$125,000,000
PRIMUS GUARANTY, LTD.
7.0% SENIOR NOTES DUE 2036
UNDERWRITING AGREEMENT
December 19, 2006
WACHOVIA CAPITAL MARKETS LLC
MORGAN STANLEY & CO. INCORPORATED
LEHMAN BROTHERS INC.
As Representatives of the
several Underwriters named in Schedule 1 hereto
c/o WACHOVIA SECURITIES
1525 W. WT Harris Blvd.
Charlotte, NC 28262-8522
Ladies and Gentlemen:
Primus Guaranty, Ltd., a Bermuda exempted company (the "COMPANY"),
proposes to issue and sell $125,000,000 aggregate principal amount
of its 7.0%
Senior Notes due 2036 (the "NOTES") to the several underwriters
named in the
Schedule 1 hereto (the "UNDERWRITERS"), for whom you are acting as
representatives (the "REPRESENTATIVES"). The Notes will (i) have
terms and
provisions which are summarized in the Disclosure Package as of the
Applicable
Time and the Prospectus dated as of the date hereof (each as
defined in Section
1(a) hereof) and (ii) be issued pursuant to an Indenture to be
dated as of
December 27, 2006 (the "INDENTURE") between the Company and
Deutsche Bank Trust
Company Americas, as Trustee (the "TRUSTEE"). This agreement (this
"AGREEMENT")
is to confirm the agreement concerning the purchase of the Notes
from the
Company by the Underwriters.
SECTION 1. Representations, Warranties and Agreements of the
Company. The
Company represents and warrants to, and agrees with, each
Underwriters that:
(a)
A "shelf registration statement" on Form S-3 in respect of the
Notes
(File No. 333-135108) has (i) been prepared by the Company in
conformity with
the requirements of the Securities Act of 1933, as amended (the
"SECURITIES
ACT") and the rules and regulations (the "RULES AND REGULATIONS")
of the United
States Securities and Exchange Commission (the "COMMISSION")
thereunder, (ii)
been filed with the Commission under the Securities Act and (iii)
become
effective and remains effective under the Securities Act. Copies of
such
registration statement and each of the amendments thereto
(excluding exhibits to
such registration statement
1
but including all documents incorporated by reference in each
prospectus
contained therein) have been delivered by the Company to you; and
no other
document with respect to such registration statement or any such
document
incorporated by reference therein has heretofore been filed or
transmitted for
filing with the Commission. For purposes of this Agreement, the
following terms
have the specified meanings:
"APPLICABLE TIME" means 10:00 a.m. (New York City time) on the date
of this Agreement;
"BASE PROSPECTUS" means the base prospectus filed as part of the
Registration Statement, in the form in which it has most recently
been
amended on or prior to the date hereof, relating to the Notes;
"DISCLOSURE PACKAGE" means, as of the Applicable Time, the most
recent Preliminary Prospectus, together with each Issuer Free
Writing
Prospectus filed or used by the Company on or before the Applicable
Time
and identified on Schedule 2 hereto, other than a road show that is
an
Issuer Free Writing Prospectus under Rule 433 of the Rules and
Regulations;
"EFFECTIVE DATE" means any date as of which any part of the
Registration Statement or any post-effective amendment thereto
relating to
the Notes became, or is deemed to have become, effective under the
Securities Act in accordance with the Rules and Regulations
(including
pursuant to Rule 430B of the Rules and Regulations);
"FINAL TERM SHEET" means the term sheet prepared pursuant to
Section
6(a) of this Agreement and substantially in the form attached in
Schedule
3 hereto;
"ISSUER FREE WRITING PROSPECTUS" means each "free writing
prospectus" (as defined in Rule 405 of the Rules and Regulations)
prepared
by or on behalf of the Company or used or referred to by the
Company in
connection with the offering of the Notes, including the Final Term
Sheet;
"PRELIMINARY PROSPECTUS" means any preliminary prospectus relating
to the Notes, including the Base Prospectus and any preliminary
prospectus
supplement thereto, included in the Registration Statement or as
filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations
and provided to the Representatives for use by the Underwriters;
"PROSPECTUS" means the final prospectus relating to the Notes,
including the Base Prospectus and the final prospectus supplement
thereto
relating to the Notes, as filed with the Commission pursuant to
Rule
424(b) of the Rules and Regulations and provided to the
Representatives
for use by the Underwriters; and
"REGISTRATION STATEMENT" means, collectively, the various parts of
the above-referenced registration statement, each as amended as of
the
Effective Date for such part, including any Preliminary Prospectus
or the
Prospectus and all exhibits to such registration statement.
2
Any reference to the "MOST RECENT PRELIMINARY PROSPECTUS" will be
deemed
to refer to the latest Preliminary Prospectus included in the
Registration
Statement or filed pursuant to Rule 424(b) of the Rules and
Regulations prior to
or on the date hereof (including, for purposes of this Agreement,
any documents
incorporated by reference therein prior to or on the date of this
Agreement).
Any reference to any Preliminary Prospectus or the Prospectus will
be deemed to
refer to and include any documents incorporated by reference
therein pursuant to
Form S-3 under the Securities Act as of the date of such
Preliminary Prospectus
or the Prospectus, as the case may be. Any reference to any
amendment or
supplement to any Preliminary Prospectus or the Prospectus will be
deemed to
refer to and include any document filed under the Securities
Exchange Act of
1934, as amended (the "EXCHANGE ACT"), after the date of such
Preliminary
Prospectus or the Prospectus, as the case may be, and incorporated
by reference
in such Preliminary Prospectus or the Prospectus, as the case may
be; and any
reference to any amendment to the Registration Statement will be
deemed to
include any annual report of the Company on Form 10-K filed with
the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act after the
Effective Date
that is incorporated by reference in the Registration Statement.
(b)
The Commission has not issued any order preventing or suspending
the
effectiveness of the Registration Statement or preventing or
suspending the use
of any Preliminary Prospectus, any Issuer Free Writing Prospectus
or the
Prospectus; and no proceeding for any such purpose or pursuant to
Section 8A of
the Securities Act against the Company or related to the offering
has been
instituted or threatened by the Commission. The Commission has not
issued any
order directed to any document incorporated by reference in the
most recent
Preliminary Prospectus or the Prospectus, and no proceeding has
been instituted
or threatened by the Commission with respect to any document
incorporated by
reference in the most recent Preliminary Prospectus or the
Prospectus. The
Commission has not notified the Company of any objection to the use
of the
Registration Statement.
(c)
The Company has not been, and continues not to be, an "ineligible
issuer" (as defined in Rule 405 of the Rules and Regulations), in
each case at
all times relevant under the Securities Act in connection with the
offering of
the Notes.
(d)
The Registration Statement conformed on the Effective Date and
conforms, and any amendment to the Registration Statement filed
after the date
hereof will conform, in all material respects to the requirements
of the
Securities Act and the Rules and Regulations. The most recent
Preliminary
Prospectus conforms on the date hereof, and the Prospectus, and any
amendment or
supplement thereto, will conform as of its date and as of the
Closing Date, in
all material respects to the requirements of the Securities Act and
the Rules
and Regulations. The documents incorporated by reference in the
most recent
Preliminary Prospectus or the Prospectus, when they became
effective or were
filed with the Commission, as the case may be, conformed in all
material
respects to the requirements of the Securities Act or the Exchange
Act, as
applicable, and the Rules and Regulations, and any further
documents so filed
and incorporated by reference in the Prospectus or any further
amendment or
supplement thereto, when such documents become effective or are
filed with the
Commission, as the case may be, will conform, in all material
respects to the
requirements of the Securities Act or the Exchange Act, as
applicable, and the
Rules and Regulations; and no such documents have been filed with
the Commission
since the close of business of the Commission on the Business Day
immediately
prior to the date hereof.
3
(e)
The Registration Statement did not, as of the Effective Date,
contain any untrue statement of a material fact or omit to state
any material
fact required to be stated therein or necessary to make the
statements therein
not misleading; provided, however, that no representation or
warranty is made as
to information contained in or omitted from the Registration
Statement in
reliance upon and in conformity with written information furnished
to the
Company through the Representatives by or on behalf of any
Underwriter
specifically for inclusion therein (which information is specified
in Section
8(e) hereof).
(f)
The Disclosure Package did not, as of the Applicable Time, contain
any untrue statement of a material fact or omit to state any
material fact
required to be stated therein or necessary to make the statements
therein, in
the light of the circumstances under which they were made, not
misleading;
provided, however, that no representation or warranty is made as to
information
contained in or omitted from the Disclosure Package in reliance
upon and in
conformity with written information furnished to the Company
through the
Representatives by or on behalf of any Underwriter specifically for
inclusion
therein (which information is specified in Section 8(e) hereof).
(g)
The Prospectus, and any amendment or supplement thereto, will not,
as of its date and on the Closing Date, contain any untrue
statement of a
material fact or omit to state any material fact required to be
stated therein
or necessary to make the statements therein, in the light of the
circumstances
under which they were made, not misleading; provided, however, that
no
representation or warranty is made as to information contained in
or omitted
from the Prospectus in reliance upon and in conformity with written
information
furnished to the Company through the Representatives by or on
behalf of any
Underwriter specifically for inclusion therein (which information
is specified
in Section 8(e) hereof).
(h)
The documents incorporated by reference in any Preliminary
Prospectus or the Prospectus did not, and any further documents
incorporated by
reference therein will not, when filed with the Commission, contain
any untrue
statement of a material fact or omit to state any material fact
required to be
stated therein or necessary to make the statements therein, in the
light of the
circumstances under which they were made, not misleading.
(i)
The Company and each of its subsidiaries (as defined in Section
17(b) and listed in Schedule 4) have been duly organized or formed
and are
validly existing as companies, corporations or other entities in
good standing
under the laws of their respective jurisdictions of organization or
formation,
are duly qualified to do business and are in good standing
(including as an
exempted company) as foreign corporations or companies in each
jurisdiction in
which their respective ownership, lease or operation of property or
the conduct
of their respective businesses requires such qualification, and
have all power
and authority necessary to own, lease, hold or operate their
respective
properties and to conduct the businesses in which they are engaged.
None of the
subsidiaries of the Company other than Primus Financial Products,
LLC ("PRIMUS
FINANCIAL") is a "significant subsidiary", as such term is defined
in Rule 405
of the Rules and Regulations.
(j)
The Company has an authorized capitalization as set forth in the
most recent Preliminary Prospectus and the Prospectus. All of the
issued shares
of share capital of the Company have been duly and validly
authorized and
issued, are fully paid and non-assessable, were issued in
compliance with
applicable laws and conform to the description thereof contained
4
in the most recent Preliminary Prospectus and the Prospectus; and
all of the
issued shares of share capital of each subsidiary of the Company
have been duly
and validly authorized and issued, are fully paid and
non-assessable and are
owned directly or indirectly by the Company, free and clear of all
liens,
encumbrances, equities or claims. Except as set forth in the most
recent
Preliminary Prospectus and the Prospectus, no options, warrants or
other rights
to purchase or other obligations to issue, or rights to convert any
obligations
into or exchange any securities for, shares of share capital of or
ownership
interests in the Company and each subsidiary of the Company are
outstanding. All
options, warrants and other rights to purchase shares of share
capital of, or
other ownership interests in, the Company and each subsidiary of
the Company
have been duly and validly authorized and issued, were issued in
compliance with
federal and state securities laws and applicable Bermuda law and
conform to the
description thereof contained in the most recent Preliminary
Prospectus and the
Prospectus.
(k)
This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the valid and binding agreement of the
Company,
enforceable against the Company in accordance with its terms,
except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization
or similar laws relating to or affecting creditors' rights
generally, by general
equitable principles (regardless of whether such enforceability is
considered in
a proceeding in equity or at law) or by considerations of public
policy.
(l)
The Indenture has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company
enforceable
against the Company in accordance with its terms, except as the
enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws
relating to or affecting creditors' rights generally and by general
equitable
principles (regardless of whether such enforceability is considered
in a
proceeding in equity or at law). The Indenture (i) has been duly
qualified under
the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT"), (ii)
complies as to form with the requirements of the Trust Indenture
Act and (iii)
conforms to the description thereof in the most recent Preliminary
Prospectus
and the Prospectus.
(m)
The Notes have been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in
accordance with the
Indenture and delivered to the Underwriters against payment
therefor in
accordance with the terms of this Agreement, will be validly issued
and
delivered, and will constitute valid and binding obligations of the
Company
entitled to the benefits of the Indenture and enforceable against
the Company in
accordance with their terms, except as enforcement thereof may be
limited by
bankruptcy, insolvency, reorganization or other similar laws
relating to or
affecting the enforcement of creditors' rights generally and by
general
equitable principles (regardless of whether such enforceability is
considered in
a proceeding in equity or at law), and the Notes conform, or will
conform, to
the description thereof in the Disclosure Package and the
Prospectus.
(n)
The execution, delivery and performance of this Agreement by the
Company, the consummation of the transactions contemplated hereby,
the execution
and delivery of the Indenture and the Notes by the Company or
compliance by the
Company with all of the provisions of this Agreement, the Indenture
and the
Notes will not conflict with or result in a breach or violation of
any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to
which the
Company or any of its subsidiaries is a party or by which the
Company or any of
its subsidiaries
5
is bound or to which any of the property or assets of the Company
or any of its
subsidiaries is subject, nor will such actions result in any
violation of the
provisions of the memorandum of association or bye-laws of the
Company or any of
its subsidiaries or any statute or any order, rule or regulation of
any court or
governmental agency or body having jurisdiction over the Company or
any of its
subsidiaries or any of their properties or assets; and except for
the
registration of the Notes under the Securities Act, and such
consents,
approvals, authorizations, registrations or qualifications as may
be required
under the Exchange Act and under applicable state or foreign
securities laws or
regulations which have been made or obtained and are in full force
and effect in
connection with the purchase and distribution of the Notes by the
Underwriters,
no consent, approval, authorization or order of, or filing or
registration with,
any such court or governmental agency or body is required for the
execution,
delivery and performance of this Agreement by the Company, the
consummation of
the transactions contemplated hereby, the execution and delivery of
the
Indenture and the Notes by the Company or compliance by the Company
with all of
the provisions of this Agreement, the Indenture and the Notes.
(o)
Except as described in the most recent Preliminary Prospectus and
the Prospectus, there are no contracts, agreements or
understandings between the
Company and any person granting such person the right to require
the Company to
file a registration statement under the Securities Act with respect
to any
securities of the Company owned or to be owned by such person or to
require the
Company to include such securities in the securities registered
pursuant to the
Registration Statement or in any securities being registered
pursuant to any
other registration statement filed by the Company under the
Securities Act.
Neither the filing of the Registration Statement, the most recent
Preliminary
Prospectus or the Prospectus nor the offer or sale of the Notes as
contemplated
by this Agreement gives rise to any rights, other than those which
have been
duly waived or satisfied, for or relating to the registration of
any securities
of the Company.
(p)
Neither the Company nor any of its subsidiaries has sustained,
since
the respective dates as of which information is given in the most
recent
Preliminary Prospectus and the Prospectus, any material loss or
interference
with its business from fire, explosion, flood or other calamity,
whether or not
covered by insurance, or from any labor dispute or court or
governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus;
and, since such date, there has not been any change in the share
capital or
long-term debt of the Company or any of its subsidiaries or any
material adverse
change, or any development involving a prospective material adverse
change, in
or affecting the general affairs, management, consolidated
financial position,
shareholders' equity, results of operations, business or prospects
of the
Company and its subsidiaries, otherwise than as set forth or
contemplated in the
most recent Preliminary Prospectus and the Prospectus.
(q)
(i) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement
or included or
incorporated by reference in the most recent Preliminary Prospectus
and the
Prospectus present fairly the financial condition and results of
operations of
the entities purported to be shown thereby, at the dates and for
the periods
indicated, and have been prepared in conformity with generally
accepted
accounting principles in the United States applied on a consistent
basis
throughout the periods involved and comply as to form in all
material respects
with the Rules and Regulations, except as otherwise noted therein;
(ii) the
supporting schedules included or incorporated by reference in the
most recent
Preliminary Prospectus and the Prospectus present fairly in all
materials
respects the
6
information required to be stated therein; and (iii) there are no
material
off-balance sheet arrangements (as defined in Regulation S-K Item
303(a)(4)(ii))
that may have a material current or future effect on the Company's
financial
condition, changes in financial condition, results of operations,
liquidity,
capital expenditures or capital resources.
(r)
No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making
any other
distribution on such subsidiary's capital stock or membership
interests, as
applicable, from repaying to the Company any loans or advances to
such
subsidiary from the Company or from transferring any of such
subsidiary's
property or assets to the Company or any other subsidiary of the
Company, except
as described in the Disclosure Package.
(s)
Ernst & Young LLP, who have certified certain financial
statements
of the Company and its subsidiaries, whose report appears in the
most recent
Preliminary Prospectus and the Prospectus, who have delivered the
initial letter
referred to in Section 7(f) hereof, and who have audited the
Company's internal
control over financial reporting and management's assessment
thereof, are
independent public accountants as required by the Securities Act,
the Rules and
Regulations and the rules and regulations of the Public Company
Accounting
Oversight Board. Except as described in the most recent Preliminary
Prospectus
and the Prospectus and as preapproved in accordance with the
requirements set
forth in Section 10A of the Exchange Act, since May 6, 2003, Ernst
& Young LLP
has not engaged in any "PROHIBITED ACTIVITIES" (as defined in
Section 10A of the
Exchange Act) on behalf of the Company.
(t)
The Company and each of its subsidiaries have good and marketable
title in fee simple to all real property, if any, and good and
marketable title
to all personal property owned by them, in each case free and clear
of all
liens, encumbrances and defects, except such as are described in
the most recent
Preliminary Prospectus and the Prospectus or such as do not
materially affect
the value of such property and do not materially interfere with the
use made and
proposed to be made of such property by the Company and its
subsidiaries; and
all assets held under lease by the Company and its subsidiaries are
held by them
under valid, subsisting and enforceable leases, with such
exceptions as are not
material and do not interfere with the use made and proposed to be
made of such
property and buildings by the Company and its subsidiaries.
(u)
The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate
for the conduct
of their respective businesses and the value of their respective
properties.
(v)
The Company and each of its subsidiaries own or possess adequate
rights to use all material trademarks, service marks, service
names, trade
names, trademark registrations, service mark registrations,
copyrights and
licenses (collectively, the "INTELLECTUAL PROPERTY") necessary for
the conduct
of their respective businesses and have no reason to believe that
the conduct of
their respective businesses will conflict with, and have not
received any notice
of any pending or threatened claim of conflict with, any such
rights of others,
which, singly or in the aggregate, if the subject of an unfavorable
decision,
ruling or finding, would have a Material Adverse Effect (as defined
below).
7
(w)
There are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any
property or assets
of the Company or any of its subsidiaries is the subject which, (i)
if
determined adversely to the Company or any of its subsidiaries,
might have a
material adverse effect on the general affairs, management,
consolidated
financial position, shareholders' equity, results of operations,
business or
prospects of the Company and its subsidiaries (a "MATERIAL ADVERSE
EFFECT") or
(ii) is required to be disclosed in the most recent Preliminary
Prospectus and
the Prospectus and is not disclosed; and to the best of the
Company's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities
or threatened by others.
(x)
There are no contracts or other documents which are required to be
described in the Registration Statement, any Preliminary Prospectus
or the
Prospectus or filed as exhibits to the Registration Statement or to
a document
incorporated by reference into the Registration Statement by the
Securities Act
or by the Rules and Regulations which have not been described or
filed as
required. Each material contract, agreement or arrangement to which
the Company
or any of its subsidiary is a party or by which it may be bound, or
to which any
of the property or assets of the Company or any of its subsidiary
is subject,
has been duly and validly authorized, executed and delivered by the
Company;
neither the Company nor any of its subsidiaries knows of any
present condition
or fact which would prevent compliance in all material respects by
the Company
or any of its subsidiaries or any other party thereto with the
terms of any such
contract, agreement or arrangement in accordance with its terms;
neither the
Company nor any of its subsidiaries has a present intention to
exercise any
right that it may have to cancel any such contract, agreement or
arrangement or
otherwise to terminate its rights and obligations thereunder other
than in the
ordinary course of business or which would not have a Material
Adverse Effect,
and the Company or any of its subsidiaries has no knowledge that
any other party
to any such contract, agreement or arrangement has any intention
not to render
performance in all material respects as contemplated by the terms
thereof.
(y)
Except as required to be and as are described in the most recent
Preliminary Prospectus and the Prospectus, no relationships
(including, without
limitation, any loans or advances), direct or indirect, exist, nor
has any
transaction been entered into since January 1, 2001, between or
among the
Company and its subsidiaries on the one hand, and the directors,
officers,
shareholders or counterparties of the Company or any subsidiary on
the other
hand. Since July 30, 2002, the Company has not, directly or
indirectly,
including through any subsidiary, extended or maintained credit, or
arranged for
the extension of credit, or renewed or amended any extension of
credit, in the
form of a personal loan to or for any of its directors or executive
officers.
(z)
No labor disturbance by the employees of the Company exists or, to
the knowledge of the Company, is imminent, which might be expected
to have a
Material Adverse Effect.
(aa)
The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income
Security Act
of 1974, as amended, including the regulations and published
interpretations
thereunder ("ERISA"); no "REPORTABLE EVENT" (as defined in ERISA)
has occurred
with respect to any "PENSION PLAN" (as defined in ERISA) for which
the Company
would have any liability; the Company has not incurred and does not
expect to
incur liability under (i) Title IV of ERISA with respect to the
termination of,
or withdrawal from, any "PENSION PLAN" or (ii) Sections 412 or 4971
of the
Internal Revenue Code of 1986, as
8
amended, including the regulations and published interpretations
thereunder (the
"CODE"); and, to the knowledge of the Company, each "pension plan"
for which the
Company would have any liability that is intended to be qualified
under Section
401(a) of the Code is so qualified in all material respects and
nothing has
occurred, whether by action or by failure to act, which would cause
the loss of
such qualification.
(bb)
The Company and each of its subsidiaries have filed all material
tax
returns required to be filed through the date hereof and has paid
all taxes due
thereon, and no tax deficiency has been determined adversely to the
Company or
any of its subsidiaries which has had (nor does the Company have
any knowledge
of any asserted or pending tax deficiency which, if determined
adversely to the
Company or any of its subsidiaries, might have) a Material Adverse
Effect.
(cc)
Since the respective dates as of which information is given in the
most recent Preliminary Prospectus and the Prospectus through the
date hereof,
and except as may otherwise be disclosed in the most recent
Preliminary
Prospectus and the Prospectus, the Company has not (i) issued any
securities,
(ii) incurred any liability or obligation, direct or contingent,
other than
liabilities and obligations which were incurred in the ordinary
course of
business, (iii) entered into any transaction not in the ordinary
course of
business or (iv) declared or paid any dividend on its share
capital.
(dd)
The Company (on a consolidated basis) (i) makes and keeps accurate
books and records and (ii) maintains a system of internal
accounting controls
(as described under Section 13b(2)(B) of the Exchange Act) which
provide
reasonable assurance that (A) transactions are executed in
accordance with
management's authorization, (B) transactions are recorded as
necessary to permit
preparation of its financial statements and to maintain
accountability for its
assets, (C) access to its assets is permitted only in accordance
with
management's authorization and (D) the recorded accountability for
their assets
is compared with existing assets at reasonable intervals and
appropriate action
is taken with respect thereto.
(ee)
Neither the Company nor any of its subsidiaries (i) is in violation
of its memorandum of association or bye-laws or other governing
documents, as
applicable, (ii) is in default, and no event has occurred which,
with notice or
lapse of time or both, would constitute such a default, in the due
performance
or observance of any term, covenant or condition contained in any
material
indenture, mortgage, deed of trust, loan agreement or other
agreement or
instrument to which it is a party or by which it is bound or to
which any of its
properties or assets is subject or (iii) is in violation of any
law, ordinance,
governmental rule, regulation or court decree to which it or its
property or
assets may be subject or has failed to obtain any license, permit,
certificate,
franchise or other governmental authorization or permit necessary
to the
ownership of its property or to the conduct of its business,
except, in the case
of clauses (ii) and (iii), for such defaults, violations or
failures to obtain
as would not, individually or in the aggregate, reasonably be
expected to have a
Material Adverse Effect.
(ff)
Neither the Company nor any of its subsidiaries, nor any director,
officer, agent, employee or other person associated with or acting
on behalf of
the Company or any of its subsidiaries, has used any corporate
funds for any
unlawful contribution, gift, entertainment or other unlawful
expense relating to
political activity; made any direct or indirect unlawful payment to
any foreign
or domestic government official or employee from corporate funds;
9
violated or is in violation of any provision of the Foreign Corrupt
Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or
other unlawful payment.
(gg)
To our knowledge, there are no costs or liabilities associated with
any and all applicable laws and regulations relating to the
protection of human
health and safety, the environment or hazardous or toxic substances
or wastes,
pollutants or contaminants (including, without limitation, any
capital or
operating expenditures required for clean-up, closure of properties
or any
permit, license or approval, any related constraints on operating
activities and
any potential liabilities to third parties) which would, singly or
in the
aggregate, have a Material Adverse Effect on the Company and its
subsidiaries,
taken as a whole.
(hh)
Neither the Company nor any of its subsidiaries is, and on the
Closing Date and, after giving effect to the offering of the Notes
and the
application of the proceeds therefrom as described under "Use of
Proceeds" in
each of the most recent Preliminary Prospectus and the Prospectus
will be, an
"investment company" as defined in the Investment Company Act of
1940, as
amended (the "INVESTMENT COMPANY ACT").
(ii)
There are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim
against the Company
or any Underwriter for a brokerage commission, finder's fee or
other like
payment in connection with the offering and sale of the Notes
contemplated by
this Agreement.
(jj)
The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the
Exchange Act),
which (i) are designed to ensure that material information relating
to the
Company, including its consolidated subsidiaries, is made known to
the Company's
principal executive officer and its principal financial officer by
others within
those entities, particularly during the preparation of the
Registration
Statement, and in the future, during the periods in which the
periodic reports
required under the Exchange Act are being prepared; (ii) comply
with the
requirements of the Exchange Act; and (iii) are effective in all
material
respects to perform the functions for which they were established.
(kk)
The Company's internal control over financial reporting (as such
term is defined in Rule 13a-15(f) under the Exchange Act) are
effective in all
material respects to perform the functions for which they were
established, and
the Company is not aware of (i) any significant deficiency or
material weakness
in the design or operation of internal control over financial
reporting which is
reasonably likely to adversely affect the Company's ability to
record, process,
summarize and report financial information; or (ii) any fraud,
whether or not
material, that involves management or other employees who have a
significant
role in the Company's internal control over financial reporting.
(ll)
No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or
on behalf of
the Underwriters to the Bermuda Government or any political
subdivision or
taxing authority thereof or therein in connection with the sale and
delivery by
the Company of the Notes to or for the respective accounts of the
Underwriters
or the sale and delivery by the Underwriters of the Notes to the
initial
purchasers thereof.
10
No stamp or other issuance or transfer taxes or duties are payable
by or
on behalf of the Underwriters to the United States government or
any political
subdivision or taxing authority thereof or therein in connection
with the sale
and delivery by the Company of the Notes to or for the respective
accounts of
the Underwriters or the sale and delivery by the Underwriters of
the Notes to
the initial purchasers thereof.
(mm)
The Company has no knowledge of any threatened or pending
downgrading of its corporate debt credit rating or Primus
Financial's
counterparty credit ratings by any "nationally recognized
statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the
Securities Act.
(nn)
Neither the Company nor any of its subsidiaries has taken or will
take, directly or indirectly, any action (i) designed to cause or
which has
caused or which might reasonably be expected to cause or result in
the
stabilization or manipulation of the price of the Notes to
facilitate the sale
or resale of the Notes or (ii) prohibited by Regulation M under the
Securities
Act.
(oo)
The Notes will be pari passu with all existing and future senior
and
unsecured indebtedness of the Company.
(pp)
There is, and has been, no material failure on the part of the
Company or any of the Company's directors or officers, in their
capacities as
such, to comply with the provisions of the Sarbanes-Oxley Act of
2002 and the
rules and regulations promulgated in connection therewith.
Each certificate signed by any officer of the Company and delivered
to the
Underwriters or counsel to the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as
to the matters
covered thereby. Further, for purposes of this Section 1, as well
as for Section
7 hereof, references to "the most recent Preliminary Prospectus and
the
Prospectus" or "the Disclosure Package and the Prospectus" are to
each of the
most recent Preliminary Prospectus or the Disclosure Package, as
the case may
be, and the Prospectus as separate or stand-alone documentation
(and not the
most recent Preliminary Prospectus or the Disclosure Package, as
the case may
be, and the Prospectus taken together), so that representations,
warranties,
agreements, conditions and legal opinions will be made, given or
measured
independently in respect of each of the most recent Preliminary
Prospectus or
the Disclosure Package, as the case may be, and the Prospectus.
SECTION 2. Purchase of the Notes by the Underwriters. On the basis
of the
representations and warranties contained in, and subject to the
terms and
conditions of, this Agreement, the Company agrees to issue and sell
to the
several Underwriters and each of the Underwriters, severally and
not jointly,
agrees to purchase from the Company, at a price equal to 96.85% of
the principal
amount thereof, plus accrued interest, if any, from December 27,
2006, the
principal amount of the Notes set forth opposite such Underwriter's
name in
Schedule 1 hereto.
SECTION 3. Delivery of and Payment for the Notes. Delivery of the
Notes
shall be made at the offices of Davis Polk & Wardwell, 450
Lexington Avenue, New
York, NY 10017, at 10:00 A.M., New York City time, on December 27,
2006 or at
such other time, date or place as
11
shall be determined by agreement between the Representatives and
the Company.
This date and time are referred to as the "CLOSING DATE."
Delivery of the Notes will be made to the Representatives by or on
behalf
of the Company against payment of the purchase price therefor by
wire transfer
of immediately available funds. Delivery of the Notes will be made
through the
facilities of The Depository Trust Company ("DTC") unless the
Representatives
will otherwise instruct. Delivery of the Notes at the time and
place specified
in this Agreement is a further condition to the obligations of each
Underwriter.
SECTION 4. Covenants of the Company. The Company covenants and
agrees with
each Underwriter that:
(a)
the Company (i) will prepare the Prospectus in a form approved by
the Representatives and to file such Prospectus pursuant to Rule
424(b) of the
Rules and Regulations within the time period prescribed by such
Rule; (ii) will
not file any amendment or supplement to the Registration Statement
or to the
Prospectus or file any document under the Exchange Act before the
termination of
the offering of the Notes by the Underwriters if such document
would be deemed
to be incorporated by reference into the Prospectus, except as
permitted herein;
(iii) will advise the Representatives, promptly after it receives
notice
thereof, of the time when any amendment or supplement to the
Registration
Statement, the most recent Preliminary Prospectus or the Prospectus
has been
filed or becomes effective and will furnish the Representatives
with copies
thereof; (iv) will prepare the Final Term Sheet, substantially in
the form of
Schedule 3 hereto and approved by the Representatives and file the
Final Term
Sheet pursuant to Rule 433(d) of the Rules and Regulations within
the time
period prescribed by such Rule; (v) will advise the
Representatives, promptly
after it receives notice thereof, of the issuance by the Commission
or any state
or other regulatory body of any stop order or of any order
suspending the
effectiveness of the Registration Statement, preventing or
suspending the use of
any Preliminary Prospectus, the Prospectus or any Issuer Free
Writing Prospectus
or suspending the qualification of the Notes for offering or sale
in any
jurisdiction, of the initiation or threatening of any proceeding
for any such
purpose or pursuant to Section 8A of the Securities Act, of receipt
by the
Company from the Commission of any notice of objection to the use
of the
Registration Statement or any post-effective amendment thereto or
of any request
by the Commission for the amending or supplementing of the
Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus or
for
additional information; and, (vi) will use its best efforts to
prevent the
issuance of any stop order or other such order or any such notice
of objection
and, in the event of the issuance of any stop order or of other
such order or
any such notice of objection, will use promptly its best efforts to
obtain the
lifting or withdrawal thereof;
(b)
the Company will furnish promptly to each of the Representatives
and
to counsel for the Underwriters a signed copy of the Registration
Statement as
originally filed with the Commission, and each amendment thereto
filed with the
Commission, including all consents and exhibits filed therewith;
(c)
The Company (i) will deliver promptly to the Representatives and to
counsel for the Underwriters, without charge, such number of the
following
documents as the Representatives shall reasonably request: (A)
conformed copies
of the Registration Statement as originally filed with the
Commission and each
amendment thereto (in each case excluding
12
exhibits) and (B) each Preliminary Prospectus, the Final Term Sheet
and any
other Issuer Free Writing Prospectus, the Prospectus, and all
amendments and
supplements to any of such documents (including any document filed
under the
Exchange Act and deemed to be incorporated by reference in the
Registration
Statement, any Preliminary Prospectus or the Prospectus); (ii)
during the period
in which the Prospectus relating to the Notes (or in lieu thereof,
the notice
referred to in Rule 173(a) of the Rules and Regulations) is
required to be
delivered under the Securities Act, will comply with all
requirements imposed
upon it by the Securities Act and by the Rules and Regulations, as
from time to
time in force, so far as is necessary to permit the continuance of
sales of or
dealings in the Notes as contemplated by the provisions of this
Agreement and by
the Prospectus; and (iii) if during such period any events shall
have occurred
as a result of which the Disclosure Package or the Prospectus as
then amended or
supplemented would include 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 when such
Disclosure Package or
the Prospectus is delivered, not misleading, or, if during such
period for any
other reason it shall be necessary to amend the Registration
Statement or amend
or supplement the Disclosure Package or the Prospectus or file any
document in
order to comply with the Securities Act, will notify the
Representatives and,
subject to (a) hereof, amend the Registration Statement, amend or
supplement the
Disclosure Package or the Prospectus, as the case may be, or file
any document
(in each case, at the expense of the Company) so as to correct such
statement or
omission or to effect such compliance, and upon the request of the
Representatives, furnish without charge to each Underwriter as many
written and
electronic copies as the Representatives may from time to time
reasonably
request of such amendment or supplement;
(d)
the Company will prepare and file with the Commission promptly upon
the request of the Representatives, any amendment or supplement to
the
Registration Statement, the Disclosure Package or the Prospectus
that may, in
the reasonable judgment of the Company or the Representatives, be
required by
the Securities Act or requested by the Commission or may be
necessary or
advisable in connection with the offering of the Notes;
(e)
prior to filing with the Commission any amendment or supplement to
the Registration Statement or the Prospectus or any document under
the Exchange
Act before the termination of the offering of the Notes by the
Underwriters if
such document would be deemed to be incorporated by reference into
the
Prospectus, the Company will furnish a copy thereof to the
Representatives and
counsel for the Underwriters and obtain the consent of the
Representatives to
the filing, such consent not to be unreasonably withheld or
delayed;
(f)
as soon as practicable, the Company will make generally available
to
its security holders and to deliver to the Representatives an
earnings statement
of the Company and its subsidiaries (which need not be audited)
complying with
Section 11(a) of the Securities Act and the Rules and Regulations
(including, at
the option of the Company, Rule 158);
(g)
the Company will promptly from time to time take such action as the
Representatives may reasonably request to qualify the Notes for
offering and
sale by the Underwriters and by dealers under the securities laws
of such
jurisdictions as the Representatives may designate and comply with
such laws so
as to permit the continuance of sales and dealings therein in such
jurisdictions
for as long as may be necessary to complete the distribution of the
Notes;
provided that in connection therewith the Company shall not be
required to
qualify as a
13
foreign corporation or to file a general consent to service of
process in suits,
other than for actions or proceedings arising out of the offering
or sale of the
Notes, in any jurisdiction in which it is not otherwise subject;
(h)
Until 60 days following the Closing Date, the Company will not,
without the prior written consent of the Representatives, directly
or
indirectly, issue, sell, offer to sell, grant any option for the
sale of or
otherwise dispose of, any debt securities that are substantially
similar to the
Notes (including, without limitation, with respect to the maturity,
currency,
interest rate and other material terms of the Notes);
(i)
the Company will apply the net proceeds from the sale of the Notes
as set forth in the most recent Preliminary Prospectus and the
Prospectus;
(j)
the Company will comply, in all material respects, with all
effective applicable provisions of the Sarbanes-Oxley Act of 2002;
(k)
Until termination of the offering of the Notes, the Company will
timely file all reports, documents and amendments to previously
filed documents
required to be filed by it pursuant to Section 12, 13(a), 13(c), 14
or 15(d) of
the Exchange Act,
(l)
If required by Rule 430B(h) of the Rules and Regulations, the
Company will prepare a prospectus in a form approved by the
Representatives and
file such prospectus pursuant to Rule 424(b) of the Rules and
Regulations not
later than may be required by such Rule; and the Company will make
no further
amendment or supplement to such prospectus that will be disapproved
by the
Representatives promptly after reasonable notice thereof;
(m)
the Company will not take, directly or indirectly, any action
designed to cause or result in, or that might cause or result in,
stabilization
or manipulation of the price of the Notes to facilitate the sale or
resale of
the Notes; and
(n)
the Company will comply with all agreements set forth in the
representation letters of the Company to DTC relating to the
acceptance of the
Notes for "book-entry" transfer through the facilities of DTC.
SECTION 5. Expenses. The Company agrees to pay, whether or not this
Agreement becomes effective or is terminated or the sale of the
Notes to the
Underwriters is consummated, (a) the costs incident to the
preparation, printing
and filing under the Securities Act of the Registration Statement
(including any
exhibits thereto), any Preliminary Prospectus, any Issuer Free
Writing
Prospectus, the Prospectus and any amendments or supplements
thereto; (b) the
costs of distributing the Registration Statement as originally
filed and each
amendment thereto and any post-effective amendments thereof
(including, in each
case, exhibits), any Preliminary Prospectus, any Issuer Free
Writing Prospectus,
the Prospectus and any amendment or supplement thereto, all as
provided in this
Agreement; (c) the costs of printing, producing, copying and
distributing this
Agreement, the Indenture, closing documents (including any
compilations thereof)
and any other agreements, memoranda, correspondence and any other
related
documents in connection with the offering, purchase, sale and
delivery of the
Notes; (d) the filing fees, if any, incident to securing the review
by the
National Association of Securities Dealers, Inc. of the terms of
the sale of the
Notes (including related fees and expenses of counsel to the
Underwriters); (e)
the costs incidental to the services of the Company's independent
14
registere
