Execution Copy
XL Capital Ltd
Series A Preference Ordinary Shares
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Underwriting Agreement
August 9, 2002
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center - North Tower
250 Vesey Street
New York, New York 10281
as Representatives of the several
Underwriters named in the Pricing
Agreement hereinafter described
Ladies and Gentlemen:
From time to time XL Capital Ltd, a Cayman Islands exempted limited company
(the "Company"), proposes to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, to issue and sell to the firms named in
Schedule I to the applicable Pricing Agreement (such firms constituting the
"Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain shares of its Series A Preference Ordinary Shares,
par value $0.01 per share (the "Shares"), specified in Schedule II to such
Pricing Agreement (with respect to such Pricing Agreement, the "Firm Shares").
If specified in such Pricing Agreement, the Company may grant to the
Underwriters the right to purchase at their election an additional number of
shares, specified in such Pricing Agreement as provided in Section 3 hereof (the
"Optional Shares"). The Firm Shares and the Optional Shares, if any, which the
Underwriters elect to purchase pursuant to Section 3 hereof are herein
collectively called the "Designated Shares".
The terms and rights of any particular issuance of Designated Shares shall
be as specified in the Pricing Agreement relating thereto.
1. Particular sales of Designated Shares may be made from time to time to
the Underwriters of such Shares, for whom the firms designated as
representatives of the Underwriters of such Shares in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters
and to Underwriters who act without any firm being designated as their
representative. This Underwriting Agreement shall not be construed as an
obligation of the Company to sell any of the Shares or as an obligation of any
of the Underwriters to purchase any of the Shares. The obligation of the Company
to issue and sell any of the Shares and the obligation of any of the
Underwriters to purchase any of the Shares shall be evidenced by the Pricing
Agreement with respect to the Designated Shares specified therein. Each Pricing
Agreement shall specify the aggregate number of the Firm Shares, the maximum
number of Optional Shares, if any, the initial public offering price of such
Firm and Optional Shares or the manner of determining such price, the purchase
price to the Underwriters of such Designated Shares, the names of the
Underwriters of such Designated Shares, the names of the Representatives of such
Underwriters, the number of such Designated Shares to be purchased by each
Underwriter and the commission, if any, payable to the Underwriters with respect
thereto and shall set forth the date, time and manner of delivery of such Firm
and Optional Shares, if any, and payment therefor. The Pricing Agreement shall
also specify (to the extent not set forth in the registration statement and
prospectus with respect thereto) the terms of such Designated Shares. A Pricing
Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters under this
Agreement and each Pricing Agreement shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of the
Underwriters, as of the date hereof, as of the date of the Pricing Agreement
with respect to any Designated Shares and as of each Time of Delivery, that:
(a) The Company meets the requirements for use of Form S-3 under the
Act; and a registration statement on Form S-3 (File No 333-75240) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered or to be delivered to the Representatives
and, excluding exhibits to the Initial Registration Statement, but
including all documents incorporated by reference in the prospectus
included therein, to the Representatives for each of the other Underwriters
has been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement or document incorporated by reference therein has heretofore been
filed, or transmitted for filing, with the Commission (other than the
prospectuses filed pursuant to Rule 424(b) of the rules and regulations of
the Commission under the Act, in the form heretofore delivered to the
Representatives); and no stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial Registration
Statement or filed with the Commission pursuant to Rule 424(a) under the
Act, including the related preliminary prospectus supplement with respect
to the Shares), is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the Initial
Registration Statement became effective, each as amended at the time such
part of the Initial Registration Statement became
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effective or such part of the Rule 462(b) Registration Statement, if any,
became or hereafter becomes effective, are hereinafter collectively called
the "Registration Statement"; the prospectus relating to the Designated
Shares, in the form first furnished to the Underwriters for use in
connection with the offering of the Designated Shares (including the
related prospectus supplement with respect to the Designated Shares) and
filed with the Commission pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the date
of such Preliminary Prospectus or Prospectus, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment to the Initial Registration
Statement shall be deemed to refer to and include any annual report of the
Company filed pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is incorporated
by reference in the Registration Statement;
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
any further documents so filed and incorporated by reference in the
Prospectus or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date, as of the date
hereof and as of the date of execution of the Pricing Agreement with
respect to such Designated Shares as to the Registration Statement and any
amendment thereto and as of the applicable filing date and as of the Time
of Delivery as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements in
the Registration Statement not misleading and the statements in the
Prospectus, 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 an
Underwriter of Designated Shares through the Representatives expressly for
use in the Prospectus;
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(d) Neither the Company nor any of its Significant Subsidiaries (as
defined below) has sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus 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 Prospectus 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; and, since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, 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 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
Prospectus;
(e) 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 full power and authority to own its properties and conduct
its business as described in the Prospectus 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 or the transactions contemplated by this Agreement (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;
(f) The Company had, on June 30, 2002, an authorized capitalization as
set forth in the Prospectus under the caption "Actual" under the heading
"Capitalization", and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable;
(g) The Shares have been duly and validly authorized, and, when the
Firm Shares are issued and delivered pursuant to this Agreement and the
Pricing Agreement with respect to such Designated Shares and, in the case
of any Optional Shares, pursuant to each Over-allotment Option (as defined
in Section 3 hereof) with respect to such Shares, such Designated Shares
will be duly and validly issued and fully paid and non-assessable and will
not be subject to preemptive or other similar rights of any securityholder
of the Company, and no holder of the Shares will be subject to personal
liability by reason of being such a holder; the Shares conform to the
description thereof contained in the Registration Statement and the
Designated Shares will conform to the description thereof contained in the
Prospectus; the applicable resolution of the Special Finance Committee of
the Company's Board of Directors creating the Designated Shares shall be in
full force and effect prior to the Closing Date;
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(h) This Agreement has been duly authorized, executed and delivered by
the Company, and each Pricing Agreement has been duly authorized by and, on
the date thereof, will be duly executed and delivered by the Company;
(i) The issue and sale of the Shares, the execution and delivery of
this Agreement and any Pricing Agreement and the compliance by the Company
with all of the provisions of this Agreement, any Pricing Agreement, the
Shares and each Over-allotment Option, if any, and the consummation of the
transactions contemplated herein and therein 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 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
charter, the Articles of Association, the Memorandum of Association or
By-laws (or similar organizational documents) of the Company or any of its
Significant Subsidiaries 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 its properties except in each case (other than with respect to such
charter, Articles of Association, Memorandum of Association or By-Laws (or
similar organizational documents)) for such conflicts, violations, breaches
or defaults which would not result in a Material Adverse Effect;
(j) No consent, approval, authorization, order, filing, 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
Shares or the consummation by the Company of the transactions contemplated
by this Agreement or any Pricing Agreement or any Over-allotment Option,
except such as have been, or will have been prior to each Time of Delivery
(as defined in Section 4 hereof), obtained under the Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(k) All of the issued share capital of each Significant Subsidiary of
the Company which is a corporation has been duly and validly authorized and
issued, is fully paid and non-assessable and (except for directors'
qualifying shares) is 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 (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));
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(l) 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 Designated Shares) 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;
(m) 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 Designated
Shares in violation of the Exchange Act;
(n) Other than as set forth or incorporated by reference in the
Prospectus, or as encountered in the ordinary course of business in the
Company's claims activities, there are no legal or governmental actions,
suits or proceedings pending to which the Company or any of its Significant
Subsidiaries is a party or of which any property of the Company or any of
its Significant Subsidiaries is the subject, which would individually or in
the aggregate reasonably be expected to have a Material Adverse Effect on
the operations of the Company and its Significant Subsidiaries; and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(o) The financial statements of the Company and its consolidated
subsidiaries incorporated by reference in the Prospectus 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 Prospectus, such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis;
(p) 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;
(q) The Company is subject to Section 13 or 15(d) of the Exchange Act;
(r) Neither the Company nor any of its Significant Subsidiaries is in
violation of its charter, Articles of Association, Memorandum of
Association or By-laws (or similar organizational documents) or in default
in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, 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;
(s) The statements set forth in the Prospectus under the captions
"Description of Series A Preference Shares," "Description of XL
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Capital Share Capital" and "Description of XL Capital Preference Ordinary
Shares", insofar as they purport to constitute a summary of the terms of
the Shares, and the statements set forth under the caption "Certain Tax
Considerations" in the Prospectus insofar as they purport to describe the
provisions of the laws referred to therein, are accurate, complete and fair
in all material respects;
(t) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company", as such term is
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(u) PricewaterhouseCoopers LLP, the Company's auditors, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(v) 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 Underwriters 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 Underwriters of the Designated Shares or (B) the sale or
delivery outside the Cayman Islands by the Underwriters of the Designated
Shares to the initial purchasers thereof, other than as described in the
opinion of Hunter & Hunter delivered pursuant to Section 7(d) of this
Agreement.
3. Upon the execution of the Pricing Agreement applicable to any Designated
Shares and authorization by the Representatives of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
The Company may specify in the Pricing Agreement applicable to any
Designated Shares that the Company thereby grants to the Underwriters the right
(an "Overallotment Option") to purchase at their election up to the number of
Optional Shares set forth in such Pricing Agreement, on the terms set forth in
the paragraph above, for the sole purpose of covering over-allotments in the
sale of the Firm Shares. Any such election to purchase Optional Shares may be
exercised by written notice from the Representatives to the Company, given
within a period specified in the Pricing Agreement, setting forth the aggregate
number of Optional Shares to be purchased and the date on which such Optional
Shares are to be delivered, as determined by the Representatives but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless the Representatives and the Company otherwise agree in writing, earlier
than or later than the respective number of business days after the date of such
notice set forth in such Pricing Agreement.
The number of Optional Shares to be added to the number of Firm Shares to
be purchased by each Underwriter as set forth in Schedule I to the Pricing
Agreement applicable to such Designated Shares shall be, in each case, the
number of Optional Shares which the Company has been advised by the
Representatives have been attributed to such Underwriter; provided that, if the
Company has not been so advised, the number of Optional Shares to be so added
shall be, in each case, that proportion of Optional Shares which the number of
Firm Shares to be purchased by such Underwriter under such Pricing Agreement
bears to the aggregate number of Firm Shares (rounded as the Representatives may
determine to the nearest 100 shares). The total number of Designated Shares to
be purchased by all the Underwriters pursuant to such Pricing Agreement shall be
the aggregate
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number of Firm Shares set forth in Schedule I to such Pricing Agreement plus the
aggregate number of Optional Shares which the Underwriters elect to purchase.
4. Certificates for the Firm Shares and the Optional Shares to be purchased
by each Underwriter pursuant to the Pricing Agreement relating thereto, in the
form specified in such Pricing Agreement and in such authorized denominations
and registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company, shall be delivered by or on
behalf of the Company to the Representatives for the account of such
Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company to Merrill Lynch, Pierce, Fenner & Smith
Incorporated at least twenty-four hours in advance as specified in such Pricing
Agreement, (i) with respect to the Firm Shares, all in the manner and at the
place and time and date specified in such Pricing Agreement or at such other
place and time and date as the Representatives and the Company may agree upon in
writing, such time and date being herein called the "First Time of Delivery" and
(ii) with respect to the Optional Shares, if any, in the manner and at the time
and date specified by the Representatives in the written notice given by the
Representatives of the Underwriters' election to purchase such Optional Shares,
or at such other time and date as the Representatives and the Company may agree
upon in writing, such time and date, if not the First Time of Delivery, herein
called the "Second Time of Delivery". Each such time and date for delivery is
herein called a "Time of Delivery".
5. The Company agrees with each of the Underwriters of any Designated
Shares:
(a) To prepare the Prospectus in relation to the applicable Designated
Shares in a form approved by the Representatives and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of the Pricing Agreement relating to the applicable
Designated Shares or, if applicable, such earlier time as may be required
by Rule 424(b); to make no further amendment or any supplement to the
Registration Statement or Prospectus after the date of the Pricing
Agreement relating to such Shares and prior to any Time of Delivery for
such Shares which shall be disapproved by the Representatives for such
Shares promptly after reasonable notice thereof; to advise the
Representatives promptly of any such amendment or supplement so long as the
delivery of a prospectus is required in connection with the offering or
sale of such Shares and furnish the Representatives with copies thereof; to
file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as
the delivery of a prospectus is required in connection with the offering or
sale of such Shares, and during such same period to advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has
been filed with the Commission, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
prospectus relating to the Shares, of the suspension of the qualification
of such Shares for offering or sale in any jurisdiction, of the initiation
or threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of
the issuance of any such stop order or of any such order preventing or
suspending the use of any prospectus relating to the Shares or suspending
any such qualification, promptly to use its best efforts to obtain the
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withdrawal of such order; Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall advise the Company when the delivery of a prospectus is
no longer required in connection with the offer or sale of Shares pursuant
to this Section 5(a);
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Shares for offering
and sale under the securities laws of such jurisdictions as the
Representatives 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 such Shares, 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) Prior to noon, New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with written and electronic copies of the
Prospectus in New York City in such quantities as the Representatives may
reasonably request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Shares and if at such
time any event shall have occurred as a result of which the Prospectus 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 Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act
or the Exchange Act, to notify the Representatives and upon their request
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many written and electronic
copies as the Representatives may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) That during the period beginning from the date hereof and
continuing until the date 30 days after the date of this Underwriting
Agreement, not to offer, sell, contract to sell or otherwise dispose of,
except as provided hereunder with regard to the Firm Shares and the
Optional Shares, if any, any Shares of the Company or any retail preference
ordinary shares of the Company or any securities that are convertible into
or exchangeable for, or that represent the right to receive, Shares, any
such retail preference ordinary shares or any such convertible or
exchangeable securities, without the prior written consent of Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc.,
on behalf of the Underwriters;
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(f) To use its best efforts to cause the Designated Shares to be
listed, and to maintain the listing of the Designated Shares, on the New
York Stock Exchange;
(g) To use the net proceeds received by it from the sale of the
Designated Shares pursuant to this Agreement and the Pricing Agreement in
the manner set forth in the Prospectus under the caption "Use of Proceeds;"
(h) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of the
Pricing Agreement with respect to the Designated Shares, and the Company
shall at the time of filing either pay the Commission the filing fee for
the Rule 462(b) Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(b) under the Act; and
(i) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
corporate logo for use on the website, if any, operated by such Underwriter
for the purpose of facilitating the on-line offering of the Shares in
connection with the distribution contemplated by this Underwriting
Agreement (the "License"); provided, however, that the License shall be
used solely for the purpose described above, is granted without any fee and
may not be assigned or transferred.
6. The Company covenants and agrees with the several Underwriters 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
registration of the Shares under the Act and the issuance and sale of the
Designated Shares, and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and any amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriters and dealers; (ii) the cost
of printing or producing any Agreement among Underwriters, this Agreement, any
Pricing Agreement, any Blue Sky Memorandum, closing documents (including
compilations thereof); (iii) all expenses in connection with the qualification
of the Shares for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the reasonable fees and disbursements of counsel
for the Underwriters in connection with such qualification and in connection
with the Blue Sky and legal investment surveys; (iv) any filing fees incident
to, and the fees and disbursements of counsel for the Underwriters in connection
with, any required reviews by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; (v) the cost of preparing
certificates for the Shares; (vi) the cost and charges of any transfer agent or
registrar or dividend disbursing agent; (vii) all expenses and taxes arising as
a result of the issuance, sale and delivery of the Designated Shares, of the
sale and delivery outside of the Cayman Islands of the Designated Shares by the
Underwriters to the initial purchasers thereof in the manner contemplated under
this Agreement and the Pricing Agreement, including, in any such case, any
Cayman Islands income, capital gains, withholding, transfer or other tax
asserted against a Underwriter by reason of the purchase and sale of the
Designated Shares pursuant to the Underwriting Agreement and the Pricing
Agreement; (viii) any fees charged by securities rating services for the rating
of the Designated Shares; (ix) any cost incurred in connection with the listing
of the Designated Shares on the New York Stock Exchange; and (x) all other costs
and expenses incident to the performance of its obligations hereunder, under any
Pricing Agreement and under any Over-allotment Options which are not otherwise
specifically provided for in this Section. It is
10
understood, however, that, except as provided in this Section, and Sections 8,
11 and 19 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Shares by them, and any advertising expenses connected with any offers they may
make.
7. The obligations of the Underwriters of any Designated Shares under the
Pricing Agreement relating to such Designated Shares shall be subject, in the
discretion of the Representatives, to the condition that all representations and
warranties and other statements of the Company in or incorporated by reference
in the Pricing Agreement relating to such Designated Shares are, at and as of
each Time of Delivery for such Designated Shares, 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) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of the Pricing Agreement with respect to
such Designated Shares; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the Representatives' reasonable
satisfaction;
(b) Simpson Thacher & Bartlett, counsel for the Underwriters, shall
have furnished to the Representatives their written opinion or opinions,
dated such Time of Delivery, in form and substance reasonably satisfactory
to the Representatives, in the form attached hereto in Annex II, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Cahill Gordon & Reindel, United States counsel for the Company,
shall have furnished to the Representatives their written opinion or
opinions, dated such Time of Delivery, in form and substance reasonably
satisfactory to the Representatives, in the form attached hereto in Annex
III;
(d) Hunter & Hunter, Cayman Islands counsel for the Company, shall
have furnished to the Representatives their written opinion or opinions,
dated such Time of Delivery, in form and substance reasonably satisfactory
to the Representatives, in the form attached hereto in Annex IV;
(e) Paul S. Giordano, Executive Vice President and General Counsel to
the Company, shall have furnished to the Representatives his written
opinion or opinions, dated such Time of Delivery, in form and substance
reasonably satisfactory to the Representatives, in the form attached hereto
in Annex V;
(f) On the date of the Pricing Agreement for such Designated Shares
and at each Time of Delivery for such Designated Shares,
PricewaterhouseCoopers LLP, the independent
11
accountants of the Company who have certified the financial statements of
the Company and its subsidiaries included or incorporated by reference in
the Registration Statement shall have furnished to the Representatives a
letter or letters, dated the respective dates of delivery thereof, in form
and substance reasonably satisfactory to the Representatives;
(g) (i) Neither the Company nor any of its Significant Subsidiaries
shall have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus 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 Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus, there shall not have been
any change in the capital stock (other than changes resulting from the
exercise of share or over-allotment 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 Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is in
the judgment of the Representatives so material and adverse as to make it
impractical or inadvisable to proceed with the public offering or the
delivery of the Designated Shares on the terms and in the manner
contemplated in the Prospectus;
(h) At each Time of Delivery, the Shares shall be rated at least "A3"
by Moody's and "A-" by S&P, and the Company shall have delivered to the
Representatives a letter dated on, or prior to, such Time of Delivery, from
each such rating agency, or other evidence satisfactory to the
Representatives confirming that the Shares have such ratings. On or after
the date of the Pricing Agreement relating to the Designated Shares (i) no
downgrading shall have occurred in the rating accorded the Company's debt
securities or preference ordinary shares or the Company's financial
strength 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 preference ordinary shares or the Company's financial
strength or claims paying ability;
(i) On or after the date of the Pricing Agreement relating to the
Designated Shares 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 Exchange; (iii) a
general moratorium on commercial banking activities in New York, the Cayman
Islands or Bermuda declared by the relevant authority or a material
disruption in commercial banking or securities settlement or clearance
services in the United States or any other relevant jurisdiction; (iv) the
outbreak or escalation of hostilities involving the United States, the
Cayman Islands or Bermuda or the declaration by the United States, the
Cayman Islands or Bermuda of a national emergency or war, if the effect of
any such event specified in this clause (iv) in the judgment of the
Representatives is so material and adverse as to make it
12
impractical or inadvisable to proceed with the public offering or the
delivery of the Designated Shares on the terms and in the manner
contemplated in the Prospectus; (v) a change or development involving a
prospective change in the Cayman Islands or Bermuda taxation affecting the
Company, the Designated Shares or the transfer thereof or the imposition of
exchange controls by the United States, Bermuda or the Cayman Islands or
(vi) the occurrence of any other calamity or crisis or any change in
financial, political or economic conditions in the United States or
currency exchange rates or controls in the United States, the Cayman
Islands, Bermuda or elsewhere, if the effect of any such event specified in
this clause (vi) in the judgment of the Representatives is so material and
adverse as to make it impractical or inadvisable to proceed with the public
offering or the delivery of the Designated Shares on the terms and in the
manner contemplated in the Prospectus;
(j) The Shares at each Time of Delivery shall have been duly listed,
subject to notice of issuance, on the Exchange;
(k) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of the Pricing Agreement relating to
such Designated Shares;
(l) The Company shall have furnished or caused to be furnished to the
Representatives at each Time of Delivery for the Designated Shares
certificates of officers of the Company satisfactory to the Representatives
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 subsections (a)
relating to the effectiveness of the Registration Statement and no stop
orders, the matters set forth in subsections (h) and (i) of this Section
and as to such other matters as the Representatives may reasonably request;
and
(m) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
8. The Company will indemnify and hold harmless each Underwriter against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter 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 any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus, 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 required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal expenses of one counsel (in addition to
any local counsel) engaged reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses are
incurred; 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 any Preliminary Prospectus, any preliminary prospectus
supplement, the
13
Registration Statement, the Prospectus and any other prospectus relating to the
Shares, or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by any Underwriter of
Designated Shares through the Representatives expressly for use in the
Prospectus.
(a) Each Underwriter 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 any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus and any other prospectus relating to the Shares, 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 required to be
stated therein 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 any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus and any other prospectus relating to the Shares, or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives 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 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 (except as set forth below). Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest; (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party; (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the
14
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. 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 any 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 Underwriters of the Designated Shares on
the other from the offering of the Designated Shares to which such loss, claim,
damage or liability (or action in respect thereof) relates. 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 Underwriters of the Designated
Shares 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 such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by such Underwriters.
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 such Underwriters 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
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters 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 Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the applicable Designated Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter 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(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Underwriters
of Designated Shares in this subsection (d) to
15
contribute are several in proportion to their respective underwriting
obligations with respect to such Shares 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
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters 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 Underwriter shall default in its
obligation to purchase the Firm Shares or Optional Shares which it has agreed to
purchase under the Pricing Agreement relating to such Shares, the
Representatives may in their discretion arrange for themselves or another party
or other parties satisfactory to the Company to purchase such Shares on the
terms contained herein. If within thirty-six hours after such default by any
Underwriter the Representatives do not arrange for the purchase of such Firm
Shares or Optional Shares, as the case may be, 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 the Representatives to purchase such
Shares on such terms. In the event that, within the respective prescribed
period, the Representatives notify the Company that they have so arranged for
the purchase of such Shares, or the Company notifies the Representatives that it
has so arranged for the purchase of such Shares, the Representatives or the
Company shall have the right to postpone a Time of Delivery for such Shares for
a period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary. The term
"Underwriter" 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 the Pricing Agreement with respect to such Designated Shares.
(a) If, after giving effect to any arrangements for the purchase of the
Firm Shares or Optional Shares, as the case may be, of a defaulting Underwriter
or Underwriters by the Representatives and the Company as provided in subsection
(a) above, the aggregate number of such Shares which remains unpurchased does
not exceed one-eleventh of the aggregate number of the Firm Shares or Optional
Shares, as the case may be, to be purchased at the respective Time of Delivery,
then the Company shall have the right to require each non-defaulting Underwriter
to purchase the number of Firm Shares or Optional Shares, as the case may be,
which such Underwriter agreed to purchase under the Pricing Agreement relating
to such Designated Shares and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Firm Shares
or Optional Shares, as the case may be, which such Underwriter agreed to
purchase under such Pricing Agreement) of the Firm Shares or Optional Shares, as
the case may be, of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(b) If, after giving effect to any arrangements for the purchase of the
Firm Shares or Optional Shares, as the case may be, of a defaulting Underwriter
or Underwriters by the Representatives and the Company as provided in subsection
(a) above, the aggregate number of
16
Firm Shares or Optional Shares, as the case may be, which remains unpurchased
exceeds one-eleventh of the aggregate number of the Firm Shares or Optional
Shares, as the case may be, to be purchased at the respective Time of Delivery,
as referred to in subsection (b) above, or if the Company shall not exercise the
right described in subsection (b) above to require non-defaulting Underwriters
to purchase Firm Shares or Optional Shares, as the case may be, of a defaulting
Underwriter or Underwriters, then the Pricing Agreement relating to such Firm
Shares or the Over-allotment Option relating to such Optional Shares, as the
case may be, shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, 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 Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.
11. If any Pricing Agreement or Over-allotment Option shall be terminated
pursuant to Section 9 hereof, the Company shall not then be under any liability
to any Underwriter with respect to the Firm Shares or Optional Shares with
respect to which such Pricing Agreement shall have been terminated except as
provided in Sections 6, 8 and 19 hereof; but, if for any other reason,
Designated Shares are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Underwriters through the Representatives
for all out-of-pocket expenses approved in writing by the Representatives,
including reasonable fees and disbursements of counsel, reasonably incurred by
the Underwriters in making preparations for the purchase, sale and delivery of
such Designated Shares, but the Company shall then be under no further liability
to any Underwriter with respect to such Designated Shares except as provided in
Sections 6, 8 and 19 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Shares shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; 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
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its principal
address, which address will be supplied to the Company by the Representatives
upon written request. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the extent
provided in Sections 8 and 10 hereof,
17
the officers and directors of the Company and each person who controls the
Company or any Underwriter, 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 or any such Pricing
Agreement. No purchaser of any of the Shares from any Underwriter 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 Underwriter or by any person who
controls any Underwriter arising out of or based upon this Agreement, any
Pricing Agreement or the transactions contemplated hereby or thereby 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 System, 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, any Pricing Agreement or the
transactions contemplated hereby or thereby which may be instituted in the
federal district court for the Southern District of New York and the New York
County Court by any Underwriter or by any person who controls any Underwriter,
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 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. Time shall be of the essence in each Pricing Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business. "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.
16. This Agreement and each Pricing Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
17. This Agreement and each Pricing Agreement may be executed by any one or
more of the parties hereto and thereto 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.
18. The Company is authorized, subject to applicable law, to disclose any
and all aspects of this potential transaction that are necessary to support any
U.S. federal income tax benefits expected to be claimed with respect to such
transaction, without the Underwriters imposing any limitation of any kind.
19. In respect of any judgment or order given or made for any amount due
hereunder or under any Pricing Agreement that is expressed and paid in a
currency (the "judgment currency") other than United States dollars, the Company
will indemnify each Underwriter against any loss incurred by such
18
Underwriter as a result of any variation 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 Underwriter is able to purchase United States dollars with the amount of
judgment currency actually received by such Underwriter. 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
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.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
19
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and one for each of the Representatives
counterparts hereof.
Very truly yours,
XL Capital Ltd
By: /s/ Jerry de St. Paer
-------------------------------------
Name: Jerry de St. Paer
Title: Executive Vice President &
Chief Financial Officer
Accepted as of the date hereof:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ Gregory Lang
--------------------------------------
Name: Gregory Lang
Title: Vice President
20
ANNEX I
Pricing Agreement
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center - North Tower
250 Vesey Street
New York, New York 10281
August __, 2002
Ladies and Gentlemen:
XL Capital Ltd, a Cayman Islands exempted limited company (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated August __, 2002 (the "Underwriting Agreement"),
between the Company on the one hand and Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc., on the other hand, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") the Shares
specified in Schedule II hereto (the "Designated Shares") consisting of Firm
Shares and any Optional Shares the Underwriters may elect to purchase. Each of
the provisions of the Underwriting Agreement is incorporated herein by reference
in its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as therein
defined), and also a representation and warranty as of the date of this Pricing
Agreement in relation to the Prospectus relating to the Designated Shares which
are the subject of this Pricing Agreement. Each reference to the Representatives
herein and in the provisions of the Underwriting Agreement so incorporated by
reference shall be deemed to refer to you. Unless otherwise defined herein,
terms defined in the Underwriting Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the Representatives and on
behalf of each of the Underwriters of the Designated Shares pursuant to Section
12 of the Underwriting Agreement and the address of the Representatives referred
to in such Section 12 are set forth in Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Shares, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from
the Company, at the time and place and at the purchase price to the Underwriters
set forth in Schedule II hereto, the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto and, (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Shares, as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company at the purchase price to the Underwriters
set forth in Schedule II hereto that portion of the number of Optional Shares as
to which such election shall have been exercised.
The Company hereby grants to each of the Underwriters the right to purchase
at their election up to the number of Optional Shares set forth opposite the
name of such Underwriter in Schedule I hereto on the terms referred to in the
paragraph above for the sole purpose of covering over-allotments in the sale of
the Firm Shares. Any such election to purchase Optional Shares may be exercised
by written notice from the Representatives to the Company given within a period
of 20 calendar days after the date of this Pricing Agreement, setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by the Representatives, but
in no event earlier than the First Time of Delivery or, unless the
Representatives and the Company otherwise agree in writing, no earlier than two
or later than ten business days after the date of such notice.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and one for each of the Representatives plus
one for each counsel counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is or will be pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination, upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours,
XL Capital Ltd
By:
--------------------------------------
Name:
Title:
Accepted as of the date hereof:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: __________________________________
Name:
Title:
For themselves and the other several
Underwriters named in Schedule I to
the foregoing Agreement.
SCHEDULE I
Underwriter Number of Firm Maximum Number of
Shares to be Optional
Purchased Shares Which May be
Purchased
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
A.G. Edwards & Sons, Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
UBS Warburg LLC
Wachovia Securities, Inc.
Total...........................................................
=============== ===================
SCHEDULE II
Title of Designated Shares:
Number of Designated Shares:
Number of Firm Shares:
Maximum Number of Optional Shares:
Initial Offering Price to Public:
per Share
Purchase Price by Underwriters:
per Share
Commission Payable to Underwriters:
per Share
Form of Designated Shares:
Specified Funds for Payment of Purchase Price:
Describe any lock-up provisions with respect to the Designated Shares:
Time of Delivery:
Time of Delivery Location:
Names and Addresses of Representatives:
Liquidation Preference:
Redemption Provisions:
Dividend Rate:
Dividend Payment Dates:
Conversion Provisions:
Other Terms:
ANNEX II
SIMPSON THACHER & BARTLETT FORM OF OPINION
ANNEX III
CAHILL GORDON & REINDEL FORM OF OPINION
ANNEX IV
HUNTER & HUNTER FORM OF OPINION
ANNEX V
XL CAPITAL LTD FORM OF OPINION