Exhibit 4.6 - Registration Rights Agreement, dated April 5, 2007


    EXHIBIT
      4.6

     

    Execution
      Copy

    


     

      
        

      

    

    


     

    REGISTRATION
      RIGHTS AGREEMENT

     

    


     

    Dated
      as of April 5, 2007


     

    by
      and among

     

    Security
      Capital Assurance Ltd,

    


    as
      Issuer,

     

    and

     

    Lehman
      Brothers Inc.

    Merrill
      Lynch, Pierce, Fenner & Smith Incorporated

    and

    Wachovia
      Capital Markets, LLC,

    


    


    as
      Initial Purchasers

     

    


     

      
        

      

    

    


     

    


     


    
      
        
           

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    



    This
      Registration Rights Agreement (this “Agreement”)
      is
      dated as of April 5, 2007 by and among Security Capital Assurance Ltd, a Bermuda
      limited company (the “Company”)
      and
      Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
      Wachovia Capital Markets, LLC as Representatives of other Initial Purchasers
      (each an “Initial
      Purchaser” and,
      collectively, the “Initial
      Purchasers”), each
      of
      whom has agreed to purchase the Company’s Fixed/Floating Series A Perpetual
      Non-Cumulative Preference Shares, having a par value of US $0.01 per share
      and a
      liquidation preference of US $1,000 per share (the “Preference
      Shares”) pursuant
      to the Purchase Agreement (as defined below).

     

    This
      Agreement is made pursuant to the Purchase Agreement, dated March 29, 2007
      (the
“Purchase
      Agreement”), by
      and
      among the Company and the Initial Purchasers. In order to induce the Initial
      Purchasers to purchase the Preference Shares, the Company has agreed to provide
      the registration rights set forth in this Agreement. The execution and delivery
      of this Agreement is a condition to the obligations of the Initial Purchasers
      set forth in Section 7(j) of the Purchase Agreement. 

     

    The
      parties hereby agree as follows:

     

    SECTION
      1.   DEFINITIONS

     

    As
      used
      in this Agreement, the following capitalized terms shall have the following
      meanings:

     

    Act: 
      The U.S.
      Securities Act of 1933, as amended, or any successor statute and the rules
      and
      regulations promulgated by the Commission (as defined below)
      thereunder.

     

    Affiliate:
      As
      defined in Rule 144 of the Act.

     

    Board
      Resolutions:
      The
      Resolutions of a Subcommittee of the Board of Directors of the Company, dated
      March 29, 2007, setting forth the rights, preferences and other terms of the
      Preference Shares. 

     

    Broker-Dealer:
      Any
      broker or dealer registered under the Exchange Act.

     

    Business
      Day:
      Any day
      that is not a Saturday, Sunday or other day on which banking institutions in
      Bermuda and New York, New York are authorized or required by law to close.
      If
      the time to perform any action hereunder falls on a day that is not a Business
      Day, such time will be extended to the next Business Day and no additional
      dividends shall accrue on such payment for the intervening period.

     

    Certificated
      Securities:
      Definitive Preference Shares as defined in the Board Resolutions.

     

    Closing
      Date:
      The
      date of this Agreement.

     

    Commission:
      The
      U.S. Securities and Exchange Commission.

     

    Consummate:
      An
      Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon
      the occurrence of (a) the filing and effectiveness under the Act of the Exchange
      Offer Registration Statement relating to the Exchange Preference Shares to
      be
      issued in the Exchange Offer, (b) the maintenance of such Exchange Offer
      Registration Statement continuously effective and the keeping of the Exchange
      Offer open for a period not less than the period required pursuant to Section
      3(b) hereof and

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (c)
      the
      delivery by the Company to the Registrar and Transfer Agent of Exchange
      Preference Shares in the same aggregate number as the aggregate number of
      Preference Shares validly tendered by Holders thereof pursuant to the Exchange
      Offer.

     

    Consummation
      Deadline: As
      defined in Section 3(b) hereof.

     

    Dividend
      Payment Date:
      As
      defined in the Board Resolutions.

     

    DTC:
      As
      defined in Section 6(c)(v) hereof.

     

    Effectiveness
      Deadline:
      The
      Exchange Offer Effectiveness Deadline or the Shelf Effectiveness Deadline,
      as
      applicable.

     

    Exchange
      Act:
      The
      U.S. Securities Exchange Act of 1934, as amended, or any successor statute,
      and
      the rules and regulations promulgated by the Commission thereunder.

     

    Exchange
      Preference Shares:
      The
      Company’s Fixed/Floating Series A Perpetual Non-Cumulative Preference Shares,
      registered under the Act in the Exchange Offer.

     

    Exchange
      Offer:
      The
      exchange and issuance by the Company of an aggregate number of Exchange
      Preference Shares (which shall be registered pursuant to the Exchange Offer
      Registration Statement) equal to the outstanding aggregate number of Preference
      Shares that are validly tendered by such Holders in connection with such
      exchange and issuance.

     

    Exchange
      Offer Effectiveness Deadline:
      As
      defined in Section 3(a) hereof.

     

    Exchange
      Offer Filing Deadline:
      As
      defined in Section 3(a) hereof.

     

    Exchange
      Offer Registration Statement:
      The
      Registration Statement relating to the Exchange Offer, including the related
      Prospectus.

     

    Exempt
      Resales:
      The
      transactions in which the Initial Purchasers propose to sell the Preference
      Shares to certain “qualified institutional buyers,” as such term is defined in
      Rule 144A under the Act, and certain persons who are not U.S. Persons (as
      defined in Regulation S) in offshore transactions pursuant to Regulation S
      under
      the Act.

     

    Filing
      Deadline:
      The
      Exchange Offer Filing Deadline or the Shelf Filing Deadline, as
      applicable.

     

    Free
      Writing Prospectus:
      Each
      free writing prospectus (as defined in Rule 405 under the Securities Act)
      prepared by or on behalf of the Company or used or referred to by the Company
      in
      connection with the sale of the Preference Shares or the Exchange Preference
      Shares.

     

    Holders:
      As
      defined in Section 2 hereof.

     

    Person:
      means
      any
      individual, corporation, partnership, joint venture, association, joint-stock
      company, trust, unincorporated organization, limited liability company or
      government or other entity.

     

    Prospectus:
      The
      prospectus included in a Registration Statement, including any preliminary
      prospectus, as amended or supplemented by any prospectus supplement and by
      all
      other

     


    
      
        
        

      

      
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    amendments
      thereto, including post-effective amendments, and all material incorporated
      by
      reference into such Prospectus.

     

    Recommencement
      Date:
      As
      defined in Section 6(e) hereof.

     

    Registrar
      and Transfer Agent: The
      Bank
      of New York.

     

    Registration
      Default:
      As
      defined in Section 5 hereof.

     

    Registration
      Period:
      As
      defined in Section 3(c) hereof.

     

    Registration
      Statement:
      Any
      registration statement of the Company relating to (a) an offering of Exchange
      Preference Shares pursuant to an Exchange Offer or (b) the registration for
      resale of Transfer Restricted Securities pursuant to the Shelf Registration
      Statement, in each case (i) that is filed pursuant to the provisions of this
      Agreement and (ii) including the Prospectus included therein, all amendments
      and
      supplements thereto (including post-effective amendments) and all exhibits
      and
      material incorporated by reference therein.

     

    Regulation
      S:
      Regulation S promulgated under the Act.

     

    Rule
      144:
      Rule
      144 promulgated under the Act.

     

    Shelf
      Effectiveness Deadline:
      As
      defined in 4(a) hereof.

     

    Shelf
      Filing Deadline:
      As
      defined in Section 4(a) hereof.

     

    Shelf
      Registration Statement:
      As
      defined in Section 4(a) hereof.

     

    Shelf
      Period:
      As
      defined in Section 4(a) hereof.

     

    Suspension
      Notice:
      As
      defined in Section 6(e) hereof.

     

    Transfer
      Restricted Securities:
      (a)
      Each Preference Share until the earliest to occur of (i) the date on which
      such
      Preference Share has been exchanged by a Person other than a Broker-Dealer
      for
      an Exchange Preference Share in the Exchange Offer and is entitled to be resold
      to the public by such Person without complying with the prospectus delivery
      requirements of the Act, (ii) the date on which such Preference Share has been
      effectively registered under the Act and disposed of in accordance with the
      Shelf Registration Statement, (iii) the date on which such Preference Share
      is
      distributed to the public pursuant to Rule 144 under the Act, or (iv) the date
      on which such Preference Share is eligible to be distributed to the public
      pursuant to Rule 144(k) under the Act, and (b) each Exchange Preference Share
      acquired by a Broker-Dealer in the Exchange Offer of a Preference Share for
      such
      Exchange Preference Share, until the date on which such Exchange Preference
      Share is sold to a purchaser who receives from such Broker-Dealer on or prior
      to
      the date of such sale a copy of the Prospectus contained in the Exchange Offer
      Registration Statement.

     

    SECTION
      2.   HOLDERS

     

    A
      Person
      is deemed to be a holder of Transfer Restricted Securities (each, a
“Holder”)
      whenever
      such Person owns Transfer Restricted Securities.

     


    
      
        
        

      

      
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    SECTION
      3.   REGISTERED EXCHANGE OFFER

     

    (a) 
       The
      Company shall (i) cause the Exchange Offer Registration Statement to be filed
      with the Commission on or prior to 180 days after the Closing Date (such 180th
      day being the “Exchange
      Offer Filing
      Deadline”), (ii)
      use
      its commercially reasonable efforts to cause such Exchange Offer Registration
      Statement to become effective on or prior to 240 days after the Closing Date
      (such 240th day being the “Exchange
      Offer Effectiveness
      Deadline”), (iii)
      in
      connection with the foregoing use its commercially reasonable efforts to, (A)
      file all pre-effective amendments to such Exchange Offer Registration Statement
      as may be necessary in order to cause it to become effective, (B) file, if
      applicable, a post-effective amendment to such Exchange Offer Registration
      Statement pursuant to Rule 430A under the Act and (C)
      cause
      all
      necessary filings, if any, in connection with the registration and qualification
      of the Exchange Preference Shares to be made under the Blue Sky laws of such
      jurisdictions as are necessary to permit Consummation of the Exchange Offer
      provided, however, that the Company shall not be required to take any action
      that would subject it to general service of process or taxation in any
      jurisdiction where it is not already subject and (iv) as promptly as practicable
      after the effectiveness of such Exchange Offer Registration Statement, unless
      the Exchange Offer shall not be permitted by applicable law or Commission
      policy, commence the Exchange Offer and use its commercially reasonable efforts
      to Consummate the Exchange Offer on or prior to 30 days, or longer, if required
      by federal securities laws after the date on which the Exchange Offer
      Registration Statement was declared effective by the Commission. The Exchange
      Offer shall be on the appropriate form permitting (I) registration of the
      Exchange Preference Shares to be offered in exchange for the Transfer Restricted
      Securities and (II) resales of Exchange Preference Shares by Broker-Dealers
      that
      tendered into the Exchange Offer Preference Shares that such Broker-Dealers
      acquired for their own account as a result of market-making activities or other
      trading activities (other than Preference Shares acquired directly from the
      Company or any of its Affiliates) as contemplated by Section 3(c)
      below.

     

    (b) 
       Unless
      the Exchange Offer shall not be permitted by applicable law or Commission policy
      (after the procedures set forth in Section 6(a)(A) have been complied with),
      the
      Company shall use its commercially reasonable efforts to cause the Exchange
      Offer Registration Statement to be effective continuously, and shall keep the
      Exchange Offer open for a period of not less than the minimum period required
      under applicable federal and state securities laws to Consummate the Exchange
      Offer; provided,
      however,
      that in
      no event shall such period be less than 20 Business Days. The Company shall
      cause the Exchange Offer to comply with all applicable federal and state
      securities laws. No securities other than the Exchange Preference Shares shall
      be included in the Exchange Offer Registration Statement. The Company shall
      use
      its commercially reasonable efforts to cause the Exchange Offer to be
      Consummated within 30 days after the Exchange Offer Registration Statement
      has
      become effective, but in no event (unless required by federal securities laws)
      later than 270 days after the Closing Date (such 270th day being the
“Consummation
      Deadline”).

     

    (c) 
       The
      Company shall include a “Plan of Distribution” section in the Prospectus
      contained in the Exchange Offer Registration Statement and indicate therein
      that
      any Broker-Dealer who holds Transfer Restricted Securities that were acquired
      for the account of such Broker-Dealer as a result of market-making activities
      or
      other trading activities (other than Transfer Restricted Securities acquired
      directly from the Company or any Affiliate of the Company), may exchange such
      Transfer Restricted Securities pursuant to the Exchange Offer. Such “Plan of
      Distribution” section shall also contain all other information with respect to
      such sales by such Broker-Dealers that the Commission may require in order
      to
      permit such sales pursuant thereto, but such “Plan of Distribution” shall not
      name any such Broker-Dealer or disclose the amount of Transfer Restricted
      Securities held by any such Broker-Dealer, except to the extent required by
      the
      Commission as a result of a change in policy, rules or regulations after the
      date of this Agreement. See the Shearman
      & Sterling
      no-action letter (available July 2, 1993).

     


    
      
        
        

      

      
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    Because
      such Broker-Dealer may be deemed to be an “underwriter” within the meaning of
      the Act and must, therefore, deliver a prospectus meeting the requirements
      of
      the Act in connection with its initial sale of any Exchange Preference Shares
      received by such Broker-Dealer in the Exchange Offer, the Company shall permit
      the use of the Prospectus contained in the Exchange Offer Registration Statement
      by such Broker-Dealer to satisfy such prospectus delivery requirement. To the
      extent necessary to ensure that the Prospectus contained in the Exchange Offer
      Registration Statement is available for sales of Exchange Preference Shares
      by
      Broker-Dealers, the Company agrees to use its commercially reasonable efforts
      to
      keep the Exchange Offer Registration Statement continuously effective,
      supplemented, amended and current as required by and subject to the provisions
      of Section 6(a) and 6(c) hereof and in conformity with the requirements of
      this
      Agreement, the Act and the policies, rules and regulations of the Commission
      as
      announced from time to time, for a period of one year from the date on which
      the
      Exchange Offer is Consummated or such shorter period as will terminate when
      all
      Transfer Restricted Securities covered by such Registration Statement have
      been
      sold pursuant thereto (the “Registration
      Period”).
      The
      Company shall provide sufficient copies of the latest version of such Prospectus
      to such Broker-Dealers, promptly upon request, and in no event later than one
      day after such request, at any time during such period.

     

    SECTION
      4.    SHELF
      REGISTRATION

     

    (a)  
       Shelf
      Registration.
      If (i)
      the Company is not required to file the Exchange Offer Registration Statement,
      (ii) the Exchange Offer is not permitted by applicable law or Commission policy
      (after the Company has complied with the procedures set forth in Section 6(a)(A)
      hereof), (iii) the Commission shall notify the Company that it shall refuse
      to
      declare effective the Exchange Offer Registration Statement filed with the
      Commission or (iv) if any Holder of Transfer Restricted Securities shall notify
      the Company prior to the 20th Business Day following the Consummation of the
      Exchange Offer that (A) such Holder was prohibited by applicable law or
      Commission policy from participating in the Exchange Offer or (B) such Holder
      may not resell the Exchange Preference Shares acquired by it in the Exchange
      Offer to the public without delivering a prospectus and the Prospectus contained
      in the Exchange Offer Registration Statement is not appropriate or available
      for
      such resales by such Holder or (C) such
      Holder is a Broker-Dealer and holds Preference Shares acquired directly from
      the
      Company or any Affiliate of the Company, then the Company shall:

     

    (I)  
       use
      its
      commercially reasonable efforts to cause to be filed, on or prior to 30 days
      after the earlier of (x) the date on which the Company determines that the
      Exchange Offer Registration Statement is not required to be filed or cannot
      be
      filed as a result of clause (a)(i) or (a)(ii) of this Section 4(a) and (y)
      the
      date on which the Company receives the notice specified in clause (a)(iii)
      or
      (a)(iv)of this Section 4(a) (the 30th day after such earlier date (and in any
      event within 300 days after the Closing Date), the “Shelf
      Filing Deadline”), a
      shelf
      registration statement pursuant to Rule 415 under the Act (which may be an
      amendment to the Exchange Offer Registration Statement (the “Shelf
      Registration Statement”)), relating
      to all Transfer Restricted Securities of Holders that have provided information
      pursuant to Section 4(b) hereof; and

     

    (II)  
       use
      its
      commercially reasonable efforts to cause such Shelf Registration Statement
      to
      become effective on or prior to 60 days after the Filing Deadline for the Shelf
      Registration Statement (such 60th day the “Shelf
      Effectiveness Deadline”).

     

    If,
      after
      the Company has filed an Exchange Offer Registration Statement that satisfies
      the requirements of Section 3(a) above, the Company is required to file and
      make
      effective a Shelf

     


    
      
        
        

      

      
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    Registration
      Statement solely because the Exchange Offer is not permitted under applicable
      federal law or Commission policy (i.e.,
      clause
      (a)(ii) of this Section 4), then the filing of the Exchange Offer Registration
      Statement shall be deemed to satisfy the requirements of clause (I) above;
      provided
      that,
      in
      such event, the Company shall remain obligated to meet the Effectiveness
      Deadline set forth in clause (II) above.

     

    To
      the
      extent necessary to ensure that the Shelf Registration Statement is available
      for sales of Transfer Restricted Securities by the Holders thereof entitled
      to
      the benefit of this Section 4(a) and the other securities required to be
      registered therein pursuant to Section 6(b)(ii) hereof, the Company shall use
      its commercially reasonable efforts to keep any Shelf Registration Statement
      required by this Section 4(a) continuously effective, supplemented, amended
      and
      current as required by and subject to the provisions of Sections 6(b) and 6(c)
      hereof and in conformity with the requirements of this Agreement, the Act and
      the policies, rules and regulations of the Commission as announced from time
      to
      time, for a period of at least two years (as extended pursuant to Section
      6(d)(i) hereof) following the Closing Date, or such shorter period as will
      terminate when all Transfer Restricted Securities covered by such Shelf
      Registration Statement have been sold pursuant thereto (the “Shelf
      Period”).

     

    (b) 
       Provision
      by Holders of Certain Information in Connection with the Shelf Registration
      Statement.
      No
      Holder of Transfer Restricted Securities may include any of its Transfer
      Restricted Securities in any Shelf Registration Statement pursuant to this
      Agreement unless and until (i) such Holder furnishes to the Company in writing,
      within 20 days after receipt of a written request therefor, the information
      specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for
      use in connection with any Shelf Registration Statement or Prospectus or
      preliminary Prospectus included therein, and (ii) in the case of an underwritten
      offering, such Holder completes and executes all questionnaires, powers of
      attorney, underwriting agreements, lock-up letters and other documents
      reasonably requested by the Company in connection with the terms of the
      underwritten offering. Furthermore, no Holder of Transfer Restricted Securities
      may include any of its Transfer Restricted Securities in any Shelf Registration
      Statement pursuant to this Agreement unless and until such Holder furnishes
      to
      the Company in writing, within 10 Business Days after receipt of a request
      therefor, such Holder’s comments to the disclosure relating to such Holder in
      the Shelf Registration Statement. No Holder of Transfer Restricted Securities
      shall be entitled to additional non-cumulative dividends pursuant to Section
      5
      hereof unless and until such Holder shall have provided all such information.
      By
      its acceptance of Transfer Restricted Securities, each Holder agrees to notify
      the Company promptly if any of the information previously furnished is
      misleading or inaccurate in any material respect and to promptly furnish
      additional information required to be disclosed in order to make the information
      previously furnished to the Company by such Holder not materially
      misleading.

     

    SECTION
      5.   ADDITIONAL
      DIVIDENDS

     

    If
      (a)
      any Registration Statement required by this Agreement is not filed with the
      Commission on or prior to the applicable Filing Deadline, (b) any such
      Registration Statement has not been declared effective by the Commission on
      or
      prior to the applicable Effectiveness Deadline, (c) the Exchange Offer has
      not
      been Consummated on or prior to the Consummation Deadline or (d) any
      Registration Statement required by this Agreement is filed and declared
      effective but shall thereafter cease to be effective or fail to be usable for
      its intended purpose during the Registration Period or Shelf Period, as
      applicable, without being succeeded immediately by a post-effective amendment
      or
      an additional Registration Statement that causes the Exchange Offer Registration
      Statement (and/or, if applicable, the Shelf Registration Statement) to again
      be
      declared effective or made usable (each such event referred to in clauses (a)
      through (d), a “Registration
      Default”), then
      the
      Company hereby agrees to pay to each Holder of Transfer Restricted Securities
      affected thereby additional dividends at a rate of 0.25% per annum on the
      liquidation preference of Transfer Restricted Securities held by such Holder
      for

     


    
      
        
        

      

      
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    the
      first
      90-day period immediately following the occurrence of such Registration Default.
      The amount of the additional non-cumulative dividends shall increase by an
      additional 0.25% per annum on the liquidation preference of Transfer Restricted
      Securities with respect to each subsequent 90-day period until all Registration
      Defaults have been cured, up to a maximum rate of additional non-cumulative
      dividends of 0.50% per annum on the liquidation preference of Transfer
      Restricted Securities; provided
      that
      the
      Company shall in no event be required to pay additional non-cumulative dividends
      for more than one Registration Default at any given time. Notwithstanding
      anything to the contrary set forth herein, (i) upon filing of the Exchange
      Offer
      Registration Statement (and/or, if applicable, the Shelf Registration
      Statement), in the case of clause (a) above, (ii) upon the effectiveness of
      the
      Exchange Offer Registration Statement (and/or, if applicable the Shelf
      Registration Statement), in the case of clause (b) above, (iii) upon
      Consummation of the Exchange Offer, in the case of clause (c) above, or (iv)
      upon the filing of a post-effective amendment to the Registration Statement
      or
      an additional Registration Statement that causes the Exchange Offer Registration
      Statement (and/or, if applicable, the Shelf Registration Statement) to again
      be
      declared effective or made usable, in the case of clause (d) above, the
      additional dividends payable with respect to the Transfer Restricted Securities
      as a result of such clause (a), (b), (c) or (d), as applicable, shall cease
      to
      be payable on the date of such cure. 

     

    All
      additional non-cumulative dividends shall be paid to the Holders entitled
      thereto, in the manner provided for the payment of dividends in the Board
      Resolutions, on each Dividend Payment Date, as more fully set forth in the
      Board
      Resolutions. Notwithstanding the fact that any securities for which additional
      dividends are due cease to be Transfer Restricted Securities, all obligations
      of
      the Company to pay additional dividends with respect to securities shall survive
      until such time as such obligations with respect to such securities shall have
      been satisfied in full.

     

    A
      Holder
      of Preference Shares or Exchange Preference Shares who is not entitled to the
      benefits of a Shelf Registration Statement shall not be entitled to additional
      dividends with respect to a Registration Default that pertains to such Shelf
      Registration Statement.

    


    SECTION
      6.    REGISTRATION
      PROCEDURES

     

    (a)  
       Exchange
      Offer Registration Statement.
      In
      connection with the Exchange Offer, the Company shall (i) comply with all
      applicable provisions of Section 6(c) below, (ii) use its commercially
      reasonable efforts to effect such exchange and to permit the resale of Exchange
      Preference Shares by any Broker-Dealer that tendered Preference Shares in the
      Exchange Offer that such Broker-Dealer acquired for its own account as a result
      of its market-making activities or other trading activities (other than
      Preference Shares acquired directly from the Company or any Affiliate of the
      Company) being sold in accordance with the intended method or methods of
      distribution thereof set forth in the Registration Statement, and (iii) comply
      with all of the following provisions:

     

    (A) 
       If,
      following the date hereof there has been announced a change in Commission policy
      with respect to exchange offers such as the Exchange Offer, that in the
      reasonable opinion of counsel to the Company raises a substantial question
      as to
      whether the Exchange Offer is permitted by applicable federal law, the Company
      hereby agrees to seek a no-action letter or other favorable decision from the
      Commission allowing the Company to Consummate an Exchange Offer for such
      Transfer Restricted Securities. The Company hereby agrees to pursue the issuance
      of such a decision to the Commission staff level but shall not be required
      to
      take commercially unreasonable action to effect a change in Commission policy.
      In connection with the foregoing, the Company hereby agrees to take all such
      other actions as may be requested by the Commission or otherwise required in
      connection with the issuance of such decision, including without limitation
      (I)
      participating in telephonic conferences with the Commission staff, (II)
      delivering to the Commission staff an analysis prepared by counsel to the
      Company setting forth the legal

     


    
      
        
        

      

      
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    bases,
      if
      any, upon which such counsel has concluded that such an Exchange Offer should
      be
      permitted and (III) diligently pursuing a resolution (which need not be
      favorable) by the Commission staff.

     

    (B) 
       As
      a
      condition to its participation in the Exchange Offer, each Holder of Transfer
      Restricted Securities (including, without limitation, any Holder who is a
      Broker-Dealer) shall furnish, upon the request of the Company, prior to the
      Consummation of the Exchange Offer, a written representation to the Company
      (which may be contained in the letter of transmittal contemplated by the
      Exchange Offer Registration Statement) to the effect that (I) it is not an
      Affiliate of the Company, (II) it is not engaged in, and does not intend to
      engage in, and has no arrangement or understanding with any Person to
      participate in, a distribution of the Exchange Preference Shares to be issued
      in
      the Exchange Offer and (III) it is acquiring the Exchange Preference Shares
      in
      its ordinary course of business. As a condition to its participation in the
      Exchange Offer, each Holder using the Exchange Offer to participate in a
      distribution of the Exchange Preference Shares will be required to acknowledge
      and agree that, if the resales are of Exchange Preference Shares obtained by
      such Holder in exchange for Preference Shares acquired directly from the Company
      or any Affiliate of the Company, it (1) could not, under Commission policy
      as in
      effect on the date of this Agreement, rely on the position of the Commission
      enunciated in Morgan
      Stanley and Co., Inc.
      (available March 27, 1991), Morgan
      Stanley and Co., Inc.
      (available June 5, 1991) and Exxon
      Capital Holdings Corporation (available
      May 13, 1988), as interpreted in the Commission’s letter to Shearman
      & Sterling dated
      July 2, 1993, and similar no-action letters (including, if applicable, any
      no-action letter obtained pursuant to clause (A) above), and (2) must comply
      with the registration and prospectus delivery requirements of the Act in
      connection with a secondary resale transaction and that such a secondary resale
      transaction must be covered by an effective Registration Statement containing
      the selling security holder information required by Item 507 or 508, as
      applicable, of Regulation S-K.

     

    (C) 
       Prior
      to
      effectiveness of the Exchange Offer Registration Statement, the Company shall,
      to the extent required by the Commission, provide a supplemental letter to
      the
      Commission (I) stating that the Company is registering the Exchange Offer in
      reliance on the position of the Commission enunciated in Morgan
      Stanley and Co., Inc.
      (available March 27, 1991), Exxon
      Capital Holdings Corporation
      (available May 13, 1988), Morgan
      Stanley and Co., Inc.
      (available June 5, 1991) as interpreted in the Commission’s letter to
Shearman
      & Sterling
      dated
      July 2, 1993, and, if applicable, any no-action letter obtained pursuant to
      clause (A) above, (II) including a representation that the Company has not
      entered into any arrangement or understanding with any Person to distribute
      the
      Exchange Preference Shares to be received in the Exchange Offer and that, to
      the
      best of the Company’s information and belief, each Holder participating in the
      Exchange Offer is acquiring the Exchange Preference Shares in its ordinary
      course of business and has no arrangement or understanding with any Person
      to
      participate in the distribution of the Exchange Preference Shares received
      in
      the Exchange Offer and (III) any other undertaking or representation required
      by
      the Commission as set forth in any no-action letter obtained pursuant to clause
      (A) above, if applicable.

     

    (b) 
       Shelf
      Registration Statement.
      In
      connection with the Shelf Registration Statement, the Company
      shall:

     

    (i) comply
      with all the provisions of Section 6(c) and (d) below and use its commercially
      reasonable efforts to effect such registration to permit the sale of the
      Transfer Restricted Securities being sold in accordance with the intended method
      or methods of distribution thereof (as indicated in the information furnished
      to
      the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
      will prepare and file with the Commission a Registration Statement relating
      to
      the

     


    
      
        
        

      

      
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    registration
      on any appropriate form under the Act, which form shall be available for the
      sale of the Transfer Restricted Securities in accordance with the intended
      method or methods of distribution thereof within the time periods and otherwise
      in accordance with the provisions hereof; and

     

    (ii) 
       issue,
      upon the request of any Holder or purchaser of Preference Shares covered by
      any
      Shelf Registration Statement contemplated by this Agreement, Exchange Preference
      Shares in an aggregate number equal to the aggregate number of Preference Shares
      sold pursuant to the Shelf Registration Statement and surrendered to the Company
      for cancellation; provided that such Holder provides all documentation
      reasonably requested by the Company in connection with such issuance; the
      Company shall register Exchange Preference Shares on the Shelf Registration
      Statement for this purpose and issue the Exchange Preference Shares to the
      purchaser(s) of securities subject to the Shelf Registration Statement in the
      names as such purchaser(s) shall designate.

     

    (c) 
       General
      Provisions.
      In
      connection with any Registration Statement and any related Prospectus required
      by this Agreement, the Company shall:

     

    (i) 
       use
      its
      commercially reasonable efforts to keep such Registration Statement continuously
      effective and provide all requisite financial statements for the period
      specified in Section 3 or 4 hereof, as applicable. Upon the occurrence of any
      event that would cause (A) any such Registration Statement to contain an untrue
      statement of material fact or omit to state any material fact necessary to
      make
      the statements therein not misleading or the Prospectus contained in such
      Registration Statement to contain an untrue statement of a material fact or
      omit
      to state any material fact necessary to make the statements therein, in the
      light of the circumstances under which they were made, not misleading or (B)
      such Registration Statement or the Prospectus contained therein not to be
      effective and usable for resale of Transfer Restricted Securities during the
      period required by this Agreement, the Company shall file as promptly as
      practicable an appropriate amendment to such Registration Statement curing
      such
      defect, and, if Commission review is required, use its commercially reasonable
      efforts to cause such amendment to be declared effective as soon as practicable.
      If at any time the Commission shall issue any stop order suspending the
      effectiveness of any Registration Statement, or any state securities commission
      or other regulatory authority shall issue an order suspending the qualification
      or exemption from qualification of the Transfer Restricted Securities under
      state securities or Blue Sky laws, the Company shall use its commercially
      reasonable efforts to obtain the withdrawal or lifting of such order at the
      earliest practicable time;

     

    (ii) 
       prepare
      and file with the Commission such amendments and post-effective amendments
      to
      the applicable Registration Statement as may be necessary to keep such
      Registration Statement effective for the applicable period set forth in Section
      3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented
      by
      any required Prospectus supplement, and as so supplemented to be filed pursuant
      to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462,
      as
      applicable, under the Act in a timely manner; and comply with the provisions
      of
      the Act with respect to the disposition of all securities covered by such
      Registration Statement during the applicable period in accordance with the
      intended method or methods of distribution by the sellers thereof set forth
      in
      such Registration Statement or supplement to the Prospectus;

     

    (iii)
        in
      connection with any sale of Transfer Restricted Securities that will result
      in
      such securities no longer being Transfer Restricted Securities, cooperate with
      the Holders to facilitate the timely preparation and delivery of certificates
      representing Transfer Restricted Securities to be sold and not bearing any
      restrictive legends; and to enable such Transfer Restricted Securities to be
      registered in such denominations and such names as the selling Holders may
      request at least three Business Days prior to such sale of Transfer Restricted
      Securities;

     


    
      
        
        

      

      
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    (iv) 
       use
      its
      commercially reasonable efforts to cause the disposition of the Transfer
      Restricted Securities covered by the Registration Statement to be registered
      with or approved by such other governmental agencies or authorities as may
      be
      necessary to enable the seller or sellers thereof to consummate the disposition
      of such Transfer Restricted Securities other than as set forth in Section
      6(d)(x) hereof; provided,
      however, that
      the
      Company shall not be required to register or qualify as a foreign corporation
      or
      as a dealer in securities in any jurisdiction where it is not now so qualified
      or to take any action that would subject it to the service of process in suits
      or to taxation, other than as to matters and transactions relating to the
      Registration Statement, in any jurisdiction where it is not now so
      subject;

     

    (v) 
       provide
      a
      CUSIP number for all Transfer Restricted Securities not later than the effective
      date of a Registration Statement covering such Transfer Restricted Securities
      and provide The Depository Trust Company (“DTC”)
      with
      certificates for the Transfer Restricted Securities which are in a form eligible
      for deposit with DTC; and

     

    (vi) 
       otherwise
      use its commercially reasonable efforts to comply with all applicable rules
      and
      regulations of the Commission, and make generally available to its security
      holders with regard to any applicable Registration Statement, as soon as
      practicable, a consolidated earnings statement meeting the requirements of
      Rule
      158 under the Act (which need not be audited) covering a twelve-month period
      beginning after the effective date of the registration statement (as such term
      is defined in paragraph (c) of Rule 158 under the Act).

     

    (d)  
       Additional
      Provisions Applicable to Shelf Registration Statements and Certain Exchange
      Offer Prospectuses.
      In
      connection with each Shelf Registration Statement, and each Exchange Offer
      Registration Statement if and to the extent that an Initial Purchaser has
      notified the Company that it is a holder of Transfer Restricted Securities
      (for
      so long as such Preference Shares are Transfer Restricted Securities or for
      the
      period provided in Section 3 hereof, whichever is shorter), with respect to
      any
      Holder selling pursuant to the Shelf Registration Statement or with respect
      to
      any such Initial Purchaser, the Company shall:

     

    (i) 
       advise
      such Holder as promptly as practicable and, if requested by such Holder, confirm
      such advice in writing, (A) when the Prospectus or any Prospectus supplement
      or
      post-effective amendment has been filed, and, with respect to any applicable
      Registration Statement or any post-effective amendment thereto, when the same
      has become effective, (B) of any request by the Commission for amendments to
      the
      Registration Statement or amendments or supplements to the Prospectus or for
      additional information relating thereto, (C) of
      the
      issuance by the Commission of any stop order suspending the effectiveness of
      the
      Registration Statement under the Act or of the suspension by any state
      securities commission of the qualification of the Transfer Restricted Securities
      for offering or sale in any jurisdiction, or the initiation of any proceeding
      for any of the preceding purposes, (D) of the existence of any fact or the
      happening of any event that makes any statement of a material fact made in
      the
      Registration Statement, the Prospectus, any amendment or supplement thereto
      or
      any document incorporated by reference therein untrue, or that requires the
      making of any additions to or changes in the Registration Statement in order
      to
      make the statements therein not misleading, or that requires the making of
      any
      additions to or changes in the Prospectus in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading;

     

    (ii) 
       subject
      to Section 6(c)(i) hereof, if any fact or event contemplated by Section
      6(d)(i)(D) above shall exist or have occurred, prepare a supplement or
      post-effective amendment to the Registration Statement or related Prospectus
      or
      any document incorporated therein by reference or file any other required
      document so that, as thereafter delivered to the purchasers of Transfer
      Restricted Securities, the Prospectus will not contain an untrue statement
      of a
      material fact or omit to state any material fact necessary to make the
      statements therein, in the light of the circumstances under which they were
      made, not misleading;

     


    
      
        
        

      

      
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    (iii)
       furnish
      to such Holder in connection with such exchange or sale, if any, before filing
      with the Commission, copies of any Registration Statement or any Prospectus
      included therein (except the Prospectus included in the Exchange Offer
      Registration Statement at the time it was declared effective) or any amendments
      or supplements to any such Registration Statement or Prospectus (including
      all
      documents incorporated by reference after the initial filing of such
      Registration Statement), which documents will be subject to the review and
      comment of such Holders in connection with such sale, if any, for a period
      of
      not less than five Business Days, and the Company will not file any such
      Registration Statement or Prospectus or any amendment or supplement to any
      such
      Registration Statement or Prospectus (including all such documents incorporated
      by reference) to which such Holders shall reasonably object within five Business
      Days after the receipt thereof. A Holder shall be deemed to have reasonably
      objected to such filing if such Registration Statement, amendment, Prospectus
      or
      supplement, as applicable, as proposed to be filed, contains an untrue statement
      of a material fact or omits to state any material fact necessary to make the
      statements therein not misleading or fails to comply with the applicable
      requirements of the Act;

     

    (iv)
       promptly
      prior to the filing of any document that is to be incorporated by reference
      into
      a Registration Statement or Prospectus, provide copies of such document, upon
      request, to such Holder in connection with such exchange or sale, if any, make
      the Company’s representatives reasonably available for discussion of such
      document and other customary due diligence matters and include such information
      in such document prior to the filing thereof as such Holders may reasonably
      request;

     

    (v)
       subject
      to a confidentiality agreement reasonable acceptable to the Company, make
      available, at reasonable times, for inspection by such Holder and any attorney
      or accountant retained by such Holders, all financial and other records,
      pertinent corporate documents of the Company reasonably requested by such
      persons and cause the Company’s officers, directors and employees to supply all
      information reasonably requested by any such Holder, attorney or accountant,
      in
      connection with such Registration Statement or any post-effective amendment
      thereto subsequent to the filing thereof and prior to its
      effectiveness;

     

    (vi)
       if
      requested by any such Holders in connection with such exchange or sale, promptly
      include in any Registration Statement or Prospectus, pursuant to a supplement
      or
      post-effective amendment if necessary, such information as such Holders may
      reasonably request to have included therein, including, without limitation,
      information relating to the “Plan of Distribution” of the Transfer Restricted
      Securities; and make all required filings of such Prospectus supplement or
      post-effective amendment as soon as practicable after the Company is notified
      of
      the matters to be included in such Prospectus supplement or post-effective
      amendment;

     

    (vii)
       upon
      request, furnish to such Holder in connection with such exchange or sale,
      without charge, at least one copy of the Registration Statement, as first filed
      with the Commission, and of each amendment thereto (without all documents
      incorporated by reference therein or exhibits thereto, unless
      requested);

     

    (viii)
       upon
      request, deliver to such Holder without charge, as many copies of the Prospectus
      (including each preliminary prospectus) and any amendment or supplement thereto
      as such Holder reasonably may request. The Company hereby consents to the use
      (in accordance with law) of the Prospectus and any amendment or supplement
      thereto by each selling Holder in connection with the

     


    
      
        
        

      

      
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    offering
      and the sale of the Transfer Restricted Securities covered by the Prospectus
      or
      any amendment or supplement thereto;

     

    (ix) 
       upon
      the
      reasonable request of any such Holder, enter into such agreements (including
      underwriting agreements containing customary terms) and make such reasonable
      and
      customary representations and warranties and take all such other reasonable
      and
      customary actions in connection therewith in order to expedite or facilitate
      the
      disposition of the Transfer Restricted Securities pursuant to any applicable
      Registration Statement contemplated by this Agreement as may be reasonably
      requested by any such Holder in connection with any sale or resale pursuant
      to
      any applicable Registration Statement. In such connection, the Company
      shall:

     

    (A)
       upon
      the
      reasonable request of such Holder, furnish (or in the case of paragraphs (2)
      and
      (3), use its commercially reasonable efforts to cause to be furnished) to each
      such Holder, upon Consummation of the Exchange Offer or upon the effectiveness
      of the Shelf Registration Statement, as the case may be:

     

    (1) 
       a
      certificate in customary form, dated such date, signed on behalf of the Company
      by (x) the President or any Vice President and (y) a principal financial or
      accounting officer of the Company, confirming, as of the date thereof, the
      type
      of matters set forth in Section 7(j) of the Purchase Agreement with respect
      to
      the Registration Statement and the securities registered thereunder and such
      other similar matters as such Holders may reasonably request;

     

    (2) 
       an
      opinion in customary form, dated the date of Consummation of the Exchange Offer
      or the date of effectiveness of the Shelf Registration Statement, as the case
      may be, of counsel for the Company covering matters set forth in the opinions
      provided on the Closing Date pursuant to Sections 7(c) through (f) of the
      Purchase Agreement and such other matters as such Holder may reasonably request;
      and

     

    (3)   a
      customary comfort letter, dated the date of Consummation of the Exchange Offer,
      or as of the date of effectiveness of the Shelf Registration Statement, as
      the
      case may be, from the Company’s independent accountants, in the customary form
      and covering matters of the type customarily covered in comfort letters to
      underwriters in connection with underwritten offerings, and affirming the
      matters set forth in the comfort letters delivered pursuant to Section 7(g)
      of the Purchase Agreement; and

     

    (B)   deliver
      such other documents and certificates as may be reasonably requested by the
      selling Holders and as are customarily delivered in similar offerings to
      evidence compliance with the matters covered in clause (A) above and with any
      customary conditions contained in any agreement entered into by the Company
      pursuant to this clause (ix);

     

    (x)
       prior
      to
      any public offering of Transfer Restricted Securities, cooperate with the
      selling Holders and their counsel in connection with the registration and
      qualification of the Transfer Restricted Securities under the securities or
      Blue
      Sky laws of such jurisdictions as the selling Holders may reasonably request
      and
      use its commercially reasonable efforts to do any and all other acts or things
      necessary or advisable to enable the disposition in such jurisdictions of the
      Transfer Restricted Securities covered by the applicable Registration Statement;
      provided,
      however, that
      the
      Company shall not be required to register or qualify as a foreign corporation
      or
      as a dealer in securities in any jurisdiction where it is not now so qualified
      or to take any action that would subject it to the service of process in suits
      or to taxation, other than as to matters and transactions relating to the
      Registration Statement, in any jurisdiction where it is not now so subject;
      and

     


    
      
        
        

      

      
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    (xi)
       provide
      as promptly as practicable to each such Holder, upon request, each document
      filed with the Commission pursuant to the requirements of Section 13 or Section
      15(d) of the Exchange Act.

     

    (e)
       Restrictions
      on Holders.
       Each Holder’s acquisition of a Transfer Restricted Security constitutes
      such Holder’s agreement that, upon receipt of the notice referred to in Section
      6(d)(i)(C) or any notice from the Company of the existence of any fact of the
      kind described in Section 6(d)(i)(D) hereof (in each case, a “Suspension
      Notice”), such
      Holder will forthwith discontinue disposition of Transfer Restricted Securities
      pursuant to the applicable Registration Statement until (i) such Holder has
      received copies of the supplemented or amended Prospectus contemplated by
      Section 6(d)(ii) hereof, or (ii) such Holder is advised in writing by the
      Company that the use of the Prospectus may be resumed, and has received copies
      of any additional or supplemental filings that are incorporated by reference
      in
      the Prospectus (in each case, the “Recommencement
      Date”).
      Each
      Holder receiving a Suspension Notice shall be required to either (I) destroy
      any
      Prospectuses, other than permanent file copies, then in such Holder’s possession
      that have been replaced by the Company with a more recently dated Prospectus
      or
      (II) deliver to the Company (at the Company’s expense) all copies, other than
      permanent file copies, then in such Holder’s possession of the Prospectuses
      covering such Transfer Restricted Securities that was current at the time of
      receipt of the Suspension Notice. The time periods regarding such Registration
      Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
      by a number of days equal to the number of days in the period from and including
      the date of delivery of the Suspension Notice to the date of delivery of the
      Recommencement Date.

     

    SECTION
      7.   REGISTRATION
      EXPENSES

     

    (a) 
       All
      expenses incident to the Company’s performance of or compliance with this
      Agreement (other than underwriting discounts and commissions) will be borne
      by
      the Company, regardless of whether a Registration Statement becomes effective,
      including without limitation: (i) all registration and filing fees and expenses;
      (ii) all fees and expenses of compliance with federal securities and state
      Blue
      Sky or securities laws; (iii) all expenses of printing (including certificates
      for the Exchange Preference Shares to be issued in the Exchange Offer and
      printing of Prospectuses), messenger and delivery services and telephone; (iv)
      all fees and disbursements of counsel for the Company and all reasonable fees
      and disbursements of one counsel for the Holders of Transfer Restricted
      Securities (which shall be Simpson Thacher & Bartlett LLP or such other
      counsel as may be selected by a majority of such Holders); and (v) all fees
      and
      disbursements of independent certified public accountants of the Company
      (including the expenses of any special audit and comfort letters required by
      or
      incident to such performance).

     

    The
      Company will, in any event, bear its internal expenses (including, without
      limitation, all salaries and expenses of its officers and employees performing
      legal or accounting duties), the expenses of any annual audit and the fees
      and
      expenses of any Person, including special experts, retained by the
      Company.

     

    (b) 
       In
      connection with any Registration Statement required by this Agreement
      (including, without limitation, the Exchange Offer Registration Statement and
      the Shelf Registration Statement), the Company will reimburse the Initial
      Purchasers and the Holders of Transfer Restricted Securities who are tendering
      Preference Shares into in the Exchange Offer and/or selling or reselling
      Preference Shares or Exchange Preference Shares pursuant to the “Plan of
      Distribution” contained in the Exchange Offer Registration Statement or the
      Shelf Registration Statement, as applicable, for the reasonable fees and
      disbursements of not more than one counsel (who shall be Simpson Thacher &
Bartlett LLP unless another firm shall be chosen by the Holders of a majority
      of
      the Transfer Restricted Securities for whose benefit such Registration Statement
      is being prepared). The Company shall not be

     


    
      
        
        

      

      
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    required
      to pay any underwriting discounts, commissions or similar fees related to the
      sale of any securities, except as contemplated by the Purchase
      Agreement.

    
SECTION
      8.   INDEMNIFICATION

    
       

      (a) The
        Company will indemnify and hold harmless each Holder, its directors, officers
        and each Person, if any, who controls such Holder (within the meaning of
        Section
        15 of the Act or Section 20 of the Exchange Act), against any losses, claims,
        damages or liabilities, joint or several, to which such Holder 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
        Registration Statement, Prospectus, Free Writing Prospectus or any “issuer
        information” (as defined in Rule 433 of the Act) filed or required to be filed
        pursuant to Rule 433(d) under the Act, 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 Holder for any legal expenses of one counsel (which shall
        be
        Simpson Thacher & Bartlett LLP or such other counsel as may be selected by a
        majority of Holders in addition to any local counsel as may be selected by
        a
        majority of such Holders) engaged reasonably incurred by such Holder in
        connection with investigating or defending any such action or claim as such
        expenses are incurred; provided, however, that the Company shall not be liable
        in any such case to the extent that any such loss, claim, damage or liability
        arises out of or is based upon an untrue statement or alleged untrue statement
        or omission or alleged omission made in any Registration Statement, Prospectus,
        Free Writing Prospectus or any “issuer information,” in reliance upon and in
        conformity with written information furnished to the Company by any Holder
        expressly for use therein. 

       

      (b) By
        its
        acquisition of Transfer Restricted Securities, each Holder of Transfer
        Restricted Securities 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
        Registration Statement, Prospectus, Free Writing Prospectus or any “issuer
        information,” 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 Registration Statement, Prospectus,
        Free Writing Prospectus or any “issuer information,” in reliance upon and in
        conformity with written information furnished to the Company by such Holder
        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 

       

       

      
        
          
          

        

        
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      forth
        below). Notwithstanding the indemnifying party’s election to appoint counsel to
        represent the indemnified party in an action, the indemnified party shall
        have
        the right to employ separate counsel (including local counsel), and the
        indemnifying party shall bear the reasonable fees, costs and expenses of
        such
        separate counsel if (i) the use of counsel chosen by the indemnifying party
        to
        represent the indemnified party would present such counsel with a conflict
        of
        interest; (ii) the actual or potential defendants in, or targets of, any
        such
        action include both the indemnified party and the indemnifying party, and
        the
        indemnified party shall have reasonably concluded that there may be legal
        defenses available to it and/or other indemnified parties which are different
        from or additional to those available to the indemnifying party; (iii) the
        indemnifying party shall not have employed counsel satisfactory to the
        indemnified party to represent the indemnified party within a reasonable
        time
        after notice of the institution of such action or (iv) the 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
        (1) includes an unconditional release of the indemnified party from all
        liability arising out of such action or claim and (2) does not include a
        statement as to or an admission of fault, culpability or a failure to act,
        by or
        on behalf of any indemnified party.

       

      (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 Holders on the other from the initial sale
        by
        the Company of the Transfer Restricted Securities (or in the case of Exchange
        Preference Shares that are Transfer Restricted Securities, the sale of the
        Preference Shares for which such Exchange Preference Shares were exchanged).
        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 Holders on the
        other
        in connection with the statements or omissions which resulted in such losses,
        claims, damages or liabilities (or actions in respect thereof), as well as
        any
        other relevant equitable considerations. The relative benefits received by
        the
        Company on the one hand and the Holders on the other shall be deemed to be
        in
        the same proportion as the total net proceeds from the offering (before
        deducting expenses) received by the Company bear to the total purchasing
        discounts and commissions received by the Holders. The relative fault shall
        be
        determined by reference to, among other things, whether the untrue or alleged
        untrue statement of a material fact or the omission or alleged omission to
        state
        a material fact relates to information supplied by the Company on the one
        hand
        or the Holders 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 Holders 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 Holders were treated as one entity for such purpose)
        or
        by any other method of allocation which does not take account of the equitable
        considerations referred to above in this subsection (d). The amount paid
        or
        payable by an indemnified party as a result of the losses, claims, damages
        or
        liabilities (or actions in respect thereof) referred to above in this subsection
        (d) shall be deemed to include any legal or other expenses reasonably incurred
        by such indemnified party in connection with investigating or defending any
        such
        action or claim. Notwithstanding the provisions of this subsection (d), no
        Holder shall be required to contribute any amount in excess of the amount
        by
        which the total price at which the Transfer 

       

       

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

       

       

      Restricted
        Securities purchased by it, pursuant to the Registration Statement, and
        distributed to the public were offered to the public exceeds the amount of
        any
        damages which such Holder 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 Holders' obligations in this subsection
        (d) to contribute are several in proportion to their respective purchasing
        obligations 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 Holder within
        the
        meaning of the Act; and the obligations of the Holders under this Section
        8
        shall be in addition to any liability which the respective Holders 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.

       

      SECTION
        9. RULE
        144A and Rule 144

      
 

      The
        Company agrees with each Holder, for so long as any Transfer Restricted
        Securities remain outstanding and during any period in which the Company
        (a) is
        not subject to Section 13 or 15(d) of the Exchange Act, to make available,
        upon
        request of any Holder, or beneficial owner of Transfer Restricted Securities
        in
        connection with any sale thereof and any prospective purchaser of such Transfer
        Restricted Securities designated by such Holder or beneficial owner, the
        information required by Rule 144A(d)(4) under the Act in order to permit
        resales
        of such Transfer Restricted Securities pursuant to Rule 144A, and (b) is
        subject
        to Section 13 or 15(d) of the Exchange Act, to use its commercially reasonable
        efforts to make all filings required thereby in a timely manner in order
        to
        permit resales of such Transfer Restricted Securities pursuant to Rule
        144.

       

      SECTION
        10. MISCELLANEOUS

       

      (a) Remedies.
        The provisions of Section 5 represent the sole monetary remedy available
        to the
        Holders in connection with any failure by the Company to comply with their
        obligations under Sections 3 and 4 hereof. The Company acknowledges and agrees
        that any failure by the Company to comply with its obligations under Sections
        3
        and 4 hereof may result in material irreparable injury to the Initial Purchasers
        or the Holders for which there is no adequate remedy at law, that it will
        not be
        possible to measure damages for such injuries precisely and that, in the
        event
        of any such failure, the Initial Purchasers or any Holder may obtain such
        relief
        as may be required to specifically enforce the Company’s obligations under
        Sections 3 and 4 hereof. The Company further agrees to waive the defense
        in any
        action for specific performance that a remedy at law would be
        adequate.

       

      
        (b) Free
          Writing Prospectus. The Company represents, warrants and covenants that it
          (including its agents and representatives) will not prepare, make, use,
          authorize, approve or refer to any “written communication” (as defined in Rule
          405 under the Securities Act) in connection with the issuance and sale
          of the
          Preference Shares and the Exchange Preference Shares, other than any
          communication pursuant to Rule 134, Rule 135 or Rule 135c under the Securities
          Act, any document constituting an offer to sell or solicitation of an offer
          to
          buy the Preference Shares or the Exchange Preference Shares that falls
          within
          the exception from the definition of prospectus in Section 2(a)(10)(a)
          of the
          Securities Act or a prospectus satisfying the requirements of section 10(a)
          of
          the Securities Act or of Rule 430, Rule 430A, Rule 430B, Rule 430C or Rule
          431
          under the Securities Act.

         

      

      (c) No
        Inconsistent Agreements.
        The
        Company will not, on or after the date of this Agreement, enter into any
        agreement with respect to its securities that is inconsistent with the
        rights

       

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

      granted
        to the Holders in this Agreement or otherwise conflicts with the provisions
        hereof. The Company has not previously entered into any agreement granting
        any
        registration rights with respect to its securities to any Person that would
        require such securities to be included in any Registration Statement filed
        hereunder. The rights granted to the Holders hereunder do not in any way
        conflict with and are not inconsistent with the rights granted to the holders
        of
        the Company’s securities under any agreement in effect on the date
        hereof.

       

      (d) Amendments
        and Waivers.
        The
        provisions of this Agreement may not be amended, modified or supplemented,
        and
        waivers or consents to or departures from the provisions hereof may not be
        given
        unless (i) in the case of Section 5 hereof and this Section 10(d)(i), the
        Company has obtained the written consent of Holders of all outstanding Transfer
        Restricted Securities and (ii) in the case of all other provisions hereof,
        the
        Company has obtained the written consent of Holders of a majority of the
        outstanding Transfer Restricted Securities (excluding Transfer Restricted
        Securities held by the Company or its Affiliates). Notwithstanding the
        foregoing, a waiver of or consent to departure from the provisions hereof
        that
        relates exclusively to the rights of Holders whose Transfer Restricted
        Securities are being tendered pursuant to the Exchange Offer, and that does
        not
        affect directly or indirectly the rights of other Holders whose Transfer
        Restricted Securities are not being tendered pursuant to such Exchange Offer,
        may be given by the Holders of a majority of the outstanding Transfer Restricted
        Securities subject to such Exchange Offer.

       

      (e) Third
        Party Beneficiary.
        The
        Holders shall be third party beneficiaries to the agreements made hereunder
        between the Company, on the one hand, and the Initial Purchasers, on the
        other
        hand, and shall have the right to enforce such agreements directly to the
        extent
        they may deem such enforcement necessary or advisable to protect their rights
        hereunder.

       

      (f) Notices.
        All
        notices and other communications provided for or permitted hereunder shall
        be
        made in writing by hand-delivery, first-class mail (registered or certified,
        return receipt requested), telecopier, or air courier guaranteeing overnight
        delivery:

       

      (i) if
        to a
        Holder, at the address set forth on the records of the Registrar and Transfer
        Agent, with a copy to the Registrar and Transfer Agent; and

       

      (ii) if
        to the
        Company: 

       

      Security
        Capital Assurance Ltd

      One
        Bermudiana Road

      Hamilton
        HM 11

      Bermuda

      Attention:  Kirstin
        Romann Gould

      Fax:  (441)
        295-2840

      


      with
        a
        copy to:

      


      Cahill
        Gordon & Reindell LLP

      Eighty
        Pine Street

      New
        York,
        New York 10008

      Attention:
        Michael Becker, Esq.

      Fax:
        (212) 328-2165

      


      All
        such
        notices and communications shall be deemed to have been duly given at the
        time
        delivered by hand, if personally delivered; five Business Days after being
        deposited in the mail, postage 

       

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

       

      prepaid,
        if mailed; when receipt is acknowledged, if telecopied; and on the next Business
        Day, if timely delivered to an air courier guaranteeing overnight
        delivery.

       

      (g) Successors
        and Assigns.
        This
        Agreement shall inure to the benefit of and be binding upon the successors
        and
        assigns of each of the parties, including without limitation and without
        the
        need for an express assignment, subsequent Holders; provided
        that
        nothing herein shall be deemed to permit any assignment, transfer or other
        disposition of Transfer Restricted Securities in violation of the terms hereof
        or of the Purchase Agreement. If any transferee of any Holder shall acquire
        Transfer Restricted Securities in any manner, whether by operation of law
        or
        otherwise, such Transfer Restricted Securities shall be held subject to all
        of
        the terms of this Agreement, and by taking and holding such Transfer Restricted
        Securities such Person shall be conclusively deemed to have agreed to be
        bound
        by and to perform all of the terms and provisions of this Agreement, including
        the restrictions on resale set forth in this Agreement and, if applicable,
        the
        Purchase Agreement, and such Person shall be entitled to receive the benefits
        hereof.

       

      (h) Submission
        to Jurisdiction.
        The
        Company irrevocably (i) agrees that any legal suit, action or proceeding
        against
        the Company brought by any Initial Purchaser or by any person who controls
        any
        Initial Purchaser arising out of or based upon this Agreement or the
        transactions contemplated hereby may be instituted in the federal district
        court
        for the Southern District of New York and the New York County Court, (ii)
        waives, to the fullest extent it may effectively do so, any objection which
        it
        may now or hereafter have to the laying of venue of any such proceeding and
        (iii) submits to the exclusive jurisdiction of such courts in any such suit,
        action or proceeding. The Company has appointed CT Corporation System, New
        York,
        New York, as its authorized agent (the “Authorized
        Agent”)
        upon
        whom process may be served in any such action arising out of or based on
        this
        Agreement or the transactions contemplated hereby which may be instituted
        in the
        federal district court for the Southern District of New York and the New
        York
        County Court by any Initial Purchaser or by any person who controls any Initial
        Purchaser, expressly consents to the jurisdiction of any such court in respect
        of any such action, and waives any other requirements of or objections to
        personal jurisdiction with respect thereto. Such appointment shall be
        irrevocable. The Company represents and warrants that the Authorized Agent
        has
        agreed to act as such agent for service of process and agrees to take any
        and
        all action, including the filing of any and all documents and instruments
        that
        may be necessary to continue such appointment in full force and effect as
        aforesaid. Service of process upon the Authorized Agent and written notice
        of
        such service to the Company shall be deemed, in every respect, effective
        service
        of process upon the Company.

       

      (i) Judgment
        Currency.
        In
        respect of any judgment or order given or made for any amount due hereunder
        that
        is expressed and paid in a currency (the “judgment currency”) other than United
        States dollars, the Company will indemnify each Initial Purchaser against
        any
        loss incurred by such Initial Purchaser 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 Initial Purchaser is able to purchase United
        States
        dollars with the amount of judgment currency actually received by such Initial
        Purchaser. The foregoing indemnity shall constitute a separate and independent
        obligation of the Company and shall continue in full force and effect
        notwithstanding any such judgment or order 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.

       

       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

       

      (j) Counterparts.
        This
        Agreement may be executed in any number of counterparts and by the parties
        hereto in separate counterparts, each of which when so executed shall be
        deemed
        to be an original and all of which taken together shall constitute one and
        the
        same agreement.

       

      (k) Headings.
        The
        headings in this Agreement are for convenience of reference only and shall
        not
        limit or otherwise affect the meaning hereof.

       

      (l) Governing
        Law.
        THIS
        AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
        OF
        THE STATE OF NEW YORK.

       

      (m) Severability.
        In the
        event that any one or more of the provisions contained herein, or the
        application thereof in any circumstance, is held invalid, illegal or
        unenforceable, the validity, legality and enforceability of any such provision
        in every other respect and of the remaining provisions contained herein shall
        not be affected or impaired thereby.

       

      (n) Entire
        Agreement.
        This
        Agreement is intended by the parties as a final expression of their agreement
        and intended to be a complete and exclusive statement of the agreement and
        understanding of the parties hereto in respect of the subject matter contained
        herein. There are no restrictions, promises, warranties or undertakings,
        other
        than those set forth or referred to herein with respect to the registration
        rights granted with respect to the Transfer Restricted Securities. This
        Agreement supersedes all prior agreements and understandings between the
        parties
        with respect to such subject matter.

       

      


      [Signature
        Pages to Follow]

    


    
      
        
           

           

        

        
        

      

      
        -19-

        
          

        

      

      
        
        

        
        

      

    



    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      written above.

     

    
      
        	 	
                SECURITY
                  CAPITAL ASSURANCE LTD

                 

              
	 	
                By:

              	
                /s/
                  Thomas W. Currie

              
	 	 	
                Name:

              	
                Thomas
                  W. Currie

              
	 	 	
                Title:

              	
                Senior
                  Vice President and Chief Risk
                  Officer

              


      

       

    

     

    

      
        	
                LEHMAN
                  BROTHERS INC.

                MERRILL
                  LYNCH, PIERCE, FENNER & SMITH INCORPORATED

                WACHOVIA
                  CAPITAL MARKETS, LLC

                 

              	 
	
                By:

                 

              	
                LEHMAN
                  BROTHERS INC.

                 

              	 
	
                By:

              	
                /s/
                  William Gartland

              	 
	 	
                Authorized
                  Representative

              	 


      

    

     

    On
      behalf
      of each of the Initial Purchasers