1

 
   will be a net amount equal to the Contract’s then current account value after (i)increase for any positive market value adjustment that would be credited to a Payeeunder the terms of the Contract for the transaction in question and (ii) reduction forany interest, fees, charges, outstanding loans, and negative market value adjustmentsthat would be charged against a Payee under the terms of the Contract for thetransaction in question; or  (b) upon payment of any other amount as a consequence of the death of any owner,holder, or annuitant under a Contract prior to a complete conversion of account valueto annuity payments, will be a net amount equal to the Contract’s then current accountvalue after (i) increase to reflect any accrued but uncredited statutory interestattributable thereto and (ii) reduction for any interest, fees, charges, andoutstanding loans that would be charged against a Payee under the terms of theContract for the transaction in question.For this purpose, Contract Value Interests include net amounts removed in connection with the abovetransactions and amounts remaining in the Contract, but do not include annuity payments that aremade following the complete or partial conversion of account value to annuity payments.          SECTION 2. Gross Up. All payments made by the Guarantor to any Payee under thisSubordinated Guarantee shall be made in full, free of and without withholding or deduction for, oron account of, any present or future Canadian Taxes (as defined below) (other than Excluded Taxes,as defined below) unless the withholding or deduction of such taxes by the Guarantor is required bylaw or by the administration or interpretation of such law and provided that, if the Guarantorshall be required by law to deduct or withhold any Canadian Taxes (other than Excluded Taxes) fromor in respect of any payment or sum payable to the Payees, the payment or sum payable shall beincreased as may be necessary so that after making all required deductions or withholdings(including deductions or withholdings applicable to additional amounts payable under this Section)the Payee receives an amount equal to the sum it would have received if no deduction or withholdinghad been made (the “Guarantor Additional Amounts”), and the Guarantor shall pay the full amountdeducted or withheld to the relevant taxation or other authority in accordance with applicable law.          For the purposes of this Section, “Canadian Taxes” means “any taxes, duties, assessments orgovernmental charges of whatever nature imposed or levied by or on behalf of the Government ofCanada, or any province, territory or political subdivision thereof, or any authority therein orthereof having power to tax” and “Excluded Taxes” means any Canadian Taxes which are imposed on aPayee with respect to any Contract: (a) (i) by reason of his being a person with whom JHUSA or theGuarantor is not dealing at arm’s length for the purposes of the *Income Tax Act*(Canada), or (ii)by reason of his having a connection with Canada or any province or territory thereof other thanthe mere holding, use or ownership or deemed holding, use orownership of such Contract; (b) where the Payee would not be  liablefor or subject to such withholding or deduction by making a claim forexemption to the relevant tax authority; or (c) more than 10days after
2

 
the Relevant Date (as defined below) except to the extent that the Payee thereof wouldhave been entitled to Guarantor Additional Amounts on presenting the same for payment on the lastday of such period of 10 days. For the purposes of this Section, “Relevant Date” means the date onwhich such payment first becomes due.          SECTION 3. Guarantee Absolute. The Guarantor agrees that this Subordinated Guaranteeis a guarantee of payment and not of collection or collectibility, and that the obligations of theGuarantor hereunder shall be primary, absolute and unconditional and, without limiting thegenerality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respectof any obligation of JHUSA under the Contracts, or by operation of law or otherwise;  (ii) any modification, amendment, supplement, endorsement or rider to theContracts;  (iii) any change in the corporate existence, structure or ownership of JHUSA, orany insolvency, bankruptcy, reorganization or other similar proceeding affecting JHUSAor its assets or any resulting release or discharge of any obligation of JHUSAcontained in the Contracts;  (iv) the existence of any defense, claim, set-off or other rights which theGuarantor may have at any time against JHUSA, or any other person, whether inconnection herewith or any unrelated transactions, provided that nothing herein shallprevent the assertion of any such claim by separate suit or compulsory counterclaim orwith respect to obligations of the Guarantor other than obligations hereunder;  (v) any invalidity or unenforceability relating to or against JHUSA for anyreason under the Contracts, or any provision of applicable law or regulationpurporting to prohibit the payment by JHUSA of any amount payable by JHUSA under theContracts; or  (vi) any other act or omission to act or delay of any kind by JHUSA or any otherperson or any other circumstance whatsoever which might, but for the provisions ofthis paragraph, constitute a legal or equitable discharge of the Guarantor’sobligations hereunder.          SECTION 4. Representations and Warranties. The Guarantor hereby represents andwarrants that:          (a) Authorization; No Contravention. The execution, delivery and performance by theGuarantor of this Subordinated Guarantee is within the Guarantor’s powers, has been duly authorizedby all necessary action, requires no action by or in respect of, or filing with, any governmentalbody, agency or official to be effective and does not contravene, or constitute a default under,any provision of applicable law or regulation, as amended from time to time, or the Letters Patentof Incorporation or by-laws of the Guarantor or of any agreement, judgment, injunction, order,decree or other instrument
3

 
binding upon the Guarantor or result in or require the creation or imposition of any lien onany asset of the Guarantor.          (b) Binding Effect. This Subordinated Guarantee constitutes a valid and bindingagreement of the Guarantor, enforceable against the Guarantor in accordance with its terms.          SECTION 5. Enforcement of Guarantee. Without limiting any other provision of thisSubordinated Guarantee, in no event shall any Payee have any obligation to proceed against JHUSA orany other person or property before seeking satisfaction from the Guarantor. Any Payee may enforcethis Subordinated Guarantee directly against the Guarantor, subject to no preconditions other thanfailure by JHUSA to pay when due any guaranteed amount.          SECTION 6. Waiver. Without limiting any other provision of this SubordinatedGuarantee, the Guarantor hereby irrevocably waives promptness, diligence, or notice of acceptancehereof, presentment, demand, protest and any and all other notice not provided for herein and anyrequirement that at any time a Payee or any other person exhaust any right or take any actionagainst JHUSA and any other circumstances whatsoever that might otherwise constitute a legal orequitable discharge, release or defense of the Guarantor or that might otherwise limit recourseagainst the Guarantor.          SECTION 7. Compliance with Regulation S-X. This Subordinated Guarantee shall beinterpreted in such a manner that it will be “full and unconditional” as those words are used inRule 3-10 of Regulation S-X of the United States Securities and Exchange Commission, as currentlyin effect, and as they may be amended from time to time.          SECTION 8. No Waiver; Remedies. No failure on the part of a Payee to exercise, andno delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any singleor partial exercise of any right hereunder preclude any other or further exercise thereof or theexercise of any other right. The remedies herein provided are cumulative and not exclusive of anyremedies provided by law.          SECTION 9. Continuing Guarantee; Reinstatement in Certain Circumstances. ThisSubordinated Guarantee is a continuing guarantee and the Guarantor’s obligations hereunder shall(i) remain in full force and effect until the indefeasible payment in full of all Contract ValueInterests payable by JHUSA pursuant to or under the Contracts prior to a complete conversion ofaccount value to annuity payments and (ii) be binding upon the Guarantor and its successors andassigns. If at any time any payment by JHUSA of any amounts payable by JHUSA pursuant to or underthe Contracts is rescinded or must otherwise be restored or returned upon the insolvency,bankruptcy or reorganization of JHUSA or otherwise, the Guarantor’s obligations hereunder withrespect to such payment shall be reinstated as though such payment had been due but not made atsuch time.
4

 
          SECTION 10. Termination. The Guarantor may terminate this Subordinated Guarantee asit would apply to Contract Value Interests in any Contracts issued after the effective terminationdate (the “Termination Date”) by giving written notice to JHUSA at least 14 days prior to theeffective Termination Date specified in such notice. The termination of this SubordinatedGuarantee with respect to Contract Value Interests in Contracts to be issued after the effectiveTermination Date shall not in any way affect, modify, alter or amend the Guarantor’s obligationswith respect to guarantees of Contract Value Interests in Contracts issued hereunder prior to theeffective Termination Date.          SECTION 11. Successor Guarantor. In the event of any amalgamation or consolidation bythe Guarantor with or merger by the Guarantor into any other corporation or any transactioninvolving the transfer of all or substantially all of the Guarantor’s assets to any corporation orother entity and which as a matter of law or contract results in the successor corporation orentity becoming bound by or assuming the Guarantor’s obligations under this Subordinated Guarantee,such successor corporation or other entity formed by such amalgamation or consolidation or intowhich the Guarantor is merged or to which such transfer is made shall succeed to, and besubstituted for, and may exercise every right and power of, the Guarantor under this SubordinatedGuarantee, with the same effect as if it had been named herein as the Guarantor, and thereafter,the predecessor corporation or entity shall be relieved of all obligations and covenants under thisSubordinated Guarantee.          SECTION 12. Stay of Time of Payment. Without limiting any other provision of thisSubordinated Guarantee, if the time for payment of any amount payable by JHUSA under a Contract isstayed upon the insolvency, bankruptcy or reorganization of JHUSA, all such amounts otherwisesubject to payment under the terms of this Subordinated Guarantee shall nonetheless be payable bythe Guarantor hereunder forthwith on demand by the Payee.          SECTION 13. Subordination. The obligations under this Subordinated Guarantee shall beunsecured obligations of the Guarantor, and shall be subordinated in right of payment in the eventof bankruptcy, liquidation, dissolution, winding up or reorganization, or upon the acceleration ofany senior indebtedness of the Guarantor and shall be subordinate in right of payment to the priorpayment in full of all other obligations of the Guarantor except for other guarantees orobligations of the Guarantor which by their terms are designated as ranking equally in right ofpayment with or subordinate to this Subordinated Guarantee. This Subordinated Guarantee shall rankequally in right of payment with all other guarantees issued or to be issued by the Guarantor infavor of the holders of any securities (including, without limitation, any notes, annuities ormarket value adjustments) issued or to be issued by any of the Guarantor’s subsidiaries, whichguarantees are issued to enable such subsidiaries to be exempt from filing periodic reports underthe Exchange Act.          SECTION 14. Governing Law. This Subordinated Guarantee shall be governed by, andconstrued in accordance with, the laws of the Commonwealth of Massachusetts.
5

 
          SECTION 15. Agent for Service; Submission to Jurisdiction: Waiver of Immunities.The Guarantor: (i) acknowledges that it has, by separate written instrument, irrevocably designatedand appointed John Hancock Life Insurance Company (U.S.A.), 601 Congress Street, Boston,Massachusetts 02210, as authorized agent for service (the “Agent for Service”) upon whom processmay be served in any legal action or proceeding against it arising out of or in connection withthis Subordinated Guarantee that may be instituted in any state or federal court located in theCity of Boston, Massachusetts (a “Massachusetts Court”); (ii) acknowledges that the Agent forService has accepted such designation; and (iii) agrees that service of process upon the Agent forService shall be deemed in every respect effective service of process upon the Guarantor in anysuch action or proceeding.          The Guarantor irrevocably: (i) agrees that any legal action or proceeding against it arisingout of or in connection with this Subordinated Guarantee or for recognition or enforcement of anyjudgment rendered against it in connection with this Subordinated Guarantee may be brought in anyMassachusetts Court; (ii) agrees that by execution and delivery of this Subordinated Guarantee, theGuarantor hereby irrevocably accepts and submits to the non-exclusive jurisdiction of anyMassachusetts Court *in personam*, generally and unconditionally with respect to any such action orproceeding for itself and in respect of its property, assets and revenues; (iii) waives, to thefullest extent permitted by law, any objection which it may now or hereafter have to the laying ofvenue of any such action or proceeding brought in any Massachusetts Court and any claim that anysuch action or proceeding has been brought in an inconvenient forum.          SECTION 16. Severability. Any provision of this Subordinated Guarantee which isillegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such illegality, invalidity, prohibition or unenforceabilitywithout invalidating the remaining provisions hereof and any such illegality, invalidity,prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceablesuch provision in any other jurisdiction.          SECTION 17. Entire Agreement. This Subordinated Guarantee embodies the entireundertaking of the Guarantor with respect to the subject matter hereof and supersedes any priorwritten or oral agreements and understandings relating to the subject matter hereof.          SECTION 18. Amendment. No term or provision of this Subordinated Guarantee may bewaived, amended, supplemented or otherwise modified except in a writing signed by the Guarantor.
6

 
          SECTION 19. Notices. All notices and other communications provided for herein shallbe made in writing and mailed by certified or registered mail, delivered by hand or overnightcourier service as follows:          (a) If to the GuarantorManulife Financial Corporation200 Bloor Street EastToronto, OntarioM4W 1E5Attention:     Treasurer          (b) If to JHUSA:John Hancock Life Insurance Company (U.S.A.)601 Congress StreetBoston, Massachusetts02210Attention:     General Manager, Fixed Products     Notices mailed by certified or registered mail or sent by hand or overnight courier serviceshall be deemed to have been given when received.     SECTION 20. Counterparts. This Subordinated Guarantee and any amendments, waivers,consents or supplements hereto may be executed in counterparts, each of which shall constitute anoriginal, but all of which together shall constitute one and the same instrument.
7

 
          IN WITNESS WHEREOF, the Guarantor has caused this Subordinated Guarantee to be duly executedand delivered by its officer thereunto duly authorized as an instrument under seal as of the datefirst above written.      MANULIFE FINANCIAL CORPORATION