-----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, OEi2ZyjT/jcCkr9Wfc3OLELmhkbOn1B1QH/GDNa8qsR8iyGqe+a5VTfAUrjseFz3 xNGz4jIJwJJF8QGIq87yNw== 0000930413-04-003896.txt : 20040823 0000930413-04-003896.hdr.sgml : 20040823 20040823105847 ACCESSION NUMBER: 0000930413-04-003896 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040823 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20040823 DATE AS OF CHANGE: 20040823 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: 04991061 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 c33470_8-k.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): AUGUST 23, 2004 ------------------------ XL CAPITAL LTD (Exact name of registrant as specified in its charter) ------------------------ CAYMAN ISLANDS 1-10809 98-0191089 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) 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) ------------------------ CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO SIMULTANEOUSLY SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE FOLLOWING PROVISIONS: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 8.01. OTHER EVENTS. On August 23, 2004, XL Capital Ltd, a Cayman Islands exempted limited company (the "Company" or the "Registrant"), issued $300,000,000 aggregate principal amount of 5.25% Senior Notes due 2014 (the "Notes") in a public offering. The Company sold the Notes pursuant to an Underwriting Agreement and related Pricing Agreement, each dated as of August 18, 2004, by and among the Company and Morgan Stanley & Co. Incorporated and Lehman Brothers Inc., as underwriters. The Company received $296,946,000 in proceeds from the sale of the Notes after deducting underwriting discounts. The Notes were issued under a Senior Debt Indenture, which the Company entered into with The Bank of New York, as Trustee, on June 2, 2004, and a First Supplemental Indenture, which the Company entered into with The Bank of New York, as Trustee, on August 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. 333-116245) first filed with the Securities and Exchange Commission on June 7, 2004, 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 August 6, 2004, and such exhibits are hereby incorporated into the Registration Statement by reference. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following exhibits are filed herewith: EXHIBIT NO. DESCRIPTION ----------- ----------- 1.1 Underwriting Agreement, dated August 18, 2004, by and among the Registrant and Morgan Stanley & Co. Incorporated and Lehman Brothers Inc., as Underwriters. 1.2 Pricing Agreement, dated August 18, 2004, by and among the Registrant and Morgan Stanley & Co. Incorporated and Lehman Brothers Inc., as Underwriters. 4.1 First Supplemental Indenture, dated August 23, 2004, to the Indenture, dated June 2, 2004, between the Registrant and The Bank of New York, as Trustee. 4.2 Form of Senior Note (included in Exhibit 4.1 hereto). 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: August 23, 2004 XL CAPITAL LTD (Registrant) By: /s/ Paul S. Giordano ------------------------------------- Name: Paul S. Giordano Title: Executive Vice President, General Counsel & Secretary EX-1.1 2 c33470_ex1-1.txt EXECUTION COPY XL CAPITAL LTD SENIOR DEBT SECURITIES ------------- UNDERWRITING AGREEMENT August 18, 2004 Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Lehman Brothers Inc. 745 Seventh Avenue New York, New York 10019 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 senior debt securities (the "Debt Securities"), specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Debt Securities"). The terms and rights of any particular issuance of Designated Debt Securities shall be as specified in the Pricing Agreement relating thereto and in or pursuant to the indenture, as amended or supplemented by any supplemental indenture relating Designated Debt Securities (the "Indenture"), between the Company and the trustee (the "Trustee"), in each case as identified in the Pricing Agreement. 1. Particular sales of Designated Debt Securities may be made from time to time to the Underwriters of such Debt Securities, for whom the firms designated as representatives of the Underwriters of such Debt Securities 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 Debt Securities or as an obligation of any of the Underwriters to purchase any of the Debt Securities. The obligation of the Company to issue and sell any of the Debt Securities and the obligation of any of the Underwriters to purchase any of the Debt Securities shall be evidenced by the Pricing Agreement with respect to the Designated Debt Securities specified therein. Each Pricing Agreement shall specify the aggregate principal amount of such Designated Debt Securities, the initial public offering price of such Designated Debt Securities or the manner of determining such price, the purchase price to the Underwriters of such Designated Debt Securities, the names of the Underwriters of such Designated Debt Securities, the names of the Representatives of such Underwriters, the aggregate principal amount of such Designated Debt Securities 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 Designated Debt Securities, if any, and payment therefor. The Pricing Agreement shall also specify (to the extent not set forth in the registration statement and prospectus with respect thereto) the terms of such Designated Debt Securities, including the interest rates, if any, and maturity of the Designated Debt Securities, whether such Designated Debt Securities will be convertible at the option of the holder thereof, 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 Debt Securities and as of the Time of Delivery (as defined in Section 4 hereof), 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 333-116245) (the "Initial Registration Statement") in respect of the Debt Securities 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 (as amended by the Company's Annual Report on Form 10-K/A filed on August 9, 2004), the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and the Company's Current Reports on Form 8-K dated March 2 16, 2004, March 18, 2004, March 24, 2004, May 19, 2004, August 9, 2004 and August 18, 2004 incorporated by reference into the Initial 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 Designated Debt Securities), 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 Designated Debt Securities, 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 Debt Securities 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 3 necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the 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 Debt Securities 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 Debt Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Debt Securities; and on the applicable effective date and at the Time of Delivery, the Indenture did and will comply in all material respects with the applicable requirements of the Trust Indenture Act and the rules and regulations thereunder; (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 4 change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its Significant Subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Prospectus; (e) The Company has been duly incorporated and is validly existing as an exempted limited company in good standing under the laws of the Cayman Islands, with full power and authority to own its properties and conduct its business as described in the Prospectus and has been duly qualified as a foreign company for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where such failure to be so qualified in any such jurisdiction or to have any such power or authority would not have a material adverse effect on the current or future condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole or the transactions contemplated by this Agreement (a "Material Adverse Effect"); and each Significant Subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; (f) The Company had, on June 30, 2004, an authorized capitalization as set forth in the Prospectus under the caption "Actual" under the heading "Capitalization", and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; (g) 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 Debt Securities, the Designated Debt Securities shall have been duly and validly authorized, and, when the Designated Debt Securities are issued and delivered pursuant to the this Agreement and the Pricing Agreement with respect to such Designated Debt Securities, and when authenticated by the Trustee in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters, such Designated Debt Securities will have been duly and validly executed, authenticated, issued 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 will be entitled to the benefits provided by the Indenture; the Indenture has been duly authorized by the Company, and at the Time of Delivery for such Designated Debt Securities, will be duly executed and delivered by the Company and will constitute a valid and legally binding agreement 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; the Indenture has been duly qualified under the Trust Indenture Act; 5 and the Designated Debt Securities and the Indenture will conform to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to the Designated Debt Securities; the Indenture is substantially in the form filed as an exhibit to the Registration Statement; (i) If the Pricing Agreement with respect to the Designated Debt Securities specifies that such Designated Debt Securities shall be listed on an exchange, the Designated Debt Securities will be duly registered under the Exchange Act and will be authorized for listing on such exchange subject to official notice of issuance, in each case, prior to the Time of Delivery; (j) The issue and sale of the Debt Securities, the execution and delivery of this Agreement, any Pricing Agreement and the Indenture and the compliance by the Company with all of the provisions this Agreement, any Pricing Agreement, the Indenture and the Debt Securities, 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 respective 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; (k) 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 Debt Securities or the consummation by the Company of the transactions contemplated by this Agreement or any Pricing Agreement or the Indenture, except such as have been, or will have been prior to the Time of Delivery, 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 Debt Securities by the Underwriters; (l) 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 (i) a 15% ownership interest in XL Financial Assurance Ltd. owned by a third party and (ii) 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 6 50% of the outstanding Voting Shares of such person is, at any time, directly or indirectly, owned by such person and/or one or more subsidiaries of such person and "Significant Subsidiary" shall have the meaning of "significant subsidiary" as set forth in Regulation S-X under the Act; for purposes of the definition of " Subsidiary," "Voting Shares" means, with respect to any corporation, the capital stock having the general voting power under ordinary circumstances to elect at least a majority of the board of directors (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency)); (m) 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 Debt Securities) will violate or result in a violation of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without limitation, Regulations T, U, and X of the Board of Governors of the Federal Reserve System; (n) 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 Debt Securities in violation of the Exchange Act; (o) 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; (p) 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; (q) 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; (r) The Company is subject to Section 13 or 15(d) of the Exchange Act; 7 (s) 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; (t) The statements set forth in the Prospectus as amended or supplemented relating to the Designated Debt Securities under the captions "Description of the Senior Notes," "Prospectus Supplement Summary," and "Description of XL Capital Debt Securities", insofar as they purport to constitute a summary of the terms of the Debt Securities, the Indenture and the other transaction documents described therein and the statements set forth under the caption "Certain Tax Consequences" in the Prospectus as amended or supplemented relating to the Designated Debt Securities insofar as they purport to describe the provisions of the laws referred to therein, are accurate, complete and fair in all material respects; (u) The Company is not and, after giving effect to the offering and sale of the Debt Securities, will not be an "investment company", as such term is defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); (v) PricewaterhouseCoopers LLP, the Company's auditors, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; and (w) 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 Debt Securities or (B) the sale or delivery outside the Cayman Islands by the Underwriters of the Designated Debt Securities to the initial purchasers thereof, other than as described in the opinion of Appleby Spurling Hunter delivered pursuant to Section 7(d) of this Agreement. 3. Upon the execution of the Pricing Agreement applicable to any Designated Debt Securities and authorization by the Representatives of the release of the Designated Debt Securities, the several Underwriters propose to offer the Designated Debt Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. 4. Designated Debt Securities 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 the Representatives at least twenty-four hours in advance as specified in such Pricing Agreement, all in the manner and at the place and time and date specified in 8 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 "Time of Delivery" for such Debt Securities. 5. The Company agrees with each of the Underwriters of any Designated Debt Securities: (a) To prepare the Prospectus as amended or supplemented in relation to the applicable Designated Debt Securities 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 Debt Securities 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 Debt Securities and prior to any Time of Delivery for such Debt Securities which shall be disapproved by the Representatives for such Debt Securities 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 Debt Securities 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 Debt Securities, and during such same period to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Debt Securities, of the suspension of the qualification of such Debt Securities 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 Debt Securities or suspending any such qualification, promptly to use its best efforts to obtain the withdrawal of such order; the Representatives shall advise the Company when the delivery of a prospectus is no longer required in connection with the offer or sale of Designated Debt Securities 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 Debt Securities 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 Debt Securities, provided that 9 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 the Pricing Agreement with respect to the Designated Debt Securities 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 Designated Debt Securities 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) During the period beginning from the date of the Pricing Agreement for such Designated Debt Securities and continuing to and including the earlier of (i) the termination of trading restrictions for such Designated Debt Securities, as notified to the Company by the Representatives and (ii) the Time of Delivery for such Designated Debt Securities, not to offer, sell, contract to sell or otherwise dispose of any debt securities of the Company that mature more than one year after such Time of Delivery and that are substantially similar to such Designated Debt Securities, without the prior written consent of the Representatives; (f) To use its best efforts to cause the Designated Debt Securities to be listed, and to maintain the listing of the Designated Debt Securities, on the exchange, if any, set forth in Pricing Agreement with respect to the Designated Debt Securities; (g) To use the net proceeds received by it from the sale of the Designated Debt Securities 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;" and 10 (h) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of the Pricing Agreement with respect to the Designated Debt Securities, 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 Debt Securities under the Act and the issuance and sale of the Debt Securities 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 Blue Sky Memorandum, and any closing documents (including compilations thereof); (iii) all expenses in connection with the qualification of the Debt Securities 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 Debt Securities; (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 Debt Securities; (vi) the cost of preparing the Debt Securities; (vii) the fees and expenses of any Trustee and any agent of any Trustee and the fees and disbursements of counsel for any such persons in connection with any Indenture or the Debt Securities; (viii) all expenses and taxes arising as a result of the issuance, sale and delivery of the Designated Debt Securities, of the sale and delivery outside of the Cayman Islands of the Designated Debt Securities 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 Debt Securities pursuant to the Underwriting Agreement and the Pricing Agreement; (ix) any cost incurred in connection with the listing of the Designated Debt Securities on the exchange, if any, set forth in the Pricing Agreement with respect to the Designated Debt Securities; and (x) all other costs and expenses incident to the performance of its obligations hereunder and under any Pricing Agreement 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 Debt Securities by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Underwriters of any Designated Debt Securities under the Pricing Agreement relating to such Designated Debt Securities 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 Debt 11 Securities are, at and as of the Time of Delivery for such Designated Debt Securities, 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 Debt Securities 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 Debt Securities; 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) Appleby Spurling Hunter, Cayman Islands counsel for the Company, shall have furnished to the Representatives their written opinion or opinions, dated such Time of Delivery, in form and substance reasonably satisfactory to the Representatives, in the form attached hereto in Annex IV; (e) Paul S. Giordano, Executive Vice President and General Counsel to the Company, shall have furnished to the Representatives his written opinion or opinions, dated such Time of Delivery, in form and substance reasonably satisfactory to the Representatives, in the form attached hereto in Annex V; (f) On the date of the Pricing Agreement for such Designated Debt Securities and at the Time of Delivery for such Designated Debt Securities, PricewaterhouseCoopers LLP, the independent registered public 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; 12 (g) (i) Neither the Company nor any of its Significant Subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Debt Securities 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 Debt Securities, 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 Debt Securities, there shall not have been any change in the capital stock (other than changes resulting from the exercise of 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 Debt Securities, 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 Debt Securities on the terms and in the manner contemplated in the Prospectus as amended or supplemented relating to the Designated Debt Securities; (h) On or after the date of the Pricing Agreement relating to the Designated Debt Securities (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; (i) On or after the date of the Pricing Agreement relating to the Designated Debt Securities there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange (the "Exchange"); (ii) a suspension or material limitation in trading in the Company's securities on the Exchange; (iii) a general moratorium on commercial banking activities in New York, the Cayman Islands or Bermuda declared by the relevant authority or a material disruption in commercial banking or securities settlement or clearance services in the United States or any other relevant jurisdiction; (iv) the outbreak or escalation of hostilities involving the United States, the Cayman Islands or Bermuda or the declaration by the United States, the Cayman Islands or Bermuda of a national emergency or war, if the effect of any such event specified in this clause (iv) in the judgment of the Representatives is so material and adverse as to make it 13 impractical or inadvisable to proceed with the public offering or the delivery of the Designated Debt Securities on the terms and in the manner contemplated in the Prospectus as amended or supplemented relating to the Designated Debt Securities; (v) a change or development involving a prospective change in the Cayman Islands or Bermuda taxation affecting the Company, the Designated Debt Securities 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 Debt Securities on the terms and in the manner contemplated in the Prospectus as amended or supplemented relating to the Designated Debt Securities; (j) The Designated Debt Securities at the Time of Delivery shall have been duly listed, subject to notice of issuance, on the exchange, if any, set forth in the Pricing Agreement with respect to such Designated Debt Securities; (k) The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of the Pricing Agreement relating to such Designated Debt Securities; (l) The Company shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Debt Securities 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 (g) and (h) of this Section and as to such other matters as the Representatives may reasonably request; and (m) Prior to the 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 Debt Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal expenses of one counsel (in addition to any local counsel) engaged reasonably incurred by such Underwriter in 14 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 as amended or supplemented and any other prospectus relating to the Debt Securities, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter of Designated Debt Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Debt Securities. (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 Debt Securities, 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 Debt Securities, 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 15 right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the 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 Debt Securities on the other from the offering of the Designated Debt Securities 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 Debt Securities 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 16 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 Debt Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters of Designated Debt Securities in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Debt Securities 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 Designated Debt Securities which it has agreed to purchase under the Pricing Agreement relating to such Designated Debt Securities, the Representatives may in their discretion arrange for themselves or another party or other parties satisfactory to the Company to purchase such Designated Debt Securities 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 Designated Debt Securities then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Designated Debt Securities 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 Designated Debt Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Designated Debt Securities, the Representatives or the Company shall have the right to postpone the Time of Delivery for such Designated Debt Securities 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 Debt Securities. 17 (b) If, after giving effect to any arrangements for the purchase of the Designated Debt Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of such Designated Debt Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of the Designated Debt Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Designated Debt Securities which such Underwriter agreed to purchase under the Pricing Agreement relating to such Designated Debt Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Debt Securities which such Underwriter agreed to purchase under such Pricing Agreement) of the Designated Debt Securities 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. (c) If, after giving effect to any arrangements for the purchase of the Designated Debt Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of Designated Securities which remains unpurchased exceeds one-eleventh of the aggregate principal amount of the Designated Debt Securities to be purchased at the 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 Designated Debt Securities of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Designated Debt Securities 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 Debt Securities. 11. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, the Company shall not then be under any liability to any Underwriter with respect to the Designated Debt Securities 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 Debt Securities 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 Debt Securities, but the Company shall then be under no further liability to any Underwriter with respect to such Designated Debt Securities except as provided in Sections 6, 8 and 19 hereof. 18 12. In all dealings hereunder, the Representatives of the Underwriters of Designated Debt Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in the Pricing Agreement. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the address of the Representatives as set forth in the Pricing Agreement; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement, Attention: Secretary; PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its principal address, which address will be supplied to the Company by the Representatives upon written request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Sections 8 and 10 hereof, 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 Debt Securities 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. 19 15. Time shall be of the essence in each Pricing Agreement. As used herein, the term "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close. 16. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 17. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 18. The Company is authorized, subject to applicable law, to disclose any and all aspects of this potential transaction that are necessary to support any U.S. federal income tax benefits expected to be claimed with respect to such transaction, without the Underwriters imposing any limitation of any kind. 19. In respect of any judgment or order given or made for any amount due hereunder or under any Pricing Agreement that is expressed and paid in a currency (the "judgment currency") other than United States dollars, the Company will indemnify each Underwriter against any loss incurred by such 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] 20 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/ Christopher V. Greetham ----------------------------------- Name: Christopher V. Greetham Title: Executive Vice President & Chief Investment Officer Accepted as of the date hereof: Morgan Stanley & Co. Incorporated Lehman Brothers Inc. By: Morgan Stanley & Co. Incorporated By: /s/ Harold J. Hendershot III ----------------------------- Name: Harold J. Hendershot III Title: Executive Director By: Lehman Brothers Inc. By: /s/ Martin Goldberg ----------------------------- Name: Martin Goldberg Title: Senior Vice President ANNEX I PRICING AGREEMENT ----------------- Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Lehman Brothers Inc. 745 Seventh Avenue New York, New York 10019 As Representatives of the several Underwriters named in Schedule I hereto August 18, 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 August 18, 2004 (the "Underwriting Agreement"), between the Company on the one hand and Morgan Stanley & Co. Incorporated and Lehman Brothers Inc., on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Debt Securities specified in Schedule II hereto (the "Designated Debt Securities"). 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 Debt Securities 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 Debt Securities 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 Debt Securities, 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 aggregate principal amount of Designated Debt Securities set forth opposite the name of such Underwriter in Schedule I hereto. [Remainder of Page Intentionally Left Blank; Signature Page Follows] 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: Morgan Stanley & Co. Incorporated Lehman Brothers Inc. By: Morgan Stanley & Co. Incorporated By:_____________________________ Name: Title: By: Lehman Brothers Inc. By:_____________________________ Name: Title: For themselves and the other several Underwriters named in Schedule I to the foregoing Agreement. SCHEDULE I PRINCIPAL AMOUNT OF DESIGNATED DEBT SECURITIES UNDERWRITER TO BE PURCHASED Morgan Stanley & Co. Incorporated $150,000,000 Lehman Brothers Inc. $150,000,000 ------------ Total............................................. $300,000,000 ============ SCHEDULE II TITLE OF DESIGNATED DEBT SECURITIES: 5.25% Senior Notes due 2014 AGGREGATE PRINCIPAL AMOUNT OF DESIGNATED DEBT SECURITIES: $300,000,000 INITIAL OFFERING PRICE TO PUBLIC: 99.432% of the principal amount of the Designated Debt Securities, plus accrued interest, if any, from August 23, 2004. PURCHASE PRICE BY UNDERWRITERS: 98.982% of the principal amount of the Designated Debt Securities, plus accrued interest, if any, from August 23, 2004. UNDERWRITERS' COMMISSION: 0.450% FORM OF DESIGNATED DEBT SECURITIES: Book-entry only form represented by one or more global certificates deposited with The Depository Trust Company ("DTC") of its designated custodian, to be made available for checking by the Representatives at least 24 hours prior to the Time of Delivery. SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Federal (Same-Day) funds INDENTURE: Indenture, dated June 2, 2004, between the Company and The Bank of New York, as Trustee, as supplemented by the First Supplemental Indenture, to be dated as of August 23, 2004 MATURITY: September 15, 2014 INTEREST RATE: 5.25% per annum INTEREST PAYMENT DATES: March 15 and September 15, commencing on March 15, 2005 RECORD DATES: The relevant record dates will be the March 1 and September 1 preceding the relevant payment dates REDEMPTION PROVISIONS: The Notes are redeemable at the option of the Company (i) in whole at any time or in part from time to time at a make-whole redemption price described in the Prospectus under the caption "Description of the Senior Notes--Optional Redemption" and (ii) if a "tax event" occurs, as described in the Prospectus under the caption "Description of the Senior Notes--Tax Event Redemption"), in each case in accordance with and subject to the terms to be set forth in the Indenture. SINKING FUND PROVISIONS: No sinking fund provisions ADDITIONAL CLOSING CONDITIONS: None TIME OF DELIVERY: 9:30 A.M., New York City time, on August 23, 2004 TIME OF DELIVERY LOCATION: Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 DELAYED DELIVERY: None LISTING: None NAMES AND ADDRESSES OF REPRESENTATIVES: Designated Representatives: Morgan Stanley & Co. Incorporated Lehman Brothers Inc. Address for Notices, etc.: Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Attn: Financial Services Group Lehman Brothers Inc. 745 Seventh Avenue New York, New York 10019 Attn: Debt Capital Markets, Financial Institutions Group (with a copy to the General Counsel at the same address) OTHER TERMS: None 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 APPLEBY SPURLING HUNTER FORM OF OPINION ANNEX V XL CAPITAL LTD FORM OF OPINION EX-1.2 3 c33470_ex1-2.txt EXECUTION COPY PRICING AGREEMENT Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Lehman Brothers Inc. 745 Seventh Avenue New York, New York 10019 As Representatives of the several Underwriters named in Schedule I hereto August 18, 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 August 18, 2004 (the "Underwriting Agreement"), between the Company on the one hand and Morgan Stanley & Co. Incorporated and Lehman Brothers Inc., on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Debt Securities specified in Schedule II hereto (the "Designated Debt Securities"). 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 Debt Securities 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 Debt Securities 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 Debt Securities, 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 aggregate principal amount of Designated Debt Securities set forth opposite the name of such Underwriter in Schedule I hereto. [Remainder of Page Intentionally Left Blank; Signature Pages Follow] 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/ Christopher V. Greetham ----------------------------------- Name: Christopher V. Greetham Title: Executive Vice President & Chief Investment Officer Accepted as of the date hereof: Morgan Stanley & Co. Incorporated Lehman Brothers Inc. By: Morgan Stanley & Co. Incorporated By: /s/ Harold J. Hendershot III ------------------------------ Name: Harold J. Hendershot III Title: Executive Director By: Lehman Brothers Inc. By: /s/ Martin Goldberg ------------------------------ Name: Martin Goldberg Title: Senior Vice President For themselves and the other several Underwriters named in Schedule I to the foregoing Agreement. SCHEDULE I PRINCIPAL AMOUNT OF DESIGNATED DEBT SECURITIES UNDERWRITER TO BE PURCHASED ----------- -------------------------- Morgan Stanley & Co. Incorporated $150,000,000 Lehman Brothers Inc. $150,000,000 ------------ Total..................................... $300,000,000 ============ SCHEDULE II TITLE OF DESIGNATED DEBT SECURITIES: 5.25% Senior Notes due 2014 AGGREGATE PRINCIPAL AMOUNT OF DESIGNATED DEBT SECURITIES: $300,000,000 INITIAL OFFERING PRICE TO PUBLIC: 99.432% of the principal amount of the Designated Debt Securities, plus accrued interest, if any, from August 23, 2004. PURCHASE PRICE BY UNDERWRITERS: 98.982% of the principal amount of the Designated Debt Securities, plus accrued interest, if any, from August 23, 2004. UNDERWRITERS' COMMISSION: 0.450% FORM OF DESIGNATED DEBT SECURITIES: Book-entry only form represented by one or more global certificates deposited with The Depository Trust Company ("DTC") of its designated custodian, to be made available for checking by the Representatives at least 24 hours prior to the Time of Delivery. SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Federal (Same-Day) funds INDENTURE: Indenture, dated June 2, 2004, between the Company and The Bank of New York, as Trustee, as supplemented by the First Supplemental Indenture, to be dated as of August 23, 2004 MATURITY: September 15, 2014 INTEREST RATE: 5.25% per annum INTEREST PAYMENT DATES: March 15 and September 15, commencing on March 15, 2005 RECORD DATES: The relevant record dates will be the March 1 and September 1 preceding the relevant payment dates REDEMPTION PROVISIONS: The Notes are redeemable at the option of the Company (i) in whole at any time or in part from time to time at a make-whole redemption price described in the Prospectus under the caption "Description of the Senior Notes--Optional Redemption" and (ii) if a "tax event" occurs, as described in the Prospectus under the caption "Description of the Senior Notes--Tax Event Redemption"), in each case in accordance with and subject to the terms to be set forth in the Indenture. SINKING FUND PROVISIONS: No sinking fund provisions ADDITIONAL CLOSING CONDITIONS: None TIME OF DELIVERY: 9:30 A.M., New York City time, on August 23, 2004 TIME OF DELIVERY LOCATION: Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 DELAYED DELIVERY: None LISTING: None NAMES AND ADDRESSES OF REPRESENTATIVES: Designated Representatives: Morgan Stanley & Co. Incorporated Lehman Brothers Inc. EX-4.1 4 c33470_ex4-1.txt EXECUTION COPY XL CAPITAL LTD TO THE BANK OF NEW YORK, AS TRUSTEE FIRST SUPPLEMENTAL INDENTURE DATED AS OF AUGUST 23, 2004 SENIOR DEBT SECURITIES SUPPLEMENT TO INDENTURE DATED AS OF JUNE 2, 2004 FIRST SUPPLEMENTAL INDENTURE, dated as of August 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 The Bank of New York, a New York banking corporation, having a Corporate Trust Office at 101 Barclay Street, Floor 8 West, New York, New York 10286, as trustee (the "TRUSTEE"), under the Indenture. WHEREAS, the Company and the Trustee have as of June 2, 2004 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; and (e) the following terms have the meanings given to them in this Section 1.1(e): "ADDITIONAL AMOUNTS" has the meaning set forth in Section 2.13(b). "COMPARABLE TREASURY ISSUE" means the United States Treasury ecurity selected as having a maturity comparable to the remaining term of the Notes to be redeemed that would be used, at the time of selection and under customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes. "COMPARABLE TREASURY PRICE" means, with respect to any Redemption Date, the average of the Reference Treasury Dealer Quotations for the Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or if the Trustee obtains fewer that four Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations. "DEPOSITARY" has the meaning set forth in Section 2.7. "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. "GLOBAL NOTE" means a Global Security representing the Notes. "ISSUE DATE" means August 23, 2004. "REFERENCE TREASURY DEALERS" means each of Morgan Stanley & Co. Incorporated and Lehman Brothers Inc. and their respective successors and any other primary Treasury dealer the Company selects. If any of the foregoing ceases to be a primary U.S. government securities dealer in New York City, the Company must substitute another primary Treasury dealer. "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day before the Redemption Date. "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. "TAX EVENT" means if the Company determines that, as a result of (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 from or through which the Company makes a payment on the Notes or 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 in clauses (1) and (2), a "CHANGE IN TAX LAW"), the Company is, or on the next Interest Payment Date in respect of the Notes would be, required to pay more than de minimis Additional Amounts with respect to the Notes as described under 2.13(b), and such obligation cannot be avoided by taking commercially reasonable measures available to the Company. The Change in Tax Law must become effective on or after August 18, 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 on or after August 18, 2004, with respect to the original entity). "TREASURY RATE" means, with respect to any Redemption Date, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated on the third Business Day preceding the Redemption Date. ARTICLE II CREATION OF THE NOTES Section 2.1. Designation of Series. Pursuant to the terms hereof and Sections 2.01 and 3.01 of the Base Indenture, the Company hereby creates a series of its senior debt securities designated as the 5.25% Senior Notes due 2014 (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 September 15, 2014. Section 2.3. Interest and Interest Rate Reset. (a) The Notes 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, to maturity or early redemption, as the case may be, at the rate of 5.25% per annum payable semi-annually on March 15 and September 15 of each year, commencing on March 15, 2005, to the persons in whose names the Notes were registered at the close of business on the preceding March 1 and September 1, respectively. (b) Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi-annual period for which interest is computed will be computed on the basis of the actual number of days elapsed in the 180-day period. Section 2.4. Limit on Amount of Notes. (a) The Notes initially will be limited in aggregate principal amount to $300,000,000 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. (b) The Company may issue from time to time, without giving notice to or seeking the consent of the Holders of the Notes, additional notes having the same terms as the Notes (except for the initial public offering price, first Interest Payment Date and the Issue Date). Any such additional notes, together with the Notes, will constitute a single series of Securities under the Indenture. 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. Section 2.6. No Sinking Fund. The Notes do not have the benefit of any mandatory redemption or sinking fund obligation and 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 one fully registered Global Note registered in the name of The Depository Trust Company, as Depositary (the "DEPOSITARY"), or its nominee, and deposited with the Trustee, as custodian for the Depositary, for credit by the Depositary to the respective accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct). (b) The payment of 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 each Holder at its address set forth in the Security Register; PROVIDED HOWEVER, that if a Holder has given wire transfer instructions to the Company and the Paying Agent and Security Registrar at least ten Business Days prior to the applicable payment date, payment of principal of and the interest on the Notes will be payable by wire transfer of immediately available funds to the account specified in such instructions. Section 2.8. Notes Not Convertible or Exchangeable. The Notes will not be convertible or exchangeable for other securities or property. Section 2.9. Redemption. Pursuant to Section 3.01(6) and Section 11.01 of the Base Indenture, so long as any of the Notes are Outstanding, the following provisions shall be applicable to the Notes: (a) The Notes will be redeemable, in whole at any time or in part from time to time, at the Company's option, at a redemption price equal to accrued and unpaid interest on the principal amount of the Notes being redeemed to the Redemption Date plus the greater of: (A) 100% of the principal amount of the Notes to be redeemed, and (B) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including any portion of such payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate, plus 20 basis points. (b) If a Tax Event occurs and is continuing, the Company may, at its option, redeem the Notes in whole, but not in part, at any time at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the Redemption Date and Additional Amounts, if any, then due or that will become due on the date fixed for redemption as a result of the redemption. Installments of interest on Notes which are due and payable on or prior to a Redemption Date will be payable to Holders of the Notes registered as such at the close of business on the relevant record dates. (c) (i) Notwithstanding Section 11.04 of the Indenture, any notice of redemption pursuant to Section 2.9(a) or (b) 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) be mailed to the Holders not less than 30 nor more than 60 days prior to the Redemption Date. (ii) Notwithstanding the foregoing, in case of a Tax Event redemption, no such notice of redemption will be given (a) earlier than 90 days prior to the earliest date on which the payor would be obliged 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 in this clause (ii) and the circumstances described in the definition of "Tax Event" exist. Section 2.10. Guarantees. The Notes will not be guaranteed by any third party. Section 2.11. Place of Payment. 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 101 Barclay Street, Floor 8 West, New York, New York 10286. 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 2.12. Events of Default. The following shall constitute additional Events of Default pursuant to Section 5.01 of the Base Indenture with respect to the Notes with the same effect as if expressly set forth in such Section 5.01: (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 5.01(1) of the Base Indenture shall be amended to be "30 days" with respect to the Notes. 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 2.13. 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): (a) SECTION 10.09. 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 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. (b) SECTION 10.10. 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 (including a payment made in connection with a redemption) 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 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; (ii) the receipt of principal, interest, or other amount in respect of such Note; or (iii) the mere enforcement of rights with respect to 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 or Bermuda, or make a payment on the Notes from any jurisdiction other than or in addition to the Cayman Islands or 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 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 2.14. Non-Applicability of Certain Sections. Sections 11.08, 11.09 and 11.10 of the Base Indenture shall not apply to the Notes. 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 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; Waiver of Jury Trial; 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. EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS FIRST SUPPLEMENTAL INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY. 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 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. 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 4.7. 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 4.8. 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. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as a deed 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 & Secretary The Bank of New York, as Trustee By: /s/ Julie Salovitch-Miller ------------------------------------- Name: Julie Salovitch-Miller Title: Vice President EXHIBIT A FORM OF NOTE [If the Note is a Global Note, insert - THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, 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 IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE (I) BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR (II) BY A NOMINEE OF THE DEPOSITARY OR THE DEPOSITARY TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY [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 NOTES 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 OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] No. CUSIP No. 98372P AF 5 $_____________ XL CAPITAL LTD 5.25% SENIOR NOTE DUE 2014 XL CAPITAL LTD, an exempted limited company duly organized and existing under the laws of the Cayman Islands (the "COMPANY", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to , the principal sum of ________________ United States dollars (U.S.$______________) [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 September 15, 2014 (such date is hereinafter referred to as the "STATED MATURITY"), and to pay interest thereon, from _______ __, 20__, or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, at the rate of 5.25% per annum to, but excluding, the relevant Interest Payment Date, until the Stated Maturity or early redemption. Interest on this Note initially shall be payable quarterly in arrears on March 15 and September 15 of each year (each, an "INTEREST PAYMENT DATE"), commencing _______ __, 20__ through and including September 15, 2014, until the Stated Maturity or early redemption. 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 March 1 and September 1, respectively (whether or not a Business Day) preceding 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 days prior to such Special Record Date and shall otherwise be payable, all as more fully provided in the Indenture. The payment of 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 each Holder at its address set forth in the Security Register; PROVIDED HOWEVER, that if a Holder has given wire transfer instructions to the Company and the Paying Agent and Security Registrar at least ten Business Days prior to the applicable payment date, payment of principal of and the interest on the Notes will be payable by wire transfer of immediately available funds to the account specified in such instructions. Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi- A-1 annual period for which interest is computed will be computed on the basis of the actual number of days elapsed in the 180-day period. 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-2 IN WITNESS WHEREOF, the Company has caused this Note to be executed and delivered as a deed. Dated: XL CAPITAL LTD By:________________________________ Name: Title: By:________________________________ Name: Title: A-3 CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. The Bank of New York, as Trustee By:____________________________ Authorized Officer A-4 [FORM OF REVERSE] This Note is one of a duly authorized issue of securities of the Company designated as its "5.25% Senior Notes due 2014" (herein sometimes referred to as the "NOTES"), initially limited in aggregate principal amount to $300,000,000, issued under and pursuant to an Indenture, dated as of June 2, 2004 (the "BASE INDENTURE"), duly executed and delivered between the Company and The Bank of New York, as Trustee (the "TRUSTEE"), and a First Supplemental Indenture, dated as of August 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. 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 will be redeemable, in whole at any time or in part from time to time, at the Company's option, at a redemption price equal to accrued and unpaid interest on the principal amount of the Notes being redeemed to the Redemption Date plus the greater of: (A) 100% of the principal amount of the Notes to be redeemed, and (B) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including any portion of such payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate, plus 20 basis points, as provided in, and subject to the terms of, the Indenture. If a Tax Event occurs and is continuing, the Company may, at its option, redeem the Notes in whole, but not in part, at any time at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the Redemption Date and Additional Amounts, if any, then due or that will become due on the Redemption Date as a result of the redemption, as provided in, and subject to the terms of, the Indenture. No sinking fund is provided for the Notes. 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 case of an Event of Default described in Section 5.01(5) or 5.01(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 A-5 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. 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 have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity, and (iv) 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 written request during such 60-day period. 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 A-6 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 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. [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 2.03 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-7 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 JT TEN--as joint tenants with rights of under Uniform Gifts to survivorship and not as tenants in common Minors Act ________________ (State) Additional abbreviations may also be used though not on the above list. A-8 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-9 [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 --------------------- ------------------- ---------------------- ------------------ --------------------
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