______ SHARES
PRIMUS GUARANTY, LTD.
COMMON SHARES
UNDERWRITING AGREEMENT
____________, 2004
XXXXXX BROTHERS INC.
XXXXXX XXXXXXX & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON LLC
UBS SECURITIES LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXX, XXXXXXXX & XXXXX, INC.
As Representatives of the
several Underwriters named in Schedule 1 hereto
c/x XXXXXX BROTHERS INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Primus Guaranty, Ltd., a Bermuda exempted company (the "COMPANY"), and
certain shareholders of the Company named in Schedule 2 hereto (the "SELLING
SHAREHOLDERS", and each a "SELLING SHAREHOLDER") propose to issue and sell an
aggregate of ______ shares (the "FIRM SHARES") of the Company's Common Shares,
par value $0.01 per share (the "COMMON SHARES"), to the several Underwriters
named in the Schedule 1 hereto (the "UNDERWRITERS"), for whom you are acting as
representatives (the "REPRESENTATIVES"). Of the ______ Firm Shares, ______ are
being sold by the Company and ______ by the Selling Shareholders. In addition,
the Selling Shareholders propose to grant to the Underwriters an option to
purchase up to an additional ______ Common Shares on the terms and for the
purposes set forth in Section 3 (the "OPTION SHARES"). The Firm Shares and the
Option Shares, if purchased, are hereinafter collectively called the "SHARES."
This is to confirm the agreement concerning the purchase of the Shares from the
Company and the Selling Shareholders by the Underwriters.
Section 1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to the Company, the
Selling Shareholders and the Shares 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 under the Securities Act. Copies of such registration
statement and each of the amendments thereto have been delivered by the Company
to you. As used in this Agreement, "EFFECTIVE TIME" means the date and the time
as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "EFFECTIVE
DATE" means the date of the Effective Time; "PRELIMINARY PROSPECTUS" means each
prospectus included in such registration statement, or amendments thereof,
before it became effective under the Securities Act and any prospectus filed
with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules and Regulations; "REGISTRATION STATEMENT"
means such registration statement, as amended at the Effective Time, including
all information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and deemed to be a part of
the registration statement as of the Effective Time pursuant to Rule 430A of the
Rules and Regulations; and "PROSPECTUS" means the prospectus in the form first
used to confirm sales of Shares. If the Company has filed an abbreviated
registration statement to register additional Common Shares pursuant to Rule
462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then
any reference herein to the term "REGISTRATION STATEMENT" shall be deemed to
include such Rule 462 Registration Statement. The Commission has not issued any
order preventing or suspending the use of any Preliminary Prospectus or
suspending the effectiveness of the Registration Statement, and no proceedings
for such purpose has been instituted or threatened by the Commission.
(b) The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will,
when they become effective or are filed with the Commission, as the case may be,
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations and the Registration Statement and any amendments thereto do not
and will not, as of the applicable effective date, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Prospectus and any amendment or supplement thereto will not, as of the
applicable filing date and each Delivery Date (as defined in Section 5 below)
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to information contained
in
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or omitted from the Registration Statement or the Prospectus in reliance upon
and in conformity with written information concerning any Underwriter furnished
to the Company through the Representatives by or on behalf of such Underwriter
specifically for inclusion therein; and the statistical and market-related data
included in the Prospectus and the Registration Statement are based on or
derived from sources which the Company believes to be reliable and accurate.
(c) The Company and each of its subsidiaries (as defined in Section 15 and
listed in Schedule 3) 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.
(d) The Company has an authorized capitalization as set forth in the
Prospectus, including under the caption "Capitalization - Actual", and will have
as of the First Delivery Date (as defined below) authorized capitalization as
set forth in the Prospectus under the caption "Capitalization - Pro forma". 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
in 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 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 are outstanding. All options, warrants and other rights to
purchase shares of share capital of, or other ownership interests in, 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 Prospectus.
(e) The Shares to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized and, when issued and delivered
against payment therefor in accordance with this Agreement, will be duly and
validly issued, fully paid and non-assessable; and the Shares will
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conform to the descriptions thereof contained in the Prospectus. Upon payment
for and delivery of such Shares pursuant to this Agreement, the Underwriters
will acquire good and valid title to such Shares, free and clear of all liens,
encumbrances, equities, preemptive rights, subscription rights, other rights to
purchase, voting or transfer restrictions (except as provided in the Company's
bye-laws) and other claims.
(f) This Agreement has been duly authorized, executed and delivered by the
Company.
(g) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby 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 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 Shares under the Securities Act, the filing
of the Prospectus under the Companies Xxx 0000 of Bermuda and such consents,
approvals, authorizations, registrations or qualifications as may be required
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
under applicable state or foreign securities laws or have been made or obtained
and are in full force and effect in connection with the purchase and
distribution of the Shares 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 and the consummation of the
transactions contemplated hereby.
(h) Except as described in 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. Except as set forth in the Amended and
Restated Shareholders' Agreement, dated as of March 14, 2002, as amended and
restated on January 27, 2003, and as further amended as of April 6, 2004, the
holders of outstanding shares of the Company's share capital are not entitled to
preemptive rights, co-sale rights, rights of first refusal or other rights to
subscribe for or
4
purchase any shares of the Shares and there are no contracts, agreements or
understandings between the Company and any person granting such person such
preemptive rights, co-sale rights, rights of first refusal or other rights to
subscribe for or purchase the Shares.
(i) Except as set forth in the Registration Statement, the Company has not
sold or issued any Common Shares during the six-month period preceding the date
of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act other than shares issued pursuant to
employee benefit plans, stock option plans or other employee compensation plans
or pursuant to outstanding options, rights or warrants.
(j) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included in 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 Prospectus.
(k) (i) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
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 (ii) 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.
(l) Except as described in the Prospectus, all dividends and other
distributions declared and payable on the shares of share capital of the Company
may under the current laws and regulations of Bermuda be paid in United States
dollars and may be freely transferred out of Bermuda, and all such dividends and
other distributions will not be subject to withholding or other taxes under the
current laws and regulations of Bermuda and are otherwise free and clear of any
other tax, withholding or deduction in and without the necessity of obtaining
any consents, approvals, authorizations, orders, licenses, registrations,
clearances and qualifications of or with any court or governmental agency or
body or any stock
5
exchange authorities in Bermuda, other than as may apply to residents of Bermuda
for Bermuda exchange control purposes in the case of distributions of securities
by the Company.
(m) Ernst & Young LLP, who have certified certain financial statements of
the Company, whose report appears in the Prospectus and who have delivered the
initial letter referred to in Section 9(k) hereof, are independent public
accountants as required by the Securities Act and the Rules and Regulations.
Except as described in 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.
(n) 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 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.
(o) 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.
(p) 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 xxxx 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).
(q) 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, 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
6
Company and its subsidiaries (a "MATERIAL ADVERSE EFFECT"); and to the best of
the Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(r) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the Registration Statement.
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.
(s) Except as required to be and are described in 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.
(t) 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.
(u) 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
7
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 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.
(v) The Company has 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 tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, might have) a Material Adverse Effect.
(w) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in 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.
(x) The Company (i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls 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 reported accountability for its assets is compared with existing assets at
reasonable intervals.
(y) 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
8
(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.
(z) 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; 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.
(aa) 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.
(bb) Neither the Company nor any of its subsidiaries is, or, after giving
effect to the offering and sale of the Shares and the application of the net
proceeds therefrom as described in the Prospectus will be, an "investment
company" as defined in the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT").
(cc) 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 Shares contemplated by
this Agreement.
(dd) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 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) have been evaluated for
effectiveness as of the date of the filing of the Registration Statement with
the Commission; and (iii) are effective in all material respects to perform the
functions for which they were established.
9
(ee) Based on the evaluation of its internal controls over financial
reporting, 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 are 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.
(ff) 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 Shares to or for the respective accounts of the Underwriters or
the sale and delivery by the Underwriters of the Shares to the initial
purchasers thereof.
(gg) The Company has no knowledge of any threatened or pending downgrading
of 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.
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.
Section 2. Representations, Warranties and Agreements of the Selling
Shareholders. Each Selling Shareholder severally represents, warrants and agrees
that:
(a) The Selling Shareholder has, and immediately prior to the sale of the
Shares by the Selling Shareholder on First Delivery Date (as defined in Section
5 hereof) the Selling Shareholder will have, good and valid title to the Shares
to be sold by the Selling Shareholder hereunder on such date, free and clear of
all liens, encumbrances, equities or claims (except for such claims as may arise
under this Agreement or the Irrevocable Power of Attorney and Custody Agreement
entered into in connection herewith); and upon delivery of such Shares (and the
relevant executed Share transfer instruments) and registration of such Shares in
the name of Cede & Co. (or such other nominee as shall be designated by The
Depository Trust Company ("DTC")), as nominee of DTC, on the Company's register
of members, payment therefor pursuant to this Agreement, and the crediting by
DTC of such Shares to securities accounts (within the meaning of Section 8-501
of the UCC) of the several Underwriters maintained by DTC, DTC will be a
protected purchaser (within the meaning of Section 8-503 of the UCC) of such
Shares, the several Underwriters will have acquired security entitlements in
respect of such
10
Shares and an action based on an adverse claim (within the meaning of Section
8-102(a)(i) of the UCC) to such Shares, whether framed in conversion, replevin,
constructive trust, equitable lien, or other theory, may not be asserted against
any Underwriter.
(b) The Selling Shareholder has placed in custody under an Irrevocable
Power of Attorney and Custody Agreement (the "CUSTODY AGREEMENT") with Mellon
Investor Services LLC, as custodian (the "CUSTODIAN"), for delivery under this
Agreement, certificates representing the Shares to be sold by the Selling
Shareholder hereunder.
(c) The Selling Shareholder has duly and irrevocably executed and delivered
a power of attorney (the "POWER OF ATTORNEY"), contained within the Custody
Agreement, appointing the persons named therein as attorneys-in-fact, with full
power of substitution, and with full authority (exercisable by any one or more
of them) to execute and deliver this Agreement on the Selling Shareholder's
behalf and to take such other action as may be necessary or desirable to carry
out the provisions hereof on behalf of the Selling Shareholder.
(d) The Selling Shareholder has full right, power and authority to enter
into this Agreement, the Power of Attorney and the Custody Agreement; the
execution, delivery and performance of this Agreement, the Power of Attorney and
the Custody Agreement by the Selling Shareholder and the consummation by the
Selling Shareholder of the transactions contemplated hereby and thereby 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 material indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to which
the Selling Shareholder or any of its subsidiaries is a party or by which the
Selling Shareholder or any of its subsidiaries is bound or to which any of the
property or assets of the Selling Shareholder or any of its subsidiaries is
subject, nor will such actions result in any violation of the provisions of the
certificate of incorporation, by-laws or other organizational document of the
Selling Shareholder 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 Selling Shareholder or any of its subsidiaries or their property or
assets; and, except for the registration of the Shares under the Securities Act
and such consents, approvals, authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Shares 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, the Power of Attorney or the Custody
Agreement by the Selling Shareholder and the consummation by the Selling
Shareholder of the transactions contemplated hereby and thereby.
11
(e) The Registration Statement and any amendment thereto does not and will
not, as of the applicable effective date, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Prospectus and
any amendment or supplement thereto will not, as of the applicable filing date
and each Delivery Date, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only with respect to any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information concerning the Selling Shareholder furnished
to the Company by or on behalf of the Selling Shareholder expressly for use in
any Preliminary Prospectus, the Registration Statement, the Prospectus or any
amendments or supplements thereto, which consists solely of the information
specified in Section 10(g).
(f) The Selling Shareholder has carefully reviewed the Registration
Statement and the Prospectus (as amended or supplemented) and is not selling the
Common Shares pursuant to any material non-public information concerning the
Company or any subsidiary of the Company which is not set forth in the
Registration Statement and the Prospectus.
(g) The Selling Shareholder has not taken and will not take, directly or
indirectly, any action (i) designed to or which has constituted or which might
reasonably be expected to cause or result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares or (ii) prohibited by Regulation M under the Securities Act.
(h) This Agreement has been duly authorized, executed and delivered by or
on behalf of the Selling Shareholder.
Each certificate signed by or on behalf of the Selling Shareholder and
delivered to the Underwriters or counsel to the Underwriters shall be deemed to
be a representation and warranty by the Selling Shareholder to the Underwriters
as to the matters covered thereby.
Section 3. Purchase of the Shares 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 sell ______ Firm Shares and
each Selling Shareholder hereby agrees to sell the number of Firm Shares set
opposite its name in Schedule 2 hereto, severally and not jointly, to the
several Underwriters and each of the Underwriters, severally and not jointly,
agrees to purchase the number of Firm Shares set forth opposite that
Underwriter's name in Schedule 1 hereto. The respective purchase obligations of
the Underwriters with
12
respect to the Firm Shares shall be rounded among the Underwriters to avoid
fractional shares, as the Representatives may determine.
In addition, the Selling Shareholders grant to the Underwriters an option
to purchase the Option Shares. Such option is granted for the purpose of
covering over-allotments, if any, in the sale of the Firm Shares and is
exercisable as provided in Section 5 hereof. Option Shares shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Shares set forth opposite the name of such Underwriters in
Schedule 1 hereto. The respective purchase obligations of each Underwriter with
respect to the Option Shares shall be adjusted by the Representatives so that no
Underwriter shall be obligated to purchase Option Shares other than in 100 share
amounts.
The price of both the Firm Shares and any Option Shares shall be $O per
share.
Neither the Company nor the Selling Shareholders shall be obligated to
deliver any of the Shares to be delivered on any Delivery Date (as hereinafter
defined), except upon payment for all the Shares to be purchased on such
Delivery Date as provided herein.
Section 4. Offering of Shares by the Underwriters. Upon authorization by
the Representatives of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale upon the terms and conditions set
forth in the Prospectus.
Section 5. Delivery of and Payment for the Shares. Delivery of and payment
for the Firm Shares to be issued and sold by the Company shall be made at the
offices of Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at
10:00 A.M., New York City time, on the fourth full business day following the
date of this Agreement or at such other time, date or place as shall be
determined by agreement between the Representatives and the Company. This date
and time are sometimes referred to as the "FIRST DELIVERY DATE." On the same
date and immediately following the sale of Firm Shares by the Company, delivery
of and payment for the Firm Shares to be sold by the Selling Shareholders shall
be made at the offices of Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
XX 00000. On the First Delivery Date, the Company and the Selling Shareholders
shall deliver or cause to be delivered certificates representing the Firm Shares
to the Representatives for the account of each Underwriter against payment to or
upon the order of the Company and the Selling Shareholders of the purchase price
by wire transfer in immediately available funds. Time shall be of the essence,
and delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm Shares shall be registered in such names and in such
denominations as the Representatives shall request in
13
writing not less than two full business days prior to the First Delivery Date.
For the purpose of expediting the checking and packaging of the certificates for
the Firm Shares, the Company and the Selling Shareholders shall make the
certificates representing the Firm Shares available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of this
Agreement and may be exercised in whole or in part from time to time by written
notice being given to the Company and the Selling Shareholders by the
Representatives. Such notice shall set forth the aggregate number of Option
Shares as to which the option is being exercised, the names in which the Option
Shares are to be registered, the denominations in which the Option Shares are to
be issued and the date and time, as determined by the Representatives, when the
Option Shares are to be delivered; provided, however, that this date and time
shall not be earlier than the First Delivery Date nor earlier than the second
business day after the date on which the option shall have been exercised nor
later than the fifth business day after the date on which the option shall have
been exercised. The date and time the Option Shares are delivered are sometimes
referred to as a "SUBSEQUENT DELIVERY DATE" and the First Delivery Date and any
Subsequent Delivery Date are sometimes each referred to as a "DELIVERY DATE".
Delivery of and payment for the Option Shares shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on each such Subsequent
Delivery Date. On each such Subsequent Delivery Date, the Selling Shareholders
shall deliver or cause to be delivered the certificates representing the Option
Shares to be purchased on such Subsequent Delivery Date to the Representatives
for the account of each Underwriter against payment to or upon the order of the
Selling Shareholders of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Option Shares shall
be registered in such names and in such denominations as the Representatives
shall request in the aforesaid written notice. For the purpose of expediting the
checking and packaging of the certificates for the Option Shares, the Selling
Shareholders shall make the certificates representing the Option Shares
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to each such
Subsequent Delivery Date.
Section 6. Further Agreements of the Company. The Company covenants and
agrees:
14
(a) To prepare the Prospectus in a form approved by the Representatives and
to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second business day
following the execution and delivery of this Agreement or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to
make no further amendment or any supplement to the Registration Statement or to
the Prospectus except as permitted herein; to advise the Representatives,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such qualification,
to use promptly its best efforts to obtain its withdrawal;
(b) To 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) To deliver promptly to the Representatives, without charge, such number
of the following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits) and (ii)
each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Shares or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify
the Representatives and, upon their request, to file such document and to
prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of
15
an amended or supplemented Prospectus which will correct such statement or
omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
reasonable judgment of the Company or the Representatives, be required by the
Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the Registration
Statement or supplement to the Prospectus or any Prospectus pursuant to Rule 424
of the Rules and Regulations, to 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 after the Effective Date, to make generally
available to the Company's 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) For a period of five years following the Effective Date, to furnish to
the Representatives copies of all materials furnished by the Company to its
shareholders and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange upon
which the Common Shares may be listed pursuant to requirements of or agreements
with such exchange or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder (it being understood that filing on
XXXXX shall be deemed to constitute delivery hereunder);
(h) Promptly from time to time to take such action as the Representatives
may reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as the Representatives may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Shares; provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction in which it is not otherwise
subject;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any Common Shares or securities convertible into or exchangeable for Common
Shares (other than the Shares to be sold by the Company pursuant to this
Agreement, the
16
automatic conversion of Series A convertible preferred shares into Common
Shares, and shares issued pursuant to employee benefit plans, stock option plans
or other employee compensation plans existing on the date hereof or pursuant to
currently outstanding options, warrants or rights), or sell or grant options,
rights or warrants with respect to any Common Shares or securities convertible
into or exchangeable for Common Shares (other than the grant of options or other
rights with respect to Common Shares pursuant to option plans existing on the
date hereof), or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such Common Shares, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Shares or other
securities, in cash or otherwise, in each case without the prior written consent
of Xxxxxx Brothers Inc. on behalf of the Underwriters; provided, however, that
such 180-day period shall be extended by up to 17 days if Xxxxxx Brothers Inc.
notifies the Company and the undersigned prior to the expiration of such 180-day
period that such extension is necessary in order to permit any Underwriter to
publish a research report in compliance with New York Stock Exchange Rule
472(f)(4) and NASD Conduct Rule 2711(f)(4); and to use its reasonable best
efforts to cause each shareholder, officer and director of the Company to
furnish to the Representatives, prior to the First Delivery Date, a letter or
letters, substantially in the form of Exhibit A hereto, pursuant to which each
such person shall agree not to, directly or indirectly, (A) offer for sale,
sell, pledge or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any Common Shares or securities convertible
into or exchangeable for Common Shares or (B) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common Shares,
whether any such transaction described in clause (A) or (B) above is to be
settled by delivery of Common Shares or other securities, in cash or otherwise,
in each case for a period of 180 days from the date of the Prospectus, without
the prior written consent of Xxxxxx Brothers Inc. on behalf of the Underwriters;
provided, however, that such 180-day period shall be extended by up to 17 days
if Xxxxxx Brothers Inc. notifies the Company and the undersigned prior to the
expiration of such 180-day period that such extension is necessary in order to
permit any Underwriter to publish a research report in compliance with New York
Stock Exchange Rule 472(f)(4) and NASD Conduct Rule 2711(f)(4);
(j) To apply for the listing of the Shares on the New York Stock Exchange,
and to use its reasonable best efforts to complete that listing, subject only to
official notice of issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Shares as set forth in
the Prospectus;
17
(l) To comply, in all material respects, with all effective applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002; and
(m) Not to waive any provisions of any "LOCK-UP" or similar provision of
any agreement previously entered into with any securityholder of the Company
without the prior written consent of Xxxxxx Brothers Inc. on behalf of the
Underwriters, and to allow Xxxxxx Brothers Inc. to enforce any such provision on
behalf of the Company.
Section 7. Further Agreements of the Selling Shareholders. Each Selling
Shareholder severally agrees:
(a) That the Shares (including Series A preferred shares convertible into
Common Shares immediately upon sale of the Firm Shares by the Company on the
First Delivery Date) to be sold by such Selling Shareholder hereunder, which are
represented by certificates held in custody for the Selling Shareholder, are
subject to the interest of the Underwriters, that the arrangements made by the
Selling Shareholder for such custody are to that extent irrevocable, and that
the obligations of such Selling Shareholder hereunder shall not be terminated by
any act of such Selling Shareholder, by operation of law, or the occurrence of
any other event;
(b) To deliver to the Representatives prior to the First Delivery Date a
properly completed and executed United States Treasury Department Form W-8 (if
the Selling Shareholder is a non-United States person) or Form W-9 (if the
Selling Shareholder is a United States person); and
(c) To cooperate with the Company and the Underwriters and to execute and
deliver, or use its best efforts to cause to be executed and delivered, all
relevant share transfer instruments and such other instruments, and take all
such other actions as such party may reasonably be requested to take by the
Company and the Underwriters from time to time, in order to effectuate the sale
of the Shares in the offering contemplated hereby.
Section 8. Expenses. The Company agrees to pay (a) the costs incident to
the authorization, issuance, sale and delivery of the Shares and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) 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, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement and any other related documents in connection with the offering,
purchase, sale and delivery of the Shares; (e) the filing fees incident to
securing the review by the
18
National Association of Securities Dealers, Inc. of the terms of sale of the
Shares (including related reasonable fees and expenses of counsel to the
Underwriters); (f) any applicable listing or other fees; (g) the fees and
expenses of qualifying the Shares under the securities laws of the several
jurisdictions as provided in Section 6(h), if any, and of preparing, printing
and distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (h) the costs and expenses of the Company relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show and (i) all other costs and expenses incident to the performance of the
obligations of the Company and the Selling Shareholders under this Agreement;
provided that, except as provided in this Section 8 and in Section 13 the
Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Shares which they may sell
and the expenses of advertising any offering of the Shares made by the
Underwriters. The provisions of this Section 8 shall not affect any agreement
that the Company and the Selling Shareholders may have with respect to the
payment of such costs and expenses.
Section 9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the respective representations and warranties of
the Company and the Selling Shareholders contained herein, to the performance by
the Company and the Selling Shareholders of their respective obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(a); no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Shares, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company and the Selling Shareholders shall have furnished to such counsel all
19
documents and information that they may reasonably request to enable them to
pass upon such matters.
(c) Xxxxxx, Xxxxx & Bockius LLP, as U.S. counsel to the Company, shall have
furnished to the Representatives their written opinion addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect set forth in the form
attached hereto as Exhibit B.
(d) Xxxxxxx Xxxx & Pearman, Hamilton, Bermuda as special Bermuda counsel to
the Company, shall have furnished to the Representatives their written opinion
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect set
forth in the form attached hereto as Exhibit C.
(e) Chancery Xxxxxxxx, as Barbados tax counsel to the Company, shall have
furnished to the Representatives their written opinion addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that the information in the
Prospectus under the caption "Tax Considerations - Taxation of Primus Guaranty
and Its Subsidiaries - Barbados Taxation", to the extent that it constitutes
matters of law, summaries of legal matters or legal proceedings, or legal
conclusions, has been reviewed by such counsel and [is correct] [fairly and
accurately present the matters therein described] in all material respects.
(f) Xxxxxx Xxxxxx & Xxxxxxx LLP, U.S. counsel to XL Capital Principal
Partners I, L.L.C. and XL Insurance (Bermuda) Ltd (collectively, "XL"), as
Selling Shareholders, shall have furnished to the Representatives their written
opinion addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect set
forth in the form attached hereto as Exhibit D.
(g) (i) Winston & Xxxxxx LLP, special counsel to Transamerica Life
Insurance Company, one of the Selling Shareholders, shall have furnished to the
Representatives their written opinion addressed to the Underwriters and dated
such Delivery Date, in form and substance reasonably satisfactory to the
Representatives, to the effect set forth in the form attached hereto as Exhibit
H-1, (ii) ___________, in-house counsel to Transamerica Life Insurance Company,
shall have furnished to the Representatives his written opinion addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect set forth in the form
attached hereto as Exhibit H-2, (iii) Xxxxxx, Xxxx & Xxxxxxxx LLP, special
counsel to CalPers/PCG Corporate Partners Fund, LLC, one of the Selling
Shareholders, shall have furnished to the Representatives their written opinion
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably
20
satisfactory to the Representatives, and (iv) each other U.S. counsel to the
Selling Shareholders, reasonably acceptable to the Underwriters, shall have
furnished to the Representatives their written opinion addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect set forth in the form
attached hereto as Exhibit E.
(h) Xxxxxxx, Xxxx & Xxxxxxx, special Bermuda counsel to XL Insurance
(Bermuda) Ltd, one of the Selling Shareholders, shall have furnished to the
Representatives their written opinion addressed to the Underwriters and dated
such Delivery Date, in form and substance reasonably satisfactory to the
Representatives, to the effect set forth in the form attached hereto as Exhibit
F.
(i) The Representatives shall have received from Xxxxx Xxxx & Xxxxxxxx,
counsel for the Underwriters, such opinion or opinions, dated such Delivery
Date, with respect to the issuance and sale of the Shares, the Registration
Statement, the Prospectus and other related matters as the Representatives may
reasonably require, in form and substance reasonably satisfactory to
Representatives, to the effect set forth in the form attached hereto as Exhibit
G, and the Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such matters.
(j) At the time of execution of this Agreement, the Representatives shall
have received from Ernst & Young LLP a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than three days prior to the date hereof), the conclusions
and findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "COMFORT LETTERS" to underwriters in
connection with registered public offerings.
(k) With respect to the letter of Ernst & Young LLP referred to in the
preceding paragraph and delivered to the Representatives concurrently with the
execution of this Agreement (the "INITIAL LETTER"), the Company shall have
furnished to the Representatives a letter (the "BRING-DOWN LETTER") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of
21
which specified financial information is given in the Prospectus, as of a date
not more than three days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the financial information
and other matters covered by the initial letter and (iii) confirming in all
material respects the conclusions and findings set forth in the initial letter.
(l) The Company shall have furnished to the Representatives a certificate,
dated such Delivery Date, of its Chief Executive Officer and Chief Financial
Officer stating that:
(i) The representations, warranties and agreements of the Company in
Section 1 are true and correct as of such Delivery Date; the Company has
complied with all its agreements contained herein; and the conditions set
forth in Sections 9(a), 9(m) and 9(q) have been fulfilled; and
(ii) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue statement
of a material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and (B) since the Effective Date no event has occurred which is required to
be set forth in a supplement or amendment to the Registration Statement or
the Prospectus and which is not so set forth.
The officers signing and delivering such certificate may rely upon the best
of their knowledge as to proceedings threatened.
(m) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included in the
Prospectus (A) any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus or (B) since such date, there shall not
have been any change in the share capital or long-term debt of the Company or
any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (A) or (B), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
22
(n) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities generally on,
or by, as the case may be, any of the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or materially limited or the
settlement of such trading generally shall have been materially disrupted or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or any state authority, (iii) the United States shall
have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or there shall have occurred
any other calamity or crisis or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions,
including, without limitation, as a result of terrorist activities after the
date hereof, (or the effect of international conditions on the financial markets
in the United States shall be such) as to make it, in the judgment of the
Representatives, impracticable or inadvisable to proceed with the public
offering or delivery of the Shares being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(o) The New York Stock Exchange, Inc. shall have approved the Shares for
listing, subject only to official notice of issuance.
(p) Each Selling Shareholder shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that the
representations, warranties and agreements of such Selling Shareholder in
Section 2 are true and correct as of such Delivery Date; and such Selling
Shareholder has complied with all its agreements contained herein.
(q) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in Primus Financial's counterparty credit rating
by any "NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION", as that term is
defined by the Commission for purposes of Rule 436(g)(2) of the Rules and
Regulations and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, Primus
Financial's counterparty credit rating.
(r) No Underwriter shall have discovered and disclosed to the Company on or
prior to such Delivery Date that the Registration Statement or the Prospectus or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the reasonable opinion of the counsel for the Underwriters, is
23
material or omits to state a fact which, in the reasonable opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading and has not been cured by any
amendment or supplement thereto filed on or prior to the date hereof.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 10. Indemnification And Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
directors, officers and employees, each person, if any, who controls any
Underwriter within the meaning of the Securities Act, and each affiliate of any
Underwriter within the meaning of Rule 405 under the Securities Act from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Shares), to which that
Underwriter, any such director, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto or (B) in any materials or information
provided subsequent to the printing of any "red-xxxxxxx" Preliminary Prospectus
to investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Shares, including any roadshow or investor
presentations made to investors by the Company (whether in person or
electronically) (the "MARKETING MATERIALS"), (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any Marketing
Materials, any material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or relating
in any manner to, the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action arising
out of or based upon matters covered by clause (i) or (ii) above (provided that
the Company shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such director, officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by that
Underwriter, director, officer, employee or controlling person in connection
with investigating
24
or defending or preparing to defend against any such loss, claim, damage,
liability or action 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, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any such amendment or supplement, in reliance upon and in conformity with
written information concerning such Underwriter furnished to the Company through
the Representatives by or on behalf of any Underwriter specifically for
inclusion therein which information consists solely of the information specified
in Section 10(f); provided further, that the foregoing indemnity with respect to
any Preliminary Prospectus shall not inure to the benefit of any Underwriter
from whom the persons asserting any such losses, claims, damages or liabilities
purchased Stock if, to the extent required by applicable law, a copy of the
Prospectus (as then amended or supplemented) was not sent or given by or on
behalf of such Underwriter to such person at or prior to the written
confirmation of the sale of the Stock to such person and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability, unless such failure to send or give a copy of
the Prospectus is the result of noncompliance by the Company with Section
6(c)(ii) hereof. The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to any Underwriter or to any
director, officer, employee or controlling person of that Underwriter.
(b) Each Selling Shareholder, severally and not jointly, shall indemnify
and hold harmless each Underwriter, its directors, officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act, and each affiliate of any Underwriter within the meaning of Rule
405 under the Securities Act from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Shares), to which that Underwriter, director, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or (ii)
the omission or alleged omission to state in any Preliminary Prospectus,
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, any material fact required to be stated therein or necessary to make
the statements therein not misleading, but, in the case of clauses (i) and (ii),
only with respect to untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
concerning such Selling Shareholders furnished to the Company by or on behalf of
such Selling Shareholder expressly for use in any
25
Preliminary Prospectus, the Registration Statement, the Prospectus or any
amendments or supplements thereto which consists solely of the information
specified in Section 10(g); and shall reimburse each Underwriter and any such
director, officer, employee or controlling person for any legal or other
expenses reasonably incurred by that Underwriter or any such director, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided that the foregoing indemnity with respect
to any Preliminary Prospectus shall not inure to the benefit of any Underwriter
from whom the persons asserting any such losses, claims, damages or liabilities
purchased Stock if, to the extent required by applicable law, a copy of the
Prospectus (as then amended or supplemented) was not sent or given by or on
behalf of such Underwriter to such person at or prior to the written
confirmation of the sale of the Stock to such person and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability, unless such failure to send or give a copy of
the Prospectus is the result of noncompliance by the Company with Section
6(c)(ii) hereof. Notwithstanding the foregoing, the liability of each Selling
Shareholder pursuant to the provisions of this Section 10 shall be limited to an
amount equal to the aggregate purchase price, less underwriting discounts and
commissions but before deducting expenses, received by such Selling Shareholder
from the sale of Shares hereunder by such Selling Stockholder. The foregoing
indemnity agreement is in addition to any liability which the Selling
Shareholders may otherwise have to any Underwriter or any officer, employee or
controlling person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, each Selling Shareholder, their respective officers and
employees, each of their respective directors, officer and each person, if any,
who controls the Company or such Selling Shareholder within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company, any Selling
Shareholder or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any amendment or supplement thereto, any material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Company through the
26
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, which information is limited to the information set forth in Section
10(f), and shall reimburse the Company, such Selling Shareholder and any such
director, officer, employee or controlling person for any legal or other
expenses reasonably incurred by the Company, such Selling Shareholder or any
such director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company, such Selling Shareholder or any such director,
officer, or controlling person.
(d) Promptly after receipt by an indemnified party under this Section 10 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 10, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 10 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 10. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ one separate counsel (in
addition to any local counsel) to represent jointly the Representatives and
those other Underwriters and their respective directors, officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against the Company
or any Selling Shareholder, as the case may be, under this Section 10 if, in the
reasonable judgment of the Representatives, it is advisable for the
Representatives and those Underwriters, directors, officers, employees and
controlling persons to be jointly represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the
Company or the Selling Shareholders, as the case may be. No indemnifying party
shall (i) without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or compromise or consent to
27
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
the consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Sections 10(a), 10(b) or 10(c) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company or the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company or
the Selling Shareholders on the one hand and the Underwriters on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by each of the Company
or the Selling Shareholders on the one hand and the Underwriters on the other
with respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company or the Selling
Shareholders, as the case may be, on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Shares purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the Shares under
this Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Shareholders or the Underwriters, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company, the Selling
28
Shareholders and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 10 were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be deemed to
include, for purposes of this Section 10(e), 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
Section 10(e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public was offered to the public exceeds the amount
of any damages which such Underwriter has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 10(e) are
several in proportion to their respective underwriting obligations and not
joint.
(f) The Underwriters severally confirm and the Company acknowledges that
the statements with respect to the public offering of the Shares by the
Underwriters set forth on the cover page of, and the concession and reallowance
figures and the information included under the sub-caption "Electronic
Distribution" appearing under the caption "Underwriting" in, the Prospectus are
correct and constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the Prospectus.
(g) Each Selling Shareholder confirms as to itself, and the Company
acknowledges, that the information appearing in the table in the section
entitled "Principal and Selling Shareholders" under the headings "Name of
Beneficial Owner," "Shares Beneficially Owned Prior to Offering - Number of
Shares," "Maximum Number of Shares Offered in this Offering," "Maximum Number of
Shares Being Sold in the Over-Allotment Option, if any," and in the footnote
related to such information pertaining to such Selling Shareholder constitute
the only information concerning such Selling Shareholder furnished in writing to
the Company by or on behalf of such Selling Shareholder for inclusion in the
Registration Statement and the Prospectus.
(h) The provisions of this Section 10 shall not affect any agreement among
the Company and the Selling Shareholders with respect to indemnification or
contribution.
29
Section 11. Defaulting Underwriters.
If, on any Delivery Date, any Underwriter defaults in the performance of
its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Shares which the defaulting Underwriter
agreed but failed to purchase on such Delivery Date in the respective
proportions which the number of shares of the Firm Shares set opposite the name
of each remaining non-defaulting Underwriter in Schedule 1 hereto bears to the
total number of shares of the Firm Shares set opposite the names of all the
remaining non-defaulting Underwriters in Schedule 1 hereto; provided, however,
that the remaining non-defaulting Underwriters shall not be obligated to
purchase any of the Shares on such Delivery Date if the total number of shares
of the Shares which the defaulting Underwriter or Underwriters agreed but failed
to purchase on such date exceeds 9.09% of the total number of shares of the
Shares to be purchased on such Delivery Date, and any remaining non-defaulting
Underwriter shall not be obligated to purchase more than 110% of the number of
shares of the Shares which it agreed to purchase on such Delivery Date pursuant
to the terms of Section 4. If the foregoing maximums are exceeded, the remaining
non-defaulting Underwriters, or those other underwriters satisfactory to the
Representatives who so agree, shall have the right, but shall not be obligated,
to purchase, in such proportion as may be agreed upon among them, all the Shares
to be purchased on such Delivery Date. If the remaining Underwriters or other
underwriters satisfactory to the Representatives do not elect to purchase the
shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such Delivery Date, this Agreement (or, with respect to any
Subsequent Delivery Date, the obligation of the Underwriters to purchase, and of
the Company to sell, the Option Shares) shall terminate without liability on the
part of any non-defaulting Underwriter or the Company or the Selling
Shareholders, except that the Company will continue to be liable for the payment
of expenses to the extent set forth in Sections 8 and 13. As used in this
Agreement, the term "UNDERWRITER" includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule 1 hereto
who, pursuant to this Section 11, purchases Shares which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or the Selling Shareholders for damages
caused by its default. If other Underwriters are obligated or agree to purchase
the Shares of a defaulting or withdrawing Underwriter, either the
Representatives or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that in the opinion of counsel
for the Company or counsel for the Underwriters may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement.
30
Section 12. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Shares if, prior to that
time, any of the events described in Sections 9(m), 9(n) or 9(q), shall have
occurred or if the Underwriters shall decline to purchase the Shares for any
reason permitted under this Agreement.
Section 13. Reimbursement of Underwriters' Expenses. If the Company or any
Selling Shareholder shall fail to tender the Shares for delivery to the
Underwriters by reason of any failure, refusal or inability on the part of the
Company or any Selling Shareholder to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company or the Selling Shareholders is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Shares, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 11 by
reason of the default of one or more Underwriters, neither the Company nor the
Selling Shareholders shall be obligated to reimburse any defaulting Underwriter
on account of those expenses.
Section 14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
X.X. 00000, Attention: Syndicate Registration Department, Fax (000) 000-0000,
with a copy, in the case of any notice pursuant to Section 10(d), to the
Director of Litigation, Office of the General Counsel, Xxxxxx Brothers Inc., 000
Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to Primus Guaranty, Ltd., Clarendon House, 0 Xxxxxx
Xxxxxx, Xxxxxxxx XX 00, Xxxxxxx, Xxxxxxxxx: Xxxxx Xxxxx (Fax: 000-000-0000),
with a copy to Primus Asset Management, Inc., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000, Attention: Xxxxxxx Xxxx (Fax: 000-000-0000);
(c) if to the Selling Shareholders, shall be delivered or sent by mail,
telex or facsimile transmission to such Selling Shareholder at the address set
forth on Schedule 2 hereto; and
(d) provided, however, that any notice to an Underwriter pursuant to
Section 10(d) shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its acceptance
telex to the
31
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and the
Selling Shareholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Xxxxxx Brothers Inc. on behalf of the Representatives.
Section 15. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, the
Selling Shareholders and their respective successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of
the Company and the Selling Shareholders contained in this Agreement shall also
be deemed to be for the benefit of the directors, officers and the person or
persons, if any, who control any Underwriter within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 10(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company and the Selling Shareholders, officers of the Company
who have signed the Registration Statement and any person controlling the
Company or any Selling Shareholder within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 15, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
Section 16. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Selling Shareholders and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Shares and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
Section 17. Definition of the Terms "BUSINESS DAY" and "SUBSIDIARY". For
purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "SUBSIDIARY" has the meaning set forth in Rule 405 of the Rules
and Regulations.
Section 18. Governing Law; Submission To Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of New York.
Each of the Company and the Selling Shareholders irrevocably agrees that
any legal suit, action or proceeding arising out of or based upon this Agreement
or
32
the transactions contemplated hereby ("RELATED PROCEEDINGS") may be instituted
in the federal courts of the United States of America located in the City of New
York or the courts of the State of New York in each case located in the Borough
of Manhattan in the City of New York (collectively, the "SPECIFIED COURTS"), and
irrevocably submits to the non-exclusive jurisdiction of such courts in any such
suit, action or proceeding. Each of the Company and the Selling Shareholders
further agree that service of any process, summons, notice or document by mail
to their respective addresses set forth above shall be effective service of
process for any lawsuit, action or other proceeding brought in any such court.
Any Selling Shareholder not located in the United States has appointed CT
Corporation System as its authorized agent in the Borough of Manhattan in The
City of New York upon which process may be served in any such suit, action or
proceeding, and agrees that service of process upon such agent, and written
notice of said service to such Selling Shareholder by the person serving the
same to the address provided in Section 14, shall be deemed in every respect
effective service of process upon such Selling Shareholder in any such suit,
action or proceeding. Any such Selling Shareholder further agrees that, in the
event that CT Corporation System shall at any time cease to be such duly
appointed and authorized agent for service of process, it shall take any and all
action as may be necessary to ensure that there shall be a duly appointed and
authorized agent for service of process in the Borough of Manhattan, The City of
New York. Each of the Company and the Selling Shareholders hereby irrevocably
and unconditionally waives any objection to the laying of venue of any lawsuit,
action or other proceeding in the Specified Courts, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such lawsuit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
With respect to any Related Proceedings, each of the Company and the
Selling Shareholders irrevocably waives, to the fullest extent permitted by
applicable law, all immunity (whether on the basis of sovereignty or otherwise)
from jurisdiction, service of process, attachment (both before and after
judgment) and execution to which it might otherwise be entitled in the Specified
Courts, and with respect to any judgment by Specified Court ("RELATED
JUDGMENT"), each of the Company and the Selling Shareholders waives any such
immunity in the Specified Courts or any other court of competent jurisdiction,
and will not raise or claim or cause to be pleaded any such immunity at or in
respect of any such Related Proceeding or Related Judgment, including, without
limitation, any immunity pursuant to the United States Foreign Sovereign
Immunities Act of 1976, as amended.
Nothing herein shall be construed to prevent or impair the right of any
Underwriter to serve process in any other manner permitted by law or to bring
any suit, action or proceeding in any other jurisdiction.
33
Section 19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
Section 20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
34
If the foregoing correctly sets forth the agreement among the Company, the
Selling Shareholders and the Underwriters, please indicate your acceptance in
the space provided for that purpose below.
Very truly yours,
PRIMUS GUARANTY, LTD.
By:
--------------------------------------------
Name:
Title:
SELLING SHAREHOLDERS:
[Names]
By:
--------------------------------------------
Name:
Title:
Accepted:
XXXXXX BROTHERS INC.
XXXXXX XXXXXXX & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON LLC
UBS SECURITIES LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXX, XXXXXXXX & XXXXX, INC.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By: XXXXXX BROTHERS INC.
By:
--------------------------------------------
Authorized Representative
35
SCHEDULE 1
NUMBER OF
FIRM SHARES TO
UNDERWRITERS BE PURCHASED:
Xxxxxx Brothers Inc. ...............................
Xxxxxx Xxxxxxx & Co. Incorporated ..................
Credit Suisse First Boston LLC .....................
UBS Securities LLC .................................
Xxxxxxx Xxxxx & Company, LLC .......................
Xxxxx, Xxxxxxxx & Xxxxx, Inc. ......................
TOTAL:
---------------
===============
36
SCHEDULE 2
NUMBER OF
SHARES TO
SELLING SHAREHOLDERS BE PURCHASED:
TOTAL:
---------------
===============
37
SCHEDULE 3
As used in this Agreement, the "SUBSIDIARIES" of the Company are as follows:
1. Primus (Barbados), Ltd., a Barbados corporation;
2. Primus Group Holdings, LLC, a Delaware limited liability company;
3. Primus Financial Products, LLC, a Delaware limited liability company;
4. Primus Asset Management, Inc., a Delaware corporation; and
5. Primus Re, Ltd., a Bermuda exempted company.
38
EXHIBIT A
LOCK-UP LETTER AGREEMENT
XXXXXX BROTHERS INC.
XXXXXX XXXXXXX & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON LLC
UBS SECURITIES LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXX, XXXXXXXX & XXXXX, INC.
As Representatives of the several
Underwriters named in Schedule 1
to the Underwriting Agreement
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that you and certain other firms may enter
into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing for the
purchase by you and such other firms (the "UNDERWRITERS") of shares (the
"SHARES") of Common Shares, par value $0.01 per share (the "COMMON SHARES"), of
Primus Guaranty, Ltd., a Bermuda corporation (the "COMPANY"), and that the
Underwriters propose to reoffer the Shares to the public (the "OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
Common Shares (including, without limitation, Common Shares that may be deemed
to be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and Common Shares that may
be issued upon exercise of any option or warrant) or securities convertible into
or exchangeable for Common Shares (other than the Shares) owned by the
undersigned on the date of execution of this Lock-Up Letter Agreement or on the
date of the completion of the Offering, or (2) enter into any swap or other
A-1
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such Common Shares, whether any
such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Shares or other securities, in cash or otherwise, for a
period of 180 days after the date of the final Prospectus relating to the
Offering; provided, however, that such 180-day period shall be extended by up to
17 days if Xxxxxx Brothers Inc. notifies the Company and the undersigned prior
to the expiration of such 180-day period that such extension is necessary in
order to permit any Underwriter to publish a research report in compliance with
New York Stock Exchange Rule 472(f)(4) and NASD Conduct Rule 2711(f)(4).
The foregoing sentence shall not apply to bona fide gifts or other
dispositions of shares of any class of the Company's share capital that do not
involve a disposition for value, in each case that are made exclusively between
and among the undersigned or members of the undersigned's family, or affiliates
of the undersigned, including its partners (if a partnership), members (if a
limited liability company), any of its wholly-owned subsidiaries (if a
corporation) or any trust for the direct or indirect benefit of the undersigned
or members of the undersigned's family; provided that it shall be a condition to
any such transfer that (i) the transferee agrees to be bound by the terms of the
lock-up letter agreement to the same extent as if the transferee were a party
hereto, and (ii) no filing by any party (donor, donee, transferor or transferee)
under the Securities Exchange Act of 1934, as amended, shall be required or
shall be voluntarily made in connection with such transfer or distribution
(other than an annual filing on a Form 5 made during, or after the expiration
of, the 180-day period referred to above).
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
Nothing in this Lock-Up Agreement shall be deemed to prohibit or restrict
the automatic conversion of shares of Series A Convertible Voting Preferred
Shares into Common Shares as provided in Section 6 of the Certificate of
Designation, Preferences and Rights to the By-laws of the Company adopted on
March 14, 2002.
It is understood that, if (i) Xxxxxx Brothers Inc. and the Company notify
you that they do not intend to proceed with the Offering, (ii) the Underwriting
Agreement has not been executed and delivered by the Company on or prior to
October 15, 2004 or (iii) the Underwriting Agreement after its execution by the
Company (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Shares, then
in each case the undersigned will be released from its obligations under this
Lock-Up Letter Agreement.
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The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
This Lock-Up Letter Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
A-3
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
By:
--------------------------------
Name:
Title:
Dated: _________________
A-4
EXHIBIT B
FORM OF OPINION OF XXXXXX, XXXXX & BOCKIUS LLP
Xxxxxx, Xxxxx & Xxxxxxx LLP, as U.S. counsel to the Company, shall have
furnished to the Representatives their written opinion addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) The U.S. subsidiaries of the Company have been duly
incorporated or formed and are validly existing as corporations or
limited liability companies in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing 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 power
and authority as a corporation or limited liability company, as
applicable, necessary to own or hold their respective properties and
conduct the businesses in which they are engaged;
(ii) Except as described in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any of the Shares pursuant
to any agreement or other instrument known to such counsel [that have
not been waived in writing prior to the date hereof and such waiver is
in full force and effect as of the date hereof];
(iii) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened or contemplated 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 that are required to be described in the Prospectus but are not
so described;
(iv) The Registration Statement has been declared effective
under the Securities Act, the Prospectus was timely filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the Rules and
Regulations and no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the knowledge of such
counsel, no proceeding for that purpose is pending or threatened by the
Commission;
(v) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
such Delivery Date (except for the financial statements and related
notes and schedules therein, and other financial and statistical data
derived
B-1
therefrom, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations;
(vi) The statements contained in the Prospectus under the
captions "Certain Relationships and Related Transactions", "Description
of Share Capital," "Management - Share Options and Other Benefit
Plans," "Shares Eligible for Future Sales" and in the Registration
Statement in Items 14 and 15, insofar as they describe provisions of
the Delaware General Corporation Law and federal statutes, rules and
regulations, constitute an accurate and fair summary thereof;
(vii) The statements contained in the Prospectus under the
caption "Tax Considerations", insofar as they constitute summaries of
matters of U.S. federal income tax laws or regulations, fairly and
accurately present the matters therein described in all material
respects. As stated therein, counsel does not express a view as to the
tax treatment by the Company and its subsidiaries of credit default
swaps sold by Primus Financial as options for U.S. federal income tax
purposes.
(viii) To such counsel's knowledge, there are no contracts or
other documents which are required to be described in the Prospectus or
filed as exhibits to the Registration Statement by the Securities Act
or by the Rules and Regulations which have not been described or filed
as exhibits to the Registration Statement;
(ix) To the extent governed by New York law, this Agreement
has been duly executed and delivered by the Company;
(x) The issue and sale of the shares of Shares being delivered
on such Delivery Date by the Company pursuant to this Agreement and the
execution, delivery and compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby 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 [agreement or instrument filed as an exhibit to the
Registration Statement - TO BE COVERED BY XXXXXX XXXXX
OPINION][indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject - TO BE COVERED BY
IN-HOUSE COUNSEL OPINION], nor will such actions result in any
violation of the provisions of any law, statute or any order, rule or
regulation that, in such counsel's experience, is generally applicable
to transactions of the type contemplated by this
B-2
Agreement, or, to such counsel's knowledge, any decree, judgment or
order of any governmental body, agency or court having jurisdiction
over the Company or any of its subsidiaries; and, except for the
registration of the Shares under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws
in connection with the purchase and distribution of the Shares 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 and the consummation of the transactions contemplated
hereby, except for such consents, approvals, authorizations, orders,
filings or registrations as have been obtained or made;
(xi) Except as described in the Prospectus, to such counsel's
knowledge, 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;
(xii) Neither the Company nor any of its subsidiaries is, or,
after giving effect to the offering and sale of the Shares and the
application of the net proceeds therefrom as described in the
Prospectus will be, an "INVESTMENT COMPANY" as defined in the
Investment Company Act; and
(xiii) Subject to the comment below, under the laws of the
State of New York relating to the submission to personal jurisdiction,
Section 18 of this Agreement is sufficient to validly and irrevocably
submit a person or entity to the personal jurisdiction of any New York
state court or United States federal court sitting in the Borough of
Manhattan, The City of New York, and any appellate court thereof, in
any suit, action or proceeding arising out of or based upon this
Agreement, and Section 18 is sufficient to validly and irrevocably
waive any objection to the venue of a proceeding in any such court and
validly appoint the authorized agent named in Section 18 of this
Agreement for the purposes described therein, and service of process
effected in the manner set forth in Section 18 of this Agreement will
be effective to confer valid personal jurisdiction.
With respect to the opinion set forth in paragraph (xiii)
above, such counsel may note the limitations of 28 U.S.C. sections 1331
and 1332 on federal court jurisdiction, and may also note that the
submission to the jurisdiction
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of such court cannot supersede such court's discretion in determining
whether to transfer an action from one U.S. federal court to another
under 28 U.S.C. ss.1404(a). Such counsel may further note that
submission to the jurisdiction of a New York state court cannot
supersede the discretion of such court in determining whether to
transfer the place of trial under NYCPLR ss.510.
In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Delaware. Such counsel shall also confirm that (x) such counsel has acted as
counsel to the Company in connection with the preparation of the Registration
Statement and (y) based on the foregoing, no facts have come to the attention of
such counsel which lead them to believe that the Registration Statement (except
for the financial statements and related notes and schedules therein, and other
financial and statistical data derived therefrom, as to which such counsel need
express no view) as of the Effective Date, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, or that the
Prospectus (except as stated above) contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
statement may be qualified by a statement to the effect that such counsel does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (other than
as set forth in clauses (ii), (vi) and (vii) above).
B-4
EXHIBIT C
FORM OF OPINION OF XXXXXXX XXXX & XXXXXXX
AS COMPANY'S BERMUDA COUNSEL
1. Each of the Company and Primus Re is duly incorporated and existing
under the laws of Bermuda in good standing (meaning solely that it has
not failed to make any filing with any Bermuda governmental authority
or to pay any Bermuda government fee or tax which would make it liable
to be struck off the Register of Companies and thereby cease to exist
under the laws of Bermuda).
2. The Company has the necessary corporate power and authority to execute
and file the Registration Statement under the Securities Act and under
the Act and to execute, deliver and perform its obligations under the
Document. The Company has the necessary corporate power to be a holding
company and Primus Re has the necessary corporate power to conduct its
business as described in the Prospectus. The execution and delivery of
the Document by the Company and the performance by the Company of its
obligations thereunder, and the execution and filing of the
Registration Statement by the Company under the Securities Act and
under the Act, will not violate the said memorandum of association or
bye-laws of the Company nor any applicable law, regulation, order or
decree in Bermuda.
3. The Company has taken all corporate action required to authorise its
execution and filing of the Registration Statement under the Securities
Act and under the Act and its execution, delivery and performance of
the Document. The Registration Statement has been duly authorized and
executed by or on behalf of the Company. The Document has been duly
executed and delivered by or on behalf of the Company, and constitutes
the valid and binding obligations of the Company, enforceable against
the Company in accordance with the terms thereof.
4. No order, consent, approval, licence, authorisation or validation of,
filing with or exemption by any government or public body or authority
of Bermuda or any sub-division thereof is required (i) to authorize or
in connection with the execution and filing of the Registration
Statement under the Securities Act and under the Act, or (ii) to
authorise or is required in connection with the execution, delivery,
performance and enforcement of the Document (including, without
limitation, in connection
C-1
with the issue and sale of the Shares), except such as have been duly
obtained [or filed] in accordance with Bermuda law.
5. It is not necessary or desirable to ensure the enforceability in
Bermuda of the Document that it be registered in any register kept by,
or filed with, any governmental authority or regulatory body in
Bermuda.
6. The Document will not be subject to ad valorem stamp duty in Bermuda
and no registration, documentary, recording, transfer or other similar
tax, fee or charge is payable in Bermuda in connection with the
execution, delivery, filing, registration or performance of the
Document by the Company or in connection with the issue and delivery of
the Shares by the Company to the Underwriters other than in connection
with the filing of the Prospectus under the Act. There is no income or
other tax of Bermuda imposed by withholding or otherwise on any payment
to be made to or by the Company pursuant to the Document. There is no
income or other tax of Bermuda imposed by withholding or otherwise on
any dividend or distribution to be made by the Company to registered
holders of the Shares or any payment to be made by the Company pursuant
to the Document.
7. The Company and Primus Re have been designated as non-resident of
Bermuda for the purposes of the Exchange Control Act, 1972 and, as
such, are free to acquire, hold, transfer and sell foreign currency
(including the payment of dividends or other distributions) and
securities without restriction. Each of the Company and Primus Re is an
"exempted company" under the Act.
8. The statements set forth in the Prospectus under the caption "Risk
Factors - Risks Related to our Business - We do not intend to pay cash
dividends on our common shares for the foreseeable future"; "Risk
Factors - Risks Related to Our Status as a Bermuda company" (excluding
the last paragraph of that captioned section); "Dividend Policy" (the
last paragraph of that captioned section only); "Business - Certain
Bermuda Law Considerations"; "Underwriting - Other Bermuda
Considerations"; "Description of Share Capital," , "Taxation of Primus
Guaranty and Its Subsidiaries - Bermuda Taxation", "Taxation of
Shareholders - "Bermuda Taxation", to the extent that they constitute
statements of Bermuda law and not summaries of bye-laws, are accurate
in all material respects. The authorised share capital of the Company
(not including any issued share capital) conforms, as to matters of
Bermuda law, to the description thereof contained in the Prospectus
under the heading "Description of Share Capital " in all material
respects.
9. The choice of the Foreign Laws as the governing law of the Document is
a valid choice of law and would be recognised and given effect to in
any
C-2
action brought before a court of competent jurisdiction in Bermuda,
except for those laws (i) which such court considers to be procedural
in nature, (ii) which are revenue or penal laws or (iii) the
application of which would be inconsistent with public policy, as such
term is interpreted under the laws of Bermuda. The submission in the
Document to the non-exclusive jurisdiction of the Foreign Courts, the
waiver of any objection related to inconvenient forum with respect to
the Foreign Courts, and the appointment of an agent for service
pursuant thereto are valid and binding upon the Company.
10. The courts of Bermuda would recognise as a valid judgment, a final and
conclusive judgment in personam obtained in the Foreign Courts against
the Company based upon the Document under which a sum of money is
payable (other than a sum of money payable in respect of multiple
damages, taxes or other charges of a like nature or in respect of a
fine or other penalty) and would give a judgment based thereon
provided that (a) such courts had proper jurisdiction over the parties
subject to such judgment, (b) such courts did not contravene the rules
of natural justice of Bermuda, (c) such judgment was not obtained by
fraud, (d) the enforcement of the judgment would not be contrary to
the public policy of Bermuda, (e) no new admissible evidence relevant
to the action is submitted prior to the rendering of the judgment by
the courts of Bermuda and (f) there is due compliance with the correct
procedures under the laws of Bermuda.
11. (a) Based solely upon the Constitutional Documents and the Minutes the
authorized share capital of the Company is US$6,000,000 divided into
[62,500,000] common shares of par value US$[0.08] each and 100,000,000
preferred shares of par value US$0.01 each.
(b) Based solely upon a review of a copy of the register of members of
the Company dated ________, 2004 certified by the Secretary of the
Company on _________, 2004 (the "Register"), the issued share capital
of the Company consists of ______ common shares and ______ Series A
Preferred Shares, in each case having a par value of US$0.01 and each
such common share and Series A Share is duly authorized, validly
issued, fully paid and non-assessable (which term when used herein
means that no further sums are required to be paid by the holders
thereof in connection with the issue thereof) and the Selling
Shareholders were the registered holders of ______ of such Series A
Shares.
(c) When the Shares to be sold by the Company are duly issued and paid
for in accordance with the Document, such Shares will be validly
issued, fully paid and non-assessable and will not be subject to any
statutory pre-emptive or similar statutory rights of general
application under Bermuda law.
C-3
(d) When the Shares to be sold by the Selling Shareholders are issued
on the due conversion of the Series A Shares, and are unconditionally
and duly transferred to the Underwriters by the Selling Shareholders in
accordance with the Document, such Shares will be validly issued, fully
paid and non-assessable and will not be subject to any statutory
pre-emptive or similar statutory rights.
12. Each of the Company and Primus Re has received an assurance from the
Minister of Finance under The Exempted Undertakings Tax Protection Act
1966 in Bermuda that in the event of there being enacted in Bermuda any
legislation imposing tax computed on profits or income or computed on
any capital asset, gain or appreciation, or any tax in the nature of
estate duty or inheritance tax, then the imposition of any such tax
shall not be applicable to the Company or any of its operations or its
shares, debentures or other obligations of the Company, until 28 March
2016 (subject to the proviso expressed in such assurance as described
in the Prospectus).
13. Based solely upon a search of the Cause Book of the Supreme Court of
Bermuda conducted at ______ [am/pm] on _________, 2004 (which would not
reveal details of proceedings which have been filed but not actually
entered in the Cause Book at the time of our search), there are no
judgments against the Company nor against Primus Re, nor any legal or
governmental proceedings pending in Bermuda to which the Company or
Primus Re is subject.
14. The Company is not entitled to any immunity under the laws of Bermuda,
whether characterised as sovereign immunity or otherwise, from any
legal proceedings to enforce the Document in respect of itself or its
property.
15. Consummation by the Company of the transactions contemplated by the
Document to be taken by the Company, including but not limited to any
actions taken pursuant to the indemnification and contribution
provisions set forth therein, will not constitute unlawful financial
assistance by the Company under Bermuda law.
C-4
EXHIBIT D
FORM OF OPINION OF XXXXXX XXXXXX & XXXXXXX LLP
Xxxxxx Xxxxxx & Xxxxxxx LLP, as U.S. counsel to XL, shall have
furnished to the Representatives their written opinion addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) XL Capital Principal Partners I, L.L.C. is an existing
limited liability company in good standing under the laws of its
jurisdiction of organization.
(ii) The sale of the Shares by XL is not subject to any
preemptive rights, co-sale rights or rights of first refusal;
Immediately prior to the First Delivery Date, XL had good and valid
title to the Shares to be sold by it under this Agreement, free and
clear of all liens, encumbrances, equities or claims; XL has full
right, power and authority to sell, transfer and deliver such Shares
pursuant to this Agreement;
(iii) Upon (a) payment for the Shares to be sold by XL in
accordance with this Agreement, (b) registration of the transfer of
such Shares to, and registration of such Shares in the name of, Cede &
Co. or other nominee designated by The Depository Trust Company ("DTC")
and (c) the crediting of such Shares to the accounts of the several
Underwriters maintained by DTC, assuming that such accounts are
"securities accounts" (as defined in Section 8-501 of the Uniform
Commercial Code ("UCC"), the Underwriters will acquire "security
entitlements" (as defined in Section 8-102 of the UCC) in respect of
such Shares and, assuming that each Underwriter does not have "notice
of an adverse claim" (within the meaning of Section 8-105 of the UCC)
to such Shares, no action based on an adverse claim to such Shares,
whether framed in conversion, replevin, constructive trust, equitable
lien or other theory, may be asserted against the Underwriters;
(iv) This Agreement has been duly authorized, executed and
delivered by or on behalf of XL;
(v) A Power-of-Attorney and a Custody Agreement have been duly
authorized, executed and delivered by XL and constitute valid and
binding agreements of XL, enforceable in accordance with their
respective terms;
(vi) The execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement by XL and
D-1
the consummation by XL of the transactions contemplated hereby and
thereby 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
material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which XL is a party or
by which such XL is bound or to which any of the property or assets of
XL is subject, nor will such actions result in any violation of the
provisions of the charter or by-laws or other governing documents of XL
or any statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction over XL
or the property or assets of XL; and, except for the registration of
the Shares under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Shares 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, the Power of Attorney or the Custody Agreement by XL and the
consummation by XL of the transactions contemplated hereby and thereby;
and
(vii) Subject to the comment below, under the laws of the
State of New York relating to the submission to personal jurisdiction,
Section 18 of this Agreement is sufficient to validly and irrevocably
submit a person or entity to the personal jurisdiction of any New York
state court or United States federal court sitting in the Borough of
Manhattan, The City of New York, and any appellate court thereof, in
any suit, action or proceeding arising out of or based upon this
Agreement, and Section 18 is sufficient to validly and irrevocably
waive any objection to the venue of a proceeding in any such court and
validly appoint the authorized agent named in Section 18 of this
Agreement for the purposes described therein, and service of process
effected in the manner set forth in Section 18 of this Agreement will
be effective to confer valid personal jurisdiction.
With respect to the opinion set forth in paragraph (vii)
above, such counsel may note the limitations of 28 U.S.C. ss.ss.1331
and 1332 on federal court jurisdiction, and may also note that the
submission to the jurisdiction of such court cannot supersede such
court's discretion in determining whether to transfer an action from
one U.S. federal court to another under 28 U.S.C. ss.1404(a). Such
counsel may further note that submission to the jurisdiction of a New
York state court cannot supersede the discretion of such court in
determining whether to transfer the place of trial under NYCPLR ss.510.
D-2
In rendering such opinion, such counsel may (a) state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Delaware, (b) rely for the purposes of its opinion above on the opinion of
Xxxxxxx Xxxx & Xxxxxxx, Bermuda counsel to XL, addressed to the Underwriters as
to matters governed by Bermuda law, and (c) rely as to matters of fact, to the
extent such counsel deems proper on the representations of XL set forth in
Section 2 of the Underwriting Agreement, on certificates of responsible officers
of the XL and public officials.
D-3
EXHIBIT E
FORM OF OPINION OF _________
_________, as U.S. counsel to the Selling Shareholders (other than XL
and Transamerica), shall have furnished to the Representatives their written
opinion addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect that:
(i) Each Selling Shareholder is an existing corporation in
good standing under the laws of its jurisdiction of incorporation [with
corporate power and authority to own its property and conduct its
business as currently conducted];
(ii) Each Selling Shareholder has full power, right and
authority to sell, transfer and deliver such Shares pursuant to this
Agreement; and the sale of the Shares by any Selling Shareholder is not
subject to any preemptive rights, co-sale rights or rights of first
refusal; Immediately prior to the First Delivery Date, each Selling
Shareholder had good and valid title to the shares of Shares to be sold
by such Selling Shareholder under this Agreement, free and clear of all
liens, encumbrances, equities or claims;
(iii) Upon (a) payment for the Shares to be sold by each
Selling Shareholder in accordance with this Agreement, (b) registration
of the transfer of such Shares to, and registration of such Shares in
the name of, Cede & Co. or other nominee designated by The Depository
Trust Company ("DTC") and (c) the crediting of such Shares to the
accounts of the several Underwriters maintained by DTC, assuming that
such accounts are "securities accounts" (as defined in Section 8-501 of
the Uniform Commercial Code ("UCC"), the Underwriters will acquire
"security entitlements" (as defined in Section 8-102 of the UCC) in
respect of such Shares and, assuming that each Underwriter does not
have "notice of an adverse claim" (within the meaning of Section 8-105
of the UCC) to such Shares, no action based on an adverse claim to such
Shares, whether framed in conversion, replevin, constructive trust,
equitable lien or other theory, may be asserted against the
Underwriters;
(iv) This Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Shareholder;
(v) A Power-of-Attorney and a Custody Agreement have been duly
authorized, executed and delivered by each Selling Shareholder and
constitute valid and binding agreements of such Selling Shareholder,
enforceable in accordance with their respective terms;
E-1
(vi) The execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement by each
Selling Shareholder and the consummation by such Selling Shareholder of
the transactions contemplated hereby and thereby 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 material indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known to
such counsel to which such Selling Shareholder is a party or by which
such Selling Shareholder is bound or to which any of the property or
assets of such Selling Shareholder is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws or
other governing documents of the respective Selling Shareholders or any
statute or any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over such
Selling Shareholder or the property or assets of such Selling
Shareholder; and, except for the registration of the Shares under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection with the
purchase and distribution of the Shares 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, the Power of
Attorney or the Custody Agreement by such Selling Shareholder and the
consummation by such Selling Shareholder of the transactions
contemplated hereby and thereby; and
(vii) Subject to the comment below, under the laws of the
State of New York relating to the submission to personal jurisdiction,
Section 18 of this Agreement is sufficient to validly and irrevocably
submit a person or entity to the personal jurisdiction of any New York
state court or United States federal court sitting in the Borough of
Manhattan, The City of New York, and any appellate court thereof, in
any suit, action or proceeding arising out of or based upon this
Agreement, and Section 18 is sufficient to validly and irrevocably
waive any objection to the venue of a proceeding in any such court and
validly appoint the authorized agent named in Section 18 of this
Agreement for the purposes described therein, and service of process
effected in the manner set forth in Section 18 of this Agreement will
be effective to confer valid personal jurisdiction.
With respect to the opinion set forth in paragraph (vii)
above, such counsel may note the limitations of 28 U.S.C. ss.ss.1331
and 1332 on federal court jurisdiction, and may also note that the
submission to the jurisdiction of such court cannot supersede such
court's discretion in determining whether to transfer an action from
one U.S. federal court to another under 28 U.S.C. ss.1404(a). Such
counsel may further note that submission to the
E-2
jurisdiction of a New York state court cannot supersede the discretion
of such court in determining whether to transfer the place of trial
under NYCPLR ss.510.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Delaware.
E-3
EXHIBIT F
FORM OF OPINION OF XXXXXXX, XXXX & XXXXXXX, BERMUDA COUNSEL FOR XL
1. XL Insurance (Bermuda) Ltd (the "Bermuda Selling Shareholder") is duly
continued and existing under the laws of Bermuda in good standing
(meaning solely that it has not failed to make any filing with any
Bermuda governmental authority or to pay any Bermuda government fee or
tax which would make it liable to be struck off the Register of
Companies and thereby cease to exist under the laws of Bermuda).
2. The Bermuda Selling Shareholder has the necessary corporate power and
authority to execute, deliver and perform its obligations under the
Documents. The execution and delivery of the Documents by the Bermuda
Selling Shareholder and the performance by the Bermuda Selling
Shareholder of its obligations thereunder will not violate the
memorandum of association or bye-laws of the Bermuda Selling
Shareholder nor any applicable law, regulation, order or decree in
Bermuda.
3. The Bermuda Selling Shareholder has taken all corporate action required
to authorise its execution, delivery and performance of the Documents.
The Documents have been duly executed and delivered by or on behalf of
the Bermuda Selling Shareholder, and constitute the valid and binding
obligations of the Bermuda Selling Shareholder, enforceable against the
Bermuda Selling Shareholder in accordance with the terms thereof.
4. No order, consent, approval, licence, authorisation or validation of,
filing with or exemption by any government or public body or authority
of Bermuda or any sub-division thereof is required (i) in connection
with the sale of the Shares being delivered by the Bermuda Selling
Shareholder pursuant to the Underwriting Agreement, or (ii) to
authorise or is required in connection with the execution, delivery,
performance and enforcement of the Documents by the Bermuda Selling
Shareholder, except such as have been duly obtained or filed in
accordance with Bermuda law.
5. It is not necessary or desirable to ensure the enforceability in
Bermuda of the Documents against the Bermuda Selling Shareholder that
they be registered in any register kept by, or filed with, any
governmental authority or regulatory body in Bermuda.
6. The Documents will not be subject to ad valorem stamp duty in Bermuda
and no registration, documentary, recording, transfer or other similar
tax, fee or charge is payable in Bermuda in connection with the
execution,
F-1
delivery, filing, registration or performance of the Documents by the
Bermuda Selling Shareholder or in connection with the transfer and
delivery of the Shares by the Bermuda Selling Shareholder to the
Underwriters. There is no income or other tax of Bermuda imposed by
withholding or otherwise on any payment to be made to or by the
Bermuda Selling Shareholder pursuant to the Documents.
7. The choice of the Foreign Laws as the governing law of the Documents
is a valid choice of law and would be recognised and given effect to
in any action brought before a court of competent jurisdiction in
Bermuda, except for those laws (i) which such court considers to be
procedural in nature, (ii) which are revenue or penal laws or (iii)
the application of which would be inconsistent with public policy, as
such term is interpreted under the laws of Bermuda. The submission in
the Underwriting Agreement to the non-exclusive jurisdiction of the
Foreign Courts, the waiver of any objection related to inconvenient
forum with respect to the Foreign Courts and the appointment of an
agent for service of process pursuant thereto, are valid and binding
upon the Bermuda Selling Shareholder.
8. The courts of Bermuda would recognise as a valid judgment, a final and
conclusive judgment in personam obtained in the Foreign Courts against
the Bermuda Selling Shareholder based upon the Documents under which a
sum of money is payable (other than a sum of money payable in respect
of multiple damages, taxes or other charges of a like nature or in
respect of a fine or other penalty) and would give a judgment based
thereon provided that (a) such courts had proper jurisdiction over the
parties subject to such judgment, (b) such courts did not contravene
the rules of natural justice of Bermuda, (c) such judgment was not
obtained by fraud, (d) the enforcement of the judgment would not be
contrary to the public policy of Bermuda, (e) no new admissible
evidence relevant to the action is submitted prior to the rendering of
the judgment by the courts of Bermuda and (f) there is due compliance
with the correct procedures under the laws of Bermuda.
9. Based solely upon a review of a copy of the register of members of the
Company dated __________, 2004 certified by the Secretary of the
Company on ___________, 2004 (the "Register"), the Selling Shareholder
is the registered holder of ______ Common Shares and ______ Series A
Preferred Shares and each such Common Share and Series A Share is duly
authorized, validly issued, fully paid and non-assessable (which term
when used herein means that no further sums are required to be paid by
the holders thereof in connection with the issue thereof).
F-2
EXHIBIT G
FORM OF OPINION OF XXXXX XXXX & XXXXXXXX
Xxxxx Xxxx & Xxxxxxxx, as U.S. counsel to the Underwriters, shall have
furnished to the Representatives their written opinion addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
1. The statements relating to legal matters or documents included in
the Prospectus under the caption "Underwriting" fairly summarize in all material
respects such matters or documents.
Such counsel may state that such counsel has not itself checked the
accuracy, completeness or fairness of, or otherwise verified, the information
furnished with respect to other matters in the Registration Statement or the
Prospectus. Such counsel has generally reviewed and discussed with the
Representatives and with certain officers and employees of, and counsel and
independent public accountants for, the Company the information furnished,
whether or not subject to its check and verification. On the basis of such
consideration, review and discussion, but without independent check or
verification except as stated above, nothing has come to the attention of such
counsel that causes it to believe that (i) the Registration Statement or the
Prospectus does not comply as to form in all material respects with the Act and
the rules and regulations of the Commission thereunder, (ii) the Registration
Statement or the prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (iii) the Prospectus as of its
date or as of the Delivery Date contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. In expressing the foregoing belief, such counsel has
not been called to pass upon, and need express no belief as to, the financial
statements or financial schedules or other financial or statistical data
included in the Registration Statement or the Prospectus.
G-1
EXHIBIT H-1
FORM OF OPINION OF WINSTON & XXXXXX LLP
Winston & Xxxxxx, as special counsel to Transamerica, shall have
furnished to the Representatives their written opinion addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
1. Upon (a) payment for the Shares to be sold by Transamerica
in accordance with the Underwriting Agreement, (b) registration of the
transfer of such Shares to, and registration of such Shares in the name
of Cede & Co. or such other nominee designated by The Depository Trust
Company ("DTC"), and (c) the crediting of such Shares to the accounts
of the several Underwriters maintained by DTC, assuming that such
accounts are "securities accounts" (as defined in Section 8-105 of the
Uniform Commercial Code as currently in effect in the State of New York
(the "UCC")), the Underwriters will acquire "security entitlements" (as
defined in Section 8-102 of the UCC) in respect of such Shares and,
assuming that each Underwriter does not have "notice of an adverse
claim" (within the meaning of Section 8-105 of the UCC) to such Shares,
no action based on an adverse claim to such Shares, whether framed in
conversion, replevin, constructive trust, equitable lien or other
theory, may be successfully asserted against the Underwriters.
2. Assuming the Power-of-Attorney and the Custody Agreement
have been duly authorized, executed, and delivered by Transamerica,
they constitute valid and binding agreements of Transamerica,
enforceable in accordance with their respective terms.
3. Except for the registration of the Shares under the
Securities Act and such consents, approvals, authorizations,
registrations, or qualifications as may be required under the
Securities Exchange Act of 1934 and applicable state securities laws in
connection with the purchase and distribution of the Shares 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 the
Underwriting Agreement, the Power of Attorney, or the Custody Agreement
by Transamerica and the consummation by Transamerica of the
transactions contemplated thereby.
H-1-1
[4. Subject to the comment below, under the laws of the State
of New York relating to the submission to personal jurisdiction,
Section 18 of this Agreement is sufficient to validly and irrevocably
submit a person or entity to the personal jurisdiction of any New York
state court or United States federal court sitting in the Borough of
Manhattan, The City of New York, and any appellate court thereof, in
any suit, action or proceeding arising out of or based upon this
Agreement, and Section 18 is sufficient to validly and irrevocably
waive any objection to the venue of a proceeding in any such court and
validly appoint the authorized agent named in Section 18 of this
Agreement for the purposes described therein, and service of process
effected in the manner set forth in Section 18 of this Agreement will
be effective to confer valid personal jurisdiction.
With respect to the opinion set forth in paragraph 4 above,
such counsel may note the limitations of 28 U.S.C. ss.ss.1331 and 1332
on federal court jurisdiction, and may also note that the submission to
the jurisdiction of such court cannot supersede such court's discretion
in determining whether to transfer an action from one U.S. federal
court to another under 28 U.S.C. ss.1404(a). Such counsel may further
note that submission to the jurisdiction of a New York state court
cannot supersede the discretion of such court in determining whether to
transfer the place of trial under NYCPLR ss.510.]
X-0-0
XXXXXXX X-0
XXXX XX XXXXXXX OF _________
_________, as in-house counsel to Transamerica, shall have furnished to
the Representatives his written opinion addressed to the Underwriters and dated
such Delivery Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
1. Transamerica is validly existing as a corporation in good
standing under the laws of the State of Iowa.
2. Transamerica is the sole record owner of the Shares to be
sold by it, and has full power, right, and authority to sell such
Shares, and the sale of the Shares by Transamerica is not subject to
any preemptive rights, co-sale rights, or rights of first refusal.
Assuming the Shares have been validly issued and are fully paid and
non-assessable, immediately prior to the First Delivery Date,
Transamerica had good and valid title to the Shares to be sold by
Transamerica under the Underwriting Agreement, free and clear of all
liens, encumbrances, equities, or claims.
3. The Underwriting Agreement has been duly authorized,
executed, and delivered by Transamerica.
4. The Power-of-Attorney and Custody Agreement have been duly
authorized, executed, and delivered by Transamerica.
5. The execution, delivery, and performance of the
Underwriting Agreement, the Power of Attorney, and the Custody
Agreement by Transamerica and the consummation by Transamerica of the
transactions contemplated thereby 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 known to me to which
Transamerica is a party or by which Transamerica is bound or to which
any of the property or assets of Transamerica is subject, nor will such
actions result in any violation of the provisions of the charter or
by-laws or other governing documents of Transamerica, or of any statute
or any order, rule, or regulation known to me of any court or
governmental agency or body having jurisdiction over Transamerica or
the property or assets of Transamerica.
H-2-1
