the person entitled to the beneficial interest in the Bond (on receipt of appropriate evidence), return the investment in full along with an interest payment based on a rate of 3% gross/AER*, for the period in question. For the avoidance of doubt only Bonds open at the Maturity Date will qualify for an interest payment under paragraph 4.

7. Money Back Guarantee
The Investor may, only prior to the Issue Date, withdraw the deposit plus any interest earned at the rate payable on our AA Telephone Access Plus Account†† within 14 days of receipt of the original deposit by Birmingham Midshires, provided any cheques have cleared. We calculate the interest on the money in your account every day. For cheques interest will be payable from the first banking day following receipt. BACS payments earn interest from the day of receipt. If you transfer money from an AA product into into another AA product, interest is payable from the second banking day after we complete your instructions. The day of a withdrawal is not a day on which your withdrawal will earn interest.

8. Market Disruption
If, on or between the dates used to calculate the Initial and Maturity Index Levels, there shall occur (a) any disruption in the trading in such securities which comprise the FTSE 100 Index or (b) a failure to calculate or announce the FTSE 100 Index, then Birmingham Midshires may be entitled to take the level of the FTSE 100 Index on the next succeeding business day when a market disruption does not occur.

9. Income Tax
Birmingham Midshires will deduct the basic income tax liability for Investors before making any payment, but HM Revenue & Customs still requires that Investors must declare all interest received or credited on their annual tax return. If an Investor is (or becomes) liable to tax at a higher rate, or in receipt of age allowance, he or she will have further tax to pay.

10. Stock Exchange Disclaimer
These Bonds are not in any way sponsored, endorsed, sold or promoted by FTSE International Limited ("FTSE") or by the London Stock Exchange Limited ("The Exchange") or by The Financial Times Limited ("FT") and neither FTSE nor The Exchange nor the FT makes any warranty or representation whatsoever, expressly or implied, either as to the results to be obtained from the use of the FTSE 100 Index ("The Index") and/or the figure at which the said Index stands at any particular day or otherwise. The Index is compiled and calculated solely by FTSE. However, neither FTSE, nor The Exchange, nor the FT shall be liable (whether in negligence or otherwise) to any person for any error therein. FTSE is a registered trademark of The London Stock Exchange and The Financial Times Limited and is used by FTSE International Limited and Birmingham Midshires under licence.

11. Cancellation
If total funds received by Birmingham Midshires from all Investors during the Offer Period are deemed by Birmingham Midshires to be insufficient, then Birmingham Midshires reserves the right to withdraw this issue and repay investments received plus any interest earned at the rate payable on the AA Telephone Access Plus Account (underlying rate) within 14 days of the Issue Date.

12. Certificate of Investment
Birmingham Midshires shall, by 13 October 2008, mail out to investors a Certificate of Investment giving details of the investment, including the Initial Index Level and the amount invested.

13. Identification
In the interest of security, new customers may be asked to provide acceptable proof of identification on opening a bond. Birmingham Midshires may also take steps to check the identity of Investors applying by post which may include making further enquiries or following up references.

14. Correspondence
All correspondence will be sent to the Investor at the registered address as detailed in Birmingham Midshires' records. An Investor is asked to notify Birmingham Midshires promptly of any change of address.

15. Complaints
Birmingham Midshires has its own internal procedure for the proper handling of customers' complaints and details of those procedures will be provided on request from our Corporate Centre at Pendeford.

16. Averaging
The Bond uses a special averaging feature both at the start and maturity of the bond. This averaging may restrict the return you receive. However, these averages are intended to smooth the FTSE 100 Index performance over time and designed to protect your investment from any uncharacteristic high FTSE 100 Index fixing at the start of the account or low FTSE 100 Index fixing at the maturity date.

* AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. As every advertisement for a savings product which quotes an interest rate will contain an AER, you will be able to compare more easily what return you can expect from your savings over time. Gross is the contractual rate of interest payable before the deduction of income tax at the rate specified by law.

† Assumes investment is made on 1 September 2008.

†† AA Telephone Access Plus Account variable rate 5.75% gross (5.73% AER*), correct as at 20 June 2008.

# To assess the FTSE 100 Index over the period of your investment, we use a special averaging feature at the start and maturity of the bond, this averaging may restrict or improve the return you receive. Please refer to 4a in the special Terms and Conditions above.