11 Cable. Street Wellington Australia. Tower. o.nz/update. 100% of. Tower outlining the ENDS. TOWER Michael. Stiassny Chairman.

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1 13 February 2017 Market Infrmatin NZX Limited Level 1, NZX Centree 11 Cable Street Wellingtn New Zealand Cmpany Annuncements Office ASX Limited Exchange Centre Level 6, 20 Bridge Street S Sydneyy NSW Australia Twer releases summary f Key Terms f Scheme Implementatin Agreement Twer attaches a summary f the t Scheme Implementatin Agreement dated 9 February 2017 between Fairfax Financial Hldings Limitedd (Fairfax) and Twer Limited (Twer). Further infrmatin abut the Fairfax Prpsal, including the Scheme Implementatin Agreement, is available frm Twer sharehlderss d nt yet need t take any actin in respnsee t Fairfax ss ffer t acquire 100% f Twer shares. In due curse, sharehlders will receive detailed dcumentatin frm Twer utlining the prpsed transactin and instructins fr vting. ENDS TOWER Michael Stiassny Chairman Twer Limited ARBN Incrprated in New Zealand T arrange media interviews, please cntact in the first instance: Nichlas Meseldzija Twer Limited Head f Crprate Cmmunicatins Mbile: nichlas.meseldzija@twer.c.nz 1

2 Parties and Date The SIA is dated 9 February 2017 and is between Fairfax Financial Hldings Limited (Fairfax) and Twer Limited (Twer). Fairfax is incrprated in Canada and is currently listed n the Trnt Stck Exchange. Twer is incrprated in New Zealand and is currently listed n the NZX Main Bard and the fficial list f the ASX as a Freign Exempt Entity. Scheme Twer has agreed t prpse the Scheme t the Twer Sharehlders. If the Scheme is implemented, each Twer Sharehlder wh hlds Twer Shares n the Scheme Recrd Date will be entitled t receive the Scheme Cnsideratin and all f the Twer Shares will be transferred t Fairfax. Further details abut the Scheme will be set ut in the Scheme Bklet. Cnditins Implementatin f the Scheme is subject t cnditins, which must be satisfied r waived (as applicable) prir t the Scheme being implemented. The cnditins are: receiving relevant regulatry apprvals (including apprvals required frm the New Zealand Overseas Investment Office (OIO Apprval), the RBNZ and the applicable regulatrs f Twer's subsidiaries in the Pacific Islands (RBNZ and Pacific Island Regulatry Apprvals)); Curt apprval f the Scheme in accrdance with sectin 236(1) f the Cmpanies Act (Curt Apprval); apprval f the Scheme by Twer Sharehlders by: a majrity f 75% f the vtes f the sharehlders in each interest class entitled t vte and vting n the Scheme reslutin; and a simple majrity f the vtes f all sharehlders entitled t vte n the Scheme reslutin, (Sharehlder Apprval); n temprary restraining rder, preliminary r permanent injunctin r ther rder being issued by a curt in New Zealand in a prceeding brught by a Gvernment Agency preventing r delaying the Transactin and n actin (ther than actin carried ut in the rdinary curse f business by a tax authrity) r investigatin in relatin t any Twer Grup Member being annunced r cmmenced by a Gvernment Agency (Regulatry Interventin); n Twer Prescribed Occurrence ccurring between the date f the SIA and 7.59am n the Implementatin Date; and A.M. Best Cmpany nt (ther than as a result f the annuncement f the Transactin r the actins f Fairfax), befre and as at 7.59am n the Implementatin Date, lwering the financial strength rating assigned t Twer Insurance Limited (TIL) t any rating lwer than A- r impsing cnditins (financial AKLDOC01-# v3-SIA_Key_Terms_Summary

3 r therwise) specifically n TIL and its subsidiaries relating t the rating held by TIL at the date f the SIA (Rating). The cnditins relating t OIO Apprval, RBNZ and Pacific Island Regulatry Apprval, Regulatry Interventin (s far as it relates t an actin r investigatin by a Gvernment Agency int a Twer Grup Member r the Scheme), Curt Apprval and Sharehlder Apprval cannt be waived. The cnditins relating t Regulatry Interventin (s far as it relates t an rder r injunctin preventing r delaying the Transactin), Twer Prescribed Occurrences and Rating may be waived by Fairfax. The last date by which the cnditins relating t OIO Apprval, RBNZ and Pacific Islands Regulatry Apprvals, Curt Apprval and Sharehlder Apprval must be satisfied r waived (if capable f waiver) is 31 August 2017 r such later date as Fairfax and Twer may agree (the End Date). If any event ccurs which wuld, r in fact des, prevent a cnditin being satisfied, and the cnditin is nt waived by Twer r Fairfax r bth (as applicable), Twer and Fairfax must cnsult in gd faith t: determine whether the Transactin may prceed by way f alternative means r methds; t change the date f the applicatin made t the Curt fr an rder apprving the Scheme (r adjurning that applicatin, as applicable); r t extend the End Date by up t ne mnth. If the parties are unable t reach an agreement as referred t abve within five business days f becming aware f the relevant ccurrence r relevant date r by the End Date, then unless the cnditin is waived by Twer r Fairfax r bth, either party may terminate the SIA. Timing The parties have agreed t use their best endeavurs t implement the Transactin in accrdance with the indicative timetable belw: Scheme Bklet despatched mid-march 2017 Anticipated apprval frm RBNZ mid-march 2017 Scheme Meeting held mid-april 2017 Anticipated apprvals frm OIO and Pacific Island regulatrs by mid-may 2017 Secnd Curt Date late May 2017 Scheme Recrd Date Implementatin Date End Date Mid-June 2017 (unless Fairfax agrees t an earlier date) 30 June 2017 (unless Fairfax agrees t an earlier date) 31 August 2017 (r such later date as the parties agree) Page 2

4 If a Superir Prpsal (Relevant Superir Prpsal) is received, Twer may pstpne the Scheme Meeting t the earlier f: the first pssible date upn which Twer culd reasnably be expected t cnvene a meeting f sharehlders t vte n bth the Scheme and the Relevant Superir Prpsal and in any event n later than three weeks after the Superir Prpsal was annunced; r the date falling tw weeks prir t the End Date. Implementatin f the Scheme The parties have agreed that they will each carry ut certain respnsibilities relating t implementatin f the Scheme. In particular, Twer will: make a public annuncement that the directrs f Twer intend t recmmend t Twer Sharehlders that the Scheme be apprved and thse directrs wh hld Twer Shares intend t vte in favur f the Scheme, subject t there being n Superir Prpsal; appint the Independent Adviser and prvide assistance and infrmatin reasnably requested by the Independent Adviser t enable the Independent Adviser t prepare the Independent Adviser's Reprt; prepare the Scheme Bklet in accrdance with the applicable laws and regulatry guidance; cnsult with Fairfax as t the cntent and preparatin f the Scheme Bklet (including prviding drafts t Fairfax and btaining the necessary infrmatin frm Fairfax abut Fairfax fr inclusin in the Scheme Bklet); ldge the draft Scheme Bklet with the Takevers Panel and NZX fr their review; apply t the Takevers Panel fr a "n bjectin" statement in respect f the Scheme; cnsult with Fairfax in relatin t the cntent f the dcuments required fr the Curt hearings relating t the Scheme; apply t the Curt fr rders relating t the Scheme Meeting and fr rders relating t apprval f the Scheme; take all reasnably necessary steps after implementatin f the Scheme t delist Twer frm the NZX and ASX; issue supplementary disclsure t Twer Sharehlders if Twer becmes aware that any infrmatin in the Scheme Bklet is r has becme misleading r deceptive in any material respect r there is infrmatin that is legally required t be disclsed but was nt included in the Scheme Bklet (Twer must cnsult with Fairfax in gd faith in respect f the need fr and frm f supplementary disclsure); cnvene the Scheme Meeting as sn as reasnably practicable; Page 3

5 allw a representative f Fairfax t attend and speak at the Scheme Meeting and Curt hearings related t the Scheme; except if a Superir Prpsal is made that is nt matched by Fairfax, slicit prxies in favur f the Scheme frm Twer Sharehlders (including permitting Fairfax (at Fairfax's expense), directly r thrugh a nminee, t actively slicit prxies in favur f the Scheme); and determine the entitlements t the Scheme Cnsideratin and carry ut ldgments and registratins relating t implementatin f the Scheme. In particular, Fairfax will: review drafts f the Scheme Bklet and prvide Twer with infrmatin abut Fairfax as required by applicable laws and regulatry guidance t be cntained in the Scheme Bklet; if Fairfax becmes aware that any infrmatin in the Scheme Bklet is misleading r deceptive in any material respect r there is infrmatin that was legally required t be disclsed but was nt included in the Scheme Bklet, prvide that infrmatin t Twer; prvide assistance and infrmatin reasnably requested by the Independent Adviser in cnnectin with preparatin f the Independent Adviser's Reprt; and if the Scheme is implemented, accept a transfer f all f the Twer Shares and pay the Scheme Cnsideratin pursuant t the terms f the SIA and the Scheme. Cnduct f Twer's business Twer has agreed t carry n its business, frm the date f the SIA up t and including the Implementatin Date, in the rdinary and prper curse in substantially the same manner and at the same lcatins as it was cnducted prir t the date f the SIA. T that end, except with the cnsent f Fairfax, Twer will nt: fllwing satisfactin f the Sharehlder Apprval cnditin, cntinue further wrk n the Separatin Prpsal (and will use its reasnable endeavurs t prcure that any wrk by its advisers and any regulatrs, reinsurers r rating agency ceases); dispse, r agree t dispse f any business, asset, interest in a jint venture, entity r undertaking, the value f which exceeds $500,000, t any persn ther than anther entity within the Twer Grup (excluding investment prtfli dispsitins in the rdinary curse); acquire, r agree t acquire any securities, business, asset, interest in a jint venture, entity r undertaking the price r value f which exceeds $500,000 in relatin t any individual item, frm anther persn ther than anther entity within the Twer Grup (excluding investment prtfli acquisitins in the rdinary curse); incur financial indebtedness in the nature f brrwings (including by drawing dwn n any facility) in excess f $3.5 millin in the aggregate except fr regulatry slvency purpses and prvided that Twer ntifies Fairfax f the debt incurrence and makes available t Fairfax certain details and infrmatin relating t the indebtedness; Page 4

6 d r cause t be dne, r fail t d r cause nt t be dne, anything that wuld r may result in the Scheme nt being implemented r being implemented therwise than in accrdance with the timetable agreed between Fairfax and Twer and the terms f the SIA; d anything which might reasnably be expected t give rise t the ccurrence f a Twer Prescribed Occurrence; change its methds f accunting fr financial reprting purpses in effect at 30 September 2016, except as may be required by changes in (r, in its reasnable gd faith judgment, is advisable under) applicable law r GAAP; r make, change r revke any material tax electin, file any amended tax return, settle any tax claim, audit, actin, surrender any right t claim a material tax refund, ffset r ther reductin in tax liability r change its methd f tax accunting (except, with respect t any amended tax return r any change in tax accunting methd, as may be required by changes in applicable law r the fficial interpretatin by any relevant tax authrity), in each case, if such actin wuld have the effect f increasing any f its tax liabilities by an amunt that exceeds $500,000; undertake any capital expenditure r prject expenditure in respect f which the price r value exceeds $500,000 in relatin t any individual prject, excluding any such expenditure that: is within, and materially cnsistent with, Twer's current year's capital expenditure budget disclsed t Fairfax in due diligence materials; r was therwise apprved by the Twer Bard prir t the date f the SIA and has been fairly disclsed t Fairfax in due diligence materials prir t the date f the SIA; either: enter int a new emplyment cntract with a ptential emplyee f the Twer Grup (ther than t replace an emplyee wh has ceased t be an emplyee f the Twer Grup); r enter int a new emplyment cntract r amend (ther than as part f any annual salary review cnducted in the rdinary curse) an emplyment cntract with an existing emplyee f the Twer Grup, in respect f which the ttal emplyment csts payable t that existing r ptential emplyee is in excess f $225,000 per annum; enter int any cllective bargaining agreement ther than in the rdinary curse f business r pursuant t cntractual arrangements in effect n the date f the SIA; settle r ffer t settle any legal prceedings, claim, investigatin, arbitratin r ther like prceeding where the settlement amunt exceeds $200,000 r therwise require any admissin f liability (ther than the settlement f rdinary curse insurance claims under plicies in accrdance with plicy terms and plicy limits nt exceeding $2 millin), r which require the impsitin f injunctive relief r any restrictin n the business f any Twer Grup Member. Twer will keep Fairfax fully infrmed with respect t any such prceedings nt within these limits; enter int a jint venture r strategic partnership with any persn where the cntractually cmmitted investment by the Twer Grup exceeds $500,000; Page 5

7 alter r amend, in any material respect, the Twer Risk Plicy r any existing underwriting, claim handling, lss cntrl, calculatin f lss reserves r expenses, actuarial, financial reprting r accunting r cmpliance practices, guidelines, plicies r interpretatins r any material assumptin underlying an actuarial practice r plicy, except as may be required by (r, in its reasnable gd faith judgment, is advisable under) law r GAAP; enter int, mdify r amend (in any material respect) r terminate any reinsurance agreement r waive, release r assign any material rights r claims thereunder, ther than in the rdinary curse f business cnsistent with past practices; vluntarily frfeit, abandn, mdify, waive, terminate r therwise change any f its material licences except as may be required by any Gvernmental Agency r law; enter, t the extent material, any new lines f business, r markets which Twer and its Related Cmpanies d nt materially perate in as f the date f this SIA; r authrise, cmmit r agree t d any f the matters set ut abve. Exclusivity The SIA cntains certain exclusivity arrangements in favur f Fairfax. These arrangements apply frm the date f SIA until the earlier f terminatin f the SIA r the time that a Superir Prpsal is nt matched by a cunter prpsal frm Fairfax (the Restricted Perid). N Talk: During the Restricted Perid, Twer will nt, and will ensure that nne f its Related Cmpanies and nne f their representatives (including Financial Advisers) will: slicit, invite, encurage r initiate any Cmpeting Transactin; directly r indirectly participate in r cntinue r respnd t any discussins r negtiatins (including respnding t any inquiry, prpsal r ffer); prvide r make available any infrmatin (including by way f prviding infrmatin and access t perfrm due diligence); enter int any agreement, arrangement r understanding, r cmmunicate any intentin t d any f thse things, in relatin t, r which may reasnably be expected t lead t r encurage, a Cmpeting Transactin. N Shp: Twer will nt, and will ensure that nne f its representatives, Related Cmpanies and nne f their representatives (including Financial Advisers) will: slicit r invite r permit enquiries, discussins r prpsals in relatin t, r which may reasnably be expected t lead t r encurage, a Cmpeting Transactin; r cmmunicate t any persn an intentin t d any f the things referred t in the N Talk prvisin. Nthing in the exclusivity arrangements prevents Twer, its Related Cmpanies and representatives, prir t satisfactin f the Sharehlder Apprval Cnditin, frm making disclsures r public ntificatins if a failure t make that disclsure wuld cnstitute a Page 6

8 material breach f the prvisins f the Financial Markets Cnduct Act 2013 relating t insider trading, market manipulatin and cntinuus disclsure r the Takevers Cde. In making such a disclsure, Twer must act in gd faith, nly disclse the infrmatin that is legally required, ntify Fairfax in advance f the disclsure, and ensure that the recmmendatin in favur f the Scheme is nt changed. Twer, its Related Cmpanies r any f their representatives must ntify Fairfax if they becme aware f any inquiry, prpsal r ffer made t the Twer Grup r its representatives relating t a Cmpeting Transactin r a prpsed r ptential Cmpeting Transactin, whether unslicited r therwise, r if they prvide any infrmatin relating t Twer's businesses r peratins t any persn in cnnectin with r fr the purpses f any actual r ptential, current r future Cmpeting Transactin. Matching Right: if there is a Cmpeting Transactin fr Twer which is determined t be a Superir Prpsal, Fairfax has the right t make a matching r superir prpsal (Fairfax Cunter Prpsal), and Twer must use its reasnable endeavurs t ensure that its directrs d nt publicly recmmend the Cmpeting Transactin until Fairfax makes such a prpsal (Fairfax must exercise its matching right within 10 business days f being ntified f the Cmpeting Transactin). Twer will use its best endeavurs t prcure that its directrs, within tw business days f receiving the Fairfax Cunter Prpsal, cnsider the prpsal in gd faith. If the directrs determine that Fairfax Cunter Prpsal is n less favurable t the relevant Cmpeting Transactin, Twer and Fairfax will implement the Fairfax Cunter Prpsal as sn as reasnably practicable. In this case, Twer will make a public statement recmmending, and use its best endeavurs t prcure that each f its directrs recmmends, the Fairfax Cunter Prpsal. If Fairfax des nt make a cunter prpsal (r fails t d s with the 10 business days after being ntified abut the Cmpeting Transactin), Twer is nt required t cmply with its bligatins under the matching right prvisin. Break Fee Twer has agreed t pay Fairfax a break fee f NZ$1,973,350 (excluding GST) if: prir t the date the Scheme cmes int effect r the End Date, whichever is earlier, the Twer bard (r any bard member) fails t recmmend the Scheme r withdraws r adversely mdifies his r her supprt fr the Scheme r fails t vte their shares as required by the SIA, except as a result f Twer being entitled t terminate the SIA r as a result f a failure f the cnditins precedent relating t OIO Apprval, RBNZ and Pacific Islands Regulatry Apprval, Regulatry Interventin, Curt Apprval r the Sharehlder Apprval cnditin (ther than as a result f a breach by Twer f its bligatin t use best endeavurs t fulfill the cnditins); a Cmpeting Transactin is annunced prir t the Secnd Curt Date (r the End Date if the Secnd Curt Date has nt been set) and, within 12 mnths f that annuncement, the persn annuncing r making the Cmpeting Transactin (r their Related Cmpanies r assciates) acquires 20% r mre f the Twer Shares, r has a right t acquire r ecnmic interest in all r a substantial part f Twer's business, r therwise acquires cntrl f the Twer Grup; the Curt des nt apprve the Scheme as a result f a material breach by Twer f its bligatins under the SIA; Fairfax terminates the SIA fr breach f a fundamental warranty by Twer, a material breach f any ther warranty, r because a Twer directr withdraws r adversely mdifies his r her recmmendatin t vte in favur f the Scheme r recmmends a Cmpeting Transactin; r Page 7

9 a Twer Prescribed Occurrence ccurs. The purpse f the break fee is t cmpensate Fairfax fr advisry csts, its management and directrs' time, ut-f-pcket expenses and pprtunity csts in pursuing the Scheme in place f ther initiatives if the Scheme des nt prceed. Reimbursement f csts Twer has als agreed t reimburse Fairfax's reasnably incurred csts (capped at $400,000 excluding GST) if: subject t the break fee prvisin nt applying, the cnditins relating t OIO Apprval, RBNZ and Pacific Island Regulatry Apprvals, Regulatry Interventin, Curt Apprval, Sharehlder Apprval, and Rating are nt satisfied r waived; r Fairfax terminates the SIA by reasn f a Material Adverse Change. The purpse f this payment is t cmpensate Fairfax fr its advisry csts and expenses. Terminatin Rights Twer may terminate the SIA if, at any time befre 8.00am n the Implementatin Date, Fairfax is in breach f the SIA (including Fairfax's representatins and warranties) and: the breach is material in the cntext f the Scheme and the Twer Grup taken as a whle; Twer has ntified Fairfax f the breach; and Fairfax has failed t remedy the breach t Twer's reasnable satisfactin within five business days (r any shrter perid ending n the Implementatin Date) f receiving that ntice. Fairfax may terminate the SIA if: Twer is in breach f certain "fundamental" warranties (these relate t Twer's legal pwer t enter the SIA, Twer's capital and crprate structure and Twer's slvency); there is a Material Adverse Change; Twer is in breach f the SIA (including Twer's representatins and warranties that are nt "fundamental") and: that breach is material (which means material in the cntext f the Scheme r the Twer Grup taken as a whle r the lss suffered as a result f the relevant breach (when aggregated with the lss suffered as a result f any ther breach f a relevant warranty) exceeds $5 millin in aggregate); Fairfax has ntified Twer f the breach; and Twer has failed t remedy the breach t Fairfax's reasnable satisfactin within five business days (r any shrter perid ending n the Implementatin Date) f receiving that ntice; r Page 8

10 A Twer directr withdraws r adversely mdifies his r her recmmendatin that Twer Sharehlders vte in favur f the Scheme r recmmends a Cmpeting Transactin. Representatins and warranties Twer and Fairfax have each given representatins and warranties t the ther which are custmary fr an agreement such as the SIA. The warranties are given at the date f the SIA, the date the Scheme Bklet is despatched t Twer Sharehlders, immediately prir t the Curt hearing n the Secnd Curt Date, immediately prir t the implementatin f the Scheme, and, where expressed t be given at a particular time, at that time. Other than fr warranties identified as fundamental, the representatins and warranties given by Twer are each subject t matters that have been fairly disclsed thrugh the NZX markets annuncement platfrm after 1 Octber 2015 r t Fairfax thrugh due diligence. Bradly speaking, the representatins and warranties given by Twer relate t: the infrmatin in the Scheme Bklet relating t Twer (i.e., excluding infrmatin frm Fairfax, the Independent Adviser's Reprt and ther third party infrmatin) being prepared in gd faith and cmplying in all material respects with applicable laws and regulatry guidance, and that such infrmatin is nt materially misleading r deceptive; Twer's cmpliance in all material respects with its cntinuus disclsure bligatins under the NZX Listing Rules and that the due diligence materials it prvided t Fairfax being materially true and accurate; Twer's capacity and authrity t enter int and perfrm its bligatins under the SIA and the Scheme; Twer's entry int and perfrmance f its bligatins under the SIA nt cnflicting with r resulting in a breach f r a default under Twer's cnstitutin r any legal rder r law t which Twer is bund; certain details abut Twer's capital and crprate structure; cnfirmatins that n members f the Twer Grup are inslvent r subject t regulatry actin that wuld limit their ability t perfrm their bligatins under the SIA; that n dividends will be paid by Twer befre the Implementatin Date; cnfirmatins relating t disclsure f material business cntracts and arrangements, including Twer nt being in breach f thse cntracts r that entry by Twer int the SIA will nt entitle any persn t cancel, terminate r adversely mdify r acquire, r require a Twer Grup Member t dispse f, an asset, and Twer hlding the apprpriate intellectual prperty rights; that all regulatry licences and apprvals are in place enabling Twer t prperly carry n its business including that there are n agreements, undertakings r cmmitments t any Gvernment Agency that affect the cnduct f the Twer business); cnfirmatin that reinsurance cntracts are in place and enfrceable; Page 9

11 cnfirmatins relating t the due diligence materials prvided t Fairfax in respect f Twer's risk plicies, investments and derivatives being true, cmplete and current (as at the date f the SIA); Twer's Statement f Slvency Capital prepared in accrdance with "Slvency Standard fr Nn-Life Insurance Business 2014" made by the Reserve Bank f New Zealand under the applicable legislatin being, in all material respects, accurate; that A.M. Best Cmpany, as at the date f the SIA, has assigned an A- rating t TIL and that a BBB- rating was in place fr Twer when it had listed debt securities; there being n Material Adverse Change; Twer's cmpliance with all material applicable laws in all material respects; cnfirmatin that Twer is nt aware f any current r pending legal prceedings against members f the Twer Grup (ther than insurance and reinsurance claims and litigatin r arbitratin arising in the rdinary curse f business); Twer's bnus plans and prgrammes with emplyees being disclsed in the due diligence materials; and Twer's tax liabilities, including that all taxes which a Twer Grup Member is liable t pay n r befre the Implementatin Date having been paid r will be paid by the due date fr payment. Bradly speaking, the undertakings given by Fairfax relate t: the infrmatin relating t Fairfax in the Scheme Bklet being prepared in gd faith and cmplying in all material respects with the applicable laws and regulatry guidance, and that such infrmatin is nt materially misleading r deceptive; all infrmatin prvided by Fairfax t the Independent Adviser being prvided in gd faith and n the understanding that the Independent Adviser wuld rely n it in preparing the Independent Adviser's Reprt; Fairfax's capacity and authrity t enter int and perfrm its bligatins under the SIA and the Scheme; Fairfax's entry int and perfrmance f its bligatins under the SIA nt cnflicting with r resulting in a breach f r a default under Fairfax's cnstitutin r any legal rder r law t which Fairfax is bund; cnfirmatins that Fairfax is nt inslvent r subject t regulatry actin that wuld limit its ability t perfrm its bligatins under the SIA; cnfirmatins f Fairfax nt having any dealings with Twer Sharehlders under which thse sharehlders wuld be entitled t receive cnsideratin fr their shares that was different frm the Scheme Cnsideratin; cnfirmatin f Fairfax having a reasnable basis t expect it wuld have sufficient cash amunts available t it t satisfy its bligatins t pay the Scheme Cnsideratin; and Page 10

12 cnfirmatin that by 8.00am n the Implementatin Date, Fairfax having available t it n an uncnditinal basis sufficient cash reserves t pay the Scheme cnsideratin. Glssary In this summary, capitalised terms used but nt therwise defined have the fllwing meanings: Cmpanies Act means the Cmpanies Act 1993 (NZ); Cmpeting Transactin means a prpsal, transactin r arrangement frm r with any third party r third parties, relating t: (a) (b) (c) (d) any acquisitin (whether directly r indirectly) f an interest in, r the right t acquire r have an ecnmic interest in, directly r indirectly, mre than 20% f the Twer Shares (ther than Custdial Shares); any acquisitin (whether directly r indirectly) f, r the right t acquire r have an ecnmic interest in, directly r indirectly, a material part f the business f the Twer Grup; an transfer f cntrl f Twer r a material part f the business r Twer Grup; r therwise an acquisitin f, r merger with, Twer, whether by takever ffer, scheme f arrangement, acquisitin, capital reductin r buyback, sale r purchase f shares r assets, share issue r ther recapitalisatin, jint venture, inslvency prceeding, dual-listed cmpany structure (r ther synthetic merger), r ther transactin r arrangement. Fr the purpse f paragraph (c) abve, the acquisitin f an interest in a material part f the business f the Twer Grup will be material if the acquisitin entitles the acquirer t share in: (a) (b) 20% r mre f the cnslidated net prfit after tax f Twer Grup; r 20% r mre f the ttal cnslidated assets f Twer Grup; Curt means the High Curt f New Zealand; Effective means when used in relatin t the Scheme, the cming int effect, under sectin 236(3) f the Cmpanies Act, f the rder f the Curt made under sectin 236(1) in relatin t the Scheme; Effective Date means the date n which the Scheme becmes Effective; Financial Adviser means any financial adviser retained by Twer in relatin t the Scheme r a Cmpeting Transactin frm time t time acting in its capacity as such, and includes Gldman Sachs; Gvernment Agency means any freign r New Zealand gvernment r gvernmental, semi-gvernmental, administrative, fiscal r judicial bdy, department, cmmissin, authrity, tribunal, agency r entity, r any gvernmental minister; Implementatin Date means 30 June 2017, r such ther date as agreed in writing by Twer and Fairfax; Page 11

13 Independent Adviser means the independent adviser appinted by Twer in respect f the Scheme; Independent Adviser's Reprt means the reprt frm the Independent Adviser t accmpany the Scheme Bklet, including any update r supplementary reprt, stating its pinin n the merits f the Transactin; Material Adverse Change means a significant adverse event r circumstance: (a) (b) in the nature f an earthquake, lightning, strm, fld, fire, earthquake r explsin, cyclne, tidal wave, landslide, r adverse weather cnditins; r the impsitin by any Gvernment Agency f nerus new regulatry r perating restrictins, that ccurs, r is annunced, after the date f the SIA which has, r is reasnably likely t have either individually, r when aggregated with any ther matters, events r circumstances f a similar kind r categry, the effect f: (a) diminishing the cnslidated net assets f the Twer Grup taken as a whle by at least $22.5 millin (which is 10% f the last reprted figure); r (b) diminishing the cnslidated n-ging underlying prfitability by mre than $5 millin (excluding the impact f any CEQ reserve strengthening); r (c) causing any Twer Grup Member t breach any regulatry capital requirement t which it is subject, in each case ther than matters, events r circumstances: (d) (e) (f) (g) (h) required r specifically permitted by the SIA r the Scheme; resulting frm changes in general ecnmic r plitical cnditins, the securities market in general r law; dne r nt dne at the written request r with the written apprval f Fairfax, including any reasnably freseeable cnsequences arising as a result f such matters; resulting frm the actual r anticipated change f cntrl f Twer cntemplated by the Transactin; resulting frm changes in generally accepted accunting principles r the judicial interpretatin f them, prvided hwever, that with respect t clauses (e) t (h), such matter des nt have a materially disprprtinate effect n the Twer Grup; Related Cmpany has the meaning set ut in sectin 2(3) the Cmpanies Act read as if a reference t a cmpany was a reference t any cmpany r bdy crprate wherever incrprated; Scheme Bklet means the infrmatin t be apprved by the Curt and despatched t the Twer Sharehlders and which will include the ntice f meeting and prxy frm, an explanatry statement, the Scheme and the Deed Pll, but fr the purpse f this definitin excludes the Independent Adviser's reprt r any summary f such reprt; Page 12

14 Scheme Cnsideratin means the cnsideratin t be prvided by Fairfax in cnsideratin fr the transfer f the Twer Shares held by a Scheme Sharehlder t Fairfax, being, in respect f each Scheme Share, $1.17 cash and therwise subject t the terms f this Scheme; Scheme Recrd Date means 7.00pm (New Zealand time) n the fifth business day after the Effective Date, r such ther date as agreed in writing by Twer and Fairfax; Scheme Meeting means any meeting f Twer Sharehlders fr the purpses f sectin 236(1) f the Cmpanies Act rdered by the Curt t be cnvened under sectin 236(2)(b) f the Cmpanies Act (and includes any adjurned meeting); Scheme Share means a Twer Share held by a Scheme Sharehlder; Scheme Sharehlder means a Twer Sharehlder as at the Scheme Recrd Date; Secnd Curt Date means the first day n which an applicatin made t the Curt fr an rder under sectin 236(1) f the Cmpanies Act apprving the Scheme is heard, r if the applicatin is adjurned fr any reasn, the first day n which the adjurned applicatin is heard; Separatin Prpsal means: (a) (b) the prpsal Twer annunced t the market n 29 Nvember 2016, cmprising a prpsal t transfer its nn-christchurch earthquake related insurance plicies and liabilities frm Twer Insurance Limited (RunOffC) t anther Twer Grup member (New Twer), and fr the shares in RunOffC t be (indirectly) transferred t Twer's sharehlders under a scheme f arrangement; r any prpsed transactin similar t the abve; SIA means the Scheme Implementatin Agreement entered int by Twer and Fairfax n 9 February Superir Prpsal means an unslicited bna fide written Cmpeting Transactin fr 100% f the Twer Shares which the Twer Bard reasnably determines, in gd faith, taken as a whle, after cnsultatin with its financial advisers and external cunsel, is superir frm a financial pint f view and therwise (taken as a whle) superir t the Scheme, taking int cnsideratin: (a) (b) the cnditins precedent f the Cmpeting Transactin relative t thse f the Scheme (taken as a whle); the likely timing f implementatin f the Cmpeting Transactin, relative t the Scheme; prvided that a Cmpeting Transactin will be deemed nt t be a Superir Prpsal if: (c) it requires Twer r any ther persn t seek t interfere with the attempted successful cmpletin f the Scheme (including requiring Twer t delay, adjurn, pstpne r cancel the Scheme Meeting) r prvides fr the payment f any break, terminatin r ther fee r expense (excluding a bna fide agreement fr reimbursement f reasnable csts incurred) r cnfers any rights r ptins t acquire assets r securities f any Twer Grup Member t any persn in the event that Twer cmpletes the Scheme r any ther similar transactin with Fairfax agreed t prir t the terminatin f the SIA; r Page 13

15 (d) (e) it is subject t a financing cnditin (it being acknwledged that any requirement t btain the apprval f Twer Sharehlders t a scrip cmpnent will nt amunt t a financing cnditin); r it resulted frm a breach f the exclusivity prvisins f the SIA. Twer Bard means the bard f directrs f Twer; Twer Grup means Twer and each f its Related Cmpanies and a reference t a Twer Grup Member r a Twer Grup Member is t Twer r any f its Related Cmpanies; Twer Prescribed Occurrence means, ther than: (a) (b) as expressly required r permitted by the SIA r the Scheme; with the written cnsent f Fairfax, nt t be unreasnably withheld, the ccurrence f any f the fllwing between the date f the SIA and 8.00am n the Implementatin Date: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) Twer cnverting all r any f its shares int a larger r smaller number f shares; Twer reducing its share capital in any way r reclassifying, cmbining, splitting r redeeming r repurchasing directly r indirectly any f its shares; Twer agreeing t buy-back any Twer Shares r reslving t apprve the terms f a buy-back f Twer Shares under the Cmpanies Act; a Twer Grup Member issuing shares, r granting a right r an ptin ver an unissued share, r agreeing t make such an issue r grant such a right r an ptin; a Twer Grup Member issuing, r agreeing t issue, securities cnvertible int shares, r debt securities, ther than any issue (r agreement t issue) by a subsidiary f Twer t that subsidiary's direct parent cmpany fr the purpse f cntinuing t meet any slvency requirements impsed by a regulatry in the jurisdictin where that subsidiary perates; Twer declaring, paying r making any dividend r distributin; a Twer Grup Member acquiring, r agreeing t acquire, any material business r assets valued at mre than $2 millin ther than the writing f new insurance business and acquisitin f financial assets fr the investment prtfli f the Twer Grup (each in the rdinary curse); a Twer Grup Member dispsing, r agreeing t dispse, f any material part f the Twer Grup's business r prperty; a Twer Grup Member charging, r agreeing t charge, f any material substantial part, f the Twer Grup's business r prperty; a Twer Grup Member making any change t its cnstitutin; a Twer Grup Member reslving that it be wund up; Page 14

16 (l) (m) (n) () (p) a liquidatr r prvisinal liquidatr f a Twer Grup Member being appinted; a curt making an rder fr the winding up f a Twer Grup Member; an administratr f a Twer Grup Member being appinted under the Cmpanies Act; a Twer Grup Member executing a deed f cmpany arrangement; r a receiver, r a receiver and manager, being appinted in relatin t the whle, r a substantial part, f the prperty f the Twer Grup. Twer Risk Plicies means the risk management plicies and practices applicable t the insurance business f the Twer Grup; Twer Share means a fully paid rdinary share f Twer; Twer Sharehlder means each persn wh is registered as the hlder f a Twer Share frm time t time; and Transactin means the acquisitin f Twer by Fairfax thrugh implementatin f the Scheme. Page 15