XL Capital Ltd
Liquid Yield Option TM Notes due 2021
(Zero Coupon--Senior)
Purchase Agreement
September 4, 2001
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
North Tower
World Financial Center
New York, New York 10281
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 Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (the "Purchaser" or
"Xxxxxxx Xxxxx") an aggregate of $ 442,471,000 principal amount at maturity
(subject to adjustment for contingent additional principal, if any) of the
Liquid Yield Option TM Notes due 2021 (the "XXXXx"), convertible into Class A
Ordinary Shares, par value $0.01 per share (the "Shares" and, together with the
XXXXx, the "Firm Securities") of the Company, specified above and, at the
election of the Purchaser, up to an aggregate of $ 66,371,000 additional
aggregate principal amount at maturity (subject to adjustment for contingent
additional principal, if any) of the XXXXx (the "Optional Securities"). The Firm
Securities and the Optional Securities which the Purchaser elects to purchase
pursuant to Section 2 hereof are herein collectively called the "Securities".
The Securities have the benefit of a registration rights agreement (the
"Registration Rights Agreement"), to be dated as of September 7, 2001, between
the Company and the Purchaser, pursuant to which the Company has agreed to
register the Securities under the Securities Act of 1933, as amended (the"Act")
subject to the terms and conditions therein specified.
1. The Company represents and warrants to, and agrees with the Purchaser
that:
(a) An offering memorandum, dated September 4, 2001 (the "Offering
Memorandum"), has been prepared in connection with the offering of the
Securities and the Shares issuable upon conversion thereof. Any reference
to the Offering Memorandum shall be deemed to refer to and include the
Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000, Quarterly Report on Form 10-Q for
the quarters ended March 31 and June 30, 2001 and Current Reports on Form
8-K dated February 23, 2001, May 17, 2001, May 18, 2001 and July 25, 2001
which are incorporated by reference into the Offering Memorandum, 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 Memorandum and any
reference to the Offering Memorandum 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 Memorandum, 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 Memorandum, 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 Memorandum 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 Xxxxxxx Xxxxx expressly for use therein;
(b) Holders (including subsequent transferees) of the Securities will
have the registration rights pursuant to the Registration Rights Agreement,
substantially as described in the Offering Memorandum and containing other
customary and reasonable provisions. Pursuant to the Registration Rights
Agreement, the Company will agree to file with the Commission, under the
circumstances set forth therein, a shelf registration statement pursuant to
Rule 415 under the Act (the "Shelf Registration Statement") relating to the
resale by certain holders of the Securities and use its reasonable best
efforts to cause such Shelf Registration Statement to be declared and
remain effective and usable for the periods specified in the Registration
Rights Agreement;
(c) 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 Memorandum 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 Memorandum, which loss or interference would
have a Material Adverse Effect (as defined below), or would reasonably be
expected to have a prospective Mate-
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rial Adverse Effect; and, since the respective dates as of which
information is given in the Offering Memorandum, 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 Offering Memorandum;
(d) 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 Memorandum, 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;
(e) 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 XXXXx 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 Memorandum; 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 mean any
Subsidiary of the Company constituting a "significant subsidiary" within
the meaning of 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
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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));
(f) 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 September 7, 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 Memorandum;
(g) This Agreement has been duly authorized, executed and delivered by
the Company;
(h) The Registration Rights Agreement has been duly authorized and,
when executed and delivered by the Company and the Purchaser, will have
been duly executed and delivered, and the Registration Rights Agreement
will conform to the description thereof in the Offering Memorandum;
(i) None of the transactions contemplated to be performed by the
Company by this Agreement (including, without limitation, the use by the
Company 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;
(j) 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;
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(k) The issue and sale by the Company of the Securities, the execution
and delivery of the Indenture and the Registration Rights Agreement and the
compliance by the Company with all of the provisions of the Securities, the
Indenture, the Registration Rights Agreement and this Agreement and the
consummation of the transactions herein and therein required 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 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 or By-laws 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;
(l) 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, the Registration Rights
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 Purchaser;
(m) The statements set forth in the Offering Memorandum under the
caption "Description of XXXXx" 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;
(n) Other than as set forth or incorporated by reference in the
Offering Memorandum, 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;
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(o) The financial statements of the Company incorporated by reference
in the Offering Memorandum 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 Memorandum, 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) 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 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;
(r) The Company is subject to Section 13 or 15(d) of the Exchange Act;
(s) 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");
(t) 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 Purchaser and
its affiliates;
(u) Except for the Company's offering of its Zero Coupon Debentures
due May 2031, 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 Purchaser
hereunder; provided, that the Company makes no representation as to the
Purchaser and its 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 Xxxxxxx Xxxxx), is made under restrictions and other
circumstances reasonably designed not to affect the status of the offer and
sale of the Securities
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in the United States and to U.S. persons contemplated by this Agreement as
transactions exempt from the registration provisions of the Securities Act;
(v) PricewaterhouseCoopers LLP, the Company's auditors, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(w) 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
(x) 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 Purchaser 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
Purchaser of the Securities or (B) the sale or delivery outside the Cayman
Islands by the Purchaser of the Securities to the initial purchasers
thereof, other than as described in the opinion of Xxxxxx & Xxxxxx
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 Purchaser, and the Purchaser agrees to purchase
from the Company, the Firm Securities at a purchase price of 55.23 % of the
initial amount of the Securities and (b) in the event and to the extent that the
Purchaser shall exercise the election to purchase Optional Securities as
provided below, the Company agrees to issue and sell to the Purchaser, and the
Purchaser agrees to purchase from the Company, at the same purchase price set
forth in clause (a) of this Section 2 plus accrued original issue discount to
the Second Time of Delivery (as defined below) , that portion of the aggregate
principal amount at maturity of the Optional Securities as to which such
election shall have been exercised.
The Company hereby grants to the Purchaser the right to purchase at its
election up to $66,371,000 aggregate principal amount at maturity of Optional
Securities, at the purchase price set forth in clause (b) 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 30
calendar days after the date of this Agreement, setting forth the aggregate
principal amount of Optional Securities to be purchased and the date on 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
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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, the
Purchaser proposes to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Memorandum and the
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 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.
(c) The Securities to be purchased by the 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 Purchaser, through the
facilities of The Depository Trust Company ("DTC"), for the account of the
Purchaser, against payment by or on behalf of the 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 Purchaser. 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,
Xxxxxxx & Xxxx LLP, Four Times Square, New York, New York 10036 (the "Closing
Location"). The time and date for the delivery and payment of the Firm
Securities shall be 9:30 a.m., New York City time, on September 7, 2001 or such
other time and date as Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx of its election to purchase such Optional
Securities, or such other time and date as Xxxxxxx Xxxxx 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."
(d) 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 Purchaser
pursuant to Section 7(m) hereof, will be delivered at such time and date at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Four Times Square, New
York, New York, 10036, 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
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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.
4. The Company agrees with the Purchaser:
(a) To prepare the Offering Memorandum in a form approved by you; to make
no amendment or any supplement to the Offering Memorandum 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 Purchaser with copies of the Offering Memorandum 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 Memorandum, any event shall have occurred as a result of
which the Offering Memorandum 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 Memorandum 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 Memorandum, to notify you and upon
your request to prepare and furnish without charge to the Purchaser and to any
dealer in securities as many written and electronic copies as you may from time
to time reasonably request of an amended Offering Memorandum or a supplement to
the Offering Memorandum 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 First 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
9
this Agreement or pursuant to this Agreement or upon conversion of the XXXXx),
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, the Company will 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 XXXXx 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 First 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 Memorandum), to make available to its securityholders 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;
(i) During a period of three years from the date of the Offering
Memorandum, 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;
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(j) During the period of two years after the First 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) Not to use the net proceeds received by the Company from the sale of
the Securities pursuant to this Agreement, other than in the manner specified in
the Offering Memorandum 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 upon conversion of the Securities.
5. The Company covenants and agrees with the Purchaser 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 Memorandum and any amendments and supplements thereto
and the mailing and delivering of copies thereof to the Purchaser 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
Purchaser in connection with such qualification and in connection 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 Ordinary
Shares 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
Purchaser 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 the 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 Purchaser 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.
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6. The obligations of the Purchaser hereunder shall be subject, in its
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) Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Purchaser,
shall have furnished to the Purchaser 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) Xxxxxx Xxxxxx & Xxxxxxx, 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) Xxxxxx & Xxxxxx, 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) Xxxx X. Xxxxxxxx, 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;
(e) On the date of the Offering Memorandum 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 Memorandum 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 Memorandum,
and (ii) since the respective dates as of which information is given in the
Offering Memorandum 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 Memorandum, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of Xxxxxxx Xxxxx so
12
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 Memorandum;
(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
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 the
Company's financial strength 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 Cayman Islands of a national emergency
or war, if the effect of any such event specified in this clause (iv) in the
judgment of Xxxxxxx Xxxxx 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 Memorandum; (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 Xxxxxxx
Xxxxx, 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 subsections (f) and (g) of this Section
and as to such other matters as you may reasonably request;
(j) The Purchaser shall have received letters, dated the First Time of
Delivery, from Xxxxxxx Xxxxxxxx, Jr. and Xxxxx X'Xxxx whereby each such person
agrees, for the period commencing on the date of the Time of Delivery and ending
60 days after the date of the Offering Memorandum, 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
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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 Purchaser;
(k) The Indenture shall have been duly executed and delivered by the
Company and the XXXXx 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 Purchaser the
Registration Rights Agreement; and
(m) The Company shall have furnished to the Purchaser such further
information, certificates and documents as the Purchaser may reasonably request
to evidence compliance with the conditions set forth in this Section 7.
(d) The Company will indemnify and hold harmless the Purchaser against any
losses, claims, damages or liabilities to which the 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 Memorandum, 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 the
Purchaser for any expenses reasonably incurred by the 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 Memorandum or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Purchaser expressly for use therein.
(e) The 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 Memorandum, 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 Memorandum or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Purchaser 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
14
expenses are incurred, including the reasonable fees and expenses of one counsel
(in addition to any applicable local counsel).
(f) 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. 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.
(g) 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 Purchaser 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 Purchaser 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 Purchaser on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses)
15
received by the Company bear to the total underwriting discounts and commissions
received by the Purchaser, in each case as set forth in the Offering Memorandum.
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 Purchaser 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 Purchaser
agree that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above 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), the Purchaser shall not
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 the 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.
(h) 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 the
Purchaser within the meaning of the Act; and the obligations of the Purchaser
under this Section 8 shall be in addition to any liability which the respective
Purchaser 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.
7. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Purchaser, 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 the Purchaser or any controlling person of the 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.
8. If the Securities are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Purchaser through you for all
out_of_pocket expenses approved in writing by you, including the reasonable fees
and disbursements of counsel, incurred by the Purchaser in making preparations
for the purchase, sale and delivery of the Securities, but the Company shall
then be under no further liability to the Purchaser except as provided in
Sections 6 and 8 hereof.
16
9. All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchaser shall be delivered or sent by mail, telex or
facsimile transmission to Xxxxxxx Xxxxx & Co. at North Tower, World Financial
Center, New York, New York 10281, Attention: Xxxxxxx Xxxxxxxxx, Equity Capital
Markets Syndicate (telecopier no. 212-738 1069); 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 Memorandum, Attention: Secretary; provided,
however, that any notice to the Purchaser pursuant to Section 8(c) hereof shall
be delivered or sent by mail, telex or facsimile transmission to the Purchaser
at its address set forth in its Purchaser's 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.
10. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchaser, the Company and, to the extent provided in Sections 8 hereof,
the officers and directors of the Company and each person who controls the
Company or the 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
the Purchaser shall be deemed a successor or assign by reason merely of such
purchase.
11. The Company irrevocably (i) agrees that any legal suit, action or
proceeding against the Company brought by the Purchaser or by any person who
controls the 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 the
Purchaser or by any person who controls the 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 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.
12. 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 the Purchaser
against any loss incurred by the Purchaser as
17
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 the
Purchaser is able to purchase United States dollars with the amount of judgment
currency actually received by the 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.
13. Time shall be of the essence of this Agreement.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. 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.
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If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and the Purchaser plus one for each counsel
counterparts hereof, and upon the acceptance hereof by you, on behalf of the
Purchaser, this letter and such acceptance hereof shall constitute a binding
agreement between the Purchaser and the Company.
Very truly yours,
XL Capital Ltd
By:
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Name:
Title:
Accepted as of the date hereof:
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
By:
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Name:
Title:
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