-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HomvsmPQc4+LZ/hYW4UVkz1mbc6GxqOXUZ77bo2ngOBKL9w4HXv5zRQqkxERw9eH L3H5H4aK3Fpt/IFYj2nQSA== 0000898080-01-500330.txt : 20020413 0000898080-01-500330.hdr.sgml : 20020413 ACCESSION NUMBER: 0000898080-01-500330 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20011231 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011231 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCOTTISH ANNUITY & LIFE HOLDINGS LTD CENTRAL INDEX KEY: 0001064122 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-29788 FILM NUMBER: 1826746 BUSINESS ADDRESS: STREET 1: GRAND PAVILION COMMERCIAL CENTRE STREET 2: 802 WEST BAY RD GEORGE TOWN GRAND CAYMAN CITY: GRAND CAYMAN CAYMAN STATE: E9 ZIP: 00000 BUSINESS PHONE: 3459492800 MAIL ADDRESS: STREET 1: GRAND PAVILION COMMERCIAL CENTRE STREET 2: 802 WEST BAY RD GEORGE TOWN CITY: GRAND CAYMAN CAYMAN STATE: E9 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: SCOTTISH LIFE HOLDINGS LTD DATE OF NAME CHANGE: 19980615 8-K 1 form8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): December 31, 2001 SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. (Exact Name of Registrant as Specified in its Charter) Cayman Islands (State or Other Jurisdiction of Incorporation) 0-29788 N/A (Commission File Number) (I.R.S. Employer Identification Number) (441) 295-4451 (Registrant's Telephone Number, Including Area Code) P.O. Box HM 2939 Crown House, Third Floor, 4 Par-la-Ville Road N/A Hamilton HM12, Bermuda (Zip Code) (Address of Principal Executive Offices) (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets. On December 31, 2001, Scottish Annuity & Life Holdings, Ltd. ("Scottish Holdings"), a Cayman Islands corporation, completed the acquisition of all of the issued and outstanding shares of World-Wide Holdings Limited ("World-Wide") from Pacific Life Insurance Company ("Pacific Life") pursuant to a Share Purchase Agreement between Scottish Holdings and Pacific Life dated as of August 6, 2001 as amended (the "Purchase Agreement"). As a result of the acquisition, World-Wide became a wholly owned subsidiary of Scottish Holdings, and Pacific Life received 4,532,380 ordinary shares of Scottish Holdings representing approximately 22.5% of the issued and outstanding shares of Scottish Holdings. Pursuant to the Stockholder Agreement attached as an exhibit hereto, Pacific Life has the right, initially, to appoint two directors to the board of directors of Scottish Holdings. The two Pacific Life appointees are Glenn S. Schafer and Khanh T. Tran. The acquisition of World-Wide was approved by the shareholders of Scottish Holdings at an Extraordinary General Meeting of Shareholders held on December 14, 2001. Item 5. Other Events Scottish Holdings issued a press release on December 31, 2001 announcing the completion of the transaction described in Item 2 herein. The press release is attached as an exhibit hereto. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Business Acquired The audited consolidated financial statements of World-Wide for the year ended September 30, 2000 and the unaudited consolidated financial statements of World-Wide for the nine months ended June 30, 2001 have been previously reported in Scottish Holdings' Definitive Proxy Statement, dated November 8, 2001 on pages F-8 through F-30 and therefore are not being reported pursuant to Instruction B.3. to Form 8-K. (b) Pro Forma Financial Information The pro forma financial information of Scottish Holdings for the period ended June 30, 2001 has been previously reported in Scottish Holdings' Definitive Proxy Statement, dated November 8, 2001 on pages F-1 through F-7 and therefore are not being reported pursuant to Instruction B.3. to Form 8-K. (c) Exhibits 10.1 Share Purchase Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of August 6, 2001 (incorporated by reference to Scottish Holdings' 8-K, dated August 6, 2001) 10.2 Amendment No. 1, dated November 8, 2001, to Share Purchase Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of August 6, 2001, filed herewith 10.3 Registration Rights Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of December 31, 2001, filed herewith 10.4 Stockholder Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of December 31, 2001, filed herewith 10.5 Tax Deed of Covenant by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of December 31, 2001, filed herewith 10.6 Letter Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company dated as of December 28, 2001, filed herewith 99.1 Press Release issued by Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company on December 31, 2001, filed herewith SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. By: /s/ Scott E. Willkomm ------------------------------------- Scott E. Willkomm President and Chief Financial Officer Dated: December 31, 2001 INDEX TO EXHIBITS Number Description 10.1 Share Purchase Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of August 6, 2001 (incorporated by reference to Scottish Holdings' 8-K, dated August 6, 2001) 10.2 Amendment No. 1, dated November 8, 2001, to Share Purchase Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of August 6, 2001, filed herewith 10.3 Registration Rights Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of December 31, 2001, filed herewith 10.4 Stockholder Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of December 31, 2001, filed herewith 10.5 Tax Deed of Covenant by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of December 31, 2001, filed herewith 10.6 Letter Agreement by and between Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company, dated as of December 28, 2001, filed herewith 99.1 Press Release issued by Scottish Annuity & Life Holdings, Ltd. and Pacific Life Insurance Company on December 31, 2001, filed herewith EX-10.2 3 ex102.txt AMENDMENT TO SHARE PURCHASE AGREEMENT AMENDMENT TO SHARE PURCHASE AGREEMENT This Amendment to the Share Purchase Agreement (this "Amendment") is entered into as of November 8, 2001 between Scottish Annuity & Life Holdings, Ltd., a Cayman Islands company ("Buyer"), and Pacific Life Insurance Company, a California corporation ("Seller"). RECITALS WHEREAS, Seller and Buyer are parties to a Share Purchase Agreement entered into as of August 6, 2001 (the "Share Purchase Agreement") providing for the purchase by Buyer from Seller of all of the issued and allotted share capital of World-Wide Holdings Limited, an English private company limited by shares, for consideration and on the terms as set forth in the Share Purchase Agreement; and WHEREAS, Seller and Buyer desire to amend the Share Purchase Agreement as provided in this Amendment. NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Amendment, and for other valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree that the Share Purchase Agreement shall be amended as follows: AMENDMENT 1. Defined Terms. (a) (a) All capitalized terms not otherwise defined in this Amendment shall have the same meaning as in the Share Purchase Agreement. (b) The term "Registration Statement" is deleted from the list of Definitions in the Table of Contents. 2. Sections 2.2(c) of the Share Purchase Agreement. Section 2.2(c) of the Share Purchase Agreement is amended and restated in its entirety by deleting the phrase "Audited Company Financials for the year ended September 30, 2001" and inserting the phrase "Intentionally left blank" in its place. 3. Section 2.2 (n)(i)(B) of the Share Purchase Agreement. Section 2.2(n)(i)(B) of the Share Purchase Agreement is amended to read in full as follows: "recording the appointment of such persons as the directors, the Secretary and the auditors of the Company as Buyer shall nominate, provided that appointment of such persons shall be contingent upon any required notices with and approvals of the FSA;" 4. Section 3.25 of the Share Purchase Agreement. Section 3.25 of the Share Purchase Agreement is amended to read in full as follows: "3.25 Proxy Statement. None of the information supplied or to be supplied by Seller for inclusion in the Proxy Statement will cause the Proxy Statement, when first mailed to the shareholders of Buyer and at the time of the Meeting, to contain any untrue statement of a material fact, or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading." 5. Section 4.3 of the Share Purchase Agreement. Section 4.3 of the Share Purchase Agreement is amended to read in full as follows: "4.3 Consents and Approvals. Except for (i) any filing required under the HSR Act and the expiration or early termination of any applicable waiting period thereunder, (ii) any filings of applications and notices, as applicable, with the insurance regulatory authorities in the jurisdictions in which any insurance company Subsidiaries of Buyer operate their respective businesses and the approval of such applications or the grant of required licenses by such authorities, (iii) any filings, approvals or other requirements under applicable securities laws or applicable insurance company stock issuance laws, (iv) the filing with the Securities and Exchange Commission (the "SEC") of the proxy statement (as amended and/or supplemented from time to time, the "Proxy Statement") relating to the meeting of its shareholders to be held for purposes of obtaining shareholder approval of the Charter Amendment, the transactions contemplated by this Agreement and the adoption of a 2001 stock option plan (the "Meeting"), (v) any filings of applications and notices with the FSA in relation to the change of controller of the Company that will take effect on Closing, (vi) the filing of an amendment to the Company's Articles of Association with the appropriate authority in the Cayman Islands, and (vii) any other approvals set forth on Schedule 4.3 of the Buyer's Disclosure Schedule, no Consent is required to be obtained, made or given by or with respect to Buyer in connection with the execution and delivery by Buyer of any of the Transaction Documents to which Buyer is a party, the performance by Buyer of its obligations under any of such Transaction Documents or the consummation of the transactions contemplated by the Transaction Documents, except for such Consents, the failure of which to be made or obtained would not reasonably be expected to have a Buyer Material Adverse Effect or which would not interfere in any material way with the ability of Buyer or its Subsidiaries to consummate the transactions contemplated by the Transaction Documents." 6. Section 5.9 of the Share Purchase Agreement. Section 5.9 of the Share Purchase Agreement is amended to read in full as follows: "5.9 Proxy Statement. As promptly as practicable following the date of this Agreement, Buyer shall prepare and file with the SEC the Proxy Statement in accordance with the Securities Act and the Exchange Act and shall use all reasonable efforts to have the Proxy Statement cleared by the SEC; provided, however, that prior to filing, Buyer shall deliver a copy of the proposed filing to Seller and provide Seller with a reasonable time period in which to review and comment upon such filing, it being agreed that Buyer will not make any such filing without the prior consent of 2 Seller, such consent not to be unreasonably withheld. Buyer shall promptly provide to Seller copies of any written comments received from the SEC and shall promptly advise Seller of any oral comments received from the SEC. Seller shall be entitled to review and comment on any proposed amendments to the Proxy Statement. As promptly as practicable after the Proxy Statement has been cleared by the SEC, Buyer shall mail the Proxy Statement to its shareholders as of the record date for the Meeting. Buyer shall take such action as may be required to be taken under applicable state securities or "blue sky" laws in connection with issuance of the Shares. The Proxy Statement shall include the recommendation of Buyer's Board of Directors that shareholders of the Buyer vote in favor of the Charter Amendment and the other transactions contemplated by this Agreement." 7. Section 6.1(b) of the Share Purchase Agreement. Section 6.1(b) of the Share Purchase Agreement is amended and restated in its entirety by deleting the heading and all of the text therein and inserting the phrase "Intentionally left blank" in its place. 8. Exhibit F of the Share Purchase Agreement. Exhibit F of the Share Purchase Agreement is amended to read in full as set forth in the attached Exhibit A to this Amendment. 9. Continued Effect of the Share Purchase Agreement. Except as amended hereby, the Share Purchase Agreement shall remain in full force and effect. 10. Severability. If at any time any provision of this Amendment is or becomes illegal, invalid, void or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity, nor enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby, the remainder of the provisions of this Amendment shall remain in full force and effect. The parties shall endeavor in good faith negotiations to replace any invalid, illegal, void or unenforceable provision with a valid, legal and enforceable provision, the economic effect of which comes as close as possible to the invalid, illegal, void or unenforceable provision. 11. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. 12. Waiver of Jury Trial. Each party hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Amendment. 13. Counterparts. This Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. 3 IN WITNESS WHEREOF, the parties have duly executed and delivered this Amendment as of the date first above written. SELLER: BUYER: PACIFIC LIFE INSURANCE COMPANY SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. By:/s/ Sharon A. Cheever By:/s/ Scott E. Willkomm --------------------------- ------------------------------ Sharon A. Cheever Scott E. Willkomm Vice President, Investment Counsel President By:/s/ Brian D. Klemens --------------------------- Brian D. Klemens Vice President and Treasurer 4 EXHIBIT A SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. Text of the Amendments to the Memorandum of Association Bracketed bold text indicates text to be deleted upon effectiveness of amendments. Underlined bold text indicates text to be added upon effectiveness of amendments. The following Sections of the Memorandum of Association shall be amended and restated in their entirety to read as set forth below: Clause 3(i)(a) of the Memorandum of Association 3. The objects for which the Company is established are, subject to section (i) of this Clause 3, unrestricted and shall include, but without limitation, the following: (i) (a) To own, hold, purchase or otherwise acquire equity or debt securities in companies, firms or other persons engaged in all or any forms of insurance or reinsurance business and to promote the establishment of such entities. [, NOTWITHSTANDING any other provisions of this Memorandum of Association and of this Clause 3 in particular, the objects for which the Company is established are restricted to holding shares in one or more majority-owned subsidiaries, each of which operates as an insurance company (i) incorporated under the laws of the Cayman Islands, British West Indies, (ii) regulated as such by the government of the Cayman Islands and (iii) engaged primarily and predominantly in the writing of insurance agreements of the type specified in section 3(a)(8) of the United States Securities Act of 1933, as amended (except for the substitution of supervision by Cayman Islands insurance regulators for the regulators referred to in that section), or the reinsurance of risks on such agreements underwritten by insurance companies.] Clause 4 of the Memorandum of Association 4. Except as prohibited or limited by the Companies Law [1998 Revision] (2001 Second Revision), the Company shall have full power and authority to carry - ---------------------- out any object and shall have and be capable of, from time to time and at all times, exercising any and all of the powers at any time or from time to time exercisable by a natural person or body corporate in doing in any part of the world whether as principal, agent, contractor or otherwise whatever may be considered by it necessary for the attainment of its objects and whatever else may be considered by it as incidental or conducive thereto or consequential thereon, including, but without in any way restricting the generality of the foregoing, the power to make any alterations or amendments to this Memorandum of Association and the Articles of Association of the Company considered necessary or convenient in the manner set out in the Articles of Association of the Company, and the power to do any of the following acts or things, viz: to pay all expenses of and incidental to the promotion, formation and incorporation of the Company; to register the Company to do business in any other jurisdiction; to sell, lease or dispose of any property of the Company; to draw, make, accept, endorse, discount, execute and issue promissory notes, debentures, bills of exchange, bills of lading, warrants and other negotiable or transferable instruments; to lend money or other assets and to acts as guarantors; to borrow or raise money on the security of the undertaking or transferable instruments; to lend money or other assets and to act as guarantors; to borrow or raise money on the security of the undertaking or on all or any of the assets of the Company including uncalled capital or without security; to invest monies of the Company in such manner as the Directors determine; to promote other companies; to sell the undertaking of the Company for cash or any other consideration; to distribute assets in specie to Members of the Company; to make charitable or benevolent donations; to pay pensions or gratuities or provide other benefits in cash or kind to Directors, officers, employees, past or present and their families; to purchase Directors and officers liability insurance and to carry on any trade or business and generally to do all acts and things which, in the opinion of the Company or the Directors, may be 5 conveniently or profitably or usefully acquired and dealt with, carried on, executed or done by the Company in connection with the business aforesaid. [PROVIDED THAT the Company shall only carry on the businesses permitted in accordance with section (i) of Clause 3 of this Memorandum of Association and for which a license is required under the laws of the Cayman Islands when so licensed under the terms of such laws.] 6 EXHIBIT A SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. Text of the Amendments to Articles of Association Bracketed bold text indicates text to be deleted upon effectiveness of amendments. Underlined bold text indicates text to be added upon effectiveness of amendments. The following Sections of the Articles of Association shall be amended and restated in their entirety to read as set forth below: 6. (b) Notwithstanding Article 6(a) of these Articles, the Company shall not issue any shares in a manner that the Board of Directors of the Company believes would cause, by reason of such issuance, the total Controlled Shares of any Person to equal or exceed 10% of a class of the Company's shares; provided, however, that this provision shall not apply to (i) the issuance of shares to ----------------------------- Pacific Life Insurance Company in such amount so that Pacific Life Insurance - ---------------------------------------------------------------------------- Company's Controlled Shares do not exceed 24.9% of a class of the Company's - --------------------------------------------------------------------------- shares and (ii) any issuance of shares to a person acting as an underwriter in - --------------- the ordinary course of its business, purchasing such shares pursuant to a purchase agreement to which the company is a party, for resale. 9. (b) Except with respect to transfers of the Company's shares executed on the NASDAQ National Market, the Directors shall decline to register a transfer of shares if the Directors have reason to believe that the effect of such transfer would be to increase the number of total Controlled Shares of any Person to ten percent (10%) or any higher percentage of a class of the Company's shares on an Unadjusted Basis. Notwithstanding the foregoing, Pacific Life Insurance Company, -------------------------------------------------------------- Pacific Mutual Holding Company, Pacific LifeCorp and/or any direct or indirect - ------------------------------------------------------------------------------ wholly-owned subsidiary of Pacific Mutual Holding Company (each, a "Pacific Life - -------------------------------------------------------------------------------- Entity", provided however, that any Pacific Life Entity shall cease to be a - -------------------------------------------------------------------------------- Pacific Life Entity in the event it is no longer a 100% direct or indirect - -------------------------------------------------------------------------- subsidiary of Pacific Mutual Holding Company), shall each be permitted to - ------------------------------------------------------------------------- transfer shares of the Company to another Pacific Life Entity, provided that the - -------------------------------------------------------------------------------- Controlled Shares of the Pacific Life Entities in the aggregate do not exceed - ----------------------------------------------------------------------------- 24.9% of a class of the Company's shares. - ----------------------------------------- 47. (a) Subject to Article 6, every Member of record present in person or by proxy shall have one vote for each issued and outstanding Ordinary Share registered in his name in the register; PROVIDED THAT, subject to the following provisions of this Article 47, if and for so long as the number of Controlled Shares of any Person other than a Pacific Life Entity would constitute 10% or -------------------------------- more of the total combined voting rights attaching to the issued shares of the ------ Company (calculated after giving effect to any prior reductions in voting rights - -------------------------------------------------------------------------------- attaching to Controlled Shares of other persons as provided in this Article - --------------------------------------------------------------------------- 47), or the total number of Controlled Shares of the Pacific Life Entities' - --------------------------------------------------------------------------- would constitute 25% or more of the total combined voting rights attaching to - ----------------------------------------------------------------------------- the issued shares of the Company (calculated after giving effect to any prior - ----------------- reductions in voting rights attaching to Controlled Shares of other persons as provided in this Article 47), each such issued controlled Share, regardless of the identity of the registered holder thereof, shall confer only a fraction of a vote as determined by the following formula (the "Formula"): (T-C)/([9.1]XxC) - Where: "T" is the aggregate number of votes conferred by all the issued shares immediately prior to that application of the Formula adjusted to take into account any prior reduction taken with respect to any other Member pursuant to Article 47(d) as at the same date; "C" is the number of issued Controlled Shares attributable to such Person; and "X" is (i) 9.1 if such Person is any Person other than a Pacific Life --------------------------------------------------------------------- Entity or (ii) 3.016 if the Formula is being applied to determine the --------------------------------------------------------------------- reduction in total combined voting rights attributable to the total ------------------------------------------------------------------- number of Controlled Shares of the Pacific Life Entities. --------------------------------------------------------- 7 47. (d) The Formula shall be applied successively as many times as may be necessary to ensure that no Person other than a Pacific Life Entity shall be a -------------------------------- 10% Shareholder at any time, and that the total combined voting rights attached -------------------------------------------------- to the Controlled Shares of the Pacific Life Entities shall not exceed 24.9% at - ------------------------------------------------------------------------------- any time. For the purposes of determining the votes exercisable by Members as at - -------- any date, the Formula shall be applied first to the votes of Controlled Shares attributable to the Person to whom the greatest number of Controlled Shares are attributed and successively to the Controlled Shares attributable to them, in each case calculations being made on the basis of the aggregate number of votes conferred by the issued shares as at such date as reduced by the application of the Formula to any larger number of Controlled Shares as at such date. 47. (e) Notwithstanding the provisions of Articles 47(a) and (d) above, having applied the provisions thereof as best as they consider reasonably practicable, the Directors may make such final adjustments to the aggregate number of votes attaching to the shares of any Member that they consider fair and reasonable in all the circumstances to ensure that no Person other than a Pacific Life Entity -------------------------------- shall be a 10% Shareholder at any time, and that the voting rights attached to -------------------------------------- the Controlled Shares of the Pacific Life Entities shall not exceed 24.9 % at - ----------------------------------------------------------------------------- any time. - -------- 89. (b) If the Company redeems or purchases shares or directs the sale and transfer of such shares pursuant to this Article 89, it shall do so only in a manner the Board believes would not result, upon consummation of such redemption or purchase, in the total number of Controlled Shares of any Person other than ----- ---------- a Pacific Life Entity, increasing to ten percent (10%) or any higher percentage - --------------------- of a class of the Company's shares on an Unadjusted Basis or the total number of ---------------------- Controlled Shares of the Pacific Life Entities increasing to twenty-five percent - -------------------------------------------------------------------------------- (25%) or any higher percentage of a class of the Company's shares on a - ---------------------------------------------------------------------- Unadjusted Basis. - ---------------- 8 EX-10.3 4 ex103.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT between SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. and PACIFIC LIFE INSURANCE COMPANY Dated as of December 31, 2001 TABLE OF CONTENTS Section 1. Definitions.....................................................1 Section 2. Demand Registrations............................................3 Section 3. Piggyback Registrations.........................................5 Section 4. Hold-Back Agreements............................................6 Section 5. Registration Procedures.........................................7 Section 6. Registration Expenses..........................................11 Section 7. Indemnification................................................11 Section 8. Rules l44 and 144A.............................................13 Section 9. Underwritten Registrations.....................................14 Section 10. Covenants of Stockholder.......................................14 Section 11. Miscellaneous..................................................14 i REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of December 31, 2001, is entered into between Pacific Life Insurance Company, a California corporation ("Stockholder") and Scottish Annuity & Life Holdings, Ltd., a Cayman Islands corporation (the "Company"). WHEREAS, the Company has entered into a Share Purchase Agreement with Stockholder, dated August 6, 2001, as amended (the "Share Purchase Agreement"), pursuant to which and in connection with the transactions contemplated thereby, Stockholder will acquire beneficial ownership of the Shares; WHEREAS, the parties each desire to make certain covenants and agreements concerning, among other things, the registration from time to time of the Shares under the Securities Act of 1933, as amended (the "Securities Act"); and WHEREAS, concurrent with the execution and delivery hereof, Stockholder and the Company have entered into an agreement with respect to Stockholder's investment in the Company (the "Stockholder Agreement"). NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, the Company and Stockholder hereby agree as follows: Section 1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Commission" means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act. "Company Shares" means the ordinary shares, par value US $.01 per share, of the Company. "Delay Period" has the meaning set forth in Section 2(d) of this Agreement. "Demand Notice" has the meaning set forth in Section 2(a) of this Agreement. "Demand Registration" has the meaning set forth in Section 2(b) of this Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. "Interruption Period" has the meaning set forth in Section 5(o) of this Agreement. "list" means the listing of any securities on any stock exchange, quotation system or other securities market in Europe, the United States or elsewhere. "Losses" has the meaning set forth in Section 7(a) of this Agreement. "Misstatement/Omission" has the meaning set forth in Section 7(a) of this Agreement. "Other Security Holders" has the meaning set forth in Section 2(c) of this Agreement. "Pacific LifeCorp" means Pacific LifeCorp, a Delaware corporation domiciled in California that is the wholly-owned subsidiary of PMHC and the direct parent corporation of Stockholder. "Pacific Life Entity" means (a) PMHC, (b) Pacific LifeCorp and/or (c) any direct or indirect wholly-owned subsidiary of PMHC. "Person" means any natural person, corporation, partnership, firm, association, trust, government, governmental agency, limited liability company or any other entity, whether acting in an individual, fiduciary or other capacity. "Piggyback Registration" has the meaning set forth in Section 3(a) of this Agreement. "PMHC" shall mean Pacific Mutual Holding Company, a California mutual holding company, which is the indirect parent corporation of Pacific Life Insurance Company. "qualify" means the qualification of any securities for sale, or of any offering document in relation thereto, with any securities regulatory authority. "register" means the preparation and filing of a Registration Statement in compliance with the Securities Act and the declaration or ordering by the Commission of the effectiveness of such Registration Statement. "Registrable Securities" means (i) the Shares, (ii) any Company Shares issued or issuable with respect to the Shares by way of stock dividends or stock splits or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization or otherwise and (iii) any depositary shares or depositary receipts representing or evidencing the Shares referred to in (i) and (ii) hereof. As to any particular Registrable Securities, such securities will cease to be Registrable Securities when (i) they have been distributed to the public pursuant to an offering registered under the Securities Act, (ii) they have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act or (iii) they are eligible for immediate sale pursuant to Rule 144(k) under the Securities Act. "Registration Statement" means any registration statement under the Securities Act of the Company that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the related prospectus and any information deemed to be a part of such prospectus pursuant to Rule 430A under the Securities Act, all amendments and supplements to such registration statement or prospectus, including pre-and post-effective amendments (including any registration statement filed pursuant to Rule 462(b) under the Securities Act), all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "Securities Act" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the Commission promulgated thereunder. "Shares" means the Company Shares acquired by Stockholder pursuant to and in connection with the Share Purchase Agreement and any other Shares acquired by Stockholder other than in violation of the Stockholder Agreement. "Stockholder" means Pacific Life Insurance Company and any of its affiliates that hold Company Shares. Unless otherwise stated, capitalized terms used but not defined herein have the meanings set forth in the Share Purchase Agreement. Section 2. Demand Registrations. (a) Demand Registration. At any time following the Closing Date, Stockholder shall have the right to require the Company to file a Registration Statement in respect of all or a portion of the Registrable Securities (a "Demand Registration"), by delivering to the Company written notice stating that such right is being exercised, specifying the number of the Registrable Securities to be included in such registration and describing the intended method of distribution thereof (a "Demand Notice"); provided, however, that the Company shall not be required to file a Registration Statement unless the total aggregate value of the Registrable Securities, as of the date of the Demand Notice, proposed to be registered by Stockholder pursuant to such Registration Statement shall exceed US$ five (5) million. As promptly as practicable, but in no event later than forty-five (45) days after the Company receives a Demand Notice, the Company shall file with the Commission and thereafter use commercially reasonable efforts to cause to be declared effective promptly a Registration Statement (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act if the Company is then eligible to use such a registration) (a "Demand Registration") providing for the registration of such number of Registerable Securities Stockholder shall have demanded be registered for distribution in accordance with such intended method of distribution. (b) Number of Demand Registrations. Stockholder shall be entitled to request an aggregate of three (3) Demand Registrations pursuant to this Section 2; provided, however, that Stockholder shall not be entitled to request more than one (1) Demand Registration during any 12-month period. A registration shall not count as one of the permitted Demand Registrations (i) unless it has been declared or ordered effective and (ii) unless Stockholder is able to register and sell at least 50% of the Registrable Securities requested by Stockholder to be included in such registration. (c) Shelf Registrations. Notwithstanding anything to the contrary in this Section 2, if the Company is eligible to register the Registerable Securities on Form S-3 (or F-3), Stockholder shall have the right to require up to two (2) such registrations per calendar year, each of which registrations shall be a "Demand Registration" for all purposes of this Agreement, except that such registrations shall not count as one or more of the three (3) Demand Registrations that the Company is required to effect pursuant to Section 2(b). Subject to paragraph (f) below, the Company may include in such registration other securities for sale for its own account or for the account of any other holders of the securities of the Company ("Other Security Holders"). (d) Effectiveness of Registration Statements. Subject to Section 2(e), upon the occurrence of any event that would cause the Registration Statement (i) to contain a material misstatement or omission or (ii) to be not effective and usable for resale of Registrable Securities during the period that such Registration Statement is required to be effective and usable, the Company shall file an amendment to the Registration Statement as soon as reasonably practicable, in the case of clause (i), correcting any such misstatement or omission and, in the case of either clause (i) or (ii), use commercially reasonable efforts to cause such amendment to be declared effective and such Registration Statement to become usable as soon as reasonably practicable thereafter. The Company agrees to use commercially reasonable efforts to keep any Registration Statement filed pursuant to this Section 2 continuously effective and usable for the sale of Registrable Securities (i) until 180 days from the date on which the Commission declares such Registration Statement effective or (ii) until all the Registrable Securities covered by such Registration Statement have been sold pursuant to such Registration Statement, if earlier, in either case as such period may be extended pursuant to this Section 2. (e) Restrictions on Demand Registrations. The Company shall have the right to delay the filing of any Registration Statement otherwise required to be prepared and filed by the Company pursuant to this Section 2, or to suspend the use of any Registration Statement, for such period as set forth below (a "Delay Period"), if: (i) the Board of Directors of the Company determines that, in the Board of Director's reasonable judgment and good faith, the registration and distribution of the Registrable Securities covered or to be covered by such Registration Statement would materially interfere with any pending financing, acquisition, reorganization or other material transaction involving the Company or any of its subsidiaries or would require disclosure of any other material corporate development that the Company is not otherwise required or prepared to disclose, for a period not in excess of 90 days; provided, however, that the Company may not exercise this right more than twice in any 12 month period; or (ii) the Demand Registration would require that the Company prepare audited financial statements as of a date other than its fiscal year end (unless Stockholder agrees to pay the expenses of such an audit), until such time as year-end audited financial statements become available. (f) The Company will promptly give Stockholder written notice of such determination and an approximation of the period of the anticipated delay. Stockholder agrees to cease all public disposition efforts under such Registration Statement with respect to Registrable Securities immediately upon receipt of notice of the beginning of any Delay Period. The Company shall provide written notice to Stockholder of the end of each Delay Period. The time period for which the Company is required to maintain the effectiveness of a Registration Statement referred to in Section 2(d) hereto shall be extended by the aggregate number of days of all Delay Periods and Interruption Periods affecting such Registration. (g) Other Registration Rights. The Company shall not enter into any agreement granting any Other Security Holder piggyback rights to include such Other Security Holder's securities in any registration in which Stockholder has the right to include Registrable Securities on a priority basis more favorable to such Other Security Holder than is provided to Stockholder pursuant to Section 3(b). (h) Withdrawal of Demand Notice. In connection with a Demand Notice delivered by Stockholder pursuant to this Section 2, Stockholder may, at any time prior to the effective date of the Registration Statement in respect thereof, withdraw such Demand Notice by providing written notice to Company to such effect; provided, however, that no such withdrawn Demand Notice shall be deemed to have been a Demand Registration if such Demand Notice is withdrawn prior to the filing by the Company of a Registration Statement pursuant thereto or if Stockholder elects to bear all expenses associated with such withdrawn Demand Notice and the Registration Statement pursuant thereto. (i) Preemption of Demand Registration. Notwithstanding anything to the contrary contained herein, after receiving a written request for a Demand Registration, the Company may elect to effect an underwritten primary registration in lieu of the Demand Registration if the Company's Board of Directors believes that such primary registration would be in the best interests of the Company. If the Company so elects to effect a primary registration, the Company shall give prompt written notice (which shall be given not later than thirty (30) days after the date of the Demand Notice) to Stockholder of its intention to effect such a registration and shall afford Stockholder the rights contained in Section 3 with respect to Piggyback Registrations. In the event that the Company so elects to effect a primary registration after receiving a request for a Demand Registration, the Company shall use commercially reasonable efforts to have the Registration Statement declared effective by the Commission as soon as reasonably practicable. In addition, the request for a Demand Registration shall be deemed to have been withdrawn and such primary registration shall not be deemed to be a Demand Registration. Section 3. Piggyback Registrations. (a) Right to Piggyback. Whenever the Company proposes to register any of its equity securities (other than Registrable Securities) under the Securities Act (other than a registration statement on Form S-4 (or F-4) or S-8 (or F-8)(or any successor forms to such Forms), whether or not for sale for its own account, the Company will give prompt written notice of such proposed filing to Stockholder at least thirty (30) days before the anticipated filing date. Such notice shall offer Stockholder the opportunity to register such amount of Registrable Securities as it shall request (a "Piggyback Registration"). Subject to Sections 3(b) and 3(c) hereof, the Company shall include in each such Piggyback Registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after such notice has been given by Stockholder to the Company. If the Registration Statement relating to the Piggyback Registration is to cover an underwritten offering, such Registrable Securities shall be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters. Stockholder shall be permitted to withdraw all or part of the Registrable Securities from a Piggyback Registration at any time prior to the effective time of such Piggyback Registration. (b) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company by or through one or more underwriters of recognized standing and the lead underwriters advise the Company that, in their good faith judgment, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without materially and adversely affecting the marketability of the offering, then the Company will include in the Registration Statement relating to such registration (i) first, the securities the Company proposes to sell, and (ii) second, the Registrable Securities requested to be included in such registration by Stockholder and the securities requested to be included in such registration by Other Security Holders, reduced, in each case, on a pro rata basis, based on the amount of Registrable Securities owned by Stockholder or the securities owned by each such Other Security Holder. (c) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of Other Security Holders by or through one or more underwriters of recognized standing and the lead underwriters advise the Company that, in their good faith judgment, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without materially and adversely affecting the marketability of the offering, the Company will include in such registration the securities owned by such Other Security Holders and the Registrable Securities requested to be included in such registration by Stockholder, reduced, in each case, on a pro rata basis, based on the amount of Registrable Securities owned by Stockholder or the securities owned by each such Other Security Holder. Section 4. Hold-Back Agreements. (a) Company Hold-Back. The Company agrees (i) if so required by the lead underwriters of an underwritten offering effected pursuant to a Registration Statement under Section 2 or 3 hereof, not to effect any public or private sale or distribution of securities of the same type (including any underlying securities) as the Registrable Securities included in such underwritten registration, or any securities convertible into or exchangeable or exercisable for such securities, during the ten (10) days prior to the pricing of such offering and until the earlier of (A) the end of the 120-day period beginning on the date of pricing of such offering (except as part of such underwritten offering and except pursuant to registrations on Form S-4 (or F-4) or Form S-8 (or F-8) (or any successor forms to such Forms)), unless the lead underwriters for such offering otherwise agree, and (B) the abandonment of such offering, and (ii) to use commercially reasonable efforts to cause each holder of securities of the same type as the securities included in such underwritten offering, or any securities convertible into or exchangeable or exercisable for such securities, in each case purchased from the Company at any time after the date of this Agreement (other than in a registered public offering), to agree not to effect any public or private sale or distribution or otherwise dispose (including sales pursuant to Rule 144 under the Securities Act) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the lead underwriters for such offering otherwise agree. (b) Stockholder Hold-Back. If the Company registers securities of the Company in connection with an underwritten public offering of Company Shares solely by the Company, Stockholder, if so requested by the lead underwriters of such underwritten offering, agrees not to effect any public sale or distribution of any of the Registrable Securities, including any sale pursuant to Rule 144 under the Securities Act (other than as a part of such underwritten public offering) without the consent of the Company or such lead underwriters during the period commencing on a date specified by the lead underwriters, such date not to exceed ten (10) days prior to the effective date of such Registration Statement, and ending on the earlier of (A) 120 days after the pricing of such offering, (B) the abandonment of such offering and (C) the first date on which the Company or any affiliate or executive officer of the Company is permitted to sell Company Shares. Section 5. Registration Procedures. Whenever the Company is required to register Registrable Securities pursuant to Section 2 or 3 hereof, the Company will use commercially reasonable efforts to effect the registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company will as expeditiously as possible: (a) prepare and file with the Commission a Registration Statement with respect to such Registrable Securities as prescribed by Section 2 or 3 on a form available for the sale of the Registrable Securities by Stockholder in accordance with the intended method or methods of distribution thereof and use commercially reasonable efforts to cause each such Registration Statement to become and remain effective within the time periods and otherwise as provided herein; (b) prepare and file with the Commission such amendments, (including post-effective amendments) to the Registration Statement and such supplements to the prospectus as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such Registration Statement; (c) furnish to Stockholder and to each underwriter, if any, such number of copies of such Registration Statement, each amendment and post-effective amendment thereto, the prospectus included in such Registration Statement (including each preliminary prospectus and any supplement to such prospectus and any other prospectus filed under Rule 424 of the Securities Act), in each case including all exhibits, and such other documents as Stockholder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by Stockholder or to be disposed of by such underwriter (the Company hereby consenting to the use in accordance with all applicable law of each such Registration Statement (or amendment or post-effective amendment thereto) and each such prospectus (or preliminary prospectus or supplement thereto) by Stockholder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Registration Statement or prospectus); (d) use commercially reasonable efforts to register or qualify and, if applicable, to cooperate with Stockholder, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of, the Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as the Stockholder or lead underwriters (if any) shall reasonably request, to keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the applicable Registration Statement; provided, however, that the Company will not be required (i) to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph or (ii) to consent to general service of process or taxation in any such jurisdiction where it is not so subject; (e) use commercially reasonable efforts to cause all such Registrable Securities to be listed on each securities exchange on which securities of the same class as the Registrable Securities are then listed and, if not so listed, to be listed on NASDAQ or a national securities exchange selected by the Company; (f) provide a transfer agent and registrar for all such Registrable Securities and a CUSIP number or other recognized securities identification number for all such Registrable Securities not later than the effective date of such Registration Statement; (g) comply with all applicable rules and regulations of the Commission, and make available to its security holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) (or in each case within such extended period of time as may be permitted by the Commission for filing the applicable report with the Commission) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in an underwritten offering or (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which earnings statement shall cover said 12-month period; (h) use commercially reasonable efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or suspending the qualification (or exemption from qualification) of any of the Registrable Securities included therein for sale in any jurisdiction, and, in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending the qualification of any Registrable Securities included in such Registration Statement for sale in any jurisdiction, the Company will use commercially reasonable efforts promptly to obtain the withdrawal of such order at the earliest possible moment; (i) obtain "cold comfort" letters and updates thereof (which letters and updates (in form, scope and substance) shall be reasonably satisfactory to the lead underwriters, if any, and Stockholder) from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each of the underwriters, if any, and Stockholder, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings and such other matters as the lead underwriters, if any, or Stockholder may reasonably request; (j) obtain opinions of independent counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the lead underwriters, if any, and Stockholder), addressed to Stockholder and each of the underwriters, if any, covering the matters customarily covered in opinions of issuer's counsel requested in underwritten offerings, such as the effectiveness of the Registration Statement and such other matters as may be requested by such counsel and lead underwriters, if any; (k) promptly notify Stockholder and the lead underwriters, if any, and confirm such notice in writing, (i) when a prospectus or any supplement or post-effective amendment to such prospectus has been filed and, with respect to a Registration Statement or any post-effective amendment thereto, when the same has become effective, (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or related prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any prospectus or the initiation of any proceedings by any Person for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Securities for offer or sale under the securities or blue sky laws of any jurisdiction, or the contemplation, initiation or threatening of any proceeding for such purpose, and (v) of the happening of any event or the existence of any facts that make any statement made in such Registration Statement or prospectus untrue in any material respect or that require the making of any changes in such Registration Statement or prospectus so that it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of any prospectus), not misleading (which notice shall be accompanied by an instruction to Stockholder and the lead underwriters, if any, to suspend the use of the prospectus until the requisite changes have been made); (l) if requested by the lead underwriters, if any, or Stockholder, promptly incorporate in a prospectus, supplement or post-effective amendment such information as the lead underwriters, if any, and Stockholder reasonably request to be included therein relating to the sale of the Registrable Securities, including, without limitation, information with respect to the number of shares of Registrable Securities being sold to the underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering, and make all required filings of such prospectus, supplement or post-effective amendment promptly following notification of the matters to be incorporated in such supplement or post-effective amendment; (m) furnish to Stockholder and the lead underwriters, without charge, at least one signed copy of the Registration Statement; (n) as promptly as practicable upon the occurrence of any event contemplated by clause 5(k)(v) above, prepare a supplement or post-effective amendment to the Registration Statement or the prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold hereunder, the prospectus will not contain an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or prospectus or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (o) if such offering is an underwritten offering, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other appropriate and reasonable actions requested by Stockholder or by the lead underwriters (including cooperating in reasonable marketing efforts, including participation by the senior executives of the Company in any "roadshow" or similar meeting with potential investors) in order to expedite or facilitate the disposition of such Registrable Securities and, in connection therewith, provide indemnification provisions and procedures substantially to the effect set forth in Section 7 hereof with respect to all parties to be indemnified pursuant to said Section. The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder. Stockholder agrees that, upon receipt of written notice from the Company of the happening of any event of the kind described in Section 5(k)(iii), (iv) or (v), Stockholder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement until Stockholder's receipt of the copies of the supplemented or amended Registration Statement contemplated by Section 5(n), or until it is advised in writing by the Company that the use of the applicable prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such prospectus (such period during which disposition is discontinued being an "Interruption Period"), and, if so directed by the Company, Stockholder will deliver to the Company all copies of the prospectus covering such Registrable Securities current at the time of receipt of such notice. Section 6. Registration Expenses. (a) Expenses Generally. The Company shall bear all expenses incurred in connection with the registration or attempted registration of the Registrable Securities pursuant to Sections 2 and 3 of this Agreement as provided herein. Such expenses shall include, without limitation, all printing, legal and accounting expenses incurred by the Company or Stockholder and all registration and filing fees imposed by the Commission, any state securities commission or the principal national securities exchange or national market system on which the Shares are then traded or quoted. Notwithstanding the foregoing sentence, Stockholder shall be responsible for any brokerage or underwriting commissions and taxes of any kind (including, without limitation, transfer taxes) with respect to any disposition, sale or transfer of Registrable Securities. (b) Withdrawal of Registration Statement. The obligation of the Company to bear the expenses described in Section 6(a) shall apply irrespective of whether a registration, once properly demanded, if applicable, becomes effective, is withdrawn or suspended or is converted to another form of registration, irrespective of when any of the foregoing shall occur; provided, however, that the expenses described in Section 6(a) related to any Registration Statement withdrawn solely at the request of Stockholder or any supplements or amendments to a Registration Statement resulting from a Misstatement/Omission by Stockholder shall be borne solely by Stockholder. Section 7. Indemnification. (a) Indemnification by Company. The Company agrees to indemnify, to the fullest extent permitted by law, Stockholder, each affiliate of Stockholder and each officer, director, employee, counsel, agent or representative of Stockholder and its affiliates and each Person who controls any such Person (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) against, and hold it and them harmless from, all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and attorneys' fees and disbursements) and expenses, including expenses of investigation (collectively, "Losses") arising out of, caused by or based upon any untrue or alleged untrue statement of material fact contained in any Registration Statement, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (a "Misstatement/Omission"), or any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; provided, however, that the Company shall not be liable insofar as such Misstatement/Omission or violation is made in reliance upon and in conformity with information furnished in writing to the Company by Stockholder expressly for use therein. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of Stockholder. This indemnity shall be in addition to any other indemnification arrangements to which Company may otherwise be party. (b) Indemnification by Stockholder. In connection with any Registration Statement in which Stockholder is participating, Stockholder agrees to indemnify, to the fullest extent permitted by law, the Company and each affiliate, employee, counsel, agent, representative, director or officer of the Company and each Person who controls the Company (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) against, and hold it harmless from, any Losses arising out of or based upon any Misstatement/Omission contained in the Registration Statement, if and to the extent that such Misstatement/Omission arose out of or was based upon information furnished in writing by Stockholder for use therein. The obligation of Stockholder to indemnify will be limited to the net amount of proceeds (net of payment of all expenses) received by Stockholder from the sale of Registrable Securities pursuant to such Registration Statement giving rise to such indemnification obligation. (c) Conduct of Indemnification Proceedings. In case any action, claim or proceeding shall be brought against any Person entitled to indemnification hereunder, such indemnified party shall promptly notify each indemnifying party in writing, and such indemnifying party shall assume the defense thereof including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses incurred in connection with the defense thereof. The failure to so notify such indemnifying party shall not affect any obligation it may have to any indemnified party under this Agreement or otherwise except to the extent that (as finally determined by a court of competent jurisdiction (which determination is not subject to review or appeal)) such failure materially prejudiced such indemnifying party. Each indemnified party shall have the right to employ separate counsel in such action, claim or proceeding and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of each indemnified party unless: (i) such indemnifying party has agreed to pay such expenses; (ii) such indemnifying party has failed promptly to assume the defense and employ counsel reasonably satisfactory to such indemnified party; or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and such indemnifying party or an affiliate or controlling person of such indemnifying party, and such indemnified party shall have been advised by counsel that either (x) there may be one or more legal defenses available to it which are different from or in addition to those available to such indemnifying party or such affiliate or controlling person or (y) a conflict of interest may exist if such counsel represents such indemnified party and such indemnifying party or its affiliate or controlling person; provided, however, that such indemnifying party shall not, in connection with any one such action or proceeding, or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be responsible hereunder for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel), which counsel shall be designated by such indemnified party. No indemnified party shall be liable for any settlement effected without its written consent. Each indemnifying party agrees, jointly and severally, that it will not, without the indemnified party's prior written consent, consent to entry of any judgment or settle or compromise any pending or threatened claim, action or proceeding in respect of which indemnification or contribution may be sought hereunder unless the foregoing contains an unconditional release, in form and substance reasonably satisfactory to the indemnified parties, of the indemnified parties from all liability and obligation arising therefrom. The indemnifying party's liability to any such indemnified party hereunder shall not be extinguished solely because any other indemnified party is not entitled to indemnity hereunder. (d) Survival. The indemnification provided for under this Agreement will (i) remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party, (ii) survive the transfer of securities and (iii) survive the termination of this Agreement. (e) Right to Contribution. If the indemnification provided for in this Section 7 is unavailable to, or insufficient to hold harmless, an indemnified party under Section 7(a) or Section 7(b) above in respect of any Losses referred to in such Sections, then each applicable indemnifying party shall have an obligation to contribute to the amount paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Company, on the one hand, and of Stockholder, on the other, in connection with the Misstatement/Omission which resulted in such Losses, taking into account any other relevant equitable considerations. The amount paid or payable by a party as a result of the Losses referred to above shall be deemed to include, subject to the limitations set forth in Section 7(c) above, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation, lawsuit or legal or administrative action or proceeding. The relative fault of the Company, on the one hand, and of Stockholder, on the other, shall be determined by reference to, among other things, whether the relevant Misstatement/Omission relates to information supplied by the Company or by Stockholder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Misstatement/Omission. The Company and Stockholder agree that it would not be just and equitable if contribution pursuant to this Section 7(e) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this Section 7(e), Stockholder shall not be required to contribute any amount in excess of the amount by which (i) the amount (net of payment of all expenses) at which the securities that were sold by Stockholder and distributed to the public were offered to the public exceeds (ii) the amount of any damages which Stockholder has otherwise been required to pay by reason of such Misstatement/Omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Section 8. Rules l44 and 144A. The Company shall timely file the reports required to be filed by it under the Securities Act and the Exchange Act (including but not limited to the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 adopted by the Commission under the Securities Act) and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of Stockholder, make publicly available other information) and will take such further action as Stockholder may reasonably request, all to the extent required from time to time to enable Stockholder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 and Rule 144A under the Securities Act, as such Rules may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. Section 9. Underwritten Registrations. In the case of any underwritten offering pursuant to a Demand Registration under Section 2 hereof, the lead underwriters thereof shall be selected by Stockholder and shall be reasonably satisfactory to the Company. Section 10. Covenants of Stockholder. Stockholder hereby agrees (a) to cooperate with the Company and to furnish to the Company all such information in connection with the preparation of any Registration Statement and any filings with any state securities commissions as the Company may reasonably request, (b) to the extent required by the Securities Act, to deliver or cause delivery of the prospectus contained in any Registration Statement, and any amendment or supplement thereto, to any purchaser from such Stockholder of the Registrable Securities covered by the Registration Statement and (c) to notify the Company within ten days after any sale of Registrable Securities by Stockholder. Section 11. Miscellaneous. (a) Consent to Jurisdiction and Service of Process. Any legal action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby may be instituted in any United States Federal court located in the Southern District of New York, State of New York, and each party hereto agrees not to assert as a defense in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of such court, that its property is exempt or immune from attachment or execution, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. Each party further irrevocably submits to the jurisdiction of such court in any such action, suit or proceeding. The Company and its subsidiaries hereby appoint CT Corporation System of New York as their authorized agent to accept and acknowledge on such parties' behalf service of any and all process that may be served in any such action suit or proceeding. Any and all service of process and any other notice in any such action, suit or proceeding shall be effective against any party if given properly pursuant to the United States Federal Rules of Civil Procedure or other applicable rules. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any jurisdiction other than New York. (b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW. (c) Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally to the recipient, sent to the recipient by reputable air courier guaranteeing overnight delivery (charges prepaid), mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid or sent by telecopier: If to the Company: Scottish Annuity & Life Holdings Ltd. Crown House, 3rd Floor 4 Par-la-Ville Road Hamilton, Bermuda HM12 Attention: Scott E. Willkomm President and Chief Financial Officer Fax: (441) 295-7576 with a copy to: LeBoeuf, Lamb, Greene & MacRae, L.L.P. 125 West 55th Street New York, New York 10019 Attention: Hugh T. McCormick, Esq. Fax: (212) 424-8500 If to Stockholder: Pacific Life Insurance Company 700 Newport Center Drive Newport Beach, CA 92660-6397 Attention: General Counsel Fax: (949) 219-3706 with a copy to: Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, California 90071-3197 Attention: Karen E. Bertero Fax: 213-229-6360 or to such other address or to the attention of such other personas the recipient party has specified by prior written notice to the sending party. Any notice, demand or other communication given hereunder will be deemed to have been given as of the date so delivered; as of the first business day after being delivered to an overnight air courier guaranteeing overnight delivery; on the fifth business day after being mailed; or when transmission has been completed, if telecopied; as the case may be. (d) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. (e) No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with, adversely effects or violates the rights granted to Stockholder in this Agreement. To the extent that this Agreement is inconsistent with, adversely effects or violates the rights granted to Other Security Holders under any other agreement previously entered into by and between the Company and such Other Security Holders, such inconsistency, adverse effect or violation shall be remedied, to the extent necessary and possible, by granting such Other Security Holders the rights afforded to Stockholder under this Agreement. (f) Remedies. Any Person having rights under any provision of this Agreement will be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights provided in the Share Purchase Agreement or granted by law. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance or injunctive relief that a remedy at law would be adequate. Accordingly, any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement. (g) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement, including the provisions of this sentence, may be amended, modified, supplemented or waived only upon the prior written consent of the parties hereto. (h) Successors and Assigns. This Agreement shall not be assigned, in whole or in part, by any party hereto without the written consent of the other party; provided, however, that Stockholder may, without written consent of the Company, assign its rights and delegate its duties hereunder to any Pacific Life Entity. Notwithstanding the foregoing, the rights and duties of a party hereto may only be assigned to a third party, including a Pacific Life Entity, if such third party agrees in writing to be bound by this Agreement. (i) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. (j) Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience of reference only and shall not limit or otherwise affect the meaning hereof. The use of the word "including" in this Agreement shall be by way of example rather than by limitation. (k) Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. (l) Counterparts. This Agreement may be executed in any number of counterparts, any one of which need not contain the signatures of more than one party, but each of which when so executed shall be deemed to be an original and all such counterparts taken together shall constitute one and the same Agreement. IN WITNESS WHEREOF the parties hereto have or have caused this Registration Rights Agreement to be duly executed as of the date first above written. SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. By: /s/ Scott E. Willkomm ----------------------------------- Scott E. Willkomm President and Chief Financial Officer PACIFIC LIFE INSURANCE COMPANY By: /s/ Glenn S. Schafer ----------------------------------- Glenn S. Schafer President By: /s/ Audrey L. Milfs ----------------------------------- Audrey L. Milfs Vice President and Secretary EX-10.4 5 ex104.txt STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT by and between SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. AND PACIFIC LIFE INSURANCE COMPANY Dated as of December 31, 2001 TABLE OF CONTENTS Page ARTICLE I Definitions..................................................1 ARTICLE II Agreements of Stockholder....................................3 Section 2.1 Restrictions on Purchase.....................................3 Section 2.2 Stockholder Change of Control................................4 Section 2.3 Standstill Provisions........................................5 ARTICLE III Board and Committee Representation...........................5 Section 3.1 Board Representation.........................................5 Section 3.2 Committees...................................................6 ARTICLE IV Effectiveness and Termination................................6 Section 4.1 Effectiveness................................................6 ARTICLE V Representations and Warranties...............................6 Section 5.1 Representations and Warranties of the Company................6 Section 5.2 Representations and Warranties of the Stockholder............7 ARTICLE VI Miscellaneous................................................7 Section 6.1 Injunctive Relief............................................7 Section 6.2 Successors and Assigns.......................................7 Section 6.3 Amendments; Waiver...........................................7 Section 6.4 Notices......................................................8 Section 6.5 Governing Law................................................9 Section 6.6 Headings.....................................................9 Section 6.7 Integration..................................................9 Section 6.8 Severability.................................................9 Section 6.9 Consent to Jurisdiction......................................9 Section 6.10 Counterparts.................................................9 This STOCKHOLDER AGREEMENT (this "Agreement"), dated as of December 31, 2001, is entered into by Pacific Life Insurance Company, a Delaware corporation ("Stockholder"), and Scottish Annuity & Life Holdings, Ltd., a Cayman Islands corporation (the "Company"). WITNESSETH: WHEREAS, the Company has entered into a Share Purchase Agreement with Stockholder, dated as of August 6, 2001, as amended (the "Share Purchase Agreement") pursuant to which the Stockholder will acquire 4,532,380 Shares, as set forth in the Share Purchase Agreement; and WHEREAS, in connection with the consummation of the transactions contemplated by the Share Purchase Agreement (the "Closing"), the Company and the Stockholder desire to establish in this Agreement certain terms and conditions concerning the acquisition and disposition by the Stockholder of the Shares and other Securities of the Company, as applicable, and related provisions concerning the Stockholder's rights to designate certain members of the Board. NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, the Company and Stockholder hereby agree as follows: ARTICLE I Definitions Section 1.1 As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" shall mean, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with such Person, but shall not include officers and directors of a Person solely as a result of such relationship. For the purposes of this definition, "control," when used with respect to any particular Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of Voting Securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agreement" shall have the meaning assigned to such term in the preamble to this Agreement. "Beneficial Owner" (and, with correlative meanings, "Beneficially Own" and "Beneficial Ownership") of any interest means a Person who, together with his or its Affiliates, is or may be deemed a beneficial owner of such interest for purposes of Rule 13d-3 or 13d-5 under the Exchange Act, or who, together with his or its Affiliates, has the right to become such a beneficial owner of such interest (to the extent such right is exercisable) pursuant to any agreement, arrangement or understanding, or upon the exercise, conversion or exchange of any option, warrant, right or other instrument, or otherwise. "Board" shall mean the board of directors of the Company. "Closing" shall have the meaning assigned in the second recital of this Agreement. "Code" shall mean the United States Internal Revenue Code of 1986, as amended. "Commission" shall mean the United States Securities and Exchange Commission. "Company" shall have the meaning assigned in the preamble to this Agreement. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Nominating Committee" shall mean the committee comprised of members of the Board whose functions include recommendations to the Board of nominees for election as directors. In the event there shall not be such a committee, "Nominating Committee" shall mean the Board itself. "Pacific LifeCorp" shall mean Pacific LifeCorp, a Delaware corporation domiciled in California that is the wholly-owned subsidiary of PMHC and the direct parent corporation of Stockholder. "Pacific Life Entity" shall mean (a) PMHC, (b) Pacific LifeCorp and/or (c) any direct or indirect wholly-owned subsidiary of PMHC. "Person" shall mean any individual, partnership, joint venture, corporation, trust, unincorporated organization, government or department or agency of a government. "PMHC" shall mean Pacific Mutual Holding Company, a California mutual holding company, which is the indirect parent corporation of Stockholder. "Redemption Date" shall have the meaning set forth in Section 2.2 to this Agreement. "Securities" shall mean any stock or other equity securities of a Person, including in the case of mutual insurance companies, insurance policies with the power to vote with respect to the election of directors generally. "Securities Act" shall mean the Securities Act of 1933, as amended. "Shares" shall mean the ordinary shares, par value $.01 per share, of the Company. "Stockholder" shall have the meaning assigned in the preamble to this Agreement, and shall also mean (i) any successor of Stockholder to the rights and obligations to the holder of Shares hereunder and (ii) any Pacific Life Entity then holding Shares. "Stockholder Affiliate" shall mean Pacific LifeCorp, PMHC, and any other Affiliate of the Stockholder. 2 "Stockholder Change of Control" shall mean the occurrence of an event in which any Person becomes the Beneficial Owner, directly or indirectly, of Voting Securities entitled to vote with respect to the election of directors or any similar governing body of the Stockholder or any Pacific Life Entity then holding Shares representing more than 9.9% of the Voting Securities of the Company, pursuant to the consummation of a reorganization, merger, consolidation or liquidation of, or sale of all or substantially all of the assets of, Stockholder or such Pacific Life Entity, or a share exchange or similar form of corporate transaction involving the Stockholder or such Pacific Life Entity as permitted by Article 9(b) of the Company's Articles of Association, so as to cause such Person's direct or indirect ownership percentage to exceed 50% of all Voting Securities of Stockholder or such Pacific Life Entity; provided, however, that the event described in this paragraph shall not be deemed to be a Stockholder Change of Control if it occurs as the result of any of the following acquisitions: (A) by any employee benefit plan sponsored or maintained by the Company or any Pacific Life Entity then holding any Shares; (B) by any underwriter temporarily holding securities pursuant to an offering of such securities; or (C) as a result of the demutualization of PMHC (excluding a "sponsored" demutualization, which shall be deemed a Stockholder Change of Control). "Stockholder Nominee Notice" shall have the meaning assigned in Section 3.1(a) of this Agreement. "13D Group" shall mean any group of Persons acquiring, holding, voting or disposing of any Voting Security which would be required under Section 13(d) of the Exchange Act and the rules and regulations thereunder to file a statement on Schedule 13D with the Commission as a "person" within the meaning of Section 13(d)(3) of the Exchange Act. "Transfer" shall mean any sale, transfer, pledge, encumbrance or other disposition to any Person, and to "Transfer" shall mean to sell, transfer, pledge, encumber or otherwise dispose of to any Person. "Transferee" shall mean any person to whom Securities are Transferred. "Voting Securities" shall mean Securities with the power to vote with respect to the election of directors generally. For purposes of this Agreement, any options and warrants with respect to Voting Securities, and any Securities that are convertible or exchangeable for Voting Securities, shall be treated as Voting Securities only to the extent such instruments are currently exercisable or "in the money." ARTICLE II Agreements of Stockholder Section 2.1 Restrictions on Purchase. Each of Stockholder, Pacific LifeCorp and PMHC agrees that, without the prior written consent of the Company (the granting of which shall be at the Company's sole discretion), none of Stockholder, Pacific LifeCorp and PMHC shall, and each of Stockholder, Pacific LifeCorp and PMHC shall cause each of their respective Affiliates not to, singly or as part of a partnership, limited partnership, syndicate or other 13D Group, directly or indirectly, acquire, propose to acquire, or publicly announce or otherwise disclose an intention to propose to acquire, or offer or agree to acquire, by purchase or otherwise 3 (including by exercising control over a Person it did not previously control), Beneficial Ownership of any Security so as to cause Stockholder's Beneficial Ownership percentage in the Company to exceed 24.9% of the issued and outstanding Securities of the Company (or such other percentage as is necessary to prevent the Company from being treated as a controlled foreign corporation as a result of amendments to Section 951 et seq. of the United States Internal Revenue Code of 1986, as amended, or any successor provisions thereto). For the purposes of this Section 2.1 only, a "Beneficial Owner" of an interest shall also include a Person who, together with his or its Affiliates, has the right to become a beneficial owner of an interest (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise, conversion or exchange of any option, warrant, right or other instrument, or otherwise. Section 2.2 Stockholder Change of Control. Notwithstanding any provision herein to the contrary, in connection with the occurrence of a Stockholder Change of Control, the Company shall have the option, in its sole discretion, to redeem all of the Shares Beneficially Owned by Stockholder (or, if the Stockholder Change of Control relates to any other Pacific Life Entity, such other Pacific Life Entity), at a price equal to the greater of (x) the product obtained by multiplying (i) the average of the final closing trading prices of the Shares on the NASDAQ National Market, or the New York Stock Exchange, as appropriate, as reported in the Wall Street Journal, Eastern Addition (or such other sources as the parties agree to in writing), for the twenty consecutive trading days ending on the fifth business day immediately preceding the Redemption Date, by (ii) the number of Shares Beneficially Owned by Stockholder or such other Pacific Life Entity, as applicable, and (y) the value of Stockholder's (or such other Pacific Life Entity's, if applicable) Shares, according to the following formula: Value = A x B x C, where A is the Company's earnings per share for the most recently completed fiscal year; B is the multiple of earnings used by the acquiring person in such Stockholder Change of Control to determine the acquisition price of the Stockholder or such other Pacific Life Entity, as applicable; and C is the number of Shares Beneficially Owned by Stockholder or such other Pacific Life Entity, as applicable. Stockholder or such other Pacific Life Entity shall provide written notice to the Company regarding a potential Stockholder Change of Control at least 60 days prior to the planned date of consummation of such Stockholder Change of Control. The Company shall give written notice of its intention to exercise the option provided for in this Section 2.2 not later than 30 days after receiving written notice of such potential Stockholder Change of Control and shall consummate the redemption of the Shares Beneficially Owned by the Stockholder or such other Pacific Life Entity, as applicable, at least 10 days prior to the date on which the Stockholder Change of Control is scheduled to occur (the "Redemption Date"). 4 Section 2.3 Standstill Provisions. Until the second anniversary of the Closing, Stockholder agrees that Stockholder will not, and will cause Stockholder Affiliates not to alone or with a third party, take any of the following actions: (a) deposit (either before or after the date of the execution of this Agreement) any Security of the Company in a voting trust or subject any Security of the Company to any similar arrangement or proxy with respect to the voting of such Security; or (b) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies," or become a "Participant" in a "solicitation" (as such terms are used in Regulation 14A under the Exchange Act) to seek to advise or influence any person to vote against any proposal or director nominee recommended to the stockholders of the Company; or (c) form, join or in any way participate in a 13D Group with respect to any Security of the Company or any Securities of its subsidiaries; or (d) commence (including by means of proposing or publicly announcing or otherwise disclosing an intention to propose, solicit, offer, seek to effect or negotiate) a merger, acquisition or other business combination transaction relating to the Company; or (e) initiate a "proposal," as such term is used in Rule 14a-8 under the Exchange Act, "propose," or otherwise solicit the approval of, one or more Stockholders for a "proposal" or induce or attempt to induce any other person to initiate a "proposal"; or (f) otherwise act to seek to control or influence the management, the Board or the policies of the Company other than pursuant to its right to nominate directors pursuant to Article III hereof; or (g) take any other action to seek or effect control of the Company other than in a manner consistent with the terms of this Agreement or; (h) make a public request to the Company (or its directors, officers, Stockholders, employees or agents) to take any action in respect of the foregoing materials; or (i) disclose any intention, plan or arrangement inconsistent with the foregoing. ARTICLE III Board and Committee Representation Section 3.1 Board Representation. (a) Effective as of the Closing, for such period of time as Stockholder continues to Beneficially Own Shares that constitute not less than 15% of all of the issued and outstanding Shares, the Company shall cause such number of persons, equaling not less than 20% of the total number of directors on the Board and designated by Stockholder in a written Stockholder Nominee Notice (a "Stockholder Nominee Notice") delivered to the Company not less than 60 days prior to the annual meeting of the Stockholders of the Company, to be nominated by the Nominating Committee for election or reelection to the Board at the next annual meeting of the Stockholders of the Company. 5 (b) In the event that Stockholder ceases to Beneficially Own at least 15%, but continues to Beneficially Own more than 10%, of the Shares, the Company agrees to cause the Nominating Committee to nominate one person designated by Stockholder in a Stockholder Nominee Notice, delivered to the Company not less than 60 days prior to the annual meeting of the Stockholders of the Company, for election or reelection to the Board at the next annual meeting of the Stockholders of the Company; provided, however, that in the event that Stockholder ceases to Beneficially Own at least 15% of the Shares, the directors who were not designated by Stockholder may, by majority vote of such directors at any time, request such number of directors designated by Stockholder to resign from the Board so only one director designated by Stockholder remains on the Board, and Stockholder shall immediately cause such director or directors to resign from the Board. (c) In the event that Stockholder ceases to Beneficially Own more than 5% of the Shares, the directors who were not designated by Stockholder may, by majority vote of such directors at any time, request any or all of the directors designated by Stockholder to resign from the Board, and Stockholder shall immediately cause such director or directors to resign from the Board. Section 3.2 Committees. As long as Stockholder Beneficially Owns at least 15% of the Shares, the Company shall cause the Audit and Finance and Investment Committees of the Board and, if in existence, the Compensation Committee, to each include as a voting member on such committee at least one director designated by Stockholder pursuant to the most recent Stockholder Nominee Notice. ARTICLE IV Effectiveness and Termination Section 4.1 Effectiveness. This Agreement shall take effect immediately upon the Closing and shall remain in effect until it is terminated by the mutual written agreement of the parties. ARTICLE V Representations and Warranties Section 5.1 Representations and Warranties of the Company. The Company represents and warrants to the Stockholder as of the date hereof as follows: (a) The Company has all necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. (b) This Agreement has been duly and validly authorized by the Company and all necessary and appropriate action has been taken by the Company to execute and deliver this Agreement and to perform its obligations hereunder. (c) This Agreement has been duly executed and delivered by the Company and assuming due authorization and valid execution and delivery by the Stockholder, this Agreement is a legal, valid and binding obligation of the Company, enforceable in accordance with its terms. 6 Section 5.2 Representations and Warranties of the Stockholder. Stockholder represents and warrants to the Company as of the date hereof as follows: (a) Stockholder has all necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. (b) This Agreement has been duly and validly authorized by Stockholder and all necessary and appropriate action has been taken by Stockholder to execute and deliver this Agreement and to perform its obligations hereunder. (c) This Agreement has been duly executed and delivered by the Stockholder and assuming due authorization and valid execution and delivery by the Company, this Agreement is a legal, valid and binding obligation of Stockholder, enforceable in accordance with its terms. (d) As of the Closing, neither Stockholder nor any Pacific Life Entity Beneficially Owns any Shares other than those Shares acquired pursuant to the Share Purchase Agreement. ARTICLE VI Miscellaneous Section 6.1 Injunctive Relief. Each party hereto acknowledges that it would be impossible to determine the amount of damages that would result from any breach of any of the provisions of this Agreement and that the remedy at law for any breach, or threatened breach, of any of such provisions would likely be inadequate and, accordingly, agrees that each other party shall, in addition to any other rights or remedies which it may have, be entitled to seek such equitable and injunctive relief as may be available from any court of competent jurisdiction to compel specific performance of, or restrain any party from violating, any of such provisions. In connection with any action or proceeding for injunctive relief, each party hereto hereby waives the claim or defense that a remedy at law alone is adequate and agrees, to the maximum extent permitted by law, to have each provision of this Agreement specifically enforced against him or it, without the necessity of posting bond or other security against him or it, and consents to the entry of injunctive relief against him or it enjoining or restraining any breach or threatened breach of such provisions of this Agreement. Section 6.2 Successors and Assigns. This Agreement shall not be assigned, in whole or in part, by any party hereto without the written consent of the other party; provided, however, that Stockholder may, without the written consent of the Company, assign its rights and delegate its duties hereunder to a Pacific Life Entity. Notwithstanding the foregoing, the rights and duties of a party hereto may only be assigned to a third party, including a Pacific Life Entity, if such third party agrees in writing to be bound by this Agreement. Section 6.3 Amendments; Waiver. (a) This Agreement may only be amended by an agreement in writing executed by the parties hereto. (b) Either party may waive in whole or in part any benefit or right provided to it under this Agreement, such waiver being effective only if contained in a writing executed by 7 the waiving party. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon breach thereof shall constitute a waiver of any such breach or of any other covenant, duty, agreement or condition, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. Section 6.4 Notices. Except as otherwise provided in this Agreement, all notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, when delivered personally or by courier, three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested), or when received by facsimile transmission if promptly confirmed by one of the foregoing means, as follows: If to the Company: Scottish Annuity & Life Holdings, Ltd. Crown House, 3rd Floor 4 Par-la-Ville Road Hamilton, Bermuda HM 12 Attention: Scott E. Willkomm Fax: (441) 295-7576 with a copy to: LeBoeuf, Lamb, Greene & MacRae, L.L.P. 125 West 55th Street New York, New York 10019 Attention: Hugh T. McCormick, Esq. Fax: (212) 424-8500 If to the Stockholder: Pacific Life Insurance Company 700 Newport Center Drive Newport Beach, CA 92660-6397 Attention: General Counsel Fax: (949) 219-3706 with a copy to: Gibson Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, California 90071-3197 Attention: Karen E. Bertero Fax: (213) 229-6360 or to such other address or facsimile number as either party may, from time to time, designate in a written notice given in a like manner. 8 Section 6.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW. Section 6.6 Headings. The descriptive headings of the several sections in this Agreement are for convenience only and do not constitute a part of this Agreement and shall not be deemed to limit or affect in any way the meaning or interpretation of this Agreement. Section 6.7 Integration. This Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to its subject matter other than those expressly set forth or referred to herein. Section 6.8 Severability. If any term or provision of this Agreement or any application thereof shall be declared or held invalid, illegal or unenforceable, in whole or in part, whether generally or in any particular jurisdiction, such provision shall be deemed amended to the extent, but only to the extent, necessary to cure such invalidity, illegality or unenforceability, and the validity, legality and enforceability of the remaining provisions, both generally and in every other jurisdiction, shall not in any way be affected or impaired thereby. Section 6.9 Consent to Jurisdiction. In connection with any suit, claim, action or proceeding arising out of this Agreement, the Stockholder and the Company each hereby consent to the in personam jurisdiction of the United States federal courts and state courts located in New York, New York; the Stockholder and the Company each agree that service in the manner set forth in Section 6.4 hereof shall be valid and sufficient for all purposes; and the Stockholder and the Company each agree to, and irrevocably waive any objection based on forum non conveniens or venue not to, appear in any United States federal court state court located in New York, New York. Section 6.10 Counterparts. This Agreement may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9 IN WITNESS WHEREOF, the Company and the Stockholder have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written. THE COMPANY: SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. By: /s/ Scott E. Willkomm ----------------------------------- Scott E. Willkomm President and Chief Financial Officer STOCKHOLDER: PACIFIC LIFE INSURANCE COMPANY By: /s/ Khanh T. Tran ----------------------------------- Khanh T. Tran EVP, Chief Financial Officer By: /s/ Sharon A. Cheever ----------------------------------- Sharon A. Cheever Assistant Secretary ACKNOWLEDGED AND AGREED: solely with respect to Section 2.1 hereof: PMHC: PACIFIC MUTUAL HOLDING COMPANY By: /s/ Khanh T. Tran ----------------------------------- Khanh T. Tran EVP, Chief Financial Officer By: /s/ Sharon A. Cheever ----------------------------------- Sharon A. Cheever Assistant Secretary 10 PACIFIC LIFECORP: PACIFIC LIFECORP By: /s/ Khanh T. Tran ----------------------------------- Khanh T. Tran EVP, Chief Financial Officer By: /s/ Sharon A. Cheever ----------------------------------- Sharon A. Cheever Assistant Secretary 11 EX-10.5 6 ex105.txt TAX DEED OF COVENANT Tax Deed of Covenant ================================================================================ WORLD-WIDE HOLDINGS LIMITED DATED AS OF DECEMBER 31, 2001 PACIFIC LIFE INSURANCE COMPANY and SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. TAX DEED OF COVENANT relating to the sale and purchase of the whole of the issued share capital of WORLD-WIDE HOLDINGS LIMITED ================================================================================ Reference - ACT TAX DEED OF COVENANT This deed is made as of December 31, 2001. Between (1) PACIFIC LIFE INSURANCE COMPANY a company registered in California, United States at 700 Newport Center Drive, Newport Beach, California CA92660-6397, United States (the "Seller"); and (2) SCOTTISH ANNUITY & LIFE HOLDINGS, Ltd. a company registered in the Cayman Islands at Maples and Calder, Ugland House, South Church Street, P.O. Box 309 G.T., Grand Cayman, Cayman Islands, B.W.I. (the "Buyer"). Recitals By an agreement (the "Agreement") dated August 6, 2001, as amended, and made between the Seller and the Buyer, the Seller agreed to sell the whole of the issued share capital of World-Wide Holdings Limited, a company registered and incorporated in accordance with the laws of England and Wales having registration number 2145545 and its registered address at Old Bank House, Thames Street, Windsor, Berkshire SL4 1PZ, United Kingdom, to the Buyer and the Seller agreed on the Closing Date of such sale to enter into this Deed. It is agreed as follows: 1. Interpretation 1.1 In this Deed words and expressions defined in the Agreement have the same meaning except where otherwise provided or unless there is something in the subject matter or context which is inconsistent with them. 1.2 "Auditors" means the auditors for the time being of the relevant Group Company; 1.3 "Covenantors' Reliefs" means any Relief or right to repayment of Taxation which is or becomes available to any Group Company in respect of or by reference to any period or part of a period prior to the Closing Date other than a Purchaser's Relief; 1.4 "Group Company" means either Holdings or the Company, and "Group" means both of them. 1.5 "Event" means the existence of any state of affairs and any payment, transaction, act, omission or occurrence of whatever nature whether or not a Group Company or the Buyer is a party thereto and for the avoidance of doubt includes: 2 1.5.1 the execution of the Agreement and closing of the sale of the Shares to the Buyer; and 1.5.2 the death of any person; and references to an Event occurring on or before the Closing Date shall include an Event deemed, pursuant to any Taxation Statute, to occur or which is otherwise treated or regarded as occurring on or before the Closing Date. References to an Event which occurred on or before the Closing Date include the combined result of two or more Events all of which occurred on or before the Closing Date. 1.6 "Liability for Taxation" means any liability of a Group Company to make an actual payment of or in respect of Taxation whether or not the same is primarily payable by the Group Company and whether or not the Group Company has or may have any right of reimbursement against any other person or persons and shall also include: 1.6.1 the Loss of any Relief where such Relief has been taken into account in computing and so reducing or eliminating any provision for deferred Tax which appears in the 2000 Company Financials (or which but for such Relief would have appeared in the 2000 Company Financials) or where such Relief was treated as an asset of the Group in the 2000 Company Financials or was taken into account in computing any deferred Tax asset which appears in the 2000 Company Financials in which case the amount of the Liability for Taxation shall be the amount of Taxation which would (on the basis of Tax rates current at the Balance Sheet Date) have been saved but for such Loss assuming for this purpose that the Company had sufficient profit or was otherwise in a position to use the relief; 1.6.2 the Loss of any right to repayment of Taxation (including any repayment supplement) which was treated as an asset in the 2000 Company Financials in which case the amount of the Liability for Taxation shall be the amount of the right to repayment and any related repayment supplement; and 1.6.3 the set off or use against income, profits or gains earned, accrued or received or against any Tax chargeable in respect of an event occurring on or before the Closing Date of any Relief or right to repayment of taxation (including any repayment supplement) which is not available before the Closing Date but arises after the Closing Date in circumstances where, but for such set off or use, a Group Company would have had a liability to make an actual payment of or in respect of Taxation for which the Buyer would have been able to make a claim against the Seller under this Deed in which case the amount of the Liability for Taxation shall be the amount of Taxation saved by a Group Company as a result of such set off or use. 1.7 "Loss" means any reduction, modification, loss, counteraction, nullification, utilisation, disallowance or claw back for whatever reason. 1.8 "Purchaser's Relief" means any Relief or right to repayment of Taxation as is mentioned in clauses 1.6.1 to 1.6.3. 3 1.9 "Relevant Company" means any company other than a Group Company, the Buyer and any company that may be treated as being a member of the same group of companies as the Buyer or as being associated with the Buyer for the purposes of the Tax that has given rise to the Liability for Taxation under clause 2.1.2. 1.10 "Relief" means any loss, relief, allowance, credit, exemption or set off in respect of Taxation or any deduction in computing income, profits or gains for the purposes of Taxation. 1.11 "Tax" or "Taxation" means: 1.11.1 all forms of Taxation (both direct and indirect) including and without limitation any charge, tax, duty, levy, impost, withholding or liability wherever chargeable imposed for support of national, state, federal, municipal or local government or any other person and whether of the UK or any other jurisdiction; and 1.11.2 any penalty, fine, surcharge, interest, charges or costs payable in connection with any taxation within clause 1.11.1 above. 1.12 "Tax Claim" means any assessment, self assessment, notice, demand, letter or other document issued or action taken by or on behalf of any Taxation Authority from which it appears that a Group Company or the Buyer is or may be subject to a Liability for Taxation or other liability in respect of which the Seller are or may be liable under this Deed. 1.13 "Taxation Authority" means the Inland Revenue, Customs & Excise, Department of Social Security and any other governmental or other authority whatsoever competent to impose any Taxation whether in the United Kingdom or elsewhere. 1.14 "Taxation Statute" means any directive, statute, enactment, law or regulation wheresoever enacted or issued, coming into force or entered into providing for imposing any Taxation and shall include orders, regulations, instruments, by-laws or other subordinate legislation made under the relevant statute or statutory provision and any directive, statute, enactment, law, order, regulation or provision which amends, extends, consolidates or replaces the same or which has been amended, extended, consolidated or replaced by the same. 1.15 Headings are for convenience only and shall not affect the construction of this Deed. 1.16 References to gross receipts, income, profits or gains earned, accrued or received shall include any gross receipts, income, profits or gains deemed pursuant to the relevant Taxation Statute to have been or treated or regarded as earned, accrued or received. 1.17 Unless the context otherwise requires the singular shall include the plural and vice versa, the masculine shall include the feminine and references to persons shall include bodies corporate, unincorporated associations and partnerships in each case whether or not having separate legal personality. 4 2. Covenant 2.1 Subject as hereinafter provided the Seller hereby covenants to pay to the Buyer an amount equal to: 2.1.1 any Liability for Taxation resulting from or by reference to any Event occurring on or before the Closing Date or in respect of any gross receipts, income, profits or gains earned, accrued or received by the Group Company in question on or before the Closing Date; 2.1.2 any Liability for Taxation for which the Group Company in question would not have been liable but for being treated as being or having been a member of the same group as or associated with any Relevant Company on or prior to the Closing Date for the purposes of any Tax; and 2.1.3 all costs and expenses reasonably and properly incurred and payable by a Group Company or the Buyer in connection with any action taken to avoid, resist or settle any Tax Claim, Liability for Taxation or otherwise taking or defending any action under this Deed. 3. Limitation of Sellers Liability 3.1 The covenant given by clause 2 above shall not cover any Liability for Taxation: 3.1.1 to the extent that a provision or reserve in respect thereof was made in the 2000 Company Financials; 3.1.2 to the extent that such Liability for Taxation arises from any gross receipts, income, profits or gains earned, accrued or received, Event, act or transaction of a Group Company to which the Liability for Taxation relates in the ordinary course of its trading of the Group Company since the Balance Sheet Date; 3.1.3 to the extent that such Liability for Taxation arises or is increased wholly as a result of any decision of any court or tribunal or the coming into force of or any change in any enactment, law, regulation, directive, requirement or any published practice of any government, government department or agency or regulatory body (including but not limited to extra statutory concessions of any Taxation Authority) after the date hereof; 3.1.4 to the extent recovery (less costs and expenses) has been made by the Buyer or a Group Company under the Agreement in respect of the same subject matter; 3.1.5 to the extent that such Liability for Taxation would not have arisen but for a voluntary act or transaction carried out by the Buyer or a Group Company after the date hereof otherwise than in the ordinary course of business or otherwise than pursuant to a legally binding obligation created on or before the date hereof, wherein either such case such act or transaction was carried out without the consent of the Seller and where the Buyer or a Group Company knew or ought reasonably to have known that such act or transaction would give rise to such Liability for Taxation; 5 3.1.6 except in the case of fraudulent conduct unless written notice of such Liability for Taxation or any Tax Claim which may give rise to such Liability for Taxation specifying in reasonable detail the circumstances giving or which may give rise to such Liability for Taxation and the amount thereof has been served on the Seller on or prior to the seventh anniversary of the Closing Date; 3.1.7 in respect of stamp duty or stamp duty reserve Tax payable on the transfer or agreement to transfer the Shares pursuant to the Agreement; 3.1.8 to the extent that the Liability for Taxation has been made good or otherwise compensated for or extinguished at no expense to the Buyer or a Group Company; 3.1.9 where the Liability for Taxation is attributable to a Group Company ceasing to be entitled to the small companies' rate of corporation tax; 3.1.10 to the extent that the Liability for Taxation arises or is increased as a consequence of the failure of the Buyer to comply with or procure the compliance of a Group Company with their respective obligations under clauses 4 (disputes and conduct of Tax claims), 7 (recovery from other persons), and 8 (corporation Tax returns); 3.1.11 to the extent that the Auditors of the relevant Group Company confirm that a specific amount in respect of that Liability for Taxation was taken into account in computing any provision or reserve for deferred Taxation in the 2000 Company Financials; 3.1.12 to the extent that the Liability for Taxation has been paid or otherwise extinguished on or before the Closing Date; 3.1.13 to the extent that the Liability for Taxation can be discharged at no cost to the Group Company in question by the surrender of a Relief by the Seller to the Group Company in question; 3.1.14 to the extent that any Covenantors' Reliefs are available to relieve or mitigate that Liability for Taxation or would have been available but for the application of any of sections 245, 245A, 245B or 768 ICTA 1988 in so far as the Loss of any of the Covenantors' Reliefs arises as a result of an Event occurring after Completion and any Relief that is so available in relation to more than one Liability for Taxation to which this Deed applies shall be deemed, so far as possible, to be used in such a way as to reduce to the maximum extent possible the Seller's total liability hereunder; 3.1.15 the Liability for Taxation arises or is increased as a result of any increase in the rates of Taxation or variation in the method of applying or calculating the rate of Taxation made after the Closing Date with retrospective effect; 6 3.1.16 the Liability for Taxation comprises interest or penalties arising by virtue of an underpayment of Tax prior to Completion, insofar as such underpayment would not have been an underpayment but for any event or events occurring wholly after the Closing Date; 3.1.17 the Liability for Taxation arises or is increased as a result of any change made after Completion to the accounting period or the accounting policy or practice of or applicable to the Buyer or any Group Company after the Closing Date; 3.1.18 the Liability for Taxation would not have arisen or would have been reduced or eliminated but for: (i) the making of a claim, election, surrender or disclaimer or the giving of a notice or consent or the doing of any other thing by any Group Company or any other person connected with any of them (other than the making giving or doing of which was taken in to account in computing any provision or reserve for Taxation in the 2000 Company Financials under or in connection with a provision of an enactment of regulation relating to Taxation otherwise than at the written direction of the Seller; or (ii) the failure or omission on the part of any Group Company or any other person connected with any of them to make any such valid claim, election, surrender or disclaimer or give any notice or consent or do any other thing the making or giving or doing of which was disclosed to the Buyer as taken into account in computing any provision or reserve for Taxation in 2000 Company Financials; 3.1.19 the matter giving rise to the Liability for Taxation is an amount for which the Buyer or relevant Group Company has a right of recovery against, or an indemnity from, a person other than the Seller or a Relevant Company; 3.1.20 the Liability for Taxation arises or is increased by any voluntary act of the Buyer or a Group Company after the Closing Date which has the result that any instalment of corporation Tax (within the meaning of section 6 of the Taxes Act 1988) paid prior to the Closing Date pursuant to the Corporation Tax (Instalment Payments) (Large Companies) Regulations 1998 is insufficient. and for the purposes of this clause 3 only "Liability for Taxation" shall be deemed to include a liability or loss falling within clause 2.1.3 above. 3.2 The Seller shall have no liability to the Buyer under any part of this Deed in respect of any non-availability, inability to use, or loss or restriction of any Relief ("failure of relief") where such failure of relief does not give rise to a Tax liability to which clause 2 applies. 7 4. Disputes and Conduct of Tax Claims 4.1 If the Buyer or a Group Company shall become aware of a Tax Claim of which the Seller is not then aware, the Buyer shall or shall procure that a Group Company shall within 14 days thereafter give written notice thereof to the Seller. 4.2 If the Seller shall indemnify a Group Company and/or (as the case shall require) the Buyer to the Buyer's reasonable satisfaction against all liabilities, reasonable costs, damages or reasonable expenses which may be incurred thereby including any additional Liability for Taxation, the Buyer shall and shall procure that a Group Company shall take such action as the Seller may reasonably request by notice in writing given to a Group Company and the Buyer to avoid, dispute, defend, resist, appeal, postpone or compromise any Tax Claim (such a Tax Claim where action is so requested being hereinafter referred to as a "Dispute"). Provided that neither a Group Company nor the Buyer shall be obliged to appeal or procure an appeal against any assessment to Taxation raised on either of them if, the Seller has been given written notice of the receipt of such assessment the Buyer has not at least 5 Business Days prior to the last day for filing notice of appeal received instructions in writing from the Seller to do so. 4.3 If the Seller does not request the Buyer or a Group Company to take any action under clause 4.2 of this Deed or fails to indemnify the Buyer and a Group Company to the Buyer's reasonable satisfaction within a period of time (commencing with the date of the notice given to the Seller) that is reasonable having regard to the nature of the Tax Claim and the existence of any time limit in relation to avoiding, disputing, defending, resisting, appealing or compromising such Tax Claim and which period shall not in any event exceed a period of 90 days or the Dispute concerns fraudulent conduct, the Buyer or Company shall have the conduct of the Dispute absolutely (without prejudice to its rights under this Deed) and shall be free to pay or settle the Tax Claim on such reasonable terms as the Buyer or a Group Company may in its absolute discretion consider fit. 4.4 Subject to sub-clause 4.3, if the Seller indemnifies the Buyer and a Group Company in accordance with clause 4.2, the conduct of a Dispute shall be delegated to the Seller upon the following terms (or such other terms as may be agreed from time to time between the Buyer and the Seller): 4.4.1 the Buyer shall promptly be kept fully informed of all matters pertaining to a Dispute and shall be entitled to see and keep copies of all correspondence and notes or other written records of telephone conversations or meeting and, in the event that there is no written record, shall be given a report of all telephone conversations with any Taxation Authority to the extent that it relates to a Dispute; 4.4.2 the appointment of solicitors or other professional advisers to any Group Company shall be subject to the approval of the Buyer, such approval not to be unreasonably withheld; 4.4.3 all written communications pertaining to the Dispute which are to be transmitted to the relevant Taxation Authority shall first be submitted to the Buyer and a Group Company for approval and shall only be finally 8 transmitted if such approval is given, which approval is not to be unreasonably withheld or delayed; and 4.4.4 the Seller shall make no settlement or compromise of the Dispute or agree to any matter in the conduct of the Dispute which is likely to affect the amount of any material future Liability for Taxation of a Group Company or of the Buyer without the prior approval of a Group Company and the Buyer (as may be appropriate), such approval not to be unreasonably withheld or delayed. 4.5 Neither the Buyer nor a Group Company shall be subject to any claim by or liability to the Seller for non-compliance with any of the foregoing provisions of this clause 4 if the Buyer or a Group Company has bona fide acted in accordance with the instructions of the Seller. 5. Payment Date and Interest 5.1 Where the Seller is liable to make any payment under clause 2, the due date for the making of that payment (the "Due Date") shall be the later of the date falling seven days after the Buyer has served a notice on the Seller demanding that payment and: 5.1.1 in a case that involves an actual payment of Taxation by a Group Company, the date on which the Taxation in question would have had to have been paid to the relevant Taxation Authority in order to prevent a liability to a fine, surcharge or penalty from arising in respect of the Liability for Taxation in question; or 5.1.2 in any case that involves a Liability for Taxation falling within clause 1.6.1 the last date upon which the Taxation is or would have been required to be paid to the relevant Taxation Authority in respect of the period in which the Loss of the Relief occurs (assuming for this purpose that a Group Company had sufficient profits or was otherwise in a position to use the Relief); or 5.1.3 in any case that involves a Liability for Taxation falling within Clause 1.6.2 the date upon which the repayment was due from the relevant Taxation Authority; or 5.1.4 in any case that involves a Liability for Taxation falling within clause 1.6.3 the date upon which the Taxation saved by a Group Company is or would have been required to be paid to the relevant Taxation Authority. 5.2 Any dispute as to the amount specified in any notice served on the Seller under clause 5.1.2, 5.1.3 or 5.1.4 shall be determined by the Auditors of a Group Company for the time being, acting as experts and not as arbitrators (the costs of that determination being shared equally the Seller and the Buyer). 5.3 If any sums required to be paid by the Seller under this Deed are not paid on the Due Date, then, except to the extent that the Seller's liability under clause 2 compensates the Buyer for the late payment by virtue of it extending to interest and penalties, such sums 9 shall bear interest (which shall accrue from day to day after as well as before any judgment for the same) at the rate equal to the base rate from time to time of Buyer's bank or (in the absence thereof) at such similar rate as the Buyer shall select from the day following the Due Date up to and including the day of actual payment of such sums such interest to be compounded quarterly. 6. Taxation of Payments 6.1 Any sum payable by the Seller to the Buyer under this Deed shall be paid free and clear of any deduction or withholding whatsoever, save only as may be required by law. 6.2 If any deduction or withholding is required by law to be made from any payment by the Seller under this Deed (other than a payment made pursuant to clause 5.3) or if (ignoring any Relief) the Buyer is subject to Taxation in respect of such payment the Seller shall increase the amount of the payment by such additional amount as is necessary to ensure that the net amount received and retained by the Buyer (after taking account of all deductions or withholdings or Taxation) is equal to the amount which it would have received and retained had the payment in question not been subject to any deductions or withholdings or Taxation. 7. Recovery from other persons 7.1 Where the Buyer or a Group Company is or becomes entitled to recover from some other person not being the Buyer a Group Company or any other company within the same group of companies as the Buyer or a Group Company (i) any amount or Relief which is referable to a Liability for Taxation which has resulted in a payment being made by the Seller under this Deed; or (ii) any amount or Relief which is referable to any deduction or withholding under clause 6.2, the Buyer shall or procure that a Group Company shall: 7.1.1 notify the Seller of its entitlement; and 7.1.2 if required by the Seller and, subject to the Buyer and a Group Company being secured and indemnified by the Seller against any Taxation that may be suffered on receipt of that amount and any costs and expenses incurred in recovering that amount or obtaining that Relief, take or procure that a Group Company takes all reasonable steps to enforce that recovery or right. 7.2 If the Buyer or a Group Company recovers or obtains any amount or Relief referred to in clause 7.1 the Buyer shall account to the Seller for: 7.2.1 any amount recovered (including any related interest or related repayment supplement) less any Taxation suffered in respect of that amount and any costs and expenses incurred in recovering that amount (save to the extent that that amount has already been made good by the Seller under sub-clause 7.1.2) within five Business Days of the date of recovery; and 7.2.2 in the case of a Relief, the Purchaser shall, within five Business Days of the date on which Taxation would otherwise have been payable had 10 such credit not been available, pay to the Covenantor an amount equal to the amount of such Taxation; subject to a maximum of the aggregates of the amounts paid by the Seller under clause 2 and clause 6 in respect of the Liability for Taxation in question. 8. Over-provisions and Savings 8.1 If the Buyer discovers (or is made aware) that any provision for Taxation in the 2000 Company Financials (excluding any provision for deferred tax) may prove to be an over-provision (an "Over-provision") or any Liability for Taxation which may result in a payment under this Deed by the Seller may give rise to a saving of Taxation by any Group Company (a "Saving"), it shall or shall procure that the Group Company give full details to the Seller. The Buyer shall (at the Seller's request and expense) procure that the Auditors certify the amount of the Over-provision or the value of the Saving. 8.2 In the case of a Saving, the Buyer will as soon as reasonably practicable after the amount of the Saving is certified by the Auditors in accordance with clause 8.1 repay to the Seller the lesser of: 8.2.1 the amount of the Saving (as determined by the Auditors) less any costs incurred by the Group Companies or the Buyer; and 8.2.2 the amount paid by the Seller under clause 2 in respect of the Liability for Taxation which gave rise to the Saving less any part of the amount previously repaid to the Seller under any provision of this Deed or otherwise. 8.3 In the case of an Over-provision, the Buyer shall as soon as reasonably practicable after the amount of the Over-provision is certified by the Auditors in accordance with clause 8.1: 8.3.1 set off the Over-provision against any payment then due from the Sellers under this Deed; 8.3.2 to the extent there is an excess, refund to the Sellers any previous payment or payments made by the Sellers under this Deed; and 8.3.3 to the extent the excess referred to in clause 8.3.2 is not exhausted under that clause, the remainder of that excess shall be carried forward and set off against any future payment or payments which become due from the Covenantors under this Deed. 8.4 Where any such certification as is mentioned in clause 8.1 has been made, the Seller or the Buyer (in either case at the expense of the person requesting the review) may request the Auditors to review such certification in the light of all relevant circumstances, including any facts which have become known only since such certification, and to certify whether such certification remains correct or whether, in the light of those circumstances, the amount that was the subject of such certification should be amended. 11 8.5 If the Auditors certify under clause 8.4 that an amount previously certified should be amended, that amended amount shall be substituted for the purposes of clauses 8.2 and 8.3 as the amount of the Over-provision or Saving (as appropriate) in respect of the certification in question in place of the amount originally certified, and such adjusting payment (if any) as may be required by virtue of the above-mentioned substitution shall be made as soon as practicable by the Buyer or (as the case may be) to the Seller. 8.6 For the purposes of this clause, an Over-provision is a provision for Taxation in the 2000 Company Financials (excluding a provision for deferred taxation) which is or proves to be an Over-provision. 9. Corporation Tax Returns 9.1 The Seller or its authorised agent shall at the Seller's cost and expense prepare the corporation Tax returns and computations of a Group Company for all accounting periods ended on or prior to the Balance Sheet Date, to the extent that the same shall not have been prepared before the Closing Date, and submit them to the Buyer. 9.2 The Buyer shall procure that the returns and computations mentioned in clause 9.1 shall be authorised, signed and submitted to H.M. Inspector of Taxes without amendment or with such amendments as the Buyer reasonably considers to be necessary and shall give the Seller or its agents all such assistance as may reasonably be required (at the Seller's cost and expense) to agree those returns and computations with H.M. Inspector of Taxes provided that the Buyer shall not be obliged to take any such action as is mentioned in this clause 9.2 in relation to any return that is not full, true and accurate in all material respects. 9.3 The Seller or its duly authorised agents shall at the Seller's cost and expense prepare all documentation and shall have conduct of all matters (including correspondence) relating to the corporation Tax returns and computations of a Group Company for all accounting periods ended on or prior to the Balance Sheet Date provided that the Seller shall not without the prior written consent of the Buyer (not to be unreasonably withheld or delayed) transmit any communication (written or otherwise) to H.M. Inspector of Taxes or agree any matter with H.M. Inspector of Taxes. 9.4 The Buyer shall procure that a Group Company, affords such access to its books, accounts and records as is necessary and reasonable to enable the Seller or its duly authorised agents to prepare the corporation Tax returns and computations of a Group Company for all accounting periods ended on or before the Balance Sheet Date and conduct matters relating to them in accordance with this clause 9. 9.5 The Seller shall take all reasonable steps to ensure that the corporation Tax returns and computations of a Group Company for all accounting periods ended on or before the Balance Sheet Date are prepared and agreed with H.M. Inspector of Taxes as soon as possible. 10. General 10.1 The provisions of clauses 9.1 (Coordination of Tax Deed Covenant and the Agreement), 11.1 (Consent to Jurisdiction and Service of Process), 11.2 (Notices), 12 11.8 (Interpretation) and 11.11 (Counterparts) of the Agreement shall apply mutatis mutandis to this Deed. 10.2 The benefit of this Deed may be assigned by the Buyer only with the prior written consent of the Covenantors (such consent not to be unreasonably withheld or delayed). 10.3 The Buyer hereby covenants with the Seller to pay to the Seller by way of adjustment to the consideration for the sale of the Shares, an amount equivalent to any Taxation for which the Seller or any other person falling within section 767A(2) of Taxes Act 1988 ("ICTA") become liable by virtue of the operation of sections 767A, 767AA and 767B of ICTA in circumstances where the taxpayer company (as referred to in section 767A(1)) is any Group Company. The covenant contained in this clause 10.3 shall: 10.3.1 extend to any reasonable costs incurred by the Seller or such person in connection with such taxation or a claim under clause 10.3; 10.3.2 not apply to Taxation to the extent that the Buyer could claim payment in respect of it under clause 2; and 10.3.3 not apply to Taxation which has been recovered under section 767B(2) of ICTA (and the Seller shall procure that no such recovery is sought to the extent that payment is made hereunder). 10.4 This Deed shall be governed by and construed in accordance with the laws of New York. The parties irrevocably submit to the exclusive jurisdiction of the Courts of New York in respect of any claim, dispute or difference arising out of or in connection with this Deed 13 This deed has been entered into on the date stated at the beginning of this document. Signed as a Deed by: ) Pacific Life Insurance Company ) presence of: ) /s/ Sharon A. Cheever -------------------------- Sharon A. Cheever Vice President, Investment Counsel /s/ Audrey L. Milfs -------------------------- Audrey L. Milfs Vice President and Secretary Signed as a Deed by: ) Scottish Annuity & Life Holdings, Ltd. ) presence of: ) /s/ Scott E. Willkomm -------------------------- Scott E. Willkomm President and Chief Financial Officer 14 EX-10.6 7 ex106.txt LETTER AGREEMENT [Pacific Life Letterhead] Scottish Annuity & Life Holdings, Ltd. Crown House, 3rd Floor 4 Par-la-Ville Road Hamilton, Bermuda HM12 Dear Sir or Madam: For purposes of this letter agreement (this "Letter Agreement"), reference is hereby made to that certain Share Purchase Agreement dated August 6, 2001, by and between Scottish Annuity & Life Holdings Ltd. ("Buyer") and Pacific Life Insurance Company ("Seller") (such agreement, as heretofore amended, the "SPA"). Any capitalized term used herein and not otherwise defined herein shall have the meaning ascribed to such term in the SPA. Seller hereby proposes the following arrangement to Buyer: 1. On or before April 30, 2002, Holdings shall advise Seller in writing of (a) Holdings' consolidated pretax net income for the twelve months ending December 31, 2001 as determined in accordance with accounting principles generally accepted in the United States ("Holdings' 2001 Calendar Year US GAAP Consolidated Net Income"), (b) Holdings' United Kingdom ("UK") consolidated statutory taxable income attributable to Holdings' and the Company's business operations during the taxable year ending September 30, 2001 (the "2001 Tax Year") as determined without taking into account any income attributable to the release by Holdings or the Company of any amounts from investment reserves maintained by Holdings or the Company ("Holdings' 2001 Regular Taxable Income"), and (c) Holdings' UK consolidated income tax liability payable with respect to Holdings' 2001 Regular Taxable Income, exclusive of any tax liability attributable to the release of any amounts from investment reserves ("Holdings' 2001 Regular Tax Liability"). 2. On or before May 31, 2002, Seller shall advise Buyer in writing of (a) the portion of Holdings' 2001 Calendar Year US GAAP Consolidated Net Income with respect to which Seller must pay United States ("US") income taxes ("2001 Subpart F Income") and (b) Seller's US tax liability with respect to such 2001 Subpart F Income (the "2001 Subpart F Tax Liability"). 3. If Seller's 2001 Subpart F Tax Liability exceeds Holdings' 2001 Regular Tax Liability (such excess, the "Buyer Adjustment Amount"), the following shall apply: (a) the amount of the Buyer Adjustment Amount shall first be applied to reduce any payment due from Seller to Buyer pursuant to paragraph 5 hereof, and (b) the excess (if any) of the Buyer Adjustment Amount over the Seller Adjustment Amount (as defined in paragraph 4 hereof) shall be paid by Buyer to Seller, as an adjustment of the purchase consideration under the SPA, by the delivery to Seller of additional Buyer Shares having a value equal to such excess, with such value to be based on the value of the Buyer Shares used in determining the Purchase Share Consideration under the SPA. Any payment of additional Buyer Shares pursuant to the foregoing clause (b) hereof shall be made on or before June 10, 2002. Notwithstanding the foregoing, for all purposes of this Letter Agreement the parties agree that Seller's 2001 Subpart F Tax Liability shall not exceed US $1,629,400, and, accordingly, Buyer shall have no liability to Seller under this paragraph 3 if Holdings' 2001 Regular Tax Liability equals or exceeds US $1,629,400 (which, for avoidance of doubt, would be a Holdings' 2001 Regular Tax Liability of 1,140,000 UK pounds at an exchange rate of 1.4293 US dollars for 1 pound sterling). 4. For purposes of this Letter Agreement, the term "Seller Adjustment Amount" shall mean the following: (a) If Holdings' 2001 Regular Tax Liability is US $815,000 or less, the Seller Adjustment Amount shall equal 50% of Holdings' 2001 Regular Tax Liability. (b) If Holdings' 2001 Regular Tax Liability exceeds US $815,000 but does not exceed US $1,629,400, the Seller Adjustment Amount shall be US $408,000. (c) If Holdings' 2001 Regular Tax Liability exceeds US $1,629,400, the Seller Adjustment Amount shall be US $408,000 plus 100% of the amount by which Holdings' 2001 Regular Tax Liability exceeds US $1,629,400. 5. On or before June 10, 2002, Seller shall make a purchase price adjustment payment to Buyer equal to the excess (if any) of the Seller Adjustment Amount over the Buyer Adjustment Amount. Such payment shall be treated as an adjustment of the purchase consideration under the SPA and shall be made in cash. 6. The parties agree that the threshold for Damages in the amount of US $1,000,000 as set forth in Section 8.2(d)(iii) of the SPA shall be reduced by the amount described in subparagraph (a), (b) or (c) hereinbelow, whichever is applicable: (a) If Holdings' 2001 Regular Tax Liability is US $815,000 or less, an amount equal to 25% of Holdings' 2001 Regular Tax Liability; or (b) If Holdings' 2001 Regular Tax Liability exceeds US $815,000 but does not exceed US $1,629,400, an amount equal to the sum of US $203,750 plus 50% of the amount by which Holdings' 2001 Regular Tax Liability exceeds US $815,000; or (c) If Holdings' 2001 Regular Tax Liability exceeds US $1,629,400, an amount equal to US $610,950. Such Damages threshold shall be reduced in the same manner as if the amount specified in subparagraph (a), (b) or (c), as applicable, constituted a claim for Damages. 7. For all purposes of this Letter Agreement, the exchange rate to be used for determining the British pound sterling equivalent of any amount of US dollars shall be 1.4293 US dollars to 1 British pound sterling. 8. The parties agree to cooperate to the fullest extent possible (a) in exchanging information and tax liability estimates relative to the information to be exchanged between Buyer and Seller pursuant to paragraphs 1 and 2 hereof, (b) to reduce the aggregate amount of Seller's 2001 Subpart F Tax Liability and Holdings' 2001 Regular Tax Liability, and (c) in correcting any discrepancies between any estimated tax liabilities and actual tax liabilities. 9. Holdings will (a) pay or cause to be paid the Holdings' 2001 Regular Tax Liability on or before the date as of which it is obligated to do so under applicable UK tax laws, and (b) furnish to Seller evidence, reasonably acceptable to Seller, that such taxes have been paid. If the foregoing is acceptable, please execute this Letter Agreement where indicated below and return to the undersigned one copy of this Letter Agreement as executed by Buyer. Very truly yours, PACIFIC LIFE INSURANCE COMPANY By: /s/ R. Lee Wirthlin ------------------------------------- R. Lee Wirthlin Vice President, Tax By: /s/ Sharon A. Cheever ------------------------------------- Sharon A. Cheever Vice President, Assistant Secretary AGREED SCOTTISH ANNUITY & LIFE HOLDINGS, LTD. By: /s/ Scott E. Willkomm Dated: December 28, 2001 -------------------------------- Scott E. Willkomm President and Chief Financial Officer EX-99.1 8 ex991.txt PRESS RELEASE SCOTTISH ANNUITY & LIFE PACIFIC LIFE NEWS RELEASE For further information: Scott E. Willkomm John A. Soller Scottish Annuity & Life Holdings, Ltd. Pacific Life Insurance Company (441) 298-4364 (949) 219-3416 scott.willkomm@scottishannuity.com john.soller@pacificlife.com For Immediate Release Scottish Annuity & Life Holdings, Ltd. Completes Acquisition of World-Wide Reassurance; Pacific Life Becomes Largest Shareholder of Scottish Annuity HAMILTON, Bermuda and NEWPORT BEACH, California - December 31, 2001 - Scottish Annuity & Life Holdings, Ltd. (Nasdaq:SCOT) and Pacific Life Insurance Company announced today that Scottish Annuity had completed the acquisition of World-Wide Reassurance Company Limited and its parent company World-Wide Holdings Limited, from Pacific Life, in exchange for 4,532,380 newly-issued ordinary shares of Scottish Annuity. The number of Scottish Annuity shares issued to Pacific Life was computed based upon an agreed upon value of of $78 million and the average closing price of Scottish Annuity's shares for the twenty trading days ending December 20, 2001 of $17.2095. As a result of the transaction, Pacific Life becomes the largest shareholder of Scottish Annuity, with ownership representing approximately 22.5% of Scottish Annuity's outstanding ordinary shares. In connection with the transaction, Glenn S. Schafer, president of Newport Beach, CA-based Pacific Life, and Khanh T. Tran, executive vice president and chief financial officer of Pacific Life, have joined the Board of Directors of Scottish Annuity. World-Wide Reassurance, based in Windsor, England, provides life reinsurance primarily to insurance companies outside the United States, and also serves as a retrocessionaire to U.S. reinsurance companies. "This completion of this transaction is an important step in our continuing quest to build value for all of our shareholders," said Michael C. French, chairman and chief executive officer of Scottish Annuity. "Not only are we acquiring a respected global life reinsurance operation, but we are welcoming Pacific Life as a strategic investor and partner with our company. We look forward to supporting the continued growth of World-Wide Reassurance's business and to leveraging the benefits of our relationship with Pacific Life." "We are pleased to become a strategic investor in Scottish Annuity," said Thomas C. Sutton, chairman and chief executive officer of Pacific Life. "This partnership allows us to transition and further enhance our investment in the life reinsurance business." "The business of World-Wide Reassurance and the expertise of its management and staff complement the franchise we are building at Scottish," said Scott E. Willkomm, president of Scottish Annuity. "As a result of this transaction, we have increased the geographic reach of the company and our consolidated capital to well in excess of $300 million and have significantly enhanced the earnings power of the enterprise." According to Paul A. Bispham, managing director of World-Wide Reassurance, "We are excited to become a part of the Scottish Annuity family. This new affiliation will allow us increased access to capital markets to further our plans for continued growth and will ensure the continuity of our management team." World-Wide Reassurance will continue to do business using its existing name. Scottish Annuity & Life Holdings, Ltd. provides reinsurance of life insurance and annuities and is a direct issuer of customized variable life and annuity products for high net worth individuals. Scottish Annuity has operating companies in Bermuda, Charlotte, North Carolina, Dublin, Ireland and Grand Cayman. Its flagship subsidiaries, Scottish Annuity & Life Insurance Company (Cayman), Ltd. and Scottish Re (U.S.), Inc., are rated A (Strong) by Fitch, A- (Excellent) by A.M. Best and A- (Strong) by Standard and Poor's. Additional information about Scottish Annuity can be obtained from its Web site, www.scottishannuity.com. Founded in 1868, Pacific Life provides life and health insurance products, individual annuities, mutual funds, and group employee benefits, and offers to individuals, businesses, and pension plans a variety of investment products and services. Over the past five years, the company has grown from the 23rd to the 14th largest life insurance company in the United States./1/ The Pacific Life family of companies manages more than $345 billion in assets, making it one of the largest financial institutions in America, and currently counts 81 of the 100 largest U.S. companies as clients./2/ Additional information about Pacific Life can be obtained at its Web site, www.PacificLife.com. Pacific Life is rated A++ (superior) by A.M. Best, AA+ (very strong) by Standard & Poor's, AA+ (very strong) by Fitch, and Aa3 (excellent) by Moody's for financial strength./3/ Pacific Life is a member of IMSA (Insurance Marketplace Standards Association), whose membership promotes ethical market conduct for individual life insurance and annuities. Certain statements included herein are "forward-looking statements" within the meaning of the federal securities laws. The management of Scottish Annuity & Life Holdings, Ltd. (the "Company") cautions that forward-looking statements are not guarantees, and that actual results could differ materially from those expressed or implied in the forward-looking statements. Important events that could cause the actual results of operations or financial condition of the Company to differ include, but are not necessarily limited to, the Company's ability to attract clients and generate business; the competitive environment; the Company's ability to underwrite business; performance of outside service providers; mortality risk; surrender risk; investment risk (including asset value risk, reinvestment risk and disintermediation risk); the impact of unforeseen economic changes (such as changes in interest rates, currency exchange rate, inflation rates, recession and other external economic factors); the impact of terrorist activities on the economy, the insurance and related industries in general and the Company in particular; regulatory changes (such as changes in U.S. tax law and insurance regulation which directly affect the competitive environment for the Company's products); rating agency policies and practices; and loss of key executives. Investors are also directed to consider the risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Mutual funds are distributed by Pacific Select Distributors, Inc (member NASD & SIPC), a subsidiary of Pacific Life Insurance Company. /1/ The Townsend & Schupp Company, based on assets, as of December 31, 2000. /2/ Data compiled by Pacific Life using the 2001 FORTUNE 500(R) list. /3/ These ratings do not apply to the safety or performance of any separate accounts or mutual funds. ##### -----END PRIVACY-ENHANCED MESSAGE-----