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EXHIBIT 2.1
EXECUTION COPY
TRANSACTION AGREEMENT
BETWEEN
GREAT-WEST LIFECO INC.
AND
CANADA LIFE FINANCIAL CORPORATION
MADE AS OF FEBRUARY 14, 2003
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TABLE OF CONTENTS
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ARTICLE 1 INTERPRETATION.................................................................................1
1.1 Definitions....................................................................................1
1.2 Interpretation Not Affected by Headings, etc...................................................8
1.3 Rules of Construction..........................................................................8
1.4 Date For Any Action............................................................................8
1.5 Subsidiaries...................................................................................8
1.6 Schedules......................................................................................9
1.7 Accounting Matters.............................................................................9
1.8 Material Adverse Change and Material Adverse Effect............................................9
ARTICLE 2 THE TRANSACTION...............................................................................10
2.1 The Transaction...............................................................................10
2.2 Approvals and Recommendations.................................................................10
2.3 Capital Reorganization........................................................................10
2.4 Issuance of Lifeco Shares.....................................................................13
2.5 Calling of Meeting............................................................................13
2.6 Circular......................................................................................13
2.7 Securities Compliance.........................................................................14
2.8 Preparation of Filings........................................................................14
2.9 Stock Options.................................................................................15
2.10 Rights Plan...................................................................................17
2.11 Action Consistent With the Transaction........................................................17
2.12 Election......................................................................................17
2.13 Proration.....................................................................................18
2.14 Fractional Shares.............................................................................20
2.15 Small Lots....................................................................................20
2.16 Payments......................................................................................21
2.17 Local Currency................................................................................21
2.18 Share Repurchase Adjustment...................................................................21
2.19 Deferred Stock Unit Plan......................................................................21
ARTICLE 3 PUBLICITY AND PROXY SOLICITATION..............................................................21
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3.1 Publicity.....................................................................................21
3.2 Proxy Solicitation............................................................................22
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF CLFC........................................................22
4.1 Organization and Standing.....................................................................22
4.2 Capitalization................................................................................22
4.3 Authority and No Conflicts....................................................................23
4.4 No Defaults...................................................................................24
4.5 Absence of Certain Changes or Events..........................................................24
4.6 Public Disclosure.............................................................................24
4.7 Financial Statements and Financial Matters....................................................25
4.8 Employment Matters............................................................................26
4.9 Litigation....................................................................................27
4.10 Tax...........................................................................................27
4.11 Pension and Employee Benefits.................................................................28
4.12 Compliance with Laws and Permits; Regulatory Matters..........................................29
4.13 Restrictions on Business Activities...........................................................30
4.14 Brokerage and Finders' Fees...................................................................30
4.15 U.S. Securities Law Matters...................................................................30
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF LIFECO......................................................30
5.1 Organization and Standing.....................................................................30
5.2 Capitalization................................................................................31
5.3 Authority and No Conflicts....................................................................31
5.4 No Defaults...................................................................................32
5.5 Absence of Certain Changes or Events..........................................................32
5.6 Public Disclosure.............................................................................33
5.7 Financial Statements..........................................................................33
5.8 Litigation....................................................................................34
5.9 Taxes.........................................................................................34
5.10 Compliance with Laws and Permits; Regulatory Matters..........................................35
5.11 Restriction on Business Activities............................................................36
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5.12 Brokerage and Finders' Fees...................................................................36
5.13 U.S. Securities Law Matters...................................................................36
ARTICLE 6 COVENANTS RELATING TO THE TRANSACTION.........................................................36
6.1 Conduct of Business by CLFC...................................................................36
6.2 Covenants of Lifeco...........................................................................41
6.3 Access to Information and Confidentiality.....................................................42
6.4 Regulatory Approvals..........................................................................43
6.5 Third Party Consents..........................................................................44
6.6 Co-operation..................................................................................44
6.7 Solicitation of Acquisition Proposals.........................................................45
6.8 Request for Access to Confidential Information and Right to Match.............................46
6.9 Notice of Superior Proposal...................................................................47
6.10 Adjourning or Postponing the Meeting..........................................................48
6.11 Insurance.....................................................................................49
ARTICLE 7 CONDITIONS....................................................................................49
7.1 Mutual Conditions.............................................................................49
7.2 Additional Conditions to the Obligations of Lifeco............................................50
7.3 Additional Conditions to the Obligations of CLFC..............................................51
7.4 Closing Matters...............................................................................52
ARTICLE 8 ARTICLES. TERMINATION, AMENDMENT AND WAIVER...................................................52
8.1 Termination...................................................................................52
8.2 Effect of Termination.........................................................................53
8.3 Termination Fee and Expenses..................................................................53
8.4 Amendment.....................................................................................55
8.5 Waiver........................................................................................55
ARTICLE 9 GENERAL.......................................................................................55
9.1 Investigation.................................................................................55
9.2 Alternative Structure.........................................................................55
9.3 Notices.......................................................................................55
9.4 Assignment....................................................................................56
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9.5 Binding Effect................................................................................56
9.6 Third Party Beneficiaries.....................................................................57
9.7 Further Assurances............................................................................57
9.8 Expenses......................................................................................57
9.9 Governing Law.................................................................................57
9.10 Time of Essence...............................................................................57
9.11 Entire Agreement..............................................................................57
9.12 Severability..................................................................................57
9.13 Remedies......................................................................................57
9.14 Counterparts..................................................................................58
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AMENDED AND RESTATED TRANSACTION AGREEMENT
This amended and restated agreement is made as of February 14, 2003, and
is between Great-West Lifeco Inc. ("Lifeco") and Canada Life Financial
Corporation ("CLFC").
RECITALS
A. The board of directors of CLFC has determined that the Transaction is in
the best interests of CLFC, has determined to recommend to CLFC Common
Shareholders that they vote in favour of the Transaction and has
determined to take all reasonable action to support and effect the
Transaction.
B. CLFC and Lifeco entered into a transaction agreement dated February 14,
2003 which agreement is amended and restated by this Agreement
The parties agree as follows.
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. In this Agreement:
"ACQUISITION PROPOSAL" means (other than the transactions contemplated by
this Agreement or permitted by section 6.1 of this Agreement) (i) any
merger, amalgamation, arrangement, share exchange, take-over bid,
recapitalization, consolidation or business combination involving,
directly or indirectly, CLFC or any of its Material Subsidiaries, (ii) any
acquisition of assets representing 25% or more of the book value (on a
consolidated basis) of the assets of CLFC and its Subsidiaries, taken as a
whole (or any lease, long-term supply agreement, exchange, mortgage,
pledge or other arrangement having a similar economic effect) in a single
transaction or a series of related transactions, (iii) any acquisition of
beneficial ownership of 25% or more of the CLFC Common Shares in a single
transaction or a series of related transactions, (iv) any reinsurance
arrangement outside the ordinary course of business that is material to
CLFC, (v) any acquisition by CLFC of any assets or securities of another
person (other than acquisitions of capital stock or assets or securities
of any other person that, individually or in the aggregate, are not
material to CLFC and its Subsidiaries, taken as a whole), (vi) any sale of
treasury shares, or securities convertible, exercisable or exchangeable
for treasury shares, which exceeds 25% of the outstanding voting
securities of CLFC or a Material Subsidiary of CLFC or rights or interests
therein or thereto, or (vii) any BONA FIDE proposal, or public
announcement of an intention, to do any of the foregoing, and includes any
amendment to an Acquisition Proposal;
"APPROVAL DATE" means the date on which all of the approvals specified in
paragraphs 7.1(a),(c),(d), and (e) and paragraph 7.3(a) have been
obtained;
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory
holiday in Toronto, Ontario and Winnipeg, Manitoba;
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"CANADA LIFE" means The Canada Life Assurance Company, a company existing
under the ICA and a wholly-owned Subsidiary of CLFC;
"CAPITAL REORGANIZATION" has the meaning specified in subsection 2.3(1);
"CASH ALTERNATIVE" has the meaning specified in paragraph 2.13(1)(a);
"CIRCULAR" means the notice of the Meeting and accompanying information
circular of CLFC to be prepared and sent to CLFC Common Shareholders in
contemplation of the Meeting;
"CLFC COMMON SHAREHOLDERS" means the registered holders of CLFC Common
Shares and CLFC Ownership Statements;
"CLFC COMMON SHARES" means the common shares in the capital of CLFC,
including the associated rights under the Rights Plan;
"CLFC EXPENSE FEE" means $15 million;
"CLFC MATERIAL SUBSIDIARIES" means Canada Life, Canada Life Capital
Corporation Inc., Canada Life International Holdings Limited, Canada Life
Insurance Company of America, The Canada Life Group (U.K.) Ltd. and Canada
Life Limited;
"CLFC OPTIONS" means the options to purchase CLFC Common Shares granted
under the Management Incentive Plans;
"CLFC OWNERSHIP STATEMENT" means a share ownership statement issued by
CLFC as a record of the CLFC Common Shares owned by a CLFC Common
Shareholder following the demutualization of Canada Life;
"CLFC PLANS" has the meaning specified in subsection 4.11(1);
"CLFC PREFERRED SHARES" has the meaning specified in section 4.2;
"CLFC PUBLIC DISCLOSURE DOCUMENTS" has the meaning specified in subsection
4.6(2);
"CLFC RETIREMENT PLANS" has the meaning specified in subsection 4.11(2);
"CLICS" means the Canada Life Capital Securities issued by the Canada Life
Capital Trust, which, in certain circumstances, are exchangeable for
preferred shares of Canada Life and/or CLFC Common Shares as described in
the prospectus of Canada Life Capital Trust dated March 7, 2002;
"CLICS TRANSACTION" means the offering of $450 million of CLiCS in March,
2002 by Canada Life Capital Trust as described in the prospectus of Canada
Life Capital Trust dated March 7, 2002;
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"CLOSING DATE" means the later of (i) July 2, 2003 and (ii) the twelfth
Business Day after the Approval Date or such other date as may be agreed
to by the parties;
"CLOSING TIME" means 8:00 a.m. (Toronto time) on the Closing Date;
"COMBINATION ALTERNATIVE" has the meaning specified in paragraph
2.13(1)(e);
"COMMON SHARE ALTERNATIVE" has the meaning specified in paragraph
2.13(1)(d);
"COMMISSIONER" means the Commissioner of Competition appointed under the
COMPETITION ACT (Canada);
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated
January 20, 2003 between CLFC and Lifeco;
"DEPOSITARY" has the meaning specified in section 2.14;
"DISSENT RIGHTS AGREEMENT" means the dissent rights agreement to be made
as at the date of the Circular between CLFC, Lifeco and each Dissenting
Shareholder substantially in the form of the agreement attached hereto as
Schedule B;
"DISSENTING SHAREHOLDER" means a CLFC Common Shareholder who dissents from
the Transaction Resolution in accordance with the Dissent Rights
Agreement;
"ELECTED CONSIDERATION" means the consideration payable to (i) Dissenting
Shareholders pursuant to the terms of the Dissent Rights Agreement and
(ii) all other CLFC Common Shareholders pursuant to section 2.13;
"ELECTING SHAREHOLDER" has the meaning specified in subsection 2.13(2);
"ELECTION DATE" means the date determined pursuant to section 2.12, after
taking into account any changes made pursuant to such section;
"ELIGIBLE SHAREHOLDER" means a CLFC Common Shareholder who: (i) is
resident in Canada for purposes of the Tax Act and is not exempt from tax
under the Tax Act, or (ii) is not resident in Canada for purposes of the
Tax Act and whose Exchangeable Shares constitute taxable Canadian property
(as defined in the Tax Act), provided that any gain realized by such
non-resident from the disposition of Exchangeable Shares would not be
exempt from Canadian tax by virtue of an applicable international tax
treaty to which Canada is a party, or (iii) is a partnership that owns
Exchangeable Shares if one or more of its members would be an Eligible
Shareholder if such member held such Exchangeable Shares directly;
"ENVIRONMENTAL LAWS" means all applicable Laws, including applicable
common Law, relating to the protection of the environment (including air,
surface water, groundwater and soil) and public health and safety;
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"EXCHANGE OPTION" has the meaning specified in subsection 2.9(4);
"EXCHANGEABLE SHARES" has the meaning specified in paragraph 2.3(1)(a);
"FORM F-8" means a registration statement on Form F-8 that may be filed
with the SEC by Lifeco in connection with the issuance of the Lifeco
Shares in the United States pursuant to the Transaction and any of the
amendments or supplements thereto;
"FORM F-80" means a registration statement on Form F-80 that may be filed
with the SEC by Lifeco in connection with the issuance of the Lifeco
Shares in the United States pursuant to the Transaction and any of the
amendments or supplements thereto;
"GOVERNING DOCUMENTS" means, with respect to any person, the letters
patent, certificate or articles of incorporation, by-laws, articles of
organization, limited liability company agreement, partnership agreement,
formation agreement, joint venture agreement, unanimous shareholder
agreement or declaration or other similar governing documents of such
person;
"GREAT WEST LIFE" means The Great-West Life Assurance Company;
"HSR ACT" means the HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
of the United States of America;
"ICA" means the INSURANCE COMPANIES ACT (Canada);
"KNOWLEDGE" means, with respect to Lifeco, to the knowledge, after
reasonable inquiry, of R.L. McFeetors, Co-President and Chief Executive
Officer of Lifeco, and, with respect to CLFC, to the knowledge, after
reasonable inquiry, of D.A. Nield, Chairman and Chief Executive Officer
of CLFC;
"LAWS" means any law, statute, rule, regulation, by-law, judgment or order
of general application, or any direction, policy, guideline, bulletin,
ruling, judgment, order or requirement, including of a Regulatory
Authority (whether or not having the force of law, but if it does not have
the force of law being of a nature such that a prudent financial
institution would comply);
"LETTER OF ELECTION AND TRANSMITTAL" means the letter of election and
transmittal providing for, among other things, the selection of the form
of the Elected Consideration and the transmittal of share certificates
representing CLFC Common Shares to the Depositary;
"LIABILITY" means any liability, obligation, claim or cause of action of
any kind or nature, whether absolute, accrued, contingent or other and
whether known or unknown, including any liability, obligation, claim or
cause of action arising pursuant to, or as a result of, any insurance or
other contract;
"LIFECO CA" has the meaning specified in subsection 6.3(3);
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"LIFECO COMMON SHARES" means the common shares in the capital of Lifeco;
"LIFECO EXPENSE FEE" means $30 million;
"LIFECO OPTIONS" has the meaning specified in section 5.2;
"LIFECO PUBLIC DISCLOSURE DOCUMENTS" has the meaning specified in
subsection 5.6(2);
"LIFECO SERIES E SHARES" means the 4.80% Non-Cumulative First Preferred
Shares, Series E of Lifeco having the attributes substantially as set out
in Schedule C-1 to this Agreement;
"LIFECO SERIES F SHARES" means the 5.90% Non-Cumulative First Preferred
Shares, Series F of Lifeco having the attributes substantially as set out
in Schedule C-2 to this Agreement;
"LIFECO SHARES" means, as applicable, the Lifeco Common Shares, the Lifeco
Series E Shares and the Lifeco Series F Shares;
"LIFECO STOCK OPTION PLAN" means the Great-West Lifeco Inc. Stock Option
Plan. "MCCSR" means the Minimum Continuing Capital and Surplus
Requirements for life insurance companies contained in Guideline A of OSFI
dated October l997, as amended from time to time;
"MANAGEMENT INCENTIVE PLANS" means the 2003 Annual Incentive Compensation
Plans, the 2003 Long Term Incentive Plan, the 1995 Long Term Incentive
Plan (as amended), the Directors Share Purchase Plan, the Canada Life
Financial Corporation Stock Option Plan, the Canada Life Financial
Corporation Deferred Stock Unit Plan dated February 6, 2001 and the
following CLFC employee share purchase plans: the CLFC Employee Share
Purchase Plan dated as of January 1, 2001, the Canada Life Assurance
(Ireland) Limited Share Ownership Scheme and the Canada Life UK Division
All Employee Share Plan;
"MATERIAL SUBSIDIARY" means a Subsidiary (i) the assets of which exceed
10% of the total assets of the ultimate parent corporation on a
consolidated basis as at the end of the last completed fiscal year of the
ultimate parent corporation or (ii) of which the ultimate parent
corporation's direct or indirect equity interest in the income (before
income taxes and extraordinary items) exceeds 10% of such income of the
ultimate parent corporation on a consolidated basis during the last
completed fiscal year of the ultimate parent corporation, and in the case
of CLFC, has the meaning specified under "CLFC Material Subsidiaries";
"MAXIMUM CASH CONSIDERATION" has the meaning specified in clause
2.3(1)(a)(i);
"MAXIMUM COMMON SHARE CONSIDERATION" has the meaning specified in clause
2.3(1)(a)(i);
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"MAXIMUM SERIES E CONSIDERATION" has the meaning specified in clause
2.3(1)(a)(i);
"MAXIMUM SERIES F CONSIDERATION" has the meaning specified in clause
2.3(1)(a)(i);
"MEETING" means the special meeting of CLFC Common Shareholders to be held
to consider the Transaction Resolution;
"MINISTER" means the Minister of Finance of Canada;
"MISREPRESENTATION" has the meaning specified in the Securities Act;
"NON-ELECTING SHAREHOLDERS" has the meaning specified in subsection
2.13(3);
"OSC" means the Ontario Securities Commission;
"OSFI" means the Office of the Superintendent of Financial Institutions
established pursuant to the OFFICE OF THE SUPERINTENDENT OF FINANCIAL
INSTITUTIONS ACT (Canada);
"OUTSIDE DATE" means July 31, 2003 or such other date as agreed upon in
writing by the parties;
"OVER REQUESTED CONSIDERATION" has the meaning specified in subsection
2.13(2);
"PERSON" includes any individual, firm, partnership, joint venture,
limited liability company, unlimited liability company, association,
trust, trustee, executor, administrator, legal personal representative,
estate, body corporate, corporation, unincorporated association or
organization, Regulatory Authority, syndicate or other entity, whether or
not having legal status;
"REGULATORY APPROVALS" means the rulings, consents, orders, exemptions,
permits and other approvals of Regulatory Authorities as set out in
Schedule A;
"REGULATORY AUTHORITY" means any (i) supranational, multinational,
federal, provincial, state, regional, municipal, local or other
government, governmental or public department, central bank, court,
tribunal, arbitral body, commission, board, bureau, agency, association,
institution, or other similar authority, (ii) quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority
under, or for the account of, any of the foregoing, (iii) industry,
self-regulatory organization or any stock exchange or (iv) minister,
secretary or other governmentally appointed individual, in each case,
whether domestic or foreign, and includes the Commissioner, the Minister
and the Superintendent;
"REPRESENTATIVES" has the meaning specified in subsection 6.3(1);
"RIGHTS PLAN" means the shareholder rights plan of CLFC established
pursuant to a shareholders rights agreement dated April 3, 2000 between
CLFC and Montreal Trust Company of Canada as it may be amended from time
to time;
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"SEC" means the U.S. Securities and Exchange Commission;
"SECURITIES ACT" means the SECURITIES ACT (Ontario);
"SECURITIES LAWS" means the Securities Act, other Canadian provincial
securities laws, regulations and rules, United States federal and state
securities laws and any other applicable Laws regulating the issuance of,
or the trading in, securities;
"SERIES E ALTERNATIVE" has the meaning specified in paragraph 2.13(1)(b);
"SERIES F ALTERNATIVE" has the meaning specified in paragraph 2.13(1)(c);
"SUBSIDIARY" means, with respect to a specified body corporate, any body
corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the board of directors thereof (whether or
not shares of any other class or classes shall or might be entitled to
vote upon the happening of any event or contingency) are at the time owned
directly or indirectly by such specified body corporate and shall include
any body corporate, partnership, joint venture or other entity over which
such specified body corporate exercises direction or control or which is
in a like relation to a Subsidiary;
"SUPERINTENDENT" means the Superintendent of Financial Institutions
appointed pursuant to the OFFICE OF THE SUPERINTENDENT OF FINANCIAL
INSTITUTIONS ACT (Canada);
"SUPERIOR PROPOSAL" means an Acquisition Proposal that (i) if completed in
accordance with its terms, would result in a transaction more favourable
to CLFC and the CLFC Common Shareholders than the Transaction, (ii) would
have a greater value per CLFC Common Share than the Transaction, and (iii)
is reasonably capable of completion without undue delay having regard to
the nature, scope and size of CLFC and its business and the regulatory
environment in which it and its Subsidiaries operate;
"TAX" and "TAXES" have the respective meanings specified in subsection
4.10(6);
"TAX ACT" means the INCOME TAX ACT (Canada);
"TAX ELECTION PACKAGE" means a package consisting of: (a) two copies of
Federal Election Form T-2057 or, if the holder of the Exchangeable Shares
is a partnership as indicated on the Letter of Election and Transmittal,
two copies of Federal Election Form T-2058; (b) if the holder of the
Exchangeable Shares is required to file income tax returns in Quebec as
indicated on the Letter of Election and Transmittal, then two copies of
the Quebec Tax Election Form TP-518V or any replacement form released by
the Quebec tax authority or, if the holder of the Exchangeable Shares is
required to file in Quebec and is a partnership as indicated on the Letter
of Election and Transmittal, then three copies of Quebec Tax Election Form
TP-529V or any replacement form released by the Quebec tax authority; and
(c) a tax election filing authorization letter (two copies if the holder
is required to file in Quebec as indicated on the Letter of Election and
Transmittal);
"TAX RETURNS" has the meaning specified in subsection 4.10(6);
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"TERMINATION FEE" means a fee of $287,315,000;
"TRANSACTION" means the Capital Reorganization and implementation of the
Capital Reorganization and acquisition by Lifeco of the Exchangeable
Shares at the Closing Time through the steps set out in subsection 2.3(2);
"TRANSACTION RESOLUTION" means a special resolution of the CLFC Common
Shareholders voting as a class approving the Transaction and consenting to
the waiver of the application of the Rights Plan to the Transaction;
"UNDER REQUESTED CONSIDERATION has the meaning specified in subsection
2.13(2);
"U.S. EXCHANGE ACT" means the United States SECURITIES EXCHANGE ACT OF
1934, as amended;
"U.S. HOLDER" means any person whose address appears on the share
registers (including, in the case of CLFC, the registers of holders of
CLFC Ownership Statements) maintained by or on behalf of CLFC or Lifeco,
as applicable, as being located in the United States;
"U.S. SECURITIES ACT" means the United States SECURITIES ACT OF 1933; and
"U.S. TAX CODE" has the meaning specified in subsection 4.10(4).
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
Agreement into articles, sections and other parts and the use of headings are
for convenience of reference only and do not affect the construction or
interpretation of this Agreement.
1.3 RULES OF CONSTRUCTION. Unless otherwise specifically indicated or the
context otherwise requires, (i) all references to "dollars" or "$" mean Canadian
dollars, (ii) words importing the singular include the plural and vice versa and
words importing any gender include all genders, (iii) "include," "includes" and
"including" are deemed to be followed by the words "without limitation" and (iv)
references to a statute are to the statute as amended or replaced from time to
time and include any regulations, rules, guidelines, bulletins and policy
statements made under the statute.
1.4 DATE FOR ANY ACTION. If the date on which any action is required to be
taken under this Agreement by either party is not a Business Day, that action
will be required to be taken on the next day that is a Business Day.
1.5 SUBSIDIARIES. To the extent any covenants in this Agreement relate,
directly or indirectly, to a Subsidiary of either party, each such provision
will be construed as a covenant by such party to cause such Subsidiary to
perform the required action.
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1.6 SCHEDULES. The following are the Schedules attached to, and forming part
of, this Agreement:
Schedule A - Regulatory Approvals
Schedule B - Form of Dissent Rights Agreement
Schedule C-1 - Lifeco Series E Term Sheet
Schedule C-2 - Lifeco Series F Term Sheet
Schedule 4.1 - Organization and Standing
Schedule 4.6(3) - Public Disclosure
Schedule 4.8(1) - Employment Matters
Schedule 4.8(2) - Collective Bargaining Agreements
Schedule 4.9 - Litigation
Schedule 4.11 - Pension & Employment Benefits
Schedule 6.1(1)(b)(iv) - Excluded Transactions in the Course of
Implementation
Schedule 6.1(1)(b)(vi) - Lifeco Dividend Dates
Schedule 6.1(1)(d)(i) - 2003 Long-Term Incentive Grant
Schedule 6.11 CLFC D&O Policies
1.7 ACCOUNTING MATTERS. Unless otherwise stated, subject to subsection 331(4)
of the ICA, all accounting terms used in this Agreement have the meanings
attributed to them under Canadian generally accepted accounting principles and
all determinations of an accounting nature required to be made will be made in a
manner consistent with Canadian generally accepted accounting principles.
1.8 MATERIAL ADVERSE CHANGE AND MATERIAL ADVERSE EFFECT. The terms "material
adverse change" and "material adverse effect" mean, in respect of Lifeco or
CLFC, any change, effect, event, occurrence or change in state of facts that is,
or would reasonably be expected to be, material and adverse to the business,
assets, Liabilities, financial condition, results of operations or long term
prospects of Lifeco or CLFC, respectively, and their respective Subsidiaries,
taken as a whole, other than any change, effect, event, occurrence or change in
state of facts relating to (i) general political, financial or economic
conditions or the state of securities markets in general, including any
reduction in major market indices, (ii) the life insurance industry in general
or the financial services industry in general, and not specifically relating to
Lifeco or CLFC, respectively, or their respective Subsidiaries, (iii) changes in
insurance and similar Laws of
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general applicability or interpretations of those Laws by Regulatory
Authorities, or (iv) this Agreement, the Transaction or the announcement
thereof. For the purposes of interpreting the terms "material adverse change"
and "material adverse effect", a decrease in the market price of the Lifeco
Shares or the CLFC Common Shares, as the case may be, will not in and of itself
constitute a "material adverse change" or "material adverse effect" except to
the extent such decrease is attributable to, or arises as a consequence of, any
change, effect, event, occurrence or change in state of facts that would
otherwise constitute a material adverse change in respect of, or have a material
adverse effect on, Lifeco or CLFC, as the case may be.
ARTICLE 2
THE TRANSACTION
2.1 THE TRANSACTION. Subject to the terms and conditions of this Agreement,
CLFC and Lifeco agree to the Transaction and will use, and each agrees that it
will cause its respective Subsidiaries to use, its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or advisable to support approval of and to complete the
Transaction.
2.2 APPROVALS AND RECOMMENDATIONS.
(1) CLFC represents and warrants that its board of directors, following
consultation with its advisors, has determined unanimously:
(a) to recommend to the CLFC Common Shareholders that they vote to
approve the Transaction; and
(b) that this Agreement is in the best interests of CLFC and its
shareholders.
(2) CLFC represents and warrants that its board of directors has obtained
advice from its financial advisors, BMO Nesbitt Burns Inc. and Credit
Suisse First Boston LLC, that the aggregate consideration offered by
Lifeco in connection with the Transaction is fair, from a financial point
of view, to the CLFC Common Shareholders.
(3) The Circular will include, among other things, (i) the unanimous
recommendation of the board of directors of CLFC as described in
subsection (1), and (ii) the favourable opinions of BMO Nesbitt Burns Inc.
and Credit Suisse First Boston LLC which have been received and which
state that the aggregate consideration offered by Lifeco in connection
with the Transaction is fair, from a financial point of view, to the CLFC
Common Shareholders.
2.3 CAPITAL REORGANIZATION.
(1) The Transaction will be effected by means of a reorganization of CLFC's
share capital (the "Capital Reorganization"), which will comprise the
following:
(a) the by-laws of CLFC will be amended by CLFC's board of directors
prior to the Meeting (which amendment will be confirmed and ratified
by the CLFC Common
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Shareholders upon their approval of the Transaction Resolution at the
Meeting) to, in addition to the matters set forth in paragraph (b), create
a new class of voting shares (the "Exchangeable Shares") ranking junior to
the CLFC Preferred Shares and equal to the CLFC Common Shares and having
rights, privileges, restrictions and conditions that include the following
and that are otherwise consistent with this Agreement:
(i) each Exchangeable Share (other than those held by Dissenting
Shareholders) will be automatically exchanged at the Closing Time
for the Elected Consideration, which shall be delivered by Lifeco in
accordance with the procedure set forth in section 2.13 and provided
that the aggregate Elected Consideration payable to holders of
Exchangeable Shares other than Dissenting Shareholders will consist,
and be in the form of: (A) $4,372,161,384 in cash less estimated
amounts payable pursuant to clause (1)(a)(ii) and any reductions
made pursuant to subsection 2.9(5) and section 2.18 (the "Maximum
Cash Consideration"); (B) 24,000,000 Lifeco Series E Shares (the
"Maximum Series E Consideration"); (C) 8,000,000 Lifeco Series F
Shares (the "Maximum Series F Consideration"); and (D) 55,958,505
Lifeco Common Shares (the "Maximum Common Share Consideration"),
(ii) each Exchangeable Share held by a Dissenting Shareholder will be
exchanged at the Closing Time in accordance with the procedures set
forth in the Dissent Rights Agreement for the right to receive an
amount equal to the fair value in cash of such shareholder's CLFC
Common Shares from Lifeco, provided that for the purposes of
determining the Maximum Cash Consideration pursuant to clause (i)
above, each Exchangeable Share held by a Dissenting Shareholder will
be deemed to have been exchanged for $44.50 in cash at the Closing
Time,
(iii) all Exchangeable Shares will be transferred to Lifeco at the Closing
Time in exchange for (A) in the case of CLFC Common Shareholders who
are not Dissenting Shareholders, the delivery by Lifeco to the
holders thereof of the applicable Elected Consideration or, (B) in
the case of Dissenting Shareholders, the right to receive from
Lifeco an amount equal to the fair value in cash of such
shareholders' CLFC Common Shares, in each case automatically and
immediately after the step contemplated in paragraph 2.3(1)(b) and
without any act required of the holders of Exchangeable Shares, and
(iv) upon completion of the transfer of all Exchangeable Shares to Lifeco
pursuant to clause (iii) above, the Exchangeable Shares will become
convertible at the option of the holder thereof into CLFC Common
Shares;
(b) the by-laws of CLFC will be amended in the manner set forth in paragraph
(a) to change the CLFC Common Shares, other than any CLFC Common Shares
owned
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beneficially by Lifeco or its Subsidiaries that have not been
allocated to a segregated or other investment fund established and
maintained by any of such Subsidiaries, into Exchangeable Shares at
the Closing Time on the basis of one Exchangeable Share for each CLFC
Common Share, which change shall occur on a tax-free rollover basis
for CLFC Common Shareholders who hold CLFC Common Shares as capital
property under subsection 86(1) of the Tax Act; and
(c) the entering into of the Dissent Rights Agreement to provide CLFC
Common Shareholders with a dissent right substantially similar to the
dissent right in section 190 of the CANADA BUSINESS CORPORATIONS ACT,
except that any payment in respect of their Exchangeable Shares would
be made by Lifeco only in cash and otherwise on the terms set out in
the Dissent Rights Agreement.
(2) At the Closing Time, the following steps will occur in the following
order:
(a) each CLFC Common Share, except those beneficially owned by Lifeco or
any of its Subsidiaries that have not been allocated to a segregated
or other investment fund established and maintained by any of such
Subsidiaries, will be changed into one Exchangeable Share, which
change shall occur on a tax-free rollover basis for CLFC Common
Shareholders who hold CLFC Common Shares as capital property under
subsection 86(1) of the Tax Act;
(b) each Exchangeable Share will be transferred to Lifeco automatically,
in exchange for (i) in the case of each Exchangeable Share not held
by a Dissenting Shareholder, the appropriate Elected Consideration
and (ii) in the case of each Exchangeable Share held by a Dissenting
Shareholder, the right provided in the Dissent Rights Agreement; and
(c) Lifeco will convert the Exchangeable Shares acquired by it as
contemplated by paragraph (b) into CLFC Common Shares in accordance
with the share conditions of the Exchangeable Shares.
(3) CLFC will give Lifeco a reasonable opportunity to review and comment on
the share conditions for the Exchangeable Shares and the amendments and
changes to CLFC's by-laws required to effect the Capital Reorganization,
and the share conditions and amendments and changes shall be in form and
content satisfactory to Lifeco, acting reasonably.
(4) Lifeco will make a joint election with a holder of Exchangeable Shares
(hereinafter for purposes of this subsection, a "Shareholder") under
subsection 85(1) or 85(2) of the Tax Act (and, in either case, the
corresponding provision of any applicable provincial income tax
legislation) (a "Tax Election") only if the Shareholder is an "Eligible
Shareholder" at all relevant times and the Shareholder has duly completed
and provided to Lifeco a Tax Election Package in the manner and within the
time set out below and the Shareholder receives Lifeco Shares only or in
combination with cash upon disposition of its Exchangeable Shares. No Tax
Election will be made with any Shareholder who is not an
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Eligible Shareholder. A Shareholder who completes the Tax Election Package
and forwards such package to Lifeco will be considered to have represented
to Lifeco that the Shareholder is an Eligible Shareholder.
A duly completed Tax Election Package together with any required
supporting schedules must be signed and forwarded by a Shareholder to
Lifeco on or before the day that is 120 days after the Closing Date (the
"Tax Election Date"). Lifeco will not be obliged to execute any Tax
Election received by Lifeco after the Tax Election Date. Any Shareholder
who does not ensure that Lifeco has received a duly completed Tax Election
Package on or before the Tax Election Date will not be entitled to benefit
from the "rollover" provisions in subsections 85(1) and 85(2) of the Tax
Act or their provincial equivalents.
Lifeco agrees to execute any properly completed Tax Election contained in
a Tax Election Package received on or before the Tax Election Date by
Lifeco from a Shareholder (together with the required tax election filing
authorization letter) and to forward such Tax Election by mail within 30
days after the receipt thereof by Lifeco to the appropriate tax
authorities with a copy to such Shareholder. Any late filing penalties
shall be the responsibility of and shall be paid by the Shareholder.
2.4 ISSUANCE OF LIFECO SHARES. Lifeco will take all steps necessary to issue
the Lifeco Shares on the exchange of the Exchangeable Shares, in each case as
validly issued and fully-paid and non-assessable shares in the capital of
Lifeco.
2.5 CALLING OF MEETING. CLFC will take all actions necessary under the ICA and
other applicable Laws to call, give notice of and hold the Meeting as soon as
reasonably practicable after the date of this Agreement on a date selected by
CLFC, in consultation with Lifeco, which is expected to be May 5, 2003.
2.6 CIRCULAR.
(1) As soon as reasonably practicable, CLFC will prepare the Circular together
with any other documents required by the ICA, Securities Laws or other
applicable Laws to be sent to CLFC Common Shareholders in connection with
the approval of the Transaction Resolution.
(2) CLFC will give Lifeco a reasonable opportunity to review and comment on
the Circular and all other documentation contemplated by subsection (1)
(including the form of proxy and the Letter of Election and Transmittal),
but Lifeco recognizes that whether or not its comments are appropriate
will be determined by CLFC, acting reasonably; provided that all
information relating to Lifeco or the Lifeco Shares which is included in
the Circular shall be in form and content satisfactory to Lifeco, acting
reasonably, before the Circular or such documentation is sent to the CLFC
Common Shareholders or filed with securities Regulatory Authorities as
required by applicable Securities Laws.
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(3) CLFC will cause the Circular and any other documentation required in
connection with the Meeting to be sent to each CLFC Common Shareholder as
required by applicable Laws and filed with securities Regulatory
Authorities as required by applicable Securities Laws as soon as
reasonably practicable after the date of this Agreement and in any event
in sufficient time to comply with the minimum delivery requirements to
hold the Meeting on the date specified in section 2.5.
2.7 SECURITIES COMPLIANCE.
(1) Lifeco and CLFC will use their respective reasonable best efforts to
obtain all orders required from applicable Regulatory Authorities to
permit the issuance and first trade of the Lifeco Shares issuable on
exchange of the Exchangeable Shares and on the exercise of Exchange
Options as contemplated by subsection 2.9(4), without qualification with,
or approval of, or the filing of any prospectus or similar document or the
taking of any proceeding with, or the obtaining of any further order,
ruling or consent from, any Regulatory Authority under applicable
Securities Laws, or the fulfillment of any other legal requirement in any
jurisdiction (other than, with respect to such first trades, any
restrictions on transfer by reason of a holder being a "control person"
for purposes of applicable Securities Laws and other exceptions or
requirements of general application).
(2) Lifeco will file with the SEC Form F-8 or Form F-80, including a
prospectus consisting of the Circular and any other information required
to be contained therein, before any offering documents are sent to CLFC
shareholders who are U.S. holders and will make all other submissions or
filings required to be made by Lifeco under applicable United States
Securities Laws relating to the Transaction, and CLFC will make all
required filings under applicable United States Securities Laws relating
to the vote on the Transaction Resolution.
2.8 PREPARATION OF FILINGS.
(1) Lifeco and CLFC will cooperate with each other in:
(a) the preparation of any applications for orders and the preparation
of any other documents reasonably determined by Lifeco or CLFC to be
necessary to discharge their respective obligations under applicable
Securities Laws in connection with the Transaction and the other
obligations under this Agreement;
(b) the taking of any action that may be required under applicable
Securities Laws in connection with the issuance of the Lifeco Shares
on the exchange of the Exchangeable Shares and on the exercise of
Exchange Options; and
(c) the taking of any action that may be required under the ICA and
state insurance Laws in the United States and the applicable
insurance laws of any jurisdiction in connection with the
transactions contemplated by this Agreement.
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(2) Each of Lifeco and CLFC will promptly furnish to the other all information
concerning it as may be required to effect the actions described in
subsection (1) and sections 2.6 and 2.7, and each covenants that none of
the information furnished or to be furnished by it in connection with such
actions or otherwise in connection with the Transaction or the other
transactions contemplated by this Agreement will contain any
misrepresentation.
(3) Except with respect to the information relating to or provided by Lifeco
for inclusion in the Circular, CLFC will ensure that the Circular complies
with all applicable Laws and, in particular, that the Circular does not
contain any misrepresentation. Lifeco will prepare all PRO FORMA financial
statements required by applicable Laws to be included in the Circular and
will ensure that all information, including such PRO FORMA financial
statements, relating to Lifeco or provided by it for inclusion in the
Circular, complies with all applicable Laws and does not contain any
misrepresentation. Lifeco will ensure that the PRO FORMA financial
statements prepared by it for inclusion in the Circular present fairly the
PRO FORMA financial position of Lifeco for the relevant periods, after
giving effect to the Transaction and the other transactions contemplated
by this Agreement and are prepared in accordance with applicable
Securities Laws and with Canadian generally accepted accounting
principles. CLFC will ensure that the Circular complies in all material
respects with applicable Securities Laws and provides CLFC Common
Shareholders with information in sufficient detail to permit them to form
a reasoned judgment concerning the matters to be placed before them at the
Meeting; provided, however, that Lifeco will provide all information
required in respect of Lifeco and the Lifeco Shares in order that the
Circular complies with applicable Securities Laws and that CLFC Common
Shareholders will be provided with information in respect of Lifeco and
the Lifeco Shares in sufficient detail to permit them to form a reasoned
judgment concerning the matters with respect thereto to be placed before
them at the Meeting.
(4) Each of Lifeco and CLFC will promptly notify the other if at any time
before or after the Meeting it becomes aware that the Circular, the Form
F-8 or Form F-80, as applicable, or any application for an order referred
to in subsection (1) contains any misrepresentation, or otherwise requires
an amendment or supplement to the Circular, the Form F-8 or Form F-80, as
applicable, or such application. In any such event, Lifeco and CLFC will
co-operate in the preparation of a supplement or amendment to the
Circular, the Form F-8 or Form F-80, as applicable, or other document and,
if required, will cause it to be filed with the relevant securities
Regulatory Authorities and/or distributed to the CLFC Common Shareholders,
as required by Securities Laws.
2.9 STOCK OPTIONS.
(1) CLFC shall make commercially reasonable efforts to amend the Management
Incentive Plans to cause all unvested CLFC Options to vest 10 days prior
to the Election Date, including obtaining (and providing copies to Lifeco)
not later than May 15, 2003 all approvals and consents required under the
Management Incentive Plans and all required Regulatory Approvals in
connection with the matters contemplated by this subsection.
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(2) CLFC covenants and agrees to make commercially reasonable efforts, prior
to the Closing Date, to establish to the satisfaction of Lifeco, acting
reasonably, that:
(a) no holder of a CLFC Option is a corporation;
(b) no holder of a CLFC Option is a person that at any time during the
one year period ending at the Closing Time was a "specified
shareholder" of CLFC for purposes of the Tax Act, as such term is
applied in subparagraph 88(1)(c)(vi) of the Tax Act; and
(c) if all holders of CLFC Options were a single person, such person
would not be a person that at any time during the one year period
ending at the Closing Time was a "specified shareholder" of CLFC for
purposes of the Tax Act, as such term is applied in subparagraph
88(1)(c)(vi) of the Tax Act.
(3) If (A) CLFC is unable to establish to the satisfaction of Lifeco, acting
reasonably, that the matters set out in clauses (a), (b) and (c) of
subsection (2) are true; and (B) Lifeco has not received prior to the
Closing Date a comfort letter from the Department of Finance (Canada)
("Finance") satisfactory to Lifeco acting reasonably (a "Satisfactory
Comfort Letter") confirming that Finance intends to recommend an amendment
to the Tax Act such that the rights (including rights to acquire Lifeco
Common Shares) which would be acquired by all holders of CLFC Options if
the amendment of the Management Incentive Plans described in subsection
(4) below were made would not constitute property acquired in substitution
for any property owned (directly or indirectly) by CLFC for purposes of
paragraph 88(1)(c) of the Tax Act, then CLFC agrees that it shall make
commercially reasonable efforts to amend the Management Incentive Plans
prior to the Closing Time such that all such unexercised CLFC Options will
expire immediately after the Closing Time, including obtaining (and
providing copies to Lifeco) not later than May 15, 2003 all approvals and
consents required under the Management Incentive Plans and all required
Regulatory Approvals in connection with the matters contemplated by this
subsection.
(4) If (A) CLFC is able to establish to the satisfaction of Lifeco, acting
reasonably, that the matters set out in clauses (a), (b) and (c) of
subsection (2) are true, or (B) Lifeco has received prior to the Closing
Date a Satisfactory Comfort Letter, subject to the receipt of the approval
of the Toronto Stock Exchange, CLFC will amend the Management Incentive
Plans prior to the Closing Time such that each unexercised CLFC Option
outstanding at the Closing Time will be exchanged (effective immediately
after completion of the step described in paragraph 2.3(2)(b)) for an
option (an "Exchange Option") under the Management Incentive Plans to
acquire only that number of Lifeco Common Shares as is equal to the number
of CLFC Common Shares that were issuable on exercise of such CLFC Option
immediately prior to the Closing Time multiplied by 1.1849 and rounded
down to the nearest whole number at an exercise price per Lifeco Common
Share equal to the quotient determined by dividing the exercise price per
CLFC Common Share at which such CLFC Option was exercisable immediately
prior to the Closing Time by 1.1849, rounded up to the nearest cent and to
provide that all
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unexercised Exchange Options shall automatically expire 45 days after the
Closing Date. Lifeco will take all steps necessary in order to issue the
Lifeco Common Shares issuable on the exercise of Exchange Options in
accordance with the terms of the Management Incentive Plans, as so
amended, and in order that such Lifeco Shares will be freely tradeable by
the holders thereof as contemplated by subsection 2.7(1) and Lifeco will
make commercially reasonable efforts to establish a facility with one or
more investment dealers to facilitate the cashless exercise of such
options, at no cost to Lifeco. CLFC will make commercially reasonable
efforts to obtain (and provide copies to Lifeco) not later than May 15,
2003 all approvals and consents required under the Management Incentive
Plans and all required Regulatory Approvals in connection with the matters
contemplated by this subsection.
(5) At the Closing Time, the Maximum Cash Consideration specified in clause
2.3(1)(a)(i)(A) shall be reduced by an amount equal to the product of (i)
the aggregate number of CLFC Common Shares originally issuable upon
exercise of the CLFC Options outstanding at the Closing Time, and (ii)
$44.50.
2.10 RIGHTS PLAN. Subject to applicable Law, CLFC will not waive the
application of the Rights Plan, including redeeming any of the outstanding
rights issued under the Rights Plan, or take any other action that would limit
the application of the Rights Plan to any transaction, including an Acquisition
Proposal, other than a Superior Proposal that consists of a specific offer that
is not conditional upon access or continued access to confidential or material
non-public information relating to CLFC or its Subsidiaries, unless (i) it is
permitted to do so under the Rights Plan and (ii) it has complied with sections
6.7, 6.8 and 6.9 and the five day period under paragraph 6.9(1)(d) has elapsed.
Any such waiver or other action taken by CLFC will not be effective if the
Transaction Resolution has been approved at the Meeting.
2.11 ACTION CONSISTENT WITH THE TRANSACTION. Neither Lifeco nor CLFC will take,
or will permit any of its respective Subsidiaries to take, any action, and each
of them will refrain, and will cause its respective Subsidiaries to refrain,
from taking any action, that would be inconsistent with this Agreement or the
completion of the Transaction or that would reasonably be expected to prevent or
materially delay the approval of or completion of the Transaction, except as
permitted or contemplated by this Agreement. In particular, CLFC will not change
the date of or adjourn, postpone or cancel (or propose to adjourn, postpone or
cancel) the Meeting without Lifeco's prior written consent (not to be
unreasonably withheld), except as provided in section 6.10 or as required by
valid shareholder action.
2.12 ELECTION.
(1) In order for a CLFC Common Shareholder to elect (i) one of the forms of
Elected Consideration offered pursuant to the Transaction and to be
considered an "Electing Shareholder" and (ii) the other options
contemplated by this Article 2, such CLFC Common Shareholder's duly
completed Letter of Election and Transmittal, together with the documents
contemplated in the Letter of Election and Transmittal to be included
therewith, must be received by the Depositary by 4:00 p.m. (Toronto time)
on the Election Date (as defined herein).
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(2) The "Election Date" shall be June 26, 2003, unless Lifeco in its sole
judgment determines that the Closing Date is not reasonably likely to
occur on July 2, 2003. In such case, the Election Date shall be changed to
such date as Lifeco expects to be no later than three Business Days before
the Closing Date. If the Election Date is changed. CLFC shall provide at
least 10 days' notice of such change by means of publication in generally
the same publications and manner in which CLFC publishes notices of the
record date for meetings of CLFC Common Shareholders.
(3) For greater certainty, the Election Date may be changed more than once,
provided that all changes are made in accordance with the terms of this
section and provided further that all other provisions of this Agreement,
including subsection 8.1(d), shall continue to apply unamended.
2.13 PRORATION.
(1) Each CLFC Common Shareholder (other than Dissenting Shareholders) may,
subject to subsection (2), elect to receive Elected Consideration in
respect of all Exchangeable Shares held by such CLFC Common Shareholder
consisting of:
(a) $44.50 in cash, multiplied by the number of CLFC Common Shares
designated for cash consideration by such CLFC Common Shareholder,
provided that such number may not exceed the total number of CLFC
Common Shares then held by such CLFC Common Shareholder, less CLFC
Common Shares in respect of which designations are made by such
shareholder under paragraphs (b), (c) and (d) (the "Cash
Alternative"); or
(b) 1.78 Lifeco Series E Shares, multiplied by the number of CLFC Common
Shares designated for Series E Share consideration by such CLFC
Common Shareholder, provided that such number may not exceed the
total number of CLFC Common Shares then held by such CLFC Common
Shareholder, less CLFC Common Shares in respect of which
designations are made by such shareholder under paragraphs (a), (c)
and (d) (the "Series E Alternative"); or
(c) 1.78 Lifeco Series F Shares, multiplied by the number of CLFC Common
Shares designated for Series F Share consideration by such CLFC
Common Shareholder, provided that such number may not exceed the
total number of CLFC Common Shares then held by such CLFC Common
Shareholder, less CLFC Common Shares in respect of which
designations are made by such shareholder under paragraphs (a), (b)
and (d) (the "Series F Alternative"); or
(d) 1.1849 Lifeco Common Shares, multiplied by the number of CLFC Common
Shares designated for Lifeco Common Share consideration by such CLFC
Common Shareholder, provided that such number may not exceed the
total number of CLFC Common Shares then held by such CLFC Common
Shareholder, less CLFC Common Shares in respect of which
designations are
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made by such shareholder under paragraphs (a), (b) and (c) (the
"Common Share Alternative"); or
(e) any combination of the forms of consideration referred to in
paragraphs (a) to (d) above, in accordance with the provisions of
paragraphs (a) to (d) above, provided that the total number of CLFC
Common Shares in respect of which all such elections are made does
not exceed the total number of CLFC Common Shares then held by such
CLFC Common Shareholder (the "Combination Alternative").
(2) If, on the Closing Date, proper elections have been made in respect of
CLFC Common Shares which, if complied with by Lifeco, would result in
Lifeco paying the holders thereof in excess of any of the Maximum Cash
Consideration, the Maximum Common Share Consideration, the Maximum Series
E Consideration or the Maximum Series F Consideration (the form(s) of
Elected Consideration for which the relevant maximum would be exceeded
being referred to herein as the "Over Requested Consideration", and the
other form(s) of Elected Consideration for which the relevant maximum
would not be exceeded being referred to herein as the "Under Requested
Consideration"), then the following rules shall be applied to allocate the
Elected Consideration among all of the CLFC Common Shareholders who have
properly elected the form or forms of consideration that each such
shareholder wishes to receive (each such shareholder being referred to as
an "Electing Shareholder"):
(a) an Electing Shareholder who has properly elected Under Requested
Consideration shall be entitled to receive such Under Requested
Consideration in the form that such Electing Shareholder elected in
respect of all CLFC Common Shares in respect of which such proper
election was made;
(b) an Electing Shareholder who has properly elected a particular form
of Over Requested Consideration shall receive a portion of such Over
Requested Consideration based on the proportion that the number of
CLFC Common Shares in respect of which the particular form of Over
Requested Consideration was elected by such Electing Shareholder is
of the total number of CLFC Common Shares in respect of which that
particular form of Over Requested Consideration was elected, such
that all such Electing Shareholders receive, in the aggregate, the
maximum applicable type of Elected Consideration;
(c) the balance of the Elected Consideration to be received by an
Electing Shareholder in respect of all such shareholder's CLFC
Common Shares which remain unallocated as a result of the operation
of paragraph (b) ("Unallocated CLFC Common Shares") shall be in the
form of a proportion of each form of the Under Requested
Consideration remaining after taking into account the allocations
made pursuant to paragraph (a), based upon the number of Unallocated
CLFC Common Shares held by such Electing Shareholder as a proportion
of the total number of (i) all Unallocated CLFC Common Shares and
(ii) all CLFC Common Shares held by Non-Electing Shareholders (as
defined in subsection (3)); provided that all Electing Shareholders
will receive in respect of
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their Unallocated CLFC Common Shares, and all Non-Electing
Shareholders will receive in respect of their CLFC Common Shares,
the same relative proportions, as nearly as may be practical, of
each form of the remaining Under Requested Consideration.
(3) If there are CLFC Common Shares in respect of which a proper election was
not made, then the following rules shall be applied to allocate the
Elected Consideration to the holders (the "Non-Electing Shareholders") of
such shares: each Non-Electing Shareholder will be entitled to receive a
proportion of each form of the Under Requested Consideration remaining
after taking into account the allocations made to the Electing
Shareholders pursuant to paragraph (2)(a), based upon the number of CLFC
Common Shares held by such Non-Electing Shareholder as a proportion of the
total number of (i) all Unallocated CLFC Common Shares and (ii) all CLFC
Common Shares held by Non-Electing Shareholders; provided that all
Electing Shareholders will receive in respect of their Unallocated CLFC
Common Shares, and all Non-Electing Shareholders will receive in respect
of their CLFC Common Shares, the same relative proportions, as nearly as
may be practical, of each form of the remaining Under Requested
Consideration.
(4) For greater certainty, in any case where a CLFC Common Shareholder
receives more than one form of consideration for that shareholder's
Exchangeable Shares, such shareholder shall be considered for all purposes
to have disposed of each individual Exchangeable Share for such combined
consideration in such a manner that the amount of each form of
consideration received for any one Exchangeable Share shall be equal to
the amount of such form of consideration received for every other
Exchangeable Share previously held by such CLFC Common Shareholder.
2.14 FRACTIONAL SHARES. Each person who would, as a result of the Transaction,
otherwise be entitled to a fractional interest in a Lifeco Share will receive in
lieu of such fractional interest a cash payment equal to such person's
proportionate share of the proceeds (after deducting fees and expenses) received
by a depositary chosen by Lifeco (the "Depositary") on the sale of whole Lifeco
Shares of such class representing an accumulation of all fractional interests in
Lifeco Shares to which all such persons would otherwise be entitled. The
Depositary will sell such Lifeco Shares involved on the Toronto Stock Exchange
as soon as commercially reasonable, but in any event no later than three
Business Days following the Closing Date. The aggregate proceeds (after
deducting fees and expenses) of such sale will be remitted by the Depositary,
proportionately in relation to the respective fractions, among the persons
otherwise entitled to receive fractional interests in Lifeco Shares of such
class.
2.15 SMALL LOTS. Each person who would as a result of the Transaction,
otherwise be entitled to receive an amount of any class of Lifeco Shares
numbering less than 100 shares (a "Small Lot"), shall be entitled to receive,
provided that such person properly so elects (a "Small Lot Election") in lieu of
such Small Lot, a cash payment equal to such person's proportionate share of the
proceeds (after deducting fees and expenses) received by the Depositary on
behalf of such person on the sale of all Lifeco Shares of such class for which a
Small Lot Election was made. The Depositary will sell such Lifeco Shares on the
Toronto Stock Exchange as soon as commercially reasonable, but in any event no
later than three Business Days following the
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Closing Date. The aggregate proceeds (after deducting fees and expenses) of such
sale will be distributed by the Depositary, proportionately in relation to the
respective number of Lifeco Shares of such class in respect of which an electing
person made a Small Lot Election as a proportion of the total number of Lifeco
Shares of such class in respect of which a Small Lot Election was made to such
electing person.
2.16 PAYMENTS. Lifeco shall make commercially reasonable efforts to cause to be
paid to each CFLC Common Shareholder each form of Elected Consideration
(including any amounts payable pursuant to sections 2.14 and 2.15) as soon as
commercially practicable after the quantum of each such form to be paid to each
CLFC Common Shareholder has been determined.
2.17 LOCAL CURRENCY. CLFC Common Shareholders resident in the United States,
the United Kingdom and Ireland who are entitled to receive cash from Lifeco
pursuant to the Transaction (which for the purposes of this section shall
include any payments payable to such shareholders pursuant to sections 2.14 or
2.15) will be paid the local currency equivalent of such cash, at the rate of
exchange obtained by Lifeco for such exchange (which shall be made by Lifeco
within 3 Business Days of the date of payment) at no cost to Lifeco, except that
where such a CLFC Common Shareholder so elects, Lifeco shall make such cash
payments to such CLFC Common Shareholder in Canadian currency.
2.18 SHARE REPURCHASE ADJUSTMENT. The Maximum Cash Consideration specified in
clause 2.3(1)(a)(i)(A) shall be reduced by an amount equal to the product of (x)
the aggregate number of CLFC Common Shares acquired by CLFC or any of its
Subsidiaries subsequent to December 31, 2002 and prior to the Closing Time and
(y) $44.50.
2.19 DEFERRED STOCK UNIT PLAN.
(1) CLFC will cause all required steps to be taken to formally terminate the
granting of any additional units under the Canada Life Financial
Corporation Deferred Stock Unit Plan dated February 6, 2001 (the "DSU
Plan") as soon as reasonably possible.
(2) Lifeco will use commercially reasonable efforts to make adjustments to
units granted under the DSU Plan and amendments to the DSU Plan to attempt
to preserve the tax benefit of the DSU Plan to its participants and will
honor the terms of the DSU Plan in accordance therewith.
ARTICLE 3
PUBLICITY AND PROXY SOLICITATION
3.1 PUBLICITY.
(1) Each of Lifeco and CLFC will consult with the other with respect to any
press release or other public written statements relating to the
Transaction or this Agreement with a view to achieving co-ordinated and
consistent public news releases and other public written statements.
Neither Lifeco nor CLFC will issue any such press release or make any such
public written statement prior to consulting with the other, except as may
be required by
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applicable Laws or by obligations pursuant to any listing agreement with a
stock exchange, but only after using its reasonable commercial best
efforts to consult the other party, taking into account the time
constraints to which it is subject as a result of such Laws or
obligations.
(2) Each of Lifeco and CLFC will provide the other with a reasonable
opportunity to review and comment on any material change report filed
pursuant to applicable Canadian Securities Laws in respect of this
Agreement and the Transaction.
3.2 PROXY SOLICITATION. CLFC will retain, in consultation with Lifeco, Merrill
Lynch & Co. and one or more other firms to act as proxy solicitation agents (the
"Soliciting Agents") in connection with the Meeting to solicit proxies in favour
of the Transaction. CLFC will be responsible for the cost of the Soliciting
Agents, which costs will be determined by Lifeco in consultation with CLFC.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CLFC
CLFC represents and warrants to Lifeco as follows:
4.1 ORGANIZATION AND STANDING.
(1) CLFC and each of its Subsidiaries has been duly incorporated, organized or
formed and is validly existing under the Laws of its jurisdiction of
incorporation, organization or formation and has full corporate power and
authority to own, lease and operate its properties and to conduct its
businesses as currently conducted, and except as disclosed in Schedule 4.1
is duly qualified, licensed or registered to carry on business in each
jurisdiction in which the nature of the business conducted by it or the
ownership, leasing or operation of its properties requires it to be so
qualified, licensed or registered, except where, individually or in the
aggregate, the failure to be so qualified, licensed or registered would
not have a material adverse effect on CLFC.
(2) The definition of "CLFC Material Subsidiaries" contains a complete and
accurate list of each of the Material Subsidiaries of CLFC. For each CLFC
Material Subsidiary, CLFC has provided to Lifeco a list of (i) the nature
of its legal organization and (ii) the jurisdiction of its organization or
formation. CLFC owns beneficially, directly or indirectly, all the
outstanding shares (or equivalent equity or ownership interests) of the
CLFC Material Subsidiaries and all such shares (or equivalent equity or
ownership interests) are owned free of any liens, security interests,
claims of third parties or other encumbrances.
(3) CLFC has made available to Lifeco complete and accurate copies of its
governing documents.
4.2 CAPITALIZATION. As of the date hereof, the authorized share capital of
CLFC consists of an unlimited number of common shares and an unlimited number of
non-voting preferred shares,
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issuable in series, of which one series, non-cumulative redeemable Series B
preferred shares (the "CLFC Preferred Shares") has been created. As of the close
of business on February 14, 2003 there are issued and outstanding no more than
160,400,000 CLFC Common Shares and 6,000,000 CLFC Preferred Shares, and there
are no other shares of any class or series outstanding. As of the close of
business on February 14, 2003, there are no more than 3,100,000 CLFC Common
Shares issuable upon the exercise of CLFC Options and there are no CLFC Common
Shares issuable upon the exercise of any other options, warrants or conversion
or exchange rights, other than the Rights Plan. As of December 31, 2002, less
than 25% of the CLFC Common Shares were held by U.S. holders. Except as set
forth above, and other than CLFC Common Shares issuable pursuant to the
Management Incentive Plans or the CLiCS Transaction, there are no options,
warrants or other rights, shareholder rights plans (other than the Rights Plan),
agreements or commitments of any character whatsoever requiring the issuance,
sale or transfer by CLFC of any shares of CLFC or any of its Subsidiaries
(including CLFC Common Shares) or any securities convertible into, or
exchangeable or exercisable for, or otherwise evidencing a right to acquire, any
shares of CLFC (including CLFC Common Shares) or any of its Subsidiaries. All
outstanding CLFC Common Shares and CLFC Preferred Shares have been duly
authorized and validly issued, are fully paid and non-assessable and are not
subject to, nor were they issued in violation of, any pre-emptive rights, and
all CLFC Common Shares issuable upon the exercise of outstanding CLFC Options in
accordance with their respective terms have been duly authorized and, upon
issuance, will be validly issued as fully paid and non-assessable and will not
be subject to any pre-emptive rights. Other than the CLFC Options, there are no
securities of CLFC or of any Subsidiary outstanding which have the right to vote
generally (or are convertible into or exchangeable for securities having the
right to vote generally) with the CLFC Common Shareholders on any matter. There
are no outstanding or other obligations of CLFC or any CLFC Material Subsidiary
to repurchase, redeem or otherwise acquire any securities of CLFC or any CLFC
Material Subsidiary or with respect to the voting or disposition of any
outstanding securities of any of the Material Subsidiaries of CLFC.
4.3 AUTHORITY AND NO CONFLICTS.
(1) CLFC has all requisite corporate power and authority to enter into and to
perform its obligations under this Agreement. CLFC has taken all necessary
corporate action to authorize the execution and delivery by it of and the
performance of its obligations under this Agreement.
(2) This Agreement has been duly executed and delivered by CLFC and
constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency and other applicable Laws affecting creditors'
rights generally and by general principles of equity.
(3) None of the execution and delivery of this Agreement by CLFC, the
performance by it of its obligations under this Agreement or the
completion of the transactions contemplated by this Agreement will:
(a) conflict with, or violate any provision of, the governing documents
of CLFC or any of its Subsidiaries;
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(b) subject to the consents, approvals, orders, authorizations,
registrations, declarations or filings referred to in section
6.3(2)(b) being made or obtained, violate or conflict with or result
in a breach of any Laws applicable to CLFC or any of its
Subsidiaries; or
(c) result in the imposition of any encumbrance, charge or lien on any
of CLFC's assets or the assets of any of its Subsidiaries;
except, in the case of clauses (b) and (c), for any of the foregoing that would
not, individually or in the aggregate, have a material adverse effect on CLFC or
materially impair its ability to perform its obligations under this Agreement or
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
4.4 NO DEFAULTS. None of CLFC or any of the CLFC Material Subsidiaries is in
default under or in violation of, and there has been no event, condition or
occurrence which, after notice or lapse of time or both, would constitute such a
default or violation of, or permit the termination or acceleration of, or give
rise to other rights in favour of any party under, any term, condition or
provision of (i) their respective governing documents, (ii) any agreement,
mortgage, indenture, lease, license or other obligation or instrument to which
CLFC or any of the CLFC Material Subsidiaries is a party or by which CLFC or any
of the CLFC Material Subsidiaries or any of its or their property is bound or
subject, except, in the case of clause (ii), defaults, violations, terminations
or accelerations that, individually or in the aggregate, would not have a
material adverse effect on CLFC or materially impair its ability to perform its
obligations under this Agreement or prevent or materially delay the consummation
of any of the transactions contemplated by this Agreement.
4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as publicly announced or as
disclosed in the CLFC Public Disclosure Documents filed prior to the date of
this Agreement, since December 31, 2002, CLFC and the CLFC Material Subsidiaries
have conducted their respective businesses only in the ordinary course in a
manner consistent with past practice and there has not been any material adverse
change with respect to CLFC or any event, occurrence or development that would
reasonably be expected to have a material adverse effect on CLFC or that may
materially and adversely affect the ability of CLFC to perform its obligations
under this Agreement or prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement.
4.6 PUBLIC DISCLOSURE.
(1) CLFC is a reporting issuer under the Securities Act and other applicable
Canadian Securities Laws and is not in material default of the
requirements of the Securities Act or any such other applicable Securities
Laws. CLFC has filed on a timely basis all required forms and documents
with the SEC since January 1, 2001, each of which has complied in all
material respects with all applicable requirements of the U.S. Securities
Act and the U.S. Exchange Act, as in effect on the dates such forms and
documents were filed. Since January 1, 2000, no subsidiary of CLFC has
filed, or has been required to file, any form, report or other document
with the SEC under Sections 13(a) or 15(d) of the U.S.
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Exchange Act. The CLFC Common Shares are not listed on any stock exchange
or traded in any over-the-counter market other than the Toronto Stock
Exchange and the New York Stock Exchange.
(2) After giving effect to subsequent filings in relation to matters covered
in earlier filings, the public filings made by CLFC under the Securities
Act, the U.S. Exchange Act and other applicable Securities Laws (the "CLFC
Public Disclosure Documents") since January 1, 2001 do not contain any
misrepresentation. CLFC has not filed any confidential material change
report with the OSC or any other securities authority or regulators or any
stock exchange or other self-regulatory authority.
(3) Since January 1, 2002, other than as disclosed in Schedule 4.6(3), CLFC
has not received written notice from any Regulatory Authority that any of
its accounting policies or practices are or may be the subject of any
review, inquiry, investigation or challenge by such Regulatory Authority.
Since January 1, 2002, CLFC's independent auditors have not informed CLFC
that they have any material questions, challenges or disagreements
regarding or pertaining to CLFC's accounting policies or practices.
Neither CLFC nor any of its Subsidiaries has used any off-balance sheet
special purpose entities in connection with material financing
arrangements.
4.7 FINANCIAL STATEMENTS AND FINANCIAL MATTERS.
(1) The consolidated financial statements of CLFC (including any related
notes) included in any CLFC Public Disclosure Documents (i) have been
prepared, subject to subsection 331(4) of the ICA, in accordance with
Canadian generally accepted accounting principles applied on a consistent
basis during the periods involved, (ii) comply in all material respects
with the requirements of the ICA and applicable Securities Laws and (iii)
fairly present, in all material respects, the consolidated financial
position of CLFC and the segregated funds of any of CLFC's Subsidiaries
and the results of operations, cash flows and changes in the net assets of
such segregated funds on a consolidated basis as of the respective dates
thereof and for the respective periods covered thereby, subject, in the
case of unaudited financial statements, to normal recurring year end
adjustments, none of which will be material.
(2) Since December 31, 2002, there has not been any change by CLFC or any of
its Subsidiaries in their accounting policies, methods, practices or
principles that is material to CLFC's consolidated financial statements,
other than as disclosed in Note 1 to CLFC's 2002 annual financial
statements.
(3) The aggregate actuarial reserves, other actuarial amounts and provisions
held by CLFC in respect of Liabilities relating to insurance contracts of
it (if any) and its Subsidiaries as established or reflected in its last
published audited consolidated financial statements or in other reports or
statements filed with insurance Regulatory Authorities (i) were determined
in accordance with generally accepted actuarial standards consistently
applied, (ii) were fairly stated in accordance with sound actuarial
principles, (iii) were based on sound actuarial assumptions, (iv) met the
requirements of the ICA in all
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material respects, and (v) were adequate at such date under generally
accepted actuarial standards consistently applied to cover the total
amount of the reasonably accepted matured and unmatured Liabilities of it
and its Subsidiaries under all their outstanding insurance contracts; and
it and its Subsidiaries own assets of sufficient kind, quality and other
characteristics to meet the requirements of, in the case of it and its
Subsidiaries regulated pursuant to the ICA, the ICA, and in the case of
Subsidiaries regulated other than pursuant to the ICA, all other
applicable insurance Laws.
(4) None of CLFC or any of its Subsidiaries has any Liabilities other than (i)
Liabilities reflected in accordance with Canadian generally accepted
accounting principles in CLFC's latest published audited consolidated
financial statements, (ii) Liabilities incurred or arising since the date
of such financial statements in the ordinary course of business consistent
with past practice, (iii) Liabilities which would not, individually or, in
the aggregate, have a material adverse effect on CLFC, or (iv) Liabilities
assumed in connection with the acquisition of the German business of
Prudential U.K. plc on January 2, 2003.
(5) The information provided by or on behalf of CLFC to Lifeco with respect to
CLFC's MCCSR and "embedded value" has been compiled based on reasonable
underlying data and assumptions, including actuarial assumptions and
reserves, and such information concerning CLFC's MCCSR is accurate in all
material respects as of the date to which it pertains.
4.8 EMPLOYMENT MATTERS.
(1) Except as described in the CLFC Public Disclosure Documents or Schedule
4.8(1), none of CLFC or any of its Subsidiaries is a party to any
employment, consulting, severance or termination of employment agreement
other than agreements that may be terminated in accordance with those CLFC
severence policies which have been disclosed in writing to Lifeco between
February 14, 2003 and February 28, 2003, or on reasonable notice or
reasonable payment in lieu of notice in accordance with applicable Laws.
(2) Other than as disclosed in Schedule 4.8(2), none of CLFC or any of its
Subsidiaries is a party to, or bound by, any collective bargaining
agreement or any other labour contract applicable to any employees of CLFC
or its Subsidiaries. There is no strike or labour dispute, slowdown,
lockout or stoppage pending or, to the knowledge of CLFC, threatened
against or affecting CLFC or any of its Subsidiaries. To the knowledge of
CLFC, there are no current union organizing activities involving employees
of CLFC.
(3) There are no current or pending or, to the knowledge of CLFC, threatened
proceedings before any board or tribunal or claims with respect to
employment and labour Laws, including employment and labour standards,
unfair labour practices, employment discrimination, occupational health
and safety, employment equity, pay equity, workers' compensation, human
rights and labour relations, other than such proceedings and claims which,
individually or in the aggregate, would not have a material adverse effect
on CLFC.
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4.9 LITIGATION. Except as disclosed in Schedule 4.9, there are no claims,
actions, proceedings or investigations pending or, to the knowledge of CLFC,
threatened against CLFC or any of its Subsidiaries before any arbitrator or
Regulatory Authority (and CLFC and its Subsidiaries have no knowledge of any
facts that are likely to give rise to any such claim, action, proceeding or
investigation), including in relation to the sales or marketing of its insurance
contracts or other products or services or the environment that would be
reasonably expected to have a material adverse effect on CLFC or prevent or
materially delay the transactions contemplated by this Agreement.
4.10 TAX.
(1) A representation with respect to Taxes contained in this section shall be
deemed to be accurate unless an inaccuracy contained therein would,
individually or in the aggregate, have a material adverse effect on CLFC.
(2) CLFC and each of its Subsidiaries has duly and timely filed all Tax
Returns required to be filed by it and all such Tax Returns are complete
and correct in all material respects. CLFC and each of its Subsidiaries
has paid all Taxes which are due and payable by it, other than those which
are being contested in good faith and in respect of which adequate
reserves have been provided in the most recently published financial
statements of CLFC. CLFC's most recently published consolidated financial
statements contain adequate provision, in accordance with Canadian
generally accepted accounting principles, for Taxes payable in respect of
each period covered by such financial statements and all prior periods to
the extent such Taxes have not been paid, whether or not due and whether
or not shown as being due on any Tax Returns, and, since the date of such
statements, neither CLFC nor any of its Subsidiaries has incurred a
liability for a material amount of Taxes otherwise than in the ordinary
course of business. CLFC and each of its Subsidiaries has made adequate
provision, in accordance with Canadian generally accepted accounting
principles, in its books and records for any amount of Taxes material to
CLFC on a consolidated basis and accruing in respect of any accounting
period ending after the period covered by such financial statements.
(3) There are no actions, suits, proceedings, investigations, audits or claims
made (or, to the knowledge of CLFC, threatened) against CLFC or any of its
Subsidiaries in respect of Taxes or any matters under discussion with any
Regulatory Authority relating to Taxes asserted by any such authority, in
each case, which may have a material adverse effect on CLFC, net of
provisions in respect thereof in the most recent published financial
statements of CLFC. There have been no waivers of statutes of limitations
or objections to any assessments or reassessments involving Taxes given,
filed or requested with respect to CLFC or any of its Subsidiaries except
in circumstances where the Taxes under objection have been paid or
adequate provision for the payment thereof has been made. All liabilities
of CLFC and the CLFC Material Subsidiaries for federal and provincial
income and capital taxes have been assessed by the Canada Customs and
Revenue Agency and, where applicable, Canadian provincial, tax authorities
for all fiscal years up to and including the fiscal year ended December
31, 2001.
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(4) None of CLFC or any of its Subsidiaries (i) has made an election to be
treated as a "consenting corporation" under subsection 341(f) of the
United States Internal Revenue Code of 1986 (the "U.S. Tax Code") or (ii)
is a party to any Tax sharing or other similar agreement or arrangement or
any Tax indemnification agreement of any nature with any other person
(other than in agreements with CLFC or any of its Subsidiaries) pursuant
to which CLFC or any of its Subsidiaries has or could have any material
liabilities in respect of Taxes. CLFC has not made an election under
subsection 897(i) of the U.S. Tax Code to be treated as a domestic
corporation for purposes of section 897, 1445 and 6039C of the U.S. Tax
Code.
(5) CLFC and each of its Subsidiaries has collected, withheld and remitted all
Taxes required to be collected, withheld and remitted by it within the
time required by applicable Laws.
(6) "Tax" and "Taxes" means all taxes, charges, fees, levies or other
assessments imposed by any taxing authority (Canada or foreign), including
income taxes (including any tax on or based on net income, gross income,
income as specially defined, earnings, profits or selected items of
income, earning or profits), taxes under Part XII.3 or any Part or
provision of the Tax Act, capital gains taxes, corporation taxes, capital
acquisition taxes, capital taxes, gross receipts taxes, environmental
taxes, taxes on registered investments or in respect of excessive holdings
of foreign property, sales taxes, use taxes, AD VALOREM taxes, value added
taxes, transfer taxes, franchise taxes, license taxes, disability taxes,
withholding taxes, payroll taxes, employment taxes, employer health taxes,
pension plan premiums, excise taxes, severance, social security or social
insurance premiums, workers' compensation premiums, unemployment insurance
or compensation premiums, stamp taxes or duties, occupation taxes, premium
taxes, property taxes, alternative or add-on minimum taxes, goods and
services taxes, customs duties or other taxes, fees, imposts, assessments
or charges of any kind whatsoever, together with any interest and any
penalties or fines or additional amounts imposed and any interest, fines,
penalties, additional taxes and additions to tax imposed with respect to
the foregoing. "Tax Returns" means all returns, reports, information
returns, tax slips and statements filed or required to be filed in
connection with Taxes.
4.11 PENSION AND EMPLOYEE BENEFITS.
(1) Each registered, supplementary or other pension, retirement, profit
sharing, bonus, savings, deferred compensation, stock option, purchase,
appreciation, group insurance or other material employee or retiree
benefit plans, programs or arrangements, formal or informal, oral or
written, maintained or contributed to by CLFC or any of its Material
Subsidiaries (each plan, program or arrangement, a "CLFC Plan") has been
administered, established, invested, and operated in material compliance
with its terms and all applicable Laws and all required contributions or
premiums thereunder have been made in material compliance with (i) all
applicable Laws or other legislative, administrative or judicial
promulgations applicable to such CLFC Plan and (ii) the terms of such CLFC
Plan.
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(2) Schedule 4.11 identifies (x) each CLFC Plan which is a pension plan,
supplementary pension plan or retiree benefits plan maintained or
contributed to by CLFC or any of its Material Subsidiaries (each such
plan, a "CLFC Retirement Plan") and (y) each banked vacation pay,
short-term disability, long-term disability and deferred commission
arrangement maintained or contributed to by CLFC or any of its Material
Subsidiaries for their employees employed in Canada (each a "CLFC
Post-Employment Arrangement"). Except for plans identified as such in
Schedule 4.11, the assets of each CLFC Retirement Plan and each CLFC
Post-Employment Arrangement are at least equal to its liabilities as at
the dates and determined using the actuarial methods and assumptions
identified in Schedule 4.11.
(3) No CLFC Plan is a multi-employer plan within the meaning of applicable
pension Laws. No commitments have been made to increase the benefits under
any CLFC Plan, except as required by applicable Laws. No circumstance
presently exists pursuant to which any CLFC Plan may be required to be
wound up, in whole or in part, have its registration, qualification or
other regulatory status revoked or be required to pay any material amounts
of Taxes, fees or penalties under applicable Laws.
4.12 COMPLIANCE WITH LAWS AND PERMITS; REGULATORY MATTERS.
(1) CLFC and its Subsidiaries are in compliance with all applicable Laws
(including Environmental Laws) except for any failure which (alone or
together with any other such failure) has not had and would not reasonably
be expected to have a material adverse effect on CLFC.
(2) CLFC and its Subsidiaries hold all authorizations, licenses, permits,
consents, certificates, approvals and orders where the failure to hold the
same would reasonably be expected to have a material adverse effect on
CLFC, and all are valid and in good standing, are not subject to any
qualifications or restrictions, and are not, and (on the basis of facts or
circumstances known to CLFC at the date of this Agreement) would not
reasonably be expected to be, the subject of any suspension, modification
or revocation or proceedings related thereto, that, in any case (alone or
together with other such matters) would reasonably be expected to have a
material adverse effect on CLFC, and CLFC and its Subsidiaries are not,
and (on the basis of facts or circumstances known to CLFC at the date of
this Agreement) would not reasonably be expected to be, subject to any
restrictive injunction or order of, or agreement with, any Regulatory
Authority that (alone or together with other such matters) would
reasonably be expected to have a material adverse effect on CLFC and CLFC
is not aware of anything which would result in it or its Subsidiaries not
being able to renew all authorizations, licenses, permits, consents,
certificates, approvals and orders where the failure to hold the same
would reasonably be expected to have a material adverse effect on CLFC. No
person has any voting rights with respect to CLFC, other than any such
rights which may arise as the result of holding CLFC Common Shares or CLFC
Preferred Shares.
(3) No order has been made in respect of CLFC or any of its Subsidiaries under
subsection 515(3) of the ICA, no prudential agreement has been entered
into by CLFC or any of its
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Subsidiaries under section 675.1 of the ICA, no direction has been issued
to CLFC or any of its Subsidiaries under section 676 of the ICA and no
order is in force against CLFC or any of its Subsidiaries under section
1031 of the ICA.
4.13 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgment,
injunction, order or decree (a "Complaint") binding on CLFC or any of its
Subsidiaries that has, or could be reasonably expected to have, the effect of
prohibiting, restricting or impairing any business practice of CLFC or any of
the CLFC Material Subsidiaries or, upon completion of the Transaction, Lifeco or
any of its Subsidiaries, or the conduct of business by CLFC or any of the CLFC
Material Subsidiaries, or, upon completion of the Transaction, Lifeco or any of
its Subsidiaries, other than any Complaint which (alone or together with any
other such Complaint) has not had and would not reasonably be expected to have a
material adverse effect on CLFC or Lifeco.
4.14 BROKERAGE AND FINDERS' FEES. Except for CLFC's obligations to BMO Nesbitt
Burns Inc. and Credit Suisse First Boston LLC, none of CLFC or any of its
Subsidiaries has incurred or will incur any brokerage, finders' or similar fee
in connection with the Transaction or the other transactions contemplated by
this Agreement. CLFC has disclosed to Lifeco all the material financial and
other terms of the retainer agreements with its financial advisors. At the
Closing Date, there will not be any material obligations of CLFC in favour of
the financial advisors.
4.15 U.S. SECURITIES LAW MATTERS. CLFC is incorporated or organized under the
Laws of Canada or a Canadian province or territory, is a foreign private issuer
(as that term is defined in Rule 3b-4 of the U.S. Exchange Act) and meets all
the other eligibility requirements of Form F-8 and Form F-80 for a company
participating in a business combination. CLFC is not an investment company or a
company "controlled" by an investment company (as those terms are defined under
the United States INVESTMENT COMPANY ACT OF 1940, as amended).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LIFECO
Lifeco represents and warrants to CLFC as follows
5.1 ORGANIZATION AND STANDING.
(1) Lifeco and each of its Subsidiaries has been duly incorporated, organized
or formed and is validly existing under the Laws of its jurisdiction of
incorporation, organization or formation and has full corporate power and
authority to own, lease and operate its properties and to conduct its
businesses as currently conducted, and is duly qualified, licensed or
registered to carry on business in each jurisdiction in which the nature
of the business conducted by it or the ownership, leasing or operation of
its properties requires it to be so qualified, licensed or registered,
except where, individually or in the aggregate, the failure to be so
qualified, licensed or registered would not have a material adverse effect
on Lifeco.
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(2) Lifeco has made available to CLFC complete and accurate copies of its
governing documents.
5.2 CAPITALIZATION. As of the date hereof, the authorized share capital of
Lifeco consists of an unlimited number of First Preferred Shares, issuable in
series, an unlimited number of Second Preferred Shares, issuable in series, an
unlimited number of Class A Preferred Shares issuable in series and an unlimited
number of common shares. As of December 31, 2002 there were issued and
outstanding no more than 366,376,712 Lifeco Common Shares, 4,000,000 First
Preferred Shares Series C, 8,000,000 First Preferred Shares Series D and
5,192,242 Class A Preferred Shares Series 1 and there are no other shares of any
class or series outstanding. As of December 31, 2002, options had been duly
granted and were outstanding permitting the holders to purchase a total of
10,030,737 Lifeco Common Shares (the "Lifeco Options"). Except as set forth
above, and other than Lifeco Common Shares issuable pursuant to the Lifeco Stock
Option Plan and pursuant to share purchase agreements between Lifeco and
Investors Group Inc. (as to 2,662,000 Lifeco Common Shares) and between Lifeco
and Power Financial Corporation (as to 21,302,000 Lifeco Common Shares), and
Lifeco Common Shares issuable upon conversion of the Lifeco First Preferred
Shares Series C and Lifeco First Preferred Shares Series D and Lifeco Common
Shares issuable pursuant to Great-West Life Trust Securities, there are no
options, warrants or other rights, shareholder rights plans, agreements or
commitments of any character whatsoever requiring the issuance, sale or transfer
by Lifeco of any shares of Lifeco or any securities convertible into, or
exchangeable or exercisable for, or otherwise evidencing a right to acquire, any
shares of Lifeco. As of December 31, 2002, less than 25% of the Lifeco Common
Shares were held by U.S. holders. All outstanding Lifeco Shares have been duly
authorized and validly issued, are fully paid and non-assessable and are not
subject to, nor were they issued in violation of, any pre-emptive rights, and
all Lifeco Common Shares issuable upon the exercise of outstanding Lifeco
Options in accordance with their respective terms have been duly authorized and,
upon issuance, will be validly issued as fully paid and non-assessable and will
not be subject to any pre-emptive rights. Other than the Lifeco Options and the
Lifeco First Preferred Shares, there are no securities of Lifeco or of any
Subsidiary outstanding which have the right to vote generally (or are
convertible into, or exchangeable for, securities having the right to vote
generally) with the holders of Lifeco Shares on any matter. There are no
outstanding contractual or other obligations of Lifeco or any Subsidiary to
repurchase, redeem or otherwise acquire any of its securities or with respect to
the voting or disposition of any outstanding securities of any of Lifeco's
Material Subsidiaries. There are no outstanding contractual or other obligations
of Lifeco or any Material Subsidiary of Lifeco to repurchase, redeem or
otherwise acquire any of its securities or with respect to the voting or
disposition of any outstanding securities of any of the Material Subsidiaries of
Lifeco.
5.3 AUTHORITY AND NO CONFLICTS.
(1) Lifeco has all requisite corporate power and authority to enter into and
to perform its obligations under this Agreement. Lifeco has taken all
necessary corporate action to authorize the execution and delivery by it
of, and the performance of, its obligations under this Agreement.
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(2) This Agreement has been duly executed and delivered by Lifeco and
constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency and other applicable Laws affecting creditors'
rights generally and by general principles of equity.
(3) None of the execution and delivery of this Agreement by Lifeco, the
performance by it of its obligations under this Agreement or the
completion of the transactions contemplated by this Agreement will:
(a) conflict with, or violate any provision of the governing documents
of Lifeco or any of its Subsidiaries;
(b) subject to the consents, approvals, orders, authorizations,
registrations, declarations or filings referred to in section
6.3(2)(b) being made or obtained, violate or conflict with, or
result in a breach of, any Laws applicable to Lifeco or any of its
Subsidiaries; or
(c) result in the imposition of any encumbrance, charge or lien on any
of Lifeco's assets or the assets of any of its Subsidiaries;
except, in the case of clauses (b) and (c), for any of the foregoing that
would not, individually or in the aggregate, have a material adverse
effect on Lifeco or materially impair its ability to perform its
obligations under this Agreement or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
5.4 NO DEFAULTS. None of Lifeco or any of its Material Subsidiaries is in
default under or in violation of, and there has been no event, condition or
occurrence which, after notice or lapse of time or both, would constitute such a
default or violation of, or permit the termination or acceleration of, any term,
condition or provision of (i) their respective governing documents, or (ii) any
agreement, mortgage, indenture, lease, license or other obligation or instrument
to which Lifeco or any of its Subsidiaries is a party or by which Lifeco or any
of its Subsidiaries or any of its or their property is bound or subject, except,
in the case of clause (ii), defaults, violations, terminations or accelerations
that, individually or in the aggregate, would not have a material adverse effect
on Lifeco or materially impair its ability to perform its obligations under this
Agreement or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as publicly announced or as
disclosed in the Lifeco Public Disclosure Documents filed prior to the date of
this Agreement, since December 31, 2002, Lifeco and its Material Subsidiaries
have conducted their respective businesses only in the ordinary course in a
manner consistent with past practice and there has been no material adverse
change with respect to Lifeco or any event, occurrence or development that would
reasonably be expected to have a material adverse effect on Lifeco or that may
materially and adversely affect the ability of Lifeco to perform its obligations
under this Agreement or prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement.
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5.6 PUBLIC DISCLOSURE.
(1) Lifeco is a reporting issuer under the Securities Act and other applicable
Canadian Securities Laws and is not in material default of the
requirements of the Securities Act or other applicable Securities Laws.
The Lifeco Common Shares are listed on the Toronto Stock Exchange.
(2) After giving effect to subsequent filings in relation to matters covered
in earlier filings, the public filings made by Lifeco under the Securities
Act and other applicable Securities Laws (the "Lifeco Public Disclosure
Documents") do not contain any misrepresentation. Lifeco has not filed any
confidential material change report with the OSC or any other securities
authority or regulator or any stock exchange or other self regulatory
authority.
(3) Since January 1, 2002, Lifeco has not received written notice from any
Regulatory Authority that any of its accounting policies or practices are
or may be the subject of any review, inquiry, investigation or challenge
by such Regulatory Authority. Since January 1, 2002, Lifeco's independent
auditors have not informed Lifeco that they have any material questions,
challenges or disagreements regarding or pertaining to Lifeco's accounting
policies or practices. Neither Lifeco nor any of its Subsidiaries has used
any off-balance sheet special purpose entities in connection with material
financing arrangements.
5.7 FINANCIAL STATEMENTS.
(1) The consolidated financial statements of Lifeco (including any related
notes) included in any Lifeco Public Disclosure Documents (i) have been
prepared in accordance with Canadian generally accepted accounting
principles applied on a consistent basis during the periods involved, (ii)
comply in all material respects with the requirements of applicable
Securities Laws, and (iii) fairly present, in all material respects, the
consolidated financial position of Lifeco as of the respective dates
thereof and for the respective periods covered thereby, subject, in the
case of unaudited financial statements, to normal recurring year end
adjustments, none of which will be material.
(2) Since December 31, 2002, there has not been any change by Lifeco or any of
its Subsidiaries in their accounting policies, methods, practices or
principles that is material to Lifeco's consolidated financial statements.
(3) The aggregate actuarial reserves, other actuarial amounts and provisions
held by Lifeco in respect of Liabilities relating to insurance contracts
of its Subsidiaries as established or reflected in its last published
audited consolidated financial statements (i) were determined in
accordance with generally accepted actuarial standards consistently
applied, (ii) were fairly stated in accordance with sound actuarial
principles, (iii) were based on sound actuarial assumptions, (iv) met the
requirements of applicable insurance Laws in all material respects, and
(v) were adequate at such date under generally accepted actuarial
standards consistently applied to cover the total amount of the reasonably
accepted matured and unmatured Liabilities of it and its Subsidiaries
under all
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their outstanding insurance contracts; and it and its Subsidiaries own
assets of sufficient kind, quality and other characteristics to meet the
requirements of applicable insurance Laws.
(4) None of Lifeco or any of its Subsidiaries has any Liabilities other than,
(i) Liabilities reflected in accordance with Canadian generally accepted
accounting principles in Lifeco's latest published audited consolidated
financial statements, (ii) Liabilities incurred or arising since the date
of such financial statements in the ordinary course of business consistent
with past practice or (iii) Liabilities which would not, individually or
in the aggregate, have a material adverse effect on Lifeco.
5.8 LITIGATION.
(1) Except as disclosed in the Lifeco Public Disclosure Documents, there are
no claims, actions, proceedings or investigations pending or, to the
knowledge of Lifeco, threatened against Lifeco or any of its Subsidiaries
before any arbitrator or Regulatory Authority (and Lifeco and its
Subsidiaries have no knowledge of any facts that are likely to give rise
to any such claim, action, proceeding or investigation), including in
relation to the sales or marketing of its insurance contracts or other
products or services or the environment that would be reasonably expected
to have a material adverse effect on Lifeco, or prevent or materially
delay the transactions contemplated by this Agreement.
5.9 TAXES.
(1) A representation with respect to Taxes contained in this section shall be
deemed to be accurate unless an inaccuracy contained therein would,
individually or in the aggregate, have a material adverse effect on
Lifeco.
(2) Lifeco and each of its Subsidiaries has duly and timely filed all Tax
Returns required to be filed by it and all such Tax Returns are complete
and correct in all material respects. Lifeco and each of its Subsidiaries
has paid all Taxes which are due and payable by it, other than those which
are being contested in good faith and in respect of which adequate
reserves have been provided in the most recently published financial
statements of Lifeco. Lifeco's most recently published consolidated
financial statements contain adequate provision, in accordance with
Canadian generally accepted accounting principles, for Taxes payable in
respect of each period covered by such financial statements and all prior
periods to the extent such Taxes have not been paid, whether or not due
and whether or not shown as being due on any Tax Returns, and, since the
date of such statements, neither Lifeco nor any of its Subsidiaries has
incurred a liability for a material amount of Taxes otherwise than in the
ordinary course of business. Lifeco and each of its Subsidiaries has made
adequate provision, in accordance with Canadian generally accepted
accounting principles, in its books and records for any amount of Taxes
material to Lifeco on a consolidated basis and accruing in respect of any
accounting period ending after the period covered by such financial
statements.
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(3) There are no actions, suits, proceedings, investigations or claims made
(or to the best of its knowledge, threatened) against Lifeco or any of its
Subsidiaries in respect of Taxes or any matters under discussion with any
Regulatory Authority relating to Taxes asserted by any such authority, in
each case, which may have a material adverse effect on Lifeco, net of
provisions in respect thereof in the most recent published financial
statements of Lifeco. There have been no waivers of statutes of
limitations or objections to any assessments or reassessments involving
Taxes given, filed or requested with respect to Lifeco or any of its
Subsidiaries except in circumstances where the Taxes under objection have
been paid or adequate provision for the payment thereof has been made. All
liabilities of Lifeco and its Subsidiaries for federal and provincial
income and capital taxes have been assessed by the Canada Customs and
Revenue Agency and, where applicable, Canadian provincial authorities for
all fiscal years up to and including the fiscal year ended December 31,
2001.
(4) None of Lifeco or any of its Subsidiaries (i) has made an election to be
treated as a "consenting corporation" under subsection 341(f) of the U.S.
Tax Code or (ii) is a party to any Tax sharing or other similar agreement
or arrangement or any Tax indemnification agreement of any nature with any
other person (other than in agreements with Lifeco or any of its
Subsidiaries) pursuant to which Lifeco or any of its Subsidiaries has or
could have any material liabilities in respect of Taxes. Lifeco has not
made an election under section 897(i) of the U.S. Tax Code to be treated
as a domestic corporation for purposes of sections 897, 1445 and 6039C of
the U.S. Tax Code.
(5) Lifeco and each of its Subsidiaries has collected, withheld and remitted
all Taxes required to be collected, withheld and remitted by it within the
time required by applicable Laws.
5.10 COMPLIANCE WITH LAWS AND PERMITS; REGULATORY MATTERS.
(1) Lifeco and its Subsidiaries are in compliance with all applicable Laws
(including Environmental Laws) except for any failure which (alone or
together with any other such failure) has not had, and would not
reasonably be expected to have, a materially adverse effect on Lifeco.
(2) Lifeco and its Subsidiaries hold all authorizations, licenses, permits,
consents, certificates, approvals and orders where the failure to hold the
same would reasonably be expected to have a material adverse effect on
Lifeco, and all are valid and in good standing, are not subject to any
qualifications or restrictions, and are not, and (on the basis of facts or
circumstances known to Lifeco at the date of this Agreement) would not
reasonably be expected to be, the subject of any suspension, modification
or revocation or proceedings related thereto, that, in any case (alone or
together with other such matters) would reasonably be expected to have a
material adverse effect on Lifeco, and Lifeco and its Subsidiaries are
not, and (on the basis of facts or circumstances known to Lifeco at the
date of this Agreement) would not reasonably be expected to be, subject to
any restrictive injunction or order of, or agreement with, any Regulatory
Authority that (alone or together with other such matters) would
reasonably be expected to have a material adverse effect on Lifeco and
Lifeco is not aware of anything which would result
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in it or its Subsidiaries not being able to renew all authorizations,
licenses, permits, consents, certificates, approvals and orders where the
failure to hold the same would reasonably be expected to have a material
adverse effect on Lifeco.
(3) No order has been made in respect of Great-West Life or any of its
Subsidiaries under subsection 515(3) of the ICA, no prudential agreement
has been entered into by Great-West Life or any of its Subsidiaries under
section 675.1 of the ICA, no direction has been issued to Great-West Life
or any of its Subsidiaries under section 676 of the ICA and no order is in
force against Great-West Life or any of its Subsidiaries under section
1031 of the ICA.
5.11 RESTRICTION ON BUSINESS ACTIVITIES. There is no injunction, order or
decree (a "Complaint") binding on Lifeco or any of its Subsidiaries that has, or
could reasonably be expected to have, the effect of prohibiting, restricting or
impairing any business practice of Lifeco or any of its Material Subsidiaries,
other than any Complaint which (alone or together with any other such Complaint)
has not had and would not reasonably be expected to have a material adverse
effect on Lifeco.
5.12 BROKERAGE AND FINDERS' FEES. None of Lifeco or any of its Subsidiaries has
incurred or will incur any brokerage, finders' or similar fee in connection with
the Transaction, except that Lifeco has employed Merrill Lynch & Co. as its
financial advisor.
5.13 U.S. SECURITIES LAW MATTERS. Lifeco is incorporated or organized under the
Laws of Canada or a Canadian province or territory, is a foreign private issuer
(as that term is defined in Rule 3b-4 of the U.S. Exchange Act) and meets all
the other eligibility requirements of Form F-8 and Form F-80 for a company
participating in a business combination. Lifeco is not an investment company or
a company "controlled" by an investment company (as those terms are defined
under the United States INVESTMENT COMPANY ACT OF 1940, as amended).
ARTICLE 6
COVENANTS RELATING TO THE TRANSACTION
6.1 CONDUCT OF BUSINESS BY CLFC.
(1) CLFC agrees that, until the earlier of the Closing Time and the
termination of this Agreement in accordance with section 8.1, unless
Lifeco otherwise agrees in writing or except as contemplated by this
Agreement:
(a) it will conduct, and will cause each of its Subsidiaries to conduct,
its and their respective businesses only in, and not take any action
except in, the ordinary course of business and consistent with past
practice;
(b) it will not, and it will not permit any of its Subsidiaries to, do
any of the following:
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(i) make or propose to make any change in its or their dividend,
underwriting, investments or other insurance practices in
any material respect;
(ii) accept, cede or retrocede reinsurance except (A) in
accordance with existing reinsurance agreements or in the
ordinary course of business, consistent with past practice
and (B) in transactions with a newly established Subsidiary
of CLFC in Barbados;
(iii) enter into, or make any commitment to enter into, any
significant new line of business;
(iv) authorize, or enter into, any agreement, arrangement or
understanding with respect to, (A) any acquisition of
businesses, assets or securities, the value of the
consideration for which (including assumed debt or other
obligations) would exceed $25 million (including in a series
of related transactions) or, taken together with any other
acquisitions made in reliance on this clause, would exceed
$50 million in the aggregate or (B) any disposition of
businesses, assets or securities, the value of the
consideration for which (including assumed debt or other
obligations) would exceed $25 million (including in a series
of related transactions) or, taken together with any other
dispositions made in reliance on this clause, would exceed
$50 million in the aggregate, other than, in either case,
(x) any transactions in the course of its or their regular
investment management operations effected at fair market
value, at arm's length and in the exercise of reasonable
business judgment, and (y) the transactions in the course of
implementation at the date of this Agreement set out in
Schedule 6.1(1)(b)(iv);
(v) amend or propose to amend its or their governing documents
except as may be required by applicable Laws;
(vi) subdivide, consolidate or reclassify any of its or their
outstanding securities, or declare, set aside or pay any
dividend or other distribution (in cash or any other
property) with respect to its or their securities, except
dividends payable on the CLFC Preferred Shares and
distributions and dividends in respect of securities related
to the CLiCS Transaction, in each case payable in accordance
with their terms with record and payment dates consistent
with past practice and regular quarterly cash dividends on
the CLFC Common Shares of $0.20 per share which such
dividends will be declared with record dates the same as the
record dates for the payment of Lifeco Common Shares which
dates are as set out on Schedule 6.1(1)(b)(vi);
(vii) issue, sell, pledge, reserve, set aside, dispose of or
encumber, repurchase, redeem or otherwise acquire, any of
its or their shares or any securities or obligations
convertible into, exercisable or exchangeable for, or any
rights,
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warranties or options to acquire, any such shares, except
(A) pursuant to the terms of the CLFC Plans (other than the
Management Incentive Plans), (B) as required by the terms of
any securities outstanding on the date of this Agreement,
(C) pursuant to fully vested CLFC Options granted prior to
the date of this Agreement, (D) purchases or other
acquisitions in connection with the CLFC share purchase
plans forming part of the Management Incentive Plans, and
(E) inter-affiliate transactions related to the
establishment of a new Barbados reinsurance Subsidiary of
CLFC;
(viii) reorganize, amalgamate or merge with any other person;
(ix) incur or commit to incur, in excess of $25 million in any
single transaction or series of related transactions or $50
million in the aggregate, any indebtedness for borrowed
money or purchase money indebtedness or assume or guarantee
any indebtedness except for borrowings in the ordinary
course of business and consistent with past practice; or
(x) amend or propose to amend the Management Incentive Plans
except as contemplated by sections 2.9 and 2.19;
(c) it will use its commercially reasonable efforts, and cause each of
its Subsidiaries to use its commercially reasonable efforts, to
preserve intact its respective business organizations and goodwill,
to keep available the services of its officers and employees and to
maintain satisfactory relations with suppliers, agents,
distributors, customers and others having business relationships
with it or its Subsidiaries;
(d) except as required by applicable Laws or any agreement to which CLFC
or any of its Subsidiaries is a party at the date of this Agreement
and, in the case of clauses (i) and (ii), except for ordinary course
salary and compensation increases for 2003 as have already been
approved by CLFC, it will not, and it will not permit any of its
Subsidiaries to do any of the following:
(i) other than as contemplated by section 2.9, increase the
amount of (or accelerate the payment or vesting of) any
benefit or amount payable under any employee benefit plan or
any other contract, agreement, commitment, arrangement, plan
or policy providing for compensation or benefits to any
former, present or future director, officer or employee of
CLFC or any of its Subsidiaries, except for payments under
the CLFC 2003 Long Term Incentive Plan authorized by the
board of directors of Canada Life, as set out on Schedule
6.1(1)(d)(i);
(ii) increase (or enter into any commitment or arrangement to
increase) the compensation or benefits, or otherwise extend,
expand or enhance the engagement, employment or any related
rights, of any former, present or future director, officer,
employee or consultant of CLFC or any of its
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Subsidiaries, except for (1) annual increases to employee
and officers of its Subsidiaries' European operations which
have been proposed for approval by the board of directors of
these Subsidiaries in the normal course, (2) bonus
arrangements designed to retain key employees in an
aggregate amount not exceeding 25% of the base salary of 10%
of employees and officers, and (3) normal increases for
persons who are not directors or officers made in the
ordinary course of business consistent with past practice;
provided that in no event shall the overall compensation
budget increase by more than 4.5% on an annual basis in the
aggregate as a result of increases or payments made in
accordance with this clause;
(iii) accelerate the release of, or the expiry date of any hold
period relating to, any CLFC Common Shares held in the CLFC
Plans except as contemplated by this Agreement, or otherwise
amend, vary or modify such plans or the Management Incentive
Plans except as may be reasonably necessary to give effect
to, or adjust for the effects of, transactions contemplated
by this Agreement;
(iv) adopt, establish, enter into or implement, or permit any of
its Subsidiaries to adopt, establish, enter into or
implement, any employee benefit plan, policy, severance or
termination agreement providing for any form of benefits or
other compensation to any former, present or future
director, officer or employee of CLFC or any of its
Subsidiaries holding, in the case of any officer or
employee, a position of vice president or any position
senior thereto or amend, or permit any of its Subsidiaries
to amend, any employee benefit plan, policy, severance or
termination agreement; or
(v) other than with respect to the payment of ordinary course
dividends, collect or contribute funds or make grants or
allocations in respect of: (A) the 2003 Long Term Incentive
Plan, (B) the 1995 Long Term Incentive Plan (as amended),
(C) the Directors Share Purchase Plan, (D) the CLFC Employee
Share Purchase Plan dated as of January 1, 2001, (E) the
Canada Life Assurance (Ireland) Limited Share Ownership
Scheme and (F) the Canada Life UK Division All Employee
Share Plan, on or after June 15, 2003, or such other date as
may be agreed to by the parties (and CLFC shall provide all
affected plan participants with appropriate notice thereof);
(e) it will not pay, discharge, satisfy, compromise or settle (i) any
claim or Liability in excess of $30 million prior to it being due,
or (ii) any claims or Liabilities prior to their being due which,
individually or in the aggregate, are in excess of $30 million,
other than in CLFC's ordinary course of business, consistent with
past practice; and it will not permit any of its Subsidiaries to do
any of the foregoing;
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(f) except as required by applicable Laws, it will not enter into,
terminate or waive any provision of, exercise any option or
relinquish any contractual rights under, or modify in any material
respect, any agreement, guarantee, lease or other commitment or
obligation which is material to CLFC or any agreement or commitment
which involves payments or receipts by CLFC or any of its
Subsidiaries of more than $10 million over the term of such
agreement or commitment, and it will not permit any of its
Subsidiaries to do any of the foregoing;
(g) it will not enter into or agree to enter into, or permit any of its
Subsidiaries to enter into or agree to enter into, any agreement or
commitment providing for the outsourcing of (i) services (excluding
legal, audit, actuarial and accounting services) where such
agreement or commitment, individually or in the aggregate, involves
payments by CLFC or any of its Subsidiaries of more than $1.5
million over the term of such agreement or commitment or payment of
more than $1.5 million to terminate any such agreement or commitment
or (ii) systems (for the purposes of this paragraph, a service or
system shall be deemed to be outsourced if it is undertaken by a
third party unrelated to CLFC and is currently or could reasonably
be expected to be undertaken by CLFC or its Subsidiaries);
(h) it will not make any change, and it will not permit any of is
Subsidiaries to make any change, to its or their existing accounting
practices, methods and principles except as required by the ICA or
by Canadian generally accepted accounting principles as advised by
CLFC's independent auditors, other than as disclosed in Note 1 to
CLFC's 2002 annual financial statements;
(i) except as permitted by subsection 6.8(3), it will not enter into any
confidentiality or standstill agreement relating to the acquisition
or disposition of securities (other than in connection with a
transaction permitted under section 6.1(1)(b)(iv)), amend, release
any third party from its obligations or grant any consent under any
confidentiality or standstill provision relating to the acquisition
or disposition of securities (other than in connection with a
transaction permitted under section 6.1(1)(b)(iv)) or fail to
enforce fully any such provision, and it will not permit any of its
Subsidiaries to do any of the foregoing;
(j) it will not take or fail to take, and it will not permit any of its
Subsidiaries to take or fail to take, any action that would cause
any of CLFC's representations or warranties in this Agreement to be
untrue in any material respect (or, where already qualified by
materiality, in any respect) or would reasonably be expected to
prevent or materially impede, interfere with or delay any of the
transactions contemplated by this Agreement;
(k) it will use its reasonable best efforts to list the Exchangeable
Shares on the Toronto Stock Exchange; and
(l) it will use its reasonable best efforts to complete the Transaction.
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(2) CLFC will promptly advise Lifeco in writing:
(a) of any event, condition or circumstance that might reasonably be
expected to cause any representation or warranty of CLFC in this
Agreement to be untrue or inaccurate at the Closing Time (or, in the
case of any representation or warranty made as of a specified date,
as of such specified date);
(b) of any material adverse change affecting CLFC or any event,
occurrence or development which would be reasonably expected to have
a material adverse effect on CLFC; and
(c) of any material breach by CLFC of any of its covenants, obligations
or agreements contained in this Agreement.
6.2 COVENANTS OF LIFECO.
(1) Lifeco agrees that, until the earlier of the Closing Time and the
termination of this Agreement in accordance with section 8.1, unless CLFC
otherwise agrees in writing or except as contemplated by this Agreement:
(a) it will not adopt or propose to adopt any amendments to its
governing documents that would have a materially adverse impact on
its ability to perform its obligations under this Agreement;
(b) it will not authorize, or enter into, any agreement with respect to
any acquisition of a person or business and will not acquire a
person or business, the value of the consideration for which would
exceed $2 billion individually or in the aggregate, (whether by way
of take-over bid, purchase, merger, reorganization,
recapitalization, consolidation, business combination or otherwise
and including in a series of related transactions);
(c) it will not authorize, or enter into, any agreement with respect to
any disposition of a person or business and will not dispose of a
person or business where the purchase or sale price would exceed $25
million (whether by way of take-over bid, purchase, merger,
reorganization, recapitalization, consolidation, business
combination or otherwise and including in a series of related
transactions) other than any transactions in the course of its
regular investment management operations effected at fair market
value, at arm's length and in the exercise of reasonable business
judgment;
(d) it will not subdivide, consolidate or reclassify any of its
outstanding securities, or declare, set aside or pay any dividend or
other distribution (in cash or any other property) with respect to
its securities or permit any of its Subsidiaries to do the
foregoing, except amounts payable pursuant to previously issued
debentures and preferred shares, and regular quarterly cash
dividends on the Lifeco Common Shares all with record and payment
dates consistent with past practice;
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(e) it will use its reasonable best efforts to complete the Transaction;
(f) it will not make any change, and it will not permit any of its
Subsidiaries to make any change, to its or their existing accounting
practices, methods and principles except as required by the ICA or
by Canadian generally accepted accounting principles as advised by
Lifeco's independent auditors; and
(g) it will not take or fail to take, and it will not permit any of its
Subsidiaries to take or fail to take, any action that would cause
any of Lifeco's representations or warranties in this Agreement to
be untrue in any material respect or would reasonably be expected to
prevent or materially impede, interfere with or delay any of the
transactions contemplated by this Agreement.
(2) Lifeco will promptly advise CLFC in writing:
(a) of any event, condition or circumstance that might reasonably be
expected to cause any representation or warranty of Lifeco in this
Agreement to be untrue or inaccurate at the Closing Time (or, in the
case of any representation or warranty made as of a specified date,
as of such specified date);
(b) of any material adverse change affecting Lifeco or any event,
occurrence or development that would be reasonably expected to have
a material adverse effect on Lifeco; and
(c) of any material breach by Lifeco of any of its covenants,
obligations or agreements contained in this Agreement.
(3) Lifeco will use its reasonable best efforts to list on the Toronto Stock
Exchange the Lifeco Shares issuable to holders of Exchangeable Shares on
the automatic exchange of the Exchangeable Shares and to ensure that those
Lifeco Shares are "freely tradeable" under applicable Securities Laws,
subject to customary exceptions.
6.3 ACCESS TO INFORMATION AND CONFIDENTIALITY.
(1) Subject to the Confidentiality Agreement and the Lifeco CA and applicable
Laws, until the Closing Time, CLFC will furnish promptly (and will cause
each of its Subsidiaries to furnish promptly) to Lifeco and its officers,
employees, counsel, accountants and other authorized representatives,
advisors and agents ("Representatives") all information concerning its
business, properties and personnel as Lifeco and its Representatives may
reasonably request for the purposes of (i) completing the Transaction,
including for the purposes of planning the integration of the parties' and
their respective Subsidiaries' businesses, (ii) preparing submissions to
Regulatory Authorities in respect of the Transaction, and (iii) preparing
the information that Lifeco is required to prepare for inclusion in the
Circular and related documents.
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(2) CLFC shall, from and after the date of this Agreement, diligently and
promptly investigate and analyze (and, where to do so could be expected to
facilitate a more accurate or speedier investigation or analysis, employ
external counsel or consultants to investigate and analyze) the following
matters:
(a) the identification of (i) all jurisdictions in which CLFC or any of
its Subsidiaries carries on business or is otherwise required to be
licensed or registered and (ii) all licenses or registrations held
by CLFC or any of its Subsidiaries; and
(b) the identification of any consent, approval, order or authorization
of, or registration, declaration or filing with, any third party
(other than a Regulatory Authority) that is required by or in
respect to CLFC or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by CLFC, the performance of
its obligations under this Agreement, the Capital Reorganization or
the completion of the Transaction, other than filings and other
actions required under Securities Laws as are contemplated by this
Agreement and any other consents, approvals, orders, authorizations,
registrations, declarations or filings which, if not obtained or
made, would not individually or in the aggregate have a material
adverse effect on CLFC or materially impair its ability to perform
its obligations under this Agreement.
Subject to the Confidentiality Agreement and the Lifeco CA, until the
Closing Time, CLFC will furnish promptly (and will cause each of its
Subsidiaries to furnish promptly) to Lifeco and its Representatives the
results of such investigations and analyses and portions thereof as they
are substantively completed. Such reports may be made orally or by way of
summary where final written reports are not available, which oral or
summary reports shall be followed promptly by written reports.
(3) The Confidentiality Agreement and the confidentiality agreement dated
February 14, 2003 between Lifeco and CLFC (the "Lifeco CA") will continue
to apply and will apply to any Confidential Information (as defined in
such agreements) made available to either party or its Representatives.
6.4 REGULATORY APPROVALS.
(1) Each of Lifeco and CLFC will use its commercially reasonable efforts to
obtain all Regulatory Approvals and all other approvals under Laws that
are applicable in connection with the Transaction as soon as is reasonably
practicable and in any event not later than the Closing Time.
(2) Subject to sections 2.7 and 2.8, the terms of the Confidentiality
Agreement and the Lifeco CA and applicable Laws, each of Lifeco and CLFC
will make and co-operate in the making of all filings and applications and
submissions of information under all Laws which are applicable in
connection with the Transaction and the other transactions contemplated by
this Agreement and will take all reasonable actions in connection
therewith, including in connection with the Regulatory Approvals, and by
participating
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and appearing in any proceedings of either party before Regulatory
Authorities, and will use its reasonable efforts to co-ordinate the
parties' discussions with and responses to all Regulatory Authorities
where both parties are seeking to obtain significant approvals or make
significant filings.
(3) Subject to sections 2.7 and 2.8, the terms of the Confidentiality
Agreement and the Lifeco CA and applicable Laws, each of Lifeco and CLFC
will consult with each other in making any filings with any Regulatory
Authority with respect to such filings. CLFC will (i) enable Lifeco to
review and comment on all such filings that are significant prior to their
release, (ii) consider all such comments reasonably and in good faith,
(iii) provide a copy of each such filing to Lifeco, and (iv) consult with
Lifeco in connection with all material enquiries from or with any material
Regulatory Authority and the possible resolution of all material issues.
Lifeco will, to the extent that CLFC reasonably requires non-sensitive
information included in any such filing made by Lifeco in order to make
one or more of its own filings, provide any such non-sensitive information
to CLFC, which CLFC shall use exclusively for that purpose.
6.5 THIRD PARTY CONSENTS. Each of Lifeco and CLFC will use its commercially
reasonable efforts to obtain consents, waivers or approvals from other parties
to material contracts, material agreements, material guarantees, material
leases, material debt obligations or other material commitments or material
obligations to which it is or any of its Subsidiaries is a party or by which it
or they are bound that are applicable in connection with the Transaction and the
other transactions contemplated by this Agreement as soon as is reasonably
practicable and in any event not later than the Closing Time.
6.6 CO-OPERATION.
(1) Each of Lifeco and CLFC will use its commercially reasonable efforts to
take, or to cause to be taken, all other actions and to do, or to cause to
be done, all other things necessary or advisable to complete the
Transaction and the other transactions contemplated by this Agreement, and
fully to perform and carry out the terms and intent of this Agreement. In
particular, each of Lifeco and CLFC will use its reasonable best efforts:
(a) to defend all lawsuits or other legal, regulatory or other
proceedings to which it is a party challenging or affecting this
Agreement or the consummation of the transactions contemplated by
this Agreement;
(b) to have lifted or rescinded any injunction or restraining order or
other order which may adversely affect the ability of the parties to
consummate the transactions contemplated by this Agreement; and
(c) to effect all necessary registrations, filings and submissions of
information required by Regulatory Authorities in connection with
the transactions contemplated by this Agreement.
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(2) Prior to the Closing Time, at the request of Lifeco, CLFC will, and CLFC
will cause its Subsidiaries to, cooperate with Lifeco, its
Representatives, its Subsidiaries and their Representatives in connection
with business transactions including sales of assets or shares,
reinsurance transactions, reorganizations, joint ventures or dispositions
of any part of the undertaking of CLFC and its Subsidiaries that Lifeco
proposes be undertaken at or following the completion of the Transaction.
Such cooperation will include providing assistance with any regulatory
filings or notices and causing CLFC or its applicable Subsidiaries to
enter into any agreements with respect to such matters as Lifeco shall
reasonably request, so long as all such agreements are made conditional
upon completion of the Transaction.
6.7 SOLICITATION OF ACQUISITION PROPOSALS.
(1) CLFC will immediately close all data rooms (other than data rooms
established in connection with the disposition of CLFC's Puerto Rican and
Bahamian operations), cease and cause to be terminated any existing
solicitation, encouragement, activity, discussion or negotiation with any
person by CLFC, any of its Subsidiaries or any of its or its Subsidiaries'
Representatives with respect to any Acquisition Proposal, whether or not
initiated by CLFC, and, in connection therewith, CLFC will request (and
preserve all rights it has to require) the return or destruction of
information regarding CLFC and its Subsidiaries previously provided to any
such person or any other person and will request (and preserve all rights
it has to require) the destruction of all materials including or
incorporating any information regarding CLFC and its Subsidiaries.
(2) Subject to section 6.8, CLFC will not do any of the following or permit
any of its Subsidiaries or any of its or its Subsidiaries' Representatives
to do any of the following:
(a) solicit, initiate, invite, assist, facilitate, promote, encourage or
entertain any inquiry or the making of any proposal to it or its
shareholders from any person which constitutes, or may reasonably be
expected to lead to, (in either case in one transaction or a series
of transactions) an Acquisition Proposal;
(b) enter into or participate in or continue any discussions or
negotiations regarding, agree to or endorse or recommend, or enter
into or propose to enter into any agreement, arrangement or
understanding in relation to, an Acquisition Proposal; or
(c) furnish to any person any information with respect to the business,
properties, operations, prospects or condition (financial or
otherwise) of CLFC or any of its Subsidiaries in circumstances under
which it knows, or it ought reasonably to know, that such
information will be used by the recipient in connection with, or in
order to make or evaluate making, an Acquisition Proposal.
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6.8 REQUEST FOR ACCESS TO CONFIDENTIAL INFORMATION AND RIGHT TO MATCH.
(1) CLFC will notify Lifeco as soon as possible (and in any event within 24
hours of receipt) of any BONA FIDE written Acquisition Proposal of which
its senior management or board of directors becomes aware, or any request
for non-public information relating to it or any of its Subsidiaries in
connection with an Acquisition Proposal or for access to the properties,
books or records of it or any of its Subsidiaries by any person that
informs it or any of its Subsidiaries or any of its Representatives that
such person is considering making, or has made, an Acquisition Proposal.
Such notice must include a description of the material terms and
conditions of any proposal and provide such details of the proposal,
inquiry or contact as Lifeco may reasonably request, including the
identity of the person making such proposal, inquiry or contact. If such
Acquisition Proposal consists of a specific offer which is not conditional
upon access or continued access to confidential or material non-public
information and includes a request for access to confidential or material
non-public information regarding CLFC and the CLFC Board of Directors
determines in good faith that (i) if such Acquisition Proposal were made
it would be or would reasonably be expected to result in a Superior
Proposal and (ii) after consultation with its financial and legal
advisors, it is necessary for the directors to do so in order to discharge
properly their fiduciary duties and the CLFC Board of Directors wishes to
provide the person making such Acquisition Proposal with access to such
confidential and material non-public information, then CLFC shall provide
notice of the Acquisition Proposal including all relevant details thereof
to Lifeco.
(2) Lifeco shall have the right to match the terms of any Acquisition Proposal
made pursuant to subsection (1) for a period of 48 hours from the time
that it receives from CLFC notice of the Acquisition Proposal and the
request for information and the relevant details of the Acquisition
Proposal, and upon Lifeco agreeing to amend this Agreement and the terms
of the Transaction to provide for terms that to CLFC and to CLFC Common
Shareholders are as favourable as, or superior to, the terms of the
Acquisition Proposal, CLFC will not enter into any discussions or
negotiations with or provide any confidential or material non-public
information to the person making such Acquisition Proposal.
(3) If Lifeco does not exercise the right provided by subsection (2) in the
manner set out therein, then, and only in that case, but subject to the
execution of a confidentiality agreement substantially similar to the
Confidentiality Agreement, the directors of CLFC may provide such person
with access to information regarding CLFC, provided that CLFC sends a copy
of any such confidentiality agreement to Lifeco immediately on its
execution and Lifeco is provided with a list of or copies of the
information provided to, such person and immediately provided with access
to similar information to which such person was provided and that in no
event shall any such information be provided until at least 48 hours after
Lifeco has received from CLFC the notice of the request therefor as
provided in subsection (1).
(4) CLFC will be responsible for the breach of this section by any of its
Subsidiaries or Representatives.
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6.9 NOTICE OF SUPERIOR PROPOSAL.
(1) CLFC may accept, approve, recommend or enter into an agreement,
arrangement or understanding in respect of an Acquisition Proposal, if
such Acquisition Proposal consists of a specific offer which is not
conditional upon access or continued access to confidential or material
non-public information, (provided that this section shall not apply to a
confidentiality agreement that complies with subsection 6.8(3)) on the
basis that it constitutes a Superior Proposal, provided that:
(a) it gives notice to Lifeco that it proposes to do so, promptly after
so determining;
(b) after consultation with its financial and legal advisors, the board
of directors of CLFC has determined that it would be necessary for
the directors to take that action in order to discharge properly
their fiduciary duties;
(c) it provides to Lifeco a copy of the agreement relating to the
Acquisition Proposal, if any;
(d) it provides Lifeco with the opportunity, for a period of five days
from the later of the dates that Lifeco received notice under (i)
paragraph (a) and (ii) subsection 6.8(1), to negotiate to amend this
Agreement and the terms of the Transaction to provide for terms that
to CLFC and the CLFC Common Shareholders are (in the good faith
determination of the directors of CLFC) as favourable as, or
superior to, the terms of the Superior Proposal;
(e) if at any time during but not later than the end of the five day
period provided for in paragraph (d), Lifeco elects to make a
proposal that (in the good faith belief of the directors of Lifeco)
provides for terms that to CLFC, and the CLFC Common Shareholders
are as favourable as, or superior to, the terms of the Superior
Proposal and delivers to CLFC an executed amendment to this
Agreement reflecting the new proposal, the directors of CLFC will:
(i) call and hold a meeting of the directors (or the appropriate
committee thereof) to consider Lifeco's proposal as soon as
reasonably possible but not later than 48 hours after
receipt of such proposal;
(ii) in good faith consider such proposal and permit Lifeco and
its Representatives to make a presentation to the meeting in
respect of the relative merits of Lifeco's proposal and the
Superior Proposal but not otherwise to attend or participate
in the meeting or the deliberation of the directors; and
(iii) not later than the date the meeting is required to be held
under clause (i), determine and advise Lifeco as to whether
CLFC's board of directors has determined that Lifeco's
proposal provides for terms that to CLFC and the
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CLFC Common Shareholders are as favourable as, or superior
to, the terms of the Superior Proposal; and
(f) in the event that the determination referred to in clause (e)(iii)
is made in the affirmative by CLFC's board of directors, immediately
thereafter execute the amendment to this Agreement delivered by
Lifeco pursuant to paragraph (e) and not take any actions in
furtherance or support of the Superior Proposal.
(2) If despite its consideration of any proposal made by Lifeco under
paragraph (1)(e), the board of directors of CLFC continues to believe, in
good faith, and after consultation with its financial advisors and outside
counsel, that the Superior Proposal continues to be a Superior Proposal,
and therefore rejects Lifeco's amended proposal, then, CLFC may terminate
this Agreement (which termination, for greater certainty, will not relieve
CLFC of its obligations to pay the Termination Fee to Lifeco as provided
in subsection 8.3(7)).
(3) Each successive material modification of any Acquisition Proposal will
constitute a new Acquisition Proposal for purposes of sections 6.7, 6.8
and 6.9 and for the purposes of the requirements under paragraphs 6.8(2)
and 6.9(1)(e) to start an additional 48 hours' or five business days'
notice period, respectively.
(4) CLFC will not have any rights under sections 6.8 and 6.9 after the Meeting
if the Transaction Resolution is approved at the Meeting.
(5) CLFC will not release any person from any confidentiality agreement or
standstill agreement by which such person is bound unless such person has
made a Superior Proposal which has been accepted pursuant to subsection
(2) and the provisions of such subsection have been fulfilled.
6.10 ADJOURNING OR POSTPONING THE MEETING.
(1) Where at any time before the Meeting CLFC has provided Lifeco with a
notice under subsection 6.8(1) or paragraph 6.9(1)(a), an Acquisition
Proposal has been publicly disclosed or announced and either the 48 hour
period provided by subsection 6.8(2) or the five day period provided by
subsection 6.9(1)(d) has not elapsed, then, subject to applicable Laws, at
Lifeco's request, CLFC will postpone or adjourn the Meeting at the Meeting
(but not beforehand without Lifeco's consent) to a date acceptable to
Lifeco but not later than 20 days after the scheduled date of the Meeting.
(2) If CLFC provides Lifeco with notice under subsection 6.8(1) or paragraph
6.9(1)(a) on a date that is less than either the 48 hour period or the
five day period referred to in subsection (1) before the date of the
Meeting and Lifeco has not made a proposal in accordance with paragraph
6.9(1)(e) that the directors of CLFC have determined in accordance with
paragraph 6.9(1)(e) provides for terms that to CLFC and the CLFC Common
Shareholders are as favourable as, or superior to, the terms of the
Superior Proposal in respect of which notice was given under paragraph
6.9(1)(a), subject to applicable Laws, CLFC may postpone or adjourn the
Meeting to a date that is at least five
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Business Days but not more than 10 Business Days after the scheduled date
of the Meeting.
6.11 INSURANCE. Lifeco agrees that, for the period from and including the
Closing Date until six years after the Closing Date, it will cause CLFC or any
successor to CLFC to maintain CLFC's current insurance policies (as set out in
Schedule 6.11, the "CLFC D&O Policies") or equivalent policies or provide
equivalent protection subject in either case to terms and conditions no less
advantageous to "Insured Persons" (which means "Insured Person" as such term is
defined in the CLFC D&O Policies and "insured individuals" as defined in the
CLFC Fiduciary Liability Policy) than those contained in the CLFC D&O Policies,
for all present and former Insured Persons, covering claims made prior to or
within six years from and after the Closing Date for actions taken or not taken
on or after June 1, 1995 while they were Insured Persons. Lifeco also agrees
that after the expiration of such six year period it will use reasonable
commercial efforts to cause the Insured Persons (other than former directors and
officers of CLFC as at the date of this Agreement) to be covered under its then
existing directors' and officers' insurance policy, if any, for actions taken or
not taken on or after June 1, 1995 while they were Insured Persons. After the
Closing Date Lifeco will indemnify the Insured Persons consistent with the
practice of Lifeco in respect of its own directors and officers and Pension
Trustees for actions while they were Insured Persons. Insured Persons who become
directors or officers of Lifeco or a Subsidiary of Lifeco will be entitled to
indemnification as provided in Lifeco's governing documents. Lifeco agrees for
the benefit of the Insured Persons that "equivalent protection" within the
meaning of this section 6.11 means that Lifeco will pay on behalf of each
Insured Person all Loss which the Insured Person becomes legally obligated to
pay on account of any Claim made against such Insured Person for any Wrongful
Act (as such terms, whether or not capitalized, are defined in the CLFC D&O
Policies) as if Lifeco were the insurer under the CLFC D&O Policies (the
"Indemnity"), subject to the terms and conditions thereof, with Lifeco waiving
all rights of set-off in respect of such Indemnity, and agreeing not to assert
any defenses other than those contained in the CLFC D&O Policies, in response to
any claim for Indemnity made by an Insured Person. The provisions of this
section are intended to be for the benefit of, and will be enforceable by, each
of the Insured Persons and their heirs or representatives, and are in addition
to and not in substitution for any rights to indemnification or contribution or
cause of action that any persons may have by contract or otherwise.
ARTICLE 7
CONDITIONS
7.1 MUTUAL CONDITIONS. The obligations of Lifeco and CLFC to complete the
Transaction are subject to the satisfaction of the following conditions (each of
which is for their mutual benefit) on or before the Closing Date (and in any
event before the Closing Time):
(a) the Transaction Resolution has been approved by the CLFC Common
Shareholders at the Meeting in the manner required by the ICA or
other applicable Laws;
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(b) no provision of any applicable Laws and no judgment, injunction,
order or decree is in effect which restrains or enjoins or otherwise
prohibits the Transaction or the other transactions contemplated by
this Agreement;
(c) the Regulatory Approvals in Schedule A have been obtained (except
where the failure to obtain any such approvals would not,
individually or in the aggregate, have a material adverse effect on
Lifeco and CLFC on a combined basis, in the reasonable opinion of
Lifeco, or except where the failure to obtain any such approvals
would not, individually or in the aggregate, affect the listing or
"free tradeability" of the Lifeco Shares to be issued to holders of
Exchangeable Shares) and such Regulatory Approvals do not in the
reasonable opinion of Lifeco impose or contain terms and conditions
which would, individually or in the aggregate, have a material
adverse effect on Lifeco and CLFC and their Subsidiaries on a
combined basis;
(d) in the opinion of Lifeco, acting reasonably, all other consents,
waivers, permits, orders and approvals of any Regulatory Authority,
in connection with, or required to permit, the Transaction have been
obtained and all waiting periods have expired, where the failure to
obtain or the non-expiry of the same would constitute a criminal
offence, or would, individually or in the aggregate, have a material
adverse effect on Lifeco and CLFC and their Subsidiaries on a
combined basis;
(e) the Exchangeable Shares shall be listed on the Toronto Stock
Exchange;
(f) this Agreement has not been terminated pursuant to Article 8; and
(g) the Form F-8 or Form F-80 shall have been filed with the SEC before
any offering documents are sent to CLFC shareholders who are U.S.
holders and no stop order suspending its effectiveness shall have
been issued by the SEC and be in effect and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
7.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF LIFECO. The obligation of
Lifeco to complete the Transaction will be subject to the satisfaction of the
following conditions (each of which is for the exclusive benefit of Lifeco and
may be waived by it on or before the Closing Date):
(a) CLFC has performed or complied with, in all material respects, each
of its obligations, agreements and covenants in this Agreement to be
performed and complied with by it on or before the Closing Time;
(b) the representations and warranties made by CLFC in this Agreement
are true and correct in all material respects (or, where such
representations and warranties are qualified by materiality, in all
respects) as of the Closing Date as if made on and as of such date
(except for any representations and warranties made as of a
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specified date, which will be true and correct in all material
respects or in all respects, as appropriate, as of such specified
date);
(c) since the date of this Agreement, there has not been any change,
event, occurrence or development that would reasonably be expected
to have a material adverse effect on CLFC or that would materially
and adversely affect the ability of CLFC to perform its obligations
under this Agreement;
(d) the board of directors of CLFC has adopted all necessary
resolutions, and all other necessary corporate action has been taken
by CLFC, to approve and permit the Transaction and to enable CLFC to
perform its obligations under this Agreement; and
(e) holders of not more than 5% of the CLFC Common Shares, other than
Manulife Financial Corporation or its affiliates, have exercised
(and not withdrawn) their rights to dissent in respect of the
Transaction.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF CLFC. The obligation of CLFC
to complete the Transaction will be subject to satisfaction of the
following conditions (each of which is for the exclusive benefit of CLFC
and may be waived by it on or before the Closing Date):
(a) the Lifeco Shares issuable on exchange of the Exchangeable Shares
have been conditionally approved for listing on the Toronto Stock
Exchange, subject to the filing of required documentation, and are
"freely tradeable" under applicable Securities Laws, subject to
customary exceptions;
(b) Lifeco has performed or complied with, in all material respects,
each of its obligations, agreements and covenants under this
Agreement to be performed and complied with by it on or before the
Closing Time;
(c) the representations and warranties made by Lifeco under this
Agreement are true and correct in all material respects (or, where
such representations and warranties are qualified by materiality, in
all respects) as of the Closing Date as if made on and as of such
date (except for any representations and warranties made as of a
specified date, which will be true and correct in all material
respects or in all respects, as appropriate, as of such specified
date);
(d) since the date of this Agreement, there has not been any change,
event, occurrence or development that would reasonably be expected
to have a material adverse effect on Lifeco or that would materially
and adversely affect the ability of Lifeco to perform its
obligations under this Agreement; and
(e) the board of directors of Lifeco has adopted all necessary
resolutions, and all other necessary corporate action has been taken
by Lifeco, to enable Lifeco to perform its obligations under this
Agreement.
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7.4 CLOSING MATTERS. Each of Lifeco and CLFC will deliver, at the Closing
Time, any customary certificates, resolutions, legal opinions and other closing
documents as may be required by the other party, acting reasonably, including a
certificate signed by two senior officers of each party confirming compliance
with the condition in paragraphs 7.2(a) to (d), in the case of CLFC, and
paragraphs 7.3(b) to (e), in the case of Lifeco.
ARTICLE 8
ARTICLES. TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Time (even if the CLFC Common Shareholders have approved the Transaction
Resolution at the Meeting):
(a) by mutual agreement of Lifeco and CLFC;
(b) by Lifeco or CLFC, if any Laws make the Transaction or any part of
it illegal or otherwise prohibited, or if any judgment, injunction,
order or decree of a competent Regulatory Authority enjoining Lifeco
or CLFC from proceeding with or completing the Transaction or any
part of it is entered and such judgment, injunction, order or decree
has become final and non-appealable;
(c) by Lifeco or CLFC, if either of the conditions set forth in
paragraphs 7.1(c) or (d) becomes incapable of satisfaction;
(d) by Lifeco or CLFC, if the Closing Date does not occur on or prior to
the Outside Date; provided, however, that if the Closing Date is
delayed by (x) an injunction or order made by a Regulatory Authority
of competent jurisdiction or (y) the parties not having obtained any
Regulatory Approval which is necessary to permit the completion of
the Transaction and the other transactions contemplated by this
Agreement, then, provided that such injunction or order is being
contested or appealed or such regulatory waiver, consent or approval
is being actively sought, as applicable, this Agreement may not be
terminated pursuant to this paragraph 8.1(d) until the earlier of 30
days after the Outside Date and the fifth Business Day following the
date on which such injunction or order ceases to be in effect or
such Regulatory Approval is obtained, as applicable; and further
provided that the right to terminate this Agreement pursuant to this
paragraph will not be available to a party whose failure to perform
any material covenant, agreement or obligation under this Agreement
has been the cause of, or resulted in, the failure of the Closing
Date to occur on or before such date;
(e) by Lifeco if, (i) the board of directors of CLFC fails to recommend
or confirm its recommendation within two Business Days of being
requested to do so by Lifeco, or withdraws, modifies or changes its
approval or recommendation of this Agreement or the Transaction in a
manner adverse to Lifeco, (ii) CLFC has materially breached its
obligations under any of sections 6.7, 6.8 or 6.9, or (iii) the
board of directors of CLFC accepts, approves, recommends or enters
into an
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agreement (other than a confidentiality agreement entered into in
compliance with subsection 6.8(3)) with any person with respect to a
Superior Proposal;
(f) by either Lifeco or CLFC, if at the Meeting the requisite votes of
the holders of CLFC Common Shares to approve the Transaction
Resolution are not obtained;
(g) by CLFC in the circumstances described in subsection 6.9(2);
(h) by Lifeco, if CLFC has breached any of its representations,
warranties, agreements or obligations in this Agreement (other than
those referred to in clause 8.1(e)(iii)), the breach of which would
result in the failure to satisfy one or more conditions in paragraph
7.2(a) or (b) and in the case of paragraph 7.2(a) such breach is not
curable or if curable is not cured within 15 days after notice of
the breach has been received by CLFC;
(i) by CLFC, if Lifeco has breached any of its representations,
warranties, agreements or obligations in this Agreement, the breach
of which would result in the failure to satisfy one or more
conditions set forth in paragraph 7.3(b) or (c) and in the case of
paragraph 7.3(b) such breach is not curable or if curable is not
cured within 15 days after notice of the breach has been received by
Lifeco;
(j) by Lifeco, if there has been since the date of this Agreement (or,
if there exists or has previously occurred, there has been
disclosed, generally or to Lifeco), any change, event, occurrence or
development that would reasonably be expected to have a material
adverse affect on CLFC or that would materially and adversely effect
the ability of CLFC to perform its obligations under this Agreement;
or
(k) by CLFC, if there has been since the date of this Agreement (or, if
there exists or has previously occurred, there has been disclosed,
generally or to CLFC), any change, event, occurrence or development
that would reasonably be expected to have a material adverse affect
on Lifeco or that would materially and adversely effect the ability
of Lifeco to perform its obligations under this Agreement.
8.2 EFFECT OF TERMINATION. If this Agreement is terminated in accordance with
section 8.1, neither party will have any further liability to perform its
obligations under this Agreement except for those under section 6.3(3), this
section and sections 8.3 and 9.8, which will continue in effect, but nothing in
this Agreement (including payment of the Termination Fee, the CLFC Expense Fee
or the Lifeco Expense Fee) will relieve either party from liability for any
breach of any covenant contained in this Agreement prior to such termination;
provided, however, that the party paying the Termination Fee, the CLFC Expense
Fee or the Lifeco Expense Fee will be relieved from liability for any breach of
any representation or warranty in this Agreement.
8.3 TERMINATION FEE AND EXPENSES.
(1) If this Agreement is terminated by Lifeco pursuant to paragraph 8.1(e),
then, within three Business Days following any such termination, CLFC will
pay the Termination Fee
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to Lifeco in cash by wire transfer in immediately available funds to an
account designated by Lifeco.
(2) If (i) prior to the date of the Meeting a BONA FIDE Acquisition Proposal
has been made, (other than the initial offer made by Manulife Financial
Corporation dated December 27, 2002) and (ii) this Agreement is terminated
by either party pursuant to paragraph 8.1(f), then within three Business
Days following any such termination, CLFC will pay the Termination Fee to
Lifeco in cash by wire transfer in immediately available funds to an
account designated by Lifeco.
(3) If this Agreement is terminated by Lifeco pursuant to paragraph 8.1(h),
then, within three Business Days following notice of such termination,
CLFC will pay to Lifeco in cash by wire transfer in immediately available
funds to an account designated by Lifeco an amount equal to the Lifeco
Expense Fee as payment in full of Lifeco's costs and expenses in
connection with the transactions contemplated by this Agreement; provided,
however, if the Agreement is terminated by Lifeco pursuant to paragraph
8.1(c) on the basis that CLFC failed to obtain a required approval for
which it had sole or principal responsibility, CLFC will only reimburse
Lifeco's actual expenses to a maximum of $5 million.
(4) If this Agreement is terminated by Lifeco pursuant to paragraph 8.1(j),
then, within three Business Days following notice of such termination,
CLFC will pay to Lifeco in cash by wire transfer in immediately available
funds to an account designated by Lifeco an amount equal to $15 million as
payment in full of Lifeco's costs and expenses in connection with the
transactions contemplated by this Agreement.
(5) If this Agreement is terminated by CLFC pursuant to paragraph 8.1(i),
then, within three Business Days following notice of such termination,
Lifeco will pay to CLFC in cash by wire transfer in immediately available
funds to an account designated by CLFC an amount equal to the CLFC Expense
Fee as payment in full of CLFC's costs and expenses in connection with the
transactions contemplated by this Agreement; provided, however, if the
Agreement is terminated by CLFC pursuant to paragraph 8.1(c) on the basis
that Lifeco failed to obtain a required approval for which it had sole or
principal responsibility, Lifeco will only reimburse CLFC's actual
expenses incurred in respect of the Transaction to a maximum of $5
million.
(6) If this Agreement is terminated by CLFC pursuant to paragraph 8.1(k),
then, within three Business Days following notice of such termination,
Lifeco will pay to CLFC in cash by wire transfer in immediately available
funds to an account designated by CLFC an amount equal to $15 million as
payment in full of CLFC's costs and expenses in connection with the
transactions contemplated by this Agreement.
(7) If this Agreement is terminated by CLFC pursuant to paragraph 8.1(g),
then, within three Business Days of such termination, CLFC will pay the
Termination Fee to Lifeco in immediately available funds by wire transfer
to an account designated by Lifeco.
<Page>
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8.4 AMENDMENT. This Agreement may not be amended except by mutual written
agreement of the parties.
8.5 WAIVER. Lifeco or CLFC, as applicable, may (i) extend the time for the
performance by the other of any of its obligations or other acts, (ii) waive
compliance by the other with any of its agreements or the fulfillment of any
conditions to its own obligations contained in this Agreement or (iii) waive
inaccuracies in any of the other's representations or warranties contained in
this Agreement or in any document delivered pursuant to this Agreement.
ARTICLE 9
GENERAL
9.1 INVESTIGATION. Any investigation by either party and its advisors will not
mitigate, diminish or affect the representations and warranties of the other
party.
9.2 ALTERNATIVE STRUCTURE. The parties agree that in the event that they
mutually determine that it is inadvisable to complete the Transaction, the
parties will promptly enter into an amended and restated agreement which
contemplates an alternative transaction structure whereby Lifeco or one of its
Subsidiaries would obtain control over CLFC, but which agreement is otherwise on
substantially the same terms as this Agreement.
9.3 NOTICES. All notices and other communications under this Agreement must be
in writing and may be delivered personally or sent by telecopier or by a
nationally recognized overnight courier service with overnight delivery
instructions, in each case addressed to the particular party at:
(a) if to Lifeco:
Great-West Lifeco Inc.
100 Osborne Street North
Winnipeg, Manitoba
R3C 3A5
Attention: Raymond L. McFeetors
Co-President and Chief Executive Officer
Telephone: 204.946.1190
Facsimile: 204.946.7134
<Page>
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with a copy to:
Blake, Cassels & Graydon LLP
Box 25, Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1A9
Attention: J. David A. Jackson
Telephone: 416.863.2636
Facsimile: 416.863.2653
(b) if to CLFC:
Canada Life Financial Corporation
330 University Avenue
Toronto, Ontario
M5G 1R8
Attention: David A. Nield
Chairman and Chief Executive Officer
Telephone: 416.597.1440
Facsimile: 416.597.1940
with a copy to:
McCarthy Tetrault LLP
Suite 4700
Toronto Dominion Tower
Toronto-Dominion Centre
Toronto, Ontario
M5R 1E6
Attention: Garth M. Girvan
Telephone: 416.601.7574
Facsimile: 416.868.0673
or at such other address of which either party may advise, from time to time,
the other party by notice in writing given in accordance with the foregoing. Any
such notice or other communication if delivered personally will be deemed to
have been given and received on the date on which it was delivered to the
relevant address (if a Business Day and, if not, on the next Business Day), if
sent by telecopier, will be deemed to have been given and received at the time
of receipt and despite the foregoing, if any notice or other communication is
received after 4:00 p.m. (Toronto time) on any Business Day or on a day other
than a Business Day, it will be deemed to have been given and received the next
Business Day.
<Page>
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9.4 ASSIGNMENT. Neither party may assign this Agreement or any of its rights,
interests or obligations under this Agreement (whether by operation of law or
otherwise).
9.5 BINDING EFFECT. This Agreement is binding on, enures to the benefit of and
is enforceable by, the parties and their respective successors and permitted
assigns.
9.6 THIRD PARTY BENEFICIARIES. For greater certainty, Lifeco and CLFC
acknowledge and agree that it is not intended that CLFC Common Shareholders be
granted or entitled to any rights under this Agreement as third party
beneficiaries.
9.7 FURTHER ASSURANCES. Each party from time to time will and will at all
times hereafter, at the request of the other party, but without further
consideration, do all such further acts and execute and deliver all such further
documents and instruments as reasonably required in order to fully perform and
carry out the terms and intent of the Agreement.
9.8 EXPENSES. Subject to section 8.3, each party will be responsible for its
own costs and expenses in relation to this Agreement and the Transaction,
including legal fees, accounting fees, financial advisory fees, regulatory
filing fees, all disbursements of advisors, and printing and mailing costs. In
particular, CLFC will be responsible for all costs associated with the Meeting,
including printing and mailing costs.
9.9 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the Laws of Ontario and the Laws of Canada applicable in
Ontario.
9.10 TIME OF ESSENCE. Time is of the essence of this Agreement.
9.11 ENTIRE AGREEMENT. This Agreement, together with the Confidentiality
Agreement and the Lifeco CA, constitutes the entire agreement of the parties,
and this Agreement supersedes all other prior agreements, understandings,
negotiations and discussions (oral or written) (other than the Confidentiality
Agreement and the Lifeco CA) between the parties with respect to the subject
matter hereof and thereof.
9.12 SEVERABILITY. If any provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement will nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to either
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties will negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated by this Agreement are fulfilled to the maximum extent possible.
9.13 REMEDIES. Lifeco and CLFC acknowledge and agree that an award of money
damages would be inadequate for any breach of this Agreement by the other party
or its Representatives and any such breach would cause the non-breaching party
irreparable harm. Accordingly, Lifeco and CLFC agree that, in the event of any
breach or threatened breach of this Agreement by the
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other party or its Representatives, the non-breaching party will also be
entitled, without the requirement of posting a bond or other security, to
equitable relief, including injunctive relief and specific performance, provided
it is not in material default under this Agreement.
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9.14 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which will be deemed to be an original but all of which together will constitute
one and the same instrument.
The parties have executed this Agreement.
GREAT-WEST LIFECO INC.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
CANADA LIFE FINANCIAL CORPORATION
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
<Page>
SCHEDULE A
REGULATORY APPROVALS
(a) all applicable approvals under the ICA, including the approval of
the Minister under subsection 407(1) of the ICA;
(b) the approval of the Superintendent;
(c) the Commissioner shall have issued an advance ruling certificate
pursuant to section 102 of the COMPETITION ACT (Canada) in respect
of the Transaction or the applicable waiting period under Part IX of
the COMPETITION ACT (Canada) shall have expired and the Commissioner
shall have advised Lifeco in writing that he does not intend to
commence any proceedings under the COMPETITION ACT (Canada) in
respect of the Transaction, such advice being on terms and in a form
satisfactory to Lifeco, acting reasonably, and not having been
rescinded or amended;
(d) any applicable approvals (or the expiry or termination of any,
applicable waiting periods) under the HSR Act and other applicable
competition or anti-trust Laws, including those of the European
Union;
(e) any applicable approvals under the TRUST AND LOAN COMPANIES ACT
(Canada);
(f) any applicable approvals under insurance and trust company Laws of
each applicable province and territory of Canada and the Isle of
Man;
(g) any applicable approval under Securities Laws (and Investment
Dealers Association of Canada by-laws, rules and regulations) of
each applicable province and territory of Canada and/or of any other
applicable jurisdiction, including approvals relating to:
(i) the change in control of a mutual fund manager;
(ii) the change in control of a registered dealer;
(iii) the permitted holdings of a mutual fund;
(iv) the issuance of the Exchangeable Shares; and
(v) the issuance of the Lifeco Shares on exchange of the
Exchangeable Shares;
(h) any applicable approvals (or the expiry or termination of any
applicable waiting periods) under applicable United States insurance
Laws (including those of Michigan, New York, Colorado and Puerto
Rico), under the applicable financial
<Page>
services laws of the United Kingdom, and under insurance laws of the
United Kingdom, the Isle of Man, Ireland, and any other applicable
jurisdiction;
(i) approval of the Toronto Stock Exchange to the listing at the Closing
Time of the Exchangeable Shares into which CLFC Common Shares will
be changed at the Closing Time;
(j) approval of the Toronto Stock Exchange to the listing of the Lifeco
Shares issuable on the exchange of the Exchangeable Shares; and
(k) any other approvals required by any Regulatory Authority.
A-2
<Page>
SCHEDULE B
FORM OF DISSENT RIGHTS AGREEMENT
<Page>
DISSENT RIGHTS AGREEMENT
THIS AGREEMENT is made as of the ____ day of March, 2003
AMONG:
CANADA LIFE FINANCIAL CORPORATION,
a company incorporated under the INSURANCE COMPANIES ACT
(Canada), (hereinafter called "CLFC")
- and -
GREAT-WEST LIFECO INC.,
a company incorporated under the CANADA BUSINESS CORPORATIONS
ACT, (hereinafter called "Lifeco")
- and -
EACH REGISTERED HOLDER OF CLFC COMMON SHARES WHO DISSENTS FROM
THE TRANSACTION RESOLUTION.
RECITALS:
A. WHEREAS under the provisions of the INSURANCE COMPANIES ACT (Canada), CLFC
Common Shareholders do not have any right to dissent from the Transaction
Resolution;
B. AND WHEREAS CLFC and Lifeco have agreed to offer to CLFC Common
Shareholders, by contract, a right to dissent from the Transaction
Resolution;
C. AND WHEREAS CLFC and Lifeco have entered into this Agreement to give
effect to such contractual right of dissent and to set forth the terms and
conditions with which CLFC Common Shareholders must comply in order to
exercise such right to dissent;
D. AND WHEREAS each CLFC Common Shareholder who exercises a right to dissent
in accordance with the provisions of this Agreement shall be deemed to
have accepted and agreed to be bound by the terms and conditions of this
Agreement, including the Dissent Procedures.
NOW THEREFORE in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged) the parties agree as follows.
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS.
In this Agreement and in the recitals hereto, the following terms shall
have the following meanings:
<Page>
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(a) "AGREEMENT" means this Dissent Rights Agreement.
(b) "ARBITRATOR" means a retired judge of the Ontario Superior Court of
Justice or Ontario Court of Appeal selected by the Co-ordinator from
the panel of arbitrators maintained by ADR Chambers: An Alternative
Dispute Resolution Group or any replacement body.
(c) "ARBITRATION" means the proceeding conducted by the Arbitrator
pursuant to the provisions of Article 4 of this Agreement.
(d) "AUTOMATIC EXCHANGE TIME" has the meaning set forth in the
Exchangeable Share Provisions.
(e) "CANADA LIFE" means The Canada Life Assurance Company, a company
existing under the INSURANCE COMPANIES ACT (Canada), and a
wholly-owned subsidiary of CLFC.
(f) "CERTIFICATE" means a share certificate issued by CLFC in the name
of a holder of CLFC Common Shares and representing such number of
CLFC Common Shares as is set forth on the face thereof.
(g) "CLFC COMMON SHAREHOLDER" means a registered holder of CLFC Common
Shares (excluding for greater certainty Non-Certificated
Shareholders).
(h) "CLFC COMMON SHARES" means common shares in the capital of CLFC.
(i) "CLFC OWNERSHIP STATEMENT" means a share ownership statement issued
by CLFC as a record of the CLFC Common Shares owned by certain
Canada Life policyholders following the demutualization of Canada
Life.
(j) "CO-ORDINATOR" means the Co-ordinator of "ADR Chambers: An
Alternative Dispute Resolution Group".
(k) "COMPUTERSHARE" means Computershare Trust Company of Canada, the
registrar and transfer agent for the CLFC Common Shares.
(l) "DEMAND FOR PAYMENT" means the written notice sent by each
Dissenting Shareholder to CLFC within the time period and containing
the information set forth in section 3.7 hereof.
(m) "DISSENT PROCEDURES" means those steps and procedures required to be
taken or followed, those notices required to be given and all other
matters required to be done pursuant to this Agreement in order to
exercise a Dissent Right.
(n) "DISSENT RIGHT" means the right of a CLFC Common Shareholder to
dissent from the Transaction Resolution, and to be paid in cash an
amount equal to the fair value of its
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CLFC Common Shares, in accordance with and upon the terms and
conditions set out in this Agreement.
(o) "DISSENTING SHAREHOLDER" means a CLFC Common Shareholder who
exercises a Dissent Right in accordance with the terms of this
Agreement, and who does not thereafter cease to be entitled to
exercise a Dissent Right.
(p) "ELECTED CONSIDERATION" has the meaning set forth in the Transaction
Agreement.
(q) "EXCHANGEABLE SHARES" means the new class of exchangeable shares of
CLFC having the rights, privileges, restrictions and conditions set
forth in the Exchangeable Share Provisions.
(r) "EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares as
set forth in Schedule 1 to Appendix 1 to Schedule A of the Proxy
Circular, together with such additions, deletions or modifications
as may be approved by CLFC Common Shareholders at the Special
Meeting.
(s) "NON-CERTIFICATED SHAREHOLDER" means a holder of a CLFC Ownership
Statement.
(t) "NON-REGISTERED CLFC COMMON SHARE" means a CLFC Common Share held by
a Non-Registered Holder.
(u) "NON-REGISTERED HOLDER" means a beneficial owner of CLFC Common
Shares that is neither a registered holder of CLFC Common Shares nor
a Non-Certificated Shareholder.
(v) "NOTICE OF OBJECTION" means the written notice of objection to the
Transaction Resolution sent to CLFC by a CLFC Common Shareholder
pursuant to section 3.3 hereof.
(w) "NOTICE OF RESOLUTION" means the notice sent by CLFC to each
Dissenting Shareholder pursuant to section 3.6 hereof confirming
that the Transaction Resolution has been adopted.
(x) "OFFER TO PAY" means the written offer to pay, sent by Lifeco to
each Dissenting Shareholder pursuant to section 3.15 hereof,
offering to pay for each Exchangeable Share held by a Dissenting
Shareholder, that amount of cash considered by the directors of
Lifeco to be the fair value of a CLFC Common Share on the close of
business on the day before the Transaction Resolution was adopted,
accompanied by a statement showing how the fair value was
determined.
(y) "PROXY CIRCULAR" means the proxy circular of CLFC dated
March -, 2003 to be sent to CLFC Common Shareholders in connection
with the Special Meeting.
(z) "SPECIAL MEETING" means the special meeting of CLFC Common
Shareholders to be held on May -, 2003 at 10:00 a.m. in Toronto,
Ontario, and any adjournment or postponement thereof, to consider
and, if deemed advisable, to pass, the Transaction Resolution.
(aa) "TRANSACTION" means the change of CLFC Common Shares into
Exchangeable Shares and the subsequent exchange of such Exchangeable
Shares for the Elected Consideration.
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(bb) "TRANSACTION AGREEMENT" means the amended and restated agreement
made between CLFC and Lifeco dated as of February 14, 2003, as it
may be amended from time to time, pursuant to which CLFC and Lifeco
agreed to enter into the Transaction.
(cc) "TRANSACTION DATE" means the date on which the Transaction becomes
effective.
(dd) "TRANSACTION RESOLUTION" means the resolution of the CLFC Common
Shareholders, adopted in accordance with the INSURANCE COMPANIES ACT
(Canada), approving certain amendments to the by-laws of CLFC
required to implement the Transaction and consenting to the waiver
of the application of CLFC's shareholder rights plan to the
Transaction, the text of which is annexed as Schedule A to the Proxy
Circular.
1.2 INTERPRETATION.
In this Agreement, unless the context otherwise requires, words importing
the singular include the plural and VICE VERSA, and words importing gender
include all genders.
1.3 HEADINGS.
The headings included in this Agreement are for convenience of
reference only and are not to be used to interpret, or to define or limit the
scope of, any provision of this Agreement.
ARTICLE 2
OFFER OF DISSENT RIGHT AND BINDING AGREEMENT
2.1 OFFER OF DISSENT RIGHT.
Lifeco and CLFC hereby offer to each CLFC Common Shareholder a Dissent
Right, which right may be exercised only upon compliance with the terms and
conditions set forth in this Agreement.
2.2 BINDING AGREEMENT.
Each CLFC Common Shareholder who exercises a Dissent Right shall, upon
sending a Notice of Objection to CLFC in accordance with section 3.3 hereof, be
deemed to have accepted the offer of a Dissent Right made pursuant to section
2.1, and to have agreed to be bound by the terms and conditions of this
Agreement in respect of the exercise of such right, without the necessity of
taking any other action or formality of any kind, including the execution of
this Agreement or a counterpart thereof or any other agreement, instrument or
document evidencing the intention of such CLFC Common Shareholder to be bound by
this Agreement.
ARTICLE 3
DISSENT PROCEDURES
3.1 GENERAL RULE.
In order to exercise a Dissent Right, a CLFC Common Shareholder must
strictly comply with each and every provision of this Agreement to be observed
or performed by it. The failure to comply strictly with any such provisions
shall result in the loss of its Dissent Right.
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3.2 RIGHT OF PAYMENT.
A CLFC Common Shareholder who complies with the provisions of this
Agreement shall, in addition to any other rights it may have, have the right,
on or after the Transaction Date, to be paid by Lifeco in cash an amount
equal to the fair value of its CLFC Common Shares. Such fair value shall be
determined as of the close of business on the day before the Transaction
Resolution was adopted and shall be expressed as a cash amount for each such
CLFC Common Share.
3.3 NOTICE OF OBJECTION.
In order to exercise a Dissent Right, a CLFC Common Shareholder must send
to CLFC a duly authorized and properly completed Notice of Objection, which must
be received by CLFC not later than 2:00 p.m. (Toronto time) on the business day
before the Special Meeting.
3.4 NO PARTIAL DISSENT.
A CLFC Common Shareholder may only exercise a Dissent Right under this
Agreement with respect to all CLFC Common Shares held by it on behalf of
itself or any one beneficial owner and which are registered in the name of
such CLFC Common Shareholder.
3.5 REGISTERED CLFC COMMON SHAREHOLDER REQUIREMENT.
In order to exercise a Dissent Right, a beneficial owner of CLFC Common
Shares must be a CLFC Common Shareholder. Accordingly, (i) a Non-Certificated
Shareholder must take all necessary steps to have a Certificate issued in
respect of its CLFC Common Shares; and (ii) a Non-Registered Holder must take
all necessary steps to have its CLFC Common Shares, which are registered in
the name of a nominee, an investment dealer, a clearing agency or other
intermediary, re-registered in the name of the such holder, prior to sending
to CLFC the Notice of Objection referred to in section 3.3, unless such
Non-Registered Holder instructs such intermediary to exercise the Dissent
Right on such holder's behalf, in which case such intermediary must comply
with all of the provisions of this Agreement in order to exercise the Dissent
Right on such Non-Registered Holder's behalf.
3.6 NOTICE OF RESOLUTION.
CLFC shall, within ten days after adoption of the Transaction Resolution,
send a Notice of Resolution to each CLFC Common Shareholder who has filed a
Notice of Objection. A Notice of Resolution need not be sent to any CLFC Common
Shareholder who voted in favour of the Transaction Resolution or who has
withdrawn its Notice of Objection.
3.7 DEMAND FOR PAYMENT.
In order to maintain its status as a Dissenting Shareholder, a Dissenting
Shareholder must, within twenty days after receiving a Notice of Resolution or,
if the Dissenting Shareholder does not receive such notice, within twenty days
after learning that the Transaction Resolution has been adopted, send to CLFC a
Demand for Payment containing:
(a) the Dissenting Shareholder's name and address;
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(b) the number of CLFC Common Shares in respect of which it dissents;
and
(c) a demand for payment in cash of an amount equal to the fair value of
such shares.
3.8 SENDING OF CERTIFICATE.
In order to maintain its status as a Dissenting Shareholder, a Dissenting
Shareholder must, within thirty days after sending a Demand for Payment pursuant
to section 3.7, send the Certificate(s) representing the CLFC Common Shares in
respect of which the Dissenting Shareholder dissents to Computershare.
3.9 WITHDRAWAL.
A Dissenting Shareholder shall, by sending notice to CLFC, have the right
to withdraw its Demand for Payment until the Automatic Exchange Time. CLFC may,
in its sole judgment, accept or reject any such notice of withdrawal of a Demand
for Payment.
A Dissenting Shareholder will cease to be a Dissenting Shareholder
immediately upon voting in favour of the Transaction Resolution and shall be
deemed to have withdrawn its Notice of Objection as of such time.
3.10 FORFEITURE OF DISSENT RIGHTS.
A Dissenting Shareholder who, in the sole judgment of CLFC, fails to
strictly comply with the terms of this Agreement, forfeits its right to make
a claim under this Agreement.
3.11 ENDORSING CERTIFICATE.
CLFC shall cause Computershare to endorse on any Certificate received
under section 3.8 notice that the holder thereof is a Dissenting Shareholder
under this Agreement.
3.12 CERTIFICATES TO BE HELD BY TRANSFER AGENT.
Any Certificate(s) sent to Computershare in accordance with section 3.8
and endorsed by Computershare in accordance with section 3.11, together with any
certificates representing Exchangeable Shares to which a Dissenting Shareholder
may otherwise be entitled as a result of the completion of the Transaction,
shall be retained by Computershare on behalf of the Dissenting Shareholder until
the earliest of:
(a) the date on which the Dissenting Shareholder withdraws its Demand
for Payment in accordance with section 3.9,
(b) the date on which the Dissenting Shareholder accepts an Offer to
Pay,
(c) the date on which the Arbitrator determines the fair value in cash
of the CLFC Common Shares in respect of which the Dissenting
Shareholder has exercised a Dissent Right or an Arbitration pursuant
to the terms hereof is settled by the parties, and
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(d) the date the Transaction is terminated in accordance with the
provisions of the Transaction Agreement,
in which event, either:
(x) in the circumstances described in (b) or (c), the Certificate(s)
representing such shareholder's CLFC Common Shares, together with
any certificates representing Exchangeable Shares to which the
shareholder may have been entitled as a result of the completion
of the Transaction, will be cancelled by Computershare and the
shareholder (or any transferee thereof in accordance with the
terms of this Agreement, provided that the Dissenting Shareholder
provides Computershare with satisfactory evidence of such
transfer at least one business day in advance of the delivery of
such consideration) shall receive the payment in cash in the
amount determined in accordance with the terms hereof,
(y) in the circumstances described in (a), the shareholder (or to any
transferee thereof in accordance with the terms of this Agreement,
provided that the Dissenting Shareholder provides Computershare with
satisfactory evidence of such transfer at least one business day in
advance of the issuance) shall be entitled to participate in the
Transaction in accordance with the terms thereof as if such
shareholder had not dissented hereunder, or
(z) in the circumstance described in (d), replacement Certificate(s)
representing such shareholder's CLFC Common Shares will be issued by
Computershare to the shareholder (or to any transferee thereof in
accordance with the terms of this Agreement, provided that the
Dissenting Shareholder provides Computershare with satisfactory
evidence of such transfer at least one business day in advance of
the issuance).
3.13 SUSPENSION OF CLFC COMMON SHAREHOLDER RIGHTS.
On sending a Demand for Payment pursuant to section 3.7, a Dissenting
Shareholder ceases to have any rights as a shareholder of CLFC and any rights
to become a shareholder of Lifeco as a result of the exchange of its CLFC
Common Shares or its Exchangeable Shares, other than its right to be paid in
cash an amount equal to the fair value of such CLFC Common Shares as
determined under this Agreement, except where:
(a) the Dissenting Shareholder withdraws its Demand for Payment in
accordance with section 3.9, in which case the Dissenting
Shareholder's rights as a CLFC Common Shareholder are reinstated as
of the date the Demand for Payment was sent; or
(b) the Transaction is terminated in accordance with the provisions of
the Transaction Agreement, in which case the Dissenting
Shareholder's rights as a CLFC Common Shareholder are deemed to have
been reinstated as of the date the Demand for Payment was sent.
Without limiting the generality of the foregoing, on sending a Demand for
Payment, a Dissenting Shareholder shall not have the right in relation to the
CLFC Common Shares or the Exchangeable Shares into which CLFC Common Shares will
be changed as a result of the completion of the Transaction:
(x) to vote such shares;
(y) to receive any dividends or other distributions in respect of such
shares; or
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(z) to transfer such shares, except pursuant to section 3.14 hereof.
3.14 TRANSFER OF SHARES.
A Dissenting Shareholder is not entitled to transfer those CLFC Common
Shares in respect of which it has exercised a Dissent Right or the Exchangeable
Shares into which such CLFC Common Shares will be changed as a result of the
completion of the Transaction, except to a person who agrees in writing, in a
manner satisfactory to CLFC and Lifeco, acting reasonably, to be bound by the
provisions of this Agreement.
3.15 OFFER TO PAY.
Lifeco shall, not later than seven days after the later of the
Transaction Date or the day CLFC received the Demand for Payment, send to
each Dissenting Shareholder who has sent such a demand an Offer to Pay. Every
Offer to Pay shall be on the same terms. An Offer to Pay may only be
expressed as the amount of cash for which Exchangeable Shares may be
exchanged, and, for greater certainty, may not be expressed, or be required
to be expressed, in any other form of consideration. An Offer to Pay will
lapse if Lifeco does not receive an acceptance thereof within thirty days
after the offer has been made.
3.16 PAYMENT.
Lifeco shall pay for Exchangeable Shares held by a Dissenting Shareholder
within ten days after an Offer to Pay has been accepted by such shareholder.
3.17 APPOINTMENT OF ARBITRATOR.
If Lifeco fails to make an Offer to Pay, or if a Dissenting Shareholder
fails to accept an Offer to Pay, Lifeco may, within fifty days after the
Transaction Date apply to the Co-ordinator to appoint an Arbitrator who shall
fix in cash the fair value, as of the close of business on the day before the
Transaction Resolution was adopted, of the CLFC Common Shares in respect of
which any Dissenting Shareholder has exercised a Dissent Right. If Lifeco
fails to apply to the Co-ordinator in accordance with the preceding sentence,
a Dissenting Shareholder may so apply for the same purpose within a further
period of twenty days.
ARTICLE 4
CONDUCT OF THE ARBITRATION
4.1 GOVERNING STATUTE.
The Arbitration conducted under this Agreement shall be governed by, and
conducted in accordance with, the provisions of the ARBITRATIONS ACT, 1991
(Ontario), unless the Arbitration is "international" as defined in the UNCITRAL
Model Law on International Commercial Arbitration, in which event the
INTERNATIONAL COMMERCIAL ARBITRATION ACT (Ontario) shall apply.
4.2 VENUE.
The Arbitration shall be conducted in Toronto, Ontario at a place to be
determined by the Arbitrator.
<Page>
-9-
4.3 ARBITRATION PROCEDURES.
The Arbitrator shall determine the rules and procedures for the conduct of
the Arbitration, provided that such rules and procedures are not inconsistent
with the provisions of the ARBITRATIONS ACT, 1991 (Ontario), and provided
further that, to the extent reasonably practicable, the Arbitration is conducted
in a manner that is consistent with a proceeding in the Ontario Superior Court
of Justice (Commercial List) under section 190 of the CANADA BUSINESS
CORPORATIONS ACT.
4.4 NO SECURITY FOR COSTS.
A Dissenting Shareholder is not required to give security for costs in
connection with the appointment of the Arbitrator made pursuant to section 3.17.
4.5 PARTIES TO ARBITRATION.
Upon the appointment of an Arbitrator pursuant to section 3.17,
(a) all Dissenting Shareholders who have not accepted an Offer to Pay
shall be joined as parties and shall be bound by the decision of the
Arbitrator; and
(b) Lifeco shall notify each affected Dissenting Shareholder of the
date, place and consequences of the application and of its right to
appear and be heard in person or by counsel.
4.6 POWERS OF ARBITRATOR.
The Arbitrator may determine whether any other person is a Dissenting
Shareholder who should be joined as a party to the Arbitration, and the
Arbitrator shall then fix the fair value in cash of the Dissenting Shareholders'
CLFC Common Shares in accordance with section 3.17.
4.7 APPRAISERS.
The Arbitrator may in its discretion appoint one or more appraisers to
assist the Arbitrator in fixing the fair value in cash of the Dissenting
Shareholders' CLFC Common Shares.
4.8 FINAL ORDER.
The final order of the Arbitrator shall be rendered against Lifeco in
favour of each Dissenting Shareholder and shall be expressed as an amount of
cash for each affected Exchangeable Share which cash amount shall be
determined on the basis of the fair value of each affected CLFC Common Share
as of the close of business on the day before the Transaction Resolution was
adopted. The making of the final order by the Arbitrator shall constitute a
deemed offer by Lifeco to pay each Dissenting Shareholder the Arbitrator's
awarded cash amount (including amounts permitted under section 4.9) and such
Dissenting Shareholder's deemed acceptance thereof.
4.9 ADDITIONAL AMOUNT.
In addition to fixing the amount in section 4.8, the Arbitrator may, in
its discretion, allow a reasonable rate of interest to be paid on the amount
payable to Dissenting Shareholders party to the Arbitration to take into account
the time between the Transaction Date and the date of payment.
<Page>
-10-
4.11 MISCELLANEOUS
The final order of the Arbitrator made pursuant to section 4.8 shall be
final and binding on all parties and shall not be subject to appeal on any issue
of fact or law by any party.
The Arbitrator may award the costs of the Arbitration having regard to the
factors enumerated in Rule 57.01 of the ONTARIO RULES OF CIVIL PROCEDURE. The
costs of the Arbitration shall consist of the parties' legal expenses, the fees
and expense of the Arbitration and any other expenses related to the
Arbitration. If (i) a party to the Arbitration makes an offer to another party
to settle the dispute (which offer takes the form of an offer to pay or accept
an amount of cash), (ii) the offer is not accepted and (iii) the Arbitrator's
award is not more favourable to the second-named party than was the offer, then
the Arbitrator may take such facts into account in awarding costs in respect of
the period from the making of the offer to the making of the award.
ARTICLE 5
GENERAL PROVISIONS
5.1 NATURE OF CONSIDERATION.
Notwithstanding anything to the contrary contained in this Agreement, a
Dissenting Shareholder shall only be entitled to receive cash as payment for its
Exchangeable Shares.
5.2 NOTICES.
Any notice, communication, application or demand (a "Notice") required or
permitted to be given or made hereunder shall be sufficiently given or made for
all purposes if (i) delivered personally to the person to whom the Notice is
directed, (ii) sent by registered mail, postage prepaid, or (iii) transmitted by
facsimile, in each case to the addresses set out below:
if to CLFC:
Canada Life Financial Corporation
330 University Avenue
Toronto, Ontario
M5G 1R8
Attention: Senior Vice President and General Counsel
Telephone: 416.597.1440
Facsimile: 416.597.1940
<Page>
-11-
with a copy to:
McCarthy Tetrault LLP
Suite 4700
Toronto Dominion Tower
Toronto-Dominion Centre
Toronto, Ontario
M5R 1E6
Attention: Garth M. Girvan
Telephone: 416.362.1812
Facsimile: 416.868.0673
if to Lifeco:
Great-West Lifeco Inc.
100 Osborne Street North
Winnipeg, Manitoba
R3C 3A5
Attention: General Counsel
Telephone: 204.946.1190
Facsimile: 204.946.4129
with a copy to:
Blake, Cassels & Graydon LLP
Box 25, Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1A9
Attention: J. David A. Jackson
Telephone: 416.863.2400
Facsimile: 416.863.2653
if to a Dissenting Shareholder, to the most recent address of such CLFC
Common Shareholder as is maintained in the books and records of Computershare;
if to Computershare:
Computershare Trust Company of Canada
110 University Avenue
11th Floor
Toronto, Ontario
M5J 2Y1
Attention: Investor Services
Facsimile: 416.981.9800
<Page>
-12-
if to the Arbitrator:
c/o Co-ordinator
ADR Chambers: An Alternative Dispute Resolution Group
48 Yonge Street
Suite 1100
Toronto, Ontario
M5E IG6
Facsimile: 416.362.8825
All such Notices shall be deemed to have been received on the date when
delivered personally or when transmitted by facsimile or electronic means, or,
if sent by prepaid registered mail, three business days following the date that
the Notice is mailed. Notice of a change of address will also be governed by
this section 5.2.
5.3 SEVERABILITY.
Each of the provisions of this Agreement is distinct and severable, and,
accordingly, if any provision of this Agreement is determined to be invalid,
void or unenforceable in whole or in part, such determination shall not affect,
or be deemed to affect, the validity or enforceability of any other provision of
this Agreement.
5.4 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
respecting the subject matter hereof. There are no representations, warranties,
covenants or agreements with respect to the subject matter hereof except as
expressly set forth in this Agreement.
5.5 WAIVER.
No waiver of any provision of this Agreement will constitute a waiver of
any other provision, nor will any such waiver constitute a continuing waiver.
5.6 NO ASSIGNMENT.
This Agreement, including the rights and benefits hereunder, may not be
assigned in whole or in part by the parties hereto to any other person,
except as otherwise permitted pursuant to section 3.14.
5.7 ENUREMENT.
This Agreement shall enure to the benefit of and shall be binding on the
parties hereto and their respective successors, heirs, executors or personal
representatives.
5.8 TIME OF ESSENCE.
Time is of the essence in this Agreement.
<Page>
-13-
5.9 GOVERNING LAW.
This Agreement shall be governed in all respects by the laws of the
Province of Ontario and the federal laws of Canada applicable therein.
IN WITNESS WHEREOF CLFC and Lifeco have executed this Agreement as of the
date above written.
CANADA LIFE FINANCIAL CORPORATION
by:
------------------------------------------------
Name: -
Title: -
by:
------------------------------------------------
Name: -
Title: -
GREAT-WEST LIFECO INC.
by:
------------------------------------------------
Name: -
Title: -
by:
------------------------------------------------
Name: -
Title: -
<Page>
SCHEDULE C-1
LIFECO SERIES E TERM SHEET
NON-CUMULATIVE REDEEMABLE FIRST PREFERRED SHARES, SERIES E
(10 YEAR SOFT RETRACTABLE)
INDICATIVE TERMS
ISSUER: Great West Lifeco Inc. (the "Company").
ISSUE: 24,000,000 Non-Cumulative First Preferred Shares,
Series E (the "Series E Shares")
ISSUE SIZE: $600,000,000
ISSUE PRICE: $25.00 per Series E Share
DIVIDENDS: 4.80% per annum, payable quarterly on a non-cumulative basis
on the last day of March, June, September and December in
each year. The initial dividend will be paid on and will
be $ per Series E Share based on an anticipated closing
date of [ ], 2003.
REDEMPTION: The Series E Shares are not redeemable prior to [ ], 2009.
On or after [ ], 2009, the Company may, on not less than 30
nor more than 60 days' notice, redeem the Series E Shares in
whole or in part, at the Company's option, by the payment in
cash of $26.00 per Series E Share if redeemed prior to [ ],
2010, of $25.67 per Series E Share if redeemed on or after
[ ], 2010 but prior to [ ], 2011, of $25.33 if redeemed on
or after [ ], 2011 but prior to [ ], 2012, and of $25.00 per
Series E Share if redeemed on or after [ ], 2012, in each
case together with all declared and unpaid dividends up to
but excluding the date fixed for redemption.
CONVERSION On and after [ 2009], the Series E Shares are convertible,
BY THE COMPANY: in whole or in part, at the option of the Company on not
less than 30 nor more than 60 days notice into that number
of common shares of Great West Lifeco Inc. ("the Common
Shares") determined by dividing the then applicable
Redemption Price together with declared and unpaid dividends
up to but excluding the date of conversion by the greater of
$3.00 and 95% of the then Current Market Price of the Common
Shares. The Current Market Price is defined as the weighted
average trading price of the Common Shares on The Toronto
Stock Exchange for the period of 20 trading days which ends
on the fourth day prior to the date specified for
<Page>
conversion or, if that fourth day is not a trading day, on
the immediately preceding trading day. Fractional Common
Shares will not be issued on any conversion of Series E
Shares but in lieu thereof, the Company will make cash
payments.
<Page>
NON-CUMULATIVE REDEEMABLE FIRST PREFERRED SHARES, SERIES E
(10 YEAR SOFT RETRACTABLE)
CONVERSION BY THE On and after [ 2013], and subject to the Company's right on
HOLDER: at least 2 days notice prior to the conversion date
to redeem for cash or to find substitute purchasers, each
Series E Share will be convertible at the option of the
holder on the last day of each of March, June, September and
December in each year on at least 30 days' notice into that
number of freely tradeable Common Shares determined by
dividing $25.00 together with declared and unpaid dividends
up to but excluding the conversion date by the greater of
$3.00 and 95% of the then Current Market Price of the Common
Shares. Fractional Common Shares will not be issued on any
conversion of Series E Shares but in lieu thereof, the
Company will make cash payments.
PURCHASE Subject to restrictions on dividends and retirement of
FOR CANCELLATION: shares and the provisions of other shares of the Company
ranking prior to or pari passu with the Series E Shares, the
Company may at any time or times purchase for cancellation
in any manner all or any part of the Series E Shares at any
price.
RATINGS: DBRS: Pfd-1 (low)n
S&P: P-1(low)
PRIORITY: The Series E Shares rank on a parity with the First
Preferred Shares of every other series and in priority to
any other shares ranking junior to the First Preferred
Shares with respect to the payment of dividends and the
distribution of assets in the event of liquidation,
dissolution or winding-up of the Company.
C1-3
<Page>
NON-CUMULATIVE REDEEMABLE FIRST PREFERRED SHARES, SERIES E
(10 YEAR SOFT RETRACTABLE)
VOTING Holders of Series E Shares will be entitled to receive
notice of, to attend and to vote at all meetings of holders
of voting shares of the Company (other than meetings of
holders of a class or series of shares at which such holders
are entitled to vote separately as a class or series) until
such time as the public voting requirements currently in
Section 411 of the Insurance Companies Act cease to be
applicable to the Company. Thereafter, holders of Series E
Shares will not be entitled to receive notice of or to
attend or to vote at any meeting of the shareholders of the
Company, unless and until the Company shall have failed to
declare and pay the whole amount of a quarterly dividend on
the Series E Shares. In that event and until such time as
the Company pays the whole amount of a quarterly dividend on
the Series E Shares, the holders of Series E Shares will be
entitled to receive notice of and to attend all meetings of
the shareholders of the Company and will be entitled to one
vote per Series E Share in the election of two directors to
be elected in conjunction with the holders of any other
series of First Preferred Shares which has such right. The
voting rights of the holders of the Series E Shares shall
forthwith cease upon payment by the Company of the whole
amount of a quarterly dividend on the Series E Shares
subsequent to the time such voting rights first arose.
LISTING: An application will be made to list the Series E Shares on
The Toronto Stock Exchange.
TAX ELECTION: The Issuer will elect to pay tax under Part VI.1
of the INCOME TAX Act (Canada) on dividends on the Series E
Preferred Shares such that no tax under Part IV.1 of such
Act will be payable by holders of the Series E Preferred
Shares.
ELIGIBILITY: Eligible for registered retirement savings plans, registered
retirement income funds, deferred profit sharing plans and
registered education savings plans under the Income Tax Act
(Canada).
CLOSING: On or about [ ], 2003.
C1-4
<Page>
SCHEDULE C-2
LIFECO SERIES F TERM SHEET
NON-CUMULATIVE FIRST PREFERRED SHARES, SERIES F
INDICATIVE TERMS
ISSUER: Great West Lifeco Inc. (the "Company").
ISSUE: 8,000,000 Non-Cumulative First Preferred Shares, Series F
(the "Series F Shares")
ISSUE SIZE: $200,000,000
ISSUE PRICE: $25.00 per Series F Share
DIVIDENDS: 5.90% per annum, payable quarterly on a non-cumulative basis
on the last day of March, June, September and December in
each year. The initial dividend will be paid on and will
be $ per Series F Share based on an anticipated closing
date of [ ], 2003.
REDEMPTION FOR The Series F Shares are not redeemable prior to [ ], 2008.
CASH: On or after [ ], 2008, the Company may, on not less than 30
nor more than 60 days' notice, redeem the Series F Shares in
whole or in part, at the Company's option, by the payment in
cash of $26.00 per Series F Share if redeemed prior to [ ],
2009, of $25.75 per Series F Share if redeemed on or after
[ ], 2009 but prior to [ ], 2010, of $25.50 if redeemed on
or after [ ], 2010 but prior to [ ], 2011, of $25.25 if
redeemed on or after [ ], 2011 but prior to [ ], 2012, and
of $25.00 per Series F Share if redeemed on or after [ ],
2012, in each case together with all declared and unpaid
dividends up to but excluding the date fixed for redemption.
PURCHASE Subject to restrictions on dividends and retirement of
FOR CANCELLATION: shares and the provisions of other shares of the Company
ranking prior to or pari passu with the Series F Shares, the
Company may at any time or times purchase for cancellation
in any manner all or any part of the Series F Shares at any
price.
RATINGS: DBRS: Pfd-1 (low) n
S&P: P-1(low)
<Page>
PRIORITY: The Series F Shares rank on a parity with the First
Preferred Shares of every other series and in priority to
any other shares ranking junior to the First Preferred
Shares with respect to the payment of dividends and the
distribution of assets in the event of liquidation,
dissolution or winding-up of the Company.
NON-CUMULATIVE FIRST PREFERRED SHARES, SERIES F
VOTING Holders of Series F Shares will be entitled to receive
notice of, to attend and to vote at all meetings of holders
of voting shares of the Company (other than meetings of
holders of a class or series of shares at which such holders
are entitled to vote separately as a class or series) until
such time as the public voting requirements currently in
Section 411 of the Insurance Companies Act cease to be
applicable to the Company. Thereafter, holders of Series F
Shares will not be entitled to receive notice of or to
attend or to vote at any meeting of the shareholders of the
Company, unless and until the Company shall have failed to
declare and pay the whole amount of a quarterly dividend on
the Series F Shares. In that event and until such time as
the Company pays the whole amount of a quarterly dividend on
the Series F Shares, the holders of Series F Shares will be
entitled to receive notice of and to attend all meetings of
the shareholders of the Company and will be entitled to one
vote per Series F Share in the election of two directors to
be elected in conjunction with the holders of any other
series of First Preferred Shares which has such right. The
voting rights of the holders of the Series F Shares shall
forthwith cease upon payment by the Company of the whole
amount of a quarterly dividend on the Series F Shares
subsequent to the time such voting rights first arose.
LISTING: An application will be made to list the Series F Shares on
The Toronto Stock Exchange.
TAX ELECTION: The Issuer will elect to pay tax under Part VI.1 of the
INCOME TAX Act (Canada) on dividends on the Series F Shares
such that no tax under Part IV.1 of such Act will be payable
by holders of the Series F Shares.
ELIGIBILITY: Eligible for registered retirement savings plans, registered
retirement income funds, deferred profit sharing plans and
registered education savings plans under the Income Tax Act
(Canada).
CLOSING: On or about [ ], 2003.
C2-2
<Page>
SCHEDULE 4.1
ORGANIZATION AND STANDING
1. The Canada Life Insurance Company of Canada, a newly acquired insurance
subsidiary, is currently in the process of updating its registrations
under Canadian provincial insurance legislation to reflect the recent
change of name and change of control.
2. Canada Life Trust Company, a newly established trust company subsidiary,
has obtained its letters patent, but is currently in the process of
obtaining its order to commence and carry on business. It is also in the
process of applying for licences under provincial trust legislation,
membership in the Canada Deposit Insurance Corporation and registration as
an extra-provincial corporation.
<Page>
SCHEDULE 4.6(3)
PUBLIC DISCLOSURE
1. Letter to Canada Life Financial Corporation from the Ontario Securities
Commission dated September 30, 2003, a copy of which has been provided to
Lifeco.
<Page>
SCHEDULE 4.8(1)
EMPLOYMENT MATTERS
(1) EMPLOYMENT, CONSULTING, SEVERANCE OR TERMINATION AGREEMENTS
The U.S. division of The Canada Life Assurance Company is in the process
of settling an agreement which will provide one senior employee with specified
post-termination benefits in the event the employee is terminated other than for
cause on or before January 1, 2005. The agreement is expected to provide for a
severance payment of:
(a) an amount equal to twice the employee's then current annual base
salary (currently U.S. $145,000); and
(b) if the employee's performance is rated not less than "meets
expectations," an additional amount equal to the greater of (i)
75-100% of the employee's maximum award under the US Division
incentive compensation plan for the calendar year in which
employment is terminated, and (ii) 30% of the employee's then
current annual base salary.
The Agreement is also expected to provide for the continuation of medical
insurance coverage for up to 6 months following termination as well as the
receipt of outplacement services.
The Agreement further contemplates the employee receiving guaranteed
minimum levels of incentive compensation if the employee remains employed at the
end of each of 2003 and 2004, regardless of whether the employee is otherwise
eligible to receive any other benefit under the Agreement (including the
severance payment described above). Provided the employee is rated not less than
"meets expectations" in the applicable year, the employee will be entitled to an
amount equal to the greater of (i) 75-100% of the employee's maximum award under
the US Division incentive compensation plan for the applicable year; and (ii)
30% of the employee's then current annual base salary.
<Page>
SCHEDULE 4.8(2)
COLLECTIVE BARGAINING AGREEMENTS
Approximately 210 staff in Bristol, United Kingdom (formerly with Royal &
Sun Alliance) have recognition through the AMICUS and UNIFI unions under a
collective agreement dated December 18, 2001.
<Page>
SCHEDULE 4.9
LITIGATION
<Table>
<Caption>
TYPE OF
PLAINTIFF LAWSUIT JURISDICTION AMOUNT CURRENTLY BEING CLAIMED
- --------------------- --------------------------- -------------------------- ----------------------------------------
J. Argomaniz & General Agent's Contract Puerto Rico U.S.$20 million
Associates Termination
Carson Bad faith handling of LTD New Jersey U.S.$15 million.
claim.
Foss Premium Offset Ontario $20.5 million.
Manulife Pension Mis-selling U.K. Manulife is seeking up to 23 million
PS.
McCorvey Premium Offset Alabama Unspecified compensatory and punitive
damages.
Meloche Monnex Class actions re charging Two Ontario, 1 B.C. and Over $610 million in each of
of deductibles to 1 Alberta actions, compensatory and punitive and
insured owners of seeking to represent aggravated damages.
written-off vehicles sold affected insureds in
by casualty companies for every Canadian province
salvage and territory except
Quebec, Manitoba and
Saskatchewan
Mintz Deceptive sales and New Jersey/Texas Unspecified compensatory and punitive
marketing practices damages.
Tseu Dividend entitlement California/Texas (Hong Unspecified damages.
class action Kong, Taiwan, Macau,
Singapore, Malaysia,
Philippines)
Vaughan Premium Offset class Quebec Unknown damages.
action
Zubryn Premium Offset class Quebec Unknown damages.
action
</Table>
<Page>
REINSURANCE 9/11 DISPUTES
<Table>
<Caption>
PARTY JURISDICTION AMOUNT CURRENTLY BEING CLAIMED
- ------------- ---------------------- -------------------------------------------------------
Zurich Re New York Canada Life is seeking approximately U.S.$76.5 million
CCR New York Canada Life is seeking approximately U.S.$29.7 million
Guardian New York Canada Life is seeking approximately U.S.$56.4 million
AUL Indiana Canada Life is seeking approximately U.S.$59.8 million
</Table>
<Page>
SCHEDULE 4.11
PENSION AND EMPLOYEE BENEFITS
This Schedule is being provided solely for the purpose of identifying CLFC
Retirement Plans and CLFC Post-Employment Arrangements that do not have assets
equal to or greater than liabilities, and for no other purpose.
FUNDED PENSION PLANS
<Table>
<Caption>
ACTUARIAL VALUATION
----------------------------------------------------------------------------
Assets
Date of Assets in Liabilities in Greater than
PENSION PLAN Estimate Millions Millions Liabilities?
- ------------------------------------ -------------- ------------------ ----------------- -----------------
Canadian Employees Plan (Defined 01/01/2003 $599 $433(1) Yes
Benefit) market value
Crown Canada Plan (Defined 01/01/2003 $99.4 $98(1) Yes
Benefit/Defined Contribution) market value
Canadian Supplemental Plan (Defined 12/31/2002 $173.9(2) $187.7 No
Benefit) market value ($13.8)
U.S. Consolidated Plan (Defined 01/01/2002 U.S. $30.6 market U.S. $36.4 No
Benefit) value (U.S. $5.8)
U.K. Staff Plan (Defined Benefit) 10/10/2002 (L)56.7 (L)70.3 No
market value ((L)13.6)
Bahamas Staff Pension Plan 09/30/2002 Bah $0.736 Bah $0.8 No
(Bah$0.06)
</Table>
- ----------
(1) The estimated liabilities are based on the liabilities determined in the
January 1, 2000 actuarial valuation and have been rolled forward using the
actuarial assumptions provided for in the applicable plan valuation (see
attached valuation summaries).
(2) Of the $173.9 million in total plan assets held in trust, $81.9 million is
held by the Canada Customs and Revenue Agency as refundable tax.
<Page>
CANADA LIFE CANADIAN EMPLOYEES PENSION PLAN
Last Actuarial Valuation: January 1, 2000.
<Table>
<Caption>
BASIS ASSETS LIABILITIES SURPLUS/(DEFICIT)
- -------------------- ------------- ------------- -----------------
Going Concern $677,839,000 $341,714,000 $336,125,000
Solvency $707,459,000 $233,222,000 $474,237,000
</Table>
Next Valuation: as of January 1, 2003
GOING CONCERN METHOD: Projected unit credit actuarial cost method prorated on
credited service.
GOING CONCERN ASSETS: Market Adjusted, i.e. actuarial value, with the gains and
losses spread on a straight line basis over three years.
SOLVENCY METHOD: Assumes wind up of the plan on the valuation date and includes
all benefits payable immediately, with all members fully vested in their accrued
benefits.
SOLVENCY ASSETS: Market value.
Primary actuarial assumptions used in the January 1, 2000 valuation:
<Table>
<Caption>
GOING CONCERN SOLVENCY
- --------------------------------- -------------------------- --------------------------------
Discount Rate 7.0% Lump Sums: 6.75% for 15 years,
(Net of expenses) 6.0% thereafter
Annuities: 6.5%
Inflation 3.5% 2.29%
Salary Escalation 5.5% N/A
(3.5% for disabled)
Increases in YMPE/ITA Maximum 4.0% N/A
Mortality ACTIVES: GAM83
GAM83 projected to 1991
INACTIVES:
GAM83 projected to 1994
Retirement Age Staff: Age 62 Optimal Age
Field Management:
Age 60
Terminated Members:
Age 55
Termination See attached table N/A
Family Composition 80% married 80% married
</Table>
For complete methods and assumptions please refer to the applicable Valuation
Report.
4.11-2
<Page>
CROWN CANADA PENSION PLAN
Last Actuarial Valuation: January 1, 2000.
<Table>
<Caption>
BASIS ASSETS LIABILITIES SURPLUS/(DEFICIT)
- -------------------- ------------- ------------- -----------------
Going Concern $103,672,000 $98,725,000 $4,947,000
Solvency $103,672,000 $95,183,000 $8,489,000
</Table>
Next Valuation: as of January 1, 2003
GOING CONCERN METHOD: Projected unit credit actuarial cost method.
GOING CONCERN ASSETS: Market value.
SOLVENCY METHOD: Assumes wind up of the plan on the valuation date and includes
all benefits payable immediately, with all members fully vested in their accrued
benefits.
SOLVENCY ASSETS: Market Value.
Primary actuarial assumptions used in the January 1, 2000 valuation:
<Table>
<Caption>
GOING CONCERN SOLVENCY
- --------------------------------- -------------------------- --------------------------------
Discount Rate 7.0% Lump Sums: 6.75% for 15 years,
(Net of expenses) 6.0% thereafter
Annuities: 6.5%
Inflation 3.5% 2.29%
Salary Escalation 5.5% N/A
(3.5% for disabled)
Increases in YMPE/ITA Maximum 4.0% N/A
Mortality ACTIVES: GAM83
GAM83 projected to 1991
INACTIVES:
GAM83 projected to 1994
Retirement Age 62 Optimal Age
Termination See attached table N/A
Family Composition 80% married 80% married
</Table>
For complete methods and assumptions please refer to the applicable Valuation
Report.
<Page>
CANADIAN SUPPLEMENTAL PENSION PLAN
Last Actuarial Valuation: December 31, 2001.
<Table>
<Caption>
BASIS ASSETS LIABILITIES SURPLUS/(DEFICIT)
- -------------------- ------------- ------------- -----------------
Projected Wind Up $158,000,000 $163,900,000 ($5,900,000)(1)
</Table>
Next Valuation: as of December 31, 2002.
PROJECTED WIND-UP METHOD: Assumes plan is terminated at date of valuation with
service and earnings projected forward for one year. The projected wind-up
liability is 105% of the wind-up liability.
PROJECTED WIND-UP ASSETS: Market Value.
Primary actuarial assumptions used in the December 31, 2001 valuation:
<Table>
<Caption>
SOLVENCY
-------------------------------------------------------
Discount Rate REGISTERED BENEFITS
Pre-Retirement: 6.0%
Post-Retirement: 4.0%
SUPPLEMENTAL BENEFITS
Pre-Retirement: 3.0% for 15 years, 3.0% thereafter
Post-Retirement: 1.0% for 15 years, 1.0% thereafter
Inflation 2.0%
Earnings Estimated 2002 provided by Canada Life
Mortality GAM83 50% male
Retirement Age Optimal
Family Composition 80% married
</Table>
For complete methods and assumptions please refer to the applicable Valuation
Report.
- ----------
(1) Canada Life contributed $5,900,000 to the supplemental plan in June 2002,
in accordance with the terms of the plan (i.e. 50% to trust and 50% to CCRA).
4.11-4
<Page>
TERMINATION RATES FOR
CANADIAN EMPLOYEES AND THE CROWN CANADA PENSION PLANS
Termination Rates
<Table>
<Caption>
Age Male Female
- -------------- ------- ----------
25 5.43% 4.09%
30 4.99% 5.05%
35 4.29% 5.10%
40 3.38% 4.52%
45 2.39% 3.61%
50 1.48% 2.57%
55 0.00% 0.00%
</Table>
UNITED STATES CONSOLIDATED PENSION PLAN
Last Actuarial Valuation: December 31, 2001.
<Table>
<Caption>
BASIS ASSETS LIABILITIES SURPLUS/(DEFICIT)
- -------------------- ------------- ------------- -----------------
Going Concern U.S. $30,624,914 U.S. $36,470,439 U.S. ($5,845,525)
</Table>
Next Valuation: as of December 31, 2002.
GOING CONCERN METHOD: Liabilities and contributions are computed using the
Individual Entry Age Normal method.
GOING CONCERN ASSETS: Market value.
Primary actuarial assumption used in the December 31, 2001 valuation:
<Table>
<Caption>
GOING CONCERN
------------------------------------------------
Discount Rate 8%
Inflation 3.5%
Earnings 5%
Mortality GAM83 projected to 1991
Retirement Age 65
Marital Characteristics Wives are assumed to be the same age as husbands
</Table>
For complete methods and assumptions please refer to the applicable Valuation
Report.
4.11-5
<Page>
UNITED KINGDOM STAFF PENSION PLAN
Last Actuarial Valuation: December 31, 2001.
<Table>
<Caption>
BASIS ASSETS LIABILITIES SURPLUS/(DEFICIT)
- -------------------- ------------- ------------- -----------------
Going Concern (L)74,031,000 (L)69,281,000 (L)4,750,000
</Table>
Next Valuation: as of December 31, 2004.
Note that the United Kingdom had its actuarial valuation updated to October
2002. There was no change to the actuarial assumptions noted below. The updated
results are as follows:
<Table>
<Caption>
BASIS ASSETS LIABILITIES SURPLUS/(DEFICIT)
- -------------------- ------------- ------------- -----------------
Going Concern (L)56,700,000 (L)70,300,000 ((L)13,600,000)
</Table>
GOING CONCERN METHOD: Liabilities are calculated using market-related
assumptions. Market expectations for inflation is determined from the difference
between the yield on fixed interest and index-linked gilts of a similar term.
GOING CONCERN ASSETS: Market value.
Primary actuarial assumption used in the December 31, 2001 valuation:
<Table>
<Caption>
GOING CONCERN
------------------------------------
Discount Rate 7%
Inflation 2.75%
Earnings 4.75%
Mortality AM92
Retirement Age 60
Family Composition Based on 1991 census figures
</Table>
For complete methods and assumptions please refer to the applicable Valuation
Report.
BAHAMAS STAFF PENSION PLAN
Last Actuarial Valuation: September 30, 2002.
<Table>
<Caption>
BASIS ASSETS LIABILITIES SURPLUS/(DEFICIT)
- -------------------- ------------- ------------- -----------------
Going Concern Bah $736,400 Bah $800,000 Bah ($63,600)
Solvency Bah $775,800 Bah $775,800 Bah ($39,400)
</Table>
Next Valuation: To be determined.
GOING CONCERN METHOD: Unit credit actuarial cost method.
4.11-6
<Page>
GOING CONCERN ASSETS: Market value plus receivables minus payables in transit.
SOLVENCY METHOD: Assumes wind up of the plan on the valuation date. Actuarial
liabilities represent the actuarial present value of accrued benefits under the
plan.
SOLVENCY ASSETS: Market Value plus receivables minus payables in transit.
Primary actuarial assumptions used in the September 30, 2002 valuation:
<Table>
<Caption>
GOING CONCERN SOLVENCY
----------------------------- ------------------------------------
Discount Rate 7.5% 7.0%
(Net of expenses)
Salary Escalation 2.5% for three years and 3.5% N/A
thereafter
Mortality GAM83 GAM83
Retirement Age 63 65 - all members less than
age 55
Immediate - all members
age 55 or older
Termination 5% each year to age 50 N/A
</Table>
For complete methods and assumptions please refer to the applicable Valuation
Report.
4.11-7
<Page>
NON-FUNDED PENSION AND EMPLOYEE BENEFIT LIABILITIES
The following liabilities are based on the November 21, 2002 Benefit Expense
report prepared by Mercer Human Resource Consulting and have been valued as at
the date of Canada Life Financial Corporation's 2002 audited financial
statements (i.e. December 31,2002). By definition, all of the plans described
below have liabilities exceeding the plan assets.
Unless otherwise indicated, all amounts in the table and footnotes below are in
thousands of Canadian dollars. U.S. dollars and U.K. pounds were converted to
Canadian dollars using exchange rates of 1.59 and 2.49, respectively.
<Table>
<Caption>
JURISDICTION PENSION POST RETIREMENT POST EMPLOYMENT
- ---------------- ------------ ---------------- -----------------
Canada $54,925(1) $89,488(2) $37,757(3)
United States $7,283(4) $17,643(5) $0
United Kingdom $1,327(6) $0 $0
</Table>
(1). Pension liability of $54,925 consists of: DCI* ($42,962) and Crown
Retiring Allowance ($11,963).
(2). Post Retirement liability of $89,488 consists of: Health ($53,699); Life
($16,429) and Dental ($19,360).
(3). Post Employment liability of $37,757 consists of: Vacation ($584); STD
($653); LTD ($17,582) and New York Life Insurance Company (NYLIC)*
($18,938).
(4). Pension liability of $7,283 consists of: Excess pension ($2,889); DCI*
($2,226); Non-Trusteed ($1,607) and Other - DCI in pay ($561).
(5). Post Retirement liability of $17,643 consists of: Health ($14,060); Life
($347); Dental ($1,158) and Puerto Rico ($2,078).
(6). Pension liability of $1,327 represents benefits earned above the U.K.
earnings cap (currently (L)97,200) for anyone hired after April 1989.
* DCI and NYLIC are Deferred Commission Arrangements in place for
Agents/Former Agents.
4.11-8
<Page>
The following table provides the primary assumptions used to determine the
non-funded pension and employee benefit liabilities on the previous page.
<Table>
<Caption>
Liability Discount Expected long term Salary Escalation
Jurisdiction Rate return on assets
- -------------------- ------------------- --------------------- -----------------------
CANADA
- - Pension 6.75% 7.25% 5.00%
- - Post/Retirement/ 7.00% Not applicable 5.50%
Post Employment
UNITED STATES
- - Pension 6.75% 8.00% 4.50%
- - Post/Retirement/ 6.75% Not applicable 4.50%
Post Employment
UNITED KINGDOM
- - Pension 5.75% 6.50% 3.75%
- - Post/Retirement/ Not applicable Not applicable Not applicable
Post Employment
</Table>
MULTI-GEOGRAPHIC PENSION POLICY
In addition to the above noted liabilities, Canada Life has a multi-geographic
pension policy that is not funded. The multi-geographic policy applies to
employees who have pension service in more than one Canada Life pension plan
internationally. The Multi-geographic policy provides a benefit that would have
been earned if the final average earnings used in the first country were
increased by the percentage the employee's earnings increased during his/her
service in the second country. The supplement is paid upon termination,
retirement or death of the employee.
4.11-9
<Page>
HONG KONG MANDATORY PROVIDENT FUND
Canada Life maintains and contributes to a Mandatory Provident Fund Scheme
whereby the employer contributes 5% of relevant pay and the employee contributes
5% of relevant pay. The Scheme is administered by the Hong Kong and Shanghai
Banking Corporation in accordance with the Mandatory Provident Fund Schemes
Ordinance.
No valuation is conducted since the Mandatory Provident Fund is a savings plan
and therefore the assets and liabilities are equal (assuming 100% vested).
Employer contributions vest 10% per year of service.
As of June 30, 2002 the market value of assets in the Scheme were:
<Table>
HK $1,731,468
CDN. $ 349,903
</Table>
<Page>
SCHEDULE 6.1(1)(b)(IV)
EXCLUDED TRANSACTIONS IN THE COURSE OF IMPLEMENTATION
Agreements, arrangements and understandings with respect to:
1. the proposed sale of Canada Life's Puerto Rico operations; and
2. the proposed sale of Canada Life's Bahamas operations.
<Page>
SCHEDULE 6.1(1)(b)(vi)
LIFECO DIVIDEND DATES
COMMON SHARES
LIFECO / GWL&A FIN (CAN) / GWL&A (NS) / GWL / LIG / LL
<Table>
Declaration January 30 April 30 July 30 October 28
RECORD March 17 June 16 September 16 December 17
Payment March 31 June 30 September 30 December 31
</Table>
LIFECO PREF SHARES, CLASS A, SERIES 1
GWL PREF SHARES, SERIES L & O
<Table>
Declaration January 30 April 30 July 30 October 28
Record April 16 July 17 October 17 January 16/04
Payment April 30 July 31 October 31 January 31/04
</Table>
LIFECO - PREF SHARES, SERIES C & D
LL - PREF SHARES, SERIES C
GWL - PREF SHARES, SERIES Q
<Table>
Declaration January 30 April 30 July 30 October 28
Record March 17 June 16 September 16 DECEMBER 17
Payment March 31 June 30 September 30 December 31
</Table>
<Page>
SCHEDULE 6.1(1)(d)(i)
2003 LONG-TERM INCENTIVE GRANT
(All Amounts in Canadian $ unless otherwise noted)
<Table>
<Caption>
TOTAL
LTIP PAYOUT LTIP PAYOUT PAYOUT
LTIP GRANT @ TARGET @ 50% @ 50%
# OF UNITS (LOCAL CURRENCY) (LOCAL CURRENCY) (CDN $) (1)
- -------------------------------------------------------------------------------------------------------------------
SENIOR EXECUTIVE(2) 77,803 $7,780,300 $3,890,150 $3,890,150
CANADA 42,472 $4,247,200 $2,123,600 $2,123,600
UNITED STATES(3) 14,540 USD 1,454,000 USD 727,000 $1,112,310
UNITED KINGDOM(4) 9,629 (L)481,450 (L)240,725 $596,998
IRELAND(5) 9,068 (EURO)453,400 (EURO)226,700 $371,788
TOTAL 153,512 $8,094,846
</Table>
(1) Estimated Canadian dollar equivalent of payout obligation, calculated as
at January 20, 2003
(2) Includes Chairman and CEO, President and COO and senior executives in
Canada
(3) Includes Ron Beettam
(4) Includes Ian Gilmour
(5) Includes Tom Barry
<Page>
SCHEDULE 6.11
CLFC D&O POLICIES
<Page>
[CHUBB LOGO]
- --------------------------------------------------------------------------------
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCONVER
PREMIUM BILL
Policy Period JUNE 1, 2000 To JUNE 1, 2003
Policy Number 7022 71 05(C)
Insured CANADA LIFE FINANCIAL CORPORATION
Date Issued JULY 5, 2000 / OR
Producer MARSH CANADA LIMITED
TORONTO, ONTARIO
- --------------------------------------------------------------------------------
THIS BILLING IS TO BE ATTACHED TO AND FORM A PART OF THE POLICY
Please Send Payment To Agent or Broker
<Table>
<Caption>
COVERAGE PREMIUM
Directors & Officers Liability - Renewal $ 360,000.
</Table>
- --------------------------------------------------------------------------------
When sending payment please indicate policy or certificate number.
Note: Please return this bill with payment and include any additional changes.
<Page>
[CHUBB LOGO]
DECLARATIONS
FINANCIAL INSTITUTION
EXECUTIVE LIABILITY AND
INDEMNIFICATION POLICY
Item 1. PARENT ORGANIZATION: Policy Number 7022 71 05(C)
(name and address)
CHUBB INSURANCE COMPANY OF CANADA
CANADA LIFE FINANCIAL CORPORATION herein called the Company
330 University Avenue
Toronto, Ontario M5G 1R8
This is a Claims Made Policy. Except as otherwise provided herein, this Policy
covers only CLAIMS first made against the INSURED PERSONS during the POLICY
PERIOD. This Policy does not provide for any duty by the Company to defend those
insured under the Policy. Please read carefully.
Item 2. Limits of Liability
(A) Each LOSS $ 25,000,000.
(B) Aggregate Limit of Liability Each POLICY PERIOD $ 25,000,000.
Note that the Limit of Liability and any Deductible Amounts are reduced or
exhausted by Defense Costs.
Item 3. Coinsurance Percent: NIL
Item 4. Deductible Amounts:
Insuring Clause 1(A) $ NIL each INSURED PERSON
(B) $ NIL all INSURED PERSONS
Insuring Clause 2(C) $ 1,000,000. Executive Indemnification
Item 5. Policy Period: Inception Date: From 12.01 A.M. June 1, 2000
Expiration Date: To 12.01 A.M. June 1, 2003
Local time at the address shown in Item 1.
Item 6. Extended Reporting Period:
(A) Additional Premium: 150%
(B) Additional Period: 6 years
Item 7. Pending or Prior Date: June 1, 1995
Item 8. Endorsements effective at Inception: 1-20
In witness whereof, the Company issuing this policy has caused this policy to be
signed by its authorized officers, but it shall not be valid unless also signed
by a duly authorized representative of the Company.
CHUBB INSURANCE COMPANY OF CANADA
Toronto, Ontario July 31, 2000 / or /s/ [ILLEGIBLE]
- ------------------------------------------- -------------------------
Issued at Date Authorized Representative
Page 1 of 2
<Page>
[CHUBB LOGO]
In consideration of payment of the premium and
subject to the Declarations, limitations,
conditions, provisions and other terms of this
Policy, the Company agrees as follows:
INSURING CLAUSE 1
EXECUTIVE LIABILITY 1. The Company shall pay on behalf of each of the
COVERAGE INSURED PERSONS all LOSS for which the INSURED
PERSON is not indemnified by the ORGANIZATION
and which the INSURED PERSON becomes legally
obligated to pay on account of any CLAIM first
made against such INSURED PERSON, individually
or otherwise, during the POLICY PERIOD or, if
exercised, during the Extended Reporting
Period, for a WRONGFUL Act committed,
attempted, or allegedly committed or attempted
by such INSURED PERSON before or during the
POLICY PERIOD.
INSURING CLAUSE 2
EXECUTIVE INDEMNIFICATION 2. The Company shall pay on behalf of the
COVERAGE ORGANIZATION all LOSS for which the
ORGANIZATION grants indemnification to each
INSURED PERSON, as permitted or required by
law, which the INSURED PERSON has become
legally obligated to pay on account of any
CLAIM first made against such INSURED PERSON
individually or otherwise, during the POLICY
PERIOD or, if exercised, during the Extended
Reporting Period, for a WRONGFUL ACT committed,
attempted, or allegedly committed or attempted
by such INSURED PERSON before or during the
POLICY PERIOD.
EXTENDED REPORTING PERIOD 3. If this Policy is terminated or nonrenewed for
any reason other than for nonpayment of
premium, the PARENT ORGANIZATION, on behalf of
the INSURED PERSONS shall have the right, upon
payment of the additional premium set forth in
Item 6(A) of the Declarations for this Policy,
to an extension of the coverage granted by this
Policy for the period set forth in Item 6(B) of
the Declarations for this Policy (Extended
Reporting Period) following the effective date
of termination or nonrenewal with respect to
any CLAIM OR CLAIMS made during the Extended
Reporting Period, but only for any Wrongful Act
committed, attempted, or allegedly committed or
attempted prior to the effective date of
termination or nonrenewal. This right of
extension shall lapse unless written notice of
such election, together with payment of the
additional premium due, is received by the
Company within thirty (30) days following the
effective date of termination or nonrenewal.
Any CLAIM made during the Extended Reporting
Period shall be deemed to have been made during
the immediately preceding Policy Period.
If the Extended Reporting Period is purchased,
the entire premium noted in Item 6A of the
Declarations shall be deemed fully earned at
the inception of the Extended Reported Period.
Page 1 of 11
<Page>
[CHUBB LOGO]
EXCLUSIONS
EXCLUSIONS APPLICABLE TO 4. The Company shall not be liable for LOSS on
INSURING CLAUSES 1 AND 2 account of any CLAIM made against any INSURED
PERSON:
(a) based upon, arising from, or in consequence
of any circumstances if written notice of
such circumstance has been given under any
policy of which this Policy is a renewal or
replacement and if such prior policy
affords coverage (or would afford such
coverage except for the exhaustion of its
limits of liability) for such LOSS, in
whole or in part, as a result of such
notice;
(b) based upon, arising from, or in consequence
of any demand, suit or other proceeding
pending, or order, decree or judgment
entered against any INSURED PERSON or the
ORGANIZATION on or prior to the Pending or
Prior Date set forth in Item 7 of the
Declarations, or the same or substantially
the same fact, circumstance or situation
underlying or alleged therein;
(c) brought or maintained by or on behalf of
any other INSURED PERSON or the
ORGANIZATION except
(i) a CLAIM that is a derivative action
brought or maintained on behalf of
the ORGANIZATION by one or more
persons who are not INSURED PERSONS
and who bring and maintain the CLAIM
without the solicitation, assistance
or participation of any INSURED
PERSON or the ORGANIZATION,
(ii) a CLAIM brought or maintained by an
INSURED PERSON, other than an INSURED
PERSON who is or was a director of
the ORGANIZATION, for the actual or
alleged wrongful termination of the
INSURED PERSON, or
(iii) a CLAIM brought or maintained by an
INSURED PERSON for contribution or
indemnity, if the CLAIM directly
results from another CLAIM covered
under this Policy;
(d) for any WRONGFUL ACT OF INSURED PERSONS
serving in their capacities as fiduciaries,
(including fiduciaries as defined by the
Pension Benefit Standards Act, 1985 of
Canada, by the Employee Retirement Income
Security Act of 1974 of the United States
of America, and any amendments thereto or
similar provisions of any federal,
provincial, state or local statutory law or
common law), of any pension, profit
sharing, health and welfare or other
employee benefit plan or trust established
or maintained for the purpose of providing
benefits to employees of the ORGANIZATION.
(e) for bodily injury, mental or emotional
distress, sickness, disease or death of any
person or damage to or destruction of any
tangible property including loss of use
thereof;
(f) based upon, arising from, or in consequence
of (i) the actual, alleged or threatened
discharge, release, escape or disposal of
POLLUTANTS into or on real or personal
property, water or the atmosphere; or (ii)
any direction or request that the
ORGANIZATION test for, monitor, clean up,
remove, contain, treat detoxify or
neutralize POLLUTANTS, or any voluntary
decision to do so; including but not
limited to any CLAIM for financial Loss to
the ORGANIZATION, its security holders or
its creditors based upon, arising from, or
in consequence of the matters described in
(i) or (ii) of this exclusion; or
Page 2 of 11
<Page>
[CHUBB LOGO]
EXCLUSIONS
EXCLUSIONS APPLICABLE TO (g) for defamation libel, slander, wrongful
INSURING CLAUSES 1 AND 2 entry, eviction, false arrest, false
(CONTINUED) imprisonment, malicious prosecution,
assault or battery.
EXCLUSIONS APPLICABLE ONLY 5. The Company shall not be liable under Insuring
TO INSURING CLAUSE 1 Clause 1 for LOSS on account of any CLAIM MADE
against any INSURED PERSON:
(a) for an accounting of profits made from the
purchase or sale by such INSURED PERSON of
securities of the ORGANIZATION within the
meaning of Section 75 of the Securities Act
of 1978 of the Province of Ontario and
amendments thereto, or within the meaning
of Section 16(b) or the Securities Exchange
Act of 1934 and amendments thereto, or
similar provisions of any federal,
provincial, state or local statutory law or
common law;
(b) based upon, arising from or in consequence
of any dishonest, deliberately criminal or
deliberately fraudulent act or omission or
any willful violation of any statute or
regulation by such INSURED PERSON,
provided, however, that this exclusion
shall not apply unless it is established in
fact that such CLAIM was brought about or
contributed to by a dishonest, deliberately
criminal or deliberately fraudulent act or
omission or any willful violation of any
statute or regulation by the INSURED
PERSON; or
(c) based upon, arising from, or in consequence
of such INSURED PERSON having gained in
fact any personal profit, remuneration or
advantage to which such INSURED PERSON was
not legally entitled.
SEVERABILITY OF EXCLUSIONS 6. With respect to the Exclusions of this Policy,
no fact pertaining to or knowledge possessed by
any INSURED PERSON shall be imputed to any
other INSURED PERSON to determine if coverage
is available.
LIMIT OF LIABILITY, 7. All Loss arising out of the same WRONGFUL ACT
DEDUCTIBLE AND COINSURANCE and all INTERRELATED WRONGFUL ACTS of any
INSURED PERSONS shall be deemed one LOSS, and
such LOSS shall be deemed to have originated in
the earliest POLICY PERIOD in which a CLAIM is
first made against any INSURED PERSON alleging
any such WRONGFUL ACT or INTERRELATED WRONGFUL
ACTS.
The Company's maximum liability for each LOSS,
whether covered under Insuring Clause 1 or
Insuring Clause 2 or both, shall be the Limit
of Liability for each Loss set forth in Item
2(A) of the Declarations. The Company's maximum
aggregate liability for all Loss on account of
all CLAIMS first made during the same POLICY
PERIOD, whether covered under Insuring Clause 1
or Insuring Clause 2 or both, shall be the
Limit of Liability for each POLICY PERIOD set
forth in Item 2(B) of the Declarations.
The Company's liability under Insuring Clause 1
or Insuring Clause 2 or both shall apply only
to that part of each LOSS which is excess of
the applicable Deductible Amount set forth in
Item 4 of the Declarations and such Deductible
Amount shall be borne by the INSURED PERSONS
and/or ORGANIZATION uninsured and at their own
risk.
Page 3 of 11
<Page>
[CHUBB LOGO]
LIMIT OF LIABILITY, If a single LOSS is covered in part under
DEDUCTIBLE AND COINSURANCE Insuring Clause I and in part under Insuring
(CONTINUED) Clause 2, the maximum Deductible Amount
applicable to the LOSS shall be the Insuring
Clause 2 deductible set forth in Item 4 of the
Declarations.
With respect to all Loss (excess of the
Deductible Amount) originating in any one
POLICY PERIOD, the INSURED PERSONS and the
ORGANIZATION shall bear uninsured and it their
own risk that percent of all such LOSS
specified as the Coinsurance Percent in Item 3
of the Declaration, and the Company's liability
hereunder shall apply only to the remaining
percent of all such LOSS.
The Limit of Liability available during the
Extended Reporting Period, if exercised, shall
be the remaining portion, if any, of the
Aggregate Limit of Liability provided by the
immediately preceding POLICY PERIOD.
PRESUMPTIVE 8. If the Organization:
INDEMNIFICATION
(a) fails or refuses, other than for reason of
FINANCIAL IMPAIRMENT, to indemnify the
INSURED PERSON for Loss; and
(b) is permitted or required to indemnify the
INSURED PERSON for such LOSS pursuant to
the fullest extent permitted by LAW;
then, notwithstanding any other conditions,
provisions or terms of this Policy to the
contrary, any payment by the Company of
such LOSS shall be subject to (i) the
Insuring Clause 2 Deductible Amount set
forth in Item 4 of the Declarations for
this Policy, and (ii) all of the Exclusions
of this Policy.
DEFENSE AND SETTLEMENT 9. Subject to this section, it shall be the duty
of the INSURED PERSONS and not the duty of the
Company to defend CLAIMS made against the
INSURED PERSONS.
The INSURED PERSONS and the ORGANIZATION agree
not to settle any Claim, incure any DEFENSE
COSTS or otherwise assume any contractual
obligation or admit any liability with respect
to any Claim without the Company's written
consent, which shall not be unreasonably
withheld. The Company shall not be liable for
any settlement, DEFENSE COSTS, assumed
obligation or admission to which it has not
consented.
The Company shall have the right and shall be
given the opportunity to effectively associate
with the INSURED PERSONS and the ORGANIZATION
in the investigation, defense and settlement,
including but not limited to the negotiation of
a settlement, of any Claim that appears
reasonably likely to be covered in whole or in
part by this Policy.
The INSURED PERSONS and the ORGANIZATION agree
to provide the Company with all information,
assistance and cooperation which the Company
reasonably requests and agree that, in the
event of a CLAIM, the INSURED PERSONS and the
ORGANIZATION will do nothing that may prejudice
the Company's position or its potential or
actual rights of recovery.
DEFENSE COSTS are part of and not in addition
to the Limits of Liability set forth in Item 2
of the Declarations for this Policy, and the
payment by the Company of Defense Costs reduces
such Limits of Liability.
Page 4 of 11
<Page>
[CHUBB LOGO]
ALLOCATION 10. If both LOSS covered by this Policy and loss
not covered by this Policy and incurred, either
because a CLAIM against the INSURED PERSONS
includes both covered and uncovered matters or
because a CLAIM is made against both as INSURED
PERSON and others, including the ORGANIZATION,
the INSURED PERSONS, ORGANIZATION and the
Company shall use their best efforts to agree
upon a fair and proper allocation of such
amount between covered LOSS and uncovered loss.
If the INSURES PERSONS, ORGANIZATION and the
Company agree on an allocation of DEFENSE
COSTS, the Company shall advance on a current
basis DEFENSE COSTS allocated to the covered
LOSS. If the INSURED PERSONS, ORGANIZATION and
the Company cannot agree on an allocation:
(a) no presumption as to allocation shall exist
in any arbitration, suit or other
proceeding;
(b) the Company shall advance on a current
basis DEFENSE COSTS which the Company
believes to be covered under this Policy
until a different allocation is negotiated,
arbitrated or judicially determined; and
(c) the Company, if requested by the INSURED
PERSONS and/or the ORGANIZATION, shall
submit the dispute to binding arbitration.
The arbitration panel shall consist of one
arbitrator selected by the INSURED PERSONS
and the ORGANIZATION, and one arbitrator
selected by the Company, and a third
independent arbitrator selected by the
first two arbitrators.
Any negotiated, arbitrated or judicially
determined allocation of DEFENSE COSTS on
account of a CLAIM shall be applied
retroactively to all DEFENSE COSTS on account
of such CLAIM, notwithstanding any prior
advancement to the contrary. Any allocation or
advancement of DEFENSE COSTS on account of a
CLAIM shall not apply to or create any
presumption with respect to the allocation of
other LOSS on account of such CLAIM.
REPORTING AND NOTICE 11. The INSURED PERSONS and the ORGANIZATION shall,
as a condition precedent to exercising their
rights under this Policy, give to the Company
written notice as soon as practicable, but in
no event later than ninety (90) days after the
termination of the POLICY PERIOD, of any CLAIM
made against the INSURED PERSONS for a WRONGFUL
ACT.
If an INSURED PERSON or the ORGANIZATION
becomes aware of circumstances which could give
rise to a CLAIM and gives written notice of
such circumstance(s) to the Company during the
POLICY PERIOD, then any CLAIMS subsequently
arising from such circumstances shall be
considered to have been made during the POLICY
PERIOD in which the circumstances were first
reported to the Company.
The INSURED PERSONS and/or the ORGANIZATION
shall, as a condition precedent to exercising
their rights under this Policy, give to the
Company such information and cooperation as it
may reasonably require, including but not
limited to a description of the CLAIM or
circumstances, the nature of the alleged
WRONGFUL ACT, the nature of the alleged or
potential damage, the names of actual or
potential claimants, and the manner in which
the INSURED PERSONS and/or ORGANIZATION first
became aware of the CLAIM or circumstances.
Page 5 of 11
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GENERAL CONDITIONS 12. Notice to the Company under this Policy shall
Notice be given in writing addressed to the following
or any branch office of the Company:
Notice of CLAIM: All Other Notices:
National Claims Department of Financial
Department
Institutions
One Financial Place One Financial Place
1 Adelaide Street 1 Adelaide Street
East East
Toronto, Ontario Toronto, Ontario
MSC 2V9 MSC 2V9
Such notice shall be effective on the date of
receipt by the Company at such address or any
branch office of the company
ESTATES AND LEGAL 13. Coverage shall extend to CLAIMS for the
REPRESENTATIVES WRONGFUL ACTS of INSURED PERSONS made against
the estates, heirs, legal representatives, or
assigns or assigns of INSURED PERSONS who are
deceased or against the legal representatives
or assigns of INSURED PERSONS who are
incompetent, insolvent or bankrupt.
OTHER INSURANCE 14. If any LOSS arising from any CLAIMS made
against any INSURED PERSONS is insured under
any other valid policy(ies), prior or current,
then this Policy shall cover such LOSS, subject
to its limitations, conditions, provisions, and
other terms, only to the extent that the amount
of such Loss is in excess of the amount of
payment from such other insurance whether such
other insurance is stated to be primary,
contributory, excess, contingent or otherwise,
unless such other insurance is written only as
specific excess insurance over the Limits of
Liability provided in this Policy.
CHANGES IN EXPOSURE
ACQUISITION OR CREATION 15. If the ORGANIZATION (i) acquires securities or
OF ANOTHER ORGANIZATION voting rights in another organization or
creates another organization, which as result
of such acquisition or creation becomes a
SUBSIDIARY, or (ii) acquires any organization
by merger into or consolidation with an
ORGANIZATION, coverage shall apply to the
INSURED PERSONS of such organization under this
Policy but only with respect to WRONGFUL ACTS
committed, attempted, or allegedly committed or
attempted, after such acquisition or creation
unless the Company agrees, after presentation
of a complete application and all appropriate
information, to provide coverage by endorsement
for WRONGFUL ACTS committed, attempted, or
allegedly committed or attempted, by such
INSURED PERSONS prior to such acquisition or
creation.
If the fair value of the assets of the acquired
or created organization exceeds 10% of the
total assets of the PARENT ORGANIZATION as
reflected in the PARENT ORGANIZATION'S most
recent audited consolidated financial
statements, the PARENT ORGANIZATION shall give
written notice of such acquisition or creation
to the Company as soon as practicable together
with such information as the Company may
require and shall pay any reasonable additional
premium required by the Company.
Page 6 of 11
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CHANGES IN EXPOSURE
(CONTINUED)
ACQUISITION OF PARENT 16. If (i) the PARENT ORGANIZATION merges into or
ORGANIZATION BY ANOTHER consolidates with another organization, or (ii)
ORGANIZATION another Organization or person or group of
organizations and/or persons acting in concert
acquires securities or voting rights which
result in ownership or voting control by the
other organization(s) or person(s) of more than
50% of the outstanding securities representing
the present right to vote for the election of
directors of the PARENT ORGANIZATION, or (iii)
the ORGANIZATION completely ceases to actively
engage in its primary business ("cessation"),
or (iv) upon the FINANCIAL IMPAIRMENT of the
ORGANIZATION, coverage under this Policy shall
continue until termination of this Policy, but
only with respect to CLAIMS for WRONGFUL ACTS
committed, attempted, or allegedly committed or
attempted, by INSURED PERSONS prior to such
merger, consolidation, acquisition, cessation
of FINANCIAL IMPAIRMENT. The PARENT
ORGANIZATION shall give written notice of such
merger, consolidation, acquisition or cessation
to the Company as soon as practicable together
with such information as the Company may
require. The full annual premium for the POLICY
PERIOD shall be deemed fully earned immediately
upon the occurrence of any event outlined in
Items (i) through (iv) above.
CESSATION OF SUBSIDIARIES 17. In the event an organization ceases to be a
SUBSIDIARY before or after the Inception Date
of this Policy, coverage with respect to such
SUBSIDIARY and its INSURED PERSONS shall
continue until termination of this Policy but
only with respect to CLAIMS for WRONGFUL ACTS
committed, attempted or allegedly committed or
attempted prior to the date such organization
ceased to be a SUBSIDIARY.
REPRESENTATIONS AND 18. It is agreed by the ORGANIZATION and INSURED
APPLICATION FORM PERSONS that the particulars and statements
contained in the Application Form and the
attachments and materials submitted with the
Application Form (which shall be retained on
file by the Company and shall be deemed
attached hereto, as if physically attached
hereto) are true and are the basis of the
Policy and are to be considered as incorporated
in and constituting a part of this Policy. It
is further agreed by the ORGANIZATION and the
INSURED PERSONS that such particulars and
statements are material to the decision to
issue this Policy and that the Policy is issued
in reliance upon the truth of such particulars
and statements. All such particulars and
statements shall be deemed to be made by each
and every one of the INSURED PERSONS provided,
however, that, except for any misstatements or
omissions of which the signers of the
Application Form are aware, any misstatement or
omission in such Application Form or the
attachments and materials submitted with it
concerning a specified WRONGFUL ACT by a
particular INSURED PERSON or his cognizance of
any matter which he has reason to suppose might
afford grounds for a future CLAIM against him
shall not be imputed, for purposes of any
rescission of this Policy, to any other INSURED
PERSONS who are not aware of the omission or
the falsity of the statement.
Page 7 of 11
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[CHUBB LOGO]
INVESTIGATION AND 19. The Company may make any investigation it deems
SETTLEMENT necessary and may, with the written consent of
the ORGANIZATION, on behalf of the INSURED
PERSONS, make any settlement of a CLAIM it
deems expedient.
SUBROGATION 20. In the event of any payment under this Policy,
the Company shall be subrogated, to the extent
of such payment, to all the INSURED PERSONS'
and the ORGANIZATION'S rights of recovery, and
the INSURED PERSONS and the ORGANIZATION shall
execute all papers required and shall do
everything necessary to secure and preserve
such rights, including the execution of such
documents necessary to enable the Company
effectively to bring suit in the name of the
INSURED PERSONS or the ORGANIZATION.
ACTION AGAINST THE COMPANY 21. No action shall lie against the Company unless,
as a condition precedent thereto, there shall
have been full compliance with all the terms of
this Policy. No person or organization shall be
have any right under this Policy to join the
Company as a party to any action against the
INSURED PERSONS and/or the ORGANIZATION to
determine the INSURED PERSONS' liability nor
shall the Company be impleaded by the INSURED
PERSONS and/or the ORGANIZATION or their legal
representatives.
BANKRUPTCY OR INSOLVENCY 22. Bankruptcy or insolvency of an INSURED PERSON
or the estate of an INSURED PERSON shall not
relieve the Company of its obligations nor
deprive the Company of its rights under this
Policy.
AUTHORIZATION CLAUSE 23. By acceptance of this Policy, the PARENT
ORGANIZATION agrees to act on behalf of all
INSURED PERSONS and the ORGANIZATION with
respect to the giving and receiving of notice
of CLAIM or termination, the payment of
premiums and the receiving of any return
premiums that may become due under this Policy,
the negotiation, agreement to and acceptance of
endorsements, and the giving or receiving of
any notice provided for in this Policy, and the
INSURED PERSONS and the ORGANIZATION agree that
the PARENT ORGANIZATION shall act on their
behalf.
ALTERATION OR ASSIGNMENT 24. No change in, modification of, or assignment of
interest under this Policy shall be effective
except when made by a written endorsement to
this Policy which is signed by an authorized
employee of the Chubb Insurance Company of
Canada.
TERMINATION OF POLICY 25. This Policy shall terminate at the earliest of
the following times:
(a) upon the receipt by the Company of written
notice of termination from the PARENT
ORGANIZATION,
(b) upon expiration of the Policy Period as set
forth in Item 5 of the Declarations of this
Policy, or
(c) at such other time as may be agreed upon by
the Company and the PARENT ORGANIZATION, or
Page 8 of 11
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[CHUBB LOGO]
TERMINATION OF POLICY (d) sixty (60) days after receipt by the PARENT
(CONTINUED) ORGANIZATION of a written notice of
termination from the Company.
The Company shall refund the unearned premium
computed at customary short rates if the Policy
is terminated by the ORGANIZATION. Under any
other circumstances the refund shall be
computed pro rata.
VALUATION AND FOREIGN 26. All premiums, limits, retentions, LOSS and
CURRENCY other amounts under this Policy are expressed
and payable in the currency of Canada. Except
as otherwise provided in any coverage section,
if judgment is rendered, settlement is
denominated or another element of LOSS under
this Policy is stated in a currency other than
Canadian dollars, payment under this Policy
shall be made in Canadian dollars at the rate
of exchange published in THE GLOBE AND MAIL on
the date the final judgment is reached, the
amount of the settlement is agreed upon or the
other element of LOSS is due, respectively.
DEFINITIONS 27. CLAIM means:
(i) a written demand for monetary
damages,
(ii) a civil proceeding commenced by the
service of a complaint or similar
pleading,
(iii) a criminal proceeding commenced by a
return of an indictment, or
(iv) a formal administrative or regulatory
proceeding commenced by the filing of
a notice of charges, formal
investigate order or similar
document,
against any INSURED PERSON for a WRONGFUL
ACT, including any appeal therefrom.
DEFENSE COSTS means that part of LOSS consisting of
reasonable costs, charges, fees (including but not
limited to attorneys' fees and experts' fees) and
expenses (other than regular or overtime wages,
salaries or fees of the directors, officers or
employees of the ORGANIZATION) incurred in
defending or investigating CLAIMS and the premium
for appeal, attachment or similar bonds.
FINANCIAL IMPAIRMENT means the financial position
of the ORGANIZATION as a debtor as that term is
defined and used in Canada within the provisions of
the Bankruptcy Act R.S., c.B-3 and without limiting
the generality of the foregoing shall occur when
(i) any receiver, conservator, liquidator, trustee,
sequestrator, or similar official has been
appointed by a provincial, state or federal court,
agency, official or by a creditor to take control
of, supervise, manage or liquidate the
ORGANIZATION, (ii) a reorganization proceeding
relating to the ORGANIZATION has been brought in
Canada under the Companies' Creditors Arrangement
Act, R.S., c.C-36, or (iii) the ORGANIZATION
becomes a debtor in possession under Title 11 of
the United States Code, Bankruptcy.
Page 9 of 11
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DEFINITIONS INSURED CAPACITY means the INSURED PERSON'S
(CONTINUED) position or capacity but shall not include any
position or capacity in any entity other than the
ORGANIZATION, even if the ORGANIZATION directed or
requested the INSURED PERSON to serve in such other
position or capacity.
INSURED PERSON, either in the singular or plural,
means any past, present or future duly elected
director or duly elected or appointed officer of
the ORGANIZATION.
INTERRELATED WRONGFUL ACTS means all causally
connected WRONGFUL ACTS.
LOSS means the total amount which any INSURED
PERSON becomes legally obligated to pay on account
of each CLAIM and for all CLAIMS in each POLICY
PERIOD and the Extended Reporting Period, if
exercised, made against them for WRONGFUL ACTS for
which coverage applies, including, but not limited
to, damages, judgments, settlements, costs and
DEFENSE COSTS. LOSS does not include: (i) any
amount not indemnified by the ORGANIZATION for
which the INSURED PERSON is absolved from payment
by reason of any covenant, agreement or court
order; (ii) any amount incurred by the ORGANIZATION
(including its board of directors or any committee
of the board of directors) in connection with the
investigation or evaluation of any CLAIM or
potential CLAIM by or on behalf of the
ORGANIZATION; (iii) fines or penalties imposed by
law including but not limited to punitive or
exemplary damages; or the multiplied portion of any
multiplied damage award; or (iv) matters
uninsurable under the law pursuant to which this
Policy is construed.
ORGANIZATION shall mean the PARENT ORGANIZATION and
any SUBSIDIARY.
PARENT ORGANIZATION means the entity named in Item
1 of the Declarations.
POLICY PERIOD means the period of time specified in
Item 5 of the Declarations, subject to prior
termination in accordance with Section 25. If this
period is less than or greater than one year, then
the Limits of Liability specified in Item 2 of the
Declarations shall be the Company's maximum limit
of liability under this Policy for the entire
period.
Page 10 of 11
<Page>
[CHUBB LOGO]
DEFINITIONS POLLUTANTS means any substance located anywhere in
(CONTINUED) the world exhibiting any hazardous characteristics
as defined by, or identified on a list of hazardous
substances issued by, the Canadian Environmental
Protection Act, the United States Environmental
Protection Agency or a federal, provincial, state,
county, municipality or locality counterpart
thereof. Such substances shall include, without
limitation, solids, liquids, gaseous or thermal
irritants, contaminants or smoke, vapor, soot,
fumes, acids, alkalis, chemicals or waste
materials. POLLUTANTS shall also mean any other air
emission, odor, waste water, oil or oil products,
infectious or medical waste, asbestos or asbestos
products and any noise.
SUBSIDIARY, either in the singular or plural, means
any entity that, at the Inception Date of this
Policy, is named in the Application Form and of
which more than 50% of the outstanding securities
or voting rights representing the present right to
vote for election of directors is owned or
controlled by the PARENT ORGANIZATION either
directly or through one or more of its SUBSIDIARIES
or any entity of which more than 50% of the
outstanding securities or voting rights
representing the right to vote for election of
directors was owned or controlled by the PARENT
ORGANIZATION either directly or through one or more
of its SUBSIDIARIES prior to the Inception Date of
this Policy.
WRONGFUL ACT means any error, misstatement,
misleading statement, act, omission, neglect, or
breach of duty committed, attempted, or allegedly
committed or attempted, by an INSURED PERSON,
individually or otherwise, in his INSURED CAPACITY,
or any matter claimed against him solely by reason
of his serving in such INSURED CAPACITY.
Page 11 of 11
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 1
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that Section 4, EXCLUSIONS Applicable to Insuring Clauses 1 and 2,
is amended by adding the following:
(h) Insurer shall not be liable to make any payment for LOSS in connection
with any CLAIM or CLAIMS based upon, arising out of, related to in
consequence of or in any way involving the ORGANIZATION or the INSURED
PERSON'S performance of professional services for others in the
ORGANIZATION or the INSURED PERSON'S capacity as a broker, dealer,
financial adviser, investment adviser, investment banker, investment
manager, clearing agent, or service rendered as a trustee or other
fiduciary or agent for individuals, governments, corporations or other
entities provided, however, that the foregoing exclusion shall not be
applicable to any derivative or class action brought by SECURITY
HOLDERS or MEMBERS, in their capacity as MEMBERS, of the ORGANIZATION,
against the INSURED PERSON'S in connection with the performance of
such professional services or the supervision thereof.
For the purposes of this endorsement, MEMBERS of the ORGANIZATION, are
those policy holders entitled to vote for the election of directors or
trustees of the ORGANIZATION, and to receive dividends or rebates on
future premiums.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
PROFESSIONAL SERVICES EXCLUSION WITH DERIVATIVE AND MEMBERS
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 2
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is understood and agreed that the INSURER shall not be liable to make any
payment for LOSS in connection with any Claim based upon, arising out of,
relating to, in consequence of, or in any way involving:
1) any policy of insurance, reinsurance, or bond, including, without
limitation, annuities, endowments or pension contracts (hereinafter
collectively referred to as "Insurance Policy") issued by the ORGANIZATION;
or
2) any insurance policy issued by any other entity, or self-insured program,
for which the ORGANIZATION provides services of any kind or character
whatsoever; or
3) the issuance of, refusal to issue or renew, or cancellation of any
insurance policy by the ORGANIZATION; or
4) the issuance of, refusal to issue or renew, or cancellation of any
insurance policy issued by any other Organization, or of any evidence of
insurance under any self-insured program; for which the ORGANIZATION
provides services of any kind or character whatsoever; or
5) any claim under any insurance policy issued by the ORGANIZATION, or any
insurance policy issued by any other entity or any self-insured program for
which the ORGANIZATION provides services of any kind or character
whatsoever; or
6) the handling by the ORGANIZATION or any of its representatives of any claim
or obligation arising out of any insurance policy issued by the
ORGANIZATION, or any insurance policy issued by any other entity or
self-insured program for which the ORGANIZATION provides services of any
kind or character whatsoever.
It is further understood and agreed that the foregoing exclusion shall not
be applicable to any derivative or class action, brought by security
holders or members, in their capacity as MEMBERS, of the ORGANIZATION,
against the INSURED PERSON in connection with the performance of such
professional services or the supervision thereof.
For the purposes of this endorsement, MEMBERS of the ORGANIZATION are those
policy holders entitled to vote for the election of directors or trustees
of the ORGANIZATION and to receive dividends or rebates on future premiums.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
INSURANCE COMPANY E & O WITH DERIVATIVE FOR MEMBERS
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 3
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that;
1) EXCLUSIONS shall be amended by deleting a paragraph (f) and replacing it
with the following:
(f) based on, arising from, or in consequence of:
(i) the actual, alleged or threatened discharge, release, escape or
disposal of POLLUTANTS into or on real or personal property,
water or the atmosphere; or
(ii) any direction or request that the Insured test for, monitor,
clean up, remove, contain, treat, detoxify or neutralize
POLLUTANTS or any voluntary decision to do so;
including, but not limited to, any claim for financial loss to the
ORGANIZATION, its security holders, its MEMBERS, or creditors based
upon, arising from, or in consequence of the matter described in (i)
and (ii) above. However, this exclusion shall not apply to that part
of LOSS which is DEFENSE COSTS for claims brought, commenced and
conducted in the territorial limits and jurisdiction of Canada; and
for which the ORGANIZATION either is not permitted, or fails by reason
of FINANCIAL IMPAIRMENT, to indemnify the INSURED PERSON(S). For
purposes of this Endorsement, the certificate of incorporation,
by-laws and shareholder and board of director resolutions of the
ORGANIZATION shall be deemed to provide indemnification to the INSURED
PERSON(S) to the fullest extent permitted by law.
2) The Limits of Liability, Item 2 of the Declarations page, with respect
to any coverage provided by this endorsement under paragraph 1) above
shall not exceed five million dollars ($5,000,000.00) each LOSS and
each POLICY PERIOD.
3) For the purposes of this endorsement, MEMBERS of the ORGANIZATION, are
those policy holders entitled to vote for the election of Directors or
Trustees of the ORGANIZATION and to receive dividends or rebates on
future premiums.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
POLLUTION DEFENSE COVERAGE
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 4
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that if a CLAIM against an INSURED PERSON includes a CLAIM against
the INSURED PERSON'S lawful spouse solely by reason of:
(a) such spouse's status as a spouse of the INSURED PERSON, or
(b) such spouse's ownership interest in property which the claimant seeks
as recovery for alleged WRONGFUL ACTS of the INSURED PERSON, all LOSS
which such spouse becomes legally obligated to pay on account of such
CLAIM shall be treated for purposes of this Policy as LOSS which the
INSURED PERSON becomes legally obligated to pay on account of the
CLAIM made against the INSURED PERSON. All limitations, conditions,
provisions and other terms of coverage (including the deductible)
applicable to the INSURED PERSON'S LOSS shall also be applicable to
such spousal LOSS.
The coverage extension afforded by this Endorsement does not apply to any CLAIM
alleging any WRONGFUL ACT or omission by the INSURED PERSON'S spouse.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/[ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
SPOUSAL EXTENSION
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 5
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: THE CANADA LIFE ASSURANCE COMPANY
It is agreed that:
1. INSURED PERSON(S), set forth in the DEFINITIONS shall be amended by adding
the following:
a) or any Advisory Board Member or Trustee of the ORGANIZATION;
b) All present and future EMPLOYEE(S), but only if such EMPLOYEE(S) in
named as a Co-defendant in a civil suit filed in a court of law with a
Director or an officer, duly elected or appointed in conformance with
the written by-laws of the ORGANIZATION.
2. DEFINITIONS, is amended to include the following definition:
EMPLOYEE(S) means, a person while in the regular service of the
ORGANIZATION in the ordinary course of the ORGANIZATION'S business during
the terms of this policy and who the ORGANIZATION compensates by salary,
wages and/or commissions and has the right to govern and direct in the
performance of such service; and shall also mean:
(A) Any trustee of the ORGANIZATION while performing acts coming within
the scope of the usual duties of an EMPLOYEE.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/[ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
EMPLOYEE AS CO-DEFENDANT
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 6
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
In consideration of the premium paid, it is agreed that ALLOCATION, is deleted
in its entirety and the following is inserted:
ALLOCATION
If both LOSS covered by this coverage section and LOSS not covered by this
coverage section are incurred, either because a CLAIM against an INSURED PERSON
includes both covered and uncovered matters or because a CLAIM is made against
both an INSURED PERSON and others, including the ORGANIZATION, the INSURED
PERSONS and the Company shall allocate such amount as follows:
(a) with respect to DEFENSE COSTS, to create certainty in determining a fair
and proper allocation of DEFENSE COSTS, 90% of all DEFENSE COSTS which must
be otherwise be allocated as described above shall be allocated to covered
LOSS and shall be advanced by the Company on a current basis; provided,
however, that no DEFENSE COSTS shall be allocated to the ORGANIZATION to
the extent the ORGANIZATION is unable to pay by reason of FINANCIAL
IMPAIRMENT.
The DEFENSE COST allocation shall be the final and binding allocation of such
DEFENSE COSTS and shall not apply to or create any presumption with respect to
the allocation of any other LOSS;
(b) with respect to LOSS other than DEFENSE COSTS:
(i) the INSURED PERSONS and the Company shall use their best efforts to
agree upon a fair and proper allocation of such amount between covered
LOSS and uncovered loss; and
(ii) if the INSURED PERSONS and the Company cannot agree on any allocation,
no presumption as to allocation shall exist in any arbitration, suit
or other proceeding. The Company, if requested by the INSURED PERSONS,
shall submit the allocation dispute to binding arbitration. The
arbitration panel shall consist of one arbitrator selected by the
INSURED PERSONS, one arbitrator selected by the Company, and a third
independent arbitrator selected by the first two arbitrators.
<Page>
[CHUBB LOGO]
(c) with respect to this endorsement only, the Company shall not be liable for
LOSS on account of any claim made against any insured person:
(i) based upon, arising from, or in consequence of, or in any way
involving, directly, or indirectly, the purchase, sale, participation,
grant, commitment, restructure, termination, transfer, repossession or
foreclosure of any loan, lease or extension of credit, or rendering or
any advice in connection with any loan, lease or extension of credit.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
Page 2 of 2
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 7
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that the EXTENDED REPORTING PERIOD shall be amended by reducing the
written notice of the right of extension from thirty (30) days to ten (10) days.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 8
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that:
1. Section 4 (d) of the EXCLUSIONS Applicable to Insuring Clauses 1 and 2, is
deleted in its entirety and replaced with the following:
(d) for any WRONGFUL ACT of INSURED PERSONS serving in their capacities as
fiduciaries, (including fiduciaries as defined by the Employment
Retirement Income Security Act of 1974 of the United States of
America, and any amendments thereto or similar provisions of any
federal, provincial, state or local statutory law or common law), of
any pension, profit sharing, health and welfare or other employee
benefit plan or trust established or maintained for the purpose of
providing benefits to employees of the ORGANIZATION.
2. Section 5 (a) of the EXCLUSIONS Applicable Only to Insuring Clause 1, is
deleted in its entirety and replaced with the following:
(a) for an accounting of profits made from the purchase or sale by such
INSURED PERSON of Securities of the ORGANIZATION within the meaning of
Section 76 of the Securities Act of 1990 of the Province of Ontario
and amendments thereto, or within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto, or similar
provisions of any federal, provincial, state or local statutory law or
common law.
3. Section 27, of the DEFINITIONS, FINANCIAL IMPAIRMENT is deleted in its
entirety and replaced with the following:
FINANCIAL IMPAIRMENT means the financial position of the ORGANIZATION as a
debtor as that term is defined and used in Canada within the provisions of
the Bankruptcy and Insolvency Act and amendments thereto, and without
limiting the generality of the foregoing shall occur when (i) any receiver,
conservator, liquidator, trustee, sequestrator, or similar official has
been appointed by a provincial, state or federal court, agency, official or
by a creditor to take control of, supervise, manage or liquidate the
ORGANIZATION, (ii) a reorganization proceeding relating to the ORGANIZATION
has been brought in Canada under the Companies' Creditors Arrangement Act
and amendments thereto, or (iii) the ORGANIZATION becomes a debtor in
possession under Title 11 of the United States Code, Bankruptcy.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 9
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is understood and agreed that the INSURER shall not be liable to make any
payment for LOSS in connection with any CLAIM or CLAIMS based upon, arising out
of, related to, in consequence of, or in any way involving the ORGANIZATION'S or
the INSURED PERSONS and the Securities and Investments Board's (U.K.)
investigation/inquiry of sales practices with respect to the purchase and sale
of tax sheltered retirement plans by the Canada Life Assurance Company of Great
Britain Limited as more fully described in the appendix attached to the
ORGANIZATION'S signed Executive Liability Insurance-Financial Institutions
application. This application shall be deemed attached to and shall form part of
this Policy No. 7022 71 05 (C)
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 10
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is understood and agreed that in the event of a CLAIM based upon, arising
from, or in consequence of an EMPLOYMENT RELATED ACT the following shall apply:
1. Definitions, with respect to this endorsement only.
a) INSURED PERSONS is amended to include any past, present or future
employee of the ORGANIZATION
b) WRONGFUL ACT shall include, but not be limited to, EMPLOYMENT
RELATED ACTS.
EMPLOYEE RELATED ACTS means wrongful dismissal, discharge or
termination of employment, breach of any oral or written
employment contract, or quasi-employment contract,
employment-related misrepresentation, violation of employment
discrimination laws (including work place harassment), wrongful
failure to employ or promote, wrongful discipline, wrongful
deprivation of career opportunity, failure to grant tenure,
negligent evaluation, invasion of privacy employment-related
defamation or employment-related wrongful infliction of emotional
distress.
c) BENEFITS means prerequisites, fringe benefits, payments in
connection with any employee benefit plan and any other payment,
other than salary or wages, to or for the benefit of an employee
arising out of the employment relationship.
2. EXCLUSIONS, with respect to this endorsement only.
a) for an actual or alleged violation of the responsibilities,
obligations or duties imposed by the Employee Retirement Income
Security Act of 1974, the Fair Labor Standards Act, the National
Labor Relations Act, the Worker Adjustment and Retraining
Notification Act, the Consolidated Omnibus Budget Reconciliation
Act of 1985, the Occupational Safety and Health Act, rules or
regulations promulgated thereunder and amendments thereto or
similar provisions of any federal, state or local statutory law
or common law;
b) based upon, arising from, or in consequence of such INSURED
PERSON intentionally violating in fact any statute, rule,
regulation, agreement or judicial or regulatory order;
Page 1 of 3
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[CHUBB LOGO]
c) based upon, arising from or in consequence of any actual or
alleged obligation of any ORGANIZATION pursuant to any worker's
compensation, unemployment insurance, social security, disability
benefits or similar law; provided, however, this Exclusion shall
not apply to any CLAIM based upon, arising from, or in
consequence of any actual or alleged retaliatory treatment of the
claimant by the INSURED PERSON on account of the claimant's
exercise of rights pursuant to any such law;
d) based upon, arising from, or in consequence of liability of
others assumed by the ORGANIZATION under any contract or
agreement, either oral or written, except to the extent that the
ORGANIZATION would have been liable in the absence of the
contract or agreement;
e) based upon, arising from, or in consequence of:
(1) any litigation; arbitration; claims; demands; causes of
action; equitable; legal or quasi-legal proceedings; decrees
of judgments (collectively referred to as LITIGATION against
the ORGANIZATION and/or any INSURED PERSON where such
LITIGATION was prior to or pending as of June 1, 1995 and
where the ORGANIZATION and/or the INSURED PERSON received
notice or otherwise had knowledge as of such date; or
(2) any subsequent LITIGATION arising from, or based on
substantially the same matters as alleged in the prior or
pending litigation; or
(3) any WRONGFUL ACT of the ORGANIZATION and/or any INSURED
PERSON which gave rise to the prior or pending litigation;
(f) based upon, arising from, in consequence of, or any actual or
alleged EMPLOYMENT RELATED ACTS committed, attempted or allegedly
committed or attempted by an INSURED PERSON while serving as a
director or officer of any entity than the ORGANIZATION.
(g) based upon, arising from, in consequence of, bodily injury,
sickness, disease, or death of any person, or damage to or
destruction of any tangible property including losses of use
thereof;
(h) by, on behalf of, or at the behest of any other INSURED PERSON or
the ORGANIZATION, except for a MEMBER or security holder
derivative action brought on behalf of the ORGANIZATION by one or
more MEMBERS or security holder who are not INSURED PERSONS and
make such CLAIM without the cooperation or solicitation of any
INSURED PERSONS or the ORGANIZATION, provided, however, this
exclusion shall not apply to EMPLOYMENT RELATED ACTS brought by
an employee, other than an employee who is or was a Director of
the ORGANIZATION.
Page 2 of 3
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[CHUBB LOGO]
3) It is further agreed with respect to this endorsement only the Company
shall not be liable for that part of LOSS, other than DEFENSE COSTS
which:
A. constitutes BENEFITS due to become due or the equivalent value of
such BENEFITS;
B. is based upon, arises from or is in consequence of the employment
reinstatement of the claimant by the ORGANIZATION or the
continued employment of the claimant;
C. constitutes front pay, future damages or other future economic
relief, or the equivalent thereof, if the ORGANIZATION has the
option pursuant of a judgment or other final adjudication but
fails to reinstate; or
D. is based upon, arises from or is in consequence of mental
anguish, emotional distress or humiliation.
For the purposes of this endorsement, MEMBERS OF THE ORGANIZATION are those
policy holders entitled to vote for the election of Directors or Trustees of the
ORGANIZATION and to receive dividends or rebates on future premiums.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
Page 3 of 3
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 11
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that:
1. The Company shall issue to the Insureds an excess policy which follows the
form of this policy, except as set forth in paragraph three of this
endorsement, if:
a. A claim is reported to the Company pursuant to the reporting and
notice requirements of this policy, and
b. The PARENT ORGANIZATION provides the Company with a written request
for such excess policy after the first annual anniversary of the
inception of this policy.
The PARENT ORGANIZATION may make only one such request of, and may be
issued only one such excess policy by, the Company.
2. An additional premium of 150% of the unearned premium, however, not less
than 150% of the annual premium of $160,000, required by the Company for
such excess policy shall be paid by the PARENT ORGANIZATION on or before
the inception date of such excess policy.
3. Such excess policy shall include the following terms and conditions:
a. The limits of liability for each coverage section of such excess
policy shall be equal to the limits of liability set forth in the
Declarations for the respective coverage section of this policy.
However, if a claim is covered under both a coverage section of this
policy and such excess policy (or if any claim would be so covered if
not for the exhaustion of the limits of liability of this policy), the
Company's maximum aggregate liability for such claim shall be the
Limit of Liability set forth in Item 2 of the Declarations for the
applicable coverage section of this policy.
b. The policy period for such excess policy shall incept on the date of
the PARENT ORGANIZATION'S written request for such policy, and shall
terminate on the same date of termination of this policy.
c. Such excess policy shall not provide coverage for any claim based
upon, arising from or in consequence of any demand, suit or other
proceeding pending, or order decree judgment entered against any
Insured on or prior to the inception date of such excess policy as
described in paragraph 3b of this endorsement.
d. Such excess policy shall be excess over this policy and any policy
which is written as excess over this policy.
Page 1 of 2
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[CHUBB LOGO]
e. Such excess policy shall not provide coverage for any claim first made
against any Insured, or any facts or circumstances reported to the
Company, prior to the inception date of such excess policy as
described in paragraph 3b of this endorsement.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
Page 2 of 2
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 12
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
NON CANCELLABLE ENDORSEMENT
It is agreed that section 25, Termination of Policy, is amended by deleting
subsections (a), (d) and the last paragraph.
It is further agreed that this policy is non-cancellable by either the
ORGANIZATION or the Company, except in the event of non-payment of premium.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------
Authorized Representative
July 5, 2000
-------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 13
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is hereby agreed that Section 27. DEFINITIONS, LOSS is deleted in its
entirety and replaced by the following:
Loss means the total amount which any INSURED PERSON becomes legally obligated
to pay on account of each CLAIM and for all CLAIMS in each POLICY PERIOD and the
Extended Reporting Period, if exercised, made against them for WRONGFUL ACTS for
which coverage applies, including, but not limited to, compensatory or punitive
damages, judgments, settlements, costs and DEFENSE COSTS. LOSS does not include:
(i) any amount not indemnified by the ORGANIZATION for which the INSURED PERSON
is absolved from payment by reason of any covenant, agreement or court order;
(ii) any amount incurred by the ORGANIZATION (including its board of directors
or any committee of the board of directors) in connection with the investigation
or evaluation of any CLAIM or potential CLAIM by or on behalf of the
ORGANIZATION; (iii) fines or penalties imposed by law, the multiplied portion of
any multiplied damage award; or (iv) any other matters or sanctions which may be
deemed uninsurable under the law pursuant to which this Policy in construed.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 5, 2000
-------------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 14
To be attached to and form
part of : Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that:
1. This policy is amended by adding the following:
Insuring Clause 3
ORGANIZATION COVERAGE
The Company shall pay on behalf of the ORGANIZATION all LOSS for which it
becomes legally obligated to pay on account of any CLAIM first made against
it during the POLICY PERIOD or, if exercised, during the Extended Reporting
Period, for a WRONGFUL ACT committed, attempted, or allegedly committed or
attempted, by an INSURED PERSON or the ORGANIZATION before or during the
POLICY PERIOD.
2. Section 27, Definitions, is amended as follows:
a. The Definitions of CLAIM and WRONGFUL ACT are deleted in their
entirety and replaced with the following:
CLAIMS means
(a) For purposes of coverage under Insuring Clauses 1 or 2:
(i) a written demand for monetary or non-monetary damages;
(ii) a civil proceeding commenced by the service of a
complaint or similar pleading;
(iii) a criminal proceeding commenced by the return of an
indictment; or
(iv) a formal administrative or regulatory proceeding
commenced by the filing of a notice of charges, formal
investigative order or similar document,
against an INSURED PERSON for a WRONGFUL ACT, including any
appeal therefrom;
(b) For purposes of coverage under Insuring Clauses 3:
(i) a written demand for monetary or non-monetary damages;
(ii) a civil proceeding commenced by the service of a
complaint or similar pleading; or
(iii) a criminal proceeding commenced by the return of an
indictment;
against the ORGANIZATION for WRONGFUL ACT, including any appeal
therefrom.
Entity Percentage Endorsement
Form 17-02-1331 (Ed.6/96) Page 1 of 4
<Page>
[CHUBB LOGO]
WRONGFUL ACT means:
(a) For purposes of coverage under Insuring Clauses 1 or 2, any
error, misstatement, misleading statement, act, omission,
neglect, or breach of duty committed, attempted, or allegedly
committed or attempted, by an INSURED PERSON, individually or
otherwise, in his INSURED CAPACITY, or any matter claimed
against him solely by reason of his serving in such INSURED
CAPACITY;
(b) For purposes of coverage under Insuring Clause 3, any error,
misstatement, misleading statement, act, omission, neglect, or
breach of duty committed, attempted, or allegedly committed or
attempted, by an INSURED PERSON or the ORGANIZATION based upon,
arising from, or in consequence of a SECURITIES TRANSACTION.
b. The following definition is added:
SECURITIES TRANSACTION means the purchase or sale of, or offer to
purchase or sell, any securities issued by the ORGANIZATION.
c. The definitions of INSURED PERSON and LOSS are amended by adding the
following:
INSURED PERSON also means:
(i) For purposes of coverage under Insuring Clause 1 or 2, any past,
present and future employee of the ORGANIZATION, but only for
WRONGFUL ACTS based upon, arising from or in consequence of any
SECURITIES TRANSACTION; and
(ii) For purposes of coverage under Insuring Clause 3, the
ORGANIZATION.
LOSS does not include any amount allocated to uncovered loss pursuant
to Section 10, Allocation. For purposes of coverage under Insuring
Clause 3, LOSS includes punitive or exemplary damages which the
ORGANIZATION becomes legally obligated to pay, provided the punitive
or exemplary damages are otherwise covered under Insuring Clause 3
and are insurable under the law pursuant to which this Policy is
construed.
3. The heading for Section 4 is deleted in its entirety and replaced with the
following:
Exclusions Applicable to all Insuring Clauses.
4. Section 4, Exclusions Applicable to all Insuring Clauses, is amended by
adding the following to paragraph (c):
(iv) a Claim that is brought by any INSURED PERSON identified in section
2c(1) of this Endorsement for any WRONGFUL ACT based upon, arising
from or in consequence of any SECURITIES TRANSACTION.
5. Exclusions is amended by adding the following Section after Exclusions
Applicable Only to Insuring Clause 1:
Exclusions Applicable Only to Insuring Clause 3:
5A. The Company shall not be liable, under Insuring Clause 3, for LOSS on
account of any CLAIM made against the ORGANIZATION based upon,
arising from, or in consequence of any deliberately fraudulent act or
omission or any willful violation of any statute or regulation by any
past, present or future chief financial officer, President or
Chairman if a judgment or other final adjudication adverse to the
ORGANIZATION establishes such a deliberately fraudulent act or
omission or willful violation.
Entity Percentage Endorsement
Form 17-02-1331 (Ed.6/96) Page 2 of 4
<Page>
[CHUBB LOGO]
5B. The Company shall not be liable, under Insuring Clause 3, for that
part of LOSS, other than DEFENSE COSTS:
(a) which is based upon, arises from, or is in consequence of the
actual or proposed payment by the ORGANIZATION of allegedly
inadequate or excessive consideration in connection with its
purchase of securities issued by the ORGANIZATION; or
(b) Which is based upon, arises from, or is in consequence of the
ORGANIZATION having gained in fact any profit or advantage to
which it was not legally entitled.
6. The second, third and fourth paragraphs of Section 7, Limit of Liability,
Deductible and Coinsurance, are deleted in their entirety and replaced with
the following:
The Company's maximum liability for each LOSS, whether covered under one or
more Insuring Clauses, shall be the Limit of Liability for each LOSS set
forth in Item 2(A) of the Declarations. The Company's maximum aggregate
liability for all LOSS on account of all CLAIMS first made during the same
POLICY PERIOD, whether covered under one or more Insuring Clauses, shall be
the Limit of Liability for each POLICY PERIOD set forth in Item 2(B) of the
Declarations.
The Company's liability under Insuring Clause 1 or Insuring Clause 2 or
Insuring Clause 3 shall apply only to the part of each LOSS which is excess
of the applicable Deductible Amount set forth in Item 4 of the
Declarations, and such Deductible Amount shall be borne by the INSURED
PERSONS and/or the ORGANIZATION uninsured and at their own risk. However,
the Deductible Amount applicable to each LOSS on account of any CLAIM for
WRONGFUL ACTS based upon, arising from or in consequence of any SECURITIES
TRANSACTION shall:
(a) apply only to that part of LOSS which constitutes DEFENSE COSTS; and
(b) not apply if:
(i) a final adjudication which prejudice pursuant to a trial, motion
to dismiss or motion for summary judgment in such CLAIM, or
(ii) a complete and final settlement of such CLAIM with prejudice
establishes that no INSURED PERSON and/or the ORGANIZATION in such
CLAIM is liable for any LOSS, other than DEFENSE COSTS. The Company
shall reimburse any INSURED PERSON and/or the ORGANIZATION which has
funded a Deductible Amount if such amount subsequently becomes
inapplicable based upon (i) or (ii) above.
The maximum Deductible Amount applicable to a single LOSS which is covered
under more than one Insuring Clause shall be the Insuring Clause 2
deductible set forth in Item 4 of the Declarations.
7. The first paragraph of Section 10, Allocation, is deleted in its entirety
and replaced with the following:
(a) If a CLAIM based on, arising from or in consequence of a SECURITIES
TRANSACTION covered, in whole or in part, under Insured Clauses 2 or
3 results in both LOSS covered by this Policy and loss not covered by
this Policy, because such CLAIM includes both covered and uncovered
matters or is made against both covered and uncovered parties, the
INSURED PERSONS, ORGANIZATION and the Company shall allocate such
amount to Loss as follows:
(i) 100% of such amount constituting defense costs shall be
allocated to covered LOSS; and
(ii) 100% of such amount other than defense costs shall be allocated
to covered LOSS.
Entity Percentage Endorsement
Form 17-02-1331 (Ed.6/96) Page 3 of 4
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[CHUBB LOGO]
(b) If any other CLAIM results in both LOSS covered by this Policy and
loss not covered by this Policy, because such CLAIM includes both
covered and uncovered matters or is made against both covered and
uncovered parties, the INSURED PERSONS, ORGANIZATION and the Company
shall allocate such amount between covered LOSS and uncovered loss
based upon the relative legal exposures of the parties to such
matters.
8. For purposes of coverage Under insuring clause 3 only, Section 18,
Representations and Severability, is amended by adding the following:
With respect to the declarations and statements contained in the written
application(s) for coverage, all declarations and statements contained in
such application and knowledge possessed by any INSURED PERSON shall be
imputed to the ORGANIZATION for the purpose of determining if coverage is
available.
9. For purpose of coverage under INSURING CLAUSE 3 only, Section 6,
Severability of Exclusions, is deleted in its entirety and replaced with
the following:
SEVERABILITY OF EXCLUSIONS
6. With respect to the exclusions in Sections 4, 5A and 5B, only facts
pertaining to and knowledge possessed by any past, present or future
chief financial officer, President or Chairman of the ORGANIZATION
shall be imputed to the ORGANIZATION to determine if coverage is
available for such ORGANIZATION.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 5, 2000
-------------------------------
Date
Entity Percentage Endorsement
Form 17-02-1331 (Ed.6/96) Page 4 of 4
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 15
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that under Section 27, DEFINITIONS, the definition of INSURED
PERSON is deleted in its entirety and replaced with the following:
INSURED PERSON, either in the singular or plural, means any past, present or
future duly elected director or duly elected or appointed officer of:
(i) The Organization;
(ii) Mutual Fund managed by the Organization;
(iii) Segregated Fund managed by the Organization; or
(iv) Investment Trust managed by the Organization
organized under federal, state or provincial laws of Canada or the United States
of America, or any equivalent executive position under applicable law in any
country other than Canada or the United States of America.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 5, 2000
-------------------------------
Date
GLOBAL TITLES ENDORSEMENT
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 16
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that:
1. The following Insuring Clause is added to this Policy:
INSURING CLAUSE 3 Investigative Costs Coverage
The Company shall pay on behalf of the ORGANIZATION all INVESTIGATION COSTS
which such ORGANIZATION becomes legally obligated to pay on account of any
SHAREHOLDER DERIVATIVE DEMAND first made during the POLICY PERIOD or, if
exercised, the Extended Reporting Period, for a WRONGFUL ACT committed,
attempted, or allegedly committed or attempted, by an INSURED PERSON before
or during the POLICY PERIOD.
2. The heading for Section 4. Exclusions Applicable to Insuring Clauses 1 and
2, is deleted in its entirety and replaced with the following:
Exclusions Applicable to all Insuring Clauses
3. Section 7, Limit of Liability, Deductible and Coinsurance, is amended as
follows:
a. The following is added to the second paragraph:
The Company's maximum liability for all INVESTIGATION COSTS covered
under Insuring Clause 3 on account of all SHAREHOLDER DERIVATIVE
DEMANDS first made during the same POLICY PERIOD shall be $250,000.
This is a sublimit which further limits and does not increase the
Company's maximum liability under this Policy as set forth in Item
2(B) of the Declarations for this Policy.
b. The following is added to the third paragraph:
No deductible amount shall apply to INVESTIGATION COSTS covered under
Insuring Clause 3.
4. Section 9, Defense and Settlement, is amended for purposes of coverage
under Insuring Clause 3 by deleting the first paragraph in its entirety and
replacing it with the following:
Subject to this Section, it shall be the duty of the ORGANIZATION and not
the duty of the Company to investigate and evaluate any SHAREHOLDER
DERIVATIVE DEMAND.
FORM 17-82-1435 (Ed.12/97) Page 1 of 2
<Page>
[CHUBB LOGO]
5. Section 27, Definitions, is amended by adding the following:
INVESTIGATION COSTS means reasonable costs, charges, fees (including but
not limited to attorney's fees and expert's fees) and expenses (other than
regular or overtime wages, salaries or fees of the directors, officers or
employees of the ORGANIZATION) incurred by the ORGANIZATION (including its
board of directors or any committee of the board of directors) in
connection with the investigation or evaluation of any SHAREHOLDER
DERIVATIVE DEMAND.
SHAREHOLDER DERIVATIVE DEMAND means any written demand, by one or more
shareholders of an ORGANIZATION, upon the board of directors of such
ORGANIZATION, to bring a civil proceeding in a court of law against any
INSURED PERSON for a WRONGFUL ACT committed, attempted, or allegedly
committed or attempted by an INSURED PERSON before or during the POLICY
PERIOD.
6. For purposes of coverage under Insuring Clause 3 only:
a. all references in this Policy to LOSS or DEFENSE COSTS shall only
mean INVESTIGATION COSTS; and.
b. all references in this Policy to CLAIM or to CLAIM against any
INSURED PERSON shall only mean any SHAREHOLDER DERIVATIVE DEMAND.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 5, 2000
-------------------------------
Date
INVESTMENT COST COVERAGE ENDORSEMENT
Form 17-02-1435 (Ed. 12/97) Page 2 of 2
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 17
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that Section 27, DEFINITIONS, is amended to include the following:
1. OUTSIDE DIRECTORSHIP means:
(A) The executive position held by an INSURED PERSON(S) at the specific
request of the ORGANIZATION in any corporation, joint venture,
partnership, trust or other enterprise which is not included in the
definition of ORGANIZATION; and
(B) The position held by a Director(s), Officer(s) or Employee(s) with
the approval of any ORGANIZATION as a Director, Officer, Governor,
Trustee or Committee Member of any non-profit organization which is
not included in the definition of ORGANIZATION.
2. Coverage under this policy shall extend to an OUTSIDE DIRECTORSHIP(S) held
by an INSURED PERSON(S) only if such OUTSIDE DIRECTORSHIP(S) are at the
specific request of the ORGANIZATION or was part of the duties regularly
assigned to the INSURED PERSON(S) by the ORGANIZATION or is included by
endorsements during the policy period. Any coverage under this policy
resulting from such inclusion shall be subject to the following:
(A) such coverage shall not be construed to extend to the Organization in
which such OUTSIDE DIRECTORSHIP is held or to any of the other
Officers, Directors, or Employees of such organization; and
(B) such coverage shall be specifically excess of any other indemnity or
insurance available to such INSURED PERSON(S) from the OUTSIDE
ORGANIZATION by reason of serving in such OUTSIDE DIRECTORSHIP.
3. The amount payable for LOSS under this policy shall be reduced by the
amount(s) paid or payable under any other policy issued by any one of the
Chubb Group of Insurance Companies for any one claim for LOSS or series of
interrelated claims for LOSS.
ODL NON-PROFIT AND FOR-PROFIT ENTITIES Page 1 of 2
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[CHUBB LOGO]
4. If the ORGANIZATION is permitted or required by law to indemnify an INSURED
PERSON(S) referred to in 5(A) below and does not in fact do so, other than
for reason of FINANCIAL IMPAIRMENT of the ORGANIZATION, then the Company
shall pay all such LOSS on behalf of such INSURED PERSON(S), but subject to
the deductible amount set forth in Item 4 of the Declarations, all of the
exclusions set forth in Section V and all other provisions, terms and
conditions in this policy.
5. Coverage under this policy shall extend to:
(A) Any INSURED PERSON(S) of any ORGANIZATION who holds an OUTSIDE
DIRECTORSHIP position with the approval of the ORGANIZATION.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 5, 2000
-------------------------------
Date
ODL NON-PROFIT AND FOR-PROFIT ENTITIES Page 2 of 2
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[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 18
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that under Section 15. CHANGES IN EXPOSURE ACQUISITION OR CREATION
OF ANOTHER ORGANIZATION is deleted in its entirety and replaced with the
following:
15. If the ORGANIZATION (i) acquires securities or voting rights in another
organization or creates another organization, which as a result of such
acquisition or creation becomes a SUBSIDIARY, or (ii) acquires any
organization by merger into or consolidation with an ORGANIZATION, coverage
shall apply to the INSURED PERSONS of such organization under this policy
but only with respect to WRONGFUL ACTS committed, attempted, or allegedly
committed or attempted, after such acquisition or creation unless the
Company agrees, after presentation of a complete application and all
appropriate information, to provide coverage by endorsement for WRONGFUL
ACTS committed, attempted, or allegedly committed or attempted, by such
INSURED PERSONS prior to such acquisition or creation.
If the fair value of the assets of the acquired or created organization
exceeds 20% of the total assets of the PARENT ORGANIZATION as reflected in
the PARENT ORGANIZATION'S most recent audited consolidated financial
statements, the PARENT ORGANIZATION shall give written notice of such
acquisition or creation to the Company as soon as practicable together with
such information as the Company may require and shall pay any reasonable
additional premium required by the Company.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 5, 2000
-------------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 19
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that under Section 11. REPORTING AND NOTICE is deleted in its
entirety and replaced with the following:
11. The DIRECTOR, CORPORATE SERVICES shall, as a condition precedent to
exercising their rights under this Policy, give to the Company written
notice as soon as practicable, but in no event later than ninety (90) days
after the termination of the POLICY PERIOD, of any CLAIM made against the
INSURED PERSONS for a WRONGFUL ACT.
If an INSURED PERSON or the ORGANIZATION becomes aware of circumstances
which could give rise to a CLAIM and gives written notice of such
circumstance(s) to the Company during the POLICY PERIOD, then any CLAIMS
subsequently arising from such circumstances shall be considered to have
been made during the POLICY PERIOD in which the circumstances were first
reported to the Company.
The INSURED PERSONS and/or the ORGANIZATION shall, as a condition precedent
to exercising their rights under this Policy, give to the Company such
information and cooperation as it may reasonably require, including but not
limited to a description of the CLAIM or circumstances, the nature of the
alleged WRONGFUL ACT, the nature of the alleged or potential damage, the
names of actual or potential claimants, and the manner in which the INSURED
PERSONS and/or ORGANIZATION first became aware of the CLAIM or
circumstances.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 5, 2000
-------------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 20
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is hereby agreed:
Within 60 days after the end of the first year of the POLICY PERIOD the PARENT
ORGANIZATION shall have the option to extend the policy for one (1) year at no
less favourable terms and conditions, provided that none of the following events
occur:
1. A loss is paid or reported under this policy; or
2. The PARENT ORGANIZATION fails to maintain the minimum regulatory capital
requirements during the previous annual period; or
3. The PARENT ORGANIZATION experiences a material change as outlined in
section 15 of the policy, CHANGES IN EXPOSURE.
The additional premium(s) upon exercise of this option shall be as follows:
1. The premium shall be payable within 30 days upon the exercise date of this
option.
2. The premium for this one (1) year extension shall not be greater than
fifteen percent (15%) of the previous year's annual premium.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 31, 2000
-------------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: JUNE 1, 2000 Endorsement No.: 21
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is hereby agreed that Endorsement No.: 19 is deleted and replaced by the
following:
It is agreed that under Section 11. REPORTING AND NOTICE is deleted in its
entirety and replaced with the following:
11. The ASSISTANT VP, CORPORATE SERVICES shall, as a condition precedent to
exercising their rights under this Policy, give to the Company written
notice as soon as practicable, but in no event later than ninety (90) days
after the termination of the POLICY PERIOD, of any CLAIM made against the
INSURED PERSONS for a WRONGFUL ACT.
If an INSURED PERSON or the ORGANIZATION becomes aware of circumstances
which could give rise to a CLAIM and gives written notice of such
circumstances(s) to the Company during the POLICY PERIOD, then any CLAIMS
subsequently arising from such circumstances shall be considered to have
been made during the POLICY PERIOD in which the circumstances were first
reported to the Company.
The INSURED PERSONS and/or the ORGANIZATION shall, as a condition precedent
to exercising their rights under this Policy, give to the Company such
information and cooperation as it may reasonably require, including but not
limited to a description of the CLAIM or circumstances, the nature of the
alleged WRONGFUL ACT, the nature of the alleged or potential damage, the
names of actual or potential claimants, and the manner in which the INSURED
PERSONS and/or ORGANIZATION first became aware of the Claim or
circumstances.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
September 22, 2000
-------------------------------
Date
Issued: September 22nd, 2000/or
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: OCTOBER 3, 2001 Endorsement No.: 22
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that Paul Wharram is added as an INSURED PERSON.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
February 6, 2002/or
-------------------------------
Date
<Page>
[CHUBB LOGO]
CHUBB INSURANCE COMPANY OF CANADA
MONTREAL - TORONTO - OAKVILLE - CALGARY - VANCOUVER ENDORSEMENT
Effective date of
this endorsement: MAY 1, 2002 Endorsement No.: 23
To be attached to and form
part of Policy No.: 7022 71 05 (C)
Issued to: CANADA LIFE FINANCIAL CORPORATION
It is agreed that:
1. Section 27, Definitions, the definition of INSURED PERSON is amended to
include a past, present or future employee of the ORGANIZATION while s/he
is acting as an APPROVED PERSON.
2. Section 27, Definitions, is further amended to add the following:
APPROVED PERSON either in the singular or plural, means a person whose
performance of a CONTROLLED FUNCTION as an employee of the ORGANIZATION has
been approved by the Financial Services Authority pursuant to Section 60 of
Part V of the Financial Services and Markets Act 2000 (U.K.), Chapter c.8
CONTROLLED FUNCTION either in the singular or plural, means any of the
functions numbered 1 through 20, specified by the Financial Services
Authority in its Table of Controlled Functions of its Supervision Manual,
SPECIFICATION OF FUNCTIONS, at 10.4.5 in Block 3 of its Handbook, and for
which an employee of the ORGANIZATION has been approved by the Financial
Services Authority pursuant to Section 60 of Part V of the Financial
Services and Markets Act 2000 (U.K.), Chapter c.8.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
/s/ [ILLEGIBLE]
-------------------------------
Authorized Representative
July 8, 2002/or
-------------------------------
Date
<Page>
SUMMARY OF INSURANCE 2002 TO 2003 CANADA LIFE
CONFIDENTIAL
19
FIDUCIARY LIABILITY
NAMED INSURED Canada Life Financial Corporation, et al
INSURER Liberty Mutual Insurance Company
POLICY NUMBER RR1-B71-030169-062
POLICY TERM June 1, 2002 to June 1, 2003
SUBJECT OF INSURANCE Pays on behalf of
- Canada Life (Sponsor Organization);
- Named Plans;
- Any persons serving as past, present or future
trustee or fiduciary of such Plans
All loss for which they are legally obligated to pay on
account of any claims first made during the policy
period for a wrongful act committed, attempted, or
allegedly committed or attempted by an insured or by any
personal for whose wrongful acts the insured is legally
responsible.
LIMITS OF LIABILITY U.S. $10,000,000 Each Loss
U.S. $10,000,000 Each Policy Period
Limits of Liability are reduced or exhausted by Defence
Costs
DEDUCTIBLES $ NIL Non-Indemnifiable loss (where the Plan or
Sponsor organization is not permitted or
required to indemnify, or cannot due to
insolvency)
U.S. $25,000 Indemnifiable Loss
MARSH 40
<Page>
SUMMARY OF INSURANCE 2002 TO 2003 CANADA LIFE
Any deductible amount is reduced or exhausted by Defence
Costs
KEY EXTENSIONS - Prior Acts for Reported Plans
- Continuity: October 2, 1987
- Full severability of exclusions; no fact pertaining
to or knowledge possessed by any insured shall be
imputed to any other insured
- Coverage extended to protect estates, heirs, legal
representatives for claims arising out of the
wrongful acts of an insured person
- 60 Days Notice of Cancellation
- 15 days automatic extension of coverage upon
termination of policy if no replacement policy
effected.
- Extended Reporting Period (if the Insured terminates
or refuses to renew):
(a) Additional Premium: To be determined at time
of request
(b) Additional Period: 7 Years
KEY EXCLUSIONS - Pending or Prior Litigation Exclusion - June 1, 2002
- Libel, Slander Exclusion
- Willful Violation - Intentional Acts Exclusion
- Dishonest or Fraudulent Acts Exclusion
- Personal Injury Exclusion
- Property Damage including Loss of Use Exclusion
TERRITORY Fiduciary Liability for Employee Benefits Plans as
reported to the insurer
REPORTING - Annual Renewal Application
REQUIREMENTS - Annual Schedule of benefit plans
- Annual Audited Statements for each Plan
- Notice as soon as practicable of any new newly
created or acquired plans, or of any terminated
plans
- This is a claims made policy. All claims against the
Insured or circumstances which arise in the policy
period that may result in a claim should be reported
immediately. Failure to comply with the claims
reporting provisions of this policy could result in
the insurer denying coverage for a claim under the
policy. Special attention must be given prior to
expiry to ensure that all incidents which may give
rise to a claim and all actual claims are reported
to insurers prior to the expiry date of the policy
THIS IS A SUMMARY ONLY. Please refer to the actual policies for a complete
statement of terms, conditions, exclusions and limitations regarding coverage.
MARSH 41
<Page>
[SEAL]
[LIBERTY INTERNATIONAL UNDERWRITERS CANADA(TM) LOGO]
LIBERTY INTERNATIONAL UNDERWRITERS CANADA
(a division of Liberty Mutual Insurance Company,
hereinafter called "the Company")
FIDUCIARY LIABILITY INSURANCE
DECLARATIONS
- --------------------------------------------------------------------------------
Policy Number: RR3-B71-030169-012
Renewal of: NEW
Item I Parent Organization:
CANADA LIFE FINANCIAL CORPORATION
Item II Parent Organization's Address:
330 University Avenue
Toronto, Ontario
M5G 1R8
- --------------------------------------------------------------------------------
THIS IS A CLAIMS MADE POLICY. This policy covers only claims first made against
an insured (as defined in the policy) and reported to the Company during the
policy period or during the discovery period (both as defined in the policy).
Please read the attached policy terms carefully.
<Table>
Item III Policy Period: (A) From 12:01 a.m. June 1, 2002
(B) To 12:01 a.m. June 1, 2003
Both local time at the address shown in Item II
Item IV Limits of Liability: (A) Each loss $10,000,000 US
(B) Aggregate per policy year $10,000,000 US
Item V Insured Organization Deductible: $25,000 US
Item VI Plans ANY EMPLOYEE BENEFIT PLAN, BENEFIT
PROGRAM OR INSURED PLAN NOW EXISTING OR
HEREINAFTER CREATED
Item VII Endorsement(s): 1-4
</Table>
This Policy (consisting of this declaration, the applicable application, the
attached policy terms and the endorsement(s) referred to in Item VII) is valid
only if, in addition to the facsimile signature of the President of Liberty
Mutual Insurance Company, it is dated and signed below by a duly authorized
representative of Liberty Mutual Insurance Company.
BROKER'S COPY
/s/ [ILLEGIBLE]
- ---------------------------------
Authorized Representative
Liberty International Underwriters Canada
Liberty Mutual Insurance Company
OCTOBER 16, 2002
- ---------------------------------
Date
- --------------------------------------------------------------------------------
Liberty Executive Advantage Fiduciary Liability Insurance
Form (7/94)
<Page>
-2-
[LIBERTY INTERNATIONAL UNDERWRITERS CANADA(TM) LOGO]
LIBERTY INTERNATIONAL UNDERWRITERS CANADA
(a division of Liberty Mutual Insurance Company,
hereinafter called "the Company")
POLICY TERMS
(Words and expressions, other than in the headings, printed in
bold are defined in paragraph 24 below.)
Relying upon the completeness and accuracy of the statements and disclosures in
the application for this policy, in consideration of the payment of the premium
as due and subject to the terms, provisions, limitations, conditions and
exclusions of this policy, the Company AGREES as follows:
1. INSURING AGREEMENT: In respect of a loss resulting from a WRONGFUL ACT
which an insured individual(s) becomes legally obligated to pay on account
of any claim first made against him or her during the policy period and
reported to the Company during the policy period or discovery period, the
Company shall pay:
1.1 on behalf of the insured individual(s), as and to the extent
permitted or required by the applicable law, the loss for which
the insured individual(s) are not indemnified by the INSURED
ORGANIZATION or the plan; and
1.2 on behalf of the INSURED ORGANIZATION or the plan, the loss for
which the INSURED ORGANIZATION or the plan has granted
indemnification to such insured individual(s) as and to the
extent permitted or required by the applicable law.
2. EXCLUSIONS: The Company shall not be liable under this policy to make any
payment for loss respecting a claim:
2.1 resulting from or contributed to by the fraud, dishonesty,
criminal act or willful violation of any applicable act or any
other law or regulation of/by the INSURED INDIVIDUAL determined
by a final judgement or adjudication and which was material to
the outcome of the judgment or adjudication - the exclusion in
this paragraph 2.1 applies to paragraph 1.1 only; or
2.2 to the extent that it is an illegal benefit - the exclusion in
this paragraph 2.2 applies to paragraph 1.1 only; or
2.3 brought by an insured; or
2.4 for bodily injury, sickness, disease or the death of any person,
or for damage to or destruction of any tangible property
including loss of use thereof; or
2.5 for or in respect of a pollution loss; or
2.6 alleging, arising out of, based upon or attributable to any
failure or omission on the part of an insured to effect and
maintain insurance or bonding for plan property, assets or
obligations; or
- --------------------------------------------------------------------------------
Liberty Executive Advantage Fiduciary Liability Insurance
Form (7/94)
<Page>
-3-
2.7 alleging, arising out of, based upon or attributable to the facts
alleged, or to the same or related WRONGFUL ACTS alleged or
contained, in any claim which has been reported, or in any
circumstances or which notice has been given, under any policy of
which this policy is a renewal or replacement or which it may
succeed in time; or
2.8 alleging, arising out of, based upon or attributable to any act
or omission of INSURED INDIVIDUAL(S) in their capacities as
fiduciaries or administrators of any plan other than a covered
plan, or by reason of their status as a fiduciary of such other
plan;
2.9 for discrimination whether on the basis of local, state or
federal law, statutory or common, including but not limited to
APPLICABLE LAW; or
2.10 for failure to fund a PLAN in accordance with APPLICABLE LAW or a
PLAN INSTRUMENT, or the failure to collect contributions owed to
a plan; provided, however, that this exclusion shall not apply to
the payment or reimbursement of DEFENCE COSTS; or
2.11 alleging, arising out of, based upon or attributable to any
WRONGFUL ACT as respects a PLAN taking place at any time when the
INSURED ORGANIZATION did not sponsor such PLAN.
3. SEVERABILITY: With respect to paragraph 2 and with respect to the
statements and disclosures in the application for this policy, the wrongful
act or knowledge of any INSURED INDIVIDUAL shall not be imputed to any
other INSURED INDIVIDUAL.
4. REPORTING REQUIREMENTS: The INSURED, as a condition precedent to their
rights under this policy, shall give written notice during the POLICY
PERIOD or DISCOVERY PERIOD of any claim together with full particulars to
the Company as soon as practicable and shall give the Company such
information and cooperation as it may require. Notice shall be given as
provided in paragraph 19.
5. INITIAL REPORT: If during the POLICY PERIOD or DISCOVERY PERIOD, any
INSURED becomes aware of CIRCUMSTANCES which could reasonably give rise to
a CLAIM and written notice together with full particulars of such
circumstance(s) is given to the COMPANY, then any claims subsequently
arising from such circumstances shall be considered to have been reported
during the POLICY PERIOD or DISCOVERY PERIOD, as applicable, in which the
circumstances were reported.
6. DUTY: Upon a CLAIM being made, the INSURED shall cooperate fully and
promptly with the COMPANY and its representatives.
7. LIABILITY LIMIT: The total limit of the Company's obligation to pay any
loss under paragraph 1 (including DEFENCE COSTS) shall not exceed the
limits of liability set forth in Item IV of the declarations.
8. DEDUCTIBLE:
8.1 There is no deductible in respect of the Company's obligation
respecting a loss under paragraph 1.1.
8.2 The COMPANY'S obligation respecting each loss under paragraph 1.2
is only to pay the amount which is excess of the deductible amount
specified in Item V of the DECLARATIONS. The deductible amount shall be
borne by the INSURED ORGANIZATION or the PLAN, as the case may be,
uninsured and at its own risk.
This policy assumes that the PARENT ORGANIZATION, each applicable
subsidiary of the PARENT ORGANIZATION and each applicable PLAN has
indemnified the INSURED INDIVIDUALS(S) to the full extent permitted or
required by applicable law. However, if the PARENT ORGANIZATION or any such
subsidiary or plan is financially unable to pay the deductible under this
policy in respect of such indemnity because: (i) a receiver, liquidator,
trustee or similar official has been properly
- --------------------------------------------------------------------------------
Liberty Executive Advantage Fiduciary Liability Insurance
Form (7/94)
<Page>
-4-
appointed by a court, or by a creditor, to control, manage or liquidate it;
(ii) a proceeding to reorganize it has been brought under the Companies'
Creditors Agreements Act (Canada) R.S.C. 1985 c. C-36; or (iii) it becomes
a debtor in possession under title 11 of the United States Code,
Bankruptcy, the Company shall advance such deductible on behalf of, and
with a full right of recovery against, the parent organization or such
subsidiary or plan, as the case may be.
9. DEFENCE: The Company has no duty to defend CLAIMS. DEFENCE COSTS shall only
be incurred with the consent of the Company, such consent not to be
unreasonably withheld and any DEFENCE COSTS incurred without such consent
are deemed excluded from LOSS. Any amount paid by the Company prior to
final determination of the LOSS shall be considered to be an advance only,
any such amount which is subsequently determined as not being covered by
this policy, shall be promptly repaid by the INSURED on whose behalf it was
advanced and the payment of any such amount is without prejudice to such
subsequent determination.
10. ALLOCATION: In the event that a CLAIM involves a LOSS that is covered by
this POLICY and a LOSS or payment not covered by this POLICY or if the
CLAIM is against an INSURED INDIVIDUAL and another person(s) (including the
INSURED ORGANIZATION or PLAN), the INSURED and the Company will in good
faith NEGOTIATE an agreement respecting a fair and reasonable allocation
between such covered loss and such uncovered loss or payment whereupon the
Company will, subject to paragraph 9, advance on a current basis DEFENCE
COSTS it has agreed to and based upon such agreed upon allocation. If the
allocation of DEFENCE COSTS is not agreed upon:
10.1 The Company will, subject to paragraph 9, advance on a current
basis such DEFENCE COSTS as it considers appropriate until a
different allocation is finally determined by agreement,
arbitration or litigation and without prejudice to such final
determination; and
10.2 if the INSURED disagree with the allocation under paragraph 10.1,
at the written request of the INSURED affected, the allocation
respecting DEFENCE COSTS shall be determined by a single
arbitrator agreed to by such INSURED and the COMPANY, or, failing
such agreement, by a single arbitrator appointed in accordance
with the arbitration legislation of the province or territory of
the address of the PARENT ORGANIZATION set out in Item II of the
DECLARATIONS which shall also govern the arbitration, the
arbitrator, in making his award, shall disregard any advances
made by the Company hereunder and the decision of the arbitrator
shall be final and binding and shall not be subject to appeal.
Any amount advanced by the Company, which is subsequently determined by
AGREEMENT, arbitration or litigation as not being covered by this policy
shall be promptly repaid by the INSURED on whose behalf it was advanced.
11. SETTLEMENTS: No settlement shall be made without the consent of the Company
(consent not to be unreasonably withheld) and any settlement made without
such consent shall be deemed not to be a loss.
12. OTHER INSURANCE: If any other insurance policy(ies) covers a loss or any
amount of a LOSS which would, but for this paragraph, be covered by this
POLICY, then this POLICY shall cover the LOSS (subject to the terms,
limitations, exclusions and conditions of this policy), to and only to the
extent in excess of the coverage provided by such other insurance
policy(ies) (regardless of whether they are stated to be primary, umbrella,
contributory, excess or otherwise) provided that the limitation in this
paragraph 12 shall not apply to an insurance policy(ies) that expressly
refers to this POLICY and that is specifically written as excess to the
limits of this POLICY.
13. DISCOVERY PERIOD:
13.1 If the Company terminates or refuses to renew this policy, other
than for nonpayment of premium or if the PARENT ORGANIZATION
fails to renew this policy, there shall be an
- --------------------------------------------------------------------------------
Liberty Executive Advantage Fiduciary Liability Insurance
Form (7/94)
<Page>
-5-
automatic extension of the coverage granted by this policy for a
period of 15 days following the effective date of termination,
but only for any wrongful act occurring prior to the effective
date of termination and only if there is no replacement policy
obtained providing coverage anytime during such 15 day period.
13.2. If the Company terminates or refuses to renew this policy, other
than for nonpayment of premium, the insured may, by giving
written notice to the Company together with payment of an
additional premium equal to 70% of the then most current annual
premium, all within 30 days following the effective date of
termination, extend the coverage granted by this policy for a
period of 12 months following the effective date of termination,
but only for any wrongful act occurring prior to the effective
date of termination and in this event the automatic extension in
paragraph 13.1 shall form part of and shall not be in addition to
such period.
The DISCOVERY PERIOD is deemed to be part of the then last policy year and
does not increase the limits under paragraph 7. In paragraph 13.1,
replacement policy means any fiduciary liability insurance policy whether
or not its terms, conditions and premiums are comparable to those offered
by the Company. An offer of renewal terms and conditions or premiums
different from those in effect prior to renewal shall not constitute
refusal to renew and, in such event, extension under paragraph 13.2 may
only be obtained by an appropriate endorsement to this policy.
14. SALE OR DISSOLUTION: In the event of the sale or the dissolution of the
PARENT ORGANIZATION, this policy shall, until its termination date,
continue to apply to claims but only for WRONGFUL ACTS occurring prior to
the time of such sale of dissolution. In the event of the sale or the
dissolution of another member of the INSURED ORGANIZATION, with respect to
that member, plan(s) sponsored by that member and the INSURED INDIVIDUAL(S)
respecting such plan(s), this policy shall, until its termination date,
continue to apply to claims but only for WRONGFUL ACTS occurring prior to
the time of such sale or dissolution. Sale of the PARENT ORGANIZATION means
a change in the control (within the meaning of subsection 2(3) of the
Canada Business Corporations Act R.S.C. 1985 c. C-44) of the PARENT
ORGANIZATION or a sale, lease or exchange of more than 50% of its property.
Sale of a SUBSIDIARY means a sale of such number of shares of the
SUBSIDIARY such that the INSURED ORGANIZATION no longer owns more than 50%
of the issued and outstanding shares of the former SUBSIDIARY.
15. SUBROGATION: The Company shall be subrogated to the extent of any payment
under this policy to all the rights of recovery of any of the insured and
shall be entitled to seek recovery in the name(s) of any of the insured.
16. TERMINATION: This policy terminates at the earliest of the following times:
16.1. upon the date set forth in Item III(B) of the declarations;
16.2. the later of the date of receipt or deemed receipt by the Company
of written notice of termination from the PARENT ORGANIZATION or
the date specified in such notice;
16.3. the later of the date which is 90 days after receipt or deemed
receipt of a written notice of termination from the Company or
the date specified in such notice; or
16.4. at such other date as may be mutually agreed upon by the Company
and the PARENT ORGANIZATION.
17. PREMIUM REFUND: If this policy is terminated pursuant to paragraph 16.2,
the Company shall refund any unearned premium computed at short rates. If
this policy is terminated under paragraphs 16.3 or 16.4 the refund shall be
computed pro rata.
18. PARENT ORGANIZATION AS AUTHORIZED REPRESENTATIVE: The Company shall deal
with the PARENT ORGANIZATION on behalf of all insured with respect to
matters respecting this policy, the giving and receiving of any notices
hereunder, the payment or return of premiums, the receiving of any
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Liberty Executive Advantage Fiduciary Liability Insurance
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<Page>
-6-
return premiums that may become due under this policy, the delivery and
acceptance of endorsements, and the giving or receiving of any other notice
provided for in this policy; and by accepting this policy the PARENT
ORGANIZATION represents and warrants to the Company that it is authorized
to so act on behalf of the insured. The PARENT ORGANIZATION is not an agent
of the Company.
19. NOTICE: All notices required or permitted to be given hereunder shall be
sufficiently given if: (1) delivered personally; (2) sent by prepaid
registered mail; or (3) transmitted by facsimile telecommunication (fax)
but only if it is also sent by prepaid registered mail as soon as possible
and no later than four days after such transmission:
19.1. In the case of notice to the insured or any of them, to the
PARENT ORGANIZATION at the address or the fax number designated
in Item II of the declarations; and
19.2. in the case to notice of Liberty International Underwriters
Canada, to: Suite 1000, P.O. Box 744, BCE Place, 181 Bay Street,
Toronto, Ontario, M5J 2T3, Attention: Vice President of Claims,
Fax:(416) 307-4372.
Any notice delivered personally to the party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on
the day and at the time it is so delivered at such address. Any notice
transmitted by facsimile telecommunication (fax) if it is also so mailed,
shall be deemed given and received on the day of its completed transmission
as verified by the sending fax machine. Any notice mailed as aforesaid
shall be deemed to have been given and received on the fourth day next
following the date of its mailing provided that during such period postal
service is not interrupted at either the jurisdiction of origin or the
jurisdiction of destination. A party may by written notice hereunder to the
other party change its address or its fax number from time to time provided
that a fax number must always be provided.
20. FURTHER ASSURANCES: The insured will execute such further and other
documents and do such further acts as may be necessary or desirable to
carry out and give effect to the intent of this policy including doing
everything necessary to preserve, secure and give effect to paragraph 15.
21. AMENDMENT OR ASSIGNMENT: Any amendment or change to or assignment, in whole
or in part, of an interest in this policy shall only be effective if made
in writing and signed by an authorized representative of the Company.
22. SPOUSAL BENEFIT AND ENUREMENT: If a claim against an INSURED INDIVIDUAL for
a WRONGFUL ACT includes a claim against his legal spouse because and only
because: (1) they are married; or (2) the claimant seeks to obtain recovery
against property in which the spouse has an interest, the amount which the
spouse becomes legally obligated to pay in respect of such claim (including
the applicable DEFENCE COSTS) shall be deemed to be a loss of such INSURED
INDIVIDUAL under this policy and subject to its terms, limitations,
exclusions and conditions. This policy shall be binding upon and ensure to
the benefit of the estates, heirs, executors, administrators and legal
representatives of an INSURED INDIVIDUAL but only in respect of the
wrongful act of such INSURED INDIVIDUAL.
23. INTERPRETATION: In this policy:
23.1. a reference to a paragraph followed by a number means the
provision of this policy bearing that number and includes all
provisions commencing with that number, for example, a reference
to paragraph 1 includes paragraph 1.1 and paragraph 1.2;
23.2 words and expressions shall be read with such changes in gender
or number as the context shall require;
23.3. the headings to the paragraphs and the table of contents, if any,
are inserted for convenience only and shall not affect the
construction hereof;
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Liberty Executive Advantage Fiduciary Liability Insurance
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-7-
23.4. a reference to an act, statute, regulation or other legislation
shall be deemed to extend to and include any amendments thereto
and successor legislation and any rules, regulations, orders or
directives issued thereunder;
23.5. all dollar amounts expressed herein refer to the lawful currency
of Canada; and
23.6. time shall be of the essence hereof.
24. DEFINITIONS: In this policy:
24.1. "ADMINISTRATOR" means any natural person in the performance of
administrative (non-fiduciary) duties regarding a plan.
24.2. "APPLICABLE LAW" means the Canada Pension Plan, R.S.C. 1985, c,
C-8 the Pension Benefits Act of Ontario, R.S.O. 1990, c.P-8, the
Employee Retirement Income Security Act of 1974 of the United
States of America, 29 U.S.C.A. Sections 1001-1461 or any similar
common or statutory law of Canada, the United States or any
province, state or territory thereof, the regulations thereto,
all as amended from time to time provided however, that
"APPLICABLE LAW" shall not include any such law concerning
government mandated or run workers' compensation, unemployment
insurance, social security or disability benefits.
24.3. "CLAIMS" means any verbal or written claim or allegation made
anywhere in the world against or in respect of an insured which
may reasonably result in a loss.
24.4. "DECLARATIONS" means the most current applicable declarations or
renewal certificate.
24.5. "DEFENCE COSTS" means that part of the loss consisting of
reasonable and necessary costs, charges and expenses (including
premiums for any appeal bond, attachment bond or similar bond)
incurred in investigating, defending, appealing or monitoring
legal actions, claims, or proceedings respecting a loss or
possible loss.
24.6. "DISCOVERY PERIOD" means the period of time under paragraph 13.1
or, if exercised in accordance with the provisions of paragraph
13.2, the period of time in such paragraph 13.2, but in either
case only if the requirements of paragraph 13 are met.
24.7. "FIDUCIARY" means any person who has or exercise discretionary
authority or control over the management of any plan or its
assets and who therefore is subject to fiduciary obligations
under the APPLICABLE LAW.
24.8. "ILLEGAL BENEFIT" means a loss from a claim: (1) based upon or
attributable to such INSURED INDIVIDUAL having gained any
personal profit or advantage to which he was not legally
entitled; (2) for the return by such INSURED INDIVIDUAL of any
remuneration paid to him without the required approval(s) if it
is legally determined that such remuneration is in violation of
any APPLICABLE LAW or if under a settlement agreement it is
agreed that such remuneration is to be repaid to the INSURED
ORGANIZATION or the plan.
24.9. "INSURED INDIVIDUAL" means: (1) any past, present or future
natural person, director, officer, partner or employee of the
INSURED ORGANIZATION or of a plan, in his or her capacity as a
fiduciary or administrator of a plan; and (2) any other natural
person who is included in the definition of "INSURED " by
specific written endorsement attached to this policy, but only in
his or her capacity as a FIDUCIARY or ADMINISTRATOR OF A PLAN
24.10. "INSURED" means: (1) the INSURED ORGANIZATION; (2) A PLAN; and
(3) any INSURED INDIVIDUAL.
24.11. "INSURED ORGANIZATION" means the PARENT ORGANIZATION and any
SUBSIDIARY of the PARENT ORGANIZATION.
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Liberty Executive Advantage Fiduciary Liability Insurance
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-8-
24.12. "LOSS" means the total amount which an insured become legally
obligated to pay on account of each claim and for all claims
first made in a policy year against the insured for wrongful acts
for which coverage applies under this policy, including, but not
limited to damages, judgments, settlements, costs and defence
costs but excluding:(1) civil or criminal fines or penalties
imposed by law; (2) punitive or exemplary damages; (3) the
multiplied portion of multiplied damages; (4) taxes; (5) any
amount for which the insured is not financially liable or which
are without legal recourse to the insured; (6) plan benefits, or
that portion of any settlement or award in an amount equal to
such plan benefits, unless and to the extent that recovery of
such benefits is based upon a covered wrongful act and is payable
as a personal obligation of an insured individuals; (7) matters
which are uninsurable under the law of the jurisdiction pursuant
to which this policy shall be construed; or (8) regular or
overtime wages, salaries or fees of the directors, officers or
employees of the insured organization incurred in assessing,
investigating, dealing with or assisting others to deal with the
claim. all loss attributable to interrelated wrongful acts are
deemed one loss originating in and attributable to the earliest
policy year in which the applicable claim occurred.
24.13. "PARENT ORGANIZATION means the entity designated as the Parent
Organization in Item I of the declarations.
24.14. "PLAN", means: (1) any pension plan designated in Item VI of the
declarations, whether in Canada, the United States of America or
elsewhere, which was on or prior to the inception date of this
policy sponsored solely by the INSURED ORGANIZATION or sponsored
jointly by the INSURED ORGANIZATION and a labour organization,
solely for the benefit of the employees of the INSURED
ORGANIZATION including any pension plan merged into or
consolidated with such pension plan prior to such inception date;
(2) any specified type of benefit including health care,
disability, death or welfare plan subject to regulation under
APPLICABLE LAW which was, is now or hereinafter becomes sponsored
solely by the INSURED ORGANIZATION or sponsored jointly by the
INSURED ORGANIZATION and a labour organization, solely for the
benefit of the employees of the INSURED ORGANIZATION; or (3) any
pension plan which during the policy period becomes sponsored
solely by the insured organization or jointly by the insured
organization and a labour organization, solely for the benefit of
the employees of the insured organization, but only upon the
condition that within 90 days of its becoming so sponsored, the
insured organization shall have provided the Company with a
completed application for such plan, agreed to any additional
premium and/or amendment of the provisions of the policy required
by the Company relating to such new plan, and paid same when due,
and the Company shall by endorsement have added such new plan to
Item VI of the declarations.
24.15. "POLICY" means the application received by the Company for the
coverage hereunder, the declarations, the terms, provisions,
limitations, conditions and exclusions hereof and the
endorsements hereto and, in the case of renewal by means of a
renewal certificate, means the application received by the
Company for the renewal, the renewal certificate, the then most
current terms, provisions, limitations, conditions and
exclusions, and all applicable endorsements.
24.16. "policy period" means from the date specified in Item III(A) of
the declarations to the date of termination of this policy under
paragraph 16.
24.17. "policy year" means the period of one year following the
commencement date of this policy or any anniversary of such date
provided that if the period between such commencement or
anniversary date and the termination of this policy is less than
one year, such lesser period. The discovery period is deemed to
be part of the then last policy year.
24.18. "pollution loss" means a loss resulting from or attributable to
or in any way involving, directly or indirectly, (1) the actual,
alleged or threatened seepage, discharge, dispersal,
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Liberty Executive Advantage Fiduciary Liability Insurance
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<Page>
-9-
release or escape of pollutants in contravention of; or (2)
any direction or request to test for, monitor, clean up,
remove, contain, treat, detoxify or neutralise pollutants
under, the Environmental Protection Act of the Province of
Ontario R.S.O. 1990 c. E-19 or any federal, provincial, state,
municipal or other governmental statute, law, regulation or
ordinance or the common law (including nuisance and trespass)
or equity. Pollutants include (but are not limited to) any
solid, liquid, gaseous or thermal irritant or contaminant,
including smoke, vapour, soot, fumes, acids, alkalies,
chemicals and waste. Waste includes (but is not limited to)
materials to be recycled, reconditioned or reclaimed.
24.19. "subsidiary" of the parent organization means a company of
which the parent organization owns more than 50% of the issued
and outstanding shares voting in all circumstances either
directly or through one or more subsidiaries of the parent
organization.
24.20. "wrongful act" means: (1) as respects a fiduciary of a plan, a
plan or the insured organization; a violation of any of the
responsibilities, obligations or duties imposed upon
fiduciaries by the applicable legislation or any matter
claimed against the insureds solely with respect to the
applicable plan and solely by reason of their status as a
fiduciary of a plan, a plan or the insured organization; and
(2) as respects an administrator of a plan, any act, error or
omission solely in the performance of one or more of the
following administrative duties or activities but only with
respect to the applicable plan: (a) counselling employees with
respect to the plan; (b) providing interpretations with
respect to the plan; (c) handling of records in connection
with the plan; or (d) activities affecting enrollment,
termination or cancellation of employees under the plan.
/s/ [illegible] /s/ [illegible]
President Secretary
<Page>
[LIBERTY INTERNATIONAL UNDERWRITERS CANADA(TM) LOGO]
LIBERTY INTERNATIONAL UNDERWRITERS CANADA
(a division of Liberty Mutual Insurance Company,
hereinafter called "the Company")
ENDORSEMENT #1
PRIOR & PENDING LITIGATION EXCLUSION
- --------------------------------------------------------------------------------
This endorsement, effective June 1, 2002 forms part of
Policy No. RR1-B71-030169-062 issued to CANADA LIFE FINANCIAL CORPORATION
by Liberty International Underwriters Canada
- --------------------------------------------------------------------------------
IT IS HEREBY UNDERSTOOD AND AGREED THAT:
SECTION 2: Exclusions, shall be amended to include the following:
arising from any litigation, claims, demands, causes of action, legal or
quasi-legal proceedings, decrees or judgments against any Insured,
occurring prior to, or pending as of June 1, 2002 which any Insured had
received notice or otherwise had knowledge as of such date; or arising from
any subsequent litigation, claims, demands, causes of action, legal or
quasi-legal proceedings, decrees or judgments against any Insured arising
from, or based upon substantially the same matters as alleged in the
pleadings of such prior or pending litigation, claims, demands, causes of
action, legal or quasi-legal proceedings, decrees or judgments against any
Insured.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
/s/ [ILLEGIBLE]
- -----------------------
Authorized Representative
Liberty International Underwriters Canada
Liberty Mutual Insurance Company
OCTOBER 16, 2002
- -----------------------
Date
- --------------------------------------------------------------------------------
03/97 PRIOR & PENDING LITIGATION EXCLUSION
EAD File: DO.22B (FOR FIDUCIARY POLICY)
Fiduciary Liability Standard Endorsement Form DO.22B
<Page>
[LIBERTY INTERNATIONAL UNDERWRITERS CANADA(TM) LOGO]
LIBERTY INTERNATIONAL UNDERWRITERS CANADA
(a division of Liberty Mutual Insurance Company,
hereinafter called "the Company")
ENDORSEMENT #2
SPECIAL ENDORSEMENT - U.K. FINES & PENALTIES COVERAGE
This endorsement effective June 1, 2002 forms part of
Policy No. RR1-B71-030169-062 issued to CANADA LIFE FINANCIAL CORPORATION
by Liberty International Underwriters Canada
IT IS HEREBY UNDERSTOOD AND AGREED THAT:
Exclusion with respect to the underlying plan only, is deleted in its entirety
and replaced with the following:
The Company shall not be liable, under the Fiduciary Liability Insuring Clause,
for that part of loss, other than defense costs:
(a) which constitutes fines or penalties or the multiple portion of any
multiplied damage award, other than five percent or less or the twenty
percent or less, civil penalties imposed upon an insured as a
fiduciary under Section 502 (i) or (I), respectively of the Employee
Retirement Income Security Act of 1974, as amended.
However, fines and penalties shall not include any civil penalties imposed
by the Pension Ombudsman of England and the Occupational Pensions
Regulatory Authority of England pursuant to the English Pension Scheme Act
of 1993, the English Pension Act of 1995, and rules and regulations
thereunder, if:
(i) the premium for this endorsement is paid prior to its effective date;
and
(ii) the funds or assets of the pension scheme shall not be used to fund,
pay or reimburse the premium for this coverage or any portion thereof.
The definitions, are amended by adding the following paragraph to the definition
of claim:
Any fact -finding investigation by the Pension Ombudsman appointed by the
Secretary of State for Social Services and/or by the Occupational Pension
Regulatory Authority or any successor body to it.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
/s/ [ILLEGIBLE]
- -----------------------
Authorized Representative
Liberty International Underwriters Canada
Liberty Mutual Insurance Company
OCTOBER 16, 2002
- -----------------------
Date
October 2002 SPECIAL ENDORSEMENT - U.K. FINES or PENALTIES COVERAGE
<Page>
[LIBERTY INTERNATIONAL UNDERWRITERS CANADA(TM) LOGO]
LIBERTY INTERNATIONAL UNDERWRITERS CANADA
(a division of Liberty Mutual Insurance Company,
hereinafter called "the Company")
ENDORSEMENT # 3
AMENDMENT TO TERMINATION CLAUSE
This endorsement, effective June 1, 2002 forms part of
Policy No. RR1-B71-030169-062 issued to CANADA LIFE FINANCIAL CORPORATION
by Liberty International Underwriters Canada
IT IS HEREBY UNDERSTOOD AND AGREED THAT:
Termination Section 16.2 is deleted in its entirety and replaced with the
following:
16.2 This policy may be cancelled by the PARENT ORGANIZATION any time
by written notice or by surrender of this policy to the Company.
This policy may also be cancelled by or on behalf of the Company
by delivery to the PARENT ORGANIZATION or by mailing to the
Parent Corporation, by registered, certified or other first class
mail, at the address shown in Item II of the Declaration, written
notice stating when, not less than sixty (60) days thereafter,
the cancellation shall become effective. The mailing of such
notice as aforesaid shall be sufficient proof of notice and this
policy shall terminate at the date and the hour specified in such
notice.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
/s/ [ILLEGIBLE]
- -----------------------
Authorized Representative
Liberty International Underwriters Canada
Liberty Mutual Insurance Company
OCTOBER 16, 2002
- -----------------------
Date
08/01 AMENDMENT TO TERMINATION CLAUSE
EAD D&O File: Form DO.03D (FOR FIDUCIARY POLICY)
D&O Standard Endorsement Form DO.03D
<Page>
[LIBERTY INTERNATIONAL UNDERWRITERS CANADA(TM) LOGO]
LIBERTY INTERNATIONAL UNDERWRITERS CANADA
(a division of Liberty Mutual Insurance Company,
hereinafter called "the Company")
ENDORSEMENT # 4
APPLICATION RELIANCE ENDORSEMENT
This endorsement, effective June 1, 2002 forms part of
Policy No. RR1-B71-030169-062 issued to CANADA LIFE FINANCIAL CORPORATION
by Liberty International Underwriters Canada
IT IS HEREBY UNDERSTOOD AND AGREED THAT:
In consideration of the premium paid, notwithstanding any other information
furnished to the Company, this policy is issued in reliance upon the statements
and disclosures made in any insurance application submitted to the Company,
including but not limited to the Chubb Insurance Company of Canada Fiduciary
Application signed and dated October 2, 1987, and any renewal or supplemental
application, and that these applications will form part of the policy.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
/s/ [ILLEGIBLE]
- -----------------------
Authorized Representative
Liberty International Underwriters Canada
Liberty Mutual Insurance Company
OCTOBER ??, 2002
- -----------------------
Date
October 2002 APPLICATION RELIANCE ENDORSEMENT
<Page>
[LETTERHEAD OF MARSH]
Coverage : FIDUCIARY LIABILITY Binder No. : 2002014063 - 0
Assigned Policy No. : TBA Date : May 31, 2002
Binder
THE CANADA LIFE ASSURANCE COMPANY
ATTN: RITA NOVIELLI
330 UNIVERSITY AVE.
TORONTO, ON, MSG 1R8
This is to certify that in accordance with your instructions, the following
insurance has been offered on your behalf against which a certificate/s and/or
policy/ies will be issued by the insurer/s at which time the insurance under
this binder shall cease. It is agreed that insurance contracts and premium
agreements subsequently issued shall conform to this binder or amendments
thereto.
NAMED INSURED:
CANADA LIFE FINANCIAL CORPORATION
MAILING ADDRESS:
ATTN: RITA NOVIELLI
330 UNIVERSITY AVE.
TORONTO, ON, M5G 1R8
PERIOD OF INSURANCE:
From JUNE 1, 2002 to JUNE 1, 2003
Birth Dates at 12:01 am standard time at the mailing address of the Insured
DETAILS OF COVERAGE:
COVERAGE 1 - FIDUCIARY LIABILITY
LIMITS OF LIABILITY: (Including Sublimits, Aggregates)
US$ 10,000,000 each loss
US$ 10,000,000 each policy period
DEDUCTIBLES:
(A) Non-Indemnifiable Loss, NIL
(B) Indenmifiable Loss, $25,000 U.S.
ADDITIONAL DETAILS:
Canada Life Financial
Fiduciary Liability
Subject to:
Fully completed Liberty International Underwriters Canada application
Copy of most recent warranty statement
Current financials for all funds except Ireland, as soon as practicable
Fiduciary Application for UK plan
Actuary certification that Bahamas plan is funded adequately
Client meeting within 60 days of binding
Notification of cancellation for non-payment endorsement - as agreed
UK Premium Fine and Penalties endorsement - as agreed
- --------------------------------------------------------------------------------
Page 1 of 2
<Page>
[LETTERHEAD OF MARSH]
Coverage : FIDUCIARY LIABILITY Binder No. : 2002014063 - 0
Assigned Policy No. : TBA Date : May 31, 2002
Binder
- --------------------------------------------------------------------------------
LIU Fiduciary Wording
Print and Pending litigation Exclusion - policy inception
Continuity endorsement - October 1, 1987, upon receipt of last
warranty statement
Full severability of Exclusions
Coverage extended to protect estates, heirs, legal representatives
for claims arising out of the wrongful acts of an insured person.
Extended Reporting Period - 7 years, premium to be determined at time of
request.
PREMIUM:
US $44,000.00
Total for Coverage US $44,000.00
ADDITIONAL INTERESTS:
Various
INSURERS AND PARTICIPATION:
Insurers Interest (%) US Premium Underwriter Authorized Date
Signature
and Stamp
COVERAGE 1- FIDUCIARY LIABILITY
<Table>
LIBERTY MUTUAL 100.0000 $44,000.00 /s/ [ILLEGIBLE]
INSURANCE COMPANY( -----------------------
Liberty International Underwriters Canada
Liberty Mutual Insurance Company
-------- ----------
Total for Coverage: 100.0000 $44,000.00
</Table>
CANCELLATION: Insurance may be cancelled by the Insurers by mailing at least 60
days written notice to the Named Insured at the address stated
herein, except for Non-Payment of premium which is 15 days by
registered mail or 5 days hand delivered.
[1] The Insurers are severally and not jointly liable, each for the percentage
interest set against its name.
[2] The subscribing Insurers' obligations under contracts of insurance to which
they subscribe are several and not joint and are limited solely to the extent of
their individual subscriptions. The subscribing Insurers are not responsible for
the subscription of any co-subscribing Insurer who for any reason does not
satisfy all or part of its obligation.
CURRENCY CODES USED: Direct Enquires To:
US - US DOLLAR Neil Gilberman
416) 868 8893
Jeffrey Traynor
416) 868 2756
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