Exhibit 4d
]
XL Capital Ltd
Zero-Coupon Convertible Debentures due 2021
Purchase Agreement
May 18, 2001
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
Deutsche Banc Alex. ▇▇▇▇▇ Inc.
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ LLC
As representatives of the several Purchasers
named in Schedule I hereto,
c/o Goldman, ▇▇▇▇▇ & Co.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Ladies and Gentlemen:
XL Capital Ltd, a Cayman Islands exempted limited company (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$842,361,000 principal amount at maturity (subject to adjustment in the event
there is an upward interest adjustment) of the Zero-Coupon Convertible
Debentures (the "Debentures"), convertible into Class A Ordinary Shares, par
value $0.01 per share (the "Shares" and, together with the Debentures, the "Firm
Securities") of the Company, specified above and, at the election of the
Purchasers, up to an aggregate of $168,473,000 additional aggregate principal
amount at maturity (subject to adjustment in the event there is an upward
interest adjustment) of the Debentures (the "Optional Securities"). The Firm
Securities and the Optional Securities which the Purchasers elect to purchase
pursuant to Section 2 hereof are herein collectively called the "Securities".
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) An offering circular, dated May 18, 2001 (the "Offering
Circular"), has been prepared in connection with the offering of the
Securities and the Shares issuable upon conversion thereof. Any reference
to the Offering Circular shall be deemed to refer to and include the
Company's Annual Report on Form 10-K for the fiscal year
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ended December 31, 2000, Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001 and Current Report on Form 8-K dated February 23,
2001, which are incorporated by reference into the Offering Circular, and
all subsequent documents filed with the United States Securities and
Exchange Commission (the "Commission") pursuant to Section 13(a), 13(c) or
15(d) of the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or prior to the date of the Offering Circular and any
reference to the Offering Circular as amended or supplemented, as of any
specified date, shall be deemed to include (i) any documents filed with the
Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act
after the date of the Offering Circular, and prior to such specified date
and (ii) any Additional Issuer Information (as defined in Section 5(f))
furnished by the Company prior to the completion of the distribution of the
Securities; and all documents filed under the Exchange Act and so deemed to
be included in the Offering Circular, as the case may be, or any amendment
or supplement thereto are hereinafter called the "Exchange Act Reports."
The Exchange Act Reports, when they were or are filed with the Commission,
conformed or will conform in all material respects to the applicable
requirements of the Exchange Act and the applicable rules and regulations
of the Commission thereunder. The Offering Circular and any amendments or
supplements thereto and the Exchange Act Reports did not and will not, as
of their respective dates, contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by a
Purchaser through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein;
(b) Neither the Company nor any of its Significant Subsidiaries (as
defined below) has sustained since the date of the latest audited financial
statements included in the Offering Circular any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Offering Circular, which loss or interference would have a Material Adverse
Effect (as defined below), or would reasonably be expected to have a
prospective Material Adverse Effect, on the Company and its Significant
Subsidiaries, taken as a whole; and, since the respective dates as of which
information is given in the Offering Circular, there has not been any
change in the capital stock (other than changes resulting from the exercise
of stock options or the conversions of warrants or capital stock which were
outstanding as of such date, or from the exercise of options granted after
such date in the ordinary course of business or from repurchases of capital
stock) or long-term debt of the Company or any of its Significant
Subsidiaries or
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any material adverse change, or any development that would reasonably be
expected to involve a prospective material adverse change, in or affecting
the general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its Significant Subsidiaries,
taken as a whole, otherwise than as set forth or contemplated in the
Offering Circular;
(c) The Company has been duly incorporated and is validly existing as
an exempted limited company in good standing under the laws of the Cayman
Islands, with power and authority to own its properties and conduct its
business as described in the Offering Circular, and has been duly qualified
as a foreign company for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, except where such failure to be so qualified in any such
jurisdiction or to have any such power or authority would not have a
material adverse effect on the current or future condition (financial or
other), business, properties or results of operations of the Company and
its subsidiaries taken as a whole (a "Material Adverse Effect"); and each
Significant Subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(d) All of the issued share capital of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable; the
Shares initially issuable upon conversion of the Securities have been duly
and validly authorized and reserved for issuance and, when issued and
delivered in accordance with the provisions of the Debentures and the
Indenture referred to below, will be duly and validly issued, fully paid
and non-assessable and will conform to the description of the Shares
contained in the Offering Circular; and all of the issued share capital of
each Significant Subsidiary of the Company which is a corporation have been
duly and validly authorized and issued, are fully paid and non-assessable
and (except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims (for purposes of this agreement, "Subsidiary" means, as
applied to any person, any corporation, limited or general partnership,
trust, association or other business entity of which an aggregate of
greater than 50% of the outstanding Voting Shares of such person is, at any
time, directly or indirectly, owned by such person and/or one or more
subsidiaries of such person and "Significant Subsidiary" shall have the
meaning of "significant subsidiary" as set forth in Regulation S-X under
the Act; for purposes of the definition of " Subsidiary," "Voting Shares"
means, with respect to any corporation, the capital stock having the
general voting power under ordinary circumstances to elect at least a
majority of the board of directors
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(irrespective of whether or not at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of
any contingency));
(e) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, and when authenticated by the Trustee
(as defined below), will have been duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the indenture to be dated as
of May 23, 2001 (the "Indenture") between the Company and State
Street Bank and Trust Company, as Trustee (the "Trustee"), under which they
are to be issued; the Indenture has been duly authorized and, when
executed and delivered by the Company and the Trustee, the Indenture will
constitute a valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement, to (i) bankruptcy,
insolvency, reorganization, conveyance and other similar laws now or
hereafter in effect relating to or affecting creditors' rights or remedies
generally and to general equity principles and to the discretion of the
court before which any proceedings therefor may be brought (regardless of
whether enforcement is sought in a proceeding at law or in equity) and (ii)
the enforceability of provisions imposing liquidated damages, penalties or
an increase in interest rate upon the occurrence of certain events may be
limited in certain circumstances; and the Securities and the Indenture will
conform to the descriptions thereof in the Offering Circular;
(f) None of the transactions contemplated to be performed by the
Company by this Agreement (including, without limitation, the use of the
proceeds from the sale of the Securities) will violate or result in a
violation of Section 7 of the Exchange Act, or any regulation promulgated
thereunder, including, without limitation, Regulations T, U, and X of the
Board of Governors of the Federal Reserve System;
(g) Prior to the date hereof, neither the Company nor, to the
Company's knowledge, any of its affiliates has taken any action which is
designed to or which has constituted or which might have been expected to
cause or result in stabilization or manipulation of the price of any
security of the Company in connection with the offering of the Securities
in violation of the Exchange Act;
(h) The issue and sale by the Company of the Securities pursuant to
this Agreement and the compliance by the Company with all of the provisions
of the Securities, the Indenture, and this Agreement and the consummation
of the transactions herein and therein contemplated to be performed by the
Company will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its Significant Subsidiaries is a party or by
which the Company or any of its Significant Subsidiaries is bound or to
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which any of the property or assets of the Company or any of its
Significant Subsidiaries is subject, nor will such action result in any
violation of the provisions of the Articles of Association of the Company
or any statute or any order, rule or regulation of any court or
governmental agency or body ("Governmental Agency") having jurisdiction
over the Company or any of its Significant Subsidiaries or any of their
properties, except in each case (other than with respect to such Articles
of Association or Bye-laws) for such conflicts, violations, breaches or
defaults which would not result in a Material Adverse Effect;
(i) No consent, approval, authorization, order, registration or
qualification of or with any such Governmental Agency (a "Governmental
Authorization") is required for the issue and sale by the Company of the
Securities pursuant to this Agreement or the consummation by the Company of
the transactions contemplated by this Agreement or the Indenture to be
performed by the Company, except for registration of the Securities under
the federal securities laws, and except such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws and the laws of the Cayman Islands in
connection with the purchase and distribution of the Securities by the
Purchasers;
(j) The statements set forth in the Offering Circular under the
caption "Description of Debentures" and "Description of Ordinary Shares",
insofar as they purport to constitute a summary of the terms of the
Securities and the Shares, insofar as they purport to describe the
provisions of the documents referred to therein, fairly summarize such
documents in all material respects;
(k) Other than as set forth or incorporated by reference in the
Offering Circular, or as encountered in the ordinary course of business in
the Company's claims activities, there are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Significant Subsidiaries or any
property of the Company or any of its Significant Subsidiaries in any court
or before any arbitrator of any kind or before any governmental authority
that, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect;
(l) The financial statements incorporated by reference in the Offering
Circular present fairly the financial position of the Company and its
consolidated Subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and except as otherwise
disclosed in the Offering Circular, such financial statements have been
prepared in conformity with the generally accepted accounting principles in
the United States applied on a consistent basis;
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(m) The Company and its Significant Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by them
and have not received any written notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
that would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect;
(n) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the Securities Act of 1933, as amended (the "Act")) as
securities which are listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system;
(o) The Company is subject to Section 13 or 15(d) of the Exchange Act;
(p) The Company is not, and after giving effect to the offering and
sale of the Securities, will not be an "investment company", as such term
is defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act"); (q) Neither the Company nor any person
acting on its behalf has offered or sold the Securities by means of any
general solicitation or general advertising within the meaning of Rule
502(c) under the Act; provided, that the Company makes no representation as
to the Purchasers and their affiliates;
(r) Within the preceding six months, neither the Company nor any other
person acting on behalf of the Company has offered or sold to any person
any Securities, or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchasers
hereunder; provided, that the Company makes no representation as to the
Purchasers and their affiliates. The Company will take reasonable
precautions designed to insure that any offer or sale, direct or indirect,
in the United States of any Securities or any substantially similar
security issued by the Company, within six months subsequent to the date on
which the distribution of the Securities has been completed (as notified to
the Company by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.), is made under restrictions and other
circumstances reasonably designed not to affect the status of the offer and
sale of the Securities in the United States and to U.S. persons
contemplated by this Agreement as transactions exempt from the registration
provisions of the Securities Act;
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(s) PricewaterhouseCoopers LLP, the Company's auditors, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(t) Neither the Company nor any of its Significant Subsidiaries is in
violation of its Articles of Association or Bye-laws or in default in the
performance or observance of any material obligation, covenant or condition
contained in any indentures, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, except for such defaults which would
not result in a Material Adverse Effect; and
(u) No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Purchasers to the Cayman Islands or any political subdivision
or taxing authority thereof or therein in connection with (A) the issuance,
sale and delivery by the Company to or for the respective accounts of the
Purchasers of the Securities or (B) the sale or delivery outside the Cayman
Islands by the Purchasers of the Securities to the initial purchasers
thereof, other than as described in the opinion of Hunter & Hunter
delivered pursuant to Section 7(c) of this Agreement.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to the Purchasers, and the Purchasers agree to purchase
from the Company, at a purchase price of 97.75% of the initial amount of the
Securities, such principal amount at maturity of the Securities as set forth
opposite the name of such Purchaser in Schedule I hereto and (b) in the event
and to the extent that the Purchasers shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to issue and sell to
the Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Company, at the same purchase price set forth in clause (a) of this
Section 2, that portion of the aggregate principal amount at maturity of the
Optional Securities as to which such election shall have been exercised,
determined by multiplying such aggregate principal amount at maturity of
Optional Securities by a fraction, the numerator of which is the maximum
aggregate principal amount of Optional Securities which such Purchaser is
entitled to purchase and the denominator of which is the maximum aggregate
principal amount at maturity of Optional Securities which all of the Purchasers
are entitled to purchase hereunder.
The Company hereby grants to the Purchasers the right to purchase at their
election up to $168,473,000 aggregate principal amount at maturity of Optional
Securities, at the purchase price set forth in clause (a) of the first paragraph
of this Section 2. Any such election to purchase Optional Securities may be
exercised by written notice from you to the Company, given within a period of 13
calendar days after the date of this Agreement, setting forth the aggregate
principal amount of Optional Securities to be purchased and the date on
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which such Optional Securities are to be delivered, as determined by you but in
no event earlier than the First Time of Delivery (as defined in Section (4)
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice. No Optional
Securities shall be sold or delivered unless the Firm Securities previously have
been, or simultaneously are, sold and delivered.
3. Upon the authorization by you of the release of the Securities, each
Purchaser proposes to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within
the meaning of Rule 144A under the Act in transactions meeting the
requirements of Rule 144A;
(b) It is an Institutional Accredited Investor; and
(c) It has not and will not offer or sell the Securities by any form
of general solicitation or general advertising, including but not limited
to the methods described in Rule 502(c) under the Act.
4. The Securities to be purchased by each Purchaser hereunder, in
book-entry form, will be represented by permanent global certificates and shall
be delivered by or on behalf of the Company to the Purchasers, through the
facilities of The Depository Trust Company ("DTC"), for the account of the
Purchasers, against payment by or on behalf of such Purchaser of the purchase
price therefor by wire transfer to the Company of federal (same day) funds, by
causing DTC to credit the Securities to the account of the Purchasers. The
Company will cause the global certificates representing the Firm Securities to
be made available for checking and packaging at least twelve hours prior to the
Time of Delivery (as defined below) at the office of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP. The time and date for the delivery and payment of the Firm
Securities shall be 9:30 a.m., New York City time, on May 23, 2001 or such other
time and date as ▇▇▇▇▇▇▇, Sachs & Co. and the Company may agree upon in writing,
and, with respect to the Optional Securities, 9:30 a.m., New York City time, on
the date specified by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. of the Purchasers' election to
purchase such Optional Securities, or such other time and date as ▇▇▇▇▇▇▇, Sachs
& Co. and the Company may agree upon in writing. Such time and date of delivery
of the Firm Securities herein called the "First Time of Delivery," such time and
date of delivery of the Optional Securities, if not the First Time of Delivery,
is herein called the "Second Time of Delivery," and each such time and date of
delivery is herein called the "Time of Delivery."
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(a) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7(m) hereof, will be delivered at such time and date at the
offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
(the "Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the Closing
Location at 3:00 p.m., New York City time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to
make no amendment or any supplement to the Offering Circular which shall be
disapproved by you promptly after reasonable notice thereof, unless such
amendment or supplement is legally necessary as advised by outside counsel
to the Company; and to furnish you with a reasonable number of copies
thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities, and the Shares issuable upon
conversion of the Securities for offering and sale under the securities
laws of such jurisdictions as you may reasonably request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Securities, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Purchasers with copies of the Offering Circular and
each amendment or supplement thereto and additional written and electronic
copies thereof in such quantities as you may from time to time reasonably
request, and if, at any time prior to the expiration of nine months after
the date of the Offering Circular, any event shall have occurred as a
result of which the Offering Circular as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Offering
Circular is delivered, not misleading, or, if for any other reason it shall
be necessary or desirable during such same period to amend or supplement
the Offering Circular, to notify you and upon your request to prepare and
furnish without charge to each Purchaser and to any dealer
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in securities as many written and electronic copies as you may from time to
time reasonably request of an amended Offering Circular or a supplement to
the Offering Circular which will correct such statement or omission or
effect such compliance;
(d) During the period beginning from the date hereof and continuing
until the date 90 days after the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder any
securities of the Company that are substantially similar to the Securities
or any Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Shares or any such substantially similar securities (other than
pursuant to stock option or other similar plans existing on, or upon the
conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement or pursuant to this Agreement
or upon conversion of the Debentures), without your prior written consent;
(e) Not to be or become, at any time prior to the expiration of two
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time prior to the expiration of two years after the Time of
Delivery, when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, to furnish at its expense, upon request, to holders of
Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Act;
(g) To use its best efforts to cause the Debentures to be eligible for
the PORTAL trading system of the National Association of Securities
Dealers, Inc.;
(h) Prior to the expiration of two years after the Time of Delivery,
to furnish to the holders of the Securities as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the date of the Offering Circular), to make available to its
stockholders consolidated summary financial information of the Company and
its consolidated subsidiaries for such quarter in reasonable detail,
except, in each case, to the extent such reports or information are
publicly available or the deadline for submission of such reports or
information to the Commission has not yet occurred;
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(i) During a period of three years from the date of the Offering
Circular, to furnish to you copies of all reports or other communications
(financial or other) furnished to stockholders of the Company, and to
deliver to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
securities exchange on which the Securities or any class of securities of
the Company is listed (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its Subsidiaries are
consolidated in reports furnished to its stockholders generally or to the
Commission); and (ii) such additional information concerning the business
and financial condition of the Company as you may from time to time
reasonably request, except, in each case, such information that the Company
determines, in its discretion, constitutes material non-public information
(such financial statements to be on a consolidated basis to the extent the
accounts of the Company and its Subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission), except, in
each case, to the extent such reports, communications, statements or other
information are publicly available or the deadline of such reports or
information to the Commission has not yet occurred;
(j) During the period of two years after the Time of Delivery, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144 under the Securities Act) to, resell any of the Securities
which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them;
(k) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds;" and
(l) To reserve and keep available at all times, free of preemptive
rights, Shares for the purpose of enabling the Company to satisfy any
obligations to issue shares of its Shares upon conversion of the
Securities.
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and the Shares issuable upon conversion of the
Securities and all other expenses of the Company in connection with the
preparation, printing and filing of the Offering Circular and any amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Purchasers and dealers; (ii) the cost of printing or producing the Indenture and
closing documents (including any compilations thereof); (iii) all expenses in
connection with the qualification of the Securities and the Shares issuable upon
conversion of the Securities for offering and sale under state securities laws
as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Purchasers in connection with such qualification and in
con-
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nection with the Blue Sky and legal investment surveys; (iv) any fees charged by
any securities rating service for rating the Securities; (v) the cost of
preparing the Securities; (vi) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities; (vii) any cost incurred in
connection with the designation of the Securities for trading in PORTAL and the
listing of the shares of Stock issuable upon conversion of the Securities;
(viii) all expenses and taxes arising as a result of the issuance, sale and
delivery of the Securities, of the sale and delivery outside of the Cayman
Islands of the Securities by the Purchasers to the initial purchasers thereof in
the manner contemplated under the Purchase Agreement, including, in any such
case, any Cayman Islands income, capital gains, withholding, transfer or other
tax asserted against a Purchaser by reason of the purchase and sale of the
Securities pursuant to the Purchase Agreement; and (ix) all other costs and
expenses incident to the performance of the Company's obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Purchasers will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Purchasers, shall have furnished to you their written opinion, dated the
Time of Delivery, in form and substance reasonably satisfactory to you, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(b) ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, shall have
furnished to you their written opinion, dated the Time of Delivery, in form
and substance reasonably satisfactory to you;
(c) Hunter & Hunter, counsel for the Company, shall have furnished to
you their written opinion, dated the Time of Delivery, in form and
substance reasonably satisfactory to you;
(d) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President and General Counsel to
the Company, shall have furnished to you his written opinion, dated the
Time of Delivery, in form and substance reasonably satisfactory to you;
-13-
(e) On the date of the Offering Circular prior to the execution of
this Agreement and also at the Time of Delivery, PricewaterhouseCoopers LLP
shall have furnished to you a letter or letters, dated the respective dates
of delivery thereof, in form and substance reasonably satisfactory to you;
(f) (i) Neither the Company nor any of its Significant Subsidiaries
shall have sustained since the date of the latest audited financial
statements included in the Offering Circular any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Offering Circular, and (ii) since the respective dates as of which
information is given in the Offering Circular there shall not have been any
change in the capital stock (other than changes resulting from the exercise
of stock options or the conversion of warrants or capital stock which were
outstanding as of such date, or from the exercise of options granted after
such date in the ordinary course of business or from repurchases of capital
stock) or long-term debt of the Company or any of its Significant
Subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and
its Significant Subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Offering Circular, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of ▇▇▇▇▇▇▇, Sachs
& Co. so material and adverse as to make it impracticable or inadvisable to
proceed with the offering or the delivery of the Securities on the terms
and in the manner contemplated in this Agreement and in the Offering
Circular;
(g) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities or the Company's
financial strengths or claims paying ability by any "nationally recognized
statistical rating organization", as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization
shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of the Company's
debt securities or the Company's financial strengths or claims paying
ability;
(h) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange (the "Exchange"); (ii)
a suspension or material limitation in trading in the Company's securities
on the New York Stock Exchange; (iii) a general moratorium on commercial
banking activities declared by either Federal or New York State
authorities; (iv) the outbreak or escalation of hostilities involving the
United States or the Cayman Islands or the declaration by the United States
or the
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
makes it impracticable or inadvisable to proceed with the public offering
or the delivery of the Securities on the terms and in the manner
contemplated in the Offering Circular; (v) a change or development
involving a prospective change in the Cayman Islands taxation affecting the
Company, the Securities or the transfer thereof or the imposition of
exchange controls by the United States or the Cayman Islands; or (vi) the
occurrence of any material adverse change in the existing financial,
political or economic conditions in the United States or elsewhere which,
in the judgment of ▇▇▇▇▇▇▇, Sachs & Co., would materially and adversely
affect the financial markets or the markets for the Securities or other
debt securities or any other equity securities;
(i) The Company shall have furnished or caused to be furnished to you
at the Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsection (e) of this Section and as to such other matters as you may
reasonably request;
(j) The Purchasers shall have received letters, dated the First Time
of Delivery, from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr. and ▇▇▇▇▇ ▇'▇▇▇▇ whereby each such
person agrees, for the period commencing on the date of the Time of
Delivery and ending 90 days after the date of the Offering Circular, not to
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any Shares or other securities convertible into or exchangeable
or exercisable for any Shares, or publicly disclose the intention to make
any such offer, sale, pledge or disposal (1) other than no more than 10% of
the Shares held by each such person on the date of such letters and other
than as bona fide gift or gifts, provided that the donee or donees thereof
agree to be bound by such letters or (2) without the prior written consent
of the Purchasers;
(k) The Indenture shall have been duly executed and delivered by the
Company and the Debentures shall have been duly executed and delivered by
the Company and duly authenticated by the Trustee in accordance with the
Indenture;
(l) The Company shall have executed and delivered to the Purchasers
the Registration Rights Agreement; and
(m) The Company shall have furnished to the Purchasers such further
information, certificates and documents as the Purchasers may reasonably
request to evidence compliance with the conditions set forth in this
Section 7.
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8. The Company will indemnify and hold harmless each Purchaser against any
losses, claims, damages or liabilities, joint or several, to which such
Purchaser may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Offering Circular, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein not
misleading, and will reimburse each Purchaser for any expenses reasonably
incurred by such Purchaser in connection with investigating or defending any
such action or claim as such expenses are incurred, including the reasonable
fees and expenses of one counsel (in addition to any applicable local counsel);
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein.
(a) Each Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in the Offering Circular, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Offering Circular or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Purchaser through ▇▇▇▇▇▇▇, Sachs & Co.
expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred, including the reasonable fees and expenses of one counsel (in
addition to any applicable local counsel).
(b) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to
-16-
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and, after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof
other than reasonable costs of investigation. No indemnifying party shall,
without the written consent of the indemnified party, effect the settlement
or compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising
out of such action or claim and (ii) does not include a statement as to, or
an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(c) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Purchasers on the other from the offering of the
Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then
each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on
the one hand and the Purchasers on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Purchasers on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Purchasers, in each case as set
forth in the Offering Circular. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one
hand or the Purchasers on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Purchasers agree that it would
not be just and equitable if contribution pursuant to this
-17-
subsection (d) were determined by pro rata allocation (even if the
Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities underwritten by it and distributed to investors were
offered to investors exceeds the amount of any damages which such Purchaser
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 of the Act)
shall be entitled to contribution from any person not guilty of such
fraudulent misrepresentation. The Purchasers' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(d) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within the meaning of the Act; and the obligations
of the Purchasers under this Section 8 shall be in addition to any
liability which the respective Purchasers may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of
the Company and to each person, if any, who controls the Company within the
meaning of the Act.
9. If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may arrange for you or
another party or other parties satisfactory to the Company to purchase such
Securities on the terms contained herein. If within thirty-six hours after such
default by any Purchaser you do not arrange for the purchase of such Securities,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Securities on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Securities, or the Company notifies you that it has so arranged
for the purchase of such Securities, you or the Company shall have the right to
postpone the Time of Delivery for a period of not more than seven days, in order
to effect whatever changes may thereby be made necessary in the Offering
Circular, or in any other documents or arrangements, and the Company agrees to
prepare promptly any amendments to the Offering Circular which in your opinion
may thereby be made necessary. The term "Purchaser" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Securities.
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(a) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of such Securities which remains unpurchased does not exceed one-eleventh
of the aggregate principal amount of all the Securities, then the Company
shall have the right to require each non-defaulting Purchaser to purchase
the principal amount of Securities which such Purchaser agreed to purchase
hereunder and, in addition, to require each non-defaulting Purchaser to
purchase its pro rata share (based on the principal amount of Securities
which such Purchaser agreed to purchase hereunder) of the Securities of
such defaulting Purchaser or Purchasers for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of Securities which remains unpurchased exceeds one-eleventh of the
aggregate principal amount of all the Securities, or if the Company shall
not exercise the right described in subsection (b) above to require
non-defaulting Purchasers to purchase Securities of a defaulting Purchaser
or Purchasers, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company,
except for the expenses to be borne by the Company and the Purchasers as
provided in Section 6 hereof and the indemnity and contribution agreements
in Section 8 hereof; but nothing herein shall relieve a defaulting
Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Purchasers, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including the reasonable fees and
disbursements of counsel, incurred by the Purchasers in making preparations for
the purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
-19-
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representative in care of ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co. at ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Registration Department; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Offering Circular, Attention: Secretary; provided, however, that any notice
to a Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Purchaser at its address set forth
in its Purchasers' Questionnaire, or telex constituting such Questionnaire,
which address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. The Company irrevocably (i) agrees that any legal suit, action or
proceeding against the Company brought by any Purchaser or by any person who
controls any Purchaser arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in the federal district court
for the Southern District of New York and the New York County Court, (ii)
waives, to the fullest extent it may effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such proceeding and
(iii) submits to the exclusive jurisdiction of such courts in any such suit,
action or proceeding. The Company has appointed CT Corporation, New York, New
York, as its authorized agent (the "Authorized Agent") upon whom process may be
served in any such action arising out of or based on this Agreement or the
transactions contemplated hereby which may be instituted in the federal district
court for the Southern District of New York and the New York County Court by any
Purchaser or by any person who controls any Purchaser, expressly consents to the
jurisdiction of any such court in respect of any such action, and waives any
other requirements of or objections to personal jurisdiction with respect
thereto. Such appointment shall be irrevocable. The Company represents and
warrants that the Authorized Agent has agreed to act as such agent for service
of process and agrees to take any and all action, including the filing of any
and all documents and instruments, that may be necessary to
-20-
continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent and written notice of such service to the
Company shall be deemed, in every respect, effective service of process upon the
Company.
15. In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "judgment currency")
other than United States dollars, the Company will indemnify each Purchaser
against any loss incurred by such Purchaser as a result of any variation as
between (i) the rate of exchange at which the United States dollar amount is
converted into the judgment currency for the purpose of such judgment or order
and (ii) the rate of exchange at which an Purchaser is able to purchase United
States dollars with the amount of judgment currency actually received by such
Purchaser. The foregoing indemnity shall constitute a separate and independent
obligation of the Company and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of or conversion into United States dollars.
16. Time shall be of the essence of this Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
18. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
-21-
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Purchasers plus one for each
counsel counterparts hereof, and upon the acceptance hereof by you, on behalf of
each of the Purchasers, this letter and such acceptance hereof shall constitute
a binding agreement between each of the Purchasers and the Company.
Very truly yours,
XL Capital Ltd
By:
----------------------------
Name:
Title:
Accepted as of the date hereof:
▇▇▇▇▇▇▇, Sachs & Co.
Deutsche Bank Alex. ▇▇▇▇▇ Inc.
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ LLC
By: (▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
-----------------------------
SCHEDULE I
Principal
Amount of
Securities
to be
Purchased
Purchaser
----------------------
▇▇▇▇▇▇▇, Sachs & Co. $673,888,800
Deutsche Banc Alex. ▇▇▇▇▇ Inc. 84,236,500
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ LLC 84,236,500
Total $842,361,000
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