Exhibit 99.L
October 29, 1999
White Mountains Insurance Group Ltd.
Xxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx
Attn: Mr. K. Xxxxxx Xxxx
President and Chief Executive Officer
Re: Sale of U.S. $50,000,000 of Common Stock of Financial Security Assurance
Holdings Ltd.
Financial Security Assurance Holdings Ltd., a New York corporation ("FSA"), and
White Mountains Insurance Group Ltd, a Bermuda corporation ("WMIG"), hereby
agree that, upon the terms and subject to the conditions set forth below, FSA
shall sell to WMIG and WMIG shall purchase from FSA, shares of FSA Common Stock,
par value $.01 per share ("FSA Common Stock"), for U.S.$50,000,000 (the
"Aggregate Purchase Price").
1. NUMBER OF SHARES.
The purchase price per share (the "Per Share Price") shall equal 97.5% of the
average of the high sale price and the low sale price of FSA common stock on the
New York Stock Exchange on the date hereof, resulting in a Per Share Price of
$54.20. Accordingly, the number of shares of FSA Common Stock to be sold by FSA
to WMIG hereunder (the "Shares") shall equal the quotient of the Aggregate
Purchase Price divided by the Per Share Price, being 922,509 shares. At least
750,000 of the Shares will be registered under FSA's current shelf registration
statement and will not bear restricted legends. All the Shares acquired by WMIG
will be subject to demand registration rights under same terms and conditions
(on an aggregate basis) as the shares of FSA common stock currently owned by
WMIG and its affiliates.
2. CONDITIONS TO PARTIES OBLIGATIONS HEREUNDER.
The sole conditions (the "Closing Conditions") to the performance by FSA and
WMIG of their obligations hereunder are (a) approval by the Board of Directors
of WMIG of this Agreement and the transaction contemplated hereby at its meeting
to be held on November 1, 1999 or as promptly thereafter as practicable (the
"WMIG Board Approval Condition"); and (b) if applicable, (i) expiration or
earlier termination of the waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), and (ii) confirmation that the requirements of the New York
Stock Exchange applicable to the sale of Shares contemplated hereby will not
require FSA shareholder approval (the "NYSE Condition"). FSA and WMIG shall
endeavor to (i) promptly make any filing required under the HSR Act and use
commercially reasonable efforts to obtain expiration or earlier termination of
the waiting period under the HSR Act (the "HSR Condition") and satisfaction of
the NYSE Condition, and (ii) consummate, and shall use their best efforts to
consummate, the closing hereunder. In furtherance of the foregoing, WMIG agrees
to schedule a Board meeting on November 1, 1999 or as promptly thereafter as
practicable at which the Board of WMIG shall consider this Agreement and the
transaction contemplated hereby. If the WMIG Board shall not approve this
Agreement and the transaction contemplated hereby at such meeting, then this
Agreement shall terminate.
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3. CLOSING DATE.
The closing hereunder shall occur on a date (the "Closing Date") determined by
FSA on which commercial banks are open for business in New York following the
date on which the Closing Conditions shall have been satisfied. FSA shall
provide WMIG at least 5 business days' notice of the Closing Date.
4. ANTI-DILUTION PROTECTION.
Until the earlier of May 13, 2004 and the date at which WMIG shall cease to own
all the outstanding shares of White Mountain Services Corporation, FSA agrees
that, immediately prior to any issuance of shares by FSA that would otherwise
dilute WMIG's ownership from more than 25% to less than 25% of the outstanding
common stock of FSA, FSA will offer WMIG the ability (on at least 5 business
days notice) to retain WMIG's fully diluted ownership in the common stock of FSA
at a level equal to or greater than 25% by selling FSA common stock to WMIG for
a purchase price per share equal to the price per share of the diluting event as
determined in good faith by FSA (e.g. the price to public in the case of a
public offering and the closing price per share on the NYSE in the case of any
shares issued in connection with any FSA benefit plan); provided, however, that
(a) any such purchase by WMIG shall comply with law and any requirements or
constraints applicable to FSA, including the requirements of (i) any securities
rating agency rating FSA or any FSA subsidiary and (ii) any securities exchange
on which shares of FSA are listed and (b) FSA shall not be required to delay
consummation of the diluting event in order to close the purchase by WMIG if
such delay would be adverse to the interests of FSA as determined in good faith
by FSA.
5. DELIVERY OF AND PAYMENT FOR SHARES.
At the closing hereunder, FSA will deliver, or cause to be delivered to WMIG,
the Shares, registered in the name of WMIG or its nominee, and WMIG shall
simultaneously deliver to FSA immediately available funds in an amount equal to
the Aggregate Purchase Price.
6. REPRESENTATIONS AND WARRANTIES OF FSA.
FSA hereby represents and warrants that (a) FSA is a corporation duly organized
and validly existing under the laws of the State of New York, (b) FSA has the
full corporate power and authority to execute, deliver and perform its
obligations hereunder, and (c) on the date of consummation of the transaction
contemplated hereby, FSA shall transfer the Shares to WMIG, free and clear of
any lien, charge, encumbrance or restriction on transfer.
7. REPRESENTATIONS AND WARRANTIES OF WMIG.
WMIG hereby represents and warrants that it is acquiring the Shares hereunder
for investment only and not with a view toward distribution.
8. FEES AND EXPENSES.
Each of FSA and WMIG shall pay its own respective fees and expenses (including,
without limitation, the fees of any attorneys, accountants, or other
representatives) incurred in connection with this letter agreement and the
transactions contemplated hereby, whether or not such transactions are
consummated, it being agreed that fees of Cravath, Swaine & Xxxxx incurred to
date in connection with a possible sale of White Mountains Services Corporation
shall be for the account of WMIG. Each of FSA and WMIG represents that no
broker, finder or investment banker has been retained or engaged on its behalf
or is entitled to any brokerage, finder's or other fee, commission or
compensation in connection with the transactions contemplated hereby.
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9. COMMUNICATIONS.
All notices and other communications provided for in this letter agreement shall
be in writing and shall be deemed effective upon receipt at the party's address
and facsimile number (a), in the case of WMIG, by telephonic communication with
Xxxxxxx Xxxxxxxx at 000-000-0000, with a facsimile to his attention at telecopy
number 000-000-0000, and (b) in the case of FSA, by telephonic communication
with Xxxxx Xxxxx at (000) 000-0000, with a facsimile to his attention at
telecopy number (000) 000-0000.
10. ASSIGNMENT.
The rights and obligations of FSA and WMIG hereunder may not be assigned without
the prior written consent of the other party.
11. AMENDMENT.
The terms and provisions of this letter agreement may not be amended, modified
or waived except by written instrument signed by both FSA and WMIG.
12. COUNTERPARTS.
This letter agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but such counterparts together
shall constitute but one instrument. 13. Governing Law. This letter agreement
shall be governed by and construed in accordance with the laws of the State of
New York. If the foregoing is in accordance with WMIG understanding of our
agreement, please sign and return to us the enclosed copy of this Agreement,
whereupon it shall become a binding agreement between us.
Very truly yours,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.,
By: /s/ Xxxxx Xxxxx
Title: Managing Director and General Counsel
Agreed and Accepted by:
WHITE MOUNTAINS INSURANCE GROUP, LTD.,
By: /s/ K. Xxxxxx Xxxx
Title: President and Chief Executive Officer
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