-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T3KyLTC9ABd+PKBd4X3B2YgPv6bnCKiRbIipIefCNqiIOTR6Q3PB6y1cGtU65fJ7 aZ1XKKSnLFItYg+C8JEoKg== 0000930413-04-001248.txt : 20040324 0000930413-04-001248.hdr.sgml : 20040324 20040324133519 ACCESSION NUMBER: 0000930413-04-001248 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040323 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: XL CAPITAL LTD CENTRAL INDEX KEY: 0000875159 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 980191089 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10804 FILM NUMBER: 04686841 BUSINESS ADDRESS: STREET 1: XL HOUSE STREET 2: ONE BERMUDIANA ROAD CITY: HAMILTON HM11 BERMUD STATE: D2 BUSINESS PHONE: 4412928515 MAIL ADDRESS: STREET 1: CAHILL GORDON & REINDEL(IMMANUEL KOHN) STREET 2: 80 PINE STREET CITY: NEW YORKI STATE: NY ZIP: 10005 FORMER COMPANY: FORMER CONFORMED NAME: EXEL LTD DATE OF NAME CHANGE: 19950720 8-K 1 c31556_8k.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 23, 2004 ------------------------ XL CAPITAL LTD (Exact name of registrant as specified in its charter) ------------------------ CAYMAN ISLANDS 1-10809 98-0191089 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) XL HOUSE, ONE BERMUDIANA ROAD, HAMILTON, BERMUDA HM11 (Address of principal executive offices) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (441) 292 8515 NOT APPLICABLE (Former name or former address, if changed since last report) ================================================================================ ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE. On March 23, 2004, XL Capital Ltd, a Cayman Islands exempted limited company (the "Company" or the "Registrant"), issued 33,000,000 6.50% Equity Security Units (the "Units") in a public offering. The Company sold the Units pursuant to an Underwriting Agreement and related Pricing Agreement, each dated as of March 17, 2004, by and among the Company and Goldman, Sachs & Co. and the other underwriters named on SCHEDULE I of the Pricing Agreement, as the underwriters. The Company received $800,195,000 in proceeds from the sale of the Units after deducting underwriting discounts. Each Unit has a stated amount of $25 and consists of (a) a contract pursuant to which the holder agrees to purchase, for $25, shares of the Company's ordinary shares on May 15, 2007 and (b) a 1/40, or 2.5%, ownership interest in a 2.53% senior note issued by the Company due May 15, 2009 with a principal amount of $1,000. The senior notes were issued under a Senior Debt Indenture, which the Company entered into with U.S. Bank National Association, as Trustee, on January 23, 2003, and a First Supplemental Indenture, which the Company entered into with U.S. Bank National Association, as Trustee, on March 23, 2004. This Current Report on Form 8-K is being filed for the purpose of filing the attached documents in connection therewith as exhibits to the shelf registration statement on Form S-3 (Registration No. 333-101288) filed with the Securities and Exchange Commission on November 18, 2002, and as thereafter amended by the Registrant, XL Capital Finance (Europe) plc, XL Capital Trust I, XL Capital Trust II and XL Capital Trust III (the "REGISTRATION STATEMENT"), which became effective on June 19, 2003, and such Exhibits are hereby incorporated into the Registration Statement by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following exhibits are filed herewith: Exhibit No. Description ----------- ----------- 1.1 Underwriting Agreement, dated March 17, 2004, by and among the Registrant and Goldman, Sachs & Co. and the other underwriters named on SCHEDULE I of the related Pricing Agreement, as Underwriters. 1.2 Pricing Agreement, dated March 17, 2004, by and among the Registrant and Goldman, Sachs & Co. and the other underwriters named on SCHEDULE I thereto, as Underwriters. 4.2 First Supplemental Indenture, dated March 23, 2004, to the Indenture, dated January 23, 2003, between the Registrant and U.S. Bank National Association, as Trustee. 4.3 Purchase Contract Agreement, dated March 23, 2004, between the Registrant and U.S. Bank National Association, as Purchase Contract Agent. 4.4 Pledge Agreement, dated March 23, 2004, by and among the Registrant and U.S. Bank Trust National Association, as Collateral Agent, Custodial Agent and Securities Intermediary, and U.S. Bank National Association, as Purchase Contract Agent. 4.5 Form of Remarketing Agreement to be entered into by and among the Registrant and U.S. Bank National Association, as Purchase Contract Agent, and a remarketing agent to be named therein, as Remarketing Agent. 4.6 Form of Normal Units Certificate (included in Exhibit 4.3 hereto). 4.7 Form of Stripped Units Certificate (included in Exhibit 4.3 hereto). 4.8 Form of Senior Note (included in Exhibit 4.2 hereto). 12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges and Preference Dividends (supercedes Exhibit 12.1 to the Registration Statement), incorporated by reference to Exhibit 12 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2003. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: March 23, 2004 XL CAPITAL LTD (Registrant) By: /s/ Paul Giordano -------------------------------------------- Name: Paul Giordano Title: Executive Vice President and General Counsel EX-1.1 3 c31556_ex1-1.txt EXECUTION COPY XL CAPITAL LTD EQUITY SECURITY UNITS ------------- UNDERWRITING AGREEMENT March 17, 2004 Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. c/o Goldman, Sachs & Co. 85 Broad Street, New York, New York 10004 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 of its Equity Security Units (the "Units"), with a stated amount of $25, specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Firm Units"). Each Unit will consist of (a) a purchase contract pursuant to which the Company agrees to sell and the holder agrees to buy Class A Ordinary Shares, par value $0.01 per share of the Company ("Ordinary Shares") on May 15, 2007 (the "Purchase Contracts") and (b) a 1/40, or 2.5%, ownership interest in a senior note of the Company as identified in the Pricing Agreement relating thereto (the "Underlying Notes") on the terms set forth herein and in the Pricing Agreement. If specified in such Pricing Agreement, the Company may grant to the Underwriters the right to purchase at their election an additional number of Units, specified in such Pricing Agreement as provided in Section 3 hereof (the "Optional Units"). The Firm Units and the Optional Units, if any, which the Underwriters elect to purchase pursuant to Section 3 hereof are herein collectively called the "Designated Units". The terms and rights of any particular issuance of Designated Units shall be as specified in the Pricing Agreement relating thereto and in or pursuant to the agreement governing the Purchase Contracts (the "Purchase Contract Agreement"), the indenture including the supplemental indenture relating to the Underlying Notes (collectively, the "Indenture"), the Purchase Contracts, the pledge agreement (the "Pledge Agreement"), the Underlying Notes, and the remarketing agreement (the "Remarketing Agreement"), each as identified in such Pricing Agreement. 1. Particular sales of Designated Units may be made from time to time to the Underwriters of such Units, for whom the firms designated as representatives of the Underwriters of such Units 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 Units or as an obligation of any of the Underwriters to purchase any of the Units. The obligation of the Company to issue and sell any of the Units and the obligation of any of the Underwriters to purchase any of the Units shall be evidenced by the Pricing Agreement with respect to the Designated Units specified therein. Each Pricing Agreement shall specify the aggregate number of the Firm Units, the maximum number of Optional Units, if any, the initial public offering price of such Firm and Optional Units or the manner of determining such price, the purchase price to the Underwriters of such Designated Units, the names of the Underwriters of such Designated Units, the names of the Representatives of such Underwriters, the number of such Designated Units 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 Units, 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 the Underlying Notes and the Purchase Contracts of which the Designated Units shall initially consist, interest rates, if any, and maturity of the Underlying Notes, whether such Units or any of the securities of which the Designated Units shall consist will be convertible at the option of the holder thereof, any settlement rates or price(s), any redemption provisions and any sinking fund requirements. 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 Units 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 333-101288) (the "Initial Registration Statement") in respect of the Units 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 Company's Annual Report on Form 10-K for the year ended December 31, 2003 incorporated by reference into the Initial 2 Registration Statement and the prospectuses filed pursuant to Rule 424(b) of the rules and regulations of the Commission under the Act, each 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) or Rule 424(b) under the Act, including the related preliminary prospectus supplement with respect to the Units), 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 and the Rule 462(b) Registration Statement, if any, at the time such part of the Initial Registration Statement or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective but excluding each Form T-1, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became effective and, as amended, at the time each incorporated document was filed with the Commission are hereinafter collectively called the "Registration Statement"; the prospectus relating to the Units, in the form in which it has most recently been filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, including any prospectus supplements thereto, 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; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Units in the form in which it is filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof, including any documents incorporated by reference therein as of the date of such filing); (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 3 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 Trust Indenture Act of 1939, as amended (the "Trust Indenture 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 Units 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 Units through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Units; (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 4 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 December 31, 2003, 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; the Ordinary Shares issuable pursuant to the terms of the Purchase Contracts (the "Underlying Shares") have been duly and validly authorized and reserved for issuance and, when issued and delivered in accordance with the provisions of such Purchase Contracts, will be duly and validly issued, fully paid and non-assessable; the stockholders of the Company have no preemptive or similar rights with respect to such Underlying Shares and no shareholder consents are required in connection with the Company's issuance and sale of Ordinary Shares to be issued pursuant to the Purchase Contracts; and the Underlying Shares will conform in all material respects to the description thereof contained in the Prospectus as amended or supplemented with respect to the Designated Units; (g) 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; (h) Prior to the execution and delivery of the Pricing Agreement relating to the Designated Units, each of the Purchase Contract Agreement and the Pledge Agreement referred to therein shall have been duly authorized by the Company; and, at the First Time of Delivery, will be duly executed and delivered by the Company, and will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights and remedies and to general equity principles; and each of the Purchase Contract Agreement and the Pledge Agreement will conform in all material respects, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to the Designated Units; (i) Prior to the execution and delivery of the Pricing Agreement relating to the Designated Units, the Remarketing Agreement referred to therein shall have been duly authorized by the Company; and, when duly executed and delivered by the Company, will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights and remedies and to general equity principles; and the Remarketing Agreement will conform in all material respects, to the description thereof contained in the Prospectus as amended or supplemented with respect to the Designated Units; (j) Prior to the execution and delivery of the Pricing Agreement relating to the Designated Units, the Purchase Contracts included in such Designated Units shall have been duly and validly authorized by the Company and, at the First Time of Delivery will be duly 5 executed, authenticated and delivered in accordance with the related Purchase Contract Agreement and paid for in accordance with the terms of this Agreement and the Pricing Agreement and will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and remedies and to general equity principles; the issuance of the Purchase Contracts is not subject to any preemptive or similar rights; and the Purchase Contracts will conform in all material respects to the description thereof contained in the Prospectus as amended or supplemented with respect to the Designated Units; (k) Prior to the execution and delivery of the Pricing Agreement relating to the Designated Units, the Underlying Notes included in such Designated Units shall have been duly and validly authorized, and, when such Underlying Notes are issued and delivered, such Underlying Notes will have been duly executed, authenticated and delivered and will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights and remedies and to general equity principles and entitled to the benefits provided by the Indenture; (l) The Indenture is substantially in the form filed as an exhibit to the Registration Statement; the Indenture has been duly authorized by the Company and duly qualified under the Trust Indenture Act and, at the Time of Delivery for such Underlying Notes (as defined in Section 4 hereof), will be duly executed and delivered by the Company and will constitute a valid and legally binding instrument, enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights and remedies and to general equity principles; and the Indenture and such Underlying Notes will conform, in all material respects, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to the Designated Units; (m) Prior to the execution and delivery of the Pricing Agreement relating to the Designated Units, the Firm Units and any Optional Units shall have been duly and validly authorized, and, when the Firm Units are issued and delivered pursuant to the related Purchase Contract Agreement, this Agreement and the Pricing Agreement with respect to such Designated Units and, in the case of any Optional Units, pursuant to each option to purchase additional units (as described in Section 3 hereof) with respect to such Units, such Designated Units will be duly and validly executed, authenticated and delivered and will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights and remedies and to general equity principles and entitled to the benefits provided by such Purchase Contract Agreement; the Designated Units and the Underlying Shares will be duly registered under the Exchange Act and will be authorized for listing on the New York Stock Exchange subject to official notice of issuance, in each case, prior to the First Time of Delivery; and the Designated Units will 6 conform in all material respects to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to such Designated Units; (n) The issue and sale of the Units, the Underlying Notes and the Underlying 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 Remarketing Agreement, the Purchase Contract Agreement, the Pledge Agreement, the Indenture, the Purchase Contracts, the Units and each option to purchase additional units (as described in Section 3 hereof), 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 Articles of Association or the Memorandum of Association (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 Articles of Association or Memorandum of Association (or similar organizational documents)) for such conflicts, violations, breaches or defaults which would not result in a Material Adverse Effect; (o) 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 Units or the consummation by the Company of the transactions contemplated by this Agreement or any Pricing Agreement or any option to purchase Optional Units, or the Indenture, or the Remarketing Agreement, or the Purchase Contract Agreement, or the Purchase Contracts, or the Pledge Agreement, 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 the Trust Indenture 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 Units by the Underwriters and other filings, if any, required to be made under the New York Uniform Commercial Code to perfect the Company's security interest as contemplated by the Pledge Agreement and the filing of any registration statements required in connection with the remarketing of the Underlying Notes as contemplated by the Purchase Contract Agreement; (p) 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 7 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)); (q) 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 Units) 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; (r) 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 Units in violation of the Exchange Act; (s) 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; (t) 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; (u) 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; (v) The Company is subject to Section 13 or 15(d) of the Exchange Act; (w) Neither the Company nor any of its Significant Subsidiaries is in violation of its Articles of Association or Memorandum of Association (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; 8 (x) The statements set forth in the Prospectus as amended or supplemented relating to the Designated Units under the captions "Description of the Equity Security Units," "Description of the Senior Notes," "Prospectus Supplement Summary," "Description of XL Capital Share Capital," "Description of XL Capital Ordinary Shares," "Description of XL Capital Ordinary Share Purchase Contracts and Ordinary Share Purchase Units" and "Description of XL Capital Debt Securities", insofar as they purport to constitute a summary of the terms of the Units, the Underlying Notes, the Purchase Contracts, the Underlying Shares and the other transaction documents described therein and the statements set forth under the caption "Certain Tax Considerations" in the Prospectus as amended or supplemented relating to the Designated Units insofar as they purport to describe the provisions of the laws referred to therein, are accurate, complete and fair in all material respects; (y) The Company is not and, after giving effect to the offering and sale of the Units, will not be an "investment company", as such term is defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); (z) PricewaterhouseCoopers LLP, the Company's auditors, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (aa) 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 Units (including the Underlying Shares and the Underlying Notes) or (B) the sale or delivery outside the Cayman Islands by the Underwriters of the Designated Units (including the Underlying Shares and the Underlying Notes) 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 Units and authorization by the Representatives of the release of the Firm Units, the several Underwriters propose to offer the Firm Units for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. The Company may specify in the Pricing Agreement applicable to any Designated Units that the Company thereby grants to the Underwriters the right to purchase at their election up to the number of Optional Units set forth in such Pricing Agreement, on the terms set forth in the paragraph above. Any such election to purchase Optional Units 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 Units to be purchased and the date on which such Optional Units 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 Units to be added to the number of Firm Units to be purchased by each Underwriter as set forth in Schedule I to the Pricing Agreement applicable to such Designated 9 Units shall be, in each case, the number of Optional Units 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 Units to be so added shall be, in each case, that proportion of Optional Units which the number of Firm Units to be purchased by such Underwriter under such Pricing Agreement bears to the aggregate number of Firm Units (rounded as the Representatives may determine to the nearest 40 Units). The total number of Designated Units to be purchased by all the Underwriters pursuant to such Pricing Agreement shall be the aggregate number of Firm Units set forth in Schedule I to such Pricing Agreement plus the aggregate number of Optional Units which the Underwriters elect to purchase. 4. Certificates for the Firm Units and the Optional Units 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 Goldman, Sachs & Co. at least twenty-four hours in advance as specified in such Pricing Agreement, (i) with respect to the Firm Units, 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 Units, 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 Units, 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 Units: (a) To prepare the Prospectus as amended or supplemented in relation to the applicable Designated Units 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 Units 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 as amended or supplemented after the date of the Pricing Agreement relating to such Units and prior to any Time of Delivery for such Units which shall be disapproved by the Representatives for such Units 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 Units 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 Units, 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 10 order preventing or suspending the use of any prospectus relating to the Units, of the suspension of the qualification of such Units 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 Units or suspending any such qualification, promptly to use its best efforts to obtain the withdrawal of such order; Goldman, Sachs & Co. shall advise the Company when the delivery of a prospectus is no longer required in connection with the offer or sale of Units 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 Units, the Underlying Shares, the Purchase Contracts and the Underlying Notes 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 Units, the Underlying Shares, the Purchase Contracts and the Underlying Notes, 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 3:00 P.M., 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 as amended or supplemented 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 Units 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, the Exchange Act or the Trust Indenture 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 90 days after the date of this Underwriting Agreement, not to offer to sell, sell, contract to sell 11 or otherwise dispose of, except as provided hereunder with regard to the Firm Units and the Optional Units, if any, any Ordinary Shares, equity-linked securities or Units (including the related Purchase Contracts and Underlying Notes) of the Company or any securities that are substantially similar to Ordinary Shares, equity-linked securities or Units (including the related Purchase Contracts and Underlying Notes), or any securities convertible into, exchangeable for or that represent the right to receive Ordinary Shares, equity-linked securities or Units (other than sales of Ordinary Shares (i) pursuant to employee benefit plans existing on the date of this Agreement, (ii) in connection with any repurchase or conversion of any of the Company's Zero-Coupon Convertible Debentures due 2021 or (iii) pursuant to this Agreement), without the prior written consent of Goldman, Sachs & Co. and Citigroup Global Markets Inc., on behalf of the Underwriters; (f) That the Underwriters shall have received letters, dated the First Time of Delivery, from Michael Esposito, Jr. and Brian O'Hara 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 Underwriting Agreement, not to offer to sell, sell, contract to sell or otherwise dispose of any Ordinary Shares, equity-linked securities or Units (including the related Purchase Contracts and Underlying Notes) of the Company or any securities that are substantially similar to Ordinary Shares, equity-linked securities or Units (including the related Purchase Contracts and Underlying Notes), or any securities convertible into, exchangeable for or that represent the right to receive Ordinary Shares, equity-linked securities or Units (other than sales of Ordinary Shares (i) pursuant to Rule 10b5-1 programs for such director or officer existing on the date of this Agreement, (ii) in an amount not greater than 10% of the number of Ordinary Shares held by each such person on the date of this Agreement or (iii) at any time after the date on which such person ceases to be a director or officer of the Company), without the prior written consent of Goldman, Sachs & Co. and Citigroup Global Markets Inc., on behalf of the Underwriters; (g) To use its best efforts to cause the Designated Units and the Underlying Shares to be listed, and to maintain the listing of the Designated Units and the Underlying Shares, on the New York Stock Exchange; (h) To use the net proceeds received by it from the sale of the Designated Units pursuant to this Agreement and the Pricing Agreement in the manner set forth in the Prospectus as amended or supplemented under the caption "Use of Proceeds;" (i) To enter into the Remarketing Agreement with a nationally recognized investment banking firm at least one month prior to the Remarketing Date, such Remarketing Agreement to contain provisions that are consistent in all material respects with the descriptions in the Prospectus as amended or supplemented of the rights and obligations of each of the Company, the Purchase Contract Agent and the Remarketing Agent under the Remarking Agreement; (j) To reserve and keep available at all times, free of preemptive rights, Ordinary Shares for the purpose of enabling the Company to satisfy its obligation to issue the Underlying Shares in accordance with the provisions of such Purchase Contracts; and 12 (k) 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 Units, 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. 6. The Company covenants and agrees with the several Underwriters, subject to any agreements between the Company and the Representatives relating to expenses, 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 Units under the Act and the issuance and sale of the Designated Units 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 Indenture, any Remarketing Agreement, any Purchase Contract Agreement, any Purchase Contracts, any Pledge Agreement, any Blue Sky Memorandum, closing documents (including compilations thereof); (iii) all expenses in connection with the qualification of the Units 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 fees charged by securities rating services for rating the Underlying Notes; (v) 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 Units; (vi) the cost of preparing the Units, the Underlying Notes and certificates for the Underlying Shares; (vii) the fees and expenses of any Trustee, any Purchase Contract Agent, any Collateral Agent, any Custodial Agent, any Securities Intermediary, any Remarketing Agent, any Registrar, any Transfer Agent, Dividend Disbursing Agent, or any Calculation Agent and any agent of any Trustee, Purchase Contract Agent, Collateral Agent, Custodial Agent, Securities Intermediary, Remarketing Agent, Registrar, Transfer Agent, Dividend Disbursing Agent, or Calculation Agent and the fees and disbursements of counsel for any such persons in connection with any Indenture, any Remarketing Agreement, any Purchase Contract Agreement, any Purchase Contracts and any Pledge Agreement; (viii) the cost and charges of any transfer agent or registrar or dividend disbursing agent; (ix) all expenses and taxes arising as a result of the issuance, sale and delivery of the Designated Units, of the sale and delivery outside of the Cayman Islands of the Designated Units 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 Units pursuant to the Underwriting Agreement and the Pricing Agreement; (x) any cost incurred in connection with the listing of the Designated Units or the Underlying Shares on the New York Stock Exchange; and (xi) all other costs and expenses incident to the performance of its obligations hereunder, under any Pricing Agreement and under any options to purchase additional Units which are not otherwise specifically provided for in this Section. It is 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 Units by them, and any advertising expenses connected with any offers they may make. 13 7. The obligations of the Underwriters of any Designated Units under the Pricing Agreement relating to such Designated Units 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 Units are, at and as of each Time of Delivery for such Designated Units, 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 as amended or supplemented in relation to such Designated Units 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 Units; 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 LLP, counsel for the Underwriters, shall have furnished to the Representatives their written opinion or opinions and letter, dated such Time of Delivery, in form and substance reasonably satisfactory to the Representatives, in the form attached hereto in Annex II-1 and Annex II-2, respectively, 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 LLP, United States counsel for the Company, shall have furnished to the Representatives their written opinion or opinions and letter, dated such Time of Delivery, in form and substance reasonably satisfactory to the Representatives, in the form attached hereto in Annex III-1 and Annex III-2, respectively; (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) White & Case, counsel to U.S. Bank National Association, as Purchase Contract Agent and Collateral Agent, shall have furnished 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 VI; (g) On the date of the Pricing Agreement for such Designated Units and at each Time of Delivery for such Designated Units, PricewaterhouseCoopers LLP, the independent 14 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; (h) (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 as amended prior to the date of the Pricing Agreement relating to the Designated Units 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 as amended or supplemented prior to the date of the Pricing Agreement relating to the Designated Units, and (ii) since the respective dates as of which information is given in the Prospectus as amended or supplemented prior to the date of the Pricing Agreement relating to the Designated Units, 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 as amended or supplemented prior to the date of the Pricing Agreement relating to the Designated Units, 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 Units on the terms and in the manner contemplated in the Prospectus as amended or supplemented relating to the Designated Units; (i) On or after the date of the Pricing Agreement relating to the Designated Units (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) other than any announcements made prior to the date of the Pricing Agreement, 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; (j) On or after the date of the Pricing Agreement relating to the Designated Units 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 15 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 Units on the terms and in the manner contemplated in the Prospectus as amended or supplemented relating to the Designated Units; (v) a change or development involving a prospective change in the Cayman Islands or Bermuda taxation affecting the Company, the Designated Units 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 Units on the terms and in the manner contemplated in the Prospectus as amended or supplemented relating to the Designated Units; (k) The Units and the Underlying Shares at each Time of Delivery shall have been duly listed, subject to notice of issuance, on the Exchange; (l) 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 Units; (m) The Company shall have obtained and delivered to the Underwriters executed copies of a lock-up agreement from each person listed in Section 5(f) in form and substance reasonably satisfactory to the Representatives; (n) The Company shall have furnished or caused to be furnished to the Representatives at each Time of Delivery for the Designated Units 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 (o) Prior to each Time of Delivery, the Company shall have furnished to the Representatives such further information, certificates and documents as the Representatives may reasonably request. 8. (a) 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 as amended or supplemented and any other prospectus relating to the Units, 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 16 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 Registration Statement, the Prospectus and any other prospectus relating to the Units, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter of Designated Units through the Representatives expressly for use in the Prospectus as amended or supplemented relating to the such Units. (b) 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 as amended or supplemented and any other prospectus relating to the Units, 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 as amended or supplemented and any other prospectus relating to the Units, 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). (c) 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 17 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 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. (d) 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 Units on the other from the offering of the Designated Units 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 Units 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 Units 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 18 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 Units in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Units and not joint. (e) 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. (a) If any Underwriter shall default in its obligation to purchase the Firm Units or Optional Units which it has agreed to purchase under the Pricing Agreement relating to such Units, the Representatives may in their discretion arrange for themselves or another party or other parties satisfactory to the Company to purchase such Units 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 Units or Optional Units, 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 Units 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 Units, or the Company notifies the Representatives that it has so arranged for the purchase of such Units, the Representatives or the Company shall have the right to postpone a Time of Delivery for such Units 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 as amended or supplemented, 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 Units. (b) If, after giving effect to any arrangements for the purchase of the Firm Units or Optional Units, 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 Units which remains unpurchased does not exceed one-eleventh of the aggregate number of the Firm Units or Optional Units, 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 Units or Optional Units, as the case may be, which such Underwriter agreed to purchase under the Pricing Agreement relating to such Designated Units and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Firm Units or Optional Units, as the case may be, which such Underwriter agreed to purchase under such Pricing Agreement) of the Firm Units or Optional Units, 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. 19 (c) If, after giving effect to any arrangements for the purchase of the Firm Units or Optional Units, 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 Firm Units or Optional Units, as the case may be, which remains unpurchased exceeds one-eleventh of the aggregate number of the Firm Units or Optional Units, 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 Units or Optional Units, as the case may be, of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Firm Units or the option to purchase additional Units relating to such Optional Units, 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 Units. 11. If any Pricing Agreement or option to purchase additional Units 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 Units or Optional Units 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 Units 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 Units, but the Company shall then be under no further liability to any Underwriter with respect to such Designated Units except as provided in Sections 6, 8 and 19 hereof. 12. In all dealings hereunder, the Representatives of the Underwriters of Designated Units 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. 20 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, 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 Units 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 21 than United States dollars, the Company will indemnify each Underwriter against any loss incurred by such 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] 22 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/ PAUL S. GIORDANO ------------------------------------ Name: Paul S. Giordano Title: Executive Vice President, General Counsel & Secretary Accepted as of the date hereof: Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. /s/ GOLDMAN, SACHS & CO. - ------------------------------------ (Goldman, Sachs & Co.) ANNEX I PRICING AGREEMENT Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. c/o Goldman, Sachs & Co. 85 Broad Street, New York, New York 10004 As Representatives of the several Underwriters named in Schedule I hereto March 17, 2004 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 March 17, 2004 (the "Underwriting Agreement"), between the Company on the one hand and Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Units specified in Schedule II hereto (the "Designated Units") consisting of Firm Units and any Optional Units 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 as amended or supplemented relating to the Designated Units 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 Units 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 Units, 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 Units 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 Units, 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 Units 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 Units set forth opposite the name of such Underwriter in Schedule I hereto on the terms referred to in the paragraph above. Any such election to purchase Optional Units may be exercised by written notice from Goldman, Sachs & Co. and Citigroup Global Markets, Inc. to the Company, setting forth the aggregate number of Optional Units to be purchased and the date on which such Optional Units are to be delivered, as determined by Goldman, Sachs & Co. and Citigroup Global Markets, Inc., but in no event earlier than the First Time of Delivery or later than 13 calendar days after the First Delivery Date or, unless Goldman, Sachs & Co., Citigroup Global Markets, Inc. 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: Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. - ---------------------------------- (Goldman, Sachs & Co.) For themselves and the other several Underwriters named in Schedule I to the foregoing Agreement. SCHEDULE I
MAXIMUM NUMBER OF NUMBER OF FIRM OPTIONAL UNITS TO BE UNITS WHICH MAY BE UNDERWRITER PURCHASED PURCHASED ----------- --------- --------- Goldman, Sachs & Co. 5,188,800 1,500,000 Citigroup Global Markets Inc. 5,188,800 1,500,000 Deutsche Bank Securities Inc. 5,188,800 0 J.P. Morgan Securities Inc. 4,191,000 0 Banc One Capital Markets, Inc. 997,500 0 Barclays Capital Inc. 997,500 0 Merrill Lynch, Pierce, Fenner & Smith Incorporated 997,500 0 Morgan Stanley & Co. Incorporated 997,500 0 UBS Securities LLC 997,500 0 Wachovia Capital Markets, LLC 997,500 0 ABN Amro Rothschild LLC 266,100 0 BNP Paribas Securities Corp. 266,100 0 BNY Capital Markets, Inc. 266,100 0 Comerica Securities, Inc. 266,100 0 Credit Lyonnais Securities (USA) Inc. 266,100 0 Dowling & Partners Securities, LLC 266,100 0 Fleet Securities, Inc. 266,100 0 Fox-Pitt, Kelton Inc. 266,100 0 HSBC Securities (USA) Inc. 266,100 0 ING Financial Markets LLC 266,100 0 Keefe, Bruyette & Woods 266,100 0 Lazard Freres & Co. LLC 266,100 0 McDonald Investments Inc., A KeyCorp Company 266,100 0 Sandler O'Neill & Partners, L.P. 266,100 0 Scotia Capital (USA) Inc. 266,100 0 The Royal Bank of Scotland plc 266,100 0 Total........................................................... 30,000,000 3,000,000 ========== =========
SCHEDULE II TITLE OF DESIGNATED UNITS: 6.50% Equity Security Units (the "Units"). Each Unit has a stated amount of $25 and will initially consist of (a) a contract pursuant to which the holder agrees to purchase Ordinary Shares of the Company on May 15, 2007 (collectively, the "Purchase Contracts") and (b) a 1/40, or 2.5%, ownership interest in a 2.53% Senior Note due May 15, 2009 of the Company with a principal amount of $1,000 (collectively, the "Underlying Notes"). NUMBER OF UNITS: Number of Firm Units: 30,000,000 Maximum Number of Optional Units: 3,000,000 INITIAL OFFERING PRICE TO PUBLIC PER UNIT: $25, plus accumulated Contract Adjustment Payments and interest on the Underlying Notes, if any, from March 23, 2004. PURCHASE PRICE BY UNDERWRITERS PER UNIT: $24.2483, plus accumulated Contract Adjustment Payments and interest on the Underlying Notes, if any, from March 23, 2004. UNDERWRITERS' COMMISSION PER UNIT: $0.7517 SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Same-Day funds INDENTURE: Indenture, dated January 23, 2003, between the Company and U.S. Bank National Association, as Trustee, as supplemented by the First Supplemental Indenture, to be dated as of March 23, 2004 PURCHASE CONTRACT AGREEMENT: Purchase Contract Agreement, to be dated as of March 23, 2004, between the Company and U.S. Bank National Association, as Purchase Contract Agent PLEDGE AGREEMENT: Pledge Agreement, to be dated as of March 23, 2004, between the Company and U.S. Bank National Association, as Purchase Contract Agent, and U.S. Bank Trust National Association, as Collateral Agent, Custodial Agent and Securities Intermediary REMARKETING AGREEMENT: Remarketing Agreement, to be entered into between the Company and a nationally recognized investment bank, as the Remarketing Agent STOCK PURCHASE DATE: May 15, 2007 CONTRACT ADJUSTMENT PAYMENTS: 3.97% per annum PAYMENT DATES OF CONTRACT ADJUSTMENT PAYMENTS: February 15, May 15, August 15 and November 15, commencing on May 15, 2004 and ending on the Stock Purchase Date REFERENCE PRICE: $75.19 THRESHOLD APPRECIATION PRICE: $93.99 MATURITY OF UNDERLYING NOTES: May 15, 2009 INTEREST RATE ON UNDERLYING NOTES: 2.53% per annum INTEREST PAYMENT DATES OF UNDERLYING NOTES: Initially, February 15, May 15, August 15 and November 15, commencing on May 15, 2004, and, following the earlier of a successful remarketing and the Stock Purchase Date, semi-annually on May 15 and November 15 RECORD DATES FOR CONTRACT ADJUSTMENT PAYMENTS AND INTEREST PAYMENTS: The relevant record dates will be the 15th calendar day prior to the relevant payment dates INITIAL REMARKETING DATE: The ninth Business Day prior to the Stock Purchase Date REDEMPTION PROVISIONS: The Underlying Notes are redeemable at the option of the Company if a Special Event (as defined in the Indenture) occurs in accordance with, and subject to, the terms set forth in the Indenture SINKING FUND PROVISIONS: No sinking fund provisions DEFEASANCE PROVISIONS: No defeasance provisions TIME OF DELIVERY: 9:30 A.M., New York City time, on March 23, 2004 (which is four business days after the date of the Pricing Agreement relating to the Units, which date may be delayed by agreement among the Representatives and the Company (as defined therein)) FORM AT TIME OF DELIVERY: Book-entry only CLOSING LOCATION: Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 DELAYED DELIVERY: None NAMES AND ADDRESSES OF REPRESENTATIVES: Designated Representatives: Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. Address for Notices, etc.: Goldman, Sachs & Co. 85 Broad Street New York, New York 10004. ANNEX II-1 SIMPSON THACHER & BARTLETT LLP FORM OF OPINION ANNEX II-2 SIMPSON THACHER & BARTLETT LLP FORM OF NEGATIVE ASSURANCE LETTER ANNEX III-1 CAHILL GORDON & REINDEL LLP FORM OF OPINION ANNEX III-2 CAHILL GORDON & REINDEL LLP FORM OF NEGATIVE ASSURANCE LETTER ANNEX IV HUNTER & HUNTER FORM OF OPINION ANNEX V XL CAPITAL LTD FORM OF OPINION ANNEX VI FORM OF OPINION OF COUNSEL TO PURCHASE CONTRACT AGENT AND COLLATERAL AGENT EX-1.2 4 c31556_ex1-2.txt Execution copy PRICING AGREEMENT Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. c/o Goldman, Sachs & Co. 85 Broad Street, New York, New York 10004 As Representatives of the several Underwriters named in Schedule I hereto March 17, 2004 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 March 17, 2004 (the "Underwriting Agreement"), between the Company on the one hand and Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Units specified in Schedule II hereto (the "Designated Units") consisting of Firm Units and any Optional Units 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 as amended or supplemented relating to the Designated Units 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 Units 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 Units, 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 Units 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 Units, 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 Units 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 Units set forth opposite the name of such Underwriter in Schedule I hereto on the terms referred to in the paragraph above. Any such election to purchase Optional Units may be exercised by written notice from Goldman, Sachs & Co. and Citigroup Global Markets, Inc. to the Company, setting forth the aggregate number of Optional Units to be purchased and the date on which such Optional Units are to be delivered, as determined by Goldman, Sachs & Co. and Citigroup Global Markets, Inc., but in no event earlier than the First Time of Delivery or later than 13 calendar days after the First Delivery Date or, unless Goldman, Sachs & Co., Citigroup Global Markets, Inc. and the Company otherwise agree in writing, no earlier than two or later than ten business days after the date of such notice. 2 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: /s/ Paul S. Giordano --------------------------------- Name: Paul S. Giordano Title: Executive Vice President, General Counsel & Secretary Accepted as of the date hereof: Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. /s/ Goldman, Sachs & Co. - ---------------------------------- (Goldman, Sachs & Co.) For themselves and the other several Underwriters named in Schedule I to the foregoing Agreement. SCHEDULE I
MAXIMUM NUMBER OF NUMBER OF FIRM OPTIONAL UNITS TO BE UNITS WHICH MAY BE UNDERWRITER PURCHASED PURCHASED Goldman, Sachs & Co. 5,188,800 1,500,000 Citigroup Global Markets Inc. 5,188,800 1,500,000 Deutsche Bank Securities Inc. 5,188,800 0 J.P. Morgan Securities Inc. 4,191,000 0 Banc One Capital Markets, Inc. 997,500 0 Barclays Capital Inc. 997,500 0 Merrill Lynch, Pierce, Fenner & Smith Incorporated 997,500 0 Morgan Stanley & Co. Incorporated 997,500 0 UBS Securities LLC 997,500 0 Wachovia Capital Markets, LLC 997,500 0 ABN Amro Rothschild LLC 266,100 0 BNP Paribas Securities Corp. 266,100 0 BNY Capital Markets, Inc. 266,100 0 Comerica Securities, Inc. 266,100 0 Credit Lyonnais Securities (USA) Inc. 266,100 0 Dowling & Partners Securities, LLC 266,100 0 Fleet Securities, Inc. 266,100 0 Fox-Pitt, Kelton Inc. 266,100 0 HSBC Securities (USA) Inc. 266,100 0 ING Financial Markets LLC 266,100 0 Keefe, Bruyette & Woods 266,100 0 Lazard Freres & Co. LLC 266,100 0 McDonald Investments Inc., A KeyCorp Company 266,100 0 Sandler O'Neill & Partners, L.P. 266,100 0 Scotia Capital (USA) Inc. 266,100 0 The Royal Bank of Scotland plc 266,100 0 Total........................................................... 30,000,000 3,000,000 ========== =========
SCHEDULE II TITLE OF DESIGNATED UNITS: 6.50% Equity Security Units (the "Units"). Each Unit has a stated amount of $25 and will initially consist of (a) a contract pursuant to which the holder agrees to purchase Ordinary Shares of the Company on May 15, 2007 (collectively, the "Purchase Contracts") and (b) a 1/40, or 2.5%, ownership interest in a 2.53% Senior Note due May 15, 2009 of the Company with a principal amount of $1,000 (collectively, the "Underlying Notes"). NUMBER OF UNITS: Number of Firm Units: 30,000,000 Maximum Number of Optional Units: 3,000,000 INITIAL OFFERING PRICE TO PUBLIC PER UNIT: $25, plus accumulated Contract Adjustment Payments and interest on the Underlying Notes, if any, from March 23, 2004. PURCHASE PRICE BY UNDERWRITERS PER UNIT: $24.2483, plus accumulated Contract Adjustment Payments and interest on the Underlying Notes, if any, from March 23, 2004. UNDERWRITERS' COMMISSION PER UNIT: $0.7517 SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Same-Day funds INDENTURE: Indenture, dated January 23, 2003, between the Company and U.S. Bank National Association, as Trustee, as supplemented by the First Supplemental Indenture, to be dated as of March 23, 2004 PURCHASE CONTRACT AGREEMENT: Purchase Contract Agreement, to be dated as of March 23, 2004, between the Company and U.S. Bank National Association, as Purchase Contract Agent PLEDGE AGREEMENT: Pledge Agreement, to be dated as of March 23, 2004, between the Company and U.S. Bank National Association, as Purchase Contract Agent, and U.S. Bank Trust National Association, as Collateral Agent, Custodial Agent and Securities Intermediary REMARKETING AGREEMENT: Remarketing Agreement, to be entered into between the Company and a nationally recognized investment bank, as the Remarketing Agent STOCK PURCHASE DATE: May 15, 2007 CONTRACT ADJUSTMENT PAYMENTS: 3.97% per annum PAYMENT DATES OF CONTRACT ADJUSTMENT PAYMENTS: February 15, May 15, August 15 and November 15, commencing on May 15, 2004 and ending on the Stock Purchase Date REFERENCE PRICE: $75.19 THRESHOLD APPRECIATION PRICE: $93.99 MATURITY OF UNDERLYING NOTES: May 15, 2009 INTEREST RATE ON UNDERLYING NOTES: 2.53% per annum INTEREST PAYMENT DATES OF UNDERLYING NOTES: Initially, February 15, May 15, August 15 and November 15, commencing on May 15, 2004, and, following the earlier of a successful remarketing and the Stock Purchase Date, semi-annually on May 15 and November 15 RECORD DATES FOR CONTRACT ADJUSTMENT PAYMENTS AND INTEREST PAYMENTS: The relevant record dates will be the 15th calendar day prior to the relevant payment dates INITIAL REMARKETING DATE: The ninth Business Day prior to the Stock Purchase Date REDEMPTION PROVISIONS: The Underlying Notes are redeemable at the option of the Company if a Special Event (as defined in the Indenture) occurs in accordance with, and subject to, the terms set forth in the Indenture SINKING FUND PROVISIONS: No sinking fund provisions DEFEASANCE PROVISIONS: No defeasance provisions TIME OF DELIVERY: 9:30 A.M., New York City time, on March 23, 2004 (which is four business days after the date of the Pricing Agreement relating to the Units, which date may be delayed by agreement among the Representatives and the Company (as defined therein)) FORM AT TIME OF DELIVERY: Book-entry only CLOSING LOCATION: Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 DELAYED DELIVERY: None NAMES AND ADDRESSES OF REPRESENTATIVES: Designated Representatives: Goldman, Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. Address for Notices, etc.: Goldman, Sachs & Co. 85 Broad Street New York, New York 10004. EX-4.2 5 c31556_ex4-2.txt EXECUTION COPY XL CAPITAL LTD TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FIRST SUPPLEMENTAL INDENTURE DATED AS OF MARCH 23, 2004 SENIOR DEBT SECURITIES SUPPLEMENT TO INDENTURE DATED AS OF JANUARY 23, 2003 FIRST SUPPLEMENTAL INDENTURE, dated as of March 23, 2004 (the "FIRST SUPPLEMENTAL INDENTURE"), by and between XL CAPITAL LTD, a Cayman Islands exempted limited company (the "COMPANY"), having its principal office at XL House, One Bermudiana Road, Hamilton HM11, Bermuda, and U.S. BANK NATIONAL ASSOCIATION, a national banking association, having a Corporate Trust Office at 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, as trustee (the "TRUSTEE") under the Indenture. WHEREAS, the Company and the Trustee have as of January 23, 2003 entered into an Indenture (the "BASE INDENTURE") providing for the issuance by the Company from time to time of its senior debt securities; WHEREAS, no Securities have been issued under the Indenture and there do not currently exist any Holders; WHEREAS, the Company desires to issue one series of senior debt securities under the Base Indenture, and has duly authorized the creation and issuance of such senior debt securities and the execution and delivery of this First Supplemental Indenture to modify the Base Indenture and provide certain additional provisions as hereinafter described (the Base Indenture, as amended and supplemented by the First Supplemental Indenture is hereinafter referred to as the "INDENTURE"); WHEREAS, the Company and the Trustee deem it advisable to enter into this First Supplemental Indenture for the purposes of establishing the terms of such senior debt securities and providing for the rights, obligations and duties of the Trustee with respect to such senior debt securities; WHEREAS, the execution and delivery of this First Supplemental Indenture has been authorized by a resolution of the Board of Directors of the Company or a duly authorized committee thereof; WHEREAS, concurrent with the execution hereof, the Company has delivered an Officers' Certificate and has caused its counsel to deliver to the Trustee an Opinion of Counsel; and WHEREAS, all conditions and requirements of the Base Indenture necessary to make this First Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled by the parties hereto and the execution and delivery thereof have been in all respects duly authorized by the parties hereto. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the mutual premises and agreements herein contained, the Company and the Trustee covenant and agree, for the equal and proportionate benefit of all Holders of the Notes (as defined below), as follows: ARTICLE I DEFINITIONS SECTION 1.1. DEFINITION OF TERMS. Unless otherwise provided herein or unless the context otherwise requires: (a) a term defined in the Base Indenture has the same meaning when used in this First Supplemental Indenture; (b) a term defined anywhere in this First Supplemental Indenture has the same meaning throughout; (c) the singular includes the plural and vice versa; (d) headings are for convenience of reference only and do not affect interpretation; (e) the following terms have the meanings given to them in the Purchase Contract Agreement (as defined below), as in effect on the date hereof: Clearing Agency, Clearing Agency Participant, Last Failed Remarketing; Normal Unit; Purchase Price; Redemption Price; Remarketing Agent; Remarketing Notice; Remarketing Fee; Remarketing Period; Separate Notes; Stock Purchase Date; Subsequent Remarketing Date; Trading Day; and Underwriting Agreement; and (f) the following terms have the meanings given to them in this Section 1.1(f): "BUSINESS DAY" means, with respect to any Notes, any day other than a Saturday, Sunday or other day in the City of New York, in the City of Boston, Massachussetts, in Bermuda or in any Place of Payment on which banking institutions are authorized by law or regulations to close. "DTC" has the meaning set forth in Section 2.7. "GLOBAL NOTE" means a Global Security representing the Notes. "ISSUE DATE" means March 23, 2004. "ISSUE PRICE" means 100% of the aggregate principal amount. "PLEDGE AGREEMENT" means the Pledge Agreement, dated as of March 23, 2004, between the Company, U.S. Bank National Association, as Purchase Contract Agent, and as attorney-in-fact for Holders of the Units, and U.S. Bank Trust National Association, as Collateral Agent, Custodial Agent and Securities Intermediary. "PURCHASE CONTRACT AGENT" means U.S. Bank National 2 Association, a national banking association, as purchase contract agent under the Purchase Contract Agreement (as defined below), until a successor Purchase Contract Agent shall have become such pursuant to the applicable provisions of the Purchase Contract Agreement, and thereafter "Purchase Contract Agent" shall mean such successor. "PURCHASE CONTRACT AGREEMENT" means the Purchase Contract Agreement, dated as of March 23, 2004, between the Company and U.S. Bank National Association, as purchase contract agent. "RELEVANT DATE" means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the Trustee on or prior to such due date, it means the first date on which, the full amount of such moneys having been so received and being available for payment to Holders, notice to that effect shall have been duly given to the Holders of the Notes. "REMARKETING" means any remarketing conducted pursuant to and in accordance with the Remarketing Agreement. "REMARKETING AGREEMENT" means the Remarketing Agreement to be entered into by and among the Company, a remarketing agent and the Purchase Contract Agent. "REMARKETING DATE" means the ninth Business Day before the Stock Purchase Date, which shall be May 2, 2007. "REMARKETING VALUE" means, with respect to any Note, the principal amount of such Note. "RESET DATE" means the date following the Remarketing Date or a Subsequent Remarketing Date, as applicable, on which the trades in a successful remarketing of the Notes pursuant to the Purchase Contract Agreement and the Remarketing Agreement settle. Notwithstanding whether a successful remarketing occurs on the Remarketing Date or on a Subsequent Remarketing Date, the settlement date for such remarketing, if successful, shall be on the Stock Purchase Date; provided that the Company with the consent of the Remarketing Agent and the Purchase Contract Agent shall have the option to provide for a settlement date of a successful remarketing that is earlier than the Stock Purchase Date so long as the Company shall pay on the Stock Purchase Date to the Holders of the Normal Units and the Separate Notes an interest payment on the Notes for the period from and including the Payment Date immediately preceding the Stock Purchase Date to but excluding the Stock Purchase Date at the Initial Interest Rate. "RESET RATE" has the meaning set forth in Section 2.19. ARTICLE II CREATION OF THE NOTES SECTION 2.1. DESIGNATION OF SERIES. 3 Pursuant to the terms hereof and Sections 201 and 301 of the Base Indenture, the Company hereby creates a series of its senior debt securities designated as the 2.53% Senior Notes due 2009 (the "NOTES"), which Notes shall be deemed "Securities" for all purposes under the Indenture. SECTION 2.2. FORM OF NOTES. The definitive form of the Notes shall be substantially in the form set forth in EXHIBIT A attached hereto, which is incorporated herein and made part hereof. The Final Maturity of the Notes shall be May 15, 2009. SECTION 2.3. INTEREST AND INTEREST RATE RESET. (a) Each Note will bear interest from the Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for, as the case may be, initially at the rate of 2.53% per annum (the "INITIAL INTEREST RATE") up to but excluding the Reset Date, payable in immediately available funds, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts; provided that in the event that a Last Failed Remarketing occurs, each Note shall continue to bear interest at the Initial Interest Rate until the principal of the Notes is paid or made available for payment. In the event the Notes are successfully remarketed pursuant to the Purchase Contract Agreement and the Remarketing Agreement, each Note shall bear interest at the Reset Rate from and including the Reset Date to the date on which the principal of the Notes is paid or made available for payment; provided that any principal and installment of interest which is overdue shall bear interest (to the extent that payment of such interest is enforceable under applicable law) at the Initial Interest Rate up to but excluding the Reset Date, if any, and thereafter at the Reset Rate, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand. Interest on the Notes initially shall be payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year (each, an "INTERESTPAYMENT DATE"), commencing May 15, 2004, through and including May 15, 2007 and then semi-annually in arrears on the Interest Payment Dates of May 15 and November 15 of each year, commencing November 15, 2007, until the principal thereof is paid or made available for payment. The Regular Record Date shall be the 15th calendar day (whether or not a Business Day) prior to the relevant Interest Payment Date. (b) The amount of interest payable for any period on any Interest Payment Date will be computed on the basis of a 360-day year consisting of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly or semi-annual period, as applicable, for which interest is computed will be computed on the basis of the actual number of days elapsed in such a 90-day or 180-day period, as applicable. In the event that any date on which interest is payable on the Notes is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such 4 Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. SECTION 2.4. LIMIT ON AMOUNT OF NOTES. The Notes will be limited in aggregate principal amount to $825,000,000 and may, upon execution of this First Supplemental Indenture, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Notes in accordance with a Company Order. SECTION 2.5. NATURE OF NOTES/MINIMUM DENOMINATION (a) The Notes shall constitute senior, unsecured and unsubordinated obligations of the Company and shall rank pari passu with all other unsecured and unsubordinated indebtedness of the Company from time to time outstanding. (b) The Notes shall be issuable only in registered form and without coupons in denominations of $1,000 and any integral multiples thereof except that an interest in a Note held as part of a Normal Unit represents an ownership interest of 1/40th, or 2.5%, of a Note in aggregate principal amount of $1,000 and will therefore correspond to the stated amount of $25 per Normal Unit. SECTION 2.6. NO SINKING FUND. The Notes do not have the benefit of any sinking fund obligation and, subject to Section 2.21 hereof are not redeemable at the option of the Holders. SECTION 2.7. ISSUANCE OF NOTES AND PAYMENT. (a) The Notes, on original issuance, shall be issued in the form of (i) one or more definitive, fully registered Notes registered initially in the name of U.S. Bank National Association, as Purchase Contract Agent and (ii) with respect to any Notes that are no longer a component of Normal Units and released from the lien of the Pledge Agreement, one fully registered Global Note registered in the name of The Depository Trust Company ("DTC"), as Depositary, or its nominee, and deposited with the Trustee, as custodian for DTC, for credit by DTC to the respective accounts of beneficial owners of the Separate Notes represented thereby (or such other accounts as they may direct). (b) The principal of and the interest on the Notes will be payable at the Corporate Trust Office or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears on the Register or by wire transfer to the account maintained in the United States designated by written notice given ten Business Days prior to the applicable payment date by such Person. SECTION 2.8. NOTES NOT CONVERTIBLE OR EXCHANGEABLE. The Notes will not be convertible or exchangeable for other securities or property. 5 SECTION 2.9. GLOBAL NOTE. (a) DTC shall serve as the initial Depositary for the Global Note. (b) Unless and until it is exchanged for definitive Notes in accordance with the terms of the Base Indenture, a Global Note may be transferred, in whole but not in part, only to another nominee of the Depositary, or to a successor Depositary selected or approved by the Company or to a nominee of such successor Depositary. SECTION 2.10. DEFEASANCE. The defeasance provisions of Sections 4.03 and 4.04 of the Base Indenture shall not apply to the Notes. SECTION 2.11. REDEMPTION. Pursuant to Section 301(6) and Section 1101 of the Base Indenture, so long as any of the Notes are Outstanding, the following provisions shall be applicable to the Notes: (a) If certain events specified in EXHIBIT A attached hereto shall occur and be continuing, the Company may, at its option, redeem the Notes then Outstanding in whole (but not in part) at any time at the Redemption Price and in accordance with the terms and conditions set forth in EXHIBIT A. (b) Notwithstanding Section 1104 of the Indenture, notice of redemption shall (i) be sufficient if instead of setting forth a specific price with respect to the Redemption Price, it sets forth the manner of calculation thereof and (ii) shall be mailed to the Holders not less than 30 nor more than 60 days prior to the redemption date. SECTION 2.12. LISTING. In the event that the Notes become separately traded from the Normal Units to the extent that applicable exchange listing requirements are met, the Company covenants and agrees to use commercially reasonable efforts to cause such Notes to be listed on the securities exchange on which the Normal Units are then listed. SECTION 2.13. REMARKETING. The Notes may be remarketed at a specified price on certain dates, all as specified in EXHIBIT A and Section 2.19 of this First Supplemental Indenture, in Section 5.4(b) of the Purchase Contract Agreement and in Section 4.5(d) of the Pledge Agreement and the remarketing procedures set forth in such sections shall apply to the Notes. SECTION 2.14. GUARANTEES. The Notes will not be guaranteed by any third party. SECTION 2.15. PLACE OF PAYMENT. 6 The Paying Agent for the Notes shall initially be the Trustee, and the Place of Payment for the Notes shall initially be the Corporate Trust Office, which as of the date hereof for such purpose is located at 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103. The Company may from time to time designate one or more additional offices or agencies where Notes may be presented or surrendered for payment. SECTION 2.16. EVENTS OF DEFAULT. The following shall constitute additional Events of Default pursuant to Section 501 of the Base Indenture with respect to the Notes with the same effect as if expressly set forth in such Section 501: (a) default by the Company under any instrument or instruments under which there is or may be secured or evidenced any of the Company's indebtedness (other than the Notes) having an outstanding principal amount of $50,000,000 (or its equivalent in any other currency or currencies) or more, individually or in the aggregate, that has caused the holders thereof to declare such indebtedness to be due and payable prior to its stated maturity, unless such declaration has been rescinded within 30 days; (b) default by the Company in the payment when due of the principal or premium, if any, of any bond, debenture, note or other evidence of the Company's indebtedness, in each case for money borrowed, or in the payment of principal or premium, if any, under any mortgage, indenture, agreement or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness of the Company for money borrowed, which default for payment of principal or premium, if any, is in an aggregate principal amount exceeding $50,000,000 (or its equivalent in any other currency or currencies), if such default shall continue unremedied or unwaived for more than 30 days after the expiration of any grace period or extension of the time for payment applicable thereto; (c) default in the payment of any Additional Amounts payable with respect to interest on any Notes, when such Additional Amounts become due and payable, and continuance of such default for a period of 30 days; (d) default in the payment of any Additional Amounts payable with respect to any principal of or premium, if any, on any Notes, when such Additional Amounts become due and payable either at maturity, upon any redemption, by declaration of acceleration or otherwise; and (e) default in the payment of the Put Price on the Notes following the exercise of the Put Right by any Holder of Notes on the date that such payment is due and payable. In addition, with respect to the Notes, the reference to "60 days" in Section 501(1) of the Base Indenture shall be amended to be "30 days" with respect to the Notes. 7 The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any Event of Default or any event which, after notice or lapse of time or both, would constitute an Event of Default. SECTION 2.17. COVENANTS. The Notes shall be entitled to the benefit of each of the covenants in Article Ten of the Base Indenture and the following additional covenants (which shall be deemed to be a provision of the Indenture and, when referred to as a provision of the Indenture, shall be identified by reference to the Section number that is set forth immediately preceding the covenant): SECTION 1008. LIMITATION ON LIENS ON STOCK OF DESIGNATED SUBSIDIARIES. The Company covenants that, so long as any Notes are outstanding, the Company will not, nor will the company permit any Designated Subsidiary to, create, assume, incur, guarantee or otherwise permit to exist any indebtedness evidenced by notes, debentures, bonds or similar instruments, which is secured by any mortgage, pledge, lien, security interest or other encumberance upon any shares of Capital Stock of the Company or any Designated Subsidiary (whether such shares of stock are now owned or hereafter acquired) without effectively providing concurrently that the Notes will be secured equally and ratably with such indebtedness for at least the time period such other indebtedness is so secured. "DESIGNATED SUBSIDIARY" means any present or future consolidated subsidiary of the Company that is a regulated insurance company, the assets of which constitute at least 20% of the Company's consolidated assets. SECTION 1009. ADDITIONAL AMOUNTS. All amounts payable (whether in respect of principal, interest or otherwise) in respect of the Notes will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, levies, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the Cayman Islands or Bermuda or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, levies, assessments or governmental charges is required by law. In that event, the Company will pay, or cause to be paid, such additional amounts as may be necessary in order that the net amounts receivable by a Holder after such withholding or deduction (including any withholding or deduction on such payment of additional amounts) shall equal the respective amounts that would have been receivable by such Holder had no such withholding or deduction been required ("ADDITIONAL AMOUNTS"), except that no such Additional Amounts shall be payable in relation to any payment in respect of any of the Notes (a) to, or to a third party on behalf of, a Person who would be able to avoid such withholding or deduction by complying with such Person's statutory requirements or by making a declaration of non-residence or similar claim for exemption but, in either case, fails to do so, or is liable for such taxes, duties, levies, assessments or governmental charges in 8 respect of such Note by reason of his having some connection with (including, without limitation, being a citizen of, being incorporated or engaged in a trade or business in, or having a residence or principal place of business or other presence in) the Cayman Islands or Bermuda, as the case may be, other than (i) the mere holding of such Note or (ii) the receipt of principal, interest, or other amount in respect of such Note; (b) presented for payment more than 30 days after the Relevant Date, except to the extent that the relevant Holder would have been entitled to such Additional Amounts on presenting the same for payment on or before the expiry of such period of 30 days; (c) on account of any inheritance, gift, estate, personal property, sales or transfer or similar taxes, duties, levies, assessments or similar governmental charges; or (d) on account of any taxes, duties, levies, assessments or governmental charges that are payable otherwise than by withholding from payments in respect of such Note. If the Company becomes subject generally at any time to any taxing jurisdiction other than or in addition to the Cayman Islands and Bermuda, references in this section to the Cayman Islands and Bermuda shall be read and construed as references to such other jurisdiction(s) and/or to the Cayman Islands and Bermuda. Any reference in the Indenture to principal, premium or interest in respect of the Notes, any redemption amount and any other amounts in the nature of principal, shall be deemed also to refer to any Additional Amounts that may be payable under the Indenture, and the express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made. Except as otherwise provided in or pursuant to the Indenture, if the Notes require the payment of Additional Amounts, at least 30 days prior to each date on which any payments under or with respect to the Notes are due and payable (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter) the Company, or its designee shall furnish to the Trustee, the Registrar and the Paying Agent an Officers' Certificate stating the fact that Additional Amounts will be payable, the amounts so payable, and any other information to enable the Trustee or such Paying Agent to pay such Additional Amounts to Holders on the payment date. The Company will pay any present or future stamp, court or documentary taxes, or any other excise or property taxes, charges or similar levies which arise in any jurisdiction from the execution, delivery or registration of any Notes or any other document or instrument referred to therein (other than a transfer of the Notes), or the receipt of any payments with respect to the Notes, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside the Cayman Islands or Bermuda in which a Paying Agent is located, other than those 9 resulting from, or required to be paid in connection with, the enforcement of the Notes, the Indenture or any other such document or instrument following the occurrence of any Event of Default with respect to the Notes. SECTION 2.18. NON-APPLICABILITY OF CERTAIN SECTIONS. Sections 1108, 1109 and 1110 of the Base Indenture shall not apply to the Notes. SECTION 2.19. REMARKETING. (a) Unless a Special Event Redemption has occurred, the Company shall engage, no later than 30 days prior to the Remarketing Date, a nationally recognized investment bank (the "REMARKETING AGENT") pursuant to a Remarketing Agreement to be entered into between the Company and the Remarketing Agent, but providing for remarketing procedures substantially as set forth below, to sell the Notes of Holders of Normal Units, other than Holders that have elected not to participate in the remarketing pursuant to the procedures set forth in paragraph (b) below, and Holders of Separate Notes that have elected to participate in the remarketing pursuant to the procedures set forth in Section 2.20 below and in Section 4.5(d) of the Pledge Agreement. (b) The Pledged Notes comprising part of Normal Units and the Separate Notes of Holders of Separate Notes that have elected to participate in the Remarketing shall be remarketed by the Remarketing Agent on the Remarketing Date, and, if necessary, on each Subsequent Remarketing Date. A Holder of Normal Units may elect not to participate in a Remarketing and retain the Notes underlying such Normal Units by notifying the Purchase Contract Agent of such election and delivering the Purchase Price to the Collateral Agent prior to 5:00 p.m., New York City time, on the thirteenth Business Day immediately preceding the Stock Purchase Date, which such amount will be paid to the Company on the Stock Purchase Date in settlement of such Holder's obligations under the Purchase Contracts. A Holder of Normal Units that has not settled the related Purchase Contract through a Cash Settlement or an Early Settlement pursuant to Sections 5.4(a) and 5.9 of the Purchase Contract Agreement or by electing not to participate in the Remarketing pursuant to this paragraph (b) and Section 5.4(b)(iv) of the Purchase Contract Agreement shall be deemed to have elected to participate in the Remarketing. (c) No later than 10:00 a.m. (New York City time) on the seventh Business Day preceding the Remarketing Date, the Company, or the Purchase Contract Agent, at the Company's request, shall deliver the Remarketing Notice to Holders of Normal Units and Holders of Separate Notes, of the Remarketing to take place on the Remarketing Date, and, if necessary, on each Subsequent Remarketing Date. The Remarketing Notice will include the amount of cash that must be delivered by Holders of Normal Units that elect not to participate in the remarketing and the deadline for such delivery, as well as information with respect to the exercise of the Put Right. If such Normal Units or Separate Notes are held in global form, the Company, or the Purchase Contract Agent, at the Company's request, will cause the Clearing Agency to notify the Clearing Agency Participants of the Remarketing by no later than the seventh Business Day preceding the Remarketing Date. 10 (d) The Purchase Contract Agent shall notify, by 10:00 a.m., New York City time, on the eleventh Business Day immediately preceding the Stock Purchase Date, the Remarketing Agent and the Collateral Agent of the aggregate principal amount of Notes of Normal Units Holders to be remarketed. On the the eleventh Business Day immediately preceding the Stock Purchase Date, no later than by 10:00 a.m. New York City time, pursuant to the terms of the Pledge Agreement, the Custodial Agent will notify the Remarketing Agent of the aggregate principal amount of Separate Notes to be remarketed. No later than 10:00 a.m., New York City time, on the tenth Business Day immediately preceding the Stock Purchase Date, the Collateral Agent and the Custodial Agent, pursuant to the terms of the Pledge Agreement, will deliver for Remarketing to the Remarketing Agent all Notes to be remarketed. (e) The right of each Holder of Notes to have its Notes tendered for purchase will be limited to the extent that (i) the Remarketing Agent conducts a Remarketing pursuant to the terms of the Remarketing Agreement, (ii) the Notes included in the Remarketing have not been called for redemption upon the occurrence of a Special Event; (iii) the Remarketing Agent is able to find a purchaser or purchasers for the remarketed Notes at a Reset Rate such that the aggregate value of such remarketed Notes is equal to 100.25% of the Remarketing Value and (iv) such purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent. (f) Upon receipt of the notice provided above in paragraph (d) from the Purchase Contract Agent and the Custodial Agent and such Notes from the Collateral Agent and the Custodial Agent, the Remarketing Agent will, on the Remarketing Date, and, if necessary, on each Subsequent Remarketing Date, use its reasonable best efforts to (i) establish a rate of interest that, in the opinion of the Remarketing Agent, will, when applied to the outstanding Notes, enable the then current aggregate market value of the Notes to have a value equal to 100.25% of the Remarketing Value as of the Remarketing Date or as of any Subsequent Remarketing Date, as the case may be (the "RESET RATE") and (ii) sell such Notes on suchdate at a price equal to 100.25% of the Remarketing Value. (g) If, in spite of using its reasonable best efforts, the Remarketing Agent cannot establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to 100.25% of the Remarketing Value on the Remarketing Date, the Remarketing Agent will attempt to establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to 100.25% of the Remarketing Value on each Subsequent Remarketing Date, if necessary. If, in spite of using its reasonable best efforts, the Remarketing Agent fails to remarket the Notes included in the remarketing at a price equal to 100.25% of the Remarketing Value on or before 4:00 p.m., New York City time, on the third Business Day immediately preceding the Stock Purchase Date, the remarketing will be deemed to have failed (the "LAST FAILED REMARKETING"). (h) On the Remarketing Date and any Subsequent Remarketing Date, the Remarketing Agent shall advise the Company, by telephone, of any successful or unsuccessful Remarketing as soon as practicable after such determination. 11 (i) If a successful Remarketing shall have occurred, the Remarketing Agent will, on or prior to the third Business Day following the date on which the Notes were successfully remarketed, in accordance with the Purchase Contract Agreement and the Remarketing Agreement: (i) deduct and retain for itself the Remarketing Fee; (ii) pay the proceeds from such successful Remarketing related to the Notes of Holders of Normal Units that were remarketed to the Collateral Agent, which, for the benefit of the Company, will thereupon apply such proceeds, in accordance with the Pledge Agreement in direct settlement of the Holders' obligations under the Purchase Contracts; (iii) if any Separate Notes were remarketed, remit to the Custodial Agent for payment to the Holders of such Separate Notes sold in the Remarketing the remaining proceeds from such successful Remarketing attributable to the Separate Notes; and (iv) if there remain any proceeds from such successful Remarketing, after the application of such proceeds as set forth in clauses (i) through (iii) of this sentence, then remit such remaining proceeds to the Purchase Contract Agent for the benefit of the Holders of the Normal Units that were remarketed, all determined on a pro rata basis. (j) If a successful Remarketing occurs, the Remarketing Agent shall, as soon as practicable on the Remarketing Date or on the Subsequent Remarketing Date, as the case may be, in the case of the Company, and by approximately 4:30 p.m. (New York City time) on the Trading Day following the Remarketing Date, or the Subsequent Remarketing Date, as the case may be, advise, by telephone: (i) the Depositary and the Company of the Reset Rate determined in the Remarketing and the aggregate principal amount of Notes sold in the Remarketing; (ii) each purchaser (or the Depository Participant thereof) of the Reset Rate and the aggregate principal amount of remarketed Notes such purchaser is to purchase; and (iii) each purchaser to give instructions to its Depository Participant to pay the purchase price on the date of settlement for such Remarketing in same day funds against delivery of the remarketed Notes purchased through the facilities of DTC. (k) Any distribution to Holders of excess funds and interest described in this Section 2.19 shall be payable at the office of the Purchase Contract Agent in the Borough of Manhattan, New York City, or, if the Units do not remain in book-entry only form, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears on the Register or by wire transfer to the account 12 maintained in the United States designated by written notice given ten Business Days prior to the applicable payment date by such Person. (l) If a failed remarketing occurs, the Remarketing Agent and the Company, as applicable, shall take the following actions: (i) the Remarketing Agent shall notify by telephone the Company and the Depositary that a failed remarketing has occurred; (ii) The Company will cause a notice of failed remarketing to be published by 9:00 a.m., New York City time, on the Business Day following such failed remarketing; and (iii) The Company will release this information by means of Bloomberg and Reuters (or any successor or equivalent newswires) newswires. (m) The Remarketing Agent shall remit, within three Business Days following the Last Failed Remarketing, the Pledged Notes that were to be remarketed to the Collateral Agent and the Separate Notes that were to be remarketed to the Custodial Agent. The Collateral Agent, for the benefit of the Company, may exercise its rights as a secured party with respect to such Notes, including those actions specified in Section 2.19(n) below; provided that, if upon the Last Failed Remarketing the Collateral Agent exercises such rights for the benefit of the Company with respect to such Notes, any accumulated and unpaid interest on such Notes will become payable by the Company to the Purchase Contract Agent for payment to the Holders of the Normal Units to which such Notes relate. Such payment will be made by the Company on or prior to 2:00 p.m., New York City time, on the Stock Purchase Date in lawful money of the United States by certified or cashier's check or wire transfer in immediately available funds payable to or upon the order of the Purchase Contract Agent. (n) With respect to any Notes which constitute part of Normal Units which are subject to the Last Failed Remarketing, the Collateral Agent for the benefit of the Company reserves all of its rights as a secured party with respect thereto and, subject to applicable law and Section 5.4(e) of the Purchase Contract Agreement, may, among other things permit the Company to, (A) retain and cancel such Notes or (B) cause the Notes to be sold, in either case, in full satisfaction of the Holders' obligations under the Purchase Contracts. (o) In the event of a Last Failed Remarketing, the interest rate payable on the Notes will not be reset. (p) In accordance with DTC's normal procedures, on the date of settlement of such Remarketing, the transactions described above with respect to each Note remarketed in the Remarketing shall be executed through DTC, and the accounts of the respective Depository Participants shall be debited and credited and such remarketed Notes delivered by book-entry as necessary to effect purchases and sales of such remarketed Notes. DTC shall make payment in accordance with its normal procedures. 13 (q) The Remarketing Agent is not obligated to purchase any Notes that otherwise would remain unsold in the Remarketing. Neither the Company nor the Remarketing Agent shall be obligated in any case to provide funds to make payment upon tender of the Notes for Remarketing. (r) Under the Remarketing Agreement, the Company, in its capacity as issuer of the Notes, shall be liable for, and shall pay, any and all costs and expenses incurred in connection with the Remarketing, other than the Remarketing Fee. (s) The settlement procedures set forth herein, including provisions for payment by purchasers of the remarketed Notes in the Remarketing, shall be subject to modification to the extent required by DTC or if the book-entry system is no longer available for the remarketed Notes at the time of the Remarketing, to facilitate the Remarketing of the remarketed Notes in certificated form, and shall provide for the authentication and delivery of Notes in a principal amount equal to the unremarketed portion of such Notes. In addition, the Remarketing Agent may modify the settlement procedures set forth herein in order to facilitate the settlement process. SECTION 2.20. OPTIONAL REMARKETING. (a) On or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date but no earlier than the sixteenth Business Day immediately preceding the Stock Purchase Date, Holders of Separate Notes may elect to have their Separate Notes remarketed by delivering their Separate Notes, together with a notice of such election, substantially in the form of Exhibit C to the Pledge Agreement, to the Custodial Agent. On the eleventh Business Day immediately prior to the Stock Purchase Date, by 10:00 a.m., New York City time, the Custodial Agent shall notify the Remarketing Agent of the aggregate principal amount of such Separate Notes to be remarketed. The Custodial Agent will hold such Separate Notes in an account separate from the Collateral Account. A Holder of Separate Notes electing to have its Separate Notes remarketed will also have the right to withdraw such election by written notice to the Custodial Agent, substantially in the form of Exhibit D to the Pledge Agreement, on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date, upon which notice the Custodial Agent will return such Separate Notes to such Holder. (b) On the tenth Business Day immediately preceding the Stock Purchase Date, the Custodial Agent at the written direction of the Remarketing Agent will deliver to the Remarketing Agent for Remarketing all Separate Notes delivered to the Custodial Agent pursuant to Section 4.5(d) of the Pledge Agreement and not withdrawn pursuant to the terms thereof prior to such date. If the Holder of the Separate Notes delivers only such notice but not the Separate Notes subject to such notice, then none of such Holder's Separate Notes shall be included in the Remarketing. Once the Holder of Separate Notes elects to participate in the Remarketing, such Separate Notes will be remarketed in the Remarketing, unless such notice is properly withdrawn. In accordance with Section 4.5(d) of the Pledge Agreement, upon the occurrence of a Last Failed Remarketing, the Remarketing Agent will promptly return such Separate Notes to the Custodial Agent for redelivery to such Holders of such Separate Notes. 14 SECTION 2.21. PUT RIGHT. Any Remarking Notice delivered pursuant to Section 2.19(c) hereof shall include information relating to the Put Right provided for in this Section 2.21. In the case of the Last Failed Remarketing, the Holders of Notes that remain outstanding and that are not Pledged Notes (as defined in the Pledge Agreement) will have the right to put on June 14, 2007 (the "Put Right") their Notes to the Company for an amount equal to the principal amount of the Notes, plus accrued and unpaid interest to June 14, 2007 (the "Put Price"), by providing notice to the Company on or prior to the date set forth in the Remarketing Notice and by following the procedures for delivery of such Notes to be set forth therein. The Put Price shall be due and payable by the Company upon receipt of the Notes from the Holders that have exercised their Put Right, on June 14, 2007. ARTICLE III APPOINTMENT OF THE TRUSTEE FOR THE NOTES SECTION 3.1. APPOINTMENT OF TRUSTEE. Pursuant and subject to the Indenture, the Company and the Trustee hereby constitute the Trustee as trustee to act on behalf of the Holders of the Notes, and as the principal Paying Agent and Security Registrar for the Notes, effective upon execution and delivery of this First Supplemental Indenture. By execution, acknowledgment and delivery of this First Supplemental Indenture, the Trustee hereby accepts appointment as trustee, Paying Agent and Security Registrar with respect to the Notes, and agrees to perform such trusts upon the terms and conditions set forth in the Indenture and in this First Supplemental Indenture. SECTION 3.2. RIGHTS, POWERS, DUTIES AND OBLIGATIONS OF THE TRUSTEE. Any rights, powers, duties and obligations by any provisions of the Indenture conferred or imposed upon the Trustee shall, insofar as permitted by law, be conferred or imposed upon and exercised or performed by the Trustee with respect to the Notes. ARTICLE IV MISCELLANEOUS SECTION 4.1. APPLICATION OF FIRST SUPPLEMENTAL INDENTURE. Each and every term and condition contained in the First Supplemental Indenture that modifies, amends or supplements the terms and conditions of the Base Indenture shall apply only to the Notes created hereby and not to any future series of Securities issued under the Base Indenture. SECTION 4.2. BENEFITS OF FIRST SUPPLEMENTAL INDENTURE. Nothing contained in this First Supplemental Indenture shall or shall be construed to confer upon any person other than a Holder of the Notes, the Company and the Trustee any 15 right or interest to avail itself or himself, as the case may be, of any benefit under any provision of the Base Indenture or this First Supplemental Indenture. SECTION 4.3. AMENDMENT OF FIRST SUPPLEMENTAL INDENTURE. The Company and the Trustee, at any time and from time to time, may amend, modify or supplement this First Supplemental Indenture in accordance with the provisions of Article Nine of the Base Indenture. SECTION 4.4. EFFECTIVE DATE. This First Supplemental Indenture shall be effective as of the date first above written and upon the execution and delivery hereof by each of the parties hereto. SECTION 4.5. GOVERNING LAW; SUBMISSION TO JURISDICTION; JUDGMENT CURRENCY. THIS FIRST SUPPLEMENTAL INDENTURE AND EACH NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The Company and the Trustee hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in the Borough of Manhattan in New York City for the purposes of all legal proceedings arising out of or relating to the Indenture. The Company and the Trustee irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. The Company hereby designates and appoints CT Corporation System, 111 Eighth Avenue, New York, New York 10011 as its authorized agent upon which process may be served in any legal suit, action or proceeding arising out of or relating to the Indenture which may be instituted in any federal or state court in the Borough of Manhattan, The City of New York, New York, and agrees that service of process upon such agent, and written notice of said service to the Company by the Person serving the same, shall be deemed in every respect effective service of process upon the Company in any such suit, action or proceeding and further designates its domicile, the domicile of CT Corporation System specified above and any domicile CT Corporation System may have in the future as its domicile to receive any notice hereunder (including service of process). If for any reason CT Corporation System (or any successor agent for this purpose) shall cease to act as agent for service of process as provided above, the Company will promptly appoint a successor agent for this purpose reasonably acceptable to the Trustee. The Company agrees to take any and all actions as may be necessary to maintain such designation and appointment of such agent in full force and effect. The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due (the "REQUIRED CURRENCY") into a currency in which a judgment will be rendered (the "JUDGMENT CURRENCY"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New 16 York the requisite amount of the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which a final unappealable judgment is given and (b) its obligations under the Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with clause (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under the Indenture. For purpose of the foregoing, "NEW YORK BANKING DAY" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or obligated by law, regulation or executive order to be closed. SECTION 4.6. TAX TREATMENT. The Company agrees, and by acceptance of a beneficial ownership interest in the Notes, each beneficial Holder of Notes will be deemed to have agreed (1) to treat the acquisition of a Normal Unit as the acquisition of the Note and the Purchase Contract constituting the Normal Unit and to allocate the purchase price of the Normal Unit between the Note and the Purchase Contract as $25 and $0, respectively and (2) to treat the Notes as indebtedness for United States federal income tax purposes. SECTION 4.7. COUNTERPARTS. This First Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 4.8. RATIFICATION OF BASE INDENTURE. The Base Indenture, as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided. SECTION 4.9. VALIDITY AND SUFFICIENCY. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this First Supplemental Indenture or for or in respect of the recitals contained herein, all of which are made solely by the Company. 17 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed by their respective officers hereunto duly authorized, all as of the day and year first above written. XL CAPITAL LTD, as Issuer By: /s/ Paul S. Giordano ------------------------------------- Name: Paul S. Giordano Title: Executive Vice President, General Counsel and Secretary U.S. BANK NATIONAL ASSOCIATION, as Trustee By: /s/ Arthur L. Blakeslee ------------------------------------- Name: Arthur L. Blakeslee Title: Assistant Vice President EXHIBIT A TO FIRST SUPPLEMENTAL INDENTURE FORM OF NOTE [If the Note is a Global Note, insert - THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE DEPOSITORY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS NOTE FOR ALL PURPOSES, INCLUDING THE PAYMENT OF PRINCIPAL AND INTEREST. UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.] [If the Depository is The Depository Trust Company, insert - UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] A-1 No. CUSIP No. 98372PAE8 $ -------------- XL CAPITAL LTD 2.53% SENIOR NOTE DUE 2009 XL CAPITAL LTD, an exempted limited company duly organized and existing under the laws of the Cayman Islands (the "COMPANY", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ___________, the principal sum of ________________ United States dollars (U.S.$______________) [If the Note is a Global Note, insert - , as such amount may be increased or decreased as set forth on the Schedule of Increases or Decreases in Global Note annexed hereto,] on May 15, 2009 (such date is hereinafter referred to as the "STATED MATURITY"), and to pay interest thereon, from March 23, 2004, or from the most recent Interest Payment Date (as defined below) for which interest has been paid or duly provided for, initially at the rate of 2.53% per annum (the "INITIAL INTEREST RATE") up to, but excluding, the Reset Date; provided that in the event a Failed Remarketing occurs, this Note shall continue to bear interest at the Initial Interest Rate until the principal of the Notes is paid or made available for payment. In the event the Notes are successfully remarketed pursuant to the Indenture, the Purchase Contract Agreement and the Remarketing Agreement, this Note shall bear interest at the Reset Rate, from and including the Reset Date to the date on which principal hereof is paid or made available for payment; provided that any principal and installment of interest which is overdue shall bear interest (to the extent that payment of such interest is enforceable under applicable law) at the Initial Interest Rate up to but excluding the Reset Date, if any, and thereafter at the Reset Rate, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand. Interest on this Note initially shall be payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year (each, an "INTEREST PAYMENT DATE"), commencing May 15, 2004 through and including May 15, 2007, and then semi-annually in arrears on the Interest Payment Dates of May 15 and November 15 of each year, commencing on November 15, 2007, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be, the 15th calendar day (whether or not a Business Day) prior to the relevant Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to Holders of Securities of this series not less than 10 A-2 days prior to such Special Record Date and shall otherwise be payable, all as more fully provided in the Indenture. The principal of and the interest on the Notes will be payable at the Corporate Trust Office or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears on the Register or by wire transfer to the account maintained in the United States designated by written notice given ten Business Days prior to the applicable payment date by such Person. The amount of interest payable for any period on any Interest Payment Date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly or semi-annual period, as applicable, for which interest is computed will be computed on the basis of the actual number of days elapsed in such a 90-day or 180-day period, as applicable. In the event that any date on which interest is payable on the Notes is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if fully set forth at this place. Unless the certificate of authorization hereon has been executed by the Trustee referred to on the reverse hereof by the manual signature of one of its respective authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. [Remainder of Page Intentionally Left Blank; Signature Pages Follow] A-3 IN WITNESS WHEREOF, the Company has caused this Note to be executed and delivered under its corporate seal. Dated: XL CAPITAL LTD By: ----------------------------------- Name Title: [Corporate Seal] Attest: ------------------------------ Name Title: A-4 CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. U.S. Bank National Association, as Trustee By: --------------------------------------- Authorized Officer A-5 [FORM OF REVERSE] This Note is one of a duly authorized issue of securities of the Company designated as its "2.53% Senior Notes due 2009" (herein sometimes referred to as the "NOTES"), limited in aggregate principal amount to $825,000,000, issued and to be issued under and pursuant to an Indenture, dated as of January 23, 2003 (the "BASE INDENTURE"), duly executed and delivered between the Company and U.S. Bank National Association, as Trustee (the "TRUSTEE"), and a First Supplemental Indenture, dated as of March 23, 2004 (the "First Supplemental Indenture"), between the Company and the Trustee (such Base Indenture as amended and supplemented by the First Supplemental Indenture, the "INDENTURE"), to which Indenture and all subsequent indentures supplemental thereto relating to the Notes reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. The Notes are issuable only in registered form without coupons, in denominations of $1,000 and any integral multiple thereof except that an interest in a Note held as part of a Normal Unit represents an ownership interest of 1/40th, or 2.5%, of a Note in aggregate principal amount of $1,000 and will therefore correspond to the stated amount of $25 per Normal Unit. As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series so issued are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. The Notes were initially issued as components of the Company's 6.50% Equity Security Units that are in the form of Normal Units, each such Normal Unit initially consisting of (a) a stock purchase contract (each, a "PURCHASE CONTRACT") under which (i) the Holder will agree to purchase from the Company on May 15, 2007, a specified number of newly issued Class A Ordinary Shares, par value $0.01 per share, of the Company and (ii) the Company will pay to the Holder quarterly contract adjustment payments and (b) a 1/40, or 2.5%, ownership interest in a Note of $1,000 principal amount. In accordance with the terms of the Purchase Contract Agreement, on their initial issuance, the Notes were pledged by the Purchase Contract Agent, on behalf of the Holders of the Normal Units, to U.S. Bank Trust National Association, as collateral agent, custodial agent and securities intermediary (the "COLLATERAL AGENT"), pursuant to the Pledge Agreement, dated as of March 23, 2004 (the "PLEDGE AGREEMENT"), among the Company, the Purchase Contract Agent and the Collateral Agent, to secure such Holders' obligations to purchase Class A Ordinary Shares of the Company under the Purchase Contracts. The Notes that are a component of Normal Units or that so elect under Section 2.20 of the Supplemental Indenture will be subject to Remarketing and, in the case of the Last Failed Remarketing, the Collateral Agent for the benefit of the Company reserves all of its rights as a secured party of the Pledged Notes with respect thereto and, subject to applicable law and Section 5.4 of the Purchase Contract Agreement, may, among other things, permit the Company to cause the Notes to be sold or to retain and cancel such Notes, in either case, in full satisfaction of the Holders' obligations under the Purchase Contracts. Pursuant to the Remarketing Agreement, the Remarketing Agent shall use its reasonable best efforts to remarket the Notes that are included in Normal Units and the Separate Notes included pursuant to Section 2.20 of the First Supplemental Indenture at a specified price on certain dates, all as specified in A-6 Section 2.19 of the First Supplemental Indenture and in Section 5.4(b) of the Purchase Contract Agreement. If a Special Event (as herein defined) shall occur and be continuing, the Company may, at its option, redeem the Notes then Outstanding in whole (but not in part) at any time ("SPECIAL EVENT REDEMPTION") at the Redemption Price (as herein defined). If such Special Event Redemption occurs prior to the earlier of a successful remarketing pursuant to Section 5.4 of the Purchase Contract Agreement and May 15, 2007, the Redemption Price payable with respect to the Notes pledged to the Collateral Agent under the Pledge Agreement will be paid to the Collateral Agent on the Special Event Redemption Date on or prior to 12:00 p.m., New York City time, by wire transfer in immediately available funds at such place and at such account as may be designated by the Collateral Agent in exchange for the Notes pledged to the Collateral Agent. In such event, the Collateral Agent shall apply such Redemption Price pursuant to the terms of the Purchase Contract Agreement and the Pledge Agreement. Notice of any redemption (which notice will be irrevocable) will be mailed at least 30 days but not more than 60 days before the date of redemption (the "SPECIAL EVENT REDEMPTION DATE") to each registered Holder of Notes to be redeemed at its registered address as more fully provided in the Indenture. Unless the Company defaults in payment of the Redemption Price, on and after the Special Event Redemption Date interest shall cease to accrue on such Notes. Notwithstanding the foregoing, in case of a Special Event Redemption for a Tax Event, no such notice of redemption will be given (a) earlier than 90 days prior to the earliest date on which the payor would be obligated to make such payment or withholding if a payment in respect of Notes by it were then due and (b) unless at the time such notice is given, such obligation to pay such Additional Amounts remains in effect. Prior to the publication or mailing of any notice of redemption of Notes pursuant to the foregoing, the Company will deliver to the Paying Agent (a) an Officer's Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that any factual conditions precedent to the Company's right so to redeem have been satisfied and (b) a legal opinion of an outside nationally recognized tax counsel to the effect that the circumstances referred to below in "Tax Event" exist. "QUOTATION AGENT" means Goldman, Sachs & Co. or any of its successors or any other primary U.S. government securities dealer in New York City selected by the Company. "ACCOUNTING EVENT REDEMPTION" means the receipt, at any time prior to the earlier of the date of any successful remarketing of the Notes pursuant to the Purchase Contract Agreement and the Remarketing Agreement and the Stock Purchase Date, by the audit committee of the Board of Directors of the Company or a written report in accordance with Statement on Auditing Standards ("SAS") No. 97, "Amendment to SAS No. 50--Reports on the Application of Accounting Principles," from the Company's independent auditors, provided at the request of management of the Company, to the effect that, as a result of any change in accounting rules applicable to the Company or interpretations thereof after March 17, 2004, the Company must either (i) account for the Purchase Contracts as derivatives under SFAS 133 (or any successor accounting standard) or (ii) account for the Units using the if-converted method under SFAS 128 (or any successor accounting standard), and that such accounting treatment will cease to apply upon redemption of the Notes. A-7 "REDEMPTION PRICE" means, for each Note, whether or not included in a Normal Unit, the greater of (a) the principal amount of the Note and (b) the product of (i) the principal amount of such Note and (ii) a fraction whose numerator is the Treasury Portfolio Purchase Price (as herein defined) and whose denominator is the applicable Special Event Redemption Principal Amount (as herein defined). "SPECIAL EVENT" means either an Accounting Redemption Event or a Tax Event. "TAX EVENT" means a determination by the Company that, as a result (1) any change in, or amendment to, the law or treaties (or any regulations or rulings promulgated thereunder) of the Cayman Islands, Bermuda or any other jurisdiction in which the Company generally becomes subject to taxation; or (2) any change in position regarding the application, administration or interpretation of such laws, treaties, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction) (each of the foregoing clauses (1) and (2), a "CHANGE IN TAX LAW"), the Company is, or on the next Interest Payment Date would be, required to pay more than DE MINIMIS Additional Amounts (as defined in Section 1009 of the Indenture) and such obligations cannot be avoided by taking commercially reasonable measures available to the Company. The Change in Tax Law must become effective after March 17, 2004. In the case of a successor entity, the Change in Tax Law must become effective after the date that such successor entity first becomes an obligor on the Notes (unless the Change in Tax Law had already occurred prior to such date, but occurring after March 17, 2004, with respect to the original entity). "SPECIAL EVENT REDEMPTION PRINCIPAL AMOUNT" means (i) in the case of a Special Event Redemption Date occurring prior to a successful remarketing of the Notes pursuant to the Purchase Contract Agreement, the aggregate principal amount of Notes included in Normal Units on such date, and (ii) in the case of a Special Event Redemption Date occurring after a successful remarketing of the Notes pursuant to the Purchase Contract Agreement or the Stock Purchase Date, the aggregate principal amount of the Notes. "TREASURY PORTFOLIO" means: (i) if a Special Event Redemption occurs prior to a successful remarketing of the Notes pursuant to the provisions of the Purchase Contract Agreement, a portfolio (A) of zero coupon U.S. Treasury securities consisting of principal or interest strips of U.S. Treasury securities that mature on or prior to May 15, 2007 in an aggregate amount equal to the applicable Special Event Redemption Principal Amount and (B) with respect to each scheduled Interest Payment Date on the Notes that occurs after the Special Event Redemption Date and on or before May 15, 2007, interest or principal strips of U.S. Treasury securities that mature on or prior to such Interest Payment Date in an aggregate amount equal to the aggregate interest payment that would be due on the applicable Special Event Redemption Principal Amount on such date if the interest rate of the Notes were not reset on the Reset Date, and (ii) solely for purposes of determining the Treasury Portfolio Purchase Price in the case of a Special Event Redemption Date occurring after a successful remarketing of the Notes pursuant to the Purchase Contract Agreement or May 15, 2007, a portfolio (A) of zero coupon U.S. Treasury securities consisting of principal or interest strips of U.S. Treasury securities that mature on or prior to May 15, 2009 in an aggregate amount equal to the applicable Special Event Redemption Principal Amount and (B) with respect to each scheduled Interest Payment Date on the Notes that occurs after the Special Event Redemption Date and on or before May 15, 2009, interest or A-8 principal strips of U.S. Treasury securities that mature on or prior to such Interest Payment Date in an aggregate amount equal to the aggregate interest payment that would be due on the applicable Special Event Redemption Principal Amount of the Notes Outstanding on the Special Event Redemption Date. "TREASURY PORTFOLIO PURCHASE PRICE" means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the Quotation Agent on the third Business Day immediately preceding the Special Event Redemption Date for the purchase of the Treasury Portfolio for settlement on the Special Event Redemption Date. The Notes shall constitute the senior, unsecured and unsubordinated obligations of the Company and shall rank equally in right of payment with all existing and future senior, unsecured and unsubordinated obligations of the Company. In the event of the Last Failed Remarketing, any Holder of Notes that remain outstanding on May 15, 2007 and that are not subject to the pledge of the Pledge Agreement, shall have the benefit of the Put Right set forth in Section 2.21 of the First Supplemental Indenture. No sinking fund is provided for the Notes. In the event of a redemption of the Notes, the Company will not be required (a) to register the transfer or exchange of Notes for a period of 15 days immediately preceding the selection of Notes for redemption or (b) to register the transfer or exchange of any Note, or portion thereof, called for redemption. In the case of an Event of Default described in Section 501(5) or 501(6) of the Indenture, all unpaid principal of and accrued interest and Additional Amounts on the Notes then Outstanding shall be due and payable immediately without any declaration or other act on the part of the Trustee or the Holders of any Notes. In the case all other Events of Default, if such Event of Default shall occur and be continuing, the principal of all of the Notes, together with accrued interest to the date of declaration, may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the written consent of the Holders of not less than a majority in principal amount of the Securities at the time Outstanding and affected thereby. The Indenture also contains, with certain exceptions as therein provided, provisions permitting Holders of not less than a majority in principal amount of the Securities of any series at the time Outstanding, on behalf of the Holders of all the Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Note or such other Note. A-9 As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless (i) such Holder shall have previously given the Trustee written notice of a continuing Event of Default, (ii) the Holders of not less than 25% in principal amount of the Notes that are Outstanding shall have made a written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity satisfactory to it, (iii) the Trustee shall not have received from the Holders of a majority in principal amount of the Notes that are Outstanding a direction inconsistent with such request, and (iv) the Trustee shall have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by any Holder of this Note for the enforcement of any payment of principal hereof, or any premium of interest hereon on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable on the Security Register upon surrender of this Note for registration of transfer at the Corporate Trust Office of the Trustee or at such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York (which shall initially be an office or agency of the Trustee), or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Security Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees by the Security Registrar. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered, as the owner thereof for all purposes, whether or not such Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. No recourse for the payment of the principal (and premium, if any) or interest on this Note and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, officer or director or subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the A-10 enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of consideration for the issue hereof, expressly waived and released. The Company agrees, and by acceptance of a beneficial ownership interest in the Notes, each beneficial Holder of Notes will be deemed to have agreed (1) to treat the acquisition of a Normal Unit as the acquisition of the Note and the Purchase Contract constituting the Normal Unit and to allocate the purchase price of the Normal Unit between the Note and the Purchase Contract as $25 and $0, respectively and (2) to treat the Notes as indebtedness for United States federal income tax purposes. [If Note is a Global Note, insert - This Note is a Global Note and is subject to the provisions of the Indenture relating to Global Notes, including the limitations in Section 203 of the Base Indenture on transfers and exchanges of Global Notes.] THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. All capitalized terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. A-11 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM--as tenants in common UNIF GIFT MIN ACT- ______ Custodian _______ (Cust) (Minor) TEN ENT--as tenants by the entireties under Uniform Gifts to Minors Act ________________ JT TEN--as joint tenants with rights of (State) survivorship and not as tenants in common
Additional abbreviations may also be used though not on the above list. A-12 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Note to: ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- (Insert assignee's social security or tax identification number) ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoint agent to transfer this Note on the Security Register. The agent may substitute another to act for him or her. Dated: Signed: Signature Guarantee: (Sign exactly as your name appears on the other side of this Note) Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-13 [TO BE ATTACHED TO GLOBAL NOTES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE The following increases or decreases in this Global Note have been made:
AMOUNT OF DECREASE IN AMOUNT OF INCREASE STATED AMOUNT OF THE SIGNATURE OF STATED AMOUNT OF THE IN STATED AMOUNT OF GLOBAL NOTE FOLLOWING AUTHORIZED OFFICER GLOBAL NOTE THE GLOBAL NOTE SUCH DECREASE/INCREASE OF TRUSTEE DATE - -------------------------------------------------------------------------------------------------------------------
A-14 EX-4.3 6 c31556_ex4-3.txt Exhibit 4.3 EXECUTION COPY PURCHASE CONTRACT AGREEMENT XL CAPITAL LTD AND U.S. BANK NATIONAL ASSOCIATION, AS PURCHASE CONTRACT AGENT PURCHASE CONTRACT AGREEMENT DATED AS OF MARCH 23, 2004 TABLE OF CONTENTS PAGE ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..............1 SECTION 1.1. Definitions.................................................1 SECTION 1.2. Compliance Certificates and Opinions.......................13 SECTION 1.3. Form of Documents Delivered to Purchase Contract Agent.....13 SECTION 1.4. Acts of Holders; Record Dates..............................14 SECTION 1.5. Notices 15 SECTION 1.6. Notice to Holders; Waiver..................................16 SECTION 1.7. Effect of Headings and Table of Contents...................16 SECTION 1.8. Successors and Assigns.....................................16 SECTION 1.9. Separability Clause........................................16 SECTION 1.10. Benefits of Agreement.....................................17 SECTION 1.11. Governing Law.............................................17 SECTION 1.12. Judgment Currency.........................................17 SECTION 1.13. Legal Holidays............................................18 SECTION 1.14. Counterparts..............................................18 SECTION 1.15. Inspection of Agreement...................................18 SECTION 1.16. Appointment of Financial Institution as Purchase Contract Agent for the Company.................18 SECTION 1.17. No Waiver.................................................19 ARTICLE II CERTIFICATE FORMS..................................................19 SECTION 2.1. Forms of Certificates Generally............................19 SECTION 2.2. Form of Purchase Contract Agent's Certificate of Authentication........................................20 ARTICLE III THE UNITS.........................................................20 SECTION 3.1. Number of Units; Denominations.............................20 SECTION 3.2. Rights and Obligations Evidenced by the Certificates.......21 SECTION 3.3. Execution, Authentication, Delivery and Dating.............21 SECTION 3.4. Temporary Certificates.....................................22 SECTION 3.5. Registration; Registration of Transfer and Exchange........23 SECTION 3.6. Book-Entry Interests.......................................24 SECTION 3.7. Notices to Holders.........................................25 SECTION 3.8. Appointment of Successor Clearing Agency...................25 SECTION 3.9. Definitive Certificates. If:...............................25 SECTION 3.10. Mutilated, Destroyed, Lost and Stolen Certificates........25 SECTION 3.11. Persons Deemed Owners.....................................27 SECTION 3.12. Cancellation..............................................27 SECTION 3.13. Establishment of Stripped Units...........................28 SECTION 3.14. Reestablishment of Normal Units...........................29 SECTION 3.15. Transfer of Collateral upon Occurrence of Termination Event.......................................30 SECTION 3.16. No Consent to Assumption..................................31 SECTION 3.17. CUSIP Numbers.............................................31 i SECTION 3.18. Currency of Payments......................................31 ARTICLE IV THE NOTES..........................................................31 SECTION 4.1. Payment of Interest; Rights to Interest Payments Preserved.31 SECTION 4.2. Notice and Voting..........................................32 SECTION 4.3. Special Event Redemption...................................33 ARTICLE V THE PURCHASE CONTRACTS; THE REMARKETING.............................33 SECTION 5.1. Purchase of Ordinary Shares................................33 SECTION 5.2. Contract Adjustment Payments...............................35 SECTION 5.3. Deferral of Contract Adjustment Payments...................40 SECTION 5.4. Payment of Purchase Price; Remarketing.....................42 SECTION 5.5. Issuance of Ordinary Shares................................46 SECTION 5.6. Adjustment of Settlement Rate..............................47 SECTION 5.7. Notice of Adjustments and Certain Other Events.............53 SECTION 5.8. Termination Event; Notice..................................54 SECTION 5.9. Early Settlement...........................................54 SECTION 5.10. Early Settlement Upon Cash Merger.........................56 SECTION 5.11. Charges and Taxes.........................................58 SECTION 5.12. No Fractional Shares......................................58 ARTICLE VI REMEDIES...........................................................58 SECTION 6.1. Unconditional Right of Holders To Receive Purchase Contract Adjustment Payments and Purchase Ordinary Shares.........................................58 SECTION 6.2. Restoration of Rights and Remedies........................59 SECTION 6.3. Rights and Remedies Cumulative............................59 SECTION 6.4. Delay or Omission Not Waiver..............................59 SECTION 6.5. Undertaking for Costs.....................................59 SECTION 6.6. Waiver of Stay or Extension Laws..........................60 ARTICLE VII THE PURCHASE CONTRACT AGENT.......................................60 SECTION 7.1. Certain Duties and Responsibilities........................60 SECTION 7.2. Notice of Default..........................................61 SECTION 7.3. Certain Rights of Purchase Contract Agent..................61 SECTION 7.4. Not Responsible for Recitals or Issuance of Units..........62 SECTION 7.5. May Hold Units.............................................62 SECTION 7.6. Money Held in Custody......................................62 SECTION 7.7. Compensation and Reimbursement.............................63 SECTION 7.8. Corporate Purchase Contract Agent Required; Eligibility....64 SECTION 7.9. Resignation and Removal; Appointment of Successor..........64 SECTION 7.10. Acceptance of Appointment by Successor.....................65 SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business..............................................66 SECTION 7.12. Preservation of Information................................66 SECTION 7.13. No Obligations of Purchase Contract Agent..................66 SECTION 7.14. Tax Compliance.............................................66 ii ARTICLE VIII SUPPLEMENTAL AGREEMENTS..........................................67 SECTION 8.1. Supplemental Agreements Without Consent of Holders.........67 SECTION 8.2. Supplemental Agreements with Consent of Holders............67 SECTION 8.3. Execution of Supplemental Agreements.......................68 SECTION 8.4. Effect of Supplemental Agreements..........................68 SECTION 8.5. Reference to Supplemental Agreements.......................69 ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE..........................69 SECTION 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions.................69 SECTION 9.2. Rights and Duties of Successor Corporation.................69 SECTION 9.3. Opinion of Counsel Given to Purchase Contract Agent........70 ARTICLE X COVENANTS...........................................................70 SECTION 10.1. Performance Under Purchase Contracts......................70 SECTION 10.2. Maintenance of Office or Agency...........................70 SECTION 10.3. Company To Reserve Ordinary Shares........................71 SECTION 10.4. Covenants as to Ordinary Shares...........................71 SECTION 10.5. Statements of Officer of the Company as to Default........71 SECTION 10.6. Listing...................................................71 SECTION 10.7. Registration Statement....................................71 SECTION 10.8. Securities Contract.......................................71 SECTION 10.9. Payment to Holders of Units on the Stock Purchase Date....72 SECTION 10.10. Consent to Treatment for Tax Purposes....................72 EXHIBITS EXHIBIT A Form of Normal Units Certificate EXHIBIT B Form of Stripped Units Certificate EXHIBIT C Instruction from Purchase Contract Agent to Collateral Agent EXHIBIT D Instruction to Purchase Contract Agent EXHIBIT E Notice to Settle by Separate Cash iii PURCHASE CONTRACT AGREEMENT, dated as of March 23, 2004, between XL Capital Ltd, a Cayman Island exempted limited company (the "Company"), and U.S. Bank National Association, a national banking association, acting as purchase contract agent and attorney-in-fact for the Holders of Units from time to time (the "Purchase Contract Agent"). RECITALS The Company has duly authorized the execution and delivery of this Agreement and the Certificates evidencing the Units. All things necessary to make the Purchase Contracts, when the Certificates are executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Purchase Contract Agent, as provided in this Agreement, the valid obligations of the Company, and to constitute this Agreement a valid agreement of the Company, in accordance with its terms, have been done. WITNESSETH: For and in consideration of the premises and the purchase of the Units by the Holders thereof, it is mutually agreed as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular, and nouns and pronouns of the masculine gender include the feminine and neuter genders; (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States; (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (d) the following terms have the meanings given to them in this Section 1.1(d): "Accounting Redemption Event" means the receipt at any time prior to the earlier of the date of any successful remarketing of the Notes pursuant to the provisions of Section 5.4 and the Stock Purchase Date by the audit committee of the Board of Directors of a written report in accordance with Statement on Auditing Standards ("SAS") No. 97, "Amendment to SAS No. 50 - Reports on the Application of Accounting Principles," from the Company's independent auditors, PROVIDED at the request of the management of the Company, to the effect that, as a result 2 of a change in accounting rules or interpretations thereof applicable to the Company after March 17, 2004, the Company must either (a) account for the Purchase Contracts as derivatives under SFAS 133 (or any successor accounting standard) or (b) account for the Units using the if-converted method under SFAS 128 (or any successor accounting standard), and that such accounting treatment will cease to apply upon redemption of the Notes. "Accounting Settlement Rate Event" means the receipt at any time prior to the earlier of the date of any successful remarketing of the Notes pursuant to the provisions of Section 5.4 and the Stock Purchase Date by the audit committee of the Board of Directors of a written report in accordance with Statement on Auditing Standards ("SAS") No. 97, "Amendment to SAS No. 50 - Reports on the Application of Accounting Principles," from the Company's independent auditors, PROVIDED at the request of the management of the Company, to the effect that, as a result of a change in accounting rules or interpretations thereof applicable to the Company after March 17, 2004, the Company must either (a) account for the Purchase Contracts as derivatives under SFAS 133 (or any successor accounting standard) or (b) account for the Units using the if-converted method under SFAS 128 (or any successor accounting standard), and that such accounting treatment will cease to apply upon the fixing of the Settlement Rate on the Purchase Contracts. "Act" when used with respect to any Holder, has the meaning specified in Section 1.4(a). "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder. "Agreement" means this agreement as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof. "Applicable Market Value" has the meaning specified in Section 5.1(c). "Bankruptcy Code" means Title 11 of the United States Code, or any other law of the United States that from time to time provides a uniform system of bankruptcy laws. "Bankruptcy Law" means (i) the Bankruptcy Code or (ii) any and all relevant provisions of the Cayman Islands Companies Law (2003 Revision), or any successor thereto, relating to the winding up of the Company (including without limitation in the circumstances set out in Section 95 of the Cayman Islands Companies Law). "Beneficial Owner" means, with respect to a Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry Interest as reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). "Board of Directors" means either the Board of Directors of the Company or the executive committee of such Board of Directors or any other committee of such Board of 3 Directors duly authorized to act generally or in any particular respect for the Board of Directors hereunder. "Board Resolution" means (i) a copy of a resolution certified by the Secretary or the Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, (ii) a copy of a unanimous written consent of the Board of Directors or (iii) a certificate signed by the authorized officer or officers to whom the Board of Directors has delegated its authority and, in each case, delivered to the Purchase Contract Agent. "Book-Entry Interest" means a beneficial interest in a Global Certificate, ownership and transfers of which shall be maintained and made through book entries by a Clearing Agency as described in Section 3.6. "Business Day" means any day other than a Saturday, Sunday or other day in the City of New York, in the City of Boston, Massachussetts, in Bermuda or in any Place of Payment on which banking institutions are authorized by law or regulations to close. "Capital Stock" means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated, whether voting or non-voting) corporate stock or similar interests in other types of entities. "Cash Consideration" has the meaning set forth in Section 5.4(b)(iv). "Cash Merger" has the meaning set forth in Section 5.10(a). "Cash Merger Date" means the date on which a Cash Merger is consummated. "Cash Settlement" has the meaning set forth in Section 5.4(a). "Certificate" means a Normal Units Certificate or a Stripped Units Certificate. "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act that is acting as a depositary for the Units and in whose name, or in the name of a nominee of that organization, shall be registered a Global Certificate and which shall undertake to effect book-entry transfers and pledges of the Units. "Clearing Agency Participant" means a broker, dealer, bank, trust company, clearing corporation, other financial institution or other Person for whom from time to time the Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Price" has the meaning set forth in Section 5.1(c). "Collateral" has the meaning set forth in Section 2.1(a) of the Pledge Agreement. "Collateral Agent" means U.S. Bank Trust National Association, a national banking association, as Collateral Agent under the Pledge Agreement until a successor Collateral 4 Agent shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter "Collateral Agent" shall mean the Person who is then the Collateral Agent thereunder. "Collateral Substitution" has the meaning set forth in Section 3.13(a). "Company" means the Person named as the "Company" in the first paragraph of this Agreement until a successor shall have become such pursuant to the applicable provisions of this Agreement, and thereafter "Company" shall mean such successor. "Constituent Person" has the meaning set forth in Section 5.6(b). "Contract Adjustment Payments" means, in the case of Normal Units and Stripped Units, the amount payable on each Payment Date by the Company in respect of each Purchase Contract constituting a part of such Unit, which amount shall be equal to 3.97% per year of the Stated Amount, in each case computed (i) for any full quarterly period, on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly period, on the basis of a 30-day month, and for periods of less than a month, on the basis of the actual number of days elapsed per 30-day month, plus any Deferred Contract Adjustment Payments accrued pursuant to Section 5.3. "Corporate Trust Office" means the corporate trust office of the Purchase Contract Agent at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Arthur L. Blakeslee. "Coupon Rate" means the percentage rate per annum at which each Note will bear interest initially. "Current Market Price" has the meaning set forth in Section 5.6(a)(9). "Custodial Agent" means U.S. Bank Trust National Association, a national banking association, as Custodial Agent under the Pledge Agreement until a successor Custodial Agent shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter "Custodial Agent" shall mean the Person who is then the Custodial Agent thereunder. "Default" means a default by the Company in any of its obligations under this Agreement. "Deferred Contract Adjustment Payments" has the meaning set forth in Section 5.3(a). "Depositary" means, initially, DTC, until another Clearing Agency becomes its successor, and thereafter "Depositary" shall mean such successor. "DTC" means The Depository Trust Company, the initial Clearing Agency. 5 "Early Settlement" has the meaning set forth in Section 5.9(a). "Early Settlement Amount" has the meaning set forth in Section 5.9(a). "Early Settlement Date" has the meaning set forth in Section 5.9(a). "Early Settlement Rate" has the meaning set forth in Section 5.9(b). "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder. "Expiration Date" has the meaning set forth in Section 1.4(f). "Expiration Time" has the meaning set forth in Section 5.6(a)(5). "First Supplemental Indenture" means the First Supplemental Indenture, dated as of March 23, 2004, to the Indenture between the Company and the Trustee. "Global Certificate" means a Certificate that evidences all or part of the Units and is registered in the name of a Depositary or a nominee thereof. "Holder" means the Person in whose name the Unit evidenced by a Normal Units Certificate and/or a Stripped Units Certificate is registered in the related Normal Units Register and/or the Stripped Units Register, as the case may be. "Indenture" means the Indenture, dated as of January 23, 2003, between the Company and the Trustee pursuant to which the Notes are to be issued, as originally executed and delivered and as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions thereof and shall include the terms of a particular series established as contemplated thereof. "Issuer Order" or "Issuer Request" means a written order or request signed in the name of the Company by the Chief Executive Officer, the Chief Financial Officer, the President, any Vice-President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary (or other officer performing similar functions) of the Company and delivered to the Purchase Contract Agent. "Last Failed Remarketing" has the meaning set forth in Section 5.4(b)(ii). "Merger Early Settlement" has the meaning set forth in Section 5.10(a). "Merger Early Settlement Amount" has the meaning set forth in Section 5.10(b). "Merger Early Settlement Date" has the meaning set forth in Section 5.10(a)(i). "Non-electing Share" has the meaning set forth in Section 5.6(b). 6 "Normal Unit" means the collective rights and obligations of a Holder of a Normal Units Certificate in respect of a 1/40 undivided beneficial interest in a Note in the original principal amount of $1,000 or the Treasury Consideration, as the case may be, subject in each case to the Pledge thereof, and the related Purchase Contract. "Normal Units Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Normal Units set forth on such certificate, substantially in the form of Exhibit A hereto. "Normal Units Register" and "Normal Units Registrar" have the respective meanings set forth in Section 3.5(a). "Notes" means the 2.53% Senior Notes due 2009 of the Company issued under the Indenture. "NYSE" has the meaning set forth in Section 5.1(c). "Officers' Certificate" means a certificate signed by the Chief Executive Officer, the Chief Financial Officer, the President or any Vice-President, and by the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary (or other officer performing similar functions) of the Company and delivered to the Purchase Contract Agent. "Opt-Out" has the meaning set forth in Section 5.4(b)(iv). "Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company or an Affiliate of the Company and who shall be reasonably acceptable to the Purchase Contract Agent. "Ordinary Shares" means the Class A Ordinary Shares, par value $0.01 per share, of the Company. "Outstanding Units" means, as of the date of determination, all Normal Units or Stripped Units evidenced by Certificates theretofore authenticated, executed and delivered under this Agreement, except: (i) If a Termination Event has occurred, (A) Stripped Units for which the related Treasury Securities have been theretofore deposited with the Purchase Contract Agent in trust for the Holders of such Stripped Units and (B) Normal Units for which the related Notes or the Treasury Consideration, as the case may be, has been theretofore deposited with the Purchase Contract Agent in trust for the Holders of such Normal Units; (ii) Normal Units and Stripped Units evidenced by Certificates theretofore cancelled by the Purchase Contract Agent or delivered to the Purchase Contract Agent for cancellation or deemed cancelled pursuant to the provisions of this Agreement; and 7 (iii) Normal Units and Stripped Units evidenced by Certificates in exchange for or in lieu of which other Certificates have been authenticated, executed on behalf of the Holder and delivered pursuant to this Agreement, other than any such Certificate in respect of which there shall have been presented to the Purchase Contract Agent proof satisfactory to it that such Certificate is held by a protected purchaser in whose hands the Normal Units or Stripped Units evidenced by such Certificate are valid obligations of the Company; PROVIDED that, in determining whether the Holders of the requisite number of the Normal Units or Stripped Units have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Normal Units or Stripped Units owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be outstanding, except that, in determining whether the Purchase Contract Agent shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Normal Units or Stripped Units which a Responsible Officer of the Purchase Contract Agent knows to be so owned shall be so disregarded. Normal Units or Stripped Units so owned which have been pledged in good faith may be regarded as Outstanding Units if the pledgee establishes to the satisfaction of the Purchase Contract Agent the pledgee's right so to act with respect to such Normal Units or Stripped Units and that the pledgee is not the Company or any Affiliate of the Company. "Payment Date" means each February 15, May 15, August 15 and November 15, commencing May 15, 2004 and ending on May 15, 2007. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Pledge" has the meaning set forth in Section 2.1(c) of the Pledge Agreement. "Pledge Agreement" means the Pledge Agreement, dated as of the date hereof, by and among the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, on its own behalf and as attorney-in-fact for the Holders from time to time of the Units. "Pledged Notes" has the meaning set forth in Section 2.1(c) of the Pledge Agreement. "Pledged Treasury Consideration" has the meaning set forth in Section 2.1(c) of the Pledge Agreement. "Pledged Treasury Securities" has the meaning set forth in Section 2.1(c) of the Pledge Agreement. "Predecessor Certificate" means a Predecessor Normal Units Certificate or a Predecessor Stripped Units Certificate. "Predecessor Normal Units Certificate" of any particular Normal Units Certificate means every previous Normal Units Certificate evidencing all or a portion of the rights and 8 obligations of the Company and the Holder under the Normal Units evidenced thereby; and, for the purposes of this definition, any Normal Units Certificate authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Normal Units Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Normal Units Certificate. "Predecessor Stripped Units Certificate" of any particular Stripped Units Certificate means every previous Stripped Units Certificate evidencing all or a portion of the rights and obligations of the Company and the Holder under the Stripped Units evidenced thereby; and, for the purposes of this definition, any Stripped Units Certificate authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Stripped Units Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Stripped Units Certificate. "Purchase Contract," when used with respect to any Unit, means the contract forming a part of such Unit and obligating the Company to issue and sell and the Holder of such Unit to purchase Ordinary Shares on the terms and subject to the conditions set forth in Article V. "Purchase Contract Agent" means the Person named as the "Purchase Contract Agent" in the first paragraph of this Agreement until a successor Purchase Contract Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter "Purchase Contract Agent" shall mean such Person. "Purchase Contract Settlement Fund" has the meaning set forth in Section 5.5. "Purchase Price" has the meaning set forth in Section 5.1(a). "Purchased Shares" has the meaning set forth in Section 5.6(a)(5). "Quotation Agent" means Goldman, Sachs & Co. or any of its successors or any other primary U.S. government securities dealer in New York City selected by the Company. "Record Date" for the payment of a distribution payable on any Payment Date means, the 15th calendar day preceding such Payment Date. "Redemption Price" means, for each Note, whether or not included in a Normal Unit, (a) the greater of the principal amount of such Note and (b) the product of (i) the principal amount of such Note and (ii) a fraction whose numerator is the applicable Treasury Portfolio Purchase Price and whose denominator is the applicable Special Event Redemption Principal Amount. "Register" means the Normal Units Register and the Stripped Units Register, as applicable. "Registrar" means the Normal Units Registrar and the Stripped Units Registrar, as applicable. 9 "Remarketing Agent" has the meaning set forth in Section 5.4(b)(i). "Remarketing Agreement" means the Remarketing Agreement to be entered into by and among the Company, the Remarketing Agent and the Purchase Contract Agent. "Remarketing Date" means the ninth Business Day before the Stock Purchase Date, which shall be May 2, 2007. "Remarketing Fee" has the meaning set forth in Section 5.4(b)(i). "Remarketing Notice" has the meaning set forth in Section 5.4(b)(i). "Remarketing Period" means the seven Business Day period beginning on the Remarketing Date and ending on the third Business Day preceding the Stock Purchase Date. "Remarketing Rate" means the percentage rate per year at which each Note will bear interest on and following the Reset Date. "Remarketing Value" means, with respect to any Note, the principal amount of such Note. "Reorganization Event" has the meaning set forth in Section 5.6(b). "Reset Date" means the date following the Remarketing Date or a Subsequent Remarketing Date, as applicable, on which the trades in a successful remarketing of the Notes, pursuant to the provisions of Section 5.4, settle. Notwithstanding whether a successful remarketing occurs on the Remarketing Date or on a Subsequent Remarketing Date, the settlement date for such remarketing, if successful, shall be on the Stock Purchase Date; PROVIDED that the Company with the consent of the Remarketing Agent and the Purchase Contract Agent shall have the option to provide for a settlement date of a successful remarketing that is earlier than the Stock Purchase Date so long as the Company shall pay on the Stock Purchase Date to the Holders of the Normal Units and the Separate Notes payment on the Notes for the period from and including the Payment Date immediately preceding the Stock Purchase Date to but excluding the Stock Purchase Date at the Coupon Rate. "Responsible Officer" means, when used with respect to the Purchase Contract Agent, any officer within the corporate trust department of the Purchase Contract Agent (or any successor of the Purchase Contract Agent), including any Vice-President, any assistant Vice-President, any assistant secretary, the treasurer, any assistant treasurer, any trust officer, any senior trust officer or any other officer of the Purchase Contract Agent who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who, in each of the above cases, shall have direct responsibility for the administration of this Agreement. "Securities Intermediary" means U.S. Bank Trust National Association, a national banking association, in its capacity as Securities Intermediary under the Pledge Agreement, together with its successors in such capacity. 10 "Senior Indebtedness" means indebtedness of any kind of the Company unless the instrument under which such indebtedness is incurred expressly provides that it is in parity or subordinate in right of payment to the Contract Adjustment Payments. "Separate Notes" has the meaning set forth in the Pledge Agreement. "Settlement Date" means any Early Settlement Date or Merger Early Settlement Date or the Stock Purchase Date. "Settlement Rate" has the meaning set forth in Section 5.1(a). "Special Event" means either an Accounting Redemption Event or a Tax Event. "Special Event Redemption" means, if a Special Event shall occur and be continuing, the redemption of the Notes, at the option of the Company, in whole but not in part, on not less than 30 days' nor more than 60 days' prior written notice. "Special Event Redemption Date" means the date upon which a Special Event Redemption is to occur. "Special Event Redemption Principal Amount" means (i) in the case of a Special Event Redemption Date occurring prior to a successful remarketing of the Notes pursuant to the provisions of Section 5.4, the aggregate principal amount of Notes included in Normal Units outstanding on such date, and (ii) in the case of a Special Event Redemption Date occurring after either a successful remarketing of the Notes pursuant to the provisions of Section 5.4 or the Stock Purchase Date, the aggregate principal amount of the Notes outstanding on such date. "Stated Amount" means, with respect to any one Normal Unit or Stripped Unit, $25, and, with respect to any one Note, $1,000. "Stock Purchase Date" means May 15, 2007. "Stripped Unit" means the collective rights and obligations of a Holder of a Stripped Units Certificate in respect of a 1/40 undivided beneficial interest in a Treasury Security or, in the case of an Opt-Out, the Cash Consideration, subject to the Pledge thereof, and the related Purchase Contract. "Stripped Units Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Stripped Units specified on such certificate, substantially in the form of Exhibit B hereto. "Stripped Units Register" and "Stripped Units Registrar" have the respective meanings set forth in Section 3.5(a). "Subsequent Remarketing Date" has the meaning set forth in Section 5.4(b)(ii). "Tax Event" has the meaning set forth in Exhibit A of the First Supplemental Indenture. 11 "Termination Date" means the date, if any, on which a Termination Event occurs. "Termination Event" means the occurrence of any of the following events: (i) at any time on or prior to the Stock Purchase Date, a judgment, decree or court order shall have been entered granting relief under any Bankruptcy Law or any other similar foreign, federal or state law, adjudicating the Company to be insolvent, or approving as properly filed a petition seeking reorganization or liquidation of the Company, and, unless such judgment, decree or order shall have been entered within 60 days prior to the Stock Purchase Date, such decree or order shall have continued undischarged and unstayed for a period of 60 days; (ii) except under Cayman Islands law, at any time on or prior to the Stock Purchase Date, a judgment, decree or court order for the appointment of a custodian, receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property substantially in its entirety, or for the winding up or liquidation of its affairs, shall have been entered, and, unless such judgment, decree or order shall have been entered within 60 days prior to the Stock Purchase Date, such judgment, decree or order shall have continued undischarged and unstayed for a period of 60 days; or (iii) at any time on or prior to the Stock Purchase Date, the Company, a member of the Company or a creditor shall file a petition for relief under any Bankruptcy Law or any other foreign, federal or state law substantially similar to any Bankruptcy Law, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization or liquidation under any Bankruptcy Law or any other similar foreign, federal or state law, or shall consent to the filing of any such petition, or shall consent to the appointment of a custodian, receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property substantially in its entirety, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due; or (iv) at any time on or prior to the Stock Purchase Date, a judgment, decree or court order for the appointment of a receiver or liquidator or trustee or assignee or provisional liquidator in bankruptcy or insolvency of the Company or of its property under any Bankruptcy Law of the Cayman Islands, or for the termination or liquidation of the affairs of the Company on its bankruptcy or insolvency or for the reorganization of the Company's affairs, shall have been entered and if such judgment, decree or order shall have been entered more than 60 days prior to the Stock Purchase Date, such judgment, decree or order shall have continued undischarged and unstayed for a period of 60 days. "Threshold Appreciation Price" has the meaning set forth in Section 5.1(a)(i). "TIA" means the Trust Indenture Act of 1939, and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder. "Trading Day" has the meaning set forth in Section 5.1(c). 12 "Treasury Consideration" means, as the context requires, (i) with respect to a Normal Unit, (A) a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal or interest amount of a principal or interest strip in a U.S. Treasury security included in the Treasury Portfolio which matures on or prior to the Stock Purchase Date and (B) for each scheduled interest Payment Date on the Notes that occurs after the Special Event Redemption Date and on or before the Stock Purchase Date, a .0158125% undivided beneficial ownership interest in a $1,000 principal or interest amount of a principal or interest strip in a U.S. Treasury security included in the Treasury Portfolio that matures on or prior to that interest Payment Date or (ii) with respect to any number of Normal Units greater than one, (A) an equal number of 1/40, or 2.5%, undivided beneficial ownership interests in a $1,000 principal or interests amounts of principal or interest strips in a U.S. Treasury securitities included in the Treasury Portfolio which matures on or prior to the Stock Purchase Date and (B) for each scheduled interest Payment Date on the Notes that occurs after the Special Event Redemption Date and on or before the Stock Purchase Date, an equal number of .0158125% undivided beneficial ownership interests in a $1,000 principal or interest amounts of principal or interest strips in a U.S. Treasury securitities included in the Treasury Portfolio that matures on or prior to that interest Payment Date. "Treasury Portfolio" means (i) if a Special Event Redemption occurs prior to a successful remarketing of the Notes pursuant to the provisions of Section 5.4, a portfolio of (A) zero-coupon U.S. Treasury securities consisting of principal or interest strips of U.S. Treasury securities that mature on or prior to the Stock Purchase Date in an aggregate amount equal to the applicable Special Event Redemption Principal Amount and (B) with respect to each scheduled interest Payment Date on the Notes that occurs after the Special Event Redemption Date and on or before the Stock Purchase Date, interest or principal strips of U.S. Treasury securities that mature on or prior to such interest Payment Date in an aggregate amount equal to the aggregate interest payment that would be due on the applicable Special Event Redemption Principal Amount on such date if the interest rate of the Notes were not reset on the Reset Date, and (ii) solely for purposes of determining the Treasury Portfolio Purchase Price in the case of a Special Event Redemption Date occurring after the successful remarketing of the Notes pursuant to the provisions of Section 5.4 or the Stock Purchase Date, a portfolio of (A) zero-coupon U.S. Treasury securities consisting of principal or interest strips of U.S. Treasury securities that mature on or prior to May 15, 2009 in an aggregate amount equal to the applicable Special Event Redemption Principal Amount and (B) with respect to each scheduled interest Payment Date on the Notes that occurs after the Special Event Redemption Date and on or before May 15, 2009, interest or principal strips of U.S. Treasury securities that mature on or prior to such interest Payment Date in an aggregate amount equal to the aggregate interest payment that would be due on the applicable Special Event Redemption Principal Amount. "Treasury Portfolio Purchase Price" means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the Quotation Agent on the third Business Day immediately preceding the Special Event Redemption Date for the purchase of the Treasury Portfolio for settlement on the Special Event Redemption Date. "Treasury Security" means a zero-coupon U.S. Treasury security (Number 912820 BX 4) maturing on May 15, 2007 that will pay $1,000 on such maturity date. 13 "Trustee" means U.S. Bank National Association, a national banking association, as trustee under the Indenture and the First Supplemental Indenture, or any successor thereto. "Underwriting Agreement" means the Underwriting Agreement relating to the Units dated March 17, 2004 between the Company and the underwriters named therein. "Unit" means a Normal Unit or a Stripped Unit. "Vice-President" means any vice-president, whether or not designated by a number or a word or words added before or after the title "vice-president." SECTION 1.2. COMPLIANCE CERTIFICATES AND OPINIONS. Except as otherwise expressly provided by this Agreement, upon any application or request by the Company to the Purchase Contract Agent to take any action under any provision of this Agreement, the Company shall furnish to the Purchase Contract Agent an Officers' Certificate stating that all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and, if requested by the Purchase Contract Agent, an Opinion of Counsel stating that, in the opinion of such counsel, such action is authorized or permitted by this Agreement and that all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement shall include: (a) a statement that the individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable such individual to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of such individual based on his or her knowledge, such condition or covenant has been complied with. SECTION 1.3. FORM OF DOCUMENTS DELIVERED TO PURCHASE CONTRACT AGENT. (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. 14 (b) Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. SECTION 1.4. ACTS OF HOLDERS; RECORD DATES. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Purchase Contract Agent and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and (subject to Section 7.1) conclusive in favor of the Purchase Contract Agent and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Purchase Contract Agent deems sufficient. (c) The ownership of Units shall be proved by the Normal Units Register or the Stripped Units Register, as the case may be. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Certificate shall bind every future Holder of the same Certificate and the Holder of every Certificate issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Purchase Contract Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Certificate. (e) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Units entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Agreement to be given, made or taken by Holders of Units. If any record date is set pursuant to this paragraph, the Holders of the Outstanding Normal Units and the Outstanding Stripped Units, as the case may be, on such record date, and no other Holders, shall be entitled to 15 take the relevant action with respect to the Normal Units or the Stripped Units, as the case may be, whether or not such Holders remain Holders after such record date; PROVIDED that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite number of Outstanding Units on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite number of Outstanding Units on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Purchase Contract Agent in writing and to each Holder of Units in the manner set forth in Section 1.6. (f) With respect to any record date set pursuant to this Section, the Company may designate any date as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; PROVIDED that no such change shall be effective unless notice of the proposed new Expiration Date is given to the Purchase Contract Agent in writing, and to each Holder of Units in the manner set forth in Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the Company shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. SECTION 1.5. NOTICES. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with: (a) the Purchase Contract Agent by any Holder or by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered, mailed, first-class postage prepaid, telecopied or delivered by overnight air courier guaranteeing next day delivery, addressed to and received by the Purchase Contract Agent at 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Arthur L. Blakeslee, telecopy: (503) 258-5977, or at any other address furnished in writing by the Purchase Contract Agent to the Holders and the Company; or (b) the Company by the Purchase Contract Agent or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered, mailed, first-class postage prepaid, telecopied or delivered by overnight air courier guaranteeing at least second day delivery, addressed to and received by the Company at XL Capital Ltd, XL House, One Bermudiana Road, Hamilton HM11, Bermuda Attention: Paul S. Giordano, telecopy: (441) 292-5280, or at any other address furnished in writing to the Purchase Contract Agent by the Company; or (c) the Collateral Agent by the Purchase Contract Agent, the Company or any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly 16 provided) if made, given, furnished or filed in writing and personally delivered, mailed, first-class postage prepaid, telecopied or delivered by overnight air courier guaranteeing next day delivery, addressed to and received by the Collateral Agent at 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Elizabeth Hammer, telecopy: (860) 241-6897, or at any other address furnished in writing by the Collateral Agent to the Purchase Contract Agent, the Company and the Holders; or (d) the Trustee by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered, mailed, first-class postage prepaid, telecopied or delivered by overnight air courier guaranteeing next day delivery, addressed to and received by the Trustee at 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Arthur L. Blakeslee, telecopy: (503) 258-5927, or at any other address furnished in writing by the Trustee to the Company. SECTION 1.6. NOTICE TO HOLDERS; WAIVER. (a) Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at its address as it appears in the applicable Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Purchase Contract Agent, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. (b) In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Purchase Contract Agent shall constitute a sufficient notification for every purpose hereunder. SECTION 1.7. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.8. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Agreement by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 1.9. SEPARABILITY CLAUSE. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction. 17 SECTION 1.10. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the Units, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and, to the extent provided hereby, the Holders, any benefits or any legal or equitable right, remedy or claim under this Agreement. The Holders from time to time shall be beneficiaries of this Agreement and shall be bound by all of the terms and conditions hereof and of the Units evidenced by their Certificates by their acceptance of delivery of such Certificates. SECTION 1.11. GOVERNING LAW. THIS AGREEMENT AND THE UNITS SHALL BE GOVERNED BY, DEEMED TO BE A CONTRACT UNDER, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The Company, the Purchase Contract Agent and the Holders from time to time of the Units, acting through the Purchase Contract Agent as their attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in the Borough of Manhattan in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company, the Purchase Contract Agent and the Holders from time to time of the Units, acting through the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. The Company hereby designates and appoints CT Corporation System, 111 Eighth Avenue, New York, New York 10011 as its authorized agent upon which process may be served in any legal suit, action or proceeding arising out of or relating to this Agreement which may be instituted in any federal or state court in the Borough of Manhattan, The City of New York, New York, and agrees that service of process upon such agent, and written notice of said service to the Company by the Person serving the same, shall be deemed in every respect effective service of process upon the Company in any such suit, action or proceeding and further designates its domicile, the domicile of CT Corporation System specified above and any domicile CT Corporation System may have in the future as its domicile to receive any notice hereunder (including service of process). If for any reason CT Corporation System (or any successor agent for this purpose) shall cease to act as agent for service of process as provided above, the Company will promptly appoint a successor agent for this purpose reasonably acceptable to the Purchase Contract Agent. The Company agrees to take any and all actions as may be necessary to maintain such designation and appointment of such agent in full force and effect. SECTION 1.12. JUDGMENT CURRENCY. The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Purchase Contract Agent could purchase in The City of New York the requisite amount of the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which a final unappealable judgment is given and (b) its obligations under this Agreement to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with clause (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be 18 payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Agreement. For purpose of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or obligated by law, regulation or executive order to be closed. SECTION 1.13. LEGAL HOLIDAYS. (a) In any case where any Payment Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement or the Normal Units Certificates) payments on the Units shall not be made on such date, but such payments shall be made on the next succeeding day which is a Business Day with the same force and effect as if made on such Payment Date, PROVIDED that no interest shall accrue or be payable by the Company in respect of such payment for the period from and after any such Payment Date, except that if such next succeeding Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day with the same force and effect as if made on such Payment Date. (b) If any date on which Contract Adjustment Payments are to be made on the Purchase Contracts is not a Business Day, then payment of the Contract Adjustment Payments payable on that date will be made on the next succeeding day which is a Business Day, and no interest or additional payment will be paid in respect of the delay. However, if that Business Day is in the next succeeding calendar year, the payment will be made on the immediately preceding Business Day with the same force and effect as if made on that Payment Date. (c) In any case where the Stock Purchase Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement or the Certificates) the Purchase Contracts shall not be performed on such date, but the Purchase Contracts shall be performed on the next succeeding day which is a Business Day with the same force and effect as if performed on the Stock Purchase Date. SECTION 1.14. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. SECTION 1.15. INSPECTION OF AGREEMENT. A copy of this Agreement shall be available at all reasonable times during normal business hours at the Corporate Trust Office for inspection by any Holder. SECTION 1.16. APPOINTMENT OF FINANCIAL INSTITUTION AS PURCHASE CONTRACT AGENT FOR THE COMPANY. The Company may appoint a financial institution (which may be the Collateral Agent) to act as its agent in performing its obligations and in accepting and enforcing performance of the obligations of the Purchase Contract Agent and the Holders, under this Agreement and the Purchase Contracts, by giving notice of such appointment in the manner provided in Section 1.5 hereof. Any such appointment shall not relieve the Company in any way from its obligation hereunder. 19 SECTION 1.17. NO WAIVER. No failure on the part of the Company, the Purchase Contract Agent, the Collateral Agent, the Securities Intermediary or any of their respective agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Company, the Purchase Contract Agent, the Collateral Agent, the Securities Intermediary or any of their respective agents of any right, power or remedy hereunder preclude any further exercise thereof or the exercise of any right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law. ARTICLE II CERTIFICATE FORMS SECTION 2.1. FORMS OF CERTIFICATES GENERALLY. (a) The Normal Units Certificates (including the form of Purchase Contract forming part of the Normal Units evidenced thereby) shall be in substantially the form set forth in Exhibit A hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange or quotation system on which the Normal Units are listed or quoted for trading or any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Normal Units Certificates, as evidenced by their execution of the Normal Units Certificates. (b) The definitive Normal Units Certificates shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Normal Units Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof. (c) The Stripped Units Certificates (including the form of Purchase Contracts forming part of the Stripped Units evidenced thereby) shall be in substantially the form set forth in Exhibit B hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange or the quotation system on which the Stripped Units may be listed or quoted for trading or any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Stripped Units Certificates, as evidenced by their execution of the Stripped Units Certificates. (d) The definitive Stripped Units Certificates shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Stripped Units Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof. (e) Every Global Certificate authenticated, executed on behalf of the Holders and delivered hereunder shall bear a legend in substantially the following form: "THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT (AS DEFINED ON THE REVERSE HEREOF) AND IS REGISTERED IN THE NAME OF THE CLEARING AGENCY OR 20 A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT. [Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Company or its agent for registration of transfer, exchange or payment, and any Certificate issued is registered in the name of Cede & Co., or such other name as requested by an authorized representative of The Depository Trust Company, and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of The Depository Trust Company, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR CERTIFICATES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE PURCHASE CONTRACT AGREEMENT, THIS GLOBAL CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY." SECTION 2.2. FORM OF PURCHASE CONTRACT AGENT'S CERTIFICATE OF AUTHENTICATION. (a) The form of the Purchase Contract Agent's certificate of authentication of the Normal Units shall be in substantially the form set forth on the form of the Normal Units Certificates. (b) The form of the Purchase Contract Agent's certificate of authentication of the Stripped Units shall be in substantially the form set forth on the form of the Stripped Units Certificates. ARTICLE III THE UNITS SECTION 3.1. NUMBER OF UNITS; DENOMINATIONS. (a) The aggregate number of Normal Units and Stripped Units, if any, evidenced by Certificates authenticated, executed on behalf of the Holders and delivered hereunder is limited to 33,000,000, except for Certificates authenticated, executed on behalf of the Holder and delivered upon registration of transfer of, in exchange for, or in lieu of, other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9(e), 5.10(e) or 8.5. 21 (b) The Certificates shall be issuable only in registered form and only in denominations of a single Unit and any integral multiple thereof. SECTION 3.2. RIGHTS AND OBLIGATIONS EVIDENCED BY THE CERTIFICATES. (a) Each Normal Units Certificate shall evidence the number of Normal Units specified therein, with each such Normal Unit representing the ownership by the Holder thereof of a 1/40 undivided beneficial interest in a Note in the original principal amount of $1,000 or the Treasury Consideration, as the case may be, subject to the Pledge of such interest in such Note or the Treasury Consideration, as the case may be, by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder thereof and the Company under one Purchase Contract. The Purchase Contract Agent, as attorney-in-fact for, and on behalf of, the Holder of each Normal Unit, shall pledge and grant, pursuant to the Pledge Agreement, to the Collateral Agent, for the benefit of the Company, as collateral security for the payment and performance when due by such Holder of its respective obligations to the Company under the related Purchase Contracts, a security interest in, and right of set-off against, all of the right, title and interest of the Purchase Contract Agent and such Holder in such Note or the Treasury Consideration forming a part of such Normal Unit. (b) Each Stripped Units Certificate shall evidence the number of Stripped Units specified therein, with each such Stripped Unit representing the ownership by the Holder thereof of a 1/40 undivided beneficial interest in a Treasury Security or, in the case of an Opt-Out, the Cash Consideration, subject to the Pledge of such interest in such Treasury Security or Cash Consideration, as the case may be, by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder thereof and the Company under one Purchase Contract. The Purchase Contract Agent, as attorney-in-fact for, and on behalf of, the Holder of each Stripped Unit, shall pledge and grant, pursuant to the Pledge Agreement, to the Collateral Agent, for the benefit of the Company, as collateral security for the payment and performance when due by such Holder of its respective obligations to the Company under the related Purchase Contracts, a security interest in, and right of set off against, all of the right, title, and interest of the Purchase Contract Agent and such Holder in such interest in the Treasury Security forming a part of such Stripped Unit. (c) Prior to the purchase of Ordinary Shares under each Purchase Contract, such Purchase Contract shall not entitle the Holder of the related Units Certificates to any of the rights of a holder of Ordinary Shares, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as a shareholder in respect of the meetings of shareholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as a shareholder of the Company. SECTION 3.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. (a) Subject to the provisions of Sections 3.13 and 3.14, upon the execution and delivery of this Agreement, and at any time and from time to time thereafter, the Company may deliver Certificates executed by the Company to the Purchase Contract Agent for authentication, execution on behalf of the Holders and delivery, together with its Issuer Order for authentication and delivery of such Certificates, and the Purchase Contract Agent in accordance with such Issuer Order shall authenticate, execute on behalf of the Holders and deliver such Certificates. 22 (b) The Certificates shall be executed on behalf of the Company by its Chairman of the Board of Directors, a Vice-Chairman, its President or one of its Vice-Presidents and delivered to the Purchase Contract Agent. The signature of any of these officers on the Certificates may be manual or facsimile. (c) Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Certificates or did not hold such offices at the date of such Certificates. (d) No Purchase Contract evidenced by a Certificate shall be valid until such Certificate has been executed on behalf of the Holder by the manual or facsimile signature of an authorized officer of the Purchase Contract Agent, as such Holder's attorney-in-fact. Such signature by an authorized officer of the Purchase Contract Agent shall be conclusive evidence that the Holder of such Certificate has entered into the Purchase Contract or Purchase Contracts evidenced by such Certificate. (e) Each Certificate shall be dated the date of its authentication. (f) No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by an authorized officer of the Purchase Contract Agent by manual or facsimile signature, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. SECTION 3.4. TEMPORARY CERTIFICATES. (a) Pending the preparation of definitive Certificates, the Company shall execute and deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of the Holders, and deliver, in lieu of such definitive Certificates, temporary Certificates which are in substantially the form set forth in Exhibit A or Exhibit B hereto, as the case may be, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Normal Units or Stripped Units, as the case may be, are listed or quoted for trading or any depositary transfer, or as may, consistently herewith, be determined by the officers of the Company executing such Certificates, as evidenced by their execution of the Certificates. (b) If temporary Certificates are issued, the Company will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the Corporate Trust Office or such other office or agency designated pursuant to Section 10.2 at the expense of the Company and without charge to the Holder. Upon surrender for cancellation of any one or more temporary Certificates, the Company shall execute and deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, one or more definitive Certificates of like tenor and denominations and evidencing a like number of Normal Units or Stripped Units, as the case may be, as the temporary Certificate or Certificates 23 so surrendered. Until so exchanged, the temporary Certificates shall in all respects evidence the same benefits and the same obligations with respect to the Normal Units or Stripped Units, as the case may be, evidenced thereby as definitive Certificates. SECTION 3.5. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. (a) The Purchase Contract Agent shall keep at the Corporate Trust Office a register (the register maintained in such office or in any other office or agency designated pursuant to Section 10.2 being herein referred to as "Normal Units Register") in which, subject to such reasonable regulations as it may prescribe, the Purchase Contract Agent shall provide for the registration of Normal Units Certificates and of transfers of Normal Units Certificates (the Purchase Contract Agent, in such capacity, the "Normal Units Registrar") and a register (the register maintained in such office or in any other office or agency designated pursuant to Section 10.2 being herein referred to as the "Stripped Units Register") in which, subject to such reasonable regulations as it may prescribe, the Purchase Contract Agent shall provide for the registration of the Stripped Units Certificates and of transfers of Stripped Units Certificates (the Purchase Contract Agent, in such capacity, the "Stripped Units Registrar"). (b) Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office or such office or agency designated pursuant to Section 10.2, the Company shall execute and deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of the designated transferee or transferees, and deliver one or more new Certificates of like tenor and denominations, registered in the name of the designated transferee or transferees, and evidencing a like number of Normal Units or Stripped Units, as the case may be. (c) At the option of the Holder, Certificates may be exchanged for other Certificates, of like tenor and denominations and evidencing a like number of Normal Units or Stripped Units, as the case may be, upon surrender of the Certificates to be exchanged at such office or agency. Whenever any Certificates are so surrendered for exchange, the Company shall execute and deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of the Holder, and deliver the Certificates which the Holder making the exchange is entitled to receive. (d) All Certificates issued upon any registration of transfer or exchange of a Certificate shall evidence the ownership of the same number of Normal Units or Stripped Units, as the case may be, and be entitled to the same benefits and subject to the same obligations, under this Agreement as the Normal Units or Stripped Units, as the case may be, evidenced by the Certificate surrendered upon such registration of transfer or exchange. (e) Every Certificate presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Purchase Contract Agent) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Purchase Contract Agent duly executed by the Holder thereof or its attorney duly authorized in writing. 24 (f) No service charge shall be made for any registration of transfer or exchange of a Certificate, but the Company and the Purchase Contract Agent may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Certificates, other than any exchanges pursuant to Sections 3.6, 3.9 and 8.5 not involving any transfer. (g) Notwithstanding the foregoing, the Company shall not be obligated to issue or execute and deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall not be obligated to authenticate, execute on behalf of the Holder and deliver, any Certificate presented or surrendered for registration of transfer or for exchange on or after the fifth Business Day immediately preceding the earlier of the Stock Purchase Date or the Termination Date. In lieu of delivery of a new Certificate, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, the Purchase Contract Agent shall, (i) if the Stock Purchase Date has occurred, deliver the Ordinary Shares issuable in respect of the Purchase Contracts forming a part of the Units evidenced by such Certificate, (ii) in the case of Normal Units, if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Notes or the Treasury Consideration, as applicable, relating to such Normal Units, or (iii) in the case of Stripped Units, if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Treasury Securities relating to such Stripped Units, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article V. SECTION 3.6. BOOK-ENTRY INTERESTS. The Certificates, on original issuance, will be issued in the form of one or more fully registered Global Certificates, to be delivered to the Depositary or a nominee or custodian thereof by, or on behalf of, the Company. Such Global Certificate shall initially be registered on the books and records of the Company in the name of Cede & Co., the nominee of the Depositary, and no Beneficial Owner will receive a definitive Certificate representing such Beneficial Owner's interest in such Global Certificate, except as provided in Section 3.9. The Purchase Contract Agent shall enter into a customary agreement with the Depositary if so requested by the Company. Unless and until definitive, fully registered Certificates have been issued to Beneficial Owners pursuant to Section 3.9: (a) the provisions of this Section 3.6 shall be in full force and effect; (b) the Company and the Purchase Contract Agent shall be entitled to deal with the Clearing Agency for all purposes of this Agreement (including the payment of Contract Adjustment Payments and Deferred Contract Adjustment Payments, if any, and receiving approvals, votes or consents hereunder) as the Holder of the Units and the sole holder of the Global Certificate(s) and shall have no obligation to the Beneficial Owners; 25 (c) to the extent that the provisions of this Section 3.6 conflict with any other provisions of this Agreement or any Certificate, the provisions of this Section 3.6 shall control; and (d) the rights of the Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants. The Clearing Agency will make book-entry transfers among Clearing Agency Participants and receive and transmit payments of Contract Adjustment Payments and Deferred Contract Adjustment Payments, if any, to such Clearing Agency Participants. SECTION 3.7. NOTICES TO HOLDERS. Whenever a notice or other communication to the Holders is required to be given under this Agreement, the Company or the Company's agent shall give such notices and communications to the Holders and, with respect to any Units registered in the name of a Clearing Agency or the nominee of a Clearing Agency, the Company or the Company's agent shall, except as set forth herein, have no obligations to the Beneficial Owners. SECTION 3.8. APPOINTMENT OF SUCCESSOR CLEARING AGENCY. If any Clearing Agency elects to discontinue its services as securities depositary with respect to the Units or ceases to be eligible as a "clearing agency" under the Exchange Act, the Company may, in its sole discretion, appoint a successor Clearing Agency with respect to the Units. SECTION 3.9. DEFINITIVE CERTIFICATES. If: (a) a Clearing Agency notifies the Company that it is unwilling or unable to continue its services as securities depositary with respect to the Units and a successor Clearing Agency is not appointed within 90 days after such discontinuance pursuant to Section 3.8, (b) the Company elects to terminate the book-entry system arrangements through the Clearing Agency with respect to the Units, or (c) there shall have occurred and be continuing a default by the Company in respect of its obligations under this Agreement or the Indenture governing the Notes, then, upon surrender of the Global Certificates representing the Book-Entry Interests with respect to the Units by the Clearing Agency, accompanied by registration instructions, the Company shall cause definitive Certificates to be delivered to Beneficial Owners in accordance with the instructions of the Clearing Agency. The Company shall not be liable for any delay in delivery of such instructions and may conclusively rely on and shall be protected in relying on, such instructions. SECTION 3.10. MUTILATED, DESTROYED, LOST AND STOLEN CERTIFICATES. (a) If any mutilated Certificate is surrendered to the Purchase Contract Agent, the Company shall execute and deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, a new Certificate at the cost of the Holder, 26 evidencing the same number of Normal Units or Stripped Units, as the case may be, and bearing a Certificate number not contemporaneously outstanding. (b) If there shall be delivered to the Company and the Purchase Contract Agent (i) evidence to their satisfaction of the destruction, loss or theft of any Certificate, and (ii) such security or indemnity at the cost of the Holder as may be required by them to hold each of them and any agent of either of them harmless, then, in the absence of notice to the Company or to a Responsible Officer of the Purchase Contract Agent that such Certificate has been acquired by a protected purchaser, the Company shall execute and deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of the Holder, and deliver to the Holder, in lieu of any such destroyed, lost or stolen Certificate, a new Certificate, evidencing the same number of Normal Units or Stripped Units, as the case may be, and bearing a Certificate number not contemporaneously outstanding. (c) Notwithstanding the foregoing, the Company shall not be obligated to execute and deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall not be obligated to authenticate, execute on behalf of the Holder, and deliver to the Holder, a Certificate on or after the fifth Business Day immediately preceding the earlier of the Stock Purchase Date or the Termination Date. In lieu of delivery of a new Certificate, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, the Purchase Contract Agent shall: (i) if the Stock Purchase Date has occurred, deliver the Ordinary Shares issuable in respect of the Purchase Contracts forming a part of the Units evidenced by such Certificate, (ii) in the case of Normal Units, if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Notes or the Treasury Consideration, as applicable, relating to such Normal Units, or (iii) in the case of Stripped Units, if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Treasury Securities relating to such Stripped Units, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article V. (d) Upon the issuance of any new Certificate under this Section 3.10, the Company and the Purchase Contract Agent may require the payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Purchase Contract Agent) connected therewith. (e) Every new Certificate issued pursuant to this Section 3.10 in lieu of any destroyed, lost or stolen Certificate shall constitute an original additional contractual obligation of the Company and of the Holder in respect of the Unit evidenced thereby, whether or not the destroyed, lost or stolen Certificate (and the Units evidenced thereby) shall be at any time enforceable by anyone, and shall be entitled to all the benefits and be subject to all the 27 obligations of this Agreement equally and proportionately with any and all other Certificates delivered hereunder. (f) The provisions of this Section 3.10 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Certificates. SECTION 3.11. PERSONS DEEMED OWNERS. (a) Prior to due presentment of a Certificate for registration of transfer, the Company and the Purchase Contract Agent, and any agent of the Company or the Purchase Contract Agent, may treat the Person in whose name such Certificate is registered on the Register as the owner of the Units evidenced thereby, for the purpose of receiving quarterly payments on the Notes or Treasury Consideration, receiving payment of Contract Adjustment Payments, if any, and any Deferred Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not any such payments shall be overdue and notwithstanding any notice to the contrary, and neither the Company nor the Purchase Contract Agent, nor any agent of the Company or the Purchase Contract Agent, shall be affected by notice to the contrary. (b) Notwithstanding the foregoing, with respect to any Global Certificate, nothing herein shall prevent the Company, the Purchase Contract Agent or any agent of the Company or the Purchase Contract Agent, from treating the Clearing Agency as the sole Holder of such Global Certificate or from giving effect to any written certification, proxy or other authorization furnished by any Clearing Agency (or its nominee), as a Holder of such Global Certificate, with respect to such Global Certificate or impair, as between such Clearing Agency and the Beneficial Owners, the operation of customary practices governing the exercise of rights of such Clearing Agency (or its nominee) as a Holder of such Global Certificate. SECTION 3.12. CANCELLATION. (a) All Certificates surrendered (i) for delivery of Ordinary Shares on or after any Settlement Date; (ii) upon the transfer of Notes or Treasury Consideration or Treasury Securities, as the case may be, after the occurrence of a Termination Event or pursuant to an Early Settlement or Merger Early Settlement, or a Collateral Substitution or an establishment or re-establishment of a Normal Unit; or (iii) upon the registration of a transfer or exchange of a Unit shall, if surrendered to any Person other than the Purchase Contract Agent, be delivered to the Purchase Contract Agent and, if not already cancelled, shall be promptly cancelled by it. The Company may at any time deliver to the Purchase Contract Agent for cancellation any Certificates previously authenticated, executed on behalf of any Holder and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Certificates so delivered shall, upon Issuer Order, be promptly cancelled by the Purchase Contract Agent. No Certificates shall be authenticated, executed on behalf of any Holder and delivered in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Purchase Contract Agent shall be disposed of by the Purchase Contract Agent in accordance with its then customary procedures. 28 (b) If the Company or any Affiliate of the Company shall acquire any Certificate, such acquisition shall not operate as a cancellation of such Certificate unless and until such Certificate is cancelled or delivered to the Purchase Contract Agent for cancellation. SECTION 3.13. ESTABLISHMENT OF STRIPPED UNITS. (a) A Holder may separate the Pledged Notes or Pledged Treasury Consideration, as applicable, from the related Purchase Contracts in respect of the Normal Units held by such Holder by substituting for such Pledged Notes or Pledged Treasury Consideration, as the case may be, Treasury Securities that will pay at the Stock Purchase Date an amount equal to the aggregate Stated Amount of such Normal Units (a "Collateral Substitution"), at any time from and after the date of this Agreement and on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date, by (i) depositing with the Collateral Agent Treasury Securities having an aggregate principal amount equal to the aggregate Stated Amount of such Normal Units, and (ii) transferring the related Normal Units to the Purchase Contract Agent accompanied by a notice to the Purchase Contract Agent, substantially in the form of Exhibit D hereto, with a copy of such of such notice to the Company, stating that the Holder has transferred the relevant amount of Treasury Securities to the Collateral Agent and requesting that the Purchase Contract Agent instruct the Collateral Agent to release the Pledged Notes or Pledged Treasury Consideration, as the case may be, underlying such Normal Units, whereupon the Purchase Contract Agent shall promptly give such instruction to the Collateral Agent, with a copy of such instruction to the Company, substantially in the form of Exhibit C hereto. Upon receipt of the Treasury Securities described in clause (i) above and the instruction described in clause (ii) above, in accordance with the terms of the Pledge Agreement, the Collateral Agent will release to the Purchase Contract Agent, on behalf of the Holder, such Pledged Notes or Pledged Treasury Consideration from the Pledge, free and clear of the Company's security interest therein, and upon receipt thereof the Purchase Contract Agent shall promptly: (x) cancel the related Normal Units Certificate; (y) transfer the Pledged Notes or Pledged Treasury Consideration, as the case may be, to the Holder; and (z) authenticate, execute on behalf of such Holder and deliver a Stripped Units Certificate executed by the Company in accordance with Section 3.3 evidencing the same number of Purchase Contracts as were evidenced by the cancelled Normal Units. (b) Holders who elect to separate the Pledged Notes or Pledged Treasury Consideration, as the case may be, from the related Purchase Contract and to substitute Treasury Securities for such Pledged Notes or Pledged Treasury Consideration shall be responsible for any fees or expenses payable to the Collateral Agent for its services as Collateral Agent in respect of the substitution, and the Company shall not be responsible for any such fees or expenses. (c) Holders may make Collateral Substitutions (i) if Treasury Securities are being substituted for Pledged Notes, only in integral multiples of 40 Normal Units, or (ii) if the Collateral Substitutions occur after a Special Event Redemption, as the case may be, only in 29 integral multiples of Normal Units such that the Treasury Securities to be deposited and the Treasury Consideration to be released are in integral multiples of $1,000. (d) In the event a Holder making a Collateral Substitution pursuant to this Section 3.13 fails to effect a book-entry transfer of the Normal Units or fails to deliver a Normal Units Certificate to the Purchase Contract Agent after depositing Treasury Securities with the Collateral Agent, the Pledged Notes or Pledged Treasury Consideration, as the case may be, constituting a part of such Normal Units, and any distributions on such Pledged Notes or Pledged Treasury Consideration shall be held in the name of the Purchase Contract Agent or its nominee in trust for the benefit of such Holder, until such Normal Units are so transferred or the Normal Units Certificate is so delivered, as the case may be, or, with respect to a Normal Units Certificate, such Holder provides evidence satisfactory to the Company and the Purchase Contract Agent that such Normal Units Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Purchase Contract Agent and the Company. (e) Except as described in this Section 3.13, for so long as the Purchase Contract underlying a Normal Unit remains in effect, such Normal Unit shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Normal Unit in respect of the Pledged Note or the Pledged Treasury Consideration, as the case may be, and the Purchase Contract comprising such Normal Unit may be acquired, and may be transferred and exchanged, only as a Normal Unit. SECTION 3.14. REESTABLISHMENT OF NORMAL UNITS. (a) A Holder of Stripped Units may reestablish Normal Units at any time from and after the date of this Agreement and on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date, by: (i) depositing with the Collateral Agent Notes in a principal amount or the Treasury Consideration (identified and calculated by reference to the Treasury Consideration then comprising Normal Units), as the case may be, then comprising such number of Normal Units as is equal to the number of such Stripped Units; and (ii) transferring such Stripped Units to the Purchase Contract Agent accompanied by a notice to the Purchase Contract Agent, substantially in the form of Exhibit D hereto, stating that the Holder has transferred the relevant principal amount of Notes or the Treasury Consideration, as the case may be, to the Collateral Agent and requesting that the Purchase Contract Agent instruct the Collateral Agent to release the Pledged Treasury Securities underlying such Stripped Unit, whereupon the Purchase Contract Agent shall promptly give such instruction to the Collateral Agent, with a copy of such instruction to the Company, substantially in the form of Exhibit C hereto. Upon receipt of the Notes or the Treasury Consideration, as the case may be, described in clause (i) above and the instruction described in clause (ii) above, in accordance with the terms of the Pledge Agreement, the Collateral Agent will release to the Purchase Contract Agent, on behalf of the Holder, such Pledged Treasury Securities from the Pledge, free and clear of the Company's security interest therein, and upon receipt thereof the Purchase Contract Agent shall promptly: (x) cancel the related Stripped Units certificate; 30 (y) transfer the Pledged Treasury Securities to the Holder; and (z) authenticate, execute on behalf of such Holder and deliver a Normal Units Certificate executed by the Company in accordance with Section 3.3 evidencing the same number of Purchase Contracts as were evidenced by the cancelled Stripped Units. (b) Holders of Stripped Units may reestablish Normal Units (i) if Notes are being substituted for the Pledged Treasury Securities, only in integral multiples of 40 Stripped Units for 40 Normal Units or (ii) if the reestablishment occurs after a Special Event Redemption, as the case may be, only in integral multiples of Stripped Units such that the Treasury Consideration to be deposited and the Treasury Securities to be released are in integral multiples of $1,000. (c) Except as provided in this Section 3.14, for so long as the Purchase Contract underlying a Stripped Unit remains in effect, such Stripped Unit shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Stripped Unit in respect of the Pledged Treasury Securities and Purchase Contract comprising such Stripped Unit may be acquired, and may be transferred and exchanged, only as a Stripped Unit. (d) In the event a Holder who reestablishes Normal Units pursuant to this Section 3.14 fails to effect a book-entry transfer of the Stripped Units or fails to deliver a Stripped Units Certificate to the Purchase Contract Agent after depositing Pledged Notes with the Collateral Agent, the Treasury Securities constituting a part of such Stripped Units, and any distributions on such Treasury Securities shall be held in the name of the Purchase Contract Agent or its nominee in trust for the benefit of such Holder, until such Stripped Units are so transferred or the Stripped Units Certificate is so delivered, as the case may be, or, with respect to a Stripped Units Certificate, such Holder provides evidence satisfactory to the Company and the Purchase Contract Agent that such Stripped Units Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Purchase Contract Agent and the Company. SECTION 3.15. TRANSFER OF COLLATERAL UPON OCCURRENCE OF TERMINATION EVENT. Upon the occurrence of a Termination Event and the transfer to the Purchase Contract Agent of the Notes or the Treasury Consideration or the Treasury Securities, as the case may be, underlying the Normal Units and the Stripped Units pursuant to the terms of the Pledge Agreement, the Purchase Contract Agent shall request transfer instructions with respect to such Notes or the Treasury Consideration or Treasury Securities, as the case may be, from each Holder by written request mailed to such Holder at its address as it appears in the Normal Units Register or the Stripped Units Register, as the case may be. Upon book-entry transfer of the Normal Units or Stripped Units or delivery of a Normal Units Certificate or Stripped Units Certificate to the Purchase Contract Agent with such transfer instructions, the Purchase Contract Agent shall transfer the Notes, the Treasury Consideration or the Treasury Securities underlying such Normal Units or 31 Stripped Units, as the case may be, to such Holder by book-entry transfer, or other appropriate procedures, in accordance with such instructions. In the event a Holder of Normal Units or Stripped Units fails to effect such transfer or delivery, the Notes, the Treasury Consideration or the Treasury Securities, as the case may be, underlying such Normal Units or Stripped Units, as the case may be, and any distributions thereon, shall be held in the name of the Purchase Contract Agent or its nominee in trust for the benefit of such Holder, until such Normal Units or Stripped Units are transferred or the Normal Units Certificate or Stripped Units Certificate is surrendered or such Holder provides satisfactory evidence that such Normal Units Certificate or Stripped Units Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Purchase Contract Agent and the Company. In the case of the Treasury Portfolio or any Treasury Securities, the Purchase Contract Agent may dispose of the subject securities for cash and pay the applicable portion of such cash to the Holders in lieu of such Holders' Treasury Securities, where such Holder would otherwise have been entitled to receive less than $1,000 of any such security. SECTION 3.16. NO CONSENT TO ASSUMPTION. Each Holder of a Unit, by acceptance thereof, shall be deemed expressly to have withheld any consent to the assumption (i.e., affirmance), under Section 365 of the Bankruptcy Code or otherwise, of the Purchase Contract by the Company, any receiver, liquidator or person or entity performing similar functions or its trustee in the event that the Company becomes the debtor under the Bankruptcy Code or subject to other similar state or federal or other law providing for reorganization or liquidation. SECTION 3.17. CUSIP NUMBERS. The Company in issuing the Units may use "CUSIP" numbers (if then generally in use), and, if so, the Purchase Contract Agent shall use "CUSIP" numbers in notices to Holders as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice to Holders and that reliance may be placed only on the other identification numbers printed on the Units, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Purchase Contract Agent of any changes in the "CUSIP" numbers. SECTION 3.18. CURRENCY OF PAYMENTS. Any cash payments under this Agreement shall be paid in U.S. dollars in immediately available funds. ARTICLE IV THE NOTES SECTION 4.1. PAYMENT OF INTEREST; RIGHTS TO INTEREST PAYMENTS PRESERVED. (a) A payment on any Note or Treasury Consideration, as the case may be, which is paid on any Payment Date shall, subject to receipt thereof by the Purchase Contract Agent from the Collateral Agent (if the Collateral Agent is the registered owner thereof) as provided by the terms of the Pledge Agreement, be paid to the Person in whose name the Normal Units Certificate (or one or more Predecessor Normal Units Certificates), of which such Note or the Treasury Consideration is a part, is registered at the close of business on the Record Date for such Payment Date. (b) Each Normal Units Certificate evidencing Notes delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of any other Normal Units Certificate shall carry the rights to interest accrued and unpaid, and rights to accrue 32 interest, which were carried by the Notes or Treasury Consideration, as the case may be, underlying such other Normal Units Certificate. (c) In the case of any Normal Unit, with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date, or with respect to which Merger Early Settlement of the underlying Purchase Contract is effected on a Merger Early Settlement Date, or with respect to which Cash Settlement is effected on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date, or with respect to which a Collateral Substitution is effected, in each case on a date that is after any Record Date and on or prior to the next succeeding Payment Date, payments on the Note or the Treasury Consideration, as the case may be, underlying such Normal Unit otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Early Settlement, Merger Early Settlement, Cash Settlement or Collateral Substitution, as the case may be, and such payments shall, subject to receipt thereof by the Purchase Contract Agent, be payable to the Person in whose name the Normal Units Certificate (or one or more Predecessor Normal Unit Certificates) was registered at the close of business on such Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Normal Unit with respect to which Early Settlement, Merger Early Settlement or Cash Settlement of the underlying Purchase Contract is effected, or with respect to which a Collateral Substitution has been effected, payments on the related Notes or payments on the Treasury Consideration that would otherwise be payable after the applicable Settlement Date or after such Collateral Substitution, as the case may be, shall not be payable hereunder to the Holder of such Normal Unit; PROVIDED that, to the extent that such Holder continues to hold the separated Notes that formerly comprised a part of such Holder's Normal Units, such Holder shall be entitled to receive any payments on such separated Notes. SECTION 4.2. NOTICE AND VOTING. The Purchase Contract Agent will be entitled to exercise the voting and any other consensual rights pertaining to the Pledged Notes but only to the extent instructed in writing by the Holders as described below. Upon receipt of notice of any meeting at which holders of Notes are entitled to vote or upon any solicitation of consents, waivers or proxies of holders of Notes, the Purchase Contract Agent shall, as soon as practicable thereafter, mail, at the Company's expense, to the Holders of Normal Units a notice prepared by the Company (a) containing such information as is contained in the notice or solicitation, (b) stating that each Holder on the record date set by the Purchase Contract Agent therefor (which, to the extent possible, shall be the same date as the record date for determining the holders of Notes entitled to vote) shall be entitled to instruct the Purchase Contract Agent as to the exercise of the voting rights pertaining to the Pledged Notes underlying their Normal Units and (c) stating the manner in which such instructions may be given. Upon the written request of any Holder of Normal Units on such record date, the Purchase Contract Agent shall endeavor insofar as practicable to vote or cause to be voted, in accordance with the instructions set forth in such request, the maximum number of Pledged Notes as to which any particular voting instructions are received. In the absence of specific instructions from the Holder of a Normal Unit, the Purchase Contract Agent shall abstain from voting the Pledged Note underlying such Normal Unit. The Company hereby agrees, if applicable, to solicit Holders of Normal Units to timely instruct the Purchase Contract Agent in writing in order to enable the Purchase Contract Agent to vote such Pledged Notes. 33 SECTION 4.3. SPECIAL EVENT REDEMPTION. Upon the occurrence of a Special Event Redemption prior to the successful remarketing of the Notes pursuant to the provisions of Section 5.4, the Company shall instruct in writing the Collateral Agent to apply, and upon such written instruction, the Collateral Agent shall apply, out of the aggregate Redemption Price for the Notes that are components of Normal Units, an amount equal to the Special Event Redemption Principal Amount to purchase on behalf of the Holders of Normal Units the Treasury Portfolio and promptly remit the remaining portion of such Redemption Price to the Purchase Contract Agent for payment to the Holders of such Normal Units. The Treasury Portfolio will be substituted for the Pledged Notes, and will be pledged to the Collateral Agent in accordance with the terms of the Pledge Agreement to secure the obligation of each Holder of a Normal Unit to purchase the Ordinary Shares under the Purchase Contract constituting a part of such Normal Unit. Following the occurrence of a Special Event Redemption prior to a successful remarketing of the Notes pursuant to the provisions of Section 5.4, the Holders of Normal Units and the Collateral Agent shall have such security interests, rights and obligations with respect to the Treasury Portfolio as the Holder of Normal Units and the Collateral Agent had in respect of the Notes, as the case may be, subject to the Pledge thereof as provided in Articles II, III, IV, V and VI of the Pledge Agreement, and any reference herein or in the Certificates to the Note shall be deemed to be a reference to such Treasury Portfolio and any reference herein or in the Certificates to interest on the Notes shall be deemed to be a reference to corresponding distributions on the Treasury Portfolio. The Company may cause to be made in any Normal Unit Certificates thereafter to be issued such change in phraseology and form (but not in substance) as may be appropriate to reflect the substitution of the Treasury Portfolio for Notes as collateral. Upon the occurrence of a Special Event Redemption after the successful remarketing of the Notes or after the Stock Purchase Date, the Redemption Price will be payable in cash to the holders of the Notes. ARTICLE V THE PURCHASE CONTRACTS; THE REMARKETING SECTION 5.1. PURCHASE OF ORDINARY SHARES. (a) Each Purchase Contract shall, unless a Termination Event, an Early Settlement or a Merger Early Settlement shall have occurred prior to the Stock Purchase Date, obligate the Holder of the related Unit to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of validly issued, fully paid and non-assessable newly issued Ordinary Shares equal to the Settlement Rate or, if we have fixed the Settlement Rate pursuant to Section 5.1(f), the Fixed Settlement Rate. The "Settlement Rate" is equal to, (i) if the Applicable Market Value (as defined below) is equal to or greater than $93.99 (the "Threshold Appreciation Price"), 0.2660 Ordinary Shares per Purchase Contract, (ii) if the Applicable Market Value is less than the Threshold Appreciation Price, but is greater than $75.19 (the "Reference Price"), the number of Ordinary Shares per Purchase Contract equal to the Purchase Price divided by the Applicable Market Value, and 34 (iii) if the Applicable Market Value is equal to or less than the Reference Price, 0.3325 Ordinary Shares per Purchase Contract, in each case subject to adjustment as provided in Section 5.6 (and in each case rounded upward or downward to the nearest 1/10,000th of a share). (b) No fractional Ordinary Shares will be issued by the Company with respect to the payment of Contract Adjustment Payments on the Stock Purchase Date. In lieu of fractional shares otherwise issuable with respect to such payment of Contract Adjustment Payments, the Holder will be entitled to receive an amount in cash as provided in Section 5.12. (c) The "Applicable Market Value" means the average of the Closing Price per Ordinary Share on each of the 20 consecutive Trading Days ending on the third Trading Day immediately preceding the Stock Purchase Date or, in the event of a Cash Merger, the Cash Merger Date. The "Closing Price" of the Ordinary Shares on any date of determination means the closing sale price (or, if no closing sale price is reported, the last reported sale price) of the Ordinary Shares on the New York Stock Exchange (the "NYSE") on such date or, if the Ordinary Shares are not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Ordinary Shares are so listed, or if the Ordinary Shares are not so listed on a United States securities exchange, as reported by The Nasdaq Stock Market, or, if the Ordinary Shares are not so reported, the last quoted bid price for the Ordinary Shares in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of the Ordinary Shares on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company. A "Trading Day" means a day on which the Ordinary Shares (A) are not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) have traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Ordinary Shares at the close of business on such day. (d) Each Holder of a Unit, by its acceptance thereof, irrevocably authorizes the Purchase Contract Agent to enter into and perform the related Purchase Contract on its behalf as its attorney-in-fact (including the execution of Certificates on behalf of such Holder), agrees to be bound by the terms and provisions thereof, covenants and agrees to perform its obligations under such Purchase Contract, consents to the provisions hereof, irrevocably authorizes the Purchase Contract Agent as its attorney-in-fact to enter into and perform the Pledge Agreement on its behalf as its attorney-in-fact, and consents to and agrees to be bound by the Pledge of the Notes, the Treasury Consideration or the Treasury Securities pursuant to the Pledge Agreement; PROVIDED that upon a Termination Event, the rights of the Holder of such Unit under the Purchase Contract may be enforced without regard to any other rights or obligations. (e) Upon registration of transfer of a Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee) under the terms of this Agreement, the Purchase Contracts underlying such Certificate and the Pledge Agreement, and the transferor shall be released from the obligations under this Agreement, the Purchase Contracts underlying the Certificate so transferred and the Pledge Agreement. The Company 35 covenants and agrees, and each Holder of a Certificate, by its acceptance thereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. (f) If an Accounting Settlement Rate Event occurs and is continuing at any time prior to the earlier of the date of any successful remarketing of the Notes and the Stock Purchase Date, the Company may elect to fix the Settlement Rate in accordance with the Black-Scholes option pricing formula for European call options as described under "Description of the Equity Security Units--Fixed Settlement Rate Option Upon Accounting Event" in the Company's prospectus supplement, dated March 17, 2004, to the prospectus dated June 19, 2003 (the "Fixing Formula") (the new Settlement Rate referred to as the "Fixed Settlement Rate"). If the Company elects to fix the Settlement Rate, the Company must prepare and transmit to the Purchase Contract Agent an Officers' Certificate setting forth its intention to fix the Settlement Rate. The Fixed Settlement Rate shall be determined by a calculation agent selected by the Company in good faith, which such calculation agent shall be a nationally recognized investment bank. Prior to 10:00 a.m., New York City time, on the Business Day following the expiration of the 20 consecutive Trading Day period commencing the third Trading Day following the date of such Officers' Certificate, the Company will be required, in accordance with Section 5.7, to prepare and transmit to the Purchase Contract Agent an additional Officers' Certificate setting forth the calculation of the Fixed Settlement Rate in accordance with the Fixing Formula and the effective date of the Fixed Settlement Rate. In no event will the Fixed Settlement Rate be greater than 0.3325, subject to adjustment as provided in Section 5.6. The Fixed Settlement Rate will become effective at the open of business two Business Days after the close of the 20 consecutive Trading Day period. The Fixed Settlement Rate shall be adjusted in the same manner and at the same time as the Settlement Rate pursuant to Section 5.6. The Fixed Settlement Rate determined by the Calculation Agent shall be conclusive, absent manifest error. SECTION 5.2. CONTRACT ADJUSTMENT PAYMENTS. (a) Contract Adjustment Payments shall accumulate on each Purchase Contract constituting a part of a Unit at 3.97% per year of the Stated Amount of such Unit, from March 23, 2004 through but excluding the Stock Purchase Date, PROVIDED that no Contract Adjustment Payment shall accrue after an Early Settlement or Merger Early Settlement. Subject to Section 5.3, the Company shall pay, on each Payment Date, the Contract Adjustment Payments, if any, payable in respect of each Purchase Contract to the Person in whose name a Certificate (or one or more Predecessor Certificates) is registered on the Register at the close of business on the Record Date next preceding such Payment Date in such coin or currency of the United States as at the time of payment shall be legal tender for payments. The Contract Adjustment Payments, if any, will be payable at the office of the Purchase Contract Agent in the Borough of Manhattan, New York City, or, if the Units do not remain in book-entry only form, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears on the Register or by wire transfer to the account maintained in the United States designated by written notice given ten Business Days prior to the applicable payment date by such Person. (b) Upon the occurrence of a Termination Event, the Company's obligation to pay Contract Adjustment Payments (including any accrued and unpaid Deferred Contract Adjustment Payments), if any, shall cease. 36 (c) Each Certificate delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of any other Certificate (including as a result of a Collateral Substitution or the re-establishment of a Normal Unit) shall carry the rights to receive Contract Adjustment Payments (including any accrued and unpaid Deferred Contract Adjustment Payments), if any, and to accrue Contract Adjustment Payments, if any, which were carried by the Purchase Contracts underlying such other Certificates. (d) Subject to Sections 5.4, 5.9 and 5.10, in the case of any Unit with respect to which Early Settlement or Merger Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date or a Merger Early Settlement Date, respectively, or in respect of which Cash Settlement of the underlying Purchase Contract is effected on the thirteenth Business Day immediately preceding the Stock Purchase Date, or with respect to which a Collateral Substitution or a reestablishment of a Normal Unit pursuant to Section 3.14 is effected, in each case on a date that is after any Record Date and on or prior to the next succeeding Payment Date, Contract Adjustment Payments on the Purchase Contract underlying such Unit otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Cash Settlement, Early Settlement, Merger Early Settlement, Collateral Substitution or a reestablishment of Normal Units, and such Contract Adjustment Payments shall, subject to receipt thereof by the Purchase Contract Agent, be payable to the Person in whose name the Certificate evidencing such Unit (or one or more Predecessor Certificates) was registered at the close of business on such Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Unit with respect to which Early Settlement or Merger Early Settlement on an Early Settlement Date or Merger Early Settlement Date, as the case may be, Contract Adjustment Payments, if any, that would otherwise be payable after the Early Settlement Date, or Merger Early Settlement Date, with respect to such Purchase Contract shall not be payable. (e) The Company's obligations with respect to Contract Adjustment Payments (including any accrued or Deferred Contract Adjustment Payments) will be subordinated and junior in right of payment to the Company's obligations under any Senior Indebtedness to the extent set forth in Section 5.2(f). (f) Subject to the provisions of Section 5.8, in the event (x) of any payment by, or distribution of assets of, the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution, winding-up, liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, or (y) subject to the provisions of Section 5.2(h) below, that (i) a default shall have occurred and be continuing with respect to the payment of principal, interest or any other monetary amounts due and payable on any Senior Indebtedness and such default shall have continued beyond the period of grace, if any, specified in the instrument evidencing such Senior Indebtedness (and the Purchase Contract Agent shall have received written notice thereof from the Company or one or more holders of Senior Indebtedness or their representative or representatives or the trustee or trustees under any indenture pursuant to which any such Senior Indebtedness may have been issued), or (ii) the maturity of any Senior Indebtedness shall have been accelerated because of a default in respect of such Senior Indebtedness (and the Purchase Contract Agent shall have received written notice thereof from the Company or one or more holders of Senior Indebtedness or their representative or representatives or the trustee or trustees 37 under any indenture pursuant to which any such Senior Indebtedness may have been issued), then: (i) the holders of all Senior Indebtedness shall first be entitled to receive, in the case of clause (x) above, payment in full of all amounts due or to become due upon all Senior Indebtedness and, in the case of subclauses (i) and (ii) of clause (y) above, payment of all amounts due thereon, or provision shall be made for such payment in money or money's worth, before the Holders of any of the Units are entitled to receive any Contract Adjustment Payments or Deferred Contract Adjustment Payments on the Purchase Contracts underlying the Units; (ii) any payment by, or distribution of assets of, the Company of any kind or character, whether in cash, property or securities, to which the Holders of any of the Units would be entitled except for the provisions of Sections 5.2(e) through (q), including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of such Contract Adjustment Payments on the Purchase Contracts underlying the Units, shall be paid or delivered by the Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of such Senior Indebtedness held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness, before any payment or distribution is made of such Contract Adjustment Payments to the Holders of such Units; and (iii) in the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, the Company of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of Contract Adjustment Payments or Deferred Contract Adjustment Payments on the Purchase Contracts underlying the Units, shall be received by the Purchase Contract Agent or the Holders of any of the Units when such payment or distribution is prohibited pursuant to Sections 5.2(e) through (q), such payment or distribution shall be paid over to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any such Senior Indebtedness may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness. 38 (g) For purposes of Sections 5.2(e) through (q), the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other Person provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in Sections 5.2(e) through (q) with respect to such Contract Adjustment Payments or Deferred Contract Adjustment Payments on the Units to the payment of all Senior Indebtedness which may at the time be outstanding; PROVIDED that (i) the indebtedness or guarantee of indebtedness, as the case may be, that constitutes Senior Indebtedness is assumed by the Person, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of the Senior Indebtedness are not, without the consent of each such holder adversely affected thereby, altered by such reorganization or readjustment. (h) Any failure by the Company to make any payment on or perform any other obligation under Senior Indebtedness, other than any indebtedness incurred by the Company or assumed or guaranteed, directly or indirectly, by the Company for money borrowed (or any deferral, renewal, extension or refunding thereof) or any indebtedness or obligation as to which the provisions of Sections 5.2(e) through (g) shall have been waived by the Company in the instrument or instruments by which the Company incurred, assumed, guaranteed or otherwise created such indebtedness or obligation, shall not be deemed a default or event of default if (i) the Company shall be disputing its obligation to make such payment or perform such obligation and (ii) either (A) no final judgment relating to such dispute shall have been issued against the Company which is in full force and effect and is not subject to further review, including a judgment that has become final by reason of the expiration of the time within which a party may seek further appeal or review, and (B) in the event a judgment that is subject to further review or appeal has been issued, the Company shall in good faith be prosecuting an appeal or other proceeding for review and a stay of execution shall have been obtained pending such appeal or review. (i) Subject to the payment in full of all Senior Indebtedness, the Holders of the Purchase Contracts underlying the Units shall be subrogated (equally and ratably with the holders of all obligations of the Company which by their express terms are subordinated to Senior Indebtedness of the Company to the same extent as payment of the Contract Adjustment Payments or Deferred Contract Adjustment Payments in respect of the Purchase Contracts underlying the Units is subordinated and which are entitled to like rights of subrogation) to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until all such Contract Adjustment Payments or Deferred Contract Adjustment Payments owing on the Purchase Contracts underlying the Units shall be paid in full, and as between the Company, its creditors other than holders of such Senior Indebtedness and the Holders, no such payment or distribution made to the holders of Senior Indebtedness by virtue of Sections 5.2(e) through (q) that otherwise would have been made to the Holders shall be deemed to be a payment by the Company on account of such Senior Indebtedness, it being understood that the provisions of Sections 5.2(e) through (q) are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Senior Indebtedness, on the other hand. (j) Nothing contained in Sections 5.2(e) through (q) or elsewhere in this Agreement or in the Units is intended to or shall impair, as among the Company, its creditors 39 other than the holders of Senior Indebtedness and the Holders, the obligation of the Company, which, subject to the occurrence of a Termination Event as described in Section 5.2(b) and the Company's right pursuant to Section 5.3 to defer Contract Adjustment Payments, is absolute and unconditional, to pay to the Holders such Contract Adjustment Payments on the Purchase Contracts underlying the Units as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Purchase Contract Agent or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Agreement, subject to the rights, if any, under these Sections 5.2(e) through (q), of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. (k) Upon payment or distribution of assets of the Company referred to in these Sections 5.2(e) through (q), the Purchase Contract Agent and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any such dissolution, winding up, liquidation or reorganization proceeding affecting the affairs of the Company is pending or upon a certificate of the trustee in bankruptcy, receiver, assignee for the benefit of creditors, liquidating trustee or agent or other Person making any payment or distribution, delivered to the Purchase Contract Agent or to the Holders, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to these Sections 5.2(e) through (q). (l) The Purchase Contract Agent shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee or representative on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a trustee or representative on behalf of any such holder or holders. In the event that the Purchase Contract Agent determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to Sections 5.2(e) through (q), the Purchase Contract Agent may request such Person to furnish evidence to the reasonable satisfaction of the Purchase Contract Agent as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under Sections 5.2(e) through (q), and, if such evidence is not furnished, the Purchase Contract Agent may defer payment to such Person pending judicial determination as to the right of such Person to receive such payment. (m) Nothing contained in Sections 5.2(e) through (q) shall affect the obligations of the Company to make, or prevent the Company from making, payment of the Contract Adjustment Payments, except as provided in these Sections 5.2(e) through (q). (n) Each Holder of Units, by his acceptance thereof, authorizes and directs the Purchase Contract Agent on his, her or its behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in Sections 5.2(e) through (q) and appoints 40 the Purchase Contract Agent his, her or its attorney-in-fact, as the case may be, for any and all such purposes. (o) The Company shall give prompt written notice to the Purchase Contract Agent of any fact known to the Company that would prohibit the making of any payment of moneys to or by the Purchase Contract Agent in respect of the Purchase Contracts underlying the Units pursuant to the provisions of this Section 5.2. Notwithstanding the provisions of Sections 5.2(e) through (q) or any other provisions of this Agreement, the Purchase Contract Agent shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of moneys to or by the Purchase Contract Agent, or the taking of any other action by the Purchase Contract Agent, unless and until a Responsible Officer of the Purchase Contract Agent shall have received written notice thereof from the Company, any Holder, any paying agent or the holder or representative of any Senior Indebtedness; PROVIDED that, if at least two Business Days prior to the date upon which by the terms hereof any such moneys may become payable for any purpose, the Purchase Contract Agent shall not have received with respect to such moneys the notice provided for in this Section 5.2(o), then, anything herein contained to the contrary notwithstanding, the Purchase Contract Agent shall have full power and authority to receive such moneys and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to or on or after such date. (p) The Purchase Contract Agent in its individual capacity shall be entitled to all the rights set forth in this Section 5.2 with respect to any Senior Indebtedness at the time held by it, to the same extent as any other holder of Senior Indebtedness and nothing in this Agreement shall deprive the Purchase Contract Agent of any of its rights as such holder. (q) No right of any present or future holder of any Senior Indebtedness to enforce the subordination herein shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any noncompliance by the Company with the terms, provisions and covenants of this Agreement, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. (r) Nothing in this Section 5.2 shall apply to claims of, or payments to, the Purchase Contract Agent under or pursuant to Section 7.7 hereof. With respect to the holders of Senior Indebtedness, (i) the duties and obligations of the Purchase Contract Agent shall be determined solely by the express provisions of this Agreement; (ii) the Purchase Contract Agent shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement; (iii) no implied covenants or obligations shall be read into this Agreement against the Purchase Contract Agent; and (iv) the Purchase Contract Agent shall not be deemed to be a fiduciary as to such holders. SECTION 5.3. DEFERRAL OF CONTRACT ADJUSTMENT PAYMENTS. (a) The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Purchase Contract Agent written notice of its election to defer each such deferred Contract Adjustment Payment (specifying the amount to be deferred) at 41 least ten Business Days prior to the earlier of (i) the next succeeding Payment Date or (ii) the date the Company is required to give notice of the Payment Date with respect to payment of such Contract Adjustment Payments to the NYSE or other applicable self-regulatory organization or to Holders of the Units, but in any event not less than one Business Day prior to such Record Date. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, accrue additional Contract Adjustment Payments thereon at the rate of 6.50% per year (computed on the basis of a 360-day year of twelve 30-day months), compounding on each succeeding Payment Date, until paid in full (such deferred installments of Contract Adjustment Payments, if any, together with the additional Contract Adjustment Payments, if any, accrued thereon, being referred to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be due on the next succeeding Payment Date except to the extent that payment is deferred pursuant to this Section 5.3. No Contract Adjustment Payments may be deferred to a date that is after the Settlement Date and no such deferral period may end other than on a Payment Date. If the Purchase Contracts are terminated upon the occurrence of a Termination Event or Early Settlement, the Holder's right to receive Contract Adjustment Payments, if any, and any Deferred Contract Adjustment Payments, will terminate. (b) In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date. (c) In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, each Holder will receive on the Stock Purchase Date in lieu of a cash payment a number of Ordinary Shares (in addition to a number of Ordinary Shares equal to the Settlement Rate or, if the Settlement Rate has been fixed pursuant to Section 5.1(f), the Fixed Settlement Rate) equal to (A) the aggregate amount of Deferred Contract Adjustment Payments payable to such Holder (net of any required tax withholding on such Deferred Contract Adjustment Payment, which shall be remitted to the appropriate taxing jurisdiction) divided by (B) the Applicable Market Value. (d) No fractional Ordinary Shares will be issued by the Company with respect to the payment of Deferred Contract Adjustment Payments on the Stock Purchase Date. In lieu of fractional shares otherwise issuable with respect to such payment of Deferred Contract Adjustment Payments, the Holder will be entitled to receive an amount in cash as provided in Section 5.12. (e) In the event the Company exercises its option to defer the payment of Contract Adjustment Payments then, until the date on which the Deferred Contract Adjustment Payments have been paid, the Company shall not, and will not permit any subsidiary of the Company to, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of the Company's Ordinary Shares other than: (i) repurchases, redemptions or acquisitions of Ordinary Shares of the Company in connection with any employment contract, benefit plan or other 42 similar arrangement with or for the benefit of employees, officers, directors or agents or a share purchase or dividend reinvestment plan, or the satisfaction by the Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its right to defer the payment of Contract Adjustment Payments; (ii) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one class or series of the Company's Capital Stock for another class or series of the Company's Capital Stock; (iii) the purchase of fractional interests of the Company's Capital Stock pursuant to the conversion or exchange provisions of such Capital Stock or the security being converted or exchanged; (iv) dividends or distributions in the Company's Capital Stock (or rights to acquire the Company's Capital Stock) or repurchases, redemptions or acquisitions of the Company's Capital Stock in exchange for or out of the net cash proceeds of the sale of the Company's Capital Stock (or securities convertible into or exchangeable for shares of the Company's Capital Stock); or (v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan on the date the Company exercises its right to defer the payment of Contract Adjustment Payments or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future, or the redemption or repurchase of any rights pursuant thereto. SECTION 5.4. PAYMENT OF PURCHASE PRICE; REMARKETING. (a) Unless a Special Event Redemption or Termination Event has occurred, or a Holder of a Unit has settled the underlying Purchase Contract through an Early Settlement pursuant to Section 5.9 or a Merger Early Settlement pursuant to Section 5.10, each Holder of a Normal Unit may pay in cash ("Cash Settlement") the Purchase Price for the Ordinary Shares to be purchased pursuant to a Purchase Contract if such Holder notifies the Purchase Contract Agent by surrender of the Normal Unit Certificate, if in certificated form, and delivery of a notice in substantially the form of Exhibit E hereto of its intention to make a Cash Settlement. Such notice shall be made on or prior to 5:00 p.m., New York City time, on the thirteenth Business Day immediately preceding the Stock Purchase Date. The Purchase Contract Agent shall promptly notify the Collateral Agent of the receipt of such a notice from a Holder intending to make a Cash Settlement. (i) A Holder of a Normal Unit who has so notified the Purchase Contract Agent of its intention to make a Cash Settlement is required to pay the Purchase Price to the Collateral Agent prior to 5:00 p.m., New York City time, on the thirteenth Business Day immediately preceding the Stock Purchase Date in lawful money of the United States by certified or cashier's check or wire transfer, in each case in immediately available funds payable to or upon the order of the Collateral Agent for deposit in the Collateral Account. Any cash received by the Collateral Agent will be paid to the Company on the Stock Purchase Date in settlement of the Purchase Contract in accordance with the terms of this 43 Agreement and the Pledge Agreement, and any funds received by the Collateral Agent in excess of the Purchase Price for the Ordinary Shares to be purchased by such Holder shall be distributed to the Purchase Contract Agent when received for payment to the Holder. (ii) If a Holder of a Normal Unit fails to notify the Purchase Contract Agent of its intention to make a Cash Settlement in accordance with paragraph (a)(i) above, the Holder shall be deemed to have consented to the disposition of the Pledged Notes pursuant to the remarketing as described in paragraph (b) below. If a Holder of a Normal Unit does notify the Purchase Contract Agent as provided in paragraph (a)(i) above of its intention to pay the Purchase Price in cash, but fails to make such payment as required by paragraph (a)(i) above, the Holder shall be deemed to have consented to the disposition of the Pledged Notes pursuant to the remarketing as described in paragraph (b) below. (b) (i) Unless a Special Event Redemption has occurred, the Company shall engage, no later than 30 days prior to the Remarketing Date, a nationally recognized investment bank (the "Remarketing Agent") pursuant to a Remarketing Agreement to be entered into between the Company and the Remarketing Agent, but providing for remarketing procedures substantially as set forth below to sell the Notes of Holders of Normal Units, other than Holders that have elected not to participate in the remarketing pursuant to the procedures set forth in clause (iv) below, and holders of Separate Notes that have elected to participate in the remarketing pursuant to the procedures set forth in Section 4.5(d) of the Pledge Agreement and Section 2.20 of the First Supplemental Indenture. The Company or the Purchase Contract Agent, at the Company's request, shall notify (the "Remarketing Notice"), not later than 10:00 a.m. (New York City time) on the seventh Business Day immediately preceding the Remarketing Date, Holders of Normal Units, and holders of Separate Notes, of the remarketing to take place on the Remarketing Date, and if necessary, on the eighth Business Day immediately preceding the Stock Purchase Date, and if necessary, on the seventh Business Day immediately preceding the Stock Purchase Date, and if necessary, on the sixth Business Day immediately preceding the Stock Purchase Date, and if necessary, on the fifth Business Day immediately preceding the Stock Purchase Date, and if necessary, on the fourth Business Day immediately preceding the Stock Purchase Date, and if necessary, on the third Business Day immediately preceding the Stock Purchase Date (each such date other than the Remarketing Date a "Subsequent Remarketing Date") (and if such Normal Units or Separate Notes are held in global form, the Company, or the Purchase Contract Agent, at the Company's request, will cause the Clearing Agency to notify the Clearing Agency Participants of such remarketing by no later than the seventh Business Day preceding the Remarketing Date). The Remarketing Notice will include the amount of cash that must be delivered by the Holders of Normal Units that elect not to participate in the remarketing and the deadline for such delivery, as well as information with respect to the exercise of the Put Right (as defined in the First Supplemental Indenture). The Purchase Contract Agent shall notify, by 10:00 a.m., New York City time, on the eleventh Business Day immediately preceding the Stock Purchase Date, the Remarketing Agent and the Collateral Agent of the aggregate principal amount of Notes of Normal Unit Holders to be remarketed. On the eleventh Business Day preceding the Stock Purchase Date, no later than by 10:00 a.m., New York City time, pursuant to the terms of the Pledge Agreement, the Custodial Agent will notify the Remarketing Agent of the aggregate principal amount of Separate Notes to 44 be remarketed. No later than 10:00 a.m., New York City time, on the tenth Business Day immediately preceding the Stock Purchase Date, the Collateral Agent and the Custodial Agent, pursuant to the terms of the Pledge Agreement, will deliver for remarketing to the Remarketing Agent all Notes to be remarketed. Upon receipt of such notice from the Purchase Contract Agent and the Custodial Agent and such Notes from the Collateral Agent and the Custodial Agent, the Remarketing Agent will, on the Remarketing Date, and if necessary, on each Subsequent Remarketing Date, use its reasonable best efforts to sell such Notes on such dates at an aggregate price equal to 100.25% of the aggregate principal amount of such Notes. If the Remarketing Agent is able to remarket such Notes at a price equal to 100.25% of the aggregate principal amount of such Notes, the proceeds will be paid to the Collateral Agent, on behalf of the Company, in direct settlement of the obligations of the Holders under the related Purchase Contracts to purchase Ordinary Shares of the Company. In the event of a successful remarketing pursuant to this Section 5.4, the Remarketing Agent will deduct as a remarketing fee an amount not exceeding 25 basis points (0.25%) of the Remarketing Value of such Notes (the "Remarketing Fee"). The Remarketing Agent will remit (1) to the Custodial Agent, for the benefit of the holders of Separate Notes that were remarketed, the portion of the proceeds from the remarketing attributable to such Separate Notes and (2) the remaining portion of the proceeds, less those proceeds paid to the Collateral Agent, for the benefit of the Company, and used to pay the Company in direct settlement of the Holders' obligations under the Purchase Contracts, to the Purchase Contract Agent for the benefit of the Holders of the Normal Units that were remarketed, all determined on a pro rata basis, in each case, on or prior to the third Business Day following the date on which the Notes were successfully remarketed. Holders whose Notes are so remarketed will not otherwise be responsible for the payment of any Remarketing Fee in connection therewith. (ii) If, in spite of using its reasonable best efforts, the Remarketing Agent cannot remarket the Notes included in the remarketing at a price equal to 100.25% of the principal amount of the Notes included in the remarketing on the Remarketing Date, the Remarketing Agent will attempt to establish a Remarketing Rate meeting these requirements on each of the Subsequent Remarketing Dates. If, in spite of using its reasonable best efforts, the Remarketing Agent fails to remarket the Notes included in the remarketing at a price equal to 100.25% of the principal amount of the Notes included in the remarketing on or before 4:00 p.m., New York City time on the third Business Day immediately preceding the Stock Purchase Date, the remarketing will be deemed to have failed (the "Last Failed Remarketing"), and in this case, the Remarketing Agent will agree to advise the Collateral Agent in writing that it cannot remarket the Notes. Within three Business Days following the date of the Last Failed Remarketing, the Remarketing Agent shall return any Notes delivered to it to the Collateral Agent and the Custodial Agent, as applicable. The Collateral Agent, for the benefit of the Company may exercise its rights as a secured party with respect to such Notes, including those actions specified in (b) (iii) below; PROVIDED that if upon the Last Failed Remarketing, the Collateral Agent exercises such rights for the benefit of the Company with respect to such Notes, any accumulated and unpaid interest on such Notes will become payable by the Company to the Purchase Contract Agent for payment to the Holders of the Normal Units to which such Notes relate. Such payment will be made by the 45 Company on or prior to 2:00 p.m., New York City time, on the Stock Purchase Date in lawful money of the United States by certified or cashier's check or wire transfer in immediately available funds payable to or upon the order of the Purchase Contract Agent. The Company will cause a notice of any failed remarketing and of the Last Failed Remarketing to be published before 9:00 a.m., New York City time, on the Business Day following each failed remarketing and the Last Failed Remarketing, as the case may be. The Company will also release this information by means of Bloomberg and Reuters newswire (or any successor or equivalent of such newswires). (iii) With respect to any Notes which constitute part of Normal Units which are subject to the Last Failed Remarketing, the Collateral Agent for the benefit of the Company reserves all of its rights as a secured party with respect thereto and, subject to applicable law and Section 5.4 (e) below, may, among other things permit the Company to, (A) retain and cancel such Notes or (B) cause the Notes to be sold, in either case, in full satisfaction of the Holders' obligations under the Purchase Contracts. (iv) A Holder of Normal Units may elect not to participate in the remarketing and retain the Notes underlying such Units by notifying the Purchase Contract Agent of such election and delivering the requisite amount of cash in lawful money of the United States by certified or cashier's check or wire transfer, in each case, in immediately available funds, equal to the Purchase Price per Purchase Contract (the "Cash Consideration") to the Purchase Contract Agent not later than 5:00 p.m. New York City time on the thirteenth Business Day prior to the Stock Purchase Date as set forth in the Remarketing Notice and following the procedures to exchange its Normal Units for Stripped Units (substituting references to Treasury Securities with references to Cash Consideration) as described in Section 3.13 (an "Opt-Out"). In such event, all references to the Treasury Securities or Pledged Treasury Securities herein, including for purposes of Sections 3.15 and 5.8, shall be deemed to include such Cash Consideration in addition to the Treasury Securities. Upon receipt thereof by the Purchase Contract Agent, the Purchase Contract Agent shall deliver such Cash Consideration to the Collateral Agent, which will for the benefit of the Company, thereupon apply such Cash Consideration to secure such Holder's obligations under the Purchase Contracts. On the Business Day immediately preceding the first day of the Remarketing Period, the Collateral Agent, pursuant to the terms of the Pledge Agreement, will deliver the Pledged Notes of such Holder to the Purchase Contract Agent and within three Business Days thereof, the Purchase Contract Agent shall distribute such Notes to the Holders thereof. A Holder that does not so deliver the requisite Cash Consideration or does not so notify the Agent of its election not to participate in the remarketing pursuant to this clause (iv) shall be deemed to have elected to participate in the remarketing. Any Cash Consideration received by the Collateral Agent will be paid to the Company on the Stock Purchase Date in settlement of the Purchase Contract in accordance with the terms of this Agreement and the Pledge Agreement, and any funds received by the Collateral Agent in excess of the Purchase Price for the Ordinary Shares to be 46 purchased by such Holder shall be distributed to the Purchase Contract Agent when received for payment to the Holder. (c) Upon the maturity of the Pledged Treasury Securities underlying the Stripped Units and, in the event of a Special Event Redemption, the Pledged Treasury Consideration underlying the Normal Units, on the Stock Purchase Date the Collateral Agent shall remit to the Company an amount equal to the aggregate Purchase Price applicable to such Units, as payment for the Ordinary Shares issuable upon settlement thereof without needing to receive any instructions from the Holders of such Units. In the event the payments in respect of the Pledged Treasury Securities or the Pledged Treasury Consideration underlying a Unit is in excess of the Purchase Price of the Purchase Contract being settled thereby, the Collateral Agent will distribute such excess to the Purchase Contract Agent for the benefit of the Holder of such Unit when received. (d) Any distribution to Holders of excess funds and interest described in Section 5.4 (b) and (c) above shall be payable at the office of the Purchase Contract Agent in the Borough of Manhattan, New York City, or, if the Units do not remain in book-entry only form, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears on the Register or by wire transfer to the account maintained in the United States designated by written notice given ten Business Days prior to the applicable payment date by such Person. (e) Notwithstanding anything to the contrary herein or in the Pledge Agreement, subject to Section 3.2 of the Pledge Agreement, the obligations of each Holder to pay the Purchase Price are non-recourse obligations and are payable solely out of the proceeds of any Collateral pledged to secure the obligations of the Holders (except to the extent paid by Cash Settlement, Early Settlement or Merger Early Settlement) and in no event will Holders be liable for any deficiency between such payments and the Purchase Price. (f) Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any Ordinary Shares in respect of a Purchase Contract or deliver any certificates therefor to the Holder of the related Unit unless the Company shall have (i) received payment in full of the aggregate Purchase Price for the Ordinary Shares to be purchased thereunder by such Holder in the manner herein set forth or (ii) become entitled to exercise its rights as a secured party under Section 5.4(b)(iii). SECTION 5.5. ISSUANCE OF ORDINARY SHARES. Unless a Termination Event shall have occurred on or prior to the Stock Purchase Date or an Early Settlement or a Merger Early Settlement shall have occurred, on the Stock Purchase Date, upon the Company's receipt of payment in full of the Purchase Price for the Ordinary Shares purchased by the Holders pursuant to the foregoing provisions of this Article and subject to Section 5.6(b) or the Company's exercise of its rights as a secured party pursuant to Section 5.4(b)(iii), the Company shall issue and deposit with the Purchase Contract Agent, for the benefit of the Holders of the Outstanding Units, one or more certificates representing the newly issued Ordinary Shares, registered in the name of the Purchase Contract Agent (or its nominee) as custodian for the Holders (such certificates for Ordinary Shares, together with any dividends or distributions for which both a record date and payment date for such dividend or distribution has occurred after the Stock 47 Purchase Date, being hereinafter referred to as the "Purchase Contract Settlement Fund"), to which the Holders are entitled hereunder. Subject to the foregoing, upon surrender of a Certificate to the Purchase Contract Agent on or after the Stock Purchase Date, together with settlement instructions thereon duly completed and executed, the Holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole Ordinary Shares which such Holder is entitled to receive pursuant to the provisions of this Article V (after taking into account all Units then held by such Holder) together with cash in lieu of fractional shares as provided in Section 5.12 and any dividends or distributions with respect to such shares constituting part of the Purchase Contract Settlement Fund, but without any interest thereon, and the Certificate so surrendered shall forthwith be cancelled. Such shares shall be registered in the name of the Holder or the Holder's designee as specified in the settlement instructions provided by the Holder to the Purchase Contract Agent. If any Ordinary Shares issued in respect of a Purchase Contract are to be registered to a Person other than the Person in whose name the Certificate evidencing such Purchase Contract is registered, no such registration shall be made unless the Person requesting such registration has paid any transfer and other taxes required by reason of such registration in a name other than that of the registered Holder of such Certificate or has established to the satisfaction of the Company that such tax either has been paid or is not payable. SECTION 5.6. ADJUSTMENT OF SETTLEMENT RATE. (a) Adjustments for Dividends, Distributions, Stock Splits, Etc. (1) Adjustment for Change in Capital Stock. If, after the date of this Agreement, the Company: (A) pays a dividend or makes another distribution to all holders of the Company's Ordinary Shares payable exclusively in Ordinary Shares on the Company's Ordinary Shares; (B) subdivides or splits the outstanding Ordinary Shares into a greater number of shares; or (C) combines the outstanding Ordinary Shares into a smaller number of shares, then the Settlement Rate in effect immediately prior to such action shall be adjusted so that the Holder of a Purchase Contract forming a part of a Unit thereafter settled may receive the number of Ordinary Shares which such Holder would have owned immediately following such action if such Holder had settled the Purchase Contract immediately prior to such action. The adjustment shall become effective immediately after the record date in the case of a dividend, distribution or subdivision and immediately after the effective date in the case of a combination. (2) Adjustment for Rights Issue. If, after the date of this Agreement, the Company distributes any rights, options or warrants to all holders of the Company's Ordinary Shares entitling them to purchase or subscribe for, for a period expiring within 60 days, Ordinary Shares at a price per share less than the Current Market Price as of the Time of Determination (except that no adjustment will be made if Holders of the Units may participate in the distribution on a basis and with the notice that the Company's Board of Directors determines to be fair and appropriate), the Settlement Rate shall be adjusted in accordance with the formula: (O + N) R' = R x -------------------- (O + (N x P)/M) 48 where: R' = the adjusted Settlement Rate. R = the current Settlement Rate. O = the number of Ordinary Shares outstanding on the record date for the distribution to which this Section 5.6(a)(2) is being applied. N = the number of additional Ordinary Shares offered pursuant to the distribution. P = the offering price per share of the additional shares. M = the Current Market Price. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the rights, warrants or options to which this Section 5.6(a)(2) applies. If all of the Ordinary Shares subject to such rights, warrants or options have not been issued when such rights, warrants or options expire, then the Settlement Rate shall promptly be readjusted to the Settlement Rate which would then be in effect had the adjustment upon the issuance of such rights, warrants or options been made on the basis of the actual number of Ordinary Shares issued upon the exercise of such rights, warrants or options. No adjustment shall be made under this Section 5.6(a)(2) if the application of the formula stated above in this Section 5.6(a)(2) would result in a value of R' that is equal to or less than the value of R. (3) Adjustments for Other Distributions. If, after the date of this Agreement, the Company dividends or distributes to all holders of its Ordinary Shares any of its debt, Capital Stock, securities or assets or any rights, warrants or options to purchase securities of the Company (including securities or cash, but excluding (x) distributions of Capital Stock referred to in Section 5.6(a)(1)(A) and distributions of rights, warrants or options referred to in Section 5.6(a)(2) and (y) dividends or distributions that are paid exclusively in cash) the Settlement Rate shall be adjusted, subject to the provisions of the last paragraph of this Section 5.6(a)(3), in accordance with the formula: M R' = R x ------- (M-F) where: R' = the adjusted Settlement Rate. 49 R = the current Settlement Rate. M = the Current Market Price. F = the fair market value (on the record date for the distribution to which this Section 5.6(a)(3) applies) of the debt, Capital Stock, assets, securities, rights, warrants or options to be distributed in respect of each Ordinary Share in the distribution to which this Section 5.6(a)(3) is being applied (including, in the case of cash dividends or other cash distributions giving rise to an adjustment, all such cash distributed concurrently). In the event the Company distributes shares of Capital Stock of a subsidiary, the Settlement Rate will be adjusted, if at all, based on the market value of the subsidiary stock so distributed relative to the market value of the Ordinary Shares, as discussed below. The Board of Directors shall determine fair market values for the purposes of this Section 5.6(a)(3), except that in respect of a dividend or other distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit of the Company (a "Spin-off"), the fair market value of the securities to be distributed shall equal the average of the daily Closing Prices of those securities for the five consecutive Trading Days commencing on and including the sixth day of trading of those securities after the effectiveness of the Spin-off. In the event, however, that an underwritten initial public offering of the securities in the Spin-off occurs simultaneously with the Spin-off, fair market value of the securities distributed in the Spin-off shall mean the initial public offering price of such securities and the Current Market Price shall mean the Closing Price for the Ordinary Shares on the same Trading Day. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the distribution to which this Section 5.6(a)(3) applies, except that an adjustment related to a Spin-off shall become effective at the earlier to occur of (i) 10 Trading Days after the effective date of the Spin-off and (ii) the initial public offering of the securities distributed in the Spin-off. (4) Cash Distributions. In case the Company or any of its subsidiaries shall, by dividend or otherwise, pay regular quarterly, semi-annual or annual cash dividends or make any other distributions consisting exclusively of cash to all holders of its Ordinary Shares, excluding any cash dividend or distribution on the Ordinary Shares to the extent that the aggregate cash dividend or distribution per Ordinary Share in any quarter does not exceed $0.49 (the "Dividend Threshold Amount") (the Dividend Threshold Amount is subject to adjustment on the same basis as the Settlement Rate, provided that no adjustment shall be made to the Dividend Threshold Amount for any adjustment made pursuant to this clause (4)) then, in such case, the Settlement Rate in effect at the close of business on the date fixed for the determination of shareholders entitled to receive such dividend or distribution shall be adjusted by dividing such rate by a fraction of which the numerator shall be the Current Market Price per Ordinary Share on such date less the amount of cash so distributed applicable to one Ordinary Share in excess of the Dividend Threshold Amount; and the denominator shall be the Current Market Price per Ordinary Share on such date, such adjustment to be effective at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or distribution; provided that if the portion of the cash so distributed applicable to one 50 Ordinary Share in excess of the Dividend Threshold Amount is equal to or greater than the Current Market Price on such date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of a Unit shall have the right to receive upon settlement of the Purchase Contracts such excess amount. In the event that such dividend or distribution is not so paid or made, the Settlement Rate shall again be adjusted to be the Settlement Rate that would then be in effect if such dividend or distribution had not been declared. (5) Adjustment for Company Tender Offer. If, after the date of this Agreement, the Company or any subsidiary of the Company pays holders of the Ordinary Shares in respect of a tender or exchange offer, other than an odd-lot offer, by the Company or any of its subsidiaries for Ordinary Shares to the extent that the offer involves aggregate consideration that, together with (i) any cash and the fair market value of any other consideration payable in respect of any tender offer by the Company or any of its subsidiaries for shares of Ordinary Shares consummated within the preceding 12 months not triggering a Settlement Rate adjustment and (ii) all-cash distributions to all or substantially all holders of Ordinary Shares made within the preceding 12 months (other than regular quarterly, semi-annual or annual cash dividends), exceeds an amount equal to 12.5% of the market capitalization of the Ordinary Shares on the expiration date of the tender offer, the Settlement Rate shall be increased so that the same shall equal the price determined by multiplying the Settlement Rate in effect immediately prior to the effectiveness of the Settlement Rate increase contemplated by this Section 5.6(a)(5) by a fraction of which the denominator shall be the number of Ordinary Shares outstanding (including any tendered or exchanged shares) at the last time tenders or exchanges may be made pursuant to such tender or exchange offer (the "Expiration Time") multiplied by the current market value per Ordinary Share on the Trading Day on the NYSE next succeeding the Expiration Time and the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of Ordinary Shares (less any Purchased Shares) at the Expiration Time and the current market value per Ordinary Share on the Trading Day on the NYSE next succeeding the Expiration Time, such increase to become effective immediately prior to the opening of business on the day following the Expiration Time. (6) Calculation of Adjustments. All adjustments to the Settlement Rate shall be calculated by the Company to the nearest 1/10,000th of an Ordinary Share (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment to the Settlement Rate shall be required unless such adjustment would require an increase or a decrease of at least one percent; provided that any adjustments not made shall be carried forward and taken into account in any subsequent adjustment and notwithstanding whether or not such one percent threshold shall have been met, all such adjustments shall be made on the Stock Purchase Date. If an adjustment is made to the Settlement Rate pursuant to paragraph (1) through (5) or (7) of this Section 5.6(a), an adjustment shall also be made to the Applicable Market Value solely to determine which of clauses (i), (ii) or (iii) of the definition of Settlement Rate in Section 5.1(a) will apply on the Stock Purchase Date. Such adjustment shall be made by multiplying the Applicable Market Value by a fraction, the numerator of which shall be the Settlement Rate 51 immediately after such adjustment pursuant to paragraph (1) through (5) or (7) of this Section 5.6(a) and the denominator of which shall be the Settlement Rate immediately before such adjustment; provided that if such adjustment to the Settlement Rate is required to be made pursuant to the occurrence of any of the events contemplated by paragraph (1) through (5) or (7) of this Section 5.6(a) during the period taken into consideration for determining the Applicable Market Value, appropriate and customary adjustments shall be made to the Settlement Rate. (7) Increase of Settlement Rate. The Company may make such increases in the Settlement Rate, in addition to those required by this Section, as it considers to be advisable in order to avoid or diminish any income tax to any holders of Ordinary Shares resulting from any dividend or distribution of Capital Stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reasons. (8) When No Adjustment Required. No adjustment to the Settlement Rate need be made as a result of: (i) the issuance of the rights; (ii) the distribution of separate certificates representing the rights; (iii) the exercise or redemption of the rights in accordance with any rights agreement; or (iv) the termination or invalidation of the rights, in each case, pursuant to the Company's stockholders rights plan existing on the date of this Agreement, as amended, modified, or supplemented from time to time or any newly adopted stockholders rights plans; provided, however that to the extent that the Company has a stockholder rights plan in effect upon settlement of a Purchase Contract (including the Company's rights plan existing on the date of this Agreement), the Holder shall receive, in addition to the Ordinary Shares, the rights under such rights plan, unless, prior to any settlement of a Purchase Contract, the rights have separated from the Ordinary Shares, in which case the Settlement Rate will be adjusted at the time of separation as if the Company made a distribution to all holders of its Ordinary Shares as described in clause (3) above, subject to readjustment in the event of the expiration, termination or redemption of the rights. In addition, no adjustment to the Settlement Rate need be made: (A) upon the issuance of any Ordinary Shares pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in Ordinary Shares under any plan; (B) upon the issuance of any Ordinary Shares or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its subsidiaries; or (C) upon the issuance of any Ordinary Shares pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security outstanding as of the date the Units were first issued. No adjustment to the Settlement Rate need be made for a transaction referred to in 5.6(a)(2) or 5.6(a)(3) if Holders of the Units may participate in the transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Ordinary Shares participate in the transaction. No adjustment to 52 the Settlement Rate need be made for a change in the par value or no par value of the Ordinary Shares. (9) Use of Terms. "Time of Determination" means the time and date of the earlier of (i) the determination of stockholders entitled to receive rights, warrants or options or a distribution in each case, to which Section 5.6(a)(2) or Section 5.6(a)(3) applies and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of "ex-dividend" trading for such rights, warrants or options or distribution on the NYSE or such other U.S. national or regional exchange or market on which the Ordinary Shares are then listed or quoted. "Current Market Price" means the average of the Closing Prices of the Ordinary Shares for the five consecutive Trading Day period ending on the third Business Day ending on the earlier of the day in question and the day before the "ex date" with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term "ex date," when used with respect to any issuance or distribution, means the first date on which the Ordinary Shares trade regular way on such exchange or in such market without the right to receive the issuance or distribution. (b) Adjustment for Consolidation, Merger or Other Reorganization Event. In the event of (1) any consolidation or merger of the Company with or into another Person (other than a merger or consolidation in which the Company is the continuing corporation and in which the Ordinary Shares outstanding immediately prior to the merger or consolidation are not exchanged for cash, securities other property of the Company or another corporation), (2) any sale, transfer, lease or conveyance to another Person of the property of the Company as an entirety or substantially as an entirety, (3) any statutory exchange of securities of the Company with another Person (other than in connection with a merger or acquisition) or any binding share exchange which reclassifies or changes its outstanding Ordinary Shares, or (4) any liquidation, dissolution or winding up of the Company other than as a result of or after the occurrence of a Termination Event (any such event, a "Reorganization Event"), each Ordinary Share covered by each Purchase Contract forming part of a Unit immediately prior to such Reorganization Event shall, after such Reorganization Event, be converted for purposes of the Purchase Contract into the kind and amount of securities, cash and other property receivable in such Reorganization Event (without any interest thereon, and without any right to dividends or distribution thereon which have a record date that is prior to the Stock Purchase Date) per Ordinary Share by a holder of Ordinary Shares that (i) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (any such Person, a "Constituent Person"), or an Affiliate of a Constituent Person to the extent such Reorganization Event 53 provides for different treatment of Ordinary Shares held by Affiliates of the Company and non-Affiliates, and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such Reorganization Event (PROVIDED that if the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each Ordinary Share held immediately prior to such Reorganization Event by a Person other than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("Non-electing Share"), then for the purpose of this Section the kind and amount of securities, cash and other property receivable upon such Reorganization Event by each Non-electing Share shall be deemed to be the kind and amount so receivable per Ordinary Share by a plurality of the Non-electing Shares). On the Stock Purchase Date, the Settlement Rate then in effect will be applied to the value on the Stock Purchase Date of such securities, cash or other property. In the event of such a Reorganization Event, the Person formed by such consolidation, merger or exchange or the Person which acquires the assets of the Company or, in the event of a liquidation or dissolution of the Company, the Company or a liquidating trust created in connection therewith, shall execute and deliver to the Purchase Contract Agent an agreement supplemental hereto providing that the Holder of each Outstanding Unit shall have the rights provided by this Section 5.6. Such supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section. The above provisions of this Section shall similarly apply to successive Reorganization Events. (c) Successive Adjustments. After an adjustment to the Settlement Rate under this Section 5.6, any subsequent event requiring an adjustment under this Section 5.6 shall cause an adjustment to the Settlement Rate as so adjusted. (d) Multiple Adjustments. For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Settlement Rate pursuant to this Section 5.6 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder. SECTION 5.7. NOTICE OF ADJUSTMENTS AND CERTAIN OTHER EVENTS. (a) Whenever the Settlement Rate is adjusted as herein provided or the Settlement Rate is fixed pursuant to Section 5.1(f), the Company shall as soon as practicable following the occurrence of an event that requires or permits the Settlement Rate to be adjusted or fixed, (i) provide written notice to the Purchase Contract Agent of the occurrence of that event and (ii) compute the Settlement Rate and the Applicable Market Value in accordance with Section 5.6 or, in the case of a fixing of the Settlement Rate, pursuant to Section 5.1(f), and prepare and transmit to the Purchase Contract Agent an Officers' Certificate setting forth the Settlement Rate and the Applicable Market Value or the Fixed Settlement Rate, as the case may be, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based (which Officers' Certificate, in the case of the fixing of the Settlement Rate pursuant to Section 5.1(f) shall be delivered by such time and date as specified in Section 5.1(f)). 54 (b) The Purchase Contract Agent shall not at any time be under any duty or responsibility to any Holder of Units to determine whether any facts exist which may require any adjustment of the Settlement Rate and the Applicable Market Value, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Purchase Contract Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any Ordinary Shares, or of any securities or property, which may at the time be issued or delivered with respect to any Purchase Contract, and the Purchase Contract Agent makes no representation with respect thereto. The Purchase Contract Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any Ordinary Shares pursuant to a Purchase Contract or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. SECTION 5.8. TERMINATION EVENT; NOTICE. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of Holders to receive Contract Adjustment Payments, if any, or any Deferred Contract Adjustment Payments and obligations of Holders to purchase Ordinary Shares, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Purchase Contract Agent or the Company, if, on or prior to the Stock Purchase Date, a Termination Event shall have occurred. Upon and after the occurrence of a Termination Event, the Normal Units shall thereafter represent the right to receive the Notes or the Treasury Consideration, as the case may be, forming a part of such Normal Units, and the Stripped Units shall thereafter represent the right to receive the Treasury Securities forming a part of such Stripped Units, in each case in accordance with the provisions of Section 4.3 of the Pledge Agreement. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two Business Days thereafter give written notice to the Purchase Contract Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Register. SECTION 5.9. EARLY SETTLEMENT. (a) Subject to and upon compliance with the provisions of this Section 5.9, Purchase Contracts underlying Units having an aggregate Stated Amount equal to $1,000 or an integral multiple thereof may, at the option of the Holder thereof, be settled early ("Early Settlement") on or prior to 10:00 a.m., New York City time, on the thirteenth Business Day immediately preceding the Stock Purchase Date. Holders of Stripped Units may only effect Early Settlement of the related Purchase Contracts in integral multiples of 40 Stripped Units, and if Treasury Consideration has been substituted for the Notes as a component in the Normal Units due to the occurrence of a Special Event Redemption, Purchase Contracts underlying such Normal Units may only be settled early in integral multiples of Normal Units such that the Treasury Consideration to be deposited and the Treasury Consideration to be released are in integral multiples of $1,000. In order to exercise the right to effect Early Settlement with respect to any Purchase Contracts, the Holder of the Certificate evidencing the related Units shall deliver such Certificate to the Purchase Contract Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early on the reverse thereof duly completed and accompanied by payment payable to the Company in immediately available funds in an amount (the "Early Settlement Amount") equal to (A) the product of (i) the Purchase Price multiplied by (ii) the number of Purchase Contracts with respect to which the Holder has elected to effect Early Settlement, plus (B) if such delivery is made with respect to any Purchase Contracts during the period from the close of business on any Record Date next preceding any Payment Date to the opening of 55 business on such Payment Date, an amount equal to the Contract Adjustment Payments, if any, payable on such Payment Date with respect to such Purchase Contracts; PROVIDED that no payment shall be required pursuant to clause (B) of this sentence if the Company shall have elected to defer the Contract Adjustment Payments which would otherwise be payable on such Payment Date. Except as provided in the immediately preceding sentence and subject to Section 5.2(d), no payment or adjustment shall be made upon Early Settlement of any Purchase Contract on any Contract Adjustment Payments accrued on such Purchase Contract or on account of any dividends on the Ordinary Shares issued upon such Early Settlement. If the foregoing requirements are first satisfied with respect to Purchase Contracts underlying any Unit at or prior to 5:00 p.m., New York City time, on a Business Day, such day shall be the "Early Settlement Date" with respect to such Unit and if such requirements are first satisfied after 5:00 p.m., New York City time, on a Business Day or on a day that is not a Business Day, the "Early Settlement Date" with respect to such Units shall be the next succeeding Business Day. (b) No later than the third Business Day after an Early Settlement of any Purchase Contract by the Holder of the related Units, the Company shall issue, and the Holder shall be entitled to receive, 0.2660 Ordinary Shares on account of such Purchase Contract (the "Early Settlement Rate"), or, if the Company has fixed the Settlement Rate pursuant to Section 5.1(f) of this Agreement, the Fixed Settlement Rate. The Early Settlement Rate shall be adjusted in the same manner and at the same time as the Settlement Rate is adjusted pursuant to Section 5.6. As promptly as practicable after Early Settlement of Purchase Contracts in accordance with the provisions of this Section 5.9, the Company shall issue and shall deliver to the Purchase Contract Agent at the Corporate Trust Office a certificate or certificates for the full number of Ordinary Shares issuable upon such Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 5.12. (c) No later than the third Business Day after the applicable Early Settlement Date the Company shall cause (i) the Ordinary Shares issuable upon Early Settlement of Purchase Contracts to be issued and delivered, and (ii) the related Pledged Notes or Pledged Treasury Consideration, in the case of Normal Units, or the related Pledged Treasury Securities, in the case of Stripped Units, to be released from the Pledge by the Collateral Agent and transferred, in each case, to the Purchase Contract Agent for delivery to the Holder thereof or the Holder's designee. (d) Upon Early Settlement of any Purchase Contracts, and subject to receipt of Ordinary Shares from the Company and the Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, as the case may be, from the Collateral Agent, as applicable, the Purchase Contract Agent shall, in accordance with the instructions provided by the Holder thereof on the applicable form of Election to Settle Early on the reverse of the Certificate evidencing the related Units, (i) transfer to the Holder the Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, as the case may be, forming a part of such Units, and (ii) deliver to the Holder a certificate or certificates for the full number of Ordinary Shares issuable upon such Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 5.12. (e) In the event that Early Settlement is effected with respect to Purchase Contracts underlying less than all the Units evidenced by a Certificate, upon such Early 56 Settlement the Company shall execute and the Purchase Contract Agent shall authenticate and execute on behalf of the Holder and deliver to the Holder thereof, at the expense of the Company, a Certificate evidencing the Units as to which Early Settlement was not effected. (f) No Early Settlement will be permitted under this Section 5.9 unless, at the time of delivery of the Election to Settle Early form or the time the Early Settlement is effected, there is an effective shelf or other registration statement with respect to the Ordinary Shares to be issued and delivered in connection with such Early Settlement (unless the Company has been advised by counsel that no such registration statement is required under the Securities Act and that no prospectus is required to be delivered in connection therewith). In addition, the Company may suspend the use of any such prospectus up to four times in any 360-day period not to exceed 90 days in any such 360-day period if (i) any such prospectus would, in the Company's judgment, contain a material misstatement or omission as a result of an event that has occurred and is continuing or as a result of any proposed or pending material business transaction, event or announcement; and (ii) the Company reasonably determines that the disclosure of such material non-public information could have a material adverse effect on the Company and its subsidiaries taken as a whole or could impede the consummation of any proposed or pending material business transaction. SECTION 5.10. EARLY SETTLEMENT UPON CASH MERGER. (a) Prior to the Stock Purchase Date, in the event of a merger or consolidation of the Company of the type described in clause (1) of Section 5.6(b) in which the Ordinary Shares outstanding immediately prior to such merger or consolidation are exchanged for consideration consisting of at least 30% cash or cash equivalents (any such event a "Cash Merger"), then the Company (or the successor to the Company hereunder) shall be required to offer the Holder of each Unit the right to settle the Purchase Contract underlying such Unit prior to the Stock Purchase Date ("Merger Early Settlement") as provided herein. On or before the fifth Business Day after the consummation of a Cash Merger, the Company or, at the request and expense of the Company, the Purchase Contract Agent, shall give all Holders notice of the occurrence of the Cash Merger and of the right of Merger Early Settlement arising as a result thereof. The Company shall also deliver a copy of such notice to the Purchase Contract Agent and the Collateral Agent. Each such notice shall contain: (i) the date, which shall be not less than 20 or more than 30 calendar days after the date of such notice, on which the Merger Early Settlement will be effected (the "Merger Early Settlement Date"); (ii) the date, which shall be on or one Business Day prior to the Merger Early Settlement Date, by which the Merger Early Settlement right must be exercised; (iii) the Settlement Rate in effect as a result of such Cash Merger and the kind and amount of securities, cash and other property receivable by the Holder upon settlement of each Purchase Contract pursuant to Section 5.6(b); 57 (iv) a statement to the effect that all or a portion of the Purchase Price payable by the Holder to settle the Purchase Contract will be offset against the amount of cash so receivable upon exercise of Merger Early Settlement, as applicable; and (v) the instructions a Holder must follow to exercise the Merger Early Settlement right. (b) To exercise a Merger Early Settlement right, a Holder shall deliver to the Purchase Contract Agent at the Corporate Trust Office on or before 5:00 p.m., New York City time, on the date specified in the notice the Certificate(s) evidencing the Units, if the Units are held in certificated form, with respect to which the Merger Early Settlement right is being exercised duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early on the reverse thereof duly completed and accompanied by payment payable to the Company in immediately available funds in an amount equal to the Early Settlement Amount less the amount of cash that otherwise would be deliverable by the Company or its successor upon settlement of the Purchase Contract in lieu of Ordinary Shares pursuant to Section 5.6(b) and as described in the notice to Holders (the "Merger Early Settlement Amount"). (c) On the Merger Early Settlement Date, the Company shall deliver or cause to be delivered (i) the net cash, securities and other property to be received by such exercising Holder, equal to the Settlement Rate or if the Company has fixed the Settlement Rate pursuant to Section 5.1(f), the Fixed Settlement Rate, as adjusted pursuant to Section 5.6, in respect of the number of Purchase Contracts for which such Merger Early Settlement right was exercised, and (ii) the related Pledged Notes or Pledged Treasury Consideration, in the case of Normal Units, or Pledged Treasury Securities, in the case of Stripped Units, to be released from the Pledge by the Collateral Agent and transferred, in each case, to the Corporate Trust Office for delivery to the Holder thereof or its designee. In the event a Merger Early Settlement right shall be exercised by a Holder in accordance with the terms hereof, all references herein to Stock Purchase Date shall be deemed to refer to such Merger Early Settlement Date. If a Holder effects a Merger Early Settlement of some or all of its Purchase Contracts, such Holder shall be entitled to receive, on the Merger Early Settlement Date, the aggregate amount of any Deferred Contract Adjustment Payments and any accumulated and unpaid Contract Adjustment Payments since the immediately preceding Payment Date with respect to such Purchase Contracts. The Company shall pay such amount as a credit against the amount otherwise payable by the Holders to effect such Specified Merger Early Settlement and in any remainder in the form of a cash payment. (d) Upon Merger Early Settlement of any Purchase Contracts, and subject to receipt of such net cash, securities or other property from the Company and the Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, as the case may be, from the Collateral Agent, as applicable, the Purchase Contract Agent shall, in accordance with the instructions provided by the Holder thereof on the applicable form of Election to Settle Early on the reverse of the Certificate evidencing the related Units, (i) transfer to the Holder the Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, as the case may be, forming a part of such Units, and (ii) deliver to the Holder such net cash, securities or other property issuable upon such Merger Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 5.12. 58 (e) In the event that Merger Early Settlement is effected with respect to Purchase Contracts underlying less than all the Units evidenced by a Certificate, upon such Merger Early Settlement the Company (or the successor to the Company hereunder) shall execute and the Purchase Contract Agent shall authenticate, execute on behalf of the Holder and deliver to the Holder thereof, at the expense of the Company, a Certificate evidencing the Units as to which Merger Early Settlement was not effected. SECTION 5.11. CHARGES AND TAXES. The Company will pay all stock transfer, stamp and similar taxes or duties attributable to the initial issuance and delivery of the Ordinary Shares pursuant to the Purchase Contracts and in payment of any Deferred Contract Adjustment Payments; provided that the Company shall not be required to pay any such tax or taxes which may be payable in respect of any exchange of or substitution for a Certificate evidencing a Unit or any issuance of a Ordinary Share in a name other than that of the registered Holder of a Certificate surrendered in respect of the Units evidenced thereby, other than in the name of the Purchase Contract Agent, as custodian for such Holder, and the Company shall not be required to issue or deliver such Certificate or Ordinary Share unless and until the Person or Persons requesting the transfer or issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. SECTION 5.12. NO FRACTIONAL SHARES. No fractional shares or scrip representing fractional Ordinary Shares shall be issued or delivered upon settlement on the Stock Purchase Date or upon Early Settlement or Merger Early Settlement of any Purchase Contracts. If Certificates evidencing more than one Purchase Contract shall be surrendered for settlement at one time by the same Holder, the number of full Ordinary Shares which shall be delivered upon settlement shall be computed on the basis of the aggregate number of Purchase Contracts evidenced by the Certificates so surrendered. Instead of any fractional Ordinary Share which would otherwise be deliverable upon settlement of any Purchase Contracts on the applicable Settlement Date or upon Early Settlement or Merger Early Settlement, the Company, through the Purchase Contract Agent, shall make a cash payment in respect of such fractional shares in an amount equal to the value of such fractional shares times the Applicable Market Value. The Company shall provide the Purchase Contract Agent with sufficient funds to permit the Purchase Contract Agent to make all cash payments required by this Section 5.12 in a timely manner. ARTICLE VI REMEDIES SECTION 6.1. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PURCHASE CONTRACT ADJUSTMENT PAYMENTS AND PURCHASE ORDINARY SHARES. The Holder of any Unit shall have the right, which is absolute and unconditional, (a) subject to the right of the Company to defer payment thereof pursuant to Section 5.3, and to the forfeiture of any Deferred Contract Adjustment Payments upon Early Settlement pursuant to Section 5.9 or upon the occurrence of a Termination Event, to receive payment of each installment of the Contract Adjustment Payments, if any, with respect to the Purchase Contract constituting a part of such Unit on the respective Payment Date for such Unit, 59 and to institute suit for the enforcement of such right to receive Contract Adjustment Payments, and (b) to purchase Ordinary Shares pursuant to the Purchase Contract constituting a part of such Unit and to institute suit for the enforcement of any such right to purchase Ordinary Shares, and such rights shall not be impaired without the consent of such Holder. SECTION 6.2. RESTORATION OF RIGHTS AND REMEDIES. If any Holder has instituted any proceeding to enforce any right or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder, then and in every such case, subject to any determination in such proceeding, the Company and such Holder shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of such Holder shall continue as though no such proceeding had been instituted. SECTION 6.3. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Certificates in Section 3.10(f), no right or remedy herein conferred upon or reserved to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 6.4. DELAY OR OMISSION NOT WAIVER. No delay or omission of any Holder to exercise any right or remedy upon a default shall impair any such right or remedy or constitute a waiver of any such right. Every right and remedy given by this Article or by law to the Holders may be exercised from time to time, and as often as may be deemed expedient, by such Holders. SECTION 6.5. UNDERTAKING FOR COSTS. All parties to this Agreement agree, and each Holder of a Unit, by its acceptance of such Unit shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Purchase Contract Agent for any action taken, suffered or omitted by it as Purchase Contract Agent, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Purchase Contract Agent, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the Outstanding Units, or to any suit instituted by any Holder for the enforcement of distributions on any Notes or Contract Adjustment Payments, if any, on any Purchase Contract on or after the respective Payment Date therefor in respect of any Unit held by such Holder, or for enforcement of the right to purchase Ordinary Shares under the Purchase Contract constituting part of any Unit held by such Holder. 60 SECTION 6.6. WAIVER OF STAY OR EXTENSION LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Agreement; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VII THE PURCHASE CONTRACT AGENT SECTION 7.1. CERTAIN DUTIES AND RESPONSIBILITIES. (a) The Purchase Contract Agent shall act as agent and attorney-in-fact for the Holders of the Normal Units and Stripped Units hereunder with such powers as are specifically vested in the Purchase Contract Agent by the terms of this Agreement, the Pledge Agreement, the Remarketing Agreement, the Notes, the Normal Units and Stripped Units, and any documents evidencing them or related thereto, together with such other powers as are reasonably incidental thereto. The Purchase Contract Agent: (1) undertakes to perform, with respect to the Units and Separate Notes, such duties and only such duties as are specifically set forth in this Agreement and the Pledge Agreement, and no implied covenants or obligations shall be read into this Agreement against the Purchase Contract Agent; and (2) in the absence of bad faith, willful misconduct or negligence on its part, the Purchase Contract Agent may, with respect to the Units and Separate Notes, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Purchase Contract Agent reasonably believed by the Purchase Contract Agent to be genuine and correct and conforming to the requirements of this Agreement, but in the case of any certificates or opinions which by any provision hereof are specifically required to be furnished to the Purchase Contract Agent, the Purchase Contract Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement (but need not confirm or investigate the accuracy of the mathematical calculations or other facts stated therein). (b) No provision of this Agreement shall be construed to relieve the Purchase Contract Agent from liability for its own negligent action, its own negligent failure to act, its own bad faith or its own willful misconduct, except that: (1) this paragraph (b) shall not be construed to limit the effect of paragraph (a) of this Section; (2) the Purchase Contract Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Purchase Contract Agent was negligent in ascertaining the pertinent facts; and 61 (3) no provision of this Agreement shall require the Purchase Contract Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers. (c) Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Purchase Contract Agent shall be subject to the provisions of this Section. (d) The Purchase Contract Agent is authorized to execute and deliver the Pledge Agreement in its capacity as Purchase Contract Agent. SECTION 7.2. NOTICE OF DEFAULT. Within 30 days after the occurrence of any default by the Company hereunder or under a Purchase Contract of which a Responsible Officer of the Purchase Contract Agent has actual knowledge, the Purchase Contract Agent shall transmit by mail to the Company and the Holders of Units, as their names and addresses appear in the applicable Register, notice of such default hereunder, unless such default shall have been cured or waived. SECTION 7.3. CERTAIN RIGHTS OF PURCHASE CONTRACT AGENT. Subject to the provisions of Section 7.1: (a) the Purchase Contract Agent may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer Request, and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Agreement the Purchase Contract Agent shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Purchase Contract Agent (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company; (d) the Purchase Contract Agent may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Purchase Contract Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Purchase Contract Agent, in its discretion, may make reasonable further inquiry or investigation into such facts or matters related to the 62 execution, delivery and performance of the Purchase Contracts as it may see fit, and, if the Purchase Contract Agent shall determine to make such further inquiry or investigation, it shall be given a reasonable opportunity to examine the books, records and premises of the Company, personally or by agent or attorney; (f) the Purchase Contract Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or an Affiliate of the Purchase Contract Agent and the Purchase Contract Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney or an affiliate of the Purchase Contract Agent appointed with due care hereunder; (g) the Purchase Contract Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement solely at the request or direction of any of the Holders pursuant to this Agreement, unless such Holders shall have offered to the Purchase Contract Agent security or indemnity reasonably satisfactory to the Purchase Contract Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (h) the Purchase Contract Agent shall not be deemed to have notice of any default unless a Responsible Officer of the Purchase Contract Agent has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Purchase Contract Agent at the Corporate Trust Office of the Purchase Contract Agent, and such notice references the Units and this Agreement and states that it is a notice of default; and (i) the Purchase Contract Agent may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Agreement, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such Certificate previously delivered and not superseded. SECTION 7.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF UNITS. The recitals contained herein and in the Certificates shall be taken as the statements of the Company and the Purchase Contract Agent assumes no responsibility for their accuracy. The Purchase Contract Agent makes no representations as to the validity or sufficiency of either this Agreement or of the Units, or of the Pledge Agreement or the Pledge. The Purchase Contract Agent shall not be accountable for the use or application by the Company of the Units or the proceeds therefrom or in respect of the Purchase Contracts. SECTION 7.5. MAY HOLD UNITS. Any Registrar or any other agent of the Company, or the Purchase Contract Agent and its Affiliates, in their individual or any other capacity, may become the owner or pledgee of Units and may otherwise deal with the Company, the Collateral Agent or any other Person with the same rights it would have if it were not Registrar or such other agent, or the Purchase Contract Agent. SECTION 7.6. MONEY HELD IN CUSTODY. Money held by the Purchase Contract Agent in custody hereunder need not be segregated from the Purchase Contract Agent's other funds except to the extent required by law or provided herein. The Purchase Contract Agent shall be 63 under no obligation to invest or pay interest on any money received by it hereunder except as otherwise agreed in writing with the Company. SECTION 7.7. COMPENSATION AND REIMBURSEMENT. The Company agrees: (a) to pay to the Purchase Contract Agent from time to time reasonable compensation for all services rendered by it hereunder; (b) except as otherwise expressly provided herein, to reimburse the Purchase Contract Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Purchase Contract Agent in accordance with any provision of this Agreement (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith; and (c) to indemnify the Purchase Contract Agent and any predecessor Purchase Contract Agent, their officers, directors, employees and agents for, and to hold it harmless against, any loss, liability or expense incurred without gross negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Purchase Contract Agent shall promptly notify the Company of any third-party claim which may give rise to the indemnity hereunder and give the Company the opportunity to control the defense of such claim with counsel reasonably satisfactory to the indemnified party, and no such claim shall be settled without the written consent of the Company, which consent shall not be unreasonably withheld. For purposes of this Section 7.7, "Purchase Contract Agent" shall include any predecessor Purchase Contract Agent; PROVIDED that the negligence, bad faith or willful misconduct of any Purchase Contract Agent hereunder shall not affect the rights of any other Purchase Contract Agent hereunder. The provisions of this Section 7.7 shall survive the termination of this Agreement, the satisfaction or discharge of the Units and/or the Separate Notes and/or the resignation or removal of the Purchase Contract Agent. The Company will also pay all fees and expenses relating to the enforcement by the Purchase Contract Agent of the rights of the Holders of the Purchase Contracts and the retention of the Collateral Agent. In no event shall the Purchase Contract Agent be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Purchase Contract Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. In no event shall the Purchase Contract Agent be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, 64 fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of services contemplated by this Agreement. SECTION 7.8. CORPORATE PURCHASE CONTRACT AGENT REQUIRED; ELIGIBILITY. There shall at all times be a Purchase Contract Agent hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having (or being a member of a bank holding company having) a combined capital and surplus of at least $50,000,000, subject to supervision or examination by federal or state authority and having a Corporate Trust Office in the Borough of Manhattan, The City of New York, if there be such a corporation, qualified and eligible under this Article and willing to act on reasonable terms. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Purchase Contract Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 7.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Purchase Contract Agent and no appointment of a successor Purchase Contract Agent pursuant to this Article shall become effective until the acceptance of appointment by the successor Purchase Contract Agent in accordance with the applicable requirements of Section 7.10. (b) The Purchase Contract Agent may resign at any time by giving written notice thereof to the Company 60 days prior to the effective date of such resignation. If the instrument of acceptance by a successor Purchase Contract Agent required by Section 7.10 shall not have been delivered to the Purchase Contract Agent within 30 days after the giving of such notice of resignation, the resigning Purchase Contract Agent may petition any court of competent jurisdiction for the appointment of a successor Purchase Contract Agent. (c) The Purchase Contract Agent may be removed at any time by Act of the Holders of a majority in number of the Outstanding Units delivered to the Purchase Contract Agent and the Company. (d) If at any time: (1) the Purchase Contract Agent fails to comply with Section 310(b) of the TIA, as if the Purchase Contract Agent were an indenture trustee under an indenture qualified under the TIA, after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Unit for at least six months; or (2) the Purchase Contract Agent shall cease to be eligible under Section 7.8 and shall fail to resign after written request therefor by the Company or by any such Holder; or 65 (3) the Purchase Contract Agent shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Purchase Contract Agent or of its property shall be appointed or any public officer shall take charge or control of the Purchase Contract Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, (x) the Company by a Board Resolution may remove the Purchase Contract Agent, or (y) any Holder who has been a bona fide Holder of a Unit for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Purchase Contract Agent and the appointment of a successor Purchase Contract Agent. (e) If the Purchase Contract Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Purchase Contract Agent for any reason, the Company, by a Board Resolution, shall promptly appoint a successor Purchase Contract Agent and shall comply with the applicable requirements of Section 7.10. If no successor Purchase Contract Agent shall have been so appointed by the Company and accepted appointment in the manner required by Section 7.10, any Holder who has been a bona fide Holder of a Unit for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Purchase Contract Agent. (f) The Company shall give, or shall cause such successor Purchase Contract Agent to give, notice of each resignation and each removal of the Purchase Contract Agent and each appointment of a successor Purchase Contract Agent by mailing written notice of such event by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the applicable Register. Each notice shall include the name of the successor Purchase Contract Agent and the address of its Corporate Trust Office. SECTION 7.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In case of the appointment hereunder of a successor Purchase Contract Agent, every such successor Purchase Contract Agent so appointed shall execute, acknowledge and deliver to the Company and to the retiring Purchase Contract Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Purchase Contract Agent shall become effective and such successor Purchase Contract Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, agencies and duties of the retiring Purchase Contract Agent. On the request of the Company or the successor Purchase Contract Agent, such retiring Purchase Contract Agent shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Purchase Contract Agent all the rights, powers and trusts of the retiring Purchase Contract Agent and shall duly assign, transfer and deliver to such successor Purchase Contract Agent all property and money held by such retiring Purchase Contract Agent hereunder. (b) Upon request of any such successor Purchase Contract Agent, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Purchase Contract Agent all such rights, powers and agencies referred to in paragraph (a) of this Section. 66 No successor Purchase Contract Agent shall accept its appointment unless at the time of such acceptance such successor Purchase Contract Agent shall be qualified and eligible under this Article. SECTION 7.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any Person into which the Purchase Contract Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Purchase Contract Agent shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Purchase Contract Agent, shall be the successor of the Purchase Contract Agent hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been authenticated and executed on behalf of the Holders, but not delivered, by the Purchase Contract Agent then in office, any successor to such Purchase Contract Agent shall adopt such authentication and execution and deliver the Certificates so authenticated and executed with the same effect as if such successor Purchase Contract Agent had itself authenticated and executed such Units. SECTION 7.12. PRESERVATION OF INFORMATION. The Purchase Contract Agent shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders received by the Purchase Contract Agent in its capacity as Registrar. SECTION 7.13. NO OBLIGATIONS OF PURCHASE CONTRACT AGENT. Except to the extent otherwise provided in this Agreement, the Purchase Contract Agent assumes no obligation and shall not be subject to any liability under this Agreement, the Pledge Agreement or any Purchase Contract in respect of the obligations of the Holder of any Unit thereunder. The Company agrees, and each Holder of a Certificate, by such Holder's acceptance thereof, shall be deemed to have agreed, that the Purchase Contract Agent's execution of the Certificates on behalf of the Holders shall be solely as agent and attorney-in-fact for the Holders, and that the Purchase Contract Agent shall have no obligation to perform such Purchase Contracts on behalf of the Holders, except to the extent expressly provided in Article V. SECTION 7.14. TAX COMPLIANCE. (a) The Purchase Contract Agent, on its own behalf and on behalf of the Company, will comply with all applicable certification, information reporting and withholding (including "backup" withholding) requirements imposed by applicable tax laws, regulations or administrative practice with respect to (i) any payments made with respect to the Units or (ii) the issuance, delivery, holding, transfer, redemption or exercise of rights under the Units. Such compliance shall include, without limitation, the preparation and timely filing of required returns and the timely payment of all amounts required to be withheld to the appropriate taxing authority or its designated agent. For purposes of United States backup withholding tax and information reporting requirements, each Holder will provide the Purchase Contract Agent with an executed copy of Internal Revenue Service Form W-9 (for United States persons) or Form W-8 (for non-United States persons) or any successor forms. (b) The Purchase Contract Agent shall comply with any reasonable written direction timely received from the Company with respect to the execution or certification of any required documentation and the application of such requirements to particular payments or 67 Holders or in other particular circumstances, and may for purposes of this Agreement conclusively rely on any such direction in accordance with the provisions of Section 7.1(a)(2). (c) The Purchase Contract Agent shall maintain all appropriate records documenting compliance with such requirements, and shall make such records available, on written request, to the Company or its authorized representative within a reasonable period of time after receipt of such request. ARTICLE VIII SUPPLEMENTAL AGREEMENTS SECTION 8.1. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders, the Company and the Purchase Contract Agent, at any time and from time to time, may enter into one or more agreements supplemental hereto, in form satisfactory to the Company and the Purchase Contract Agent, for any of the following purposes: (a) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Certificates; or (b) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company (PROVIDED such covenants or such surrender shall not adversely affect the validity, perfection or priority of the security interests granted or created under the Pledge Agreement); or (c) to evidence and provide for the acceptance of appointment hereunder by a successor Purchase Contract Agent; or (d) to make provision with respect to the rights of Holders pursuant to the requirements of Section 5.6(b) or 5.10; or (e) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, PROVIDED such action shall not adversely affect the interests of the Holders. SECTION 8.2. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF HOLDERS(a) With the consent of the Holders of not less than a majority of the outstanding Units voting together as one class, by Act of said Holders delivered to the Company and the Purchase Contract Agent, the Company and the Purchase Contract Agent may enter into an agreement or agreements supplemental hereto, in form satisfactory to the Company and the Purchase Contract Agent, for the purpose of modifying in any manner the terms of the Purchase Contracts, or the provisions of this Agreement or the rights of the Holders in respect of the Units; PROVIDED that, except as contemplated herein, no such supplemental agreement shall, as to any Holder affected thereby, without the consent of such Holder: (1) change any Payment Date; 68 (2) change the amount or the type of Collateral required to be Pledged to secure a Holder's obligations under the Purchase Contracts, impair the right of the Holder of any Purchase Contract or Unit to receive distributions on the related Collateral (except for the rights of Holders of Normal Units to substitute the Treasury Securities for the Pledged Notes or Pledged Treasury Consideration or the rights of holders of Stripped Units to substitute Notes or Treasury Consideration for the Pledged Treasury Securities) or otherwise materially adversely affect the Holder's rights in or to such Collateral; (3) reduce any Contract Adjustment Payments or any Deferred Contract Adjustment Payment, or change the place or currency in which, any Contract Adjustment Payment or other payment under this Agreement is payable or increase any amounts payable by the Holders in respect of the Units or decrease any other amounts receivable by Holders in respect of the Units; (4) impair the right to institute suit for the enforcement of any Purchase Contract, any Contract Adjustment Payment, if any, or any Deferred Contract Adjustment Payment, if any; (5) reduce the number of Ordinary Shares to be purchased pursuant to any Purchase Contract, increase the price to purchase Ordinary Shares upon settlement of any Purchase Contract, change the Stock Purchase Date or otherwise materially adversely affect the Holder's rights under any Purchase Contract; or (6) reduce the percentage of the outstanding Purchase Contracts the consent of whose Holders is required for any such supplemental agreement; PROVIDED that if any amendment or proposal referred to above would adversely affect only the Normal Units or the Stripped Units, then only the affected class of Holder as of the record date for the Holders entitled to vote thereon will be entitled to vote on or consent to such amendment or proposal; PROVIDED, however, that no such agreement, whether with or without the consent of Holders, shall affect Section 3.16. (b) It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 8.3. EXECUTION OF SUPPLEMENTAL AGREEMENTS. In executing, or accepting the additional agencies created by, any supplemental agreement permitted by this Article or the modifications thereby of the agencies created by this Agreement, the Purchase Contract Agent shall be entitled to receive and (subject to Section 7.1) shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement and that all conditions precedent to the execution of such supplemental agreement have been satisfied. The Purchase Contract Agent shall enter into any such supplemental agreement which does not materially adversely affect the Purchase Contract Agent's own rights, duties or immunities under this Agreement or otherwise. SECTION 8.4. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance 69 therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Holder of Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered hereunder shall be bound thereby. SECTION 8.5. REFERENCE TO SUPPLEMENTAL AGREEMENTS. Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any supplemental agreement pursuant to this Article may, and shall if required by the Purchase Contract Agent, bear a notation in form approved by the Purchase Contract Agent as to any matter provided for in such supplemental agreement. If the Company shall so determine, new Certificates so modified as to conform, in the opinion of the Purchase Contract Agent and the Company, to any such supplemental agreement may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Purchase Contract Agent in exchange for Outstanding Certificates. ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1. COVENANT NOT TO MERGE, CONSOLIDATE, SELL OR CONVEY PROPERTY EXCEPT UNDER CERTAIN CONDITIONS. The Company covenants that, so long as any Units are outstanding, it will not (a) merge with or into or consolidate with any other Person or (b) transfer, lease or convey all or substantially all its assets to any Person or buy all or substantially all of the assets of another Person, unless (i) either the Company shall be the surviving person or the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease all or substantially all of the properties and assets of the Company is an entity organized and existing under the laws of the United States of America (including any State thereof or the District of Columbia), the United Kingdom, the Cayman Islands, Bermuda or any country which is, on March 17, 2004, a member of the Organization of Economic Cooperation and Development or the European Union and shall expressly assume, all the obligations of the Company under the Purchase Contracts, this Agreement, the Remarketing Agreement and the Pledge Agreement by one or more supplemental agreements in form reasonably satisfactory to the Purchase Contract Agent and the Collateral Agent, executed and delivered to the Purchase Contract Agent and the Collateral Agent by such Person, and (ii) the Company or such successor, as the case may be, shall not, immediately after such merger or consolidation, or such transfer, lease or conveyance, be in default in the performance of any covenant or condition hereunder, under any of the Purchase Contracts, under the Remarketing Agreement or under the Pledge Agreement. SECTION 9.2. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. (a) In case of any such consolidation, merger, transfer, lease, purchase or conveyance and upon any such assumption by a successor entity in accordance with Section 9.1, such successor entity shall succeed to and be substituted for the Company with the same effect as if it had been named herein as the Company. Such successor entity thereupon may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Certificates evidencing Units issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Purchase Contract Agent; and, upon the order of such successor corporation, instead of the Company, and subject to all the terms, conditions and limitations in this Agreement prescribed, the Purchase 70 Contract Agent shall authenticate and execute on behalf of the Holders and deliver any Certificates which previously shall have been signed and delivered by the officers of the Company to the Purchase Contract Agent for authentication, execution on behalf of the Holder and delivery, and any Certificate evidencing Units which such successor entity thereafter shall cause to be signed and delivered to the Purchase Contract Agent for that purpose. All the Certificates so issued shall in all respects have the same legal rank and benefit under this Agreement as the Certificates theretofore or thereafter issued in accordance with the terms of this Agreement as though all of such Certificates had been issued at the date of the execution hereof. (b) In case of any such consolidation, merger, transfer, lease, purchase or conveyance such change in phraseology and form (but not in substance) may be made in the Certificates evidencing Units thereafter to be issued as may be appropriate. SECTION 9.3. OPINION OF COUNSEL GIVEN TO PURCHASE CONTRACT AGENT. The Purchase Contract Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, transfer, lease, purchase or conveyance, and any such assumption, complies with the provisions of this Article and that all conditions precedent to the consummation of any such consolidation, merger, sale, assignment, transfer, lease, purchase or conveyance have been met. ARTICLE X COVENANTS SECTION 10.1. PERFORMANCE UNDER PURCHASE CONTRACTS. The Company covenants and agrees for the benefit of the Holders from time to time that it will duly and punctually perform its obligations under the Purchase Contracts in accordance with the terms of the Purchase Contracts and this Agreement. SECTION 10.2. MAINTENANCE OF OFFICE OR AGENCY. (a) The Company will maintain in the Borough of Manhattan, The City of New York an office or agency, which may be the office of the Purchase Contract Agent, where Certificates may be presented or surrendered for payment of Contract Adjustment Payments, acquisition of Ordinary Shares upon settlement of the Purchase Contracts on any Settlement Date and for transfer of Collateral upon occurrence of a Termination Event, where Certificates may be surrendered for registration of transfer or exchange, for a Collateral Substitution or reestablishment of Normal Units and where notices and demands to or upon the Company in respect of the Units and this Agreement may be served. The Company will give prompt written notice to the Purchase Contract Agent of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Purchase Contract Agent with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Company hereby appoints the Purchase Contract Agent as its agent to receive all such presentations, surrenders, notices and demands. (b) The Company may also from time to time designate one or more other offices or agencies where Certificates may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED that no such designation 71 or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Purchase Contract Agent of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates as the place of payment for the Units the Corporate Trust Office and appoints the Purchase Contract Agent at its Corporate Trust Office as paying agent in such city. SECTION 10.3. COMPANY TO RESERVE ORDINARY SHARES. The Company shall at all times prior to the Stock Purchase Date reserve and keep available, free from preemptive rights, out of its authorized but unissued Ordinary Shares the maximum number of Ordinary Shares issuable against tender of payment in respect of all Purchase Contracts constituting a part of the Units evidenced by Outstanding Certificates. SECTION 10.4. COVENANTS AS TO ORDINARY SHARES. The Company covenants that all Ordinary Shares which may be issued against tender of payment in respect of any Purchase Contract constituting a part of the Outstanding Units will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company will endeavor to promptly list or cause to have quoted such Ordinary Shares on each national exchange or in the over-the-counter market or other such market on which the Ordinary Shares are then listed or quoted. SECTION 10.5. STATEMENTS OF OFFICER OF THE COMPANY AS TO DEFAULT. The Company will deliver to the Purchase Contract Agent, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which such Officers may have knowledge. In the event the Company shall change its fiscal year at any time the Units are outstanding, the Company shall notify the Purchase Contract Agent of the effective date of such change. SECTION 10.6. LISTING. In the event that the Stripped Units or Notes become separately traded from the Normal Units to the extent that applicable exchange listing requirements are met, the Company covenants and agrees to use commercially reasonable efforts to cause such Stripped Units or Notes, as the case may be, to be listed on the securities exchange on which the Normal Units are then listed. SECTION 10.7. REGISTRATION STATEMENT. The Company agrees to use commercially reasonable efforts to ensure that, if required by applicable law, a registration statement with regard to the full amount of the Notes to be remarketed in the remarketing shall be effective with the Securities and Exchange Commission in a form that will enable the Remarketing Agent to rely on it in connection with such remarketing. SECTION 10.8. SECURITIES CONTRACT. Without limiting the applicability of Section 365 of the Bankruptcy Code, it is the intention of the Company that this Agreement shall constitute a "securities contract" for purposes of and subject to the provisions of Section 555 of the Bankruptcy Code. The Company agrees that (i) prior to an exercise by the Collateral Agent on 72 behalf of the Company of its rights as a secured party pursuant to the Pledge Agreement, the Company does not have any ownership right, title or interest in and to the Pledged Notes and (ii) the Holders of a Security shall not be deemed to have purchased, and the Company shall not be deemed to have sold any Ordinary Shares pursuant to a Purchase Contract related to such Security prior to a Cash Settlement, an Early Settlement or the occurrence of the Stock Purchase Date (provided that no prior occurrence of a Termination Event with respect to such Ordinary Shares has occurred). SECTION 10.9. PAYMENT TO HOLDERS OF UNITS ON THE STOCK PURCHASE DATE. Each Holder of a Unit, by its acceptance thereof, further covenants and agrees that, to the extent and in the manner provided in Section 5.4 and the Pledge Agreement, but subject to the terms thereof, payments in respect of the Pledged Notes, the Pledged Treasury Consideration or the Pledged Treasury Securities to be paid upon settlement of such Holder's obligations to purchase Ordinary Shares under the Purchase Contract, shall be paid on the Stock Purchase Date by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. SECTION 10.10. CONSENT TO TREATMENT FOR TAX PURPOSES. The Company and each Holder of a Normal Unit or a Stripped Unit, by its acceptance thereof, covenants and agrees (a) to treat a Holder's acquisition of the Normal Unit as the acquisition of the Note and Purchase Contract constituting the Normal Unit, (b) to treat a Holder's acquisition of a Stripped Unit as the acquisition of a Treasury Security and Purchase Contract constituting the Stripped Unit, (c) to treat each Holder as the owner, for federal, state and local income and franchise tax purposes of (i) the related Notes or the Treasury Consideration, in the case of the Normal Units, or (ii) the Treasury Securities, in the case of the Stripped Units, (d) to treat the Notes as indebtedness of the Company for federal, state and local income and franchise tax purposes and (e) to allocate 100% of the issue price of a Normal Unit to the beneficial interest in the Note and 0.00% of the issue price to the Purchase Contract. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. XL CAPITAL LTD By: /s/ PAUL S. GIORDANO --------------------------------------- Name: Paul S. Giordano Title: Executive Vice President, General Counsel and Secretary U.S. BANK NATIONAL ASSOCIATION, as Purchase Contract Agent By: /s/ ARTHUR L. BLAKESLEE --------------------------------------- Name: Arthur L. Blakeslee Title: Assistant Vice President EXHIBIT A FORM OF NORMAL UNITS CERTIFICATE (Form of Global Certificate Legend) [THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT (AS DEFINED ON THE REVERSE HEREOF) AND IS REGISTERED IN THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.]* [so long as DTC is the Depositary, insert: Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Company or its agent for registration of transfer, exchange or payment, and any Certificate issued is registered in the name of Cede & Co., or such other name as requested by an authorized representative of The Depository Trust Company, and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of The Depository Trust Company, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] [UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR CERTIFICATES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE PURCHASE CONTRACT AGREEMENT, THIS GLOBAL CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]* - ---------- * To be inserted in Global Certificates only. A-1 (FORM OF FACE OF NORMAL UNITS CERTIFICATE) XL CAPITAL LTD 6.50% Equity Security Units No. CUSIP No. G98255402 Number of Normal Units This Normal Units Certificate certifies that _______________is the registered Holder of the number of Normal Units set forth above [If the Certificate is a Global Certificate, insert - , as such number may be increased or decreased as set forth on the Schedule of Increases or Decreases in Global Certificate annexed hereto]. Each Normal Unit represents (i) either (a) a 1/40, or 2.5%, beneficial ownership interest of the Holder in one 2.53% Senior Note due 2009 (the "Note") of XL Capital Ltd, a Cayman Islands exempted limited company (the "Company"), having a principal amount of $1,000, subject to the Pledge of such Note by such Holder pursuant to the Pledge Agreement, or (b) after a Special Event Redemption, the Treasury Consideration, subject to the Pledge of such Treasury Consideration by such Holder pursuant to the Pledge Agreement, and (ii) the rights and obligations of the Holder under one Purchase Contract with the Company. Each Normal Unit will have a stated amount of $25 (the "Stated Amount"). All capitalized terms used herein which are defined in the Purchase Contract Agreement have the meaning set forth therein. Pursuant to the Pledge Agreement, the interest in the Note or the Treasury Consideration, as the case may be, constituting part of each Normal Unit evidenced hereby has been pledged to the Collateral Agent, for the benefit of the Company, to secure the obligations of the Holder under the Purchase Contract comprising a part of such Normal Unit to purchase Ordinary Shares of the Company. Prior to the purchase of Ordinary Shares under each Purchase Contract, such Purchase Contracts shall not entitle the Holders of Normal Units Certificates to any of the rights of a holder of Ordinary Shares, including without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as shareholders in respect of the meetings of shareholders, or for the election of directors of the Company or for any other matter or any other rights whatsoever as shareholder of the Company. The Pledge Agreement provides that all payments in respect of the Pledged Notes or Pledged Treasury Consideration received by the Collateral Agent shall be paid by the Collateral Agent by wire transfer in same day funds (i) in the case of (A) any interest payments on Normal Units which include Pledged Notes or Pledged Treasury Consideration, as the case may be, and (B) any payments in respect of the Notes or Treasury Consideration, as the case may be, that have been released from the Pledge pursuant to the Pledge Agreement, to the Purchase Contract Agent to the account designated by the Purchase Contract Agent, no later than 11:00 a.m., New York City time, on the Business Day such payment is received by the Collateral Agent (PROVIDED that in the event such payment is received by the Collateral Agent on a day that is not a Business Day or after 10:30 a.m., New York City time, on a Business Day, then such payment shall be made no later than 9:30 a.m., New York City time, on the next succeeding Business Day) and (ii) in the case of payments in respect of any Pledged Notes or Pledged Treasury Consideration, as A-2 the case may be, to be paid upon settlement of such Holder's obligations to purchase Ordinary Shares under the Purchase Contract, to the Company on the Stock Purchase Date (as defined herein) in accordance with the terms of the Pledge Agreement, in full satisfaction of the respective obligations of the Holders of the Normal Units of which such Pledged Notes or Pledged Treasury Consideration are a part under the Purchase Contracts forming a part of such Normal Units. Interest payments payable on each Payment Date (as defined below) with respect to Pledged Notes or the Pledged Treasury Consideration included in the Normal Units shall be made quarterly in arrears on such Payment Date, subject to receipt thereof by the Purchase Contract Agent from the Trustee or Collateral Agent, as the case may be, to the Person in whose name this Normal Units Certificate (or a Predecessor Normal Units Certificate) is registered at the close of business on the Record Date for such Payment Date. Each Purchase Contract evidenced hereby obligates the Holder of this Normal Units Certificate to purchase, and the Company to sell, on May 15, 2007 (the "Stock Purchase Date"), at a price equal to $25 (the "Purchase Price"), a number of Class A Ordinary Shares, par value $0.01 per share ("Ordinary Shares"), of the Company, equal to the Settlement Rate or, if the Company has fixed the Settlement Rate pursuant to Section 5.1(f) of the Purchase Contract Agreement, the Fixed Settlement Rate, unless on or prior to the Stock Purchase Date there shall have occurred a Termination Event or an Early Settlement or Merger Early Settlement with respect to the Normal Units of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement, as defined and more fully described on the reverse hereof. The Purchase Price for the Ordinary Shares purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier, shall be satisfied on the Stock Purchase Date by either (i) the application of payments received with regard to Pledged Treasury Consideration, or (ii) the exercise of the Company's rights as a secured party in connection with the Pledged Notes, as the case may be. The Company shall pay on each February 15, May 15, August 15 and November 15 each year, commencing May 15, 2004 (each a "Payment Date") in respect of each Purchase Contract forming part of a Normal Unit evidenced hereby an amount (the "Contract Adjustment Payments") equal to 3.97% per year of the Stated Amount through but excluding the Stock Purchase Date, computed on the basis of a 360-day year of twelve 30-day months, subject to deferral at the option of the Company as provided in the Purchase Contract Agreement and more fully described on the reverse hereof (PROVIDED that if on any date on which Contract Adjustment Payments are to be made on the Purchase Contracts is not a Business Day, then payment of the Contract Adjustment Payments payable on that date will be made on the next succeeding day which is a Business Day, and no interest or payment will be paid in respect of the delay, except that if such next succeeding Business Day is in the next succeeding calendar year, such payment will be made on the immediately preceding Business Day). Such Contract Adjustment Payments shall be payable to the Person in whose name this Normal Units Certificate (or a Predecessor Normal Units Certificate) is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments and payments on the Treasury Consideration will be payable at the office of the Purchase Contract Agent in the Borough of Manhattan, New York City, or, if the Units do not remain in book-entry only form, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears A-3 on the Normal Units Register or by wire transfer to the account maintained in the United States designated by written notice given ten Business Days prior to the applicable payment date by such Person. Payments on the Notes will be payable at the Corporate Trust Office or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears on the Normal Units Register or by wire transfer to the account maintained in the United States designated by written notice given ten Business Days prior to the applicable payment date by such Person. Reference is hereby made to the further provisions set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Purchase Contract Agent by manual signature, this Normal Units Certificate shall not be entitled to any benefit under the Pledge Agreement or the Purchase Contract Agreement or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: __________ XL CAPITAL LTD By: --------------------------------------- Name: Title: HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the Purchase Contracts evidenced hereby) By: U.S. BANK NATIONAL ASSOCIATION, not individually but solely as Attorney-in-Fact of such Holder By: ---------------------------------- Name: Title: A-4 PURCHASE CONTRACT AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Normal Units Certificates referred to in the within mentioned Purchase Contract Agreement. U.S. Bank National Association, as Purchase Contract Agent Dated: By: ------------------ ---------------------------------------- Authorized Officer A-5 (Form of Reverse of Normal Units Certificate) Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of March 23, 2004 (as may be supplemented from time to time, the "Purchase Contract Agreement"), between the Company and U.S. Bank National Association, as Purchase Contract Agent (including its successors thereunder, herein called the "Purchase Contract Agent"), to which Purchase Contract Agreement and supplemental agreements thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Purchase Contract Agent, the Company, and the Holders and of the terms upon which the Normal Units Certificates are, and are to be, executed and delivered. All defined terms used but not defined in this Certificate have the meanings ascribed to them in the Purchase Contract Agreement. Each Purchase Contract evidenced hereby obligates the Holder of this Normal Units Certificate to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of Ordinary Shares of the Company equal to the Settlement Rate or, if the Company has fixed the Settlement Rate pursuant to Section 5.1(f) of the Purchase Contract Agreement, the Fixed Settlement Rate, unless, on or prior to the Stock Purchase Date, there shall have occurred a Termination Event or a Cash Settlement, Early Settlement or Merger Early Settlement with respect to the Unit of which such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal to or greater than $93.99 (the "Threshold Appreciation Price"), 0.2660 Ordinary Shares per Purchase Contract, (b) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $75.19, the number of Ordinary Shares per Purchase Contract equal to the Purchase Price divided by the Applicable Market Value and (c) if the Applicable Market Value is equal to or less than $75.19, 0.3325 Ordinary Shares per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract Agreement. No fractional Ordinary Shares will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement. The "Applicable Market Value" means the average of the Closing Price per Ordinary Share on each of the 20 consecutive Trading Days ending on the third Trading Day immediately preceding the Stock Purchase Date or, in the event of a Cash Merger, the Cash Merger Date. The "Closing Price" of the Ordinary Shares on any date of determination means the closing sale price (or, if no closing sale price is reported, the last reported sale price) of the Ordinary Shares on the New York Stock Exchange (the "NYSE") on such date or, if the Ordinary Shares are not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Ordinary Shares are so listed, or if the Ordinary Shares are not so listed on a United States national or regional securities exchange, as reported by The Nasdaq Stock Market, or, if the Ordinary Shares are not so reported, the last quoted bid price for the Ordinary Shares in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of the Ordinary Shares on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company. A-6 A "Trading Day" means a day on which the Ordinary Shares (A) are not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) have traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Ordinary Shares at the close of business on such day. Each Purchase Contract evidenced hereby may be settled prior to the Stock Purchase Date through Cash Settlement, Early Settlement or Merger Early Settlement, in accordance with the terms of the Purchase Contract Agreement. In accordance with the terms of the Purchase Contract Agreement, the Holder of this Normal Units Certificate shall pay the Purchase Price for the Ordinary Shares purchased pursuant to each Purchase Contract evidenced hereby (i) by effecting a Cash Settlement, an Early Settlement or Merger Early Settlement; (ii) if the Holder has elected not to participate in the remarketing described in Section 2.19 of the Supplemental Indenture, by application of the cash payment delivered in respect thereof deposited by such Holder in respect of such Purchase Contract in accordance with the procedures set forth in Section 5.4(b)(iv) of the Purchase Contract Agreement or (iii) if a Special Event Redemption has occurred prior to the successful remarketing of the Notes as contemplated by Section 5.4 of the Purchase Contract Agreement, by application of payments received in respect of the Pledged Treasury Consideration purchased by the Collateral Agent on behalf of the Holder of this Normal Units Certificate. The Company shall not be obligated to issue any Ordinary Shares in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment in full of the aggregate Purchase Price for the Ordinary Shares to be purchased thereunder or become entitled to exercise its rights as a secured party in the manner set forth in the Purchase Contract Agreement. If, as provided in the Purchase Contract Agreement, upon the occurrence of a Last Failed Remarketing the Collateral Agent, for the benefit of the Company, exercises its rights as a secured creditor with respect to the Pledged Notes related to this Normal Units Certificate, any accrued and unpaid interest on such Pledged Notes will become payable by the Company to the Holder of this Normal Units Certificate in the manner provided for in the Purchase Contract Agreement. The Purchase Contract Agent will be entitled to exercise the voting and any other consensual rights pertaining to the Pledged Notes, but only to the extent instructed by the Holders as described below. Upon receipt of notice of any meeting at which holders of Notes are entitled to vote or upon the solicitation of consents, waivers or proxies of holders of Notes, the Purchase Contract Agent shall, as soon as practicable thereafter, mail to the Holders of Normal Units a notice (a) containing such information as is contained in the notice or solicitation, (b) stating that each such Holder on the record date set by the Purchase Contract Agent therefor (which, to the extent possible, shall be the same date as the record date for determining the holders of Notes entitled to vote) shall be entitled to instruct the Purchase Contract Agent as to the exercise of the voting rights pertaining to the Pledged Notes constituting a part of such Holder's Normal Units and (c) stating the manner in which such instructions may be given. Upon the written request of any Holder of Normal Units on such record date, the Purchase Contract Agent shall endeavor insofar as practicable to vote or cause to be voted, in accordance with the instructions set forth in such request the maximum number of Pledged Notes as to which any particular voting instructions are received. In the absence of specific instructions from the Holder A-7 of a Normal Unit, the Purchase Contract Agent shall abstain from voting the Pledged Note evidenced by such Normal Unit. The Normal Units Certificates are issuable only in registered form and only in denominations of a single Normal Unit and any integral multiple thereof. The transfer of any Normal Units Certificate will be registered and Normal Units Certificates may be exchanged as provided in the Purchase Contract Agreement. The Normal Units Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents permitted by the Purchase Contract Agreement. No service charge shall be required for any such registration of transfer or exchange of a Normal Units Certificate, but the Company and the Purchase Contract Agent may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Certificates, other than exchanges not involving any transfer as provided for in the Purchase Contract Agreement. The Holder of a Normal Unit may substitute for the Pledged Notes or Pledged Treasury Consideration securing its obligations under the related Purchase Contract Treasury Securities in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. From and after such Collateral Substitution, the Unit for which such Pledged Treasury Securities secures the Holder's obligation under the Purchase Contract shall be referred to as a "Stripped Unit." A Holder that elects to substitute Treasury Securities for Pledged Notes or Pledged Treasury Consideration, thereby creating Stripped Units, shall be responsible for any fees or expenses payable in connection therewith. Except as provided in the Purchase Contract Agreement, for so long as the Purchase Contract underlying a Normal Unit remains in effect, such Normal Unit shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Normal Units in respect of the Pledged Note or Pledged Treasury Consideration and Purchase Contract comprising such Normal Unit may be acquired, and may be transferred and exchanged, only as a Normal Unit. A Holder of Stripped Units may reestablish Normal Units at any time from and after the date of the Purchase Contract Agreement and on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date by depositing with the Collateral Agent the Notes or the Treasury Consideration in exchange for the release of the Pledged Treasury Securities in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. Subject to the next succeeding paragraph, the Company shall pay, on each Payment Date, the Contract Adjustment Payments, if any, payable in respect of each Purchase Contract to the Person in whose name the Normal Units Certificate (or one or more Predecessor Normal Units Certificates) evidencing such Purchase Contract is registered on the Normal Units Register at the close of business on the Record Date next preceding such Payment Date. The Contract Adjustment Payments, if any, will be payable at the office of the Purchase Contract Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto as such address appears on the Normal Units Register or by wire transfer to the account designated by such Person in writing. The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Purchase Contract Agent A-8 written notice of its election to defer each such Contract Adjustment Payments as provided in the Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, accrue additional Contract Adjustment Payments thereon at the rate of 6.50% per year (computed on the basis of a 360-day year of twelve 30-day months), compounding on each succeeding Payment Date, until paid in full (such deferred installments of Contract Adjustment Payments, if any, together with the additional Contract Adjustment Payments, if any, accrued thereon, are referred to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be due on the next succeeding Payment Date except to the extent that payment is deferred pursuant to the Purchase Contract Agreement. No Contract Adjustment Payments may be deferred to a date that is after the Stock Purchase Date and no such deferral period may end other than on a Payment Date. In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date. The Company's obligations with respect to Contract Adjustment Payments (including any accrued or Deferred Contract Adjustment Payments) will be subordinated and junior in right of payment to the Company's obligations under any Senior Indebtedness in the manner and to the extent set forth in the Purchase Contract Agreement. In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, the Holder of this Normal Units Certificate will receive on the Stock Purchase Date, in lieu of a cash payment, a number of Ordinary Shares (in addition to the number of Ordinary Shares equal to the Settlement Rate) equal to (i) the aggregate amount of Deferred Contract Adjustment Payments payable to the Holder of this Normal Units Certificate divided by (ii) the Applicable Market Value. In the event the Company exercises its option to defer the payment of Contract Adjustment Payments, then, until the date on which the Deferred Contract Adjustment Payments have been paid, the Company shall not, and will not permit any subsidiary of the Company to, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of the Company's Ordinary Shares other than (i) repurchases, redemptions or acquisitions of Ordinary Shares of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or agents or a stock purchase or dividend reinvestment plan, or the satisfaction by the Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its rights to defer the Contract Adjustment Payments; (ii) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one class or series of the Company's Capital Stock for another class or series of the Company's Capital Stock; (iii) the purchase of fractional interests in shares of any series of the Company's Capital Stock pursuant to the conversion or exchange provisions of such Capital Stock or the security being converted or exchanged; (iv) dividends or distributions in any series of the Company's Capital Stock (or rights to acquire the Company's Capital Stock) or repurchases, redemptions or acquisitions of the Company's Capital Stock in exchange for or out of the net cash proceeds of the sale of the Company's Capital Stock (or securities convertible A-9 into or exchangeable for shares of the Company's Capital Stock); or (v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan on the date the Company exercises its right to defer the payment of Contract Adjustment Payments or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future, or the redemption or repurchase of any rights pursuant thereto. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive accumulated Contract Adjustment Payments, if any, or any Deferred Contract Adjustment Payments and the obligations of the Holders to purchase Ordinary Shares, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Purchase Contract Agent or the Company, if, on or prior to the Stock Purchase Date, a Termination Event shall have occurred. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two Business Days thereafter give written notice to the Purchase Contract Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Normal Units Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Pledged Notes or Pledged Treasury Consideration from the Pledge in accordance with the provisions of the Pledge Agreement. Upon registration of transfer of this Normal Units Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee, except as may be required by the Purchase Contract Agent pursuant to the Purchase Contract Agreement), under the terms of the Purchase Contract Agreement, the Purchase Contracts evidenced hereby and the Pledge Agreement and the transferor shall be released from the obligations under the Purchase Contract Agreement, the Purchase Contracts evidenced by this Normal Units Certificate and the Pledge Agreement. The Company covenants and agrees, and the Holder, by its acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. The Holder of this Normal Units Certificate, by its acceptance hereof, irrevocably authorizes the Purchase Contract Agent to enter into and perform the related Purchase Contracts forming part of the Normal Units evidenced hereby on his behalf as his attorney-in-fact, expressly withholds any consent to the assumption (i.e., affirmance) of the Purchase Contracts by the Company, any receiver, liquidator or person or entity performing similar functions or its trustee in the event that the Company becomes the debtor under the Bankruptcy Code or subject to other similar state or federal or other law, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform such Holder's obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, irrevocably authorizes the Purchase Contract Agent to enter into and perform the Pledge Agreement on such Holder's behalf as attorney-in-fact, and consents to the Pledge of the Notes or the Treasury Consideration underlying this Normal Units Certificate pursuant to the Pledge Agreement, PROVIDED, that, upon a Termination Event, the rights of the Holder of such Notes may be enforced without regard to any other rights or obligations. The Holder further covenants and agrees, that, to the extent and in the manner provided in the Purchase Contract Agreement and the Pledge Agreement, but subject to the terms thereof, payments in respect of the Pledged Notes or the Pledged Treasury Consideration to be paid upon settlement of such Holder's obligations to purchase Ordinary Shares under the Purchase Contract, shall be paid on the Stock Purchase Date by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract A-10 and such Holder shall acquire no right, title or interest in such payments. The obligations of each Holder to pay the Purchase Price are non-recourse obligations and except to the extent paid by Cash Settlement, Early Settlement or Merger Early Settlement, are payable solely out of the proceeds of any Collateral pledged to secure the obligations of the Holders and in no event will Holders be liable for any deficiency between such payments and the Purchase Price. Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any Ordinary Shares in respect of a Purchase Contract or deliver any certificates therefor to the Holder of the related Unit unless the Company shall have (i) received payment in full of the aggregate Purchase Price for the Ordinary Shares to be purchased thereunder by such Holder in the manner herein set forth or (ii) exercised its rights as a secured party under Section 5.4(b)(iii) of the Purchase Contract Agreement. The Company and each Holder of a Normal Unit, by its acceptance thereof, covenants and agrees (a) to treat a Holder's acquisition of the Normal Unit as the acquisition of the Note and Purchase Contract constituting the Normal Unit, (b) to treat each Holder as the owner, for federal, state and local income and franchise tax purposes of the related Notes or the Treasury Consideration, (d) to treat the Notes as indebtedness of the Company for federal, state and local income and franchise tax purposes and (d) to allocate 100% of the issue price of a Normal Unit to the beneficial interest in the Note and 0.00% of the issue price to the Purchase Contract. Subject to certain exceptions, the provisions of the Purchase Contract Agreement may be amended with the consent of the Holders of a majority of the outstanding Purchase Contracts. The Purchase Contracts shall for all purposes be governed by, deemed to be a contract under, and construed in accordance with, the laws of the State of New York. The Company, the Purchase Contract Agent and its Affiliates and any agent of the Company or the Purchase Contract Agent may treat the Person in whose name this Normal Units Certificate is registered as the owner of the Normal Units evidenced hereby for the purpose of receiving quarterly payments of interest on the Notes or the Treasury Consideration, as the case may be, receiving payments of Contract Adjustment Payments, if any, and any Deferred Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not any payments in respect thereof be overdue and notwithstanding any notice to the contrary, and neither the Company, the Purchase Contract Agent, such Affiliates nor any such agent shall be affected by notice to the contrary. The Purchase Contracts shall not, prior to the settlement thereof, entitle the Holder to any of the rights of a holder of Ordinary Shares. A copy of the Purchase Contract Agreement is available for inspection at the offices of the Purchase Contract Agent. A-11 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian ----------------------------------------- (cust) (minor) Under Uniform Gifts to Minors Act ----------------------------------------- (State) TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. A-12 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto - -------------------------------------------------------------------------------- (Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee) - -------------------------------------------------------------------------------- (Please Print or Type Name and Address Including Postal Zip Code of Assignee) the within Normal Units Certificates and all rights thereunder, hereby irrevocably constituting and appointing ______________attorney to transfer said Normal Units Certificates on the books of XL Capital Ltd with full power of substitution in the premises. Dated: Signature : --------------------- ------------------------------ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Normal Units Certificates in every particular, without alteration or enlargement or any change whatsoever. Signature Guarantee: ------------------------------------------------------------ A-13 SETTLEMENT INSTRUCTIONS The undersigned Holder directs that a certificate for Ordinary Shares deliverable upon settlement on or after the Stock Purchase Date of the Purchase Contracts underlying the number of Normal Units evidenced by this Normal Units Certificate be registered in the name of, and delivered, together with a check in payment for any fractional share, to the undersigned at the address indicated below unless a different name and address have been indicated below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: Signature: -------- ---------------------------- Signature Guarantee: ------------------- (if assigned to another person) If shares are to be registered in the REGISTERED HOLDER name of and delivered to a Person other than the Holder, please (i) print such Please print name and address of Person's name and address and (ii) Registered Holder: provide a guarantee of your signature: - --------------------------------------- --------------------------------------- Name Name - --------------------------------------- --------------------------------------- Address Address Social Security or other Taxpayer Identification Number, if any: A-14 ELECTION TO SETTLE EARLY The undersigned Holder of this Normal Units Certificate hereby irrevocably exercises the option, subject to Section 5.9(g) of the Purchase Contract Agreement, to effect Early Settlement in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Normal Units evidenced by this Normal Units Certificate specified below. The option to effect Early Settlement may be exercised only with respect to Purchase Contracts underlying Normal Units with an aggregate Purchase Price equal to $1,000 or an integral multiple thereof. The undersigned Holder directs that a certificate for Ordinary Shares deliverable upon such Early Settlement be registered in the name of, and delivered, together with a check in payment for any fractional share and any Normal Units Certificate representing any Normal Units evidenced hereby as to which Early Settlement of the related Purchase Contracts is not effected, to the undersigned at the address indicated below unless a different name and address have been indicated below. Pledged Notes or Pledged Treasury Consideration deliverable upon such Early Settlement will be transferred in accordance with the transfer instructions set forth below. If Ordinary Shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: Signature: -------- ---------------------------- Signature Guarantee: ------------------- Number of Units evidenced hereby as to which Early Settlement of the related Purchase Contracts is being elected: If Ordinary Shares are to be registered REGISTERED HOLDER in the name of and delivered to and Pledged Notes or Pledged Treasury Consideration are to be transferred to Please print name and address of a Person other than the Holder, please Registered Holder: print such Person's name and address: - --------------------------------------- --------------------------------------- Name Name - --------------------------------------- --------------------------------------- Address Address Social Security or other Taxpayer Identification Number, if any: --------------------------------------- A-15 Transfer instructions for Pledged Notes or Pledged Treasury Consideration transferable upon Early Settlement or a Termination Event: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-16 [TO BE ATTACHED TO GLOBAL CERTIFICATES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE The following increases or decreases in this Global Certificate have been made: Stated Amount Amount of Amount of of the Global Decrease in Increase in Certificate Signature of Authorized Stated Amount Stated Amount Following Such Officer of Purchase of the Global of the Global Decrease of Contract Agent Date Certificate Certificate Increase - --------- ------------- ------------- -------------- ----------------------- A-17 EXHIBIT B FORM OF STRIPPED UNITS CERTIFICATE (Form of Global Certificate Legend) [THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT (AS DEFINED ON THE REVERSE HEREOF) AND IS REGISTERED IN THE NAME OF A CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.] [so long as DTC is the Depositary, insert: Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Company or its agent for registration of transfer, exchange or payment, and any Certificate issued is registered in the name of Cede & Co., or such other name as requested by an authorized representative of The Depository Trust Company, and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of The Depository Trust Company, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] [UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR CERTIFICATES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE PURCHASE CONTRACT AGREEMENT, THIS GLOBAL CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]* - ---------- * To be inserted in Global Certificates only. B-1 (Form of Face of Stripped Units Certificate) XL Capital Ltd 6.50% Equity Security Units No. CUSIP No. G98255501 Number of Stripped Units This Stripped Units Certificate certifies that ________________________ is the registered Holder of the number of Stripped Units set forth above [If the Certificate is a Global Certificate, insert -, as such number may be increased or decreased as set forth on the Schedule of Increases or Decreases in Global Certificate annexed hereto]. Each Stripped Unit represents (i) a 1/40 undivided beneficial ownership interest in a Treasury Security or, in the case of an Opt-Out, the Cash Consideration, subject to the Pledge of such interest in such Treasury Security or Cash Consideration, as the case may be, by such Holder pursuant to the Pledge Agreement, and (ii) the rights and obligations of the Holder under one Purchase Contract with XL Capital Ltd, a Cayman Islands exempted limited company (the "Company"). Each Stripped Unit will have a stated amount of $25 (the "Stated Amount"). In the event a Holder creates a Stripped Unit as a result of an Opt-Out pursuant to Section 5.4(b)(iv) of the Purchase Contract Agreement, all references herein to Treasury Securities or Pledged Treasury Securities, including for purposes of Sections 3.15 and 5.8 of the Purchase Contract Agreement, shall be deemed to include the Cash Consideration in addition to the Treasury Securities. All capitalized terms used herein which are defined in the Purchase Contract Agreement have the meaning set forth therein. Pursuant to the Pledge Agreement, the Treasury Security constituting part of each Stripped Unit evidenced hereby has been pledged to the Collateral Agent, for the benefit of the Company, to secure the obligations of the Holder under the Purchase Contract comprising a part of such Stripped Unit to purchase Ordinary Shares of the Company. Prior to the purchase of Ordinary Shares under each Purchase Contract, such Purchase Contracts shall not entitle the Holders of Normal Units Certificates to any of the rights of a holder of Ordinary Shares, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as shareholders in respect of the meetings of shareholders, or for the election of directors of the Company or for any other matter or any other rights whatsoever as shareholder of the Company. Each Purchase Contract evidenced hereby obligates the Holder of this Stripped Units Certificate to purchase, and the Company to sell, on May 15, 2007 (the "Stock Purchase Date"), at a price equal to $25 (the "Purchase Price"), a number of Class A Ordinary Shares, par value $0.01 per share ("Ordinary Shares"), of the Company, equal to the Settlement Rate or, if the Company has fixed the Settlement Rate pursuant to Section 5.1(f) of the Purchase Contract Agreement, the Fixed Settlement Rate, unless on or prior to the Stock Purchase Date there shall have occurred a Termination Event or an Early Settlement or Merger Early Settlement with respect to the Stripped Units of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The Purchase Price (as defined herein) for the Ordinary Shares purchased pursuant to each Purchase Contract B-2 evidenced hereby, if not paid earlier, shall be paid on the Stock Purchase Date by application of payments received in respect of the Pledged Treasury Securities pledged to secure the obligations of the Holder under such Purchase Contract in accordance with the terms of the Pledge Agreement. The Company shall pay on each Payment Date in respect of each Purchase Contract forming part of a Stripped Unit evidenced hereby an amount (the "Contract Adjustment Payments") equal to 3.97% per year of the Stated Amount through but excluding the Stock Purchase Date, computed on the basis of a 360-day year of twelve 30-day months, subject to deferral at the option of the Company as provided in the Purchase Contract Agreement and more fully described on the reverse hereof (provided that if on any date on which Contract Adjustment Payments are to be made on the Purchase Contracts is not a Business Day, then payment of the Contract Adjustment Payments payable on that date will be made on the next succeeding day which is a Business Day, and no interest or payment will be paid in respect of the delay, except that if such next succeeding Business Day is in the next succeeding calendar year, such payment will be made on the immediately preceding Business Day). Such Contract Adjustment Payments shall be payable to the Person in whose name this Stripped Units Certificate (or a Predecessor Stripped Units Certificate) is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments will be payable at the office of the Purchase Contract Agent in the City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto as such address appears on the Stripped Units Register or by wire transfer to the account designated by such Person in writing. Reference is hereby made to the further provisions set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Purchase Contract Agent by manual signature, this Stripped Units Certificate shall not be entitled to any benefit under the Pledge Agreement or the Purchase Contract Agreement or be valid or obligatory for any purpose. B-3 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: _________________ XL CAPITAL LTD By: ------------------------------------ Name: Title: HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the Purchase Contracts evidenced hereby) By: U.S. BANK NATIONAL ASSOCIATION, not individually but solely as Attorney-in-Fact of such Holder By: ------------------------------------ Name: Title: B-4 PURCHASE CONTRACT AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Stripped Units Certificates referred to in the within-mentioned Purchase Contract Agreement. Dated: ----------------- U.S. Bank National Association, as Purchase Contract Agent By: ------------------------------------ Authorized Officer B-5 (Form of Reverse of Stripped Units Certificate) Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of March 23, 2004 (as may be supplemented from time to time, the "Purchase Contract Agreement"), between the Company and U.S. Bank National Association, as Purchase Contract Agent (including its successors thereunder, herein called the "Purchase Contract Agent"), to which the Purchase Contract Agreement and supplemental agreements thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Purchase Contract Agent, the Company and the Holders and of the terms upon which the Stripped Units Certificates are, and are to be, executed and delivered. All defined terms used but not defined in this Certificate have the meanings ascribed to them in the Purchase Contract Agreement. Each Purchase Contract evidenced hereby obligates the Holder of this Stripped Units Certificate to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of Ordinary Shares of the Company equal to the Settlement Rate or, if the Company has fixed the Settlement Rate pursuant to Section 5.1(f) of the Purchase Contract Agreement, the Fixed Settlement Rate, unless, on or prior to the Stock Purchase Date, there shall have occurred a Termination Event or a Cash Settlement, an Early Settlement or Merger Early Settlement with respect to the Unit of which such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal to or greater than $93.99 (the "Threshold Appreciation Price"), 0.2660 Ordinary Shares per Purchase Contract, (b) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $75.19, the number of Ordinary Shares per Purchase Contract equal to the Purchase Price divided by the Applicable Market Value and (c) if the Applicable Market Value is equal to or less than $75.19, 0.3325 Ordinary Shares per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract Agreement. No fractional Ordinary Shares will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement. The "Applicable Market Value" means the average of the Closing Price per Ordinary Share on each of the 20 consecutive Trading Days ending on the third Trading Day immediately preceding the Stock Purchase Date or in the event of a Cash Merger, the Cash Merger Date. The "Closing Price" of the Ordinary Shares on any date of determination means the closing sale price (or, if no closing sale price is reported, the last reported sale price) of the Ordinary Shares on the New York Stock Exchange (the "NYSE") on such date or, if the Ordinary Shares are not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Ordinary Shares are so listed, or if the Ordinary Shares are not so listed on a United States national or regional securities exchange, as reported by The Nasdaq Stock Market, or, if the Ordinary Shares are not so reported, the last quoted bid price for the Ordinary Shares in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of the Ordinary Shares on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company. B-6 A "Trading Day" means a day on which the Ordinary Shares (A) are not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) have traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Ordinary Shares at the close of business of such day. Each Purchase Contract evidenced hereby may be settled prior to the Stock Purchase Date through Cash Settlement, Early Settlement or Merger Early Settlement, in accordance with the terms of the Purchase Contract Agreement. In accordance with the terms of the Purchase Contract Agreement, the Holder of this Stripped Units Certificate shall pay the Purchase Price for the Ordinary Shares purchased pursuant to each Purchase Contract evidenced hereby (i) by effecting a Cash Settlement, an Early Settlement or Merger Early Settlement or (ii) by application of payments received in respect of the Pledged Treasury Securities underlying the Stripped Units represented by this Stripped Units Certificate. The Company shall not be obligated to issue any Ordinary Shares in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment in full of the aggregate Purchase Price for the Ordinary Shares to be purchased thereunder in the manner herein set forth. The Stripped Units Certificates are issuable only in registered form and only in denominations of a single Stripped Unit and any integral multiple thereof. The transfer of any Stripped Units Certificate will be registered and Stripped Units Certificates may be exchanged as provided in the Purchase Contract Agreement. The Stripped Units Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents permitted by the Purchase Contract Agreement. No service charge shall be required for any such registration of transfer or exchange of a Stripped Units Certificate, but the Company and the Purchase Contract Agent may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Certificates, other than exchanges not involving any transfer as provided for in the Purchase Contract Agreement. The Holder of a Stripped Unit may substitute for the Pledged Treasury Securities securing its obligations under the related Purchase Contract Notes or the Treasury Consideration in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. From and after such Collateral Substitution, the Unit for which such Pledged Notes or Pledged Treasury Consideration secures the Holder's obligation under the Purchase Contract shall be referred to as a "Normal Unit." A Holder that elects to substitute Notes or the Treasury Consideration for Pledged Treasury Securities, thereby reestablishing Normal Units, shall be responsible for any fees or expenses payable in connection therewith. Except as provided in the Purchase Contract Agreement, for so long as the Purchase Contract underlying a Stripped Unit remains in effect, such Stripped Unit shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Stripped Unit in respect of the Pledged Treasury Security and the Purchase Contract comprising such Stripped Unit may be acquired, and may be transferred and exchanged, only as a Stripped Unit. B-7 A Holder of Normal Units may establish Stripped Units at any time from and after the date of the Purchase Contract Agreement and on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date by depositing with the Collateral Agent Treasury Securities in exchange for the release of the Pledged Notes or the Pledged Treasury Consideration in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. Subject to the next succeeding paragraph, the Company shall pay, on each Payment Date, the Contract Adjustment Payments, if any, payable in respect of each Purchase Contract to the Person in whose name the Stripped Units Certificate (or one or more Predecessor Stripped Units Certificates) evidencing such Purchase Contract is registered on the Stripped Units Register at the close of business on the Record Date next preceding such Payment Date. Contract Adjustment Payments, if any, will be payable at the office of the Purchase Contract Agent in the Borough of Manhattan, New York City, or, if the Units do not remain in book-entry only form, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears on the Stripped Units Register or by wire transfer to the account maintained in the United States designated by written notice given ten Business Days prior to the applicable payment date by such Person. The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Purchase Contract Agent written notice of its election to defer each such Contract Adjustment Payments as provided in the Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, accrue additional Contract Adjustment Payments thereon at the rate of 6.50% per year (computed on the basis of a 360-day year of twelve 30-day months), compounding on each succeeding Payment Date, until paid in full (such deferred installments of Contract Adjustment Payments, if any, together with the additional Contract Adjustment Payments, if any, accrued thereon, are referred to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be due on the next succeeding Payment Date except to the extent that payment is deferred pursuant to the Purchase Contract Agreement. No Contract Adjustment Payments may be deferred to a date that is after the Stock Purchase Date and no such deferral period may end other than on a Payment Date. In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date. In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, the Holder of this Stripped Units Certificate will receive on the Stock Purchase Date, in lieu of a cash payment, a number of Ordinary Shares (in addition to the number of Ordinary Shares equal to the Settlement Rate) equal to (i) the aggregate amount of Deferred Contract Adjustment Payments payable to the Holder of this Stripped Units Certificate divided by (ii) the Applicable Market Value. B-8 The Company's obligations with respect to Contract Adjustment Payments (including any accrued or Deferred Contract Adjustment Payments) will be subordinated and junior in right of payment to the Company's obligations under any Senior Indebtedness in the manner and to the extent set forth in the Purchase Contract Agreement. In the event the Company exercises its option to defer the payment of Contract Adjustment Payments, then, until the date on which the Deferred Contract Adjustment Payments have been paid, the Company shall not, and will not permit any subsidiary of the Company to, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of the Company's Ordinary Shares other than (i) repurchases, redemptions or acquisitions of Ordinary Shares of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or agents or a stock purchase or dividend reinvestment plan, or the satisfaction by the Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its rights to defer the Contract Adjustment Payments; (ii) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one class or series of the Company's Capital Stock for another class or series of the Company's Capital Stock; (iii) the purchase of fractional interests in shares of any series of the Company's Capital Stock pursuant to the conversion or exchange provisions of such Capital Stock or the security being converted or exchanged; (iv) dividends or distributions in any series of the Company's Capital Stock (or rights to acquire the Company's Capital Stock) or repurchases, redemptions or acquisitions of the Company's Capital Stock in exchange for or out of the net cash proceeds of the sale of the Company's Capital Stock (or securities convertible into or exchangeable for shares of the Company's Capital Stock); or (v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan on the date the Company exercises its right to defer the payment of Contract Adjustment Payments or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future, or the redemption or repurchase of any rights pursuant thereto. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive accumulated Contract Adjustment Payments, if any, or any Deferred Contract Adjustment Payments, and the obligations of the Holders to purchase Ordinary Shares, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Purchase Contract Agent or the Company, if, on or prior to the Stock Purchase Date, a Termination Event shall have occurred. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two business days thereafter give written notice to the Purchase Contract Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Stripped Units Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Pledged Treasury Securities from the Pledge in accordance with the provisions of the Pledge Agreement. Upon registration of transfer of this Stripped Units Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee, except as may be required by the Purchase Contract Agent pursuant to the Purchase Contract Agreement), under the terms of the Purchase Contract Agreement, the Purchase Contracts evidenced hereby and the Pledge Agreement and the transferor shall be released from the obligations under the Purchase B-9 Contract Agreement, the Purchase Contracts evidenced by this Stripped Units Certificate and the Pledge Agreement. The Company covenants and agrees, and the Holder, by his acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. The Holder of this Stripped Units Certificate, by its acceptance hereof, irrevocably authorizes the Purchase Contract Agent to enter into and perform the related Purchase Contracts forming part of the Stripped Units evidenced hereby on his behalf as its attorney-in-fact, expressly withholds any consent to the assumption (i.e., affirmance) of the Purchase Contracts by the Company, any receiver, liquidator or person or entity performing similar functions or its trustee in the event that the Company becomes the debtor under the Bankruptcy Code or subject to other similar state or federal or other law, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform such Holder's obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, irrevocably authorizes the Purchase Contract Agent to enter into and perform the Pledge Agreement on such Holder's behalf as attorney-in-fact, and consents to the Pledge of the Treasury Securities underlying this Stripped Units Certificate pursuant to the Pledge Agreement, PROVIDED that upon a Termination Event, the rights of the Holder of such Stripped Units may be enforced without regard to any other rights or obligations. The Holder further covenants and agrees, that, to the extent and in the manner provided in the Purchase Contract Agreement and the Pledge Agreement, but subject to the terms thereof, payments in respect of the Pledged Treasury Securities, to be paid upon settlement of such Holder's obligations to purchase Ordinary Shares under the Purchase Contract, shall be paid on the Stock Purchase Date by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. The obligations of each Holder to pay the Purchase Price are non-recourse obligations and except to the extent paid by Early Settlement or Merger Early Settlement, are payable solely out of the proceeds of any Collateral pledged to secure the obligations of the Holders and in no event will Holders be liable for any deficiency between such payments and the Purchase Price. Each Holder of any Unit, and each Beneficial Owner thereof, by its acceptance thereof or of its interest therein, further agrees to treat (i) the formation of Stripped Units as the acquisition of a Unit consisting of the Purchase Contract and the Treasury Securities and (ii) itself as the owner of the related Notes, Treasury Consideration or Treasury Securities, as the case may be. Subject to certain exceptions, the provisions of the Purchase Contract Agreement may be amended with the consent of the Holders of a majority of the Purchase Contracts. The Purchase Contracts shall for all purposes be governed by and deemed to be a contract under, and construed in accordance with, the laws of the State of New York. The Company, the Purchase Contract Agent and its Affiliates and any agent of the Company or the Purchase Contract Agent may treat the Person in whose name this Stripped Units Certificate is registered as the owner of the Stripped Units evidenced hereby for the purpose of receiving any Contract Adjustment Payments and any Deferred Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not any payments in respect thereof be overdue and notwithstanding any notice to the B-10 contrary, and neither the Company, the Purchase Contract Agent, such Affiliate, nor any such agent shall be affected by notice to the contrary. The Purchase Contracts shall not, prior to the settlement thereof, entitle the Holder to any of the rights of a holder of Ordinary Shares. A copy of the Purchase Contract Agreement is available for inspection at the offices of the Purchase Contract Agent. B-11 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian --------------------------------------- (cust) (minor) Under Uniform Gifts to Minors Act --------------------------------------- (State) TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. B-12 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto - -------------------------------------------------------------------------------- (Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee) - -------------------------------------------------------------------------------- (Please Print or Type Name and Address Including Postal Zip Code of Assignee) the within Stripped Units Certificates and all rights thereunder, hereby irrevocably constituting and appointing ______________attorney to transfer said Stripped Units Certificates on the books of XL Capital Ltd with full power of substitution in the premises. Dated: ------------------------------------- -------- Signature NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Stripped Units Certificates in every particular, without alteration or enlargement or any change whatsoever. Signature Guarantee: ------------------------------------------------------------ B-13 SETTLEMENT INSTRUCTIONS The undersigned Holder directs that a certificate for Ordinary Shares deliverable upon settlement on or after the Stock Purchase Date of the Purchase Contracts underlying the number of Stripped Units evidenced by this Stripped Units Certificate be registered in the name of, and delivered, together with a check in payment for any fractional share, to the undersigned at the address indicated below unless a different name and address have been indicated below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: Signature: ------------ ----------------------------- Signature Guarantee: ------------------- (if assigned to another person) If shares are to be registered in the REGISTERED HOLDER name of and delivered to a Person other than the Holder, please (i) print such Person's name and address and (ii) provide a guarantee of your signature: Please print name and address of Registered Holder: - --------------------------------------- --------------------------------------- Name Name - --------------------------------------- --------------------------------------- Address Address Social Security or other Taxpayer Identification Number, if any: B-14 ELECTION TO SETTLE EARLY The undersigned Holder of this Stripped Units Certificate hereby irrevocably exercises the option, subject to Section 5.9(g) of the Purchase Contract Agreement, to effect Early Settlement in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Stripped Units evidenced by this Stripped Units Certificate specified below. The option to effect Early Settlement may be exercised only with respect to Purchase Contracts underlying Stripped Units with an aggregate Purchase Price equal to $1,000 or an integral multiple thereof. The undersigned Holder directs that a certificate for Ordinary Shares deliverable upon such Early Settlement be registered in the name of, and delivered, together with a check in payment for any fractional share and any Stripped Units Certificate representing any Stripped Units evidenced hereby as to which Early Settlement of the related Purchase Contracts is not effected, to the undersigned at the address indicated below unless a different name and address have been indicated below. Pledged Treasury Securities deliverable upon such Early Settlement will be transferred in accordance with the transfer instructions set forth below. If Ordinary Shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: Signature: ------------ ----------------------------- Signature Guarantee: ------------------- Number of Units evidenced hereby as to which Early Settlement of the related Purchase Contracts is being elected: If Ordinary Shares are to be registered REGISTERED HOLDER in the name of and delivered to and Pledged Treasury Securities are to be transferred to a Person other than the Holder, please print such Person's name Please print name and address of and address: Registered Holder: - --------------------------------------- --------------------------------------- Name Name - --------------------------------------- --------------------------------------- Address Address Social Security or other Taxpayer Identification Number, if any: Transfer instructions for Pledged Treasury Securities, transferable upon Early Settlement or a Termination Event: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- B-15 [TO BE ATTACHED TO GLOBAL CERTIFICATES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE The following increases or decreases in this Global Certificate have been made: Stated Amount Amount of Amount of of the Global Decrease in Increase in Certificate Signature of Authorized Stated Amount Stated Amount Following Such Officer of Purchase of the Global of the Global Decrease of Contract Agent Date Certificate Certificate Increase - --------- ------------- ------------- -------------- ----------------------- B-16 EXHIBIT C INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT U.S. Bank Trust National Association 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Elizabeth Hammer Re: 6.50% Equity Security Units of XL Capital Ltd (the "Company") We hereby notify you in accordance with Section 4.1 of the Pledge Agreement, dated as of March 23, 2004, among the Company, you, as Collateral Agent, Custodial Agent and Securities Intermediary, and us, as Purchase Contract Agent and as attorney-in-fact for the holders of [Normal Units] [Stripped Units] from time to time, that the holder of securities listed below (the "Holder") has elected to substitute [$ ______aggregate principal amount of Treasury Securities (CUSIP No. 912820BX4)] [$_____principal amount of Notes or the Treasury Consideration, as the case may be,] in exchange for the related [Pledged Notes or Pledged Treasury Consideration] [Pledged Treasury Securities (CUSIP No. [___________]),] held by you in accordance with the Pledge Agreement and has delivered to us a notice stating that the Holder has transferred [Treasury Securities] [Notes or the Treasury Consideration] to you, as Collateral Agent. We hereby instruct you, upon receipt of such [Pledged Treasury Securities] [Pledged Notes or Pledged Treasury Consideration], and upon the payment by such Holder of any applicable fees, to release the [Notes or Treasury Consideration, as the case may be,] [Treasury Securities] related to such [Normal Units] [Stripped Units] to us in accordance with the Holder's instructions. Capitalized terms used herein but not defined shall have the meaning set forth in the Purchase Contract Agreement. Date: ----------------------- U.S. Bank National Association, As Purchase Contract Agent under the Purchase Contract Agreement, dated as of March 23, 2004, between the Company and the Purchase Contract Agent By: ------------------------------------ Name: Title: C-1 Please print name and address of Registered Holder electing to substitute [Treasury Securities] Notes or Treasury Consideration, as the case may be,] for the Notes or Pledged Treasury Consideration, as the case may be,] [Pledged Treasury Securities]: - --------------------------------------- --------------------------------------- Name: Social Security or other Taxpayer Identification Number, if any - --------------------------------------- Address - --------------------------------------- - --------------------------------------- - --------------------------------------- Cc: XL Capital Ltd Attention: Paul S. Giordano C-2 EXHIBIT D INSTRUCTION TO PURCHASE CONTRACT AGENT U.S. Bank National Association, as Purchase Contract Agent 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Arthur L. Blakeslee Re: 6.50% Equity Security Units of XL Capital Ltd (the "Company") The undersigned Holder hereby notifies you, as Purchase Contract Agent under the Purchase Contract Agreement, dated as of March 23, 2004, between the Company and you, that it has delivered to U.S. Bank Trust National Association, as Collateral Agent, Custodial Agent and Securities Intermediary [$__________aggregate principal amount of Treasury Securities] [$_________ principal amount of Notes or the Treasury Consideration, as the case may be,] in exchange for the related [Pledged Notes or Pledged Treasury Consideration, as the case may be,] [Pledged Treasury Securities] held by the Collateral Agent, in accordance with Section 4.1 of the Pledge Agreement, dated as of March 23, 2004, among you, the Company and the Collateral Agent. The undersigned Holder has paid the Collateral Agent all applicable fees relating to such exchange. The undersigned Holder hereby instructs you to instruct the Collateral Agent to release to you on behalf of the undersigned Holder the [Pledged Notes or Pledged Treasury Consideration, as the case may be,] [Pledged Treasury Securities] related to such [Normal Units] [Stripped Units]. Capitalized terms used herein but not defined shall have the meaning set forth in the Purchase Contract Agreement. Date: By: ------------------------- ------------------------------------ --------------------------------------- Signature Guarantee: D-1 Dated: Please print name and address of Social Security or other Taxpayer Registered Holder: Identification Number, if any: Name: ---------------------------------- --------------------------------------- Address: - --------------------------------------- - --------------------------------------- - --------------------------------------- Cc: XL Capital Ltd Attention: Paul S. Giordano D-2 EXHIBIT E NOTICE TO SETTLE BY SEPARATE CASH U.S. Bank National Association, as Purchase Contract Agent 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Arthur L. Blakeslee Re: 6.50% Equity Security Units of XL Capital Ltd (the "Company") The undersigned Holder hereby notifies you in accordance with Section 5.4 of the Purchase Contract Agreement, dated as of March 23, 2004, between the Company and you, as Purchase Contract Agent, Attorney-in-Fact and Trustee for the Holders of the Purchase Contracts, that it has delivered to U.S. Bank Trust National Association, as Collateral Agent, Custodial Agent and Securities Intermediary, that such Holder has elected to pay to the Collateral Agent, on or prior to 5:00 p.m. New York City time, on the thirteenth Business Day immediately preceding the Stock Purchase Date, (in lawful money of the United States by certified or cashier's check or wire transfer, in each case in immediately available funds), $___ as the Purchase Price for the Ordinary Shares issuable to such Holder by the Company under the related Purchase Contract on the Stock Purchase Date. The undersigned Holder hereby instructs you to notify promptly the Collateral Agent of the undersigned Holder's election to make such cash settlement with respect to the Purchase Contracts related to such Holder's Normal Units. Capitalized terms used herein but not defined shall have the meaning set forth in the Purchase Contract Agreement. Date: By: ------------------------- ------------------------------------ Signature Guarantee: --------------------------------------- E-1 Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. Please print name and address of Social Security or other Taxpayer Registered Holder: Identification Number, if any - --------------------------------------- --------------------------------------- Name - --------------------------------------- Address E-2 EX-4.4 7 c31556_ex4-4.txt EXECUTION COPY XL CAPITAL LTD, U.S. BANK TRUST NATIONAL ASSOCIATION, as Collateral Agent, Custodial Agent and Securities Intermediary AND U.S. BANK NATIONAL ASSOCIATION, as Purchase Contract Agent PLEDGE AGREEMENT Dated as of March 23, 2004
TABLE OF CONTENTS PAGE ARTICLE I DEFINITIONS.............................................................................................2 SECTION 1.1 Definitions................................................................................2 ARTICLE II PLEDGE; CONTROL AND PERFECTION.........................................................................4 SECTION 2.1 The Pledge.................................................................................4 SECTION 2.2 Delivery, Control and Perfection...........................................................6 ARTICLE III PAYMENTS ON COLLATERAL................................................................................8 SECTION 3.1 Payments...................................................................................8 SECTION 3.2 Application of Payments....................................................................9 ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES................................................9 SECTION 4.1 Collateral Substitution and the Creation of Stripped Units.................................9 SECTION 4.2 Collateral Substitution and the Re-Creation of Normal Units...............................10 SECTION 4.3 Termination Event.........................................................................10 SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement................................11 SECTION 4.5 Remarketing; Application of Proceeds; Settlement..........................................11 ARTICLE V VOTING RIGHTS -- NOTES.................................................................................13 SECTION 5.1 Exercise by Purchase Contract Agent.......................................................13 ARTICLE VI RIGHTS AND REMEDIES; SPECIAL EVENT REDEMPTION.........................................................14 SECTION 6.1 Rights and Remedies of the Collateral Agent...............................................14 SECTION 6.2 Substitutions.............................................................................15 SECTION 6.3 Special Event Redemption..................................................................15 SECTION 6.4 Cash Received from Holders of Normal Units not Participating in the Remarketing...........15 ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS............................................................16 SECTION 7.1 Representations and Warranties of the Holders.............................................16 SECTION 7.2 Representations and Warranties of the Collateral Agent, Custodial Agent and Securities Intermediary.................................................................17 SECTION 7.3 Covenants.................................................................................17 ARTICLE VIII THE COLLATERAL AGENT................................................................................18 SECTION 8.1 Appointment, Powers and Immunities........................................................18
i SECTION 8.2 Instructions of the Company...............................................................19 SECTION 8.3 Reliance..................................................................................20 SECTION 8.4 Rights in Other Capacities................................................................20 SECTION 8.5 Non-Reliance on Collateral Agent..........................................................20 SECTION 8.6 Compensation and Indemnity................................................................21 SECTION 8.7 Failure to Act............................................................................21 SECTION 8.8 Resignation; Replacement of Collateral Agent, Custodial Agent or Securities Intermediary............................................................................22 SECTION 8.9 Right to Appoint Agent or Advisor.........................................................23 SECTION 8.10 Survival.................................................................................23 SECTION 8.11 Exculpation..............................................................................23 ARTICLE IX AMENDMENT.............................................................................................24 SECTION 9.1 Amendment Without Consent of Holders......................................................24 SECTION 9.2 Amendment with Consent of Holders.........................................................24 SECTION 9.3 Execution of Amendments...................................................................25 SECTION 9.4 Effect of Amendments......................................................................25 SECTION 9.5 Reference to Amendments...................................................................25 ARTICLE X MISCELLANEOUS..........................................................................................25 SECTION 10.1 No Waiver................................................................................25 SECTION 10.2 GOVERNING LAW............................................................................26 SECTION 10.3 Judgment Currency........................................................................26 SECTION 10.4 Notices..................................................................................27 SECTION 10.5 Successors and Assigns...................................................................27 SECTION 10.6 Counterparts.............................................................................27 SECTION 10.7 Severability.............................................................................27 SECTION 10.8 Expenses, Etc............................................................................28 SECTION 10.9 Security Interest Absolute...............................................................28 SECTION 10.10 Waiver of Jury Trial.....................................................................28 SECTION 10.11 Incorporation by Reference...............................................................28
EXHIBIT A Instruction from Purchase Contract Agent to Collateral Agent EXHIBIT B Instruction to Purchase Contract Agent EXHIBIT C Instruction to Custodial Agent Regarding Remarketing EXHIBIT D Instruction to Custodial Agent Regarding Withdrawal from Remarketing ii PLEDGE AGREEMENT PLEDGE AGREEMENT, dated as of March 23, 2004 (this "Agreement"), among XL Capital Ltd, a Cayman Islands exempted limited company (the "Company"), U.S. Bank Trust National Association, a national banking association, not individually but solely as collateral agent (in such capacity, together with its successors in such capacity, the "Collateral Agent"), as custodial agent (in such capacity, together with its successors in such capacity, the "Custodial Agent") and as "securities intermediary" as defined in Section 8-102(a)(14) of the Code (as defined herein) (in such capacity, together with its successors in such capacity, the "Securities Intermediary"), and U.S. Bank National Association, a national banking association, not individually but solely as purchase contract agent and as attorney-in-fact of the Holders from time to time of the Units (in such capacity, together with its successors in such capacity, the "Purchase Contract Agent") under the Purchase Contract Agreement (as defined herein). RECITALS WHEREAS, the Company and the Purchase Contract Agent are parties to the Purchase Contract Agreement, dated as of the date hereof (as modified, amended or supplemented and in effect from time to time, the "Purchase Contract Agreement"), pursuant to which there may be issued Units having a Stated Amount of $25 per Unit, all of which will initially be Normal Units. WHEREAS, each Normal Unit will be comprised of (a) a Purchase Contract and (b) either beneficial ownership of (i) a 1/40, or 2.5%, beneficial ownership interest in a Note having a $1,000 principal amount or (ii) following a Special Event Redemption in accordance with the Purchase Contract Agreement and the terms of the Notes, beneficial ownership of the Treasury Consideration. WHEREAS, in accordance with the terms of the Purchase Contract Agreement, a Holder of Normal Units may separate the Notes or the Treasury Consideration, as applicable, from the related Purchase Contracts by substituting for such Notes or the Treasury Consideration, as the case may be, Treasury Securities that will pay in the aggregate an amount equal to the aggregate Stated Amount of such Normal Units. Upon such separation, the Normal Units will become Stripped Units. Each Stripped Unit will be comprised of (a) a Purchase Contract and (b) a 1/40 undivided beneficial interest in a Treasury Security, or, in the case of an opt-out pursuant to Section 6.4, the Cash Consideration. WHEREAS, pursuant to the terms of the Purchase Contract Agreement and the Purchase Contracts, the Holders, from time to time, of the Units have irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such Holders, among other things, to execute and deliver this Agreement on behalf of such Holders and to grant the pledge provided hereby of the Notes, any Treasury Consideration and any Treasury Securities delivered in exchange therefor to secure each Holder's obligations under the related Purchase Contract, as provided herein and subject to the terms hereof. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Collateral Agent, the Securities Intermediary, the Custodial Agent and the Purchase Contract Agent, on its own behalf and as attorney-in-fact of the Holders from time to time of the Units, agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) capitalized terms used but not defined herein are used as defined in the Purchase Contract Agreement; (b) the defined terms in this Agreement have the meanings assigned to them in this Article and include the plural as well as the singular; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. "AGREEMENT" means this agreement as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof. "CASH CONSIDERATION" has the meaning specified in the Purchase Contract Agreement. "CODE" has the meaning specified in Section 6.1 hereof. "COLLATERAL" has the meaning specified in Section 2.1(a) hereof. "COLLATERAL ACCOUNT" means the securities account (number 785068000) maintained at U.S. Bank Trust National Association, 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, in the name of "U.S. Bank National Association, as Purchase Contract Agent on behalf of the holders of certain securities of XL Capital Ltd, Collateral Account subject to the security interest of U.S. Bank Trust National Association, as Collateral Agent, for the benefit of XL Capital Ltd, as pledgee" and any successor account. "COLLATERAL AGENT" has the meaning specified in the first paragraph of this Agreement. "COMPANY" means the Person named as the "Company" in the first paragraph of this Agreement until a successor shall have become such pursuant to the applicable provisions of the Purchase Contract Agreement, and thereafter "Company" shall mean such successor. 2 "CUSTODIAL AGENT" has the meaning specified in the first paragraph of this Agreement. "INDENTURE" means the Indenture dated as of January 23, 2003 between the Company and U.S. Bank National Association, as trustee, as supplemented by the First Supplemental Indenture, dated as of March 23, 2004. "INTERMEDIARY" means any entity that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity. "PLEDGE" has the meaning specified in Section 2.1(c) hereof. "PLEDGED NOTES" has the meaning specified in Section 2.1(c) hereof. "PLEDGED TREASURY CONSIDERATION" has the meaning specified in Section 2.1(c) hereof. "PLEDGED TREASURY SECURITIES" has the meaning specified in Section 2.1(c) hereof. "PROCEEDS" means all interest, dividends, cash, instruments, securities, financial assets (as defined in Section 8-102(a)(9) of the Code) and other property from time to time received, receivable or otherwise distributed upon the sale, exchange, collection or disposition of the Collateral or any proceeds thereof. "PURCHASE CONTRACT AGENT" has the meaning specified in the first paragraph of this Agreement. "PURCHASE CONTRACT AGREEMENT" has the meaning specified in the Recitals. "SECURITIES INTERMEDIARY" has the meaning specified in the first paragraph of this Agreement. "SECURITY ENTITLEMENT" has the meaning set forth in Section 8-102(a)(17) of the Code. "SEPARATE NOTES" means any Notes that are not Pledged Notes. "TRADES REGULATIONS" means the regulations of the United States Department of the Treasury, published at 31 C.F.R. Part 357, as amended from time to time. Unless otherwise defined herein, all terms defined in the TRADES Regulations are used herein as therein defined. "TRANSFER" means, with respect to the Collateral and in accordance with the instructions of the Collateral Agent, the Purchase Contract Agent or the Holder, as applicable: (i) in the case of Collateral consisting of certificated securities, delivery as provided in 8-301(a) of the UCC in appropriate physical form to the recipient accompanied by any duly executed instruments of transfer, assignments in blank, 3 transfer tax stamps and any other documents necessary to constitute a legally valid transfer to the recipient; and (ii) in the case of Collateral consisting of security entitlements relating to securities maintained in book-entry form, by causing a "securities intermediary" (as defined in Section 8-102(a)(14) of the Code) to (a) credit such "security entitlement" (as defined in Section 8-102(a)(17) of the Code) to a "securities account" (as defined in Section 8-501(a) of the Code) maintained by or on behalf of the recipient and (b) to issue a confirmation to the recipient with respect to such credit. In the case of Collateral to be delivered to the Collateral Agent, the securities intermediary shall be the Securities Intermediary and the securities account shall be the Collateral Account. In addition, any Transfer of Treasury Securities and Treasury Consideration hereunder shall be made in accordance with the TRADES Regulations and other applicable law. ARTICLE II PLEDGE; CONTROL AND PERFECTION SECTION 2.1 THE PLEDGE. (a) The Holders from time to time acting through the Purchase Contract Agent, as their attorney-in-fact hereby pledge and grant to the Collateral Agent, for the benefit of the Company, as collateral security for the payment and performance when due by such Holders of their respective obligations to the Company under the related Purchase Contracts, a security interest in, and right of set-off against, all of the right, title and interest of the Purchase Contract Agent and such Holders in: (i) the Notes constituting a part of the Units that have not been released by the Collateral Agent, other than a release to the Remarketing Agent in connection with a remarketing under Section 4.5 hereof, to such Holders under the provisions of this Agreeement; (ii) (A) the Treasury Consideration or Treasury Securities constituting a part of the Units, (B) any Treasury Securities delivered in exchange for any Notes or Treasury Consideration, as applicable, in accordance with Section 4.1 hereof, and (C) any Notes or Treasury Consideration, as applicable, delivered in exchange for any Treasury Securities in accordance with Section 4.2 hereof, in each case that have been Transferred to or otherwise received by the Collateral Agent and not released by the Collateral Agent, other than a release to the Remarketing Agent in connection with a remarketing under Section 4.5 hereof, to such Holders under the provisions of this Agreement; (iii) the Collateral Account and all securities, financial assets, security entitlements, cash and other property credited thereto and all Security Entitlements related thereto; (iv) upon the occurrence of a Special Event Redemption, the Treasury Portfolio Transferred to the Collateral Account; 4 (v) all Proceeds of the foregoing; and (vi) all powers and rights now owned or hereafter acquired under or with respect to any of the foregoing (all of the foregoing, collectively, the "COLLATERAL"). (b) Prior to or concurrently with the execution and delivery of this Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the Units, shall cause the Notes comprising a part of the Normal Units, which will be subject to the Pledge set forth in this Section 2.1, to be Transferred to the Collateral Agent for the benefit of the Company. (c) The pledge provided in this Section 2.1 is herein referred to as the "Pledge" and the Notes (including any Notes that are delivered pursuant to Section 6.2 hereof), Treasury Consideration and Treasury Securities subject to the Pledge, excluding any Notes, Treasury Consideration or Treasury Securities released from the Pledge as provided in Sections 4.1, 4.2 and 4.3 hereof, respectively, are hereinafter referred to as "Pledged Notes," "Pledged Treasury Consideration" and "Pledged Treasury Securities," respectively. Subject to the Pledge and the provisions of Section 2.2 hereof, the Holders from time to time shall have full beneficial ownership of the Collateral. For purposes of perfecting the Pledge under applicable law, including, to the extent applicable, the TRADES Regulations or the Uniform Commercial Code as adopted and in effect in any applicable jurisdiction, the Collateral Agent shall be the agent of the Company as provided herein. Whenever directed by the Collateral Agent acting on behalf of the Company, the Securities Intermediary shall have the right to reregister in its name the Notes or any other securities held in physical form. (d) Except as may be required in order to release Notes or Treasury Consideration, as applicable, in connection with a Special Event Redemption or with a Holder's election to convert its investment from a Normal Unit to a Stripped Unit, or except as may be required in order to release Treasury Securities in connection with a Holder's election to convert its investment from a Stripped Unit to a Normal Unit, or except as otherwise required to release Notes, Treasury Consideration or Treasury Securities as specified herein, the Collateral Agent, shall not relinquish physical possession of any certificate evidencing Notes, Treasury Securities or Treasury Consideration, as applicable, prior to the termination of this Agreement. If it becomes necessary for the Collateral Agent to relinquish physical possession of a certificate in order to release a portion of the Notes evidenced thereby from the Pledge, the Company shall use its commercially reasonable best efforts to arrange for the Securities Intermediary to obtain physical possession of a replacement certificate evidencing any Notes remaining subject to the Pledge hereunder registered to the Securities Intermediary or endorsed in blank (or accompanied by a bond power endorsed in blank) within fifteen calendar days of the date the Securities Intermediary relinquished possession. The Securities Intermediary shall promptly notify the Company and the Collateral Agent of its inability to obtain possession of any such replacement certificate as required hereby. (e) Notwithstanding anything contained herein to the contrary, for avoidance of doubt, (i) the cash payments at the rate of 2.53% per year of the Stated Amount of the Notes and (ii) after a Special Event Redemption, the quarterly payments with respect to the Treasury Consideration (as specified in clause (B) of the definition of Treasury Consideration) that are a 5 part of the Normal Units to Holders of Normal Units shall not be subject to the Pledge and therefore are not part of the Collateral. SECTION 2.2 DELIVERY, CONTROL AND PERFECTION. (a) The Purchase Contract Agent shall immediately deliver to the Collateral Agent all certificates or instruments representing the Collateral accompanied by stock or bond powers duly executed in blank or other instruments of reasonable satisfaction to the Collateral Agent. (b) Except as provided in Section 5.1, at all times prior to the termination of the Pledge, the Collateral Agent shall have sole control of the Collateral Account, and the Securities Intermediary shall take instructions and directions with respect to the Collateral Account solely from the Collateral Agent. In connection with the Pledge granted in Section 2.1, and subject to the other provisions of this Agreement, the Holders from time to time acting through the Purchase Contract Agent, as their attorney-in-fact, hereby authorize and direct the Securities Intermediary (without the necessity of obtaining the further consent of the Purchase Contract Agent or any of the Holders), and the Securities Intermediary agrees, to comply with and follow any instructions and entitlement orders (as defined in Section 8-102(a)(8) of the Code) that the Collateral Agent may deliver pursuant to the terms hereof or upon the written direction of the Company with respect to the Collateral Account, the Collateral credited thereto and any Security Entitlements with respect thereto. Such instructions and entitlement orders may, without limitation, direct the Securities Intermediary to transfer, redeem, assign, or otherwise deliver the Notes, the Treasury Consideration and the Treasury Securities, and any Security Entitlements with respect thereto, or sell, liquidate or dispose of such assets through a broker designated by the Company, and to pay and deliver any income, proceeds or other funds derived therefrom to the Company. The Collateral Agent shall be the agent of the Company and shall act only in accordance with the terms hereof or as otherwise directed in writing by the Company. Without limiting the generality of the foregoing, the Collateral Agent shall issue entitlement orders to the Securities Intermediary when and as required by the terms hereof or as otherwise directed in writing by the Company. (c) The Securities Intermediary hereby confirms and agrees that: (i) all securities or other property underlying any financial assets credited to the Collateral Account shall be registered in the name of the Securities Intermediary, or its nominee, endorsed to the Securities Intermediary, or its nominee, or in blank or credited to another Collateral Account maintained in the name of the Securities Intermediary and in no case will any financial asset credited to the Collateral Account be registered in the name of the Purchase Contract Agent, the Collateral Agent, the Company or any Holder, payable to the order of, or specially indorsed to, the Purchase Contract Agent, the Collateral Agent, the Company or any Holder except to the extent the foregoing have been specially endorsed to the Securities Intermediary or in blank; (ii) all property delivered to the Securities Intermediary pursuant to this Agreement (including, without limitation, any Notes, Treasury Consideration or Treasury Securities) will be promptly credited to the Collateral Account; 6 (iii) the Collateral Account is an account to which financial assets are or may be credited, and the Securities Intermediary shall, subject to the terms of this Agreement, treat the Purchase Contract Agent as entitled to exercise the rights of any financial asset credited to the Collateral Account; (iv) the Securities Intermediary has not entered into, and until the termination of this Agreement will not enter into, any agreement with any other Person relating to the Collateral Account and/or any financial assets credited thereto pursuant to which it has agreed to comply with entitlement orders (as defined in Section 8-102(a)(8) of the Code) of such other Person; and (v) the Securities Intermediary has not entered into, and until the termination of this Agreement will not enter into, any agreement with the Company, the Collateral Agent or the Purchase Contract Agent purporting to limit or condition the obligation of the Securities Intermediary to comply with entitlement orders as set forth in this Section 2.2 hereof. (d) The Securities Intermediary hereby agrees that each item of property (whether investment property, financial asset, security, instrument or cash) credited to the Collateral Account shall be treated as a "financial asset" within the meaning of Section 8-102(a)(9) of the Code. (e) In the event of any conflict between this Agreement (or any portion thereof) and any other agreement now existing or hereafter entered into, the terms of this Agreement, as may be amended pursuant to Article IX hereof, shall prevail. (f) The Purchase Contract Agent hereby irrevocably constitutes and appoints the Collateral Agent and the Company, with full power of substitution, as the Purchase Contract Agent's attorney-in-fact to take on behalf of, and in the name, place and stead of the Purchase Contract Agent and the Holders, any action necessary or desirable to perfect and to keep perfected the security interest in the Collateral referred to in Section 2.1. The grant of such power-of-attorney shall not be deemed to require of the Collateral Agent any specific duties or obligations not otherwise assumed by the Collateral Agent hereunder. Notwithstanding the foregoing, in no event shall the Collateral Agent, the Custodial Agent, the Securities Intermediary or the Purchase Contract Agent be responsible for the preparation or filing of any financing or continuation statements in the appropriate jurisdictions or responsible for maintenance or perfection of any security interest hereunder. (g) The Purchase Contract Agent shall file with the United States Internal Revenue Service and deliver to the Holders Forms 1099 (or successor or comparable forms), to the extent required by law, with respect to payments to the Holders. 7 ARTICLE III PAYMENTS ON COLLATERAL SECTION 3.1 PAYMENTS. So long as the Purchase Contract Agent is the registered owner of the Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, it shall receive all payments thereon. If the Pledged Notes are reregistered such that the Collateral Agent becomes the registered holder, all payments of the principal of, or interest or other amounts on, the Pledged Notes and all payments of the principal of, or cash distributions on, any Pledged Treasury Consideration or Pledged Treasury Securities, that are received by the Collateral Agent and that are properly payable hereunder shall be paid by the Collateral Agent by wire transfer in same day funds: (i) in the case of (A) any interest payments with respect to the Pledged Notes or Pledged Treasury Consideration (including as specified in clause (B) of the definition of Treasury Consideration), as the case may be, with respect to Normal Units and (B) any payments with respect to any Notes or Treasury Consideration (including as specified in clause (A) of the definition of Treasury Consideration), as the case may be, that have been released from the Pledge pursuant to Section 4.3 hereof, to the Purchase Contract Agent, for the benefit of the relevant Holders of the Normal Units, to the account designated by the Purchase Contract Agent for such purpose no later than 11:00 a.m., New York City time, on the Business Day such payment is received by the Collateral Agent (provided that in the event such payment or payment instructions are received by the Collateral Agent on a day that is not a Business Day or after 10:30 a.m., New York City time, on a Business Day, then such payment shall be made no later than 9:30 a.m., New York City time, on the next succeeding Business Day); (ii) in the case of any payments with respect to any Treasury Securities that have been released from the Pledge pursuant to Section 4.3 hereof to the Holders of the Stripped Units, to the accounts and in such amounts designated by the Purchase Contract Agent (subject to the Purchase Contract Agent receiving such information from the Holders) in writing for such purpose no later than 2:00 p.m., New York City time, on the Business Day such payment is received by the Collateral Agent (provided that in the event such payment or payment instructions are received by the Collateral Agent on a day that is not a Business Day or after 12:30 p.m., New York City time, on a Business Day, then such payment shall be made no later than 10:30 a.m., New York City time, on the next succeeding Business Day); any payment to be made directly to the Holders of such Stripped Units shall be subject to applicable federal withholding law, including the requirement that a Holder shall have provided to the Collateral Agent its certified taxpayer identification number by furnishing appropriate Forms W-9 (or such other forms as shall be applicable); and (iii) in the case of payments in respect of any Pledged Notes, Pledged Treasury Consideration (as specified in clause (A) of the definition of Treasury Consideration) or Pledged Treasury Securities, as the case may be, to be paid upon settlement of such Holder's obligations to purchase Ordinary Shares under the Purchase Contract, to the Company on the Stock Purchase Date in accordance with the procedure set forth in 8 Section 4.5(a) or 4.5(b) hereof, in full satisfaction of the respective obligations of the Holders under the related Purchase Contracts and, to the extent such payments exceed the Purchase Price, to the Purchase Contract Agent for the benefit of the Holders. SECTION 3.2 APPLICATION OF PAYMENTS. All payments received by the Purchase Contract Agent as provided herein shall be applied by the Purchase Contract Agent pursuant to the provisions of the Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase Contract Agent shall receive any payments of principal on account of any Notes or Treasury Consideration (which, shall be as specified in clause (A) of the definition of Treasury Consideration), as applicable, that, at the time of such payments, are Pledged Notes or Pledged Treasury Consideration (which, shall be as specified in clause (A) of the definition of Treasury Consideration), as the case may be, or a Holder of a Stripped Unit shall receive any payments of principal on account of any Treasury Securities that, at the time of such payment, are Pledged Treasury Securities, the Purchase Contract Agent or such Holder shall hold the same as trustee of an express trust for the benefit of the Company (and promptly deliver the same over to the Company) for application to the obligations of the Holders under the related Purchase Contracts, and the Holders shall acquire no right, title or interest in any such payments of principal so received. ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES SECTION 4.1 COLLATERAL SUBSTITUTION AND THE CREATION OF STRIPPED UNITS. At any time on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date, a Holder of Normal Units shall have the right to substitute Treasury Securities for the Pledged Notes or Pledged Treasury Consideration, as the case may be, securing such Holder's obligations under the Purchase Contracts comprising a part of such Normal Units, in integral multiples of 40 Normal Units, or after a Special Event Redemption, in integral multiples of Normal Units so that Treasury Securities to be deposited and the Treasury Consideration, as the case may be, to be released are in integral multiples of $1,000, by (a) Transferring to the Collateral Agent Treasury Securities having an aggregate principal amount equal to the aggregate Stated Amount of such Normal Units and (b) delivering such Normal Units to the Purchase Contract Agent, accompanied by a notice, substantially in the form of EXHIBIT B hereto, to the Purchase Contract Agent, with a copy of such notice to the Company, stating that such Holder has Transferred Treasury Securities to the Collateral Agent pursuant to clause (a) above (stating the principal amount, the maturities and the CUSIP numbers of the Treasury Securities Transferred by such Holder) and requesting that the Purchase Contract Agent instruct the Collateral Agent to release from the Pledge the Pledged Notes or Pledged Treasury Consideration related to such Normal Units, whereupon the Purchase Contract Agent shall promptly give such instruction to the Collateral Agent, with a copy of such instruction to the Company, in the form provided in EXHIBIT A. Upon receipt of Treasury Securities from a Holder of Normal Units and the related instruction from the Purchase Contract Agent, the Collateral Agent shall release the Pledged Notes or Pledged Treasury Consideration and shall promptly Transfer such Pledged Notes or Pledged Treasury Consideration free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent. All items Transferred and/or substituted by any Holder 9 pursuant to this Section 4.1, Section 4.2 or any other Section of this Agreement shall be Transferred and/or substituted free and clear of all liens, claims and encumbrances, except as otherwise set forth herein. SECTION 4.2 COLLATERAL SUBSTITUTION AND THE RE-CREATION OF NORMAL UNITS. (a) At any time on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date, a Holder of Stripped Units shall have the right to reestablish Normal Units (a) consisting of the Purchase Contracts and Notes in integral multiples of 40 Normal Units, or (b) after a Special Event Redemption, consisting of the Purchase Contracts and the Treasury Consideration (identified and calculated by reference to the Treasury Consideration then comprising Normal Units) or the appropriate portion of the Treasury Portfolio in integral multiples of Stripped Units so that the Treasury Consideration to be deposited and the Treasury Securities to be released are in integral multiples of $1,000, by (x) Transferring to the Collateral Agent Notes or the Treasury Consideration, as the case may be, then comprising such number of Normal Units as is equal to such Stripped Units and (y) delivering such Stripped Units to the Purchase Contract Agent, accompanied by a notice, substantially in the form of EXHIBIT B hereto, to the Purchase Contract Agent, with a copy of such notice to the Company, stating that such Holder has transferred Notes or Treasury Consideration to the Collateral Agent pursuant to clause (a) above and requesting that the Purchase Contract Agent instruct the Collateral Agent to release from the Pledge the Pledged Treasury Securities related to such Stripped Units, whereupon the Purchase Contract Agent shall give such instruction to the Collateral Agent, with a copy of such instruction to the Company, in the form provided in EXHIBIT A. Upon receipt of the Notes or the Treasury Consideration, as the case may be, from such Holder and the instruction from the Purchase Contract Agent, the Collateral Agent shall release the Pledged Treasury Securities and shall promptly Transfer such Treasury Securities, free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent. (b) Holders of Stripped Units who reestablish Normal Units shall be responsible for any fees or expenses payable to the Collateral Agent for its services as Collateral Agent in respect of the substitution, and the Company shall not be responsible for any such fees or expenses. SECTION 4.3 TERMINATION EVENT. (a) Upon receipt by the Collateral Agent of written notice from the Company or the Purchase Contract Agent that there has occurred a Termination Event and identifying the nature of the Termination Event, the Collateral Agent shall release all Collateral from the Pledge and shall promptly Transfer any Pledged Notes or Pledged Treasury Consideration, as the case may be, and Pledged Treasury Securities to the Purchase Contract Agent for the benefit of the Holders of the Normal Units and the Stripped Units, respectively, free and clear of any lien, pledge or security interest or other interest created in favor of the Collateral Agent hereby. (b) If such Termination Event shall result from the Company's becoming a debtor under the Bankruptcy Code or becoming subject to a petition under clause (ii) of the definition of Bankruptcy Law, and if the Collateral Agent shall fail for any reason to promptly effectuate, the release and Transfer of all Pledged Notes, Pledged Treasury Consideration or 10 Pledged Treasury Securities, as the case may be, as provided by this Section 4.3, the Purchase Contract Agent, shall: (i) use its best efforts to obtain, at the expense of the Company, an opinion of a nationally recognized law firm reasonably acceptable to the Collateral Agent to the effect that, as a result of the Company's being the debtor in such a bankruptcy case or becoming subject to a petition under clause (ii) of the definition of Bankruptcy Law, the Collateral Agent will not be prohibited from releasing or Transferring the Collateral as provided in this Section 4.3, and shall deliver such opinion to the Collateral Agent within ten days after the occurrence of such Termination Event, and if (y) the Purchase Contract Agent shall be unable to obtain such opinion within ten days after the occurrence of such Termination Event or (z) the Collateral Agent shall continue, after delivery of such opinion, to refuse to effectuate the release and Transfer of all Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, as the case may be, as provided in this Section 4.3, then the Purchase Contract Agent shall within fifteen days after the occurrence of such Termination Event commence an action or proceeding in the court with jurisdiction of the Company's case under the applicable Bankruptcy Law seeking an order requiring the Collateral Agent to effectuate the release and transfer of all Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, as the case may be, as provided by this Section 4.3; or (ii) commence an action or proceeding like that described in subsection (i)(z) hereof within ten days after the occurrence of such Termination Event. SECTION 4.4 EARLY SETTLEMENT; MERGER EARLY SETTLEMENT; CASH SETTLEMENT. Upon written notice to the Collateral Agent by the Purchase Contract Agent that one or more Holders of Units have elected to effect Early Settlement, Merger Early Settlement or Cash Settlement of their respective obligations under the Purchase Contracts forming a part of such Units in accordance with the terms of the Purchase Contracts and the Purchase Contract Agreement (setting forth the number of such Purchase Contracts as to which such Holders have elected to effect Early Settlement, Merger Early Settlement or Cash Settlement), and that the Purchase Contract Agent has received from such Holders, and paid to the Company as confirmed by written notice to the Collateral Agent by the Company, the related Early Settlement Amounts, Merger Early Settlement Amounts or Cash Settlement Amounts, as the case may be, pursuant to the terms of the Purchase Contracts and the Purchase Contract Agreement and that all conditions to such Early Settlement, Merger Early Settlement or Cash Settlement, as the case may be, have been satisfied, then the Collateral Agent shall release from the Pledge (a) Pledged Notes or Pledged Treasury Consideration, as the case may be, in the case of a Holder of Normal Units or (b) Pledged Treasury Securities, in the case of a Holder of Stripped Units, identified by the Purchase Contract Agent as relating to such Purchase Contracts as to which such Holders have paid such Early Settlement Amounts, Merger Early Settlement Amounts or Cash Settlement Amounts, and shall Transfer all such Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, as the case may be, free and clear of the Pledge created hereby, to the Purchase Contract Agent for the benefit of the Holders. SECTION 4.5 REMARKETING; APPLICATION OF PROCEEDS; SETTLEMENT. (a) Pursuant to the Purchase Contract Agreement, the Purchase Contract Agent shall notify, by 10:00 a.m., 11 New York City time, on the second Business Day immediately preceding the Remarketing Date, the Remarketing Agent and the Collateral Agent of the aggregate principal amount of Notes comprising part of Normal Units to be remarketed. The Collateral Agent shall, by 10:00 a.m., New York City time, on the Business Day immediately preceding the Remarketing Date, without any instruction from Holders of Normal Units, deliver (i) the Pledged Notes to be remarketed to the Remarketing Agent for remarketing and (ii) the remaining Pledged Notes to the Purchase Contract Agent for distribution to the Holders that have elected not to participate in the remarketing in accordance with the Purchase Contract Agreement. Upon completion of a successful remarketing, after deducting as the remarketing fee an amount not exceeding 25 basis points (0.25%) of the Remarketing Value of such Pledged Notes, the Remarketing Agent will deliver the proceeds of such remarketing to the Collateral Agent for the benefit of the Company to be held in Trust for the Company. Upon receipt of the proceeds following a successful remarketing, (i) the Collateral Agent, for the benefit of the Company, shall thereupon apply such proceeds in an amount equal to the aggregate Stated Amount of the related Normal Units in direct settlement and satisfaction in full of such Normal Units Holders' obligations to pay to the Company the Purchase Price under the Purchase Contracts on the Stock Purchase Date and (ii) the remaining portion, if any, of the proceeds of such successful remarketing shall be distributed by the Remarketing Agent to the Purchase Contract Agent for payment on a pro rata basis to such Normal Units Holders participating in such remarketing. (b) The Remarketing Agent shall agree to make one or more attempts to remarket the Notes in accordance with the procedures set forth in the Purchase Contract Agreement and the Remarketing Agreement between the Remarketing Date and the last Subsequent Remarketing Date. If by 4:00 p.m., New York City time, on the third Business Day immediately preceding the Stock Purchase Date the Remarketing Agent has failed to remarket the Notes at a price equal to 100.25% of the aggregate principal amount of the Notes participating in the remarketing, the "Last Failed Remarketing" shall be deemed to have occurred. In this case, the Remarketing Agent will agree to advise the Collateral Agent in writing that it cannot remarket the related Pledged Notes of such Holders of Normal Units and the Remarketing Agent will agree pursuant to the Remarketing Agreement to return to the Collateral Agent the Notes delivered to it pursuant to Section 4.5(a) within three Business Days of the Last Failed Remarketing. The Collateral Agent, for the benefit of the Company will, at the written direction of the Company, deliver or dispose of the Pledged Notes in accordance with the Company's written instructions to satisfy in full, from any such disposition or retention, such Holders' obligations to pay the Purchase Price for the Ordinary Shares; provided that if upon the Last Failed Remarketing, the Collateral Agent delivers or disposes of the Pledged Notes in accordance with the written instructions of the Company, any accumulated and unpaid interest on such Notes will become payable by the Company to the Purchase Contract Agent for payment to the Holder of the Normal Units to which such Notes relate in accordance with the Purchase Contract Agreement. (c) In the event a Holder of Stripped Units has not made an Early Settlement, Merger Early Settlement or Cash Settlement of the Purchase Contracts underlying its Stripped Units, such Holder shall be deemed to have elected to pay for the Ordinary Shares to be issued under such Purchase Contracts from the payments received in respect of the related Pledged Treasury Securities. Without receiving any instruction from any such Holder of Stripped Units, the Collateral Agent shall apply such payments to the Company in settlement of such Purchase 12 Contracts on the Stock Purchase Date pursuant to written instructions from the Purchase Contract Agent. In the event the payments received in respect of the related Pledged Treasury Securities are in excess of the aggregate Purchase Price of the Purchase Contracts being settled thereby, the Collateral Agent shall distribute such excess, when received, to the Purchase Contract Agent for payment to such Holders of Stripped Units. (d) Pursuant to the Remarketing Agreement and the Purchase Contract Agreement, on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date, but no earlier than the sixteenth Business Day immediately preceding the Stock Purchase Date, holders of Separate Notes may elect to have their Separate Notes remarketed by delivering their Separate Notes, together with a notice of such election, substantially in the form of EXHIBIT C hereto, to the Custodial Agent. On the second Business Day immediately prior to the Remarketing Date, by 10:00 a.m., New York City time, the Custodial Agent shall notify the Remarketing Agent of the aggregate principal amount of such Separate Notes to be remarketed. The Custodial Agent will hold such Separate Notes in an account separate from the Collateral Account. A holder of Separate Notes electing to have its Separate Notes remarketed will also have the right to withdraw such election by written notice to the Custodial Agent, substantially in the form of EXHIBIT D hereto, on or prior to the thirteenth Business Day immediately preceding the Stock Purchase Date, upon which notice the Custodial Agent will return such Separate Notes to such holder. On the Business Day immediately preceding the Remarketing Date, the Custodial Agent at the written direction of the Remarketing Agent will deliver to the Remarketing Agent for remarketing all Separate Notes delivered to the Custodial Agent pursuant to this Section 4.5(d) and not withdrawn pursuant to the terms hereof prior to such date. In the event of a successful remarketing, after deducting as the remarketing fee an amount not exceeding 25 basis points (0.25%) of the Remarketing Value of such Separate Notes, the Remarketing Agent will remit to the Custodial Agent, for the benefit of the holders of such Separate Notes, the portion of the proceeds from such remarketing equal to the amount calculated in respect of such Separate Notes as set forth in Section 5.4(b) of the Purchase Contract Agreement. If, despite using reasonable best efforts, the Remarketing Agent advises the Custodial Agent in writing that there has been a Last Failed Remarketing, the Remarketing Agent will promptly return such Notes to the Custodial Agent for redelivery to the holders of such Separate Notes. For purposes of this Section 4.5(d), a "holder" of Separate Notes shall mean the Person in whose name such Separate Notes are registered on the books of the registrar for the Notes. ARTICLE V VOTING RIGHTS -- NOTES SECTION 5.1 EXERCISE BY PURCHASE CONTRACT AGENT. The Purchase Contract Agent may exercise, or refrain from exercising, any and all voting and other consensual rights pertaining to the Pledged Notes or any part thereof for any purpose not inconsistent with the terms of this Agreement and in accordance with the terms of the Purchase Contract Agreement; provided that the Purchase Contract Agent shall not exercise or, as the case may be, shall not refrain from exercising such right if, in the judgment of the Company, such action would impair or otherwise have a material adverse effect on the value of all or any of the Pledged Notes; and provided, further, that the Purchase Contract Agent shall give the Company and the Collateral 13 Agent at least five Business Days' prior written notice of the manner in which it intends to exercise, or its reasons for refraining from exercising, any such right. Upon receipt of any notices and other communications in respect of any Pledged Notes, including notice of any meeting at which holders of Notes are entitled to vote or solicitation of consents, waivers or proxies of holders of Notes, the Collateral Agent shall use reasonable efforts to send promptly to the Purchase Contract Agent such notice or communication, and as soon as reasonably practicable after receipt of a written request therefor from the Purchase Contract Agent, execute and deliver to the Purchase Contract Agent such proxies and other instruments in respect of such Pledged Notes (in form and substance satisfactory to the Collateral Agent) as are prepared by the Purchase Contract Agent with respect to the Pledged Notes. ARTICLE VI RIGHTS AND REMEDIES; SPECIAL EVENT REDEMPTION SECTION 6.1 RIGHTS AND REMEDIES OF THE COLLATERAL AGENT. (a) In addition to the rights and remedies available at law or in equity, after an event of default under any of the Purchase Contracts by a Holder thereof, the Collateral Agent shall have all of the rights and remedies with respect to the Collateral of a secured party under the Uniform Commercial Code (or any successor thereto) as in effect in the State of New York from time to time (the "Code") (whether or not the Code is in effect in the jurisdiction where the rights and remedies are asserted) and the TRADES Regulations and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted. Wherever reference is made in this Agreement to any section of the Code, such reference shall be deemed to include a reference to any provision of the Code which is a successor to, or amendment of, such section. Without limiting the generality of the foregoing, such remedies may include, to the extent permitted by applicable law, at the direction of the Company (i) retention of the Pledged Notes or other Collateral in full satisfaction of the Holders' obligations under the Purchase Contracts or (ii) sale of the Pledged Notes or other Collateral in one or more public or private sales or otherwise at the written direction of the Company. (b) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, in the event the Collateral Agent is unable to make payments to the Company on account of any Pledged Treasury Consideration or Pledged Treasury Securities as provided in Article III hereof in full satisfaction of the obligations of the Holder of the Units of which such Pledged Treasury Consideration or Pledged Treasury Securities, as applicable, is a part under the related Purchase Contracts, any such inability to make a payment shall constitute an event of default under the Purchase Contracts and the Collateral Agent shall have and may exercise, with reference to such Pledged Treasury Securities or such Pledged Treasury Consideration, as applicable, and such obligations of such Holder, any and all of the rights and remedies available to a secured party under the Code and the TRADES Regulations after default by a debtor, and as otherwise granted herein or under any other law. (c) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably authorized to receive and 14 collect all payments of (i) the principal amount of, or interest on, the Pledged Notes, or (ii) the principal amount of the Pledged Treasury Consideration or Pledged Treasury Securities, subject, in each case, to the provisions of Article III. (d) The Purchase Contract Agent, individually and as attorney-in-fact for each Holder of Units, agrees that, from time to time, upon the written request of the Company or the Collateral Agent (acting upon the written request of the Company), the Purchase Contract Agent or such Holder shall execute and deliver such further documents and do such other acts and things as may be necessary, including as the Company or the Collateral Agent (acting upon the written request of the Company) may reasonably request in order to maintain the Pledge, and the perfection and priority thereof, and to confirm the rights of the Collateral Agent hereunder. The Purchase Contract Agent shall have no liability to any Holder for executing any documents or taking any such acts requested by the Company or the Collateral Agent (acting upon the written request of the Company) hereunder, except for liability for its own grossly negligent act, its own grossly negligent failure to act, its own bad faith or its own willful misconduct. SECTION 6.2 SUBSTITUTIONS. Whenever a Holder has the right to substitute Treasury Securities, Notes, or Treasury Consideration, as the case may be, for Collateral held by the Collateral Agent, such substitution shall not constitute a novation of the security interest created hereby. SECTION 6.3 SPECIAL EVENT REDEMPTION. Upon the occurrence of a Special Event Redemption prior to the Stock Purchase Date and the receipt of the Redemption Price of the Pledged Notes by the Collateral Agent, the Collateral Agent will, at the written direction of the Company, apply the Redemption Price to purchase on behalf of the Holders of Normal Units the Treasury Portfolio. The Collateral Agent shall Transfer the Treasury Portfolio to the Collateral Account to secure the obligation of all Holders of Normal Units to purchase Ordinary Shares of the Company under the Purchase Contracts constituting a part of such Normal Units, in substitution for the Pledged Notes. Thereafter, the Collateral Agent shall have such security interests, rights and obligations with respect to the Treasury Portfolio as it had in respect of the Pledged Notes as provided in Articles II, III, IV, V and VI, and any reference herein to the Notes shall be deemed to be reference to such Treasury Portfolio, and any reference herein to interest on the Notes shall be deemed to be a reference to corresponding distributions on such Treasury Portfolio. Upon the occurrence of a Special Event Redemption and the satisfaction of all terms and conditions related thereto as forth in the Indenture, including receipt of the Redemption Price, the Collateral Agent shall be authorized to surrender the Notes in accordance with the provisions of the Indenture. SECTION 6.4 CASH RECEIVED FROM HOLDERS OF NORMAL UNITS NOT PARTICIPATING IN THE REMARKETING. If a Holder of Normal Units shall opt not to participate in the remarketing in accordance with the Purchase Contract Agreement and upon the receipt by the Collateral Agent of the Cash Consideration paid by such Holder sufficient to satisfy the Holder's obligations to the Company under the related Purchase Contracts in full, the Collateral Agent shall transfer such Cash Consideration to the Collateral Account to secure and be applied in direct settlement and satisfaction in full of the obligations of such Holder to purchase Ordinary Shares of the 15 Company under the Purchase Contracts constituting a part of such Normal Units. Thereupon, the Collateral Agent shall deliver the related Pledged Notes to the Purchase Contract Agent on the Business Day immediately preceding the first day of the Remarketing Period, free and clear of any lien, claim and security interest created hereby. Thereafter, such Units will be Stripped Units and the Collateral Agent shall have a first priority perfected security interest in such Cash Consideration paid by such Holder. In such event, all references in this Agreement, including for purposes of Section 4.3, to the Treasury Securities or Pledged Treasury Securities shall be deemed to include such Cash Consideration (the Cash Consideration subject to the Pledge referred to as the "Pledged Cash Consideration") or Pledged Cash Consideration, as the case may be, in addition to the Treasury Securities or Pledged Treasury Securities, as the case may be, with respect to the applicable Units. ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS SECTION 7.1 REPRESENTATIONS AND WARRANTIES OF THE HOLDERS. The Holders from time to time, acting through the Purchase Contract Agent as their attorney-in-fact (it being understood that the Purchase Contract Agent shall not be liable for any representation or warranty made by or on behalf of a Holder), hereby represent and warrant to the Collateral Agent, which representations and warranties shall be deemed repeated on each day a Holder Transfers Collateral, and on each day a person becomes a Holder, that: (a) such Holder has the power to grant a security interest in and lien on the Collateral; (b) such Holder is the sole beneficial owner of the Collateral and, in the case of Collateral delivered in physical form, is the sole holder of such Collateral and is the sole beneficial owner of, or has the right to Transfer, the Collateral it Transfers to the Collateral Agent, free and clear of any security interest, lien, encumbrance, call, liability to pay money or other restriction other than the security interest and lien granted under Section 2.1; (c) upon the Transfer of the Collateral to the Collateral Account, the Collateral Agent, for the benefit of the Company, will have a valid and perfected first priority security interest therein (assuming that any central clearing operation or any Intermediary or other entity not within the control of the Holder involved in the Transfer of the Collateral, including the Collateral Agent, gives the notices and takes the action required of it hereunder and under applicable law for perfection of that interest and assuming the establishment and exercise of control pursuant to Section 2.2); and (d) the execution and performance by the Holder of its obligations under this Agreement will not result in the creation of any security interest, lien or other encumbrance on the Collateral other than the security interest and lien granted under Section 2.1 or violate any provision of any existing law or regulation applicable to it or of 16 any mortgage, charge, pledge, indenture, contract or undertaking to which it is a party or which is binding on it or any of its assets. SECTION 7.2 REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL AGENT, CUSTODIAL AGENT AND SECURITIES INTERMEDIARY. The Collateral Agent, Custodial Agent and Securities Intermediary (each an "Agent") hereby represents and warrants: (a) The Collateral Agent, Custodial Agent and Securities Intermediary is a national banking association duly organized and existing under the laws of the United States of America; (b) The Securities Intermediary is a "securities intermediary" as defined in Article 8-102(a)(14) of the Code and the Collateral Account is a "securities account" as such term is defined in Section 8-501(a) of the Code; (c) The execution, delivery and performance by the Collateral Agent, the Custodial Agent and the Securities Intermediary of this Agreement have each been duly authorized by all necessary corporate action on the part of each such Agent; this Agreement has been duly executed and delivered by the Collateral Agent, the Custodial Agent and the Securities Intermediary and constitutes a valid and legally binding obligation of each of the Agents, enforceable against such Agents in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (d) The execution, delivery and performance by the Collateral Agent, the Custodial Agent and the Securities Intermediary of this Agreement do not violate or constitute a breach of the Articles of Incorporation or By-Laws of any of such Agents; and (e) No consent of any federal or state banking authority having regulatory authority over the Agents in their individual capacity is required for the execution and delivery of, or performance by the Agents of their respective obligations under, this Agreement. SECTION 7.3 COVENANTS. The Holders from time to time, acting through the Purchase Contract Agent as their attorney-in-fact (it being understood that the Purchase Contract Agent shall not be liable for any covenant made by or on behalf of a Holder), hereby covenant to the Collateral Agent that for so long as the Collateral remains subject to the Pledge: (a) neither the Purchase Contract Agent nor such Holders will create or purport to create or allow to subsist any mortgage, charge, lien, pledge or any other security interest whatsoever over the Collateral or any part of it other than pursuant to this Agreement; and (b) neither the Purchase Contract Agent nor such Holders will sell or otherwise dispose (or attempt to dispose) of the Collateral or any part of it except for the 17 beneficial interest therein, subject to the pledge hereunder, transferred in connection with the Transfer of the Units. ARTICLE VIII THE COLLATERAL AGENT SECTION 8.1 APPOINTMENT, POWERS AND IMMUNITIES. (a) The Collateral Agent, the Custodial Agent or the Securities Intermediary shall act as agent for the Company hereunder with such powers as are specifically vested in the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Each of the Collateral Agent, the Custodial Agent and the Securities Intermediary: (i) shall have no duties or responsibilities except those expressly set forth in this Agreement and no implied covenants or obligations shall be inferred from this Agreement against any of them, nor shall any of them be bound by the provisions of any agreement by any party hereto beyond the specific terms hereof; (ii) shall not be responsible for any recitals contained in this Agreement, or in any certificate or other document referred to or provided for in, or received by it under, this Agreement, the Units or the Purchase Contract Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement (other than as against the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be), the Units or the Purchase Contract Agreement or any other document referred to or provided for herein or therein or for any failure by the Company or any other Person (except the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be) to perform any of its obligations hereunder or thereunder or, except as expressly required hereby, for the existence, validity, perfection, priority or maintenance of any security interest created hereunder; (iii) shall not be required to initiate or conduct any litigation or collection proceedings hereunder (except in the case of the Collateral Agent, pursuant to written directions furnished under Section 8.2 hereof, subject to Section 8.6 hereof); (iv) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other document or instrument referred to or provided for herein or in connection herewith or therewith, except for its own gross negligence, bad faith or willful misconduct; (v) shall not be required to advise any party as to selling or retaining, or taking or refraining from taking any action with respect to, the Units or other property deposited hereunder; (vi) may perform any of their duties hereunder directly or by or through agents or attorneys appointed with due care; 18 (vii) shall be entitled to consult with counsel and to act in full reliance upon the advice of such counsel concerning matters pertaining to the agencies created hereby and its duties hereunder, and shall not be liable for any action taken or omitted to be taken by it in good faith and in reliance upon and in accordance with the reasonable advice of counsel selected by it; (viii) shall not be liable with respect to any action taken by it in good faith in accordance with any direction of the Company or its agents except for its own gross negligence or willful misconduct; and (ix) shall not be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of services contemplated by this Agreement. Subject to the foregoing, during the term of this Agreement, each of the Collateral Agent, the Custodial Agent and the Securities Intermediary, in connection with the safekeeping and preservation of the Collateral hereunder, shall use the same standard of care it applies for similar property held for its own account. (b) No provision of this Agreement shall require the Collateral Agent, the Custodial Agent or the Securities Intermediary to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. In no event shall the Collateral Agent, the Custodial Agent or the Securities Intermediary be liable for any amount in excess of the value of the Collateral. Notwithstanding the foregoing, the Collateral Agent, the Custodial Agent, the Purchase Contract Agent and Securities Intermediary, each in its individual capacity, hereby waive any right of set-off, banker's lien, liens or perfection rights as securities intermediary or any counterclaim with respect to any of the Collateral. (c) The Collateral Agent, Custodial Agent and Securities Intermediary shall have no liability whatsoever for the action or inaction of any Clearing Agency or any book-entry system thereof. In no event shall any Clearing Agency or any book-entry system thereof be deemed an agent or subcustodian of the Collateral Agent, Custodial Agent and Securities Intermediary. SECTION 8.2 INSTRUCTIONS OF THE COMPANY. The Company shall have the right, by one or more instruments in writing executed and delivered to the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, to direct the time, method and place of conducting any proceeding for the realization of any right or remedy available to the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, or of exercising any power conferred on the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, or to direct the taking or refraining from taking of any action authorized by this Agreement; provided that (i) such direction shall be in writing and shall not conflict with the provisions of any law or of this Agreement and (ii) the Collateral Agent, the Custodial Agent and the Securities Intermediary shall each receive indemnity reasonably 19 satisfactory to it as provided herein. Nothing in this Section 8.2 shall impair the right of each of the Collateral Agent, the Custodial Agent or the Securities Intermediary in its discretion to take any action or omit to take any action which it deems proper and which is not inconsistent with such direction. SECTION 8.3 RELIANCE. Each of the Securities Intermediary, the Custodial Agent and the Collateral Agent, in absence of bad faith, shall be entitled conclusively to rely upon any certification, order, judgment, instructions, opinion, notice or other communication (including, without limitation, any thereof by telephone or facsimile) reasonably believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons (without being required to determine the correctness of any fact stated therein), and upon advice and written statements of legal counsel and other experts selected by the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be. As to any matters not expressly provided for by this Agreement, the Collateral Agent, the Custodial Agent and the Securities Intermediary shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with written instructions given by the Company in accordance with this Agreement. SECTION 8.4 RIGHTS IN OTHER CAPACITIES. The Collateral Agent, the Custodial Agent and the Securities Intermediary and their affiliates may (without having to account therefor to the Company) accept deposits from, lend money to, make their investments in and generally engage in any kind of banking, trust or other business with the Purchase Contract Agent, any Holder of Units and any holder of Separate Notes (and any of their respective subsidiaries or affiliates) as if it were not acting as the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, and the Collateral Agent, the Custodial Agent and the Securities Intermediary and their affiliates may accept fees and other consideration from the Purchase Contract Agent, any Holder of Units or any holder of Separate Notes without having to account for the same to the Company; provided that each of the Securities Intermediary, the Custodial Agent and the Collateral Agent covenants and agrees with the Company that it shall not accept, receive or permit there to be created in favor of itself (and waives any right of set-off or banker's lien with respect to) and shall take no affirmative action to permit there to be created in favor of any other Person, any security interest, lien or other encumbrance of any kind in or upon the Collateral and the Collateral shall not be commingled with any other assets of any such Person. SECTION 8.5 NON-RELIANCE ON COLLATERAL AGENT. None of the Securities Intermediary, the Custodial Agent or the Collateral Agent shall be required to keep itself informed as to the performance or observance by the Purchase Contract Agent or any Holder of Units of this Agreement, the Purchase Contract Agreement, the Units or any other document referred to or provided for herein or therein or to inspect the properties or books of the Purchase Contract Agent or any Holder of Units. The Collateral Agent, the Custodial Agent and the Securities Intermediary shall not have any duty or responsibility to provide the Company or the Remarketing Agent with any credit or other information concerning the affairs, financial condition or business of the Purchase Contract Agent, any Holder of Units or any holder of Separate Notes (or any of their respective subsidiaries or affiliates) that may come into the possession of the Collateral Agent, the Custodial Agent or the Securities Intermediary or any of their respective affiliates. 20 SECTION 8.6 COMPENSATION AND INDEMNITY. The Company agrees: (a) to pay each of the Collateral Agent, the Custodial Agent and the Securities Intermediary from time to time such compensation as shall be agreed in writing between the Company and the Collateral Agent, Custodial Agent or the Securities Intermediary, as the case may be, for all services rendered by each of them hereunder; and (b) to indemnify the Collateral Agent, the Custodial Agent and the Securities Intermediary and their officers, directors and agents for, and to hold each of them harmless from and against, any loss, liability or reasonable out-of-pocket expense incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of its powers and duties under this Agreement, including the reasonable out-of-pocket costs and expenses (including reasonable fees and expenses of one counsel) of defending itself against any claim or liability in connection with the exercise or performance of such powers and duties or collecting such amounts. The Collateral Agent, the Custodial Agent and the Securities Intermediary shall each promptly notify the Company of any third party claim which may give rise to the indemnity hereunder and give the Company the opportunity to control the defense of such claim with counsel reasonably satisfactory to the indemnified party, provided no conflict of interest exists (if such a conflict of interests exists, the Collateral Agent, the Custodial Agent and the Securities Intermediary will be entitled to one separate counsel payable by the Company), and if the Company so elects to assume such defense, the Company shall in good faith defend the Collateral Agent, the Custodial Agent or the Securities Intermediary (in which case all attorney's fees and expenses shall be borne by the Company). No compromise or settlement of any claims may be effected by any party without the other parties' consent (which consent shall not be unreasonably withheld) unless (i) there is no finding or omission of any violation of law and no effect on any other claims that may be made against any of such other parties and (ii) the sole relief provided is monetary damages that are paid in full by the party seeking the compromise or settlement. The provisions of this Section 8.6(b) shall survive the termination of this Agreement or the resignation or removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary. SECTION 8.7 FAILURE TO ACT. In the event of any ambiguity in the provisions of this Agreement or any dispute between or conflicting claims by or among the parties hereto or any other Person with respect to any funds or property deposited hereunder, the Collateral Agent, Custodial Agent and the Securities Intermediary shall be entitled, after prompt notice to the Company and the Purchase Contract Agent, at its sole option, to refuse to comply with any and all claims, demands or instructions with respect to such property or funds so long as such dispute or conflict shall continue, and neither the Collateral Agent, Custodial Agent nor the Securities Intermediary shall be or become liable in any way to any of the parties hereto for its failure or refusal to comply with such conflicting claims, demands or instructions. The Collateral Agent, Custodial Agent and the Securities Intermediary shall be entitled to refuse to act until either (i) such conflicting or adverse claims or demands shall have been finally determined by a court of competent jurisdiction or settled by agreement between the conflicting parties as evidenced in a writing, reasonably satisfactory to the Collateral Agent, Custodial Agent or the Securities Intermediary, as the case may be, or (ii) the Collateral Agent, the Custodial Agent or the Securities Intermediary, 21 as the case may be, shall have received security or an indemnity reasonably satisfactory to the Collateral Agent, Custodial Agent or the Securities Intermediary, as the case may be, sufficient to save the Collateral Agent, Custodial Agent or the Securities Intermediary, as the case may be, harmless from and against any and all loss, liability or reasonable out-of-pocket expense which the Collateral Agent, Custodial Agent or the Securities Intermediary, as the case may be, may incur by reason of its acting without bad faith, willful misconduct or negligence. The Collateral Agent, Custodial Agent or the Securities Intermediary may, but shall not be required, in addition elect to commence an interpleader action or seek other judicial relief or orders at the expense of the Company as the Collateral Agent, Custodial Agent or the Securities Intermediary, as the case may be, may deem necessary. Notwithstanding anything contained herein to the contrary, neither the Collateral Agent, Custodial Agent nor the Securities Intermediary shall be required to take any action that is in the reasonable opinion of its counsel contrary to law or to the terms of this Agreement, or which would in its reasonable opinion subject it or any of its officers, employees or directors to liability. SECTION 8.8 RESIGNATION; REPLACEMENT OF COLLATERAL AGENT, CUSTODIAL AGENT OR SECURITIES INTERMEDIARY. Subject to the appointment and acceptance of a successor Collateral Agent, Custodial Agent or Securities Intermediary, as provided below, (a) the Collateral Agent, Custodial Agent or the Securities Intermediary may resign at any time by giving notice thereof to the Company and the Purchase Contract Agent as attorney-in-fact for the Holders of Units, (b) the Collateral Agent, Custodial Agent or the Securities Intermediary may be removed at any time by the Company (with or without cause) by notice to the Purchase Contract Agent and the Collateral Agent, the Custodial Agent and the Securities Intermediary and (c) if the Collateral Agent, Custodial Agent or the Securities Intermediary fails to perform any of its material obligations hereunder in any material respect for a period of not less than 20 days after receiving written notice of such failure by the Purchase Contract Agent and such failure shall be continuing, the Collateral Agent, Custodial Agent or the Securities Intermediary may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall promptly notify the Company of any removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary pursuant to clause (c) of the immediately preceding sentence. Upon notice of any such resignation or removal, the Company shall have the right to appoint a successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be. If no successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, shall have been so appointed and shall have accepted such appointment within 30 days after any notice of such resignation or such removal, then the retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, may at the Company's expense petition any court of competent jurisdiction for the appointment of a successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be. Upon removal of the Collateral Agent, Custodial Agent or Securities Intermediary, no fees paid to the retiring Collateral Agent, Custodial Agent or Securities Intermediary pursuant to Section 8.6(a) of this Agreement shall be refunded. Each successor Collateral Agent, Custodial Agent and the Securities Intermediary shall be a bank which has an office or agency in New York, New York with a combined capital and surplus of at least $50,000,000 or any affiliate of a bank holding company having such capital and surplus. Upon the acceptance of any appointment as Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, hereunder by a successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, such successor shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, and the retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, upon payment of any of its 22 unpaid fees and expenses, shall take all appropriate action to transfer any money and property held by it hereunder (including the Collateral) to such successor. The retiring Collateral Agent, Custodial Agent or Securities Intermediary shall, upon such succession, be discharged from its duties and obligations as Collateral Agent, Custodial Agent or Securities Intermediary hereunder. After any retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's resignation hereunder as Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of this Section 8.8, and Section 8.6 hereof, shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Collateral Agent, Custodial Agent or Securities Intermediary. Any resignation or removal of the Collateral Agent hereunder shall be deemed for all purposes of this Agreement as the simultaneous resignation or removal of the Custodial Agent and the Securities Intermediary hereunder. So long as it meets the requirements of this Section 8.8, any corporation into which the Collateral Agent, the Custodial Agent or the Securities Intermediary, in its individual capacity, may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Collateral Agent in its individual capacity shall be a party, or any corporation to which substantially all the corporate trust business of the Collateral Agent in its individual capacity may be transferred, shall be the Collateral Agent, the Custodial Agent, or the Securities Intermediary, as the case may be, respectively, under this Agreement without further act. SECTION 8.9 RIGHT TO APPOINT AGENT OR ADVISOR. The Collateral Agent shall have the right to appoint agents or advisors in connection with any of its duties hereunder, and the Collateral Agent shall not be liable for any action taken or omitted by, or in reliance upon the advice of, such agents or advisors reasonably selected in good faith. The appointment of agents (other than legal counsel) pursuant to this Section 8.9 shall be subject to prior written consent of the Company. SECTION 8.10 SURVIVAL. The provisions of this Article VIII shall survive termination of this Agreement and the resignation or removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary. SECTION 8.11 EXCULPATION. Anything in this Agreement to the contrary notwithstanding, in no event shall any of the Collateral Agent, the Custodial Agent or the Securities Intermediary or their officers, employees or agents be liable under this Agreement to any third party for indirect, special, punitive or consequential loss or damage of any kind whatsoever, including lost profits or loss of business, relating to, arising from or in connection with this Agreement, whether or not the likelihood of such loss or damage was known to the Collateral Agent, the Custodial Agent or the Securities Intermediary, or any of them, incurred without any act or deed that is found to be attributable to negligence, bad faith or willful misconduct on the part of the Collateral Agent, the Custodial Agent or the Securities Intermediary. 23 ARTICLE IX AMENDMENT SECTION 9.1 AMENDMENT WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders or the holders of any Separate Notes, the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, at any time and from time to time, may amend this Agreement, in form satisfactory to the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, for any of the following purposes: (i) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company; or (ii) to add covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company so long as such covenants or such surrender do not adversely affect the validity, perfection or priority of the security interests granted or created hereunder; or (iii) to evidence and provide for the acceptance of appointment hereunder by a successor Collateral Agent, Custodial Agent, Securities Intermediary or Purchase Contract Agent; or (iv) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other such provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders. SECTION 9.2 AMENDMENT WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority of the Purchase Contracts at the time outstanding, by Act of said Holders delivered to the Company, the Purchase Contract Agent or the Collateral Agent, as the case may be, the Company, the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Securities Intermediary may amend this Agreement for the purpose of modifying in any manner the provisions of this Agreement or the rights of the Holders in respect of the Units; provided that no such amendment shall, as to any Holder of an Outstanding Unit adversely affected thereby, without the consent of such Holder, (i) change the amount or type of Collateral underlying a Unit (except for the rights of holders of Normal Units to substitute the Treasury Securities for the Pledged Notes or the Pledged Treasury Consideration, as the case may be, or the rights of Holders of Stripped Units to substitute Notes or the Treasury Consideration, as applicable, for the Pledged Treasury Securities), impair the right of the Holder of any Unit to receive distributions on the underlying Collateral or otherwise adversely affect the Holder's rights in or to such Collateral; or (ii) otherwise effect any action that would require the consent of the Holder of each Outstanding Unit affected thereby pursuant to the Purchase Contract Agreement if such action were effected by an agreement supplemental thereto; or 24 (iii) reduce the percentage of Purchase Contracts the consent of whose Holders is required for any such amendment; provided that if any amendment or proposal referred to above would adversely affect only the Normal Units or the Stripped Units, then only the affected class of Holders as of the record date for the Holders entitled to vote thereon will be entitled to vote on or consent to such amendment or proposal. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 9.3 EXECUTION OF AMENDMENTS. In executing any amendment permitted by this Article IX, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent shall be entitled to receive and (subject to Section 8.1 hereof, with respect to the Collateral Agent, and Section 7.1 of the Purchase Contract Agreement, with respect to the Purchase Contract Agent) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent, if any, to the execution and delivery of such amendment have been satisfied and, in the case of an amendment pursuant to Section 9.1, that such amendment does not adversely affect the validity, perfection or priority of the security interests granted or created hereunder. SECTION 9.4 EFFECT OF AMENDMENTS. Upon the execution of any amendment under this Article IX, this Agreement shall be modified in accordance therewith, and such amendment shall form a part of this Agreement for all purposes; and every Holder of Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered under the Purchase Contract Agreement shall be bound thereby. SECTION 9.5 REFERENCE TO AMENDMENTS. Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any amendment pursuant to this Article IX may, and shall if required by the Collateral Agent or the Purchase Contract Agent, bear a notation in form approved by the Purchase Contract Agent and the Collateral Agent as to any matter provided for in such amendment. If the Company shall so determine, new Certificates so modified as to conform, in the opinion of the Collateral Agent, the Purchase Contract Agent and the Company, to any such amendment may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Purchase Contract Agent in accordance with the Purchase Contract Agreement in exchange for outstanding Certificates. ARTICLE X MISCELLANEOUS SECTION 10.1 NO WAIVER. No failure on the part of any party hereto or any of its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial 25 exercise by any party hereto or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law. SECTION 10.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without limiting the foregoing, the above choice of law is expressly agreed to by the Securities Intermediary, the Collateral Agent, the Custodial Agent and the Holders from time to time acting through the Purchase Contract Agent, as their attorney-in-fact, in connection with the establishment and maintenance of the Collateral Account, which law, for purposes of the Code, shall be deemed to be the law governing all Security Entitlements related thereto. In addition, such parties agree that, for purposes of the Code, New York shall be the Securities Intermediary's jurisdiction. The Company, the Collateral Agent and the Holders from time to time of the Units, acting through the Purchase Contract Agent as their attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in the Borough of Manhattan in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company, the Collateral Agent and the Holders from time to time of the Units, acting through the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. The Company hereby designates and appoints CT Corporation System, 111 Eighth Avenue, New York, New York 10011 as its authorized agent upon which process may be served in any legal suit, action or proceeding arising out of or relating to this Agreement which may be instituted in any federal or state court in the Borough of Manhattan, The City of New York, New York, and agrees that service of process upon such agent, and written notice of said service to the Company by the Person serving the same, shall be deemed in every respect effective service of process upon the Company in any such suit, action or proceeding and further designates its domicile, the domicile of CT Corporation System specified above and any domicile CT Corporation System may have in the future as its domicile to receive any notice hereunder (including service of process). If for any reason CT Corporation System (or any successor agent for this purpose) shall cease to act as agent for service of process as provided above, the Company will promptly appoint a successor agent for this purpose reasonably acceptable to the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent. The Company agrees to take any and all actions as may be necessary to maintain such designation and appointment of such agent in full force and effect. SECTION 10.3 JUDGMENT CURRENCY. The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Purchase Contract Agent could purchase in The City of New York the requisite amount of the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which a final unappealable judgment is given and (b) its obligations under this Agreement to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or 26 any recovery pursuant to any judgment (whether or not entered in accordance with clause (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Agreement. For purpose of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or obligated by law, regulation or executive order to be closed. SECTION 10.4 NOTICES. Unless otherwise stated herein, all notices, requests, instructions, consents and other communications provided for herein (including, without limitation, any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telecopy) and, if sent to the Company, will be mailed, delivered or telecopied to XL House, One Bermudiana Road, Hamilton HM11, Bermuda, Attention: Paul S. Giordano (fax no.: (441) 292-5280); or if sent to the Purchase Contract Agent as attorney-in-fact of the Holders from time to time of the Units, will be mailed, delivered or telefaxed to 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Arthur Blakeslee (fax no.: (503) 258-5977); or if sent to the Collateral Agent, Custodial Agent and Securities Intermediary, will be mailed, delivered or telefaxed to 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Elizabeth Hammer (fax no.: (860) 241-6897), or as to any party, at such other address as shall be designated by such party in a notice to the other parties. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when personally delivered or, in the case of a mailed notice or notice transmitted by telecopier, upon receipt, in each case given or addressed as aforesaid. SECTION 10.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, and the Holders from time to time of the Units, by their acceptance of the same, shall be deemed to have agreed to be bound by the provisions hereof and to have ratified the agreements of, and the grant of the Pledge hereunder by, the Purchase Contract Agent. SECTION 10.6 COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. SECTION 10.7 SEVERABILITY. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction. 27 SECTION 10.8 EXPENSES, ETC. The Company agrees to reimburse the Collateral Agent, the Securities Intermediary and the Custodial Agent for: (a) all reasonable out-of-pocket costs and all reasonable expenses of the Collateral Agent, the Custodial Agent and the Securities Intermediary (including, without limitation, the reasonable fees and expenses of one counsel to the Collateral Agent, the Custodial Agent and the Securities Intermediary), in connection with (i) the negotiation, preparation, execution and delivery or performance of this Agreement and (ii) any modification, supplement or waiver of any of the terms of this Agreement; (b) all reasonable costs and expenses of the Collateral Agent, the Custodial Agent and the Securities Intermediary (including, without limitation, reasonable fees and expenses of one counsel) in connection with (i) any enforcement or proceedings resulting or incurred in connection with causing any Holder of Units to satisfy its obligations under the Purchase Contracts forming a part of the Units and (ii) the enforcement of this Section 10.7; and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any other document referred to herein and all costs, expenses, taxes, assessments and other charges, if any, incurred in connection with any filing, registration, recording or perfection of any security interest to the extent contemplated hereby. SECTION 10.9 SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent and security interests hereunder, and all obligations of the Holders from time to time hereunder, shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of any provision of the Purchase Contracts or the Units or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or any other term of, or any increase in the amount of, all or any of the obligations of Holders of Units under the related Purchase Contracts, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Purchase Contract Agreement or any Purchase Contract or any other agreement or instrument relating thereto; or (c) any other circumstance which might otherwise constitute a defense available to, or discharge of, a borrower, a guarantor or a pledgor. SECTION 10.10 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. SECTION 10.11 INCORPORATION BY REFERENCE. Each of the Company, the Collateral Agent and the Securities Intermediary agrees that the Purchase Contract Agent is, in 28 acting hereunder with respect to the Company, entitled to all rights, privileges, benefits, protections, immunities and indemnities provided to it under the Purchase Contract Agreement. 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. XL CAPITAL LTD By: /s/ Paul S. Giordano ---------------------------------------- Name: Paul S. Giordano Title: Executive Vice President, General Counsel and Secretary U.S. BANK NATIONAL ASSOCIATION, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Units By: /s/ Arthur L. Blakeslee ---------------------------------------- Name: Arthur L. Blakeslee Title: Assistant Vice President U.S. BANK TRUST NATIONAL ASSOCIATION, as Collateral Agent, Custodial Agent and Securities Intermediary By: /s/ Arthur L. Blakeslee ---------------------------------------- Name: Arthur L. Blakeslee Title: Assistant Vice President EXHIBIT A INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT U.S. Bank Trust National Association 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Corporate Trust Administration Re: 6.50% EQUITY SECURITY UNITS OF XL CAPITAL LTD (THE "COMPANY") We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge Agreement, dated as of March 23, 2004 (the "Pledge Agreement"), among the Company, yourselves, as Collateral Agent, Custodial Agent and Securities Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact for the holders of [Normal Units] [Stripped Units] from time to time, that the holder of Units listed below (the "Holder") has elected to substitute [$________ aggregate principal amount of Treasury Securities (CUSIP No. 912820 BX 4)] [$________ aggregate principal amount of Notes or $__________ aggregate principal amount of Treasury Consideration (CUSIP No. ___________)] in exchange for the related [Pledged Notes or Pledged Treasury Consideration] [Pledged Treasury Securities] held by you in accordance with the Pledge Agreement and has delivered to us a notice stating that the Holder has Transferred [Treasury Securities] [Notes or the Treasury Consideration] to you, as Collateral Agent. We hereby instruct you, upon receipt of such [Pledged Treasury Securities] [Pledged Notes or Pledged Treasury Consideration], to release the [Notes or the Treasury Consideration] [Treasury Securities] related to such [Normal Units] [Stripped Units] to us in accordance with the Holder's instructions. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. Date: _____________________ U.S. Bank National Association, as Purchase Contract Agent By: ___________________________________ Name: Title: A-1 Please print name and address of Registered Holder electing to substitute [Treasury Securities] [Notes or Treasury Consideration] for the [Pledged Notes or the Pledged Treasury Consideration] [Pledged Treasury Securities]: Name: Social Security or other Taxpayer Identification Number, if any: Address: A-2 EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT U.S. Bank National Association, as Purchase Contract Agent 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Institutional Trust Services Re: 6.50% EQUITY SECURITY UNITS OF XL CAPITAL LTD (THE "COMPANY") The undersigned Holder hereby notifies you that it has delivered to U.S. Bank Trust National Association, as Collateral Agent, [$_________ aggregate principal amount of Treasury Securities (CUSIP No. 912820 BX 4)] [$_________ aggregate principal amount of Notes or $___________ principal amount of Treasury Consideration (CUSIP No. _________)] in exchange for the related [Pledged Notes or Pledged Treasury Consideration] [Pledged Treasury Securities] held by the Collateral Agent, in accordance with Section [4.1][4.2] of the Pledge Agreement, dated as of March 23, 2004 (the "Pledge Agreement"), between you, the Company and the Collateral Agent. The undersigned Holder hereby instructs you to instruct the Collateral Agent to release to you on behalf of the undersigned Holder the [Pledged Notes or the Pledged Treasury Consideration] [Pledged Treasury Securities] related to such [Normal Units] [Stripped Units]. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. Date: ___________________ Signature: _______________________________________ Signature Guarantee: _____________________________ Please print name and address of Registered Holder: Name: Social Security or other Taxpayer Identification Number, if any: Address: B-1 EXHIBIT C INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING U.S. Bank Trust National Association 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Corporate Trust Administration Re: NOTES OF XL CAPITAL LTD The undersigned hereby notifies you in accordance with Section 4.5(d) of the Pledge Agreement, dated as of March 23, 2004 (the "Pledge Agreement"), among XL Capital Ltd, yourselves, as Collateral Agent, Securities Intermediary and Custodial Agent, and U.S. Bank National Association, as Purchase Contract Agent and as attorney-in-fact for the Holders of Normal Units and Stripped Units from time to time, that the undersigned elects to deliver on the fourth Business Day immediately preceding the Remarketing Date commencing on ____________, 2007 $__________ aggregate principal amount of Notes for delivery to the Remarketing Agent for remarketing pursuant to Section 4.5(d) of the Pledge Agreement. The undersigned will, upon request of the Remarketing Agent, execute and deliver any additional documents deemed by the Remarketing Agent or by the Company to be necessary or desirable to complete the sale, assignment and transfer of the Notes tendered hereby. The undersigned hereby instructs you, upon receipt of the proceeds of such remarketing from the Remarketing Agent, net of amounts payable to the Remarketing Agent in accordance with the Pledge Agreement, to deliver such proceeds to the undersigned in accordance with the instructions indicated herein under "A. Payment Instructions." The undersigned hereby instructs you, in the event of the Last Failed Remarketing upon receipt of the Notes tendered herewith from the Remarketing Agent, to deliver such Notes to the person(s) and the address(es) indicated herein under "B. Delivery Instructions." With this notice, the undersigned hereby (i) represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Notes tendered hereby and that the undersigned is the record owner of any Notes tendered herewith in physical form or a participant in The Depository Trust Company ("DTC") and the beneficial owner of any Notes tendered herewith by book-entry transfer to your account at DTC and (ii) agrees to be bound by the terms and conditions of Section 4.5(d) of the Pledge Agreement. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. C-1 Date: _________________ Signature: _______________________________ Signature Guarantee: ______________________ Name: __________________________________ (Please Print) Address: __________________________________ (Please Print) Zip Code: Country: Telecopy (include country code if outside U.S.): Telephone (include country code if outside U.S.): (Tax Identification or Social Security Number): A. PAYMENT INSTRUCTIONS Proceeds of the remarketing should be paid by check in the name of the person(s) set forth below and mailed to the address set forth below. Name(s): __________________________________ (Please Print) Address: __________________________________ (Please Print) Zip Code: Country: Telecopy (include country code if outside U.S.): Telephone (include country code if outside U.S.): (Special Identification or Social Security Number): B. DELIVERY INSTRUCTIONS In the event of the Last Failed Remarketing, Notes which are in physical form should be delivered to the person(s) set forth below and mailed to the address set forth below. C-2 Name(s): __________________________________ (Please Print) Address: __________________________________ (Please Print) Zip Code: Country: Telecopy (include country code if outside U.S.): Telephone (include country code if outside U.S.): (Special Identification or Social Security Number): In the event of [a/the Last] Failed Remarketing, Notes which are in book-entry form should be credited to the account at The Depository Trust Company set forth below. Name of Account Party: DTC Account Number: C-3 EXHIBIT D INSTRUCTION TO CUSTODIAL AGENT REGARDING WITHDRAWAL FROM REMARKETING U.S. Bank Trust National Association 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Corporate Trust Administration Re: NOTES OF XL CAPITAL LTD The undersigned hereby notifies you in accordance with Section 4.5(d) of Pledge Agreement, dated as of March 23, 2004 (the "Pledge Agreement"), among XL Capital Ltd, yourselves, as Collateral Agent, Securities Intermediary and Custodial Agent, and U.S. Bank National Association, as Purchase Contract Agent and as attorney-in-fact for the Holders of Normal Units and Stripped Units from time to time, that the undersigned elects to withdraw the $__________ aggregate principal amount of Notes delivered to the Custodial Agent on _________, 2007 for remarketing pursuant to Section 4.5(d) of the Pledge Agreement. The undersigned hereby instructs you to return such Notes to the undersigned in accordance with the undersigned's instructions. With this notice, undersigned hereby agrees to be bound by the terms and conditions 4.5(d) of the Pledge Agreement. Capitalized terms used herein but shall have the meaning set forth in the Pledge Agreement. Date: _________________ Signature: _______________________________ Signature Guarantee: ______________________ Name: __________________________________ (Please Print) Address: __________________________________ (Please Print) Zip Code: Country: Telecopy (include country code if outside U.S.): Telephone (include country code if outside U.S.): (Tax Identification or Social Security Number): D-1 A. DELIVERY INSTRUCTIONS In the event of [a/the Last] Failed Remarketing, Notes which are in physical form should be delivered to the person(s) set forth below and mailed to the address set forth below. Name: __________________________________ (Please Print) Address: __________________________________ (Please Print) Zip Code: Country: Telecopy (include country code if outside U.S.): Telephone (include country code if outside U.S.): (Tax Identification or Social Security Number): In the event of [a/the Last] Failed Remarketing, Notes which are in book-entry form should be credited to the account at The Depository Trust Company set forth below. Name of Account Party: DTC Account Number: D-2 EX-4.5 8 c31556_ex4-5.txt XL CAPITAL LTD FORM OF REMARKETING AGREEMENT REMARKETING AGREEMENT, dated as of [_________ __], 2007 (the "Agreement") by and between XL Capital Ltd, a Cayman Islands exempted limited company (the "Company"), and [________] (the "Remarketing Agent"), and confirmed and accepted by U.S. Bank National Association, not individually but solely as Purchase Contract Agent (the "Purchase Contract Agent") and as attorney-in-fact of the Holders of Purchase Contracts (as defined in the Purchase Contract Agreement (as defined herein)). WHEREAS, the Company issued $825,000,000 aggregate stated amount of its Normal Units (the "Normal Units") under the Purchase Contract Agreement, dated as of March 23, 2004, by and between the Purchase Contract Agent and the Company (the "Purchase Contract Agreement"); and WHEREAS, the 2.53% Senior Notes due 2009 forming a part of the Normal Units (the "Notes") have been pledged pursuant to the Pledge Agreement (the "Pledge Agreement"), dated as of March 23, 2004, by and among the Company, U.S. Bank Trust National Association, as collateral agent (the "Collateral Agent"), custodial agent and securities intermediary and U.S. Bank National Association, as Purchase Contract Agent, to secure the obligations of Holders of Normal Units under the related Purchase Contracts on the Stock Purchase Date; and WHEREAS, the Remarketing Agent will attempt on May 2, 2007 (the "Remarketing Date") to remarket all of (i) the Notes of Holders of Normal Units and (ii) the Separate Notes of Holders who elect to participate in the remarketing, pursuant respectively to the procedures set forth in Section 5.4(b) of the Purchase Contract Agreement, Section 4.5(d) of the Pledge Agreement and Sections 2.19 and 2.20 of the First Supplemental Indenture, dated as of March 23, 2004, between the Company and U.S. Bank National Association, as trustee (the "Supplemental Indenture"), to the Indenture, dated as of January 23, 2003 (the "Base Indenture"), between the Company and U.S. Bank National Association, as trustee (each of which Sections is incorporated herein by reference); and WHEREAS, in the event the remarketing on the Remarketing Date is unsuccessful, the Remarketing Agent will remarket the Notes to be included in the remarketing on May 3, 2007, and, if necessary, will attempt to remarket such Notes on May 4, 2007 and, if necessary, will attempt to remarket such Notes on May 7, 2007 and, if necessary, will attempt to remarket such Notes on May 8, 2007 and, if necessary, will attempt to remarket such Notes on May 9, 2007 and, if necessary, will attempt to remarket such Notes on May 10, 2007 (any such date after the Remarketing Date on which a subsequent remarketing is attempted, a "Subsequent Remarketing Date"); and WHEREAS, in the event of a successful remarketing on the Remarketing Date or any Subsequent Remarketing Date, as the case may be, the applicable interest rate on the Remarketed Notes (as defined below) included in such successful remarketing will be reset on the settlement date of such Remarketing Date or Subsequent Remarketing Date to the rate determined by the Remarketing Agent in good faith that will result in the aggregate market value of the Remarketed Notes to equal 100.25% of the aggregate principal amount of such Remarketed Notes, as of such Remarketing Date or Subsequent Remarketing Date (the "Reset Rate"), provided that the Reset Rate shall be limited to the maximum rate permitted by applicable law; and WHEREAS, the Company has requested [________] to act as the Remarketing Agent, and as such to perform the services described herein; and WHEREAS, [________] is willing to act as the Remarketing Agent and as such to perform such duties on the terms and conditions expressly set forth herein; NOW, THEREFORE, for and in consideration of the covenants herein made, and subject to the conditions herein set forth, the parties hereto agree as follows: Section 1. DEFINITIONS. (a) Capitalized terms used and not defined in this Agreement, in the recitals hereto or in the paragraph preceding such recitals shall have the meanings assigned to them in the Purchase Contract Agreement or, if not therein defined, the Pledge Agreement. (b) As used in this Agreement, the following terms have the following meanings: "Preliminary Prospectus" means any preliminary prospectus relating to the Remarketed Notes included in the Registration Statement (including any preliminary prospectus supplement), including the documents incorporated by reference therein as of the date of such Preliminary Prospectus; and any reference to any amendment or supplement to such Preliminary Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus, under the Exchange Act, and incorporated by reference in such Preliminary Prospectus. "Prospectus" means the prospectus relating to the Remarketed Notes (including any prospectus supplement), in the form in which first filed, or transmitted for filing, with the Commission after the effective date of the Registration Statement pursuant to Rule 424(b), including the documents incorporated by reference therein as of the date of such Prospectus; and any reference to any amendment or supplement to such Prospectus shall be deemed to refer to and include any documents filed after the date of such Prospectus, under the Exchange Act, and incorporated by reference in such Prospectus. 2 "Registration Statement" means a registration statement under the Securities Act of 1933, as amended (the "Securities Act") filed and prepared by the Company covering, inter alia, the Remarketing of the Remarketed Notes pursuant to Section 5(a) hereunder, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in such registration statement, and any post-effective amendments thereto. "Remarketed Notes" means the Pledged Notes and the Separate Notes, if any, subject to Remarketing as identified to the Remarketing Agent by the Purchase Contract Agent and the Custodial Agent, respectively, prior to 10:00 a.m., New York City time, on the Business Day immediately preceding the Remarketing Date, and shall include: (a) the Notes of the Holders of Normal Units who have not notified the Purchase Contract Agent prior to 5:00 p.m. on the thirteenth Business Day prior to the Stock Purchase Date of their intention to effect a Cash Settlement of the related Purchase Contracts pursuant to the terms of the Purchase Contract Agreement or who have so notified the Purchase Contract Agent but failed to make the required cash payment on the thirteenth Business Day prior to the Stock Purchase Date pursuant to the terms of the Purchase Contract Agreement, and (b) the Separate Notes of the holders of Separate Notes, if any, who have elected to have their Separate Notes be remarketed in such Remarketing pursuant to the terms of the Purchase Contract Agreement and the Supplemental Indenture. "Remarketing" means the remarketing of the Remarketed Notes pursuant to this Remarketing Agreement "Remarketing Agent" means [________] appointed as the Remarketing Agent by the Company pursuant to Section 2(a) hereof. "Remarketing Materials" means the Preliminary Prospectus and the Prospectus furnished by the Company to the Remarketing Agent for distribution to investors in connection with the Remarketing. "Transaction Documents" means this Agreement, the Purchase Contract Agreement, the Pledge Agreement, the Indenture and the Supplemental Indenture, in each case as amended or supplemented from time to time. Section 2. APPOINTMENT AND OBLIGATIONS OF REMARKETING AGENT. (a) The Company hereby appoints [________] and [________] hereby accepts such appointment, (i) as the Remarketing Agent to determine, in consultation with the Company, in the manner provided for herein, in the Purchase Contract Agreement and in the Notes, the Reset Rate that, in the opinion of the Remarketing Agent, will, when applied to the Remarketed 3 Notes, enable the aggregate market value of the Remarketed Notes equal 100.25% of the aggregate principal amount of such Remarketed Notes as of the Remarketing Date or as of any Subsequent Remarketing Date, as the case may be, and (ii) as the exclusive Remarketing Agent (subject to the right of such Remarketing Agent to appoint additional remarketing agents hereunder as described below) to remarket the Remarketed Notes to be included in the remarketing on the Remarketing Date, and, if necessary, on May 3, 2007, and, if necessary, on May 4, 2007 and, if necessary, on May 7, 2007 and, if necessary, on May 8, 2007 and, if necessary, on May 9, 2007 and, if necessary, on May 10, 2007, as the case may be. The Remarketing Agent shall have the right, on 15 Business Days' notice to the Company, to appoint one or more additional remarketing agents so long as any such additional remarketing agents shall be reasonably acceptable to the Company; provided that any such appointment shall not increase the Remarketing Fee (as defined in Section 4 hereof). Upon any such appointment, the parties shall enter into an appropriate amendment to this Agreement to reflect the addition of any such additional remarketing agent. (b) Subject to the terms and conditions set forth herein and in the Purchase Contract Agreement, the Remarketing Agent shall use its reasonable best efforts to (i) remarket on the Remarketing Date the Remarketed Notes at the Reset Rate, (ii) in the event the Remarketing Agent cannot establish such a Reset Rate on the Remarketing Date, attempt to remarket such Notes on May 3, 2007, and, if necessary, on May 4, 2007 and, if necessary, on May 7, 2007 and, if necessary, on May 8, 2007 and, if necessary, on May 9, 2007 and, if necessary, on May 10, 2007, in each case at the Reset Rate and (iii) in the event of a Last Failed Remarketing, promptly return the Pledged Notes, if any, included in such Last Failed Remarketing to the Collateral Agent to be held by the Collateral Agent in accordance with Section 4.5(b) of the Pledge Agreement (which Section is incorporated herein by reference) and return any Separate Notes included in the remarketing to the Custodial Agent in accordance with Section 4.5(d) of the Pledge Agreement, Section 5.4(b)(ii) of the Purchase Contract Agreement and Section 2.19 of the Supplemental Indenture (which Sections are incorporated herein by reference). After deducting the fee specified in Section 4 below, the proceeds of any such successful remarketing shall be delivered to the Purchase Contract Agent or the Custodial Agent, as applicable, in accordance with Sections 4.5(a) and 4.5(d) of the Pledge Agreement (which Section is incorporated herein by reference) and Section 5.4(b) of the Purchase Contract Agreement (which Section is incorporated herein by reference). The right of each Holder of Normal Units or Separate Notes to have Notes included in any remarketing shall be subject to the conditions that (i) the Remarketing Agent conducts a remarketing on such date pursuant to the terms of this Agreement, (ii) the Notes included in a remarketing have not been called for redemption upon the occurrence of a Special Event, (iii) the Remarketing Agent is able to find a purchaser or purchasers for the Remarketed Notes at the Reset Rate and (iv) such purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent as and when required. (c) It is understood and agreed that the Remarketing Agent shall not have any obligation whatsoever to purchase any Notes, whether in a remarketing held on the Remarketing Date or on any Subsequent Remarketing Date or otherwise, and shall in no 4 way be obligated to provide funds to make payment upon tender of Notes for remarketing or to otherwise expend or risk its own funds or incur or be exposed to financial liability in the performance of its duties under this Agreement, and, without limitation of the foregoing, the Remarketing Agent shall not be deemed an underwriter of the Remarketed Notes. The Company shall not be obligated in any case to provide funds to make payment upon delivery of Notes for remarketing. (d) The Remarketing Agent shall also, if required by the Securities Act or the rules and regulations promulgated thereunder, deliver to each purchaser a Prospectus in connection with the Remarketing. (e) If, by 4:30 p.m., New York City time, on the Remarketing Date, the Remarketing Agent is unable to remarket all Remarketed Notes included in the Remarketing, a failed Remarketing (the "Failed Remarketing") shall be deemed to have occurred, and the Remarketing Agent shall so advise by telephone the Depositary and the Company. (f) The Remarketing Agent shall advise, by telephone, the Company of the Reset Rate determined in a Successful Remarketing (as defined in Section 4 hereof) as soon as practicable after such determination. (g) By approximately 4:30 p.m., New York City time, on the Trading Day following the Remarketing Date, PROVIDED that there has not been a Failed Remarketing, the Remarketing Agent shall advise, by telephone, (i) the Depositary of the Reset Rate determined in the Remarketing and the number of Remarketed Notes sold in the Remarketing, (ii) each purchaser (or the Depositary Participant thereof) of the Reset Rate and the number of Remarketed Notes such purchaser is to purchase and (iii) each purchaser to give instructions to its Depositary Participant to pay the purchase price on the Settlement Date in same day funds against delivery of the Remarketed Notes purchased through the facilities of the Depositary. Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Remarketing Agent (i) on and as of the date any Remarketing Materials are first distributed in connection with the Remarketing (the "Commencement Date"), (ii) on and as of the Remarketing Date or any Subsequent Remarketing Date and (iii) on and as of the settlement date relating to such Remarketing Date or Subsequent Remarketing Date (the "Settlement Date"), that: (a) Each of the representations and warranties of the Company as set forth in Sections 2(a) through 2(aa) of the Underwriting Agreement dated March 17, 2004 (the "Underwriting Agreement") among the Company and the Underwriters identified in Schedule II thereto, was true and correct when made on March 17, 2004; [Note: representations and warranties similar to those contained in the Underwriting Agreement to be included and agreed upon; provided that for purposes of such representations and warranties, any reference in such sections of the Underwriting Agreement to (i) the "Registration Statement", the "Prospectus" or the "Preliminary Prospectus" shall be deemed to refer to such terms as defined herein and (ii) the "Closing Date" shall be 5 deemed to refer to the applicable Remarketing Date or Subsequent Remarketing Date.] (b) The Registration Statement, if any, in the form heretofore delivered or to be delivered to the Remarketing Agent, has been declared effective by the Commission in such form; and no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission. (c) The documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act 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 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 are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act 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 light of the circumstances under which they were made, not misleading. (d) The Registration Statement, if any, conforms (and the Prospectus, if any, and any further amendments or supplements to the Registration Statement or the Prospectus, when they become effective or are filed with the Commission, as the case may be, will conform) in all material respects to the requirements of the Securities Act, the Trust Indenture Act of 1939, as amended, and the rules and regulations promulgated thereunder, and the Registration Statement and the Remarketing Materials (and any amendment or supplement thereto) as of their respective effective or filing dates and as of the Commencement Date, applicable Remarketing Date or Subsequent Remarketing Date and Settlement Date do not and will not contain any 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 not misleading; provided that no representation and warranty is made as to any statement of eligibility on Form T-1 filed or incorporated by reference as part of the Registration Statement or the Remarketing Materials, or as to information relating to the Remarketing Agent or the Holders of the Remarketed Notes contained in or omitted from the Registration Statement or the Remarketing Materials in reliance upon and in conformity with written information furnished to the Company by the Remarketing Agent expressly for use therein. (e) This Agreement has been duly authorized, executed and delivered by the Company. 6 (f) The Remarketed Notes will conform to the descriptions thereof contained in the Prospectus and in any other Remarketing Materials. (g) No Event of Default (as defined in the Indenture, as supplemented by the Supplemental Indenture) has occurred and is continuing. Section 4. FEES. In the event of a successful remarketing in which the Remarketed Notes are sold for an aggregate amount that is equal to 100.25% of the aggregate principal amount of the Remarketed Notes (a "Successful Remarketing"), the Remarketing Agent shall retain as a remarketing fee (the "Remarketing Fee") an amount not exceeding 25 basis points (0.25%) of the Remarketing Value of the Remarketed Notes in accordance with Section 5.4(b) of the Purchase Contract Agreement and Section 2.19 of the Supplemental Indenture. Section 5. COVENANTS OF THE COMPANY. (a) The Company covenants and agrees as follows: 1. If and to the extent the Remarketed Notes are required (in the view of counsel, which need not be in the form of a written opinion, for either the Remarketing Agent or the Company) to be registered under the Securities Act as in effect at the time of the Remarketing, i. to prepare the Registration Statement and the Prospectus to file any such Prospectus pursuant to the Securities Act within the period required by the Securities Act and the rules and regulations thereunder and to use commercially reasonable efforts to cause the Registration Statement to be declared effective by the Commission prior to the second Business Day immediately preceding the Remarketing Date; ii. to file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the reasonable judgment of the Company, be required by the Securities Act or requested by the Commission; iii. to advise the Remarketing Agent, 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 and to furnish the Remarketing Agent with copies thereof; iv. to advise the Remarketing Agent, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of the Prospectus, of 7 the suspension of the qualification of any of the Remarketed Notes 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 the Prospectus or for additional information, and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal; v. to furnish promptly to the Remarketing Agent such copies of the following documents as the Remarketing Agent shall reasonably request: (A) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case excluding exhibits); (B) the Preliminary Prospectus and any amended or supplemented Preliminary Prospectus, (C) the Prospectus and any amended or supplemented Prospectus; and (D) any document incorporated by reference in the Prospectus (excluding exhibits thereto); and, if at any time when delivery of a Prospectus is required in connection with the Remarketing, any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include any 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 Securities Act or the Exchange Act, to notify the Remarketing Agent and, upon its request, to file such document and to prepare and furnish without charge to the Remarketing Agent and to any dealer in securities as many copies as the Remarketing Agent may from time to time reasonably request of an amended or supplemented Prospectus that will correct such statement or omission or effect such compliance; vi. prior to filing with the Commission (A) any amendment to the Registration Statement or supplement to the Prospectus or (B) any Prospectus pursuant to Rule 424 under the Securities Act, to furnish a copy thereof to the Remarketing Agent and counsel to the Remarketing Agent; vii. as soon as practicable, but in any event not later than eighteen months, after the effective date of the Registration Statement, to make "generally available to its security holders" an "earnings 8 statement" of the Company and its subsidiaries complying with (which need not be audited) Section 11(a) of the Securities Act and the rules and regulations thereunder (including, at the option of the Company, Rule 158 under the Securities Act). The terms "Generally Available to its Security Holders" and "Earnings Statement" shall have the meanings set forth in Rule 158 under the Securities Act; and viii. to take such action as the Remarketing Agent may reasonably request in order to qualify the Remarketed Notes for offer and sale under the securities or "blue sky" laws of such jurisdictions as the Remarketing Agent may reasonably request; provided that in no event shall the Company be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. 2. To pay: (1) the costs incident to the preparation and printing of the Registration Statement, if any, any Prospectus and any other Remarketing Materials and any amendments or supplements thereto; (2) the costs of distributing the Registration Statement, if any, any Prospectus and any other Remarketing Materials and any amendments or supplements thereto; (3) any fees and expenses of qualifying the Remarketed Notes under the securities laws of the several jurisdictions as provided in Section 5(a)(9) and of preparing, printing and distributing a Blue Sky Memorandum, if any (including any related fees and expenses of counsel to the Remarketing Agent); (4) all other costs and expenses incident to the performance of the obligations of the Company hereunder and the Remarketing Agent hereunder; and (5) the reasonable fees and expenses of one counsel to the Remarketing Agent in connection with their duties hereunder. 3. To furnish the Remarketing Agent with such information and documents as the Remarketing Agent may reasonably request in connection with the transactions contemplated hereby, and to make reasonably available to the Remarketing Agent and any accountant, attorney or other advisor retained by the Remarketing Agent such information that parties would customarily require in connection with a due diligence investigation conducted in accordance with applicable securities laws. (b) The Remarketing Agent covenants and agrees as follows: 1. that it will not disseminate any written material for or in connection with the Remarketing other than the Remarketing Materials and agrees that it will not make any written statements in connection with the 9 Remarketing, other than statements that are set forth in the Remarketing Materials unless authorized in advance by the Company; 2. that it will not distribute the Remarketing Materials if it has been notified by the Company in writing of (i) the occurrence of any event, or the discovery of any fact, that could reasonably be expected to cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect, (ii) the issuance of any comment or stop order or the taking of any other action by the Commission or any other governmental or regulatory agency with respect to the Remarketing Materials, (iii) the occurrence of any event, or the discovery of any fact, that could reasonably be expected to cause the Company to amend or supplement the Remarketing Materials and (iv) the occurrence of any event, or the discovery of any fact, that would cause the Remarketing Materials to contain any untrue statement of a material fact or omit to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 3. that if, and for so long as the Notes are in the possession of the Remarketing Agent prior to the settlement of the Purchase Contracts, (i) the Remarketing Agent will hold such Notes for the sole benefit of the Company, (ii) such Notes will continue to constitute Collateral (as defined in the Pledge Agreement and (iii) the Company will retain all of the rights, privileges and benefits with respect thereto as described in the Pledge Agreement. Section 6. REPLACEMENT AND RESIGNATION OF REMARKETING AGENT. (a) The Company may replace [_______] as the Remarketing Agent by giving notice prior to 3:00 p.m., New York City time on the [eleventh] Business Day immediately prior to the Remarketing Date. Upon providing such notice, the Company shall use all reasonable best efforts to appoint such a successor and to enter into a remarketing agreement with such successor as soon as reasonably practicable. (b) [________] may resign at any time and be discharged from its duties and obligations hereunder as the Remarketing Agent by giving notice prior to 3:00 p.m., New York City time on the [eleventh] Business Day immediately prior to the Remarketing Date. Upon receiving notice from the Remarketing Agent that it wishes to resign hereunder, the Company shall use all reasonable best efforts to appoint such a successor and enter into a remarketing agreement with it as soon as reasonably practicable. (c) The Company shall give the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Trustee prompt written notice of any replacement of the Remarketing Agent pursuant to this section. 10 (d) The Remarketing Agent shall give the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Trustee prompt written notice of its resignation pursuant to this section. (e) Notwithstanding the above, no such resignation nor any such removal shall become effective until the Company shall have appointed (with notice to the Purchase Contract Agent, the Custodial Agent, the Collateral Agent and the Trustee) at least one nationally recognized broker-dealer as successor Remarketing Agent and such successor Remarketing Agent shall have entered into a remarketing agreement with the Company, in which it shall have agreed to conduct the remarketing in accordance with this Agreement in all material respects. Section 7. DEALING IN THE SECURITIES. The Remarketing Agent, when acting hereunder or when acting in its individual or any other capacity, may, to the extent permitted by law, buy, sell, hold or deal in any of the Notes, Normal Units, Stripped Units or any other securities of the Company; provided, however, that in buying, selling, holding, or dealing in any of the Notes, Normal Units, Stripped Units or any other securities of the Company, the Remarketing Agent may not violate any of its duties under this Agreement. With respect to any Notes, Normal Units, Stripped Units or any other securities of the Company owned by it, the Remarketing Agent may exercise any vote or join in any action with like effect as if it did not act in any capacity hereunder. The Remarketing Agent, in its individual capacity, either as principal or agent, may also engage in or have an interest in any financial or other transaction with the Company as freely as if it did not act in any capacity hereunder. The Company or its affiliates may, to the extent permitted by law, purchase any Notes that are remarketed by the Remarketing Agent. Section 8. CONDITIONS TO THE REMARKETING AGENT'S OBLIGATIONS. The obligations of the Remarketing Agent hereunder shall be subject to the following conditions: (a) The Prospectus, if any, shall have been timely filed with the Commission; no stop order suspending the effectiveness of the Registration Statement, if any, or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission. (b) (1) Trading generally shall not have been suspended or materially limited on the New York Stock Exchange, (2) trading of any securities of the Company shall not have been materially suspended or limited on the New York Stock Exchange, (3) a general moratorium on commercial banking activities in New York, the Cayman Islands or Bermuda shall not have been declared by the relevant authorities and there shall not have occurred a material disruption in commercial banking or securities settlement or clearance services in the United States or other relevant jurisdiction, or (4) there shall not 11 have occurred a material adverse change in the financial markets, any 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 or other calamity or crisis, if the effect of any such event specified in this clause (4) in the judgment of the Remarketing Agent makes it impracticable or inadvisable to proceed with the Remarketing or the delivery of the Remarketed Notes on the terms and in the manner contemplated in the Transaction Documents. (c) The representations and warranties of the Company contained herein shall be true and correct in all material respects on and as of the Remarketing Date, and the Company, the Purchase Contract Agent and the Collateral Agent shall have performed in all material respects all covenants and agreements contained herein or in the Purchase Contract Agreement or Pledge Agreement to be performed on their part at or prior to the Remarketing Date. (d) The Company shall have furnished to the Remarketing Agent a certificate, dated the Remarketing Date, of the Chief Executive Officer and the Treasurer satisfactory to the Remarketing Agent stating that: (1) no order suspending the effectiveness of the Registration Statement, if any, or prohibiting the sale of the Remarketed Notes is in effect, and no proceedings for such purpose are pending before or, to the knowledge of such officers, threatened by the Commission and (2) the representations and warranties of the Company in Section 3 of this Agreement are true and correct on and as of the Remarketing Date and the Company has performed in all material respects all covenants and agreements contained herein to be performed on its part at or prior to such Remarketing Date. (e) On the Remarketing Date, the Remarketing Agent shall have received a letter addressed to the Remarketing Agent and dated such date, in form and substance satisfactory to the Remarketing Agent, of PricewaterhouseCoopers LLP, the independent accountants of the Company, containing statements and information of the type ordinarily included in accountants' "comfort letters" with respect to certain financial information contained in the Remarketing Materials, if any. (f) Each of (1) the General Counsel to the Company, (2) Cahill Gordon & Reindel LLP, counsel to the Company, (3) Hunter & Hunter, Cayman Islands counsel to the Company and (4) White & Case, counsel to the Purchase Contract Agent and Collateral Agent, shall have furnished to the Remarketing Agent its opinion, addressed to the Remarketing Agent and dated the Remarketing Date, in form and substance reasonably satisfactory to the Remarketing Agent addressing such matters as are set forth in such counsel's opinion furnished pursuant to Sections 7(c), 7(d), 7(e) and 7(f) of the Underwriting Agreement except that such opinions (i) shall appropriately address the Remarketing Agreement and, as to the enforceability of the securities, such opinions shall be limited to the Remarketed Notes and (ii) may be adapted as necessary to relate to the Remarketing Materials, if any, or to any changed circumstances or events occurring subsequent to the date of this Agreement, such adaptations being reasonably acceptable to counsel to the Remarketing Agent. 12 (g) [________], counsel for the Remarketing Agent, shall have furnished to the Remarketing Agent its opinion, addressed to the Remarketing Agent and dated the applicable Remarketing Date, in form and substance satisfactory to the Remarketing Agent. (h) There shall not have been, since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition (financial or otherwise), business, properties or results of operations of the Company and its subsidiaries taken as a whole. Section 9. TERMINATION OF REMARKETING AGREEMENT. This Agreement shall automatically terminate (i) as to the Remarketing Agent on the effective date of the resignation or removal of the Remarketing Agent pursuant to Section 6 and (ii) on the earlier of (x) any Special Event Redemption Date and (y) the Stock Purchase Date. If this Agreement is terminated pursuant to any of the other provisions hereof, except as otherwise provided herein, the Company shall not be under any liability to the Remarketing Agent and the Remarketing Agent shall not be under any liability to the Company, except that if this Agreement is terminated by the Remarketing Agent because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company will reimburse the Remarketing Agent for all of its out-of-pocket expenses (including the reasonable fees and disbursements of its counsel) reasonably incurred by it. Section 10, Section 11, Section 12 and Section 14 hereof shall survive the termination of this Agreement or the resignation or removal of the Remarketing Agent. Section 10. REMARKETING AGENT'S PERFORMANCE; DUTY OF CARE. The duties and obligations of the Remarketing Agent shall be determined solely by the express provisions of this Agreement and the Transaction Documents. No implied covenants or obligations of or against the Remarketing Agent shall be read into this Agreement or any of the Transactions Documents. In the absence of willful misconduct, bad faith or gross negligence on the part of the Remarketing Agent, the Remarketing Agent may conclusively rely upon any document furnished to it which purports to conform to the requirements hereunder as to the truth of the statements expressed therein. The Remarketing Agent shall be protected in acting upon any document or communication reasonably believed by it to be signed, presented or made by the proper party or parties. The Remarketing Agent shall not have any obligation to determine whether there is any limitation under applicable law on the Reset Rate on the Remarketed Notes or, if there is any such limitation, the maximum permissible Reset Rate on the Remarketed Notes, and it shall rely solely upon timely written notice from the Company pursuant to Section 2(a) hereof as to whether or not there is any such limitation and, if so, the maximum permissible Reset Rate. The Remarketing Agent shall not incur any liability under this Agreement to any beneficial owner or holder of Remarketed Notes, or other securities, either in its individual capacity or as Remarketing Agent, as the case may be, for any action or failure to act in connection with the remarketing of the Remarketed 13 Notes or otherwise in connection with the transactions contemplated by this Agreement, except to the extent that such liability has, by final judicial determination, resulted from the willful misconduct, bad faith or gross negligence of the Remarketing Agent or from its failure to fulfill its express obligations hereunder. The provisions of this Section 10 shall survive any termination of this Agreement and shall also continue to apply to every Remarketing Agent notwithstanding its resignation or removal. The Remarketing Agent will act as the agent of the Holders. Section 11. INDEMNIFICATION. (a) The Company will indemnify and hold harmless the Remarketing Agent, against any losses, claims, damages or liabilities to which the Remarketing Agent may become subject, under the Securities 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 Registration Statement, the Prospectus, or any amendments or supplement thereto, or any related Preliminary Prospectus or preliminary prospectus supplement 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 the Remarketing Agent for any legal expenses of one counsel (in addition to any local counsel) engaged reasonably incurred by the Remarketing Agent 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 from any of such documents in reliance upon and in conformity with written information furnished to the Company by the Remarketing Agent specifically for use therein. (b) The Remarketing Agent will indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities to which the Company may become subject, under the Securities 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 Registration Statement, the Prospectus or any amendment or supplement thereto, or any related Preliminary Prospectus or Preliminary Prospectus supplement, or any other Remarketing Materials, 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 reliance upon and in conformity with written information furnished to the Company by the Remarketing Agent specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided that in no case will the Remarketing Agent be liable or 14 responsible for any amount in excess of the fee paid to the Remarketing Agent pursuant to Section 4. (c) Promptly after receipt by an indemnified party under this section 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 subsection (a) or (b) above, 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 subsection (a) or (b) above. In the case of parties indemnified pursuant to subsection (a) above, counsel to the indemnified parties shall be selected by the Remarketing Agent. In case any such action shall be brought against the 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, 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 (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 the indemnified party 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 indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 11 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each 15 indemnified party from all liability arising out of such litigation, investigation, proceeding 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. Section 12. CONTRIBUTION. (a) If the indemnification provided for in Section 11 is unavailable to or insufficient to hold harmless an indemnified party under Sections 11(a) or 11(b), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Remarketing Agent on the other from the offering of the Remarketed Notes or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportions as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Remarketing Agent on the other in connection with the statements of omissions which resulted in such losses, claims, damages or liabilities as well as any relevant equitable considerations. The relative benefits received by the Company on one hand and the Remarketing Agent on the other hand in connection with the Remarketing shall be deemed to be in the same proportions as the total net proceeds of the Remarketed Notes less the fee paid to the Remarketing Agent on the one hand and the fee paid to the Remarketing Agent on the other hand bear to the total net proceeds of the Remarketed Notes. 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 Remarketing Agent on the other hand and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Remarketing Agent agree that it would not be just and equitable if contribution pursuant to this subsection (a) 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 (a). 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 (a) 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 (a), the Remarketing Agent shall not be required to contribute any amount in excess of the amount by which the fees received by it under Section 4 exceeds the amount of any damages which the Remarketing Agent 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 Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (b) The obligations of the Company under Section 11 and this Section 12 shall be in addition to any liability which the Company may otherwise have and shall extend, 16 upon the same terms and conditions, to each officer and director of the Remarketing Agent and to each person, if any, who controls the Remarketing Agent within the meaning of the Securities Act; and the obligations of the Remarketing Agent under Section 11 and this Section 12 shall be in addition to any liability which the Remarketing Agent may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company, to each officer of the Company who signed the Registration Statement and to each person, if any, who controls the Company within the meaning of the Securities Act. (c) The indemnity and contribution provisions contained in Section 11 and this Section 12 and the representations, warranties and other statements of the Company contained in 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 Remarketing Agent or any person controlling the Remarketing Agent, or the Company, its officers or director or any controlling person of the Company, and the completion of the Remarketing. Section 13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to the benefit of and be binding upon each party hereto and its respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (x) the representations, warranties, indemnities and agreements of the Company contained in this Agreement shall also be deemed to be for the benefit of the Remarketing Agent and the person or persons, if any, who control the Remarketing Agent within the meaning of Section 15 of the Securities Act and (y) the indemnity agreement of the Remarketing Agent contained in Section 11(b) of this Agreement shall be deemed to be for the benefit of the Company's directors and officers who sign the Registration Statement, if any, and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing contained in this Agreement is intended or shall be construed to give any person, other than the persons referred to herein, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. Section 14. GOVERNING LAW; SUBMISSION TO JURISDICTION; JUDGMENT CURRENCY. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Company irrevocably (i) agrees that any legal suit, action or proceeding against the Company brought by the Remarketing Agent or by any person who controls the Remarketing Agent arising out of or based upon this 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 17 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 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 the Remarketing Agent or by any person who controls the Remarketing Agent, 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. 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 Remarketing Agent against any loss incurred by the Remarketing Agent 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 the Remarketing Agent is able to purchase United States dollars with the amount of judgment currency actually received by the Remarketing Agent. 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. Section 15. SURVIVAL. The respective indemnities, representations, warranties and agreements of the Company and the Remarketing Agent contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive any Remarketing and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. Section 16. SUCCESSORS AND ASSIGNS. The rights and obligations of the Company hereunder may not be assigned or delegated to any other Person without the prior written consent of the Remarketing Agent. The rights and obligations of the Remarketing Agent hereunder may not be assigned or delegated to any other Person (other than an affiliate of the Remarketing Agent) without the prior written consent of the Company. 18 Section 17. HEADINGS. Section headings have been inserted in this Agreement as a matter of convenience of reference only, and such section headings are not a part of this Agreement and will not be used in the interpretation of any provision of this Agreement. Section 18. SEVERABILITY. If any provision of this Agreement is invalid, inoperative or unenforceable as applied in any particular case in any or all jurisdictions because it conflicts with any provisions of any constitution, statute, rule or public policy or for any other reason, then, to the extent permitted by law, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case, circumstances or jurisdiction, or of rendering any other provision or provisions of this Agreement, as the case may be, invalid, inoperative or unenforceable to any extent whatsoever. Section 19. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. Section 20. AMENDMENTS. This Agreement may be amended only by an instrument in writing signed by the Company and the Remarketing Agent. Section 21. NOTICES. Unless otherwise specified, any notices, requests, consents or other communications given or made hereunder shall be made in writing or transmitted by any standard form of telecommunication, including telephone or telecopy, and confirmed in writing. All written notices and confirmations of notices by telecommunication shall be deemed to have been validly given or made when delivered or mailed, registered or certified mail, return receipt requested and postage prepaid. All such notices, requests, consents or other communications shall be addressed as follows: if to the Company, to XL Capital Ltd, XL House, One Bermudiana Road, Hamilton HM11, Bermuda, fax number: (441) 292-5280, Attention: General Counsel; if to the Remarketing Agent, to [________], [________], [________], fax number [________], Attention: General Counsel; if to the Collateral Agent, to U.S. Bank Trust National Association, [________], [________], fax number [________], Attention: [________]; and if to the Purchase Contract Agent, to U.S. Bank National Association, [________], [________], fax number [________], Attention: [________], or to such other address as any of the above shall specify to the others in writing. 19 IN WITNESS WHEREOF, each of the Company, the Purchase Contract Agent and the Remarketing Agent has caused this Agreement to be executed in its name and on its behalf by one of its duly authorized signatories as of the date first above written. XL CAPITAL LTD By: ___________________________ Name: Title: [________], as Remarketing Agent By: _______________________________ Name: Title: CONFIRMED AND ACCEPTED: U.S. BANK NATIONAL ASSOCIATION not individually but solely as Purchase Contract Agent and as attorney-in-fact for the Holders of the Purchase Contracts By:__________________________ Name: Title: 20 -----END PRIVACY-ENHANCED MESSAGE-----