<PAGE>
As filed with the Securities and Exchange Commission on August 18, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------
PXRE GROUP LTD.
(Exact name of Registrant as specified in its charter)
---------------------
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<S> <C> <C>
BERMUDA 6719 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
CLARENDON HOUSE
2 CHURCH STREET, P.O. BOX HM666
HAMILTON HM CX, BERMUDA
(441) 295-1422
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
-------------
JAMES F. DORE
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
CLARENDON HOUSE
2 CHURCH STREET, P.O. BOX HM666
HAMILTON HM CX, BERMUDA
(441) 295-1422
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copy to:
F. SEDGWICK BROWNE, ESQ.
MORGAN, LEWIS & BOCKIUS LLP
101 PARK AVENUE
NEW YORK, NEW YORK 10178
(212) 309-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the merger (the "Merger") of PXRE Merger Corp. with and into
PXRE Corporation.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) OFFERING PRICE PER UNIT(2) PRICE(2) FEE(3)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
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Common Shares, par value $1.00 per share....... 13,675,000 $14.59 $199,518,250 $55,466
====================================================================================================================================
</TABLE>
(1) Represents the maximum number of Common Shares, par value $1.00 per share,
of the Registrant ("PXRE Group common shares") to be issued in connection
with the Merger in exchange for shares of PXRE Corporation's common stock,
par value $0.01 per share, determined on the basis of one PXRE Group common
share for each share of PXRE Corporation common stock.
(2) Estimated pursuant to Rule 457(f) of the Securities Act of 1933, as amended
(the "Securities Act"), based upon the market value of the shares of PXRE
Corporation to be converted in the Merger ($14.59 per share, which was the
average of the high and low sales price thereof on August 12, 1999, as
reported on the New York Stock Exchange).
(3) The registration fee of $55,466 was calculated pursuant to Rule 457(f) under
the Securities Act, as follows: .000278 multiplied by the proposed maximum
aggregate offering price.
(4) In accordance with Rule 457(b), the filing fee of $42,987 paid pursuant to
Rules 14a-(6)(i)(1) and 0-11 under the Securities Exchange Act of 1934, as
amended, at the time of filing of the preliminary proxy materials has been
credited to offset the $55,466 registration fee that would otherwise be
payable, resulting in a net fee payable of $12,479 as of the date hereof.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
[PXRE LOGO] PXRE CORPORATION
399 Thornall Street
14th Floor
Edison, New Jersey 08837
REORGANIZATION PROPOSED -- YOUR VOTE IS VERY IMPORTANT
To the stockholders of PXRE Corporation:
The Board of Directors of PXRE Corporation ("PXRE Delaware") has unanimously
approved the reorganization described in this proxy statement/prospectus. As a
result of the reorganization, PXRE Group Ltd., a newly formed Bermuda company
("PXRE Group"), will become the parent holding company of PXRE Delaware and will
carry on the holding company functions currently conducted by PXRE Delaware. The
reorganization will be accomplished through the merger of PXRE Merger Corp., a
Delaware corporation and a newly formed, indirect wholly-owned subsidiary of
PXRE Group, with and into PXRE Delaware. Following completion of the
reorganization, PXRE Group intends to capitalize a newly formed Bermuda
reinsurance company, PXRE Reinsurance Ltd. ("PXRE Bermuda"), with an initial
capital of at least $35 million. PXRE Bermuda will then commence underwriting
and service operations in Bermuda.
PXRE Delaware stockholders will have an opportunity to consider the
reorganization at a special stockholders' meeting to be held on October 5, 1999
at 10:00 a.m., local time, at the offices of PXRE Corporation, 399 Thornall
Street, 14th Floor, Edison, New Jersey 08837. The reorganization cannot be
completed unless PXRE Delaware stockholders approve the merger.
Your Board of Directors believes that the reorganization and related
transactions will enable us to create better returns for our stockholders. The
establishment of a Bermuda holding company with underwriting and service
operations in that important insurance market will allow us to benefit from more
favorable business, regulatory, tax and financing environments and provide us
with an enhanced ability to compete.
If the reorganization is completed, holders of shares of PXRE Delaware common
stock will automatically become holders of the same number of PXRE Group common
shares. The PXRE Group common shares will be listed on the New York Stock
Exchange under the symbol "PXT". THE EXCHANGE OF PXRE DELAWARE COMMON STOCK FOR
PXRE GROUP COMMON SHARES WILL BE A TAXABLE TRANSACTION IN WHICH GAIN, IF ANY
(BUT NOT LOSS), WILL BE RECOGNIZED BY EXCHANGING STOCKHOLDERS.
<PAGE>
This proxy statement/prospectus provides you with detailed information about the
proposed reorganization and constitutes the prospectus of PXRE Group with
respect to the common shares into which shares of PXRE Delaware common stock
will be converted in connection with the reorganization. We encourage you to
read this entire document carefully. PLEASE CONSIDER CAREFULLY THE "RISK
FACTORS" BEGINNING ON PAGE 17.
Whether or not you plan to attend the special meeting, please take the time to
vote by completing and mailing the enclosed proxy card to us. Your vote is very
important.
On behalf of the Board of Directors of PXRE Delaware, I urge to you to vote
"FOR" approval of the merger and the related merger agreement.
Gerald L. Radke
Chairman of the Board, Chief Executive Officer and President
- --------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
This proxy statement/prospectus is dated August 19, 1999
and was first mailed to PXRE Corporation stockholders
on or about August 19, 1999.
2
<PAGE>
[PXRE LOGO]
---------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 5, 1999
---------------------
TO THE STOCKHOLDERS
NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders of PXRE
CORPORATION, a Delaware corporation ("PXRE Delaware"), will be held on October
5, 1999 at 10:00 a.m., local time, at the offices of PXRE Corporation, 399
Thornall Street, 14th Floor, Edison, New Jersey 08837, for the following
purposes.
To consider and vote on a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of July 7, 1999, between PXRE Delaware,
PXRE Group Ltd. and PXRE Merger Corp., pursuant to which PXRE Group, a
newly formed Bermuda company, will become the parent holding company
of PXRE Delaware. This item of business is more fully described in the
proxy statement/prospectus accompanying this notice.
To vote on such other matters as may properly come before the
stockholders.
Only stockholders of record of PXRE Delaware common stock at the close of
business on August 13, 1999 are entitled to notice of, and to vote at, the
meeting.
All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign and
return the enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope. Please do not send certificates for your shares of
PXRE Delaware common stock with your proxy card. After the merger is completed,
those certificates will represent PXRE Group common shares.
Any stockholder attending the meeting may vote in person even if he or she
has returned a proxy.
By Order of the Board of Directors,
F. Sedgwick Browne
Secretary
3
<PAGE>
Edison, New Jersey
August 19, 1999
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
4
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION.................................7
SUMMARY ......................................................................8
SELECTED FINANCIAL INFORMATION................................................14
PRO FORMA COMBINED FINANCIAL DATA.............................................17
RISK FACTORS..................................................................17
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS..................23
THE STOCKHOLDERS' MEETING.....................................................24
PXRE DELAWARE AND PXRE GROUP..................................................26
THE REORGANIZATION............................................................27
CERTAIN TAX CONSIDERATIONS....................................................33
DESCRIPTION OF AUTHORIZED SHARES OF PXRE GROUP................................46
COMPARISON OF STOCKHOLDERS' RIGHTS............................................53
MANAGEMENT OF PXRE GROUP......................................................64
REGULATION OF PXRE BERMUDA....................................................65
CERTAIN FOREIGN LAW CONSIDERATIONS............................................68
LEGAL MATTERS.................................................................69
EXPERTS .....................................................................70
2000 ANNUAL MEETING OF STOCKHOLDERS...........................................70
ENFORCEABILITY OF CIVIL LIABILITIES
AGAINST FOREIGN PERSONS..............................................71
</TABLE>
5
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<TABLE>
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WHERE YOU CAN FIND MORE INFORMATION...........................................71
INDEX TO BALANCE SHEET.......................................................F-1
REPORT OF INDEPENDENT ACCOUNTANTS............................................F-2
PXRE GROUP LTD. BALANCE SHEET AS OF JUNE 1, 1999 (date of inception).........F-3
PXRE GROUP LTD. NOTES TO FINANCIAL STATEMENT.................................F-4
AGREEMENT AND PLAN OF MERGER.............................................Annex A
</TABLE>
6
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: You are being asked to vote in favor of a proposed merger as a result of
which PXRE Group will become the parent holding company of PXRE Delaware.
Q: WHAT DO I NEED TO DO NOW?
A: Just indicate on your proxy card how you want to vote, sign it and mail it in
the enclosed return envelope as soon as possible so that your shares may be
represented at the PXRE Delaware stockholders' meeting.
Q: CAN I CHANGE MY VOTE?
A: If you grant a proxy, you may take back your proxy up to and including the
date of the stockholders' meeting by following the directions on page 25 and
either change your vote or attend the stockholders' meeting and vote in person.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will not be able to vote your shares without instructions from
you. To instruct your broker to vote your shares, follow the directions provided
by your broker.
Q: SHOULD I SEND IN MY SHARE CERTIFICATES NOW?
A: No. After the merger is completed, your share certificates will represent
PXRE Group common shares. See page 30 for further information.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working to complete the merger as soon as possible. We hope to
complete the merger shortly after the PXRE Delaware stockholders' meeting,
assuming the required stockholder approval is obtained at the meeting.
Q: WHO CAN ANSWER MY OTHER QUESTIONS?
A: If you should have more questions about the merger, or would like
additional copies of this proxy statement/prospectus, you should contact:
Investor Relations or Treasurer
PXRE Corporation
399 Thornall Street
14th Floor
Edison, New Jersey 08837
Telephone: 732-906-6785
Fax Requests: Treasurer or Investor Relations
732-906-9157
E-Mail: [email protected]
7
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To understand the reorganization fully and for a more complete
description of the legal terms of the merger, you should read carefully this
entire document, including the annex, and the documents we have referred you to.
See "Where You Can Find More Information."
THE COMPANIES
PXRE CORPORATION
399 Thornall Street
14th Floor
Edison, New Jersey 08837
Telephone: 732-906-8100
PXRE Delaware and its subsidiaries provide reinsurance and insurance
products and services to a national and international market place, principally
on commercial and personal property and casualty risks, as well as marine and
aerospace risks. Such products and services are provided through national and
international underwriting and service operations in the United States, the
United Kingdom and Belgium.
PXRE GROUP LTD.
Clarendon House
2 Church Street
P.O. Box HM 666
Hamilton HM CX, Bermuda
Telephone: 441-295-1422
PXRE Group is a newly formed Bermuda company and is currently wholly-owned
by the PXRE Purpose Trust, which was formed to accomplish the proposed
reorganization. PXRE Group has no significant assets or capitalization and has
not engaged in any business or prior activities other than in connection with
the reorganization. As a result of the reorganization, it will become the
indirect parent holding company of PXRE Delaware. Please see description of the
reorganization beginning on page 27.
PXRE MERGER CORP.
399 Thornall Street
14th Floor
Edison, New Jersey 08837
Telephone: 732-906-8100
PXRE Merger Corp. is a newly formed wholly-owned Delaware subsidiary of
PXRE (Barbados) Ltd., a newly formed wholly-owned subsidiary of PXRE Group. PXRE
Merger Corp. was formed to accomplish the proposed reorganization. It has no
significant assets or capitalization and has not engaged in any business or
prior activities other than in connection with the reorganization. PXRE Merger
Corp. will be merged into PXRE Delaware, with PXRE Delaware being the surviving
entity. Please see description of the reorganization beginning on page 27.
THE REORGANIZATION
Pursuant to the reorganization, PXRE Group will become the indirect
parent holding company of PXRE Delaware through the merger of PXRE Merger Corp.
with and into PXRE Delaware. The reorganization will be effected through the
merger agreement.
8
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After the reorganization, PXRE Group will carry on the holding company
functions currently conducted by PXRE Delaware. It is also anticipated that,
following the reorganization, a newly formed, wholly-owned Bermuda subsidiary of
PXRE Group, PXRE Bermuda, will commence reinsurance underwriting and service
activities in Bermuda with an initial capital of at least $35 million.
Please see description of proposed financing beginning on page 50.
REASONS FOR THE REORGANIZATION
The establishment of a Bermuda holding company for PXRE Delaware with
underwriting and service operations in Bermuda and Barbados should allow PXRE to
benefit from more favorable business, regulatory, tax and financing environments
and provide PXRE with an enhanced ability to compete.
PXRE DELAWARE'S BOARD OF
DIRECTORS' RECOMMENDATION
The board of directors of PXRE Delaware has unanimously approved the
reorganization and recommends that you vote FOR the merger proposal.
RISKS RELATING TO AN INVESTMENT IN
PXRE GROUP
If the merger is completed, you will become a PXRE Group shareholder. An
investment in PXRE Group common shares entails a degree of risk. Before
approving the proposed merger you should consider carefully the "RISK FACTORS"
set forth beginning on page 17.
THE STOCKHOLDERS' MEETING
RECORD DATE; VOTING POWER (SEE PAGE 24)
You are entitled to vote at the PXRE Delaware stockholders' meeting if you
owned shares of PXRE Delaware common stock as of the close of business on August
13, 1999, the record date.
On the record date, there were 11,742,581 shares of PXRE Delaware common
stock outstanding. For each share of PXRE Delaware common stock that you own
on the record date, you will have one vote at the PXRE Delaware stockholders'
meeting to approve and adopt the merger proposal.
VOTES REQUIRED
The affirmative vote of a majority of the outstanding shares of PXRE
Delaware common stock is required to approve and adopt the merger proposal.
Directors and executive officers of PXRE Delaware and their affiliates
have voting control of approximately 7.4% of such PXRE Delaware common stock.
They intend to vote such shares in favor of the merger proposal.
THE MERGER
The merger agreement is attached as Annex A to this proxy
statement/prospectus. You are encouraged to read the merger agreement, as it is
the legal document that governs the merger.
9
<PAGE>
WHAT YOU WILL RECEIVE IN THE MERGER
As a result of the merger, each share of PXRE Delaware common stock that
you own will be automatically converted into and become one PXRE Group common
share.
OWNERSHIP OF PXRE GROUP AFTER THE MERGER
PXRE Delaware stockholders will become holders of PXRE Group common shares
in connection with the merger, representing 100% of the PXRE Group common shares
which will be outstanding after the merger.
EFFECT OF THE MERGER
Upon consummation of the merger, PXRE Group will become the indirect parent
holding company of PXRE Delaware.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
A number of PXRE Delaware's directors and executive officers and certain of
PXRE Delaware's stockholders may have interests in the merger that are different
from, or in addition to, your interests. See page 31 for further details.
CONDITIONS TO THE MERGER (SEE PAGE 30)
The merger will be completed only if various conditions are satisfied or
waived, including conditions relating to:
PXRE Delaware stockholders' approval; and
regulatory approvals and consents
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 29)
Either PXRE Delaware or PXRE Group may terminate the merger agreement at
any time before the merger is completed.
REGULATORY APPROVALS
The Connecticut insurance commissioner has exempted the merger from
Connecticut's insurance approval requirements.
PXRE GROUP COMMON SHARES (SEE PAGE 46)
Under PXRE Group's Bye-Laws, PXRE Group may refuse to recognize a transfer
of PXRE Group common shares which would result in a shareholder owning, directly
or indirectly, more than 9.9% of the voting power of PXRE Group's outstanding
shares or more than 9.9% of the outstanding shares of any class of PXRE Group's
stock. Ownership is broadly defined. See page 47 for further details.
A transferee will be permitted to promptly dispose of any PXRE Group shares
which violate this restriction. However, until a transfer of such shares has
been registered on PXRE Group's share transfer records, the transferor will be
deemed to own such shares for dividend, voting and reporting purposes.
In addition, if PXRE Group becomes aware of a shareholder owning more than
9.9% of the voting power of PXRE Group's outstanding shares after a transfer has
been registered, PXRE Group's Bye-Laws provide that ordinarily the voting rights
with respect to PXRE Group shares owned by such
10
<PAGE>
shareholder will be limited to a voting power of 9.9%, pursuant to a formula
specified in the Bye-Laws.
Subject to these limitations, each PXRE Group common share is entitled to
one vote on all matters submitted to a vote of holders of common shares. Holders
of common shares have no pre-emptive, redemption, conversion or sinking fund
rights, and are entitled in any liquidation of PXRE Group to share equally and
ratably in any PXRE Group assets remaining after payment of PXRE Group debts and
liabilities and the liquidation preference of any outstanding preferred shares.
COMPARISON OF RIGHTS OF STOCKHOLDERS
There are differences between the rights of stockholders under Delaware law
and Bermuda law. In addition, there are differences between PXRE Delaware's
certificate of incorporation and by-laws and PXRE Group's Memorandum of
Association and Bye-Laws. See page 53 for further details.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (SEE PAGE 33)
U.S. stockholders of PXRE Delaware will recognize gain, if any (but not
loss), for U.S. Federal income tax purposes, on the conversion of their PXRE
Delaware common stock into PXRE Group common shares. The gain that will be
recognized will be in an amount equal to the excess of the fair market value of
the PXRE Group common shares received in the reorganization over their tax basis
in their shares of PXRE Delaware common stock deemed exchanged for PXRE Group
common shares. See page 35 for reporting obligations in connection with the
reorganization which will apply to you if you are a "U.S. Holder".
The tax consequences of the reorganization and of the ownership of PXRE
Group common shares are complex and potentially adverse (as compared with the
ownership of common stock in a domestic corporation). For example, U.S.
corporate stockholders of PXRE Delaware will not be allowed the dividends
received deduction for dividends received from PXRE Group. YOU ARE URGED TO
CONSULT YOUR TAX ADVISOR FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE
REORGANIZATION TO YOU.
APPRAISAL RIGHTS (SEE PAGE 30)
Under Delaware law, PXRE Delaware stockholders will not have dissenters'
appraisal rights in connection with the reorganization.
ACCOUNTING TREATMENT
It is anticipated that the acquisition by PXRE Group of PXRE Delaware in
connection with the reorganization will be accounted for at historical cost in a
manner similar to a pooling of interests.
PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
Shares of PXRE Delaware common stock are traded on the New York Stock
Exchange under the symbol ("PXT"). On July 6, 1999, the last full trading day
prior to the public announcement of the proposed reorganization, shares of PXRE
Delaware
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common stock closed at $18 5/16. On August 16, 1999, the most recent practicable
date prior to the printing of this proxy statement/prospectus, shares of PXRE
Delaware common stock closed at $14 7/8.
There is currently no established public trading market for PXRE Group's
common shares. Immediately following the reorganization, PXRE Group's common
shares will be listed on the NYSE under the symbol "PXT", the same symbol under
which shares of PXRE Delaware common stock are currently listed.
DIVIDEND POLICY
PXRE Delaware paid quarterly cash dividends of $0.26 per share on its
common stock from the fourth quarter of 1998 through the second quarter of 1999.
On July 7, 1999 PXRE Delaware announced that it would pay a reduced quarterly
dividend of $0.06 per share beginning in the third quarter of 1999 in order to
build its capital in support of its ambitious ongoing diversification
strategies.
PXRE Group intends to pay quarterly cash dividends of $0.06 per common
share following completion of the reorganization. The declaration and payment of
dividends by PXRE Group will be at the discretion of the board of directors of
PXRE Group and will depend on many factors. See page 48 for further details.
PROPOSED FINANCING
Following the completion of the reorganization, PXRE Group intends to
capitalize PXRE Bermuda with an initial capital of at least $35 million. Such
additional capital may be raised in either the public or private markets.
Although the terms of such financing are not presently ascertainable, it is
expected that the financing will involve an offering of either PXRE Group
preferred shares or common shares or rights or warrants to acquire preferred
or common shares, or a combination of such securities.
The PXRE Group common shares offered hereby will be subject to the
limitations and prior rights associated with any PXRE Group preferred shares,
including dividend rights, redemption rights, conversion rights and liquidation
rights. An offering involving PXRE Group common shares (including PXRE Group
preferred shares convertible into PXRE Group common shares) or rights or
warrants to acquire such shares at less than net tangible book value (which was
$26.43 per share at June 30, 1999 based on net book value plus negative
goodwill) would cause you to incur dilution.
In determining the terms of such financing, the board of directors of PXRE
Group intends to consider, among other things, the historic and then current
market prices of PXRE Group common shares, the book value of PXRE Group common
shares as compared to its market price, PXRE Group's earnings and prospects,
PXRE Group's actual and pro forma ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred dividends, ratings of rating
agencies, insurance and reinsurance business and regulatory considerations,
market conditions, shareholder interests, and PXRE Group's need for capital.
12
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As an alternative to, or in conjunction with, such financing, PXRE Group
may obtain such funds, or a portion thereof, from internal sources. Any such
transaction may require insurance regulatory approval. We cannot predict whether
any required approval will be obtained or whether the required approval will
include conditions that would be detrimental to PXRE Group.
13
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SELECTED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial information
of PXRE Delaware as of and for each of the years in the five year period ended
December 31, 1998 and as of and for each of the six month periods ended June 30,
1999 and 1998. The selected consolidated financial information of PXRE Delaware
for each of the years in the five year period ended December 31, 1998 are
derived from PXRE Delaware's audited consolidated financial statements. The
financial data for the six months ended June 30, 1999 and 1998 are derived from
PXRE Delaware's unaudited consolidated financial statements and include, in the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the data for the periods. The results
for the six months ended June 30, 1999 may not be indicative of the results for
the full year. The following data should be read in conjunction with the
consolidated financial statements of PXRE Delaware and other financial
information appearing elsewhere and incorporated by reference in this proxy
statement/prospectus.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------- -----------------------------------------------------------
(unaudited)
1999 1998 1998 1997 1996 1995 1994
(1)(2) (1)(2) (1)(2) (1)(2) (2)
------ ------ ------ ------ ---- ---- ----
(in thousands, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross premiums written $ 101,452 $ 65,262 $ 136,215 $ 126,232 $ 114,348 $ 155,380 $ 179,684
Premiums ceded (33,851) (21,537) (47,521) (26,177) (46,630) (57,744) (71,166)
--------- --------- --------- --------- --------- --------- ---------
Net premiums written 67,601 43,725 88,694 100,055 67,718 97,636 108,518
Change in unearned premiums (15,076) (2,633) 3,692 (8,640) 5,078 (494) 2,083
--------- --------- --------- --------- --------- --------- ---------
Net premiums earned 52,525 41,092 92,386 91,415 72,796 97,142 110,601
Net investment income 18,123 11,998 19,612 31,191 16,782 14,730 13,786
Net realized investment (losses) gains (1,383) 1,652 (3,862) 2,467 94 85 (1,164)
Management fee(2) 1,300 1,505 2,172 3,006 6,032 6,417 6,992
--------- --------- --------- --------- --------- --------- ---------
Total revenues 70,566 56,247 110,308 128,079 95,704 118,374 130,215
--------- --------- --------- --------- --------- --------- ---------
Losses and loss expenses incurred 36,868 6,522 57,793 12,491 18,564 34,716 52,647
Commissions and brokerage 12,546 8,280 20,563 19,138 12,874 13,251 15,026
Other operating expenses 13,318 7,951 19,313 15,716 12,262 11,237 8,365
Interest expense 1,674 1,146 1,395 3,325 6,957 7,143 7,789
Minority interest in consolidated
subsidiary 4,326 4,464 8,928 8,184 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total losses and expenses 68,732 28,363 107,992 58,854 50,657 66,347 83,827
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes, extraordinary
item and equity in net earnings of TREX 1,834 27,884 2,316 69,225 45,047 52,027 46,388
Equity in net earnings of TREX(2) -- -- -- -- 3,898 5,948 4,141
Income tax (benefit) provision (450) 8,708 (1,206) 22,198 15,644 18,189 15,700
--------- --------- --------- --------- --------- --------- ---------
Net income before extraordinary loss 2,284 19,176 3,522 47,027 33,301 39,786 34,829
Extraordinary loss on debt redemption, net
of tax -- -- 843 2,774 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income $ 2,284 $ 19,176 $ 2,679 $ 44,253 $ 33,301 $ 39,786 $ 34,829
========= ========= ========= ========= ========= ========= =========
Preferred stock dividend(3) -- -- -- -- -- 599 2,005
========= ========= ========= ========= ========= ========= =========
Net income available to common
stockholders $ 2,284 $ 19,176 $ 2,679 $ 44,253 $ 33,301 $ 39,187 $ 32,824
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges(4) 1.29 5.77 1.09 6.59 7.15 7.90 6.73
Ratio of earnings to combined fixed
charges and preferred dividends(4) 1.29 5.77 1.09 6.59 7.15 7.04 4.90
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------------- ------------------------------------------------------------
(unaudited)
1999 1998 1998 1997 1996 1995 1994
(1)(2) (1)(2) (1)(2) (1)(2) (2)
------ ------ ------ ------ ---- ---- ----
(in thousands, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Basic earnings per common share:
Net income before
extraordinary item $ 0.20 $ 1.40 $ 0.26 $ 3.41 $ 3.73 $ 4.81 $ 4.99
Extraordinary loss -- -- 0.06 0.20 -- -- --
------- -------- ------- ------- ------- ------- -------
Net income $ 0.20 $ 1.40 $ 0.20 $ 3.21 $ 3.73 $ 4.81 $ 4.99
======= ======== ======= ======= ======= ======= =======
Average common shares outstanding
(2)(3) 11,694 13,677 13,339 13,776 8,922 8,150 6,580
======= ======== ======= ======= ======= ======= =======
Diluted earnings per common share:
Net income before
extraordinary item $ 0.19 $ 1.39 $ 0.26 $ 3.39 $ 3.69 $ 4.52 $ 3.99
Extraordinary loss -- -- 0.06 0.20 -- -- --
------- -------- ------- ------- ------- ------- -------
Net income $ 0.19 $ 1.39 $ 0.20 $ 3.19 $ 3.69 $ 4.52 $ 3.99
======= ======== ======= ======= ======= ======= =======
Average common shares outstanding(2) 11,809 13,755 13,452 13,893 9,020 8,812 8,719
======= ======== ======= ======= ======= ======= =======
Cash dividends per common share(5) $ 0.26 $ 0.25 $ 1.01 $ 0.88 $ 0.75 $ 0.63 $ 0.375
Other Operating Data:
GAAP loss ratio 70.2% 15.9% 62.6% 13.7% 25.5% 35.7% 47.6%
GAAP underwriting expense ratio 46.8% 35.8% 40.9% 34.8% 26.2% 18.6% 14.8%
------- -------- ------- ------- ------- ------- -------
GAAP combined ratio 117.0% 51.7% 103.5% 48.5% 51.7% 54.3% 62.4%
======= ======== ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
As of June 30, As of December 31,
---------------------- --------------------------------------------------------------
(unaudited)
1999 1998 1998 1997 1996 1995 1994
------ ------ ------ ------ ---- ---- ----
(in thousands, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Cash and investments $ 482,394 $ 518,740 $490,594 $527,738 $467,078 $269,089 $231,789
Total assets 639,062 619,175 632,691 608,172 543,324 396,084 353,794
Losses and loss expenses 101,640 46,409 102,592 57,189 70,977 72,719 81,836
Minority interest in consolidated
subsidiary 99,519 99,515 99,517 99,513 -- -- --
Debt/notes payable 50,000 20,414 50,000 21,414 64,725 67,775 69,700
Total stockholders' equity 309,002 392,665 334,376 386,688 357,678 211,162 166,771
Book value per common share $ 26.33 $ 28.57 $ 27.13 $ 28.10 $ 25.63 $ 24.15 $ 21.27
Statutory capital and surplus of
PXRE Reinsurance $ 436,343 $ 472,319 $447,229 $451,321 $400,133 $250,231 $211,988
</TABLE>
- ------------------
(1) The U.K. operations of PXRE Limited and PXRE Managing Agency are included in
the consolidated results on a one quarter lag basis beginning in 1997.
(2) On December 11, 1996, PXRE Delaware merged with Transnational Re Corporation
("TREX"). The merger has been accounted for as a purchase. Accordingly, TREX
has been included in PXRE Delaware's consolidated results of operations from
the date of acquisition, which resulted in incremental earnings of
$1,253,000 in 1996. For 1994 and 1995 and for the period from January 1,
1996 until December 11, 1996, PXRE Delaware recorded equity in net earnings
of TREX. Diluted average shares outstanding reflects the 5,680,256 weighted
shares issued to holders of TREX common shares in connection with the
merger. Included in management fee was $2,512,000, $3,526,000 and $3,364,000
in 1996, 1995 and 1994, respectively, earned from TREX prior to the merger.
If the merger had taken place at the beginning of 1996 and 1995,
consolidated revenues would have been $153,410,000 and $193,972,000 for 1996
and 1995, respectively. Consolidated pro forma net income and diluted net
income per share would have been $49,161,000 and $3.42 in 1996 and
$60,755,000 and $4.19 in 1995. Such pro forma amounts are not necessarily
indicative of what the actual consolidated results might have been if the
merger had been effected prior to December 11, 1996.
(3) During 1995, all of PXRE Delaware's outstanding shares of Series A
Cumulative Convertible Preferred Stock were converted into shares of PXRE
Delaware's common stock. Until 1995, these convertible preferred shares were
the principal reason for the difference between basic and diluted earnings
per share.
15
<PAGE>
(4) The historical ratios of earnings to fixed charges were determined by
dividing consolidated earnings by total fixed charges. For purposes of these
computations (i) earnings consist of consolidated income before considering
income taxes, fixed charges and minority interest and (ii) fixed charges
consist of interest on indebtedness and that portion of rentals which is
deemed by PXRE Delaware's management to be an appropriate interest factor.
The historical ratios of earnings to combined fixed charges and preferred
dividends were determined by dividing consolidated earnings by total fixed
charges and preferred dividends.
(5) As part of the reorganization, it was announced that the 3rd quarter
dividend would be reduced to $.06 per share.
16
<PAGE>
Financial information with respect to PXRE Group is not presented because
PXRE Group has no significant assets or capitalization and has not engaged in
any business or prior activities other than in connection with the
reorganization. See "Index to Balance Sheet."
PRO FORMA COMBINED FINANCIAL DATA
Pro forma consolidated condensed statements of income for PXRE Group are
not presented because the pro forma consolidated condensed statements of income
of PXRE Group for the six months ended June 30, 1999 and the three years ended
December 31, 1998 would be identical to the historical Consolidated Statements
of Income of PXRE Delaware as reported in PXRE Delaware's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999, and historical Consolidated
Statements of Income of PXRE Delaware as reported in PXRE Delaware's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, respectively,
which are incorporated herein by reference.
RISK FACTORS
If the merger is completed, shares of PXRE Delaware common stock will be
converted into PXRE Group common shares. In addition to the other information
contained in this proxy statement/prospectus, you should carefully consider the
following risk factors in considering whether to vote in favor of the merger
proposal and an investment in PXRE Group.
BUSINESS CONSIDERATIONS
PXRE Delaware's business is, and PXRE Group's business will be, subject to
all of the operating risks normally associated with the property and casualty
reinsurance and insurance business. The industry is experiencing an extended
period of soft market conditions characterized by inadequate pricing. The
industry is also consolidating through mergers and other acquisitions. PXRE
Delaware competes, and PXRE Group will compete, with numerous companies, many of
which have substantially greater financial, marketing and management resources.
Since its formation more than a decade ago, PXRE Delaware has specialized
in property reinsurance, including a strong focus on catastrophe-related
products. Coverage terms for these products have been deteriorating in recent
years, and PXRE Delaware has reduced commitments on marginally priced business.
Meanwhile, PXRE Delaware has adopted an ambitious, diversification strategy
involving:
the establishment of a direct presence in the Lloyd's of London
market;
17
<PAGE>
the addition of a reinsurance platform offering primarily casualty
products directly to customers;
the addition of an international broker market reinsurance platform
for property and casualty risks;
the start-up of an excess and surplus lines insurance company;
an acceleration of business offerings to one of its managed business
participants; and
the formation of a finite reinsurance unit.
The reorganization, including the start-up of underwriting and service
operations in Bermuda and Barbados, is an additional diversification initiative.
This strategy involves execution risk, particularly in light of the highly
competitive nature of the industry.
START-UP OPERATIONS
The reorganization involves the start-up of new operations primarily in
Bermuda, as well as in Barbados. PXRE Group and PXRE Barbados are newly formed
and PXRE Bermuda is in the process of being formed. Businesses which are
starting-up or in their initial stages of development present business and
financial risks. They must develop business relations, establish operating
procedures, hire staff, obtain facilities and complete other tasks appropriate
for the conduct of their intended business activities. There can be no assurance
that the companies will be successful in this regard. Their success will depend
in part upon the continued service of senior executives and their ability to
attract and retain additional executives, underwriting personnel and other
employees. There can be no assurances that the companies will be successful in
attracting and retaining such persons.
In addition, the start-up of new operations in Bermuda and Barbados will
result in additional expenses, currently estimated to be approximately $1.5
million annually, and will require a significant time commitment by certain
senior executives.
PROPOSED FINANCING
Following completion of the reorganization, PXRE Group intends to
capitalize PXRE Bermuda with an initial capital of at least $35 million,
utilizing funds to be raised in either the public or private markets. Funds
from internal sources may also be utilized. See "Description of Authorized
Shares of PXRE Group--Proposed Financing".
No assurance can be given that PXRE Group will be able to capitalize PXRE
Bermuda on satisfactory terms, if at all.
18
<PAGE>
ACTIVITIES OF PXRE BERMUDA AFTER THE REORGANIZATION
Even if such financing is consummated, PXRE Bermuda's small initial
capitalization will limit the amount of reinsurance and insurance business it
can conduct. Initially, that business is expected to be principally reinsuring
business of PXRE Delaware's reinsurance and insurance subsidiaries. Such
business, as well as any other business between PXRE Group's regulated and
non-regulated entities, must be on arm's length financial terms, further
limiting the ability of PXRE Bermuda to generate profits.
PXRE Delaware's reinsurance and insurance subsidiaries are rated "A"
(Excellent) by A.M. Best Company. PXRE Delaware's Lloyd's Syndicate enjoys the
benefit of ratings of Lloyd's, which has been rated "A" (Excellent) by A.M. Best
and has been assigned an A+ claims paying ability rating by Standard & Poor's
Corporation. PXRE Bermuda initially will have only a limited capitalization and
may not be rated by A.M. Best or by any other insurance rating agency.
Insurance ratings are used by insurers and reinsurance intermediaries
as an important means of assessing the financial strength and quality of
reinsurers. In addition, a company's own rating may be adversely affected by the
lack of a rating of its reinsurer. Therefore, the lack of a rating may dissuade
a company from reinsuring with PXRE Bermuda and may influence a company to
reinsure with a competitor of PXRE Bermuda that has an insurance rating.
PXRE Bermuda does not intend to be licensed or admitted as an insurer
in any jurisdiction other than Bermuda. Many jurisdictions do not permit
insurance companies to take credit for reinsurance obtained from unlicensed or
non-admitted insurers on their statutory financial statements unless security is
posted. Accordingly, PXRE Bermuda's reinsurance contracts may frequently require
it to post a letter of credit or other security. PXRE Bermuda intends to seek,
and believes it will obtain, a letter of credit facility. Nevertheless, it does
not yet have one and no assurances can be made that it will be able to obtain a
credit facility on terms favorable to PXRE Bermuda. The absence of a rating or
non-admitted status in any jurisdiction could have a material adverse effect on
PXRE Bermuda's ability to compete.
FOREIGN CURRENCY FLUCTUATIONS
PXRE Group's functional currency is the U.S. dollar. However, PXRE
Delaware currently conducts, and PXRE Group expects to conduct, a portion of its
business in currencies other than U.S. dollars. Also, PXRE Delaware currently
maintains, and PXRE Group expects to maintain, a portion of its investment
portfolio in investments denominated in currencies other than U.S. dollars.
Accordingly, PXRE Group expects that it may experience exchange gains and
losses, which will in turn affect its statement of operations.
A substantial portion of the investments of PXRE Delaware are, and a
substantial portion of the investments of PXRE Group are expected to be, in U.S.
dollar-denominated instruments.
19
<PAGE>
Nevertheless, PXRE Group will be exposed to significant underwriting losses in
currencies other than United States dollars. PXRE Group does not intend to
directly hedge its currency exposure with respect to catastrophe losses prior to
the occurrence of an event which may give rise to a claim. Exchange rate
fluctuations may increase PXRE Group's losses as claim amounts are settled.
REGULATION OF PXRE BERMUDA
PXRE Bermuda does not intend to be admitted to do business in any
jurisdiction except Bermuda. The insurance laws of each state of the United
States and of many non-U.S. jurisdictions regulate the sale of insurance and
reinsurance within their jurisdiction by foreign insurers, such as PXRE Bermuda.
PXRE Bermuda does not intend to maintain an office or to solicit, advertise,
settle claims or conduct other insurance activities in any jurisdiction other
than Bermuda where the conduct of such activities would require that PXRE
Bermuda be so admitted. Accordingly, PXRE Bermuda does not believe that it will
be in violation of insurance laws of any state in the United States or of any
other country. There can be no assurances, however, that inquiries or challenges
relating to the activities of PXRE Bermuda or PXRE Group will not be raised in
the future. Also, there can be no assurances that PXRE Bermuda's location,
regulatory status or restrictions on its activities resulting therefrom will not
adversely affect its ability to conduct its business.
Recently, the insurance and reinsurance regulatory framework has been
subject to increased scrutiny in many jurisdictions, including the United States
and various states within the United States. It is not possible to predict the
future impact of changing law or regulation on the operations of PXRE Bermuda.
However, such changes could have a material adverse effect on PXRE Group or the
insurance industry in general.
In general, the Bermuda laws applicable to PXRE Bermuda are less
restrictive than those that would be applicable to PXRE Bermuda were it subject
to the insurance laws of any state in the United States. No assurances can be
given that if PXRE Bermuda were to become subject to any such laws of the United
States or any state thereof or of any other country at any time in the future,
it would be in compliance with such laws.
HOLDING COMPANY STRUCTURE AND DIVIDENDS
PXRE Group, like PXRE Delaware, will be a holding company with no
operations or significant assets other than through its ownership of the capital
stock of its subsidiaries. Future dividends and other permitted payments from
such subsidiaries are expected to be PXRE Group's principal source of funds to
pay expenses and dividends. Future dividends and other permitted payments from
PXRE Delaware to PXRE Barbados are expected to be subject to U.S. withholding
taxes at the rate of 5% (reduced from 30% under the tax convention between the
United States and Barbados) and a 2 1/2% Barbados corporate income tax. PXRE
Group's subsidiaries' ability to pay dividends, as well as PXRE Group's ability
to pay dividends, is, and
20
<PAGE>
is, expected to be, subject to regulatory, contractual and other constraints.
See "Description of Authorized Shares of PXRE Group--Dividend Policy;--Credit
Agreement; and --Proposed Financing" and "Regulation of PXRE Bermuda."
TAX MATTERS
PXRE Group and its non-U.S. subsidiaries intend to operate their
business in a manner that will not cause them to be treated as engaged in a
trade or business in the United States and, thus, will not require them to pay
U.S. federal corporate income taxes (other than withholding taxes on certain
U.S. source investment income and excise taxes on reinsurance premiums).
However, because there is uncertainty as to the activities which constitute
being engaged in a trade or business within the United States, there can be no
assurances that the U.S. Internal Revenue Service will not contend successfully
that PXRE Group or a non-U.S. subsidiary is engaged in a trade or business in
the United States. If PXRE Group or any of its non-U.S. subsidiaries were
subject to U.S. income tax, PXRE Group's shareholders' equity and earnings could
be materially adversely affected. See "Certain Tax Considerations--Taxation of
the Company and its Subsidiaries--United States."
If PXRE Bermuda has "related person insurance income" ("RPII") for
any fiscal year, determined after taking into account certain de minimis
exceptions, U.S. persons who own shares of PXRE Group (directly or through
foreign entities) on the last day of such fiscal year may be required to include
in their gross income for U.S. tax purposes a proportionate share of such RPII.
RPII would include income of PXRE Bermuda attributable to insurance or
reinsurance policies where the direct or indirect insureds are U.S. persons who
own shares of PXRE Group (directly or through foreign entities) or are related
to such U.S. persons. RPII would be included in a U.S. person's gross income
whether or not such person is a policyholder. While PXRE Group does not expect
that PXRE Bermuda will have RPII, after taking into account the de minimis
exceptions, there can be no assurances that this will be the case. See "Certain
Tax Considerations--Taxation of Shareholders--United States."
In addition to the tax consequences listed above, there are other
complex and potentially adverse tax consequences attendant to the ownership of
the shares of a foreign corporation, such as PXRE Group, that is a holding
company of a foreign insurance company. For a discussion of these consequences,
please see "Certain Tax Considerations-- Taxation of Shareholders-- United
States."
ABSENCE OF PRIOR PUBLIC MARKET
Currently, there is no established trading market for PXRE Group
common shares and, although application is being made to list PXRE Group
common shares for trading on the NYSE, there can be no assurance that an active
trading market will develop or will be sustained.
LIMITATIONS ON VOTING AND OWNERSHIP;
21
<PAGE>
ANTI-TAKEOVER CONSIDERATIONS
Under PXRE Group's Bye-Laws, subject to certain exceptions and to
waiver by PXRE Group's board of directors on a case by case basis, no transfer
of PXRE Group shares is permitted if such transfer would result in a shareholder
owning, directly or indirectly, more than 9.9% of the voting power of the
outstanding shares, including common shares, of PXRE Group or more than 9.9% of
the outstanding shares of any class of PXRE Group's stock. Ownership is broadly
defined in PXRE Group's Bye-Laws.
PXRE Group may refuse to register any such transfer on PXRE Group's
share transfer records. A transferee will be permitted to promptly dispose of
any PXRE Group shares purchased which violate the restriction and as to the
transfer of which registration is refused. The transferor of such PXRE Group
shares will be deemed to own such shares for dividend, voting and reporting
purposes until a transfer of such shares has been so registered.
In addition, in the event that PXRE Group becomes aware of a
shareholder owning more than 9.9% of the voting power of PXRE Group's
outstanding shares after a transfer of shares has been registered, PXRE Group's
Bye-Laws provide that, subject to the same exceptions and waiver procedures,
the voting rights with respect to PXRE Group shares owned by any such
shareholder will be limited to a voting power of 9.9%. The voting rights with
respect to all shares held by such person in excess of the 9.9% limitation will
be allocated to the other holders of PXRE Group common shares. Such allocation
will be pro rata based on the number of PXRE Group common shares held by all
such other holders of PXRE Group common shares, subject only to the further
limitation that no shareholder allocated any such voting rights may exceed the
9.9% limitation as a result of such allocation. See "Description of Authorized
Shares of PXRE Group--Common Shares and--The Bye-Laws."
These provisions, and the provisions of PXRE Group's Bye-laws
providing for a staggered board of directors, may have the effect of rendering
more difficult or discouraging unsolicited takeover bids from third parties or
the removal of incumbent management of PXRE Group.
SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS
PXRE Group is a Bermuda company and certain of its officers and
directors may be residents of various jurisdictions outside the United States.
All or a substantial portion of the assets of such officers and directors and
certain of the assets of PXRE Group are or may be located in jurisdictions
outside the United States. PXRE Group has irrevocably agreed that it may be
served with process in New York, New York with respect to actions based on
offers and sales of PXRE Group common shares made hereby.
Nevertheless, it could be difficult for you to effect service of
process within the United States on directors and officers of PXRE Group who
reside outside the United States or to recover against PXRE Group or such
directors and officers on judgments of U.S. courts predicated upon civil
liabilities under U.S. federal securities laws.
22
<PAGE>
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains "forward-looking statements"
within the meaning of the federal securities laws. The words "anticipates,"
"estimates," "projects," "forecasts," "goals," "believes," "expects," "intends,"
and similar expressions are intended to identify such forward-looking
statements. Forward-looking statements are subject to numerous risks and
uncertainties. The following are some important factors that could cause actual
results to differ materially from those in forward-looking statements:
the frequency and severity of catastrophic events;
changes in the level of competition in the reinsurance or primary
insurance markets that impact the volume or profitability of business
(these changes include the intensity of price competition, the entry
of new competitors, existing competitors exiting the market and
competitors' development of new products);
changes in the demand for reinsurance, including changes in the
amount of ceding companies' retentions and changes in the demand for
excess and surplus lines insurance coverages;
the ability of PXRE Group to execute its diversification initiatives
in markets in which PXRE Group has not had a significant presence;
adverse development on loss reserves related to business written in
prior years;
lower than estimated retrocessional recoveries on unpaid losses,
including the effects of losses due to a decline in the
creditworthiness of PXRE Group's retrocessionaires;
increases in interest rates, which cause a reduction in the market
value of PXRE Group's interest rate sensitive investments, including
its fixed income investment portfolio;
decreases in interest rates causing a reduction of income earned on
new cash flow from operations and the reinvestment of the proceeds
from sales, calls or maturities of existing investments;
market fluctuations in equity securities and securities underlying
limited partnership investments;
foreign currency fluctuations resulting in exchange gains or losses.
changes in the composition of PXRE Group's investment portfolio;
changes in tax laws, tax treaties, tax rules and interpretations; and
23
<PAGE>
changes in management's evaluation of the impact of the Year 2000
problem on its operations.
In addition to the factors outlined above that are directly related
to PXRE Group's business, PXRE Group is also subject to general business risks,
including adverse legislation and regulation, adverse publicity or news
coverage, changes in general economic factors and the loss of key employees.
PXRE Group's actual results, performance or achievement could differ
materially from those expressed in, or implied by, forward-looking statements
and, accordingly, no assurances can be given that any of the events anticipated
by the forward-looking statements will transpire or occur, or if any of them do
so, what impact they will have on the results of operations and financial
condition of PXRE Group.
THE STOCKHOLDERS' MEETING
This proxy statement/prospectus is furnished in connection with the
solicitation of proxies from the holders of PXRE Delaware common stock by the
board of directors of PXRE Delaware for use at a stockholders' meeting at which
the merger proposal will be voted upon. This proxy statement/prospectus and
accompanying form of proxy are first being mailed to the PXRE Delaware
stockholders on or about August 19, 1999.
TIME AND PLACE; PURPOSE
The PXRE Delaware stockholders' meeting will be held at the offices
of PXRE Corporation, 399 Thornall Street, 14th Floor, Edison, New Jersey 08837
on October 5, 1999, starting at 10:00 a.m., local time. At the meeting, PXRE
Delaware stockholders will be asked to consider and vote upon the proposed
merger.
VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL
The board of directors of PXRE Delaware has fixed the close of
business on August 13, 1999 as the record date for PXRE Delaware stockholders
entitled to notice of and to vote at the PXRE Delaware stockholders' meeting.
The only outstanding voting securities of PXRE Delaware are its common stock.
Only holders of record of PXRE Delaware common stock on the record date are
entitled to notice of, and to vote at, the PXRE Delaware stockholders' meeting.
Each holder of record, as of the record date, of PXRE Delaware common stock is
entitled to cast one vote per share on the merger proposal. On the record date,
there were 11,742,581 shares of PXRE Delaware common stock outstanding and
entitled to vote at the PXRE Delaware stockholders' meeting, held by
approximately 180 stockholders of record and, based on PXRE Delaware's best
information, approximately 1,525 beneficial owners. The
24
<PAGE>
affirmative vote of the holders of a majority of the shares of PXRE Delaware
common stock outstanding on the record date are required to approve the proposed
merger.
On the record date, the directors and executive officers of PXRE
Delaware and their affiliates had voting control of 869,606 shares of PXRE
Delaware common stock (including 636,700 shares owned by Phoenix Home Life
Mutual Insurance Company) representing approximately 7.4% of the shares of PXRE
Delaware common stock outstanding on the record date. Such directors and
executive officers have indicated their intention to vote or direct the vote of
such shares in favor of the merger proposal.
VOTING OF PROXIES
All shares of PXRE Delaware common stock represented by properly
executed proxies received prior to or at the PXRE Delaware stockholders' meeting
and not revoked, will be voted in accordance with the instructions indicated in
such proxies. If no instructions are indicated on a properly executed returned
proxy, such proxies will be voted FOR the approval of the merger proposal.
It is not expected that any matter other than those referred to
herein will be brought before the PXRE Delaware stockholders' meeting. If,
however, other matters are properly presented for a vote, it is the intention of
the persons named in the proxies to vote the shares to which said proxies relate
in accordance with their judgment with respect to such matters.
The persons named as proxies by a PXRE Delaware stockholder may
propose and vote for one or more adjournments of the PXRE Delaware stockholders'
meeting to permit further solicitations of proxies in favor of any proposals.
However, no proxy which is voted against the approval of the merger agreement
will be voted in favor of any such adjournment.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by
filing, including by telegram or telecopy, with the Treasurer of PXRE Delaware
before the taking of the vote at the meeting, a written notice of revocation
bearing a later date than the date of the proxy or a later-dated proxy relating
to the same shares. Proxies may also be revoked by attending the meeting and
voting in person. In order to vote in person at the PXRE Delaware stockholders'
meeting, PXRE Delaware stockholders must attend the PXRE Delaware stockholders'
meeting and cast their votes in accordance with the voting procedures
established for such meeting. Attendance at a meeting will not, in and of
itself, constitute a revocation of a proxy. Any written notice of revocation or
subsequent proxy must be sent so as to be delivered at or before the taking of
the vote at the meeting as follows:
Mr. Sanford M. Kimmel
Senior Vice President and Treasurer
PXRE Corporation
25
<PAGE>
399 Thornall Street, 14th Floor
Edison, NJ 08837
PXRE Delaware stockholders who require assistance in changing or
revoking a proxy should contact PXRE Delaware's Treasurer at the address or
phone number provided in this proxy statement/prospectus under the caption
"Questions and Answers About the Reorganization--Who Can Answer My Other
Questions."
PXRE Delaware stockholders may abstain from voting for the
merger proposal. Since the favorable vote of a majority of the outstanding
shares of PXRE Delaware common stock is required to approve the proposal, a
proxy marked "WITHHELD" with respect thereto will effectively be counted as a
vote "AGAINST" the merger proposal. Similarly, the failure of a PXRE Delaware
stockholder to return a proxy will effectively result in the stockholder's votes
being counted "AGAINST" the proposal.
Under NYSE rules, brokers who hold shares in street names for
customers have the authority to vote on certain "routine" proposals when they
have not received instructions from beneficial owners. However, brokers are
precluded from exercising their voting discretion with respect to the approval
and adoption of non-routine matters such as the merger proposal. Absent specific
instructions from the beneficial owner of such shares, brokers are not empowered
to vote such shares with respect to the approval and adoption of such proposals.
The result is commonly referred to as a "broker non-vote." Since the affirmative
votes described above are required for approval of the merger proposal, a
"broker non-vote" will effectively result in the shares being counted "AGAINST"
the proposal.
PXRE Delaware may retain a proxy solicitation firm to aid in the
solicitation of proxies and to verify certain records related to the
solicitations. If a proxy solicitation firm is so retained, PXRE Delaware will
pay such firm customary fees and expense reimbursement for such services. To the
extent necessary in order to ensure sufficient representation at the PXRE
Delaware stockholders' meeting, PXRE Delaware may request by telephone or
telegram the return of proxy cards. The extent to which this will be necessary
depends entirely upon how promptly proxy cards are returned. PXRE Delaware
stockholders are urged to send in their proxies without delay.
PXRE DELAWARE STOCKHOLDERS SHOULD NOT SEND IN ANY SHARE CERTIFICATES
WITH THEIR PROXY CARDS. AFTER THE MERGER IS COMPLETED, THOSE CERTIFICATES WILL
REPRESENT PXRE GROUP COMMON SHARES.
PXRE DELAWARE AND PXRE GROUP
PXRE Delaware and its subsidiaries provide reinsurance and insurance
products and services to a national and international market place, principally
on commercial and personal property and casualty risks, as well as marine and
aerospace risks. Such products are provided
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through national and international underwriting and service operations in the
United States, the United Kingdom and Belgium.
PXRE Group is a newly formed Bermuda company and is currently
wholly-owned by the PXRE Purpose Trust, which was formed to accomplish the
proposed reorganization. PXRE Group was formed to become the parent holding
company of PXRE Delaware, through a newly formed Barbados company, PXRE
Barbados, which is wholly-owned by PXRE Group. After the consummation of the
reorganization, PXRE Delaware will become a subsidiary of PXRE Barbados, and an
indirect subsidiary of PXRE Group, and the stockholders of PXRE Delaware will
become shareholders of PXRE Group. In connection with the reorganization, PXRE
Group will repurchase for $1.00 per share, or $12,000 in the aggregate, the
12,000 PXRE Group common shares currently owned by the PXRE Purpose Trust. PXRE
Group is forming a wholly-owned subsidiary, PXRE Bermuda, to conduct
underwriting and service operations in Bermuda, and PXRE Barbados has formed a
wholly-owned subsidiary, PXRE Merger Corp., specifically to effect the
reorganization. None of PXRE Group, PXRE Bermuda, PXRE Barbados or PXRE Merger
Corp. has any significant assets or capitalization nor has any of them engaged
in any business or prior activities other than in connection with the
reorganization.
THE REORGANIZATION
GENERAL
The Board of Directors of PXRE Delaware has unanimously approved, and
recommends that the stockholders of PXRE Delaware adopt, a proposed corporate
reorganization pursuant to which PXRE Group, a Bermuda company, will become the
indirect parent holding company of PXRE Delaware. It is proposed that the
reorganization be effected pursuant to the merger agreement. After the
consummation of the reorganization, PXRE Group will continue to carry on the
holding company functions currently conducted by PXRE Delaware and, in addition,
PXRE Group intends to commence underwriting and service operations in Bermuda
through PXRE Bermuda and to explore alternative risk/capital market initiatives
both in Bermuda and in Barbados, where PXRE Group has established a presence
through PXRE Barbados.
BACKGROUND AND REASONS FOR THE REORGANIZATION
International activities of PXRE Delaware and its subsidiaries are a
significant part of PXRE Delaware's activities. PXRE Delaware and its
subsidiaries have offices in Belgium and the United Kingdom, as well as in the
United States. In 1998, approximately 81% of the gross premiums written by PXRE
Delaware and its subsidiaries represented non-U.S. based risks or risks written
by non-U.S. based reinsureds, principally in the United Kingdom, Continental
Europe, Australia and Asia. Meanwhile, PXRE Delaware has not had any operations
in Bermuda, which has become the third largest insurance market after the United
States and the United Kingdom for property catastrophe and high excess liability
coverages.
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The Board of Directors of PXRE Delaware believes that the
establishment of a Bermuda holding company for PXRE Delaware and its
subsidiaries with underwriting and service operations in Bermuda and Barbados
should allow PXRE to benefit from more favorable business, regulatory, tax and
financing environments and to benefit from an enhanced ability to compete.
Accordingly, the Board of Directors of PXRE Delaware believes the reorganization
and participation in the Bermuda market should have a favorable impact on the
conduct of PXRE's future business operations. In particular, the Board of
Directors of PXRE Delaware is recommending the reorganization for the following
reasons:
(a) The Board believes that Bermuda is an important insurance market which
attracts a significant deal flow because of its favorable business, regulatory
and tax environments, and having a presence in Bermuda is important as a
competitive matter. The Board also believes that a presence in Barbados, which
also provides favorable business, regulatory and tax environments, may prove to
be advantageous with respect to possible future alternative risk/capital market
initiatives and for the holding of the stock of other PXRE Group subsidiaries.
(b) The Board believes that the establishment of Bermuda and Barbados operations
will, over a period of time, reduce corporate income taxes because, unlike the
U.S. tax system which imposes corporate income tax on the worldwide income of
United States corporations, Bermuda and Barbados generally impose no corporate
income taxes on foreign income. Income taxes will therefore be reduced to the
extent operations are conducted after the reorganization outside of the U.S. and
outside of other countries with significant corporate taxes.
(c) The Board believes that the change of domicile may, in certain
circumstances, have a favorable effect on its ability to raise additional
capital in the future from non-U.S. investors. The U.S. Internal Revenue Code
currently provides for the payment of certain estate taxes in respect of the
value of shares in a U.S. corporation owned by a non-U.S. investor. In addition,
the distributions with respect to stock in a U.S. corporation to non-resident
aliens are generally subject to certain withholding taxes under the Code.
Generally, neither the Code nor Bermuda law currently provides for estate taxes
or withholding taxes on distributions to non-resident aliens in respect of stock
of a non-U.S. corporation such as PXRE Group.
(d) The Board believes that the establishment of a Bermuda presence will
favorably affect PXRE's ability to write additional lines of reinsurance.
(e) The Board believes that a holding company structure in the form proposed by
the reorganization will provide a more suitable corporate structure for
expansion of its current business and future acquisitions and diversification
opportunities. PXRE Delaware currently has no specific plans for acquisitions or
to significantly diversify its business from the business it is currently
conducting and intends to conduct subsequent to the reorganization.
In determining to recommend the reorganization, the Board consulted with PXRE
Delaware's management and its financial and legal advisors.
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THE BOARD OF DIRECTORS OF PXRE DELAWARE HAS UNANIMOUSLY APPROVED THE
PROPOSED REORGANIZATION AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADOPTION
OF THE MERGER AGREEMENT.
THE MERGER AGREEMENT
It is proposed that the reorganization be effected pursuant to the
merger agreement. Pursuant to the merger agreement:
(i) PXRE Merger Corp. will be merged with and into PXRE Delaware, with PXRE
Delaware being the surviving corporation.
(ii) Except as set forth below in paragraph (iv), each outstanding share of PXRE
Delaware common stock will be automatically converted into one PXRE Group common
share.
(iii) Each outstanding share of PXRE Merger Corp. common stock will be
automatically converted into one share of PXRE Delaware common stock.
(iv) The PXRE Group common shares outstanding prior to the effectiveness of the
merger will be repurchased by PXRE Group for $1.00 per share, or $12,000 in the
aggregate, and will be canceled. The outstanding PXRE Delaware common stock held
by PXRE Delaware or any of its subsidiaries prior to the effectiveness of the
merger will be canceled.
As a result of the foregoing, upon effectiveness of the merger, PXRE
Delaware, as the surviving corporation in the merger, will become an indirect
subsidiary of PXRE Group, and all the common shares of PXRE Group outstanding
immediately after the merger will be owned by former common stockholders of PXRE
Delaware.
The restated certificate of incorporation of PXRE Delaware will be
the certificate of incorporation of the surviving corporation of the merger
until subsequently changed as provided therein or by applicable law.
AMENDMENT OR TERMINATION
PXRE Delaware, PXRE Group and PXRE Merger Corp., by action of their
respective boards of directors, may amend, modify or supplement the merger
agreement at any time before or after its approval by the stockholders of PXRE
Delaware. After such approval, no amendment, modification or supplement may be
made or effected that by law requires further approval by such stockholders
without the further approval of such stockholders.
The merger agreement provides that it may be terminated, and the
reorganization abandoned, at any time, whether before or after stockholder
approval of the merger agreement is obtained, by action of the board of
directors of PXRE Delaware or PXRE Group.
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CONDITIONS TO CONSUMMATION OF THE REORGANIZATION
The reorganization will not be consummated unless the merger
agreement is adopted by the requisite vote of stockholders of PXRE Delaware and
all requisite governmental and regulatory approvals and other consents are
obtained. Section 38a-130 of the Connecticut General Statutes prohibits the
consummation of the merger until the approval of the Insurance Commissioner of
the State of Connecticut, the domicile state of PXRE Delaware's reinsurance and
insurance company subsidiaries, has been obtained or an exemption therefrom has
been obtained. The Insurance Commissioner of the State of Connecticut has
exempted the merger from such approval requirements. The consent of the lenders
under PXRE Delaware's revolving credit facility with First Union National Bank,
as Agent, is required to consummate the merger. We cannot predict whether such
consent will be obtained in a timely manner or, if obtained, whether the consent
will include conditions that would be detrimental to PXRE Group.
EFFECTIVE TIME
If the merger agreement is adopted by the stockholders of PXRE
Delaware and not terminated by the board of directors of PXRE Delaware or PXRE
Group, the reorganization will become effective at the close of business on the
date that an appropriate certificate of merger is filed with the Delaware
Secretary of State as required by Delaware law or at such later time as is
specified in such certificate of merger. PXRE Delaware anticipates that the
reorganization will become effective promptly following the PXRE Delaware
stockholders' meeting.
Immediately following the effective time of the reorganization, PXRE
Group will have the same directors as PXRE Delaware had immediately prior to
such time and PXRE Group's executive officers will principally be persons who
were executive officers of PXRE Delaware immediately prior to such time. See
"Management of PXRE Group."
RIGHTS OF DISSENTING STOCKHOLDERS
Holders of PXRE Delaware common stock do not have "dissenters
appraisal rights" under Delaware law in connection with the reorganization.
EXCHANGE OF SHARE CERTIFICATES
As of the effective time of the reorganization, the stockholders of
PXRE Delaware prior to the effective time will automatically become the owners
of PXRE Group common shares and, as of the effective time, will cease to be
owners of PXRE Delaware common stock. Stock certificates representing PXRE
Delaware common stock will, at the effective time, automatically represent PXRE
Group common shares. Holders of PXRE Delaware common stock will not be required
to exchange their stock certificates as a result of the reorganization. Should a
shareholder desire to sell some or all of his or her PXRE Group common shares
after the
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effective time, delivery of the stock certificate or certificates which
previously represented shares of PXRE Delaware common stock will be sufficient.
Following the reorganization, certificates bearing the name of PXRE
Group will be issued in the normal course upon surrender of outstanding PXRE
Delaware common stock certificates for transfer or exchange. If any stockholder
surrenders a certificate representing shares of PXRE Delaware common stock for
exchange or transfer and the new certificate to be issued is to be issued in a
name other than that appearing on the surrendered certificate theretofore
representing the PXRE Delaware common stock, it will be a condition to such
exchange or transfer that the surrendered certificate be properly endorsed and
otherwise be in proper form for transfer and that the person requesting such
exchange or transfer either (i) pay PXRE Group or its agents any taxes or other
governmental charges required by reason of the issuance of a certificate
registered in a name other than that appearing on the surrendered certificate or
(ii) establish to the satisfaction of PXRE Group or its agents that such taxes
or other governmental charges have been paid.
STOCK COMPENSATION PLANS
If the reorganization is consummated, PXRE Delaware's stock option
plans (including the 1988 Stock Option Plan, the Restated Employee Annual
Incentive Bonus Plan, the 1992 Officer Incentive Plan, the Employee Stock
Purchase Plan, the Director Equity and Deferred Compensation Plan, the
Non-Employee Director Deferred Stock Plan and the Director Stock Option Plan)
will be amended to provide that PXRE Group common shares will thereafter be
issued by PXRE Group upon exercise of any options issued thereunder. The
retirement, restricted stock, stock purchase and other employee and director
benefit plans of PXRE Delaware will be similarly revised or amended, as
necessary.
Stockholder approval of the merger agreement will also constitute
stockholder approval of amendments to the stock option, restricted stock and
other employee benefit plans providing for future use of PXRE Group common
shares in lieu of PXRE Delaware common stock thereunder.
PXRE Delaware has requested its employees and directors to agree that
the reorganization will not constitute or result in a "change in control" or
similar event for purposes of various PXRE Delaware benefit plans containing
provisions triggered by such events. PXRE Delaware does not expect to incur any
material costs as a consequence of the reorganization's triggering of such
provisions.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the PXRE Delaware board of
directors with respect to the merger, you should be aware that certain of the
executive officers and members of the board of directors of PXRE Delaware may
have interests in the merger that are in addition to, or different from, your
interests.
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Certain of the executive officers of PXRE Delaware will become
executive officers of PXRE Group and PXRE Bermuda. The members of the board of
directors of PXRE Delaware will become board members of PXRE Group, and will
resign their positions as board members of PXRE Delaware, and be replaced by
executive officers of PXRE Delaware. See "Management of PXRE Group."
On the record date, the directors and executive officers of PXRE
Delaware, and their affiliates had voting control of 869,606 shares of PXRE
Delaware common stock (including 636,700 shares owned by Phoenix Home Life)
representing approximately 7.4% of the shares of PXRE Delaware common stock
outstanding on the record date. Such directors and executive officers have
indicated that they intend to vote or direct the vote of such shares in favor of
the merger proposal.
See "Stock Compensation Plans" above for a discussion of certain
amendments made or to be made to various PXRE Delaware benefit plans in
anticipation of the merger. Additional information relating to employment
history, compensation and various benefit arrangements of PXRE Delaware and its
executive officers and directors is set forth in and incorporated herein by
reference to the PXRE Delaware Form 10-K. See "Where You Can Find More
Information."
On the record date Phoenix Home Life owned 636,700 shares of PXRE
Delaware common stock representing approximately 5.4% of the then outstanding
PXRE Delaware common stock. Robert W. Fiondella, David Searfoss and Philip
McLoughlin, who are executive officers of Phoenix Home Life and certain of its
affiliates, serve as directors of PXRE Delaware and will serve as directors of
PXRE Group. Phoenix Home Life has indicated that it may be interested in
participating in the proposed financing. See "Description of Authorized Shares
of PXRE Group -- Proposed Financing." Any participation by Phoenix Home Life in
such financing will be subject to approval by a majority of the disinterested
directors of PXRE Group's board of directors.
STOCK EXCHANGE LISTING
There is currently no established public trading market for PXRE
Group common shares. Immediately following the reorganization, PXRE Group common
shares will be listed on the NYSE under the symbol "PXT," the same symbol under
which PXRE Delaware common stock is currently listed.
ACCOUNTING TREATMENT OF THE REORGANIZATION
It is anticipated that the acquisition by PXRE Group of PXRE Delaware
in connection with the reorganization will be accounted for at historical cost
in a manner similar to a pooling of interests.
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FEDERAL SECURITIES LAWS CONSEQUENCES
This proxy statement/prospectus does not cover any resales of PXRE
Group common shares to be received by PXRE Delaware stockholders upon
consummation of the merger. No person is authorized to make any use of this
proxy statement/prospectus in connection with any such resale.
All PXRE Group common shares received by you in the merger will be
freely transferable, unless you are deemed to be an "affiliate" of PXRE Delaware
under the federal securities laws at the time of the special meeting of PXRE
Delaware stockholders. If you are deemed to be an "affiliate," the PXRE Group
common shares received by you in the merger may be resold by you only in
transactions permitted by Rule 145 under the Securities Act of 1933 or as
otherwise permitted under said Securities Act.
Persons who may be deemed to be affiliates of PXRE Delaware for such
purposes generally include individuals or entities that control, are controlled
by, or are under common control with, PXRE Delaware and may include officers,
directors and principal stockholders of PXRE Delaware.
CERTAIN TAX CONSIDERATIONS
The following summary of the taxation of PXRE Group, PXRE Bermuda and
PXRE Barbados and the shareholders of PXRE Group is based upon current law and
the opinions of Conyers Dill & Pearman with respect to matters of Bermuda
taxation, of Chancery Chambers, Attorneys-at-Law with respect to matters of
Barbados taxation and of Morgan, Lewis & Bockius LLP with respect to matters of
United States taxation. The following summary is for general information only
and does not purport to be a complete analysis or listing of all tax
considerations that may be applicable, nor does it address the effect of any
potentially applicable U.S. state or local tax laws, or the tax laws of any
jurisdiction outside Bermuda, Barbados or the United States (except as
indicated). The summary of U.S. federal income tax consequences to shareholders
deals only with shares of PXRE Delaware common stock that are, and PXRE Group
common shares that will be, held as capital assets and does not deal with the
tax consequences applicable to all categories of shareholders, some of which
(such as broker-dealers, banks, insurance companies, tax-exempt entities and
investors who hold common stock, or will hold common shares, as part of hedging
or conversion transactions and investors whose functional currency is not the
U.S. dollar) may be subject to special rules. In addition, the summary does not
discuss the U.S. federal income tax consequences of the reorganization to, or
the ownership of PXRE Group common shares by, shareholders that are not "U.S.
Holders." A "U.S. Holder" is, for purposes of this section of the proxy
statement/prospectus, a beneficial owner of shares of PXRE Delaware common stock
(prior to the reorganization) or PXRE Group common shares (thereafter) that is
(i) an individual citizen or resident of the United States, (ii) a corporation
created or organized in or under the laws of the United States or any political
subdivision thereof or (iii) an estate or trust the income of which is subject
to U.S. federal income taxation regardless
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of its source. Legislative, judicial or administrative changes may be
forthcoming that could affect this summary. Opinions of tax counsel are not
binding on tax authorities or courts. Neither PXRE Group, PXRE Bermuda nor PXRE
Barbados intends to seek a tax ruling with respect to any of the issues
described below.
ALL HOLDERS OF PXRE DELAWARE COMMON STOCK AND PXRE GROUP COMMON
SHARES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISERS WITH RESPECT TO THEIR
PARTICULAR CIRCUMSTANCES AND WITH RESPECT TO THE EFFECTS OF U.S. FEDERAL, STATE,
LOCAL OR OTHER LAWS TO WHICH THEY MAY BE SUBJECT.
TAX CONSEQUENCES OF THE REORGANIZATION
Bermuda
Under current Bermuda law, no income tax, capital gains tax or
withholding tax will be payable by PXRE Group, PXRE Bermuda or any U.S. Holders
(other than U.S. Holders that are also residents of Bermuda) of PXRE Delaware
common stock as a consequence of the reorganization.
Barbados
Under current Barbados law, no income tax, capital gains tax or
withholding tax will be payable by PXRE Barbados as a consequence of the
reorganization.
United States
Tax Consequences to PXRE Group and its Subsidiaries. Under current
U.S. federal income tax law, no income, capital gains or withholding tax will be
payable by PXRE Group, PXRE Bermuda, PXRE Barbados, PXRE Delaware, or their
respective direct or indirect subsidiaries as a consequence of the
reorganization transactions.
Tax Consequences to U.S. Holders of PXRE Delaware Common Stock. It is
likely that the reorganization will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, in which case U.S. Holders of PXRE
Delaware common stock would not recognize gain or loss on the conversion of
their shares if PXRE Group were a U.S. corporation. If the reorganization is so
treated, however, U.S. Holders will recognize gain, if any (but not loss), on
the conversion of their PXRE Delaware common stock for PXRE Group common shares
pursuant to Section 367(a) of the Code and the U.S. Treasury Regulations
promulgated thereunder, because PXRE Group is not a U.S. corporation. In
general, for U.S. federal income tax purposes, a U.S. Holder will recognize gain
equal to the excess of the fair market value of its PXRE Group common shares as
of the date of the reorganization over the U.S. Holder's aggregate adjusted
basis in the PXRE Delaware common stock converted thereinto pursuant to the
reorganization. Any such gain will be capital gain and will be long-term if, as
of the date of
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the reorganization, the shares of PXRE Delaware common stock were held for more
than one year. A U.S. Holder that recognizes gain on the conversion of its PXRE
Delaware common stock for PXRE Group common shares will have a basis in its PXRE
Group common shares equal to their fair market value on the date of the
reorganization, and the holding period of the PXRE Group common shares will
commence on the day after the date of the reorganization. A U.S. Holder that
realizes but does not recognize a loss as a result of the reorganization will
have a basis in its PXRE Group common shares equal to that of the PXRE Delaware
common stock converted thereinto, and the holding period of its PXRE Group
common shares will include the period the U.S. Holder held its PXRE Delaware
common stock. If a U.S. Holder owns blocks of PXRE Delaware common stock that
have different tax bases or holding periods, each block will be subject
separately to the tax treatment described in this paragraph (for example, a loss
on one block, not recognized under the rules described above, cannot be used to
offset a recognized gain of the same U.S. Holder on another block).
Reporting. Pursuant to Section 6038B of the Code, a U.S. Holder is
required to file an information return on Internal Revenue Service ("IRS") Form
926 reporting the conversion along with certain additional information that must
be attached thereto. Form 926 and its required attachments must be filed with
such holder's U.S. federal income tax return for the taxable year that includes
the conversion. The information that must be included with a Form 926 is
described in temporary Treasury Regulation Section 1.6038B-1T. PXRE Delaware
intends to provide such information to each U.S. Holder so as to enable each
such holder to file its Form 926 on a timely basis. A U.S. Holder's failure to
provide the information required by Section 6038B of the Code may result in,
among other things, such holder being subject to a penalty equal to 10% of the
fair value of the PXRE Delaware common stock converted pursuant to the
reorganization. In addition, U.S. Treasury Regulations under Section 368 of the
Code require that a U.S. Holder file with its U.S. income tax return in the year
of the reorganization a complete statement of all facts pertinent to the
reorganization, including (i) a statement of the basis of PXRE Delaware common
stock converted in the reorganization and (ii) a statement of the amount of PXRE
Group common shares received in the conversion, based upon the fair market value
of the PXRE Group common shares at the date of the reorganization.
TAXATION OF THE COMPANY AND ITS SUBSIDIARIES
Bermuda
Under present law, Bermuda will not impose on PXRE Group, PXRE Bermuda or
any of their operations or the shares, debentures or other obligations of PXRE
Group or PXRE Bermuda any 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. PXRE Group has received, and PXRE Bermuda expects to receive,
from the Minister of Finance of Bermuda an assurance under The Exempted
Undertakings Tax Protection Act, 1966 of Bermuda, to the effect that in the
event of there being enacted in Bermuda any legislation imposing any such tax,
then the imposition of such tax shall not be applicable to PXRE Group or PXRE
Bermuda or to any of their operations or the shares,
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debentures or other obligations of PXRE Group or PXRE Bermuda until March 28,
2016. These assurances are subject to the proviso that they are not construed so
as to prevent the application of any tax or duty to such persons as are
ordinarily resident in Bermuda (PXRE Group and PXRE Bermuda are not currently so
designated) or to prevent the application of any tax payable in accordance with
the provisions of The Land Tax Act 1967 of Bermuda or otherwise payable in
relation to the land, if any, leased to PXRE Group or PXRE Bermuda. PXRE Group
and PXRE Bermuda are each required to pay certain annual Bermuda government and
business fees and PXRE Bermuda, additionally, is required to pay certain
insurance registration fees as an insurer under the Insurance Act 1977 of
Bermuda. Under current rates, PXRE Group will pay a maximum fixed annual fee of
$8,500, and PXRE Bermuda will pay a total of $5,960 per year (which includes the
annual Bermuda government fee and the annual insurance business fee). In
addition, all entities employing individuals in Bermuda are required to pay an
employment tax. Currently there is no Bermuda withholding tax on dividends that
may be paid by PXRE Bermuda or PXRE Group.
Barbados
PXRE Barbados is licensed as an international business company under the
International Business Companies Act, 1991-24. As a result, PXRE Barbados is
entitled to special tax benefits, including a preferred rate of tax in respect
of profits and gains and an exemption from withholding tax in respect of any
dividends, interest, royalties, fees or management fees paid or deemed to be
paid by PXRE Barbados to another international business company or to a person
not resident in Barbados.
PXRE Barbados will be subject to a Barbados corporation tax, assessed at
a rate of 2.5% on profits and gains of up to 10 million Barbados Dollars
(approximately U.S. $5 million), and at declining rates on profits and gains
exceeding 10 million Barbados Dollars.
PXRE Barbados may elect to take a credit in respect of taxes paid to a
country other than Barbados provided that such an election does not reduce the
tax payable in Barbados to a rate less than 1% of the profits and gains of PXRE
Barbados in any income year.
No taxes will be required to be withheld on payments in respect of
dividends, interest, royalties, fees or management fees paid or deemed to be
paid by PXRE Barbados to PXRE Group or to any other person not resident in
Barbados.
PXRE Barbados will not be subject to tax on capital gains in Barbados. A
transfer of securities or assets of PXRE Barbados to a non-resident or to
another international business company (other than a transfer of taxable assets)
is also exempted from the payment of capital transfer tax or duty. The following
assets are deemed to be taxable assets: (i) real property situated in Barbados
and held by or on behalf of PXRE Barbados, and (ii) all office equipment,
supplies, furnishings and fixtures, machinery, vehicles and equipment used in
Barbados in carrying on the business and affairs of PXRE Barbados.
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United States
General. Each of PXRE Group, PXRE Bermuda and PXRE Barbados intends to
operate its business in a manner that will not cause it to be treated as engaged
in a U.S. trade or business. On this basis, none of PXRE Group, PXRE Bermuda or
PXRE Barbados expect to be required to pay United States corporate income tax.
However, whether a corporation is engaged in a U.S. trade or business is an
inherently factual question. Therefore, there can be no assurances that the IRS
will not contend successfully that PXRE Group, PXRE Bermuda or PXRE Barbados is
engaged in such a trade or business. A foreign corporation deemed to be so
engaged, unless exempted from tax by a tax treaty, as discussed below, would be
subject to U.S. corporate income tax (currently at a maximum marginal tax rate
of 35%) on the portion of its net income that is treated as effectively
connected with the conduct of that trade or business, as well as the branch
profits tax, as discussed below. Even though each of PXRE Group, PXRE Barbados
and PXRE Bermuda intends to take the position that it is not engaged in a U.S.
trade or business, each intends to file protective U.S. federal income tax
returns in order to avoid having all of its deductions disallowed in the event
that it were ultimately held to be so engaged and in order to commence the
running of various statutes of limitation.
Tax Treaties. Tax conventions between the United States and Bermuda or
Barbados may provide relief to PXRE Bermuda and PXRE Barbados, respectively, if
either such company is deemed to be engaged in the conduct of a U.S. trade or
business.
Under the tax convention between Bermuda and the United States (the
"Bermuda Treaty"), a Bermuda company predominantly engaged in the insurance
business, such as PXRE Bermuda, is subject to U.S. income tax on its insurance
income found to be effectively connected with a U.S. trade or business only if
that trade or business is conducted through a permanent establishment in the
United States. (As a holding company that is not predominantly engaged directly
in an insurance business, PXRE Group will not be entitled to the benefits of the
Bermuda Treaty.) PXRE Bermuda would not be entitled to the benefits of the
Bermuda Treaty, however, if (i) 50% or more of PXRE Bermuda's stock were
beneficially owned, directly or indirectly, by persons other than Bermuda
residents or U.S. citizens or residents, or (ii) PXRE Bermuda's income were used
in substantial part to make disproportionate distributions to, or to meet
certain liabilities to, persons who are not Bermuda residents or U.S. citizens
or residents. Although the matter is inherently factual and not free from doubt,
it is expected that the above exceptions to the Bermuda Treaty benefits will not
apply to PXRE Bermuda, although there can be no assurances because, among other
things, (i) there are no regulations promulgated under the Bermuda Treaty
providing guidance and (ii) the burden of establishing beneficial ownership in
the case of a Bermuda corporation with a publicly-traded Bermuda parent, such as
PXRE Group, will fall upon PXRE Bermuda and PXRE Group. Furthermore, the Bermuda
Treaty would not exempt PXRE Bermuda from personal holding company tax if it
were classified as a personal holding company (see the discussion below under
"-- Personal Holding Company Tax").
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Similarly, under the tax convention between Barbados and the United
States (the "Barbados Treaty"), a corporation that is a Barbados resident will
not be subject to U.S. income tax on income that is effectively connected with a
U.S. business, unless such business is conducted through a permanent
establishment in the United States. The benefits of the Treaty will be available
to PXRE Barbados only if it is "managed and controlled" in Barbados and either
(i) it is engaged in the active conduct of a trade or business in Barbados or
(ii) more than 50% of each class of its stock is owned directly or indirectly by
citizens or residents of the U.S. and residents of Barbados and it does not use
more than 50% of its gross income to meet liabilities to persons who are not
residents or citizens of the U.S. or residents of Barbados. Although the matter
is inherently factual and not free from doubt, it is expected that PXRE Barbados
will be managed and controlled in Barbados within the meaning of the Barbados
Treaty and will satisfy one or both of the active conduct or stock
ownership/gross income tests for Barbados Treaty benefits set forth above. As is
the case under the Bermuda Treaty, there are no regulations promulgated under
the Barbados Treaty providing guidance and the burden of establishing beneficial
ownership in the case of a Barbados corporation with a publicly-traded Bermuda
parent will fall upon PXRE Barbados and PXRE Group. Furthermore, the Barbados
Treaty would not exempt PXRE Barbados from personal holding company tax if it
were classified as a personal holding company (see the discussion below under
"-- Personal Holding Company Tax").
Each of PXRE Group, PXRE Bermuda and PXRE Barbados will operate under
guidelines that are intended to minimize the risk that it will be treated as
engaged in a U.S. trade or business, and each of PXRE Bermuda and PXRE Barbados
will operate under guidelines that are intended to minimize the risk that it
will be found to have a U.S. permanent establishment. Irrespective of such
guidelines, there can be no assurance that PXRE Bermuda and PXRE Barbados will
qualify for the Bermuda Treaty and the Barbados Treaty, respectively, now or in
the future, or that the Bermuda Treaty or the Barbados Treaty will not be
terminated or revised in a manner that could adversely affect any protection
from U.S. corporate tax that it currently provides. If any of PXRE Group, PXRE
Bermuda or PXRE Barbados were considered to be engaged in a U.S. trade or
business and, with respect to PXRE Bermuda and PXRE Barbados, were considered
not to be entitled to the benefits of the Bermuda Treaty and the Barbados
Treaty, respectively, then such company would be subject to U.S. income tax and
the results of operations and cash flows of the PXRE Group could be materially
adversely affected.
Branch Profits Tax. If any of PXRE Group, PXRE Bermuda or PXRE Barbados
is deemed to be engaged in a U.S. trade or business, then such company also may
be subject to a branch profits tax on the portion of its income that is
effectively connected with a U.S. trade or business. Generally, the branch
profits tax is an additional 30% tax on the earnings of a foreign corporation
that are effectively connected with the conduct of a U.S. trade or business and
deemed distributed as a dividend. In addition, any interest paid or deemed paid
by the U.S. branch of a foreign corporation subject to the branch profits tax
would be treated as U.S.-source income and subject to U.S. withholding tax. If
PXRE Bermuda or PXRE Barbados is a qualified resident of Bermuda or Barbados,
respectively, under the branch profits rules of the Code and the Bermuda Treaty
or the Barbados Treaty, respectively, and does not have a permanent
establishment in the
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U.S., then the branch profits tax would not apply to such company. In addition,
if PXRE Barbados were found to be engaged in a U.S. trade or business through a
permanent establishment, the Barbados Treaty would reduce the rate of the branch
profits tax on deemed dividends and on interest paid or deemed paid to 5%,
assuming that PXRE Barbados is a qualified resident under both the branch
profits rules of the Code and the Barbados Treaty. As noted above, both PXRE
Bermuda and PXRE Barbados are expected to qualify for the benefits of the
Bermuda Treaty and the Barbados Treaty, respectively, and neither is expected to
have a permanent establishment in the U.S., although there can be no assurances
that the companies will so qualify or that either the Bermuda Treaty or the
Barbados Treaty will not be terminated or revised to eliminate the benefits of
such treaty. If any of the companies is subject to the branch profits tax on
deemed dividends for any taxable year, then no withholding tax will be imposed
on any dividends actually paid by the company out of its earnings and profits
for that taxable year.
Personal Holding Company Tax. A 39.6% personal holding company tax
("PHCT") is imposed on the undistributed personal holding company income
(subject to certain adjustments) of a personal holding company ("PHC"). The PHCT
applies to a company that meets both of the following requirements: (i) more
than 50% by value of such company's stock is owned, directly, indirectly or
constructively, by five or fewer individuals and (ii) 60% or more of such
company's adjusted gross income from U.S. sources or effectively connected with
a U.S. trade or business is "personal holding company income," which includes
various categories of passive income from U.S. sources or effectively connected
with a U.S. trade or business, such as interest, dividends and royalties, but
does not include insurance or reinsurance premiums. It is not expected that any
of the companies will be classified as a PHC. The Bye-Laws of PXRE Group
prohibit (subject to waiver by the Board of Directors of PXRE Group) any
issuance or transfer of shares of PXRE Group that would result in any person
owning, under the relevant attribution rules of the Code, more than 9.9% of the
outstanding shares of any class of stock. There can be no assurance, however,
that the share issuance and vote restrictions will prevent the ownership test
from being met.
Accumulated Earnings Tax. The accumulated earnings tax is imposed on
corporations (including foreign corporations with direct or indirect
shareholders subject to U.S. tax) that accumulate earnings in excess of the
reasonably anticipated needs of the business (e.g., working capital, long-term
debt service and capital surplus needs of the reinsurance business). In general
terms, the tax is imposed at the rate of 39.6% on a corporation's excess
accumulated earnings. If a foreign corporation files a U.S. tax return, as PXRE
Group intends to do, then the tax can only be imposed, if at all, on U.S.-source
income reduced by allowable deductions, as well as by dividends paid and a
provision for the reasonably anticipated needs of the corporation. While it is
not expected that any aspect of the companies' planned operations will subject
PXRE Group, PXRE Bermuda or PXRE Barbados to the accumulated earnings tax, no
assurance can be given that the IRS will not seek to impose the accumulated
earnings tax on one or more of them.
Withholding and Other Taxes on Investment Income. Foreign corporations
not engaged in a trade or business in the United States are nonetheless subject
to U.S. withholding tax at a rate
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of 30% on the gross amount of certain "fixed or determinable annual or
periodical gains, profits and income" derived from sources within the United
States (such as dividends and certain types of interest on investments). Other
jurisdictions also may impose withholding taxes on investment income from
sources within such jurisdictions. The U.S. withholding tax does not apply to
interest earned on bank deposits, including certificates of deposit, or to
interest that qualifies as "portfolio interest" under Section 881(c) of the
Code.
In addition, where applicable, the Barbados Treaty limits withholding tax
on dividends from U.S. corporations to 5% if the recipient owns at least 10% of
the voting stock of the distributing corporation (the withholding tax rate is
reduced to 15% otherwise). Consequently, it is anticipated that dividends paid
by PXRE Delaware to PXRE Barbados will be subject to U.S. withholding tax at a
rate of 5%. As mentioned above, however, there can be no assurance that PXRE
Barbados will qualify for the benefits of the Barbados Treaty or that the
Barbados Treaty will not be terminated or revised to eliminate these benefits.
The Bermuda Treaty does not provide any similar reduction in U.S. withholding
tax.
Transfer Pricing. The Code provides the IRS with the authority to
reallocate income, deductions and other tax-related items among commonly
controlled entities to prevent the evasion of taxes or to clearly reflect
income. Generally, inter-company transactions on the same or similar terms as
would govern transactions between unrelated parties, so-called "arm's-length"
terms, will be respected by the IRS. With this requirement in mind, PXRE Group
will seek to ensure that transactions conducted between PXRE Bermuda and the
U.S. subsidiaries of PXRE Delaware are on arm's-length terms, but no assurance
can be given that the IRS will not successfully challenge the terms of these
transactions and increase the U.S. tax liability of PXRE Delaware and its U.S.
subsidiaries. It is important to note that the requirement of conducting
transactions between PXRE Bermuda and the U.S. subsidiaries of PXRE Delaware on
arm's length terms, subject to IRS audit, may tend to increase the U.S.
corporate income tax liabilities of the PXRE Delaware consolidated tax group and
generally reduce the tax savings which can be realized from the reorganization.
Federal Excise Taxes. The United States also imposes an excise tax on
insurance and reinsurance (including retrocessional) premiums paid to foreign
insurers or reinsurers with respect to risks located in the United States. The
rate of such tax currently applicable to reinsurance premiums is 1% of gross
premiums. Neither the Bermuda Treaty nor the Barbados Treaty currently provide
any relief from this excise tax.
U.S. State and Local Taxes. PXRE Group, PXRE Bermuda and PXRE Barbados
each intends to conduct its operations to avoid or minimize its potential
liability for state and local taxes. State income or premium taxes could be
imposed with respect to activities conducted in a state even if such activities
(i) do not constitute the conduct of a trade or business for federal income tax
purposes or (ii) qualify for the benefits of a tax treaty. In addition, state
and local tax authorities may challenge the terms of transactions among commonly
controlled entities and
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attempt to increase the state or local tax liabilities of PXRE Delaware and its
U.S. subsidiaries, applying principles similar to those discussed above under
"-- Transfer Pricing."
PXRE Group's U.S. Subsidiaries. PXRE Delaware and its U.S. subsidiaries
will continue to be subject to the same U.S. federal, state and local corporate
income and insurance premium taxes to which they had been subject before the
reorganization.
TAXATION OF SHAREHOLDERS
Bermuda
Under existing Bermuda law, there will be no Bermuda income or
withholding tax on dividends paid by PXRE Group to its shareholders.
Furthermore, no Bermuda tax or other levy is payable on the sale or other
transfer (including by gift or on the death of the shareholder) of PXRE Group
common shares (other than by shareholders resident in Bermuda). The undertakings
received by PXRE Group regarding the future imposition of taxes, discussed above
under "-- Taxation of the Company and its Subsidiaries -- Bermuda," also applies
to the possible future imposition of such taxes on PXRE Group shares.
United States
Dividends. Subject to the discussion below of the controlled foreign
corporation, passive foreign investment company or foreign personal holding
company rules, distributions with respect to PXRE Group common shares will be
treated as ordinary dividend income to the extent of PXRE Group's current or
accumulated earnings and profits. Such dividends will not be eligible for the
dividends received deduction allowed to United States corporations under the
Code. The amount of any distribution in excess of PXRE Group's current and
accumulated earnings and profits will first be applied to reduce the holder's
tax basis in the PXRE Group common shares, and any amount in excess of tax basis
will be treated as gain from the sale or exchange of the common shares.
Foreign Tax Credit. U.S. Holders generally will not be entitled to any
foreign tax credits with respect to distributions on the PXRE Group common
shares for federal income tax purposes. It is anticipated that a significant
portion of the dividends paid by PXRE Group to U.S. Holders may constitute
U.S.-source income. Furthermore, it is likely that the dividends and
substantially all of the RPII, if any, deemed distributed to U.S. Holders (as
described below under "-- Related Person Insurance Income") that are
foreign-source income will constitute either "passive" or "financial services"
income for foreign tax credit limitation purposes. Thus, it may not be possible
for most U.S. Holders of PXRE Group common shares to utilize excess foreign tax
credits to reduce U.S. tax on such income.
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Controlled Foreign Corporation Status. A foreign corporation is treated
as a controlled foreign corporation ("CFC") if "United States shareholders"
collectively own directly, indirectly through foreign persons or constructively
(by application of the rules set forth in Code Section 958(b), generally
applying to options, family members, partnerships, estates, trusts or controlled
corporations) more than 50% of the total combined voting power or total value of
the corporation's stock. In addition, a special CFC rule applies to insurance
companies, such as PXRE Bermuda: a foreign insurance (or reinsurance) company
will be treated as a CFC for the purpose of treating its underwriting profits
and associated investment income, if more than 25% of the stock (measured by
vote or value) is owned directly or indirectly by "United States shareholders"
and if more than 75% of its gross premiums are attributable to insurance or
reinsurance policies that would produce "insurance income." "Insurance income"
is defined as income attributable to the insuring, or reinsuring, of any risk
(other than, under a temporary statutory provision that will not be applicable
to PXRE Bermuda, certain insurance or reinsurance relating to risks located
outside the United States), and includes the investment income derived from
unearned premiums or reserves ordinary and necessary to the conduct of the
insurance business. Under Code Section 951(b), any U.S. corporation, citizen,
resident or other U.S. person who owns, directly, indirectly through foreign
persons, or constructively, 10% or more of the total combined voting power of
all classes of stock of the foreign corporation will be considered to be a
"United States shareholder." Under Section 951(a) of the Code, each United
States shareholder of a CFC must include in its gross income for United States
federal income tax purposes its pro rata share of the CFC's "subpart F income,"
even if the subpart F income is not distributed. Subpart F income includes,
among other things, (i) passive income such as dividends and interest, (ii)
certain income earned from related parties and (iii) certain insurance income
(as defined above). In addition, gain on the sale of stock of a CFC by a United
States shareholder will be recharacterized as a dividend (and taxed as ordinary
income, rather than as capital gain) to the extent of the United States
shareholder's share of the CFC's earnings and profits.
It is not anticipated that any of PXRE Group, PXRE Bermuda or PXRE
Barbados will be treated as a CFC under the foregoing general rule (but see the
discussion below under "--Related Person Insurance Income"). Under the Bye-Laws
of PXRE Group, if any person owns or is deemed to own, under the relevant
attribution rules of the Code, PXRE Group common shares consisting of more than
9.9% of PXRE Group's outstanding vote, then the voting rights of such common
shares generally will be reduced to 9.9% of the outstanding vote of PXRE Group
(after adjustment for such reduction in voting power). However, due to the
breadth of the CFC constructive ownership rules and for other reasons, there may
be practical difficulties in ensuring that none of PXRE Group, PXRE Barbados and
PXRE Bermuda will become a CFC. In addition, because of the special insurance
corporation CFC rule, it is possible (though not anticipated) for PXRE Bermuda
to be treated as a CFC even though PXRE Group is not. However, so long as a
shareholder of PXRE Group is not characterized as a United States shareholder,
the classification of PXRE Group, PXRE Bermuda or PXRE Barbados as a CFC should
have no adverse effect on such shareholder. Each U.S. Holder should consult its
own tax
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advisor to ensure that its ownership interest in PXRE Group will not cause it to
become a United States shareholder of PXRE Group or any of its subsidiaries.
Related Person Insurance Income ("RPII"). Certain special provisions of
the Code will apply to PXRE Bermuda if both (A) as is anticipated, 25% or more
of the value or voting power of the PXRE Group common shares is held (directly
or indirectly through foreign persons) by United States persons, and (B)(i) PXRE
Bermuda has gross RPII greater than or equal to 20% of its gross insurance
income and (ii) 20% or more of either the voting power or the value of the PXRE
Bermuda common shares is owned directly or indirectly (including through PXRE
Group) by persons directly or indirectly insured or reinsured by PXRE Bermuda or
persons related to such insureds or reinsureds (the "de minimis tests"). RPII is
any income (including investment income and premium income) from the direct or
indirect insurance or reinsurance of any United States person who is either a
shareholder in the foreign corporation receiving the income or a person related
to such shareholder. For this purpose, related persons include corporations in
which a shareholder owns more than 50% of the stock, by vote or value,
partnerships, trusts or estates in which a shareholder owns more than 50% of the
beneficial interests and, with respect to insurance policies covering liability
arising from services performed as a director, officer or employee of a
corporation or a partner or employee of a partnership, the person performing
such services and the entity for which the services are performed.
While there can be no assurance, it is not anticipated that 20% or more
of the gross insurance income of PXRE Bermuda for any taxable year will
constitute RPII or that 20% or more of the voting power or the value of PXRE
Bermuda's common shares will be owned directly or indirectly by insureds or
reinsureds or persons related thereto. If, however, both of these two
contingencies were to occur, each U.S. Holder would be taxable currently on its
allocable share of the RPII, even if such U.S. Holder is not a United States
shareholder, as defined above. For this purpose, all of PXRE Bermuda's RPII
would be allocated solely to U.S. persons (meaning generally U.S. Holders and
other persons (such as U.S. partnerships) generally subject to U.S. federal
income tax).
To the extent information is required, PXRE Group may send a letter to
each person who was a PXRE Bermuda policyholder during the year asking the
policyholder to represent (i) whether it was a U.S. Holder or related to a U.S.
Holder during the year, (ii) the number of PXRE Group common shares, if any, the
policyholder owned directly, indirectly or constructively during the year and
(iii) the amount of premiums the policyholder paid for insurance that was issued
or reinsured directly or indirectly by PXRE Bermuda. There can be no assurance
that this procedure will enable PXRE Group to identify all of PXRE Bermuda's
RPII or to determine whether either of the de minimis tests has been satisfied.
For any year that PXRE Group determines that neither of the de minimis tests has
been satisfied, PXRE Group may also seek information from its shareholders as to
whether beneficial owners of the common shares at the end of the year are United
States persons so that RPII may be apportioned among such persons. To the extent
PXRE Group is unable to determine whether a beneficial owner of shares is a U.S.
person, PXRE Group may assume that such is not a U.S. person for purposes of
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apportioning RPII, thereby increasing the per share RPII amount for all other
U.S. persons who are shareholders.
There is little guidance with respect to the RPII provisions of the Code.
Regulations interpreting the RPII provisions of the Code exist only in proposed
form, having been proposed on April 17, 1991. It is not certain whether these
regulations will be adopted in their proposed form or what changes or
clarifications might ultimately be made thereto or whether any such changes, as
well as any interpretation or application of RPII by the IRS, the courts or
otherwise, might have retroactive effect. Accordingly, the meaning of the RPII
provisions and the application thereof to PXRE Group and PXRE Bermuda are
uncertain. Each U.S. Holder should consult its tax advisor as to the effects of
these uncertainties.
Dispositions of Common Shares. Upon a disposition of common shares to a
person other than PXRE Group, a U.S. Holder generally will recognize gain or
loss in an amount equal to the difference between the amount realized on the
sale or exchange and the U.S. Holder's adjusted tax basis in such common shares.
Subject to the discussions of the CFC and PFIC rules, such gain or loss
generally will be capital gain or loss and will be long-term capital gain or
loss if the U.S. Holder has held the common shares for more than one year.
Section 1248 of the Code provides that if a United States shareholder
sells or exchanges stock in a CFC, any gain from the sale or exchange of stock
of the CFC may be treated as ordinary income to the extent of the CFC's earnings
and profits during the period that the shareholder held the shares (with certain
adjustments). As discussed above, PXRE Delaware does not anticipate that PXRE
Group or any of its subsidiaries will be CFCs. Section 953(c)(7) of the Code
generally provides that Section 1248 will also apply to the sale or exchange of
shares in a foreign corporation that earns RPII if the foreign corporation would
be taxed as an insurance company if it were a domestic corporation and the
shareholder is a U.S. person, regardless of whether (i) the shareholder is a
United States shareholder, (ii) RPII constitutes 20% or more of a corporation's
gross insurance income or (iii) 20% or more of either the voting power or the
value of the corporation's stock is owned directly or indirectly through foreign
entities by persons (directly or indirectly) insured or reinsured by the
corporation or persons related to such insureds or reinsureds. It is not clear
whether Section 1248 would apply when a foreign corporation is not a CFC but has
an insurance company subsidiary that is treated as a CFC under the special RPII
rules. PXRE Group believes that Section 1248 should not apply to dispositions of
PXRE Group common shares because a disposition of PXRE Group common shares would
not constitute a disposition of the shares of PXRE Bermuda, and that proposed
Treasury regulations issued on April 17, 1991 should be interpreted in this
manner. There can be no assurance, however, that the IRS would interpret the
proposed regulations in this manner or that the Treasury will not amend the
regulations to provide that Section 1248 will apply to dispositions of PXRE
Group common shares.
Passive Foreign Investment Companies. Sections 1291 through 1298 of the
Code contain special and adverse rules applicable with respect to foreign
corporations that are "passive foreign
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investment companies" ("PFICs"). In general, a foreign corporation will be a
PFIC if 75% or more of its income constitutes "passive income" or 50% or more of
its assets produce passive income. If PXRE Group were to be characterized as a
PFIC, a U.S. Holder could be subject to a penalty tax at the time of its sale
of, or receipt of an "excess distribution" with respect to, the common shares.
In general, a shareholder receives an "excess distribution" if the amount of the
distribution is more than 125% of the average distribution with respect to the
stock during the three preceding taxable years (or shorter period during which
the taxpayer held the stock). In general, the penalty tax is equivalent to an
interest charge on taxes that would have been due during the period the
shareholder owned the shares, computed by assuming that the excess distribution
or gain (in the case of a sale) with respect to the shares was taxed in equal
portions throughout the holder's period of ownership at the highest rate of tax
in effect in those years. The interest charge is equal to the applicable rate
imposed on underpayments of U.S. federal income tax for such period.
The PFIC statutory provisions contain an express exception for income
"derived in the active conduct of an insurance business by a corporation which
is predominantly engaged in an insurance business" and which would be subject to
taxation as an insurance company if it were a domestic corporation. This
exception is intended to ensure that income derived by a bona fide insurance
company from the investment of its insurance reserves is not treated as passive
income. The PFIC statutory provisions contain a look-through rule for purposes
of determining whether a foreign corporation is a PFIC, which provides that a
foreign corporation shall be treated as if it "received directly its
proportionate share of the income" and as if it "held its proportionate share of
the assets" of any other corporation in which it owns directly or indirectly at
least 25% of the value of such corporation's stock. Under these rules, it is
anticipated that income from the insurance operations of PXRE Bermuda and other
direct or indirect subsidiaries of PXRE Group actively engaged in the insurance
business, as well as nonpassive income of PXRE Group's other subsidiaries, and
the assets used to produce such income, will be nonpassive income and assets,
respectively, and that such nonpassive income and assets will be deemed to be
received and owned, respectively, by PXRE Group so that PXRE Group will not be
characterized as a PFIC. It is believed that this interpretation of the
look-through rule is consistent with the legislative intention generally to
exclude bona fide insurance companies and holding companies from the application
of PFIC provisions; there can, of course, be no assurances as to what positions
the IRS or a court might take in the future.
In some circumstances, a U.S. Holder may avoid certain of the
unfavorable consequences of the PFIC rules by making a qualified electing fund
("QEF") election in respect of PXRE Group. A QEF election effectively would
require an electing U.S. Holder to include in income currently its pro rata
share of the ordinary earnings and net capital gain of PXRE Group. However, a
U.S. Holder cannot elect QEF status with respect to PXRE Group unless PXRE Group
complies with certain reporting requirements and there can be no assurances that
PXRE Group will provide the required information.
No regulations interpreting the insurance income exception or the
look-through rule have yet been issued. Therefore, substantial uncertainty
exists with respect to the application or the possible retroactivity of such
regulations when they are issued. In addition, recently proposed regulations
regarding similar PFIC requirements for banks would require that a bank seeking
to qualify as an active business be licensed to conduct business in the
jurisdiction in which it is incorporated and, in its ordinary course of
business, accept deposits from customers who are residents of the country in
which it is licensed. Were such a rule adopted for the determination of the
active conduct of an insurance business, PXRE Bermuda would fail to qualify as
an active
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business, and as a result PXRE Bermuda and PXRE Group might be classified as
PFICs. Each U.S. Holder should consult its tax advisor as to the effects of the
PFIC rules.
FPHC Status. A foreign corporation is treated as a foreign personal
holding company ("FPHC") if (i) more than 50% of its stock, by vote or value, is
owned directly, indirectly or constructively by five or fewer U.S. individuals
and (ii) at least 60% (reduced to 50% in some circumstances where the
corporation has previously been an FPHC) of its gross income for the taxable
year is "foreign personal holding company income" ("FPHC income"). Shareholders
(both direct and indirect through foreign persons) in an FPHC are required to
include in their gross income their pro rata share of the FPHC's undistributed
taxable income (subject to certain adjustments). The determination of gross
income for purposes of testing FPHC status requires that all income be taken
into account, regardless of whether the income is from U.S. sources or
effectively connected with a U.S. trade or business, and generally includes, as
a deemed dividend, the income of a subsidiary corporation that is an FPHC. FPHC
income includes interest, dividends and other specified categories of passive
income (excluding interest and dividends paid by certain subsidiaries that are
not themselves FPHCs, but only to the extent the interest or dividend is not
attributable to FPHC income of the subsidiaries), but does not include insurance
or reinsurance premium income.
It is not expected that any of PXRE Group, PXRE Bermuda or PXRE Barbados
will be classified as an FPHC. The Bye-Laws of PXRE Group prohibit (subject to
waiver by the Board of Directors of PXRE Group) any issuance or transfer of
shares of PXRE Group that would result in any person owning, under the relevant
attribution rules of the Code, more than 9.9% of the outstanding shares of any
class of stock. There can be no assurance, however, that the share issuance and
transfer restrictions will prevent the ownership test from being met.
Information Reporting. Any U.S. Holder who at any time owns directly or
indirectly (including, in the case of an individual, stock owned by members of
his family) 10% or more of the vote or value of all of the outstanding stock of
PXRE Group may be required to file IRS Form 5471 or other informational returns.
In addition, any U.S. Holder that is treated as a United States shareholder
under the RPII rules may be required to file IRS Form 5471 or other
informational returns.
DESCRIPTION OF AUTHORIZED SHARES OF PXRE GROUP
GENERAL
The authorized share capital of PXRE Group consists of 50,000,000 common
shares, par value $1.00 per share, of which approximately 11,742,581 shares are
expected to be issued and outstanding immediately after the reorganization, and
10,000,000 preferred shares, par value $1.00 per share, none of which will be
issued and outstanding immediately after the reorganization. See however
"-- Proposed Financing."
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COMMON SHARES
Holders of the common shares have no pre-emptive, redemption, conversion
or sinking fund rights. Subject to the voting restrictions set forth below,
holders of common shares are entitled to one vote per share on all matters
submitted to a vote of holders of common shares and do not have any cumulative
voting rights. In the event of a liquidation, dissolution, or winding-up of PXRE
Group, the holders of common shares are entitled to share equally and ratably in
the assets of PXRE Group, if any, remaining after the payment of all debts and
liabilities of PXRE Group and the liquidation preference of any outstanding
preference shares. Upon completion of the reorganization, all outstanding common
shares will be fully paid and nonassessable. Additional authorized but unissued
common shares may be issued by the Board of Directors of PXRE Group without the
approval of the shareholders.
Each common share has one vote, except that if, and so long as, the
Controlled Shares (as defined below) of any person constitute more than 9.9% of
the voting power of the outstanding shares, including common shares, of PXRE
Group (a "Ten-percent Shareholder"), the voting rights with respect to the
Controlled Shares owned by such person will be limited, in the aggregate, to a
voting power of 9.9%, pursuant to a formula specified in PXRE Group's Bye-Laws.
Notwithstanding the foregoing, these restrictions on voting do not apply to any
person who owned or controlled more than 9.9% of the outstanding shares of
common stock of PXRE Delaware on August 9, 1999 but only with respect to PXRE
Group common shares into which shares of PXRE Delaware common stock owned on
August 9, 1999 are converted in the reorganization. Moreover, PXRE Group's
board of directors may in its discretion waive the 9.9% limitation on a case by
case basis. The share votes that could be cast by Ten-percent Shareholders but
for the restrictions on voting rights described above will be allocated to the
other holders of shares, pro rata based on the number of shares held by all
other holders of shares, subject only to the further limitation that no
shareholder allocated any such voting rights may exceed the 9.9% limitation
as a result of such allocation. "Controlled Shares" includes, among other
things, (i) all common shares that a person owns within the meaning of
Section 958(a) of the Code, or is considered as owning by applying the rules of
Section 958(b) of the Code, (ii) all common shares that a person owns by
applying the rules of Sections 544 or 554 of the Code, and (iii) all common
shares that a person owns directly, indirectly or beneficially as a result of
the possession of sole or shared voting power within the meaning of
Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated
thereunder. These voting reallocation provisions could make it difficult or
impossible for any person or group of persons acting in concert to acquire
control of PXRE Group without agreement by PXRE Group's Board of Directors.
The Bye-Laws of PXRE Group provide that the quorum required for a general
meeting of shareholders is a majority of the outstanding shares entitled to vote
at such meeting. Generally, actions by shareholders of PXRE Group are decided by
a simple majority of votes cast at a meeting at which a quorum is present. See
"Comparison of Stockholders' Rights."
The holders of common shares will receive such dividends, if any, as may
be declared by the board of directors of PXRE Group out of funds legally
available for such purposes. Under Bermuda law, a company may not declare or pay
a dividend, or make a distribution out of contributed surplus, if there are
reasonable grounds for believing that (i) the company is, or after the payment
would be, unable to pay its liabilities as they fall due, or (ii) the realizable
value of
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the company's assets after such payment or distribution would be less than the
aggregate amount of its liabilities and its issued share capital and share
premium accounts. See "--Dividend Policy."
DIVIDEND POLICY
PXRE Group intends to declare and pay quarterly cash dividends of $0.06
per common share following completion of the reorganization. The declaration and
payment of dividends will be at the discretion of the board of directors of PXRE
Group and will depend upon PXRE Group's results of operation and cash flows, the
financial position and capital requirements of PXRE Group's reinsurance and
insurance subsidiaries, general business conditions, legal, contractual, tax and
regulatory restrictions on the payment of dividends and other factors the board
of directors of PXRE Group deems relevant.
PXRE Group, like PXRE Delaware, will be a holding company with no
operations or significant assets other than through its ownership of the capital
stock of its subsidiaries. Future dividends and other permitted payments from
such subsidiaries are expected to be PXRE Group's principal source of funds to
pay expenses and dividends.
PXRE Delaware's ability to pay dividends is subject to Connecticut
regulatory constraints and is restricted by covenants in indentures, credit
agreements and other documents described in PXRE Delaware's Annual and Quarterly
Reports incorporated herein by reference. See "Where You Can Find More
Information." See also "-- Credit Agreement" below for a description of PXRE
Delaware's revolving credit facility and certain proposed amendments to it.
PXRE Bermuda will be subject to Bermuda regulatory constraints which will
affect its ability to pay dividends to PXRE Group. See "Regulation of PXRE
Bermuda."
The payment of dividends by PXRE Group will also be subject to the
dividend rights contained in any series of PXRE Group's preferred shares. See
"--Preferred Shares" and "--Proposed Financing."
Accordingly, there is no requirement or assurance that dividends in
respect of PXRE Group's common shares will be declared or paid in the future.
CREDIT AGREEMENT
In order to consummate the merger, PXRE Delaware is required to obtain
the consent of the lenders under its Credit Agreement dated as of December 30,
1998 as amended (the "Credit Agreement") with First Union National Bank ("First
Union") as Agent and First Union, Fleet National Bank, Credit Lyonnais New York
Branch and The First National Bank of Chicago as lenders (collectively, the
"Lenders"). Pursuant to the Credit Agreement, the Lenders have agreed
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to make available to PXRE Delaware a $75,000,000 revolving credit facility, and
$50,000,000 of borrowings were outstanding thereunder at the date of this proxy
statement/prospectus.
The parties are currently negotiating amendments to this facility which,
among other things, would join PXRE Group and PXRE Barbados as parties and
guarantors; extend representations, warranties, covenants and events of default
to PXRE Group, PXRE Bermuda and PXRE Barbados; regulate transactions between
PXRE Delaware and its subsidiaries on the one hand and PXRE Group and its
subsidiaries other than PXRE Delaware and its subsidiaries on the other hand;
and substitute PXRE Group for PXRE Delaware in respect of public company and
related matters, all as more fully described in the draft Restated Credit
Agreement filed with this proxy statement/prospectus and incorporated herein
by reference. We cannot predict whether a Restated Credit Agreement will be
agreed in a timely manner or, if agreed, whether it will include conditions
that would be detrimental to PXRE.
Currently, loans under the Credit Agreement bear interest at an annual
rate equal to First Union's base rate, as in effect from time to time, for base
rate loans or at a margin (1.00% as of June 30, 1999) over First Union's
Eurodollar rate for periods of 30, 60, 90 or 180 days for LIBOR loans. In
connection with the Credit Agreement, PXRE Delaware and First Union entered into
an interest rate swap which, effective December 31, 1998, has the intended
effect of converting the initial $50 million borrowings by PXRE Delaware into a
fixed rate borrowing at an annual interest of 6.34%. Commitments under the
Credit Agreement terminate on March 31, 2005 and are subject to annual
reductions of 13 1/3% commencing March 31, 2000 and 33 1/3% on March 31, 2005,
and, unless due or paid sooner, the aggregate principal of the loans are due and
payable in full on March 31, 2005.
At the date of this proxy statement/prospectus, the Credit Agreement
contains covenants which, among other things, limit the ability of PXRE Delaware
and its subsidiaries (including PXRE Reinsurance, Transnational Insurance and
PXRE Limited): (a) to incur additional Indebtedness (other than certain
permitted Indebtedness); (b) to create Liens upon their properties or assets
(other than Permitted Liens); (c) to sell, transfer or otherwise dispose of
their assets, business or properties (other than certain permitted
dispositions); (d) to make additional Investments (other than certain permitted
Investments, including Permitted Acquisitions and other Investments in
compliance with, among other things, applicable law and the limitations set
forth in the investment policy of PXRE Reinsurance and not exceeding specified
limits); (e) to pay dividends or repurchase stock if after giving effect thereto
a Default or Event of Default exists or the Fixed Charge Coverage Ratio would be
less than 1.5 to 1.0 as defined in the Credit Agreement; (f) to enter into
certain transactions with Affiliates; (g) to engage in any business other than
(1) the businesses engaged in on December 30, 1998 and businesses and activities
reasonably related thereto or (2) in the case of any Insurance Subsidiary, the
sale of any property and casualty insurance or reinsurance products; (h) to
enter into or remain a party to certain ceded reinsurance agreements (1) with
certain reinsurers that are neither rated "A-" or better by A.M. Best nor have
financial strength ratings of "A-" or better by Standard & Poor's or Moody's
Investors Service Inc. unless such reinsurers are Lloyd's syndicates and Lloyd's
maintains a rating of "A-" or better by A.M. Best or Standard & Poor's or such
reinsurers have provided appropriate collateral in respect of their obligations,
or (2) which
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constitute Surplus Relief Agreements and which increase Combined Statutory
Capital and Surplus by more than 5% as of the most recent fiscal year end; or
(i) to consolidate, merge or otherwise combine (or agree to do any of the
foregoing) unless, among other things, (1) PXRE is the surviving entity in such
merger or consolidation, (2) such merger or consolidation constitutes a
Permitted Acquisition and the conditions and requirements of the Credit
Agreement are complied with and (3) immediately thereafter no Default or Event
of Default exists. The Credit Agreement also requires PXRE Delaware and PXRE
Reinsurance where applicable to meet Leverage Ratio, Fixed Charge Coverage
Ratio, Risk-Based Capital Ratio and Combined Statutory Surplus requirements.
At the date of this proxy statement/prospectus, the Credit Agreement
enumerates various Events of Default, including but not limited to, if: (1) any
Person or group becomes the "beneficial owner" of securities of PXRE Delaware
representing 20% or more of the combined voting power of the then outstanding
securities of PXRE Delaware ordinarily having the right to vote in the election
of directors; or (2) the board of directors of PXRE Delaware ceases to consist
of a majority of the individuals who constituted the board as of December 30,
1998 or who subsequently become members after having been nominated, or
otherwise approved in writing, by at least a majority of individuals who
constituted the board as of December 30, 1998 (or their approved replacements).
A copy of the Credit Agreement is filed as Exhibit 4.8 to PXRE's 1998 10-K and
is incorporated herein by reference. Copies of various Joinder Agreements, dated
May 18, 1999, Assignment and Acceptance Agreements, dated May 18, 1999, the
First Amendment and Waiver to Credit Agreement, dated May 18, 1999, and the
Second Amendment and Waiver to Credit Agreement, dated June 25, 1999, are filed
as Exhibit 4.9 to PXRE Delaware's 10-Q for the quarterly period ended June 30,
1999 and are incorporated herein by reference.
PREFERRED SHARES
Pursuant to PXRE Group's Bye-Laws, PXRE Group's board of directors may,
without any vote or action of the holders of common shares, issue preferred
shares in one or more series with such voting rights, preferences,
qualifications, privileges, limitations, options, conversion rights, redemption
features, restrictions and other special or relative rights as PXRE Group's
board of directors may determine, including, without limitation, consideration,
dividend rights, conversion rights, voting rights (full or limited or no voting
power), terms and manner of redemption (including, without limitation, sinking
fund provisions), redemption dates, redemption price, and liquidation
preferences. Such rights, preferences, powers and limitations as may be
established could also have the effect of impeding or discouraging the
acquisition of control of PXRE Group.
PROPOSED FINANCING
Following the completion of the reorganization, PXRE Group intends to
capitalize PXRE
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Bermuda with an initial capital of at least $35 million. Such additional capital
may be raised in either the public or private markets. Although the terms of
such financing are not presently ascertainable, it is expected that the
financing will involve an offering of either PXRE Group preferred shares or
common shares or rights or warrants to acquire preferred or common shares, or
a combination of such securities.
The PXRE Group common shares offered hereby will be subject to the
limitations and prior rights associated with any PXRE Group preferred shares,
including dividend rights, redemption rights, conversion rights and liquidation
rights. An offering involving PXRE Group common shares (including PXRE Group
preferred shares convertible into PXRE Group common shares) or rights or
warrants to acquire such shares at less than net tangible book value (which was
$26.43 per share at June 30, 1999 based on net book value plus negative
goodwill) would cause you to incur dilution.
In determining the terms of such financing, the board of directors of
PXRE Group intends to consider, among other things, the historic and then
current market prices of PXRE Group common shares, the book value of PXRE Group
common shares as compared to its market price, PXRE Group's earnings and
prospects, PXRE Group's actual and pro forma ratios of earnings to fixed charges
and earnings to combined fixed charges and preferred dividends, ratings of
rating agencies, insurance and reinsurance business and regulatory
considerations, market conditions, shareholder interests, and PXRE Group's need
for capital.
As an alternative to, or in conjunction with, such financing, PXRE Group
may obtain such funds, or a portion thereof, from internal sources. Any such
transaction may require insurance regulatory approval. We cannot predict whether
any required approval will be obtained or whether the required approval will
include conditions that would be detrimental to PXRE Group.
THE BYE-LAWS
The Bye-Laws provide for the corporate governance of PXRE Group,
including the establishment of share rights, modification of such rights,
issuance of share certificates, imposition of a lien over shares in respect of
unpaid amounts on those shares, calls on shares which are not fully paid,
forfeiture of shares, the transfer of shares, alterations to capital, the
calling and conduct of general meetings, proxies, the appointment and removal of
directors, conduct and powers of directors, dividends, the appointment of an
auditor and the winding-up of PXRE Group.
The Bye-Laws provide that the board of directors of PXRE Group shall be
divided into three classes that are elected for staggered three-year terms. As a
consequence, shareholders will not vote for the election of a majority of
directors in any single year. Shareholders may only remove a director for cause
prior to the expiration of such director's term at a special meeting of
shareholders at which a majority of the holders of shares entitled to vote
thereon vote in favor of such action.
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The Bye-Laws contain various provisions affecting the transferability of
the common shares. Under the Bye-Laws, no transfer of common shares is permitted
if such transfer would result in a shareholder owning (directly, indirectly,
beneficially or constructively) more than 9.9% of the voting power of the
outstanding shares, including common shares, of PXRE Group or more than 9.9% of
the outstanding shares of any class of PXRE Group's stock. Notwithstanding the
foregoing, the restrictions on transferability do not apply to any person who
owned or controlled more than 9.9% of the outstanding shares of common stock of
PXRE Delaware on August 9, 1999 but only with respect to PXRE Group common
shares into which shares of PXRE Delaware common stock owned on August 9, 1999
are converted in the reorganization. Moreover, the PXRE Group board of directors
may in its discretion waive the 9.9% limitation on a case by case basis. The
restrictions on transferability and the restrictions on voting described
under "-- Common Shares" could have the effect of discouraging an attempt to
obtain control of PXRE Group through certain actions.
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TRANSFER AGENT
The transfer agent and registrar of PXRE Group's common shares will be
American Stock Transfer & Trust Company, New York, New York.
COMPARISON OF STOCKHOLDERS' RIGHTS
COMPARISON OF STOCKHOLDERS' RIGHTS
The rights of the stockholders of PXRE Delaware are governed by the
Delaware General Corporation Law (the "DGCL") and PXRE Delaware's Restated
Certificate of Incorporation, as amended, and Bylaws (collectively, the "PXRE
Delaware Charter Documents"). Upon completion of the merger, the rights of PXRE
Group's shareholders will be governed by (a) the Bermuda Companies Act of 1981,
as amended (the "Companies Act"), (b) certain statutes governing Bermuda
companies generally and (c) PXRE Group's Memorandum of Association and Bye-Laws
(collectively, the "PXRE Group Charter Documents"). The companies law of Bermuda
differs in certain respects from corporate laws generally applicable to Delaware
corporations and their stockholders.
The following is a summary of certain changes in the rights of
stockholders resulting from the merger described in this proxy
statement/prospectus, and does not purport to be complete or to cover all of the
respects in which Bermuda companies law or the PXRE Group Charter Documents may
differ from Delaware corporate laws and the PXRE Delaware Charter Documents.
Certain of these changes, discussed below, will be effected automatically as a
result of the merger. This comparison is qualified in its entirety by reference
to the PXRE Delaware Charter Documents and the PXRE Group Charter Documents,
which you should review carefully. Copies of the respective Charter Documents
are available for inspection at the respective offices of each company and will
be sent to you upon request.
VOTING RIGHTS AND QUORUM REQUIREMENTS
PXRE Group. Under Bermuda law, the voting rights of shareholders are
regulated by PXRE Group's Bye-Laws and, in certain circumstances, the Companies
Act. The Bye-Laws specify that shareholders, present in person or by proxy,
representing a majority of the total outstanding voting shares of PXRE Group are
required to form a quorum for the transaction of business. Generally, any action
or resolution requiring approval of the shareholders may be passed by a simple
majority of the votes cast by the shareholders at a general meeting at which a
quorum is present.
Any shareholder of PXRE Group who is present at a meeting may vote in
person, as may any corporation which is present by a duly authorized
representative. PXRE Group's Bye-Laws also permit votes by proxy, provided the
instrument appointing the proxy, together with evidence of its due execution
satisfactory to PXRE Group's board of directors, is delivered to
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PXRE Group's registered office not less than 48 hours before the time of the
meeting. In general, no proxy may be voted or acted upon after 1 year from its
date.
Under PXRE Group's Bye-Laws, each shareholder of PXRE Group is normally
entitled to one vote per PXRE Group common share held by such shareholder.
However, if, and so long as, the Controlled Shares (as defined above in
"Description of Authorized Shares of PXRE Group -- Common Shares") of any person
constitute more than 9.9% of the voting power of the issued shares, including
common shares, of PXRE Group, the voting rights with respect to the Controlled
Shares owned by such person will be limited, in the aggregate, to a voting power
of 9.9%, pursuant to a formula specified in the Bye-Laws. Notwithstanding the
foregoing, these restrictions on voting do not apply to any person who owned
or controlled more than 9.9% of the outstanding shares of common stock of PXRE
Delaware on August 9, 1999 but only with respect to PXRE Group common shares
into which shares of PXRE Delaware common stock owned on August 9, 1999 are
converted in the reorganization. Moreover, the PXRE Group board of directors may
in its discretion waive the 9.9% limitation on a case by case basis. The votes
that could be cast by such person but for the restrictions on voting rights
described above will be allocated to the other holders of shares, pro rata based
on the number of shares held by such shareholders, subject only to the further
limitation that no shareholder allocated any such voting rights may exceed the
9.9% limitation as a result of such allocation. These voting reallocation
provisions could make it difficult or impossible for any person or group of
persons acting in concert to acquire control of PXRE Group without agreement
by PXRE Group's board of directors.
PXRE Delaware. Under the DGCL and PXRE Delaware's Bylaws, each holder of
record of PXRE Delaware common stock is entitled to one vote per share. Except
as otherwise provided under Delaware law or the Charter Documents, the presence,
in person or by proxy, of the holders of record of shares representing a
majority of the outstanding shares of PXRE Delaware entitled to vote at the
meeting constitutes a quorum. At all meetings of the stockholders, a quorum
being present, all matters are decided by the affirmative vote of a majority of
the shares of stock entitled to vote held by stockholders present in person or
by proxy, except as otherwise required by PXRE Delaware's Certificate or by the
laws of Delaware.
Under the DGCL, any stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by proxy.
Unless the proxy provides for a longer period, no proxy may be voted or acted
upon after three years from its date. Proxies may be transmitted by telegram,
cablegram or other means of electronic transmission to the person who will be
the holder of the proxy or to a proxy solicitation firm, proxy support service
or like agent duly authorized by the person who will be the holder of the proxy
to receive such transmission, provided that such proxy either sets forth or is
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder.
VOTING RIGHTS WITH RESPECT TO EXTRAORDINARY CORPORATE TRANSACTIONS
PXRE Group. Bermuda law permits amalgamation between two or more Bermuda
companies (or between a Bermuda company and one or more Bermuda or foreign
companies). PXRE Group's Bye-Laws require that such amalgamations be approved by
the affirmative vote of shareholders holding a majority of the voting power of
the then outstanding shares entitled to vote.
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PXRE Delaware. Under Delaware law, mergers and consolidations and sales,
leases or exchanges of all or substantially all of the property or assets of a
company, require the approval of the holders of a majority of the outstanding
shares entitled to vote, except that no vote of stockholders of the corporation
surviving a merger is necessary if (i) the merger does not amend the certificate
of incorporation of the corporation, (ii) each outstanding share immediately
prior to the effective date of the merger is to be an identical share after the
merger, and (iii) either no common shares of the corporation and no securities
or obligations convertible into common shares are to be issued in the merger, or
the common shares to be issued in the merger plus common shares initially
issuable on conversion of other securities issued in the merger does not exceed
20% of the common shares of the corporation immediately before the effective
date of the merger.
PXRE Delaware's Certificate contains special voting provisions which
apply to certain business combination transactions involving PXRE Delaware or
PXRE Reinsurance with, or proposed by or on behalf of, an interested stockholder
or certain related parties. In general, such a transaction must be approved by
at least 66 2/3% of the total voting power of PXRE Delaware's capital stock
entitled to vote generally in the election of directors (including the
affirmative vote of an Independent Majority (as defined in the Certificate) of
PXRE Delaware stockholders); provided, however, that if the terms of such
transaction clearly satisfy certain "fair price" requirements and such
transaction is recommended to stockholders by the favorable vote of not less
than a majority of the entire PXRE Delaware board and a majority (but in any
event not less than four) of the Continuing Directors (as defined in the
Certificate), then only the vote, if any, prescribed by the DGCL is required.
RESTRICTIONS ON CERTAIN TRANSFERS
PXRE Group. Under PXRE Group's Bye-Laws no transfer of PXRE Group shares
is permitted if such transfer would result in a shareholder owning or
controlling, directly, indirectly, beneficially or constructively, more than
9.9% of the voting power of the outstanding shares, including common shares, of
PXRE Group or more than 9.9% of the outstanding shares of any class of PXRE
Group's stock. PXRE Group may refuse to register any such transfer on PXRE
Group's share transfer records. A transferee will be permitted to promptly
dispose of any PXRE Group shares purchased which violate the restriction and as
to the transfer of which registration is refused. The transferor of such PXRE
Group shares will be deemed to own such shares for dividend, voting and
reporting purposes until a transfer of such shares has been so registered.
In the event that PXRE Group becomes aware of a shareholder owning more
than 9.9% of the voting power of PXRE Group's outstanding shares after a
transfer of shares has been so registered, PXRE Group's Bye-Laws provide that
the voting rights with respect to PXRE Group
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shares owned by such shareholder will be limited to a voting power of 9.9% as
discussed more fully above.
These restrictions do not apply to any person who owned or controlled
more than 9.9% of the outstanding shares of PXRE Delaware common stock on
August 9, 1999 but only with respect to PXRE Group common shares into which
shares of PXRE Delaware common stock owned on August 9, 1999 are converted in
the reorganization. Moreover, PXRE Group's board of directors may in its
discretion waive the 9.9% limitation on a case by case basis.
PXRE Delaware. PXRE Delaware's Charter Documents do not contain transfer
and voting restrictions similar to those contained in PXRE Group's Bye-Laws.
DISSENTERS' RIGHTS
PXRE Group. Under Bermuda law, a dissenting shareholder of a company
participating in certain transactions may, under varying circumstances, apply to
a Bermuda court for a proper valuation of such shareholder's shares and receive
cash in the amount of the fair market value of his shares (as determined by a
court), in lieu of the consideration he or she would otherwise receive in any
such transactions. The court would ordinarily not set aside the transaction on
that ground absent evidence of fraud or bad faith. Bermuda law, in general,
provides for dissenters' rights in an amalgamation between non-affiliated
companies, a scheme of arrangement, a reconstruction and certain other
transactions.
PXRE Delaware. Stockholders are entitled to demand appraisal of their
shares in the case of mergers or consolidations, except where (i) they are
stockholders of the surviving company and the merger did not require their
approval under the DGCL, or (ii) the corporation's shares are either listed on a
national securities exchange or on the NASDAQ National Market System or held of
record by more than 2,000 stockholders. Appraisal rights are available in either
(i) or (ii) above, however, if the stockholders are required by the terms of the
merger or consolidation to accept any consideration other than (a) shares of the
corporation surviving or resulting from the merger or consolidation, (b) shares
of another company which are either listed on a national securities exchange or
held of record by more than 2,000 stockholders, (c) cash in lieu of fractional
shares, or (d) any combination of the foregoing. Appraisal rights are not
available in the case of a sale, lease, exchange or other disposition by a
company of all or substantially all of its property and assets.
Under Delaware law, PXRE Delaware stockholders will not have dissenters'
appraisal rights in connection with the reorganization.
SPECIAL MEETINGS OF SHAREHOLDERS
PXRE Group. Under Bermuda law and PXRE Group's Bye-Laws, a special
general meeting of shareholders may be convened by the board of directors at any
time and must be convened at the request of shareholders holding not less than
10% of the paid-in capital of PXRE Group carrying the right to vote at general
meetings.
PXRE Delaware. PXRE Delaware's Bylaws provide that the President or
Secretary of PXRE Delaware may call a special meeting of stockholders. The
President and Secretary of PXRE Delaware are also required to call a special
meeting of stockholders upon the written
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request of stockholders holding of record at least 20% of the shares entitled to
vote at such meeting. In addition, under Delaware law, if a company fails to
hold its annual meeting within a period of 30 days after the date designated
therefor, or if no date has been designated for a period of 13 months after its
last annual meeting, the Delaware Court of Chancery may order a meeting to be
held upon the application of a stockholder or director.
NUMBER AND QUALIFICATIONS OF DIRECTORS; SIZE OF BOARD
PXRE Group. Under Bermuda law, the minimum number of directors of a
company is two, although the minimum number may be set higher and the maximum
number may also be set in accordance with the bye-laws of such company. The
exact number of directors is usually fixed by the shareholders in general
meeting. Only the shareholders may increase or decrease the number of director
seats last approved by the shareholders. PXRE Group's Bye-Laws provide that the
number of directors which constitute PXRE Group's board of directors shall not
be less than 3 nor more than 12, and that the specific number of directors
constituting the board shall be determined from time to time by the shareholders
in general meeting. The size of PXRE Group's board is currently fixed at 9
directors. PXRE Group's board is divided into three classes, Classes I, II and
III and directors are elected to serve staggered 3 year terms. As a result,
approximately 1/3 of the board is elected each year. The shareholders may
increase the number of directors to more than 12 and change the classification
of PXRE Group's board by the affirmative vote of shareholders holding at least
66 2/3% of the voting power of the then outstanding shares entitled to vote.
PXRE Delaware. Pursuant to PXRE Delaware's Certificate, PXRE Delaware's
board is divided into three classes, and directors are elected to serve
staggered 3 year terms. The number of directors may be increased or decreased by
up to 2 members within any 12 month period by a resolution adopted by a majority
of the PXRE Delaware board, with any further increases or decreases in such
period requiring a resolution adopted by at least 66 2/3% of the whole PXRE
Delaware board and a majority (but in any event not less than 6) of the
Continuing Directors or by the affirmative vote of holders of at least 66 2/3%
of the total voting power of PXRE Delaware's capital stock entitled to vote in
the election of directors, including the affirmative vote of an Independent
Majority of PXRE Delaware stockholders; provided, that the number of directors
may not be less than 5 nor more than 11.
SHAREHOLDER NOMINATIONS
PXRE Group. Nominations of persons for election as directors of PXRE
Group may be made at a meeting of shareholders called for the election of
directors by any PXRE Group shareholder entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
PXRE Group' Bye-Laws. To be timely, notice must be delivered to or mailed and
received at PXRE Group's registered office not less than 60 days prior to such
meeting. Such notice must set forth (a) as to each nominee (i) the name, age,
business address and residence address of the nominee, (ii) the principal
occupation or employment of the nominee, (iii) the class and number of shares of
PXRE Group common shares beneficially owned
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by the nominee, (iv) any other information relating to the nominee that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to Schedule 14A of the Exchange Act, and (v) the consent of the nominee
to serve as a director, if so elected; and (b) as to the shareholder giving the
notice (i) the shareholder's name and address and (ii) the class and number of
shares of PXRE Group capital stock beneficially owned by the shareholder. The
chairman of the meeting, if the facts warrant, has the authority to determine
that a nomination was not made in accordance with the foregoing procedure, and,
if he should so determine, any defective nomination will be disregarded.
PXRE Delaware. PXRE Delaware's Certificate establishes procedures that
must be followed for stockholders to nominate individuals for election to PXRE
Delaware's board of directors. A stockholder entitled to vote for the election
of directors may make nominations for the election of directors to the PXRE
Delaware board, provided that (i) advance notice of the nomination is given to
the PXRE Delaware board within a specified time period, (ii) such notice sets
forth, among other things, the nominee's name, age, address and occupation and
the number of shares of PXRE Delaware common stock owned by the nominee, (iii)
the nomination can only be made at a stockholder meeting called for the election
of directors and (iv) the chairman of the meeting has the discretion to
determine whether the nominating stockholder has complied with the requirements
of (i) through (iii) above and, if the chairman determines that the stockholders
did not so comply, to disregard the nomination.
REMOVAL OF DIRECTORS; FILLING OF VACANCIES ON THE BOARD
PXRE Group. Bermuda law provides that unless a corporation's bye-laws
provide otherwise, the shareholders of a Bermuda company may, at a special
general meeting called for the purpose, remove any director or the entire board
of directors provided proper notice of the meeting is served on the director.
PXRE Group's Bye-Laws provide that a director may only be removed by the
shareholders for cause pursuant to the affirmative vote of shareholders holding
a majority of the voting power of the then outstanding shares entitled to vote
at a general meeting convened for the purpose of removing such director;
provided, the subject director(s) has been served with at least 14 days prior
notice of such meeting and is given the opportunity to be heard at the meeting.
A vacancy on the board created by the removal of a director may be filled
by the election or appointment by the shareholders at the meeting at which such
director is removed. Any director so selected shall hold office for the term
that coincides with the term of the class to which such director has been
selected. Subject to any resolution of the shareholders to the contrary, PXRE
Group's board may fill any vacancy caused by removal and left unfilled by the
shareholders. PXRE Group's board also has the power (subject to any resolution
of the shareholders to the contrary) to fill any casual vacancies on the board
that may arise from time to time. Any director so appointed by the board shall
hold office for the term that coincides with the term of the class to which such
director has been selected.
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PXRE Delaware. The DGCL provides that unless a corporation's certificate
of incorporation provides otherwise, in the case of a corporation whose board is
classified, the holders of a majority of the shares entitled to vote in an
election of directors may remove any director or the entire board of directors
only for cause. PXRE Delaware's Charter Documents provide that any director or
the entire board of directors may be removed at any time, with or without cause,
by the affirmative vote, at a meeting of stockholders called for that purpose,
of the holders of 2/3 or more of voting shares that elected the director.
Any vacancies in PXRE Delaware's board and any newly created
directorships resulting from an increase in the number of directors may be
filled only by the PXRE Delaware board acting by vote of 2/3 of the directors
then in office, even though less than a quorum. Under Delaware law, any director
elected to fill a vacancy will hold office for the term that coincides with the
term of the class to which such director has been selected. No decrease in the
number of directors may shorten the term of an incumbent director.
AMENDMENTS TO CHARTER DOCUMENTS
PXRE Group. Following approval of its board of directors, amendments to
the memorandum of association and bye-laws of a Bermuda company must be
submitted to a general meeting of the shareholders and shall be effective only
to the extent a quorum is present and the amendments are approved by a majority
of the votes cast by the shareholders present at such meeting, unless the
company's bye-laws provide otherwise. Under PXRE Group's Bye-laws, any change
to PXRE Group's authorized share capital must be approved by a majority of the
votes cast by the shareholders present at a general meeting for which notice has
been duly given, and a quorum is present. However, under PXRE Group's Bye-Laws,
the affirmative vote of shareholders holding at least 66 2/3% of the voting
power of the then outstanding shares of PXRE Group is required to amend the
Bye-law provisions relating to (i) changes to 9.9% voting limitation and related
provisions limiting the voting rights and number of shares that can be owned
and controlled by any shareholder, (ii) nomination and election of directors,
and (iii) indemnification of officers and directors.
PXRE Delaware. Amendments to PXRE Delaware's Certificate require approval
by each of the following: (i) 2/3 of the whole board of directors of PXRE
Delaware and a majority of the Continuing Directors (as defined in the
Certificate), and (ii) holders of more than 66 2/3% of the voting power of the
then outstanding shares entitled to vote and an Independent Majority of
Shareholders (as defined in the Certificate).
Amendments to PXRE Delaware's By-Laws require the approval of (i) 2/3 of
the whole Board of Directors of PXRE Delaware and a majority of the Continuing
Directors; or (ii) 66 2/3% of the voting power of the then outstanding shares
entitled to vote and an Independent Majority of Shareholders.
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ANTI-TAKEOVER STATUTES
PXRE Group. Bermuda does not currently have a tender offer statute. The
Companies Act, however, provides that where an offer is made for shares in a
company by another company and, within four months of the offer, the holders of
not less than 90% in value of the shares that are the subject of such offer
accept it, the offeror may by notice, given within two months after the
expiration of the four months, require that dissenting shareholders transfer
their shares under the terms of the offer. Dissenting shareholders may apply to
a court within one month of the notice objecting to the transfer, and the court
may give such order as it thinks fit. The Companies Act also provides that the
holders of not less than 95% of the shares of any class of shares in a company
may give notice to the remaining shareholders or class of shareholders of the
intention to acquire their shares on the terms set out in the notice. Recipients
of the notice have a right to apply to the Bermuda courts for an appraisal.
PXRE Delaware. Generally, the DGCL prohibits a publicly-held Delaware
company, such as PXRE Delaware, from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless (i)
prior to such time, the board of directors of the corporation approved either
the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owns at least 85% of the outstanding voting stock, or
(iii) at or after such time the business combination is approved by the board of
directors and by the affirmative vote of at least 66 2/3% of the outstanding
voting shares that are not owned by the interested stockholder. An "interested
stockholder" is a person who, together with affiliates or associates, owns (or
within three years, did own) 15% or more of corporation's voting stock.
DERIVATIVE SUITS
PXRE Group. The rights of shareholders under Bermuda law are not as
extensive as the rights of shareholders under legislation or judicial precedent
in many United States jurisdictions. Class actions and derivative actions are
generally not available to shareholders under the laws of Bermuda. In certain
very limited circumstances an action can be brought by minority shareholders, on
behalf of the Bermuda company, seeking to enforce a right of action vested in or
derived from the Bermuda company. However, such a derivative action will not be
permitted where there is an alternative action available which would provide an
adequate remedy. Any property or damages recovered by derivative action go to
the Bermuda company, not to the plaintiff shareholders.
The Companies Act enables a shareholder who complains that the affairs of
a company are being or have been conducted in a manner oppressive or prejudicial
to some part of the shareholders, including himself, to petition the court,
which may, if it is of the opinion that to wind up a company would unfairly
prejudice those shareholders, but that otherwise the facts would justify a
winding up order on just and equitable grounds, make such order as it thinks
fit. The Companies Act also provides that a company may be wound up by the court
if the court is of
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the opinion that it is just and equitable to do so. The latter provision is also
available to minority shareholders seeking relief from the oppressive conduct of
the majority, and the court has wide discretion to make such order as it may
think fit. Except as mentioned above, claims against a Bermuda company by its
shareholders must be based on the general law of contract or tort of Bermuda.
A statutory right of action is conferred on subscribers to shares of a
Bermuda company against persons (including directors and officers) responsible
for the issue of a prospectus in respect of damage suffered by reason of an
untrue statement therein, but this statutory provision confers no right of
action against the Bermuda company itself. In addition, the Bermuda company
itself (as opposed to its shareholders) may take action against the officers
(including directors) of a Bermuda company for breach of their statutory and
fiduciary duty to act honestly and in good faith with a view to the best
interests of the Bermuda company.
PXRE Delaware. Derivative actions may be brought in Delaware by a
stockholder on behalf of, and for the benefit of, the corporation for, among
other things, breach of fiduciary duty, corporate waste and actions not taken in
accordance with applicable law. The DGCL provides that a stockholder must state
in the complaint that he or she was a stockholder of the corporation at the time
of the transaction of which he or she complains. A stockholder may not sue
derivatively unless he or she first makes demand on the corporation that it
bring suit and such demand has been refused, unless it is shown that such demand
would have been futile. No suit may be brought against any officer, director, or
stockholder for any debt of a corporation for which he or she is an officer,
director, or stockholder, until judgment is obtained therefor against the
corporation and execution thereon returned unsatisfied. The complaint in such
an action must state the claim against the corporation and the ground on which
the plaintiff expects to charge defendants personally.
LIMITATIONS ON DIRECTOR LIABILITY
PXRE Group. Under Bermuda law, a director must observe the statutory duty
of care which requires such director to act honestly and in good faith with a
view to the best interests of PXRE Group and exercise the care, diligence and
skill that a reasonably prudent person would exercise in comparable
circumstances. Bermuda law renders void any provision in the bye-laws or any
contract between a company and any such director exempting him or her from or
indemnifying him or her against any liability in respect of fraud or dishonesty
of which he or she may be guilty in relation to PXRE Group.
Under PXRE Group's Bye-Laws, each shareholder and PXRE Group agree to
waive any claim against a director or officer of PXRE Group for any action or
failure to act in the performance of his or her duties, but such waiver does not
extend to any matter in respect of any fraud or dishonesty which may attach to
such director or officer.
PXRE Delaware. Under Delaware law, a company may include in its
certificate of incorporation, a provision eliminating or limiting the liability
of a director to the company or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that a
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company may not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) certain acts concerning unlawful
payments of dividends or stock purchases or redemptions under Section 174 of the
DGCL, or (iv) for any transactions from which a director derived an improper
personal benefit. PXRE Delaware's Certificate contains provisions limiting the
personal liability of directors to PXRE Delaware and its stockholders for
monetary damages for a breach of fiduciary duty as directors to the full extent
permitted under the DGCL.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
PXRE Group. Under Bermuda law, a company is permitted to indemnify its
officers and directors, out of the funds of the company, against any liability
incurred by them in defending any proceedings, whether civil or criminal, in
which judgment is given in their favor, or in which they are acquitted, or
where, under relevant Bermuda legislation, relief from liability is granted to
them by the court. PXRE Group's Bye-laws generally provide that the officers and
directors of PXRE Group and their heirs shall be indemnified and held harmless
out of the assets and profits of PXRE Group from and against all actions, costs,
charges, losses, damages and expenses which they or their heirs may incur by
reason of any act done or omitted in the execution of their duty in their
respective offices; provided, that PXRE Group shall not be obligated to extend
such indemnity to any matter in respect of any fraud or dishonesty which may
attach to any of such persons. As noted above, the Bye-Laws also contain a
waiver of action against the directors and officers by PXRE Group and each
shareholder which does not extend to any matter in respect of any fraud or
dishonesty which may attach to any such director or officer.
PXRE Delaware. Under Delaware law, a company is permitted to indemnify
its officers, directors and certain other persons against any liability incurred
in any civil, criminal, administrative or investigative proceeding if such
individual acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the company and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. In addition, under Delaware law, to the extent that a director,
officer, employee or agent of a company has been successful on the merits or
otherwise in defense of any proceeding referred to above or in defense of any
claim, issue or matter therein, he or she must be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred in connection
therewith. PXRE Delaware's Certificate provides for indemnification of officers
and directors of PXRE Delaware against liability that they may incur in their
capacities as such to the fullest extent permitted by Delaware law. In addition,
pursuant to certain letter agreements between PXRE Delaware and its directors,
PXRE Delaware has undertaken to indemnify its directors to the fullest extent
permitted by its Certificate and applicable Delaware law.
PREEMPTIVE RIGHTS
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PXRE Group. Under Bermuda law, no shareholder has a preemptive right to
subscribe for additional issues of a company's shares unless, and to the extent
that, such right is expressly granted to such shareholder under the bye-laws of
a company or under any contract between such shareholder and the company. PXRE
Group's Bye-Laws do not provide for preemptive rights and PXRE Group is not a
party to any contract with any holder of PXRE Group common shares providing such
rights.
PXRE Delaware. Under Delaware law, no stockholder has a preemptive right
to subscribe to additional issues of a corporation's stock unless, and to the
extent that, such right is expressly granted to such stockholder in the
corporation's certificate of incorporation. PXRE Delaware's Certificate does not
provide for preemptive rights.
DIVIDENDS
PXRE Group. Bermuda law does not permit payment of dividends or
distributions of contributed surplus by a company if there are reasonable
grounds for believing that the company, after the payment is made, would be
unable to pay its liabilities as they become due, or the realizable value of the
company's assets would be less, as a result of the payment, than the aggregate
of its liabilities and its issued share capital and share premium accounts. The
excess of the consideration paid on issue of shares over the aggregate par value
of such shares must (except in certain limited circumstances) be credited to a
share premium account. Share premium may be distributed in certain limited
circumstances, for example to pay up unissued shares which may be distributed to
shareholders in proportion to their holdings, but is otherwise subject to
limitation.
PXRE Delaware. Delaware law generally allows dividends to be paid out of
surplus of the corporation or out of the net profit of the corporation for the
current fiscal year and/or the prior fiscal year. No dividends may be paid if
they would result in the capital of the corporation being less than the capital
represented by the preferred shares of the corporation.
INSPECTION OF BOOKS AND RECORDS; SHAREHOLDER LISTS
PXRE Group. Bermuda law provides the general public with a right of
inspection of a Bermuda company's public documents at the office of the
Registrar of Companies in Bermuda, and provides a Bermuda company's shareholders
with a right of inspection of such company's bye-laws, minutes of general
(shareholder) meetings, and audited financial statements. The register of
shareholders is also open to inspection by shareholders free of charge and, upon
payment of a small fee, by any other person. A Bermuda company is required to
maintain its share register in Bermuda. A Bermuda company is required to keep at
its registered office a register of its directors and officers which is open for
inspection by shareholders or the public without charge. Bermuda law does not,
however, provide a general right for shareholders to inspect or obtain copies of
any other corporate records.
PXRE Delaware. Any stockholder of record, in person or by attorney or
other agents, upon written demand under oath stating the purpose thereof, has
the right during PXRE Delaware's
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usual hours for business to inspect, for any proper purpose, PXRE Delaware's
stock ledger, a list of its stockholders, and its other books and records, and
to make copies or extracts therefrom.
MANAGEMENT OF PXRE GROUP
The board of directors of PXRE Group, upon the effectiveness of the
reorganization, will consist of those persons who, at the effective time, are
serving as directors of PXRE Delaware, each to have the term of office for which
he or she was elected or appointed. PXRE Group intends to establish committees
of the board of directors which committees will have identical members and
functions similar to those of the committees of the board of directors of PXRE
Delaware immediately prior to the effective time.
Bermuda law requires that all Bermuda exempted companies shall have (a) a
minimum of two directors, other than alternate directors, ordinarily resident in
Bermuda; or (b) a secretary who is ordinarily resident in Bermuda and a
director, other than an alternate director, who is ordinarily resident in
Bermuda; or (c) a secretary who is ordinarily resident in Bermuda and a resident
representative; or (d) in the case of a company the shares of which are listed
on an "appointed stock exchange," a resident representative. In order to satisfy
these Bermuda law requirements, PXRE Group has appointed David J. Doyle as
Secretary and James M. Macdonald as resident representative.
PXRE Group's officers, upon the effectiveness of the reorganization, are
expected to be the following persons:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Gerald L. Radke Chairman, President and Chief Executive Officer
James F. Dore Executive Vice President and Chief Financial
Officer
F. Sedgwick Browne Vice President
David J. Doyle Secretary
I.S. Outerbridge Assistant Secretary
</TABLE>
Messrs. Radke and Dore are presently employed as executive officers of PXRE
Delaware. Mr. Browne is a partner in the law firm, Morgan, Lewis & Bockius LLP,
New York, New York and is a director and secretary of PXRE Delaware. Mr. Doyle
is an attorney in the law firm, Conyers Dill & Pearman, Hamilton, Bermuda and
Mr. Outerbridge is an employee of Codan Services Limited, Hamilton, Bermuda, a
company affiliated with Conyers Dill & Pearman.
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PXRE Group has not paid compensation to any of the above-named executives
before the date of this proxy statement/prospectus and is not expected to do so
prior to the effective time of the merger.
PXRE Group intends to hire a chief underwriting officer, an accounting
officer and an office manager to be resident in Bermuda, none of whom have been
identified at the date of this proxy statement/prospectus.
REGULATION OF PXRE BERMUDA
The Insurance Act 1978 and Related Regulations. The Insurance Act and
related regulations, which will regulate the business of PXRE Bermuda, provides
that no person shall carry on an insurance business in or from within Bermuda
unless registered as an insurer under the Act by the Minister of Finance. The
Minister, in deciding whether to grant registration, has broad discretion to act
as he thinks fit in the public interest. The Minister is required by the Act to
determine whether the applicant is a fit and proper body to be engaged in
insurance business and, in particular, whether it has, or has available to it,
adequate knowledge and expertise. In connection with registration, the Minister
may impose conditions relating to the writing of certain types of insurance.
An Insurance Advisory Committee appointed by the Minister advises him on
matters connected with the discharge of his functions and sub-committees thereof
supervise and review the law and practice of insurance in Bermuda, including
reviews of accounting and administrative procedures.
The Act imposes on Bermuda insurance companies solvency and liquidity
standards and auditing and reporting requirements and grants to the Minister
powers to supervise, investigate and intervene in the affairs of insurance
companies. Significant aspects of the Bermuda insurance regulatory framework are
set forth below.
Cancellation of Insurer's Registration. An insurer's registration may be
canceled by the Minister on certain grounds specified in the Act, including
failure of the insurer to comply with its obligations under the Act or, if in
the opinion of the Minister after consultation with the Insurance Advisory
Committee, the insurer has not been carrying on business in accordance with
sound insurance principles.
Independent Approved Auditor. Every registered insurer must appoint an
independent auditor who will annually audit and report on the statutory
financial statements and the statutory financial return of the insurer, the
latter of which is required to be filed annually with the Registrar of
Companies, who is the chief administrative officer under the Act. The auditor
must be approved by the Minister as the independent auditor of the insurer. The
approved auditor may be the same person or firm which audits the insurer's
financial statements and reports for presentation to its shareholders.
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Statutory Financial Statements. An insurer must prepare annual statutory
financial statements. The Act prescribes rules for the preparation and substance
of such statutory financial statements (which include, in statutory form, a
balance sheet, income statement, and a statement of capital and surplus, and
detailed notes thereto). The insurer is required to give detailed information
and analyses regarding premiums, claims, reinsurance and investments. The
statutory financial statements are not prepared in accordance with U.S. GAAP and
are distinct from the financial statements prepared for presentation to the
insurer's shareholders under The Companies Act 1981 of Bermuda, which financial
statements may be prepared in accordance with U.S. GAAP. The insurer, within a
specified time, must have a copy of its statutory financial statements available
at its principal office for production to the Registrar upon request and the
Registrar must be notified not later than 21 days after the date on which such
financial statements become available; in addition, the Minister may at any time
call for inspection of the statutory financial statements. The statutory
financial statements must be maintained at the principal office of the insurer
for a period of five years.
Minimum Solvency Margin. The Insurance Act provides that the value of the
long-term business assets of an insurer carrying on long-term business must
exceed the amount of its long-term business liabilities by at least $250,000.
The Insurance Act also provides that the value of the general business assets of
a Class 3 insurer must exceed the amount of its general business liabilities by
at least the prescribed minimum solvency margin.
PXRE Reinsurance, as a Class 3 insurer, will be required to maintain a
minimum solvency margin equal to the greatest of: (A) $1,000,000, (B) 20% of net
premiums written up to $6,000,000 plus 15% of net premiums written over
$6,000,000, and (C) 15% of loss reserves. In addition, PXRE Reinsurance will be
prohibited from declaring or paying any dividends during any financial year it
is in breach of its minimum solvency margin or minimum liquidity ratio or if the
declaration or payment of such dividends would cause it to fail to meet such
margin or ratio (if it fails to meet its minimum solvency margin or minimum
liquidity ratio on the last day of any financial year, the insurer will be
prohibited, without the approval of the Minister, from declaring or paying any
dividends during the next financial year).
As a Class 3 insurer, PXRE Reinsurance also will be prohibited, without
the approval of the Minister, from reducing by 15% or more its total statutory
capital, as set out in its previous year's financial statements, and if it
appears to the Minister that there is a risk of the insurer becoming insolvent
or that it is in breach of the Insurance Act or any conditions imposed upon its
registration, the Minister may, in addition to the restrictions specified above,
direct the insurer not to declare or pay any dividends or any other
distributions or may restrict it from making such payments to such extent as the
Minister may think fit.
Minimum Liquidity Ratio. The Act provides a minimum liquidity ratio for
general business. An insurer engaged in general business is required to maintain
the value of its relevant assets at not less than 75% of the amount of its
relevant liabilities. Relevant assets include cash and time deposits, quoted
investments, unquoted bonds and debentures, first liens on real estate,
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investment income due and accrued, accounts and premiums receivable and
reinsurance balances receivable. There are certain categories of assets which,
unless specifically permitted by the Minister, do not automatically qualify as
relevant assets such as unquoted equity securities, investments in and advances
to affiliates, real estate and collateral loans. The relevant liabilities are
total general business insurance reserves and total other liabilities less
deferred income tax and sundry liabilities (by interpretation, those not
specifically defined).
Annual Financial Return. An insurer is required to file with the
Registrar a statutory financial return within 21 days of the statutory financial
statements becoming available but, in any event, no later than six months from
the insurer's financial year end (unless specifically extended). The statutory
financial return includes, among other matters, a report of the approved
independent auditor on the statutory financial statements of the insurer; a
declaration of the statutory ratios; and a solvency certificate.
Supervision, Investigation and Intervention. The Minister may appoint an
inspector with extensive powers to investigate the affairs of an insurer if the
Minister believes that an investigation is required in the interest of the
insurer's policyholders or persons who may become policyholders. In order to
verify or supplement information otherwise provided to him, the Minister may
direct an insurer to produce documents or information relating to matters
connected with the insurer's business.
If it appears to the Minister that there is a risk of an insurer becoming
insolvent, the Minister may direct the insurer not to take on any new insurance
business; not to vary any insurance contract if the effect would be to increase
the insurer's liabilities; not to make certain investments; to realize certain
investments; to maintain in Bermuda, or transfer to the custody of a Bermuda
bank, certain assets; and to limit its premium income.
An insurer is required to maintain a principal office in Bermuda and to
appoint and maintain a principal representative in Bermuda. Without a reason
acceptable to the Minister, an insurer may not terminate the appointment of its
principal representative, and the principal representative may not cease to act
as such, unless thirty days' notice in writing to the Minister is given of the
intention to do so. It is the duty of the principal representative, within
thirty days of his reaching the view that there is a likelihood of the insurer
for which he acts becoming insolvent or its coming to his knowledge, or his
having reason to believe, that an "event" has occurred, to make a report in
writing to the Minister setting out all the particulars of the case that are
available to him. Examples of such an "event" include failure by the insurer to
comply substantially with a condition imposed upon the insurer by the Minister
relating to a solvency margin or a liquidity or other ratio.
Dividends. Under Bermuda law, PXRE Bermuda may not lawfully declare or
pay a dividend unless there are reasonable grounds for believing that it is, or
will after payment of the dividend be, able to pay its liabilities as they
become due, and that the realizable value of its assets will, after payment of
the dividend, be greater than the aggregate value of its liabilities,
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issued share capital and share premium accounts. PXRE Bermuda will also be
required to maintain statutory assets in an amount that permits it to meet the
prescribed minimum solvency margin for the net premium income level of its
business from time to time. In addition, the directors of PXRE Bermuda will, as
a matter of prudence, be required to ensure that any dividend declared or paid
is not of an amount that will reduce the reserves of PXRE Bermuda to a level
that is not sufficient to meet the reserve requirements of its business.
CERTAIN FOREIGN LAW CONSIDERATIONS
BERMUDA
PXRE Group has been designated as a non-resident for exchange control
purposes by the Bermuda Monetary Authority, Foreign Exchange Control, whose
permission for the issue of PXRE Group common shares has been obtained. This
proxy statement/prospectus has been filed with the Registrar of Companies in
Bermuda in accordance with Bermuda law.
IN GRANTING SUCH PERMISSION AND UPON ACCEPTING THIS PROXY
STATEMENT/PROSPECTUS FOR FILING, THE BERMUDA MONETARY AUTHORITY AND THE
REGISTRAR OF COMPANIES IN BERMUDA WILL ACCEPT NO RESPONSIBILITY FOR THE
FINANCIAL SOUNDNESS OF ANY SCHEMES OR FOR THE CORRECTNESS OF ANY OF THE
STATEMENTS MADE OR OPINIONS EXPRESSED WITH REGARD TO THEM.
The transfer of PXRE Group common shares between persons regarded as
non-resident in Bermuda for exchange control purposes and the issue of shares
after the completion of the reorganization to such persons may be effected
without specific consent under the Exchange Control Act of 1972 and regulations
thereunder. Issues and transfers of shares to any person regarded as resident in
Bermuda for exchange control purposes require specific prior approval under the
Exchange Control Act of 1972.
There are no limitations on the rights of persons regarded as
non-resident of Bermuda for foreign exchange control purposes owning PXRE Group
common shares to hold or vote their PXRE Group common shares, subject to the
provisions of PXRE Group's Bye-Laws. Because PXRE Group has been designated as a
non-resident for Bermuda exchange control purposes, there are no restrictions on
its ability to transfer funds in and out of Bermuda or to pay dividends to U.S.
residents who are holders of PXRE Group common shares, other than in respect of
local Bermuda currency.
In accordance with Bermuda law, shares certificates are issued only in
the names of corporations or individuals. In the case of an applicant acting in
a special capacity (for example, as an executor or trustee), certificates may,
at the request of the applicant, record the capacity in which the applicant is
acting. Notwithstanding the recording of any such special capacity, PXRE
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Group is not bound to investigate or incur any responsibility in respect of the
proper administration of any such estate or trust.
PXRE Group will take no notice of any trust applicable to any of its
common shares whether or not it had notice of such trust.
As an "exempted company," PXRE Group is exempt from Bermuda laws
restricting the percentage of share capital that may be held by non-Bermudians,
but as an exempted company PXRE Group may not participate in certain business
transactions, including: (i) the acquisition or holding of land in Bermuda
(except that required for its business and held by way of lease or tenancy for
terms of not more than 50 years) without the express authorization of the
Bermuda legislature; (ii) the taking of mortgages on land in Bermuda to secure
an amount in excess of $50,000 without the consent of the Minister of Finance of
Bermuda; (iii) the acquisition of securities created or issued by, or any
interest in, any local company or business, other than certain types of Bermuda
government securities or securities of another "exempted" company, partnership
or other corporation resident in Bermuda but incorporated abroad; or (iv) the
carrying on of business of any kind in Bermuda, except in furtherance of the
business of PXRE Group carried on outside Bermuda or under a license granted by
the Minister of Finance of Bermuda.
The Bermuda government actively encourages foreign investment in
"exempted" entities like PXRE Group that are based in Bermuda but do not operate
in competition with local business. In addition to having no restrictions on the
degree of foreign ownership, PXRE Group is subject neither to taxes on its
income or dividends nor to any foreign exchange controls in Bermuda. In
addition, there is no capital gains tax in Bermuda, and profits can be
accumulated by PXRE Group, as required, without limitation.
BARBADOS
The Exchange Control Act (Barbados) does not apply to companies licensed
as international business companies, and as such PXRE Barbados will not be
subject to currency controls or restrictions in respect of its international
business.
LEGAL MATTERS
Certain legal matters in connection with the common shares of PXRE Group
to be issued in the reorganization have been passed upon for PXRE Group by
Conyers Dill & Pearman, Hamilton, Bermuda. Conyers Dill & Pearman has also
rendered an opinion regarding Bermuda tax consequences of the reorganization
referred to in "Certain Tax Considerations." Chancery Chambers, Attorneys-at-Law
has rendered an opinion regarding Barbados tax consequences of the
reorganization referred to in "Certain Tax Considerations." The opinions
regarding the United States federal tax consequences of the reorganization
referred to in "Certain Tax Considerations" were rendered by Morgan, Lewis &
Bockius LLP, New York, New York. Mr. F. Sedgwick Browne, a partner of Morgan,
Lewis & Bockius LLP, is a director and secretary of
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PXRE Delaware and owns beneficially 16,512 shares (including currently
exercisable options to purchase 5,369 shares) of PXRE Delaware common stock. Mr.
Browne is also a director and officer of PXRE Group and Messrs. David J. Doyle
and James M. MacDonald of Conyers Dill & Pearman serve as Secretary and
resident-representative, respectively, of PXRE Group.
EXPERTS
PXRE Corporation consolidated financial statements incorporated in this
proxy statement/prospectus by reference to PXRE Corporation's Annual Report on
Form 10-K for the year ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
PXRE Group Ltd. financial statement as of June 1, 1999 included in this
proxy statement/prospectus has been so included in reliance on the report of
PricewaterhouseCoopers, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
2000 ANNUAL MEETING OF STOCKHOLDERS
PXRE Delaware will hold a 2000 annual meeting of stockholders only if the
merger is not consummated before the time of such meeting. If a stockholder
desires to present a proposal for inclusion in any year 2000 proxy materials of
PXRE Delaware, such stockholder must submit such proposal in writing to PXRE
Delaware for receipt not later than December 31, 1999. Proposals must comply
with the proxy rules relating to stockholder proposals, in particular Rule 14a-8
under the Exchange Act, to be included in any year 2000 proxy materials of PXRE
Delaware. Stockholders who wish to submit a proposal for consideration at PXRE
Delaware's year 2000 annual meeting of stockholders, but who do not wish to
submit a proposal for inclusion in the PXRE Delaware's proxy materials pursuant
to Rule 14a-8 under the Exchange Act, should deliver a copy of their proposal no
later than 45 days prior to the day and month of the notice of meeting
pertaining to the 1999 annual meeting of stockholders during the year 2000. If a
stockholder fails to provide such 45 day notice, the respective proposal need
not be addressed in the proxy materials and the proxies may exercise their
discretionary voting authority when the proposal is raised at the annual
meeting. In either case, proposals should be delivered to PXRE Corporation, 399
Thornall Street, Edison, New Jersey 08837, Attention: Treasurer.
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ENFORCEABILITY OF CIVIL LIABILITIES
AGAINST FOREIGN PERSONS
PXRE Group is a Bermuda company. In addition, certain of the directors
and officers of PXRE Group, as well as certain of the experts named in this
proxy statement/prospectus, reside outside the United States. Also, all or a
substantial portion of their assets, and certain of the assets of PXRE Group,
are located outside the United States. As a result, it may be difficult for you
to effect service of process within the United States upon such persons or to
realize against them upon judgments of courts of the United States predicated
upon civil liabilities under the U.S. federal securities laws. PXRE Group has
appointed CT Corporation System, New York, New York, as its agent to receive
service of process in actions against it based on violations of the U.S. federal
securities laws in connection with the transactions covered by this proxy
statement/prospectus.
PXRE Group is advised by its Bermuda counsel, Conyers Dill & Pearman,
that the United States and Bermuda do not currently have a treaty providing for
reciprocal recognition and enforcement of judgments of U.S. courts in civil and
commercial matters and that a final judgment for the payment of money rendered
by a court in the United States based on civil liability, whether or not
predicated solely upon the U.S. federal securities laws, would, therefore, not
be automatically enforceable in Bermuda. PXRE Group is also advised by Conyers
Dill & Pearman that a final and conclusive judgment obtained in a court in the
United States under which a sum of money is payable as compensatory damages
(i.e., not being a sum claimed by a revenue authority for taxes or other charges
of a similar nature by a governmental authority, or in respect of a fine or
penalty or multiple or punitive damages) may be the subject of an action on a
debt in the Supreme Court of Bermuda under the common law doctrine of
obligation. Such an action should be successful upon proof that the sum of money
is due and payable, and without having to prove the facts supporting the
underlying judgment, as long as: (i) the court that gave the judgment was
competent to hear the action in accordance with private international law
principles as applied by the courts in Bermuda; and (ii) the judgment is not
contrary to public policy in Bermuda, was not obtained by fraud or in
proceedings contrary to natural justice of Bermuda and is not based on an error
in Bermuda law. A Bermuda court may impose civil liability on PXRE Group or its
directors or officers in a suit brought in the Supreme Court of Bermuda against
PXRE Group or such persons with respect to a violation of U.S. federal
securities laws, provided that the facts surrounding such violation would
constitute or give rise to a cause of action under Bermuda law.
WHERE YOU CAN FIND MORE INFORMATION
PXRE Delaware files annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any reports, statements or other information filed by PXRE
Delaware at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. PXRE Delaware's SEC filings
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are also available to the public from commercial document retrieval services and
at the web site maintained by the SEC at http://www.sec.gov. Following the
reorganization, PXRE Group will file such reports, statements and other
information with the SEC.
PXRE Group filed a Registration Statement on Form S-4 to register with
the SEC the PXRE Group common shares to be issued to PXRE Delaware stockholders
in the merger. This proxy statement/prospectus is a part of that Registration
Statement and constitutes a prospectus of PXRE Group in addition to being a
proxy statement of PXRE Delaware for its stockholders' meeting. As permitted by
SEC rules, this proxy statement/prospectus does not contain all the information
you can find in the Registration Statement or the exhibits to the Registration
Statement.
Upon completion of the reorganization, PXRE Group's common shares will be
listed on the NYSE. At the time of such listing, PXRE Delaware's common stock
will be delisted and will no longer be registered pursuant to the Exchange Act.
The SEC allows PXRE Delaware and PXRE Group to "incorporate by reference"
information into this proxy statement/prospectus, which means that PXRE Delaware
can disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
deemed to be part of this proxy statement/prospectus, except for any information
superseded by information in this proxy statement/prospectus. This proxy
statement/prospectus incorporates by reference the documents set forth below
that PXRE Delaware has previously filed with the SEC (File No. 0-15428). These
documents contain important information about PXRE Delaware, including
information concerning such company's financial performance.
PXRE Delaware's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (which incorporates by reference certain information
from PXRE Delaware's proxy statement relating to its 1999 Annual Meeting
of Stockholders).
PXRE Delaware's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999 and June 30, 1999.
PXRE Delaware is also incorporating by reference any additional documents
that PXRE Delaware files with the SEC between the date of this proxy
statement/prospectus and the date the reorganization is consummated. However,
PXRE Delaware is not incorporating by reference the information referred to in
Item 402(a)(8) of Regulation S-K.
YOU MAY OBTAIN A COPY OF PXRE DELAWARE'S FILINGS AT NO COST BY WRITING TO
PXRE DELAWARE AT PXRE CORPORATION, 399 THORNALL STREET, EDISON, NEW JERSEY
08837, ATTENTION: INVESTOR RELATIONS OR TREASURER, OR BY TELEPHONING PXRE
DELAWARE AT 732-906-6785. If you would like to request documents from PXRE
Group, please do so by September 28, 1999 to
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receive them before the PXRE Delaware stockholders' meeting. PXRE Delaware will
send such documents by first-class mail within one business day of receiving any
such request.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus to vote on the merger proposal.
Neither PXRE Delaware nor PXRE Group has authorized anyone to provide you with
information that is different from what is contained in this proxy
statement/prospectus. This proxy statement/prospectus is dated August 19, 1999.
You should not assume that the information contained in this proxy
statement/prospectus is accurate as of any date other than such date, and
neither the mailing of this proxy statement/prospectus to stockholders nor the
issuance of PXRE Group common shares in the merger shall create any implication
to the contrary.
For North Carolina residents: PXRE Group common shares have not been
approved or disapproved by the North Carolina Commissioner of Insurance, nor has
the Commissioner of Insurance ruled upon the accuracy or adequacy of this
document.
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INDEX TO BALANCE SHEET
<TABLE>
<CAPTION>
Page
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<S> <C>
REPORT OF INDEPENDENT ACCOUNTANTS........................................................F-2
PXRE GROUP LTD. BALANCE SHEET AS OF JUNE 1, 1999 (date of inception).....................F-3
PXRE GROUP LTD. NOTES TO FINANCIAL STATEMENT.............................................F-4
</TABLE>
F - 1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and
Shareholder of PXRE Group Ltd.
In our opinion, the accompanying balance sheet presents fairly, in all material
respects, the financial position of PXRE Group Ltd. at June 1, 1999 (date of
inception) in conformity with generally accepted accounting principles in the
United States. This financial statement is the responsibility of the Company's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this statement in
accordance with generally accepted auditing standards in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statement is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS
Hamilton, Bermuda
August 10, 1999
F - 2
<PAGE>
PXRE GROUP LTD.
BALANCE SHEET
June 1, 1999 (date of inception)
(Expressed in United States Dollars)
<TABLE>
<S> <C>
ASSETS
Cash $12,000
-----------
TOTAL ASSETS $12,000
-----------
-----------
STOCKHOLDER'S EQUITY
Common stock, $1.00 par value, 12,000 shares authorized,
issued and outstanding $12,000
-----------
TOTAL STOCKHOLDER'S EQUITY $12,000
-----------
-----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
F - 3
<PAGE>
PXRE GROUP LTD.
NOTES TO FINANCIAL STATEMENT
June 1, 1999 (date of inception)
1. ORGANIZATION AND PROPOSED REORGANIZATION
PXRE Group Ltd. (the "Company") was incorporated on June 1, 1999 as a
holding company under the laws of Bermuda. The Company is a wholly owned
subsidiary of PXRE Purpose Trust, a purpose trust established under the
laws of Bermuda.
The board of directors of PXRE Corporation, a publicly held Delaware
holding company, has unanimously approved a proposed corporate
reorganization pursuant to which the Company will become the parent
holding company of PXRE Corporation. PXRE Corporation and its
subsidiaries provide property and casualty reinsurance and insurance
products to a national and international market place.
In connection with the reorganization, the Company will repurchase for
$1.00 per share 100% of the common shares owned by PXRE Purpose Trust.
Pending the approval of the holders of a majority of the outstanding
common stock of PXRE Corporation, each outstanding share of PXRE
Corporation common stock other than shares held by PXRE Corporation and
its subsidiaries will be converted into one common share of the Company.
After the consummation of the reorganization, the Company will continue
to carry on the holding company functions currently conducted by PXRE
Corporation. The Company intends to commence underwriting and service
operations in Bermuda and Barbados. To facilitate these operations, the
Company intends to form and capitalize PXRE (Barbados) Ltd., a Barbados
domiciled company and PXRE Reinsurance Ltd., a Bermuda domiciled company.
PXRE (Barbados) Ltd. and PXRE Reinsurance Ltd. will be wholly-owned
subsidiaries of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) All cash balances are held in escrow on behalf of the Company by
Conyers Dill & Pearman, the Company's attorneys.
b) All amounts are reported in US dollars.
3. COMMON STOCK RESTRICTION
The Company's bye-laws generally restrict the ownership and voting rights
of any shareholder who directly or indirectly would own more than 9.9% of
the outstanding common stock of the Company. The restriction requires the
prompt disposition of any shares held in violation of the provision and
limits the voting power of a shareholder with more than 9.9% of the
F - 4
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outstanding shares to the voting power of a shareholder with 9.9% or less
of the outstanding common shares.
4. SUBSEQUENT EVENT
On August 9, 1999, the Company's board of directors and shareholder
approved a resolution to increase the number of authorized shares from 12,000 to
60,000,000 consisting of 50,000,000 common shares and 10,000,000 preferred
shares.
F - 5
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ANNEX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 7, 1999 among PXRE CORPORATION, a
Delaware corporation ("PXRE Delaware"), PXRE GROUP LTD., a Bermuda company
("PXRE Group") and wholly-owned by the PXRE Purpose Trust, a purpose trust
established under the laws of Bermuda (the "PXRE Trust"), and PXRE MERGER CORP.,
a Delaware corporation ("Sub") and a newly formed, indirect wholly-owned
subsidiary of PXRE Group.
WHEREAS, the respective Boards of Directors of PXRE Delaware, PXRE Group and Sub
deem it advisable and in the best interests of their respective stockholders to
reorganize (the "Reorganization") so that PXRE Group becomes the parent holding
company for PXRE Delaware;
WHEREAS, the respective Boards of Directors of PXRE Delaware, Sub and PXRE Group
have approved the merger of Sub with and into PXRE Delaware (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement, whereby
each outstanding share of common stock, par value $.01 per share ("PXRE Delaware
Common Stock"), of PXRE Delaware (other than those shares held by PXRE Delaware
or any direct or indirect wholly-owned subsidiary of PXRE Delaware), will be
automatically converted into one common share, par value $1.00 per share ("PXRE
Group Common Share"), of PXRE Group and each outstanding share of common stock,
par value $.01 per share ("Sub Common Stock"), of Sub, will be automatically
converted into one share of PXRE Delaware Common Stock;
WHEREAS, PXRE (Barbados) Ltd., a Barbados company ("PXRE Barbados") and
wholly-owned subsidiary of PXRE Group has, as sole stockholder of Sub, approved
the Merger and the PXRE Trust has, as sole stockholder of PXRE Group, approved
the Merger; and
WHEREAS, the Merger requires the approval of the holders of a majority of the
outstanding shares of PXRE Delaware Common Stock entitled to vote thereon at the
meeting of holders of PXRE Delaware Common Stock to be called therefor (the
"PXRE Delaware Stockholder Approval");
NOW, THEREFORE, the parties agree as follows:
A-1
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ARTICLE I
MERGER
1.1 MERGER
Upon the terms and subject to the conditions set forth in this Agreement, and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Sub shall be merged with and into PXRE Delaware at the Effective Time
of the Merger (as defined in Section 1.2). Following the Effective Time of the
Merger, the separate corporate existence of Sub shall cease and PXRE Delaware
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in accordance
with the DGCL.
1.2 EFFECTIVE TIME
Subject to the provisions of this Agreement, as soon as practicable following
the satisfaction or waiver of the conditions set forth in Section 5.1, the
parties shall file a certificate of merger or other appropriate documents (in
any case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at the close of business on
the date that an appropriate Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such later time as Sub and
PXRE Delaware shall agree should be specified in the Certificate of Merger (the
time the Merger becomes effective being hereinafter referred to as the
"Effective Time of the Merger").
1.3 EFFECTS OF THE MERGER
The Merger shall have the effects set forth in Section 259 of the DGCL.
ARTICLE II
NAME, CERTIFICATE OF INCORPORATION, BY-LAWS,
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
2.1 NAME OF SURVIVING CORPORATION
The name of the surviving corporation shall be "PXRE Corporation."
2.2 CERTIFICATE OF INCORPORATION
The Restated Certificate of Incorporation of PXRE Delaware (the "PXRE Charter"),
as in effect immediately prior to the Effective Time of the Merger, shall, from
and after the Effective Time of the Merger, be the certificate of incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
A-2
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2.3 BY-LAWS
The by-laws of PXRE Delaware (the "PXRE By-laws") as in effect immediately prior
to the Effective Time of the Merger shall, from and after the Effective Time of
the Merger, be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
2.4 DIRECTORS
The directors of PXRE Delaware immediately prior to the Effective Time of the
Merger shall be the directors of the Surviving Corporation, until the earlier of
their death, resignation or removal in accordance with the PXRE Charter and the
PXRE By-laws, or as otherwise provided by applicable law.
2.5 OFFICERS
The officers of PXRE Delaware immediately prior to the Effective Time of the
Merger shall be the officers of the Surviving Corporation, until the earlier of
their death, resignation or removal in accordance with the PXRE Charter and the
PXRE By-laws, or as otherwise provided by applicable law.
ARTICLE III
CONVERSION AND EXCHANGE OF STOCK
3.1 CONVERSION
At the Effective Time of the Merger, by virtue of the Merger and without any
action on the part of the holder of any shares:
(a) Sub Common Stock. Each issued and outstanding share of Sub Common Stock
shall be converted into and become one fully paid and nonassessable share of
PXRE Delaware Common Stock.
(b) Cancellation of PXRE Trust and PXRE Delaware-Owned Stock. Each outstanding
PXRE Group Common Share that is owned by the PXRE Trust prior to the Effective
Time of the Merger shall immediately after the Effective Time of the Merger be
repurchased by PXRE Group for $1.00 per share, or $12,000 in the aggregate, and
shall upon such repurchase be canceled and retired and shall cease to exist.
Each outstanding share of PXRE Delaware Common Stock that is owned by PXRE
Delaware or by any direct or indirect wholly-owned subsidiary of PXRE Delaware
prior to the Effective Time of the Merger shall automatically be canceled and
retired and shall cease to exist, and no PXRE Group Common Shares or other
consideration shall be delivered or deliverable in exchange for such shares of
PXRE Delaware Common Stock.
A-3
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(c) Conversion of PXRE Delaware Common Stock. Each issued and outstanding share
of PXRE Delaware Common Stock (other than shares to be canceled in accordance
with Section 3.1(b)) shall be automatically converted into and shall become one
validly issued, fully paid and non-assessable PXRE Group Common Share.
(d) Stock Option Plans. PXRE Group shall assume all the rights and obligations
of PXRE Delaware under the 1988 Stock Option Plan, Restated Employee Annual
Incentive Bonus Plan, 1992 Officer Incentive Plan, Employee Stock Purchase Plan,
non-employee Director Stock Option Plan and non-employee director compensation
arrangements allowing directors to convert their retainer fees to options, as
each such plan has been or may be amended to the Effective Time of the Merger
(collectively, the "Plans"). The outstanding options assumed by PXRE Group shall
be exercisable upon the same terms and conditions as under the Plans and the
agreements relating thereto immediately prior to the Effective Time of the
Merger, except that upon the exercise of such options PXRE Group Common Shares
shall be issuable in lieu of shares of PXRE Delaware Common Stock. The number of
PXRE Group Common Shares issuable upon the exercise of an option immediately
after the Effective Time of the Merger and the option price of each such option
shall be the number of shares and option price in effect immediately prior to
the Effective Time of the Merger. All options issued pursuant to the Plans after
the Effective Time of the Merger shall entitle the holder thereof to purchase
PXRE Group Common Shares in accordance with the terms of the Plans.
3.2 EXCHANGE OF STOCK
(a) Exchange Procedures. Following the Effective Time of the Merger, each holder
of an outstanding certificate or certificates theretofore representing shares of
PXRE Delaware Common Stock may, but shall not be required to, surrender the same
to PXRE Group for cancellation or transfer, and each such holder or transferee
will be entitled to receive certificates representing the same number of PXRE
Group Common Shares as the shares of PXRE Delaware Common Stock previously
represented by the stock certificates surrendered. If any certificate
representing PXRE Group Common Shares is to be issued in a name other than that
in which the certificate theretofore representing PXRE Delaware Common Stock
surrendered is registered, it shall be a condition to such issuance that the
certificate surrendered shall be properly endorsed and otherwise in proper form
for transfer and that the person requesting such issuance shall either: (i) pay
PXRE Group or its agents any taxes or other governmental charges required by
reason of the issuance of certificates representing PXRE Group Common Shares in
a name other than that of the registered holder of the certificate so
surrendered; or (ii) establish to the satisfaction of PXRE Group or its agents
that such taxes or governmental charges have been paid. Until so surrendered or
presented for transfer each outstanding certificate which, prior to the
Effective Time of the Merger, represented PXRE Delaware Common Stock shall be
deemed and treated for all corporate purposes to represent the ownership of the
same number of PXRE Group Common Shares as though such surrender or transfer and
exchange had taken place.
(b) No Further Ownership Rights in PXRE Delaware Common Stock. All PXRE Group
Common Shares issued upon the surrender for exchange of certificates in
accordance with the terms of this Article III shall be deemed to have been
issued (and paid) in full satisfaction of all
A-4
<PAGE>
rights pertaining to the shares of PXRE Delaware Common Stock theretofore
represented by such certificates, subject, however, to the Surviving
Corporation's obligation (if any) to pay any dividends or make any other
distributions with a record date prior to the Effective Time of the Merger which
may have been declared or made by PXRE Delaware on such shares of PXRE Delaware
Common Stock in accordance with the terms of this Agreement or prior to the date
of this Agreement and which remain unpaid at the Effective Time of the Merger,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of PXRE Delaware Common Stock
which were outstanding immediately prior to the Effective Time of the Merger.
If, after the Effective Time of the Merger, certificates are presented to the
Surviving Corporation they shall be canceled and exchanged as provided in this
Article III, except as otherwise provided by law.
ARTICLE IV
EMPLOYEE BENEFIT AND COMPENSATION PLANS
At the Effective Time of the Merger, each employee benefit plan and incentive
compensation plan to which PXRE Delaware is then a party shall be assumed by,
and continue to be the plan of, the Surviving Corporation. To the extent any
employee benefit or incentive compensation plan of PXRE Delaware provides for
the issuance or purchase of, or otherwise relates to, PXRE Delaware Common
Stock, after the Effective Time of the Merger, such plan shall be deemed to
provide for the issuance or purchase of, or otherwise relate to, PXRE Group
Common Shares.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver of the following conditions:
(a) Stockholder Approval. The PXRE Delaware Stockholder Approval shall have been
obtained.
(b) Form S-4. The registration statement on Form S-4 filed with the Securities
and Exchange Commission by PXRE Group in connection with the issuance of the
PXRE Group Common Shares in the Merger shall have become effective under the
Securities Act of 1933, as amended, and shall not be the subject of any stop
order or proceedings seeking a stop order.
(c) Governmental, Regulatory and Other Consents. All filings required to be made
prior to the Effective Time of the Merger with, and all consents, approvals,
permits and authorizations required to be obtained prior to the Effective Time
of the Merger from, any court or governmental or regulatory authority or agency,
domestic or foreign, or other person, in
A-5
<PAGE>
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will have been made or
obtained (as the case may be).
(d) No Injunctions or Restraints. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger or any of the other transactions contemplated hereby shall be in
effect.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective Time of the
Merger, whether before or after approval by the stockholders of PXRE Delaware of
matters presented in connection with the Merger, by action of the Board of
Directors of PXRE Delaware or of PXRE Group.
6.2 EFFECT OF TERMINATION
In the event of termination of this Agreement as provided in Section 6.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of PXRE Delaware, Sub or PXRE Group, other than the
provisions of this Article VI and Article VII.
6.3 AMENDMENT
This Agreement may be amended by the parties at any time before or after any
required approval of matters presented in connection with the Merger by the
stockholders of PXRE Delaware provided, however, that after any such approval,
there shall be made no amendment that by law requires further approval by such
stockholders without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties.
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6.4 WAIVER
At any time prior to the Effective Time of the Merger, the parties may waive
compliance by the other parties with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
6.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER.
A termination of this Agreement pursuant to Section 6.1, an amendment of this
Agreement pursuant to Section 6.3 or a waiver pursuant to Section 6.4 shall, in
order to be effective, require in the case of PXRE Delaware, Sub or PXRE Group,
action by its Board of Directors.
ARTICLE VII
GENERAL PROVISIONS
7.1 NOTICES
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to PXRE Delaware:
PXRE Corporation
399 Thornall Street
Edison, NJ 08837
(b) if to PXRE Group:
PXRE Group Ltd.
c/o Conyers Dill & Pearman
Clarendon House
Church Street
P.O. Box HM666
Hamilton HM CX, Bermuda
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(c) if to Sub:
PXRE Merger Corp.
c/o PXRE Corporation
399 Thornall Street
Edison, NJ 08837
7.2 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES
This Agreement (including the documents and instruments referred to herein) (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Article
III, are not intended to confer upon any person other than the parties any
rights or remedies.
7.3 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Delaware, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
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IN WITNESS WHEREOF, PXRE Delaware and Sub have caused this Agreement to be
signed in Edison, New Jersey, and PXRE Group has caused this Agreement to be
signed in Hamilton, Bermuda, by their respective officers thereunto duly
authorized, all as of the date first written above.
PXRE CORPORATION
By: /s/ Gerald L. Radke
-----------------------------------
Name: Gerald L. Radke
Title: Chairman, CEO & President
PXRE MERGER CORP.
By: /s/ Gerald L. Radke
-----------------------------------
Name: Gerald L. Radke
Title: President
PXRE GROUP LTD.
By: /s/ David J. Doyle
-----------------------------------
Name: David J. Doyle
Title: Secretary
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(i) PXRE Group is a Bermuda company. Section 98 of the Companies Act
1981 of Bermuda (the "Act") provides generally that a Bermuda company may
indemnify its directors, officers and auditors against any liability which by
virtue of Bermuda law otherwise would be imposed on them, except in cases where
such liability arises from fraud or dishonesty of which such director, officer
or auditor may be guilty in relation to the company. Section 98 further provides
that a Bermudian company may indemnify its directors, officers and auditors
against any liability incurred by them in defending any proceedings, whether
civil or criminal, in which judgment is awarded in their favor or they are
acquitted or in which they are acquitted or granted relief by the Supreme Court
of Bermuda in certain proceedings arising under Section 281 of the Act.
The Company has adopted provisions in its Bye-Laws that provide that
the Company shall indemnify its officers and directors to the maximum extent
permitted under the Act.
(ii) PXRE Delaware is a Delaware company. Section 102(b)(7) of the DGCL
provides that a Delaware corporation may include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision may not eliminate
or limit the liability of a director for any breach of the director's duty of
loyalty to the corporation or its stockholders, for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, for the payment of unlawful dividends, or for any transaction from which
the director derived an improper personal benefit. The PXRE Delaware Certificate
contains a provision limiting the personal liability of a director to PXRE
Delaware and its stockholders for monetary damages for a breach of fiduciary
duty as a director to the full extent permitted by law.
Additionally, Section 145, "Indemnification of Officers, Directors,
Employees and Agents; Insurance", of the DGCL provides as follows:
(a) A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that the
person was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees),
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judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or
proceeding if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which the person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
(b) A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action or
suit if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall
deem proper.
(c) To the extent that a present or former director or officer
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee or
agent is proper in the circumstances because the person has met the
applicable standard of conduct set forth in subsections (a) and (b) of
this section. Such determination shall be made, with respect to a
person who is a director or officer at the time of such determination,
(1) by a majority vote of the directors who are not parties to
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such action, suit or proceeding, even though less than a quorum, or (2)
by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (3) if there are no such
directors, or if such directors so direct, by independent legal counsel
in a written opinion, or (4) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that
such person is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees)
incurred by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the
corporation deems appropriate.
(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as
to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the
power to indemnify such person against such liability under this
section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with
respect to the resulting or surviving corporation such person would
have with respect to such constituent corporation if its separate
existence had continued.
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(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants or beneficiaries;
and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this section.
(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise. The Court of Chancery may summarily determine a
corporation's obligation to advance expenses (including attorneys'
fees).
(iii) Article VI of the PXRE Delaware Certificate provides for
indemnification of directors and officers of PXRE Delaware against liability
they may incur in their capacities as such to the full extent permitted under
Delaware law. In addition, pursuant to certain letter agreements between PXRE
Delaware and its directors, PXRE Delaware has undertaken to indemnify its
directors to the fullest extent permitted by Article VI of the PXRE Delaware
Certificate and applicable Delaware law.
(iv) There is in effect Directors and Officers Liability and
Corporation Reimbursement Insurance Policies with Reliance Insurance Company and
Great American Insurance Company. The policy insures the directors and officers
of PXRE Group and PXRE Delaware against loss arising from any claim or claims
made against such directors or officers, individually or collectively, by reason
of certain wrongful acts such as any actual or alleged error or misstatement or
misleading statement or act, omission, neglect or breach of duty by the officers
and directors in the discharge of their duties. The policy also insures PXRE
Group and PXRE Delaware against loss for which PXRE Group or PXRE Delaware is
required to indemnify or for which PXRE Group or PXRE Delaware, to the extent
permitted by law, has indemnified the officers or directors arising from any
claim against any of the directors or officers of PXRE Group and PXRE Delaware
by reason of the wrongful acts described above. The policy does not insure
directors and officers of PXRE Group and PXRE Delaware against loss in
connection with any claim relating to any deliberately dishonest or fraudulent
act or omission, any criminal or
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malicious act or omission, any willful violation of law or any accounting for
profits for the purchase or sale of securities of PXRE Group and PXRE Delaware
within the meaning of Section 16(b) of the Exchange Act. The combined limit of
liability is $25,000,000 per policy year for both directors' and officers'
liability and corporate reimbursement coverage.
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--- -----------
<S> <C>
2 Agreement and Plan of Merger, dated as of July 7, 1999, among PXRE
Delaware, PXRE Group and PXRE Merger Corp. (included as Annex A to the
proxy statement/prospectus).
3.1 Memorandum of Association of PXRE Group.
3.2 Bye-Laws of PXRE Group.
4.1 Form of Specimen Common Share certificate, par value $1.00 per share,
of PXRE Group.
4.2 Credit Agreement dated as of December 30, 1998 among PXRE Delaware, the
banks and financial institutions listed on the signature pages thereto
or that subsequently become parties thereto (collectively, the
"Lenders") and First Union National Bank ("First Union") as agent for
the Lenders (Exhibit 4.8 to PXRE Delaware's Form 8-K dated January 8,
1999 (File No. 0-15428), and incorporated herein by reference).
4.3 First Amendment and Waiver to Credit Agreement dated as of May 18, 1999
among PXRE Delaware, the Lenders and First Union, Joinder Agreements
dated May 18, 1999 by Fleet National Bank and Credit Lyonnais New York
Branch, Assignments and Acceptances dated May 18, 1999 between First
Union and Fleet National Bank and between First Union and The First
National Bank of Chicago, respectively (Exhibit 4.9 to PXRE Delaware's
Form 10-Q for the quarterly period ended June 30, 1999 (File No. 0-15428),
and incorporated herein by reference).
4.4 Second Amendment and Waiver to Credit Agreement dated as of June 25,
1999 among PXRE Delaware, the Lenders and First Union, (Exhibit 4.9 to
PXRE Delaware's Form 10- Q for the quarterly period ended June 30, 1999
(File No. 0-15428), and incorporated herein by reference).
4.5 First Amended and Restated Credit Agreement among PXRE Delaware, as
borrower, PXRE Group and PXRE Barbados, as guarantors, the Lenders named
therein and First Union as agent. (draft)
4.6 Indenture, dated as of January 29, 1997, between PXRE Delaware and
First Union National Bank, as Trustee (Exhibit 4.3 to PXRE Delaware's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(File No. 0-15428), and incorporated herein by reference).
4.7 First Supplemental Indenture, dated as of January 29, 1997, between
PXRE Delaware and First Union National Bank, as Trustee, in respect of
PXRE Delaware's 8.85% Junior Subordinated Deferrable Interest
Debentures due 2027 (Exhibit 4.4 to the Annual Report on Form 10-K of
PXRE Delaware for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated herein by reference).
4.8 Amended and Restated Declaration of Trust of PXRE Capital Trust I,
dated as of January 29, 1997, among PXRE Delaware, as sponsor, the
Administrators thereof, First Union Bank of Delaware, as Delaware
Trustee, First Union National Bank, as Institutional Trustee, and the
holders from time to time of undivided interests in the assets of PXRE
Capital Trust I (Exhibit 4.5 to the Annual Report on Form 10-K of PXRE
Delaware for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated herein by reference).
</TABLE>
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<TABLE>
<S> <C>
4.9 Capital Securities Guarantee Agreement, dated as of January 29, 1997,
between PXRE Delaware and First Union National Bank, as Guarantee
Trustee (Exhibit 4.6 to the Annual Report on Form 10-K of PXRE Delaware
for the fiscal year ended December 31, 1996 (File No.0-15428), and
incorporated herein by reference).
4.10 Common Securities Guarantee Agreement, dated as of January 29, 1997,
executed by PXRE Delaware (Exhibit 4.7 to the Annual Report on Form
10-K of PXRE Delaware for the fiscal year ended December 31, 1996 (File
No. 0-15428), and incorporated herein by reference).
4.11 Registration Rights Agreement, dated January 29, 1997, among PXRE
Delaware, PXRE Capital Trust I and Salomon Brothers Inc, as
Representative of the Initial Purchasers (Exhibit 10.1 to the Annual
Report on Form 10-K of PXRE Delaware for the fiscal year ended December
31, 1996 (File No. 0-15428), and incorporated herein by reference).
4.12 Purchase Agreement among PXRE Delaware, PXRE Capital Trust I and
Salomon Brothers Inc, as Representative of the Initial Purchasers,
dated January 24, 1997 (Exhibit 10.2 to the Annual Report on Form 10-K
of PXRE Delaware for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated herein by reference).
5 Opinion of Conyers Dill & Pearman regarding the legality of the
securities being registered.
8.1 Opinion of Conyers Dill & Pearman as to certain tax matters.
8.2 Opinion of Chancery Chambers as to certain tax matters.
8.3 Opinion of Morgan, Lewis & Bockius LLP as to certain tax matters.
10.1 PXRE Reinsurance Company Management Agreement among PXRE Reinsurance
Company and, among others, Merrimack Mutual Fire Insurance Company
("Merrimack"), Pennsylvania Lumbermens Mutual Insurance Company
("Pennsylvania Lumbermens"), and NRMA Insurance Limited ("NRMA")
(Exhibit 10.1 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1991 (File No. 0-15428), and
incorporated herein by reference); letter dated November 28, 1990 from
Pennsylvania Lumbermens confirming reduced participation (Exhibit 10.7
to PXRE Delaware's Form S-2 Registration Statement dated February 21,
1992, as amended by Amendment No. 1 thereto dated April 1, 1992 and by
Amendment No. 2 thereto dated April 13, 1992 and by Amendment No. 3
thereto dated April 23, 1992 (File No. 33-45893), and incorporated
herein by reference); cover notes respecting January 1997 renewals by
Merrimack, Pennsylvania Lumbermens and NRMA and cover note respecting
participation commencing January 1, 1997 by Auto-Owners Insurance
Company ("Auto-Owners") (Exhibit 10.3 to the Annual Report on Form 10-K
of PXRE Delaware for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated herein by reference); cover notes respecting
January 1999 renewals by NRMA, Pennsylvania Lumbermens, Auto-Owners and
The Andover Companies (a Merrimack company) (Exhibit 10.3 to the Annual
Report on Form 10-K of PXRE Delaware for the fiscal year ended December
31, 1998 (File No. 0-15428), and incorporated herein by reference).
</TABLE>
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<TABLE>
<S> <C>
10.2 Quota Share Retrocessional Agreement between PXRE Reinsurance Company
and Trenwick America Reinsurance Corporation ("Trenwick Group")
(Exhibit 10.21 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1993 (File No. 0-15428), and
incorporated herein by reference); cover note respecting January 1999
renewal by Trenwick Group (Exhibit 10.17 to the Annual Report on Form
10-K of PXRE Delaware for the fiscal year ended December 31, 1998 (File
No. 0-15428), and incorporated herein by reference).
10.3 Undertaking dated September 1, 1998 between PXRE Reinsurance Company
and Select Reinsurance Ltd., Amended and Restated Facultative
Obligatory Quota Share Retrocessional Agreement between PXRE
Reinsurance Company and Select Reinsurance Ltd. and Variable Quota
Share Retrocessional Agreement between PXRE Reinsurance Company and
Select Reinsurance Ltd. (Exhibit 10.36 to the Annual Report on Form
10-K of PXRE Delaware for the fiscal year ended December 31, 1998 (File
No. 0-15428), and incorporated herein by reference).
10.4 Tax Settlement Agreement dated June 21, 1991 between PXRE Delaware,
PXRE Reinsurance Company and PM Holdings, Inc. (Exhibit 10.2 to the
Annual Report on Form 10-K of PXRE Delaware for the fiscal year ended
December 31, 1991 (File No. 0-15428), and incorporated herein by
reference).
10.5 Investment Advisory Agreement between PXRE Reinsurance Company and
Phoenix Investment Counsel, Inc., dated February 25, 1987 and effective
as of January 1, 1987 (Exhibit 10.10 to Amendment No. 1 dated February
19, 1987 to PXRE Delaware's Form S-1 Registration Statement dated
August 29, 1986, as subsequently amended by Amendment No. 2 thereto
dated March 25, 1987 (File No. 33-8406), and incorporated herein by
reference); Amendment to Investment Advisory Agreement between PXRE
Reinsurance Company and Phoenix Investment Counsel, Inc., effective
retroactively as of January 1, 1987 (Exhibit 10.3 to the Annual Report
on Form 10-K of PXRE Delaware for the fiscal year ended December 31,
1991 (File No. 0-15428), and incorporated herein by reference);
Amendment No. 2 to Investment Advisory Agreement between PXRE
Reinsurance Company and Phoenix Investment Counsel, Inc., effective as
of November 1, 1989 (Exhibit 10.4 to the Annual Report on Form 10-K of
PXRE Delaware for the fiscal year ended December 31, 1991 (File No.
0-15428), and incorporated herein by reference); Amendment No. 3 to
Investment Advisory Agreement between PXRE Reinsurance Company and
Phoenix Investment Counsel, Inc. effective June 1, 1995 (Exhibit 10.26
to the Annual Report on Form 10-K of PXRE Delaware for the fiscal year
ended December 31, 1995 (File No. 0-15428), and incorporated herein by
reference).
10.6 Investment Management Agreement, effective January 29, 1997 between
PXRE Delaware and Phoenix Investment Counsel, Inc. (Exhibit 10.29 to
the Annual Report on Form 10-K of PXRE Delaware for the fiscal year
ended December 31, 1996 (File No. 0-15428), and incorporated herein by
reference).
10.7 Amended and Restated Investment Advisory Agreement between
Transnational Reinsurance Company and Phoenix Investment Counsel, Inc.,
dated November 8, 1993 (Exhibit 10.4 to Transnational Re Corporation's
Annual Report on Form 10-K for the
</TABLE>
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<TABLE>
<S> <C>
fiscal year ended December 31, 1993 (File No. 0-22376) and incorporated
herein by reference), as amended by the Amendment thereto, effective
June 1, 1995 (Exhibit 10.11 to Transnational Re Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 (File
No. 0-22376) and incorporated herein by reference).
10.8 Amended and Restated Agreement Concerning Filing of Consolidated
Federal Income Tax Returns dated as of August 23, 1993 between PXRE
Delaware and PXRE Reinsurance Company (Exhibit 10.8 to the Annual
Report on Form 10-K of PXRE Delaware for the fiscal year ended December
31, 1993 (File No. 0-15428), and incorporated herein by reference);
Addendum No. 2 dated November 10, 1994 to the PXRE Delaware Amended and
Restated Agreement Concerning Filing of Consolidated Federal Income Tax
Returns (Exhibit 10.22 to the Annual Report on Form 10-K of PXRE
Delaware for the fiscal year ended December 31, 1994 (File No.
0-15428), and incorporated herein by reference); and Addendum No. 3
dated as of December 11, 1996 to the PXRE Delaware Amended and Restated
Agreement Concerning Filing of Consolidated Federal Income Tax Returns
(Exhibit 10.22 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1996 (File No. 0-15428), and
incorporated herein by reference).
10.9 Employee Stock Purchase Plan, as amended (Appendix A to PXRE Delaware's
Proxy Statement dated April 23, 1993, and incorporated herein by
reference). (M)
10.10 Executive Severance Plan. (M)
10.11 1988 Stock Option Plan, as amended (Exhibit A to the first Prospectus
forming part of PXRE Delaware's Form S-8 and S-3 Registration Statement
dated June 21, 1990 (File No. 33-35521), and incorporated herein by
reference). (M)
10.12 Restated Employee Annual Incentive Bonus Plan, as amended (Appendix A
to PXRE Delaware's Proxy Statement dated April 27, 1999, and
incorporated herein by reference).(M)
10.13 1992 Officer Incentive Plan, as amended (Appendix B to PXRE Delaware's
Proxy Statement dated April 27, 1999 and incorporated herein by
reference).(M)
10.14 Director Stock Option Plan (Appendix A to PXRE Delaware's Proxy
Statement dated May 3, 1995, and incorporated herein by reference) and
Amendment thereto made as of April 17, 1997 (Exhibit 10.25 to the
Annual Report on Form 10-K of PXRE Delaware for the fiscal year ended
December 31, 1997 (File No. 0-15428), and incorporated herein by
reference).(M)
10.15 Director Equity and Deferred Compensation Plan (Appendix C to PXRE
Delaware's Proxy Statement dated April 30, 1997, and incorporated
herein by reference).(M)
10.16 Non-Employee Director Deferred Stock Plan (Appendix A to PXRE
Delaware's Proxy Statement dated April 12, 1991, and incorporated
herein by reference).(M)
</TABLE>
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(M) INDICATES A MANAGEMENT CONTRACT OR COMPENSATORY PLAN OR ARRANGEMENT IN WHICH
THE DIRECTORS AND/OR EXECUTIVE OFFICERS OF PXRE PARTICIPATE.
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<TABLE>
<S> <C>
10.17 Management Agreement dated as of November 8, 1993 among PXRE
Reinsurance Company, Transnational Re Corporation and Transnational
Reinsurance Company (Exhibit 10.22 to the Annual Report on Form 10-K of
PXRE Delaware for the fiscal year ended December 31, 1993 (File No.
0-15428), and incorporated herein by reference), as amended by
Amendment No. 1 thereto, dated December 1, 1994 (Exhibit 10.21 to the
Annual Report on Form 10-K of PXRE Delaware for the fiscal year ended
December 31, 1994 (File No. 0-15428), and incorporated herein by
reference).
10.18 Aggregate Excess of Loss Reinsurance Agreement dated as of November 8,
1993 between PXRE Reinsurance Company, as reinsurer, and Transnational
Reinsurance Company, as reinsured (Exhibit 10.23 to the Annual Report
on Form 10-K of PXRE Delaware for the fiscal year ended December 31,
1993 (File No. 0-15428), and incorporated herein by reference).
10.19 Agreement and Plan of Merger dated as of August 22, 1996 between PXRE
Delaware and Transnational Re Corporation, as amended by Amendment No.
1 dated as of September 27, 1996 and Amendment No. 2 dated as of
October 24, 1996 (Annex A to PXRE Delaware's Form S-4 Registration
Statement dated October 30, 1996 (File No. 333-15087), and
incorporated herein by reference).
10.20 Services Agreement dated as of December 11, 1996 between PXRE
Reinsurance Company and Transnational Reinsurance Company (Exhibit
10.20 to the Annual Report on Form 10-K of PXRE Delaware for the fiscal
year ended December 31, 1996 (File No. 0-15428), and incorporated
herein by reference).
10.21 Reinsurance Pooling Agreement, effective as of January 1, 1999, between
PXRE Reinsurance Company and Transnational Insurance Company.
10.22 Lease dated May 9, 1994 between Thornall Associates and PXRE Delaware
(Exhibit 10.24 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1994 (File No. 0-15428), and
incorporated herein by reference).
10.23 Lloyd's Deposit Trust Deed (Third Party Deposit) dated November 29,
1996 between PXRE Limited and PXRE Reinsurance Company (Exhibit 10.32
to the Annual Report on Form 10-K of PXRE Delaware for the fiscal year
ended December 31, 1997 (File No. 0-15428), and incorporated herein by
reference).
10.24 Letter of Credit dated November 22, 1996 issued by The Chase Manhattan
Bank by order of PXRE Reinsurance Company for the benefit of Lloyds
(Exhibit 10.33 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1997 (File No. 0-15428), and
incorporated herein by reference).
10.25 Lloyd's Security Trust Deed (Letter of Credit and Bank Guarantee) dated
November 29, 1997 between PXRE Limited and Lloyds' (Exhibit 10.34 to
the Annual Report on Form 10-K of PXRE Delaware for the fiscal year
ended December 31, 1997 (File No. 0-15428), and incorporated herein by
reference).
10.26 Operating Agreement of Cat Bond Investors, effective as of June 9, 1997
among Cat Bond Investors, Phoenix Home Life and PXRE Delaware (Exhibit
10.35 to the Annual Report on Form 10-K of PXRE Delaware for the fiscal
year ended December 31, 1997 (File No. 0-15428), and incorporated
herein by reference).
</TABLE>
II-10
<PAGE>
<TABLE>
<S> <C>
10.27 Employment Agreement dated July 16, 1998 between PXRE Managing Agency
Limited and Peter G. Butler (Exhibit 10.37 to the Annual Report on Form
10-K of PXRE Delaware for the fiscal year ended December 31, 1998 (File
No. 0-15428) and incorporated herein by reference). (M)
10.28 Employment Agreement dated June 8, 1998 between PXRE Delaware and
Michael J. Toman (Exhibit 10.38 to the Annual Report on Form 10-K of
PXRE Delaware for the fiscal year ended December 31, 1998 (File No.
0-15428) and incorporated herein by reference). (M)
10.29 Employment Agreement dated April 14, 1999 between PXRE Reinsurance Company
and Jeffrey Mayer (Exhibit 10.39 to PXRE Delaware's Form 10-Q for the
quarterly period ended June 30, 1999 (File No. 0-15428) and incorporated
herein by reference). (M)
11 Statement re: computation of earnings per share: (the information
required by this exhibit is presented in the financial statements and
notes thereto included in the Annual Report on Form 10-K of PXRE
Delaware for the fiscal year ended December 31, 1998 (File No.
0-15428), and incorporated herein by reference, and Quarterly Report on
Form 10-Q of PXRE Delaware for the quarterly period ended June 30, 1999
(File No. 0-15428), and incorporated herein by reference).
12 Statement re: computation of ratios: (attached hereto as Exhibit 12).
21 Subsidiaries of the Registrant. Upon the effectiveness of the
reorganization, PXRE Group will have the following subsidiaries: PXRE
(Barbados) Ltd., a Barbados company; PXRE Reinsurance Ltd., a Bermuda
insurance company; PXRE Delaware, a Delaware corporation; PXRE
Reinsurance Company, a Connecticut insurance company; Transnational
Insurance Company, a Connecticut insurance company; PXRE Capital Trust
I, a Delaware statutory business trust; PXRE Limited., an English
company (the sole member of PG Butler Syndicate 1224 at Lloyd's); PXRE
Managing Agency Limited (the managing agency for PG Butler Syndicate
1224 at Lloyd's); PXRE Trading Corporation, a Delaware corporation;
TREX Trading Corporation, a Delaware corporation; PX/TX Associates, a
Delaware general partnership (of which PXRE Trading and TREX Trading
are the only partners); CAT Fund, L.P., a Delaware limited partnership
(of which PX/TX Associates is the sole general partner and PXRE Trading
and TREX Trading are the only limited partners); Cat Bond Investors
L.L.C. (of which PXRE Delaware and Phoenix Home Life are the only
members); PXRE Solutions Inc., a Connecticut corporation; PXRE Direct
Underwriting Managers, Inc., a Connecticut corporation; and PXRE
Underwriting Managers, Inc., a Virginia corporation.
23.1 Consent of PricewaterhouseCoopers as to financial statements of PXRE
Group.
23.2 Consent of PricewaterhouseCoopers LLP as to financial statements of
PXRE Delaware.
23.3 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 8.3).
23.4 Consent of Conyers Dill & Pearman (included in Exhibit 5 and Exhibit
8.1).
23.5 Consent of Chancery Chambers (included in Exhibit 8.2).
27 Financial Data Schedule. (Exhibit 27 included in electronic filing
only).
99.1 Form of proxy for the Special Meeting of Stockholders of PXRE Delaware.
</TABLE>
II-11
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c)(1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to
information called for by the other items of the applicable form.
(2) The undersigned registrant undertakes that every prospectus: (i)
that is filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act of
1933 and is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to the registration statement and
will
II-12
<PAGE>
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the proxy
statement/prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Hamilton, Bermuda on
August 17, 1999.
PXRE GROUP LTD.
(Registrant)
By: /s/ Gerald L. Radke
--------------------------------------
Gerald L. Radke
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Gerald L. Radke Chairman of the Board, President August 17, 1999
___________________________________________ and Chief Executive Officer
Gerald L. Radke (Principal Executive Officer)
/s/ James F. Dore Executive Vice President and Chief August 17, 1999
___________________________________________ Financial Officer (Principal
James F. Dore Financial Officer and Principal
Accounting Officer)
/s/ F. Sedgwick Browne Director August 17, 1999
___________________________________________
F. Sedgwick Browne
___________________________________________ Director _________, 1999
Robert W. Fiondella
/s/ Franklin D. Haftl Director August 17, 1999
___________________________________________
Franklin D. Haftl
</TABLE>
II-14
<PAGE>
<TABLE>
<S> <C> <C>
___________________________________________ Director _________, 1999
Bernard Kelly
/s/ Wendy Luscombe Director August 17, 1999
___________________________________________
Wendy Luscombe
/s/ Philip R. McLoughlin Director August 17, 1999
___________________________________________
Philip R. McLoughlin
___________________________________________ Director _________, 1999
David W. Searfoss
____________________________________________ Director _________, 1999
Wilson Wilde
CT CORPORATION SYSTEM August 17, 1999
By: /s/ Stephania Rocco
___________________________
Stephania Rocco
Customer Specialist
</TABLE>
II-15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
2 Agreement and Plan of Merger, dated as of July 7, 1999, among PXRE
Delaware, PXRE Group and PXRE Merger Corp. (included as Annex A to the
proxy statement/prospectus).
3.1 Memorandum of Association of PXRE Group.*
3.2 Bye-Laws of PXRE Group.*
4.1 Form of Specimen Common Share certificate, par value $1.00 per share,
of PXRE Group.*
4.2 Credit Agreement dated as of December 30, 1998 among PXRE Delaware, the
banks and financial institutions listed on the signature pages thereto
or that subsequently become parties thereto (collectively, the
"Lenders") and First Union National Bank ("First Union") as agent for
the Lenders (Exhibit 4.8 to PXRE Delaware's Form 8-K dated January 8,
1999 (File No. 0-15428), and incorporated herein by reference).
4.3 First Amendment and Waiver to Credit Agreement dated as of May 18, 1999
among PXRE Delaware, the Lenders and First Union, Joinder Agreements
dated May 18, 1999 by Fleet National Bank and Credit Lyonnais New York
Branch, Assignments and Acceptances dated May 18, 1999 between First
Union and Fleet National Bank and between First Union and The First
National Bank of Chicago, respectively (Exhibit 4.9 to PXRE Delaware's
Form 10-Q for the quarterly period ended June 30, 1999 (File No.
0-15428), and incorporated herein by reference).
4.4 Second Amendment and Waiver to Credit Agreement dated as of June 25,
1999 among PXRE Delaware, the Lenders and First Union, (Exhibit 4.9 to
PXRE Delaware's Form 10-Q for the quarterly period ended June 30, 1999
(File No. 0-15428), and incorporated herein by reference).
4.5 First Amended and Restated Credit Agreement among PXRE Delaware, as
borrower, PXRE Group and PXRE Barbados, as guarantors, the Lenders
named therein and First Union as agent. (draft)*
4.6 Indenture, dated as of January 29, 1997, between PXRE Delaware and
First Union National Bank, as Trustee (Exhibit 4.3 to PXRE Delaware's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(File No. 0-15428), and incorporated herein by reference).
4.7 First Supplemental Indenture, dated as of January 29, 1997, between
PXRE Delaware and First Union National Bank, as Trustee, in respect of
PXRE Delaware's 8.85% Junior Subordinated Deferrable Interest
Debentures due 2027 (Exhibit 4.4 to the Annual Report on Form 10-K of
PXRE Delaware for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated herein by reference).
4.8 Amended and Restated Declaration of Trust of PXRE Capital Trust I,
dated as of January 29, 1997, among PXRE Delaware, as sponsor, the
Administrators thereof, First Union Bank of Delaware, as Delaware
Trustee, First Union National Bank, as Institutional Trustee, and the
holders from time to time of undivided interests in the assets of PXRE
Capital Trust I (Exhibit 4.5 to the Annual Report on Form 10-K of PXRE
Delaware for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
4.9 Capital Securities Guarantee Agreement, dated as of January 29, 1997,
between PXRE Delaware and First Union National Bank, as Guarantee
Trustee (Exhibit 4.6 to the Annual Report on Form 10-K of PXRE Delaware
for the fiscal year ended December 31, 1996 (File No.0-15428), and
incorporated herein by reference).
4.10 Common Securities Guarantee Agreement, dated as of January 29, 1997,
executed by PXRE Delaware (Exhibit 4.7 to the Annual Report on Form
10-K of PXRE Delaware for the fiscal year ended December 31, 1996 (File
No. 0-15428), and incorporated herein by reference).
4.11 Registration Rights Agreement, dated January 29, 1997, among PXRE
Delaware, PXRE Capital Trust I and Salomon Brothers Inc, as
Representative of the Initial Purchasers (Exhibit 10.1 to the Annual
Report on Form 10-K of PXRE Delaware for the fiscal year ended December
31, 1996 (File No. 0-15428), and incorporated herein by reference).
4.12 Purchase Agreement among PXRE Delaware, PXRE Capital Trust I and
Salomon Brothers Inc, as Representative of the Initial Purchasers,
dated January 24, 1997 (Exhibit 10.2 to the Annual Report on Form 10-K
of PXRE Delaware for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated herein by reference).
5 Opinion of Conyers Dill & Pearman regarding the legality of the
securities being registered.*
8.1 Opinion of Conyers Dill & Pearman as to certain tax matters.*
8.2 Opinion of Chancery Chambers as to certain tax matters.*
8.3 Opinion of Morgan, Lewis & Bockius LLP as to certain tax matters.*
10.1 PXRE Reinsurance Company Management Agreement among PXRE Reinsurance
Company and, among others, Merrimack Mutual Fire Insurance Company
("Merrimack"), Pennsylvania Lumbermens Mutual Insurance Company
("Pennsylvania Lumbermens"), and NRMA Insurance Limited ("NRMA")
(Exhibit 10.1 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1991 (File No. 0-15428), and
incorporated herein by reference); letter dated November 28, 1990 from
Pennsylvania Lumbermens confirming reduced participation (Exhibit 10.7
to PXRE Delaware's Form S-2 Registration Statement dated February 21,
1992, as amended by Amendment No. 1 thereto dated April 1, 1992 and by
Amendment No. 2 thereto dated April 13, 1992 and by Amendment No. 3
thereto dated April 23, 1992 (File No. 33- 45893), and incorporated
herein by reference); cover notes respecting January 1997 renewals by
Merrimack, Pennsylvania Lumbermens and NRMA and cover note respecting
participation commencing January 1, 1997 by Auto-Owners Insurance
Company ("Auto-Owners") (Exhibit 10.3 to the Annual Report on Form 10-K
of PXRE Delaware for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated herein by reference); cover notes respecting
January 1999 renewals by NRMA, Pennsylvania Lumbermens, Auto-Owners and
The Andover Companies (a Merrimack company) (Exhibit 10.3 to the Annual
Report on Form 10-K of PXRE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
Delaware for the fiscal year ended December 31, 1998 (File No.
0-15428), and incorporated herein by reference).
10.2 Quota Share Retrocessional Agreement between PXRE Reinsurance Company
and Trenwick America Reinsurance Corporation ("Trenwick Group")
(Exhibit 10.21 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1993 (File No. 0-15428), and
incorporated herein by reference); cover note respecting January 1999
renewal by Trenwick Group (Exhibit 10.17 to the Annual Report on Form
10-K of PXRE Delaware for the fiscal year ended December 31, 1998 (File
No. 0-15428), and incorporated herein by reference).
10.3 Undertaking dated September 1, 1998 between PXRE Reinsurance Company
and Select Reinsurance Ltd., Amended and Restated Facultative
Obligatory Quota Share Retrocessional Agreement between PXRE
Reinsurance Company and Select Reinsurance Ltd. and Variable Quota
Share Retrocessional Agreement between PXRE Reinsurance Company and
Select Reinsurance Ltd. (Exhibit 10.36 to the Annual Report on Form
10-K of PXRE Delaware for the fiscal year ended December 31, 1998 (File
No. 0-15428), and incorporated herein by reference).
10.4 Tax Settlement Agreement dated June 21, 1991 between PXRE Delaware,
PXRE Reinsurance Company and PM Holdings, Inc. (Exhibit 10.2 to the
Annual Report on Form 10-K of PXRE Delaware for the fiscal year ended
December 31, 1991 (File No. 0-15428), and incorporated herein by
reference).
10.5 Investment Advisory Agreement between PXRE Reinsurance Company and
Phoenix Investment Counsel, Inc., dated February 25, 1987 and effective
as of January 1, 1987 (Exhibit 10.10 to Amendment No. 1 dated February
19, 1987 to PXRE Delaware's Form S-1 Registration Statement dated
August 29, 1986, as subsequently amended by Amendment No. 2 thereto
dated March 25, 1987 (File No. 33-8406), and incorporated herein by
reference); Amendment to Investment Advisory Agreement between PXRE
Reinsurance Company and Phoenix Investment Counsel, Inc., effective
retroactively as of January 1, 1987 (Exhibit 10.3 to the Annual Report
on Form 10-K of PXRE Delaware for the fiscal year ended December 31,
1991 (File No. 0-15428), and incorporated herein by reference);
Amendment No. 2 to Investment Advisory Agreement between PXRE
Reinsurance Company and Phoenix Investment Counsel, Inc., effective as
of November 1, 1989 (Exhibit 10.4 to the Annual Report on Form 10-K of
PXRE Delaware for the fiscal year ended December 31, 1991 (File No.
0-15428), and incorporated herein by reference); Amendment No. 3 to
Investment Advisory Agreement between PXRE Reinsurance Company and
Phoenix Investment Counsel, Inc. effective June 1, 1995 (Exhibit 10.26
to the Annual Report on Form 10-K of PXRE Delaware for the fiscal year
ended December 31, 1995 (File No. 0-15428), and incorporated herein by
reference).
10.6 Investment Management Agreement, effective January 29, 1997 between
PXRE Delaware and Phoenix Investment Counsel, Inc. (Exhibit 10.29 to
the Annual Report on
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
Form 10-K of PXRE Delaware for the fiscal year ended December 31, 1996
(File No. 0-15428), and incorporated herein by reference).
10.7 Amended and Restated Investment Advisory Agreement between
Transnational Reinsurance Company and Phoenix Investment Counsel, Inc.,
dated November 8, 1993 (Exhibit 10.4 to Transnational Re Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993
(File No. 0-22376) and incorporated herein by reference), as amended by
the Amendment thereto, effective June 1, 1995 (Exhibit 10.11 to
Transnational Re Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 (File No. 0-22376) and incorporated
herein by reference).
10.8 Amended and Restated Agreement Concerning Filing of Consolidated
Federal Income Tax Returns dated as of August 23, 1993 between PXRE
Delaware and PXRE Reinsurance Company (Exhibit 10.8 to the Annual
Report on Form 10-K of PXRE Delaware for the fiscal year ended December
31, 1993 (File No. 0-15428), and incorporated herein by reference);
Addendum No. 2 dated November 10, 1994 to the PXRE Delaware Amended and
Restated Agreement Concerning Filing of Consolidated Federal Income Tax
Returns (Exhibit 10.22 to the Annual Report on Form 10-K of PXRE
Delaware for the fiscal year ended December 31, 1994 (File No.
0-15428), and incorporated herein by reference); and Addendum No. 3
dated as of December 11, 1996 to the PXRE Delaware Amended and Restated
Agreement Concerning Filing of Consolidated Federal Income Tax Returns
(Exhibit 10.22 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1996 (File No. 0-15428), and
incorporated herein by reference).
10.9 Employee Stock Purchase Plan, as amended (Appendix A to PXRE Delaware's
Proxy Statement dated April 23, 1993, and incorporated herein by
reference). (M)
10.10 Executive Severance Plan. (M) *
10.11 1988 Stock Option Plan, as amended (Exhibit A to the first Prospectus
forming part of PXRE Delaware's Form S-8 and S-3 Registration Statement
dated June 21, 1990 (File No. 33-35521), and incorporated herein by
reference). (M)
10.12 Restated Employee Annual Incentive Bonus Plan, as amended (Appendix A
to PXRE Delaware's Proxy Statement dated April 27, 1999, and
incorporated herein by reference).(M)
10.13 1992 Officer Incentive Plan, as amended (Appendix B to PXRE Delaware's
Proxy Statement dated April 27, 1999 and incorporated herein by
reference).(M)
10.14 Director Stock Option Plan (Appendix A to PXRE Delaware's Proxy
Statement dated May 3, 1995, and incorporated herein by reference) and
Amendment thereto made as of
</TABLE>
- --------
(M) indicates a management contract or compensatory plan or arrangement in which
the directors and/or executive officers of PXRE participate.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
April 17, 1997 (Exhibit 10.25 to the Annual Report on Form 10-K of PXRE
Delaware for the fiscal year ended December 31, 1997 (File No.
0-15428), and incorporated herein by reference).(M)
10.15 Director Equity and Deferred Compensation Plan (Appendix C to PXRE
Delaware's Proxy Statement dated April 30, 1997, and incorporated
herein by reference).(M)
10.16 Non-Employee Director Deferred Stock Plan (Appendix A to PXRE
Delaware's Proxy Statement dated April 12, 1991, and incorporated
herein by reference).(M)
10.17 Management Agreement dated as of November 8, 1993 among PXRE
Reinsurance Company, Transnational Re Corporation and Transnational
Reinsurance Company (Exhibit 10.22 to the Annual Report on Form 10-K of
PXRE Delaware for the fiscal year ended December 31, 1993 (File No.
0-15428), and incorporated herein by reference), as amended by
Amendment No. 1 thereto, dated December 1, 1994 (Exhibit 10.21 to the
Annual Report on Form 10-K of PXRE Delaware for the fiscal year ended
December 31, 1994 (File No. 0-15428), and incorporated herein by
reference).
10.18 Aggregate Excess of Loss Reinsurance Agreement dated as of November 8,
1993 between PXRE Reinsurance Company, as reinsurer, and Transnational
Reinsurance Company, as reinsured (Exhibit 10.23 to the Annual Report
on Form 10-K of PXRE Delaware for the fiscal year ended December 31,
1993 (File No. 0-15428), and incorporated herein by reference).
10.19 Agreement and Plan of Merger dated as of August 22, 1996 between PXRE
Delaware and Transnational Re Corporation, as amended by Amendment No.
1 dated as of September 27, 1996 and Amendment No. 2 dated as of
October 24, 1996 (Annex A to PXRE Delaware's Form S-4 Registration
Statement dated October 30, 1996 (File No. 333-15087), and
incorporated herein by reference).
10.20 Services Agreement dated as of December 11, 1996 between PXRE
Reinsurance Company and Transnational Reinsurance Company (Exhibit
10.20 to the Annual Report on Form 10-K of PXRE Delaware for the fiscal
year ended December 31, 1996 (File No. 0-15428), and incorporated
herein by reference).
10.21 Reinsurance Pooling Agreement, effective as of January 1, 1999, between
PXRE Reinsurance Company and Transnational Insurance Company.*
10.22 Lease dated May 9, 1994 between Thornall Associates and PXRE Delaware
(Exhibit 10.24 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1994 (File No. 0-15428), and
incorporated herein by reference).
10.23 Lloyd's Deposit Trust Deed (Third Party Deposit) dated November 29,
1996 between PXRE Limited and PXRE Reinsurance Company (Exhibit 10.32
to the Annual Report on Form 10-K of PXRE Delaware for the fiscal year
ended December 31, 1997 (File No. 0-15428), and incorporated herein by
reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
10.24 Letter of Credit dated November 22, 1996 issued by The Chase Manhattan
Bank by order of PXRE Reinsurance Company for the benefit of Lloyds
(Exhibit 10.33 to the Annual Report on Form 10-K of PXRE Delaware for
the fiscal year ended December 31, 1997 (File No. 0-15428), and
incorporated herein by reference).
10.25 Lloyd's Security Trust Deed (Letter of Credit and Bank Guarantee) dated
November 29, 1997 between PXRE Limited and Lloyds' (Exhibit 10.34 to
the Annual Report on Form 10-K of PXRE Delaware for the fiscal year
ended December 31, 1997 (File No. 0-15428), and incorporated herein by
reference).
10.26 Operating Agreement of Cat Bond Investors, effective as of June 9, 1997
among Cat Bond Investors, Phoenix Home Life and PXRE Delaware (Exhibit
10.35 to the Annual Report on Form 10-K of PXRE Delaware for the fiscal
year ended December 31, 1997 (File No. 0-15428), and incorporated
herein by reference).
10.27 Employment Agreement dated July 16, 1998 between PXRE Managing Agency
Limited and Peter G. Butler (Exhibit 10.37 to the Annual Report on Form
10-K of PXRE Delaware for the fiscal year ended December 31, 1998 (File
No. 0-15428) and incorporated herein by reference). (M)
10.28 Employment Agreement dated June 8, 1998 between PXRE Delaware and
Michael J. Toman (Exhibit 10.38 to the Annual Report on Form 10-K of
PXRE Delaware for the fiscal year ended December 31, 1998 (File No.
0-15428) and incorporated herein by reference). (M)
10.29 Employment Agreement dated April 14, 1999 between PXRE Reinsurance
Company and Jeffrey Mayer (Exhibit 10.39 to PXRE Delaware's Form 10-Q
for the quarterly period ended June 30, 1999 (File No. 0-15428) and
incorporated herein by reference). (M)
11 Statement re: computation of earnings per share: (the information
required by this exhibit is presented in the financial statements and
notes thereto included in the Annual Report on Form 10-K of PXRE
Delaware for the fiscal year ended December 31, 1998 (File No.
0-15428), and incorporated herein by reference, and Quarterly Report on
Form 10-Q of PXRE Delaware for the quarterly period ended June 30, 1999
(File No. 0-15428), and incorporated herein by reference).
12 Statement re: computation of ratios: (attached hereto as Exhibit 12). *
21 Subsidiaries of the Registrant. Upon the effectiveness of the
reorganization, PXRE Group will have the following subsidiaries: PXRE
(Barbados) Ltd., a Barbados company; PXRE Reinsurance Ltd., a Bermuda
insurance company; PXRE Delaware, a Delaware corporation; PXRE
Reinsurance Company, a Connecticut insurance company; Transnational
Insurance Company, a Connecticut insurance company; PXRE Capital Trust
I, a Delaware statutory business trust; PXRE Limited., an English
company (the sole member of PG Butler Syndicate 1224 at Lloyd's); PXRE
Managing Agency Limited (the managing agency for PG Butler Syndicate
1224 at Lloyd's); PXRE Trading Corporation, a Delaware corporation;
TREX Trading Corporation, a Delaware corporation; PX/TX Associates, a
Delaware general partnership (of which PXRE Trading and TREX Trading
are the only partners); CAT Fund, L.P., a Delaware limited
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
partnership (of which PX/TX Associates is the sole general partner and
PXRE Trading and TREX Trading are the only limited partners); Cat Bond
Investors L.L.C. (of which PXRE Delaware and Phoenix Home Life are the
only members); PXRE Solutions Inc., a Connecticut corporation; PXRE
Direct Underwriting Managers, Inc., a Connecticut corporation; and PXRE
Underwriting Managers, Inc., a Virginia corporation.
23.1 Consent of PricewaterhouseCoopers as to financial statements of PXRE
Group. *
23.2 Consent of PricewaterhouseCoopers LLP as to financial statements of
PXRE Delaware. *
23.3 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 8.3). *
23.4 Consent of Conyers Dill & Pearman (included in Exhibit 5 and Exhibit
8.1). *
23.5 Consent of Chancery Chambers (included in Exhibit 8.2). *
27 Financial Data Schedule. (Exhibit 27 included in electronic filing
only).*
99.1 Form of proxy for the Special Meeting of Stockholders of PXRE
Delaware.*
</TABLE>
- --------
* Filed herewith
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as...................................'SS'
<PAGE>
EXHIBIT 3.1
FORM NO. 6 REGISTRATION NO. 26538
[BERMUDA COAT OF ARMS]
BERMUDA
CERTIFICATE OF INCORPORATION
I hereby in accordance with section 14 of the Companies Act 1981 issue this
Certificate of Incorporation and do certify that on the 1st day of June, 1999
PXRE Group Ltd.
was registered by me in the Register maintained by me under the provisions of
the said section and that the status of the said company is that of an EXEMPTED
company.
Given under my hand and the Seal of the
REGISTRAR OF COMPANIES this 4th
day of June, 1999.
[SEAL OF THE REGISTRAR OF COMPANIES]
/s/ Pamela Jones
for ACTING REGISTRAR OF COMPANIES
<PAGE>
FORM NO. 2
[BERMUDA COAT OF ARMS]
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF ASSOCIATION OF
COMPANY LIMITED BY SHARES
(Section 7(1) and (2))
MEMORANDUM OF ASSOCIATION
OF
PXRE Group Ltd.
(hereinafter referred to as "the Company")
1. The liability of the members of the Company is limited to the amount (if
any) for the time being unpaid on the shares respectively held by them.
2. We, the undersigned, namely,
<TABLE>
<CAPTION>
NAME ADDRESS BERMUDIAN NATIONALITY NUMBER OF
STATUS SHARES
(Yes/No) SUBSCRIBED
<S> <C> <C> <C> <C>
A.D. WHALEY 2 CHURCH STREET YES BRITISH ONE
HAMILTON HM 11
BERMUDA
J.M. MACDONALD " YES BRITISH ONE
N.P. JOHNSON " YES BRITISH ONE
</TABLE>
do hereby respectively agree to take such number of shares of the Company as may
be allotted to us respectively by the provisional directors of the Company, not
exceeding the number of shares for which we have respectively subscribed, and to
satisfy such calls as may be made by the directors, provisional directors or
promoters of the Company in respect of the shares allotted to us respectively.
<PAGE>
3. The Company is to be EXEMPTED Company as defined by the Companies Act
1981.
4. The Company, with the consent of the Minister of Finance, has power to
hold land situated in Bermuda not exceeding in all, including the
following parcels:-
N/A
5. The authorised share capital of the Company is USS12,000 divided into
shares of US$1.OO each. The minimum subscribed share capital of the
Company is US$12,000.00.
6. The objects for which the Company is formed and incorporated are -
1. TO ACT AND OR TO PERFORM ALL THE FUNCTIONS OF A HOLDING COMPANY IN ALL
ITS BRANCHES AND TO CO-ORDINATE THE POLICY AND ADMINISTRATION OF ANY
SUBSIDIARY COMPANY OR COMPANIES WHEREVER INCORPORATED OR CARRYING ON
BUSINESS OR OF ANY GROUP OF COMPANIES OF WHICH THE COMPANY OR ANY
SUBSIDIARY COMPANY IS A MEMBER OR WHICH ARE IN ANY MANNER CONTROLLED
DIRECTLY OR INDIRECTLY BY THE COMPANY OR WHICH ARE IN ANY MANNER
CONTROLLED DIRECTLY OR INDIRECTLY BY THE SAME ENTITY IN ANY MANNER
CONTROLLING DIRECTLY OR INDIRECTLY THE COMPANY;
2. TO RAISE OR SECURE THE PAYMENT OF MONEY IN SUCH MANNER AS THE COMPANY
MAY THINK FIT AND FOR THAT PURPOSE TO AUTHORISE, ISSUE, OFFER, SELL
AND DELIVER, COMMON SHARES, PREFERRED SHARES AND OTHER SECURITIES OF
THE COMPANY, NOTES, OR OTHER EVIDENCES AND TO TRANSFER, REDEEM, AND
PURCHASE ANY SUCH SECURITIES, NOTES OR EVIDENCES OF INDEBTEDNESS AS
AFORESAID;
3. TO PROVIDE AND OR PROCURE FINANCING AND FINANCIAL INVESTMENT,
MANAGEMENT AND ADVISORY SERVICES AND ADMINISTRATIVE SERVICES TO ANY
ENTITY IN WHICH THE COMPANY OWNS, DIRECTLY OR INDIRECTLY AN EQUITY
INTEREST (REGARDLESS OF WHETHER THE SAME CARRIES ANY VOTING RIGHTS OR
PREFERRED RIGHTS OR RESTRICTIONS) OF NOT LESS THAN TWENTY PERCENT OF
THE TOTAL EQUITY ISSUED AND OUTSTANDING IN THAT ENTITY (AS DETERMINED
IN GOOD FAITH BY THE BOARD OF DIRECTORS OF THE COMPANY); AND, IN
CONNECTION WITH ANY OF THE FOREGOING, TO PROVIDE AND OR PROCURE
CREDIT, FINANCIAL ACCOMMODATION, LOANS AND OR ADVANCES WITH OR WITHOUT
INTEREST OR BENEFIT TO THE COMPANY TO ANY SUCH ENTITY AND TO LEND TO
AND OR DEPOSIT WITH ANY FINANCIAL INSTITUTION, FUND AND OR TRUST, ALL
OR ANY PROPERTY OF THE COMPANY AND OR ANY INTEREST THEREIN TO PROVIDE
COLLATERAL FOR LOANS OR OTHER FORMS OF FINANCING PROVIDED TO ANY SUCH
ENTITY;
<PAGE>
4. TO ACT AS AN INVESTMENT COMPANY AND FOR THAT PURPOSE TO ACQUIRE AND
HOLD UPON ANY TERMS AND, EITHER IN THE NAME OF THE COMPANY OR THAT OF
ANY NOMINEE, SHARES, STOCK, DEBENTURES, DEBENTURE STOCK, OWNERSHIP
INTERESTS, ANNUITIES, NOTES, MORTGAGES, BONDS, OBLIGATIONS AND
SECURITIES, FOREIGN EXCHANGE, FOREIGN CURRENCY DEPOSITS AND
COMMODITIES, ISSUED OR GUARANTEES BY ANY COMPANY OR PARTNERSHIP
WHEREVER INCORPORATED, ESTABLISHED OR CARRYING ON BUSINESS, OR BY ANY
GOVERNMENT, SOVEREIGN, RULER, COMMISSIONERS, PUBLIC BODY OR AUTHORITY,
SUPREME, MUNICIPAL, LOCAL OR OTHERWISE, BY ORIGINAL SUBSCRIPTION,
TENDER, PURCHASE, EXCHANGE, UNDERWRITING, PARTICIPATION IN SYNDICATES
OR IN ANY OTHER MANNER AND WHETHER OR NOT FULLY PAID UP, AND TO MAKE
PAYMENTS THEREON AS CALLED UP OR IN ADVANCE OF CALLS OR OTHERWISE AND
TO SUBSCRIBE FOR THE SAME, WHETHER CONDITIONALLY OR ABSOLUTELY, AND TO
HOLD THE SAME WITH A VIEW TO INVESTMENT, BUT WITH THE POWER TO VARY
ANY INVESTMENTS, AND TO EXERCISE AND ENFORCE ALL RIGHTS AND POWERS
CONFERRED BY OR INCIDENT TO THE OWNERSHIP THEREOF, AND TO INVEST AND
DEAL WITH THE MONEYS OF THE COMPANY NOT IMMEDIATELY REQUIRED UPON SUCH
SECURITIES AND IN SUCH MANNER AS MAY BE FROM TIME TO TIME DETERMINED;
5. BUYING, SELLING AND DEALING IN GOODS OF ALL KINDS;
6. ACQUIRING BY PURCHASE OR OTHERWISE AND HOLDING AS AN INVESTMENT
INVENTIONS, PATENTS, TRADE MARKS, TRADE NAMES, TRADE SECRETS, DESIGNS
AND THE LIKE;
7. BUYING, SELLING, HIRING, LETTING AND DEALING IN CONVEYANCES OF ANY
SORT;
8. TO ACQUIRE BY PURCHASE OR OTHERWISE HOLD, SELL, DISPOSE OF AND DEAL IN
REAL PROPERTY SITUATED OUTSIDE BERMUDA AND IN PERSONAL PROPERTY OF ALL
KINDS WHERESOEVER SITUATED; AND
9. TO ENTER INTO ANY GUARANTEE, CONTRACT OF INDEMNITY OR SURETYSHIP AND
TO ASSURE, SUPPORT OR SECURE WITH OR WITHOUT CONSIDERATION OR BENEFIT
THE PERFORMANCE OF ANY OBLIGATIONS OF ANY PERSON OR PERSONS AND TO
GUARANTEE THE FIDELITY OF INDIVIDUALS FILLING OR ABOUT TO FILL
SITUATIONS OF TRUST OR CONFIDENCE.
7. Powers of the Company
1. THE COMPANY SHALL, PURSUANT TO THE SECTION 42 OF THE COMPANIES ACT
1981, HAVE THE POWER TO ISSUE PREFERENCE SHARES WHICH ARE, AT THE
OPTION OF THE HOLDER, LIABLE TO BE REDEEMED.
2. THE COMPANY SHALL, PURSUANT TO SECTION 42A OF THE COMPANIES ACT 1981,
HAVE THE POWER TO PURCHASE ITS OWN SHARES.
<PAGE>
Signed by each subscriber in the presence of at least one witness attesting the
signature thereof
- --------------------------------- ---------------------------------
/s/ Nicholas Johnson /s/ Rosana Vieira
- --------------------------------- ---------------------------------
/s/ J.M. Macdonald /s/ Rosana Vieira
- --------------------------------- ---------------------------------
/s/ Anthony Whaley /s/ Rosana Vieira
- --------------------------------- ---------------------------------
(Subscribers) (Witnesses)
SUBSCRIBED this 28th day of May, 1999
<PAGE>
FORM NO. 1a
[BERMUDA COAT OF ARMS]
BERMUDA
THE COMPANIES ACT 1981
CONSENT
PURSUANT TO SECTION 4A
In exercise of the powers conferred upon him by section 4A of the Companies Act
1981, the Minister of Finance hereby gives his consent to:-
PXRE GROUP LTD.
to carry on restricted business activities in accordance with the Companies Act
1981.
DATED THIS 1st DAY OF JUNE, 1999
Eugene Cox
MINISTER OF FINANCE
<PAGE>
THE COMPANIES ACT 1981
FIRST SCHEDULE
A company limited by shares may exercise all or any of the following powers
subject to any provision of the law or its memorandum:
1. [Deleted]
2. to acquire or undertake the whole or any part of the business, property
and liabilities of any person carrying on any business that the company is
authorised to carry on;
3. to apply for register, purchase, lease, acquire, hold, use, control,
licence, sell, assign or dispose of patents, patent rights, copyrights,
trade makers, formulae, licences, inventions, processes, distinctive
makers and similar rights;
4. to enter into partnership or into any arrangement for sharing of profits,
union of interests, co-operation, joint venture, reciprocal concession or
otherwise with any person carrying on or engaged in or about to carry on
or engage in any business or transaction that the company is authorised to
carry on or engage in or any business or transaction capable of being
conducted so as to benefit the company;
5. to take otherwise acquire and hold securities in any other body corporate
having objects altogether or in part similar to those of the company or
carrying on any business capable of being conducted so as to benefit the
company;
6. subject to section 96 to lend money to any employee or to any person
having dealings with the company or with whom the company proposes to have
dealings or to any other body corporate any of those shares are held by
the company;
7. to apply for, secure or acquire by grant, legislative enactment,
assignment, transfer, purchase or otherwise and to exercise, carry out and
enjoy any charter, licence, power, authority, franchise, concession, right
or privilege, that any government or authority or any body corporation or
other public body may be empowered to grant, and to pay for, aid in and
contribute toward carrying it into effect and to assume any liabilities or
obligations incidental thereto;
8. to establish and support or aid in the establishment and support of
associations, institutions, funds or trusts for the benefit of employees
or former employees of the company or its predecessors, or the pendants or
connections of such employees or former employees, and grant pensions and
allowances, and make payments towards insurance or for any object similar
to those set forth in this paragraph, and to subscribe or guarantee money
for charitable, benevolent, educational and religious objects or for any
exhibition or for any public, general or useful objects;
9. to promote any company for the purpose of acquiring or taking over any of
the property and liabilities of the company or for any other purpose that
may benefit the company;
<PAGE>
-2-
10. to purchase, lease, take in exchange, hire or otherwise acquire any
personal property and any rights or privileges that the company considers
necessary or convenient for the purposes of its business;
11. to construct maintain, alter, renovate and demolish any buildings or works
necessary or convenient for its objects;
12. to take land in Bermuda by way of lease or letting agreement for a term
not exceeding twenty-one years, being land "bona fide" required for the
purposes of the business of the company and with the consent of the
Minister granted in his discretion to take land in Bermuda by way of lease
or letting agreement for a similar period in order to provide
accommodation or recreational facilities for its officers and employees
and when no longer necessary for any of the above purposes to terminate or
transfer the lease or letting agreement;
13. except to the extent, if any, as may be otherwise expressly provided in
its incorporating Act or memorandum and subject to the provisions of this
Act every company shall have power to invest the moneys of the Company by
way of mortgage of real or personal property of every description in
Bermuda or elsewhere and to sell, exchange, vary, or dispose of such
mortgage as the company shall from time to time determine;
14. to construct, improve, maintain, work, manage, carry out or control any
roads, ways, tramways, branches or sidings, bridges, reservoirs,
watercourses, wharves, factories, warehouses, electric works, shops,
stores and other works and conveniences that may advance the interests of
the company and contribute to, subsidise or otherwise assist or take part
in the construction, improvement, maintenance, working, management,
carrying out or control thereof;
15. to raise and assist in raising money for, and aid by way of bonus, loan,
promise, endorsement, guarantee or otherwise, any person and guarantee the
performance or fulfilment of any contracts or obligations of any person,
and in particular guarantee the payment of the principal of and interest
on the debt obligations of any such person;
16. to borrow or raise or secure the payment of money in such manner as the
company may think fit;
17. to draw, make, accept, endorse, discount, execute and issue bills of
exchange, promissory notes, bills of lading, warrants and other
negotiable or transferable instruments;
18. when properly authorised to do so, to sell, lease, exchange or otherwise
dispose of the undertaking of the company or any part thereof as an
entirety or substantially as an entirety for such consideration as the
company thinks fit;
19. to sell, improve, manage, develop, exchange, lease, dispose of, turn to
account or otherwise deal with the property of the company in the ordinary
course of its business;
<PAGE>
-3-
20. to adopt such means of making known the products of the company as may
seem expedient, and in particular by advertising, by purchase and
exhibition of works of art or interest, by publication of books and
periodicals and by granting prizes and rewards and making donations;
21. to cause the company to be registered and recognised in any foreign
jurisdiction, and designate persons therein according to the laws of that
foreign jurisdiction or to represent the company and to accept service for
and on behalf of the company of any process or suit;
22. to allot and issue fully-paid shares of the company in payment or part
payment of any property purchase or otherwise acquired by the company or
for any past services performed for the company;
23. to distribute among the members of the company in cash, kind, specie or
otherwise as may be resolved, by way of dividend, bonus or in any other
manner considered advisable, any property of the company, but not so as to
decrease the capital of the company unless the distribution is made for
the purpose of enabling the company to be dissolved or the distribution,
apart from this paragraph, would be otherwise lawful;
24. to establish agencies and branches;
25. to take or hold mortgages, hypothecs, liens and charges to secure payment
of the purchase price, or of any unpaid balance of the purchase price, of
any part of the property of the company of whatsoever kind sold by the
company, or for any money due to the company from purchasers and others
and to sell or otherwise dispose of any such mortgage, a hypothec, lien
or charge;
26. to pay all costs and expenses of or incidental to the incorporation and
organisation of the company;
27. to invest and deal with the moneys of the company not immediately required
for the objects of the company in such manner as may be determined;
28. to do any of the things authorised by this subsection and all in
authorised by its memorandum as principals, agents, contractors, trustees
or otherwise, and either alone or in conjunction with others;
29. to do all such other things as are incidental or conducive to the
attainment of the objects and the exercise of the powers of the company.
Every company may exercise its powers beyond the boundaries of Bermuda
to the extent to which the laws in force where the powers are sought to be
exercised permit.
<PAGE>
PXRE GROUP LTD.
Clarendon House 2 Church Street
Hamilton HM 11 Bermuda
I, I.S. Outerbridge, Assistant Secretary of PXRE GROUP LTD., DO HEREBY
CERTIFY that the following is a true copy of a resolution adopted by the
Member of the Company by way of a Unanimous Written Resolution in accordance
with Bye-Law 41 and dated 9th August, 1999 and that such resolution is still
in full force and effect as at the date hereof:
"RESOLVED, that the increase in the authorized share capital from
$12,000 to $60,000,000 be, and hereby is approved, with such $60,000,000
divided into the following classes of shares:
(i) 50,000,000 common shares, par value $1.00 per share; and
(ii) 10,000,000 preferred shares, par value $1.00 per share; and..."
I.S. Outerbridge
------------------------
Assistant Secretary
Dated: 11th August, 1999
<PAGE>
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF INCREASE OF SHARE CAPITAL
OF
PXRE Group Ltd.
- ------------------------------------------------------------------------------
(hereinafter referred to as "the Company")
DEPOSITED in the office of the Registrar of Companies on the 10th day of
August, 1999, in accordance with the provisions of section 45(3) of the
Companies Act 1981.
<TABLE>
<S> <C>
Minimum Share Capital of the Company US$ 12,000
Authorised Share Capital of the Company US$ 12,000
Increase of Share Capital as authorised
by way of a Written Resolution
dated 9th August, 1999. US$ 59,988,000
---------------
AUTHORISED SHARE CAPITAL AS INCREASED
US$ 60,000,000
---------------
</TABLE>
DULY STAMPED in the amount of BD$ NIL being the stamp duty payable on the
amount of increase of share capital of the Company in accordance with the
provisions of the Stamp Duties Act, 1976.
I.S. Outerbridge
---------------------
Secretary
DATED THIS 11th day of August, 1999
NOTE: This memorandum must be filed in the office of the Registrar of
Companies within thirty days after the date on which the resolution
increasing the share capital has effect and must be accompanied by a
copy of the resolution and the prescribed fee.
<PAGE>
EXHIBIT 3.2
BYE-LAWS
OF
PXRE GROUP LTD.
<PAGE>
<TABLE>
<CAPTION>
Bye-Law Page
------ ----
<S> <C> <C>
1 INTERPRETATION 1
2 SHARES AND SHARE CAPITAL 7
3 COMMON SHARES 8
4 AUTHORITY OF BOARD TO ISSUE AND DIVIDE
PREFERRED SHARES INTO DIFFERENT SERIES 8
5 EMPLOYEE SHARE PURCHASE 10
6 COMPANY SHARE REPURCHASE 10
7 ALTERATION OF CAPITAL 11
8 WARRANTS 13
9 SHARE CERTIFICATES 14
10 REGISTER OF MEMBERS 15
11 INSPECTION OF REGISTER OF MEMBERS 16
12 RECORD DATES 16
13 TRANSFER OF SHARES 16
14 TRANSMISSION OF SHARES 18
15 UNTRACEABLE MEMBERS 19
16 GENERAL MEETINGS OF MEMBERS 20
17 NOTICE OF GENERAL MEETINGS 21
18 PROCEEDINGS AT GENERAL MEETINGS 22
19 INSPECTORS 24
20 VOTING AT GENERAL MEETINGS 24
21 PROXIES AND CORPORATE REPRESENTATION 28
22 NOMINATION AND REMOVAL OF DIRECTORS 30
23 ALTERNATE DIRECTORS 32
24 DIRECTORS' COMPENSATION 34
25 DIRECTORS' AND OFFICERS' INTERESTS 34
26 GENERAL POWERS OF THE BOARD OF DIRECTORS 36
27 PROCEEDINGS OF THE BOARD OF DIRECTORS 38
28 OFFICERS 40
29 REGISTER OF DIRECTORS AND OFFICERS 42
30 MINUTES 42
31 SEAL 42
32 DESTRUCTION OF DOCUMENTS 43
33 DIVIDENDS AND OTHER DISTRIBUTIONS 44
34 CAPITALIZATION 49
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Bye-Law Page
------ ----
<S> <C> <C>
35 ACCOUNTING RECORDS 50
36 AUDIT 51
37 NOTICES 52
38 WINDING UP 54
39 INDEMNIFICATION OF DIRECTORS AND OFFICERS
OF THE COMPANY 54
40 AMENDMENT OF BYE-LAWS 55
</TABLE>
<PAGE>
INTERPRETATION
1. (1) In these Bye-Laws, unless the context otherwise requires, the words
standing in the first column of the following table shall bear the meaning set
opposite them respectively in the second column.
<TABLE>
<CAPTION>
WORD MEANING
<S> <C>
"Act" The Companies Act 1981 of Bermuda, as
amended from time to time.
"Auditor" the Auditor of the Company for the time
being and may include any individual or
partnership.
"Bye-Laws" these Bye-Laws in their present form or as
supplemented or amended from time to time.
"Board" or the the Board of Directors of the Company or the
"Directors" or the Directors (including alternate Directors).
"Board of Directors"
"capital" the share capital from time to time of the
Company.
"clear days" in relation to the period of a Notice, that
period excluding the day when the Notice is
given or deemed to be given and the day for
which it is given or on which it is to take
effect.
"Code" the Internal Revenue Code of 1986, as
amended, of the United States.
"Company" PXRE Group Ltd.
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C>
"competent a competent regulatory authority in the
regulatory jurisdiction or place where the shares of the
authority" Company are listed or quoted on a stock
exchange.
"Controlled Shares" in reference to any Person means (i) all shares
of the Company that such Person owns within
the meaning of Section 958(a) of the Code, or
is considered as owning by applying the rules
of Section 958(b) of the Code, (ii) all shares
of the Company that such Person owns by
applying the rules of Sections 544 or 554 of
the Code or (iii) all shares of the Company
directly, indirectly or beneficially owned by
a Person within the meaning of Section 13(d)
of the Exchange Act (including any shares
owned by a group of Persons as so defined
and including any shares that would
otherwise be excluded by Section 13(d) of the
Exchange Act).
"Designated Stock a stock exchange which is an appointed stock
Exchange" exchange for the purposes of the Act in
respect of which the shares of the Company
are listed or quoted.
"dollars" and "$" dollars, the legal currency of the United
States.
"Exchange Act" the Securities Exchange Act of 1934, as
amended, of the United States.
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
"General Meeting" any meeting of the Members of the Company.
The General Meeting convened once in every
calendar year in compliance with the Act,
shall be known as the "Annual General
Meeting". Any General Meeting other than
an Annual General Meeting, shall be known
as a "Special General Meeting".
"Maximum Percentage" nine and nine-tenths percent (9.9%).
"Member" a duly registered holder from time to time of
the shares in the capital of the Company.
"month" a calendar month.
"9.9% Limitation" the requirement and restriction that no Person
shall be permitted to Own or Control more
than nine and nine-tenths percent (9.9%) of
the total combined voting power of all classes
of shares entitled to vote at a General Meeting
of the Company's Members or of the total
number of outstanding shares of any class of
stock, except as provided for in these Bye-
Laws or as permitted by the Board and
provided that the 9.9% Limitation shall not
apply to PXRE Purpose Trust.
"Notice" written notice unless otherwise specifically
stated and as further defined in these Bye-
Laws.
"Office" the registered office of the Company for the
time being.
"Officer" any individual appointed pursuant to Bye-
Law 28 hereof.
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C>
"Own or Control" or "Owning with respect to the Company's shares, means
or Controling" (i) shares that a Person owns within the
meaning of Section 958(a) of the Code or
is considered as owning by applying the
rules of Section 958(b) of the Code,
(ii) shares that a Person owns by
applying the rules of Sections 544 or
554 of the Code or (ii) shares directly,
indirectly or beneficially owned by a
Person within the meaning of Section
13(d) of the Exchange Act (including any
shares owned by a group of Persons as so
defined and including any shares that
would otherwise be excluded by Section
13(d) of the Exchange Act).
"paid up" paid up or credited as paid up.
"Person" any individual, general or limited partnership,
corporation, association, trust, estate,
company (including a limited liability
company) or any other entity or organization,
including a government, a political
subdivision or agency or instrumentality
thereof.
"Register" the principal register and, where
applicable, any branch register of
Members of the Company to be kept
pursuant to the provisions of the Act.
</TABLE>
-4-
<PAGE>
<TABLE>
<S> <C>
"Registration Office" in respect of any class or series of share
capital, such place as the Board may from
time to time determine to keep a branch
register of Members in respect of that class or
series of share capital and where (except in
cases where the Board otherwise directs) the
transfers or other documents of title for such
class or series of share capital are to be
delivered for registration.
"Seal" common seal or any one or more duplicate
seals of the Company (including a
securities seal) for use in Bermuda or
in any place outside Bermuda.
"Secretary" any Person appointed by the Board to
perform any of the duties of secretary
of the Company and includes any
assistant, deputy, temporary or acting
secretary.
"Securities Act" the Securities Act of 1933, as amended, of the
United States.
"shares" the Common Shares or Preferred Shares of
the Company, as the case may be.
"Subsidiary" any entity in which the Company owns,
directly or indirectly, shares
representing at least fifty percent
(50%) of the voting power or fifty
percent (50%) of the value of such
entity.
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C>
"Ten Percent Shareholder" a Person (other than the PXRE Purpose Trust)
who the Board determines Owns or Controls
more than 9.9% of the total combined voting
power of all classes of shares entitled to vote
or of the total number of outstanding shares
of any class of stock.
"year" a calendar year.
</TABLE>
(2) In these Bye-Laws, where not inconsistent with the context:
(a) words denoting the singular include the plural and vice
versa;
(b) words denoting a gender include every gender;
(c) words describing Persons include companies, associations
and bodies of Persons whether corporate or not;
(d) the word:
(i) "may" shall be construed as permissive; and
(ii) "shall" or "will" shall be construed as
imperative;
(e) expressions referring to writing shall, unless the
contrary intention appears, be construed as including
printing, lithography, photography, facsimile, computer
generated and other modes of representing words or
figures in a visible form;
(f) references to any act, ordinance, statute or statutory
provision shall be interpreted as relating to any
statutory modification or re-enactment thereof for the
time being in force;
(g) unless otherwise provided herein words and expressions
defined in the Act shall bear the same meanings in these
Bye-Laws if not inconsistent with the context;
(h) a resolution shall be a "special resolution" when it has
been passed by the affirmative vote of Members holding
not less than sixty-six and two-thirds percent (66 2/3%)
of the voting power of the then outstanding shares
entitled to vote, cast by such Members in person or, in
the
-6-
<PAGE>
case of such Members as are corporations, by their
respective duly authorized representative or, where
proxies are allowed, by proxy, at a General Meeting
of which not less than twenty-one (21) clear days'
Notice, specifying (without prejudice to the power
contained in these Bye-Laws to amend the same) the
intention to propose the resolution as a special
resolution, has been duly given;
(i) a resolution shall be an "ordinary resolution" when
it has been passed by a simple majority of votes
cast, in person, by a representative or by proxy, at
a General Meeting of which not less than twenty-one
(21) clear days' Notice has been duly given;
(j) a special resolution shall be effective for any
purpose for which an ordinary resolution is expressed
to be required under any provision of these Bye-Laws
or the Act; and
(k) headings used in these Bye-Laws are for convenience
only and are not to be used or relied upon in the
construction of these Bye-Laws.
(3) In these Bye-Laws, in calculating whether a resolution has been
passed by a particular majority or whether a particular number of shares is
represented at a General Meeting and, generally, for all purposes, in
calculating the total number of votes cast or votes represented, as the case
may be, the provisions of paragraph (4) of Bye-Law 20 hereof shall be taken
into account in all cases in computing the number of votes cast or votes
represented, as the case may be.
(4) Any right or power of the Company under the Act or the Company's
Memorandum of Association or these Bye-Laws which is not expressly subject to
approval by the Members in a General Meeting shall be exercisable by the Board.
SHARES AND SHARE CAPITAL
2. (1) The authorized share capital of the Company is $60,000,000
divided into the following classes of shares:
(i) 50,000,000 common shares, par value $1.00
per share ("Common Shares"); and
(ii) 10,000,000 preferred shares, par value $1.00
per share ("Preferred Shares").
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(2) Subject to paragraph (1) of Bye-Law 13, no Person shall be
permitted to Own or Control shares in the Company to the extent that such Person
or any other Person will be considered to Own or Control Controlled Shares, as
the Board may determine, in excess of 9.9% of the total combined voting power of
all classes of voting shares or of the total number of outstanding shares of any
class of stock of the Company, nor shall any Person be permitted to Own or
Control Controlled Shares if the result thereof would be to render such Person
or any other Person a Ten Percent Shareholder, provided, however, that the
foregoing limitation shall not apply to the PXRE Purpose Trust. Nor may any
shares be issued, redeemed, repurchased or transferred if the effect of such
issuance, redemption, repurchase or transfer would be to cause a violation of
the prohibitions of this Bye-Law. To the extent that, for any reason whatsoever
and by any method howsoever, a Person, whether an existing Member or not of the
Company, shall Own or Control Controlled Shares in excess of the 9.9%
Limitation, then the voting rights applicable to such Controlled Shares shall be
reduced in accordance with paragraph (4) of Bye-Law 20.
COMMON SHARES
3. (1) Subject to these Bye-Laws, at a General Meeting of the Company
every holder of Common Shares shall be entitled to one vote for each share held
by him on all matters submitted to a vote of the Company's Members.
(2) The Board may in its discretion, at any time, and from time to
time, issue or cause to be issued all or any part of the authorized but unissued
Common Shares of the Company for consideration of such character and value as
the Board shall in its absolute discretion from time to time fix or determine.
AUTHORITY OF BOARD TO ISSUE AND DIVIDE
PREFERRED SHARES INTO DIFFERENT SERIES
4. (1) The Board may in its discretion at any time, and from time to
time, issue or cause to be issued all or any part of the authorized but
unissued Preferred Shares of the Company for consideration of such character
and value as the Board shall in its absolute discretion from time to time fix
or determine.
(2) Without prejudice to the generality of paragraph (1) of this
Bye-Law, the Board is hereby further expressly authorized at any time, and from
time to time, to consolidate, divide or subdivide any or all of the authorized
but unissued Preferred Shares of the Company into several series, and to set
the par value of any of the unissued Preferred Shares, and in the resolution or
resolutions establishing a particular series, before issuance of any of the
shares thereof, to fix and determine the number of shares and the designation
of such series, so as to distinguish it from the shares of all other series and
classes, and to fix and determine the voting rights, preferences,
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qualifications, privileges, limitations, options, conversion rights, redemption
features, restrictions, and other special or relative rights of such series.
Each of such series may differ from every other series previously authorized,
as may be determined by the Board in any or all respects, to the fullest extent
now, or hereafter, permitted by the laws of Bermuda including, but not limited
to, the variations between different series in the following respects:
(a) the distinctive designation of such series and the
number of shares which shall constitute such series,
which number may be increased or decreased (but not
below the number of shares thereof then outstanding)
from time to time by the Board;
(b) the annual dividend or dividend rate for such series,
and the date or dates from which dividends shall
commence to accrue;
(c) the par value of the shares prior to issue, provided,
however, that the par value shall in no case be set
at less than $1.00 per share;
(d) the price or prices at which, and the terms and
conditions on which, if any, the shares of such
series may be redeemed or made redeemable;
(e) the purchase or sinking fund provisions, if any, for
the purchase or redemption of shares of such series;
(f) the preferential amount or amounts, if any, payable
upon shares of such series in the event of the
liquidation, dissolution, or winding up of the
Company;
(g) the terms and conditions, if any, upon which shares
of such series may be converted and the class or
series of shares of the Company or other securities
into which such shares may be converted;
(h) the relative seniority, priority or junior rank of
such series as to dividends or assets in relation to
any other classes or series of shares of the Company
then or thereafter to be issued;
(i) such other terms, preferences, qualifications,
privileges, limitations, options, restrictions, and
other special rights, if any, of shares of such
series as the Board may, at the time of such
resolution or resolutions, lawfully fix or determine;
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<PAGE>
(j) cancel shares which, at the date of the passing of
the resolution in that behalf, have not been taken or
agreed to be taken by any Person; and
(k) where any difficulty arises in regard to any
consolidation, division or sub- division under this
Bye-Law, the Board may settle the same as it thinks
expedient and, in particular, may issue certificates
in respect of fractions of shares or arrange for the
sale of the shares representing fractions and the
distribution of the net proceeds of sale (after
deduction of the expenses of such sale) in due
proportion among the Members who would have been
entitled to the fractions, and for this purpose the
Board may authorize a Person to transfer the shares
representing fractions to the purchaser thereof, or
resolve that such net proceeds be paid to the Company
for the Company's benefit; and such purchases shall
not be bound to see to the application of the
purchase money nor shall such Person's title to the
shares be affected by any irregularity or invalidity
in the proceedings relating to the sale.
EMPLOYEE SHARE PURCHASE
5. (1) The Board may from time to time:
(a) establish a plan or plans (including individual
agreements) for employees, directors, officers,
consultants and/or advisors of the Company, its
subsidiaries or affiliates whereby the Company
provides securities (whether restricted or
otherwise), or options to purchase securities, or
money for the purchase of, or subscription for, such
securities and/or options, whether directly or
indirectly through a trust established for the
benefit of such employees, directors, officers,
consultants and/or advisors;
(b) provide for the making by the Company of loans to
Persons, other than Directors, bona fide in the
employment of the Company or any of its Subsidiaries,
with a view to enabling those Persons to purchase or
subscribe for fully-paid shares in the Company, to be
held by themselves by way of beneficial ownership;
and
(c) provide for the giving by the Company, directly or
indirectly, of financial assistance, whether by means
of a loan, guarantee, the provision of security or
otherwise, to its bona fide employees, or the bona
fide employees of any of its Subsidiaries, whether or
not they shall also be Directors, in order that they
may buy shares in the Company and the Board may, in
its discretion,
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<PAGE>
from time to time require, as one of the terms of
issue of any such shares or by contract, that any
such employee shall be required or allowed to sell
such shares to the Company, upon such terms and at
such price as the Board may by such terms of issue or
contract establish, when such employee ceases to be
employed by the Company or any of its Subsidiaries.
COMPANY SHARE REPURCHASE
6. (1) Subject to the Act, the Company's Memorandum of Association and these
Bye-Laws and, where applicable, the rules of any Designated Stock Exchange
and/or any competent regulatory authority, the Company may purchase or otherwise
acquire its own shares upon such terms and conditions as the Board shall
determine.
ALTERATION OF CAPITAL
7. (1) The Company may from time to time by ordinary resolution in
accordance with the Act:
(a) increase its capital by such sum, to be divided
into shares of such amounts, as the resolution
shall prescribe;
(b) consolidate and divide all or any of its
capital into shares of larger amount than
its existing shares;
(c) divide its shares into several classes, and
without prejudice to any special rights
previously conferred on the holders of existing
shares, attach thereto respectively any
preferential, deferred, qualified or special
rights, privileges, conditions or such
restrictions, which, in the absence of any such
determination by the Company in a General
Meeting, as the Directors may determine,
provided always that where the Company issues
shares which do not carry voting rights, the
words "non-voting" shall appear in the
designation of such shares and where the
equity capital includes shares with different
voting rights, the designation of each class of
shares, other than those with the most favorable
voting rights, must include the words "restricted
voting" or "limited voting";
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<PAGE>
(d) sub-divide its shares, or any of them, into
shares of smaller amount than is fixed by
the Memorandum of Association (subject,
nevertheless, to the Act), and may by such
resolution determine that, as between the
holders of the shares resulting from such
sub-division, one or more of the shares may
have any such preferred rights or be subject
to any such restrictions as compared with
the other or others as the Company has power
to attach to unissued or new shares;
(e) change the currency denomination of its share
capital; and
(f) cancel any shares which, at the date of the
passing of the resolution, have not been
taken, or agreed to be taken, by any Person,
and diminish the amount of its capital by
the amount of the shares so canceled;
PROVIDED THAT, none of the foregoing actions shall be
taken if it were to result in any Person (other than
the PXRE Purpose Trust) violating the 9.9% Limitation
unless the Board otherwise determines.
(2) The Board may settle as it considers expedient any difficulty which
arises in relation to any consolidation, division or subdivision under this
Bye-Law and in particular but without prejudice to the generality of the
foregoing may issue certificates in respect of fractions of shares or arrange
for the sale of the shares representing fractions and the distribution of the
net proceeds of sale (after deduction of the expenses of such sale) in due
proportion among the Members who would have been entitled to the fractions, and
for this purpose the Board may authorize a Person to transfer the shares
representing fractions to the purchaser thereof or resolve that such net
proceeds be paid to the Company for the Company's benefit. Such purchaser will
not be bound to see to the application of the purchase money nor shall such
Person's title to the shares be affected by any irregularity or invalidity in
the proceedings relating to the sale.
(3) The Company may from time to time by ordinary resolution in
accordance with the Act reduce its authorized or issued share capital or any
share premium account or other undistributable reserve in any manner permitted
by applicable law.
(4) Except so far as otherwise provided by the conditions of issue, or
by these Bye-Laws, any capital raised by the creation of new shares shall be
treated as if it formed part of the original capital of the Company, and such
shares shall be subject to the provisions contained in these Bye-Laws with
reference to the payment of calls and installments, transfer and transmission,
forfeiture, lien, cancellation, surrender, voting and otherwise.
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<PAGE>
(5) Subject to the Act and the 9.9% Limitation, all or any of the
special rights attached to the shares or any class of shares may, unless
otherwise provided by the terms of issue of the shares of that class, from time
to time (whether or not the Company is being wound up) be varied, modified or
abrogated either with the consent in writing of the holders of not less than
sixty-six and two-thirds percent (66 2/3%) of the issued shares of that class or
with the sanction of a special resolution passed at a separate General Meeting
of the holders of the shares of that class. To every such separate General
Meeting all the provisions of these Bye-Laws relating to General Meetings of the
Company shall, as the case may be, apply, but so that:
(a) the necessary quorum shall be two or more Persons
holding or representing by proxy not less than a
majority of the issued shares of that class;
(b) subject to the 9.9% Limitation and the provisions of
paragraph (4) of Bye-Law 20, every holder of shares
of the class shall be entitled on a vote to one vote
for every such share held by him; and
(c) any holder of shares of the class present in person
or by proxy may demand a vote.
(6) The special rights conferred upon the holders of any shares or
class of shares shall not, unless otherwise expressly provided in the rights
attaching to or the terms of issue of such shares, be deemed to be varied,
modified or abrogated by the creation or issue of further shares ranking pari
passu therewith.
WARRANTS
8. (1) Subject to the 9.9% Limitation, the Board may issue warrants conferring
the right upon the holders thereof to subscribe for any class of shares or
securities in the capital of the Company on such terms as the Board may from
time to time determine.
(2) The Company may in connection with the issue of any shares exercise
all powers of paying commission and brokerage conferred or permitted by the Act.
Subject to the Act, the commission may be satisfied by the payment of cash or by
the allotment of fully or partly paid shares or partly in one and partly in the
other.
(3) Except as provided in these Bye-Laws, neither the Company nor any
of its Subsidiaries shall directly or indirectly give financial assistance to a
Person who is acquiring or proposing to acquire shares in the Company for the
purpose of that acquisition whether before or at the same time as the
acquisition takes place or afterwards, provided, however, that nothing in this
Bye-Law shall prohibit transactions permitted by the Act.
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<PAGE>
(4) Except as required by applicable law, no Person shall be recognized
by the Company as holding any share in the capital of the Company upon any trust
and the Company shall not be bound by or required in any way to recognize (even
when having Notice thereof) any equitable, contingent, future or partial
interest in any share or any fractional part of a share or (except only as
otherwise provided by these Bye-Laws or by applicable law) any other rights in
respect of any share except an absolute right to the entirety thereof in the
registered holder.
(5) Subject to the Act and these Bye-Laws, the Board may at any time
after the allotment of shares in the capital of the Company but before any
Person has been entered in the Register as the holder, recognize a renunciation
thereof by such recipient in favor of some other Person and may accord to any
such recipient of a share a right to effect such renunciation upon and subject
to such terms and conditions as the Board determines to impose.
SHARE CERTIFICATES
9. (1) Every share certificate shall be issued under the Seal or a facsimile
thereof and shall specify the number and class and distinguishing numbers of the
shares to which it relates, and may otherwise be in such form as the Directors
may from time to time determine. No certificate shall be issued representing
shares of more than one class. The Board may by resolution determine, either
generally or in any particular case or cases, that any signatures on any such
certificates (or certificates in respect of other securities) need not be
autographic but may be affixed to such certificates by some mechanical means or
may be printed thereon or that such certificates need not be signed by any
Person. Every share certificate shall recite that the voting rights relating to
such shares are subject to the limitations contained in these Bye-Laws.
(2) In the case of a share held jointly by several Persons, the Company
shall not be bound to issue more than one certificate therefor and delivery of a
certificate to one of several joint holders shall be sufficient delivery to all
such holders.
(3) Where a share stands in the names of two or more Persons, the
Person first named in the Register shall as regards service of Notices and,
subject to the provisions of these Bye-Laws, all or any other matters connected
with the Company, except the transfer of the shares, be deemed the sole holder
thereof.
(4) Every Person whose name is entered, upon an allotment of shares, as
a Member in the Register shall be entitled, without payment, to receive one
certificate for all such shares of any one class, or several certificates each
for one or more of such shares of such class upon payment, for every certificate
after the first, of such reasonable out-of-pocket expenses as the Board from
time to time determines.
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<PAGE>
(5) Subject to paragraph (2) hereof, share certificates shall be
issued, in the case of an issue of shares within twenty-one (21) days (or such
longer period as the terms of the issue provide) after allotment, or in the case
of a transfer of fully or partly paid shares within twenty-one (21) days after
delivery of a transfer to the Company, not being a transfer which the Company is
for the time being entitled to refuse to register and does not register.
(6) Notwithstanding any provision in these Bye-Laws to the contrary, a
Person may by Notice to the Company elect that no certificate be issued in
respect of shares registered or to be registered in his name and on receipt of
such election the Company shall not be required to issue a certificate for such
shares or may cancel an existing certificate without issuing another certificate
in lieu thereof.
(7) Upon every transfer of shares, the certificate held by the
transferor shall be given up to be canceled, and shall forthwith be canceled
accordingly, and a new certificate shall be issued to the transferee in respect
of the shares transferred to him. If any of the shares included in the
certificate so given up shall be retained by the transferor a new certificate
for the balance shall be issued to him.
(8) If a share certificate shall be damaged or defaced or alleged to
have been lost, stolen or destroyed, a new certificate representing the same
shares may be issued to the relevant Member upon request and on payment of such
fee as the Designated Stock Exchange or the Board may determine to be payable,
and, subject to compliance with such terms (if any) as to evidence and indemnity
and to payment of the costs and reasonable out-of-pocket expenses of the Company
in investigating such evidence and preparing such indemnity as the Board shall
determine and, in case of damage or defacement, on delivery of the old
certificate to the Company, provided always that where share warrants have been
issued, no new share warrant shall be issued to replace one that has been lost,
stolen or destroyed unless the Directors are satisfied beyond reasonable doubt
that the original has been lost, stolen or destroyed.
REGISTER OF MEMBERS
10. (1) The Company shall keep in one or more books a Register of its Members
and shall enter therein the following particulars:
(a) the name and address of each Member, the number and,
where appropriate, the class or series of shares held
by such Member and the amount paid or agreed to be
considered as paid on such shares;
(b) the date on which each Person was entered in the
Register; and
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<PAGE>
(c) the date on which any Person ceased to be a Member
for one year after such Person so ceased.
(2) Subject to the Act, the Company may keep an overseas or local or
other branch register of Members resident in any place, and the Board may make
and vary such regulations as it determines in respect of the keeping of any such
register and maintaining a Registration Office in connection therewith.
INSPECTION OF REGISTER OF MEMBERS
11. The Register and branch register of Members, as the case may be, shall be
open to inspection on every business day by Members without charge or by any
other Person, upon the maximum payment permitted under the Act, subject to such
reasonable restrictions as the Board may impose, so that not less then two (2)
hours in each business day be allowed for inspections, at the Office or such
other place in Bermuda at which the Register is kept in accordance with the Act
or, if appropriate, upon the maximum payment permitted under the Act at the
Registration Office. The Register, including any overseas or local or other
branch register of Members, may, after Notice has been given by advertisement in
an appointed newspaper and, where applicable, any other newspapers in accordance
with the requirements of any Designated Stock Exchange to that effect, be closed
at such times or for such periods not exceeding in the aggregate thirty (30)
days in each year as the Board may determine and either generally or in respect
of any class or series of shares.
RECORD DATES
12. Notwithstanding any provision of these Bye-Laws to the contrary, the Company
or the Directors may fix any date as the record date for:
(a) determining the Members entitled to receive any dividend,
distribution, allotment or issue; and
(b) determining the Members entitled to receive Notice of and to
vote at any General Meeting of the Company.
TRANSFER OF SHARES
13. (1) No transfer may be made if the effect of such transfer would result in
the transferee or any other Person Owning or Controlling in excess of nine and
nine tenths percent (9.9%) of all
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<PAGE>
of the issued and outstanding shares of the Company or Owning or Controlling
shares in excess of the 9.9% Limitation and the Board may, in its absolute
discretion, refuse to register such transfer, provided, however, that the
foregoing limitation shall not apply to the PXRE Purpose Trust. Notwithstanding
the foregoing, the Board may waive the restrictions set forth in this Bye-Law,
in its discretion and on a case by case basis. One of the purposes of the 9.9%
Limitation is to prevent the Company from being characterized as a controlled
foreign corporation, a foreign personal holding company or a personal holding
company within the meaning of the Code. Nevertheless, the Board will not be
liable to the Company, its Members or any other Person whatsoever for any errors
in judgment made by it in granting any waiver or waivers to the foregoing
restrictions in any case so long as it has acted in good faith.
(2) Subject to these Bye-Laws, any Member may transfer all or any of
his shares by an instrument of transfer in the usual or common form or in any
other form approved by the Board.
(3) The instrument of transfer shall be executed by or on behalf of the
transferor. The Board may also resolve, either generally or in any particular
case, upon request by the transferor, to accept mechanically executed transfers.
The transferor shall be deemed to remain the holder of the share until the name
of the transferee is entered in the Register in respect thereof. Nothing in
these Bye-Laws shall preclude the Board from recognizing a renunciation of the
allotment or provisional allotment of any share by the allottee in favor of some
other Person.
(4) The Board may, in its absolute discretion, and without giving any
reason therefor, refuse to register a transfer of any share issued under any
share plan for employees upon which a restriction on transfer imposed thereby
still subsists, and it may also refuse to register a transfer of any share to
more than four (4) joint holders. Nothing in these Bye-Laws shall impair the
settlement of transactions entered into through the facilities of a Designated
Stock Exchange except as provided by such exchange.
(5) No transfer shall be made to an infant or to a Person of unsound
mind or under other legal disability, known as such by the Company.
(6) The Board, in so far as permitted by applicable law may, in its
absolute discretion, at any time and from time to time transfer any share upon
the Register to any branch register or any share on any branch register to the
Register or any other branch register. In the event of any such transfer, the
shareholder requesting such transfer shall bear the cost of effecting the
transfer unless the Board otherwise determines.
(7) Unless the Board otherwise agrees (which agreement may be on such
terms and subject to such conditions as the Board in its absolute discretion may
from time to time determine, and which agreement it shall, without giving any
reason therefor, be entitled in its absolute discretion
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<PAGE>
to give or withhold), no shares upon the Register shall be transferred to any
branch register nor shall shares on any branch register be transferred to the
Register or any other branch register and all transfers and other documents of
title shall be delivered for registration, and registered, in the case of any
shares on a branch register, at the relevant Registration Office, and, in the
case of any shares on the Register, at the Office or such other place in Bermuda
at which the Register is kept in accordance with the Act.
(8) Without limiting the generality of the preceding paragraph, the
Board may decline to recognize any instrument of transfer unless:
(a) the instrument of transfer is in respect of only one
class of share;
(b) the instrument of transfer is delivered to the Office
or such other place in Bermuda at which the Register
is kept in accordance with the Act or the
Registration Office (as the case may be) accompanied
by the relevant share certificate(s) and such other
evidence as the Board may reasonably require to show
the right of the transferor to make the transfer
(and, if the instrument of transfer is executed by
some other Person on his behalf, the authority of
that Person so to do); and
(c) if applicable, it shall be satisfied to the Board
that the proposed transfer complies with the federal
and state securities laws of the United States.
(9) If the Board refuses to register a transfer of any share in
accordance with these Bye- Laws, it shall, within one hundred twenty (120) days
after the date on which the transfer was delivered to the Company, send to each
of the transferor and transferee Notice of the refusal.
(10) The registration of transfers of shares or of any class of shares
may, after Notice has been given by advertisement in an appointed newspaper and,
where applicable, any other newspapers in accordance with the requirements of
any Designated Stock Exchange to that effect, be suspended at such times and for
such periods (not exceeding thirty (30) days in any year) as the Board may
determine.
TRANSMISSION OF SHARES
14. (1) If a Member dies, the survivor or survivors where the deceased was
a joint holder, and his legal representatives where he was a sole or only
surviving holder, will be the only Persons recognized by the Company as having
any title to his interest in the shares; but nothing in this Bye-
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Law will release the estate of a deceased Member (whether sole or joint) from
any liability in respect of any share which had been solely or jointly held by
him.
(2) Subject to the Act, any Person becoming entitled to a share in
consequence of the death or bankruptcy or winding-up of a Member may, upon such
evidence as to his title being produced as may be required by the Board, elect
either to become the holder of the share or to have some Person nominated by him
registered as the transferee thereof. If he elects to become the holder he shall
notify the Company in writing either at the Registration Office or Office, as
the case may be, to that effect. If he elects to have another Person registered
he shall execute a transfer of the share in favor of that Person. The provisions
of these Bye-Laws relating to the transfer and registration of transfers of
shares shall apply to such Notice or transfer as aforesaid as if the death or
bankruptcy of the Member had not occurred and the Notice or transfer were a
transfer signed by such Member.
Accordingly, no Person shall be registered as the holder of a
share if the result would be that such Person or any other Person would Own or
Control shares in excess of the 9.9% Limitation.
(3) A Person becoming entitled to a share by reason of the death or
bankruptcy or winding-up of a Member shall be entitled to the same dividends and
other advantages to which he would be entitled if he were the registered holder
of the share. However, the Board may determine to withhold the payment of any
dividend payable or other advantages in respect of such share until such Person
shall become the registered holder of the share or shall have effectually
transferred such share, but, subject to the requirements of these Bye-Laws being
met, such a Person may vote at meetings.
UNTRACEABLE MEMBERS
15. (1) Without prejudice to the rights of the Company under paragraph (2)
of this Bye-Law, the Company may cease sending a check for dividend entitlements
or dividend warrants by mail if such check or warrants have been left uncashed
on two consecutive occasions. However, the Company may exercise the power to
cease sending a check for dividend entitlements or dividend warrant after the
first occasion on which such a check or warrant is returned undelivered.
(2) The Company shall have the power to sell, in such manner as the
Board shall determine, any shares of a Member who is untraceable, but no such
sale shall be made unless:
(a) all checks or warrants in respect of dividends of the
shares in question, being not less than three in
total number, for any sum payable in cash to the
holder
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of such shares in respect of them sent during the
relevant period in the manner authorized by these
Bye-Laws have remained uncashed;
(b) so far as it is aware at the end of the relevant
period, the Company has not at any time during the
relevant period received any indication of the
existence of the Member who is the holder of such
shares or of a Person entitled to such shares by
death, bankruptcy or operation of law; and
(c) the Company, if so required by the rules governing
the listing of shares on the Designated Stock
Exchange, has given Notice to, and caused
advertisement in newspapers in accordance with the
requirements of, the Designated Stock Exchange to be
made of its intention to sell such shares in the
manner required by the Designated Stock Exchange, and
a period of ninety (90) days or such shorter period
as may be allowed by the Designated Stock Exchange
has elapsed since the date of such advertisement.
For the purpose of the foregoing, the "relevant period" means the period
commencing twelve years before the date of publication of the advertisement
referred to in sub-paragraph (2)(c) of this Bye- Law and ending at the
expiration of the period referred to in that paragraph.
(3) To give effect to any such sale the Board may authorize a Person to
transfer the said shares and an instrument of transfer signed or otherwise
executed by or on behalf of such Person shall be as effective as if it had been
executed by the registered holder or the Person entitled by transmission to such
shares, and the purchaser shall not be bound to see to the application of the
purchase money nor shall his title to the shares be affected by any irregularity
or invalidity in the proceedings relating to the sale. The net proceeds of the
sale will belong to the Company and upon receipt by the Company of such net
proceeds it shall become indebted to the former Member for an amount equal to
such net proceeds. No trust shall be created in respect of such debt and no
interest shall be payable in respect of it and the Company shall not be required
to account for any money earned from the net proceeds which may be employed in
the business of the Company or as the Board shall determine. Any sale under this
Bye-Law shall be valid and effective notwithstanding that the Member holding the
shares sold is dead, bankrupt or otherwise under any legal disability or
incapacity.
GENERAL MEETINGS OF THE MEMBERS
16. (1) The Board shall convene and the Company shall hold Annual General
Meetings of the Members in accordance with the requirements of the Act and these
Bye-Laws. The Board may,
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whenever it shall determine, and shall, when required by the Act or these
Bye-Laws, convene a General Meeting, other than an Annual General Meeting, which
shall be called a Special General Meeting. Except with the unanimous approval of
the Board, all Annual or Special General Meetings of the Company shall be held
in Bermuda, but under no circumstance shall any General Meeting be held in the
United States.
(2) The Board may determine to call Special General Meetings, and
Members holding at the date of delivery of the written Notice not less than
one-tenth (1/10) of the paid up capital of the Company carrying the right of
voting at General Meetings of the Company shall at all times have the right, by
written Notice to the Board or the Secretary of the Company, to require a
Special General Meeting to be called by the Board for the transaction of any
business specified in such Notice; and such meeting shall be held within sixty
(60) days after the deposit of such Notice. If within twenty-one (21) days of
such delivery, the Board fails to proceed to convene such meeting such Members
may do so in accordance with the provisions of the Act.
NOTICE OF GENERAL MEETINGS
17. (1) An Annual General Meeting and any Special General Meeting of the
Members shall be called by not less than twenty-one (21) clear days' Notice.
(2) Notice of every General Meeting shall be given in any manner
permitted by these Bye-Laws to all Members other than those who, under the
provisions of these Bye-Laws or the terms of issue of the shares they hold, are
not entitled to receive such Notice from the Company.
(3) Notwithstanding that a General Meeting of the Company is called by
shorter Notice than that specified in this Bye-Law, it shall be deemed to have
been duly called if it is so agreed:
(a) in the case of a meeting called as an Annual General
Meeting, by all the Members entitled to attend and
vote thereat;
(b) in the case of any other General Meeting, by a
majority in number of the Members having the right to
attend and vote at the meeting, being a majority
together holding not less than ninety-five percent
(95%) in nominal value of the shares giving that
right.
(4) At any Annual or Special General Meeting of the Members, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an Annual or Special General Meeting,
business must be specified in the Notice of meeting (or any supplement thereto)
given by or at the direction of the Board, otherwise properly brought before the
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meeting by or at the direction of the Board, or otherwise properly brought
before the meeting by a Member. In addition to any other applicable
requirements, for business to be properly brought before an Annual or Special
General Meeting by a Member, the Member must have given timely Notice thereof in
writing to the Secretary of the Company. To be timely, a Member's Notice must be
delivered to or mailed and received at the Registration Office of the Company,
not less than sixty (60) days prior to such meeting. A Member's Notice to the
Secretary shall set forth as to each matter the Member proposes to bring before
the meeting and any material interest of the Member in such business (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and record
address of the Member proposing such business, (iii) a representation that the
Member is a holder of record of shares of the Company entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to present
such proposal or nomination, (iv) the class and number of shares of the Company
which are beneficially owned by the Member, and (v) any material interest of the
Member in such business; provided, however, that Members may only give Notice to
the Secretary of matters to be brought before an Annual or Special General
Meeting for the purposes of this Bye-Law that are matters that are suitable and
appropriate for submission to General Meetings of the Members of a publicly-
quoted company as determined by the Board.
(5) Notwithstanding anything in the Bye-Laws to the contrary, no
business shall be conducted at an Annual or Special General Meeting except in
accordance with the procedures set forth in this Bye-Law; provided, however,
that nothing in this Bye-Law shall be deemed to preclude discussion by any
Member of any business properly brought before the Annual or Special General
Meeting in accordance with the procedures herein detailed.
(6) The Chairman of an Annual or Special General Meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Bye-Law, and if he should so determine, he shall so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
(7) Any nomination or nominations of Persons for election to the Board
of the Company made in accordance with the provisions of these Bye-Laws shall be
deemed for the purposes of this Bye-Law to constitute business properly brought
before an Annual or Special General Meeting, as the case may be.
(8) The accidental omission to give Notice of a meeting or (in cases
where instruments of proxy are sent out with the Notice) to send such instrument
of proxy to, or the non-receipt of such Notice or such instrument of proxy by,
any Person entitled to receive such Notice shall not invalidate any resolution
passed or the proceedings at that meeting.
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PROCEEDINGS AT GENERAL MEETINGS
18. (1) No business shall be transacted at any General Meeting unless it
shall have been properly brought before the Annual or Special General Meeting in
accordance with these Bye-Laws and a quorum is present when the meeting proceeds
to business, but the absence of a quorum shall not preclude the appointment,
choice or election of a Chairman which shall not be treated as part of the
business of the meeting. Except as provided to the contrary in these Bye-Laws,
Members representing a majority of the outstanding shares carrying the right to
vote in the Company, represented in person or by proxy, shall constitute a
quorum for all purposes. In calculating the amount of voting shares represented
in person or by proxy to determine whether or not a quorum is present for
purposes of this Bye-Law, the inspectors appointed in accordance with Bye-Law 19
hereof, shall calculate the number of votes represented in person or by proxy in
accordance with the provisions of paragraph (4) of Bye-Law 20 hereof.
(2) If within five (5) minutes (or such longer time as the Chairman of
the meeting may determine to wait) after the time appointed for the meeting, a
quorum is not present, the meeting, if convened on the requisition of Members,
shall be dissolved. In any other case, it shall stand adjourned to such other
day and such other time and place as the Chairman of the meeting may determine
and at such adjourned meeting two Members present in person (whatever the number
of shares held by them) shall be a quorum. The Company shall give not less than
seven (7) days' Notice of any meeting adjourned through want of a quorum and
such Notice shall state that two Members present in person (whatever the number
of shares held by them) shall be a quorum.
(3) Each Director shall be entitled to attend and speak at any
General Meeting of the Company.
(4) The Chairman of the Board shall preside as Chairman at every
General Meeting. In his absence, the following shall preside in the order
stated: the Deputy Chairman, any other Director appointed by the Board, the
President, any Executive Vice President or any other Officer of the Company. If
none of the foregoing is present within five (5) minutes after the time
appointed for holding the meeting, or if none of them is willing to act as
Chairman, the Directors present shall choose one of their number to act or if
one Director only is present he shall preside as Chairman if willing to act. If
no Director is present or if each of the Directors present declines to take the
chair, the Persons present and entitled to vote shall elect one of their number
to be Chairman.
(5) The Chairman may, with the consent of any meeting at which a quorum
is present (and shall if so directed by the meeting), adjourn the meeting from
time to time and from place to place but no business shall be transacted at any
adjourned meeting except business which might lawfully have been transacted at
the meeting from which the adjournment took place. When a
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meeting is adjourned for three (3) months or more, Notice of the adjourned
meeting shall be given as in the case of an original meeting.
(6) Except as provided to the contrary in these Bye-Laws, it shall not
be necessary to give any Notice of an adjournment or of the business to be
transacted at an adjourned meeting.
INSPECTORS
19. The Board may, in advance of any meeting of Members, appoint one or more
inspectors to act at such meeting or any adjournment thereof. If the inspectors
shall not be so appointed or if any of them shall fail to appear or act, the
Chairman of the meeting may and on the request of any Member entitled to vote
thereat shall, appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to exercise the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number of shares
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, the validity and effect of proxies, and
shall receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are proper
to conduct the election or vote with fairness to all Members. On the request of
the Chairman of the meeting or any Member entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them. No
Director or candidate for the office of Director shall act as inspector.
Inspectors need not be Members.
VOTING AT GENERAL MEETINGS
20. (1) Subject to these Bye-Laws and to any special rights or other
restrictions as to voting for the time being attached to any shares by or in
accordance with these Bye-Laws or the Act, at any General Meeting on a show of
hands every Member present in person or, in the case of a Member being a
corporation, by a duly authorized representative, or by proxy, shall have one
vote and on a vote every Member present in person or by proxy shall have one
vote for every fully paid share of which he is the holder.
(2) Subject to these Bye-Laws and to the Act, any matter submitted
to the Members at a General Meeting for approval shall be approved by an
ordinary resolution of the Members provided, however, that any matter submitted
to the Members at a General Meeting for approval which relates to the
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amalgamation, merger or consolidation of the Company with another company or the
sale, lease or exchange of all or substantially all of the assets of the Company
shall be approved by at least a majority of the voting power of the then
outstanding shares entitled to vote on such matter.
(3) A resolution put to the vote of a meeting shall be decided on a
show of hands unless (before or on the declaration of the result of the show of
hands or on the withdrawal of any other demand for a vote) a vote is demanded
by:
(a) the Chairman of such meeting; or
(b) at least three (3) Members present in person or, in
the case of a Member being a corporation, by its duly
authorized representative, or by proxy, for the time
being entitled to vote at the meeting; or
(c) a Member or Members present in person or, in the case
of a Member being a corporation by its duly
authorized representative or, by proxy, and
representing not less than one-tenth (1/10) of the
total voting rights of all Members having the right
to vote at the meeting; or
(d) a Member or Members present in person or, in the case
of a Member being a corporation by its duly
authorized representative, or by proxy, and holding
shares in the Company conferring a right to vote at
the meeting being shares on which an aggregate sum
has been paid up equal to not less than one-tenth
(1/10) of the total sum paid up on all shares
conferring that right.
A demand by a Person as proxy for a Member, or in the case of a Member being a
corporation by its duly authorized representative, shall be deemed to be the
same as a demand by a Member.
(4) Subject to this Bye-Law, at any General Meeting each Member holding
shares of the Company present, in person or by proxy, shall be entitled to such
number of votes as otherwise indicated in this Bye-Law with respect to such
shares, on a non-cumulative basis, for each such share registered in such
Member's name in the Register of Members, provided that, if and for so long as
the votes conferred by the Controlled Shares of any Person shall exceed the
Maximum Percentage applicable to such Person of the votes conferred by all of
the issued and outstanding shares of the Company (reduced for any votes
represented by Controlled Shares that are not entitled to vote due to the terms
of this Bye-Law), each share comprised in such Controlled Shares shall confer
only such fraction of a vote, such that the total combined voting rights of such
Controlled Shares shall be equal to the Maximum Percentage, provided, however,
that the foregoing limitation shall not apply to the PXRE Purpose Trust. The
calculation of such fraction shall take into account the reduction of combined
voting power of the Company's Members by a number of votes equal to any votes
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represented by the Controlled Shares of such Person and any other Persons that
are not entitled to vote due to the terms of these Bye-Laws and shall be made as
of any date and, with respect to any record date for determining the Members
entitled to vote, as of such record date, including, without limitation, for any
election of directors. If, as a result of giving effect to the provisions of
this Bye-Law or otherwise, the votes conferred by the Controlled Shares of a
Person would otherwise represent an amount greater than the Maximum Percentage
applicable to such Person, the votes conferred by the Controlled Shares of such
Person shall be reduced in accordance with the foregoing provisions of this
Bye-Law. Such process shall be repeated until the votes conferred by the
Controlled Shares of each Person are less than or equal to the Maximum
Percentage applicable to such Person. The Board shall have sole discretion as to
the applicability of this Bye-Law to any Member or Person and over the manner in
which any reduction in voting power of any shares is calculated. The Board shall
have the authority to request any or all Members to provide information relating
to their ownership of Controlled Shares and if any Member fails to fully comply
with the Board's request to provide such information, the Board may make any
assumptions it deems necessary in order to determine such Member's ownership of
Controlled Shares and to calculate reductions in voting powers of shares under
this Bye-Law.
(5) Unless a vote is duly demanded and the demand is not withdrawn, a
declaration by the Chairman that a resolution has been carried, or carried
unanimously, or by a particular majority, or not carried by a particular
majority, or lost, and an entry to that effect made in the minute book of the
Company, shall be conclusive evidence of the fact without proof of the number or
proportion of the votes recorded for or against the resolution.
(6) If a vote is duly demanded, the result of the vote shall be deemed
to be the resolution of the meeting at which the vote was demanded. There shall
be no requirement for the Chairman to disclose the voting figures on a vote.
(7) A vote demanded on the election of a Chairman, or on a question of
adjournment, shall be taken forthwith. A vote demanded on any other question
shall be taken in such manner (including the use of ballot or voting papers) and
either forthwith or at such time (being not later than thirty (30) days after
the date of the demand) and place as the Chairman directs. It shall not be
necessary (unless the Chairman otherwise directs) for Notice to be given of a
vote not taken immediately.
(8) The demand for a vote shall not prevent the continuance of a
meeting or the transaction of any business other than the question on which the
vote has been demanded, and, with the consent of the Chairman, it may be
withdrawn at any time before the close of the meeting or the taking of the vote,
whichever is the earlier.
(9) Where a vote is taken, votes may be given either personally or by
proxy.
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(10) A Person entitled to more than one vote on a vote need not use all
his votes or cast all the votes he uses in the same way. Notwithstanding the
preceding sentence, nothing herein is intended to allow for cumulative voting in
the election of Directors and cumulative voting in the election of Directors is
expressly prohibited.
(11) In the case of an equality of votes, whether on a show of hands or
on a vote, the Chairman of such meeting shall be entitled to a second or casting
vote in addition to any other vote he may have.
(12) Where there are joint holders of any share any one of such joint
holders may vote, either in person or by proxy, in respect of such share as if
he were solely entitled thereto, but if more than one of such joint holders be
present at any meeting the vote of the senior who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the votes of the other
joint holders, and for this purpose seniority shall be determined by the order
in which the names stand in the Register in respect of the joint holding.
Several executors or administrators of a deceased Member in whose name any share
stands shall for the purposes of this Bye-Law be deemed joint holders thereof.
(13) A Member who is a patient for any purpose relating to mental
health or in respect of whom an order has been made by any court having
jurisdiction for the protection or management of the affairs of Persons
incapable of managing their own affairs may vote, whether on a show of hands or
on a vote, by his receiver, committee, curator bonis or other Person in the
nature of a receiver, committee or curator bonis appointed by such court, and
such receiver, committee, curator bonis or other Person may vote by proxy, and
may otherwise act and be treated as if he were the registered holder of such
shares for the purposes of General Meetings, provided that such evidence as the
Board may require of the authority of the Person claiming to vote shall have
been deposited at the Office, Registration Office or such other place as the
Board may designate, as appropriate, not less than forty-eight (48) hours before
the time appointed for holding the meeting, or adjourned meeting or vote, as the
case may be.
(14) Any Person entitled under these Bye-Laws to be registered as the
holder of any shares may vote at any General Meeting in respect thereof in the
same manner as if he were the registered holder of such shares, provided that at
least forty-eight (48) hours before the time of the holding of the meeting or
adjourned meeting, as the case may be, at which he proposes to vote, he shall
satisfy the Board of his entitlement to such shares, or the Board shall have
previously admitted his right to vote at such meeting in respect thereof.
(15) No Member shall, unless the Board otherwise determines, be
entitled to attend and vote and to be counted in a quorum at any General Meeting
unless he is duly registered and all calls or other sums presently payable by
him in respect of shares in the Company have been paid.
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(16) If: (a) any objection shall be raised to the qualification of any
voter; or (b) any votes have been counted which ought not to have been counted
or which might have been rejected; or (c) any votes are not counted which ought
to have been counted; the objection or error shall not vitiate the decision of
the meeting or adjourned meeting on any resolution unless the same is raised or
pointed out at the meeting or, as the case may be, the adjourned meeting at
which the vote objected to is given or tendered or at which the error occurs.
Any objection or error shall be referred to the Chairman of the meeting and
shall only vitiate the decision of the meeting on any resolution if the Chairman
decides that the same may have affected the decision of the meeting. The
decision of the Chairman on such matters shall be final and conclusive.
PROXIES AND CORPORATE REPRESENTATION
21. (1) Any Member entitled to attend and vote at a meeting of the Company
shall be entitled to appoint another Person as his proxy to attend and vote
instead of him. A Member may appoint a proxy in respect of part only of his
holding of shares in the Company. A proxy need not be a Member of the Company.
(2) The instrument appointing a proxy shall be in writing under the
hand of the appointor or of his attorney duly authorized in writing or, if the
appointor is a corporation, either under its seal or under the hand of an
officer, attorney or other Person authorized to sign the same. In the case of an
instrument of proxy purporting to be signed on behalf of a corporation by an
officer thereof it shall be assumed, unless the contrary appears, that such
officer was duly authorized to sign such instrument of proxy on behalf of the
corporation without further evidence of the fact.
(3) The instrument appointing a proxy and (if required by the Board)
the power of attorney or other authority (if any) under which it is signed, or a
certified copy of such power or authority, shall be delivered to such place or
one of such places (if any) as may be specified for that purpose in or by way of
Notice to or in any document accompanying the Notice convening the meeting (or,
if no place is so specified at the Registration Office or the Office, as may be
appropriate) not less than forty-eight (48) hours before the time appointed for
holding the meeting or adjourned meeting at which the Person named in the
instrument proposes to vote or, in the case of a vote taken subsequently to the
date of a meeting or adjourned meeting, not less than twenty-four (24) hours
before the time appointed for the taking of the vote, and in default the
instrument of proxy shall not be treated as valid. No instrument appointing a
proxy shall be valid after the expiration of one (1) year from the date named in
it as the date of its execution, except at an adjourned meeting or on a vote
demanded at a meeting or an adjourned meeting in cases where the meeting was
originally held within one (1) year from such date. Delivery of an instrument
appointing a proxy
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shall not preclude a Member from attending and voting in person at the meeting
convened and in such event, the instrument appointing a proxy shall be deemed to
be revoked.
(4) Instruments of proxy shall be in any common form or in such other
form as the Board may approve (provided that this shall not preclude the use of
the two-way form) and the Board may send out with the Notice of any meeting,
forms of instrument of proxy for use at the meeting. The instrument of proxy
shall be deemed to confer authority to demand or join in demanding a vote and to
vote on any amendment of a resolution put to the meeting for which it is given
as the proxy may determine. The instrument of proxy shall, unless the contrary
is stated therein, be valid as well for any adjournment of the meeting as for
the meeting to which it relates.
(5) A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the principal,
or revocation of the instrument of proxy or of the authority under which it was
executed, provided that no intimation in writing of such death, insanity or
revocation shall have been received by the Company at the Office or the
Registration Office (or such other place as may be specified for the delivery of
instruments of proxy in the Notice convening the meeting or other document sent
therewith) at least two (2) hours before the commencement of the meeting or
adjourned meeting, or the taking of the vote, at which the instrument of proxy
is used.
(6) Anything which under these Bye-Laws a Member may do by proxy he may
likewise do by his duly appointed attorney and the provisions of these Bye-Laws
relating to proxies and instruments appointing proxies shall apply, as the case
may be, in relation to any such attorney and the instrument under which such
attorney is appointed.
(7) Any corporation which is a Member of the Company may by any
authorized officer authorize such Person as it may determine to act as its
representative at any meeting of the Company or any class of Members of the
Company. The Person so authorized shall be entitled to exercise the same powers
on behalf of such corporation as the corporation could exercise if it were an
individual Member of the Company and such corporation shall for the purposes of
these Bye-Laws be deemed to be present in person at any such meeting if a Person
so authorized is present thereat. Any reference in these Bye-Laws to a duly
authorized representative of a Member being a corporation shall mean a
representative authorized under the provisions of this Bye-Law.
(8) If a clearing house is a Member, it may authorize such Person or
Persons as it determines to act as its representative or representatives at any
meeting of the Company or at any meeting of any class of Members provided that,
if more than one Person is so authorized, the authorization shall specify the
number and class of shares in respect of which each such Person is so
authorized. A Person so authorized under the provisions of this Bye-Law shall be
entitled to exercise the same powers on behalf of the clearing house (or its
nominee) which he represents as that
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clearing house (or its nominee) could exercise if it were an individual Member.
For the purposes of this Bye-Law, "clearing house" means any clearing house or
other similar body recognized by the laws of the jurisdiction in which the
shares of the Company are listed or quoted on a Designated Stock Exchange.
NOMINATION AND REMOVAL OF DIRECTORS
22. (1) The number of Directors which shall constitute the whole Board of
Directors of the Company shall be such number (not less than three (3) or more
than twelve (12)) as the Company may by ordinary resolution in general meeting
determine. The Board shall be divided into three classes, Class I, Class II and
Class III. The number of Directors in each class shall be the whole number
contained in the quotient arrived at by dividing the authorized number of
Directors by three and if a fraction is also contained in such quotient, then if
such fraction is one-third (1/3) the extra Director shall be a member of Class
III and if the fraction is two-thirds (2/3) one of the Directors shall be member
of Class III and the other shall be a member of Class II. Each Director shall
serve for a term ending on the third Annual General Meeting following the annual
meeting at which such Director was elected; provided however, that the initial
term of each class and the classes to which the first slate of Directors
elected hereunder belong, shall be determined by the ordinary resolution of
Members at the time of such initial election. The foregoing notwithstanding,
each Director shall serve until his successor shall have been duly elected and
qualified, unless he shall resign, become disqualified, disabled or shall
otherwise be removed.
(2) For the purpose of the preceding paragraph, reference to the first
election of Directors is to the election at the 1999 Annual General Meeting of
the Company. At each annual election held thereafter, the Directors chosen to
succeed those whose terms then expire shall be identified as being of the same
class as the Directors they succeed. If for any reason the number of Directors
in the various classes shall not conform with the formula set forth in the
preceding paragraph, the Board may redesignate any Director to a different class
in order that the balance of Directors in such classes shall conform thereto.
(3) A Director need not be a Member.
(4) Only Persons who are nominated in accordance with the following
procedures shall be eligible for election as Directors. Nominations of Persons
for election to the Board of the Company may be made at a meeting of Members
called for the election of directors, or at the discretion of the Board, by any
nominating committee or Person appointed by the Board, by any Member of the
Company entitled to vote for the election of Director at the meeting who
complies with the Notice procedures set forth in this Bye-Law. Such nominations,
other than those made by
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or at the direction of the Board, shall be made pursuant to timely Notice to the
Secretary of the Company. To be timely, a Member's Notice shall be delivered to
or mailed and received at the Office of the Company not less than sixty (60)
days prior to such meeting. Such Member's Notice to the Secretary shall set
forth (a) as to each Person whom the Member proposes to nominate for election or
re-election as a Director, (i) the name, age, business address and residence
address of the Person, (ii) the principal occupation or employment of the
Person, (iii) the class and number of shares of Common Shares of the Company
which are beneficially owned by the Person, (iv) any other information relating
to the Person that is required to be disclosed in solicitations for proxies for
election of Directors pursuant to Schedule 14A of the Exchange Act, and (v) the
consent of each nominee to serve as a Director, if so elected; and (b) as to the
Member giving the Notice (i) the name and record address of the Member and (ii)
the class and number of shares of capital stock of the Company which are
beneficially owned by the Member. The Company may require any proposed nominee
to furnish such other information as may reasonably be required by the Company
to determine the eligibility of such proposed nominee to serve as a Director of
the Company. No Persons shall be eligible for election as a Director of the
Company unless nominated in accordance with the procedures set forth herein.
(5) The Chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
(6) The Directors shall (subject to any resolution of the Members to
the contrary) have the power from time to time and at any time to appoint any
Person as a Director to fill a casual vacancy on the Board, provided, however,
that the number of Directors so appointed shall not exceed any maximum number
determined from time to time by the Members in a General Meeting. Any Director
so appointed by the Board shall hold office until the next election of the class
for which such director shall have been chosen and shall then be eligible for
re-election at that meeting.
(7) Neither a Director nor an Alternate Director, as the case may be,
shall be required to hold any shares of the Company by way of qualification and
a Director or an Alternate Director (as the case may be) who is not a Member
shall be entitled to receive Notice of and to attend and speak at any General
Meeting of the Company and of all classes of shares of the Company.
(8) Notwithstanding anything to the contrary in these Bye-Laws, the
Members may only remove a Director for cause prior to the expiration of such
Director's period of office or in any agreement between the Company and such
Director (but without prejudice to any claim for damages under any such
agreement) at a General Meeting convened and held in accordance with these Bye-
Laws at which a majority of the holders of shares entitled to vote thereon vote
in favor of such action provided that the Notice of any such meeting convened
for the purpose of removing a Director shall
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contain a statement of the intention so to do and be served on such Director
fourteen (14) days before the meeting and at such meeting such Director shall be
entitled to be heard on the motion for his removal.
(9) A vacancy on the Board created by the removal of a Director under
paragraph (8) of this Bye-Law may be filled by the election or appointment by
the Members at the meeting at which such Director is removed to hold office
until the next election of the class for which such director shall have been
chosen, but subject to any resolution of the Members to the contrary, the Board
may fill any vacancy in the number left unfilled.
(10) A Director whose term is expiring shall be eligible for
re-election.
(11) The office of a Director shall be vacated if the Director:
(a) resigns his office by Notice delivered to the Company
at the Office or tendered at a meeting of the Board
whereupon the Board resolves to accept such
resignation; or
(b) becomes of unsound mind (as determined by the Board
in its sole discretion) or dies; or
(c) without special leave of absence from the Board, is
absent from meetings of the Board for four
consecutive meetings, and the Board resolves that his
office be vacated; or
(d) becomes bankrupt or has a receiving order made
against him or suspends payment or comprises with his
creditors; or
(e) is prohibited by law from being a Director; or
(f) ceases to be a Director by virtue of any provision of
the Act or is removed from office pursuant to this
Bye-Law.
ALTERNATE DIRECTORS
23. (1) Any Director may at any time by Notice delivered to the Office or
at a meeting of the Directors appoint any Person to be his alternate Director
(an "Alternate Director"). Any Person so appointed shall have all the rights and
powers of the Director or Directors for whom such Person is appointed in the
alternative provided that such Person shall not be counted more than once in
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determining whether or not a quorum is present. An Alternate Director may be
removed at any time by the Director who appointed him and, subject thereto, the
office of Alternate Director shall continue until the next annual election of
Directors or, if earlier, the date on which the relevant Director ceases to be a
Director. Any appointment or removal of an Alternate Director shall be effected
by Notice signed by the appointor and delivered to the Office or tendered at a
meeting of the Board. An Alternate Director may also be a Director in his own
right and may act as alternate to more than one other Director. An Alternate
Director shall, if his appointor so requests, be entitled to receive Notices of
meetings of the Board or of committees of the Board to the same extent as, but
in lieu of, the Director appointing him and shall be entitled to such extent to
attend and vote as a Director at any such meeting at which the Director
appointing him is not personally present and generally at such meeting to
exercise and discharge all the functions, powers and duties of his appointor as
a Director and for the purposes of the proceedings at such meeting the
provisions of these Bye-Laws shall apply as if he were a Director save that as
an alternate for more than one Director his voting rights shall be cumulative.
(2) An Alternate Director shall only be a Director for the purposes of
the Act and shall only be subject to the provisions of the Act insofar as they
relate to the duties and obligations of a Director when performing the functions
of the Director for whom he is appointed in the alternative and shall alone be
responsible to the Company for his acts and defaults and shall not be deemed to
be the agent of or for the Director appointing him. An Alternate Director shall
be entitled to contract and be interested in and benefit from contracts or
arrangements or transactions and to be repaid expenses and to be indemnified by
the Company to the same extent, as the case may be, as if he were a Director but
he shall not be entitled to receive from the Company any fee in his capacity as
an Alternate Director except only such part, if any, of the remuneration
otherwise payable to his appointor as such appointor may by Notice to the
Company from time to time direct.
(3) Every Person acting as an Alternate Director shall have one vote
for each Director for whom he acts as alternate (in addition to his own vote if
he is also a Director). If his appointor is for the time being unavailable or
unable to act, the signature of an Alternate Director to any resolution in
writing of the Board or a committee of the Board of which his appointor is a
member shall, unless the Notice of his appointment provides to the contrary, be
as effective as the signature of his appointor.
(4) An Alternate Director shall ipso facto cease to be an Alternate
Director if his appointor ceases for any reason to be a Director, however, such
Alternate Director or any other Person may be re-appointed by the Directors to
serve as an Alternate Director provided always that, if at any meeting the term
of any Director expires but such Director is re-elected at the same meeting, any
appointment of such Alternate Director pursuant to these Bye-Laws which was in
force immediately before his retirement shall remain in force as though he had
not retired.
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DIRECTORS' COMPENSATION
24. The amount, if any, of Directors' fees, retainers, awards of shares
and options, or other remuneration shall from time to time be determined by the
Board. In addition, each Director shall be paid his reasonable traveling, hotel
and incidental expenses in attending and returning from meetings of the Board or
committees appointed by the Board, or any Annual General Meeting or Special
General Meeting of the Members, and shall be paid all expenses properly and
reasonably incurred by him in the conduct of the Company's business or in the
discharge of his duties as a Director. Any question as to the reasonableness of
expenses as provided herein shall be a matter to be determined by the Board. Any
Director who by request, goes or resides abroad for any purposes of the Company
or who performs services which in the opinion of the Board go beyond the
ordinary duties of a Director may be paid such extra remuneration (whether by
way of salary or otherwise) as the Board may determine, and such extra
remuneration shall be in addition to any remuneration provided for by or
pursuant to any other Bye-Law.
DIRECTORS' AND OFFICERS' INTERESTS
25. (1) A Director may:
(a) hold any other office or place of profit with the
Company (except that of Auditor) in conjunction with
his office of Director for such period and, subject
to the relevant provisions of the Act, upon such
terms as the Board may determine. Any remuneration
(whether by way of salary or otherwise) paid to any
Director in respect of any such other office or place
of profit shall be in addition to any remuneration
provided for by or pursuant to any other Bye-Law;
(b) act by himself or his firm in a professional capacity
for the Company (otherwise than as Auditor) and he or
his firm may be remunerated for professional services
as if he were not a Director;
(c) continue to be or become a director, manager or other
officer or member of any other Person whether or not
promoted by the Company or in which the Company may
be interested as a vendor, shareholder or otherwise
and (unless otherwise agreed) no such Director shall
be accountable for any remuneration or other benefits
received by him as a director, manager or other
officer or member of or from his interests in any
such other Person. Notwithstanding anything contained
in these Bye-Laws to the contrary, any Director may
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exercise or cause to be exercised the voting powers
conferred by the shares in any other company held or
owned by the Company, or exercisable by him as
director of such other company in such manner in all
respects as he may determine (including the exercise
thereof in favor of any resolution appointing himself
as a director, manager or other officer of such
company, or voting or providing for the payment of
remuneration to the director, managing director,
joint managing director, deputy managing director,
executive director, manager or other officers of such
other company) and any Director may vote in favor of
the exercise of such voting rights in the manner
aforesaid notwithstanding that he may be, or about to
be, appointed a director, manager or other officer of
such a company, and that as such he is or may become
interested in the exercise of such voting rights in
the manner aforesaid.
(2) Subject to the Act and to these Bye-Laws, no Director or Officer or
proposed Director or Officer shall be disqualified by his office from
contracting with the Company or any Subsidiary, either with regard to his tenure
of any office or place of profit or as vendor, purchaser or in any other manner
whatever, nor shall any such contract or any other contract or arrangement in
which any Director or Officer is in any way interested be liable to be avoided,
nor shall any Director or Officer so contracting or being so interested be
liable to account to the Company or the Members for any remuneration, profit or
other benefits realized by any such contract or arrangement by reason of such
Director or Officer holding that office or of the fiduciary relationship thereby
established, provided that such Director or Officer shall disclose the nature of
his interest in any contract or arrangement in which he is interested in
accordance with these Bye-Laws.
(3) A Director or Officer who to his knowledge is in any way, whether
directly or indirectly, interested in a contract or arrangement or proposed
contract or arrangement with the Company shall declare the nature of his
interest at the meeting of the Board at which the question of entering into the
contract or arrangement is first considered, if he knows his interest then
exists, or in any other case at the first meeting of the Board after he knows
that he is or has become so interested.
(4) For the purposes of the preceding paragraph, a Director shall
furnish Notice to the Board to the effect that: (a) he is a member or officer of
a specified company or firm and is to be regarded as interested in any contract
or arrangement which may after the date of the Notice be made with that company
or firm; or (b) he is to be regarded as interested in any contract or
arrangement which may after the date of the Notice be made with a specified
Person who is connected with him; and such Notice shall be deemed to be a
sufficient declaration of interest under these Bye-Laws in relation to any such
contract or arrangement, provided that no such Notice shall be effective unless
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either it is given at a meeting of the Board or the Director or Officer takes
reasonable steps to secure that it is brought up and read at the next Board
meeting after it is given.
GENERAL POWERS OF THE BOARD OF DIRECTORS
26. (1) The business of the Company shall be managed and conducted by the
Board, which may exercise all powers of the Company (whether relating to the
management of the business of the Company or otherwise) which are not by the Act
or by these Bye-Laws required to be exercised by the Company in a General
Meeting, subject nevertheless to the provisions of the Act and of these Bye-Laws
and to such regulations being not inconsistent with such provisions as may be
prescribed by the Company in a General Meeting. No regulations made by the
Company in a General Meeting shall invalidate any prior act of the Board which
would have been valid if such regulations had not been made. The general powers
given by this Bye-Law shall not be limited or restricted by any special
authority or power given to the Board by any other Bye-Law.
(2) Any Person contracting or dealing with the Company in the ordinary
course of business shall be entitled to rely on any written or oral contract or
agreement or deed, document or instrument entered into or executed as the case
may be by any Officer acting on behalf of the Company and the same shall be
deemed to be validly entered into or executed by the Company as the case may be
and shall, subject to applicable law, be binding on the Company; provided,
however, that no such contract or agreement or deed, document or instrument may
be executed on the Company's behalf within the United States unless specifically
authorized by resolution of the Board.
(3) Without prejudice to the general powers conferred by these Bye-Laws
it is hereby expressly declared that the Board shall have the following powers,
namely:
(a) to give to any Person (including, without limitation,
any Director, Officer, or employee) the right or
option of requiring at a future date that an
allotment shall be made to him of any share at par or
at such premium as may be agreed; and
(b) to give to any Director, Officer or employee of the
Company an interest in any particular business or
transaction or participation in the profits thereof
or in the general profits of the Company either in
addition to or in substitution for a salary or other
remuneration.
(4) The Board may by power of attorney appoint under the Seal any
company, firm or Person or body of Persons, whether nominated directly or
indirectly by the Board, to be the attorney
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or attorneys of the Company for such purposes and with such powers, authorities
and discretions (not exceeding those vested in or exercisable by the Board under
these Bye-Laws) and for such period and subject to such conditions as it may
determine, and any such power of attorney may contain such provisions for the
protection and convenience of Persons dealing with any such attorney as the
Board may determine, and may also authorize any such attorney to sub-delegate
all or any of the powers, authorities and discretions vested in him. Such
attorney or attorneys may, if so authorized under the Seal of the Company,
execute any deed or instrument under their personal seal with the same effect as
the affixation of the Company's Seal.
(5) The Board may entrust to and confer upon any Director any of the
powers exercisable by it upon such terms and conditions and with such
restrictions as it may determine, and either collaterally with, or to the
exclusion of, its own powers, and may from time to time revoke or vary all or
any of such powers but no Person dealing in good faith and without Notice of
such revocation or variation shall be affected thereby.
(6) All checks, promissory notes, drafts, bills of exchange and other
instruments, whether negotiable or transferable or not, and all receipts for
monies paid to the Company shall be signed, drawn, accepted, endorsed or
otherwise executed, as the case may be, in such manner as the Board shall from
time to time by resolution determine. The Company's banking accounts shall be
kept with such banks or other financial institutions as the Board shall from
time to time determine.
(7) The Board may establish or join with other companies (including any
of its Subsidiaries or other affiliated companies) in establishing and making
contributions out of the Company's monies to any plans or funds for providing
pensions, life insurance or other benefits for employees (which expression as
used in this and the following paragraph shall include any Director or
ex-Director who may hold or have held any executive office or any office of
profit under the Company or any of its Subsidiaries) and ex-employees of the
Company or any of its Subsidiaries and their dependents or any class or classes
of such Persons.
(8) The Board may pay, enter into agreements to pay or make grants of
revocable or irrevocable, and either subject or not subject to any terms or
conditions, pensions or other benefits to employees and ex-employees of the
Company or any of its Subsidiaries and their dependents, or to any of such
Persons, including pensions or benefits additional to those, if any, to which
such employees or ex-employees or their dependents are or may become entitled
under any such plan or fund as mentioned in the preceding paragraph. Any such
pension or benefit may, as the Board considers desirable, be granted to an
employee either before and in anticipation of or upon or at any time after his
actual retirement.
(9) The Board may exercise all the powers of the Company to raise or
borrow money and to mortgage or charge all or any part of the undertaking,
property and assets (present and future) and
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uncalled capital of the Company and, subject to the Act, to issue debentures,
bonds and other securities, whether outright or as collateral security for any
debt, liability or obligation of the Company or of any third party.
(10) Debentures, bonds and other securities may be made assignable free
from any equities between the Company and the Person to whom the same may be
issued.
(11) Any debentures, bonds or other securities may be issued at a
discount (other than shares), premium or otherwise and with any special
privileges as to redemption, surrender, drawings, allotment of shares, attending
and voting at General Meetings of the Company, appointment of Directors and
otherwise as the Board may determine by resolution.
PROCEEDINGS OF THE BOARD OF DIRECTORS
27. (1) The Board may meet for the conduct of business, adjourn and
otherwise regulate its meetings as it considers appropriate. Actions to be taken
at any meeting shall be determined by a majority of votes cast, provided a
quorum is present. Meetings of the Board of Directors of the Company shall be
held outside the United States.
(2) A meeting of the Board may be convened by the Secretary on request
of the President or by any two (2) Directors, provided that no business shall be
transacted at a Board meeting unless not less than seven (7) clear days' Notice
of the meeting shall be given to each Director with reasonable details of the
business to be transacted and provided further that any Director may by Notice
to the Company agree that no Notice needs, or any shorter Notice specified in a
notice may, be given to him. The Secretary shall convene a meeting of the Board,
of which Notice may be given in writing or by telephone or in such other manner
as the Board may from time to time determine, whenever he shall be required so
hereunder. Any Director may waive Notice of any meeting either prospectively or
retrospectively.
(3) The quorum necessary for the transaction of the business of the
Board may be fixed by the Board and, unless so fixed at any other number, shall
be a majority of the Directors. An Alternate Director shall be counted in a
quorum in the case of the absence of a Director for whom he is the alternate
provided that he shall not be counted more than once for the purpose of
determining whether or not a quorum is present.
(4) Directors may participate in any meeting of the Board by means of a
conference telephone or other communications equipment through which all Persons
participating in the meeting can communicate with each other simultaneously and
instantaneously and, for the purpose of
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counting a quorum, such participation shall constitute presence at a Meeting as
if those participating were present in person; provided, however, that no
Director may participate in any meeting of the Board while physically present in
the United States.
(5) Any Director who ceases to be a Director at a Board meeting may
continue to be present and to act as a Director and be counted in the quorum
until the termination of such Board meeting if no other Director objects and if
otherwise a quorum of Directors would not be present.
(6) The continuing Directors or a sole continuing Director may act
notwithstanding any vacancy in the Board but, if and so long as the number of
Directors is reduced below the minimum number fixed by or in accordance with
these Bye-Laws, the continuing Directors or Director, notwithstanding that the
number of Directors is below the number fixed by or in accordance with these
Bye-Laws as the quorum or that there is only one continuing Director, may act
for the purpose of filling vacancies in the Board or of summoning General
Meetings of the Company but not for any other purpose.
(7) The Board may elect a Chairman and a Deputy Chairman of its
meetings and determine the period for which they are respectively to hold such
office. If no Chairman or Deputy Chairman is elected, or if at any meeting
neither the Chairman nor any Deputy Chairman is present within five (5) minutes
after the time appointed for holding the same, the Directors present may choose
one of their number to be Acting Chairman of the meeting.
(8) A meeting of the Board at which a quorum is present shall be
competent to exercise all the powers, authorities and discretions for the time
being vested in or exercisable by the Board.
(9) The Board may delegate any of its powers, authorities and
discretions to committees (including, but not limited to, an Executive
Committee, an Audit Committee, a Human Resources Committee, and an Investment
Committee), consisting of Directors or Officers or other persons as it may
determine, and they may, from time to time, revoke such delegation or revoke the
appointment of and discharge any such committees either wholly or in part, and
either as to Persons or purposes. Any committee so formed shall, in the exercise
of the powers, authorities and discretions so delegated, conform to any
regulations which may be imposed on it by the Board.
(10) All acts done by any such committee in conformity with such
regulations, and in fulfillment of the purposes for which it was appointed, but
not otherwise, shall have like force and effect as if done by the Board, and the
Board shall have power to remunerate the members of any such committee, and
charge such remuneration to the current expenses of the Company.
(11) The meetings and proceedings of any committee consisting of two
(2) or more members shall be governed by the provisions contained in these
Bye-Laws for regulating the
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meetings and proceedings of the Board so far as the same are applicable and are
not superseded by any regulations imposed by the Board under the preceding
paragraph.
(12) A resolution in writing signed outside the United States by all
the Directors (except such as are temporarily unable to act through ill-health
or disability), (provided that such number is sufficient to constitute a quorum
and further provided that a copy of such resolution has been given or the
contents thereof communicated to all the Directors for the time being entitled
to receive Notices of Board meetings in the same manner as Notices of meetings
are required to be given by these Bye-Laws) shall be as valid and effectual as
if a resolution had been passed at a meeting of the Board duly convened and
held. Such resolution may be contained in one document or in several documents
in like form each signed by one or more of the Directors and for this purpose a
facsimile signature of a Director shall be treated as valid.
(13) All acts bona fide done by the Board or by any committee or by any
Person acting as a Director or member of a committee, shall, notwithstanding
that it is afterwards discovered that there was some defect in the appointment
of any member or the Board or such committee or Person acting as aforesaid or
that they or any of them were disqualified or had vacated office, be as valid as
if every such Person had been duly appointed and was qualified and had continued
to be a Director or member of such committee.
OFFICERS
28. (1) The Officers of the Company shall consist of the Chairman, Deputy
Chairman, President, Chief Executive Officer, Executive Vice-President(s),
Senior Vice President(s), Vice President(s), Chief Financial Officer and
Secretary and such additional Officers (who may or may not be Directors) as the
Board or the President may from time to time determine, all of whom shall be
deemed to be Officers for the purposes of the Act and these Bye-Laws.
(2) The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them by
the Board or another Officer from time to time.
(3) The authority of any Officer of the Company so long as such Officer
shall be physically present in the United States, shall be limited to
maintaining an oversight and review of and providing recommendations and
information to the Board, but not to any third party, regarding the affairs of
the Company pertaining to any of its Subsidiaries incorporated in the United
States and otherwise to enable the Company to fulfill its role as the holder of
shares of such Subsidiaries. Such Officer while physically present in the United
States shall have no authority (i) to negotiate or
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conclude contracts in the name of the Company (or any of its Subsidiaries not
incorporated in the United States) or otherwise bind the Company (or any of its
Subsidiaries not incorporated in the United States), or (ii) to conduct or
manage any activities of the Company (or any of its Subsidiaries not
incorporated in the United States), or (iii) to act in any way which might
result in the Company (or any of its Subsidiaries not incorporated in the United
States) being considered to be engaged in a trade or business in the United
States within the meaning of the Code. Any purported action or contract done or
made by such Officer or any other duly appointed Officer of the Company in
violation of the provisions hereof shall be null and void ab initio and the
Company or any of its Subsidiaries shall in no way be bound or affected by any
such action or contract done or made in violation hereof.
(4) The Directors shall, as soon as may be after each appointment or
election of Directors, elect the Officers of the Company, and a Chairman and a
Deputy Chairman of the Board of Directors.
(5) The Officers shall receive such remuneration as the Directors may
from time to time determine.
(6) The Company may in accordance with the Act appoint a resident
representative ordinarily resident in Bermuda and the resident representative
shall maintain an office in Bermuda and comply with the provisions of the Act.
The Company shall provide the resident representative with such documents and
information as the resident representative may require in order to be able to
comply with the provisions of the Act. The resident representative shall be
entitled to have Notice of, attend and be heard at all meetings of the Board or
meetings of the Members.
(7) The Secretary, or an Assistant Secretary, shall attend all meetings
of the Members and of the Board (and its committees) and shall keep correct
minutes of such meetings and enter the same in the proper books provided for the
purpose. The Secretary shall perform such other duties as are prescribed by the
Act or these Bye-Laws or as may be prescribed by the Board.
(8) The Chairman or the Deputy Chairman of the Board of Directors, as
the case may be, shall act as chairman at all meetings of the Members and of the
Directors at which he is present. In the absence of both the Chairman and the
Deputy Chairman, a chairman shall be appointed or elected by those present at
the meeting.
(9) The Officers of the Company shall have such powers and perform such
duties in the management, business and affairs of the Company as may be
delegated to them by the Directors or another Officer from time to time.
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(10) Any provision of the Act or of these Bye-Laws requiring or
authorizing a thing to be done by or to a Director and the Secretary shall not
be satisfied by its being done by or to the same Person acting both as Director
and as or in place of the Secretary.
REGISTER OF DIRECTORS AND OFFICERS
29. (1) The Board shall cause to be kept in one or more books at its Office
a Register of Directors and Officers and shall enter therein the particulars
required by the Act.
(2) The Register of Directors and Officers shall be open to inspection
at the Office of the Company on every business day, subject to such reasonable
restrictions as the Board may impose, so that not less than two (2) hours in
each business day be allowed for inspection.
MINUTES
30. The Board shall cause Minutes to be duly entered in books provided for the
purpose: (i) of all elections and appointments of Officers; (ii) of the names of
the Directors present at each meeting of the Directors and of any committee
appointed by the Board; and (iii) of all resolutions and proceedings of each
General Meeting of the Members, meetings of the Board and meetings of committees
of the Board.
SEAL
31. (1) The Company shall have one or more Seals, as the Board may
determine. For the purpose of sealing documents creating or evidencing
securities issued by the Company, the Company may have a securities seal which
is a facsimile of the Seal of the Company with the addition of the words
"Corporate Seal" on its face or in such other form as the Board may approve.
The Board shall provide for the custody of each Seal and no Seal shall be used
without the authority of the Board or of a committee of the Board authorized
by the Board in that regard. Except as otherwise provided in these Bye-Laws,
any instrument to which a Seal is affixed shall be signed autographically by
one Officer and the Secretary or by two Officers or by such other Person or
Persons as the Board may appoint, either generally or in any particular case,
save that as regards any certificates for shares or debentures or other
securities of the Company the Board may by resolution determine that such
signatures or either of them shall be dispensed with or affixed by some method
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or system of mechanical signature. Every instrument executed in manner provided
by this Bye-Law shall be deemed to be sealed and executed with the authority of
the Board previously given.
(2) Where the Company has a Seal for use abroad, the Board may by
writing under the Seal appoint any agent or committee abroad to be the duly
authorized agent of the Company for the purpose of affixing and using such Seal
and the Board may impose restrictions on the use thereof as it may determine.
Wherever in these Bye-Laws reference is made to the Seal, the reference shall,
when and so far as may be applicable, be deemed to include any such other Seal
as aforesaid.
(3) Any Officer or any Person appointed by the Board for the purpose
may authenticate (by affixing the seal or otherwise) any documents affecting the
constitution of the Company and any resolution passed by the Company or the
Board or any committee, and any books, records, documents and accounts relating
to the business of the Company, and to certify copies thereof or extracts
therefrom as true copies or extracts. A document purporting to be a copy of a
resolution, or an extract from the minutes of a meeting, of the Company or of
the Board or any committee which is so certified shall be conclusive evidence in
favor of all Persons dealing with the Company upon the faith thereof that such
resolution has been duly passed or, as the case may be, that such minutes or
extract is a true and accurate record of proceedings at a duly constituted
meeting.
DESTRUCTION OF DOCUMENTS
32. The Company shall be entitled to destroy the following documents at the
following times:
(a) any share certificate which has been canceled at any time
after the expiration of one (1) year from the date of such
cancellation;
(b) any dividend mandate or any variation or cancellation thereof
or any notification of change of name or address at any time
after the expiration of two (2) years from the date such
mandate, variation, cancellation or notification was recorded
by the Company;
(c) any instrument of transfer of shares which has been registered
at any time after the expiration of seven (7) years from the
date of registration;
(d) any allotment letters after the expiration of seven (7) years
from the date of issue thereof; and
(e) copies of powers of attorney, grants of probate and letters of
administration at any time after the expiration of seven (7)
years after the account to which the relevant
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power of attorney, grant of probate or letters of
administration related has been closed;
and it shall conclusively be presumed in favor of the Company that every entry
in the Register purporting to be made on the basis of any such documents so
destroyed was duly and properly made and every share certificate so destroyed
was a valid certificate duly and properly canceled and that every instrument of
transfer so destroyed was a valid and effective instrument duly and properly
registered and that every other document destroyed hereunder was a valid and
effective document in accordance with the recorded particulars thereof in the
books or records of the Company; provided, however, that: (1) the foregoing
provisions of this Bye-Law shall apply only to the destruction of a document in
good faith and without Notice to the Company that the preservation of such
document was relevant to a claim; (2) nothing contained in this Bye-Law shall be
construed as imposing upon the Company any liability in respect of the
destruction of any such document earlier than as aforesaid or in any case where
the conditions of proviso (1) above are not fulfilled; and (3) references in
this Bye-Law to the destruction of any document include references to its
disposal in any manner.
DIVIDENDS AND OTHER DISTRIBUTIONS
33. (1) Subject to the Act, the Board may from time to time declare
dividends in any currency or property to be paid to the Members. The Board may
also make a distribution to the Members out of any contributed surplus (as
ascertained in accordance with the Act).
(2) No dividend shall be paid or other distribution made out of
contributed surplus if to do so would render the Company unable to pay its
liabilities as they become due or the realizable value of its assets would
thereby become less than the aggregate of its liabilities and its issued share
capital and share premium accounts.
(3) Except in so far as the rights attaching to, or the terms of issue
of, any share otherwise provide:
(a) all dividends shall be declared and paid according to the amounts
paid; and
(b) all dividends shall be apportioned and paid pro rata according to
the amounts paid up on the shares during any portion or portions
of the period in respect of which the dividend is paid.
(4) The Board may from time to time pay to the Members such interim
dividends as appear to the Board to be justified by the profits of the Company
and in particular (but without
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prejudice to the generality of the foregoing) if at any time the share capital
of the Company is divided into different classes, the Board may pay such interim
dividends in respect of those shares in the capital of the Company which confer
on the holders thereof deferred or non-preferential rights as well as in respect
of those shares which confer on the holders thereof preferential rights with
regard to dividends and provided that the Board acts bona fide the Board shall
not incur any responsibility to the holders of shares conferring any preference
for any damage that they may suffer by reason of the payment of an interim
dividend on any shares having deferred or non-preferential rights and may also
pay any fixed dividend which is payable on any shares of the Company quarterly
or on any other dates, whenever such profits, in the opinion of the Board,
justifies such payment.
(5) The Board may deduct from any dividend or other monies payable to a
Member by the Company on or in respect of any shares all sums of money (if any)
presently payable by him to the Company on account of calls or otherwise.
(6) No dividend or other monies payable by the Company on or in respect
of any share shall bear interest against the Company.
(7) Any dividend, interest or other sum payable in cash to the holder
of shares may be paid by check or warrant sent through the mail addressed to the
holder at his registered address or, in the case of joint holders, addressed to
the holder whose name stands first in the Register in respect of the shares at
his address as appearing in the Register or addressed to such Person and at such
address as the holder or joint holders may in writing direct. Every such check
or warrant shall, unless the holder or joint holders otherwise direct, be made
payable to the order of the holder or, in the case of joint holders, to the
order of the holder whose name stands first on the Register in respect of such
shares, and shall be sent at his or their risk and payment of the check or
warrant by the bank on which it is drawn shall constitute a good discharge to
the Company notwithstanding that it may subsequently appear that the same has
been stolen or that any endorsement thereon has been forged. Any one of two or
more joint holders may give effectual receipts for any dividends or other monies
payable or property distributable in respect of the shares held by such joint
holders.
(8) All dividends or bonuses unclaimed for one (1) year after having
been declared may be invested or otherwise made use of by the Board for the
benefit of the Company until claimed. Any dividend or bonuses unclaimed after a
period of six (6) years from the date of declaration shall be forfeited and
shall revert to the Company. The payment by the Board of any unclaimed dividend
or other sums payable on or in respect of a share into a separate account shall
not constitute the Company a trustee in respect thereof.
(9) Whenever the Board has resolved that a dividend be declared or
paid, the Board may further resolve that such dividend be satisfied wholly or in
part by the distribution of specific assets of any kind and in particular of
paid up shares, debentures or warrants to subscribe securities of the
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Company or any other company, or in any one or more of such ways, and where any
difficulty arises in regard to the distribution the Board may settle the same as
it thinks expedient, and in particular may issue certificates in respect of
fractions of shares, disregard fractional entitlements or round the same up or
down, and may fix the value for distribution of such specific assets, or any
part thereof, and may determine that cash payments shall be made to any Members
upon the basis of the value so fixed in order to adjust the rights of all
parties, and may vest any such specific assets in trustees as may seem expedient
to the Board and may appoint any Person to sign any requisite instruments of
transfer and other documents on behalf of the Persons entitled to the dividend,
and such appointment shall be effective and binding on the Members. The Board
may resolve that no such assets shall be made available to Members with
registered addresses in any particular territory or territories where, in the
absence of a registration statement or other special formalities, such
distribution of assets would or might, in the opinion of the Board, be unlawful
or impracticable and in such event the only entitlement of the Members aforesaid
shall be to receive cash payments as aforesaid. Members affected as a result of
the foregoing sentence shall not be or be deemed to be a separate class of
Members for any purpose whatsoever.
(10) Whenever the Board has resolved that a dividend be declared or
paid on any class of the share capital of the Company, the Board may further
resolve either:
(a) that such dividend be satisfied wholly or in part in
the form of an allotment of shares credited as fully
paid up, provided that the shareholders entitled
thereto will be entitled to elect to receive such
dividend (or part thereof if the Board so determines)
in cash in lieu of such allotment. In such case, the
following provisions shall apply:
(i) the basis of any such allotment shall be
determined by the Board;
(ii) the Board, after determining the basis of
allotment, shall give not less than two (2)
weeks' Notice to the holders of the relevant
shares of the right of election accorded to
them, and shall send with such Notice, forms
of election and specify the procedure to be
followed and the place at which and the
latest date and time by which duly completed
forms of election must be delivered in order
to be effective;
(iii) the right of election may be exercised in
respect of the whole or part of that portion
of the dividend in respect of which the
right of election has been accorded; and
(iv) the dividend (or that part of the dividend
to be satisfied by the allotment of shares
as aforesaid) shall not be payable in cash
on
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shares in respect whereof the cash election
has not been duly exercised ("the
non-elected shares") and in satisfaction
thereof shares of the relevant class shall
be allotted credited as fully paid up to the
holders of the non-elected shares on the
basis of allotment determined as aforesaid
and for such purpose the Board shall
capitalize and apply out of any part of the
undivided profits of the Company (including
profits carried and standing to the credit
of any reserves or other special account
other than the Subscription Rights Reserve)
as the Board may determine, such sum as may
be required to pay up in full the
appropriate number of shares of the relevant
class for allotment and distribution to and
amongst the holders of the non-elected
shares on such basis; or
(b) that the shareholders entitled to such dividend shall
be entitled to elect to receive an allotment of
shares credited as fully paid up in lieu of the whole
or such part of the dividend as the Board may
determine. In such case, the following provisions
shall apply:
(i) the basis of any such allotment shall be
determined by the Board;
(ii) the Board, after determining the basis of
allotment, shall give not less than fourteen
(14) days' Notice to the holders of the
relevant shares of the right of election
accorded to them and shall send with such
Notice forms of election and specify the
procedure to be followed and the place at
which and the latest date and time by which
duly completed forms of election must be
delivered in order to be effective;
(iii) the right of election may be exercised in
respect of the whole or part of that portion
of the dividend in respect of which the
right of election has been accorded; and
(iv) the dividend (or that part of the dividend
in respect of which a right of election has
been accorded) shall not be payable in cash
on shares in respect whereof the share
election has been duly exercised ("the
elected shares") and in lieu thereof shares
of the relevant class shall be allotted
credited as fully paid up to the holders of
the elected shares on the basis of allotment
determined as aforesaid and for such purpose
the Board shall capitalize and apply out of
any part of the undivided profits of the
Company (including profits carried and
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standing to the credit of any reserves or
other special account other than the
Subscription Rights Reserve) as the Board
may determine, such sum as may be required
to pay up in full the appropriate number of
shares of the relevant class for allotment
and distribution to and amongst the holders
of the elected shares on such basis.
(11) (a) The shares allotted under paragraph (10) of this
Bye-Law shall rank pari passu in all respects with
shares of the same class (if any) then in issue save
only as regards participation in the relevant
dividend or in any other distributions, bonuses or
rights paid, made, declared or announced prior to or
contemporaneously with the payment or declaration of
the relevant dividend unless, contemporaneously with
the announcement by the Board of their proposal under
paragraph (10) of this Bye-Law in relation to the
relevant dividend or contemporaneously with their
announcement of the distribution, bonus or rights in
question, the Board shall specify that the shares to
be allotted under paragraph (10) of this Bye-Law
shall rank for participation in such distribution,
bonus or rights.
(b) The Board may do all acts and things considered
necessary or expedient to give effect to any
capitalization under paragraph (10) of this Bye-Law,
with full power to the Board to make such provisions
as it determines in the case of shares becoming
distributable in fractions (including provisions
whereby, in whole or in part, fractional entitlements
are aggregated and sold and the net proceeds
distributed to those entitled, or are disregarded or
rounded up or down or whereby the benefit of
fractional entitlements accrues to the Company rather
than to the Members concerned). The Board may
authorize any Person to enter into on behalf of all
Members interested, an agreement with the Company
providing for such capitalization and matters
incidental thereto and any agreement made pursuant to
such authority shall be effective and binding on all
concerned.
(12) The Board may resolve in respect of any particular dividend of the
Company that notwithstanding the provisions of paragraph (10) of this Bye-Law
such dividend may be satisfied wholly in the form of an allotment of shares
credited as fully paid up without offering any right to shareholders to elect to
receive such dividend in cash in lieu of such allotment.
(13) The Board may on any occasion determine that rights of election
and the allotment of shares under paragraph (10) of this Bye-Law shall not be
made available or made to any shareholders with registered addresses in any
territory where, in the absence of a registration statement or other special
formalities, the circulation of an offer of such rights of election or the
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allotment of shares would or might, in the opinion of the Board, be unlawful or
impracticable, and in such event the provisions aforesaid shall be read and
construed subject to such determination. Members affected as a result of the
foregoing sentence shall not be or be deemed to be a separate class of Members
for any purpose whatsoever.
(14) Any resolution declaring a dividend on shares of any class may
specify that the same shall be payable or distributable to the Persons
registered as the holders of such shares at the close of business on a
particular date, notwithstanding that it may be a date prior to that on which
the resolution is passed, and thereupon the dividend shall be payable or
distributable to them in accordance with their respective holdings so
registered, but without prejudice to the rights inter se in respect of such
dividend of transferors and transferees of any such shares. The provisions of
this Bye-Law shall, as the case may be, apply to bonuses, capitalization issues,
distributions of realized capital profits or offers or grants made by the
Company to the Members.
(15) Before declaring any dividend, the Board may set aside out of the
profits of the Company such sums as it determines as reserves which shall, at
the discretion of the Board, be applicable for any purpose to which the profits
of the Company may be properly applied and pending such application may, also at
such discretion, either be employed in the business of the Company or be
invested in such investments as the Board may from time to time determine and so
that it shall not be necessary to keep any investments constituting the reserve
or reserves separate or distinct from any other investments of the Company. The
Board may also, without placing the same to reserves, carry forward any profits
which it may think prudent not to distribute.
CAPITALIZATION
34. (1) The Board may resolve to capitalize any part of the amount for the
time being standing to the credit of any reserve account or to the credit of the
profit and loss account or otherwise available for distribution by applying such
sum in paying up (i) unissued shares, debentures or other obligations to be
allotted or distributed fully paid pro rata to the Members or any class of
Members or (ii) in full or partly paid shares of those Members who would have
been entitled to such sums if they were distributed by way of dividend or other
distribution. In addition, the Board may, subject to the Act, resolve to
capitalize any part of the amount for the time being standing to the credit of
the Company's share premium account by applying such sum in paying up unissued
shares to be issued to the Members, or class of Members, as fully paid bonus
shares.
(2) The Board may settle, as it considers appropriate, any difficulty
arising in regard to any distribution under the preceding paragraph and in
particular may issue certificates in respect of fractions of shares or authorize
any Person to sell and transfer any fractions or may resolve that the
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distribution should be as nearly as may be practicable in the correct proportion
but not exactly so or may ignore fractions altogether, and may determine that
cash payments shall be made to any Members in order to adjust the rights of all
parties, as may seem expedient to the Board. The Board may appoint any Person to
sign on behalf of the Persons entitled to participate in the distribution any
contract necessary or desirable for giving effect thereto and such appointment
shall be effective and binding upon the Members.
ACCOUNTING RECORDS
35. (1) The Board shall cause true accounts to be kept of the sums of money
received and expended by the Company, and the matters in respect of which such
receipts and expenditures take place, and of the property, assets, credits and
liabilities of the Company and of all other matters required by the Act or
necessary to give a true and fair view of the Company's affairs and to explain
its transactions.
(2) The accounting records shall be kept at the Office or, subject to
the Act, at such other place or places as the Board decides outside of the
United States and shall always be open to inspection by the Directors of the
Company. No Member (other than a Director of the Company) shall have any right
of inspecting any accounting record or book or document of the Company except as
conferred by law or authorized by the Board or the Company in a General Meeting.
(3) Subject to the Act, a printed copy of the balance sheet and profit
and loss account, including every document required by law to be annexed
thereto, made up to the end of the applicable financial year and containing a
summary of the assets and liabilities of the Company under convenient headings
and a statement of income and expenditures, together with a copy of the
Auditors' report, shall be sent to each Person entitled thereto at least
twenty-one (21) days before the date of the Annual General Meeting and laid
before the Company at such meeting in accordance with the requirements of the
Act provided that this Bye-Law shall not require a copy of those documents to be
sent to any Person of whose address the Company is not aware or to more than one
of the joint holders of any shares or debentures.
AUDIT
36. (1) Subject to the Act, at the Annual General Meeting or at a
subsequent Special General Meeting in each year, the Members shall appoint an
Auditor to audit the accounts of the Company and such Auditor shall hold
office until the Members appoint another Auditor. Such Auditor may
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be a Member but no Director or Officer or employee of the Company shall, during
his continuance in office, be eligible to act as an Auditor of the Company.
(2) Subject to the Act, a Person, other than a retiring Auditor, shall
not be capable of being appointed Auditor at an Annual General Meeting unless
Notice of an intention to nominate that Person to the office of Auditor has been
given not less than fourteen (14) days before the Annual General Meeting and
furthermore, the Company shall send a copy of any such Notice to the retiring
Auditor.
(3) The Members, by a resolution passed by at least two thirds of the
vote cast at a General Meeting at which notice specifying the intention to pass
such resolution was given, may remove the Auditor at any time before the
expiration of his term of office and shall by ordinary resolution at that
meeting appoint another Auditor in his stead for the remainder of his term,
provided that, not less than twenty-one (21) days before the date of the
meeting, notice in writing of the proposed resolution is given to the incumbent
auditor and to the auditor proposed to be appointed.
(4) Subject to the Act, the accounts of the Company shall be audited at
least once in every year.
(5) The remuneration of the Auditor shall be fixed by the Company in a
General Meeting or in such manner as the Members may determine.
(6) If the office of Auditor becomes vacant by the resignation or death
of the Auditor, or by his becoming incapable of acting by reason of illness or
other disability at a time when his services are required, the Directors shall
as soon as practicable convene a Special General Meeting to fill the vacancy.
(7) The statement of income and expenditures and the balance sheet
provided for by these Bye-Laws shall be examined by the Auditor and compared by
him with the books, accounts and vouchers relating thereto; and he shall make a
written report thereon stating whether such statement and balance sheet are
drawn up so as to present fairly the financial position of the Company and the
results of its operations for the period under review and, in case information
shall have been called for from Directors or Officers of the Company, whether
the same has been furnished and has been satisfactory. The financial statements
of the Company shall be audited by the Auditor in accordance with generally
accepted auditing standards. The Auditor shall make a written report thereon in
accordance with generally accepted auditing standards and the report of the
Auditor shall be submitted to the Members in a General Meeting. The generally
accepted auditing standards referred to herein may be those of a country or
jurisdiction other than Bermuda. If so, the financial statements and the report
of the Auditor should disclose this fact and name such country or jurisdiction.
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(8) The Auditor shall at all reasonable times have access to all books
kept by the Company and to all accounts and vouchers relating thereto; and he
may call on the Directors or Officers of the Company for any information in
their possession relating to the books or affairs of the Company.
NOTICES
37. (1) Any Notice from the Company to a Member shall be given in writing
or by cable, telex or facsimile transmission message and any such Notice and
(where appropriate) any other document may be served or delivered by the Company
on or to any Member either personally or by sending it through the mail or other
courier service in a prepaid envelope addressed to such Member at his registered
address as appearing in the Register or at any other address supplied by him to
the Company for the purpose or, as the case may be, by transmitting it to any
such address or transmitting it to any telex or facsimile transmission number
supplied by him to the Company for the giving of Notice to him or which the
Person transmitting the Notice reasonably and bona fide believes at the relevant
time will result in the Notice being duly received by the Member or may also be
served by advertisement in appointed newspapers (as defined in the Act) or in
accordance with the requirements of any Designated Stock Exchange. In the case
of joint holders of a share all Notices shall be given to that one of the joint
holders whose name stands first in the Register and Notice so given shall be
deemed a sufficient service on or delivery to all the joint holders.
(2) Any Notice or other document:
(a) if served or delivered by mail, shall be sent airmail
where appropriate and shall be deemed to have been
served or delivered on the day following that on
which the envelope containing the same, properly
prepaid and addressed, is put into the mail; in
proving such service or delivery it shall be
sufficient to prove that the envelope or wrapper
containing the Notice or document was properly
addressed and put into the mail and a certificate in
writing signed by the Secretary or other Officer of
the Company or other Person appointed by the Board
that the envelope or wrapper containing the Notice or
other document was so addressed and put into the mail
shall be conclusive evidence thereof; and
(b) if served or delivered in any other manner
contemplated by these Bye-Laws, shall be deemed to
have been served or delivered at the time of personal
service or delivery or, as the case may be, at the
time of the relevant dispatch or transmission; and in
proving such service or delivery a certificate in
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writing signed by the Secretary or other Officer of
the Company or other Person appointed by the Board as
to the fact and time of such service, delivery,
dispatch or transmission shall be conclusive evidence
thereof.
(3) Any Notice or other document delivered or sent by mail to or left
at the registered address of any Member in pursuance of these Bye-Laws shall,
notwithstanding that such Member is then dead or bankrupt or that any other
event has occurred, and whether or not the Company has Notice of the death or
bankruptcy or other event, be deemed to have been duly served or delivered in
respect of any share registered in the name of such Member as sole or joint
holder unless his name shall, at the time of the service or delivery of the
Notice or document, have been removed from the Register as the holder of the
share, and such service or delivery shall for all purposes be deemed a
sufficient service or delivery of such Notice or document on all Persons
interested (whether jointly with or as claiming through or under him) in the
share.
(4) A Notice may be given by the Company to the Person entitled to a
share in consequence of the death, mental disorder or bankruptcy of a Member by
sending it through the mail in a prepaid letter, envelope or wrapper addressed
to him by name, or by the title of the representative of the deceased, or
trustee of the bankrupt, or by any like description, at the address, if any,
supplied for the purpose by the Person claiming to be so entitled, or (until
such an address has been so supplied) by giving the Notice in any manner in
which the same might have been given if the death, mental disorder or bankruptcy
had not occurred.
(5) Any Person who by operation of law, transfer or other means
whatsoever shall become entitled to any share shall be bound by every Notice in
respect of such share which prior to his name and address being entered on the
Register shall have been duly given to the Person from whom he derives his title
to such share.
(6) For the purposes of these Bye-Laws, a cable or telex or facsimile
transmission message purporting to come from a holder of shares or, as the case
may be, a Director or Alternate Director, or, in the case of a corporation which
is a holder of shares from a director or the secretary thereof or a duly
appointed attorney or duly authorized representative thereof for it and on its
behalf, shall in the absence of express evidence to the contrary available to
the Person relying thereon at the relevant time be deemed to be a document or
instrument in writing signed by such holder or Director or Alternate Director or
in the terms in which it is received.
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WINDING UP
38. (1) The Board shall have power in the name and on behalf of the Company
to present a petition to the court for the Company to be wound up.
(2) A resolution that the Company be wound up by the court or be wound
up voluntarily shall be a special resolution.
(3) If the Company shall be wound up (whether the liquidation is
voluntary or by the court) the liquidator may, with the authority of a special
resolution and any other sanction required by the Act, divide among the Members
in specie or kind the whole or any part of the assets of the Company and whether
or not the assets shall consist of properties of one kind or shall consist of
properties to be divided as aforesaid of different kinds, and may for such
purpose set such value as he deems fair upon any one or more class or classes of
property and may determine how such division shall be carried out as between the
Members or different classes of Members. The liquidator may, with the like
authority, vest any part of the assets in trustees upon such trusts for the
benefit of the Members as the liquidator with the like authority shall
determine, and the liquidation of the Company may be closed and the Company
dissolved, but so that no contributory shall be compelled to accept any shares
or other property in respect of which there is a liability.
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY
39. (1) The Directors and Officers (such term to include, for the purposes
of this Bye-Law, any individual appointed to any committee by the Board) for the
time being acting in relation to any of the affairs of the Company and the
liquidator or trustees (if any) for the time being acting in relation to any of
the affairs of the Company and every one of them, and their heirs, executors and
administrators, shall be indemnified and held harmless out of the assets of the
Company from and against all actions, costs, charges, losses, damages and
expenses which they or any of them, their heirs, executors or administrators,
shall or may incur or sustain by or by reason of any act done, concurred in or
omitted in or about the execution of their duty, or supposed duty, or in their
respective offices or trusts, and none of them shall be answerable for the acts,
receipts, neglects or defaults of the others of them or for joining in any
receipts for the sake of conformity, or for any bankers or other Persons with
whom any monies or effects belonging to the Company shall or may be delivered or
deposited for safe custody, or for insufficiency or deficiency of any security
upon which any monies of or belonging to the Company shall be deposited or
invested, or for any other loss, misfortune or damage which may happen in the
execution of their respective offices or trusts, or in relation thereto,
provided that this indemnity shall not extend to any matter in respect of any
fraud or dishonesty which may attach to any of said individuals.
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(2) Each Member and the Company agree to waive any claim or right of
action he or it might have, whether individually or by or in the right of the
Company, against any Director or Officer on account of any action taken by such
Director or Officer, or the failure of such Director or Officer to take any
action, in the performance of his duties, or supposed duties, with or for the
Company; provided that such waiver shall not extend to any matter in respect of
any fraud or dishonesty which may attach to such Director or Officer. Any repeal
or modification of this Bye- Law shall not adversely affect any right or
protection of a Director or Officer of the Company existing immediately prior to
such repeal or modification.
(3) Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding as authorized by the Board in the specific case
upon receipt of an undertaking by or on behalf of the Director, Officer,
liquidator or trustee to repay such amount unless it shall ultimately be
determined that the individual is entitled to be indemnified by the Company as
authorized in these Bye-Laws or otherwise pursuant to the laws of Bermuda.
NONAPPLICABILITY OF VOTING AND TRANSFER RESTRICTIONS TO CERTAIN
SHAREHOLDERS OF PXRE CORPORATION
40. Notwithstanding anything to the contrary in these Bye-Laws, the Maximum
Percentage limitations on voting rights set forth in paragraph 4 of Bye-Law
No. 20 and the 9.9% Limitation on the transfer of shares set forth in paragraph
2 of Bye-Law No. 2, paragraph 1 of Bye-Law No. 13 and paragraph 2 of Bye-Law
No. 14 shall not apply to any Person Owning or Controlling more than 9.9% of the
outstanding shares of common stock of PXRE Corporation on the date of the
adoption of these Bye-Laws, but only with respect to Common Shares into which
shares of common stock of PXRE Corporation owned as of the date of the adoption
of these Bye-Laws are converted pursuant to the Agreement and Plan of Merger,
dated as of July 7, 1999, between the Company, PXRE Corporation and PXRE
Merger Corp.
AMENDMENT OF BYE-LAWS
41. Any amendment to these Bye-Laws or to the Company's Memorandum of
Association shall be approved by the Board and decided on by an ordinary
resolution of the Members; provided however, that any proposed amendment to
Bye-Laws 1, 3, 4, 5, 13, 17, 18, 20, 22, 39, 40 or 41 shall be approved by the
Board and by a special resolution of the Members.
*****
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[GRAPHIC]
CM ETHER 29 H-62887 A
COMMON SHARES EXHIBIT 4.1
COMMON SHARES
INCORPORATED IN THE ISLANDS OF BERMUDA SHARES
UNDER THE COMPANIES ACT, 1981
CINS 673018 10 L
[GRAPHIC]
PXRE GROUP LTD.
THIS IS TO CERTIFY THAT
is the registered holder of
FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF PAR VALUE US$1.00 EACH OF
PXRE GROUP LTD., transferable on the books of the Company by the holder hereof
in person or by duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate and the shares represented hereby are issued
and shall be held subject to all of the provisions of the Memorandum of
Association and Bye-Laws of the Company and all amendments thereof to all of
which the holder by acceptance hereof assents and shall be transferable in
accordance therewith. This certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Company and the facsimile signatures of
its duly authorized officers.
Dated
[signature] [SEAL] [signature]
SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, N.Y.)
Transfer Agent
and Registrar
By
Authorized Signature
<PAGE>
Subject to the provisions of the Bye-Laws, no person shall be permitted to
acquire, own or hold shares in PXRE Group Ltd. (the 'Company') to the extent
that such holder or any other person will be considered to (i) own under the
rules set forth in sections 544, 554 or 958 of the U.S. Internal Revenue Code of
1986 (which includes shares directly owned, indirectly owned through ownership
of another entity and constructively owned because of certain relationships such
as family relationships or ownership relationships) or (ii) beneficially own
directly or indirectly as a result of the possession of sole or shared voting
power within the meaning of section 13(d) of the U.S. Securities Exchange Act of
1934, in excess of 9.9% of the outstanding shares of all classes of voting stock
of the Company or of the outstanding shares of any class of stock of the
Company. Nor may any shares be issued or any transfer of shares be made if the
effect of such issuance or transfer would be to cause a violation of the
prohibitions summarized in this paragraph. To the extent that, for any reason
whatsoever and by any method howsoever, a person, whether an existing member or
not of the Company, who shall purchase, acquire, hold or own shares (as
described in this paragraph) in the Company in excess of the 9.9% limitation,
the voting rights conferred by such shares shall be reduced such that the total
combined votes conferred by such shares shall be equal to 9.9% of the votes
conferred by all of the issued and outstanding shares.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- Custodian
TEN ENT -- as tenants by the entireties __________ _________
JT TEN -- as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants
in common under Uniform Gifts to Minors
Act___________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED _____________________________________________________________
(fill in amount for purposes of stamp duty)
________________________________________________________________________________
(name in full of Transferor)
hereby sell, assign and transfer unto __________________________________________
(name in full of Transferee)
________________________________________________________________________________
________________________________________________________________________________
(address)
____________________________________________________ shares of the capital stock
represented by the within Certificate, and does hereby constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said shares registered on the register of members of the within
named Company with full power of substitution in the premises.
Dated ______________________________
in the presence of:
__________________________
(Transferor)
__________________________________________
(witness)
Signature(s) Guaranteed:
_____________________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
among
PXRE CORPORATION,
as Borrower,
PXRE GROUP LTD.
and
PXRE (BARBADOS) LTD.,
as Guarantors,
THE LENDERS NAMED HEREIN,
and
FIRST UNION NATIONAL BANK,
as Agent
$75,000,000 Senior Credit Facility
Arranged by
FIRST UNION CAPITAL MARKETS CORP.
Dated as of August __, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
RECITALS 1
ARTICLE I
DEFINITIONS
1.1 Defined Terms 8
1.2 Accounting Terms 29
1.3 Other Terms; Construction 30
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments 30
2.2 Borrowings 30
2.3 Disbursements; Funding Reliance; Domicile of Loans 31
2.4 Notes 32
2.5 Termination and Reduction of Commitments 32
2.6 Mandatory Payments and Prepayments 33
2.7 Voluntary Prepayments 34
2.8 Interest 35
2.9 Fees 36
2.10 Interest Periods 37
2.11 Conversions and Continuations 38
2.12 Method of Payments; Computations 38
2.13 Recovery of Payments 39
2.14 Use of Proceeds 40
2.15 Pro Rata Treatment 40
2.16 Increased Costs; Change in Circumstances; Illegality; etc. 41
2.17 Taxes 43
2.18 Compensation 45
ARTICLE III
CONDITIONS OF BORROWING
3.1 [Intentionally left blank] 45
3.2 [Intentionally left blank] 45
3.3 Conditions of All Borrowings 45
3.4 Conditions of effectiveness of this Agreement and conditions
of Borrowings after
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
the Reorganization 46
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Corporate Organization and Power 48
4.2 Authorization; Enforceability 48
4.3 No Violation 49
4.4 Governmental and Third-Party Authorization; Permits 49
4.5 Litigation 50
4.6 Taxes 50
4.7 Subsidiaries 50
4.8 Full Disclosure 51
4.9 Margin Regulations 51
4.10 No Material Adverse Change 51
4.11 Financial Matters 51
4.12 Ownership of Properties 53
4.13 ERISA 53
4.14 Environmental Matters 54
4.15 Compliance With Laws 55
4.16 Regulated Industries 55
4.17 Insurance 55
4.18 Material Contracts 55
4.19 Reinsurance Agreements 55
4.20 Labor Relations 56
4.21 Year 2000 Compatibility 57
4.22 Compliance with Old Credit Agreement 57
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Financial Statements 57
5.2 Statutory Financial Statements 58
5.3 Other Business and Financial Information 59
5.4 Corporate Existence; Franchises; Maintenance of Properties 62
5.5 Compliance with Laws 62
5.6 Payment of Obligations 62
5.7 Insurance 63
5.8 Maintenance of Books and Records; Inspection 63
5.9 Permitted Acquisitions 63
5.10 Year 2000 Compatibility 64
5.11 Further Assurances 64
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VI
FINANCIAL COVENANTS
6.1 Leverage Ratio 65
6.2 Fixed Charge Coverage Ratio 65
6.3 Risk-Based Capital Ratio 65
6.4 Combined Statutory Surplus 65
ARTICLE VII
NEGATIVE COVENANTS
7.1 Merger; Consolidation 65
7.2 Indebtedness 66
7.3 Liens 68
7.4 Disposition of Assets 69
7.5 Investments 70
7.6 Restricted Payments 73
7.7 Transactions with Affiliates 73
7.8 Lines of Business 75
7.9 Certain Amendments 75
7.10 Limitation on Certain Restrictions 76
7.11 No Other Negative Pledges 76
7.12 Accounting Changes 76
7.13 Ratings 76
7.14 Reinsurance Agreements 77
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default 78
8.2 Remedies: Termination of Commitments, Acceleration, etc. 81
8.3 Remedies: Set-Off 81
ARTICLE IX
GUARANTY
9.1 Guaranty 82
9.2 Right of Set-Off 83
9.3 No Subrogation 83
9.4 Amendments, etc. with respect to the Obligations;
Waiver of Rights 83
9.5 Guaranty Absolute and Unconditional 84
9.6 Reinstatement 85
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
9.7 Payments 85
ARTICLE X
THE AGENT
10.1 Appointment 85
10.2 Nature of Duties 85
10.3 Exculpatory Provisions 86
10.4 Reliance by Agent 86
10.5 Non-Reliance on Agent and Other Lenders 87
10.6 Notice of Default 87
10.7 Indemnification 87
10.8 The Agent in its Individual Capacity 88
10.9 Successor Agent 88
ARTICLE XI
MISCELLANEOUS
11.1 Fees and Expenses 89
11.2 Indemnification 89
11.3 Governing Law; Consent to Jurisdiction 90
11.4 Waiver of Jury Trial 91
11.5 Notices 92
11.6 Amendments, Waivers, etc. 92
11.7 Assignments, Participations 93
11.8 No Waiver 95
11.9 Successors and Assigns 96
11.10 Survival 96
11.11 Severability 96
11.12 Construction 96
11.13 Confidentiality 96
11.14 Counterparts; Effectiveness 97
11.15 Disclosure of Information 97
11.16 Entire Agreement 97
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Form of Note
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Conversion/Continuation
Exhibit C-1 Form of GAAP Compliance Certificate
Exhibit C-2 Form of SAP Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E-1 Form of Opinion of Morgan, Lewis & Bockius LLP
Exhibit E-2 Form of Opinion of Conyers Dill & Pearman, Bermuda Counsel
Exhibit E-3 Form of Opinion of Chancery Chambers, Barbados Counsel
Exhibit F Form of Financial Condition Certificate
<CAPTION>
SCHEDULES
<S> <C>
Schedule 1.1 Commitments and Addresses of Lenders
Schedule 4.4 Consents and Approvals
Schedule 4.7 Subsidiaries
Schedule 4.18 Material Contracts
Schedule 4.19 Reinsurance Agreements
Schedule 7.2 Indebtedness
Schedule 7.3 Liens
Schedule 7.5(a) Existing Investments
Schedule 7.5(b) PXRE Reinsurance's Investment Policy
Schedule 7.5(c) PXRE Bermuda's Investment Policy
Schedule 7.7 Transactions with Affiliates
6
<PAGE>
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the ____
day of August, 1999 (this "Agreement"), is made among PXRE CORPORATION, a
Delaware corporation with its principal offices in Edison, New Jersey (the
"Borrower"), PXRE GROUP LTD., a Bermuda corporation ("PXRE Group"), PXRE
(BARBADOS) LTD., a Barbados corporation ("PXRE Barbados," and collectively with
PXRE Group, the "Guarantors"), the banks and financial institutions listed on
SCHEDULE 1.1 or that become parties hereto after the date hereof (collectively,
the "Lenders"), and FIRST UNION NATIONAL BANK ("First Union"), as agent for the
Lenders (in such capacity, the "Agent").
RECITALS
A. Pursuant to a Reorganization (as defined herein), PXRE Group intends
to become the indirect parent holding company of the Borrower. The
Reorganization will be effected by the merger of PXRE Merger Corp., a newly
formed wholly-owned Delaware subsidiary of PXRE (Barbados) Ltd., a newly formed
wholly-owned subsidiary of PXRE Group, into the Borrower, with the Borrower
being the surviving entity.
B. The Lenders are willing to approve the Reorganization and continue
to make available to the Borrower the credit facilities described herein subject
to and on the terms and conditions set forth in this Agreement.
C. This Agreement amends and restates the Credit Agreement, dated as of
the 30th day of December, 1998, among the Borrower, the Lenders and the Agent
(as amended through the Second Amendment dated June 25, 1999 and execution of
Joinder Agreements dated May 18, 1999, the "Old Credit Agreement"). The Old
Credit Agreement evidenced the commitment of First Union to make available to
the Borrower $50,000,000 of the credit facility described therein, which was
subsequently increased to $75,000,000 through the addition of new Lenders by
execution of Joinder Agreements on May 18, 1999.
D. This Agreement (other than SECTIONS 11.1 and 11.2) shall not become
effective until the consummation of the Reorganization and the satisfaction of
the terms and conditions set forth in SECTION 3.4, at which time the Old Credit
Agreement shall be amended hereby and, to the extent inconsistent herewith, of
no further effect; provided that until such time, the Old Credit Agreement shall
remain in full force and effect; provided, further, that, subject to the terms
and conditions set forth in this Agreement, the Required Lenders hereby consent
to the formation of PXRE Group, PXRE Barbados, PXRE Bermuda, and PXRE Merger
Corp. as described in the Reorganization Documents.
<PAGE>
AGREEMENT
NOW, THEREFORE, in consideration of the mutual provisions, covenants
and agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, in addition to the
terms defined elsewhere herein, the following terms shall have the meanings set
forth below (such meanings to be equally applicable to the singular and plural
forms thereof):
"Account Designation Letter" shall mean a letter from the Borrower to
the Agent, duly completed and signed by an Authorized Officer and in form and
substance satisfactory to the Agent, listing any one or more accounts to which
the Borrower may from time to time request the Agent to forward the proceeds of
any Loans made hereunder.
"Acquisition" shall mean any transaction or series of related
transactions (other than the Reorganization), consummated on or after the date
hereof, by which PXRE Group directly, or indirectly through one or more
Subsidiaries, (i) acquires any going business, or all or substantially all of
the assets, of any Person or any line of business, block of business or division
of any Person, whether through purchase of assets, merger or otherwise, or (ii)
acquires securities or other ownership interests of any Person having at least a
majority of combined voting power of the then outstanding securities or other
ownership interests of such Person.
"Acquisition Amount" shall mean, with respect to any Acquisition, the
sum (without duplication) of (i) the amount of cash paid by PXRE Group and its
Subsidiaries in connection with such Acquisition, (ii) the Fair Market Value of
all Capital Stock of PXRE Group issued or given in connection with such
Acquisition, (iii) the amount (determined by using the face amount or the amount
payable at maturity, whichever is greater) of all Indebtedness incurred, assumed
or acquired by PXRE Group and its Subsidiaries in connection with such
Acquisition, (iv) all additional purchase price amounts in connection with such
Acquisition in the form of earnouts and other contingent obligations that should
be recorded as a liability on the balance sheet of PXRE Group and its
Subsidiaries or expensed, in either event in accordance with GAAP, Regulation
S-X under the Securities Act of 1933, as amended, or any other rule or
regulation of the Securities and Exchange Commission, (v) all amounts paid in
respect of covenants not to compete, consulting agreements and other affiliated
contracts in connection with such Acquisition, (vi) the amount of all
transaction fees and expenses (including, without limitation, legal, accounting
and finders' fees and expenses) incurred by PXRE Group and its Subsidiaries in
connection with such Acquisition and (vii) the aggregate fair market value of
all other consideration given by PXRE Group and its Subsidiaries in connection
with such Acquisition.
"Adjusted Base Rate" shall mean, at any time with respect to any Base
Rate Loan, a rate
8
<PAGE>
per annum equal to the Base Rate as in effect at such time plus the Applicable
Margin Percentage for Base Rate Loans as in effect at such time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the Applicable Margin Percentage for LIBOR Loans as in effect at such time.
"Affiliate" shall mean, as to any Person, each other Person that
directly, or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person or is a director or
officer of such Person. For purposes of this definition, with respect to any
Person "control" shall mean (i) the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, or
(ii) the beneficial ownership of securities or other ownership interests of such
Person having 10% or more of the combined voting power of the then outstanding
securities or other ownership interests of such Person ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors or other governing body of such Person.
"Agent" shall mean First Union, in its capacity as Agent appointed
under ARTICLE X, and its successors and permitted assigns in such capacity.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.
"Amendment Fee Letter" shall mean the letter from First Union to
Borrower, dated August 3, 1999, relating to certain fees payable by the Borrower
in respect of the Reorganization.
"Annual Statement" shall mean, with respect to any Insurance Subsidiary
for any fiscal year, the annual financial statements of such Insurance
Subsidiary as required to be filed with the Insurance Regulatory Authority of
its jurisdiction of domicile and in accordance with the laws of such
jurisdiction, together with all exhibits, schedules, certificates and actuarial
opinions required to be filed or delivered therewith.
"Applicable Margin Percentage" shall mean, at any time from and after
the Closing Date, the applicable percentage (a) to be added to the Base Rate
pursuant to SECTION 2.8 for purposes of determining the Adjusted Base Rate, (b)
to be added to the LIBOR Rate pursuant to SECTION 2.8 for purposes of
determining the Adjusted LIBOR Rate, and (c) to be used in calculating the
commitment fee payable pursuant to SECTION 2.9(b), in each case as determined
under the following matrix with reference to the Borrower's senior unsecured
debt rating by Moody's or Standard & Poor's (in each case based upon the higher
of the two ratings), when available, or, if not available, then with reference
to an implied senior or unsecured debt rating, if available (provided that, for
purposes of this Agreement, the rating that is two levels higher than the rating
of the Borrower's Trust Preferred Securities by Standard & Poor's and Moody's
shall be deemed to be an implied senior or unsecured debt rating by Standard &
Poor's and Moody's, respectively):
9
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Applicable Applicable Margin
Moody's Margin Applicable Margin Percentage for
Standard & Percentage for Percentage for Unutilized
Level Poor's Rating Base Rate Loans LIBOR Loans Commitments Fee
- ----- ------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
I A3 / A- or above 0.0% 0.750% 0.175%
II Baa1 / BBB+ 0.0% 0.875% 0.200%
III Baa2 / BBB 0.0% 1.000% 0.250%
IV Baa3 / BBB- 0.0% 1.125% 0.300%
V Less than Baa3 / BBB- 0.5% 1.625% 0.500%
</TABLE>
Notwithstanding anything set forth herein to the contrary, if at any time the
difference between the senior unsecured debt ratings by Moody's and Standard &
Poor's is more than one rating grade, then for purposes of determining the
applicable level set forth above, the higher of the two ratings shall be reduced
to the rating that is the median between the higher rating and the lower rating
(or its equivalent); or, if the median is not determinable, then the higher of
such two ratings shall be reduced to one rating grade lower.
On each Adjustment Date (as hereinafter defined), the Applicable Margin
Percentage for all Loans and the commitment fee payable pursuant to SECTION
2.9(b) shall be adjusted effective as of such date in accordance with the above
matrix; provided, however, that, notwithstanding the foregoing or anything else
herein to the contrary, if at any time an Event of Default described in SECTION
8.1(a) shall have occurred and be continuing, then at the election of the
Required Lenders, at all times from and including the date on which such Event
of Default occurred to the date on which such Event of Default shall have been
cured or waived, each Applicable Margin Percentage shall be determined in
accordance with Level V of the above matrix (notwithstanding the actual level).
For purposes of this definition, "Adjustment Date" shall mean, with respect to
any fiscal period of the Borrower beginning with the fiscal quarter ending
December 31, 1998, the tenth (10th) Business Day after the announcement by
either Moody's or Standard & Poor's of any change in its rating with respect to
the Borrower's senior unsecured debt. Until the first Adjustment Date, each
Applicable Margin Percentage shall be determined in accordance with Level III of
the above matrix.
"Asset Disposition" shall mean any sale, assignment, transfer or other
disposition by the Borrower or any of its Subsidiaries to any other Person
(other than to the Borrower or to a Wholly Owned Subsidiary of Borrower),
whether in one transaction or in a series of related transactions, of any of its
assets, business units or other properties (including any interests in property,
whether tangible or intangible, and including Capital Stock of Subsidiaries),
excluding
10
<PAGE>
(i) sales of investment assets in the ordinary course of business, (ii) sales
and licenses of inventory and other assets in the ordinary course of business,
(iii) the sale or exchange of used or obsolete equipment to the extent the
proceeds of such sale are applied towards, or such equipment is exchanged for,
similar replacement equipment, and (iv) any other disposition expressly
permitted under SECTIONS 7.4, 7.6 or 7.7.
"Assignee" shall have the meaning given to such term in SECTION
11.7(a).
"Assignment and Acceptance" shall mean an Assignment and Acceptance
entered into between a Lender and an Assignee and accepted by the Agent and the
Borrower, in substantially the form of EXHIBIT D.
"Authorized Officer" shall mean, with respect to any action specified
herein, any officer of the Borrower or either Guarantor duly authorized by
resolution of the board of directors of the Borrower or such Guarantor, as the
case may be, to take such action on its behalf, and whose signature and
incumbency shall have been certified to the Agent by the secretary or an
assistant secretary of the Borrower or such Guarantor, as the case may be.
"Available Dividend Amount" shall mean, with respect to any Insurance
Subsidiary (other than PXRE Bermuda) for any period of four consecutive fiscal
quarters, the aggregate maximum amount of dividends that is or, if such period
were a fiscal year, would be permitted by the Insurance Regulatory Authority of
its jurisdiction of domicile, under applicable Requirements of Law (without the
necessity of any consent, approval or other action of such Insurance Regulatory
Authority involving the granting of permission or the exercise of discretion by
such Insurance Regulatory Authority), to be paid by such Insurance Subsidiary to
the Borrower or another Subsidiary of the Borrower in respect of such
four-quarter period as if such period were a fiscal year (whether or not any
such dividends are actually paid).
"Average Combined Invested Assets" shall mean, with respect to the
Borrower's Insurance Subsidiaries for the four consecutive fiscal quarters most
recently ending prior to the date referred to in the context in which the term
is used, the average of the aggregate (without duplication) Invested Assets of
such Subsidiaries, determined by dividing the sum of the aggregate Invested
Assets as of the end of all four quarters by four.
"Bankruptcy Code" shall mean 11 U.S.C. 'SS''SS' 101 et seq., as amended
from time to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime rate (which may not necessarily be its best lending
rate), as adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate, and (ii) the Federal Funds Rate plus
0.5% per annum, as adjusted to conform to changes as of the opening of business
on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest
at such time at the
11
<PAGE>
Adjusted Base Rate.
"Bermuda Reinsurance Agreements" shall mean the quota share reinsurance
and stop-loss reinsurance agreements between PXRE Reinsurance and PXRE Bermuda
on terms and conditions substantially consistent with those set forth in the
summary of financial terms previously delivered to the Lenders, as the same may
be amended from time to time.
"Borrowing" shall mean the incurrence by the Borrower (including as a
result of conversions and continuations of outstanding Loans pursuant to SECTION
2.11) on a single date of a group of Loans of a single Type and, in the case of
LIBOR Loans, as to which a single Interest Period is in effect.
"Borrowing Date" shall mean, with respect to any Borrowing, the date
upon which such Borrowing is made.
"Business Day" shall mean (i) any day other than a Saturday or Sunday,
a legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or
options to purchase any of the foregoing.
"Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least "A-1" or the equivalent thereof by
Standard & Poor's or at least "P-1" or the equivalent thereof by Moody's, (iii)
time deposits and certificates of deposit maturing within 90 days from the date
of issuance and issued by a bank or trust company organized under the laws of
the United States of America or any state thereof that has combined capital and
surplus of at least $500,000,000 and that has (or is a subsidiary of a bank
holding company that has) a long-term unsecured debt rating of at least A or the
equivalent thereof by Standard & Poor's or at least A2 or the equivalent thereof
by Moody's, (iv) repurchase obligations with a term not exceeding seven (7) days
with respect to underlying securities of the types described in clause (i) above
entered into with any bank or trust company meeting the qualifications specified
in clause (iii) above, and (v) money market funds at least 95% of the assets of
which are continuously invested in securities of the type described in clause
(i) through (iv) above.
"Closing Date" shall mean December 30, 1998.
12
<PAGE>
"CMOs" shall mean any security or certificate representing any interest
or participation in a pool of Mortgage Backed Securities (it being understood
that Mortgage Backed Securities themselves are not CMOs).
"Combined Net Cash Flow" shall mean, for any period and without
duplication, the aggregate Net Cash Flow of the Borrower's non-Insurance
Subsidiaries for such period. For purposes of this definition, "non-Insurance
Subsidiaries" shall not include any Subsidiary of an Insurance Subsidiary.
"Combined Statutory Capital and Surplus" shall mean, at any time, the
aggregate (without duplication) of Statutory Capital and Surplus of each of the
Borrower's Insurance Subsidiaries at such time, after eliminating the effect
thereupon of any transactions among such Insurance Subsidiaries.
"Commitment" shall mean, with respect to any Lender at any time, as
applicable, (i) the amount set forth opposite such Lender's name on SCHEDULE
1.1; or (ii) if such Lender has entered into one or more Assignment and
Acceptances, the amount set forth for such Lender at such time in the Register
maintained by the Agent pursuant to SECTION 11.7(b) as such Lender's
"Commitment," in each case as such amount may be reduced at or prior to such
time pursuant to the terms hereof.
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of EXHIBIT C-1 or EXHIBIT C-2, together with a Covenant
Compliance Worksheet.
"Consolidated Indebtedness" shall mean, as of the last day of any
fiscal quarter, the aggregate (without duplication) of all Indebtedness (whether
or not reflected on PXRE Group's or any Subsidiary's balance sheet) of PXRE
Group and its Subsidiaries as of such date, determined on a consolidated basis
in accordance with GAAP, excluding reimbursement obligations with respect to
letters of credit issued on behalf of or deposits placed by any Insurance
Subsidiary for the benefit of Lloyd's to satisfy capital requirements imposed by
Lloyd's to support such Insurance Subsidiary's business in the Lloyd's insurance
Market and reimbursement obligations in respect of letters of credit issued for
the benefit of any Insurance Subsidiary or PXRE Group in the ordinary course of
its business to support the payment of obligations arising under insurance and
reinsurance contracts and weather and similar swap agreements, but only in each
case to the extent such letters of credit (i) are not drawn upon and (ii) are
collateralized by cash or Cash Equivalents.
"Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total interest expense of PXRE Group and its
Subsidiaries for such period in respect of Consolidated Indebtedness of PXRE
Group and its Subsidiaries (including, without limitation, all such interest
expense accrued or capitalized during such period, whether or not actually paid
during such period), determined on a consolidated basis in accordance with GAAP,
(ii) all net amounts payable under or in respect of Hedge Agreements, to the
extent paid or accrued by PXRE Group and its Subsidiaries during such period,
and (iii) all commitment fees
13
<PAGE>
and other ongoing fees in respect of Consolidated Indebtedness (including the
fees provided for under SECTION 2.9) paid, accrued or capitalized by PXRE Group
and its Subsidiaries during such period.
"Consolidated Net Income" shall mean, for any period, net income (or
loss) for PXRE Group and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date of determination
with respect to any Person, the net worth of such Person and its Subsidiaries as
of such date, determined on a consolidated basis in accordance with GAAP but (i)
excluding any Disqualified Capital Stock and (ii) without regard to the
requirements of FAS 115. When used without reference to a particular Person, the
term "Consolidated Net Worth" shall be deemed to refer to PXRE Group.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
liability or other obligation (the "primary obligation") of another Person (the
"primary obligor"), whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof; provided, however, that, with respect to PXRE Group and its
Subsidiaries, the term Contingent Obligation shall not include (y) endorsements
for collection or deposit in the ordinary course of business or (z) obligations
entered into by an Insurance Subsidiary or by PXRE Group in the ordinary course
of its business under insurance policies or contracts, reinsurance agreements
and weather and similar swap agreements issued by it or to which it is a party
(and security posted in the ordinary course of its business to secure
obligations thereunder).
"Covenant Compliance Worksheet" shall mean a fully completed worksheet
in the form of Attachment A to EXHIBIT C-1 or EXHIBIT C-2.
"Credit Documents" shall mean this Agreement, the Notes, the Fee
Letter, the Amendment Fee Letter, and all other agreements, instruments,
documents and certificates now or hereafter executed and delivered to the Agent
or any Lender by or on behalf of the Borrower or any of its Subsidiaries with
respect to this Agreement and the transactions contemplated hereby, in each case
as amended, modified, supplemented or restated from time to time.
"Credit Party" shall mean each of the Borrower and the Guarantors.
"Debt Issuance" shall mean the issuance or sale by PXRE Group or any of
its
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Subsidiaries of any debt securities, whether in a public offering of such
securities or otherwise.
"Debt Service" shall mean, for any period, the aggregate (without
duplication) of all principal and Consolidated Interest Expense paid or accrued
by PXRE Group and its Subsidiaries during such period in respect of Indebtedness
(including, without limitation, the Loans).
"Default" shall mean any event or condition that, with the passage of
time or giving of notice, or both, would constitute an Event of Default.
"Disqualified Capital Stock" shall mean, with respect to any Person,
any Capital Stock of such Person that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event or otherwise, (i) matures or is mandatorily
redeemable or subject to any mandatory repurchase requirement, pursuant to a
sinking fund obligation or otherwise, (ii) is redeemable or subject to any
mandatory repurchase requirement at the sole option of the holder thereof, or
(iii) is convertible into or exchangeable for (whether at the option of the
issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) or (ii) above, in each case under (i), (ii) or (iii) above at
any time on or prior to the first anniversary of the Maturity Date; provided,
however, that only the portion of Capital Stock that so matures or is
mandatorily redeemable, is so redeemable at the option of the holder thereof, or
is so convertible or exchangeable on or prior to such date shall be deemed to be
Disqualified Capital Stock.
"Dollar Roll Agreements" shall mean, as to any Person, an agreement
pursuant to which such Person sells securities to another Person and agrees to
repurchase "substantially the same" securities (as determined by the Public
Securities Association and GAAP) at a described or specified date and price.
"Dollars" or "$" shall mean dollars of the United States of America.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including any trade or
business, whether or not incorporated) that would be deemed to be under "common
control" with, or a member of the same "controlled group" as, the Borrower, the
Guarantors or any of the Subsidiaries, within the meaning of Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code or Section 4001 of ERISA.
"ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by PXRE Group or
any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by PXRE Group or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has
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terminated under Section 4041A of ERISA, (iii) the distribution by PXRE Group or
any ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent
to terminate any Plan or the taking of any action to terminate any Plan, (iv)
the commencement of proceedings by the PBGC under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by PXRE Group or any ERISA Affiliate of a notice from any Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of any
Multiemployer Plan against PXRE Group or any ERISA Affiliate to enforce Section
515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon PXRE Group or any ERISA Affiliate of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, or the imposition or threatened imposition of any Lien upon any
assets of PXRE Group or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii)
the engaging in or otherwise becoming liable for a nonexempt Prohibited
Transaction by PXRE Group or any ERISA Affiliate, (viii) a violation of the
applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Internal Revenue Code by any fiduciary of any
Plan for which PXRE Group or any of its ERISA Affiliates may be directly or
indirectly liable or (ix) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which such
Plan is a part if PXRE Group or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of any
other country that is a member of the Organization for Economic Cooperation and
Development or any successor thereto (the "OECD") or a political subdivision of
any such country and having total assets in excess of $1,000,000,000, provided
that such bank or other financial institution is acting through a branch or
agency located in the United States, in the country under the laws of which it
is organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the ordinary
course of its business and having total assets in excess of $500,000,000, (v)
any Affiliate of an existing Lender or (vi) any other Person approved by the
Required Lenders, which approval shall not be unreasonably withheld.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
accusations, allegations, notices of noncompliance or violation, investigations
(other than internal reports prepared by any Person in the ordinary course of
its business and not in response to any third party action or request of any
kind) or proceedings relating in any way to any actual or alleged violation of
or liability under any Environmental Law or relating to any permit issued, or
any approval given, under any such Environmental Law (collectively, "Claims"),
including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by
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any third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Substances or arising
from alleged injury or threat of injury to human health or the environment.
"Environmental Laws" shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
rules of common law and orders of courts or Governmental Authorities, relating
to the protection of human health or occupational safety or the environment, now
or hereafter in effect and in each case as amended from time to time, including,
without limitation, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.
"Event of Default" shall have the meaning given to such term in SECTION
8.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"FAS 115" shall mean Statement of Financial Accounting Standards No.
115 issued by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants.
"Fair Market Value" shall mean, with respect to any Capital Stock of
PXRE Group given in connection with an Acquisition, the value given to such
Capital Stock for purposes of such Acquisition by the parties thereto, as
determined in good faith pursuant to the relevant acquisition agreement or
otherwise in connection with such Acquisition.
"Federal Funds Rate" shall mean, for any period, a fluctuating per
annum interest rate (rounded upwards, if necessary, to the nearest 1/100 of one
percentage point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fee Letter" shall mean the letter dated December 2, 1998 from First
Union to the Borrower relating to certain fees payable by the Borrower in
respect of the transactions contemplated by the Old Credit Agreement, as
amended, modified or supplemented from time to time.
"Financial Condition Certificate" shall mean a fully completed and duly
executed
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certificate, substantially in the form of EXHIBIT F, together with the
attachments thereto.
"Financial Officer" shall mean the chief financial officer, vice
president - finance, principal accounting officer or treasurer of the Borrower
or any Guarantor.
"Fixed Charge Coverage Ratio" shall mean, as of the last day of any
period of four consecutive fiscal quarters (the "Measurement Period"), the ratio
of:
(i) the sum (without duplication) of (t) the Available
Dividend Amount for the Measurement Period for the Borrower's Insurance
Subsidiaries, other than each Insurance Subsidiary that is a Subsidiary
of another Insurance Subsidiary, plus (u) the Net Tax Sharing Payments
with respect to the Measurement Period, plus (v) the Combined Net Cash
Flow (whether positive or negative) of the Borrower's non-Insurance
Subsidiaries for the Measurement Period, plus (w) other Net Cash Flow
to the Borrower or PXRE Group (whether positive or negative) during the
Measurement Period, minus (x) Holding Company Expenses accrued during
such Measurement Period, (y) minus stock repurchases by PXRE Group
during such Measurement Period, other than stock repurchases effected
between January 1, 1998 and the day immediately preceding the Closing
Date, minus (z) dividends reasonably estimated by PXRE Group (based
upon the most recent quarterly dividend rate as set forth in the
relevant Covenant Compliance Worksheet) to be paid by PXRE Group during
the period of four consecutive fiscal quarters immediately following
the Measurement Period (the "Pro Forma Period"), to
(ii) the Debt Service with respect to the Loans and all other
Consolidated Indebtedness reasonably determined by PXRE Group (and as
set forth in the relevant Covenant Compliance Worksheet) to be required
to be paid or accrued by PXRE Group and its Subsidiaries during the Pro
Forma Period, based on the amount of the Loans and other Consolidated
Indebtedness outstanding at the beginning of such period and assuming
that the rates in effect at the beginning of such period, taking into
account the benefit and costs of any Hedge Agreement with respect to
the Loans, will remain in effect throughout such period;
provided that the stock repurchases referred to in subclause (y) of clause (i)
above shall not include the $16,195,677 of such repurchases occurring between
the Closing Date and June 30, 1999; and provided further that, for any portion
of the Measurement Period prior to the Reorganization Date, this definition and
the definitions of the capitalized terms used in this definition shall read as
if "Borrower" were substituted for "PXRE Group."
"GAAP" shall mean generally accepted accounting principles, as set
forth in the statements, opinions and pronouncements of the Accounting
Principles Board, the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained, as in
effect from time to time (subject to the provisions of SECTION 1.2).
"Governmental Authority" shall mean any nation or government, any state
or other
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political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Gross Written Premiums" shall mean, with respect to any of the
Borrower's Insurance Subsidiaries at any time, the amount of premiums written
(after adding premiums on business assumed from others) as shown on line 32,
page 9, Part 2B, sum of columns 1, 2a and 2b, of the Annual Statement of such
Insurance Subsidiary, or the amount determined in a consistent manner for any
date other than a date as of which an Annual Statement of such Insurance
Subsidiary is prepared.
"Guarantor Margin Stock" shall mean shares of capital stock of PXRE
Group that are held by PXRE Group or any of its Subsidiaries and that constitute
Margin Stock.
"Hazardous Substances" shall mean any substances or materials (i) that
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance, or (vi)
that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedge Agreement" shall mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Holding Company Expenses" shall mean, for any period, the aggregate of
all operating costs and expenses incurred or paid by the Borrower and the
Guarantors during such period, including without limitation rent, utilities,
professional fees, taxes (without duplication for taxes included in the
determination of Net Tax Sharing Payments) and payroll expenses.
"Hybrid Securities Issuance" shall mean the issuance, sale or other
disposition by PXRE Group or any of its Subsidiaries of any security that
creates an obligation of PXRE Group or such Subsidiary to pay money or issue (or
cause an Affiliate to issue) Disqualified Capital Stock to the holder thereof,
whether or not such security is classified or presented on PXRE Group's or such
Subsidiary's balance sheet as long-term debt.
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness and obligations of such Person for borrowed
money or in respect of loans or advances of any kind, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, (iii)
all reimbursement obligations of such Person with respect to surety
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bonds, letters of credit and bankers' acceptances (in each case, whether or not
drawn or matured and in the stated amount thereof), (iv) all obligations of such
Person to pay the deferred purchase price of property or services, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
obligations of such Person as lessee under leases that are or are required to
be, in accordance with GAAP, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all Disqualified Capital Stock
issued by such Person, with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to its involuntary liquidation
preference, but excluding accrued dividends, if any, (viii) the net termination
obligations of such Person under any Hedge Agreement that, as of any date of
calculation hereunder, the counterparty thereto has the right to terminate, (ix)
all indebtedness of such Person in respect of Dollar Roll Agreements and Reverse
Repurchase Agreements, other than Dollar Roll Agreements and Reverse Repurchase
Agreements of an Insurance Subsidiary entered into in the ordinary course of
such Insurance Subsidiary's business, (x) all Contingent Obligations of such
Person and (xi) all indebtedness referred to in clauses (i) through (x) above
secured by any Lien on any property or asset owned or held by such Person
regardless of whether the indebtedness secured thereby shall have been assumed
by such Person or is nonrecourse to the credit of such Person.
"Insurance Regulatory Authority" shall mean, with respect to any
Insurance Subsidiary, the insurance department or similar Governmental Authority
charged with regulating insurance companies or insurance holding companies, in
its jurisdiction of domicile and, to the extent that it has regulatory authority
over such Insurance Subsidiary, in each other jurisdiction in which such
Insurance Subsidiary conducts business or is licensed to conduct business.
"Insurance Subsidiary" shall mean any direct or indirect Subsidiary of
PXRE Group the ability of which to pay dividends is regulated by an Insurance
Regulatory Authority or that is otherwise required to be regulated thereby in
accordance with the applicable Requirements of Law of its jurisdiction of
domicile, and shall mean and include, without limitation, each of PXRE
Reinsurance, Transnational Insurance, PXRE Ltd. and PXRE Bermuda.
"Interest Period" shall have the meaning given to such term in SECTION
2.10.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"Invested Assets" shall mean, as to any Insurance Subsidiary, as of any
date, the total amount shown on page 2, column 4, line 9 of the Annual Statement
of the Insurance Subsidiary, or an amount determined in a consistent manner for
any date other than one as of which an Annual Statement is prepared.
"Investment Policy" shall mean, with respect to PXRE Reinsurance and
PXRE Bermuda, such company's Investment Policy as of the date hereof, as set
forth in SCHEDULES 7.5(b) and 7.5(c).
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"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising
part of the same Borrowing for any Interest Period, an interest rate per annum
obtained by dividing (i) (y) the rate of interest appearing on Dow Jones
Telerate Page 3750 (or any successor page) or (z) if no such rate is available,
the rate of interest determined by the Agent to be the rate or the arithmetic
mean of rates (rounded upward, if necessary, to the nearest 1/16 of one
percentage point) at which Dollar deposits in immediately available funds are
offered by First Union to first-tier banks in the London interbank Eurodollar
market, in each case under (y) and (z) above at approximately 11:00 a.m., London
time, two (2) Business Days prior to the first day of such Interest Period for a
period substantially equal to such Interest Period and in an amount
substantially equal to the amount of First Union's LIBOR Loan comprising part of
such Borrowing, by (ii) the amount equal to 1.00 minus the Reserve Requirement
(expressed as a decimal) for such Interest Period.
"Lender" shall mean each financial institution signatory hereto and
each other financial institution that becomes a "Lender" hereunder pursuant to
SECTION 11.7, and their respective successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the office of
such Lender designated as its "Lending Office" on SCHEDULE 1.1 hereto or in an
Assignment and Acceptance, or such other office as may be otherwise designated
in writing from time to time by such Lender to the Borrower and the Agent. A
Lender may designate separate Lending Offices as provided in the foregoing
sentence for the purposes of making or maintaining different Types of Loans,
and, with respect to LIBOR Loans, such office may be a domestic or foreign
branch or Affiliate of such Lender.
"Leverage Ratio" shall mean, as of any date of determination, the ratio
of (i) Consolidated Indebtedness as of such date, provided that, whether or not
any Trust Preferred Securities issued by the Borrower or any Subsidiary are
included in Consolidated Indebtedness, the aggregate redemption value of all
such securities shall be included in or added to, as the case may be, this
clause (i) but only to the extent such aggregate redemption value as of such
date exceeds fifteen percent (15%) of clause (ii) below, to (ii) the sum of
Consolidated Indebtedness and Consolidated Net Worth, each as of such date,
which sum shall include (without duplication) the aggregate redemption value of
Trust Preferred Securities issued by the Borrower or any Subsidiary; provided
that for any date of determination occurring prior to the Reorganization Date,
the definitions of the capitalized terms used in this definition shall read as
if "the Borrower" were substituted for "PXRE Group."
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
security interest, lien (statutory or otherwise), preference, priority, charge
or other encumbrance of any nature, whether voluntary or involuntary, including,
without limitation, the interest of any vendor or lessor under any conditional
sale agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.
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"Lloyd's" shall mean the Society of Lloyd's of London, the Council of
Lloyd's of London, or any other Person similarly associated with Lloyd's of
London.
"Loans" shall have the meaning given to such term in SECTION 2.1.
"Margin Stock" shall have the meaning given to such term in Regulation
U.
"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, business, properties or assets
of PXRE Group and its Subsidiaries, taken as a whole; it being understood,
however, that the events occurring during the third fiscal quarter of 1998
described in the Borrower's Form 10-Q filed on November 12, 1998 do not
constitute, either individually or in the aggregate, a Material Adverse Change.
"Material Adverse Effect" shall mean a material adverse effect upon (i)
the condition (financial or otherwise), operations, business, properties or
assets of PXRE Group and its Subsidiaries, taken as a whole, (ii) the ability of
the Borrower, the Guarantors or any Subsidiary to perform its obligations under
this Agreement or any of the other Credit Documents to which it is a party or
(iii) the legality, validity or enforceability of this Agreement or any of the
other Credit Documents or the rights and remedies of the Agent and the Lenders
hereunder and thereunder.
"Material Contract" shall have the meaning given to such term in
SECTION 4.18.
"Material Insurance Subsidiary" shall mean any Insurance Subsidiary
that is a Material Subsidiary.
"Material Subsidiary" shall mean each of (i) PXRE Reinsurance, (ii)
Transnational Insurance, (iii) PXRE Bermuda, (iv) PXRE Barbados, (v) at the
relevant time of determination, any Subsidiary having (after the elimination of
intercompany accounts) (y) in the case of a non-Insurance Subsidiary, (A) assets
constituting at least ten percent (10%) of the total assets of PXRE Group and
its Subsidiaries on a consolidated basis, (B) revenues for the four quarters
most recently ended constituting at least ten percent (10%) of the total
revenues of PXRE Group and its Subsidiaries on a consolidated basis, or (C) Net
Income for the four quarters most recently ended constituting at least ten
percent (10%) of the Consolidated Net Income of PXRE Group and its Subsidiaries,
in each case determined in accordance with GAAP as of the date of the GAAP
financial statements of PXRE Group and all its Subsidiaries most recently
delivered under SECTION 5.1 prior to such time (or, with regard to
determinations at any time prior to the initial delivery of financial statements
under SECTION 5.1, as of the date of the most recent financial statements
referred to in SECTION 4.11(a)), or (z) in the case of an Insurance Subsidiary,
(A) assets constituting at least ten percent (10%) of the aggregate assets of
all the Borrower's Insurance Subsidiaries, or (B) Gross Written Premiums for the
four quarters most recently ended constituting at least ten percent (10%) of the
aggregate Gross Written Premiums (without duplication) of all the Borrower's
Insurance Subsidiaries, in each case determined in accordance with SAP as of the
date of the statutory financial statements most recently delivered under
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SECTION 5.2 prior to such time (or, with regard to determinations at any time
prior to the initial delivery of financial statements under SECTION 5.2, as of
the date of the most recent financial statements referred to in SECTION 4.11(e))
and (vi) any Subsidiary that has one of the foregoing as a Subsidiary.
"Maturity Date" shall mean March 31, 2005.
"Moody's" shall mean Moody's Investors Service, Inc., its successors
and assigns.
"Mortgage Backed Securities" shall mean investment securities
representing any undivided interest or participation in, or which are secured
by, a pool of loans secured by mortgages or deeds of trust.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate makes, is making or is obligated to make contributions or has made or
been obligated to make contributions.
"NAIC" shall mean the National Association of Insurance Commissioners
and any successor thereto.
"Net Amount Recoverable from Reinsurers" shall mean, as to any
Insurance Subsidiary, as of any time, the amount as shown on Schedule F - Part
3, column 13 of the Annual Statement of such Insurance Subsidiary, or an amount
determined in a consistent manner as of any date other than one as of which an
Annual Statement is prepared.
"Net Cash Flow" shall mean, for any Person for any period, (i) the
aggregate Net Income of such Person for such period, plus (ii) the sum of
depreciation expense, amortization (whether positive or negative) of intangible
assets and other non-cash expenses, losses and charges reducing income, in each
case to the extent taken into account in the calculation of such Net Income for
such period, minus (iii) the sum of capital expenditures and all non-cash gains
and other non-cash items taken into account in determining such Net Income for
such period, plus (iv) any increase during such period in deferred taxes, minus
(v) any decrease during such period in deferred taxes; provided that with
respect to PXRE Group, Net Cash Flow shall not include the Net Income of any
Subsidiary except to the extent of cash dividends actually paid to PXRE Group
during such period.
"Net Cash Proceeds" shall mean, in the case of any Asset Disposition,
Hybrid Securities Issuance or Debt Issuance, the aggregate cash payments
received by PXRE Group and its Subsidiaries less reasonable and customary fees
and expenses (including underwriting discounts and commissions) incurred by PXRE
Group and its Subsidiaries in connection therewith.
"Net Income" shall mean, with respect to any Person for any period, the
net income (or loss), after extraordinary items, taxes and all other items of
expense and income of such person for such period, determined in accordance with
GAAP.
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"Net Tax Sharing Payments" shall mean, for any period, (i) the
aggregate (without duplication) of all payments made or to be made to the
Borrower by its Subsidiaries pursuant to tax sharing or tax allocation
agreements or arrangements or otherwise in respect of taxable income realized
during such period, minus (ii) the aggregate (without duplication) of all
foreign, federal, state or local income, franchise and other tax payments made
or to be made by the Borrower in respect of taxable income realized during such
period and any payments made or to be made by the Borrower during such period
pursuant to such tax sharing or tax allocation agreement or arrangement. For
purposes of the Fixed Charge Coverage Ratio, if the amount in clause (ii)
exceeds the amount in clause (i) hereof, the result shall be expressed as a
negative amount.
"Notes" shall mean the promissory notes of the Borrower in
substantially the form of EXHIBIT A, together with any amendments, modifications
and supplements thereto, substitutions therefor and restatements thereof.
"Notice of Borrowing" shall have the meaning given to such term in
SECTION 2.2(b).
"Notice of Conversion/Continuation" shall have the meaning given to
such term in SECTION 2.11(b).
"Obligations" shall mean all principal of and interest (including, to
the greatest extent permitted by law, post-petition interest) on the Loans and
all fees, expenses, indemnities and other obligations owing, due or payable at
any time by the Borrower to the Agent, any Lender or any other Person entitled
thereto, under this Agreement or any of the other Credit Documents.
"Old Credit Agreement" shall have the meaning given to such term in the
Recitals to this Agreement.
"PAC I" shall mean a planned amortization class bond which is a tranche
or class of CMO or REMIC that is retired according to a predetermined
amortization schedule independent of the prepayment rate on the underlying
collateral and which has the highest level of protection within the pool against
prepayment or extension.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"PXRE Bermuda" shall mean PXRE Reinsurance Ltd., a corporation
organized under the laws of Bermuda and a Wholly-Owned Subsidiary of PXRE Group
as of the date hereof.
"PXRE Barbados" shall mean PXRE (Barbados) Ltd., a corporation
organized under the laws of Barbados and a Wholly-Owned Subsidiary of PXRE Group
as of the date hereof.
"PXRE Group" shall mean PXRE Group Ltd., a corporation organized under
the laws of Bermuda and the indirect parent holding company of the Borrower.
"PXRE Ltd." shall mean PXRE Limited, a corporation organized under the
laws of the
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<PAGE>
United Kingdom and a Wholly Owned Subsidiary of PXRE Reinsurance as of the date
hereof.
"PXRE Reinsurance" shall mean PXRE Reinsurance Company, a Connecticut
insurance company and a Wholly Owned Subsidiary of the Borrower as of the date
hereof.
"PXRE Syndicate" shall mean any syndicate operating in the Lloyd's
insurance Market in which PXRE Ltd. participates or is a member, including, as
of the date hereof and without limitation, PG Butler Non-Marine Syndicate 1224.
"Participant" shall have the meaning given to such term in SECTION
11.7(d).
"Permitted Acquisition" shall mean (a) any Acquisition with respect to
which all of the following conditions are satisfied: (i) each business acquired
shall be within the permitted lines of business described in SECTION 7.8, (ii)
any Capital Stock given as consideration in connection therewith shall be
Capital Stock of PXRE Group, (iii) in the case of an Acquisition involving the
acquisition of control of Capital Stock of any Person, immediately after giving
effect to such Acquisition such Person (or the surviving Person, if the
Acquisition is effected through a merger or consolidation) shall be PXRE Group
or a Wholly Owned Subsidiary, and (iv) all of the conditions and requirements of
SECTIONS 5.9 applicable to such Acquisition are satisfied; or (b) any other
Acquisition to which the Required Lenders (or the Agent on their behalf) shall
have given their prior written consent (which consent may be in their sole
discretion and may be given subject to such additional terms and conditions as
the Required Lenders shall establish) and with respect to which all of the
conditions and requirements set forth in this definition and in SECTION 5.9, and
in or pursuant to any such consent, have been satisfied or waived in writing by
the Required Lenders (or the Agent on their behalf).
"Permitted CMOs and Mortgage Backed Securities" shall mean (i) mortgage
participation certificates issued by the Federal Home Loan Mortgage Corporation,
(ii) mortgage backed securities issued by the Federal National Mortgage
Association, (iii) securities guaranteed by the Government National Mortgage
Association, and (iv) other securities and certificates representing
participations in any CMO or REMIC which are PAC I's or which have comparable
priority in respect of the repayment thereof.
"Permitted Liens" shall have the meaning given to such term in SECTION
7.3.
"Person" shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA that is subject to the provisions of Title IV
of ERISA (other than a Multiemployer Plan) and to which PXRE Group or any ERISA
Affiliate may have any liability.
"Pro Forma Balance Sheets" shall have the meaning given to such term in
SECTION 4.11(b).
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<PAGE>
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
"Projections" shall have the meaning given to such term in SECTION
4.11(c).
"Quarterly Statement" shall mean, with respect to any Insurance
Subsidiary for any fiscal quarter, the quarterly financial statements of such
Insurance Subsidiary as required to be filed with the Insurance Regulatory
Authority of its jurisdiction of domicile, together with all exhibits,
schedules, certificates and actuarial opinions required to be filed or delivered
therewith.
"REMIC" shall mean a real estate mortgage investment conduit.
"Register" shall have the meaning given to such term in SECTION
11.7(b).
"Regulations D, T, U and X" shall mean Regulations D, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reinsurance Agreement" shall mean any agreement, contract, treaty,
certificate or other arrangement whereby any Insurance Subsidiary agrees to
transfer, cede or retrocede to another insurer or reinsurer all or part of the
liability assumed or assets held by such Insurance Subsidiary under a policy or
policies of insurance issued by such Insurance Subsidiary or under a reinsurance
agreement assumed by such Insurance Subsidiary.
"Reinsurance Premiums Ceded" shall mean, for any Insurance Subsidiary,
for any period, the amount as shown on Schedule F -Part 3, column 1 of the
Annual Statement of such Insurance Subsidiary, or an amount determined in a
manner consistent for any period other than one for which an Annual Statement is
prepared.
"Reorganization" shall mean the merger of PXRE Merger Corp. into the
Borrower as contemplated by the Reorganization Documents.
"Reorganization Date" shall mean the date upon which the Reorganization
is consummated and all the conditions set forth in SECTION 3.4 have been
satisfied or waived in accordance herewith.
"Reorganization Documents" shall mean, collectively, the Form S-4
registration statement of PXRE Group, including the joint proxy statement,
prospectus forming a part thereof, the merger agreement annexed thereto and all
other agreements, instruments, certificates and documents executed and delivered
in connection with the foregoing.
"Reportable Event" shall mean (i) any "reportable event" within the
meaning of Section
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4043(c) of ERISA for which the 30-day notice under Section 4043(a) of ERISA has
not been waived by the PBGC (including any failure to meet the minimum funding
standard of, or timely make any required installment under, Section 412 of the
Internal Revenue Code or Section 302 of ERISA, regardless of the issuance of any
waivers in accordance with Section 412(d) of the Internal Revenue Code), (ii)
any such "reportable event" subject to advance notice to the PBGC under Section
4043(b)(3) of ERISA, (iii) any application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Internal Revenue Code,
and (iv) a cessation of operations described in Section 4062(e) of ERISA.
"Required Lenders" shall mean the Lenders holding outstanding Loans and
Unutilized Commitments (or, after the termination of the Commitments,
outstanding Loans) representing more than fifty-one percent (51%) of the
aggregate at such time of all outstanding Loans and Unutilized Commitments (or,
after the termination of the Commitments, the aggregate at such time of all
outstanding Loans).
"Requirement of Law" shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or
other organizational or governing documents of such Person, and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Credit
Documents.
"Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) in effect from time to time
during such Interest Period, as provided by the Federal Reserve Board, applied
for determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
"Responsible Officer" shall mean the president, chief executive
officer, chief financial officer, or any other Financial Officer of the Borrower
and the Guarantors, and any executive officer, other officer or similar official
thereof responsible for the administration of the obligations of the Borrower
and the Guarantors in respect of this Agreement.
"Reverse Repurchase Agreement" shall mean, as to any Person, an
agreement pursuant to which such Person sells securities to another Person (the
"Counterparty") and agrees to repurchase such securities at a described or
specified date and price, provided, however, that "Reverse Repurchase
Agreements" shall not include any agreement pursuant to which such Person lends
securities pursuant to a securities lending arrangement to a Counterparty who
collateralizes such borrowing with cash, Cash Equivalents, letters of credit or
other collateral acceptable to the Required Lenders, and agrees to return such
securities to such Person at a described or specified date.
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<PAGE>
"SAP" shall mean, with respect to any Insurance Subsidiary, the
statutory accounting practices prescribed or permitted by the relevant Insurance
Regulatory Authority of its state of domicile, consistently applied and
maintained and in conformity with those used in the preparation of the most
recent statutory financial statements described in SECTION 4.11(e) (except where
changes are required by the relevant Insurance Regulatory Authority).
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, and any successor statute, and all rules and regulations from time
to time promulgated thereunder.
"Standard & Poor's" shall mean Standard & Poor's Rating Services, a
division of McGraw-Hill Companies, and its successors and assigns.
"Statutory Capital and Surplus" shall mean, as to any Insurance
Subsidiary, as of any date, the sum (without duplication) of the total amounts
shown (i) with respect to an Insurance Subsidiary not legally domiciled in the
United States, the shareholders' equity of such Insurance Subsidiary as
determined in accordance with GAAP (without regard to the requirements of FAS
115), and (ii) with respect to any other Insurance Subsidiary, on line 25,
column 1, page 3 of the Annual Statement of such Insurance Subsidiary, or the
sum of amounts determined in a consistent manner for any date other than one as
of which an Annual Statement is prepared.
"Subordinated Indebtedness" shall have the meaning given to such term
in SECTION 7.2.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of
directors, board of managers or other governing body of such Person, is at the
time, directly or indirectly, owned or controlled by such Person and one or more
of its other Subsidiaries or a combination thereof (irrespective of whether, at
the time, securities of any other class or classes of any such corporation or
other Person shall or might have voting power by reason of the happening of any
contingency). When used without reference to a parent entity, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of PXRE Group.
"Surplus Relief Reinsurance Agreement" shall mean any agreement or
other arrangement whereby any Insurance Subsidiary cedes business under a
reinsurance agreement that would not be considered a transaction that
indemnifies an insurer against loss or liability relating to insurance risk, as
determined in accordance with Statement of Financial Accounting Standards No.
113 ("FAS 113") issued by the Financial Accounting Standards Board (without
regard to the effective date of FAS 113).
"Termination Date" shall mean the Maturity Date or such earlier date of
termination of the Commitments pursuant to SECTION 2.5 or SECTION 8.2.
"Transnational Insurance" shall mean Transnational Insurance Company, a
Connecticut corporation and a Wholly Owned Subsidiary of PXRE Reinsurance as of
the date hereof.
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<PAGE>
"Trust Preferred Securities" shall mean the preferred securities issued
by PXRE Capital Trust I and any other preferred securities offered by a Delaware
statutory business trust of which the Borrower or any of its Subsidiaries is the
grantor, the proceeds of which securities are or have been used principally to
purchase debentures issued by the Borrower or an Affiliate of the Borrower or
such Subsidiary.
"Type" shall have the meaning given to such term in SECTION 2.2(a).
"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Unutilized Commitment" shall mean, with respect to any Lender at any
time, such Lender's Commitment at such time less the aggregate principal amount
of all Loans made by such Lender that are outstanding at such time.
"Wholly Owned" shall mean, with respect to any Subsidiary of any
Person, that 100% of the outstanding Capital Stock of such Subsidiary is owned,
directly or indirectly, by such Person.
1.2 Accounting Terms. Except as specifically provided otherwise in this
Agreement, all accounting terms used herein that are not specifically defined
shall have the meanings customarily given them in accordance with GAAP (or, to
the extent that such terms apply solely to any Insurance Subsidiary or if
otherwise expressly required, SAP). All accounting determinations and
computations under this Agreement that refer to PXRE Group or to PXRE Group and
its Subsidiaries shall, with respect to any dates or periods occurring prior to
the Reorganization Date, be deemed to mean the Borrower or the Borrower and its
Subsidiaries, as the case may be. Notwithstanding anything to the contrary in
this Agreement, for purposes of calculation of the financial covenants set forth
in ARTICLE VI, all accounting determinations and computations hereunder shall be
made in accordance with GAAP or SAP, as applicable, as in effect as of the date
of the Old Credit Agreement applied on a basis consistent with the application
used in preparing the most recent financial statements of PXRE Group (or, if
none, the Borrower) referred to in SECTIONS 4.11(a) and 4.11(e). In the event
that any changes in GAAP or SAP after such date are required to be applied to
PXRE Group or the Borrower and would affect the computation of the financial
covenants contained in ARTICLE VI, such changes shall be followed only from and
after the date this Agreement shall have been amended to take into account any
such changes. References to amounts on particular exhibits, schedules, lines,
pages and columns of any Annual Statement or Quarterly Statement are based on
the format promulgated by the NAIC for the 1997 Annual Statements and Quarterly
Statements. In the event such format is changed in future years so that
different information is contained in such items or they no longer exist, or if
the Annual Statement or Quarterly Statement is replaced by the NAIC or by any
Insurance Regulatory Authority after the date hereof such that different forms
of financial statements are required to be furnished by the Insurance
Subsidiaries in lieu
29
<PAGE>
thereof, such references shall be to information consistent with that reported
in the referenced item in the 1997 Annual Statements or Quarterly Statements, as
the case may be.
1.3 Other Terms; Construction. Unless otherwise specified or unless the
context otherwise requires, all references herein to sections, annexes,
schedules and exhibits are references to sections, annexes, schedules and
exhibits in and to this Agreement, and all terms defined in this Agreement shall
have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments. Each Lender severally agrees, subject to and on the
terms and conditions of this Agreement, to make loans (each, a "Loan," and
collectively, the "Loans") to the Borrower, from time to time on any Business
Day during the period from and including the Closing Date to but not including
the Termination Date, in an aggregate principal amount at any time outstanding
not greater than its Commitment at such time, provided that no Borrowing of
Loans shall be made if, immediately after giving effect thereto, the aggregate
principal amount of Loans outstanding at such time would exceed the aggregate
Commitments at such time. Subject to and on the terms and conditions of this
Agreement, the Borrower may borrow, repay and reborrow Loans.
2.2 Borrowings. (a) The Loans shall, at the option of the Borrower and
subject to the terms and conditions of this Agreement, be either Base Rate Loans
or LIBOR Loans (each, a "Type" of Loan), provided that all Loans comprising the
same Borrowing shall, unless otherwise specifically provided herein, be of the
same Type.
(b) In order to make a Borrowing (other than Borrowings involving
continuations or conversions of outstanding Loans, which shall be made pursuant
to SECTION 2.11), the Borrower will give the Agent written notice of the
proposed Borrowing not later than 11:00 a.m., Charlotte time, three (3) Business
Days prior to each Borrowing to be comprised of LIBOR Loans and one (1) Business
Day prior to each Borrowing to be comprised of Base Rate Loans; provided,
however, that requests for the Borrowing of any Loans to be made on the Closing
Date may, at the discretion of the Agent, be given later than the times
specified hereinabove. Each such notice (each, a "Notice of Borrowing") shall be
irrevocable, shall be given in the form of EXHIBIT B-1 and shall specify (1) the
aggregate principal amount and initial Type of the Loans to be made pursuant to
such Borrowing, (2) in the case of a Borrowing of LIBOR Loans, the initial
Interest Period to be applicable thereto, and (3) the requested date of such
Borrowing (the "Borrowing Date"), which shall be a Business Day. Upon its
receipt of a Notice of Borrowing, the Agent will promptly notify each Lender of
the proposed Borrowing. Notwithstanding anything to the contrary contained
herein:
(i) the aggregate principal amount of each Borrowing
comprised of
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<PAGE>
Base Rate Loans shall not be less than $1,000,000 or, if greater, an
integral multiple of $500,000 in excess thereof (or, if less, in the
amount of the aggregate Unutilized Commitments), and the aggregate
principal amount of each Borrowing comprised of LIBOR Loans shall not
be less than $3,000,000 or, if greater, an integral multiple of
$1,000,000 in excess thereof;
(ii) if the Borrower shall have failed to designate the Type
of Loans comprising a Borrowing, the Borrower shall be deemed to have
requested a Borrowing comprised of Base Rate Loans; and
(iii) if the Borrower shall have failed to select the duration
of the Interest Period to be applicable to any Borrowing of LIBOR
Loans, then the Borrower shall be deemed to have selected an Interest
Period with a duration of one month.
(c) Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date, each Lender will make available to the Agent at its office
referred to in SECTION 11.5 (or at such other location as the Agent may
designate) an amount, in Dollars and in immediately available funds, equal to
the amount of the Loan to be made by such Lender. To the extent the Lenders have
made such amounts available to the Agent as provided hereinabove, the Agent will
make the aggregate of such amounts available to the Borrower in accordance with
SECTION 2.3(a) and in like funds as received by the Agent.
2.3 Disbursements; Funding Reliance; Domicile of Loans. (a) The
Borrower hereby authorizes the Agent to disburse the proceeds of each Borrowing
in accordance with the terms of any written instructions from any of the
Authorized Officers, provided that the Agent shall not be obligated under any
circumstances to forward amounts to any account not listed in an Account
Designation Letter. The Borrower may at any time deliver to the Agent an Account
Designation Letter listing any additional accounts or deleting any accounts
listed in a previous Account Designation Letter.
(b) Unless the Agent has received, prior to 1:00 p.m., Charlotte time,
on the relevant Borrowing Date, written notice from a Lender that such Lender
will not make available to the Agent such Lender's ratable portion of the
relevant Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent in immediately available funds on such Borrowing Date in
accordance with the applicable provisions of SECTION 2.2, and the Agent may, in
reliance upon such assumption, but shall not be obligated to, make a
corresponding amount available to the Borrower on such Borrowing Date. If and to
the extent that such Lender shall not have made such portion available to the
Agent, and the Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, (i) in the case of such Lender, at the Federal Funds Rate, and (ii) in
the case of the Borrower, at the rate of interest applicable at such time to the
Type of Loans comprising such Borrowing, as determined under the provisions of
SECTION 2.8. If such Lender shall repay to the Agent such corresponding
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<PAGE>
amount, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement. The failure of any Lender to make any
Loan required to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Loan as part of
such Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender as part of any
Borrowing.
(c) Each Lender may, at its option, make and maintain any Loan at, to
or for the account of any of its Lending Offices, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.
2.4 Notes. (a) The Loans made by each Lender shall be evidenced by a
Note appropriately completed in substantially the form of EXHIBIT A.
(b) Each Note issued to a Lender shall (i) be executed by the Borrower,
(ii) be payable to the order of such Lender, (iii) be dated as of the Closing
Date (or, in the case of a Note issued after the Closing Date, dated the
effective date of such Lender's becoming a party to the Old Credit Agreement or
this Agreement, as the case may be, (iv) be in a stated principal amount equal
to such Lender's Commitment, (v) bear interest in accordance with the provisions
of SECTION 2.8, as the same may be applicable from time to time to the Loans
made by such Lender, and (vi) be entitled to all of the benefits of this
Agreement and the other Credit Documents and subject to the provisions hereof
and thereof.
(c) Each Lender will record on its internal records the amount and Type
of each Loan made by it and each payment received by it in respect thereof and
will, in the event of any transfer of any of its Notes, either endorse on the
reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount and Type of the Loans evidenced
thereby as of the date of transfer or provide such information on a schedule to
the Assignment and Acceptance relating to such transfer; provided, however, that
the failure of any Lender to make any such recordation or provide any such
information, or any error therein, shall not affect the Borrower's obligations
under this Agreement or the Notes.
2.5 Termination and Reduction of Commitments. (a) The Commitments shall
be automatically and permanently terminated on the Termination Date.
(b) On each date set forth below, the aggregate Commitments shall be
automatically and permanently reduced by the amounts set forth below opposite
such date:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
March 31, 2000 $10,000,000
March 31, 2001 $10,000,000
March 31, 2002 $10,000,000
March 31, 2003 $10,000,000
March 31, 2004 $10,000,000
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
March 31, 2005 $25,000,000
</TABLE>
or, if less, the remaining balance of the aggregate Commitments.
(c) The Commitments shall, on the day two (2) Business Days after the
receipt of Net Cash Proceeds therefor, be automatically and permanently reduced
by the amount of the Net Cash Proceeds with respect to any Asset Disposition,
Hybrid Securities Issuance or Debt Issuance. Promptly upon (and in any event not
later than two (2) Business Days after) its receipt of such Net Cash Proceeds,
PXRE Group will deliver to the Agent a certificate signed by a Financial Officer
of PXRE Group in form and substance satisfactory to the Agent and setting forth
the calculation of such Net Cash Proceeds. Notwithstanding the foregoing,
nothing in this subsection shall be deemed to permit any Asset Disposition not
expressly permitted under SECTION 7.4.
(d) At any time and from time to time after the date hereof, upon not
less than five (5) Business Days' prior written notice to the Agent, the
Borrower may terminate in whole or reduce in part the aggregate Unutilized
Commitments, provided that any such partial reduction shall be in an aggregate
amount of not less than $1,000,000 or, if greater, an integral multiple thereof.
The amount of any termination or reduction made under this subsection (d) may
not thereafter be reinstated.
(e) Each reduction of the Commitments pursuant to this Section shall be
applied ratably among the Lenders according to their respective Commitments.
Each reduction of the Commitments pursuant to subsections (c) or (d) shall be
applied to reduce the scheduled reductions of the Commitments set forth in
subsection (b) pro rata among the remaining scheduled reductions.
2.6 Mandatory Payments and Prepayments. (a) Except to the extent due or
paid sooner pursuant to the provisions of this Agreement, the aggregate
outstanding principal of the Loans shall be due and payable in full on the
Maturity Date.
(b) In the event that, at any time (including, without limitation, in
the event of a mandatory reduction of the Commitments pursuant to SECTION
2.5(c)), the aggregate principal amount of Loans outstanding at such time shall
exceed the aggregate Commitments at such time (after giving effect to any
concurrent termination or reduction thereof), the Borrower will immediately
prepay the outstanding principal amount of the Loans in the amount of such
excess.
(c) Each prepayment of the Loans made pursuant to SECTION 2.6(b) above
shall be applied first to prepay all Base Rate Loans before any LIBOR Loans are
prepaid. Each payment or prepayment pursuant to the provisions of this SECTION
2.6 shall be applied ratably among the Lenders holding the Loans being prepaid,
in proportion to the principal amount held by each.
(d) Each payment or prepayment of a LIBOR Loan made pursuant to the
provisions of this Section on a day other than the last day of the Interest
Period applicable thereto shall be made together with all amounts required under
SECTION 2.18 to be paid as a consequence thereof;
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<PAGE>
provided, however, at the request of the Borrower, any amount of any such
prepayment of a LIBOR Loan required by SECTION 2.6(b) as a result of the
application of SECTION 2.5(c) shall be deposited in a Prepayment Account (as
defined below). The Agent shall apply any cash deposited in the Prepayment
Account to prepay LIBOR Loans on the day interest on such LIBOR Loans would be
due and payable under SECTION 2.8(c) (or, at the direction of the Borrower, on
any earlier date) until all outstanding Loans have been prepaid or until all the
allocable cash on deposit in the Prepayment Account has been exhausted. Until
the cash deposited in the Prepayment Account is so applied, the applicable LIBOR
Loan shall be deemed not to have been repaid and shall continue to accrue
interest pursuant to SECTION 2.8. For purposes of this Agreement, the term
"Prepayment Account" shall mean an account established by the Borrower with the
Agent and over which the Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal for application in accordance with
this paragraph. The Agent will, at the request of the Borrower, invest amounts
on deposit in the Prepayment Account in Cash Equivalents that mature prior to
the last day of the applicable Interest Periods of the LIBOR Loans to be
prepaid; provided, however, that (i) the Agent shall not be required to make any
investment that, in its sole judgment, would require or cause the Agent to be
in, or would result in any, violation of any law, statute, rule or regulation,
(ii) such Cash Equivalents shall be subjected to a first priority perfected
security interest in favor of the Agent and (iii) if an Event of Default shall
have occurred and be continuing, the selection of such investments shall be in
the sole discretion of the Agent. The Borrower shall indemnify the Agent for any
losses relating to the investments so that the amount available to prepay LIBOR
Loans on the last day of the applicable Interest Period is not less than the
amount that would have been available had no investments been made pursuant
thereto. Other than any interest or profits earned on such investments, the
Prepayment Accounts shall not bear interest. Interest or profits, if any, on the
investments in any Prepayment Account shall accumulate in such Prepayment
Account and shall be applied on the day when prepayment is made (x) first, to
pay interest due and payable under SECTION 2.8(c), (y) second, as a further
prepayment of the applicable LIBOR Loan, and (z) to the extent of any excess, at
the direction of the Borrower. If the maturity of the Loans has been accelerated
pursuant to SECTION 8.2, the Agent may, in its sole discretion, apply all
amounts on deposit in the Prepayment Account to satisfy any of the Obligations.
The Borrower hereby pledges and assigns to the Agent, for its benefit and the
benefit of the Lenders, each Prepayment Account established hereunder to secure
the Obligations.
2.7 Voluntary Prepayments. (a) At any time and from time to time, the
Borrower shall have the right to prepay the Loans, in whole or in part, without
premium or penalty (except as provided in clause (iii) below), upon written
notice given to the Agent not later than 11:00 a.m., Charlotte time, three (3)
Business Days prior to each intended prepayment of LIBOR Loans and one (1)
Business Day prior to each intended prepayment of Base Rate Loans, provided that
(i) each partial prepayment shall be in an aggregate principal amount of not
less than $1,000,000 or, if greater, an integral multiple of $500,000 in excess
thereof, (ii) no partial prepayment of LIBOR Loans made pursuant to any single
Borrowing shall reduce the aggregate outstanding principal amount of the
remaining LIBOR Loans under such Borrowing to less than $3,000,000 or to any
greater amount not an integral multiple of $1,000,000 in excess thereof, and
(iii) unless made together with all amounts required under SECTION 2.18 to be
paid as a consequence of such prepayment, a prepayment of a LIBOR Loan may be
made only on the last day of the Interest
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Period applicable thereto. Each such notice shall specify the proposed date of
such prepayment and the aggregate principal amount and Type of the Loans to be
prepaid (and, in the case of LIBOR Loans, the Interest Period of the Borrowing
pursuant to which made), and shall be irrevocable and shall bind the Borrower to
make such prepayment on the terms specified therein. Loans prepaid pursuant to
this subsection (a) may be reborrowed, subject to the terms and conditions of
this Agreement.
(b) Each prepayment of the Loans made pursuant to subsection (a) above
shall be applied ratably among the Lenders holding the Loans being prepaid, in
proportion to the principal amount held by each.
2.8 Interest. (a) The Borrower will pay interest in respect of the
unpaid principal amount of each Loan, from the date of Borrowing thereof until
such principal amount shall be paid in full, (i) at the Adjusted Base Rate, as
in effect from time to time during such periods as such Loan is a Base Rate
Loan, and (ii) at the Adjusted LIBOR Rate, as in effect from time to time during
such periods as such Loan is a LIBOR Loan.
(b) Upon the occurrence and during the continuance of an Event of
Default as the result of failure by the Borrower to pay any principal of or
interest on any Loan, any fees or other amount hereunder when due (whether at
maturity, pursuant to acceleration or otherwise), and (at the election of the
Required Lenders) upon the occurrence and during the continuance of any other
Event of Default, all outstanding principal amounts of the Loans and, to the
greatest extent permitted by law, all interest accrued on the Loans and all
other accrued and outstanding fees and other amounts hereunder, shall bear
interest at a rate per annum equal to the interest rate applicable from time to
time thereafter to such Loans (whether the Adjusted Base Rate or the Adjusted
LIBOR Rate) plus 2% (or, in the case of fees and other amounts, at the Adjusted
Base Rate plus 2%), and, in each case, such default interest shall be payable on
demand. To the greatest extent permitted by law, interest shall continue to
accrue after the filing by or against the Borrower of any petition seeking any
relief in bankruptcy or under any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as
follows:
(i) in respect of each Base Rate Loan (including any Base
Rate Loan or portion thereof paid or prepaid pursuant to the provisions
of SECTION 2.6, except as provided hereinbelow), in arrears on the last
Business Day of each calendar quarter, beginning with the first such
day to occur after the Closing Date; provided, that in the event the
Loans are repaid or prepaid in full and the Commitments have been
terminated, then accrued interest in respect of all Base Rate Loans
shall be payable together with such repayment or prepayment on the date
thereof;
(ii) in respect of each LIBOR Loan (including any LIBOR Loan
or portion thereof paid or prepaid pursuant to the provisions of
SECTION 2.6, except as provided hereinbelow), in arrears (y) on the
last Business Day of the Interest Period applicable thereto (subject to
the provisions of clause (iv) in SECTION 2.10) and (z) in
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addition, in the case of a LIBOR Loan with an Interest Period having a
duration of six months or longer, on each date on which interest would
have been payable under clause (y) above had successive Interest Period
of three months' duration been applicable to such LIBOR Loan; provided
that in the event all LIBOR Loans made pursuant to a single Borrowing
are repaid or prepaid in full, then accrued interest in respect of such
LIBOR Loans shall be payable together with such repayment or prepayment
on the date thereof; and
(iii) in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Credit Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
however, that the failure of the Agent to provide the Borrower or the Lenders
with any such notice shall neither affect any obligations of the Borrower or the
Lenders hereunder nor result in any liability on the part of the Agent to the
Borrower or any Lender. Each such determination (including each determination of
the Reserve Requirement) shall, absent manifest error, be conclusive and binding
on all parties hereto.
2.9 Fees. The Borrower agrees to pay:
(a) To the Agent, for the account of the Lenders, an amendment fee of
0.15% of their respective Commitments, due and payable on the date of execution
of this Agreement by the Required Lenders.
(b) To the Agent, for the account of each Lender, a commitment fee for
each calendar quarter (or portion thereof) for the period from the date of this
Agreement to the Termination Date, at a per annum rate equal to the Applicable
Margin Percentage in effect for such fee from time to time during such quarter,
on such Lender's ratable share (based on the proportion that its
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Commitment bears to the aggregate Commitments) of the average daily aggregate
Unutilized Commitments, payable in arrears (i) on the last Business Day of each
calendar quarter, beginning with the first such day to occur after the Closing
Date, and (ii) on the Termination Date; and
(c) To the Agent, for its own account, the annual administrative fee
described in paragraph (3) of the Fee Letter and, to First Union Capital Markets
Corp., the fee described in the Amendment Fee Letter, on the terms, in the
amounts and at the times set forth therein.
2.10 Interest Periods. Concurrently with the giving of a Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of Base Rate Loans to be converted into, or LIBOR Loans to be
continued as, LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two, three or six-month period; provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing shall at
all times have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall
commence on the date of the Borrowing of such LIBOR Loan (including the
date of any continuation of, or conversion into, such LIBOR Loan), and
each successive Interest Period applicable to such LIBOR Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) LIBOR Loans may not be outstanding under more than seven
(7) separate Interest Periods at any one time (for which purpose
Interest Periods shall be deemed to be separate even if they are
coterminous);
(iv) if any Interest Period otherwise would expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day unless such next succeeding Business Day
falls in another calendar month, in which case such Interest Period
shall expire on the next preceding Business Day;
(v) the Borrower may not select any Interest Period that
expires after the Maturity Date;
(vi) no Interest Period may be selected that would end after a
scheduled date for repayment of principal of the Loans occurring on or
after the first day of such Interest Period unless, immediately after
giving effect to such selection, the aggregate principal amount of
Loans that are Base Rate Loans or that have Interest Periods expiring
on or before such principal repayment date equals or exceeds the
principal amount required to be paid on such principal repayment date;
and
(vii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month during which
such Interest Period
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would otherwise expire, such Interest Period shall expire on the last
Business Day of such calendar month.
2.11 Conversions and Continuations. (a) The Borrower shall have the
right, on any Business Day occurring on or after the Closing Date, to elect (i)
to convert all or a portion of the outstanding principal amount of any Base Rate
Loans into LIBOR Loans, or to convert any LIBOR Loans the Interest Periods for
which end on the same day into Base Rate Loans, or (ii) to continue all or a
portion of the outstanding principal amount of any LIBOR Loans the Interest
Periods for which end on the same day for an additional Interest Period,
provided that (x) any such conversion of LIBOR Loans into Base Rate Loans shall
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; any such conversion
of Base Rate Loans into, or continuation of, LIBOR Loans shall involve an
aggregate principal amount of not less than $3,000,000 or, if greater, an
integral multiple of $1,000,000 in excess thereof; and no partial conversion of
LIBOR Loans made pursuant to a single Borrowing shall reduce the outstanding
principal amount of such LIBOR Loans to less than $3,000,000 or to any greater
amount not an integral multiple of $1,000,000 in excess thereof, (y) except as
otherwise provided in SECTION 2.16(d), LIBOR Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable thereto (and,
in any event, if a LIBOR Loan is converted into a Base Rate Loan on any day
other than the last day of the Interest Period applicable thereto, the Borrower
will pay, upon such conversion, all amounts required under SECTION 2.18 to be
paid as a consequence thereof), and (z) no conversion of Base Rate Loans into
LIBOR Loans or continuation of LIBOR Loans shall be permitted during the
continuance of a Default or Event of Default.
(b) The Borrower shall make each such election by giving the Agent
written notice not later than 11:00 a.m., Charlotte time, three (3) Business
Days prior to the intended effective date of any conversion of Base Rate Loans
into, or continuation of, LIBOR Loans and one (1) Business Day prior to the
intended effective date of any conversion of LIBOR Loans into Base Rate Loans.
Each such notice (each, a "Notice of Conversion/Continuation") shall be
irrevocable, shall be given in the form of EXHIBIT B-2 and shall specify (x) the
date of such conversion or continuation (which shall be a Business Day), (y) in
the case of a conversion into, or a continuation of, LIBOR Loans, the Interest
Period to be applicable thereto, and (z) the aggregate amount and Type of the
Loans being converted or continued. Upon the receipt of a Notice of
Conversion/Continuation, the Agent will promptly notify each Lender of the
proposed conversion or continuation. In the event that the Borrower shall fail
to deliver a Notice of Conversion/Continuation as provided herein with respect
to any outstanding LIBOR Loans, such LIBOR Loans shall automatically be
converted to Base Rate Loans upon the expiration of the then current Interest
Period applicable thereto (unless repaid pursuant to the terms hereof). In the
event the Borrower shall have failed to select in a Notice of
Conversion/Continuation the duration of the Interest Period to be applicable to
any conversion into, or continuation of, LIBOR Loans, then the Borrower shall be
deemed to have selected an Interest Period with a duration of one month.
2.12 Method of Payments; Computations. (a) All payments by the Borrower
hereunder shall be made without setoff, counterclaim or other defense, in
Dollars and in
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immediately available funds to the Agent, for the account of the Lenders
entitled to such payment (except as otherwise expressly provided herein as to
payments required to be made directly to the Issuing Lender and the Lenders) at
its office referred to in SECTION 11.5, prior to 12:00 noon, Charlotte time, on
the date payment is due. Any payment made as required hereinabove, but after
12:00 noon, Charlotte time, shall be deemed to have been made on the next
succeeding Business Day. If any payment falls due on a day that is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day (except that in the case of LIBOR Loans to which the provisions of
clause (iv) in SECTION 2.10 are applicable, such due date shall be the next
preceding Business Day), and such extension of time shall then be included in
the computation of payment of interest, fees or other applicable amounts.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of the Lenders as follows: (i) if the
payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make available to each relevant Lender on the same date,
by wire transfer of immediately available funds, such Lender's ratable share of
such payment (based on the percentage that the amount of the relevant payment
owing to such Lender bears to the total amount of such payment owing to all of
the relevant Lenders), and (ii) if such payment is received after 12:00 noon,
Charlotte time, or in other than immediately available funds, the Agent will
make available to each such Lender its ratable share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its ratable share of
such payment with interest thereon at the Federal Funds Rate for each day from
the date such amount was required to be disbursed by the Agent until the date
repaid to such Lender.
(c) Unless the Agent shall have received written notice from the
Borrower prior to the date on which any payment is due to any Lender hereunder
that such payment will not be made in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date, and the Agent
may, in reliance on such assumption, but shall not be obligated to, cause to be
distributed to such Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, and without limiting the obligation of the
Borrower to make such payment in accordance with the terms hereof, such Lender
shall repay to the Agent forthwith on demand such amount so distributed to such
Lender, together with interest thereon for each day from the date such amount is
so distributed to such Lender until the date repaid to the Agent, at the Federal
Funds Rate.
(d) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 365 or 366 days, as the case may be (in the case of interest on
Base Rate Loans), or 360 days (in all other instances), and the actual number of
days (including the first day, but excluding the last day) elapsed.
2.13 Recovery of Payments. (a) The Borrower agrees that to the extent
the Borrower makes a payment or payments to or for the account of the Agent or
any Lender, which payment
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or payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy, insolvency or similar state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the Obligation intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been received.
(b) If any amounts distributed by the Agent to any Lender are
subsequently returned or repaid by the Agent to the Borrower or its
representative or successor in interest, whether by court order or by settlement
approved by the Lender in question, such Lender will, promptly upon receipt of
notice thereof from the Agent, pay the Agent such amount. If any such amounts
are recovered by the Agent from the Borrower or its representative or successor
in interest, the Agent will redistribute such amounts to the Lenders on the same
basis as such amounts were originally distributed.
2.14 Use of Proceeds. The proceeds of the Loans shall be used to
finance Permitted Acquisitions and stock repurchases, to provide capital to the
Insurance Subsidiaries and for working capital and general corporate purposes
including, without limitation, financing the operations of PXRE Group, PXRE
Bermuda, and PXRE Barbados, and in accordance with the terms and provisions of
this Agreement (provided that Permitted Acquisitions may only be effected in
accordance with the terms and provisions of this Agreement, including without
limitation the provisions set forth in SECTION 5.9).
2.15 Pro Rata Treatment. (a) All fundings, continuations and
conversions of Loans shall be made by the Lenders pro rata on the basis of their
respective Commitments (in the case of the initial funding of Loans pursuant to
SECTION 2.2) or on the basis of their respective outstanding Loans (in the case
of continuations and conversions of Loans pursuant to SECTION 2.11, and
additionally in all cases in the event the Commitments have expired or have been
terminated), as the case may be from time to time. All payments on account of
principal of or interest on any Loans, fees or any other Obligations owing to or
for the account of any one or more Lenders shall be apportioned ratably among
such Lenders in proportion to the amounts of such principal, interest, fees or
other Obligations owed to them respectively.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, or otherwise, other
than pursuant to SECTION 11.7) applicable to the payment of any of the
Obligations that exceeds its ratable share (according to the proportion of (i)
the amount of such Obligations due and payable to such Lender at such time to
(ii) the aggregate amount of such Obligations due and payable to all Lenders at
such time) of payments on account of such Obligations then or therewith obtained
by all the Lenders to which such payments are required to have been made, such
Lender shall forthwith purchase from the other Lenders such participations in
such Obligations as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each such other Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such
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recovery, together with an amount equal to such other Lender's ratable share
(according to the proportion of (i) the amount of such other Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to the provisions of
this subsection may, to the fullest extent permitted by law, exercise any and
all rights of payment (including, without limitation, setoff, banker's lien or
counterclaim) with respect to such participation as fully as if such participant
were a direct creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or similar law, any Lender receives
a secured claim in lieu of a setoff to which this subsection applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this subsection to share in the benefits of any recovery on such secured
claim.
2.16 Increased Costs; Change in Circumstances; Illegality; etc. (a) If,
at any time after the date hereof and from time to time, the introduction of or
any change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
guideline or request from any such Governmental Authority (whether or not having
the force of law), shall (i) subject such Lender to any tax or other charge, or
change the basis of taxation of payments to such Lender, in respect of any of
its LIBOR Loans or any other amounts payable hereunder or its obligation to
make, fund or maintain any LIBOR Loans (other than any change in the rate or
basis of tax on the overall net income, or a franchise tax imposed in lieu of a
tax on the overall net income, of such Lender or its applicable Lending Office),
(ii) impose, modify or deem applicable any reserve, special deposit or similar
requirement (other than as a result of any change in the Reserve Requirement)
against assets of, deposits with or for the account of, or credit extended by,
such Lender or its applicable Lending Office, or (iii) impose on such Lender or
its applicable Lending Office any other condition, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any LIBOR Loans or to reduce the amount of any sum received or receivable by
such Lender hereunder, the Borrower will, promptly upon demand therefor by such
Lender, pay to such Lender such additional amounts as shall compensate such
Lender for such increase in costs or reduction in return.
(b) If, at any time after the date hereof and from time to time, any
Lender shall have reasonably determined that the introduction of or any change
in any applicable law, rule or regulation regarding capital adequacy or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by such Lender
with any guideline or request from any such Governmental Authority (whether or
not having the force of law), has or would have the effect, as a consequence of
such Lender's Commitment or Loans hereunder, of reducing the rate of return on
the capital of such Lender or any Person controlling such Lender to a level
below that which such Lender or controlling Person could have achieved but for
such introduction, change or compliance (taking into account such Lender's or
controlling Person's policies with respect to capital adequacy), the Borrower
will, promptly upon demand therefor by such Lender therefor, pay to such Lender
such
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additional amounts as will compensate such Lender or controlling Person for
such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (y) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period or (z) the Agent
shall have received written notice from the Required Lenders of their
determination that the rate of interest referred to in the definition of "LIBOR
Rate" upon the basis of which the Adjusted LIBOR Rate for LIBOR Loans for such
Interest Period is to be determined will not adequately and fairly reflect the
cost to such Lenders of making or maintaining LIBOR Loans during such Interest
Period, the Agent will forthwith so notify the Borrower and the Lenders. Upon
such notice, (i) all then outstanding LIBOR Loans shall automatically, on the
expiration date of the respective Interest Periods applicable thereto (unless
then repaid in full), be converted into Base Rate Loans, (ii) the obligation of
the Lenders to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to the Borrowing to which such
Interest Period applies), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall be deemed to be a request for Base Rate Loans, in each case until the
Agent or the Required Lenders, as the case may be, shall have determined that
the circumstances giving rise to such suspension no longer exist (and the
Required Lenders, if making such determination, shall have so notified the
Agent), and the Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Loans, such Lender will forthwith so notify
the Agent and the Borrower. Upon such notice, (i) each of such Lender's then
outstanding LIBOR Loans shall automatically, on the expiration date of the
respective Interest Period applicable thereto (or, to the extent any such LIBOR
Loan may not lawfully be maintained as a LIBOR Loan until such expiration date,
upon such notice), be converted into a Base Rate Loan, (ii) the obligation of
such Lender to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to any Borrowing for which the
Agent has received a Notice of Borrowing but for which the Borrowing Date has
not arrived), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall, as to such Lender, be deemed to be a request for a Base Rate Loan, in
each case until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist and shall have so notified the Agent,
and the Agent shall have so notified the Borrower.
(e) Determinations by the Agent or any Lender for purposes of this
Section of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith.
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No failure by the Agent or any Lender at any time to demand payment of any
amounts payable under this Section shall constitute a waiver of its right to
demand payment of any additional amounts arising at any subsequent time. Nothing
in this Section shall require or be construed to require the Borrower to pay any
interest, fees, costs or other amounts in excess of that permitted by applicable
law.
2.17 Taxes. (a) Any and all payments by the Borrower hereunder or under
any Note shall be made, in accordance with the terms hereof and thereof, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, other than net income and franchise taxes imposed on the Agent
or any Lender by the United States or by the jurisdiction under the laws of
which the Agent or such Lender, as the case may be, is organized or in which its
principal office or any country in which it receives payments hereunder or (in
the case of a Lender) its applicable Lending Office is located, or by any
political subdivision or taxing authority thereof, or by any other jurisdiction
as a result of a connection of the Lender or Agent to such jurisdiction other
than a connection resulting from entering into or enforcing this Agreement (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to the Agent or any Lender, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), the Agent or such Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower will make such deductions, (iii) the Borrower will pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower will deliver to the Agent
or such Lender, as the case may be, evidence of such payment.
(b) The Borrower will indemnify the Agent and each Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Agent or such
Lender, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. This indemnification shall be made within 30
days from the date the Agent or such Lender, as the case may be, makes written
demand therefor.
(c) Each of the Agent and the Lenders agrees that if it subsequently
recovers, or receives a permanent net tax benefit (as opposed to a mere timing
difference benefit) with respect to, any amount of Taxes (i) previously paid by
it and as to which it has been indemnified by or on behalf of the Borrower or
(ii) previously deducted by the Borrower (including, without limitation, any
Taxes deducted from any additional sums payable under clause (i) of subsection
(a) above), the Agent or such Lender, as the case may be, shall reimburse the
Borrower to the extent of the amount of any such recovery or permanent net tax
benefit (but only to the extent of indemnity payments made, or additional
amounts paid, by or on behalf of the Borrower under this Section with respect to
the Taxes giving rise to such recovery or tax benefit); provided, however, that
the Borrower, upon the request of the Agent or such Lender, agrees to repay to
the Agent or such Lender, as the case may be, the amount paid over to the
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Borrower (together with any penalties, interest or other charges), in the event
the Agent or such Lender is required to repay such amount to the relevant taxing
authority or other Governmental Authority. The determination by the Agent or any
Lender of the amount of any such recovery or permanent net tax benefit shall, in
the absence of manifest error, be conclusive and binding.
(d) If any Lender is incorporated or organized under the laws of a
jurisdiction other than the United States of America or any state thereof (a
"Non-U.S. Lender"), such Non-U.S. Lender will deliver to each of the Agent and
the Borrower, on or prior to the Closing Date (or, in the case of a Non-U.S.
Lender that becomes a party to this Agreement as a result of an assignment or
execution of a Joinder Agreement after the Closing Date, on the effective date
of such assignment or execution), (i) in the case of a Non-U.S. Lender that is a
"bank" for purposes of Section 881(c)(3)(A) of the Internal Revenue Code, a
properly completed Internal Revenue Service Form 4224 or 1001, as applicable (or
successor forms), certifying that such Non-U.S. Lender is entitled to an
exemption from United States federal income taxes in connection with payments
under this Agreement or any of the Notes, together with a properly completed
Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms),
and (ii) in the case of a Non-U.S. Lender that is not a "bank" for purposes of
Section 881(c)(3)(A) of the Internal Revenue Code, a certificate in form and
substance reasonably satisfactory to the Agent and the Borrower and to the
effect that (x) such Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been treated as a
bank for purposes of any tax, securities law or other filing or submission made
to any governmental authority, any application made to a rating agency or
qualification for any exemption from any tax, securities law or other legal
requirements, (y) is not a 10-percent shareholder for purposes of Section
881(c)(3)(B) of the Internal Revenue Code and (z) is not a controlled foreign
corporation receiving interest from a related person for purposes of Section
881(c)(3)(C) of the Internal Revenue Code, together with a properly completed
Internal Revenue Service Form W-8 (or a successor form). Each such Non-U.S.
Lender further agrees to deliver to each of the Agent and the Borrower an
additional copy of each such relevant form on or before the date that such form
expires or becomes obsolete or after the occurrence of any event (including a
change in its applicable Lending Office) requiring a change in the most recent
forms so delivered by it, in each case certifying that such Non-U.S. Lender is
entitled to an exemption from withholding or deduction for or on account of
United States federal income taxes in connection with payments under this
Agreement or any of the Notes, unless an event (including, without limitation,
any change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required, which event renders all such
forms inapplicable or the exemption to which such forms relate unavailable and
such Non-U.S. Lender notifies the Agent and the Borrower that it is not entitled
to receive payments without deduction or withholding of United States federal
income taxes. Each such Non-U.S. Lender will promptly notify the Agent and the
Borrower of any changes in circumstances that would modify or render invalid any
claimed exemption or reduction.
(e) If any of the forms or other documentation required under
subsection (d) above are not delivered to the Borrower and the Agent as therein
required, then the Borrower and the Agent may withhold from any interest payment
owed to such Lender not providing such forms or
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other documentation an amount equivalent to the applicable withholding tax, and
the Borrower shall not be required to indemnify or make an increased payment to
the Agent or Lender pursuant to subsection (a) or (b) hereunder.
2.18 Compensation. The Borrower will compensate each Lender upon demand
for all losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Lender to fund or maintain LIBOR
Loans) that such Lender may incur or sustain (i) if for any reason (other than a
default by such Lender) a Borrowing or continuation of, or conversion into, a
LIBOR Loan does not occur on a date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation, (ii) if any repayment, prepayment or
conversion of any LIBOR Loan occurs on a date other than the last day of an
Interest Period applicable thereto (including as a consequence of acceleration
of the maturity of the Loans pursuant to SECTION 8.2), (iii) if any prepayment
of any LIBOR Loan is not made on any date specified in a notice of prepayment
given by the Borrower or (iv) as a consequence of any other failure by the
Borrower to make any payments with respect to any LIBOR Loan when due hereunder.
Calculation of all amounts payable to a Lender under this Section shall be made
as though such Lender had actually funded its relevant LIBOR Loan through the
purchase of a Eurodollar deposit bearing interest at the LIBOR Rate in an amount
equal to the amount of such LIBOR Loan, having a maturity comparable to the
relevant Interest Period; provided, however, that each Lender may fund its LIBOR
Loans in any manner it sees fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section. Determinations
by any Lender for purposes of this Section of any such losses, expenses or
liabilities shall, absent manifest error, be conclusive, provided that such
determinations are made in good faith.
ARTICLE III
CONDITIONS OF BORROWING
3.1 [Intentionally left blank]
3.2 [Intentionally left blank]
3.3 Conditions of All Borrowings. The obligation of any Lender to make
any Loans hereunder is subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date:
(a) The Agent shall have received a Notice of Borrowing in accordance
with SECTION 2.2(b);
(b) Each of the representations and warranties contained in ARTICLE IV
and in the other Credit Documents shall be true and correct on and as of such
Borrowing Date with the same effect as if made on and as of such date, both
immediately before and after giving effect to the Loans to be made on such date
(except to the extent any such representation or warranty is
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expressly stated to have been made as of a specific date, in which case such
representation or warranty shall be true and correct in all material respects as
of such date); and
(c) No Default or Event of Default shall have occurred and be
continuing on such date, both immediately before and after giving effect to the
Loans to be made on such date.
Each giving of a Notice of Borrowing, and the consummation of each
Borrowing, shall be deemed to constitute a representation by the Borrower that
the statements contained in subsections (b) and (c) above are true, both as of
the date of such notice and as of the relevant Borrowing Date.
3.4 Conditions of effectiveness of this Agreement and conditions of
Borrowings after the Reorganization. The effectiveness of this Agreement, the
amendment of the Old Credit Agreement hereby, the approval of the Reorganization
by the Required Lenders, and the obligation of each Lender to make Loans after
the consummation of the Reorganization are subject to the satisfaction, or
waiver in accordance with SECTION 11.6 hereof, of the conditions precedent of
SECTION 3.3 and the following conditions precedent:
(a) The Agent shall have received a certificate, signed by the
president, the chief executive officer or the chief financial officer of each
Credit Party, in form and substance satisfactory to the Agent, certifying that
(i) all representations and warranties of such Credit Party contained in this
Agreement and the other Credit Documents are true and correct as of the
Reorganization Date, immediately after giving effect to the consummation of the
Reorganization (except to the extent any such representation or warranty is
expressly stated to have been made as of a specific date, in which case such
representation or warranty shall be true and correct in all material respects as
of such date), (ii) all representations and warranties of the Borrower contained
in the Old Credit Agreement and the other Credit Documents are true and correct
as of the Reorganization Date, immediately before giving effect to the
consummation of the Reorganization (except to the extent any such representation
or warranty is expressly stated to have been made as of a specific date, in
which case such representation or warranty shall be true and correct in all
material respects as of such date), (iii) before giving effect to the
Reorganization, no Default or Event of Default has occurred and is continuing
under the Old Credit Agreement, (iv) after giving effect to the Reorganization,
no Default or Event of Default has occurred and is continuing under this
Agreement, (v) no Material Adverse Change has occurred since December 31, 1998,
and there exists no event, condition or state of facts that could reasonably be
expected to result in a Material Adverse Change, and (vi) all conditions to the
extensions of credit hereunder set forth in this Section and SECTION 3.3 have
been satisfied or waived as required hereunder.
(b) The Agent shall have received certificates of the secretary, clerk
or director, as applicable, or an assistant secretary, clerk or director, as
applicable, of each Credit Party, in form and substance satisfactory to the
Agent, certifying (i) that attached thereto is a true and complete copy of the
articles or certificate of incorporation and all amendments thereto of such
Credit Party, as the case may be, certified, to the extent applicable, as of a
recent date by the Secretary of State (or comparable Governmental Authority) of
its jurisdiction or organization, and that the
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same has not been amended since the date of such certification, (ii) that
attached thereto is a true and complete copy of the bylaws, operating agreement
or memorandum and articles of association, as applicable, of such Credit Party,
as the case may be, as then in effect and as in effect at all times from the
date on which the resolutions referred to in clause (iii) below were adopted to
and including the date of such certificate, (iii) that attached thereto is a
true and complete copy of resolutions adopted by the board of directors (or duly
authorized committee thereof) of such Credit Party authorizing the execution,
delivery and performance of this Agreement, the other Credit Documents to which
it is a party, and the Reorganization Documents to which it is a party, and (iv)
as to the incumbency and genuineness of the signature of each officer of such
Credit Party executing this Agreement or any of the other Credit Documents.
(c) The Credit Parties shall have duly complied with and performed all
of their agreements and conditions set forth in the Reorganization Documents
required to be complied with or performed by it on or prior to the
Reorganization Date thereunder and the Agent shall have received evidence
satisfactory to it that the Reorganization shall have been consummated in
compliance with all applicable Requirements of Law.
(d) The Agent shall have received a Covenant Compliance Worksheet, duly
completed and certified by the chief financial officer or treasurer of PXRE
Group and the Borrower and in form and substance satisfactory to the Agent,
demonstrating PXRE Group's and Borrower's compliance with the financial
covenants set forth in SECTIONS 6.1 through 6.4, determined on a pro forma basis
as of June 30, 1999, after giving effect to the consummation of the
Reorganization.
(e) The Lenders shall have received complete and final copies of the
Reorganization Documents satisfactory in all material respects to the Required
Lenders, and the corporate and capital structure of PXRE Group and its
Subsidiaries, after giving effect to the Reorganization, and all legal, tax,
accounting, business and other matters relating to the Reorganization or to PXRE
Group and its Subsidiaries, shall be satisfactory in all respects to the
Required Lenders. [THIS WILL BE DELETED UPON RECEIPT BY THE LENDERS OF FINAL
REORGANIZATION DOCUMENTS.]
(f) The Lenders shall have received, on or prior to the Reorganization
Date, a certificate as of a recent date of the good standing or existence of
each of the Credit Parties under the law of their respective state or country of
organization.
(g) All approvals, permits and consents of any Governmental Authorities
or other Person required in connection with the execution and delivery of this
Agreement, the other Credit Documents and the consummation of the Reorganization
shall have been obtained (without the imposition of conditions that are not
reasonably acceptable to the Agent), and all related filings, if any, shall have
been made, and all such approvals, permits, consents and filings shall be in
full force and effect and the Agent shall have received such copies thereof as
it shall have requested; all applicable waiting periods shall have expired
without any adverse action being taken by any Governmental Authority having
jurisdiction; and no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before, and no
order, injunction or decree shall have been entered by, any court or other
Governmental
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Authority, in each case to enjoin, restrain or prohibit, to obtain substantial
damages in respect of, or that is otherwise related to or arises out of, this
Agreement, any of the other Credit Documents or the consummation of the
Reorganization, or that, in the opinion of the Agent, would otherwise be
reasonably likely to have a Material Adverse Effect.
(h) The Agent shall have received the favorable opinions of (i) Morgan,
Lewis & Bockius LLP, special counsel to the Borrower and the Guarantors, (ii)
Conyers Dill & Pearman, Bermuda counsel to PXRE Group and (iii) Chancery
Chambers, Barbados counsel to PXRE Barbados, in the form of EXHIBITS E-1, E-2
and E-3, dated as of the Reorganization Date. [NOTE: SUCH OPINIONS FROM BERMUDA
AND BARBADOS COUNSEL SHALL BE PROVIDED BY COUNSEL ACCEPTABLE TO THE AGENT AND BE
SIMILAR TO MLB'S INCLUDING OPINIONS PERTAINING TO THE CHOICE OF LAW AND THE
VALIDITY AND ENFORCEABILITY OF THE GUARANTEES MADE BY PXRE GROUP AND PXRE
BARBADOS HEREUNDER RESPECTIVELY.]
(i) The Agent shall have received a Financial Condition Certificate,
together with the Pro Forma Balance Sheets and the Projections as described in
SECTIONS 4.11(b) and 4.11(c), all of which shall be in form and substance
satisfactory to the Agent.
(j) The Borrower shall have paid the fees due and payable under
SECTIONS 2.9(a) and (c).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to extend the credit contemplated hereby, the Borrower and
the Guarantors each represent and warrant as set forth below (PXRE Group making
such representations and warranties as to itself and as to its Subsidiaries, the
Borrower as to itself and its Subsidiaries and PXRE Barbados making such
representations and warranties as to itself):
4.1 Corporate Organization and Power. Each of the Guarantors, the
Borrower and the Material Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the full corporate power and authority to execute,
deliver and perform the Credit Documents and the Reorganization Documents to
which it is or will be a party, to own and hold its property and to engage in
its business as presently conducted, and (iii) is duly qualified, licensed,
admitted or approved to do business as a foreign corporation and is in good
standing in each jurisdiction where the nature of its business or the ownership
of its properties requires it to be so qualified, except where the failure to be
so qualified, licensed, admitted or approved would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
4.2 Authorization; Enforceability. Each of the Borrower and the
Guarantors has taken, or on the date hereof will have taken, all necessary
corporate action to execute, deliver and
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perform each of the Credit Documents and Reorganization Documents to which it is
or will be a party, and has, or on the date hereof (or any later date of
execution and delivery) will have, validly executed and delivered each of the
Credit Documents to which it is or will be a party. This Agreement constitutes,
and each of the other Credit Documents upon execution and delivery will
constitute, the legal, valid and binding obligation of the Borrower and the
Guarantors enforceable against each of them in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, by
general equitable principles or by principles of good faith and fair dealing.
4.3 No Violation. The execution, delivery and performance by each of
the Borrower and the Guarantors of this Agreement, the other Credit Documents
and the Reorganization Documents, and compliance by it with the terms hereof and
thereof, do not and will not (i) violate any provision of its certificate of
incorporation or bylaws or contravene any other material Requirement of Law
applicable to it, (ii) conflict with, result in a breach of or constitute (with
notice, lapse of time or both) a default under any indenture, agreement or other
instrument to which it is a party, by which it or any of its properties is bound
or to which it is subject, or (iii) result in or require the creation or
imposition of any Lien upon any of its properties or assets. No Subsidiary is a
party to any agreement or instrument or otherwise subject to any restriction or
encumbrance that restricts or limits its ability to make dividend payments or
other distributions in respect of its Capital Stock, to repay Indebtedness owed
to the Borrower, the Guarantors or any other Subsidiary, to make loans or
advances to the Borrower, the Guarantors or any other Subsidiary, or to transfer
any of its assets or properties to the Borrower, the Guarantors or any other
Subsidiary, in each case other than such restrictions or encumbrances existing
under or by reason of the Credit Documents or applicable Requirements of Law.
4.4 Governmental and Third-Party Authorization; Permits. (a) No
consent, approval, authorization or other action by, notice to, or registration
or filing with, any Governmental Authority or other Person is or will be
required as a condition to or otherwise in connection with the due execution,
delivery and performance by the Borrower and the Guarantors of this Agreement or
any of the other Credit Documents or Reorganization Documents or the legality,
validity or enforceability hereof or thereof, other than (i) consents,
authorizations and filings that have been (or on or prior to the Reorganization
Date will have been) made or obtained and that are (or on the Reorganization
Date will be) in full force and effect, which consents, authorizations and
filings are listed on SCHEDULE 4.4, (ii) filings pursuant to the Exchange Act,
which will be made as soon as practicable after the Reorganization Date, and
(iii) consents and filings the failure to obtain or make which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Each of the Borrower, the Guarantors and their Subsidiaries has,
and is in good standing with respect to, all governmental approvals, licenses,
permits and authorizations necessary to conduct its business as presently
conducted and to own or lease and operate its properties, except for those the
failure to obtain which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
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(c) To the knowledge of the Borrower and the Guarantors, (i) no
license, permit or authorization to transact insurance and reinsurance business
is the subject of a proceeding for suspension, revocation or limitation or any
similar proceedings; (ii) there is no sustainable basis for such a suspension,
revocation or limitation; and (iii) no such suspension, revocation or limitation
is threatened by any relevant Insurance Regulatory Authority. No Material
Insurance Subsidiary transacts any insurance business, directly or indirectly,
in any jurisdiction other than those listed on SCHEDULE 4.4, where such business
requires any license, permit or other authorization of an Insurance Regulatory
Authority of such jurisdiction.
4.5 Litigation. There are no actions, investigations, suits or
proceedings pending or, to the knowledge of the Borrower and the Guarantors,
threatened, at law, in equity or in arbitration, before any court, other
Governmental Authority or other Person, (i) against the Borrower or the
Guarantors or any of the Subsidiaries or against or affecting any of their
respective properties that would, if adversely determined, be reasonably likely
to have a Material Adverse Effect, other than actions, investigations, suits or
proceedings arising in the ordinary course of business of the Insurance
Subsidiaries for which reserves have been prudently estimated and set aside in
accordance with sound and standard industry practices; or (ii) with respect to
this Agreement, any of the other Credit Documents or the Reorganization.
4.6 Taxes. Each of the Borrower, the Guarantors and the Subsidiaries
has timely filed all federal, state and local tax returns and reports required
to be filed by it except where the failure to timely file would not,
individually or in the aggregate, have a Material Adverse Effect, and has paid
all taxes, assessments, fees and other charges levied upon it or upon its
properties that are shown thereon as due and payable, other than those that are
being contested in good faith and by proper proceedings and for which adequate
reserves have been established in accordance with GAAP. Such returns accurately
reflect in all material respects all liability for taxes of the Borrower, the
Guarantors and the Subsidiaries for the periods covered thereby. There is no
ongoing audit or examination or, to the knowledge of the Borrower and the
Guarantors, other investigation by any Governmental Authority of the tax
liability of the Borrower, the Guarantors, or any of their Subsidiaries, and
there is no unresolved claim by any Governmental Authority concerning the tax
liability of the Borrower, the Guarantors, or any of their Subsidiaries for any
period for which tax returns have been or were required to have been filed,
other than claims for which adequate reserves have been established in
accordance with GAAP. Neither the Borrower, the Guarantors nor any of the
Subsidiaries has waived or extended or has been requested to waive or extend the
statute of limitations relating to the payment of any taxes.
4.7 Subsidiaries. SCHEDULE 4.7 sets forth a list, as of the date
hereof, of all of the Subsidiaries of PXRE Group and, as to each such
Subsidiary, the percentage ownership (direct and indirect) of PXRE Group and, as
applicable, the Borrower, in each class of its capital stock and each direct
owner thereof and indicates in each case whether such Subsidiary is a Material
Subsidiary. Except for the shares of capital stock expressly indicated on
SCHEDULE 4.7, there are no shares of capital stock, warrants, rights, options or
other equity securities, or other Capital Stock of any Subsidiary of PXRE Group
outstanding or reserved for any purpose. All outstanding shares of capital stock
of each Subsidiary of PXRE Group are duly and validly issued, fully paid and
nonassessable.
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4.8 Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Agent or any Lender in writing by or on
behalf of the Borrower, the Guarantors or any of the Subsidiaries for purposes
of or in connection with this Agreement, the Reorganization and the transactions
contemplated hereby is, and all other such factual information hereafter
furnished to the Agent or any Lender in writing by or on behalf of the Borrower,
the Guarantors or any of the Subsidiaries will be, true and accurate in all
material respects on the date as of which such information is dated or certified
(or, if such information has been amended or supplemented, on the date as of
which any such amendment or supplement is dated or certified) and, when all such
information is taken together, not made incomplete by omitting to state a
material fact necessary to make the statements contained therein, in light of
the circumstances under which such information was provided, not materially
misleading.
4.9 Margin Regulations. Neither the Borrower, the Guarantors nor any of
the Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
Margin Stock. No proceeds of the Loans will be used, directly or indirectly, to
purchase or carry any Margin Stock (except as expressly permitted under SECTION
7.6(a)(i)), to extend credit for such purpose or for any other purpose that
would violate Regulations T, U or X or any provision of the Exchange Act.
4.10 No Material Adverse Change. There has been no Material Adverse
Change since December 31, 1997, and there exists no event, condition or state of
facts that could reasonably be expected to result in a Material Adverse Change.
4.11 Financial Matters. (a) The Borrower has heretofore furnished to
the Agent copies of (i) the audited consolidated balance sheets of the Borrower
and its Subsidiaries as of December 31, 1998, 1997, and 1996, and the related
statements of income, cash flows and stockholders' equity for the fiscal years
then ended, together with the opinion of PriceWaterhouseCoopers LLP thereon, and
(ii) the unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as of March 31, 1999 and June 30, 1999, and the related statements
of income, cash flows and stockholders' equity for the three- and six-month
periods then ended. Such financial statements have been prepared in accordance
with GAAP (subject, with respect to the unaudited financial statements, to the
absence of notes required by GAAP and to normal year-end adjustments) and
present fairly the financial condition of the Borrower and its Subsidiaries on a
consolidated basis as of the respective dates thereof and the consolidated
results of operations of the Borrower and its Subsidiaries for the respective
periods then ended. Except as fully reflected in (x) the most recent financial
statements referred to above and the notes thereto, (y) the financial statements
previously delivered pursuant to SECTION 5.1 of the Old Credit Agreement or this
Agreement, or (z) any Form 8-K filed by the Borrower with the Securities and
Exchange Commission and previously delivered by the Borrower to the Lenders,
there were, as of the date of the most recent financial statements described in
the immediately foregoing clause (x) or (y) or, if later, the date of the most
recently delivered Form 8-K, no material liabilities or obligations with respect
to the Borrower or any of its Subsidiaries of any nature whatsoever (whether
absolute, contingent or otherwise and whether or not due) that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect,
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and since the date thereof neither the Borrower nor any Subsidiary has incurred
any liabilities or obligations that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) Each of the unaudited pro forma balance sheets of the Borrower and
PXRE Group as of June 30, 1999, a copy of which has heretofore been delivered to
the Lenders, gives pro forma effect to the consummation of the Reorganization,
the Bermuda Reinsurance Agreements, and the payment of transaction fees and
expenses related to the foregoing, all as if such events had occurred on such
date (the "Pro Forma Balance Sheets"). Each Pro Forma Balance Sheet has been
prepared in accordance with GAAP (subject to the absence of footnotes required
by GAAP and subject to normal year-end adjustments) and, subject to stated
assumptions made in good faith and having a reasonable basis set forth therein,
presents fairly the financial condition of the Borrower and PXRE Group,
respectively, on an unaudited pro forma basis as of the date set forth therein
after giving effect to the consummation of the transactions described above.
(c) The Borrower has prepared, and has heretofore furnished to the
Lenders a copy of, annual projected balance sheets and statements of income and
cash flows of each of the Borrower and PXRE Group giving effect to the
Reorganization, the Bermuda Reinsurance Agreements, and the payment of
transaction fees and expenses related to the foregoing (the "Projections") for
the period beginning with the year ended December 31, 1999 and continuing
through December 31, 2005. In the opinion of management of PXRE Group and the
Borrower, the assumptions used in the preparation of the Projections were fair,
complete and reasonable when made and continue to be fair, complete and
reasonable as of the date hereof. The Projections have been prepared in good
faith by the executive and financial personnel of PXRE Group and the Borrower,
are complete and represent a reasonable estimate of the future performance and
financial condition of PXRE Group and the Borrower, respectively, subject to the
uncertainties and approximations inherent in any projections and the business of
PXRE Group and Borrowers.
(d) Each of PXRE Group and its Subsidiaries, after giving effect to the
consummation of the transactions contemplated hereby, (i) has capital sufficient
to carry on its businesses as conducted and as proposed to be conducted, (ii)
has assets with a fair saleable value, determined on a going concern basis, (y)
not less than the amount required to pay the probable liability on its existing
debts as they become absolute and matured and (z) greater than the total amount
of its liabilities (including identified contingent liabilities, valued at the
amount that can reasonably be expected to become absolute and matured), and
(iii) does not intend to, and does not believe that it will, incur debts or
liabilities beyond its ability to pay such debts and liabilities as they mature.
(e) The Borrower has heretofore furnished to the Agent copies of (i)
the Annual Statements of each of its Insurance Subsidiaries (other than PXRE
Ltd.) as of December 31, 1998, 1997 and 1996, and for the fiscal years then
ended, (ii) the Quarterly Statements of each of its Insurance Subsidiaries
(other than PXRE Ltd.) as of the end of the first two fiscal quarters of 1999,
and for the end of the fiscal quarters then ended, each as filed with the
relevant Insurance Regulatory Authority, and (iii) the annual report with
respect to PXRE Ltd. filed with Lloyd's (collectively, the "Historical Statutory
Statements"). The Historical Statutory Statements (including, without
limitation, the provisions made therein for investments and the valuation
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thereof, reserves, policy and contract claims and statutory liabilities) have
been prepared in accordance with SAP where required (except as may be reflected
in the notes thereto and subject, with respect to the Quarterly Statements, to
the absence of notes required by SAP and to normal year-end adjustments), were
in compliance with applicable Requirements of Law when filed and present fairly
the financial condition of the respective Insurance Subsidiaries covered thereby
as of the respective dates thereof and the results of operations, changes in
capital and surplus and cash flow of the respective Insurance Subsidiaries
covered thereby for the respective periods then ended. Except for liabilities
and obligations disclosed or provided for in the Historical Statutory Statements
(including, without limitation, reserves, policy and contract claims and
statutory liabilities), no Insurance Subsidiary had, as of the date of its
respective Historical Statutory Statements, any material liabilities or
obligations of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due) that, in accordance with SAP (or, with respect to PXRE
Ltd., the requirements of Lloyd's), would have been required to have been
disclosed or provided for in such Historical Statutory Statements. All books of
account of each Insurance Subsidiary fully and fairly disclose all of its
material transactions, properties, assets, investments, liabilities and
obligations, are in its possession and are true, correct and complete in all
material respects.
4.12 Ownership of Properties. Each of the Borrower, the Guarantors and
the Subsidiaries (i) has good and marketable title to all real property owned by
it, (ii) holds interests as lessee under valid leases in full force and effect
with respect to all material leased real and personal property used in
connection with its business, (iii) possesses or has rights to use licenses,
patents, copyrights, trademarks, service marks, trade names and other assets
sufficient to enable it to continue to conduct its business substantially as
heretofore conducted and without any material conflict with the rights of
others, and (iv) has good title to all of its other properties and assets
reflected in the most recent financial statements referred to in SECTION 4.11(a)
(except as sold or otherwise disposed of since the date thereof in the ordinary
course of business), in each case under (i), (ii), (iii) and (iv) above free and
clear of all Liens other than Permitted Liens.
4.13 ERISA. (a) Each of the Borrower, the Guarantors and their
respective ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA, and each Plan is and has been administered in
compliance in all material respects with all applicable Requirements of Law,
including, without limitation, the applicable provisions of ERISA and the
Internal Revenue Code. No ERISA Event (i) has occurred within the five-year
period prior to the Reorganization Date, (ii) has occurred and is continuing, or
(iii) to the knowledge of the Borrower and the Guarantors, is reasonably
expected to occur with respect to any Plan, except in each case where such
occurrence would not be reasonably likely to have a Material Adverse Effect. No
Plan has any Unfunded Pension Liability as of the most recent annual valuation
date applicable thereto, and neither the Borrower, the Guarantors nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA, except where such Unfunded Pension Liability or transaction
would not be reasonably likely to have a Material Adverse Effect.
(b) Neither the Borrower, the Guarantors nor any ERISA Affiliate has
had a complete or partial withdrawal from any Multiemployer Plan, and neither
the Borrower, the Guarantors
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nor any ERISA Affiliate would become subject to any liability under ERISA if the
Borrower or the Guarantors or any ERISA Affiliate were to withdraw completely
from all Multiemployer Plans as of the most recent valuation date. No
Multiemployer Plan is in "reorganization" or is "insolvent" within the meaning
of such terms under ERISA.
4.14 Environmental Matters. (a) No Hazardous Substances are or have
been generated, used, located, released, treated, disposed of or stored by the
Borrower, the Guarantors or any of the Subsidiaries or, to the knowledge of the
Borrower and the Guarantors, by any other Person (including any predecessor in
interest) or otherwise, in, on or under any portion of any real property, leased
or owned, of the Borrower or the Guarantors or any of the Subsidiaries, except
in material compliance with all applicable Environmental Laws, and no portion of
any such real property or, to the knowledge of the Borrower and the Guarantors,
any other real property at any time leased, owned or operated by the Borrower or
the Guarantors or any of the Subsidiaries, has been contaminated by any
Hazardous Substance; and no portion of any real property, leased or owned, of
the Borrower or the Guarantors or any of the Subsidiaries has been or is
presently the subject of an environmental audit, assessment or remedial action.
(b) No portion of any real property, leased or owned, of the Borrower
or the Guarantors or any of the Subsidiaries has been used by the Borrower or
the Guarantors or any of the Subsidiaries or, to the knowledge of the Borrower
and the Guarantors, by any other Person, as or for a mine, a landfill, a dump or
other disposal facility, a gasoline service station, or (other than for
petroleum substances stored in the ordinary course of business) a petroleum
products storage facility; no portion of such real property or any other real
property at any time leased, owned or operated by the Borrower or the Guarantors
or any of the Subsidiaries has, pursuant to any Environmental Law, been placed
on the "National Priorities List" or "CERCLIS List" (or any similar federal,
state or local list) of sites subject to possible environmental problems; and
there are not and have never been any underground storage tanks situated on any
real property, leased or owned, of the Borrower or the Guarantors or any of the
Subsidiaries.
(c) All activities and operations of the Borrower, the Guarantors and
the Subsidiaries are in compliance with the requirements of all applicable
Environmental Laws, except to the extent the failure so to comply, individually
or in the aggregate, would not be reasonably likely to have a Material Adverse
Effect. Each of the Borrower, the Guarantors and the Subsidiaries (i) has
obtained all licenses and permits under Environmental Laws necessary to its
respective operations, (ii) all such licenses and permits are being maintained
in good standing, and (iii) each of the Borrower, the Guarantors and the
Subsidiaries is in compliance with all terms and conditions of such licenses and
permits, except for such licenses and permits the failure to obtain, maintain or
comply with which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Other than normal claims in the
ordinary course of business pursuant to insurance policies written or reinsured
by an Insurance Subsidiary, the loss reserves for which are adequately and
properly reflected in such Insurance Subsidiary's most recent Annual or
Quarterly Statements, neither the Borrower, the Guarantors nor any of the
Subsidiaries is involved in any suit, action or proceeding, or has received any
notice, complaint or other request for information from any Governmental
Authority or other Person, with respect to any actual or alleged Environmental
Claims that, if adversely determined, would be reasonably
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likely, individually or in the aggregate, to have a Material Adverse Effect;
and, to the knowledge of the Borrower and the Guarantors, there are no
threatened actions, suits, proceedings or investigations with respect to any
such Environmental Claims.
4.15 Compliance With Laws. Each of the Borrower, the Guarantors and the
Subsidiaries has timely filed all material reports, documents and other
materials required to be filed by it under all applicable Requirements of Law
with any Governmental Authority, has retained all material records and documents
required to be retained by it under all applicable Requirements of Law, and is
otherwise in compliance with all applicable Requirements of Law in respect of
the conduct of its business and the ownership and operation of its properties,
except for such Requirements of Law the failure to comply with which,
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect.
4.16 Regulated Industries. Neither the Borrower, the Guarantors nor any
of the Subsidiaries is (i) an "investment company," a company "controlled" by an
"investment company," or an "investment advisor," within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a "holding company," a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.17 Insurance. The assets, properties and business of the Borrower,
the Guarantors and the Subsidiaries are insured against such hazards and
liabilities, under such coverages and in such amounts, as are customarily
maintained by prudent companies similarly situated and under policies issued by
insurers of recognized responsibility.
4.18 Material Contracts. SCHEDULE 4.18 lists, as of the date hereof,
each "material contract" (within the meaning of Item 601(b)(10) of Regulation
S-K under the Exchange Act) (other than insurance policies and contracts,
reinsurance agreements and weather and similar swap agreements and directly
related documentation) to which the Borrower, the Guarantors or any of the
Subsidiaries is a party, by which any of them or their respective properties is
bound or to which any of them is subject (collectively, "Material Contracts"),
other than contracts disclosed in any filing by the Borrower or PXRE Group with
the Securities Exchange Commission pursuant to the Exchange Act or the
Securities Act, and also indicates the parties, subject matter and term thereof.
As of the date hereof, (i) each Material Contract is in full force and effect
and is enforceable by the Borrower, the Guarantors or the Subsidiary that is a
party thereto in accordance with its terms, and (ii) neither the Borrower, the
Guarantors nor any of the Subsidiaries (nor, to the knowledge of the Borrower
and the Guarantors, any other party thereto) is in breach of or default under
any Material Contract in any material respect or has given notice of termination
or cancellation of any Material Contract.
4.19 Reinsurance Agreements. (a) Except as set forth on Schedule F to
the Annual Statements for the Insurance Subsidiaries or, with respect to PXRE
Ltd., as set forth in the annual report filed with Lloyd's, for the fiscal year
ending December 31, 1998, and except as set forth on SCHEDULE 4.19, there were
no material liabilities outstanding as of June 30, 1999 under any Reinsurance
Agreement and since June 30, 1999, except as previously disclosed in writing by
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PXRE Group to the Lenders pursuant to this Agreement, no Insurance Subsidiary
has incurred any material liabilities under any Reinsurance Agreement that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Each such Reinsurance Agreement (except any Reinsurance
Agreement that has expired by its terms in the ordinary course) is in full force
and effect; none of the Insurance Subsidiaries or, to the knowledge of the
Borrower and the Guarantors, any other party thereto, is in breach of or default
under any such contract; and the Borrower has no reason to believe that the
financial condition of any other party to any such contract is impaired such
that a default thereunder by such party could reasonably be anticipated. Each
such Reinsurance Agreement (except any Reinsurance Agreement that has expired by
its terms in the ordinary course) is qualified under all applicable Requirements
of Law to receive the statutory credit assigned to such Reinsurance Agreement in
the relevant Annual Statement or Quarterly Statement at the time prepared. Each
Person to whom any of the Insurance Subsidiaries has ceded any material
liability pursuant to any Reinsurance Agreement on the date hereof, other than
Select Re, either (i) has a rating of "A-" or better by A.M. Best & Company,
(ii) has a financial strength rating of "A-" or better by Standard & Poor's or
Moody's, (iii) is a syndicate that is operating as part of the Lloyd's insurance
Market, and the Lloyd's insurance Market is rated "A-" or better by A.M. Best &
Company or "A-" or better by Standard & Poors, (iv) has provided collateral in
favor of the applicable Insurance Subsidiary of the type described in SCHEDULE
4.19, or (v) has an aggregate amount of Net Amount Recoverable from Reinsurers
for the Insurance Subsidiaries attributable to it (collectively with all other
such Persons not described in clauses (i) through (iv) above) that is less than
$5,000,000 as of the end of the most recent fiscal year, and an aggregate amount
of Reinsurance Premiums Ceded by the Insurance Subsidiaries for the current
fiscal year (or portion thereof) to it (collectively with all other such Persons
not described in clauses (i) through (iv) above) that is less than $10,000,000,
or (vi) is a pooling arrangement composed solely of Persons who meet one of the
requirements described in clauses (i) through (iv) above; and with respect to
Select Re, (y) no more than $15,000,000 in Reinsurance Premiums Ceded is ceded
to it by the Insurance Subsidiaries as of the date hereof and (z) the Borrower
has submitted to the Agent recent financial statements of Select Re showing, to
the satisfaction of the Agent, that there has been no Material Adverse Change in
the financial condition of Select Re.
(b) As of the date hereof, no Insurance Subsidiary is a ceding party to
any Surplus Relief Reinsurance Agreement.
4.20 Labor Relations. Neither the Borrower, the Guarantors nor any of
the Subsidiaries is engaged in any unfair labor practice within the meaning of
the National Labor Relations Act of 1947, as amended. There is (i) no unfair
labor practice complaint before the National Labor Relations Board, or grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement, pending or, to the knowledge of the Borrower and the Guarantors,
threatened, against the Borrower or the Guarantors or any of the Subsidiaries,
(ii) no strike, lock-out, slowdown, stoppage, walkout or other labor dispute
pending or, to the knowledge of the Borrower and the Guarantors, threatened,
against the Borrower or the Guarantors or any of the Subsidiaries, and (iii) to
the knowledge of the Borrower and the Guarantors, no petition for certification
or union election or union organizing activities taking place with respect to
the Borrower or any of its Subsidiaries.
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4.21 Year 2000 Compatibility. Any reprogramming required to permit the
proper functioning, before, on and after January 1, 2000, of (i) PXRE Group's
and its Subsidiaries' material computer-based systems and (ii) equipment
containing material embedded microchips, and the testing of all such systems and
equipment, as so reprogrammed, has been completed, except for such reprogramming
the absence of which would not be expected to have a Material Adverse Effect.
The cost to the Borrower and its Subsidiaries of such reprogramming and testing
and of the reasonably foreseeable consequences of the year 2000 to the Borrower,
the Guarantors and the Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) are not
expected to result in a Default or Material Adverse Effect. Except for such of
the reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower, the Guarantors and
the Subsidiaries are and, with ordinary course upgrading and maintenance will
continue for the term of this Agreement to be, sufficient to permit the
Borrower, the Guarantors and the Subsidiaries to conduct their respective
businesses without a Material Adverse Effect.
4.22 Compliance with Old Credit Agreement. Immediately before giving
effect to the Reorganization, each of the representations and warranties
contained in Article IV of the Old Credit Agreement are true and correct as of
the date hereof and No Default or Event of Default has occurred and is
continuing under the Old Credit Agreement.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower and the Guarantors covenant and agree that, until the
termination of the Commitments and the payment in full of all principal and
interest with respect to the Loans, together with all other amounts then due and
owing hereunder:
5.1 Financial Statements. PXRE Group will deliver to each Lender:
(a) As soon as available and in any event within the earlier of fifteen
(15) days after filing with the Securities Exchange Commission and sixty (60)
days after the end of each of the first three fiscal quarters of each fiscal
year, beginning with the fiscal quarter ending June 30, 1999, unaudited
consolidated and consolidating balance sheets of PXRE Group and its Subsidiaries
as of the end of such fiscal quarter and unaudited consolidated and
consolidating statements of income, cash flows and stockholders' equity for PXRE
Group and its Subsidiaries for the fiscal quarter then ended and for that
portion of the fiscal year then ended (except that, for fiscal quarters ending
prior to the Reorganization Date, the Borrower shall deliver such financial
statements only for the Borrower and its Subsidiaries), in each case setting
forth comparative consolidated figures as of the end of and for the
corresponding period in the preceding fiscal year, all in reasonable detail and
prepared in accordance with GAAP (subject to the absence of notes required by
GAAP and subject to normal year-end adjustments) applied on a basis consistent
with that of the preceding quarter or containing disclosure of the effect on the
financial condition or results of operations of any change in the application of
accounting principles and
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practices during such quarter; and
(b) As soon as available and in any event within the earlier of fifteen
(15) days after filing with the Securities Exchange Commission and one hundred
five (105) days after the end of each fiscal year, beginning with the fiscal
year ending December 31, 1999, an audited consolidated balance sheet and an
unaudited consolidating balance sheet of PXRE Group and its Subsidiaries as of
the end of such fiscal year and audited consolidated and unaudited consolidating
statements of income, cash flows and stockholders' equity for PXRE Group and its
Subsidiaries for the fiscal year then ended, including the notes thereto, in
each case setting forth comparative figures as of the end of and for the
preceding fiscal year, all in reasonable detail and certified by the independent
certified public accounting firm regularly retained by PXRE Group or another
independent certified public accounting firm of recognized national standing
reasonably acceptable to the Required Lenders, together with (y) a report
thereon by such accountants that is not qualified as to going concern or scope
of audit and to the effect that such financial statements present fairly the
consolidated financial condition and results of operations of PXRE Group and its
Subsidiaries as of the dates and for the periods indicated in accordance with
GAAP applied on a basis consistent with that of the preceding year or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
year, and (z) a report by such accountants to the effect that, based on and in
connection with their examination of the financial statements of the Borrower
and its Subsidiaries, they obtained no knowledge of the occurrence or existence
of any Default or Event of Default relating to accounting or financial reporting
matters, or a statement specifying the nature and period of existence of any
such Default or Event of Default disclosed by their audit; provided, however,
that such accountants shall not be liable by reason of the failure to obtain
knowledge of any Default or Event of Default that would not be disclosed or
revealed in the course of their audit examination.
(c) [ADD REQUIREMENT FOR UNAUDITED QUARTERLIES AND AUDITED ANNUALS FOR
BORROWER AND ITS SUBSIDIARIES IF REQUIRED FOR TRUPS]
5.2 Statutory Financial Statements. PXRE Group will deliver to each
Lender:
(a) As soon as available and in any event within sixty (60) days after
the end of each of the first three fiscal quarters of each fiscal year (or, in
the case of PXRE Bermuda, five (5) days following the filing date required for
such statements under any Bermuda Insurance Regulatory Authority, if later),
beginning with the fiscal quarter ending September 30, 1999, a Quarterly
Statement of each Insurance Subsidiary as of the end of such fiscal quarter and
for that portion of the fiscal year then ended, in the form filed with the
relevant Insurance Regulatory Authority, prepared in accordance with SAP (or,
for any non-U.S. domiciled Insurance Subsidiaries, the approximate equivalent
under such Subsidiary's Insurance Regulatory Authority);
(b) As soon as available and in any event within seventy-five (75) days
after the end of each fiscal year (or, in the case of PXRE Bermuda, five (5)
days following the filing date required for such statements under any Bermuda
Insurance Regulatory Authority, if later),
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beginning with the fiscal year ended December 31, 1999, an Annual Statement of
each Insurance Subsidiary as of the end of such fiscal year and for the fiscal
year then ended, in the form filed with the relevant Insurance Regulatory
Authority, prepared in accordance with SAP (or, for any non-U.S. domiciled
Insurance Subsidiaries, the approximate equivalent under such Subsidiary's
Insurance Regulatory Authority); and
(c) As soon as available and in any event within one hundred
thirty-five (135) days after the end of each fiscal year, beginning with the
fiscal year ended December 31, 1999, the combined Annual Statement of the
Borrower's Insurance Subsidiaries as of the end of such fiscal year and for the
fiscal year then ended, in the form filed with the relevant Insurance Regulatory
Authority, prepared in accordance with SAP.
5.3 Other Business and Financial Information. PXRE Group will deliver
to each Lender:
(a) Concurrently with each delivery of the financial statements
described in SECTIONS 5.1 and 5.2, a Compliance Certificate in the form of
EXHIBIT C-1 (in the case of the financial statements described in SECTION 5.1)
or EXHIBIT C-2 (in the case of the financial statements described in SECTION
5.2) with respect to the period covered by the financial statements then being
delivered, executed by a Financial Officer of PXRE Group and the Borrower,
together in each case with a Covenant Compliance Worksheet reflecting the
computation of the respective financial covenants set forth in the Worksheets as
of the last day of the period covered by such financial statements;
(b) As soon as available and in any event prior to the end of each
fiscal year, beginning with the fiscal year ending December 31, 1999, a complete
set of projections for PXRE Group and its Subsidiaries for each of the
succeeding fiscal years remaining through the Maturity Date, consisting of (i)
consolidated projections prepared based on GAAP principles, (ii) consolidated
projections prepared based on SAP principles, (iii) individual projections for
each Material Subsidiary prepared based on GAAP principles, and (iv) individual
projections for each Material Insurance Subsidiary prepared based on SAP
principles or in accordance with the requirements imposed by Lloyd's, as
applicable, together with a certificate of a Financial Officer of the Borrower
to the effect that such projections have been prepared in good faith and are
reasonable estimates of the financial position and results of operations of the
Borrower and its Subsidiaries for the period covered thereby; and as soon as
available from time to time thereafter, any modifications or revisions to or
restatements of such projections;
(c) Promptly upon filing with the relevant Insurance Regulatory
Authority and in any event within ninety (90) days after the end of each fiscal
year, beginning with the fiscal year ended December 31, 1999, a copy of each
Insurance Subsidiary's "Statement of Actuarial Opinion" (or equivalent
information should the relevant Insurance Regulatory Authority not require such
a statement) as to the adequacy of such Insurance Subsidiary's loss reserves for
such fiscal year, together with a copy of its management discussion and analysis
in connection therewith, each in the format prescribed by the applicable
insurance laws of such Insurance Subsidiary's jurisdiction of domicile;
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(d) Promptly upon receipt thereof, copies of any "management letter"
submitted to PXRE Group any of its Subsidiaries by its certified public
accountants in connection with an annual, interim or special audit, and promptly
upon completion thereof, any response reports from PXRE Group or any such
Subsidiary in respect thereof;
(e) Promptly upon the sending, filing or receipt thereof, copies of (i)
all financial statements, reports, notices and proxy statements that PXRE Group
or any of its Subsidiaries shall send or make available generally to its
shareholders, (ii) all regular, periodic and special reports, registration
statements and prospectuses (other than on Form S-8) that PXRE Group or any of
its Subsidiaries shall render to or file with the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. or any national
securities exchange, and (iii) all press releases and other statements made
available generally by PXRE Group or any of its Subsidiaries to the public
concerning material developments in the business of PXRE Group or any of its
Subsidiaries; (iv) all significant reports on examination or other similar
significant reports, financial examination reports or market conduct examination
reports by the NAIC or any Insurance Regulatory Authority or other Governmental
Authority with respect to any Insurance Subsidiary's insurance business; (v) all
significant filings made under applicable state insurance holding company acts
by PXRE Group or any of its Subsidiaries, including, without limitation, filings
seeking approval of material transactions with Affiliates; and (vi) all material
information sent to rating agencies, including without limitation Moody's,
Standard & Poor's, A.M. Best & Company and Duff & Phelps Rating Co.
(f) Promptly upon (and in any event within five (5) Business Days
after) any Responsible Officer of PXRE Group or the Borrower obtaining knowledge
thereof, written notice of any of the following:
(i) the occurrence of any Default or Event of Default,
together with a written statement of a Responsible Officer of the
Borrower specifying the nature of such Default or Event of Default, the
period of existence thereof and the action that PXRE Group or the
Borrower has taken and proposes to take with respect thereto;
(ii) the institution or threatened institution of any action,
suit, investigation or proceeding against or affecting the Borrower or
the Guarantors or any of the Subsidiaries, including any such
investigation or proceeding by any Governmental Authority (other than
routine periodic inquiries, investigations or reviews), that would, if
adversely determined, be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, and any material
development in any litigation or other proceeding previously reported
pursuant to SECTION 4.5 or this subsection;
(iii) the receipt by the Borrower or the Guarantors or any of
the Subsidiaries from any Governmental Authority of (y) any notice
asserting any failure by the Borrower or the Guarantors or any of the
Subsidiaries to be in compliance with applicable Requirements of Law,
which failure is reasonably likely to have a Material Adverse Effect,
or that threatens the taking of any action against the Borrower or such
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Subsidiary, in each case that, if taken or adversely determined, would
be reasonably likely to have a Material Adverse Effect; or (z) any
notice of any actual or threatened suspension, limitation or revocation
of, failure to renew, or imposition of any restraining order, escrow or
impoundment of funds in connection with, any license, permit,
accreditation or authorization of the Borrower or the Guarantors or any
of the Subsidiaries, where in each case such action would be reasonably
likely to have a Material Adverse Effect;
(iv) the occurrence of any ERISA Event, together with (x) a
written statement of a Responsible Officer of PXRE Group specifying the
details of such ERISA Event and the action that PXRE Group has taken
and proposes to take with respect thereto, (y) a copy of any notice
with respect to such ERISA Event that may be required to be filed with
the PBGC and (z) a copy of any notice delivered by the PBGC to PXRE
Group or such ERISA Affiliate with respect to such ERISA Event;
(v) the occurrence of any material default under, or any
proposed or threatened termination or cancellation (other than upon
expiration) of, any Material Contract or other material contract or
agreement to which the Borrower or the Guarantors or any of the
Subsidiaries is a party (other than insurance policies and contracts
and reinsurance agreements pursuant to which an Insurance Subsidiary is
the assuming party and weather and similar swap agreements, but
specifically including the Bermuda Reinsurance Agreements), the
termination or cancellation of which would be reasonably likely to have
a Material Adverse Effect;
(vi) the occurrence of any of the following: (x) the assertion
of any Environmental Claim against or affecting the Borrower, the
Guarantors, any of the Subsidiaries or any of their respective real
property, leased or owned; (y) the receipt by the Borrower, the
Guarantors or any of the Subsidiaries of notice of any alleged
violation of or noncompliance with any Environmental Laws; or (z) the
taking of any remedial action by the Borrower, any Guarantor, any of
the Subsidiaries or any other Person in response to the actual or
alleged generation, storage, release, disposal or discharge of any
Hazardous Substances on, to, upon or from any real property leased or
owned by the Borrower or the Guarantors or any of the Subsidiaries; but
in each case under clauses (x), (y) and (z) above, only to the extent
the same would be reasonably likely to have a Material Adverse Effect;
(vii) the occurrence of any actual changes in any insurance
statute or regulation governing the investment or dividend practices of
any Material Insurance Subsidiary that would be reasonably likely to
have a Material Adverse Effect; and
(viii) any other matter or event pertaining directly to the
Borrower, the Guarantors or any Insurance Subsidiary that has, or would
be reasonably likely to have, a Material Adverse Effect, together with
a written statement of a Responsible Officer of the Borrower setting
forth the nature and period of existence thereof and the action that
the Borrower has taken and proposes to take with respect thereto;
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(g) Promptly, notice of (i) the occurrence of any material amendment or
modification (other than expiration) to any Reinsurance Agreement (whether
entered into before or after the Closing Date), including any such agreements
that are in a runoff mode on the date hereof, which amendment or modification
would be reasonably likely to have a Material Adverse Effect, or (ii) the
receipt by the Borrower or the Guarantors or any of its Subsidiaries of any
written notice of any denial of coverage or claim, litigation or arbitration
with respect to any Reinsurance Agreement to which it is a ceding party which
would be reasonably likely to have a Material Adverse Effect;
(h) As promptly as reasonably possible, such other information about
the business, condition (financial or otherwise), operations or properties of
the Borrower or the Guarantors or any of the Subsidiaries (including any Plan
and any information required to be filed under ERISA) as the Agent or any Lender
may from time to time reasonably request.
(i) If prepared or upon the request of the Agent at the direction of
the Required Lenders, deliver to each Lender, within the earlier of (y) sixty
(60) days of such request or (z) ten (10) days of receipt by the Borrower, PXRE
Group or any Insurance Subsidiary, an actuarial review of the liabilities and
other items of each Insurance Subsidiary prepared at the Borrower's expense, by
an actuary or a firm of actuaries reasonably acceptable to the Agent, such
actuarial review to be in form and substance reasonably acceptable to the
Required Lenders.
5.4 Corporate Existence; Franchises; Maintenance of Properties. The
Borrower and the Guarantors will, and PXRE Group will cause each of its Material
Subsidiaries to, (i) maintain and preserve in full force and effect its
corporate existence, except as expressly permitted otherwise by SECTION 7.1,
(ii) obtain, maintain and preserve in full force and effect all other rights,
franchises, licenses, permits, certifications, approvals and authorizations
required by Governmental Authorities and necessary to the ownership, occupation
or use of its properties or the conduct of its business, except to the extent
the failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (iii) keep all material properties in good working order and
condition (normal wear and tear excepted) and from time to time make all
necessary repairs to and renewals and replacements of such properties, except to
the extent that any of such properties are obsolete or are being replaced.
5.5 Compliance with Laws. The Borrower and the Guarantors will, and
PXRE Group will cause each of its Subsidiaries to, comply in all respects with
all Requirements of Law applicable in respect of the conduct of its business and
the ownership and operation of its properties, except to the extent the failure
so to comply would not be reasonably likely to have a Material Adverse Effect.
5.6 Payment of Obligations. The Borrower and the Guarantors will, and
PXRE Group will cause each of its Subsidiaries to, (i) pay all liabilities and
obligations as and when due (subject to any applicable subordination
provisions), except to the extent failure to do so would not be reasonably
likely to have a Material Adverse Effect, and (ii) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it, upon its income
or profits or
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upon any of its properties, prior to the date on which penalties would attach
thereto, and all lawful claims that, if unpaid, might become a Lien upon any of
the properties of the Borrower or the Guarantors or any of the Subsidiaries;
provided, however, that neither the Borrower, the Guarantors nor any of the
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim that is being contested in good faith and by proper proceedings and as to
which the Borrower or such Guarantor or such Subsidiary is maintaining adequate
reserves with respect thereto in accordance with GAAP.
5.7 Insurance. The Borrower and the Guarantors will, and PXRE Group
will cause each of its Material Subsidiaries to, maintain with financially sound
and reputable insurance companies insurance with respect to its assets,
properties and business, against such hazards and liabilities, of such types and
in such amounts, as is customarily maintained by companies in the same or
similar businesses similarly situated.
5.8 Maintenance of Books and Records; Inspection. The Borrower and the
Guarantors will, and PXRE Group will cause each of its Subsidiaries to, (i)
maintain adequate books, accounts and records, in which full, true and correct
entries shall be made of all financial transactions in relation to its business
and properties, and prepare all financial statements required under this
Agreement, in each case in accordance with GAAP and in compliance with the
requirements of any Governmental Authority having jurisdiction over it, and (ii)
permit employees or agents of the Agent or any Lender to inspect its properties
and examine or audit its books, records, working papers and accounts and make
copies and memoranda of them, and to discuss its affairs, finances and accounts
with its officers and employees and, upon notice to the Borrower or PXRE Group,
the independent public accountants and actuarial firms of the Borrower or PXRE
Group and the Subsidiaries (and by this provision the Borrower and PXRE Group
authorize such accountants and actuarial firms (if any) to discuss the finances
and affairs of the Borrower, the Guarantors and the Subsidiaries), all at such
times and from time to time, upon reasonable notice and during business hours,
as may be reasonably requested.
5.9 Permitted Acquisitions. (a) Subject to the provisions of subsection
(b) below and the requirements contained in the definition of Permitted
Acquisition, and subject to the other terms and conditions of this Agreement,
PXRE Group or its Subsidiaries may from time to time on or after the date hereof
effect Permitted Acquisitions, provided that, with respect to each Permitted
Acquisition:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of the consummation of such Permitted
Acquisition or would exist immediately after giving effect thereto; and
(ii) the Acquisition Amount with respect thereto (regardless
of the form of consideration) (y) shall not exceed $35,000,000, and (z)
together with the aggregate of the Acquisition Amounts (regardless of
the form of consideration) for all other Permitted Acquisitions
consummated during the same fiscal quarter, or the period of three
consecutive fiscal quarters immediately prior thereto, shall not exceed
$50,000,000.
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(b) Not less than ten (10) Business Days prior to the consummation of
any Permitted Acquisition with respect to which the Acquisition Amount exceeds
$10,000,000, PXRE Group shall have delivered to the Agent and each Lender the
following:
(i) a reasonably detailed description of the material terms
of such Permitted Acquisition (including, without limitation, the
purchase price and method and structure of payment) and of each Person
or business that is the subject of such Permitted Acquisition (each, a
"Target"); and
(ii) historical financial statements of the Target (or, if
there are two or more Targets that are the subject of such Permitted
Acquisition and that are part of the same consolidated group,
consolidated historical financial statements for all such Targets) for
the two (2) most recent fiscal years available and, if available, for
any interim periods since the most recent fiscal year-end.
(c) As soon as reasonably practicable after the consummation of any
Permitted Acquisition, PXRE Group will deliver to the Agent and each Lender a
copy of the fully executed acquisition agreement (including schedules and
exhibits thereto) and other material documents and closing papers delivered in
connection therewith.
(d) The consummation of each Permitted Acquisition shall be deemed to
be a representation and warranty by the Borrower and the Guarantors that (except
as shall have been approved in writing by the Required Lenders) all conditions
thereto set forth in this Section and in the description furnished under clause
(i) of subsection (b) above have been satisfied and that the same is permitted
in accordance with the terms of this Agreement, which representation and
warranty shall be deemed to be a representation and warranty as of the date
thereof for all purposes hereunder, including, without limitation, for purposes
of SECTIONS 3.3 and 8.1.
5.10 Year 2000 Compatibility. The Borrower and the Guarantors will, and
PXRE Group will cause each of its Material Subsidiaries to, take all action
necessary to ensure that its material computer-based systems are able to operate
and effectively process data including dates on and after January 1, 2000. At
the request of the Agent or the Required Lenders, the Borrower and the
Guarantors will provide reasonable assurance of their Year 2000 compatibility.
5.11 Further Assurances. The Borrower and the Guarantors will, and PXRE
Group will cause each of its Subsidiaries to, make, execute, endorse,
acknowledge and deliver any amendments, modifications or supplements hereto and
restatements hereof and any other agreements, instruments or documents, and take
any and all such other actions, as may from time to time be reasonably requested
by the Agent or the Required Lenders to effect, confirm or protect and preserve
the interests, rights and remedies of the Agent and the Lenders under this
Agreement and the other Credit Documents.
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ARTICLE VI
FINANCIAL COVENANTS
The Borrower and the Guarantors covenant and agree that, until the
termination of the Commitments and the payment in full of all principal and
interest with respect to the Loans, together with all other amounts then due and
owing hereunder:
6.1 Leverage Ratio. The Leverage Ratio shall not exceed 0.3 to 1.0 at
any time.
6.2 Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of
the last day of any fiscal quarter beginning with the fiscal quarter ending
December 31, 1998, shall not be less than 1.5 to 1.0.
6.3 Risk-Based Capital Ratio. The "total adjusted capital" (within the
meaning of the Risk-Based Capital for Insurers Model Act as promulgated by the
NAIC as of the date hereof (the "Model Act")), as of the last day of any fiscal
year beginning with the fiscal year ending December 31, 1998, of any Material
Insurance Subsidiary other than PXRE Bermuda shall not be less than 250% of the
applicable "Company Action Level RBC" (within the meaning of the Model Act) as
of such date.
6.4 Combined Statutory Surplus. The Combined Statutory Capital and
Surplus of the Insurance Subsidiaries, as of the last day of any fiscal quarter
beginning with the fiscal quarter ending March 31, 1999, shall not be less than
$335,422, plus 50% of the aggregate increases in the stated capital and
additional paid-in capital accounts of the Insurance Subsidiaries (without
duplication) occurring after December 31, 1998, as determined in each case in
accordance with SAP.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower and the Guarantors covenant and agree that, until the
termination of the Commitments and the payment in full of all principal and
interest with respect to the Loans, together with all other amounts then due and
owing hereunder:
7.1 Merger; Consolidation. (a) The Borrower and the Guarantors will
not, and PXRE Group will not permit or cause any of its Material Subsidiaries
to, liquidate, wind up or dissolve, or enter into any consolidation, merger or
other combination, or agree to do any of the foregoing; provided, however, that:
(i) PXRE Group or the Borrower may merge or consolidate with
another Person so long as (x) either PXRE Group or the Borrower is the
surviving entity, (y) unless such other Person is a Wholly Owned
Subsidiary immediately prior to giving
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effect thereto, such merger or consolidation shall constitute a
Permitted Acquisition and the applicable conditions and requirements of
SECTION 5.9 shall be satisfied, and (z) immediately after giving effect
thereto, no Default or Event of Default would exist;
(ii) any Material Subsidiary (other than the Borrower) may
merge or consolidate with another Person so long as (x) the surviving
entity is PXRE Group or a Wholly Owned Subsidiary, (y) unless such
other Person is a Wholly Owned Subsidiary immediately prior to giving
effect thereto, such merger or consolidation shall constitute a
Permitted Acquisition and the applicable conditions and requirements of
SECTION 5.9 shall be satisfied, and (z) immediately after giving effect
thereto, no Default or Event of Default would exist; and
(iii) Subject to satisfaction of the conditions set forth in
SECTION 3.4 (or the waiver thereof in accordance with SECTION 11.6),
PXRE Group, PXRE Barbados, and the Borrower may consummate the
Reorganization in accordance with the Reorganization Documents,
notwithstanding any other provision of this ARTICLE VII to the
contrary.
(b) PXRE Group and the Borrower will not permit or cause any of its
non-Material Subsidiaries to undertake any transaction or series of related
transactions that would not be permitted under SECTION 7.1(a) to be undertaken
by a Material Subsidiary if, immediately after the consummation of such
transaction or series of related transactions, the non-Material Subsidiary would
be a Material Subsidiary.
7.2 Indebtedness. The Borrower and the Guarantors will not, and PXRE
Group will not permit or cause any of its Subsidiaries to, create, incur, assume
or suffer to exist any Indebtedness other than:
(i) Indebtedness incurred under this Agreement and the Notes;
(ii) Indebtedness existing on the date hereof and described in
SCHEDULE 7.2;
(iii) accrued expenses (including salaries, accrued vacation
and other compensation), current trade or other accounts payable and
other current liabilities arising in the ordinary course of business
and not incurred through the borrowing of money, provided that the same
shall be paid when due except to the extent being contested in good
faith and by appropriate proceedings;
(iv) subject to SECTION 7.7(b), loans and advances by PXRE
Group or any Subsidiary to any other Subsidiary or by any Subsidiary to
PXRE Group, provided that, except for loans permitted under SECTION
7.7(b)(iv), any such loan or advance by any Subsidiary to either
Guarantor or to the Borrower is subordinated in right and time of
payment to the Obligations, except that PXRE Reinsurance may, during
the 1999 and 2000 fiscal years, make and maintain a short-term loan to
the Borrower that, so long as no Event of Default has occurred and is
continuing, is not subordinated in time of payment
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to the Obligations, and provided further that the sole use of such
short-term loan shall be to repurchase shares of the Borrower's Capital
Stock and the principal amount thereof shall not exceed $17,000,000;
(v) unsecured Indebtedness of the Borrower or PXRE Group that
is expressly subordinated and made junior in right and time of payment
to the Obligations (including, in the case of indebtedness of PXRE
Group, PXRE Group's guaranty of such Obligations as set for forth in
ARTICLE IX) and that is evidenced by one or more written agreements or
instruments having terms, conditions and provisions (including, without
limitation, provisions relating to principal amount, maturity,
covenants, defaults, interest, and subordination) satisfactory in form
and substance to the Required Lenders in their sole discretion and
which shall provide, at a minimum and without limitation, that such
Indebtedness (a) shall mature by its terms no earlier than the first
anniversary of the Maturity Date, (b) shall not require any scheduled
payment of principal prior to the first anniversary of the Maturity
Date, and (c) shall have covenants and undertakings that, taken as a
whole, are materially less restrictive than those contained herein (the
Indebtedness described hereinabove, "Subordinated Indebtedness");
provided that, as further conditions to the issuance of any
Subordinated Indebtedness, (1) immediately after giving effect to the
issuance of such Subordinated Indebtedness, no Default or Event of
Default shall exist, (2) all agreements and instruments evidencing or
governing such Subordinated Indebtedness shall have been approved in
writing by the Required Lenders (or the Agent on their behalf), and (3)
prior to or concurrently with the issuance of such Subordinated
Indebtedness, the Borrower shall have delivered to each Lender a
certificate, signed by a Financial Officer of the Borrower or PXRE
Group, as the case may be, satisfactory in form and substance to the
Required Lenders and to the effect that, after giving effect to the
incurrence of such Subordinated Indebtedness, PXRE Group is in
compliance with the financial covenants set forth in SECTIONS 6.1 and
6.2, such compliance being determined with regard to calculations made
on a pro forma basis in accordance with GAAP as of the last day of the
fiscal quarter then most recently ended and as if such Subordinated
Indebtedness had been incurred on the first day of the period
applicable to such covenants (such calculations to be attached to such
certificate); and provided further that the Net Cash Proceeds from the
issuance of such Subordinated Indebtedness shall be applied to reduce
the Commitments in accordance with, and to the extent required under,
the provisions of SECTION 2.5(c);
(vi) purchase money Indebtedness of the Borrower and its
Subsidiaries incurred solely to finance the payment of all or part of
the purchase price of any equipment, real property or other fixed
assets acquired in the ordinary course of business, including
Indebtedness in respect of capital lease obligations, and any renewals,
refinancings or replacements thereof (subject to the limitations on the
principal amount thereof set forth in this clause (vi)), which
Indebtedness shall not exceed $10,000,000 in aggregate principal amount
outstanding at any time;
(vii) Indebtedness in respect of outstanding letters of credit,
in the aggregate not to exceed twenty-five percent (25%) of the
Statutory Capital and Surplus of
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PXRE Reinsurance at any time, issued on behalf of any Insurance
Subsidiary for the benefit of Lloyd's to satisfy capital requirements
imposed by Lloyd's to support such Insurance Subsidiary's business in
the Lloyd's insurance Market, and Indebtedness in respect of
reimbursement obligations in respect of letters of credit issued for
the benefit of any Insurance Subsidiary or the Borrower in the ordinary
course of its business to support the payment of obligations arising
under insurance and reinsurance contracts and weather and similar swap
agreements; and
(viii) other unsecured Indebtedness not exceeding $20,000,000 in
aggregate principal amount outstanding at any time.
7.3 Liens. The Borrower and the Guarantors will not, and PXRE Group
will not permit or cause any of its Subsidiaries to, directly or indirectly,
make, create, incur, assume or suffer to exist, any Lien upon or with respect to
any part of its property or assets, whether now owned or hereafter acquired, or
file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any Lien with respect to any such property,
asset, income or profits under the Uniform Commercial Code of any state or under
any similar recording or notice statute, or agree to do any of the foregoing,
other than the following (collectively, "Permitted Liens"):
(i) Liens in existence on the date hereof and set forth on
SCHEDULE 7.3;
(ii) Liens imposed by law, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar
Liens incurred in the ordinary course of business for sums not
constituting borrowed money that are not overdue for a period of more
than thirty (30) days or that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(iii) Liens (other than any Lien imposed by ERISA, the creation
or incurrence of which would result in an Event of Default under
SECTION 8.1(i)) incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure the
performance of letters of credit, bids, tenders, statutory obligations
(including statutory obligations of Insurance Subsidiaries), surety and
appeal bonds, leases, government contracts and other similar
obligations (other than obligations for borrowed money) entered into in
the ordinary course of business;
(iv) Liens for taxes, assessments or other governmental
charges or statutory obligations that are not delinquent or remain
payable without any penalty or that are being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(v) Liens securing the purchase money Indebtedness permitted
under clause (vi) of SECTION 7.2, provided that any such Lien (a) shall
attach to such property
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concurrently with or within ten (10) days after the acquisition thereof
by the Borrower or such Guarantor or Subsidiary, (b) shall not exceed
the lesser of (y) the fair market value of such property or (z) the
cost thereof to the Borrower or such Guarantor or Subsidiary and (c)
shall not encumber any other property of the Borrower or any Guarantor
or any of the Subsidiaries;
(vi) any attachment or judgment Lien not constituting an Event
of Default under SECTION 8.1(h) that is being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(vii) Liens arising from the filing, for notice purposes only,
of financing statements in respect of true leases;
(viii) Liens on Borrower Margin Stock, to the extent the fair
market value thereof exceeds 25% of the fair market value of the assets
of the Borrower and its Subsidiaries (including Borrower Margin Stock);
(ix) with respect to any real property occupied by the
Borrower or the Guarantors or any of the Subsidiaries, all easements,
rights of way, licenses and similar encumbrances on title that do not
materially impair the use of such property for its intended purposes;
(x) Liens on assets, not to exceed thirty percent (30%) of
the Statutory Capital and Surplus of PXRE Reinsurance at any time, (y)
pledged to secure letters of credit described in SECTION 7.2(vii) or
(z) held in trust for the benefit of Lloyd's to satisfy capital
requirements imposed by Lloyd's to support an Insurance Subsidiary's
business in the Lloyd's insurance Market; and
(xi) other Liens securing obligations of PXRE Group and its
Subsidiaries not exceeding $5,000,000 in aggregate amount outstanding
at any time.
7.4 Disposition of Assets. The Borrower and the Guarantors will not,
and PXRE Group will not permit or cause any of its Subsidiaries to, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) all or any portion of its assets, business or properties
(including, without limitation, any Capital Stock of any Subsidiary, but
excluding any payments of losses or other liabilities incurred by an Insurance
Subsidiary, the Borrower or PXRE Group pursuant to insurance policies and
contracts, reinsurance agreements, weather and similar swap agreements and other
commitments entered into by such Insurance Subsidiary, the Borrower or PXRE
Group in the ordinary course of business), or enter into any arrangement with
any Person providing for the lease by the Borrower or the Guarantors or any
Subsidiary as lessee of any material asset that has been sold or transferred by
the Borrower or such Guarantor or Subsidiary to such Person, or agree to do any
of the foregoing, except for:
(i) sales of inventory and licenses or leases of intellectual
property and
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other assets, in each case in the ordinary course of business;
(ii) the sale or exchange of used or obsolete equipment to the
extent (y) the proceeds of such sale are applied towards, or such
equipment is exchanged for, replacement equipment or (z) such equipment
is no longer necessary for the operations of the Borrower or its
applicable Subsidiary in the ordinary course of business;
(iii) the sale or other disposition by PXRE Group and its
Subsidiaries of any Guarantor Margin Stock to the extent the fair
market value thereof exceeds 25% of the fair market value of the assets
of PXRE Group and its Subsidiaries (including Guarantor Margin Stock),
provided that fair value is received in exchange therefor;
(iv) the sale, lease or other disposition of assets by a
Subsidiary of the Borrower to the Borrower or its Subsidiary if,
immediately after giving effect thereto, no Default or Event of Default
would exist;
(v) sales of investment assets in the ordinary course of
business;
(vi) the sale by PXRE Group and its Subsidiaries of (x) the
capital stock or all or any portion of the assets, business or
properties of a Subsidiary that is not a Material Subsidiary; (y) any
asset or group of assets of an Insurance Subsidiary constituting less
than (A) in any single transaction or series of related transactions,
ten percent (10%) of Combined Statutory Capital and Surplus as of the
last day of the fiscal quarter ending on or immediately prior to the
date of such sale, and (B) during the term of this Agreement, in the
aggregate with all such other sales pursuant to this clause (vi),
thirty percent (30%) of Combined Statutory Capital and Surplus as of
the end of the immediately preceding fiscal quarter; and (z) any asset
or group of assets of a non-Insurance Subsidiary constituting less than
(A) in any single transaction or series of related transactions, ten
percent (10%) of the total assets of the Borrower and its Subsidiaries
on a consolidated basis, determined in accordance with GAAP as of the
last day of the fiscal quarter ending on or immediately prior to the
date of such sale, and (B) during the term of this Agreement, in the
aggregate with all such other sales pursuant to this clause (vi),
thirty percent (30%) of the total assets of the Borrower and its
Subsidiaries on a consolidated basis, determined in accordance with
GAAP as of the end of the immediately preceding fiscal quarter;
provided in the case of any sale pursuant to this clause (vi) that
immediately after giving effect thereto, no Default or Event of Default
would exist; and
(vii) transactions permitted under SECTION 7.7.
7.5 Investments. The Borrower and the Guarantors will not, and PXRE
Group will not permit or cause any of its Subsidiaries to, directly or
indirectly, purchase, own, invest in or otherwise acquire any Capital Stock,
evidence of indebtedness or other obligation or security or any interest
whatsoever in any other Person, or make or permit to exist any loans, advances
or extensions of credit to, or any investment in cash or by delivery of property
in, any other Person,
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or purchase or otherwise acquire (whether in one or a series of related
transactions) any portion of the assets, business or properties of another
Person (including pursuant to an Acquisition), or create or acquire any
Subsidiary, or become a partner or joint venturer in any partnership or joint
venture (collectively, "Investments"), or make a commitment or otherwise agree
to do any of the foregoing, other than:
(i) Cash Equivalents;
(ii) Investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
intellectual property and other assets, in each case in the ordinary
course of business;
(iii) Investments consisting of loans and advances to
employees for reasonable travel, relocation and business expenses in
the ordinary course of business, extensions of trade credit in the
ordinary course of business, and prepaid expenses incurred in the
ordinary course of business;
(iv) without duplication, Investments consisting of
intercompany Indebtedness permitted under clause (iv) of SECTION 7.2;
(v) Investments existing on June 30, 1999 and set forth in
SCHEDULE 7.5(a);
(vi) Investments consisting of the making of capital
contributions or the ownership or purchase of Capital Stock (a) by PXRE
Group or any Subsidiary in any other Wholly Owned Subsidiary and (b) by
any Subsidiary in the Borrower or PXRE Group;
(vii) Permitted Acquisitions;
(viii) other Investments by the Borrower and its Subsidiaries
to the extent permitted under applicable Requirements of Law and in
compliance with the following restrictions:
(a) all investments shall be in compliance at all
times with (i) the Insurance Code, if applicable, (ii) the
requirements of the Lloyd's insurance Market, if applicable,
(iii) all applicable insurance laws and regulations of any
other relevant jurisdictions relating to investments by an
Insurance Subsidiary, and (iv) the limitations set forth in
the Investment Policy;
(b) the amount equal to forty percent (40%) of the
carrying value of the aggregate admitted assets of the
Borrower's Insurance Subsidiaries (determined in accordance
with SAP) and the aggregate investment assets of the Borrower
and its non-Insurance Subsidiaries (determined in accordance
with GAAP) that comprise the "Excess Capital and Surplus
Portfolio," as defined in
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the Investment Policy, shall be less than one-third of the
Combined Statutory Capital and Surplus of the Borrower's
Insurance Subsidiaries at any time;
(c) with respect to the Insurance Subsidiaries'
Investments, other than those issued or unconditionally
guaranteed by the United States Government, the aggregate
Investments of such Insurance Subsidiaries in the securities
of any single issuer shall not constitute on any date during
the term of this Agreement more than five percent (5%) of the
Average Combined Invested Assets of such Insurance
Subsidiaries, it being understood that any securities held on
the last day of a fiscal quarter shall, for purposes of this
clause (c), be measured against the Average Combined Invested
Assets for the four quarters ending prior to such quarter;
provided that, the failure of the Borrower to comply with this
clause (c) shall not constitute a Default under this Agreement
if each failure to comply during any fiscal quarter shall have
been cured within forty-five (45) days following the end of
such fiscal quarter (or, with respect cure by the Borrower
through disposition of a limited partnership interest
requiring disposition in accordance with such limited
partnership's partnership agreement or other organizational
documents, definitive instruction to sell such partnership
interest has been given as soon as practicable (but in no
event later than five (5) Business Days) after the Borrower
obtains knowledge of noncompliance hereunder and such interest
is sold at the earliest possible date in accordance with such
partnership agreement and organizational documents); and
(d) with respect to the Investments of the Borrower
and its non-Insurance Subsidiaries (other than (A) Borrower's
Investments of cash and Cash Equivalents and (B) Borrower's
Investments of up to $10,000,000 equity in Cat Bond Investors,
L.L.C.), (i) the aggregate of such Investments shall not
exceed six and one-half percent (6-1/2%) of Borrower's
Consolidated Net Worth, and (ii) the aggregate of such
Investments in the securities of any single issuer shall
constitute at all times no more than one and one-half percent
(1-1/2%) of the Borrower's Consolidated Net Worth;
(ix) the Borrower's Investment in Cat Bond Investors, L.L.C.
up to $10,000,000;
(x) Investments of PXRE Group and its non-Insurance
Subsidiaries (other than Investments of cash and Cash Equivalents),
provided that (i) the aggregate of such Investments shall not exceed
six and one-half percent (6-1/2%) of PXRE Group's Consolidated Net
Worth, and (ii) the aggregate of such Investments in the securities of
any single issuer shall constitute at all times no more than one and
one-half percent (1-1/2%) of PXRE Group's Consolidated Net Worth; and
(xi) Investments by PXRE Bermuda to the extent permitted under
applicable Requirements of Law and in compliance with PXRE Bermuda's
Investment Policy.
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7.6 Restricted Payments. (a) The Borrower and the Guarantors will not,
and PXRE Group will not permit or cause any of its Subsidiaries to, directly or
indirectly, declare or make any dividend payment, or make any other distribution
of cash, property or assets, in respect of any of its Capital Stock or any
warrants, rights or options to acquire its Capital Stock, or purchase, redeem,
retire or otherwise acquire for value any shares of its Capital Stock or any
warrants, rights or options to acquire its Capital Stock, or set aside funds for
any of the foregoing, except that:
(i) PXRE Group may (v) declare and make dividend payments or
other distributions to holders of PXRE Group's Capital Stock
(including, without limitation, its common stock), in cash or in shares
of such Capital Stock, (w) cause the Borrower to make payments to any
Subsidiary pursuant to Indebtedness related to any Trust Preferred
Securities, and (x) purchase, redeem, retire or otherwise acquire
shares of its Capital Stock, in cash or in-kind, and the Subsidiary of
the Borrower that has issued Trust Preferred Securities may declare and
make dividend payments or other distributions to holders of such Trust
Preferred Securities and purchase, redeem, retire or otherwise acquire
such Trust Preferred Securities, in cash or in-kind, in each case
provided that, immediately after giving effect thereto, (y) no Default
or Event of Default would exist, and (z) the Fixed Charge Coverage
Ratio would be at least 1.5 to 1.0, such ratio to be determined for
purposes of this clause (i) as of the last day of the most recently
ended fiscal quarter as if such dividend, distribution, payment or
acquisition had been effected as of such date; and
(ii) each Wholly Owned Subsidiary of PXRE Group may declare
and make dividend payments or other distributions to PXRE Group or
another Wholly Owned Subsidiary of PXRE Group, to the extent not
prohibited under applicable Requirements of Law.
(b) The Borrower and the Guarantors will not, and PXRE Group will not
permit or cause any of its Subsidiaries to, make (or give any notice in respect
of) any voluntary or optional payment or prepayment of principal on any
Subordinated Indebtedness, or directly or indirectly make any redemption
(including pursuant to any change of control provision), retirement, defeasance
or other acquisition for value of any Subordinated Indebtedness, or make any
deposit or otherwise set aside funds for any of the foregoing purposes.
7.7 Transactions with Affiliates. (a) The Borrower and the Guarantors
will not, and PXRE Group will not permit or cause any of its Subsidiaries to,
enter into any transaction (including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service) with any officer,
director, stockholder or other Affiliate of the Borrower or any Subsidiary,
except in the ordinary course of its business and upon fair and reasonable terms
that are no less favorable to it than would obtain in a comparable arm's length
transaction with a Person other than an Affiliate of the Borrower or such
Subsidiary; provided, however, that nothing contained in this Section shall
prohibit:
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(i) transactions described in the Borrower's or PXRE Group's
filings under the Exchange Act or the Securities Act or on SCHEDULE 7.7
or otherwise expressly permitted under this Agreement;
(ii) the payment by PXRE Group or any Subsidiary of reasonable
and customary fees to members of its board of directors; and
(iii) the payment by the Borrower to the Guarantors of
reasonable and customary annual guaranty fees not to exceed one percent
(1%) of the aggregate Commitment of the Lenders.
(b) In addition to the requirements of SECTION 7.7(a), and
notwithstanding any provision of this Agreement to the contrary, the Borrower
will not, and PXRE Group and the Borrower will not permit or cause any of the
Borrower's Subsidiaries to, enter into any transaction with PXRE Group or any of
its Subsidiaries (other than Borrower and its Subsidiaries) other than:
(i) the following reinsurance agreements and the transactions
incident thereto (herein "Permitted Intercompany Reinsurance
Agreements"):
(A) the Bermuda Reinsurance Agreement constituting a
quota share agreement (the "Initial Quota Share Agreement"),
provided such agreement shall initially have a one year term
and be on a basis of reinsurance not exceeding thirty percent
(30%) quota share and any amendments or modifications thereto
shall be subject to SECTION 7.7(b)(i)(B);
(B) any other quota share reinsurance agreement
between any of Borrower's Insurance Subsidiaries and any of
PXRE Group's Insurance Subsidiaries and any amendments,
modifications or replacements of the Initial Quota Share
Agreement (in each case, a "New Quota Share Agreement") if (1)
no Default has occurred or is continuing immediately after
giving effect to such New Quota Share Agreement, and (2) in
the event such New Quota Share Agreement would alter the
accounting treatment or underlying economic or financial terms
of the prior agreement, the Borrower shall have provided, at
least thirty (30) days prior to the effectiveness of such New
Quota Share Agreement, the Agent and the Lenders projections,
based on reasonable assumptions and prepared in a manner
consistent with the projections required under SECTION 5.3(b),
showing that such New Quota Share Agreement (after taking into
account all other Permitted Reinsurance Agreements) will not
create or result in a Default during the period such New Quota
Share Agreement shall be in effect;
(C) the Bermuda Reinsurance Agreement constituting a
stop loss agreement (the "Initial Stop Loss Agreement"),
provided its initial term does not exceed one year, PXRE
Reinsurance's maximum loss amount
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thereunder shall not exceed $30,000,000, and any amendments
or modifications thereto shall be subject to SECTION
7.7(b)(i)(D);
(D) any other stop loss reinsurance agreement between
any of Borrower's Insurance Subsidiaries and any of PXRE
Group's Insurance Subsidiaries and any amendments,
modifications or replacements of the Initial Stop Loss
Agreement (in each case, a "New Stop Loss Agreement" and,
collectively with the Initial Stop Loss Agreement, "Permitted
Stop Loss Agreements") if (1) no Default has occurred or is
continuing immediately after giving effect to such New Stop
Loss Agreement, and (2) the aggregate of the Borrower's
Insurance Subsidiaries' maximum loss amount thereunder and
under all other Permitted Stop Loss Agreements then in effect
shall then and at all times thereafter be less than the
difference between the actual Combined Statutory Capital and
Surplus and the minimum Combined Statutory Capital and Surplus
required under SECTION 6.4;
[NOTE: THE TYPES OF PERMITTED REINSURANCE ARE STILL UNDER DISCUSSION, SO THE
WORDING IN SUBSECTIONS (B) AND (D) COULD CHANGE.]
(ii) the Reorganization in accordance with the Reorganization
Documents;
(iii) dividends and distributions by the Borrower to PXRE
Barbados otherwise permitted under SECTION 7.6;
(iv) loans from Borrower or any of its Subsidiaries to either
Guarantor (A) up to an aggregate outstanding principal amount of
$35,000,000 for the sole purpose of providing capital for PXRE Bermuda
and (B) up to an aggregate outstanding principal amount of $1,500,000
for general corporate purposes, which loans shall not be required to be
subordinated in time of payment to the Obligations so long as no Event
of Default has occurred and is continuing; and
(v) agreements for the provision of intermediary, investment,
administrative, personnel, technology or similar services by the
Borrower or any of its Subsidiaries for or on behalf of PXRE Group or
any of its Subsidiaries.
7.8 Lines of Business. The Borrower and the Guarantors will not, and
PXRE Group will not permit or cause any of its Subsidiaries to, engage in any
business other than (i) the businesses engaged in by it on the date hereof and
businesses and activities reasonably related thereto (including without
limitation insurance management, agency and brokerage business undertaken
through a Subsidiary other than a Material Subsidiary) or (ii) in the case of an
Insurance Subsidiary, the offering and sale of any property and casualty
insurance or reinsurance products or, in the case of PXRE Bermuda, life
reinsurance products.
7.9 Certain Amendments. The Borrower and the Guarantors will not, and
PXRE Group will not permit or cause any of its Subsidiaries to, (i) amend,
modify or waive, or permit
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the amendment, modification or waiver of, any provision of any agreement or
instrument evidencing or governing any Subordinated Indebtedness, the effect of
which would be to (a) increase the principal amount due thereunder, (b) shorten
or accelerate the time of payment of any amount due thereunder, (c) increase the
applicable interest rate or amount of any fees or costs due thereunder, (d)
amend any of the subordination provisions thereunder (including any of the
definitions relating thereto), (e) make any covenant therein more restrictive or
add any new covenant, or (f) otherwise materially and adversely affect the
Lenders, or breach or otherwise violate any of the subordination provisions
applicable thereto, including, without limitation, restrictions against payment
of principal and interest thereon, or (ii) amend, modify or change any provision
of its articles or certificate of incorporation or bylaws, or the terms of any
class or series of its Capital Stock or the provisions of the Reorganization
Documents, other than in a manner that could not reasonably be expected to
adversely affect the Lenders.
7.10 Limitation on Certain Restrictions. The Borrower and the
Guarantors will not, and PXRE Group will not permit or cause any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any restriction or encumbrance on (i) the ability of
the Borrower, the Guarantors and the Subsidiaries to perform and comply with
their respective obligations under the Credit Documents or (ii) the ability of
any Subsidiary to make any dividend payments or other distributions in respect
of its Capital Stock, to repay Indebtedness owed to the Borrower, the Guarantors
or any other Subsidiary, to make loans or advances to the Borrower, the
Guarantors or any other Subsidiary, or to transfer any of its assets or
properties to the Borrower, the Guarantors or any other Subsidiary, in each case
other than such restrictions or encumbrances existing under or by reason of the
Credit Documents or applicable Requirements of Law.
7.11 No Other Negative Pledges. The Borrower and the Guarantors will
not, and PXRE Group will not permit or cause any of its Subsidiaries to,
directly or indirectly, enter into or suffer to exist any agreement or
restriction that prohibits or conditions the creation, incurrence or assumption
of any Lien upon or with respect to any part of its property or assets, whether
now owned or hereafter acquired, or agree to do any of the foregoing, other than
as set forth in (i) this Agreement, (ii) any agreement or instrument creating a
Permitted Lien (but only to the extent such agreement or restriction applies to
the assets subject to such Permitted Lien), and (iii) operating leases of real
or personal property entered into by the Borrower or any of its Subsidiaries as
lessee in the ordinary course of business.
7.12 Accounting Changes. The Borrower and the Guarantors will not, and
PXRE Group will not permit or cause any of its Subsidiaries (other than PXRE
Ltd.) to, make or permit any material change in its accounting policies or
reporting practices, except as may be required by GAAP or SAP.
7.13 Ratings. The Borrower and the Guarantors will not permit or cause
(i) the rating and financial strength rating of any Material Insurance
Subsidiary (other than PXRE Ltd.) by A.M. Best & Company and Standard & Poor's,
respectively, to be lower than "A-" at any time, (ii) the rating of each PXRE
Syndicate by Standard & Poor's to be lower than "A-" at any time (in each case
to the extent such ratings are provided), or (iii) the "group rating" of
Standard &
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Poor's applicable to PXRE Bermuda to be lower than "A-" at any time.
7.14 Reinsurance Agreements. The Borrower and the Guarantors will not,
and PXRE Group will not permit or cause any of its Insurance Subsidiaries to do
any of the following:
(i) enter into any Reinsurance Agreement, or remain a party
to any Reinsurance Agreement (whether in effect as of the Closing Date
or at any time thereafter) for any period longer than the period
legally required under the terms of such Reinsurance Agreement (after
taking into account all rights not to renew such Reinsurance Agreement
or to withdraw from or terminate it without material penalty or
financial detriment to PXRE Group, the Borrower or any of its Material
Subsidiaries) with any reinsurer that is neither rated "A-" or better
by A.M. Best & Company nor has a financial strength or group rating of
"A-" or better by Standard & Poor's or Moody's (any such reinsurer, a
"Rating Deficient Reinsurer") unless such Rating Deficient Reinsurer
either
(u) is a syndicate that is operating as part of the
Lloyd's insurance Market during any period that the Lloyd's
insurance Market maintains a rating of "A-" or better by A.M.
Best & Company or "A-" or better by Standard & Poor's;
(v) is Select Re, provided that without the consent
of the Agent (which shall not be unreasonably withheld), the
amount of gross premium ceded to Select Re by the Insurance
Subsidiaries during any calendar year shall not materially
exceed that amount of gross premium determined by multiplying
Select Re's capital and surplus as at December 31 of the prior
year by a fraction the numerator of which is the aggregate
amount of gross premiums written by the Insurance Subsidiaries
and retained for their own account during such prior year and
the denominator of which is the Combined Statutory Capital and
Surplus of the Insurance Subsidiaries as at December 31 of
such prior year (all determined in accordance with SAP), and
provided further that the obligations of Select Re to the
Insurance Subsidiaries shall be secured by one or more trust
accounts, one or more clean, irrevocable and unconditional
letters of credit, or other security arrangements or
combination of the foregoing, all as more fully described in
retrocessional agreements substantially in the form of the
existing retrocessional agreements between Select Re and the
Insurance Subsidiaries.
(w) is a pooling arrangement composed solely of
Persons that are not, on an individual basis, Rating Deficient
Reinsurers;
(x) has provided a letter of credit, issued by a
"qualified" bank (as defined in the Requirements of Law of
Connecticut) having a long term senior debt rating of "A" or
better by Standard & Poor's and Moody's, in favor of the
applicable Insurance Subsidiary in an amount equal to or
greater than the obligations transferred pursuant to such
Reinsurance Agreement;
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(y) has placed assets in a trust with a fiduciary and
under terms, including investment restrictions consistent with
this Agreement, such that the ceding Insurance Subsidiary
shall be entitled to receive credit as admitted reinsurance,
under the requirements of the applicable Insurance Regulatory
Authority, for the reinsurer's share of the obligations
transferred pursuant to such Reinsurance Agreement;
(z) has otherwise provided collateral in favor of the
applicable Insurance Subsidiary in form and amount
satisfactory to the Required Lenders;
provided, however, that any Insurance Subsidiary may remain a party to
a Reinsurance Agreement with a Rating Deficient Reinsurer that does not
meet the description of clause (u), clause (v) or clause (w) above and
has not provided the collateral of the type described in clauses (x),
(y) and (z) above (all such Ratings Deficient Reinsurers, collectively,
the "Non-Approved Reinsurers") provided that for each fiscal year (or
portion thereof) ending with each fiscal quarter thereof, the aggregate
amount of Reinsurance Premiums Ceded by the Insurance Subsidiaries
during such fiscal year (or portion thereof) to all Non-Approved
Reinsurers as of each such quarter ended is not greater than
$15,000,000;
(ii) enter into any Reinsurance Agreements or, except to the
extent required by an applicable Requirement of Law, make any amendment
or modification to or waiver of any Reinsurance Agreements, that would,
individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect; or
(iii) be or become a party to any Surplus Relief Reinsurance
Agreement if the increase in Combined Statutory Capital and Surplus as
a result of or arising from such Surplus Relief Reinsurance Agreement,
when added to the increase in Combined Statutory Capital and Surplus as
a result of or arising from all other Surplus Relief Reinsurance
Agreements theretofore entered into by any Insurance Subsidiary, net of
any surplus relief recaptured in respect of such Surplus Relief
Reinsurance Agreements, exceeds five percent (5%) of Combined Statutory
Capital and Surplus as of the most recent fiscal year end.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower shall fail to pay any principal of any Loan when due
or shall fail to pay any interest on any Loan or any fee or any other Obligation
within three (3) Business Days of the date due;
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(b) The Borrower or Guarantors shall fail to observe, perform or comply
with any condition, covenant or agreement contained in any of SECTIONS 2.14,
5.1, 5.2, 5.3(f), 5.8, 5.9, 5.10 or in ARTICLE VI or ARTICLE VII;
(c) The Borrower or Guarantors or any of the Subsidiaries shall fail to
observe, perform or comply with any condition, covenant or agreement contained
in this Agreement or any of the other Credit Documents other than those
enumerated in subsections (a) and (b) above, and such failure (i) is deemed by
the terms of the relevant Credit Document to constitute an Event of Default or
(ii) shall continue unremedied for any grace period specifically applicable
thereto or, if no such grace period is applicable, for a period of thirty (30)
days after the earlier of (y) the date on which a Responsible Officer of the
Borrower or any Guarantor acquires knowledge thereof and (z) the date on which
written notice thereof is delivered by the Agent or any Lender to the Borrower;
(d) Any representation or warranty made or deemed made by or on behalf
of the Borrower or Guarantors or any of the Subsidiaries in this Agreement, any
of the other Credit Documents or in any certificate, instrument, report or other
document furnished in connection herewith or therewith or in connection with the
transactions contemplated hereby or thereby shall prove to have been false or
misleading in any material respect as of the time made, deemed made or
furnished;
(e) The Borrower, any Guarantor or Subsidiary shall (i) fail to pay
when due (whether by scheduled maturity, acceleration or otherwise and after
giving effect to any applicable grace period) (y) any principal of or interest
on any Indebtedness (other than the Indebtedness incurred pursuant to this
Agreement) having an aggregate principal amount of at least $5,000,000 or (z)
any termination or other payment under any Hedge Agreement covering a notional
amount of Indebtedness of at least $25,000,000 or (ii) fail to observe, perform
or comply with any condition, covenant or agreement contained in any agreement
or instrument evidencing or relating to any such Indebtedness, or any other
event shall occur or condition exist in respect thereof, and the effect of such
failure, event or condition is to cause such Indebtedness to become due, or to
be required to be prepaid, redeemed, purchased or defeased, prior to its stated
maturity;
(f) The Borrower, any Guarantor or Subsidiary shall (i) file a
voluntary petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
petition or case of the type described in subsection (g) below, (iii) apply for
or consent to the appointment of or taking possession by a custodian, trustee,
receiver or similar official for or of itself or all or a substantial part of
its properties or assets, (iv) fail generally, or admit in writing its
inability, to pay its debts generally as they become due, (v) make a general
assignment for the benefit of creditors or (vi) take any corporate action to
authorize or approve any of the foregoing;
(g) Any involuntary petition or case shall be filed or commenced
against the
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Borrower, any Guarantor or Subsidiary seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, and such petition or case shall continue undismissed and
unstayed for a period of sixty (60) days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such
proceeding;
(h) Any one or more money judgments, writs or warrants of attachment,
executions or similar processes involving an aggregate amount (exclusive of
amounts fully bonded or covered by insurance as to which the surety or insurer,
as the case may be, has acknowledged its liability in writing) in excess of
$3,000,000 shall be entered or filed against the Borrowers, any Guarantor or
Subsidiary or any of their respective properties and the same shall not be
dismissed, stayed or discharged for a period of thirty (30) days or in any event
later than five days prior to the date of any proposed sale thereunder;
(i) Any ERISA Event or any other event or condition shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result thereof,
together with all other ERISA Events and other events or conditions then
existing, PXRE Group and its ERISA Affiliates have incurred or would be
reasonably likely to incur liability to any one or more Plans or Multiemployer
Plans or to the PBGC (or to any combination thereof) that has or would be
reasonably likely to have a Material Adverse Effect;
(j) Any one or more licenses, permits, accreditations or authorizations
of the Borrower, any Guarantor or any of the Subsidiaries shall be suspended,
limited or terminated or shall not be renewed, or any other action shall be
taken, by any Governmental Authority in response to any alleged failure by the
Borrower, any Guarantor or any of the Subsidiaries to be in compliance with
applicable Requirements of Law, and such action, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse Effect;
(k) Any one or more Environmental Claims shall have been asserted
against the Borrower, any Guarantor or any of the Subsidiaries (or a reasonable
basis shall exist therefor); the Borrower, the Guarantors and the Subsidiaries
have incurred or would be reasonably likely to incur liability as a result
thereof; and such liability, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect;
(l) Any of the following shall occur: (i) any Person or group of
Persons acting in concert as a partnership or other group shall, as a result of
a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become, after the date hereof, the "beneficial
owner" (within the meaning of such term under Rule 13d-3 under the Exchange Act)
of securities of the Borrower or any Guarantor representing 20% or more of the
combined voting power of the then outstanding securities of the Borrower or such
Guarantor ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors; or (ii)
the Board of Directors of the Borrower shall cease to consist of a majority of
the individuals who constituted the Board of Directors as of the date hereof or
who
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shall have become a member thereof subsequent to the date hereof after having
been nominated, or otherwise approved in writing, by at least a majority of
individuals who constituted the Board of Directors of the Borrower as of the
date hereof (or their replacements approved as herein required).
8.2 Remedies: Termination of Commitments, Acceleration, etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Commitments to be terminated, whereupon the same shall
terminate (provided that, upon the occurrence of an Event of Default pursuant to
SECTION 8.1(f) or SECTION 8.1(g), the Commitments shall automatically be
terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower (provided that, upon the occurrence of an Event of
Default pursuant to SECTION 8.1(f) or SECTION 8.1(g), all of the outstanding
principal amount of the Loans and all other amounts described in this subsection
(b) shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower and Guarantors);
(c) Obtain, at the Borrower's and Guarantors' expense and as soon as
reasonably possible, with respect to each Insurance Subsidiary, a current
actuarial review and valuation statement of, and opinion as to the adequacy of,
such Insurance Subsidiary's loss and loss adjustment expense reserve positions
with respect to the insurance business then in force, and covering such other
subjects as are customary in actuarial reviews and as may be requested by the
Required Lenders, prepared by an independent actuarial firm acceptable to the
Required Lenders in accordance with reasonable actuarial assumptions and
procedures (the Borrower hereby agreeing to cooperate in connection therewith);
and
(d) Exercise all rights and remedies available to it under this
Agreement, the other Credit Documents and applicable law.
8.3 Remedies: Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable law or otherwise, upon and at
any time after the occurrence and during the continuance of any Event of
Default, each Lender may, and each is hereby authorized by the Borrower and
Guarantors, at any such time and from time to time, to the fullest extent
permitted by applicable law, without presentment, demand, protest or other
notice of any kind, all of which are hereby knowingly and expressly waived by
the Borrower and Guarantors, to set off and to apply any and all deposits
(general or special, time or demand, provisional or
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final) and any other property at any time held (including at any branches or
agencies, wherever located), and any other indebtedness at any time owing, by
such Lender to or for the credit or the account of the Borrower or either
Guarantor against any or all of the Obligations to such Lender now or hereafter
existing, whether or not such Obligations may be contingent or unmatured, the
Borrower and Guarantors hereby granting to each Lender a continuing security
interest in and Lien upon all such deposits and other property as security for
such Obligations. Each Lender agrees promptly to notify the Borrower and the
Agent after any such set-off and application; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.
ARTICLE IX
GUARANTY
9.1 Guaranty.
(a) In consideration for the Lenders' willingness to permit the
Reorganization and the amendments to the Old Credit Agreement reflected in this
Agreement, the Guarantors hereby unconditionally, irrevocably and jointly and
severally guarantee to the Agent, for the ratable benefit of the Agent and the
Lenders and their respective successors, indorsees, transferees and assigns, the
prompt and complete payment and performance by the Borrower when due (whether at
the stated maturity, by acceleration or otherwise) of the Obligations.
(b) The Guarantors further agree to pay any and all expenses
(including, without limitation, all reasonable fees and expenses of counsel
actually incurred) that may be paid or incurred by the Agent or any Lender in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, the Guarantors under this ARTICLE IX.
This ARTICLE IX shall remain in full force and effect until the Obligations are
paid in full and the Commitments have been terminated, notwithstanding that from
time to time prior thereto the Borrower may be free from any Obligations.
(c) No payment or payments made by the Borrower or any other Person or
received or collected by the Agent or any Lender from the Borrower or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of the Guarantors hereunder, and the Guarantors shall,
notwithstanding any such payment or payments, remain liable hereunder for the
Obligations until the Obligations are paid in full and the Commitments have been
terminated.
(d) The Guarantors agree that whenever, at any time, or from time to
time, they shall make any payment to the Agent or any Lender on account of their
liability under this ARTICLE IX, they will notify the Agent and such Lender in
writing that such payment is made under this ARTICLE IX for such purpose.
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9.2 Right of Set-Off. The Agent and each Lender is hereby irrevocably
authorized at any time and from time to time without notice to the Guarantors,
any such notice being expressly waived by the Guarantors, to set off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Agent or such
Lender to or for the credit or the account of either Guarantor, or any part
thereof in such amounts as the Agent or such Lender may elect, against or on
account of the obligations and liabilities of the Guarantors to the Agent or
such Lender hereunder which are then due and payable and claims of every nature
and description of the Agent or such Lender against the Guarantors, in any
currency, whether arising hereunder, under any other Credit Document or
otherwise in connection therewith, as the Agent or such Lender may elect,
whether or not the Agent or such Lender has made any demand for payment. The
Agent or such Lender shall notify the Guarantors promptly of any such set-off
and the application made by the Agent or such Lender, as the case may be, of the
proceeds thereof; provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Agent and each
Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that the Agent or such
Lender may have.
9.3 No Subrogation. Notwithstanding any payment or payments made by the
Guarantors hereunder, or any set-off or application of funds of the Guarantors
by the Agent or any Lender, the Guarantors shall not be entitled to be
subrogated to any of the rights of the Agent or any Lender against the Borrower
or against any collateral or other security or guarantee or right of offset held
by the Agent or any Lender for the payment of the Obligations, nor shall the
Guarantors seek or be entitled to seek any contribution or reimbursement from
the Borrower in respect of payments made by the Guarantors hereunder, until all
amounts owing to the Agent and the Lenders by the Borrower on account of the
Obligations are paid in full and the Commitments have been terminated. If any
amount shall be paid to the Guarantors on account of such subrogation rights at
any time when all of the Obligations shall not have been paid in full, such
amount shall be held by the Guarantors in trust for the Agent and the Lenders,
segregated from other funds of the Guarantors, and shall, forthwith upon receipt
by the Guarantors, be turned over to the Agent in the exact form received by the
Guarantors (duly endorsed by the Guarantors to the Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
Agent may determine. The provisions of this Section shall survive the
termination of this Agreement and the payment in full of the Obligations and the
termination of the Commitments.
9.4 Amendments, etc. with respect to the Obligations; Waiver of Rights.
The Guarantors shall remain obligated hereunder notwithstanding that, without
any reservation of rights against the Guarantors, and without notice to or
further assent by the Guarantors, any demand for payment of any of the
Obligations made by the Agent or any Lender may be rescinded by the Agent or
such Lender, and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral or
other security or guarantee therefor or right of offset with respect thereto,
may, from time to time,
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in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Agent or any Lender, and any
Credit Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, in accordance with the provisions thereof as the Agent (or the requisite
Lenders, as the case may be) may deem advisable from time to time, and any
collateral or other security, guarantee or right of offset at any time held by
the Agent or any Lender for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. None of the Agent or any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this Agreement or any
property subject thereto. When making any demand hereunder against either
Guarantor the Agent or any Lender may, but shall be under no obligation to, make
a similar demand on the Borrower or the other Guarantor or any other guarantor,
and any failure by the Agent or any Lender to make any such demand or to collect
any payments from the Borrower, the other Guarantor, or any such other guarantor
or any release of the Borrower, the other Guarantor or such other guarantor
shall not relieve either Guarantor of its obligations or liabilities hereunder,
and shall not impair or affect the rights and remedies, express or implied, or
as a matter of law, of the Agent or any Lender against either Guarantor. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
9.5 Guaranty Absolute and Unconditional. The Guarantors waive any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Agreement or acceptance of this Agreement; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this Agreement; and
all dealings between the Guarantors, on the one hand, and the Agent and the
Lenders, on the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon this Agreement. The Guarantors waive diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Guarantors and the Borrower with respect to the Obligations, and
without limitation of the foregoing, specifically waive the benefits of Sections
26-7 through 26-9, inclusive, of the General Statutes of North Carolina, as
amended from time to time, and any similar statute or law of any other
jurisdiction, as the same may be amended from time to time. This ARTICLE IX
shall be construed as a continuing, absolute and unconditional guaranty of
payment without regard to (a) the validity, regularity or enforceability of this
Agreement, any other Credit Document, any of the Obligations or any other
Collateral or other security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) that may at any time be available to or be asserted by
the Borrower against the Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Guarantors or the
Borrower) that constitutes, or might be construed to constitute, an equitable or
legal discharge of the Borrower for the Obligations, or of the Guarantors under
this ARTICLE IX, in bankruptcy or in any other instance. When pursuing its
rights and remedies hereunder against the Guarantors, the Agent and any Lender
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against the Borrower or any other Person or against any collateral or
other security or guarantee for the Obligations or any right of offset with
respect thereto, and any failure by the Agent or any Lender to pursue
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such other rights or remedies or to collect any payments from the Borrower or
any such other Person or to realize upon any such collateral or other security
or guarantee or to exercise any such right of offset, or any release of any of
the Borrower or any such other Person or of any such Collateral or other
security, guarantee or right of offset, shall not relieve the Guarantors of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Agent or any
Lender against the Guarantors. This ARTICLE IX shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantors and their respective successors and assigns, and shall inure to the
benefit of the Agent and the Lenders, and their respective successors,
indorsees, transferees and assigns, until all the Obligations and the
obligations of the Guarantors under this Agreement shall have been satisfied by
payment in full and the Commitments shall have been terminated, notwithstanding
that from time to time during the term of this Agreement the Borrower may be
free from any Obligations.
9.6 Reinstatement. This ARTICLE IX shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or returned
by the Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any substantial part of its property, or otherwise,
all as though such payments had not been made.
9.7 Payments. The Guarantors hereby agree that all payments required to
be made by them hereunder will be made to the Agent without set-off or
counterclaim in accordance with the terms of the Obligations, including, without
limitation, in the currency in which payment is due.
ARTICLE X
THE AGENT
10.1 Appointment. Each Lender hereby irrevocably appoints and
authorizes First Union to act as Agent hereunder and under the other Credit
Documents and to take such actions as agent on its behalf hereunder and under
the other Credit Documents, and to exercise such powers and to perform such
duties, as are specifically delegated to the Agent by the terms hereof or
thereof, together with such other powers and duties as are reasonably incidental
thereto.
10.2 Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Credit Documents. The Agent shall not have, by reason of this Agreement or
any other Credit Document, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any other Credit Document, express or implied,
is intended to or shall be so construed as to impose upon the Agent any
obligations or liabilities in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein. The Agent may execute
any of its duties under this Agreement or any other Credit Document by or
through agents or attorneys-in-fact and shall not be responsible for
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the negligence or misconduct of any agents or attorneys-in-fact that it selects
with reasonable care. The Agent shall be entitled to consult with legal counsel,
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Credit Documents and its
duties hereunder and thereunder and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts. The Lenders hereby acknowledge that the Agent
shall not be under any duty to take any discretionary action permitted to be
taken by it pursuant to the provisions of this Agreement or any other Credit
Document unless it shall be requested in writing to do so by the Required
Lenders (or, where a higher percentage of the Lenders is expressly required
hereunder, such Lenders).
10.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action taken or omitted to be taken by it or such Person under or
in connection with the Credit Documents, except for its or such Person's own
gross negligence or willful misconduct, (ii) responsible in any manner to any
Lender for any recitals, statements, information, representations or warranties
herein or in any other Credit Document or in any document, instrument,
certificate, report or other writing delivered in connection herewith or
therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Credit Document, or
for the financial condition of each Credit Party, their respective Subsidiaries
or any other Person, or (iii) required to ascertain or make any inquiry
concerning the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Credit Document or the existence or
possible existence of any Default or Event of Default, or to inspect the
properties, books or records of any Credit Party or any of their respective
Subsidiaries.
10.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any notice, statement, consent or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem and treat each Lender as the owner of its interest
hereunder for all purposes hereof unless and until a written notice of the
assignment, negotiation or transfer thereof shall have been given to the Agent
in accordance with the provisions of this Agreement. The Agent shall be entitled
to refrain from taking or omitting to take any action in connection with this
Agreement or any other Credit Document (i) if such action or omission would, in
the reasonable opinion of the Agent, violate any applicable law or any provision
of this Agreement or any other Credit Document or (ii) unless and until it shall
have received such advice or concurrence of the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first have been indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than liability and expense arising from its own gross negligence or willful
misconduct) that may be incurred by it by reason of taking, continuing to take
or omitting to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Agent as a result of the
Agent's acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Lenders (or, where
a higher percentage of the Lenders is expressly required hereunder, such
Lenders), and such instructions and any action
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taken or failure to act pursuant thereto shall be binding upon all of the
Lenders (including all subsequent Lenders).
10.5 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereinafter
taken, including any review of the affairs of the Credit Parties and their
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Lender. Each Lender represents to the Agent that (i) it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
properties, financial and other condition and creditworthiness of the Borrower,
the Guarantors and the Subsidiaries and made its own decision to enter into this
Agreement and extend credit to the Borrower hereunder, and (ii) it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action hereunder and under the other Credit Documents and to make
such investigation as it deems necessary to inform itself as to the business,
prospects, operations, properties, financial and other condition and
creditworthiness of the Credit Parties and their respective Subsidiaries. Except
as expressly provided in this Agreement and the other Credit Documents, the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information concerning the
business, prospects, operations, properties, financial or other condition or
creditworthiness of the Credit Parties, their respective Subsidiaries or any
other Person that may at any time come into the possession of the Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.6 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Agent
shall have received written notice from the Borrower or a Lender referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent will give notice thereof to the Lenders as soon as
reasonably practicable; provided, however, that if any such notice has also been
furnished to the Lenders, the Agent shall have no obligation to notify the
Lenders with respect thereto. The Agent shall (subject to SECTIONS 10.4 and
11.6) take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders except to the extent that this Agreement expressly
requires that such action be taken, or not be taken, only with the consent or
upon the authorization of the Required Lenders or all of the Lenders.
10.7 Indemnification. To the extent the Agent is not reimbursed by or
on behalf of the Borrower, and without limiting the obligation of the Borrower
to do so, the Lenders agree (i) to indemnify the Agent and its officers,
directors, employees, agents, attorneys-in-fact and
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Affiliates, ratably in proportion to their respective percentages as used in
determining the Required Lenders as of the date of determination, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
attorneys' fees and expenses) or disbursements of any kind or nature whatsoever
that may at any time (including, without limitation, at any time following the
repayment in full of the Loans and the termination of the Commitments) be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any other Credit Document or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing, and (ii) to reimburse the Agent upon demand, ratably in
proportion to their respective percentages as used in determining the Required
Lenders as of the date of determination, for any expenses incurred by the Agent
in connection with the preparation, negotiation, execution, delivery,
administration, amendment, modification, waiver or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any of the other Credit
Documents (including, without limitation, reasonable attorneys' fees and
expenses and compensation of agents and employees paid for services rendered on
behalf of the Lenders); provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the gross negligence or willful misconduct of the party to be
indemnified.
10.8 The Agent in its Individual Capacity. With respect to its
Commitment, the Loans made by it and the Note or Notes issued to it, the Agent
in its individual capacity and not as Agent shall have the same rights and
powers under the Credit Documents as any other Lender and may exercise the same
as though it were not performing the agency duties specified herein; and the
terms "Lenders," "Required Lenders," "holders of Notes" and any similar terms
shall, unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, make investments in, and generally engage in any kind of banking,
trust, financial advisory or other business with the Credit Parties, any of
their respective Subsidiaries or any of their respective Affiliates as if the
Agent were not performing the agency duties specified herein, and may accept
fees and other consideration from any of them for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
10.9 Successor Agent. The Agent may resign at any time by giving ten
(10) days' prior written notice to the Borrower and the Lenders. Upon any such
notice of resignation, the Required Lenders will, with the prior written consent
of the Borrower (which consent shall not be unreasonably withheld), appoint from
among the Lenders a successor to the Agent (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing). If no successor to the Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within such ten-day period, then the retiring Agent may, on behalf of the
Lenders and after consulting with the Lenders and the Borrower, appoint a
successor Agent from among the Lenders. Upon the acceptance of any appointment
as Agent by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the
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retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Credit Documents. After any retiring Agent's resignation as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent. If no successor
to the Agent has accepted appointment as Agent by the thirtieth (30th) day
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective, and the Lenders shall
thereafter perform all of the duties of the Agent hereunder and under the other
Credit Documents until such time, if any, as the Required Lenders appoint a
successor Agent as provided for hereinabove.
ARTICLE XI
MISCELLANEOUS
11.1 Fees and Expenses. The Borrower and the Guarantors agree effective
upon the execution of this Agreement (i) whether or not the transactions
contemplated by this Agreement shall be consummated, to pay upon demand all
reasonable out-of-pocket costs and expenses of the Agent (including, without
limitation, the reasonable fees and expenses of counsel to the Agent) in
connection with the Agent's due diligence investigation in connection with, and
the preparation, negotiation, execution, delivery and syndication of, this
Agreement and the other Credit Documents, and any amendment, modification or
waiver hereof or thereof or consent with respect hereto or thereto, (ii) to pay
upon demand all reasonable out-of-pocket costs and expenses of the Agent and
each Lender (including, without limitation, reasonable attorneys' fees and
expenses) in connection with (y) any refinancing or restructuring of the credit
arrangement provided under this Agreement, whether in the nature of a
"work-out," in any insolvency or bankruptcy proceeding or otherwise and whether
or not consummated, and (z) the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement or any of the other
Credit Documents, whether in any action, suit or proceeding (including any
bankruptcy or insolvency proceeding) or otherwise, and (iii) to pay and hold the
Agent and each Lender harmless from and against all liability for any
intangibles, documentary, stamp or other similar taxes, fees and excises, if
any, including any interest and penalties, and any finder's or brokerage fees,
commissions and expenses (other than any fees, commissions or expenses of
finders or brokers engaged by the Agent or any Lender), that may be payable in
connection with the transactions contemplated by this Agreement and the other
Credit Documents. The Borrower's obligations under this SECTION 11.1 shall
survive the repayment of the Loans.
11.2 Indemnification. (a) The Borrower and the Guarantors agree,
effective upon the execution of this Agreement and whether or not the
transactions contemplated by this Agreement shall be consummated, to indemnify
and hold the Agent and each Lender and each of their respective directors,
officers, employees, agents and Affiliates (each, an "Indemnified Person")
harmless from and against any and all claims, losses, damages, obligations,
liabilities, penalties, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) of any kind or nature whatsoever,
whether direct, indirect or consequential (collectively, "Indemnified Costs"),
that may at any time be imposed on, incurred by or asserted against any such
Indemnified Person as a result of, arising from or in any way relating to the
preparation,
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execution, performance or enforcement of this Agreement or any of the other
Credit Documents, any of the transactions contemplated herein or therein or any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loans (including, without limitation, in
connection with the actual or alleged generation, presence, discharge or release
of any Hazardous Substances on, into or from, or the transportation of Hazardous
Substances to or from, any real property at any time owned or leased by the
Borrower or any of its Subsidiaries, any other Environmental Claims or any
violation of or liability under any Environmental Law), or any action, suit or
proceeding (including any inquiry or investigation) by any Person, whether
threatened or initiated, related to any of the foregoing, and in any case
whether or not such Indemnified Person is a party to any such action, proceeding
or suit or a subject of any such inquiry or investigation; provided, however,
that no Indemnified Person shall have the right to be indemnified hereunder for
any Indemnified Costs to the extent resulting from the gross negligence or
willful misconduct of such Indemnified Person. Subject only to paragraph (b)
below, all of the foregoing Indemnified Costs of any Indemnified Person shall be
paid or reimbursed by the Borrower, as and when incurred and upon demand. The
obligations of the Borrower under this Section 11.2 shall survive the repayment
of the Loans.
(b) Any Indemnified Person shall give prompt written notice to the
Borrower after the receipt by such Indemnified party of any written notice, or
after such Indemnified Person becomes aware, of the commencement of any action,
suit, claim or proceeding for which such Indemnified Person seeks
indemnification hereunder. Upon such notice, the Borrower shall be entitled to
defend such action, suit, claim or proceeding at its own expense and by its own
counsel, provided that (i) such counsel is reasonably satisfactory to the
Indemnified Person, (ii) the Indemnified Person is kept reasonably informed of
developments, and (iii) such counsel proceeds with diligence and in good faith
with respect thereto. The Indemnified Person shall have the right to participate
in the defense and investigation of such action, suit, claim or proceeding with
its own counsel and at its own expense, except that the Borrower shall bear the
reasonable expense of such separate counsel if (x) in the reasonable judgment of
the Indemnified Person, based upon written advice of its counsel, a conflict of
interest may exist between such Indemnified Person and the Borrower with respect
to the matter, in which case if the Indemnified Person notifies the Borrower in
writing that such Indemnified Person elects to employ separate counsel at the
Borrower's expense, the Borrower shall not have the right to assume the defense
of such action, suit, claim or proceeding on behalf of such Indemnified Person,
or (y) the Borrower shall have failed to assume the defense of such claim in the
manner provided above within a reasonable time after notice thereof is given to
the Borrower; provided, however, that the Borrower shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expense of more than one separate firm for all
Indemnified Persons unless, in the reasonable judgment of any Indemnified
Person, based upon written advice of its counsel, a conflict of interest may
exist between or among the Indemnified Persons. No Indemnified Person seeking
indemnification hereunder will, without the Borrower's prior written consent,
settle, compromise, consent to the entry of any judgment in or otherwise seek to
terminate any action, suit, claim or proceeding referred to above.
11.3 Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
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STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES
HERETO HEREBY DECLARE THAT IT IS THEIR INTENTION THAT THIS AGREEMENT SHALL BE
REGARDED AS MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND THAT THE LAWS OF
SAID STATE SHALL BE APPLIED IN INTERPRETING ITS PROVISIONS IN ALL CASES WHERE
LEGAL INTERPRETATION SHALL BE REQUIRED. EACH OF THE PARTIES HERETO AGREES (A)
THAT THIS AGREEMENT INVOLVES AT LEAST $250,000; AND (B) THAT THIS AGREEMENT HAS
BEEN ENTERED INTO BY THE PARTIES HERETO IN EXPRESS RELIANCE UPON NEW YORK
GENERAL OBLIGATIONS LAW 'SS' 5-1401. NOTWITHSTANDING THE FOREGOING CHOICE OF
LAW, THE BORROWER AND GUARANTORS HEREBY CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL
COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA OR THE
SOUTHERN DISTRICT OF THE STATE OF NEW YORK FOR ANY PROCEEDING INSTITUTED
HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY
PROCEEDING TO WHICH THE AGENT OR ANY LENDER OR THE BORROWER OR ANY GUARANTOR IS
A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENT OR ANY LENDER OR THE BORROWER OR ANY GUARANTOR. THE
BORROWER AND EACH GUARANTOR IRREVOCABLY AGREE TO BE BOUND (SUBJECT TO ANY
AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED THEREBY
AND FURTHER WAIVES ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION
OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING.
THE BORROWER AND EACH GUARANTOR CONSENT THAT ALL SERVICE OF PROCESS BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS SET FORTH
HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED
STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR ANY GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
11.4 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW, EACH OF THE BORROWER, THE GUARANTORS, THE LENDERS AND THE AGENT
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT
AND
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THE OTHER CREDIT DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
11.5 Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:
(a) if to the Borrower, to 399 Thornall Street, Edison, New Jersey
08837, Attention: Mr. James F. Dore, Executive Vice President and Chief
Financial Officer, or Mr. Sanford M. Kimmel, Senior Vice President and
Treasurer, Telecopy No. (732) 906-9157, with a copy to Morgan, Lewis & Bockius
LLP, 101 Park Avenue, New York, New York 10178, Attention: F. Sedgwick Browne,
Telecopy No. (212) 309-6273;
(b) if to PXRE Group, to Clarendon House, 2 Church Street, P.O. Box
HM666, Hamilton HM CX Bermuda, Attention: David J. Doyle, Telecopy No.
(____)________________, with a copy to _______________________________;
(c) if to PXRE Barbados, to Chancery Chambers, High Street, Bridgetown,
Barbados West Indies, Attention: Trevor A. Carmichael, Telecopy No.
(____)________________, with a copy to _______________________________;
(d) if to the Agent, to First Union National Bank, One First Union
Center, DC-4, 301 South College Street, Charlotte, North Carolina 28288-0680,
Attention: Syndication Agency Services, Telecopy No. (704) 383-0288; and
(e) if to any Lender, to it at the address set forth on SCHEDULE 1.1
(or if to any Lender not a party hereto as of the date hereof, at the address
set forth in its Assignment and Acceptance);
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered to the cable company, respectively, or (iii) if
delivered by hand, upon delivery; provided that notices and communications to
the Agent shall not be effective until received by the Agent.
11.6 Amendments, Waivers, etc. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by the Borrower or
either Guarantor from, any provision of this Agreement or any other Credit
Document, shall be effective unless in a writing signed by the Required Lenders
(or by the Agent at the direction or with the consent of the Required Lenders),
and then the same shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such amendment,
modification,
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waiver, discharge, termination or consent shall:
(a) unless agreed to by each Lender directly affected thereby, (i)
reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other Obligations
(other than fees payable to the Agent for its own account), or (ii) extend the
Maturity Date or any other date (including any scheduled date for the mandatory
reduction or termination of any Commitments) fixed for the payment of any
principal of or interest on any Loan (other than additional interest payable
under SECTION 2.8(b) at the election of the Required Lenders, as provided
therein), any fees (other than fees payable to the Agent for its own account) or
any other Obligations;
(b) unless agreed to by all of the Lenders, (i) increase or extend any
Commitment of any Lender (it being understood that a waiver of any Event of
Default, if agreed to by the requisite Lenders hereunder, shall not constitute
such an increase), (ii) change the percentage of the aggregate Commitments or of
the aggregate unpaid principal amount of the Loans, or the number or percentage
of Lenders, that shall be required for the Lenders or any of them to take or
approve, or direct the Agent to take, any action hereunder (including as set
forth in the definition of "Required Lenders"), (iii) release any Guarantor from
its obligations under ARTICLE IX, or (iv) change any provision of SECTION 2.15
or this Section; and
(c) unless agreed to by the Agent in addition to the Lenders required
as provided hereinabove to take such action, affect the respective rights or
obligations of the Agent, hereunder or under any of the other Credit Documents;
and provided further that the Fee Letter may be amended or modified, and any
rights thereunder waived, in a writing signed by the parties thereto.
11.7 Assignments, Participations. (a) Each Lender may assign to one or
more other Eligible Assignees (each, an "Assignee") all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment, the outstanding Loans made by it, and the Note
or Notes held by it); provided, however, that (i) any such assignment (other
than an assignment to a Lender or an Affiliate of a Lender) shall not be made
without the prior written consent of the Agent and the Borrower (to be evidenced
by its counterexecution of the relevant Assignment and Acceptance), which
consent shall not be unreasonably withheld (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing), (ii) each such assignment shall be of a uniform,
and not varying, percentage of all of the assigning Lender's rights and
obligations under this Agreement, (iii) except in the case of an assignment to a
Lender or an Affiliate of a Lender, no such assignment shall be in an aggregate
principal amount (determined as of the date of the Assignment and Acceptance
with respect to such assignment) less than $5,000,000 determined by combining
the amount of the assigning Lender's outstanding Loans and Unutilized Commitment
being assigned pursuant to such assignment, and (iv) the parties to each such
assignment will execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment, and will pay a nonrefundable processing fee
of $3,000 to the Agent for its own
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account. Upon such execution, delivery, acceptance and recording of the
Assignment and Acceptance, from and after the effective date specified therein,
which effective date shall be at least five (5) Business Days after the
execution thereof (unless the Agent shall otherwise agree), (A) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of the assigning Lender
hereunder with respect thereto and (B) the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than rights under the
provisions of this Agreement and the other Credit Documents relating to
indemnification or payment of fees, costs and expenses, to the extent such
rights relate to the time prior to the effective date of such Assignment and
Acceptance) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The terms and provisions of each
Assignment and Acceptance shall, upon the effectiveness thereof, be incorporated
into and made a part of this Agreement, and the covenants, agreements and
obligations of each Lender set forth therein shall be deemed made to and for the
benefit of the Agent and the other parties hereto as if set forth at length
herein.
(b) The Agent will maintain at its address for notices referred to
herein a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and each Lender at any reasonable time
and from time to time upon reasonable prior notice.
(c) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Assignee and, if required,
counterexecuted by the Borrower, together with the Note or Notes subject to such
assignment and the processing fee referred to in subsection (a) above, the Agent
will (i) accept such Assignment and Acceptance, (ii) on the effective date
thereof, record the information contained therein in the Register and (iii) give
notice thereof to the Borrower and the Lenders. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, will execute
and deliver to the Agent, in exchange for the surrendered Note or Notes, a new
Note or Notes to the order of the Assignee (and, if the assigning Lender has
retained any portion of its rights and obligations hereunder, to the order of
the assigning Lender), prepared in accordance with the provisions of SECTION 2.4
as necessary to reflect, after giving effect to the assignment, the Commitments
of the Assignee and (to the extent of any retained interests) the assigning
Lender, dated the date of the replaced Note or Notes and otherwise in
substantially the form of EXHIBIT A. The Agent will return canceled Notes to the
Borrower.
(d) Each Lender may, without the consent of the Borrower, the Agent or
any other Lender, sell to one or more other Persons (each, a "Participant")
participations in any portion
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comprising less than all of its rights and obligations under this Agreement
(including, without limitation, a portion of its Commitment, the outstanding
Loans made by it and the Note or Notes held by it); provided, however, that (i)
except in the case of a participation sold to a Lender or an Affiliate of a
Lender, no such participation shall be in an aggregate principal amount less
than $3,000,000, (ii) such Lender's obligations under this Agreement shall
remain unchanged and such Lender shall remain solely responsible for the
performance of such obligations, (iii) no Lender shall sell any participation
that, when taken together with all other participations, if any, sold by such
Lender, covers all of such Lender's rights and obligations under this Agreement,
(iv) the Borrower, the Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and no Lender shall permit any Participant to
have any voting rights or any right to control the vote of such Lender with
respect to any amendment, modification, waiver, consent or other action
hereunder or under any other Credit Document (except as to actions that would
(x) reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other
Obligations, (y) extend the Maturity Date or any other date fixed for the
payment of any principal of or interest on any Loan, any fees or any other
Obligations, or (z) increase or extend any Commitment of any Lender), and (v) no
Participant shall have any rights under this Agreement or any of the other
Credit Documents, each Participant's rights against the granting Lender in
respect of any participation to be those set forth in the participation
agreement, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not granted such participation. Notwithstanding the
foregoing, each Participant shall have the rights of a Lender for purposes of
SECTIONS 2.16(a), 2.16(b), 2.17, 2.18 and 8.3 and the obligations of a Lender
under SECTION 2.17, and shall be entitled to the benefits thereto, to the extent
that the Lender granting such participation would be entitled to such benefits
if the participation had not been made, provided that no Participant shall be
entitled to receive any greater amount pursuant to any of such Sections than the
Lender granting such participation would have been entitled to receive in
respect of the amount of the participation made by such Lender to such
Participant had such participation not been made.
(e) Nothing in this Agreement shall be construed to prohibit any Lender
from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release a Lender from any of its obligations hereunder.
(f) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section,
disclose to the Assignee or Participant or proposed Assignee or Participant any
information relating to the Borrower and its Subsidiaries furnished to it by or
on behalf of any other party hereto, provided that such Assignee or Participant
or proposed Assignee or Participant agrees in writing to keep such information
confidential to the same extent required of the Lenders under SECTION 11.13.
11.8 No Waiver. The rights and remedies of the Agent and the Lenders
expressly set forth in this Agreement and the other Credit Documents are
cumulative and in addition to, and not exclusive of, all other rights and
remedies available at law, in equity or otherwise. No failure or delay on the
part of the Agent or any Lender in exercising any right, power or privilege
shall
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operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or be construed to be a waiver
of any Default or Event of Default. No course of dealing between any of the
Borrower, Guarantors, Agent or Lenders or their agents or employees shall be
effective to amend, modify or discharge any provision of this Agreement or any
other Credit Document or to constitute a waiver of any Default or Event of
Default. No notice to or demand upon the Borrower or any Guarantor in any case
shall entitle the Borrower or any Guarantor to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
the Agent or any Lender to exercise any right or remedy or take any other or
further action in any circumstances without notice or demand.
11.9 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, and all references herein to any party shall be
deemed to include its successors and assigns; provided, however, that (i)
neither the Borrower nor either Guarantor shall sell, assign or transfer any of
its rights, interests, duties or obligations under this Agreement without the
prior written consent of all of the Lenders and (ii) any Assignees and
Participants shall have such rights and obligations with respect to this
Agreement and the other Credit Documents as are provided for under and pursuant
to the provisions of SECTION 11.7.
11.10 Survival. All representations, warranties and agreements made by
or on behalf of the Guarantors, the Borrower or any of their Subsidiaries in
this Agreement and in the other Credit Documents shall survive the execution and
delivery hereof or thereof, the Reorganization and the making and repayment of
the Loans. In addition, notwithstanding anything herein or under applicable law
to the contrary, the provisions of this Agreement and the other Credit Documents
relating to indemnification or payment of fees, costs and expenses, including,
without limitation, the provisions of SECTIONS 2.16(a), 2.16(b), 2.17, 2.18,
9.7, 11.1 and 11.2, shall survive the payment in full of all Loans, the
termination of the Commitments, and any termination of this Agreement or any of
the other Credit Documents.
11.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
11.12 Construction. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
11.13 Confidentiality. Each Lender agrees to keep confidential,
pursuant to its customary procedures for handling confidential information of a
similar nature and in accordance
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with safe and sound banking practices, all nonpublic information provided to it
by or on behalf of any Guarantor, the Borrower or any of their Subsidiaries in
connection with this Agreement or any other Credit Document; provided, however,
that any Lender may disclose such information (i) to its directors, employees
and agents and to its auditors, counsel and other professional advisors, (ii) at
the demand or request of any bank regulatory authority, court or other
Governmental Authority having or asserting jurisdiction over such Lender, as may
be required pursuant to subpoena or other legal process, or otherwise in order
to comply with any applicable Requirement of Law, (iii) in connection with any
proceeding to enforce its rights hereunder or under any other Credit Document or
any other litigation or proceeding related hereto or to which it is a party,
(iv) to the Agent or any other Lender, (v) to the extent the same has become
publicly available other than as a result of a breach of this Agreement and (vi)
pursuant to and in accordance with the provisions of SECTION 11.7(f).
11.14 Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by the Agent and the Borrower of written
or telephonic notification of such execution and authorization of delivery
thereof.
11.15 Disclosure of Information. The Borrower and Guarantor agree and
consent to the Agent's disclosure of information relating to this transaction to
Gold Sheets and other similar bank trade publications. Such information will
consist of deal terms and other information customarily found in such
publications.
11.16 Entire Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, (B) UPON COMPLIANCE WITH THE CONDITIONS
SET FORTH IN SECTION 3.4 HEREOF AND CONSUMMATION OF THE REORGANIZATION,
SUPERSEDE ANY AND ALL PRIOR AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL
OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF, INCLUDING,
WITHOUT LIMITATION, THE COMMITMENT LETTER FROM FIRST UNION TO THE BORROWER DATED
DECEMBER 2, 1998 (EXCEPT FOR PROVISIONS THE SURVIVAL OF WHICH IS EXPLICITLY SET
FORTH THEREIN) BUT SPECIFICALLY EXCLUDING THE OLD CREDIT AGREEMENT, EXCEPT TO
THE EXTENT AMENDED HEREBY, THE FEE LETTER AND THE AMENDMENT FEE LETTER, AND (C)
MAY NOT BE AMENDED, SUPPLEMENTED, CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
PXRE CORPORATION
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
PXRE GROUP LTD
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
PXRE (BARBADOS) LTD
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
(signatures continued)
<PAGE>
FIRST UNION NATIONAL BANK, as Agent
and as a Lender
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
THE FIRST NATIONAL BANK OF CHICAGO
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
FLEET NATIONAL BANK
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
CREDIT LYONNAIS NEW YORK BRANCH
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
<PAGE>
EXHIBIT 5
CONYERS DILL & PEARMAN
CLARENDON HOUSE
2 CHURCH STREET
P.O. BOX HM 666
HAMILTON, HM CX BERMUDA
August 18, 1999
The United States Securites and Exchange Commission
Division of Corporation Finance
Washington, DC 20549
USA
Dear Sirs
PXRE GROUP LTD./REGISTRATION STATEMENT ON FORM S-4
We have acted as special legal counsel to the Company, a Bermuda exempted
company ("PXRE"), in connection with the Registration Statement on Form S-4 of
PXRE (the "Registration Statement"), filed with the Securities and Exchange
Commission (the "Commission") under the United States Securities Act of 1933, as
amended (the "Securities Act"), relating to the proposed issuance of common
shares, par value $1.00 per share, of PXRE ("PXRE Common Shares") in connection
with the Agreement and Plan of Merger dated as of July 7, 1999 (the "Merger
Agreement"), between PXRE, PXRE Merger Corp., a Delaware corporation ("Merger
Corp.") and PXRE Corporation, a Delaware corporation ("PXRE Delaware"), pursuant
to which, among other things, Merger Corp. will be merged with and into PXRE
Delaware (the "Merger") and each outstanding share of common stock, par value
$.01 per share, of PXRE Delaware will be converted into one PXRE Common Share
(in the aggregate, the "Shares"), all as more fully described in the
Registration Statement. The Registration Statement includes a proxy
statement/prospectus (the "Joint Proxy Statement/Prospectus") to be furnished to
the stockholders of PXRE Delaware in connection with seeking their approval of
the Merger Agreement.
This opinion is being furnished to you at the request of the Company in
accordance with the requirements of Item 601(b)(5)(i) of Regulation S-K under
the Securities Act.
For the purposes of giving this opinion, we have examined the following
documents:-
(i) the Registration Statement (including the Joint Proxy
Statement/Prospectus);
<PAGE>
(ii) the Merger Agreement; and
(iii) a specimen certificate evidencing the PXRE Common Shares.
The documents listed in items (i) through (iii) above are herein sometimes
collectively referred to as the "Documents" (which term does not include any
other instrument or agreement whether or not specifically referred to therein or
attached as an exhibit or schedule thereto).
We have also reviewed the memorandum of association and the bye-laws of the
Company, each certified by the Secretary of the Company on the date hereof,
unanimous written resolutions adopted by its board of directors, minutes of a
meeting of the board of directors held on August 9, 1999 and minutes of a
meeting of a special committee of the board of directors held on August 9, 1999
(the "Minutes"), and such other documents and made such enquiries as to
questions of law as we have deemed necessary in order to render the opinion set
forth below.
We have assumed (a) the genuineness and authenticity of all signatures and the
conformity to the originals of all copies (whether or not certified) examined by
us and the authenticity and completeness of the originals from which such copies
were taken, (b) that where a document has been examined by us in draft form, it
will be or has been executed in the form of that draft, and where a number of
drafts of a document have been examined by us all changes thereto have been
marked or otherwise drawn to our attention, (c) the capacity, power and
authority of each of the parties to the Documents, other than the Company, to
enter into and perform its respective obligations under the Documents, (d) the
due execution of the Documents by each of the parties thereto, other than the
Company, and the delivery thereof by each of the parties thereto, (e) the
accuracy and completeness of all factual representations made in the Documents
and other documents reviewed by us, (f) that the resolutions contained in the
Minutes remain in full force and effect and have not been rescinded or amended,
(g) that there is no provision of the law of any jurisdiction, other than
Bermuda, which would have any implication in relation to the opinions expressed
herein and (h) that the Company has received money or money's worth of not less
than $1.00 per Share.
We have also assumed that prior to the issuance of the Shares that (a) the
Registration Statement shall be effective, (b) the stockholders of PXRE Delaware
have approved the Merger Agreement, (c) the Certificate of Merger which will
give effect to the Merger has been properly filed with the Secretary of State
for the State of Delaware in the United States of America and (d) the
transactions contemplated by the Merger Agreement have been fully and
effectively consummated.
"Non-assessability" is not a legal concept under Bermuda law, but when we
describe shares as being "non-assessable" (see below) we mean with respect to
the shareholders of the company, in relation to fully paid shares of a company
and subject to any contrary provision in any agreement in writing between that
company and any one of its shareholders holding such shares but only with
respect to such shareholder, that such shareholders shall not be bound by an
alteration to the memorandum of association or the bye-laws of that company
after the date upon which they became such shareholders, if and insofar as the
alteration requires them to take, or subscribe for additional shares,
<PAGE>
or in any way increases their liability to contribute to the share capital of,
or otherwise pay money to, such company.
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is to be governed by and
construed in accordance with the laws of Bermuda and is limited to and is given
on the basis of the current law and practice in Bermuda. This opinion is issued
solely for your benefit and is not to be relied upon by any other person, firm
or entity or in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion that the
issuance of the Shares has been duly authorised and the Shares, when issued in
accordance with the terms and conditions of the Merger Agreement, will be
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and Joint Proxy Statement/Prospectus.
Yours faithfully
CONYERS DILL & PEARMAN
<PAGE>
EXHIBIT 8.1
CONYERS DILL & PEARMAN
CLARENDON HOUSE
2 CHURCH STREET
P.O. BOX HM 666
HAMILTON, HM CX BERMUDA
August 18, 1999
PXRE Group Ltd.
2 Church Street
Hamilton HM 11
Bermuda
Dear Sirs
PXRE GROUP LTD./REGISTRATION STATEMENT ON FORM S-4
We have acted as special legal counsel to the Company, a Bermuda exempted
company ("PXRE"), in connection with the Registration Statement on Form S-4 of
PXRE (the "Registration Statement"), filed with the Securities and Exchange
Commission (the "Commission") under the United States Securities Act of 1933, as
amended (the "Securities Act"), relating to the proposed issuance of common
shares, par value $1.00 per share, of PXRE ("PXRE Common Shares") in connection
with the Agreement and Plan of Merger dated as of July 7, 1999 (the "Merger
Agreement"), between PXRE, PXRE Merger Corp., a Delaware corporation ("Merger
Corp.") and PXRE Corporation, a Delaware corporation ("PXRE Delaware"), pursuant
to which, among other things, Merger Corp. will be merged with and into PXRE
Delaware (the "Merger") and each outstanding share of common stock, par value
$.01 per share, of PXRE Delaware will be converted into one PXRE Common Share
(in the aggregate, the "Shares"), all as more fully described in the
Registration Statement. The Registration Statement includes a proxy
statement/prospectus (the "Joint Proxy Statement/Prospectus") to be furnished to
the stockholders of PXRE Delaware in connection with seeking their approval of
the Merger Agreement.
For the purposes of giving this opinion, we have examined the following
documents:-
(i) the Registration Statement (including the Joint Proxy Statement/Prospectus);
and
(ii) the Merger Agreement.
The documents listed in items (i) through (ii) above are herein sometimes
collectively referred to
<PAGE>
as the "Documents" (which term does not include any other instrument or
agreement whether or not specifically referred to therein or attached as an
exhibit or schedule thereto).
We have also reviewed the memorandum of association and the bye-laws of the
Company, each certified by the Secretary of the Company on the date hereof,
unanimous written resolutions adopted by its board of directors, minutes of a
meeting of the board of directors held on August 9, 1999 and minutes of a
special committee of the board of directors held on August 9, 1999 (the
"Minutes"), and such other documents and made such enquiries as to questions
of law as we have deemed necessary in order to render the opinion set forth
below.
We have assumed (a) the genuineness and authenticity of all signatures and the
conformity to the originals of all copies (whether or not certified) examined by
us and the authenticity and completeness of the originals from which such copies
were taken, (b) that where a document has been examined by us in draft form, it
will be or has been executed in the form of that draft, and where a number of
drafts of a document have been examined by us all changes thereto have been
marked or otherwise drawn to our attention, (c) the capacity, power and
authority of each of the parties to the Documents, other than the Company, to
enter into and perform its respective obligations under the Documents, (d) the
due execution of the Documents by each of the parties thereto, other than the
Company, and the delivery thereof by each of the parties thereto, (e) the
accuracy and completeness of all factual representations made in the Documents
and other documents reviewed by us, (f) that the resolutions contained in the
Minutes remain in full force and effect and have not been rescinded or amended,
(g) that there is no provision of the law of any jurisdiction, other than
Bermuda, which would have any implication in relation to the opinions expressed
herein and (h) that the Company has received money or money's worth of not less
than $1.00 per Share.
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is to be governed by and
construed in accordance with the laws of Bermuda and is limited to and is given
on the basis of the current law and practice in Bermuda. This opinion is issued
solely for your benefit and is not to be relied upon by any other person, firm
or entity or in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion that the
statements in the Registration Statement under the heading "Certain Tax
Considerations--Consequences of the Reorganization--Bermuda," "Certain Tax
Considerations--Taxation of the Company and its Subsidiaries--Bermuda" and
"Certain Tax Considerations--Taxation of Shareholders--Bermuda," insofar as such
statements constitute a summary of the Bermuda law or Bermuda legal conclusions
referred to therein, are accurate in all material aspects and fairly present the
information called for with respect to such Bermuda legal matters and
conclusions and fairly summarize the Bermuda legal matters referred to therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and to the reference to our Firm under
the headings "Certain Tax Considerations," "Legal Matters" and "Enforceability
of Civil Liabilities Against Foreign Persons" in the Joint Proxy
<PAGE>
Statement/Prospectus included in the Registration Statement.
Yours faithfully
CONYERS DILL & PEARMAN
<PAGE>
EXHIBIT 8.2
CHANCERY CHAMBERS
ATTORNEYS-AT-LAW
CHANCERY HOUSE
HIGH STREET
BRIDGETOWN, BARBADOS, WEST INDIES
August 18, 1999
PXRE Group Ltd.
Clarendon House
2 Church Street
Hamilton HM CX
Bermuda
Re: PXRE Group Ltd.
---------------
Ladies and Gentlemen:
We have acted as Barbados counsel to PXRE Group Ltd., a Bermuda
corporation ("PXRE"), in connection with the Registration Statement on Form S-4
of PXRE (the "Registration Statement"), filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"), relating to the proposed issuance of common shares, par
value $1.00 per share, of PXRE ("PXRE Common Shares") in connection with the
Agreement and Plan of Merger dated as of July 7, 1999 (the "Merger Agreement"),
between PXRE, PXRE Merger Corp., a Delaware corporation ("Merger Corp.") and
PXRE Corporation, a Delaware corporation ("PXRE Delaware"), pursuant to which,
among other things, Merger Corp. will be merged with and into PXRE Delaware
(the "Merger") and each outstanding share of common stock, par value $.O1 per
share, of PXRE Delaware will be converted into one of PXRE Common Share (in the
aggregate, the "Shares"), all as more fully described in the Registration
Statement. The Registration Statement includes a proxy statement/prospectus
(the "Joint Proxy Statement/Prospectus") to be furnished to the stockholders
of PXRE Delaware in connection with seeking their approval of the Merger
Agreement.
We have reviewed the Registration Statement and have considered such
aspects of Barbados law as we have deemed relevant for purposes of the opinion
set forth below. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to authentic originals of all documents submitted to us as
copies.
Based upon and subject to the foregoing, we are of the opinion that:
<PAGE>
PXRE Group Ltd.
August 18, 1999
Page 2
1. The statements in the Registration Statement under the heading
"Certain Tax Considerations--Tax Consequences of the
Reorganization--Barbados," and "Certain Tax Considerations--Taxation
of the Company and its Subsidiaries--Barbados," insofar as such
statements constitute a summary of the law or legal conclusions
referred to therein, are accurate in all material aspects and fairly
present the information called for with respect to such legal
matters and legal conclusions and fairly summarize the legal matters
referred to therein.
We are Barbados attorneys and we do not express any opinion herein
concerning any law other than the laws of Barbados.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and to the reference to our Firm under
the headings "Certain Tax Considerations" and "Legal Matters" in the Joint Proxy
Statement/Prospectus included in the Registration Statement.
Very truly yours,
CHANCERY CHAMBERS,
ATTORNEYS-AT-LAW
<PAGE>
EXHIBIT 8.3
August 18, 1999
PXRE Group Ltd.
Clarendon House
2 Church Street
Hamilton HM CX
Bermuda
PXRE Corporation
399 Thornall Street
Edison, New Jersey 08837
Re: PXRE Group Ltd.
Ladies and Gentlemen:
We have acted as United States tax counsel to PXRE Group Ltd., a
Bermuda corporation ("PXRE"), and PXRE Corporation, a Delaware corporation
("PXRE Delaware"), in connection with the preparation of the Registration
Statement on Form S-4 of PXRE (the "Registration Statement"), filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to the proposed issuance of common shares, par value $1.00 per share,
of PXRE ("PXRE Common Shares") in connection with the Agreement and Plan of
Merger dated as of July 7, 1999 (the "Merger Agreement"), between PXRE, PXRE
Merger Corp., a Delaware corporation and PXRE Delaware. The Registration
Statement includes a proxy statement/prospectus (the "Joint Proxy
Statement/Prospectus") to be furnished to the stockholders of PXRE Delaware in
connection with seeking their approval of the Merger Agreement. Capitalized
terms used herein and not otherwise defined herein have the respective meanings
ascribed to those terms in the Registration Statement.
In arriving at the opinion referred to below, we have examined
and relied upon the following documents:
(a) the Registration Statement, including the Exhibits
thereto;
(b) the Bye-Laws of PXRE;
(c) the Bye-Laws of PXRE Bermuda;
(d) the Bye-Laws of PXRE Barbados; and
<PAGE>
PXRE Group Ltd.
PXRE Corporation
August 18, 1999
Page 2
(e) the tax representations letter of even date herewith to us
from PXRE.
We have also read and relied upon originals or copies,
certified or otherwise identified to our satisfaction, of such records of PXRE,
PXRE Delaware and their respective subsidiaries and such certificates and
representations of officers and representatives of PXRE, PXRE Delaware and their
respective subsidiaries, and we have made such investigations of law as we have
deemed appropriate as a basis for the opinion referred to below. In our
examination, we have assumed the authenticity of original documents, the
accuracy of copies and the genuineness of signatures. We understand and assume
that (i) each agreement referred to in the Registration Statement represents the
valid and binding obligation of the respective parties thereto, enforceable in
accordance with its respective terms, and the entire agreement between the
parties with respect to the subject matter thereof, (ii) the parties to each
agreement have complied, and will comply, with all of their respective
covenants, agreements and undertakings contained therein and (iii) the
transactions provided for by each agreement were and will be carried out in
accordance with their terms.
Our opinion is based upon existing United States federal
income tax laws, regulations, administrative pronouncements and judicial
decisions. All such authorities are subject to change, either prospectively or
retroactively. No assurance can be provided as to the effect of any such change
upon our opinion.
Our opinion has no binding effect on the United States
Internal Revenue Service or the courts of the United States. No assurance can be
given that, if the matter were contested, a court would agree with our opinion.
Based upon the foregoing and subject to the qualifications and
limitations set forth in the Joint Proxy Statement/Prospectus, we confirm that,
in our opinion, the material United States federal income tax consequences of
the reorganization to PXRE and its subsidiaries and U.S. Holders, of the
operations of PXRE and its subsidiaries and of the ownership of PXRE Common
Shares by U.S. Holders are as set forth in the Joint Proxy Statement/Prospectus
under the captions "Certain Tax Considerations-- Tax Consequences of the
Reorganization-- United States," "Certain Tax Considerations-- Taxation of the
Company and its Subsidiaries-- United States" and "Certain Tax Considerations--
Taxation of Shareholders-- United States." While such descriptions discuss the
material anticipated United States federal income tax consequences applicable to
such persons, they do not purport to discuss all United States tax consequences
and are limited to those United States tax consequences specifically discussed
therein.
<PAGE>
PXRE Group Ltd.
PXRE Corporation
August 18, 1999
Page 3
In giving our opinion, we express no opinion other than as to
the federal income tax law of the United States of America.
We are furnishing this letter in our capacity as special
United States tax counsel to PXRE and PXRE Delaware. This letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose, except
as set forth below.
We hereby consent to the filing of this letter as an Exhibit
to the Registration Statement and we further consent to the use of our name
under the captions "Legal Matters" and "Certain Tax Considerations" in the
Registration Statement.
Very truly yours,
MORGAN, LEWIS & BOCKIUS LLP
<PAGE>
EXHIBIT 10.10
SEVERANCE PLAN FOR CERTAIN EXECUTIVES
OF PXRE CORPORATION
1. Establishment of Plan
This Severance Plan for Certain Executives (the "Plan") was adopted by the
Board of Directors of PXRE Corporation (the "Company") on August 17, 1989, and
has been thereafter continued, for the benefit of certain executives of the
Company and its subsidiaries.
2. Purpose
The Company, on behalf of itself and its stockholders, desires to continue
to attract and retain well-qualified executives who are an integral part of the
management of the Company and its subsidiaries, such as the Designated Employees
(as hereinafter defined). The purpose of the Plan is to provide an incentive to
the Designated Employees, whose knowledge, expertise and level of performance
are critical to the current and future success of the Company and its
subsidiaries, to remain in the employ of the Company and/or its subsidiaries,
notwithstanding the uncertainty and job insecurity created by an actual or
threatened Change in Control (as hereinafter defined).
3. Definitions
Terms not otherwise defined in the Plan shall have the meanings set forth
in this Section 3.
3.1 Change in Control. A "Change in Control" of the Company shall be deemed
to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities and Exchange Act of 1934, as amended (the "Exchange Act")), other
than the Company and other than Phoenix Home Life Mutual Insurance Company or an
affiliate thereof, becomes the "beneficial owner" (as determined for purposes of
Regulation 13-D under the Exchange Act as currently in effect), directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(b) the stockholders of the Company approve (i) any merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the holders of the voting securities of the
Company outstanding immediately prior thereto holding immediately thereafter
securities representing more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
- 1 -
<PAGE>
immediately after such merger or consolidation, or (ii) any sale or other
disposition (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company; or
(c) the stockholders of the Company approve a plan or proposal for the
liquidation or dissolution of the Company; or
(d) during any period of two consecutive years (not including any
period prior to the adoption of the Plan), individuals who at the beginning of
such period constitute the entire Board of Directors of the Company and any new
director, whose election to the Board or nomination for election to the Board by
the Company's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board.
3.2 Constructive Discharge. The term "Constructive Discharge" means a
termination of employment by a Designated Employee in the event of any:
(a) material change by the Company or any of its subsidiaries after a
Change in Control of the Company (or within six (6) months prior to such Change
in Control if discussions concerning such Change in Control had commenced at or
prior to such material change) of the Designated Employee's duties or
responsibilities that would cause the Designated Employee's position with the
Company and/or its subsidiaries to become of less dignity, responsibility,
importance or scope from the position held by the Designated Employee
immediately prior to such material change, other than any such change primarily
attributable to the fact that the Company's securities are no longer publicly
traded or which is effected with the Designated Employee's prior expressed
written consent;
(b) reduction in the Designated Employee's base salary is in effect on
the date such person becomes a Designated Employee for purposes of the Plan as
the same may be increased from time to time, or a change in the method of
calculating bonuses or incentive compensation awards that would have the effect
of materially reducing the Designated Employee's annual bonus or incentive
compensation award;
(c) except as required by law, any failure by the Company or its
subsidiaries to continue in effect without substantial change any compensation,
incentive, welfare or benefit plan or arrangement, as well as any plan or
arrangement whereby the Designated Employee may acquire securities of the
Company, in which the Designated Employee is participating at the time of a
Change in Control of the Company (or within six (6) months prior to such Change
in Control if discussions concerning such Change in Control had commenced at or
prior to such failure), or any other plans providing the Designated Employee
with substantially similar benefits (hereinafter collectively the "Benefit
Plans") or the taking of any action by the Company or its subsidiaries which
would adversely affect the Designated
- 2 -
<PAGE>
Employee's participation in or materially reduce the Designated Employee's
benefits under any such Benefit Plan or deprive the Designated Employee of
specified benefits which otherwise would be accruing to him or her at such time,
unless an equitable substitute arrangement (embodied in an ongoing substitute
or alternative Benefit Plan) has been made for the benefit of the Designated
Employee with respect to the Benefit Plan in question. For purposes of the
foregoing, Benefit Plans shall include, but not be limited to, the Company's
Pension Plan, Savings and Investment Plan, Employee Stock Purchase Plan, 1992
Officer Incentive Plan, Restated Employee Annual Incentive Bonus Plan, the 1988
Stock Option Plan or any other plan or arrangement to receive and exercise stock
options or stock appreciation rights, supplemental pension plan, insured medical
reimbursement plan, automobile benefits, executive financial planning, group
life insurance, personal catastrophe liability insurance, medical, dental,
accident or disability plan;
(d) assignment or reassignment by the Company or its subsidiaries of
the Designated Employee to another place of employment more than 50 miles from
the Designated Employee's place of employment at the time of the Change in
Control of the Company (or within six (6) months prior to such Change in Control
if discussions concerning such Change in Control had commenced at or prior to
such action), except for required travel by the Designated Employee on the
Company's business to an extent substantially consistent with the Designated
Employee's prior business travel obligations;
(e) liquidation, dissolution, consolidation or merger of the Company,
or transfer of all or substantially all of its assets, other than a transaction
in which a successor corporation with a net worth at least equal to that of the
Company assumes administration of the Plan and all obligations and undertakings
of the Company hereunder; or
(f) any material breach by the Company of any provision of the Plan or
of any employment agreement between the Company or any of its subsidiaries and
the Designated Employee;
by written notice to the Company, specifying the event relied upon for such
termination, which event is not corrected by the Company within ten (10) days
following receipt of such notice.
3.3 Designated Employee(s). The terms "Designated Employees" and
"Designated Employee" shall refer to those individuals whose names appear in
Schedule A hereto ("Schedule A") together with such other executives of the
Company and its subsidiaries as may be designated, by written notice,
participants in the Plan from time to time by the Board of Directors of the
Company. The Designated Employees are divided into certain categories for
purposes of the Plan as set forth in Schedule A. Designated Employees are
excluded from participating in the Company's Employee Severance Plan.
3.4 Termination for Cause. The term "Termination for Cause" means a
termination of the Designated Employee's employment by the Company or any of its
- 3 -
<PAGE>
subsidiaries due to the Designated Employee's (a) willful and continued failure
to substantially perform his or her employment duties (other than any failure
resulting from an illness or other similar incapacity or disability) or (b)
willful misconduct which is materially injurious to the Company, monetarily or
otherwise. For purposes of the Plan, no act, or failure to act, on the
Designated Employee's part shall be deemed "willful" unless done, or omitted to
be done, by the Designated Employee not in good faith and without reasonable
belief that such action or omission was in the best interest of the Company and
its subsidiaries. During the original or any extended term of the Plan, the
definition of "Termination for Cause" contained herein shall supersede, for
purposes of the Plan, any definition of such term contained in any employment
agreement with any Designated Employee. In each instance of a Termination for
Cause of a Designated Employee, the Board of Directors of the Company shall give
written notice to the Designated Employee specifying the event relied upon for
such termination, and the Designated Employee shall have thirty (30) days within
which to correct the event or conduct so specified in the notice before any
Termination for Cause shall be effective.
4. Beneficiaries
Each Designated Employee may designate a beneficiary or beneficiaries who
are to receive any payments due to him or her under the Plan if he or she should
not be living. If the Designated Employee fails to designate a beneficiary or
such person fails to survive the Designated Employee, any payments due to the
Designated Employee shall be made to his or her executor or administrator of his
or her estate.
5. Termination Following a Change in Control
(a) If a Change in Control of the Company shall occur and within one
(1) year (or two (2) years in the case of a Category I Designated Employee)
after such Change in Control (or within six (6) months prior to such Change in
Control if discussions concerning such Change in Control had commenced at or
prior to either of the events described in clauses (i) and (ii) below):
(i) the Designated Employee's employment is terminated by the Company
or any of its subsidiaries for any reason other than a Termination for Cause or
the Designated Employee's death, Disability (as hereinafter defined) or
Retirement (as hereinafter defined); or
(ii) the Designated Employee terminates his or her employment because
of a Constructive Discharge;
then the Company shall pay to the Designated Employee, and provide the
Designated Employee and the Designated Employee's dependents with, the
following:
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<PAGE>
(A) within ten (10) business days of the Effective Date (as
hereinafter defined) of the termination (or of the date of the Change in
Control if the termination occurs during the six (6) month period prior
thereto), a lump sum cash amount equal to the sum of:
(1) the Designated Employee's annual base salary multiplied by
the applicable multiple specified in Schedule A (such annual base
salary to be, for purposes of the foregoing calculation, the
Designated Employee's annual rate of salary on the date such person
becomes a Designated Employee and as the same may be increased
thereafter from time to time;
(2) all bonuses, if any, accrued and not yet paid under the
Benefit Plans;
(3) the present lump sum value of --
(a) the additional contributions that the Company would have
made to the Company's pension plan for employees (the "Pension
Plan") on account of the number of years equal to the multiple
specified in Schedule A (his or her "additional period of
participation") computed as if the Designated Employee's period
of participation in the Plan consisted of his or her actual
period of participation as of his or her actual termination of
employment (or earlier termination of the Plan) plus his or her
additional period of participation, his or her annual rate of
compensation for purposes of the Plan during such additional
period was the annual base salary in (1), above, the actuarial
assumptions used to determine the contribution were those used
under the Plan for funding purposes for the plan year in which
his or her employment terminates (or earlier termination of the
Plan), and the Company made such additional contribution to the
Plan as of the end of such additional period, and
(b) the additional matching contributions which the Company
would have made to the Company's Savings and Investment Plan (the
"Savings and Investment Plan") on account of the Designated
Employee's additional period of participation (as provided in
(a), above) computed as if the Designated Employee's period of
participation in the Plan consisted of his or her actual period
of participation in the Plan as of his or her actual termination
of employment (or earlier termination of the Plan) plus his or
her additional period of participation, his or her annual rate
- 5 -
<PAGE>
of compensation for purposes of the Plan during such additional
period was the annual base salary in (1) above, his or her
contributions to the Plan during such additional period for
purposes of determining matching contributions were computed
under the elections in effect for the Designated Employee as of
his or her actual termination of employment (or earlier
termination of the Plan), the Company's matching contributions
allocable to the Designated Employee were based on the greater of
(x) the highest ratio of the Company's matching contribution
allocated to a participant to the participant's contribution
subject to match under the Plan for the plan year immediately
preceding the plan year in which the Designated Employee's
employment terminates (or earlier termination of the Plan) or (y)
the highest such ratio for the plan year in which the Change of
Control occurs, and the Company made such additional matching
contributions to the Plan as of the end of each month in such
additional period; and
(4) an amount equal to the total of all amounts held in
accounts for the Designated Employee under the Pension and
Savings and Investment Plans (consisting of employer
contributions, forfeitures and earnings thereon) which are
forfeited under the terms of either of those Plans on his or
her termination of employment;
provided, however, that the amount due under the foregoing
shall be reduced by the present lump sum value of the
amounts, if any, payable to the Designated Employee by
reason of the termination of his or her employment under an
employment agreement with the Company, Company policy other
than this Plan or applicable statute. For the purposes of
determining a present lump sum value under this proviso, the
discount rate shall be equal to 120% of the applicable
Federal rate (determined under Section 1274(d) of the Code
and the applicable regulations in effect on the date as of
which the present value is to be determined) compounded
semi-annually.
(B) For a period of years equal to the multiple specified in Schedule
A, disability, accident, health and life insurance substantially similar to
those insurance benefits which the Designated Employee received immediately
prior to the date of the Notice of Termination; provided, however, benefits
otherwise receivable by the Designated Employee pursuant to this Section
5(a)(B) shall be reduced to the extent comparable benefits are actually
received by the Designated Employee during such specified period following
his or her termination (or such shorter period elected by the Designated
Employee), and any such benefits actually received by the Designated
Employee shall be reported by him or her to
- 6 -
<PAGE>
the Company. If and to the extent that the benefits specified herein shall
not be payable or provided under plans then in effect, the Company shall
pay or provide such benefits on an individual basis.
(C) Upon proof of expenditure of the same, all reasonable legal fees
and expenses incurred in connection with the enforcement by a Designated
Employee of his or her rights under the Plan.
Notwithstanding the foregoing, in the event that the multiples set forth in
Schedule A for any Designated Employee are greater than the number of full years
remaining until such Designated Employee attains age 65, the multiples shall,
subject to applicable law, be automatically reduced to the number of years
and/or partial years (measured by months) remaining until such Designated
Employee's 65th birthday.
(b) Any purported termination of the Designated Employee's employment by
the Company and its subsidiaries or by the Designated Employee under this
Section 5 shall be communicated by a Notice of Termination to the other party.
For purposes of this Plan, a "Notice of Termination" shall mean a written notice
which shall indicate those specific termination provisions in the Plan relied
upon and which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Designated Employee's
employment under the provision so indicated.
(c) In the event of any termination of employment of a Designated Employee
for any reason other than a Disability or Termination for Cause, the effective
date of such termination (the "Effective Date") shall be the date specified in
the Notice of Termination. The Effective Date of any termination of employment
of a Designated Employee due to a Disability shall be the date which is thirty
(30) days after the date on which a Notice of Termination is given by the
Company to the Designated Employee (provided that the Designated Employee shall
not have returned to the full-time performance of his or her duties during such
thirty (30) day period).
(d) For purposes of the Plan, "Disability" shall mean the inability of the
Designated Employee, due to illness or incapacity, to substantially perform for
a continuous period of at least three (3) months the duties attendant to the
position held by the Designated Employee in the Company or any of its
subsidiaries. For purposes of the Plan, "Retirement" shall mean a Designated
Employee's voluntary termination of employment in accordance with the Company's
retirement policy (excluding early retirement) generally applicable to its
salaried employees or in accordance with any retirement arrangement established
with the Designated Employee's consent with respect to him or her.
- 7 -
<PAGE>
6. Indemnification for Excise Tax; Preparation of Tax Return; Cooperation
(a) The Company agrees that it will promptly pay or cause to be paid to a
Designated Employee an additional amount in cash ("Additional Amount") which net
of Attributable Taxes equals the amount of federal excise taxes, including
interest and penalties, payable under Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code") with respect to the benefits received by the
Designated Employee pursuant to Section 5 of the Plan and the Company's 1988
Stock Option Plan and 1992 Officer Incentive Plan. "Attributable Taxes" shall
mean all taxes, interest and penalties, including any federal, state and local
income taxes and any federal excise taxes under Section 4999 of the Code, which
become payable by the Designated Employee as a result of the receipt of the
Additional Amount. It is intended that no Designated Employee shall suffer any
loss or expense resulting from the assessment of any such excise tax and the
Company's reimbursement of said Designated Employee for payment of any such
excise tax.
(b) The Company, at its sole expense, agrees to supply any Designated
Employee with advice from competent tax counsel as to whether such Designated
Employee must reflect and pay an excise tax under Sections 280G and 4999 of the
Code on the filing of any federal income tax return of the Designated Employee
relating to the period or periods in which the Designated Employee received
payments or benefits under the Plan which may result in the imposition of such
an excise tax. If such tax counsel advises that such excise tax must be
reflected and paid on such tax return, the Designated Employee agrees to so
reflect and pay such tax at which time the Company will reimburse the Designated
Employee in accordance with Section 6(a) above. If such tax counsel advises that
such excise tax need not be reflected and paid on such tax return, the
Designated Employee agrees to prepare and file his tax return in accordance with
such advice. In either case the Company shall indemnify each Designated Employee
in accordance with Section 6(a) of the Plan for any subsequent assessment of
excise taxes made by the Internal Revenue Service ("IRS") under Section 4999 of
the Code with respect to the benefits received by the Designated Employee under
Section 5 of the Plan.
(c) Each Designated Employee promptly shall notify the Company in the event
of any audit by the IRS in which the IRS asserts that any excise tax should be
assessed against such Designated Employee, and further agrees to cooperate with
the Company in contesting (at the Company's sole expense) any such proposed
assessment. Each Designated Employee agrees not to settle or compromise any such
assessment without the Company's consent. If a Designated Employee's failure to
settle a proposed assessment with respect to such excise tax ("Proposed
Assessment") is at the direction of the Company and becomes the reason his
overall audit cannot be finally resolved, then such Designated Employee may
demand that the Company consent to settle the Proposed Assessment. If the
Company does not, within sixty (60) days after such demand, settle or consent to
allow the Designated Employee to settle, the Proposed Assessment, the Company
shall indemnify and hold harmless such Designated Employee from any additional
interest or penalties resulting from the delay in finally resolving the audit.
- 8 -
<PAGE>
7. Arbitration
In the event of any dispute or difference between the parties hereto
concerning their rights and duties hereunder, a Designated Employee may, by
notice to the Company, require such dispute or difference to be submitted to
arbitration. The arbitrator or arbitrators shall be selected by agreement of the
parties of, if they cannot agree on an arbitrator or arbitrators within thirty
(30) days after the Designated Employee shall have notified the Company of his
or her desire to have the question settled by arbitration, then the arbitrator
or arbitrators shall be selected by the American Arbitration Association (the
"AAA") in New York, New York upon the application of either party. The
determination reached in such arbitration shall be final and binding on both
parties without any right of appeal or further dispute. Execution of the
determination by such arbitrator(s) may be sought in any court of competent
jurisdiction. The fees and expenses of any arbitrators and the AAA shall be paid
by the Company. Unless otherwise agreed by the parties, any such arbitration
shall take place in New York, New York and shall be conducted in accordance with
the rules of the AAA.
8. No Diminution of Rights
The provisions of the Plan, and any payment provided for hereunder, shall
not reduce any amounts otherwise payable, or in any way diminish the Designated
Employee's existing rights, or rights which would accrue solely as a result of
the passage of time, under any benefit plan, employment agreement or other
contract, plan or arrangement.
9. Term; Amendments
(a) The Plan shall continue until and terminate five (5) years from the
date hereof unless the Board of Directors of the Company, by resolution duly
adopted prior to the end of the first five (5) year term or of any subsequent
renewal term, indicates that the Plan shall be renewed. Further, if a Change in
Control occurs during the original or any extended term of the Plan, the Plan
shall continue until the Company shall have fully performed all of its
obligations hereunder with respect to all Designated Employees, with no future
performance being possible.
(b) The Plan may not be amended in any manner which has a significant
adverse effect on any Designated Employee and his or her rights hereunder
without the written consent of such Designated Employee. Notwithstanding the
foregoing, upon the occurrence of a Change in Control, the Plan may not be
amended in any respect without the written consent of each Designated Employee
affected by such proposed amendment. Notwithstanding any other provision hereof,
the Plan may be amended in order to obtain or maintain the status of (i) the
Company's Pension Plan and its Savings and Investment Plan as qualified plans
under Section 401(a) of the Code and (ii) the Company's 1988 Stock Option Plans
and 1992 Officer Incentive Plan as qualified under Rule 16b-3 promulgated
pursuant to the Exchange Act.
- 9 -
<PAGE>
10. No Effect on Employment Prior to Change in Control
Nothing in the Plan or any agreement entered into pursuant to the Plan
shall confer upon the Designated Employee any right to continue in the employ of
the Company or any of its subsidiaries or shall interfere with or restrict in
any way the rights of the Company and its subsidiaries, which are hereby
expressly reserved, to discharge the Designated Employee at any time for any
reason whatsoever, with or without cause.
11. Notices
For the purpose of the Plan, notices and all other communications provided
for in the Plan shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed, in the case of a Designated Employee, to
his or her last residence address on file with the Company, and in the case of
the Company to the attention of the President of the Company, c/o Morgan, Lewis
& Bockius LLP, 101 Park Avenue, New York, New York 10178, or to such other
address as such party may have furnished to the other in writing in accordance
herewith. Notices and other communications shall be effective when actually
received by the addressee.
12. Miscellaneous
The Plan shall in all respects be governed by, and construed in accordance
with, the internal laws of the State of New York without reference to the
principles of conflict of laws. All references to sections of the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law.
Dated: June 3, 1999
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<PAGE>
Schedule A
<TABLE>
<CAPTION>
Multiple for
Category Participants Section 5 (a)
- -------- ------------ -------------
<S> <C> <C>
I Gerald L. Radke 2*
II Michael J. Bleisnick 1
James Dore 1
Gordon Forsyth, III 1
Jeffrey Mayer 1
Charles B. Penruddocke 1
Michael J. Toman 1
Paul N. Archard 1
Robert Bear 1
Peter G. Butler 1
A. Joseph Hoane 1
Frank M. Johnson 1
Sanford M. Kimmel 1
Timothy M. Lamothe 1
William S. Olsen 1
Eugene J. Sverchek 1
Alain Tounquet 1
Arthur S. Underwood 1
Donald S. Worthley 1
Stephen J. Bodnar 1
Rudy Bogaerts 1
John C. Brennan 1
Joan L. Cadd 1
Mark W. Christie 1
Jose A. Crespo 1
Mark T. Godfrey 1
Steven L. Goldstein 1
Mark E. Hilsher 1
David J. Killelay 1
Frank A. LoPiccolo 1
James M. McWilliams 1
Douglas Rofrano 1
Ferdinand Van Loon 1
Charles R. Volker 1
Christopher Wachter 1
Robert S. Yenke 1
</TABLE>
- 11 -
<PAGE>
<TABLE>
<S> <C> <C>
Eden Chan 1
Linda S. Clauser 1
Jeff Jeffreys 1
Joseph J. Lasicki 1
Daniel J. Trucano 1
Michael Blesic 1
James G. Brady 1
Peter M. Kiernan 1
Marco Nicolini 1
Christopher Shaw 1
Kathleen J. Trucano 1
Laura L. Colangelo 1
</TABLE>
* If Mr. Radke's employment is terminated more than 12 months following a
Change in Control, the multiple shall be one (1).
Dated: June 3, 1999
- 12 -
<PAGE>
EXHIBIT 10.21
REINSURANCE POOLING AGREEMENT
THIS AGREEMENT, effective as of January 1, 1999, by and between PXRE
Reinsurance Company (hereinafter sometimes called "PXRE Reinsurance"), a
corporation organized and existing under the laws of the State of Connecticut,
and Transnational Insurance Company (hereinafter sometimes called
"Transnational"), a corporation organized and existing under the laws of the
State of Connecticut.
W I T N E S S E T H :
WHEREAS, the parties hereto are engaged inter alia in the business of
insurance and reinsurance in the United States and elsewhere; and
WHEREAS, the parties hereto believe that it will be to their mutual
benefit and advantage that the aggregate net retained portion of their policies
and treaties of insurance and reinsurance be adjusted by mutual reinsurance to
specified percentages;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
FIRST: The phrase "Business" as used herein shall mean the net
retained portion of policies and treaties of insurance and reinsurance of all
kinds written by any of the parties hereto effective on and after January 1,
1999, and during the term of this Agreement, excluding any such insurance or
reinsurance which the parties agree in writing to exclude from this Agreement.
SECOND: Beginning January 1, 1999, and continuing during the term of
this Agreement, the parties hereto shall participate in each other's Business to
the extent of the following percentages (hereinafter referred to as the
"Specified Percentages"):
<TABLE>
<S> <C>
PXRE Reinsurance 75%
Transnational 25%
</TABLE>
This result shall be accomplished as follows:
(a) Transnational shall cede to PXRE Reinsurance, and PXRE Reinsurance shall
accept, 100% of the liability on account of Business of Transnational; and
(b) PXRE Reinsurance shall cede and retrocede to Transnational, and
Transnational shall accept, the Transnational Specified Percentage of
liability on account of both the Business of PXRE Reinsurance and the
Business of Transnational.
<PAGE>
THIRD: In consideration of the acceptance of liability by way of
reinsurance as hereinabove provided, each of the ceding parties shall pay to
each of the accepting parties an amount equal to the retained portion of the
premium written by the ceding company with respect to the Business comprising
each cession hereunder; it being understood that in lieu of any commission
thereon all of the underwriting expenses (other than federal income and profit
taxes) pertaining to the Business comprising each such cession hereunder shall
be apportioned among the parties to this Agreement in accordance with the
Specified Percentages.
FOURTH: Each party hereto may maintain its own reinsurance or
retrocession covers for its protection. It is understood and agreed that PXRE
Reinsurance may arrange for general reinsurances to apply to the combined
Business of both the parties to this Agreement and that the premiums paid
therefor shall be apportioned among said parties to this Agreement in accordance
with the Specified Percentages.
FIFTH: Accounts shall be rendered quarterly by each party (as the
ceding company) to the other party (as the accepting company) within 30 days
after the close of the quarter for which the account is tendered. The balance on
either side shall be paid within 60 days thereafter.
SIXTH: Losses shall be adjusted, settled or compromised by the ceding
party on each risk and the result shall be binding upon the other party hereto
and the parties hereto shall pay their Specified Percentages of such losses and
all expenses connected therewith, but such other parties shall be credited with
their Specified Percentages of any salvage or recovery which may be realized by
the ceding party.
SEVENTH: Each accepting party shall at all reasonable times have the
right to inspect at the offices of the ceding party the books and documents
referring to the Business ceded hereunder, but it is agreed that errors or
omissions inadvertently made shall not invalidate the liability of any accepting
party hereunder.
EIGHTH: The term of this Agreement shall be unlimited in duration but
this Agreement may be canceled upon written notice given by any party to the
other party hereto prior to June 30 of any calendar year, such cancellation to
become effective as of midnight of December 31 following. Cancellation by any
one party shall terminate this Agreement as to all parties as of the same date.
Upon cancellation of this Agreement, the liability of all accepting parties with
respect to all Business ceded hereunder and still outstanding and unexpired at
the effective date of such cancellation shall, unless otherwise mutually agreed
in writing among the parties hereto, continue in force until expiry in ordinary
course, or until the cancellation of such Business can be effected.
NINTH: (a) Reinsurer's Obligation: In the event of the insolvency of
PXRE Reinsurance, the reinsurance afforded by this Agreement shall be
payable by Transnational on the basis of the liability of PXRE Reinsurance
under the Business, without diminution because of such insolvency, directly
to PXRE Reinsurance or its domiciliary liquidator,
<PAGE>
receiver or conservator, except (i) where this Agreement specifically
provides another payee of such reinsurance in the event of the insolvency
of PXRE Reinsurance or (ii) where Transnational, with the consent of the
direct insured or insureds, has assumed such policy obligations as direct
obligations of Transnational to such payees and in substitution for the
obligations of PXRE Reinsurance to such payees.
(b) Notice and Defense of Claims: Transnational shall be given written notice
of the pendency of each claim or loss which may involve the reinsurance
afforded by this Agreement within a reasonable time after such claim or
loss is filed in the insolvency proceedings. Transnational shall have the
right to investigate each such claim or loss and interpose at its own
expense, in the proceeding where the claim or loss is to be adjudicated,
any defense which it may deem available to PXRE Reinsurance or its
liquidator, receiver, conservator, or statutory successor. If more than one
reinsurer is involved, they may designate one reinsurer to act for all.
(c) Defense Expense: The expense thus incurred by Transnational shall be
chargeable, subject to court approval, against the insolvent PXRE
Reinsurance as part of the expense of liquidation to the extent of a
proportionate share of the benefit which may accrue to PXRE Reinsurance
solely as a result of the defense undertaken by Transnational.
(d) Reinsurer's Obligation: In the event of the insolvency of Transnational,
the reinsurance afforded by this Agreement shall be payable by PXRE
Reinsurance on the basis of the liability of Transnational under the
Business, without diminution because of such insolvency, directly to
Transnational or its domiciliary liquidator, receiver or conservator except
(i) where this Agreement specifically provides another payee of such
reinsurance in the event of the insolvency of Transnational or (ii) where
PXRE Reinsurance, with the consent of the direct insured or insureds, has
assumed such policy obligations as direct obligations of PXRE Reinsurance
to such payees and in substitution for the obligations of Transnational to
such payees.
(e) Notice and Defense of Claims: PXRE Reinsurance shall be given written
notice of the pendency of each claim or loss which may involve the
reinsurance afforded by this Agreement within a reasonable time after such
claim or loss is filed in the insolvency proceedings. PXRE Reinsurance
shall have the right to investigate each such claim or loss and interpose
at its own expense, in the proceeding where the claim or loss is to be
adjudicated, any defense which it may deem available to Transnational or
its liquidator, receiver, conservator, or statutory successor. If more than
one reinsurer is involved, they may designate one reinsurer to act for all.
(f) Defense Expense: The expense thus incurred by PXRE Reinsurance shall be
chargeable, subject to court approval, against the insolvent Transnational
as part of the expense of liquidation to the extent of a proportionate
share of the benefit which may accrue to Transnational solely as a result
of the defense undertaken by PXRE Reinsurance.
<PAGE>
(g) Offset: Any debts or credits of the same class, liquidated or unliquidated,
in favor of or against either party on the date of the receivership or
liquidation order, under this Agreement and any other reinsurance
agreements heretofore or hereafter entered into between PXRE Reinsurance
and Transnational (except where the obligation was purchased by or
transferred to be used as an offset) are deemed mutual debts or credits and
shall be set off with the balance only to be allowed or paid. Although such
claim on the part of either party against the other may be unliquidated or
undetermined in amount on the date of the entry of the receivership or
liquidation order, such claim will be regarded as being in existence as of
such date and any credits or claims of the same class then in existence and
held by the other party may be offset against it.
(h) Rights of Parties: Nothing hereinabove set forth in this Insolvency Article
shall in any way change the relationship or status of the parties hereto,
nor enlarge the obligations of either party to any other except as
specifically hereinabove provided, to wit, to pay the receiver on the basis
of the amount of liability determined in the liquidation or receivership
proceeding rather than on the basis of the actual amount of loss
(dividends) paid by the domiciliary liquidator, receiver or conservator to
allowed claimants. Nor, except as hereinabove specifically provided, shall
anything in this Insolvency Article in any manner create any obligations or
establish any right against Transnational or PXRE Reinsurance in favor of
any third parties or any other persons not parties to this Agreement.
TENTH: It is understood and agreed that the proceeds of any security
posted in favor of either party to this Agreement to secure the performance of
obligations on any business subject to pooling under this Agreement, whether by
letter of credit, trust agreement, funds withheld or otherwise, shall be pooled
pursuant to all of the terms and conditions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement by their proper respective officers as of June 4th, 1999.
ATTEST: PXRE REINSURANCE COMPANY
Linda S. Clauser By Sanford M. Kimmel
- ------------------------------ -------------------------------
Secretary Sanford M. Kimmel
Senior Vice President & Treasurer
ATTEST: TRANSNATIONAL INSURANCE
COMPANY
Linda S. Clauser By Sanford M. Kimmel
- ------------------------------ -------------------------------
Secretary Sanford M. Kimmel
Senior Vice President & Treasurer
<PAGE>
Exhibit 12
PXRE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED
CHARGES AND RATIO OF CONSOLIDATED EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED DIVIDENDS
(In thousands, except ratios)
<TABLE>
<CAPTION>
Six Months Ended Year ended December 31,
----------------------- ----------------------------------------------------------
June 1999 June 1998 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Net income $ 2,284 $ 19,176 $ 2,679 $ 44,253 $ 33,301 $ 39,786 $ 34,829
Equity in earnings of TREX 0 0 0 0 (3,898) (5,948) (4,141)
----------------------- ---------- ---------- ---------- ---------- ----------
Income before equity in earnings of TREX 2,284 19,176 2,679 44,253 29,403 33,838 30,688
Income taxes (450) 8,708 (1,661) 22,198 15,644 18,189 15,700
----------------------- ---------- ---------- ---------- ---------- ----------
$ 1,834 $ 27,884 $ 1,018 $ 66,451 $ 45,047 $ 52,027 $ 46,388
Fixed charges:
Interest expense 6,001 5,610 10,323 11,508 6,957 7,143 7,789
Appropriated portion (1/3) of rentals 342 233 490 378 365 397 308
----------------------- ---------- ---------- ---------- ---------- ----------
Total fixed charges 6,343 5,843 10,813 11,886 7,322 7,540 8,097
----------------------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes and fixed charges $ 8,177 $ 33,727 $ 11,831 $ 78,337 $ 52,369 $ 59,567 $ 54,485
----------------------- ---------- ---------- ---------- ---------- ----------
Preferred dividend requirements $ 0 $ 0 $ 0 $ 0 $ 0 $ 599 $ 2,005
----------------------- ---------- ---------- ---------- ---------- ----------
Ratio of pre-tax income to net income 0.80 1.45 0.38 1.50 1.53 1.54 1.51
----------------------- ---------- ---------- ---------- ---------- ----------
Preferred dividend factor $ 0 $ 0 $ 0 $ 0 $ 0 $ 922 $ 3,028
Total fixed charges 6,343 5,843 10,813 11,886 7,322 7,540 8,097
----------------------- ---------- ---------- ---------- ---------- ----------
Total fixed charges and preferred dividends $ 6,343 $ 5,843 $ 10,813 $ 11,886 $ 7,322 $ 8,462 $ 11,125
----------------------- ---------- ---------- ---------- ---------- ----------
Ratio of earnings to fixed charges 1.29 5.77 1.09 6.59 7.15 7.90 6.73
----------------------- ---------- ---------- ---------- ---------- ----------
Ratio of earnings to combined fixed charges and
preferred dividends 1.29 5.77 1.09 6.59 7.15 7.04 4.90
----------------------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this proxy statement/prospectus
constituting part of this Registration Statement on Form S-4 of PXRE Group Ltd.
of our report dated August 10, 1999 relating to the financial statements of PXRE
Group Ltd., which appears in such proxy statement/prospectus. We also consent
to the reference to us under the heading "Experts" in such proxy
statement/prospectus.
PricewaterhouseCoopers
August 18, 1999
Hamilton, Bermuda
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this proxy
statement/prospectus constituting part of this Registration Statement on Form
S-4 of PXRE Group Ltd., of our report dated February 11, 1999, relating to the
consolidated financial statements of PXRE Corporation, which appears in the
Annual Report on Form 10-K of PXRE Corporation for the year ended December 31,
1998. We also consent to the incorporation by reference of our report dated
February 11, 1999, relating to the consolidated financial statement schedules of
PXRE Corporation, which appears in such Annual Report on Form 10-K. We also
consent to the reference to us under the heading "Experts" in such proxy
statement/prospectus.
PricewaterhouseCoopers LLP
August 18, 1999
New York, New York
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> Other
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-01-1999
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 0
<CASH> 12,000
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 12,000
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 12,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,000
0
<INVESTMENT-INCOME> 0
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<PAGE>
EXHIBIT 99.1
PROXY PXRE CORPORATION PROXY
SPECIAL MEETING OF STOCKHOLDERS
OCTOBER 5, 1999
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gerald L. Radke, James F. Dore and F.
Sedgwick Browne, and each or any of them, with full power of substitution, the
proxies of the undersigned to vote all of the shares of Common Stock of PXRE
Corporation which the undersigned is entitled to vote at the Special Meeting of
Stockholders of PXRE Corporation to be held at the offices of PXRE Corporation,
399 Thornall Street, 14th Floor, Edison, New Jersey on October 5, 1999
commencing at 10:00 a.m. and at any adjournment or adjournments thereof, with
all the powers the undersigned would possess if personally present upon:
(1) APPROVAL OF MERGER AGREEMENT: Authority to vote this Proxy for
the approval and adoption of the Agreement and Plan of Merger,
dated as of July 7, 1999, by and between PXRE Corporation, PXRE
Group Ltd. and PXRE Merger Corp., providing for, among other
things, the merger of PXRE Merger Corp. with and into PXRE
Corporation, the conversion of PXRE Corporation Common Stock into
PXRE Group Common Shares and the conversion of PXRE Merger Corp.
Common Stock into PXRE Corporation Common Stock, as more fully
described in the Proxy Statement dated August 19, 1999 relating
to the Special Meeting is:
[ ] GRANTED [ ] WITHHELD
(2) In their discretion, such other matters as may properly come
before this meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THE SHARES REPRESENTED BY THIS
PROXY SHALL BE VOTED FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Please sign exactly as your
name appears on this Proxy.
If signing for estates,
trusts or corporations, title
or capacity should be stated.
If shares are held jointly,
each holder should sign.
Dated:_________________, 1999
-----------------------------
Signature
-----------------------------
Signature
