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<PAGE>
REGISTRATION NOS. 333-24775
333-24775-01
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
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<S> <C>
PXRE CORPORATION PXRE CAPITAL TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS TRUST AGREEMENT)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
6719 6799
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
06-1183996 22-6721215
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
<TABLE>
<S> <C> <C>
399 THORNALL STREET, 14TH FLOOR SANFORD M. KIMMEL C/O PXRE CORPORATION
EDISON, NEW JERSEY 08837 SENIOR VICE PRESIDENT, TREASURER 399 THORNALL STREET, 14TH FLOOR
(908) 906-8100 AND CHIEF FINANCIAL OFFICER EDISON, NEW JERSEY 08837
(ADDRESS, INCLUDING ZIP CODE, PXRE CORPORATION (908) 906-8100
AND TELEPHONE NUMBER, 399 THORNALL STREET, 14TH FLOOR (ADDRESS, INCLUDING ZIP CODE,
INCLUDING AREA CODE, OF EDISON, NEW JERSEY 08837 AND TELEPHONE NUMBER, INCLUDING
REGISTRANT'S PRINCIPAL (908) 906-8100 AREA CODE, OF REGISTRANT'S
EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP PRINCIPAL
CODE, AND TELEPHONE NUMBER, EXECUTIVE OFFICES)
INCLUDING AREA CODE, OF AGENT FOR
SERVICE)
</TABLE>
------------------------
WITH A 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: As
promptly as practicable after the effective date of this Registration Statement.
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, please check the following box. [ ]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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.
________________________________________________________________________________
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<PAGE>
PROSPECTUS
$100,000,000
PXRE CAPITAL TRUST I
OFFER TO EXCHANGE ITS 8.85% CAPITAL TRUST
PASS-THROUGH SECURITIES'sm' (TRUPS'sm')
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 FOR ANY AND ALL OF ITS OUTSTANDING 8.85%
CAPITAL TRUST PASS-THROUGH SECURITIES'sm' (TRUPS'sm')
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
[LOGO] PXRE CORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON MAY 29, 1997, UNLESS EXTENDED
- ----------------------------------------------------------
PXRE Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the 'Trust'), hereby offers, upon the terms and subject
to the conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the 'Prospectus') and in the accompanying Letter
of Transmittal (which together constitute the 'Exchange Offer'), to exchange up
to $100,000,000 aggregate liquidation amount of its 8.85% Capital Trust
Pass-through Securities'sm' (TRUPS'sm'), liquidation amount $1,000 per Capital
Security (the 'New Capital Securities'), which have been registered under the
Securities Act of 1933, as amended (the 'Securities Act'), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for a like liquidation amount of its outstanding 8.85% Capital Trust
Pass-through Securities'sm' (TRUPS'sm'), liquidation amount $1,000 per Capital
Security (the 'Old Capital Securities'), of which $100,000,000 aggregate
liquidation amount is outstanding. Pursuant to the Exchange Offer, PXRE
Corporation, a Delaware corporation ('PXRE'), is also exchanging (i) its
guarantee with respect to the payment of distributions and other payments on
liquidation or redemption of the Old Capital Securities (the 'Old Guarantee')
for a like guarantee of the New Capital Securities (the 'New Guarantee'), and
(ii) all of its outstanding 8.85% Junior Subordinated Deferrable Interest
Debentures due 2027 (the 'Old Subordinated Debt Securities'), of which
$103,093,000 aggregate principal amount is outstanding, for a like aggregate
principal amount of its 8.85% Junior Subordinated Deferrable Interest Debentures
due 2027 (the 'New Subordinated Debt Securities'), which New Guarantee and New
Subordinated Debt Securities also have been registered under the Securities Act.
The Old Capital Securities, the Old Guarantee and the Old Subordinated Debt
Securities are collectively referred to herein as the 'Old
Securities' and the New Capital Securities, the New Guarantee and the New
Subordinated Debt Securities are collectively referred to herein as the 'New
Securities.'
------------------------
SEE 'RISK FACTORS' BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE NEW SECURITIES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE NEW SUBORDINATED
DEBT SECURITIES AND THE NEW CAPITAL SECURITIES MAY BE DEFERRED AND THE RELATED
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS APRIL 23, 1997.
<PAGE>
<PAGE>
(continued from cover page)
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities
have been registered under the Securities Act and therefore will not be subject
to certain restrictions on transfer applicable to the Old Securities, (ii) the
New Capital Securities will not provide for any increase in the distribution
rate thereon, and (iii) the New Subordinated Debt Securities will not provide
for any increase in the interest rate thereon. See 'Description of the Capital
Securities.' The New Capital Securities are being offered for exchange in order
to satisfy certain obligations of PXRE and the Trust under the Registration
Rights Agreement, dated January 29, 1997 (the 'Registration Rights Agreement'),
among PXRE, the Trust and Salomon Brothers Inc, as representative of the Initial
Purchasers (as defined herein) of the Old Capital Securities. In the event that
the Exchange Offer is consummated, any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will vote together with the
New Capital Securities issued in the Exchange Offer as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding liquidation amount thereof have taken certain actions or exercised
certain rights under the Declaration (as defined herein).
The Old Capital Securities and the New Capital Securities are collectively
referred to herein as the 'Capital Securities.' The Old Capital Securities
represent, and the New Capital Securities when issued will represent, undivided
beneficial interests in the assets of the Trust. PXRE owns all of the common
securities of the Trust (the 'Common Securities') representing undivided
beneficial interests in the assets of the Trust. The Trust exists for the sole
purpose of issuing the Common Securities and the Capital Securities (together,
the 'Trust Securities') and investing the proceeds thereof in the Subordinated
Debt Securities (as defined herein) and certain other limited activities
described herein.
The Old Subordinated Debt Securities and the New Subordinated Debt
Securities are collectively referred to herein as the 'Subordinated Debt
Securities' and the Old Guarantee and the New Guarantee are collectively
referred to herein as the 'Guarantee.' The Old Subordinated Debt Securities and
the Old Guarantee are, and the New Subordinated Debt Securities and the New
Guarantee when issued will be, unsecured obligations of PXRE, and are or will
be, as the case may be, subordinated and junior in right of payment to other
existing and future indebtedness of PXRE, as described herein. Upon a
Declaration Event of Default (as defined herein), the holders of the Capital
Securities will have a preference over the holders of the Common Securities with
respect to distributions and payments upon redemption, liquidation and
otherwise.
Holders of the Capital Securities are, or will be, as the case may be,
entitled to receive cumulative cash distributions at an annual rate of 8.85% per
annum of the stated liquidation amount of $1,000 per Capital Security, accruing
from January 29, 1997, the date of original issuance of the Old Capital
Securities, and (subject to extensions of distribution payment periods described
below) payable semiannually in arrears on February 1 and August 1 of each year,
commencing August 1, 1997 ('distributions'). The payment of distributions on the
Capital Securities out of moneys held by the Trust and payments on liquidation
of the Trust or the redemption of the Capital Securities, as set forth below,
are guaranteed by PXRE as provided in the Guarantee. The Guarantee covers
payments of distributions and other payments on the Capital Securities only if
and to the extent that the Trust has funds available therefor in accordance with
the terms of the Declaration (as defined herein), which funds will not be
available except to the extent PXRE has made payments of interest or principal
(or premium, if any) or other payments on the Subordinated Debt Securities held
by the Trust.
The Guarantee, when taken together with PXRE's obligations under the
Subordinated Debt Securities, the Declaration, and the Indenture (as defined
herein), including its obligations to pay costs, expenses, debts and other
obligations of the Trust (other than with respect to the Trust Securities),
provides a full and unconditional guarantee on a subordinated basis by PXRE of
amounts due on the Capital Securities. See 'Risk Factors -- Guarantee Covers
Distributions and Other Payments Only to the Extent the Trust Has Available
Funds; Related Remedies.' The obligations of PXRE under the Guarantee and the
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness (as defined herein) of PXRE, rank
pari passu with the obligations to, or rights, of PXRE's other general unsecured
creditors and are also effectively
ii
<PAGE>
<PAGE>
(continued from cover page)
subordinate to claims of creditors of PXRE's subsidiaries. As of December 31,
1996, PXRE had approximately $64,725,000 of Senior Indebtedness, which has been
reduced to $23,915,000 as of April 17, 1997 by reason of repurchases in the
market by PXRE. There are no terms in the Subordinated Debt Securities, the
Capital Securities or the Guarantee that limit the ability of PXRE or its
subsidiaries to incur additional indebtedness, including indebtedness that ranks
senior to the Subordinated Debt Securities and the Guarantee.
The distribution rate and the distribution payment dates and other payment
dates for the Capital Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Subordinated Debt
Securities, which are the sole assets of the Trust. As a result, if no principal
(or premium, if any) or interest is paid on the Subordinated Debt Securities, no
amounts will be paid on the Capital Securities. If PXRE does not make principal
(or premium, if any) or interest payments on the Subordinated Debt Securities,
the Trust will not have sufficient funds to make distributions on the Capital
Securities, and the Guarantee will not apply to distributions for which the
Trust has insufficient legally available funds.
PXRE has the right, subject to the conditions set forth herein, to defer
payments of interest on the Subordinated Debt Securities by extending the
interest payment period on the Subordinated Debt Securities at any time and from
time to time for up to 10 consecutive semiannual periods (each such extended
interest payment period, an 'Extension Period'), provided that no Extension
Period may extend beyond the maturity of the Subordinated Debt Securities. If
interest payments are so deferred, distributions on the Capital Securities and
the Common Securities will also be deferred and PXRE (subject to certain
exceptions set forth herein) will not be permitted to declare or pay any such
distributions with respect to PXRE's capital stock (which includes common and
preferred stock) or to make any payment with respect to debt securities of PXRE
that rank pari passu with or junior to the Subordinated Debt Securities. During
any such Extension Period, distributions will continue to accrue at the
distribution rate equal to 8.85% per annum for Capital Securities, compounded
semiannually (to the extent permitted by applicable law), and holders of the
Capital Securities will be subject to United States federal income tax on the
deferred amounts in advance of receipt of cash distributions with respect to
such deferred interest payments. There could be multiple Extension Periods of
varying lengths, each up to 10 consecutive semiannual periods, throughout the
term of the Subordinated Debt Securities. See 'Description of the Subordinated
Debt Securities -- Option to Extend Interest Payment Period,' 'Risk
Factors -- Option to Extend Interest Payment Period for Up to Five Years and
Consequent Deferral of Distribution on Capital Securities' and 'United States
Federal Income Taxation -- US Holders -- Original Issue Discount.'
The Subordinated Debt Securities are redeemable, in whole or in part, by
PXRE at the Call Price (as defined herein), plus accrued and unpaid interest to
the date of redemption, on or after February 1, 2007 (the 'Optional
Redemptions'). In certain limited circumstances described herein, upon the
occurrence of a Tax Event or of an Investment Company Event (each as defined
herein), the Subordinated Debt Securities also are redeemable by PXRE, in whole
or in part at any time, at (i) par in the case of a redemption upon the
occurrence of a Tax Event, (ii) the Make-Whole Amount (as defined herein) in the
case of a redemption upon the occurrence of an Investment Company Event prior to
February 1, 2007, or (iii) the Call Price in the case of a redemption upon the
occurrence of an Investment Company Event on or after February 1, 2007, in each
case together with accrued and unpaid interest thereon to the date of the
redemption. Upon redemption by PXRE or at maturity of the Subordinated Debt
Securities, the Trust must redeem on a pro rata basis its Trust Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Subordinated Debt Securities so redeemed or matured at a redemption price
equal to (i) $1,000 per Trust Security, if redeemed either upon the maturity of
the Subordinated Debt Securities or upon the occurrence and continuation of a
Tax Event under certain limited circumstances described herein, (ii) in the case
of a redemption prior to February 1, 2007 following the occurrence of an
Investment Company Event, an amount per Trust Security equal to the Make-Whole
Amount for a corresponding $1,000 principal amount of the Subordinated Debt
Securities or (iii) in the case of any Optional Redemption of Subordinated Debt
Securities or a redemption on or after February 1, 2007 following the occurrence
of
iii
<PAGE>
<PAGE>
(continued from cover page)
an Investment Company Event, an amount per Trust Security equal to the product
of $1,000 and the applicable percentage used to determine the Call Price for the
Subordinated Debt Securities being redeemed, plus, in all cases, accrued and
unpaid distributions on such Trust Securities to the date fixed for redemption
(the price specified in clauses (i), (ii) and (iii) being referred to herein as
the 'Redemption Price'). See 'Description of the Capital
Securities -- Redemption,' 'Description of the Capital Securities -- Tax Event
and Investment Company Event Redemption' and 'Description of the Subordinated
Debt Securities.'
PXRE, as the holder of all of the outstanding Common Securities, has the
right at any time to terminate the Trust (including, without limitation, upon
the occurrence of a Tax Event or an Investment Company Event) and, after
satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by PXRE), cause the Subordinated Debt Securities to be distributed to
the holders of the Trust Securities, on a pro rata basis, in accordance with the
aggregate stated liquidation amount thereof, in liquidation of the Trust.
In the event of the involuntary or voluntary liquidation, dissolution,
winding up or termination of the Trust, other than in connection with a
redemption or maturity of Subordinated Debt Securities as described above, after
satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by PXRE), the holders of the Capital Securities generally will be
entitled to receive the stated liquidation amount thereof plus accrued and
unpaid distributions thereon to the date of payment, unless, in connection with
such dissolution, the Subordinated Debt Securities held by the Trust are
distributed to the holders of the Trust Securities as would be required in
certain circumstances. The holders of the Common Securities will be entitled to
receive distributions upon any liquidation pro rata with the holders of the
Capital Securities, except that if a Declaration Event of Default has occurred
and is continuing, the Capital Securities shall have a priority over the Common
Securities. See 'Description of the Capital Securities -- Liquidation
Distribution Upon Dissolution.'
The Old Capital Securities and the Old Subordinated Debt Securities have
been issued and may be transferred only in blocks having a stated liquidation
amount or an aggregate principal amount, as the case may be, of not less than
$100,000 (100 Old Capital Securities). See 'Description of the Capital
Securities -- Restrictions on Transfer.' The New Capital Securities and the New
Subordinated Debt Securities will not be so restricted.
Based on interpretations by the staff of the Securities and Exchange
Commission (the 'Commission'), as set forth in no-action letters issued to third
parties, PXRE and the Trust believe that the New Securities issued pursuant to
the Exchange Offer may be offered for resale, resold or otherwise transferred by
holders thereof (other than any holder that is an 'affiliate' of PXRE or the
Trust as defined under Rule 405 of the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act;
provided that such New Securities are acquired in the ordinary course of such
holders' business and such holders are not engaged in, and do not intend to
engage in, a distribution of such New Securities and have no arrangement or
understanding with any person to participate in the distribution of such New
Securities. However, the staff of the Commission has not considered the Exchange
Offer in the context of a no-action letter, and there can be no assurance that
the staff of the Commission would make a similar determination with respect to
the Exchange Offer as in such other circumstances. By tendering the Old Capital
Securities in exchange for New Capital Securities, each holder other than a
broker-dealer, will represent to PXRE and the Trust that: (i) it is not an
affiliate of PXRE or the Trust (as defined under Rule 405 of the Securities
Act); (ii) any New Capital Securities to be received by it were acquired in the
course of its ordinary business; and (iii) it is not engaged in, and does not
intend to engage in, a distribution of the New Capital Securities and has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of the New Capital Securities.
Each broker-dealer that receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
'underwriter' within the meaning
iv
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<PAGE>
(continued from cover page)
of the Securities Act. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
New Capital Securities received in exchange for Old Capital Securities where
such Old Capital Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. PXRE and the Trust have
agreed that, starting on the date on which the Exchange Offer is consummated and
ending on the close of business one year after such date, they will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See 'Plan of Distribution.'
In that regard, each Exchanging Dealer (as defined herein) who surrenders
Old Capital Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal or by delivery of an Agent's
Message (as defined herein), that, upon receipt of notice from PXRE or the Trust
of the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in this Prospectus untrue in
any material respect or which causes this Prospectus to omit to state a material
fact necessary in order to make the statements contained or incorporated by
reference herein, in the light of the circumstances under which they were made,
not misleading, or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Exchanging Dealer will suspend the sale of
New Securities pursuant to this Prospectus until PXRE or the Trust has amended
or supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Exchanging
Dealer, or PXRE or the Trust has given notice that the sale of the New
Securities may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently is no market. The
New Capital Securities will not be listed on a securities exchange and there can
be no assurance as to the development or liquidity of any market for the New
Capital Securities.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Declaration (except
for those rights which terminate upon consummation of the Exchange Offer).
Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither PXRE nor the Trust will have any further obligation
to such holders (other than under certain limited circumstances) to provide for
registration under the Securities Act of the Old Capital Securities held by
them. To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. See 'Risk Factors -- Consequences of a Failure to
Exchange Old Capital Securities.'
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on May 29, 1997 (such time on such date being
hereinafter called the 'Expiration Date'), unless the Exchange Offer is extended
by PXRE and the Trust (in which case the term 'Expiration Date' shall mean the
latest date and time to which the Exchange Offer is extended). Tenders of Old
Capital Securities may be withdrawn at any time on or prior to the Expiration
Date. The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered for exchange. However, the Exchange
Offer is subject to certain events and conditions which may be waived by PXRE or
the Trust and to the terms and provisions of the Registration Rights Agreement.
Old Capital Securities may be tendered in whole or in part having a liquidation
amount of not less than $100,000 (100 Old Capital Securities) or any integral
multiple of $1,000 liquidation amount (1 Old Capital Security) in excess
thereof; provided that if any Old Capital Securities are tendered in exchange
v
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(continued from cover page)
in part, the untendered liquidation amount must be $100,000 or any integral
multiple of $1,000 in excess thereof. PXRE has agreed to pay all expenses of the
Exchange Offer, except as otherwise specified herein. See 'The Exchange
Offer -- Fees and Expenses.' Each New Capital Security will pay cumulative
distributions from the most recent Distribution Payment Date (as defined herein)
on the Old Capital Securities surrendered in exchange for such New Capital
Securities or, if no distributions have been paid on such Old Capital
Securities, from January 29, 1997. Holders of the Old Capital Securities whose
Old Capital Securities are accepted for exchange will not receive accumulated
distributions on such Old Capital Securities for any period from and after the
last Distribution Payment Date on such Old Capital Securities prior to the
original issue date of the New Capital Securities or, if no such distributions
have been paid, will not receive any accumulated distributions on such Old
Capital Securities, and will be deemed to have waived the right to receive any
distributions on such Old Capital Securities accumulated from and after such
Distribution Payment Date or, if no such distribution has been paid or duly
provided for, from and after January 29, 1997. This Prospectus, together with
the Letter of Transmittal, will be sent to all registered holders of Old Capital
Securities as soon as practicable after the date hereof.
Neither PXRE nor the Trust will receive any cash proceeds from the issuance
of the New Capital Securities offered hereby. No dealer-manager is being used in
connection with the Exchange Offer. See 'Use of Proceeds' and 'Plan of
Distribution.'
------------------------
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE CORPORATION OR THE
TRUST ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD CAPITAL SECURITIES IN
ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT
BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ('ERISA'), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE 'CODE'), NO ENTITY WHOSE
UNDERLYING ASSETS INCLUDE 'PLAN ASSETS' OF ANY SUCH PLAN BY REASON OF SUCH
PLAN'S INVESTMENT IN THE ENTITY (COLLECTIVELY, 'PLANS'), AND NO PERSON INVESTING
'PLAN ASSETS' OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY
INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE
RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION ('PTCE') 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH
PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY
INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING
THEREOF THAT IT EITHER (A) IS NOT A PLAN AND IS NOT PURCHASING SUCH SECURITIES
ON BEHALF OF OR WITH 'PLAN ASSETS' OF ANY PLAN OR (B) IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH
RESPECT TO SUCH PURCHASE OR HOLDING.
vi
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<PAGE>
AVAILABLE INFORMATION
PXRE is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices in Chicago, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and in New York, Seven
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such information may also be accessed electronically by
means of the Commission's home page on the Internet (http://www.sec.gov). In
addition, such reports, proxy statements and other information can be inspected
at The New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
on which the common stock of PXRE is listed.
PXRE and the Trust have filed with the Commission a Registration Statement
on Form S-4 (together with all amendments and exhibits thereto, the
'Registration Statement') under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. For further
information with respect to PXRE, the Trust and the securities offered hereby,
reference is made to the Registration Statement and the exhibits and financial
statements, notes and schedules filed as a part thereof or incorporated by
reference therein, which may be inspected or obtained at or from the Commission
as described above. Statements made in this Prospectus concerning the contents
of any documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such document
filed as an exhibit to the Registration Statement.
No separate financial statements of the Trust have been included herein.
PXRE and the Trust do not consider that such financial statements would be
material to holders of the Capital Securities because the Trust is a newly
formed special purpose entity, all the voting securities of which will be owned,
directly or indirectly, by PXRE, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Subordinated Debt Securities and issuing
the Trust Securities. In addition, the obligations of the Trust with respect to
the Trust Securities are fully and unconditionally guaranteed by PXRE to the
extent the Trust has funds available to meet such obligations. See 'The Trust,'
'Description of the Capital Securities,' 'Description of the Subordinated Debt
Securities' and 'Description of the Guarantee.' In addition, PXRE does not
expect that the Trust will file reports under the Exchange Act with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by PXRE and Transnational Re Corporation
('Transnational') with the Commission are incorporated by reference into this
Prospectus:
(i) PXRE's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the '1996 Form 10-K');
(ii) PXRE's Current Report on Form 8-K dated January 20, 1997;
(iii) Transnational's Annual Report on Form 10-K for the year ended
December 31, 1995; and
(iv) Transnational's Quarterly Reports on Form 10-Q for the periods
ended March 31, 1996, June 30, 1996 and September 30, 1996.
All documents filed by PXRE pursuant to Sections 13(a), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
any offering of securities made by this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained in a document
incorporated by reference or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for all purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
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document that is also incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
As used herein, the terms 'Prospectus' and 'herein' mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time.
PXRE WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS
PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE THAT HAVE BEEN OR MAY BE
INCORPORATED BY REFERENCE HEREIN, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION
THAT THIS PROSPECTUS INCORPORATES). REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED
TO PXRE AT 399 THORNALL STREET, EDISON, NEW JERSEY 08837 (TELEPHONE NUMBER (908)
906-6785) ATTENTION: TREASURER. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MAY 16, 1997.
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SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements,
including the notes thereto, appearing elsewhere or incorporated by reference
herein. Prospective investors should consider carefully the factors set forth
herein under 'Risk Factors.' As used in this Prospectus, 'PXRE' or 'the Company'
means PXRE Corporation and its subsidiaries, except as the context otherwise may
require.
PXRE CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to (i) a declaration of trust, dated as of January 21, 1997 (the 'Initial
Declaration'), and (ii) the filing of a certificate of trust (the 'Certificate
of Trust') with the Delaware Secretary of State on January 21, 1997. The Trust
exists for the exclusive purposes of (i) issuing the Trust Securities, (ii)
investing the gross proceeds from the sale of the Common Securities and Capital
Securities to acquire the Subordinated Debt Securities, and (iii) engaging in
only those other activities necessary or incidental thereto, including engaging
in the Exchange Offer. Accordingly, the Subordinated Debt Securities are the
sole assets of the Trust, and payments under the Subordinated Debt Securities
will be the sole revenues of the Trust. All of the Common Securities are owned
by PXRE. The principal place of business of the Trust is c/o PXRE Corporation,
399 Thornall Street, Edison, New Jersey 08837 (telephone number (908) 906-6785).
PXRE CORPORATION
PXRE provides reinsurance products and services to a national and
international market place, principally on commercial and personal property
risks and marine and aviation risks, with a particular focus on
catastrophe-related coverages. PXRE solicits its treaty and facultative
reinsurance business from the worldwide brokerage market. PXRE also employs its
property reinsurance underwriting expertise and generates management fee income
by managing business for other insurers and reinsurers.
The principal executive offices of PXRE are located at PXRE Corporation,
399 Thornall Street, Edison, New Jersey 08837. PXRE's telephone number is (908)
906-6785.
THE EXCHANGE OFFER
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The Exchange Offer........................ Up to $100,000,000 aggregate liquidation amount of New Capital
Securities are being offered in exchange for a like aggregate
liquidation amount of Old Capital Securities. Old Capital Securities
may be tendered for exchange, in whole or in part, in a liquidation
amount of $100,000 (100 Old Capital Securities) or any integral
multiple of $1,000 in excess thereof provided that if any Old Capital
Securities are tendered in exchange in part, the untendered
liquidation amount must be $100,000 or any integral multiple of
$1,000 in excess thereof. PXRE and the Trust are making the Exchange
Offer in order to satisfy their obligations under the Registration
Rights Agreement relating to the Old Capital Securities. For a
description of the procedures for tendering Old Capital Securities,
see 'The Exchange Offer -- Procedures for Tendering Old Capital
Securities.'
Expiration Date........................... The Expiration Date of the Exchange Offer will be 5:00 p.m., New York
City time, on May 29, 1997, unless the Exchange Offer is extended by
PXRE and the Trust. See 'The Exchange Offer -- Expiration Date;
Extensions; Amendments.'
Conditions to Exchange Offer.............. The Exchange Offer is subject to certain conditions, which may be
waived by PXRE and the Trust in their sole discretion. The Exchange
Offer is not conditioned upon any minimum
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liquidation amount of Old Capital Securities being tendered. See 'The
Exchange Offer -- Conditions to Exchange Offer.'
PXRE and the Trust reserve the right in their sole discretion,
subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Old Capital Securities for exchange, (ii)
to terminate the Exchange Offer if certain specified conditions have
occurred or exist or have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all Old Capital
Securities tendered pursuant to the Exchange Offer, subject, however,
to the right of holders of Old Capital Securities to withdraw their
tendered Old Capital Securities, or (iv) to waive any condition or
otherwise amend the terms of the Exchange Offer in any respect. See
'Exchange Offer -- Expiration Date; Extensions; Amendments.'
Withdrawal Rights......................... Tenders of Old Capital Securities may be withdrawn at any time on or
prior to the Expiration Date by delivering a written notice of such
withdrawal to First Union National Bank, as Exchange Agent (the
'Exchange Agent'), in conformity with certain procedures set forth
below under 'The Exchange Offer -- Withdrawal Rights.'
Procedures for Tendering Old Capital
Securities................................ Tendering holders of Old Capital Securities must complete and sign a
Letter of Transmittal in accordance with the instructions contained
therein and forward the same by mail, facsimile or hand delivery,
together with any other required documents, to the Exchange Agent,
either with the Old Capital Securities to be tendered or in
compliance with the specified procedures for guaranteed delivery of
Old Capital Securities. Certain brokers, dealers, commercial banks,
trust companies and other nominees may also effect tenders by
book-entry transfer, including an Agent's Message in lieu of the
Letter of Transmittal. Holders of Old Capital Securities registered
in the name of a broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person promptly if they wish
to tender Old Capital Securities pursuant to the Exchange Offer. See
'The Exchange Offer -- Procedures for Tendering Old Capital
Securities.'
Letters of Transmittal and certificates representing Old Capital
Securities should not be sent to PXRE or the Trust. Such documents
should only be sent to the Exchange Agent. Questions regarding how to
tender and requests for information should be directed to the
Exchange Agent. See 'The Exchange Offer -- Exchange Agent.'
Resales of New Capital Securities......... Based on interpretations by the staff of the Commission as set forth
in no-action letters issued to third parties, PXRE and the Trust
believe that the New Securities issued pursuant to the Exchange Offer
may be offered for resale, resold or otherwise transferred by holders
thereof (other than any holder that is an 'affiliate' of PXRE or the
Trust as defined under Rule 405 of the Securities Act) without
compliance with the registration and prospectus delivery provisions
of the Securities Act; provided that such New Securities are acquired
in the ordinary course of such holders' business and such holders are
not engaged in, and do not intend to engage in, a distribution of
such New Securities and have no arrangement or understanding with any
person to participate in the distribution of such New Securities.
However, the staff of the Commission has not considered the Exchange
Offer in the context of a no-action letter, and there can be no
assurance that the staff of the Commission would make a similar
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determination with respect to the Exchange Offer as in such other
circumstances. By tendering the Old Capital Securities in exchange
for New Capital Securities, each holder, other than a broker-dealer,
will represent to PXRE and the Trust that: (i) it is not an affiliate
of PXRE or the Trust (as defined under Rule 405 of the Securities
Act); (ii) any New Capital Securities to be received by it were
acquired in the course of its ordinary business; and (iii) it is not
engaged in, and does not intend to engage in, a distribution of the
New Capital Securities and has no arrangement or understanding with
any person to participate in a distribution (within the meaning of
the Securities Act) of the New Capital Securities.
Each broker-dealer that receives New Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New
Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an 'underwriter' within the meaning
of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Capital Securities received in
exchange for Old Capital Securities where such Old Capital Securities
were acquired by such broker-dealer as a result of market-making
activities or other trading activities. PXRE and the Trust have
agreed that, starting on the date on which the Exchange Offer is
consummated and ending on the close of business one year after such
date, they will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See 'Plan of
Distribution.'
In that regard, each Exchanging Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal or delivery of an
Agent's Message, that, upon receipt of notice from PXRE or the Trust
of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to
make the statements contained or incorporated by reference herein, in
the light of the circumstances under which they were made, not
misleading, or of the occurrence of certain other events specified in
the Registration Rights Agreement, such Exchanging Dealer will
suspend the sale of New Securities pursuant to this Prospectus until
PXRE or the Trust has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of the
amended or supplemented Prospectus to such Exchanging Dealer, or PXRE
or the Trust has given notice that the sale of the New Securities may
be resumed, as the case may be.
Exchange Agent............................ The Exchange Agent is First Union National Bank. The address and
telephone and facsimile numbers of the Exchange Agent are set forth
under 'The Exchange Offer -- Exchange Agent' and in the Letter of
Transmittal.
Use of Proceeds........................... Neither PXRE nor the Trust will receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. See 'Use of
Proceeds.'
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Certain Federal Income Tax Consequences;
ERISA Considerations.................... Holders of Old Capital Securities should review the information set
forth under 'United States Federal Income Taxation' and 'ERISA
Considerations' prior to tendering Old Capital Securities in the
Exchange Offer.
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THE CAPITAL SECURITIES
The Exchange Offer applies to the Old Securities. The terms of the New
Securities are identical in all material respects to the respective terms of the
Old Securities, except that (i) the New Securities have been registered under
the Securities Act and therefore will not be subject to certain restrictions on
transfer applicable to the Old Securities, (ii) the New Capital Securities will
not provide for any increase in the distribution rate thereon, and (iii) the New
Subordinated Debt Securities will not provide for any increase in the interest
rate thereon. In the event that the Exchange Offer is consummated, any Old
Capital Securities which remain outstanding after consummation of the Exchange
Offer will vote together with the New Capital Securities issued in the Exchange
Offer as a single class for purposes of determining whether holders of the
requisite percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the Declaration.
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Securities Offered........................ $100,000,000 aggregate liquidation amount of the New Capital
Securities (liquidation amount $1,000 per New Capital Security).
General................................... The Capital Securities represent undivided beneficial interests in
the Trust's assets, which consist solely of the Subordinated Debt
Securities. The Subordinated Debt Securities, in which the proceeds
of the Capital Securities and Common Securities are invested, mature
on February 1, 2027, unless the Subordinated Debt Securities are
redeemed by PXRE prior to such maturity as described under
'Description of the Capital Securities -- Redemption' and
'Description of the Capital Securities -- Tax Event and Investment
Company Event Redemption.'
Distributions............................. The distributions payable on the Capital Securities are fixed at a
rate per annum of 8.85% of the stated liquidation amount of $1,000
per Capital Security and will cumulatively accrue from January 29,
1997, the date of original issuance of the Old Capital Securities,
and (subject to the extensions of distribution payment periods
described below) are payable semiannually, in arrears, on February 1
and August 1 of each year, commencing August 1, 1997. See
'Description of the Capital Securities -- Distributions.'
Option to Extend Interest Payment
Period.................................... PXRE has the right, at any time, subject to certain conditions, to
defer payments of interest on the Subordinated Debt Securities for
Extension Periods, each not exceeding 10 consecutive semiannual
periods; provided that no Extension Period may extend beyond the
maturity date of the Subordinated Debt Securities. As a consequence
of PXRE's extension of the interest payment period on the
Subordinated Debt Securities, distributions on the Capital Securities
would be deferred (though such distributions would continue to accrue
interest at a rate of 8.85% per annum compounded semiannually (to the
extent permitted by law)). In the event PXRE exercises its right to
extend an interest payment period, then during any Extension Period,
subject to certain exceptions, (i) PXRE shall not declare or pay any
dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any
of its capital stock or rights to acquire such capital stock or make
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any guarantee payments (other than payments on the Guarantee and the
Common Securities Guarantee (as defined herein)) with respect to the
foregoing and (ii) PXRE shall not make any payment of interest on, or
principal of (or premium, if any, on), or repay, repurchase or
redeem, any debt securities issued by PXRE which rank pari passu with
or junior to the Subordinated Debt Securities. Upon the termination
of any Extension Period and the payment of all amounts then due, PXRE
may commence a new Extension Period, subject to certain requirements.
See 'Description of the Subordinated Debt Securities -- Option to
Extend Interest Payment Period.' Should an Extension Period occur
with respect to the Capital Securities, holders of Capital Securities
will continue to recognize interest income for United States federal
income tax purposes. As a result, such holders will be required to
include such interest in gross income for United States federal
income tax purposes in advance of the receipt of cash, and such
holders will not receive the cash from the Trust related to such
income if such holders dispose of Capital Securities prior to the
record date for payment of distributions. See 'United States Federal
Income Taxation -- US Holders -- Original Issue Discount.'
Liquidation............................... PXRE, as the holder of all of the Common Securities, has the right at
any time to terminate the Trust (including, without limitation, upon
the occurrence of a Tax Event or an Investment Company Event), with
the result that, after satisfaction of liabilities to creditors of
the Trust (to the extent not satisfied by PXRE), PXRE may cause the
Subordinated Debt Securities to be distributed to the holders of the
Trust Securities on a pro rata basis in accordance with the
respective stated liquidation amounts thereof, in liquidation of the
Trust. In addition, the Trust will be liquidated under certain other
circumstances. See 'Description of the Capital Securities --
Liquidation Distribution upon Dissolution.'
Liquidation Amount........................ In the event of the voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust, after
satisfaction of liabilities to creditors of the Trust (to the extent
not satisfied by PXRE) holders of Capital Securities issued by the
Trust will be entitled to receive $1,000 per Capital Security plus an
amount equal to accrued and unpaid distributions thereon to the date
of payment, unless the Subordinated Debt Securities are distributed
to holders of Trust Securities in exchange therefor. If such
liquidation distribution can be paid only in part because the Trust
has insufficient assets available to pay in full the aggregate
liquidation distribution, then the amounts payable directly by the
Trust on the Capital Securities shall be paid on a pro rata basis.
The holders of the Common Securities will be entitled to receive
distributions upon any such liquidation pro rata with the holders of
the Capital Securities, except that if a Declaration Event of Default
has occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities. See 'Description of the Capital
Securities -- Liquidation Distribution Upon Dissolution.'
Mandatory Redemption...................... Upon the repayment of the Subordinated Debt Securities, whether at
maturity or upon early redemption as provided in the Indenture, the
proceeds from such repayment will be applied by the Institutional
Trustee (as defined herein) to redeem a like amount of Trust
Securities, upon the terms and conditions described herein. See
'Description of the Capital Securities -- Redemption.'
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Optional Redemption....................... PXRE has the right to redeem the Subordinated Debt Securities on or
after February 1, 2007, in whole at any time or in part from time to
time, subject to the conditions described in 'Description of the
Subordinated Debt Securities -- Redemption,' at the Call Prices
described herein, together with accrued and unpaid interest to the
date of redemption. Upon the redemption of the Subordinated Debt
Securities, the proceeds of such redemption will be applied by the
Institutional Trustee to redeem a like amount of the Trust Securities
pro rata at the applicable Redemption Price and upon the terms and
conditions described herein. See 'Description of the Capital
Securities -- Redemption.'
Tax Event and Investment Company Event
Redemption................................ If at any time a Tax Event should occur and would continue despite
the advancement of the maturity date of the Subordinated Debt
Securities to no earlier than August 1, 2016, PXRE may, within 90
days of the occurrence of such Tax Event, redeem the Subordinated
Debt Securities in whole or in part, in certain limited
circumstances, at an aggregate redemption price equal to the
aggregate of the principal amount to be redeemed together with
accrued and unpaid interest thereon to the date of redemption. If an
Investment Company Event should occur, PXRE may, within 90 days of
the occurrence of such Investment Company Event, redeem the
Subordinated Debt Securities in whole or in part at the Make-Whole
Amount, if such event should occur prior to February 1, 2007, or at
the Call Prices described herein, if such event should occur on or
after February 1, 2007, in each case together with accrued and unpaid
interest thereon to the date of redemption. See 'Description of the
Capital Securities -- Tax Event and Investment Company Event
Redemption.' Upon the redemption of the Subordinated Debt Securities,
the proceeds of such redemption will be applied by the Institutional
Trustee to redeem a like amount of the Trust Securities pro rata at
the applicable Redemption Price, upon the terms and conditions
described herein. See 'Description of the Capital Securities --
Redemption.'
The Guarantee............................. The payment of distributions out of moneys held by the Trust,
payments on liquidation of the Trust and payment upon the redemption
of Capital Securities are guaranteed by PXRE as described herein
under 'Description of the Guarantee.' The Guarantee covers payments
of distributions and other payments on the Capital Securities only if
and to the extent that the Trust has funds available therefor in
accordance with the terms of the Declaration, which funds will not be
available except to the extent PXRE has made payments of interest (or
premium, if any) or principal or other payments on the Subordinated
Debt Securities. The Guarantee, when taken together with PXRE's
obligations under the Subordinated Debt Securities, the Declaration
and the Indenture, including its obligations to pay costs, expenses,
debts and other liabilities of the Trust (other than with respect to
the Trust Securities), provides a full and unconditional guarantee on
a subordinated basis by PXRE of amounts due on the Capital
Securities. PXRE has also agreed separately to guarantee the
obligations of the Trust with respect to the Common Securities as
described herein under 'Description of the Guarantee -- General.'
Ranking................................... The Common Securities will rank pari passu with, and payments thereon
will be made pro rata with, the Capital Securities, except that upon
the occurrence and during the continuance of a Declaration Event of
Default, the rights of
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the holders of the Common Securities to receive payment of periodic
distributions and payments upon liquidation, redemption or otherwise
will be subordinated to the rights of the holders of the Capital
Securities. See 'Description of the Capital Securities -- General.'
The Subordinated Debt Securities are unsecured and subordinate and
junior in right of payment to the extent and in the manner set forth
in the Indenture to all Senior Indebtedness of PXRE. See 'Description
of the Subordinated Debt Securities.' The Guarantee constitutes an
unsecured obligation of PXRE and ranks subordinate and junior in
right of payment to the extent and in the manner set forth in the
Guarantee to all Senior Indebtedness of PXRE. See 'Description of the
Guarantee.' PXRE's obligations under the Guarantee and the
Subordinated Debt Securities are also effectively subordinate to
claims of creditors of PXRE's subsidiaries. See 'Description of the
Guarantee.'
Voting Rights............................. Holders of the Capital Securities have limited voting rights relating
generally to the modification of the Capital Securities and the
Guarantee and the exercise of the Trust's rights as the holder of the
Subordinated Debt Securities. Holders of the Capital Securities are
not entitled to appoint, remove or replace the Institutional Trustee
or the Delaware Trustee (as defined herein) except upon the
occurrence of an Indenture Event of Default (as defined herein).
Holders of Capital Securities will not be entitled to appoint, remove
or replace the Administrators (as defined herein) of the Trust. See
'Description of the Capital Securities -- Voting Rights' and
' -- Removal of Issuer Trustees; Appointment of Successors.'
Transfer Restrictions..................... The Old Capital Securities have been issued and may be transferred
only in blocks having a liquidation amount of not less than $100,000
(100 Capital Securities). Any such transfer, sale or other
disposition of Old Capital Securities in a block having a Liquidation
Amount (as defined herein) of less than $100,000 shall be deemed to
be void and of no legal effect whatsoever. The New Capital Securities
will not be so restricted.
Absence of Market for the New Capital
Securities................................ The New Capital Securities will be a new issue of securities for
which there is currently no market. The New Capital Securities will
not be listed on a securities exchange and there can be no assurance
as to the development or liquidity of any market for the New Capital
Securities.
Trading Price............................. The New Capital Securities are expected to trade in the secondary
market at a price per Capital Security plus accrued and unpaid
distributions, if any, to the date of settlement. Because the Capital
Securities pay distributions at a fixed rate based on the fixed
interest rate payable on the Subordinated Debt Securities, the
trading price on the Capital Securities may decline if interest rates
rise.
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For additional information with respect to the Capital Securities, see
'Description of the Capital Securities,' 'Description of the Subordinated Debt
Securities,' 'Description of the Guarantee,' and 'United States Federal Income
Taxation.'
RISK FACTORS
Holders of the Old Capital Securities should carefully consider the matters
set forth under 'Risk Factors.'
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RISK FACTORS
Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters prior to tendering Old Capital Securities in the
Exchange Offer:
ABSENCE OF PUBLIC TRADING MARKET; TRANSFER RESTRICTIONS
There is no existing trading market for the Capital Securities and there
can be no assurance as to the liquidity of any such market that may develop, the
ability of the holders of the Capital Securities to sell such securities or
whether a trading market, if it develops, will continue to exist. If such a
market were to exist, the Capital Securities could trade at prices higher or
lower than their liquidation amounts, depending on many factors, including
prevailing interest rates, the market for similar securities and the operating
results of PXRE. In the event that the Subordinated Debt Securities are
distributed by the Trust to the holders of the Capital Securities, the preceding
considerations would be equally applicable to the Subordinated Debt Securities.
The Old Capital Securities have not been registered under the Securities Act,
and are subject to significant restrictions on resale (including a prohibition
on transfers resulting in blocks having a stated liquidation amount of less than
$100,000 (100 Old Capital Securities)). Notwithstanding the registration under
the Securities Act of the New Capital Securities in the Exchange Offer, which
will generally permit such New Capital Securities to be resold or otherwise
transferred without further registration under the Securities Act, holders who
are 'affiliates' of PXRE or the Trust as defined under Rule 405 of the
Securities Act may publicly offer for sale or resell the New Capital Securities
only in compliance with such registration requirements or the provisions of Rule
144 under the Securities Act. Each tendering holder of the Old Capital
Securities will be deemed to have made certain acknowledgments, representations
and agreements in relation to its affiliate status. In addition, each
broker-dealer that receives New Capital Securities for its own account pursuant
to the Exchange Offer, where the corresponding Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See 'Plan of
Distribution.' The New Capital Securities will not be listed on a securities
exchange.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED DEBT
SECURITIES
The obligations of PXRE under the Guarantee and the Subordinated Debt
Securities are subordinate and junior in right of payment to all present and
future Senior Indebtedness of PXRE and rank pari passu with obligations to or
rights of PXRE's other general unsecured creditors. No payment of principal of
(including redemption payments, if any) or premium, if any, or interest on the
Subordinated Debt Securities may be made if (i) any Senior Indebtedness of PXRE
is not paid when due and any applicable grace period with respect to such
default has ended with such default not having been cured or waived or ceasing
to exist or (ii) a default has occurred with respect to Senior Indebtedness
which entitles the holder thereof to accelerate such Senior Indebtedness and
such default has not been cured or waived or ceased to exist or (iii) the
maturity of any Senior Indebtedness of PXRE has been accelerated because of a
default. The subordination provisions of the Guarantee and the Indenture limit
the ability of the Subordinated Debt Securities to be accelerated upon default
or for remedies to be pursued upon default if an event of default has occurred
and is continuing with respect to Senior Indebtedness. As of December 31, 1996,
PXRE had approximately $64,725,000 of Senior Indebtedness, which has been
reduced to $23,915,000 as of April 17, 1997 by reason of repurchases in the
market by PXRE. There are no terms in the Capital Securities, the Subordinated
Debt Securities or the Guarantee that limit the ability of PXRE or its
subsidiaries to incur additional indebtedness, including indebtedness that ranks
senior to the Subordinated Debt Securities and the Guarantee. See 'Description
of the Guarantee -- Status of the Guarantee' and 'Description of the
Subordinated Debt Securities.'
Because PXRE is a holding company, the Subordinated Debt Securities and the
Guarantee are effectively subordinated to all existing and future liabilities,
including trade payables, of PXRE's subsidiaries, except to the extent that PXRE
is a creditor of the subsidiaries recognized as such.
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GUARANTEE COVERS DISTRIBUTIONS AND OTHER PAYMENTS ONLY TO THE EXTENT THE TRUST
HAS AVAILABLE FUNDS; RELATED REMEDIES
The terms of the Guarantee are those set forth in the Guarantee and those
made part of the Guarantee by the Trust Indenture Act of 1939, as amended (the
'Trust Indenture Act'), under which First Union National Bank is acting as
trustee (the 'Guarantee Trustee'). The New Guarantee has been qualified under
the Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Capital Securities.
The Guarantee guarantees to the holders of the Capital Securities the
following payments, to the extent not paid by the Trust: (i) any accrued and
unpaid distributions required to be paid on the Capital Securities, to the
extent the Trust has funds available therefor in accordance with the terms of
the Declaration, (ii) the Redemption Price, including all accrued and unpaid
distributions to the date of redemption, with respect to Capital Securities
called for redemption by the Trust, to the extent the Trust has funds available
therefor in accordance with the terms of the Declaration and (iii) upon a
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (other than in connection with the distribution of Subordinated Debt
Securities to the holders of Capital Securities in exchange therefor), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Capital Securities to the date of the payment, to the
extent the Trust has funds available therefor in accordance with the terms of
the Declaration and (b) the amount of assets of the Trust remaining available
for distribution to holders of the Capital Securities in liquidation of the
Trust. The Guarantee is subordinated as described under ' -- Ranking of
Subordinate Obligations Under the Guarantee and the Subordinated Debt
Securities.' The holders of a majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee. A holder of record of the Capital Securities may institute a legal
proceeding directly against PXRE to enforce the Guarantee Trustee's rights
without first instituting any legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity (subject to certain limitations on
pursuing remedies set forth in the subordination provisions). If PXRE were to
default on its obligation to pay amounts payable on the Subordinated Debt
Securities, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Capital Securities or
otherwise, and, in such event, holders of the Capital Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, each
holder of Capital Securities would rely on the enforcement (i) by the
Institutional Trustee of its rights as registered holder of the Subordinated
Debt Securities against PXRE pursuant to the terms of the Subordinated Debt
Securities or (ii) by such holder of Capital Securities of its right against
PXRE to enforce payments of principal (and premium, if any) and interest on
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of Capital Securities of such holder. See
'Description of the Capital Securities,' 'Description of the Guarantee' and
'Description of the Subordinated Debt Securities.' Additionally, as a holding
company, PXRE will rely primarily on cash dividends from its reinsurance
subsidiaries to meet its obligations with respect to the Subordinated Debt
Securities and the Guarantee. Such reinsurance subsidiaries are subject to state
regulatory restrictions which limit the maximum amount of annual dividends or
other distributions available to stockholders without prior regulatory approval.
See 'PXRE Corporation.' The Declaration provides that each holder of Capital
Securities, by acceptance thereof, agrees to the provisions of the Guarantee,
including the subordination provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Declaration Event of Default with respect to the Trust occurs and is
continuing, then the holders of Capital Securities would, except as provided
below, rely on the enforcement by the Institutional Trustee of its rights as
holder of the Subordinated Debt Securities against PXRE. The holders of a
majority in liquidation amount of the Capital Securities will have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee with respect to the Capital Securities or
to direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the Institutional
11
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Trustee to exercise the remedies available to it as holder of the Subordinated
Debt Securities. If the Institutional Trustee fails to enforce its rights under
the Subordinated Debt Securities after the holders of a majority in liquidation
amount of the Capital Securities have so directed such Institutional Trustee, to
the fullest extent permitted by law, a holder of record of the Capital
Securities may institute a legal proceeding directly against PXRE to enforce the
rights of the Institutional Trustee under the Subordinated Debt Securities,
without first instituting any legal proceeding against such Institutional
Trustee or any other person. (The Institutional Trustee will be subject to
certain limitations on pursuing remedies in the event there has been a default
on Senior Indebtedness.)
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of PXRE
to pay interest or principal (or premium, if any) on the Subordinated Debt
Securities on the respective dates such interest or principal (or premium, if
any) is payable (or in the case of redemption, on the redemption date), then a
holder of record of the Capital Securities may institute directly against PXRE a
proceeding for enforcement of payment (subject to certain limitations on
pursuing remedies set forth in the subordination provisions), on or after the
respective due dates specified in the Subordinated Debt Securities, to such
holder directly of the principal of (or premium, if any) or interest on
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder (a 'Direct
Action'). In connection with such Direct Action, PXRE will be subrogated to the
rights of such holder of the Capital Securities under the Declaration to the
extent of any payment made by PXRE to such holder of Capital Securities in such
Direct Action; provided, however, that no such subrogation right may be
exercised so long as a Declaration Event of Default has occurred and is
continuing. The holders of the Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated Debt
Securities. See 'Description of the Capital Securities -- Declaration Events of
Default.'
OPTION TO EXTEND INTEREST PAYMENT PERIOD FOR UP TO FIVE YEARS AND CONSEQUENT
DEFERRAL OF DISTRIBUTIONS ON CAPITAL SECURITIES
PXRE has the right under the Indenture to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment period, at any
time and from time to time, subject to certain conditions, for Extension
Periods, each not exceeding 10 consecutive semiannual periods, provided that no
Extension Period may extend beyond the stated maturity of the Subordinated Debt
Securities. During each such Extension Period, semiannual distributions on the
Capital Securities would also be deferred (but would continue to accrue, despite
such deferral, with interest thereon compounded semiannually to the fullest
extent permitted by law) by the Trust. In the event that PXRE exercises this
right to defer interest payments on the Subordinated Debt Securities, and such
deferral is continuing, or if there shall have occurred and be continuing any
Indenture Event of Default or if PXRE shall be in default with respect to the
payment of its obligations under the Guarantee, (a) PXRE shall not declare or
pay dividends on, or make a distribution with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of PXRE's capital
stock or rights to acquire such capital stock (other than (i) purchases or
acquisitions of shares of any such capital stock or rights to acquire such
capital stock in connection with the satisfaction by PXRE of its obligations
under any employee benefit plans, (ii) as a result of a reclassification of
PXRE's capital stock or rights to acquire such capital stock or the exchange or
conversion of one class or series of capital stock of PXRE or rights to acquire
such capital stock for another class or series of PXRE's capital stock or rights
to acquire such capital stock, (iii) the purchase of fractional interests in
shares of PXRE's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged or (iv)
dividends and distributions made on PXRE's capital stock or rights to acquire
such capital stock, in each case with PXRE's capital stock or rights to acquire
such capital stock) or make guarantee payments (other than payments under the
Guarantee or the Common Securities Guarantee) in respect of the foregoing, and
(b) PXRE shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by PXRE that rank
pari passu with or junior to the Subordinated Debt Securities. Prior to the
termination of any such Extension Period, PXRE may further extend the interest
payment period, provided that each such Extension Period, together with all such
previous and further extensions thereof, may not exceed 10 consecutive
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semiannual periods or extend beyond the maturity of the Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, PXRE may commence a new Extension Period, subject to the terms
set forth herein. See 'Description of the Capital Securities -- Distributions'
and 'Description of the Subordinated Debt Securities -- Option to Extend
Interest Payment Period.'
During each Extension Period, if any, each holder of Capital Securities
will continue to accrue income (as original issue discount ('OID')) in respect
of the deferred interest allocable to its Capital Securities for United States
federal income tax purposes, which will be allocated but not distributed. In
such event, each holder of Capital Securities will recognize income for United
States federal income tax purposes in advance of the receipt of cash, and will
not receive cash related to such income from the Trust if such holder disposes
of its Capital Securities prior to the record date for payment of such deferred
interest. See 'United States Federal Income Taxation -- US Holders -- Original
Issue Discount.'
PXRE has no current intention of exercising its right to defer payments of
interest on the Subordinated Debt Securities. However, should PXRE determine to
exercise such right in the future, the market price of the Capital Securities is
likely to be affected. A holder that disposes of its Capital Securities during
an Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Capital Securities. In
addition, as a result of the existence of PXRE's right to defer interest
payments, the market price of the Capital Securities (which represent undivided
beneficial interests in the Subordinated Debt Securities) may be more volatile
than the market price of other similar securities where the issuer does not have
such right to defer interest payments.
PROPOSED TAX LEGISLATION
On February 6, 1997, President Clinton proposed certain tax law changes
that would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after the date of
first Congressional committee action (the 'Proposed Legislation') if such debt
obligations have a maximum term in excess of fifteen years and are not shown as
indebtedness on the issuer's applicable consolidated balance sheet filed with
the Commission. Under current law, PXRE will be able to deduct interest on the
Subordinated Debt Securities and, based upon the effective date referred to in
the Proposed Legislation, such legislation would not apply retroactively to the
Subordinated Debt Securities. There can be no assurance, however, that the
Proposed Legislation, if enacted, or that other legislation enacted after the
date hereof, will not adversely affect the ability of PXRE to deduct the
interest payable on the Subordinated Debt Securities. Accordingly, there can be
no assurance that a Tax Event will not occur. See ' -- Redemption; Distribution
of Subordinated Debt Securities' and 'Description of the Subordinated Debt
Securities -- Proposed Tax Legislation.'
REDEMPTION; DISTRIBUTION OF SUBORDINATED DEBT SECURITIES
PXRE, as the holder of all of the outstanding Common Securities, has the
right at any time (including, without limitation, upon the occurrence of a Tax
Event or an Investment Company Event) to dissolve the Trust, and, after
satisfaction of liabilities to creditors of the Trust (to the extent not paid by
PXRE), cause the Subordinated Debt Securities to be distributed to the holders
of the Trust Securities on a pro rata basis in accordance with the respective
liquidation amounts thereof, in liquidation of the Trust. See 'Description of
the Capital Securities -- Liquidation Distribution Upon Dissolution.' Upon the
occurrence of a Tax Event, in certain circumstances described herein, or upon
the occurrence of an Investment Company Event, PXRE will have the right to
redeem the Subordinated Debt Securities, in whole or in part, in which event the
Trust will redeem the Trust Securities on a pro rata basis to the same extent as
the Subordinated Debt Securities are redeemed by PXRE. See 'Description of the
Capital Securities -- Tax Event and Investment Company Event Redemption' and
' -- Liquidation Distribution Upon Dissolution.'
Under current United States federal income tax law, a distribution of
Subordinated Debt Securities upon the dissolution of the Trust generally would
not be a taxable event to holders of the Capital Securities. However, a
dissolution of the Trust in which holders of the Capital Securities receive cash
13
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<PAGE>
would be a taxable event to such holders. See 'United States Federal Income
Taxation -- US Holders -- Receipt of Subordinated Debt Securities or Cash Upon
Liquidation of the Trust.'
There can be no assurance as to the market prices for the Capital
Securities or the Subordinated Debt Securities that may be distributed in
exchange for Capital Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Capital Securities that an investor may
purchase, whether in the Exchange Offer, secondary market or otherwise, or the
Subordinated Debt Securities that a holder of Capital Securities may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
paid to purchase the Capital Securities. Because the ability of the Trust to pay
amounts due on the Capital Securities is wholly dependent upon PXRE's making
payments on the Subordinated Debt Securities as and when required, and because
holders of Capital Securities may receive Subordinated Debt Securities upon
liquidation of the Trust, purchasers of the Capital Securities are also making
an investment decision with regard to the Subordinated Debt Securities and
should carefully review all the information regarding the Subordinated Debt
Securities contained herein and evaluate the credit risk of PXRE. See
'Description of the Capital Securities' and 'Description of the Subordinated
Debt Securities.'
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain any provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving PXRE that may adversely affect such holders. See 'Description of the
Subordinated Debt Securities.'
LIMITED VOTING RIGHTS
Holders of Capital Securities have limited voting rights relating generally
to the modification of the Capital Securities and the Guarantee and the exercise
of the Institutional Trustee's rights as the holder of the Subordinated Debt
Securities. Holders of Capital Securities are not entitled to appoint, remove or
replace the Institutional Trustee or the Delaware Trustee except upon the
occurrence of an Indenture Event of Default. Holders of Capital Securities will
not be entitled to appoint, remove or replace the Administrators. The
Institutional Trustee, PXRE and the holders of a majority of the Common
Securities are authorized to take any action, not inconsistent with applicable
law, the Certificate of Trust or the Declaration, to ensure that the Trust will
be classified for United States federal income tax purposes as a grantor trust
and will not be required to register as an 'investment company' under the 1940
Act (as defined herein) provided that such action does not adversely affect the
interests of the holders of Capital Securities in any material respect. See
'Description of the Capital Securities -- Voting Rights' and ' -- Removal of
Issuer Trustees; Appointment of Successors.'
TRADING PRICE
Because the Capital Securities pay distributions at a fixed rate based upon
the fixed interest rate payable on the Subordinated Debt Securities, the trading
price of the Capital Securities may decline if interest rates rise.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act, or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). PXRE and the Trust do not intend to register under the
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Securities Act any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, any trading market for Old Capital
Securities which remain outstanding after the Exchange Offer could be adversely
affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Declaration and, accordingly, will vote
together as a single class for purposes of determining whether holders of the
requisite percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the Declaration. See
'Description of New Securities -- Description of Capital Securities -- General.'
The Old Capital Securities provide that if the Exchange Offer is not
consummated by August 27, 1997 (subject to extension in certain circumstances),
the annual distribution rate borne by the Old Capital Securities will increase
by 0.25% until the Exchange Offer is consummated. Following consummation of the
Exchange Offer, any Old Capital Securities remaining outstanding will not be
entitled to any increase in the distribution rate thereon. The New Capital
Securities will not be entitled to any such increase in the distribution rate
thereon.
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Exchange Agent of such Old Capital Securities, a properly
completed and duly executed Letter of Transmittal or Agent's Message in lieu
thereof and all other required documents. Therefore, holders of the Old Capital
Securities desiring to tender such Old Capital Securities in exchange for New
Capital Securities should allow sufficient time to ensure timely delivery.
Neither PXRE, the Trust, nor the Exchange Agent is under any duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
PXRE CORPORATION
The information appearing below is supplementary to a more detailed
description of PXRE contained in the material incorporated by reference herein.
See 'Incorporation of Certain Documents by Reference.'
PXRE provides reinsurance products and services to a national and
international marketplace, principally on commercial and personal property risks
and marine and aviation risks, with a particular focus on catastrophe-related
coverages. PXRE solicits its treaty and facultative reinsurance business from
the worldwide brokerage market. PXRE also employs its property reinsurance
underwriting expertise and generates management fee income by managing business
for other insurers and reinsurers.
In November 1993, PXRE sponsored the initial public offering of
Transnational to raise capital and take advantage of favorable conditions in the
worldwide retrocessional reinsurance market. PXRE, through PXRE Reinsurance
Company ('PXRE Reinsurance'), retained a 21% ownership position in Transnational
and had responsibility for the day-to-day operations of Transnational, including
all the reinsurance operations of its subsidiary, Transnational Reinsurance
Company ('Transnational Reinsurance'). Transnational and Transnational
Reinsurance had no paid employees.
On December 11, 1996 (the 'Effective Time'), PXRE completed the merger of
Transnational with and into PXRE (the 'Merger'), pursuant to which each share of
common stock of Transnational was converted into the right to receive 1.0575
shares of PXRE common stock. The Merger resulted from the realization by the
management and Boards of Directors of both PXRE and Transnational that
conditions had become more competitive in the retrocessional reinsurance
marketplace, and that the reinsurance markets, rating agencies and the capital
markets are placing increased importance on the
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size and financial strength of reinsurance companies, which size and financial
strength would be augmented by the Merger. Following the Merger, Transnational
Reinsurance became a wholly-owned subsidiary of PXRE Reinsurance. The Merger has
been accounted for using the purchase method of accounting: therefore net income
of Transnational (including Transnational Reinsurance) has been included in
PXRE's consolidated results of operations from the date of acquisition. In
addition, in December 1996, both Moody's Investors Services, Inc. and Standard &
Poor's Rating Services, citing the benefits of the Merger, upgraded PXRE's
senior debt ratings to Baa3 and BBB+, respectively.
In December 1996, A.M. Best Company, Inc. affirmed PXRE Reinsurance's
rating of 'A (Excellent),' representing an independent opinion of PXRE
Reinsurance's financial strength and ability to meet its obligations to
policyholders, although such rating may not reflect the considerations
applicable to an investment in PXRE.
PXRE's strategy is to commit and withhold its underwriting capacity and to
alter its mix of business at any given point in time to focus on business where
management believes that above average underwriting results can be achieved, and
to supplement its underwriting commitments and generate management fee income by
managing business for other insurers and reinsurers.
PXRE has been pursuing a strategy of focusing on catastrophe-related
coverages. Catastrophe-related coverages include catastrophe coverage provided
to ceding insurance companies and retrocessional catastrophe coverage provided
to other reinsurers. This strategy has been designed to capitalize on the
substantial improvements in pricing and other terms of these coverages which
evolved following high levels of catastrophic loss activity experienced by the
worldwide reinsurance industry. Coverage terms have been deteriorating since the
beginning of 1995, in response to which PXRE has been contracting its premium
volume. Rather than maximizing premium growth during periods of excess capacity,
PXRE's management focuses its efforts on preserving a proper risk/reward ratio
in the business it maintains, moving to layers of risk that are less affected by
competitive pressures, or reducing commitments when necessary. For 1996,
catastrophe-related coverages represented approximately 68% of PXRE's gross
premiums written.
PXRE has also been diversifying its exposures and taking advantage of
business opportunities in international reinsurance markets. This business
includes both reinsurance contracts protecting risks underwritten by United
States ceding companies for the foreign operations of their United States
insureds and reinsurance in which the reinsured is foreign-based. In December
1996, PXRE announced that it had, like several other U.S. companies, made an
investment in the Lloyd's of London ('Lloyd's') market, forming a new syndicate
(PG Butler Syndicate 1224). The new syndicate will have an initial capacity to
underwrite `L'35 million in annual premiums ($60 million at December 31, 1996
exchange rates) commencing with the 1997 renewal season. Management expects the
syndicate will provide PXRE with access to Lloyd's worldwide licenses in
insurance, reinsurance and surplus lines, create additional opportunities for
PXRE and, in conjunction with PXRE's Brussels office, further strengthen PXRE's
presence in the worldwide insurance and reinsurance markets. For 1996,
international reinsurance (principally the United Kingdom, Continental Europe,
Australia and Asia) represented approximately 71% of the gross written premiums
of PXRE.
PXRE specializes in the reinsurance of property risks and marine and
aviation risks which involve primarily property damages. In contrast to casualty
and liability losses, which frequently can be determined only through the
lengthy, unpredictable process of litigation, property losses tend to be
reported more promptly and usually are settled within a shorter period of time.
While engaging in a volatile business, PXRE has a diversified book of business
on both a geographic and attachment point basis. While PXRE makes use of risk
modeling techniques, it adds to the discipline of its underwriting process a
seasoned underwriting team, which consists of 16 individuals with an average of
21 years of experience in the industry.
PXRE, PXRE Reinsurance and Transnational Reinsurance are subject to
regulation under the insurance statutes and state insurance authorities of
various states, including Connecticut, the domiciliary state of both PXRE
Reinsurance and Transnational Reinsurance. The premium rates and policy terms of
reinsurance agreements generally are not subject to governmental regulations.
The regulation and supervision to which PXRE Reinsurance and Transnational
Reinsurance are subject relate primarily to the standards of solvency that must
be met and maintained, licensing requirements
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for reinsurers, the nature of and limitations on investments, restrictions on
the size of risks which may be insured, deposits of securities for the benefit
of a reinsured, methods of accounting, periodic examinations of the financial
condition and affairs of reinsurers, the form and content of reports of
financial condition required to be filed, reserves for losses, holding company
registration, change of control and affiliate transaction limitations. In
general, such regulation is for the protection of the reinsureds and,
ultimately, their policyholders, rather than investors.
PXRE Reinsurance and Transnational Reinsurance are also subject to
Connecticut regulatory restrictions which limit the maximum amount of annual
dividends or other distributions, including loans or cash advances, available to
stockholders without the consent of the Insurance Commissioner. The maximum
amount of dividends or distributions that PXRE Reinsurance may declare and pay
to PXRE in 1997 without regulatory approval is $40,013,000. The maximum amount
of dividends or distributions that Transnational Reinsurance may declare and pay
to PXRE Reinsurance in 1997 without regulatory approval is $21,874,000.
From time to time various regulatory and legislative changes have been
proposed in the insurance industry, some of which could have an effect on
reinsurers. Among the proposals that have in the past been or are at present
being considered are the possible introduction of federal regulation in addition
to, or in lieu of, the current system of state regulation of insurers, the
initiative to create a federally guaranteed disaster reinsurance pool prefunded
by insurers, and proposals in various state legislatures (some of which
proposals have been enacted) to conform portions of their insurance laws and
regulations to various model acts adopted by the National Association of
Insurance Commissioners (the 'NAIC'). Furthermore, the NAIC has commenced a
project to codify statutory accounting practices, the result of which is
expected to constitute the only source of 'prescribed' statutory accounting
practices. Accordingly, that project, which is expected to be completed in 1999,
will likely change the definitions of what constitutes prescribed versus
permitted statutory accounting practices and will likely result in changes to
the accounting policies that insurance enterprises use to prepare their
statutory financial statements. The NAIC is an organization which assists state
insurance supervisory officials in achieving insurance regulatory objectives,
including the maintenance and improvement of state regulation. PXRE is unable to
predict what effect, if any, the foregoing developments may have on its
operations and financial condition in the future.
PXRE's executive offices are located at 399 Thornall Street, Edison, New
Jersey 08837, and its telephone number is (908) 906-6785.
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SELECTED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
information of PXRE as of and for each of the years in the five year period
ended December 31, 1996. The selected historical consolidated financial
information of PXRE for each of the years in the five year period ended December
31, 1996 is derived from PXRE's audited consolidated financial statements. The
following data should be read in conjunction with the consolidated financial
statements of PXRE and other financial information appearing elsewhere herein or
incorporated herein by reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1993 1992
(1) 1995 1994 (2)(3)(4)(5) (2)(3)(5)
-------- ------------ ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Gross premiums written....................................... $114,348 $155,380 $179,684 $116,975 $ 100,951
Premiums ceded............................................... (46,630) (57,744) (71,166) (39,469) (51,320)
-------- -------- -------- -------- ---------
Net premiums written......................................... 67,718 97,636 108,518 77,506 49,631
Change in unearned premiums.................................. 5,078 (494) 2,083 1,422 (1,196)
-------- -------- -------- -------- ---------
Net premiums earned.......................................... 72,796 97,142 110,601 78,928 48,435
Net investment income........................................ 16,782 14,730 13,786 8,011 5,083
Net realized investment gains (losses)....................... 94 85 (1,164) (1,526) 392
Gain on sale of subsidiary(4)................................ -- -- -- 10,564 --
Management fee(1)............................................ 6,032 6,417 6,992 3,158 809
Agency commissions........................................... -- -- -- -- 257
-------- -------- -------- -------- ---------
Total revenues....................................... 95,704 118,374 130,215 99,135 54,976
-------- -------- -------- -------- ---------
Losses and loss expenses incurred............................ 18,564 34,716 52,647 40,570 39,778
Commissions and brokerage.................................... 12,874 13,251 15,026 13,339 13,162
Other operating expenses..................................... 12,262 11,237 8,365 8,917 9,332
Interest expense............................................. 6,957 7,143 7,789 2,740 319
-------- -------- -------- -------- ---------
Total losses and expenses............................ 50,657 66,347 83,827 65,566 62,591
-------- -------- -------- -------- ---------
Income (loss) before income taxes, equity in net earnings of
Transnational and cumulative effect of accounting change... 45,047 52,027 46,388 33,569 (7,615)
Equity in net earnings of Transnational(4)................... 3,898 5,948 4,141 84 --
Income tax provision (benefit)............................... 15,644 18,189 15,700 11,008 (3,322)
-------- -------- -------- -------- ---------
Income (loss) (before cumulative effect of accounting
change).................................................... 33,301 39,786 34,829 22,645 (4,293)
Cumulative effect of adopting FASB No. 109................... -- -- -- -- 433
-------- -------- -------- -------- ---------
Net income (loss)............................................ $ 33,301 $ 39,786 $ 34,829 $ 22,645 $ (3,860)
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Preferred stock dividend(6).................................. 0 599 2,005 2,056 1,419
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Income (loss) available to common stockholders (before
cumulative effect of accounting change).................... $ 33,301 $ 39,187 $ 32,824 $ 20,589 $ (5,712)
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Ratio of earnings to fixed charges(7)........................ 7.15 7.90 6.73 12.12 --
Ratio of earnings to combined fixed charges and preferred
dividends(7)............................................... 7.15 7.04 4.90 6.02 --
Primary earnings per common share:
Income (loss) (before cumulative effect of accounting
change).................................................. $ 3.68 $ 4.74 $ 4.89 $ 3.34 $ (1.48)
Cumulative effect of accounting change..................... -- -- -- -- 0.11
-------- -------- -------- -------- ---------
Net income (loss).......................................... $ 3.68 $ 4.74 $ 4.89 $ 3.34 $ (1.37)
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Average common shares outstanding(6)....................... 9,046 8,275 6,710 6,170 3,851
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Fully diluted earnings per common share:
Income (loss) (before cumulative effect of accounting
change).................................................. $ 3.68 $ 4.48 $ 3.94 $ 2.70 $ (1.48)
Cumulative effect of accounting change..................... -- -- -- -- 0.11
-------- -------- -------- -------- ---------
Net income (loss).......................................... $ 3.68 $ 4.48 $ 3.94 $ 2.70 $ (1.37)
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Average common shares outstanding(1)....................... 9,060 8,874 8,847 8,380 3,851
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Cash dividends per common share.............................. $ 0.75 $ 0.63 $ 0.375 $ 0.225 $ 0.20
OTHER OPERATING DATA:
GAAP loss ratio(8)........................................... 25.5% 35.7% 47.6% 51.4% 82.1%
GAAP underwriting expense ratio(8)........................... 26.2 18.6 14.8 24.2 44.2
-------- -------- -------- -------- ---------
GAAP combined ratio(8)....................................... 51.7% 54.3% 62.4% 75.6% 126.3%
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
</TABLE>
18
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- ------------ ---------
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Cash and investments......................................... $467,078 $269,089 $231,789 $248,949 $ 81,994
Total assets................................................. 543,324 396,084 353,794 349,251 205,484
Losses and loss expenses..................................... 70,977 72,719 81,836 71,442 88,668
Notes payable................................................ 64,725 67,775 69,700 75,000 5,250
Total Stockholders' equity................................... 357,678 211,162 166,771 142,690 69,728
Book value per common share.................................. $ 25.63 $ 24.15 $ 21.27 $ 18.06 $ 11.20
Statutory capital and surplus of PXRE Reinsurance............ $400,133 $250,231 $211,988 $185,844 $ 65,221
</TABLE>
- ------------
(1) On December 11, 1996, PXRE merged with Transnational. The Merger has been
accounted for as a purchase. Accordingly, Transnational has been included
in PXRE's consolidated results of operations from the date of acquisition,
which resulted in incremental earnings of $1,253,000 in 1996. For the
period from January 1, 1996 until December 11, 1996, PXRE recorded equity
in net earnings of Transnational amounting to $3,898,000. Fully diluted
average shares outstanding reflects the shares issued to holders of
Transnational 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 Transnational prior to the Merger.
(2) Effective January 1, 1993, PXRE adopted the FASB's SFAS No. 113,
'Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts'. As a result of such adoption, PXRE effected a
December 31, 1992 balance sheet reclassification to assets of $53,314,969
of reinsurance recoverables on losses and loss expense liabilities and
$5,529,292 of ceded unearned premiums in 1992, which were previously
deducted from liabilities. The adoption of SFAS No. 113 had no effect on
PXRE's net income for the years ended December 31, 1993 or 1992.
(3) The FASB's Emerging Issues Task Force ('EITF') reached a consensus on July
22, 1993 regarding Issue No. 93-6, 'Accounting for Multiple-Year
Retrospectively-Rated Contracts by Ceding and Assuming Enterprises.' The
EITF consensus requires that affected companies should accrue the lesser of
termination penalties or the effect of prospective adjustments in rates or
coverages triggered by the loss event in the period that a loss is
recorded. The EITF mandate required adoption of this consensus no later
than the third quarter of 1993. As described in Note 2 to PXRE's
Consolidated Financial Statements for the year ended December 31, 1993,
PXRE had certain retrocessional catastrophe coverage for its principal
types of business. Certain of these contracts provided for terms of three
or more years and had contractual adjustments regarding rates and/or
coverages when losses are recovered under these contracts. Although PXRE
was provided with the opportunity to cancel some of these contracts without
penalty, PXRE chose to continue the contracts to obtain the coverage
provided thereunder. Accordingly, PXRE believed that the appropriate
application of the EITF's consensus was to record in the third quarter of
1992 incremental premiums that resulted from Hurricane Andrew loss
recoveries under these contracts. This change increased 1992 third quarter
ceded earned premiums by $5,772,000, deferred income tax benefit by
$1,962,000, net loss by $3,810,000 and loss per common share by $0.99.
These adjustments were determined on the basis of losses estimated by PXRE
at December 31, 1992. The financial statements for years prior to 1992 were
not affected. Also, due to additional information received during the first
six months of 1993 with respect to Hurricane Andrew losses, PXRE reported,
in the second quarter of 1993, an additional $2,500,000 of ceded premium
expenses through the application of the EITF consensus. The statutory
capital and surplus of PXRE Reinsurance has not been adjusted.
(4) Until the fourth quarter of 1993, Transnational Reinsurance was a
wholly-owned subsidiary of PXRE Reinsurance. On November 1, 1993, a
registration statement relating to an initial public offering (the
'Offering') by Transnational of 5,750,000 shares of Class A common stock at
$20.00 per share was declared effective. In conjunction with the formation
of Transnational and registration of Transnational's Class A common stock
in the Offering, all of the outstanding capital stock of Transnational
Reinsurance was contributed by PXRE Reinsurance to Transnational in
exchange for the issuance of 1,535,848 shares of Transnational's Class B
common stock which caused PXRE Reinsurance's holdings of Transnational's
Class B common stock (when combined with the 100 shares of Class B common
stock contributed to PXRE Reinsurance by PXRE in connection with the
closing of the Offering) to constitute approximately 21% of all of the
outstanding common stock of Transnational immediately after the Offering.
Thereafter, Transnational, through Transnational Reinsurance, specialized
principally in providing brokered property retrocessional reinsurance and
marine and aviation retrocessional reinsurance in the United States and
international markets pursuant to a Management Agreement with PXRE
Reinsurance. As a result of this transaction, PXRE recorded a gain on sale
in the fourth quarter of 1993 amounting to $10,564,000 on a pre-tax basis,
representing the difference between PXRE Reinsurance's interest in the net
assets of Transnational Reinsurance immediately after the Offering and the
historical book value of its investment in Transnational Reinsurance.
Subsequent to the Offering until December 11, 1996, PXRE accounted for its
investment in Transnational on the equity method as described in Note 1.
(5) During the second quarter of 1992, PXRE completed an offering of 1,059,800
depository shares, each representing 1/100 of a share of PXRE's Series A
Cumulative Convertible Preferred Stock. The net proceeds of $24,403,000
were contributed to PXRE Reinsurance's surplus. During the first quarter of
1993, PXRE completed an offering of 2,300,000 shares of common stock. The
net proceeds of $46,942,000 (except for $5,000,000 which was retained by
PXRE for general corporate purposes) were contributed to PXRE Reinsurance's
surplus. During the third quarter of 1993, PXRE completed an offering of
$75,000,000 principal amount of 9.75% Senior Notes due 2003. The net
proceeds of $72,150,000 (except for approximately $3,938,000 which was used
by PXRE to repay all amounts outstanding under and retire a term loan
facility and $15,000,000 which was retained by PXRE to provide support for
debt service on the Senior Notes) were contributed to PXRE Reinsurance's
surplus.
(6) During 1995, all of the outstanding shares of Series A Preferred Stock were
converted into shares of PXRE's common stock. To date, these convertible
preferred shares were the principal reason for the difference between
primary and fully diluted earnings per share.
(7) 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's management to be an appropriate interest
factor. Earnings were inadequate to cover fixed charges by $7,615,000 for
the year ended December 31, 1992. 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.
Earnings were inadequate to cover fixed charges and preferred dividends by
$9,034,000 for the year ended December 31, 1992.
(8) The loss, underwriting expense and combined ratios included under 'Other
Operating Data' have been derived from the audited consolidated statements
of income of PXRE prepared in accordance with GAAP.
19
<PAGE>
<PAGE>
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF PXRE
The following unaudited pro forma condensed consolidated statement of
income for the twelve months ended December 31, 1996 presents operating results
of PXRE as if the Merger, which closed on December 11, 1996, had occurred on
January 1, 1996.
The unaudited pro forma condensed consolidated financial information should
be read in conjunction with the consolidated financial statements of PXRE,
including notes thereto, and the other financial information pertaining to PXRE
and Transnational contained elsewhere herein or incorporated herein by
reference. The unaudited pro forma condensed consolidated financial information
is not intended to be indicative of the consolidated results of operations of
PXRE that would have been reported if the Merger had occurred at the date
indicated or of the consolidated results of future operations.
The Merger was accounted for as a purchase in accordance with GAAP. Under
purchase accounting, the total purchase price is allocated to the acquired
assets and liabilities based on their fair values.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------
PXRE TRANSNATIONAL
WITHOUT WITHOUT THE MERGER PRO FORMA
THE MERGER MERGER ADJUSTMENTS COMBINED
---------- ------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net premiums written.......................................... $ 66,321 $50,283 $116,604
-------- ------- --------
-------- ------- --------
Net premiums earned........................................... $ 70,039 $53,003 $123,042
Net investment income......................................... 16,176 10,707 26,883
Net realized gains (losses) on investments.................... 73 (108) (35)
Management fee income......................................... 6,170 $ 2,650 (1) 3,520
Losses and loss expenses...................................... 18,104 17,361 35,465
Acquisition costs, operating and interest expenses(2)......... 31,541 17,715 (2,650)(1)
33 (1) 46,639
Amortization of negative goodwill............................. (2,696)(3) (2,696)
Equity in net earnings of Transnational....................... 4,219 4,219 (1) --
Income tax provision.......................................... 14,984 9,462 (150)(4) 24,296
-------- ------- ------- --------
Net income.................................................... $ 32,048 $19,064 $ 1,406 $ 49,706
-------- ------- ------- --------
-------- ------- ------- --------
Operating income excluding net realized losses on
investments................................................. $ 32,001 $19,134 $ 1,406 $ 49,729
-------- ------- ------- --------
-------- ------- ------- --------
Fully diluted net income per share............................ $ 3.66 $ 3.44
Fully diluted operating income per share excluding net
realized losses............................................. 3.66 3.45
Fully diluted weighted average shares
outstanding................................................. 8,749 5,683 (5)(6) 14,432
</TABLE>
- ------------
(1) The intercompany transactions and adjustments made under equity accounting
are eliminated.
(2) Operating expense savings which are expected to result from the Merger are
not included in the pro forma financial statements.
(3) Under purchase accounting, the total purchase price is allocated to the
acquired assets and liabilities based on their fair values. The excess of
the fair value of the Transnational Class A net assets acquired over the
cost of the transaction, including the reversal of a deferred tax liability
is recorded as negative goodwill. The deferred tax liability previously
provided by PXRE Reinsurance with respect to its 22% investment in
Transnational is, after the Merger, no longer required. The elimination of
the deferred tax liability reduces the amount of the purchase price to be
allocated. PXRE recorded negative goodwill of $8,087,000 as a result of the
Merger. For purposes of the pro forma financial statements, negative
goodwill will be amortized on a straight line basis over a three year
period. The adjustment of $2,696,000 represents amortization of negative
goodwill for the twelve month period ended December 31, 1996.
(4) This adjustment reflects the net tax effect of certain pro forma
adjustments yielding a 32.8% pro forma combined effective tax rate.
(5) 3,000 outstanding options to purchase Transnational common stock have been
replaced with options to purchase PXRE common stock. This adjustment
represents the weighted average number of ordinary share equivalents
outstanding related to the newly issued PXRE options.
(6) Upon consummation of the Merger, each share of Transnational common stock
issued and outstanding immediately prior to the Effective Time was
converted into the right to receive 1.0575 shares of PXRE common stock. For
purposes of the Merger, the value assigned to the PXRE common stock issued
was $129,422,149, including the deferred tax adjustment discussed in Note 3
above and transaction costs of $1,574,000. This value was determined in
accordance with the EITF 95-19 consensus that the value of equity
securities issued to effect a purchase combination (in this case the
Merger) should be based on (a) the market price for a reasonable period
before and after the date the terms of the acquisition are agreed and
announced (in this case August 22, 1996), or (b) at a later date if the
purchase price changes. The PXRE common stock traded at an average share
price (two days preceding and two days following August 22, 1996) of $23.35
per share. For purposes of the pro forma earnings per share, PXRE has used
the $23.35 average per share price and has reflected the issuance of
5,680,256 shares of PXRE common stock in exchange for Transnational Class A
stock.
20
<PAGE>
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of PXRE as of December
31, 1996 as reported; and pro forma as adjusted to reflect the sale of the
Capital Securities. This table should be read in conjunction with the unaudited
consolidated financial statements of PXRE and other financial information herein
or incorporated by reference herein. No adjustments have been made for any
subsequent redemption or purchase of outstanding indebtedness or common stock of
PXRE. See 'Use of Proceeds.'
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------------------------
PXRE AS REPORTED PRO FORMA AS ADJUSTED
---------------- ---------------------
<S> <C> <C>
Short-term Debt:
Current portion of long-term debt..................................... $ 0 $ 0
------------ -------------
Long-term Debt:
Notes payable(1)...................................................... 64,725,000 64,725,000
------------ -------------
Minority Interest in Consolidated Subsidiary:
Company-Obligated Mandatorily Redeemable Capital Trust Pass-through
Securities of Subsidiary Trust holding solely a Company-Guaranteed
Related Subordinated Debt(2)........................................ 0 100,000,000
------------ -------------
Stockholders' Equity:
Serial preferred stock, $.01 par value; 500,000 shares authorized; 0
issued and outstanding.............................................. 0 0
Common stock, $.01 par value; 40,000,000 shares authorized; 14,705,782
shares issued(1).................................................... 147,058 147,058
Additional paid-in capital............................................ 252,978,182 252,978,182
Net unrealized appreciation on investments, net of deferred income tax
expense of $306,000................................................. 568,405 568,405
Retained earnings..................................................... 118,705,257 118,705,257
Treasury stock at cost (750,876 shares)............................... (14,090,289) (14,090,289)
Restricted stock at cost (53,279 shares).............................. (630,835) (630,835)
------------ -------------
Total stockholders' equity............................................ 357,677,778 357,677,778
------------ -------------
Total Debt, Minority Interest in Consolidated Subsidiary and Stockholders'
Equity.................................................................. $422,402,778 $ 522,402,778
------------ -------------
------------ -------------
</TABLE>
- ------------
(1) Subsequent to December 31, 1996, PXRE (a) has reduced the notes payable to
$23,915,000 as of April 17, 1997 by reason of repurchases in the market by
PXRE and (b) has repurchased 101,000 shares of common stock as of April 17,
1997.
(2) The Company-Obligated Mandatorily Redeemable Capital Trust Pass-through
Securities of Subsidiary Trust holding solely a Company-Guaranteed Related
Subordinated Debt reflects the Capital Securities. As discussed herein, the
sole assets of the Trust are $103,093,000 of 8.85% Subordinated Debt
Securities of the Company, which will mature on February 1, 2027. PXRE owns
all of the Common Securities of the Trust. It is anticipated that the Trust
will not be subject to the reporting requirements under the Exchange Act.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a
wholly-owned subsidiary of PXRE. Accordingly, the financial statements of the
Trust will be consolidated into PXRE's consolidated financial statements with
the Capital Securities shown as 'Company-Obligated Mandatorily Redeemable
Capital Trust Pass-through Securities of Subsidiary Trust holding solely a
Company-Guaranteed Related Subordinated Debt.' In a footnote to PXRE's financial
statements there will be included a statement that the sole asset of the Trust
is the Subordinated Debt Securities (indicating the principal amount, interest
rate and maturity thereof). See 'Capitalization.'
21
<PAGE>
<PAGE>
USE OF PROCEEDS
Neither PXRE nor the Trust will receive any cash proceeds from the issuance
of the New Capital Securities offered hereby. In consideration for issuing the
New Capital Securities in exchange for Old Capital Securities as described in
this Prospectus, the Trust will receive Old Capital Securities in like
liquidation amount. The Old Capital Securities surrendered in exchange for the
New Capital Securities will be retired and canceled.
All of the proceeds from the sale of the Old Capital Securities and the
Common Securities were invested by the Trust in Subordinated Debt Securities of
PXRE issued pursuant to the Indenture described herein. PXRE applied the net
proceeds (after payment of the expenses of the offering and the Initial
Purchasers' compensation) from the sale of the Subordinated Debt Securities to
its general funds to be used for general corporate purposes, which may include,
from time to time, the redemption or the purchase, in the open market or in
privately negotiated transactions or otherwise, of outstanding indebtedness and
common stock of PXRE. As of April 17, 1997, $42,771,962 of such proceeds have
already been used to repurchase Senior Indebtedness in the market and $2,565,559
of such proceeds have been used to repurchase common stock of PXRE. The
remaining net proceeds, pending the use described above, have been invested in
investment grade obligations.
THE TRUST
The Trust is a statutory business trust created under Delaware law pursuant
to (i) the Initial Declaration (as such Initial Declaration was amended and
restated on January 29, 1997, the 'Declaration') and (ii) the filing of a
certificate of trust for the Trust with the Delaware Secretary of State on
January 21, 1997. The Trust exists for the exclusive purposes of (i) issuing the
Trust Securities representing undivided beneficial interests in the assets of
the Trust, (ii) investing the gross proceeds of such Trust Securities in the
Subordinated Debt Securities, and (iii) engaging in only those other activities
necessary or incidental thereto, which include engaging in the Exchange Offer.
All of the Common Securities of the Trust are currently directly owned by PXRE.
The Common Securities of the Trust rank pari passu, and payments are made
thereon pro rata, with the Capital Securities of the Trust except that upon the
occurrence and continuation of a Declaration Event of Default, the rights of the
holders of the Common Securities to payment from the Trust in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Capital Securities. PXRE has
acquired Common Securities in an aggregate liquidation amount equal to
approximately 3% of the total capital of the Trust. The Trust has a term of
approximately 55 years, but may earlier terminate as provided in the
Declaration. PXRE, as the holder of all of the outstanding Common Securities,
has the right at any time to terminate the Trust (including, without limitation,
upon the occurrence of a Tax Event or an Investment Company Event) and, after
satisfaction of liabilities to creditors of the Trust, cause the Subordinated
Debt Securities to be distributed to the holders of the Trust Securities on a
pro rata basis in accordance with the respective liquidation amounts thereof, in
liquidation of the Trust.
Pursuant to the Declaration, at least one trustee of the Trust is required
to be an entity that maintains its principal place of business in the State of
Delaware (the 'Delaware Trustee') and at least one trustee will be a financial
institution that is unaffiliated with PXRE and is eligible to act as property
trustee and as indenture trustee pursuant to the terms set forth therein (the
'Institutional Trustee' and together with the Delaware Trustee, the 'Issuer
Trustees'). First Union National Bank initially is serving as Institutional
Trustee and First Union Bank of Delaware initially is serving as Delaware
Trustee. In addition, three individuals who are employees or officers of or
affiliated with the holder of the majority of the Common Securities, are acting
as administrators with respect to the Trust (the 'Administrators'). The
Administrators were selected by the holders of the Common Securities. See
'Description of the Capital Securities -- Voting Rights.' The Institutional
Trustee holds title to the Subordinated Debt Securities for the benefit of the
holders of the Trust Securities and has the power to exercise all rights, powers
and privileges under the Indenture as the holder of the Subordinated Debt
Securities. In addition, the Institutional Trustee maintains exclusive control
of a separate, segregated, non-interest bearing trust account (the 'Property
Account') to hold all payments made in respect of the Subordinated Debt
Securities for the benefit of the holders of the Trust Securities issued by the
Trust.
22
<PAGE>
<PAGE>
The Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of record of the Trust
Securities out of funds from the Property Account. Holders of Capital Securities
are not entitled to appoint, remove or replace the Institutional Trustee or the
Delaware Trustee except upon the occurrence of an Indenture Event of Default.
See 'Description of the Capital Securities -- Voting Rights' and ' -- Removal of
Issuer Trustees; Appointment of Successors.' PXRE, as borrower under the
Indenture, has covenanted to pay all fees and expenses related to the Trust
(other than in respect of the Trust Securities) and the offering and sale of the
Trust Securities. See 'Description of the Subordinated Debt
Securities -- Miscellaneous.' The rights of the holders of the Capital
Securities, including economic rights, rights to information and voting rights,
are set forth in the Declaration, the Delaware Business Trust Act, as amended
(the 'Trust Act'), and the Trust Indenture Act. See 'Description of the Capital
Securities.'
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, PXRE and the
Trust entered into the Registration Rights Agreement with the Initial Purchasers
pursuant to which PXRE and the Trust agreed to file and to use their best
efforts to cause to be declared effective by the Commission a registration
statement with respect to the exchange of the Old Capital Securities for capital
securities which have been registered under the Securities Act with terms
identical in all material respects to the terms of the Old Capital Securities
(except as described below). A copy of the Registration Rights Agreement has
been filed as an exhibit to PXRE's 1996 Form 10-K which is incorporated by
reference into the Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
PXRE and the Trust under the Registration Rights Agreement. The form and terms
of the New Capital Securities are the same in all material respects as the form
and terms of the Old Capital Securities, except that the New Capital Securities
(i) have been registered under the Securities Act and therefore will not be
subject to certain restrictions on transfer applicable to the Old Capital
Securities and (ii) will not provide for any increase in the distribution rate
thereon. The Old Capital Securities provide, among other things, that if the
Exchange Offer is not consummated by August 27, 1997 (subject to extension in
certain circumstances), the annual distribution rate borne by the Old Capital
Securities will increase by 0.25% until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Old Capital Securities that
remain outstanding will not be entitled to any increase in the distribution rate
thereon, or any further registration rights under the Registration Rights
Agreement except under limited circumstances. See 'Risk Factors -- Consequences
of a Failure to Exchange Old Capital Securities' and 'Description of the Capital
Securities.'
The Exchange Offer is not being made to, nor will the Trust or PXRE accept
tenders for exchange from, holders of Old Capital Securities in any jurisdiction
in which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term 'holder' with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company
('DTC') who desires to deliver such Old Capital Securities by book entry
transfer at DTC.
Pursuant to the Exchange Offer, PXRE will exchange as soon as practicable
after the date hereof, all of the Old Subordinated Debt Securities, of which
$103,093,000 aggregate principal amount is outstanding, for a like aggregate
principal amount of the New Subordinated Debt Securities. The New Guarantee and
the New Subordinated Debt Securities have been registered, to the extent
required to be registered, under the Securities Act.
23
<PAGE>
<PAGE>
TERMS OF EXCHANGE
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $100,000,000 aggregate liquidation amount of New Capital
Securities for a like aggregate liquidation amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with the procedures described below. The Trust will issue,
promptly after the Expiration Date, an aggregate liquidation amount of up to
$100,000,000 of New Capital Securities in exchange for a like aggregate
liquidation amount of outstanding Old Capital Securities tendered and accepted
in connection with the Exchange Offer. Holders may tender their Old Capital
Securities in whole or in part in a liquidation amount of not less than $100,000
or any integral multiple of $1,000 in excess thereof, provided that if any Old
Capital Securities are tendered in exchange in part, the untendered liquidation
amount must be $100,000 or any integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$100,000,000 aggregate liquidation amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered for, or are tendered but not accepted in connection with, the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Declaration, but will not be entitled to any further registration rights under
the Registration Rights Agreement, except under limited circumstances. See 'Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities' and
'Description of the Capital Securities.'
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with this Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
PXRE will pay all charges and expenses, other than certain applicable taxes
described below, in connection with the Exchange Offer. See ' -- Fees and
Expenses.'
NEITHER THE BOARD OF DIRECTORS OF PXRE NOR ANY ADMINISTRATOR OR ANY TRUSTEE
OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term 'Expiration Date' means 5:00 p.m., New York City time, on May 29,
1997, unless the Exchange Offer is extended by PXRE and the Trust (in which case
the term 'Expiration Date' shall mean the latest date and time to which the
Exchange Offer is extended).
PXRE and the Trust expressly reserve the right in their sole discretion,
subject to applicable law, at any time and from time to time (i) to delay the
acceptance of the Old Capital Securities for exchange, (ii) to terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) if PXRE and the Trust determine, in their sole
discretion, that any of the events or conditions referred to under
' -- Conditions to the Exchange Offer' have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange Offer and retain
all Old Capital
24
<PAGE>
<PAGE>
Securities tendered pursuant to the Exchange Offer, subject, however, to the
right of holders of Old Capital Securities to withdraw their tendered Old
Capital Securities as described under ' -- Withdrawal Rights,' and (iv) to waive
any condition or otherwise amend the terms of the Exchange Offer in any respect.
If the Exchange Offer is amended in a manner determined by PXRE and the Trust to
constitute a material change, or if PXRE and the Trust waive a material
condition of the Exchange Offer, PXRE and the Trust will promptly disclose such
amendment by means of an amended or supplemented Prospectus that will be
distributed to the registered holders of the Old Capital Securities, and PXRE
and the Trust will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which PXRE and the Trust may choose to make any public
announcement and subject to applicable law, PXRE and the Trust shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to an appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under ' -- Withdrawal Rights')
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a Letter of
Transmittal, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees or (in the
case of a book-entry transfer) an Agent's Message in lieu of the Letter of
Transmittal and (iii) any other documents required by the Letter of Transmittal.
The term 'book-entry confirmation' means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term 'Agent's Message' means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
Participant (as defined herein), which acknowledgment states that such
Participant has received and agrees to be bound by the Letter of Transmittal and
that the Trust and PXRE may enforce such Letter of Transmittal against such
Participant.
Subject to the terms and conditions of the Exchange Offer, PXRE and the
Trust will be deemed to have accepted for exchange, and thereby exchanged, Old
Capital Securities validly tendered and not withdrawn as, if and when the Trust
gives oral or written notice to the Exchange Agent of PXRE's and the Trust's
acceptance of such Old Capital Securities for exchange pursuant to the Exchange
Offer. The Exchange Agent will act as agent for PXRE and the Trust for the
purpose of receiving tenders of Old Capital Securities, Letters of Transmittal
and related documents, and as agent for tendering holders for the purpose of
receiving Old Capital Securities, Letters of Transmittal and related documents
and transmitting New Capital Securities to validly tendering holders. Such
exchange will be made promptly after the Expiration Date. If for any reason
whatsoever, acceptance for exchange or the exchange of any Old Capital
Securities tendered pursuant to the Exchange Offer is delayed (whether before or
after PXRE's and the Trust's acceptance for exchange of Old Capital Securities)
or PXRE and the Trust extend the Exchange Offer or are unable to accept for
exchange or exchange Old Capital Securities tendered pursuant to the Exchange
Offer, then, without prejudice to PXRE's and the Trust's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of PXRE and the Trust
and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Old Capital
Securities and such Old Capital
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Securities may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under ' -- Withdrawal Rights.'
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Old Capital Securities, that the Trust will acquire good,
marketable and unencumbered title to the tendered Old Capital Securities, free
and clear of all liens, restrictions, charges and encumbrances, and the Old
Capital Securities tendered for exchange are not subject to any adverse claims
or proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by PXRE, the Trust or the
Exchange Agent to be necessary or desirable to complete the exchange, sale,
assignment, and transfer of the Old Capital Securities tendered pursuant to the
Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees or (in the case of a book-entry tender) an
Agent's Message in lieu of the Letter of Transmittal and any other required
documents, must be received by the Exchange Agent at its address set forth under
' -- Exchange Agent,' on or prior to the Expiration Date and (i) tendered Old
Capital Securities must be received by the Exchange Agent, or (ii) such Old
Capital Securities must be tendered pursuant to the procedures for book-entry
transfer set forth below and a book-entry confirmation, including an Agent's
Message if the tendering holder has not delivered a Letter of Transmittal, must
be received by the Exchange Agent, in each case on or prior to the Expiration
Date, or (iii) the guaranteed delivery procedures set forth below must be
complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal or so indicate in an Agent's
Message in lieu of the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated. See ' -- Terms of Exchange.'
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a Participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile,
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in lieu of a Letter of Transmittal, and any
other required documents, must in any case be delivered to and received by the
Exchange Agent at its address set forth under ' -- Exchange Agent' on or prior
to the Expiration Date, or the guaranteed delivery procedure set forth below
must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or
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(ii) such registered holder completes the box entitled 'Special Issuance
Instructions' or 'Special Delivery Instructions' in the Letter of Transmittal.
In the case of (i) or (ii) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an 'eligible guarantor institution,' including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an 'Eligible Institution'), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of
Transmittal, is received by the Exchange Agent, as provided
below, on or prior to Expiration Date; and
(iii) the certificates (or book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer,
together, with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof or, in the case of a
book-entry transfer, an Agent's Message in lieu thereof), with
any required signature guarantees and any other documents
required by the Letter of Transmittal are received by the
Exchange Agent within three New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provisions hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of such Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile thereof
or, in the case of a book-entry transfer, an Agent's Message in lieu thereof),
together with any required signature guarantees and any other documents required
by the Letter of Transmittal. Accordingly, the delivery of New Capital
Securities might not be made to all tendering holders at the same time, and will
depend upon when Old Capital Securities, book-entry confirmations with respect
to Old Capital Securities and other required documents are received by the
Exchange Agent.
PXRE's and the Trust's acceptance for exchange of Old Capital Securities
tendered pursuant to any of the procedures described above will constitute a
binding agreement among the tendering holder, PXRE and the Trust upon the terms
and subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by PXRE and the Trust, in
their sole discretion, whose determination shall be final and binding on all
parties. PXRE and the Trust reserve the absolute right, in their sole
discretion, to reject any and all tenders determined by them not to be in proper
form or the acceptance of which, or exchange for, may, in the view of counsel to
PXRE or the Trust, be unlawful. PXRE and the Trust also reserve the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer as set forth under ' -- Conditions to the Exchange Offer' or any condition
or irregularity in any tender of Old Capital
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Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
PXRE's and the Trust's interpretation of the terms and conditions of the
Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. Neither PXRE, the Trust, any affiliates or
assigns of PXRE or the Trust, the Exchange Agent nor any other person shall be
under any duty to give any notification of any irregularities in tenders or
incur any liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and, unless waived by the Trust,
proper evidence satisfactory to PXRE and the Trust, in their sole discretion, of
such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
Based on existing interpretations by the staff of the Commission set forth
in no-action letters to third parties, and subject to the immediately following
sentence, PXRE and the Trust believe that New Securities issued pursuant to the
Exchange Offer in exchange for Old Securities may be offered for resale, resold
and otherwise transferred by a holder thereof without further compliance with
the registration and prospectus delivery requirements of the Securities Act,
provided that such New Securities are acquired in the ordinary course of such
holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Securities. However, any
holder of Old Capital Securities who is an 'affiliate' of either PXRE or the
Trust, a broker-dealer that acquires the Old Capital Securities in a transaction
other than a part of its market-making or other trading activities or other
holder who intends to participate in the Exchange Offer for the purpose of
distributing New Capital Securities (i) will not be able to rely on the
interpretations by the staff of the Commission set forth in the above-mentioned
interpretative letters, (ii) will not be able to tender such Old Capital
Securities in the Exchange Offer, and (iii) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or other transfer of such Old Capital Securities unless such sale is
made pursuant to an exemption from such requirements. Neither PXRE nor the Trust
sought its own no-action letter and there can be no assurance that the staff of
the Commission would make a similar determination with respect to the Exchange
Offer as it has in such no-action letters to third parties.
Each holder of Old Capital Securities (other than a broker-dealer) who
wishes to exchange Old Capital Securities for New Capital Securities in the
Exchange Offer will be required to represent that (i) it is not an 'affiliate'
of PXRE or the Trust, (ii) any New Capital Securities to be received by it are
being acquired in the ordinary course of its business and (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such New Capital Securities. The
Letter of Transmittal contains the foregoing representations. In addition, PXRE
and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to PXRE and the
Trust (or an agent thereof) in writing information as to the number of
'beneficial owners' (within the meaning of Rule 13d-3 under the Exchange Act) on
behalf of whom such holder holds the Old Capital Securities to be exchanged in
the Exchange Offer. Each broker-dealer that receives New Capital Securities
pursuant to the Exchange Offer in exchange for Old Capital Securities acquired
for its own account as a result of market-making activities or other trading
activities (an 'Exchanging Dealer') must acknowledge by execution of the Letter
of Transmittal or, in the case of a book-entry transfer, delivery of an Agent's
Message that it acquired the Old Capital Securities for its own account as the
result of market-making activities or other trading activities and must agree
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection
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with any resale of such New Capital Securities. The Letter of Transmittal states
that by so acknowledging and by delivering a Prospectus, an Exchanging Dealer
will not be deemed to admit that it is an 'underwriter' within the meaning of
the Securities Act. Based on the position taken by the staff of the Commission
in the no-action letters referred to above, PXRE and the Trust believe that
Exchanging Dealers may fulfill their prospectus delivery requirements with
respect to the New Capital Securities received upon exchange of such Old Capital
Securities (other than Old Capital Securities which represent an unsold
allotment from the original sale of the Old Capital Securities) with a
prospectus meeting the requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as it contains a description
of the plan of distribution with respect to the resale of such New Capital
Securities. Subject to certain provisions set forth in the Registration Rights
Agreement and to the limitations set out herein, PXRE and the Trust have agreed
that this Prospectus, as it may be amended or supplemented from time to time,
may be used by an Exchanging Dealer in connection with resales of such New
Capital Securities for a period ending one year after the Expiration Date (or
longer, if required by the Registration Rights Agreement). See 'Plan of
Distribution.' Any person, including any Exchanging Dealer, who is an
'affiliate' of PXRE or the Trust may not rely on such no-action letters and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
In that regard, each Exchanging Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of the Agent's Message in
lieu thereof, that, upon receipt of notice from PXRE or the Trust of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Exchanging Dealer will suspend the sale of New Securities
pursuant to this Prospectus until PXRE or the Trust has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Exchanging Dealer or
PXRE or the Trust has given notice that the sale of the New Securities may be
resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under ' -- Exchange Agent' on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate liquidation amount of Old Capital Securities to be withdrawn, and (if
certificates for such Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Old Capital
Securities, if different from that of the person who tendered such Old Capital
Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the certificate numbers
shown on the particular Old Capital Securities to be withdrawn and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution,
except in the case of Old Capital Securities tendered for the account of an
Eligible Institution. If Old Capital Securities have been tendered pursuant to
the procedures for book-entry transfers set forth in ' -- Procedures for
Tendering Old Capital Securities,' the notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawal of Old
Capital Securities, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written, telegraphic, telex or facsimile
transmission. Withdrawals of tenders of Old Capital Securities may not be
rescinded. Old Capital Securities properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer,
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but may be retendered at any subsequent time on or prior to the Expiration Date
by following any of the procedures described above under ' -- Procedures for
Tendering Old Capital Securities.'
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by PXRE and the Trust, in
their sole discretion, whose determination shall be final and binding on all
parties. Neither PXRE, the Trust, any affiliates or assigns of PXRE or the
Trust, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Capital Securities
which have been tendered but which are withdrawn will be returned to the holder
thereof promptly after withdrawal.
DISTRIBUTIONS ON NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated distributions on such Old Capital
Securities for any period from and after the last Distribution Payment Date with
respect to such Old Capital Securities prior to the original issue date of the
New Capital Securities or, if no such distributions have been made, will not
receive any accumulated distributions on such Old Capital Securities, and will
be deemed to have waived the right to receive any distributions on such Old
Capital Securities accumulated from and after such Distribution Payment Date or,
if no such distributions have been made, from and after January 29, 1997.
CONDITIONS TO EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, PXRE and the Trust will not be required to
accept for exchange, or to exchange, any Old Capital Securities for any New
Capital Securities, and, as described below, may terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any conditions to or amend the Exchange Offer, if any of
the following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an 'affiliate' of
PXRE or the Trust within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Capital Securities are
acquired in the ordinary course of such holders' business and such holders
have no arrangement or understanding with any person to participate in the
distribution of such New Capital Securities;
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in PXRE's and the Trust's judgment, would
reasonably be expected to impair the ability of the Trust or PXRE to
proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in PXRE's and the Trust's judgment, would reasonably be
expected to impair the ability of the Trust or PXRE to proceed with the
Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or New York State authorities which, in PXRE's and the Trust's
judgment, would reasonably be expected to impair the ability of the Trust
or PXRE to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in PXRE's and the
Trust's judgment, would reasonably be expected to impair the ability of the
Trust or PXRE to proceed with the Exchange Offer;
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
PXRE or the Trust, threatened for that purpose or any government
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approval has not been obtained, which approval PXRE and the Trust shall, in
their sole discretion, deem necessary for the consummation of the Exchange
Offer as contemplated hereby; or
(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Trust or PXRE or any of its
subsidiaries has occurred which, in the sole judgment of PXRE and the
Trust, might materially impair the ability of the Trust or PXRE to proceed
with the Exchange Offer.
If PXRE and the Trust determine in their sole discretion that any of the
foregoing events or conditions has occurred or exists or has not been satisfied,
PXRE and the Trust may, subject to applicable law, terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any such condition or otherwise amend the terms of the
Exchange Offer in any respect. If such waiver or amendment constitutes a
material change to the Exchange Offer, PXRE and the Trust will promptly disclose
such waiver by means of an amended or supplemented Prospectus that will be
distributed to the registered holders of the Old Capital Securities, and PXRE
and the Trust will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
EXCHANGE AGENT
First Union National Bank has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
First Union National Bank
of North Carolina
First Union Customer
Information Center
1525 West W.T. Harris Blvd.-3C3
Reorganization Department
Charlotte, North Carolina 28288
Attention: Michael Klotz (6I10)
Telephone: (704) 590-7408
Facsimile: (704) 590-7619
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
PXRE has agreed to pay the Exchange Agent reasonable and customary fees for
its services and will reimburse it for its reasonable and documented
out-of-pocket expenses in connection therewith (including reasonable and
documented fees of counsel incurred in the performance of the Exchange Agent's
duties). PXRE will also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of this Prospectus and related documents to the beneficial owners of Old
Capital Securities, and in handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither PXRE nor the Trust will make any payment to brokers, dealers or
others soliciting acceptance of the Exchange Offer.
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DESCRIPTION OF THE CAPITAL SECURITIES
The Old Capital Securities have been issued and the New Capital Securities
will be issued pursuant to the terms of the Declaration. The Institutional
Trustee, First Union National Bank, is acting as trustee for the Capital
Securities under the Declaration. The Declaration has been qualified under the
Trust Indenture Act. The following summary of the material terms and provisions
of the Capital Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration (a copy of which has
been filed as an Exhibit to PXRE's 1996 Form 10-K which has been incorporated by
reference into the Registration Statement of which this Prospectus is a part),
the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Administrators to issue, on behalf of the
Trust, the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities are currently owned
directly by PXRE. The Common Securities have equivalent terms to and will rank
pari passu, and payments will be made thereon on a pro rata basis, with the
Capital Securities, except that upon the occurrence and during the continuance
of a Declaration Event of Default, the rights of the holders of the Common
Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Capital Securities. The Declaration does not permit the issuance
by the Trust of any securities other than the Trust Securities or the incurrence
of any indebtedness by the Trust. Pursuant to the Declaration, the Institutional
Trustee holds legal title to the Subordinated Debt Securities for the benefit of
the holders of the Trust Securities. The payment of distributions out of money
held by the Trust, and payments upon redemption of the Capital Securities upon
liquidation of the Trust, are guaranteed by PXRE as described under 'Description
of the Guarantee.' The Guarantee is held by First Union National Bank, the
Guarantee Trustee (as defined herein), for the benefit of the holders of the
Capital Securities. The Guarantee does not cover payment of distributions in
respect of the Capital Securities to the extent the Trust does not have
available funds to pay distributions in accordance with the terms of the
Declaration. In such event, the remedy of holders of the Capital Securities
would be, through the vote of holders of a majority in liquidation amount of the
Capital Securities, to direct the Institutional Trustee to enforce the
Institutional Trustee's rights under the Subordinated Debt Securities except in
the circumstances in which a holder of such Capital Securities may take Direct
Action. See ' -- Voting Rights' and ' -- Declaration Events of Default.'
DISTRIBUTIONS
Distributions on the Capital Securities are fixed at a rate per annum of
8.85% of the stated liquidation amount of $1,000 per Capital Security,
compounded semiannually to the extent permitted by law. The term 'distribution'
as used herein includes cash distributions and any such compounded distributions
payable unless otherwise stated. The amount of distributions payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual number of days elapsed per 30-day month.
Distributions on the Capital Securities cumulatively accrue from January
29, 1997, the date of original issuance of the Old Capital Securities, and will
be payable (subject to extensions of distribution payment periods as described
herein) semiannually in arrears on February 1 and August 1 of each year (each, a
'Distribution Payment Date'), commencing August 1, 1997, when, as and if
available for payment. Distributions will be made by the Institutional Trustee,
except as otherwise described below.
PXRE has the right under the Indenture to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment period at any
time and from time to time, subject to the conditions described below, although
such interest will continue to accrue on the Subordinated Debt Securities at a
rate of 8.85% per annum, compounded semiannually to the extent permitted by law
during any Extension Period. If such right is exercised, semiannual
distributions on the Capital Securities will also be deferred (though such
distributions will continue to accrue at the distribution rate of 8.85% per
annum compounded semiannually to the extent permitted by law), during any
Extension
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Period. Such right to extend any interest payment period for the Subordinated
Debt Securities is limited to Extension Periods, each not exceeding 10
consecutive semiannual periods, and no Extension Period may be initiated while
accrued interest from a prior, completed Extension Period is unpaid or while
PXRE is in default on the payment of interest that has become due and payable on
the Subordinated Debt Securities, and no Extension Period may extend beyond the
maturity of the Subordinated Debt Securities. In the event that PXRE exercises
this right, then during any Extension Period (a) PXRE shall not declare or pay
dividends on, make a distribution with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or rights to acquire such capital stock (other than (i) purchases or
acquisitions of shares of any such capital stock or rights to acquire such
capital stock in connection with the satisfaction by PXRE of its obligations
under any employee benefit plans, (ii) as a result of a reclassification of
PXRE's capital stock or rights to acquire such capital stock or the exchange or
conversion of one class or series of PXRE's capital stock or rights to acquire
such capital stock for another class or series of PXRE's capital stock or rights
to acquire such capital stock, (iii) the purchase of fractional interests in
shares of PXRE's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged or (iv)
dividends and distributions made on PXRE's capital stock or rights to acquire
such capital stock, in each case with PXRE's capital stock or rights to acquire
the capital stock), or make guarantee payments (other than payments under the
Guarantee and the Common Securities Guarantee) with respect to the foregoing and
(b) PXRE shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by PXRE that rank
pari passu with or junior to the Subordinated Debt Securities. Prior to the
termination of any such Extension Period, PXRE may further extend the interest
payment period; provided that each such Extension Period, together with all such
previous and further extensions thereof, may not exceed 10 consecutive
semiannual periods or extend beyond the maturity of the Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, PXRE may commence a new Extension Period, subject to the above
requirements. See 'Description of the Subordinated Debt Securities -- Interest
and Special Payments'; ' -- Option to Extend Interest Payment Period' and
' -- Certain Covenants.' If distributions are deferred, the distributions due on
such Capital Securities shall be paid on the date that the related Extension
Period terminates, or, if such date is not a Distribution Payment Date, on the
immediately following Distribution Payment Date, to holders of Capital
Securities as they appear on the books and records of the Trust on the record
date relating to such Distribution Payment Date.
During each Extension Period, if any, each holder of Capital Securities
will continue to accrue OID in respect of the deferred interest allocable to its
Capital Securities for United States federal income tax purposes, which will be
allocated but not distributed. In such event, each holder of Capital Securities
will recognize income for United States federal income tax purposes in advance
of the receipt of cash, and will not receive cash related to such income from
the Trust if such holder disposes of its Capital Securities prior to the record
date for payment of such deferred interest. See 'United States Federal Income
Taxation -- US Holders -- Original Issue Discount.'
Distributions on the Capital Securities must be paid on the dates payable
(after giving effect to any Extension Period) to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
The Trust's funds available for distribution to the holders of the Capital
Securities will be limited to payments received from PXRE on the Subordinated
Debt Securities. See 'Description of the Subordinated Debt Securities.' The
payment of distributions out of moneys held by the Trust is guaranteed by PXRE
to the extent set forth under 'Description of the Guarantee.'
Distributions on the Capital Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Capital Securities are held solely in
book-entry only form, will be one Business Day (as defined below) prior to the
relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the
Subordinated Debt Securities in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under ' -- Book-Entry Only Issuance -- The Depository Trust Company.'
At any time when the Capital Securities are not held solely in book-entry only
form, the Administrators shall select record dates, which shall be 15 days prior
to the relevant
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payment date. In the event that any date on which distributions are to be made
on the Capital Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such payment
date. A 'Business Day' shall mean any day other than Saturday, Sunday or any
other day on which banking institutions in New York City (in the State of New
York), Newark (in the State of New Jersey) or Charlotte (in the State of North
Carolina) are permitted or required by any applicable law to close.
REDEMPTION
The Subordinated Debt Securities will mature on February 1, 2027. As
described in more detail below, the Subordinated Debt Securities may be redeemed
by PXRE in whole or in part, at any time and from time to time, at (i) par, in
the case of a redemption upon the occurrence of a Tax Event, (ii) the Make-Whole
Amount in the case of a redemption upon the occurrence of an Investment Company
Event prior to February 1, 2007, or (iii) the Call Price in the case of a
redemption upon the occurrence of an Investment Company Event on or after
February 1, 2007, in each case together with accrued and unpaid interest thereon
to the date of the redemption.
The Subordinated Debt Securities may be redeemed by PXRE, in whole or in
part, at any time and from time to time on or after February 1, 2007 (an
'Optional Redemption'), at the call prices (expressed as a percentage of the
principal amount) specified below:
<TABLE>
<CAPTION>
IF REDEEMED DURING THE
12-MONTH PERIOD BEGINNING
FEBRUARY 1, CALL PRICE
- ------------------------------------------------------------------------- ----------
<S> <C>
2007............................................................ 104.180%
2008............................................................ 103.762%
2009............................................................ 103.344%
2010............................................................ 102.926%
2011............................................................ 102.508%
2012............................................................ 102.090%
2013............................................................ 101.672%
2014............................................................ 101.254%
2015............................................................ 100.836%
2016............................................................ 100.418%
</TABLE>
and thereafter at 100% of the principal amount (each a 'Call Price'), in each
case together with accrued and unpaid interest thereon to the date of
redemption.
Upon the repayment in full at maturity or redemption in whole or in part of
the Subordinated Debt Securities (other than following the distribution of the
Subordinated Debt Securities to the holders of the Trust Securities), the
proceeds from such repayment or payment shall concurrently be applied to redeem
on a pro rata basis at the applicable Redemption Price, Trust Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Debt Securities so repaid or redeemed; provided, however, that
holders of such Trust Securities shall be given not less than 30 nor more than
60 days' notice of such redemption (other than at the scheduled maturity of the
Subordinated Debt Securities). See 'Description of the Subordinated Debt
Securities -- Redemption.' In the event that fewer than all of the outstanding
Capital Securities are to be redeemed, Capital Securities held in book-entry
form will be redeemed in accordance with the procedures of DTC as described
under ' -- Book-Entry Only Issuance -- The Depository Trust Company.'
TAX EVENT AND INVESTMENT COMPANY EVENT REDEMPTION
As described in more detail below, upon the occurrence of a Tax Event or an
Investment Company Event, PXRE will be entitled, under certain circumstances, to
redeem the Subordinated Debt Securities and cause the redemption of the Trust
Securities.
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'Tax Event' means the receipt by the Administrators of an opinion of a
nationally recognized independent tax counsel to PXRE experienced in such
matters (a 'Dissolution Tax Opinion') to the effect that, as a result of (i) any
amendment to, clarification of or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (ii) any judicial
decision or official administrative pronouncement, ruling, regulatory procedure,
notice or announcement, including any notice or announcement of intent to adopt
such procedures or regulations (an 'Administrative Action') or (iii) any
amendment to, clarification of or change in the administrative position or
interpretation of any Administrative Action or judicial decision that differs
from the theretofore generally accepted position, in each case, by any
legislative body, court, governmental agency or regulatory body, irrespective of
the manner in which such amendment, clarification or change is made known, which
amendment, clarification or change is effective, announced, enacted or
promulgated or such Administrative Action or decision is announced, in each
case, on or after January 24, 1997, there is more than an insubstantial risk
that (a) the Trust is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received on
the Subordinated Debt Securities or subject to more than a de minimis amount of
other taxes, duties or other governmental charges, (b) any portion of interest
payable by PXRE to the Trust on the Subordinated Debt Securities is not, or
within 90 days of the date thereof will not be, deductible by PXRE for United
States federal income tax purposes, or (c) PXRE could become liable to pay, on
the next date on which any amount would be payable with respect to the
Subordinated Debt Securities, any Additional Interest (as defined herein).
If, at any time, a Tax Event should occur and be continuing, PXRE shall
have the right to advance the stated maturity of the Subordinated Debt
Securities to the minimum extent required, but no earlier than August 1, 2016,
such that in the opinion of a nationally recognized independent tax counsel to
PXRE experienced in such matters, after advancing the maturity date, interest
payable by PXRE on the Subordinated Debt Securities will be deductible for
United States federal income tax purposes (the action referred to above being
referred to herein as a 'Tax Event Maturity Advancement'). If, at any time, a
Tax Event should occur and be continuing, and PXRE receives an opinion (a
'Redemption Tax Opinion') of a nationally recognized independent tax counsel to
PXRE experienced in such matters that, as a result of such Tax Event, there is
more than an insubstantial risk that PXRE would be precluded from deducting the
interest on the Subordinated Debt Securities for United States federal income
tax purposes, even if a Tax Event Maturity Advancement were effected, PXRE shall
have the right at any time, within 90 days following the occurrence of such Tax
Event, upon not less than 30 nor more than 60 days' notice, to redeem the
Subordinated Debt Securities, in whole or in part, for cash so long as such Tax
Event is continuing, at par plus any accrued and unpaid interest thereon to the
date of redemption (the 'Tax Event Redemption') and, following such redemption,
Trust Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Subordinated Debt Securities so redeemed shall be
redeemed by the Trust at $1,000 per Trust Security plus any accrued and unpaid
distributions thereon to the date fixed for redemption; provided, however, that
(i) if at the time there is available to PXRE or the Trust the opportunity to
eliminate, within such 90-day period and before any such notice is given, the
adverse effects of the Tax Event by taking some ministerial action, such as
filing a form or making an election or pursuing some other similar reasonable
measure that will have no adverse effect on the Trust, PXRE or the holders of
the Trust Securities and (ii) such notice has not been given, PXRE or the Trust
will pursue such measure in lieu of redemption.
'Investment Company Event' means the receipt by the Administrators of an
opinion of counsel rendered by a law firm having a recognized national
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority ('Change in 1940 Act Law'), there is more than an insubstantial risk
that the Trust is or will be considered an 'investment company' which is
required to be registered under the Investment Company Act of 1940, as amended
(the '1940 Act'), which Change in 1940 Act Law becomes effective or is
announced, enacted or promulgated on or after January 24, 1997.
Upon the occurrence of an Investment Company Event, PXRE shall have the
right within 90 days following the occurrence of such Investment Company Event,
upon not less than 30 nor more than 60 days' notice, to redeem the Subordinated
Debt Securities in whole or in part, for cash, at (i) the Make-
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Whole Amount, in the case of a redemption upon the occurrence of an Investment
Company Event prior to February 1, 2007 or (ii) the Call Price, in the case of a
redemption upon the occurrence of an Investment Company Event on or after
February 1, 2007, in each case together with accrued and unpaid interest thereon
to the date of redemption. Following such redemption, Trust Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Debt Securities so redeemed shall be redeemed by the Trust at the
applicable Redemption Price.
The 'Make-Whole Amount' will be equal to the greater of (i) 100% of the
principal amount of such Subordinated Debt Securities or (ii) as determined by
the Quotation Agent (as defined herein), (a) the sum of the present values of
the principal amount and premium payable as part of the Call Price with respect
to an Optional Redemption of such Subordinated Debt Securities on February 1,
2007, together with the present values of scheduled payments of interest on such
Subordinated Debt Securities from the redemption date to February 1, 2007 (the
'Remaining Life'), in each case discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate (as defined herein) less (b) accrued and unpaid interest
on such Subordinated Debt Securities to the date of redemption.
'Adjusted Treasury Rate' means, with respect to any redemption date, the
Treasury Rate plus 150 basis points if such redemption date occurs before
February 1, 1998 or (ii) 100 basis points if such redemption date occurs on or
after February 1, 1998.
'Treasury Rate' means (i) the yield, under the heading which represents the
average for the week immediately prior to the calculation date, appearing in the
most recently published statistical release designated 'H.15(519)' or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption 'Treasury Constant Maturities,' for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
'Comparable Treasury Issue' means with respect to any redemption date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after February 1, 2007, the two
most closely corresponding United States Treasury securities shall be used as
the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
'Quotation Agent' means Salomon Brothers Inc and its successors; provided,
however, that if the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a 'Primary Treasury Dealer'), PXRE shall
substitute therefor another Primary Treasury Dealer.
'Reference Treasury Dealer' means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debt Trustee after consultation
with PXRE.
'Comparable Treasury Price' means (A) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Debt Trustee
obtains fewer than five such Reference Treasury Dealer Quotations, the average
of all such Quotations.
'Reference Treasury Dealer Quotations' means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Debt Trustee, of the bid and ask prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount)
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<PAGE>
quoted in writing to the Debt Trustee by such Reference Treasury Dealer at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
The rights of PXRE described above if a Tax Event or an Investment Company
Event occurs are in addition to the right of PXRE, as the holder of the Common
Securities, to terminate the Trust and, after satisfaction of liabilities to
creditors of the Trust, cause the Subordinated Debt Securities to be distributed
to holders of the Trust Securities. See ' -- Liquidation Distribution Upon
Dissolution.'
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
such Capital Securities for all semiannual distribution periods terminating on
or prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Capital Securities
(which notice will be irrevocable), then by 12:00 noon, New York City time, on
the redemption date, provided that PXRE has paid to the Institutional Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Subordinated Debt Securities, the Institutional Trustee will irrevocably
deposit with DTC or a successor depositary (the 'Depositary') or its nominee
funds sufficient to pay the applicable Redemption Price and will give the
Depositary irrevocable instructions and authority to pay such Redemption Price
to the holders of such Capital Securities. See ' -- Book-Entry Only
Issuance -- The Depository Trust Company.' With respect to Capital Securities
that are issued in fully registered and certificated form ('Certificated
Securities'), provided that PXRE has paid to the Institutional Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Subordinated Debt Securities, the Institutional Trustee will pay the
applicable Redemption Price to the holders of such Capital Securities by check
mailed to the address of each such holder appearing on the books and records of
the Trust on the redemption date. If notice of redemption shall have been given
and funds deposited as required, then, immediately prior to the close of
business on the date of such deposit, distributions will cease to accrue on the
Capital Securities and all rights of holders of such Capital Securities will
cease, except the right of the holders of such Capital Securities to receive the
applicable Redemption Price but without interest on such Redemption Price. In
the event that any date fixed for redemption of Capital Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (without any interest or
other payment in respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Capital Securities is improperly withheld or refused and not paid
either by the Institutional Trustee or by PXRE pursuant to the Guarantee,
distributions on such Capital Securities will continue to accrue at the then
applicable rate from the original redemption date to the actual date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, Capital Securities will be redeemed on a pro rata basis as
described under ' -- Book-Entry Only Issuance -- The Depository Trust Company.'
In the event of any redemption of Capital Securities in part, the Trust
shall not be required to (i) issue, register the transfer of or exchange any
Certificated Security during a period beginning at the opening of business 15
days before any selection for redemption of Capital Securities and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Capital Securities to
be so redeemed or (ii) register the transfer of or exchange any Certificated
Securities so selected for redemption, in whole or in part, except for the
unredeemed portion of any Certificated Securities being redeemed in part.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), provided that the acquiror is not the
holder of the Common Securities or the obligor under the Subordinated Debt
Securities, PXRE or its subsidiaries may at any time, and from time to time,
purchase outstanding Capital Securities by tender, in the open market or by
private agreement.
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LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a 'Liquidation') other than in
connection with a redemption of the Subordinated Debt Securities as previously
described, the holders of the Capital Securities will be entitled to receive out
of the assets of the Trust, after satisfaction of liabilities to creditors of
the Trust (to the extent not satisfied by PXRE), distributions in an amount
equal to the aggregate of the stated liquidation amount of $1,000 per Capital
Security (as used in this section, the 'Liquidation Amount') plus accrued and
unpaid distributions thereon to the date of payment (the 'Liquidation
Distribution'), unless, in connection with such Liquidation, Subordinated Debt
Securities in an aggregate stated principal amount equal to the aggregate
Liquidation Amount of the Trust Securities have been distributed on a pro rata
basis to the holders of the Trust Securities in exchange for the Trust
Securities. Upon any Liquidation in which the Subordinated Debt Securities are
distributed, if at the time of such Liquidation the Capital Securities are rated
by at least one nationally recognized statistical rating organization, PXRE will
use its best efforts to obtain from at least one nationally recognized
statistical rating organization a rating for the Subordinated Debt Securities.
PXRE, as the holder of all of the Common Securities, has the right at any
time to dissolve the Trust (including, without limitation, upon the occurrence a
Tax Event or an Investment Company Event) and, after satisfaction of liabilities
to creditors of the Trust (to the extent not satisfied by PXRE), cause the
Subordinated Debt Securities to be distributed to the holders of the Trust
Securities on a pro rata basis in accordance with the Liquidation Amount
thereof, in liquidation of the Trust.
Pursuant to the Declaration, the Trust shall terminate and dissolve on the
first to occur of (i) January 21, 2052, the expiration of the term of the Trust,
(ii) the bankruptcy of PXRE or the Trust, (iii) (other than in connection with a
merger, consolidation or similar transaction not prohibited by the Indenture,
the Declaration or the Guarantee, as the case may be) the filing of a
certificate of dissolution or its equivalent with respect to PXRE, upon the
consent of the holders of at least a majority in Liquidation Amount of the Trust
Securities voting together as a single class to file a certificate of
cancellation with respect to the Trust, or upon the revocation of the charter of
PXRE and the expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) the distribution of Subordinated Debt Securities to
the holders of the Trust Securities, upon exercise of the right of the holder of
all of the outstanding Common Securities of the Trust to dissolve the Trust as
described above, (v) the entry of a decree of a judicial dissolution of PXRE or
the Trust, or (vi) the redemption of all of the Trust Securities. Pursuant to
the Declaration, as soon as practicable after the dissolution of the Trust and
upon completion of the winding up of the Trust, the Trust shall terminate upon
the filing of a certificate of cancellation.
If a Liquidation occurs as described in clause (i), (ii), (iii) or (v) of
the preceding paragraph, the Trust shall be liquidated by the Administrators as
expeditiously as such Administrators determine to be possible by distributing,
after satisfaction of liabilities to creditors of the Trust, to the holders of
the Trust Securities, the Subordinated Debt Securities, unless such distribution
is determined by the Administrators not to be practical, in which event such
holders will be entitled to receive out of the assets of the Trust available for
distribution to holders, after satisfaction of liabilities to creditors of the
Trust, an amount equal to the Liquidation Distribution, except in the case of
clause (i) where the Subordinated Debt Securities have been paid in full. An
early Liquidation of the Trust pursuant to clause (iv) above shall occur only if
the Administrators determine that such Liquidation is possible by distributing,
after satisfaction of liabilities to creditors of the Trust, the Subordinated
Debt Securities to the holders of the Trust Securities, and such distribution
occurs.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid on a pro rata basis. The holders
of the Common Securities issued by the Trust will be entitled to receive
distributions upon any such Liquidation pro rata with the holders of such
Capital Securities, except that if a Declaration Event of Default has occurred
and is continuing in respect of the Trust, the Capital Securities shall have a
preference over the Common Securities with regard to such distributions.
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After the date for any distribution of Subordinated Debt Securities upon
dissolution of the Trust, (i) the Trust Securities will be deemed to be no
longer outstanding, (ii) the Depositary or its nominee, as the record holder of
the Capital Securities issued in book-entry form, will receive a registered
Global Certificate (as defined herein) or certificates representing the
Subordinated Debt Securities to be delivered upon such distribution, and (iii)
any certificates representing Capital Securities not held by the Depositary or
its nominee will be deemed to represent undivided beneficial interests in
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate stated liquidation amount of such Capital Securities until such
certificates are presented to PXRE or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Capital
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase, whether pursuant to the offering made hereby or in the secondary
market, or the Subordinated Debt Securities that an investor may receive if a
dissolution and liquidation of the Trust were to occur, may trade at a discount
to the price paid to purchase the Capital Securities offered hereby.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture in respect of the Subordinated Debt
Securities (an 'Indenture Event of Default') constitutes an event of default
under the Declaration with respect to the Trust Securities (each a 'Declaration
Event of Default'); provided that pursuant to the Declaration, the holder of the
Common Securities will be deemed to have waived any Declaration Event of Default
with respect to such Common Securities until all Declaration Events of Default
with respect to the Capital Securities have been cured, waived or otherwise
eliminated. Until such Declaration Events of Default have been so cured, waived,
or otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Capital Securities and only the holders
of such Capital Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture. The holders of a majority in liquidation amount of the Capital
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the Institutional
Trustee to exercise the remedies available to it as holder of the Subordinated
Debt Securities. Under certain circumstances, the Institutional Trustee may
decline to follow any such direction if the Institutional Trustee determines
that the action so directed would be unjustly prejudicial to holders not taking
part in such direction or would be unlawful or would involve the Institutional
Trustee in personal liability. Such remedies are subject to limitations under
the subordination provisions of the Indenture. If the Institutional Trustee
fails to enforce its rights under the Subordinated Debt Securities after the
holders of a majority in liquidation amount of the Capital Securities have so
directed the Institutional Trustee, to the fullest extent permitted by law, a
holder of record of such Capital Securities may institute a legal proceeding
against PXRE to enforce the Institutional Trustee's rights under the
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. Notwithstanding
the foregoing, but subject to the subordination provisions of the Indenture, if
a Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of PXRE to pay interest or principal (or premium, if
any) on the Subordinated Debt Securities on the respective dates such interest
or principal (or premium, if any) is payable, as deferred, if applicable (or in
the case of redemption, the redemption date), then a holder of record of such
Capital Securities may institute a Direct Action against PXRE for payment, on or
after the respective due dates specified in the Subordinated Debt Securities, to
such holder directly of the principal of (or premium, if any) or interest on
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder. In
connection with such Direct Action, PXRE will be subrogated to the rights of
such holder of Capital Securities under the Declaration to the extent of any
payment made by PXRE to such holder of Capital Securities in such Direct Action;
provided, however, that no such subrogation right may be exercised so long as a
Declaration Event of Default has occurred and is continuing. The holders of
Capital Securities
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will not be able to exercise directly any other remedy available to the holders
of the Subordinated Debt Securities.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee, so long as it is the sole holder of the Subordinated Debt Securities,
will have the right under the Indenture to declare the principal of (or premium,
if any) and interest on the Subordinated Debt Securities to be immediately due
and payable, subject to the subordination provisions of the Indenture, which
limit the ability of the Subordinated Debt Securities to be accelerated and the
ability to pursue remedies against PXRE (see 'Description of the Subordinated
Debt Securities -- Subordination'). PXRE and the Trust are each required to file
annually with the Institutional Trustee an officer's certificate as to its
compliance with all conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described below, under the Trust Act and under ' -- Removal of
Issuer Trustees; Appointment of Successors' and 'Description of the
Guarantee -- Modification of the Guarantee; Assignment,' and as otherwise
required by law and the Declaration, the holders of the Capital Securities will
have no voting rights.
Subject to the requirements set forth in this paragraph, the holders of a
majority in aggregate liquidation amount of the Capital Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any trust or power
conferred upon such Institutional Trustee under the Declaration, including the
right to direct such Institutional Trustee, as holder of the Subordinated Debt
Securities, to (i) exercise the remedies available to it under the Indenture as
a holder of the Subordinated Debt Securities, (ii) waive any past default that
is waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debt Securities shall be
due and payable or (iv) consent on behalf of all the holders of the Capital
Securities to any amendment, modification or termination of the Indenture or the
Subordinated Debt Securities where such consent shall be required; provided,
however, that where a consent or action under the Indenture would require the
consent or act of holders of more than a majority in principal amount of the
Subordinated Debt Securities (a 'Super-Majority') affected thereby, the
Institutional Trustee may only give such consent or take such action at the
written direction of the holders of at least the proportion in aggregate
liquidation amount of the Capital Securities outstanding which the relevant
Super-Majority represents of the aggregate principal amount of the Subordinated
Debt Securities outstanding. If the Institutional Trustee fails to enforce its
rights under the Subordinated Debt Securities after the holders of a majority in
liquidation amount of such Capital Securities (or Super-Majority, as the case
may be) have so directed the Institutional Trustee, to the extent permitted by
law, a holder of record of the Capital Securities may institute a legal
proceeding directly against PXRE to enforce the Institutional Trustee's rights
under the Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity
(subject to limitations on the ability to pursue remedies set forth in the
subordination provisions of the Indenture). Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of PXRE to pay interest or principal (or premium, if
any) on the Subordinated Debt Securities on the respective dates such interest
or principal (or premium, if any) is payable, as deferred, if applicable, (or in
the case of redemption, the redemption date), then a holder of record of Capital
Securities may directly institute a Direct Action against PXRE for payment, on
or after the respective due dates specified in the Subordinated Debt Securities,
to such holder directly of the principal of (or premium, if any) or interest on
the Subordinated Debt Securities having an aggregate principal amount equal to
the aggregate liquidation amount of the Capital Securities of such holder. The
Institutional Trustee shall notify all holders of the Capital Securities of any
default actually known to the Institutional Trustee with respect to the
Subordinated Debt Securities unless (x) such default has been cured prior to the
giving of such notice or (y) the Institutional Trustee determines in good faith
that the withholding of such notice is in the interest of the holders of such
Capital Securities, except where the default relates to the payment of interest
or principal of (or premium, if any) on any of the Subordinated Debt Securities.
Such notice shall state that such Indenture Event of Default also constitutes a
Declaration Event of Default. Except
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with respect to directing the time, method and place of conducting a proceeding
for a remedy, the Institutional Trustee shall not take any of the actions
described in clauses (i), (ii) or (iii) above unless the Institutional Trustee
has obtained an opinion of tax counsel to the effect that, as a result of such
action, the Trust will not be classified as other than a grantor trust for
United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Subordinated Debt Securities, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, such Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of such Trust Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of such Trust Securities outstanding which the relevant
Super-Majority represents of the aggregate principal amount of the Subordinated
Debt Securities outstanding. The Institutional Trustee shall not take any such
action in accordance with the directions of the holders of such Trust Securities
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities may be
given at a separate meeting of such holders convened for such purpose, at a
meeting of the holders of Trust Securities or pursuant to written consent. The
Administrators will cause a notice of any meeting at which holders of Capital
Securities are entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be mailed to each holder of record of
the Capital Securities. Each such notice will include a statement setting forth
the following information: (i) the date of such meeting or the date by which
such action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Capital
Securities will be required for the Trust to redeem and cancel the Capital
Securities or distribute the Subordinated Debt Securities in accordance with the
Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned at such time by PXRE or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, PXRE, shall not entitle the holders thereof to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Capital
Securities were not outstanding.
The procedures by which holders of Capital Securities issued in book-entry
form may exercise their voting rights are described below. See ' -- Book-Entry
Only Issuance -- The Depository Trust Company' below.
Holders of the Capital Securities will have no right to appoint or remove
the Administrators, who may be appointed, removed or replaced solely by PXRE as
the holder of all of the Common Securities of the Trust.
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
Unless an Indenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holders of a majority in
liquidation amount of the Common Securities and its successor appointed by the
holders of a majority in liquidation amount of the Common Securities. If an
Indenture Event of Default has occurred and is continuing, an Issuer Trustee may
be removed and its successor appointed by the holders of at least a majority in
liquidation amount of Capital Securities. If an Issuer Trustee is removed by the
holders of a majority in liquidation amount of Capital Securities, the successor
may be appointed by the holders of at least 25% in liquidation amount of Capital
Securities. If a successor has not been appointed by the holders, any holder of
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Capital Securities or Common Securities may petition any court of competent
jurisdiction to appoint a successor. No resignation or removal of an Issuer
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
MODIFICATION OF THE DECLARATION
The Declaration may be amended without the consent of the holders of the
Trust Securities to: (i) cure any ambiguity; (ii) correct or supplement any
provision in such Declaration that may be defective or inconsistent with any
other provision of such Declaration; (iii) add to the covenants, restrictions or
obligations of PXRE; (iv) modify, eliminate or add to any provision of the
Declaration to such an extent as may be necessary to ensure that the Trust will
be classified for United States federal income tax purposes at all times as a
grantor trust and will not be required to register as an 'investment company'
under the 1940 Act; and (v) modify, eliminate and add to any provision of such
Declaration, provided that no such modification, elimination or addition shall
adversely affect the powers, preferences or special rights of the holders of
such Trust Securities.
In addition, the Declaration may be modified and amended if approved by the
Institutional Trustee (and in certain circumstances the Delaware Trustee),
provided that, if any proposed amendment provides for, or the Institutional
Trustee otherwise proposes to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Trust Securities, whether by
way of amendment to the Declaration or otherwise or (ii) the Liquidation of the
Trust other than pursuant to the terms of the Declaration, then the holders of
the Trust Securities voting together as a single class will be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the holders of at least a majority in
liquidation amount of the Trust Securities affected thereby; provided that if
any amendment or proposal referred to in clause (i) above would adversely affect
only the Capital Securities or only the Common Securities, then only the
affected class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of a
majority in liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust or (ii) cause the Trust to be deemed an 'investment
company' which is required to be registered under the 1940 Act or (iii) reduce
or otherwise adversely affect the powers of the Institutional Trustee in
contravention of the Trust Indenture Act.
Notwithstanding any provision of the Declaration, the provisions of Section
316(b) of the Trust Indenture Act incorporated by reference into the Declaration
provides that the right of any holder of Capital Securities to receive payments
of distributions and other payments upon redemption or otherwise on or after
their respective due dates, or to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such holder.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Trust may, with the consent of the Administrators and
without the consent of the Delaware Trustee, the Institutional Trustee or the
holders of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by, a trust organized as such under the laws of any State of the
United States; provided that (i) if the Trust is not the survivor, such
successor entity either (x) expressly assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust Securities
other securities having substantially the same terms as the Trust Securities
(the 'Successor Securities'), so that the Successor Securities rank the same as
the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise,
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(ii) a trustee of such successor entity possessing the same powers and duties as
the Institutional Trustee is appointed as the holder of the Subordinated Debt
Securities, (iii) the Capital Securities or any Successor Securities are listed,
or any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which such Capital
Securities are then listed or quoted, if any, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Capital Securities (including any
Successor Securities) to be downgraded by any nationally recognized statistical
rating organization, (v) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of the holders
of such Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in
such successor entity), (vi) such successor entity has a purpose substantially
identical to that of the Trust, (vii) prior to such merger, consolidation,
amalgamation or replacement, the Administrators have received an opinion of a
nationally recognized independent counsel to the Trust experienced in such
matters to the effect that (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in such successor entity), (B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (C)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be classified as other than a grantor trust
for United States federal income tax purposes, and (viii) PXRE or its successor
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. The Administrators
shall have furnished the Delaware Trustee at least five Business Days prior
written notice of such merger, consolidation, amalgamation or replacement;
provided that failure to provide such notice shall not affect the validity of
any such transaction. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it, if such consolidation, amalgamation, merger or
replacement would cause the Trust or the successor entity to be classified as
other than a grantor trust for United States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC is acting as securities depository for the Capital Securities. The
description of book-entry procedures in this Prospectus includes summaries of
certain rules and operating procedures of DTC that affect transfers of interests
in the global certificate or certificates issued in connection with sales of
Capital Securities. Except as described in the next paragraph, the Capital
Securities will be issued only as fully registered securities registered in the
name of Cede & Co. (as nominee for DTC). One or more fully registered global
Capital Security certificates (the 'Global Certificates') will be issued,
representing, in the aggregate, the New Capital Securities and will be deposited
with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Capital
Securities as represented by a Global Certificate.
DTC has advised PXRE and the Trust that it is a limited-purpose trust
company organized under the New York Banking Law, a 'banking organization'
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a 'clearing corporation' within the meaning of the New York Uniform
Commercial Code and a 'clearing agency' registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC holds securities that its participants
('Participants') deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Participants in DTC include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ('Direct Participants'). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange Inc., the American Stock
Exchange, Inc., and
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the National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others, such as securities brokers and dealers, banks and
trust companies that clear transactions through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ('Indirect
Participants'). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Capital Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
each Capital Security ('Beneficial Owner') is, in turn, to be recorded on the
Direct Participants' and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased Capital
Securities. Transfers of ownership interests in the Capital Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Capital Securities, except in the event that
use of the book-entry system for the Capital Securities is discontinued.
To facilitate subsequent transfers, all the Capital Securities deposited by
Participants with DTC will be registered in the name of DTC's nominee, Cede &
Co. The deposit of Capital Securities with DTC and their registration in the
name of Cede & Co. will effect no change in beneficial ownership. DTC will have
no knowledge of the actual Beneficial Owners of the Capital Securities. DTC's
records will reflect only the identity of the Direct Participants to whose
accounts such Capital Securities are credited, which may or may not be the
Beneficial Owners. The Direct Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate in respect of the Capital Securities, DTC or such nominee, as
the case may be, will be considered the sole owner or holder of the Capital
Securities represented thereby for all purposes under the Declaration and such
Capital Securities. No Beneficial Owner of an interest in a Global Certificate
will be able to transfer that interest except in accordance with DTC's
applicable procedures.
DTC has advised PXRE that it will take any action permitted to be taken by
a holder of Capital Securities (including the presentation of Capital Securities
for exchange as described below) only at the direction of one or more
Participants to whose accounts the DTC interests in the Global Certificates are
credited and only in respect of such portion of the aggregate liquidation amount
of Capital Securities as to which such Participant or Participants has or have
given such direction. However, if there is a Declaration Event of Default with
respect to the Capital Securities, DTC will, upon notice, exchange the Global
Certificates in respect of such Capital Securities for Certificated Securities,
which it will distribute to its Participants.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices in respect of the Capital Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Capital Securities are
being redeemed, the Capital Securities will be redeemed on a pro rata basis.
Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to the Capital Securities. Under its usual procedures, DTC
would mail an omnibus proxy to the Trust as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Capital Securities are credited
on the record date (identified in a listing attached to the omnibus proxy).
Distributions on the Capital Securities held in book-entry form will be
made to DTC in immediately available funds. DTC's practice is to credit Direct
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Direct
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Participants and Indirect Participants to Beneficial Owners will be governed by
standing instructions and customary practices and will be the responsibility of
such Direct Participants and Indirect Participants and not of DTC, the Trust or
PXRE, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC, the Direct Participants and the Indirect Participants to exercise any
rights under the Capital Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. None of PXRE, the Trust or the
Issuer Trustees will have any responsibility for the performance by DTC or its
Direct Participants or Indirect Participants under the rules and procedures
governing DTC. DTC may discontinue providing its services as a securities
depositary with respect to the Capital Securities at any time by giving notice
to the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Capital Security certificates will be required to be
printed and delivered. Additionally, the Trust (with the consent of PXRE) may
decide to discontinue use of the system of book-entry transfers through DTC (or
a successor depositary) with respect to the Capital Securities of the Trust. In
that event, certificates for such Capital Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that PXRE and the Trust believe to be reliable,
but neither PXRE nor the Trust takes responsibility for the accuracy thereof.
RESTRICTIONS ON TRANSFER
The Old Capital Securities have been issued and may be transferred only in
blocks having a stated liquidation amount of not less than $100,000 (100 Capital
Securities). Any such transfer of Capital Securities in a block having a stated
liquidation amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Old Capital Securities for any purpose, including but not limited
to, the receipt of distributions on such Old Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Old Capital
Securities. The New Capital Securities will not be so restricted.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution payment dates or, in the case of Certificated
Securities in non-book entry form, such payments shall be made by check mailed
to the address of the holder entitled thereto as such address shall appear on
the books and records of the Trust. The paying agent for the Trust Securities
(the 'Paying Agent') shall initially be First Union National Bank. The Paying
Agent shall be permitted to resign as Paying Agent upon 30 days' written notice
to the Institutional Trustee. In the event that First Union National Bank shall
no longer be the Paying Agent, the Institutional Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The Institutional Trustee will act as registrar, transfer agent and Paying
Agent for the Capital Securities of the Trust.
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Registration of transfers or exchanges of Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment (with the
giving of such indemnity as the Trust or PXRE may require) in respect of any tax
or other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer or exchange of Capital Securities after such Capital Securities have
been called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise such of the rights
and powers vested in it by such Declaration, and use the same degree of care and
skill in their exercise, as a prudent individual would exercise or use in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Capital Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Institutional Trustee also serves as
trustee under the Guarantee and the Indenture.
Whenever in the exercise of its rights or powers or the performance of its
duties under the Declaration the Institutional Trustee shall deem it desirable
to receive instructions with respect to enforcing any remedy or right or taking
any other action thereunder, the Institutional Trustee (i) may request
instructions from the holders of the Capital Securities, which instructions may
only be given by the holders of a majority, or such other proportion, in
liquidation amount of the Capital Securities as would be entitled to direct the
Institutional Trustee under the terms of such Capital Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting on or in
accordance with such instructions.
PXRE and certain of its affiliates in the ordinary course of their business
maintain banking relationships with the Institutional Trustee and certain of its
affiliates.
GOVERNING LAW
The Declaration and the Capital Securities are governed by, and construed
in accordance with, the laws of the State of Delaware, without regard to
principles of conflict of laws.
MISCELLANEOUS
The Administrators and the Institutional Trustee are authorized and
directed to operate the Trust in such a way so that the Trust will not be
required to register as an 'investment company' under the 1940 Act nor be
characterized as other than a grantor trust for United States federal income tax
purposes. PXRE has agreed to conduct its affairs so that the Subordinated Debt
Securities will be treated as indebtedness of PXRE for United States federal
income tax purposes. In this connection, the Institutional Trustee and PXRE are
authorized to take any action, not inconsistent with applicable law, the Amended
and Restated Certificate of Incorporation of PXRE, as the same may be amended
and/or restated from time to time, or the Declaration, that the Institutional
Trustee and PXRE determine in their discretion to be necessary or desirable to
achieve such end, as long as such action does not adversely affect the interests
of the holders of the Capital Securities in any material respect.
Holders of the Capital Securities have no preemptive rights.
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DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
has been executed and delivered by PXRE for the benefit of the holders from time
to time of the Capital Securities. First Union National Bank is acting as
Guarantee Trustee under the Guarantee. The New Guarantee has been qualified
under the Trust Indenture Act. This summary of the material terms of the
Guarantee does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Guarantee
(a copy of which has been filed as an exhibit to PXRE's 1996 Form 10-K which has
been incorporated by reference into the Registration Statement of which this
Prospectus is a part). The Guarantee will be held by the Guarantee Trustee for
the benefit of the holders of the Capital Securities of the Trust.
GENERAL
Pursuant to the Guarantee, PXRE has irrevocably and unconditionally agreed,
to the extent set forth therein, to pay in full, to the holders of the Capital
Securities, the Guarantee Payments (as defined herein) (except to the extent
paid by the Trust), as and when due, regardless of any defense, right of set-off
or counterclaim which the Trust may have or assert. The following payments with
respect to Capital Securities, to the extent not paid by the Trust (the
'Guarantee Payments'), are subject to the Guarantee (without duplication): (i)
any accrued and unpaid distributions which are required to be paid on Capital
Securities, to the extent the Trust shall have funds available therefor in
accordance with the terms of the Declaration; (ii) the Redemption Price, to the
extent the Trust has funds available therefor in accordance with the terms of
the Declaration, with respect to any Capital Securities called for redemption by
the Trust and (iii) upon Liquidation of the Trust (other than in connection with
the distribution of Subordinated Debt Securities to the holders of Capital
Securities in exchange therefor), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on such Capital
Securities to the date of payment, to the extent the Trust has funds available
therefor in accordance with the terms of the Declaration, and (b) the amount of
assets of the Trust remaining available for distribution to holders of such
Capital Securities in liquidation of the Trust. PXRE's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
PXRE to the holders of Capital Securities or by causing the Trust to pay such
amounts to such holders.
The Guarantee does not apply to any payment or distributions except to the
extent the Trust shall have funds available therefor in accordance with the
terms of the Declaration, which funds will not be available except to the extent
PXRE has made payments of interest (or premium, if any) or principal or other
payments on the Subordinated Debt Securities purchased by the Trust. See
'Description of the Subordinated Debt Securities -- Certain Covenants.' The
Guarantee, when taken together with PXRE's obligations under the Subordinated
Debt Securities, the Declaration and the Indenture, including its obligations to
pay costs, expenses, debts and liabilities of the Trust (other than with respect
to the Trust Securities), provides a full and unconditional guarantee on a
subordinated basis by PXRE of payments due on the Capital Securities.
Because the Guarantee is a guarantee of payment and not of collection,
holders of the Capital Securities may proceed directly against PXRE (subject to
certain limitations as a result of subordination, as described below), rather
than having to proceed against the Trust before attempting to collect from PXRE,
and PXRE waives any right or remedy to require that any action be brought
against the Trust or any other person or entity before proceeding against PXRE.
Such obligations will not be discharged except by payment of the Guarantee
Payments in full. The Guarantee has been deposited with the Guarantee Trustee to
be held for the benefit of the holders of Capital Securities. Except as
otherwise noted herein, the Guarantee Trustee has the right to enforce the
Guarantee on behalf of the holders of the Capital Securities.
PXRE has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to Common Securities (the
'Common Securities Guarantee') to the same extent as the Guarantee, except that
upon the occurrence and continuance of a Declaration Event of Default, holders
of Capital Securities shall have priority over holders of Common Securities with
respect to any
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payments made by PXRE on or in respect of the Trust Securities under the
Guarantee and the Common Securities Guarantee.
CERTAIN COVENANTS OF PXRE UNDER THE GUARANTEE
In the Guarantee, PXRE covenants that, so long as any Capital Securities
remain outstanding, if PXRE shall be in default under the Guarantee or there
shall have occurred and be continuing any event that would constitute a
Declaration Event of Default or if an Extension Period is in effect, then (a)
PXRE shall not declare or pay any dividend on, make a distribution with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
PXRE's capital stock or rights to acquire such capital stock (other than (i)
purchases or acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by PXRE of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of PXRE's capital stock or rights to acquire such capital stock
or the exchange or conversion of one class or series of PXRE's capital stock or
rights to acquire such capital stock for another class or series of PXRE's
capital stock or rights to acquire such capital stock, (iii) the purchase of
fractional interests in shares of PXRE's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged or (iv) dividends and distributions made on PXRE's
capital stock or rights to acquire such capital stock, in each case with PXRE's
capital stock or rights to acquire such capital stock), or make any guarantee
payments (other than payments under the Guarantee and the Common Securities
Guarantee) with respect to the foregoing) and (b) PXRE shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by PXRE that rank pari passu with or junior to
the Subordinated Debt Securities. The Guarantee will be subject to the same
subordination provisions as are applicable to the Subordinated Debt Securities,
including the limitations on the ability to pursue remedies against PXRE in the
event there has been a default on Senior Indebtedness. See 'Description of
Subordinated Debt Securities -- Subordination.'
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Capital Securities in any material respect (in which case no vote
of such holders will be required), the Guarantee may be amended only with the
prior approval of the holders of not less than a majority in liquidation amount
of the outstanding Capital Securities. All guarantees and agreements contained
in the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of PXRE and shall inure to the benefit of the holders of the
Capital Securities then outstanding.
TERMINATION
The Guarantee will terminate as to the Capital Securities (a) upon full
payment of the Redemption Price of all Capital Securities, (b) upon distribution
of the Subordinated Debt Securities to the holders of the Capital Securities or
(c) upon full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Trust. The Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of Capital
Securities must restore payment of any sums paid under such Capital Securities
or Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of PXRE
to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of the Guarantee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. Under certain circumstances, the Guarantee Trustee
may decline to follow any such direction if the Guarantee Trustee determines
that the action so directed would be unjustly prejudicial to holders not taking
part in such direction or would be unlawful or would involve the Guarantee
Trustee in personal liability. A holder of record of the Capital Securities may
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institute a legal proceeding directly against PXRE to enforce the Guarantee
Trustee's rights under the Guarantee, without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. Pursuant to the Guarantee, PXRE waives any right or remedy to require
that any action be brought first against the Trust or any other person or entity
before proceeding directly against PXRE.
STATUS OF THE GUARANTEE
PXRE's obligations under the Guarantee are subordinate and junior in right
of payment to all present and future Senior Indebtedness of PXRE, rank pari
passu with the obligations to or rights of PXRE's other general unsecured
creditors and are also effectively subordinated to claims of creditors of PXRE's
subsidiaries. The terms of the Capital Securities provide that each holder of
Capital Securities by acceptance thereof agrees to the subordination provisions
and other terms of the Guarantee relating thereto, including certain limitations
on the ability to pursue remedies set forth in the subordination provisions of
the Guarantee. Because PXRE is a holding company, the right of PXRE to
participate in any distribution of assets of any of its subsidiaries upon such
subsidiary's liquidation or reorganization or otherwise is subject to the prior
claims of creditors of that subsidiary, except to the extent PXRE may itself be
recognized as a creditor of that subsidiary. Accordingly, PXRE's obligations
under the Guarantee will be effectively subordinated to all existing and future
liabilities of PXRE's subsidiaries, and claimants should look only to the assets
of PXRE for payments thereunder. The Guarantee does not limit the incurrence or
issuance of other secured or unsecured debt of PXRE, including Senior
Indebtedness of PXRE, under any indenture that PXRE may enter into in the future
or otherwise.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in such Guarantee and, after default, shall exercise such of the rights
and powers vested in it by such Guarantee, and use the same degree of care and
skill in their exercise, as a prudent individual would exercise or use in the
conduct of his or her own affairs. Subject to such provisions, the Trustee is
under no obligation to exercise any of the powers vested in it by the Guarantee
at the request of any holder of Capital Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
PXRE and certain of its affiliates in the ordinary course of their business
maintain banking relationships with the Guarantee Trustee and certain of its
affiliates.
GOVERNING LAW
The Guarantee is governed by and construed in accordance with the laws of
the State of New York, without regard to conflict of laws principles.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
The Old Subordinated Debt Securities were issued, and the New Subordinated
Debt Securities will be issued, as a separate series under the Indenture. The
Indenture has been qualified under the Trust Indenture Act. Set forth below is a
description of the principal terms of the Subordinated Debt Securities. The
following description does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the description in the Indenture,
dated as of January 29, 1997 (the 'Base Indenture'), between PXRE and First
Union National Bank, as trustee (the 'Debt Trustee'), as supplemented by a First
Supplemental Indenture dated as of January 29, 1997 (the Base Indenture, as so
supplemented, is herein referred to as the 'Indenture'). Certain capitalized
terms used herein are defined in the Indenture. This summary of the material
terms of the Indenture does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference to,
the Indenture (a copy of which has been filed as an exhibit to PXRE's 1996 Form
10-K which has been incorporated by reference into the Registration Statement of
which this Prospectus is a part) and those terms made a part of the Indenture by
the Trust Indenture Act.
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In certain circumstances, Subordinated Debt Securities may be distributed
to the holders of the Trust Securities in liquidation of the Trust. See
'Description of the Capital Securities -- Liquidation Distribution Upon
Dissolution.'
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by PXRE for
the Common Securities, in the Old Subordinated Debt Securities issued by PXRE.
The Old Subordinated Debt Securities were, and the New Subordinated Debt
Securities exchanged for the Old Subordinated Debt Securities under the Exchange
Offer will be, issued as unsecured debt under the Indenture. Subordinated Debt
Securities will be limited to an amount equal to the sum of the aggregate stated
liquidation amounts of the Trust Securities.
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities will
mature and become due and payable, together with any accrued and unpaid interest
thereon, including Compounded Interest (as defined herein) and Additional
Interest, if any, on February 1, 2027.
If the Subordinated Debt Securities are distributed to holders of Capital
Securities in liquidation of such holders' interests in the Trust, the
Subordinated Debt Securities will, with respect to Capital Securities held in
book-entry only form, initially be issued as a Global Security (as defined
herein) having an aggregate principal amount equal to the liquidation amount of
such Capital Securities and, with respect to such Capital Securities held in
certificated non-book entry form, will initially be deemed to be represented by
such certificates and to have an aggregate principal amount equal to the
liquidation amount of such Capital Securities. As described herein, under
certain limited circumstances, Subordinated Debt Securities may be issued in
certificated non-book entry form in exchange for a Global Security. See
' -- Book-Entry Issuance and Settlement' below. Subordinated Debt Securities
deemed to be represented by a Capital Security certificate will be issued in
certificated form upon presentation for transfer or reissuance. Payments on
Subordinated Debt Securities issued as a Global Security will be made to DTC, a
successor depositary or, in the event that no depositary is used, to a paying
agent for the Subordinated Debt Securities. In the event Subordinated Debt
Securities are issued in certificated non-book entry form, interest and
principal (and premium, if any) will be payable, the transfer of the
Subordinated Debt Securities will be registrable and Subordinated Debt
Securities will be exchangeable for Subordinated Debt Securities of other
denominations of a like aggregate principal amount at the corporate trust office
of the Debt Trustee in New York, New York, or as otherwise designated; provided
that payment of interest may be made, at the option of PXRE, by check mailed to
the address of the holder entitled thereto or by wire transfer to an account
appropriately designated by the holder entitled thereto. Notwithstanding the
foregoing, so long as the holder of any Subordinated Debt Securities is the
Institutional Trustee, the payment of interest and principal (and premium, if
any) on the Subordinated Debt Securities held by the Institutional Trustee will
be made at such place and to such account as may be designated by the
Institutional Trustee.
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction or other similar transaction involving PXRE that may adversely
affect such holders.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all present and future Senior
Indebtedness of PXRE. No payment of principal (including redemption payments),
premium, if any, or interest on the Subordinated Debt Securities may be made (in
cash, property, securities, by set-off or otherwise) if (i) any Senior
Indebtedness of PXRE is not paid when due and any applicable grace period with
respect to a payment default under such Senior Indebtedness has ended and such
default has not been cured or waived or ceased to exist or (ii) a default has
occurred with respect to Senior Indebtedness which entitles the holder thereof
to accelerate such Senior Indebtedness and such default has not been cured or
waived or ceased to exist or (iii) the
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maturity of any Senior Indebtedness of PXRE has been accelerated because of a
default. Upon any distribution of assets of PXRE to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all principal, premium, if any, and interest due or to become due on all Senior
Indebtedness of PXRE must be paid in full before the holders of Subordinated
Debt Securities are entitled to receive or retain any payment. Upon satisfaction
of all claims of all Senior Indebtedness then outstanding, the rights of the
holders of the Subordinated Debt Securities will be subrogated to the rights of
the holders of Senior Indebtedness of PXRE to receive payments or distributions
applicable to Senior Indebtedness until all amounts owing on the Subordinated
Debt Securities are paid in full. The Indenture also provides that upon the
occurrence and during the continuance of a payment default or a covenant default
with respect to Senior Indebtedness, the Institutional Trustee and holders of
the Subordinated Debt Securities may not accelerate the maturity of the
Subordinated Debt Securities or initiate any judicial action to seek or enforce
collection of any amounts owed under the Subordinated Debt Securities (including
a filing of a petition for relief under bankruptcy laws) until the earliest to
occur of (a) any insolvency, bankruptcy, dissolution, liquidation or similar
proceeding of PXRE, (b) the acceleration of the maturity of any Senior
Indebtedness or the initiation of judicial proceedings by holders of Senior
Indebtedness to collect any Senior Indebtedness, and (c) the expiration of five
business days following delivery of notice to PXRE of an intent to accelerate or
pursue remedies, as the case may be, if payments with respect to the
Subordinated Debt Securities have been restricted by the subordination
provisions of the Indenture for more than 240 days in the immediately preceding
365-day period.
The term 'Senior Indebtedness' means, with respect to PXRE (except any
other obligations which by their express terms specifically rank pari passu with
or junior to the Subordinated Debt Securities), (i) all obligations of PXRE
(including, without limitation, with respect to interest, principal and premium,
if any) under the 9 3/4% Senior Notes due 2003, issued under an Indenture dated
as of August 31, 1993 between PXRE and the State Street Bank and Trust Company,
as successor trustee, and any Refinancing thereof (as such term 'Refinancing' is
defined in such indenture), including, without limitation, interest that accrues
on or after, or which would accrue but for, the filing of a petition in
bankruptcy or for reorganization, whether or not a claim for post-petition
interest is allowed in such proceeding ('Post-Petition Interest'), (ii) all
obligations of PXRE (including, without limitation, with respect to interest,
principal (and premium, if any), and including any Post-Petition Interest in
respect thereof) in respect of (A) indebtedness of PXRE for money borrowed, and
(B) indebtedness evidenced by securities, debentures, notes, bonds or other
similar instruments issued by PXRE, including, without limitation, any current
or future indebtedness under any indenture (other than the Indenture) to which
PXRE is party; (iii) all capital lease obligations of PXRE, (iv) all obligations
of PXRE issued or assumed as the deferred purchase price of property, all
conditional sale obligations of PXRE and all obligations of PXRE under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (v) all obligations of PXRE for the reimbursement
on any letter of credit, any banker's acceptance, any security purchase
facility, any repurchase agreement or similar arrangement, any interest rate
swap, any other hedging arrangement, any obligation under options or any similar
credit or other transaction, (vi) all obligations of the type referred to in
clauses (i) through (v) above of other persons for the payment of which PXRE is
responsible or liable as obligor, guarantor or otherwise and (vii) all
obligations of the type referred to in clauses (i) through (vi) above of other
persons secured by any lien on any property or asset of PXRE (whether or not
such obligation is assumed by PXRE), except for (1) any such indebtedness that
contains express terms, or is issued under a deed, indenture or other instrument
that contains express terms providing that it is subordinate to or ranks pari
passu with the Subordinated Debt Securities, (2) any indebtedness between or
among PXRE or any affiliate of PXRE and (3) any other debt securities issued
pursuant to the Indenture and guarantees in respect of those debt securities.
Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
Because PXRE is a holding company, the right of PXRE to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent PXRE may itself be recognized as a creditor
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of that subsidiary. Accordingly, PXRE's obligations under the Subordinated Debt
Securities will be effectively subordinated to all existing and future
liabilities of PXRE's subsidiaries, and claimants should look only to the assets
of PXRE for payments thereunder.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by PXRE. PXRE had approximately $64,725,000 of Senior
Indebtedness as of December 31, 1996, which has been reduced to $23,915,000 as
of April 17, 1997 by reason of repurchases in the market by PXRE.
REDEMPTION
PXRE may redeem the Subordinated Debt Securities, in whole or in part, at
any time and from time to time, on or after February 1, 2007 upon not less than
30 nor more than 60 days' notice, at the Call Price described under 'Description
of the Capital Securities -- Redemption,' together with accrued and unpaid
interest to the redemption date. In certain limited circumstances described
herein, the Subordinated Debt Securities also are redeemable by PXRE, in whole
or in part at any time at (i) par, in the case of a redemption upon the
occurrence of a Tax Event, (ii) the Make-Whole Amount in the case of a
redemption upon the occurrence of an Investment Company Event prior to February
1, 2007, or (iii) the Call Price in the case of a redemption upon the occurrence
of an Investment Company Event on or after February 1, 2007, in each case
together with accrued and unpaid interest thereon to the date of the redemption.
See 'Description of the Capital Securities -- Tax Event and Investment Company
Event Redemption.'
INTEREST
Subordinated Debt Securities bear interest at the rate of 8.85% per annum,
from the original date of issuance of the Old Subordinated Debt Securities,
payable semiannually in arrears on February 1 and August 1 of each year (each an
'Interest Payment Date'), commencing August 1, 1997, to the person in whose name
such Subordinated Debt Security is registered, subject to certain exceptions, at
the close of business on the Business Day next preceding such Interest Payment
Date. The term 'interest' as used herein, as such term relates to the
Subordinated Debt Securities, includes any Compounded Interest or Additional
Interest payable unless otherwise stated. In the event the Subordinated Debt
Securities are not held solely in book-entry only form, PXRE will select
relevant record dates, which shall be 15 days prior to the relevant Interest
Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Subordinated Debt Securities is not a Business Day,
then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as PXRE is not in default in the payment of interest that has
become due and payable on the Subordinated Debt Securities and no accrued
interest from a prior completed Extension Period is unpaid, PXRE shall have the
right to defer payments of interest on the Subordinated Debt Securities by
extending the interest payment period, at any time and from time to time, for
Extension Periods, each not exceeding 10 consecutive semiannual periods and none
extending beyond the maturity date of the Subordinated Debt Securities,
provided, however, that on the date on which each such Extension Period ends or,
if such date is not an Interest Payment Date, on the immediately following
Interest Payment Date, PXRE shall pay all interest then accrued and unpaid,
together with interest thereon at the rate of 8.85% per annum, compounded
semiannually to the extent permitted by applicable law ('Compounded Interest').
During any Extension Period (a) PXRE shall not declare or pay dividends on, make
any distribution with respect to, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock or rights to
acquire such capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in connection
with the
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satisfaction by PXRE of its obligations under any employee benefit plans, (ii)
as a result of a reclassification of PXRE's capital stock or rights to acquire
such capital stock or the exchange or conversion of one class or series of
PXRE's capital stock or rights to acquire such capital stock for another class
or series of PXRE's capital stock or rights to acquire such capital stock, (iii)
the purchase of fractional interests in shares of PXRE's capital stock pursuant
to the conversion or exchange provisions of such capital stock or the security
being converted or exchanged or (iv) dividends and distributions made on PXRE's
capital stock or rights to acquire such capital stock, in each case with PXRE's
capital stock or rights to acquire such capital stock), or make any guarantee
payments (other than payments under the Guarantee and the Common Securities
Guarantee) with respect to the foregoing, and (b) PXRE shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by PXRE that rank pari passu with or junior to
the Subordinated Debt Securities. Prior to the termination of any such Extension
Period, PXRE may further defer payments of interest by extending the interest
payment period; provided, however, that each such Extension Period, including
all such previous and further extensions thereof, may not exceed 10 consecutive
semiannual periods or extend beyond the maturity of the Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, PXRE may commence a new Extension Period, subject to the terms
set forth herein. No interest during an Extension Period, except on the date on
which such Extension Period terminates (or if such date is not an Interest
Payment Date, on the immediately following Interest Payment Date), shall be due
and payable. PXRE has no present intention of exercising its right to defer
payments of interest on the Subordinated Debt Securities. See 'Risk
Factors -- Option to Extend Interest Payment Period for up to Five Years and
Consequent Deferral of Distributions on Capital Securities' and 'United States
Federal Income Taxation -- U.S. Holders -- Original Issue Discount.'
If the Institutional Trustee shall be the sole holder of the Subordinated
Debt Securities, PXRE shall give the Administrators, the Institutional Trustee
and the Debt Trustee notice of its initiation of any Extension Period one
Business Day prior to the earlier of (i) the date distributions on the Capital
Securities are payable or (ii) the date the Administrators are required to give
notice to holders of the Capital Securities (or any national securities exchange
or other organization on which the Capital Securities are listed, if any) of the
record date or the Distribution Payment Date, in each case with respect to
distributions on the Trust Securities the payment of which is being deferred. An
Administrator shall give notice of PXRE's initiation of any Extension Period to
the holders of such Capital Securities. If the Institutional Trustee shall not
be the sole holder of the Subordinated Debt Securities, PXRE shall give the
holders of such Subordinated Debt Securities notice of its initiation of such
Extension Period ten Business Days prior to the earlier of (i) the next
succeeding Interest Payment Date or (ii) the date upon which PXRE is required to
give notice to holders of such Subordinated Debt Securities (or any national
securities exchange or other organization on which the corresponding Capital
Securities are listed, if any) of the record date or Interest Payment Date, in
each case with respect to interest payments the payment of which is being
deferred.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, PXRE will pay as additional interest ('Additional Interest') on the
Subordinated Debt Securities such additional amounts as shall be required so
that the net amounts received and retained by the Trust after paying any such
taxes, duties, assessments or other governmental charges will equal the amounts
the Trust and the Institutional Trustee would have received had no such taxes,
duties, assessments or other governmental charges been imposed.
PROPOSED TAX LEGISLATION
On February 6, 1997, President Clinton proposed the Proposed Legislation
which, among other things, would generally deny corporate issuers a deduction
for interest in respect of certain debt obligations issued on or after the date
of first Congressional committee action, if such debt obligations have a maximum
term in excess of fifteen years and are not shown as indebtedness on the
issuer's
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applicable consolidated balance sheet filed with the Commission. Under current
law, PXRE will be able to deduct interest on the Subordinated Debt Securities
and, based upon the effective date referred to in the Proposed Legislation, such
legislation would not apply retroactively to the Subordinated Debt Securities.
There can be no assurance, however, that the Proposed Legislation, if enacted,
or that other legislation enacted after the date hereof, will not otherwise
adversely affect the ability of PXRE to deduct the interest payable on the
Subordinated Debt Securities. Accordingly, there can be no assurance that a Tax
Event will not occur. See 'Risk Factors' and 'Description of the Capital
Securities -- Tax Event and Investment Company Event Redemption.'
CERTAIN COVENANTS
If (i) there shall have occurred and be continuing any event that would
constitute an Indenture Event of Default, (ii) PXRE shall be in default with
respect to its payment of any obligations under the Guarantee or Common
Securities Guarantee, or (iii) PXRE shall have given notice of its election to
defer payments of interest on the Subordinated Debt Securities by extending the
interest payment period as provided in the Indenture and such period, or any
extension thereof, shall be continuing, then (a) PXRE shall not declare or pay
any dividend on, make a distribution with respect to, or redeem, purchase or
make a liquidation payment with respect to, any of its capital stock or rights
to acquire such capital stock (other than (i) purchases or acquisitions of
shares of any such capital stock or rights to acquire such capital stock in
connection with the satisfaction by PXRE of its obligations under any employee
benefit plans, (ii) as a result of a reclassification of PXRE's capital stock or
rights to acquire such capital stock or the exchange or conversion of one class
or series of PXRE's capital stock or rights to acquire such capital stock for
another class or series of PXRE's capital stock or rights to acquire such
capital stock, (iii) the purchase of fractional interests in shares of PXRE's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, or (iv) dividends and
distributions made on PXRE's capital stock or rights to acquire such capital
stock, in each case with PXRE's capital stock or rights to acquire such capital
stock), or make any guarantee payments (other than payments under the Guarantee
and the Common Securities Guarantee) with respect to the foregoing and (b) PXRE
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by PXRE that rank pari
passu with or junior to the Subordinated Debt Securities.
For so long as the Trust Securities remain outstanding, PXRE has covenanted
(i) to maintain direct or indirect 100% ownership of the Common Securities;
provided, however, that any permitted successor of PXRE under the Indenture may
succeed to PXRE's ownership of such Common Securities, and (ii) to use its
reasonable efforts (a) to cause the Trust to remain a statutory business trust,
except in connection with the distribution of Subordinated Debt Securities to
the holders of Trust Securities in liquidation of the Trust, the redemption of
all of the Trust Securities or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration, (b) to cause the Trust to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes, (c) to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Subordinated Debt Securities, and
(d) to cause the Trust to continue not to be classified as an investment company
for purposes of the 1940 Act.
LIMITATION ON MERGERS AND SALES OF ASSETS
Nothing contained in the Indenture or in the Subordinated Debt Securities
shall prevent any consolidation or merger of PXRE with or into any other
corporation (whether or not affiliated with PXRE) or successive consolidations
or mergers in which PXRE or its successor or successors shall be a party, or
shall prevent any sale, conveyance, transfer or other disposition of the
property of PXRE or its successor or successors as an entirety, or substantially
as an entirety, to any other corporation (whether or not affiliated with PXRE or
its successor or successors) authorized to acquire and operate the same;
provided, however, that PXRE shall, upon any such consolidation, merger, sale,
conveyance, transfer or other disposition, cause the obligations of PXRE under
the Subordinated Debt Securities and under the Indenture to be expressly
assumed, by supplemental indenture satisfactory in form to the Debt Trustee and
executed and delivered to the Debt Trustee, by the successor entity formed by
such consolidation
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or into which PXRE shall have been merged, or which shall have acquired such
property. Upon execution and delivery of such supplemental indenture to the Debt
Trustee, such successor entity will be substituted under the Indenture and
thereupon PXRE will be relieved of any further liability or obligation
thereunder.
EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following described
events which has occurred and is continuing with respect to the Subordinated
Debt Securities constitutes an Indenture Event of Default with respect to the
Subordinated Debt Securities:
(a) default for 30 days in payment of any interest on the Subordinated
Debt Securities, including any Compounded Interest or Additional Interest
in respect thereof, when due; provided, however, that a valid extension of
the interest payment period by PXRE shall not constitute a default in the
payment of interest for this purpose; or
(b) default in payment of principal and premium, if any, on the
Subordinated Debt Securities when due either at maturity, upon redemption,
by declaration or otherwise; or
(c) default resulting in acceleration of other indebtedness of PXRE
for borrowed money where the aggregate principal amount so accelerated
exceeds $25 million and such acceleration is not rescinded or annulled
within 30 days after the written notice thereof to PXRE by the Debt Trustee
(provided that the Debt Trustee has actual knowledge of such event) or to
PXRE and the Debt Trustee by the holders of 25% in aggregate principal
amount of the Subordinated Debt Securities then outstanding; or
(d) default by PXRE in the performance of any other of the covenants
or agreements in the Indenture which shall not have been remedied for a
period of 90 days after notice to PXRE by the Debt Trustee or to PXRE and
the Debt Trustee by the holders of 25% in aggregate principal amount of the
Subordinated Debt Securities then outstanding; or
(e) certain events of bankruptcy, insolvency or reorganization of
PXRE; or
(f) the Liquidation of the Trust, except in connection with the
distribution of Subordinated Debt Securities to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
The Indenture provides that the Debt Trustee may, under certain
circumstances, withhold from the holders notice of default with respect to the
Subordinated Debt Securities (except for any default in payment of principal of
or interest or premium, if any, on the Subordinated Debt Securities) if the
Trustee considers it in the interest of such holders to do so.
The Indenture provides that, subject to the subordination provisions in the
Indenture, if an Indenture Event of Default shall have occurred and be
continuing, either the Debt Trustee or the holders of not less than 25% in
aggregate principal amount of the Subordinated Debt Securities then outstanding
may declare the principal of and accrued interest on all Subordinated Debt
Securities to be due and payable immediately, but upon certain conditions such
declarations may be annulled and past defaults may be waived (except defaults in
payment of principal of or interest or premium on the Subordinated Debt
Securities, which must be cured or paid in full) by the holders of a majority in
aggregate principal amount of the Subordinated Debt Securities then outstanding.
(For a description of the subordination provisions in the Indenture and
limitations on the ability to accelerate the Subordinated Debt Securities or
pursue remedies upon default, see 'Description of the Subordinated Debt
Securities -- Subordination.')
No holder of any Subordinated Debt Security shall have any right to
institute any suit, action or proceeding for any remedy under the Indenture,
unless such holder previously shall have given to the Debt Trustee written
notice of a continuing Indenture Event of Default with respect to the
Subordinated Debt Securities and unless the holders of not less than 25% in
aggregate principal amount of the Subordinated Debt Securities then outstanding
shall have given the Debt Trustee a written request to institute such action,
suit or proceeding and shall have offered to the Debt Trustee such
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reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred thereby, and the Debt Trustee for 60 days after its
receipt of such notice, request and offer of indemnity shall have failed to
institute any such action, suit or proceeding; provided that no holder of
Subordinated Debt Securities shall have any right to prejudice the rights of any
other holder of Subordinated Debt Securities, obtain priority or preference over
any other such holder or enforce any right under the Indenture except as
provided in the Indenture and for the equal, ratable and common benefit of all
holders of Subordinated Debt Securities. Notwithstanding the foregoing, the
right of any holder of any Subordinated Debt Security to receive payment of the
principal of, premium, if any, and interest, on such Subordinated Debt Security
when due, or to institute suit for the enforcement of any such payment, shall
not be impaired or affected without the consent of such holder.
The holders of a majority in aggregate principal amount of the Subordinated
Debt Securities then outstanding shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to, or
exercising any trust or power conferred on, the Debt Trustee under the
Indenture; provided, however, that, except under certain circumstances, the Debt
Trustee may decline to follow any such direction if the Debt Trustee determines
that the action so directed would be unjustly prejudicial to holders not taking
part in such direction or would be unlawful or would involve the Debt Trustee in
personal liability. The Indenture requires the annual filing by PXRE with the
Debt Trustee of a certificate as to the absence of certain defaults under the
Indenture.
An Indenture Event of Default also constitutes a Declaration Event of
Default. The holders of Capital Securities of the Trust, in certain
circumstances, have the right to direct the Institutional Trustee of the Trust
to exercise its rights as the holder of the Subordinated Debt Securities. See
'Description of the Capital Securities -- Declaration Events of Default' and
' -- Voting Rights.' Notwithstanding the foregoing, if an Indenture Event of
Default has occurred and is continuing and such event is attributable to the
failure of PXRE to pay interest or principal (or premium, if any) on the
Subordinated Debt Securities on the respective dates such interest or principal
(or premium, if any) is payable, as deferred, if applicable (or in the case of
redemption, on the redemption date), PXRE acknowledges that a holder of record
of Capital Securities may institute a Direct Action for payment, on or after the
respective due dates specified in such Subordinated Debt Securities, to such
holder directly of the principal of (or premium, if any) or interest on
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder.
Notwithstanding any payments made to such holder of Capital Securities by PXRE
in connection with a Direct Action, PXRE shall remain obligated to pay the
principal of (or premium, if any) or interest on the Subordinated Debt
Securities, and PXRE shall be subrogated to the rights of such holder of such
Capital Securities under the Declaration to the extent of any payments made by
PXRE to such holder in any Direct Action; provided, however, that no such
subrogation right may be exercised so long as a Declaration Event of Default has
occurred and is continuing. Except to the extent described above under
'Description of the Capital Securities -- Declaration Events of Default' and
' -- Voting Rights,' the holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Subordinated
Debt Securities.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting PXRE and the Debt Trustee,
with the consent of the holders of not less than a majority in principal amount
of the Subordinated Debt Securities at the time outstanding, to modify the
Indenture or any supplemental indenture or the rights of the holders of the
Subordinated Debt Securities; provided, however, that no such modification shall
without the consent of the holder of each Subordinated Debt Security so affected
(i) extend the fixed maturity of any Subordinated Debt Security, or reduce the
principal amount thereof or any redemption premium thereon, or reduce the rate
or extend the time of payment of interest thereon, or make the principal of, or
interest or premium on, the Subordinated Debt Securities payable in any coin or
currency other than that provided in the Subordinated Debt Securities, or impair
or affect the right of any holder of Subordinated Debt Securities to institute
suit for the payment thereof or (ii) reduce the aforesaid percentage of
Subordinated Debt Securities the consent of the holders of which is required for
any such modification; provided, further, that if the Subordinated Debt
Securities of such series are held by a
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PXRE Trust (as defined in the Indenture) or a trustee of such trust, such
modification shall not be effective until the holders of a majority in
liquidation amount of Trust Securities of the trust shall have consented to such
modification; provided further, that if the consent of the holder of each
Subordinated Debt Security is required, such modification shall not be effective
until each holder of the Trust Securities of the trust shall have consented to
such modification.
PXRE and the Debt Trustee may enter into supplemental indentures, without
the consent of any holder of the Subordinated Debt Securities: (i) to evidence
the succession of another corporation to PXRE and the assumption by the
successor corporation of the covenants, agreements and obligations of PXRE
pursuant to the Indenture; (ii) to add to the covenants of PXRE such further
covenants, restrictions or conditions for the protection of the holders of the
Subordinated Debt Securities and to make the occurrence, or the occurrence and
continuance (including any or no grace periods), of a default in any of such
additional covenants, restrictions or conditions a default or an Indenture Event
of Default permitting the enforcement of remedies provided in the Indenture;
(iii) to cure any ambiguity or to correct or supplement any provision contained
in the Indenture or in any supplemental indenture which may be defective or
inconsistent with any other provision contained therein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under the Indenture, provided that any such action shall not adversely
affect the interests of the holders of the Subordinated Debt Securities; (iv) to
add to, delete from, or revise the terms of the Subordinated Debt Securities to
provide for transfer procedures and restrictions substantially similar to those
applicable to the Capital Securities (for purposes of assuring that no
registration of Subordinated Debt Securities is required under the Securities
Act); (v) to evidence and provide for the acceptance of appointment under the
Indenture by a successor Debt Trustee with respect to the Subordinated Debt
Securities and to add to or change any of the provisions of the Indenture as
shall be necessary to provide for or facilitate the administration of the Trust
under the Indenture by more than one Debt Trustee, pursuant to the Indenture;
(vi) to make any change that does not adversely affect the rights of any holder
of any Subordinated Debt Security in any material respect; or (vii) to provide
for the issuance, and establish the form and terms and conditions, of the
Subordinated Debt Securities, to establish the form of any certifications
required to be furnished pursuant to the terms of the Indenture or the
Subordinated Debt Securities or to add to the rights of the holders of the
Subordinated Debt Securities.
DISCHARGE
The Indenture provides that when, among other things, all Subordinated Debt
Securities not previously delivered to the Debt Trustee for cancellation (i)
have become due and payable or (ii) will become due and payable at the stated
maturity within one year or are to be called for redemption within one year
under arrangements satisfactory to the Debt Trustee, and PXRE deposits or causes
to be deposited with the Debt Trustee funds, in trust, for the purpose and in an
amount sufficient to pay and discharge the entire indebtedness on the
Subordinated Debt Securities not previously delivered to the Debt Trustee for
cancellation, for the principal (and premium, if any) and interest to the date
of the stated maturity or redemption date, as the case may be, then the
Indenture will cease to be of further effect (except as to PXRE's obligations to
pay all other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and PXRE will be deemed
to have satisfied and discharged the Indenture.
THE DEBT TRUSTEE
The Debt Trustee, prior to the occurrence of an Indenture Event of Default
with respect to the Subordinated Debt Securities, undertakes to perform such
duties and only such duties as are specifically set forth in the Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs. Upon
prior written notice to PXRE and the Debt Trustee, the holders of a majority in
aggregate principal amount of the Subordinated Debt Securities may at any time
remove the Debt Trustee and nominate a successor Debt Trustee, which shall be
deemed appointed as successor Debt Trustee unless PXRE objects thereto within 10
Business Days, in which case the removed Debt Trustee or any holder of
Subordinated Debt
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Securities may petition any court of competent jurisdiction for appointment of a
successor Debt Trustee.
PXRE and certain of its affiliates in the ordinary course of their business
maintain banking relationships with the Debt Trustee and certain of its
affiliates.
BOOK-ENTRY ISSUANCE AND SETTLEMENT
If distributed to holders of Capital Securities of the Trust in connection
with the involuntary or voluntary dissolution, winding-up or liquidation of the
Trust, the Subordinated Debt Securities will, with respect to such Capital
Securities held in book-entry form, initially be issued in the form of one or
more global certificates (each a 'Global Security') registered in the name of
the Depositary or its nominee. Except under the limited circumstances described
below, Subordinated Debt Securities represented by a Global Security will not be
exchangeable for, and will not otherwise be issuable as, Subordinated Debt
Securities in definitive form. The Global Securities described above may not be
transferred except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Subordinated Debt
Securities in definitive form and will not be considered the holders (as defined
in the Indenture) thereof for any purpose under the Indenture, and no Global
Security representing Subordinated Debt Securities shall be exchangeable, except
for another Global Security of like denomination and tenor to be registered in
the name of the Depositary or its nominee or to a successor Depositary or its
nominee. Accordingly, each beneficial owner must rely on the procedures of the
Depositary, or if such person is not a Participant, on the procedures of the
Participant through which such person owns its interest, to exercise any rights
of a holder under the Indenture.
THE DEPOSITARY
If Subordinated Debt Securities are distributed to holders of Capital
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities Depositary for the Subordinated Debt Securities issued by the
Trust with respect to Capital Securities held in book-entry form. For a
description of DTC and the specific terms of the depositary arrangements, see
'Description of the Capital Securities -- Book-Entry Only Issuance -- The
Depository Trust Company.' As of the date of this Prospectus, the description
herein of DTC's book-entry system and DTC's practices as they relate to
purchases, transfers, notices and payments with respect to the Capital
Securities would apply in all material respects to any debt obligations
represented by one or more Global Securities held by DTC. PXRE may appoint a
successor to DTC or any successor depositary in the event DTC or such successor
depositary is unable or unwilling to continue as the Depositary for the Global
Securities.
None of PXRE, the Trust, the Institutional Trustee, the Debt Trustee, any
paying agent and any other agent of PXRE, the Trust, the Institutional Trustee
or the Debt Trustee will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in a Global Security for the Subordinated Debt Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Subordinated Debt Securities
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies PXRE that it is unwilling or unable to continue
as a depositary for such Global Security and no successor depositary shall have
been appointed, (ii) the Depositary, at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the Depositary is required to be
so registered to act as such depositary and no successor depositary shall have
been appointed, (iii) PXRE, in its sole discretion,
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determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Indenture Event of Default. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
Subordinated Debt Securities registered in such names as the Depositary shall
direct. It is expected that such instructions will be based upon directions
received by the Depositary from its Participants with respect to ownership of
beneficial interests in such Global Security.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities are governed by, and
construed in accordance with, the laws of the State of New York, without regard
to conflict of laws principles.
MISCELLANEOUS
The Indenture provides that PXRE will pay all fees and expenses related to
(i) the offering and sale of the Trust Securities and the Subordinated Debt
Securities, (ii) the organization, maintenance and dissolution of the Trust,
(iii) the retention of the Issuer Trustees and Administrators and (iv) the
enforcement by the Institutional Trustee of the rights of the holders of the
Capital Securities.
PXRE will have the right at all times to assign any of its respective
rights or obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of PXRE; provided that, in the event of any such assignment, PXRE
will remain liable for all of its obligations. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. Except as otherwise provided in
' -- Limitation on Mergers and Sales of Assets,' the Indenture provides that it
may not otherwise be assigned by the parties thereto.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES
AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
and sell the Trust Securities evidencing undivided beneficial interests in the
assets of the Trust and to invest the proceeds from such issuance and sale in
the Subordinated Debt Securities issued by PXRE in accordance with such Trust
Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of the Subordinated Debt Securities
will be equal to the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Trust Securities; (iii) PXRE shall
pay all, and the Trust shall not be obligated to pay directly or indirectly any,
costs, expenses, debts, and obligations of the Trust (other than with respect to
such Trust Securities); and (iv) the Declaration further provides that the
Institutional Trustee shall not take any action or cause or permit the Trust to,
among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions (to the extent funds therefor are available to
the Trust) and other payments due on the Capital Securities (to the extent funds
therefor are available to the Trust) are guaranteed by PXRE as described under
'Description of the Guarantee.' If PXRE does not make interest payments on the
Subordinated Debt Securities, it is expected that the Trust will not have
sufficient funds to pay distributions on such Capital Securities. The Guarantee
will not apply to any payment of distributions except to the extent that the
Trust has funds available for the payment of such distributions. The Guarantee
will cover the payment of distributions and other payments on such Capital
Securities only if and to the extent that PXRE has made payments of interest or
principal (or premium, if any) on the Subordinated Debt Securities held by the
Trust as its sole assets. The Guarantee, when taken together with PXRE's
obligations under the Subordinated Debt Securities, the Declaration and the
Indenture, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provide a full and unconditional guarantee on a subordinated basis by PXRE of
amounts when due on such Capital Securities.
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If PXRE fails to make interest or other payments on the Subordinated Debt
Securities when due (after giving effect to any Extension Period), the
Declaration provides a mechanism whereby the holders of the Capital Securities,
using the procedures described herein under 'Description of the Capital
Securities -- Book-Entry Only Issuance -- The Depository Trust Company' and
' -- Voting Rights,' may direct the Institutional Trustee, to the fullest extent
permitted by law, to enforce its rights under the Subordinated Debt Securities.
If the Institutional Trustee fails to enforce its rights under the Subordinated
Debt Securities after a majority in liquidation amount of Capital Securities
have so directed the Institutional Trustee, a holder of record of the Capital
Securities may institute a legal proceeding against PXRE to enforce the
Institutional Trustee's rights under the Subordinated Debt Securities without
first instituting any legal proceedings against the Institutional Trustee or any
other person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of PXRE to pay principal (or premium, if any) or interest on the
Subordinated Debt Securities on the respective dates such principal (or premium,
if any) or interest is payable, as deferred, if applicable (or in the case of
redemption, on the redemption date), then a holder of record of Capital
Securities may institute a Direct Action for payment on or after the respective
due dates specified in the Subordinated Debt Securities (subject to the
subordination provisions of the Indenture). In connection with such Direct
Action, PXRE will be subrogated to the rights of such holder of Capital
Securities under the Declaration to the extent of any payment made by PXRE to
such holder of Capital Securities in such Direct Action; provided, however, that
no such subrogation right may be exercised so long as a Declaration Event of
Default has occurred and is continuing.
Because PXRE is a holding company, the Subordinated Debt Securities and the
Guarantee are effectively subordinated to all existing and future liabilities,
including trade payables, of PXRE's subsidiaries, except to the extent that PXRE
is a creditor of the subsidiaries recognized as such.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Morgan, Lewis & Bockius LLP, counsel to PXRE and the
Trust ('Counsel'), the following discussion, insofar as it describes statements
of law or legal conclusions, fairly summarizes the material United States
federal income tax consequences to the holders of Capital Securities
attributable to the purchase, ownership and disposition of Capital Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
'Code'), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject to
change, possibly on a retroactive basis.
Except as otherwise stated, this summary deals only with a Capital Security
held as a capital asset by a holder who or which (i) purchased Capital
Securities upon original issuance (an 'Initial Holder') and (ii) is a US Holder
(as defined below). It does not deal with all aspects of United States federal
income taxation, nor with the particular United States federal income tax
(hereafter, 'income tax') consequences which may be applicable to certain
classes of US Holders (such as banks, thrift institutions, real estate
investment trusts, regulated investment companies, insurance companies, brokers
and dealers in securities or currencies, other financial institutions,
tax-exempt organizations, persons holding Capital Securities as a position in a
'straddle,' as part of a 'synthetic security or hedge,' as part of a 'conversion
transaction' or as part of any other integrated investment, persons having a
functional currency other than the U.S. Dollar and certain United States
expatriates). Further, this summary does not address (a) the income tax
consequences to shareholders in, or partners or beneficiaries of, a holder of
Capital Securities, (b) the United States federal alternative minimum tax
consequences of the purchase, ownership or disposition of Capital Securities, or
(c) any state, local or foreign tax consequences of the purchase, ownership and
disposition of Capital Securities.
A 'US Holder' is a holder of Capital Securities who or which is a citizen
or individual resident (or is treated as a citizen or individual resident) of
the United States for income tax purposes, a corporation or partnership created
or organized (or treated as created or organized for income tax purposes) in or
under the laws of the United States or any political subdivision thereof, or an
estate the income of
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which is includible in its gross income for United States federal income tax
purposes without regard to its source or a trust if, (i) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (ii) one or more United States trustees have the authority to
control all substantial decisions of the trust.
EXCHANGE OF CAPITAL SECURITIES
The exchange of the Old Capital Securities for the New Capital Securities
pursuant to the Exchange Offer will not constitute a taxable event to US
Holders. Consequently, (i) no gain or loss should be realized by a US Holder
upon receipt of a New Capital Security; (ii) the holding period of the New
Capital Security should include the holding period of the Old Capital Security
exchanged therefor; and (iii) the adjusted tax basis of the New Capital Security
should be the same as the adjusted tax basis of the Old Capital Security
exchanged therefor immediately before the exchange.
US HOLDERS
CHARACTERIZATION OF THE TRUST
In connection with the issuance of the Old Capital Securities, Counsel
rendered its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration (and other
documents), and based on certain assumptions and qualifications referenced in
the opinion, the Trust will be characterized for United States federal income
tax purposes as a grantor trust and will not be characterized as an association
taxable as a corporation for such purposes. The discussion herein under the
heading 'United States Federal Income Taxation' assumes that the Trust will be
so characterized. Accordingly, for income tax purposes, each holder of Capital
Securities generally will be considered the owner of an undivided interest in
the Subordinated Debt Securities owned by the Trust, and each US Holder will be
required to include all income or gain recognized for income tax purposes with
respect to its allocable share of the Subordinated Debt Securities on its own
income tax return. Investors should be aware that such tax opinion is not
binding on the Internal Revenue Service ('IRS') or the courts.
CHARACTERIZATION OF THE SUBORDINATED DEBT SECURITIES
In connection with the issuance of the Old Subordinated Debt Securities,
Counsel rendered its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Indenture (and other
documents), and based on certain assumptions and qualifications referenced in
the opinion, the Subordinated Debt Securities will be characterized for United
States federal income tax purposes as debt of PXRE. The discussion herein under
the heading 'United States Federal Income Taxation' assumes that the
Subordinated Debt Securities will be so characterized. Investors should be aware
that such tax opinion is not binding on the IRS or the courts.
ORIGINAL ISSUE DISCOUNT
Under the terms of the Subordinated Debt Securities, PXRE has the option to
defer payments of interest from time to time by extending the interest payment
period for a period not exceeding 10 consecutive semiannual periods, but not
beyond the maturity of the Subordinated Debt Securities. Recently issued
Treasury regulations under Section 1273 of the Code provide that debt
instruments like the Subordinated Debt Securities will not be considered issued
with OID by reason of PXRE's option to defer payments of interest if the
likelihood of deferral is 'remote.'
PXRE has concluded, and this discussion assumes, that, as of the date of
the issuance of the Old Subordinated Deb Securities, the likelihood of exercise
of that option is 'remote' within the meaning of the applicable regulations, in
part because exercising that option would prevent PXRE from declaring dividends
on its stock and would prevent PXRE from making any payments with respect to
debt securities that rank pari passu or junior to the Subordinated Debt
Securities. Therefore, the Subordinated Debt Securities should not be treated as
issued with OID by reason of PXRE's deferral option. Rather, stated interest on
the Subordinated Debt Securities will generally be taxable to a US
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Holder, as ordinary income, when paid or accrued in accordance with that
holder's method of accounting for income tax purposes. It should be noted,
however, that these regulations have not yet been addressed in any rulings or
other interpretations by the IRS. Accordingly, it is possible that the IRS could
take a position contrary to the interpretation described herein.
In the event PXRE does exercise its option to defer payments of interest,
the Subordinated Debt Securities would be treated as retired and reissued for
OID purposes and the sum of the remaining interest payments on the Subordinated
Debt Securities would thereafter be treated as OID, which would accrue, and be
includible in a US Holder's taxable income, on an economic accrual basis
(regardless of the US Holder's method of accounting for income tax purposes)
over the remaining term of the Subordinated Debt Securities (including any
period of interest deferral), without regard to the timing of payments under the
Subordinated Debt Securities. (Subsequent distributions of interest on the
Subordinated Debt Securities generally would not be taxable.) The amount of OID
that accrues in any period would generally equal the amount of interest that
accrues on the Subordinated Debt Securities in that period at the stated
interest rate. Consequently, during any period of interest deferral, US Holders
will include OID in gross income in advance of the receipt of cash, and a US
Holder which disposes of a Capital Security prior to the record date for payment
of distributions on the Subordinated Debt Securities following that period will
be subject to income tax on OID accrued through the date of disposition (and not
previously included in income), but will not receive cash from the Trust with
respect to that OID.
If PXRE's option to defer payments of interest were not treated as remote,
the Subordinated Debt Securities would be treated as initially issued with OID
in an amount equal to the aggregate stated interest over the term of the
Subordinated Debt. That OID would generally be includible in a US Holder's
taxable income, over the term of the Subordinated Debt Securities, on an
economic accrual basis, whether or not PXRE does exercise its option to defer
payments of interest. The amount of OID that accrues in any period generally
would equal the amount of interest that accrues on the Subordinated Debt
Securities in that period at the stated interest rate.
CHARACTERIZATION OF INCOME
Because the income underlying the Capital Securities will not be
characterized as dividends for income tax purposes, corporate holders of Capital
Securities will not be entitled to a dividends-received deduction for any income
recognized with respect to the Capital Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Capital Securities other than Initial Holders may be considered
to have acquired their undivided interests in the Subordinated Debt Securities
with market discount or acquisition premium (as each phrase is defined for
income tax purposes).
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances described herein (see 'Description of the
Capital Securities -- Liquidation Distribution Upon Dissolution'), PXRE will
have the right to distribute Subordinated Debt Securities to holders in exchange
for the Capital Securities and in liquidation of the Trust. Except as discussed
below, such a distribution would not be a taxable event for income tax purposes,
and each US Holder would have an aggregate adjusted basis in its Subordinated
Debt Securities for income tax purposes equal to such holder's aggregate
adjusted basis in its Capital Securities. For income tax purposes, a US Holder's
holding period in the Subordinated Debt Securities received in such a
liquidation of the Trust would include the period during which the Capital
Securities were held by the holder. If, however, the relevant event is a Tax
Event which results in the Trust being treated as an association taxable as a
corporation, the distribution would likely constitute a taxable event to US
Holders of the Capital Securities for income tax purposes.
Under certain circumstances described herein (see 'Description of the
Capital Securities'), the Subordinated Debt Securities may be redeemed for cash
and the proceeds of such redemption distributed to holders in redemption of
their Capital Securities. Such a redemption would be taxable for
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income tax purposes, and a US Holder would recognize gain or loss as if it had
sold the Capital Securities for cash. See ' -- Sales of Capital Securities'
below.
SALES OF CAPITAL SECURITIES
A US Holder that sells Capital Securities will recognize gain or loss equal
to the difference between its adjusted basis in the Capital Securities and the
amount realized on the sale of such Capital Securities. A US Holder's adjusted
basis in the Capital Securities generally will be its initial purchase price,
increased by OID previously included (or currently includible) in such holder's
gross income to the date of disposition, and decreased by payments received on
the Capital Securities (other than any interest received with respect to the
period prior to the effective date of PXRE's first exercise of its option to
defer payments of interest). Any such gain or loss generally will be capital
gain or loss, and generally will be a long-term capital gain or loss if the
Capital Securities have been held for more than one year.
A holder who disposes of his Capital Securities between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest (or OID) on the Subordinated Debt Securities through the date of
disposition in its taxable income for income tax purposes (notwithstanding that
the holder may receive a separate payment from the purchaser with respect to
accrued interest), and to deduct that amount from the sales proceeds received
(including the separate payment, if any, with respect to accrued interest) for
the Capital Securities (or as to OID only, to add such amount to such holder's
adjusted tax basis in its Capital Securities). To the extent the selling price
is less than the holder's adjusted tax basis (which will include accrued but
unpaid OID, if any), a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for income tax purposes.
TAX EVENT MATURITY ADVANCEMENT
Under certain circumstances described herein (see 'Description of the
Capital Securities -- Tax Event and Investment Company Event Redemption'), the
stated maturity date of the Subordinated Debt Securities may be accelerated at
the option of PXRE. Such an advance of the stated maturity date would not be a
modification of the Subordinated Debt Securities for income tax purposes and,
thus, would not constitute a taxable sale or exchange.
NON-US HOLDERS
The following discussion applies to an Initial Holder who is not a US
Holder (a 'Non-US Holder').
Payments to a holder of a Capital Security which is a Non-US Holder will
generally not be subject to withholding of income tax, provided that (a) the
beneficial owner of the Capital Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of PXRE entitled to vote, (b) the beneficial owner of
the Capital Security is not a controlled foreign corporation that is related to
PXRE through stock ownership, and (c) either (i) the beneficial owner of the
Capital Securities certifies to the Trust or its agent, under penalties of
perjury, that it is a Non-US Holder and provides its name and address, or (ii) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
'Financial Institution'), and holds the Capital Security in such capacity,
certifies to the Trust or its agent, under penalties of perjury, that such a
statement has been received from the beneficial owner by it or by another
Financial Institution between it and the beneficial owner in the chain of
ownership, and furnishes the Trust or its agent with a copy thereof.
As discussed above (see 'Description of the Capital Securities -- Tax Event
and Investment Company Event Redemption'), changes in legislation affecting the
income tax consequences of the Subordinated Debt Securities are possible, and
could adversely affect the ability of PXRE to deduct the interest payable on the
Subordinated Debt Securities. Moreover, any such legislation could adversely
affect Non-US Holders by characterizing income derived from the Subordinated
Debt Securities as dividends, generally subject to a 30% income tax (on a
withholding basis) when paid to a Non-US Holder, rather than as interest which,
as discussed above, is generally exempt from income tax in the
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hands of a Non-US Holder. In addition, in the event that such changes in
legislation occur, PXRE may effect a Tax Event Maturity Advancement pursuant to
which the stated maturity date of the Subordinated Debt Securities is
accelerated. Such event should not constitute a taxable event to Non-US Holders.
A Non-US Holder of a Capital Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Capital Security provided such holder is not engaged or
considered to be engaged in the conduct of a trade or business in the United
States or, in the case of an individual non-U.S. holder, such holder is present
in the United States for less than 183 days in the taxable year of the sale or
other disposition of the Capital Security.
A Non-US Holder which holds Capital Securities in connection with the
active conduct of a United States trade or business will be subject to income
tax on all income and gains recognized with respect to its proportionate share
of the Subordinated Debt Securities.
The exchange of the Old Capital Securities for the New Capital Securities
in the Exchange Offer should not constitute a taxable event to Non-US Holders.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, Capital Securities held by a noncorporate US
Holder within the United States. In addition, payments made on, and payments of
the proceeds from the sale of, Capital Securities to or through the United
States office of a broker are subject to information reporting unless the holder
thereof certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding. See ' -- Backup
Withholding.' Taxable income on the Capital Securities for a calendar year
should be reported to US Holders on Forms 1099 by the following January 31st.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a 'backup' withholding tax of 31% unless the holder complies with
certain identification or exemption requirements. Any amounts so withheld will
be allowed as a credit against the holder's income tax liability, or refunded,
provided the required information is provided to the IRS.
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF CAPITAL SECURITIES. HOLDERS OF CAPITAL SECURITIES ARE URGED TO CONTACT THEIR
OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX CONSEQUENCES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Capital Securities received
in exchange for Old Capital Securities where such Old Capital Securities were
acquired as a result of market-making activities or other trading activities.
PXRE and the Trust have agreed that, starting on the date on which the Exchange
Offer is consummated and ending on the close of business one year after such
date, they will make this Prospectus, as amended or supplemented, available to
any broker-dealer for use in connection with any such resale. In addition, until
July 22, 1997, all dealers effecting transactions in the New Capital Securities
may be required to deliver a prospectus.
PXRE and the Trust will not receive any proceeds from any sale of New
Capital Securities by broker-dealers. New Capital Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Capital
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or negotiated prices. Any such resale may be made directly to purchasers
or to or through brokers or dealers who may receive compensation in the form of
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commissions or concessions from any such broker-dealer and/or the purchasers of
any such New Capital Securities. Any broker-dealer that resells New Capital
Securities that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in a distribution of such New
Capital Securities may be deemed to be an 'underwriter' within the meaning of
the Securities Act and any profit on any such resale of New Capital Securities
and any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
'underwriter' within the meaning of the Securities Act.
For a period of one year after the date on which the Exchange Offer is
consummated, PXRE and the Trust will promptly send additional copies of this
Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. PXRE
has agreed to pay all expenses incident to the Exchange Offer (including the
expenses of one counsel for the holders of the Old Capital Securities) other
than commissions or concessions of any brokers or dealers and will indemnify the
holders of the Old Capital Securities (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
('ERISA') (a 'Plan'), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Capital Securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also 'Plans'), from engaging in certain transactions involving 'plan
assets' with persons who are 'parties in interest' under ERISA or 'disqualified
persons' under the Code ('Parties in Interest') with respect to such Plan. A
violation of these 'prohibited transaction' rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(5) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the 'Plan Assets Regulation') issued by the U.S.
Department of Labor (the 'DOL'), the assets of the Trust would be deemed to be
'plan assets' of a Plan for purposes of ERISA and Section 4975 of the Code if
'plan assets' of the Plan were used to acquire an equity interest in such Trust
and no exception were applicable under the Plan Assets Regulation. An 'equity
interest' is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Trust would not be deemed to be 'plan assets' of Plans acquiring
Capital Securities if (i) the Capital Securities constitute publicly offered
securities, or (ii) immediately after the most recent acquisition of any equity
interest in the Trust, less than 25% of the value of each class of equity
interests in the trust were held by Plans and other benefit plan investors
within the meaning of the Plan Assets Regulation (collectively, 'Benefit Plan
Investors'), excluding for this purpose any Trust Securities owned by the
Institutional Trustee, the Delaware Trustee, PXRE, the Administrators or any of
their affiliates. The Plan Assets Regulation states that a beneficial interest
in a trust is an equity interest. The acquisition of Capital Securities (i) by
at least 100 persons who are independent of one another (at the completion of
the initial offering or otherwise) for purposes of satisfying the definition of
a publicly offered security or (ii) by Benefit Plan Investors, will not be
monitored. Therefore, no assurances can be provided by the
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Initial Purchasers that the assets of the Trust would not be treated as 'plan
assets' of Plans owning Capital Securities at any time.
Certain transactions involving the Trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities of the Trust were acquired
with 'plan assets' of such Plan and assets of the Trust were deemed to be 'plan
assets' of Plans investing in the Trust. For example, if PXRE is a Party in
Interest with respect to an investing Plan (either directly or by reason of its
ownership of its subsidiaries), extensions of credit between PXRE and the Trust
(as represented by the Subordinated Debt Securities and the Guarantees) would
likely be prohibited by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B)
of the Code, unless exemptive relief were available under an applicable
administrative exemption (see below).
The DOL has issued five prohibited transaction class exemptions ('PTCEs')
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the Capital Securities, assuming that
assets of the Trust were deemed to be 'plan assets' of Plans investing in the
Trust (see above). Those class exemptions are PTCE 95-60 (for certain
transactions determined by in-house asset managers), PTCE 96-23 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company separate accounts,) and PTCE
84-14 (for certain transactions determined by independent qualified asset
managers).
Because the Capital Securities may be deemed to be equity interests in the
Trust for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose underlying
assets include 'plan assets' by reason of any Plan's investment in the entity (a
'Plan Asset Entity') or any person investing 'plan assets' of any Plan, unless
such purchaser or holder is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. Any purchaser or holder of the Capital
Securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that it either (a) is not a Plan or a Plan Asset
Entity and is not purchasing such securities on behalf of or with 'plan assets'
of any Plan or (b) is eligible for the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 with respect to such purchase or holding. See
'Notice to Investors' herein.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing Capital
Securities on behalf of or with 'plan assets' of any Plan consult with their
counsel regarding the potential consequences if the assets of the Trust were
deemed to be 'plan assets' and the availability of exemptive relief under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the New Capital
Securities and the formation of the Trust will be passed upon on behalf of the
Trust by Potter Anderson & Corroon, special Delaware counsel to the Trust and
PXRE. The validity under New York law of the Subordinated Debt Securities and
the Guarantee will be passed upon for PXRE and the Trust by Morgan, Lewis &
Bockius LLP, New York, New York. Certain United States federal income tax
matters have been, and will be in connection with the Exchange Offer, passed
upon for PXRE and the Trust by Morgan, Lewis & Bockius LLP, New York, New York.
Mr. F. Sedgwick Browne, a partner of Morgan, Lewis & Bockius LLP, is Secretary
of PXRE and owns 5,115 shares of PXRE common stock.
EXPERTS
The financial statements of PXRE incorporated in this Prospectus by
reference to the 1996 Form 10-K for the year ended December 31, 1996 and the
Transnational Annual Report on Form 10-K for the year ended December 31, 1995
have been incorporated in reliance on the reports of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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_____________________________ _____________________________
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER
MADE HEREBY EXCEPT AS CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF
TRANSMITTAL, AND, IF GIVEN OR MADE, NO SUCH INFORMATION OR REPRESENTATION SHOULD
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PXRE, THE TRUST, THE INITIAL
PURCHASERS OR ANY OF THEIR RESPECTIVE AGENTS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS
OF PXRE OR THE TRUST SINCE THE DATE HEREOF. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL OR BOTH TOGETHER
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE CAPITAL
SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information....................................................................................................... 1
Incorporation of Certain Documents by
Reference................................................................................................................. 1
Summary..................................................................................................................... 3
Risk Factors................................................................................................................ 10
PXRE Corporation............................................................................................................ 15
Selected Financial Data..................................................................................................... 18
Unaudited Pro Forma Condensed Consolidated Financial Information of PXRE.................................................... 20
Capitalization.............................................................................................................. 21
Accounting Treatment........................................................................................................ 21
Use of Proceeds............................................................................................................. 22
The Trust................................................................................................................... 22
The Exchange Offer.......................................................................................................... 23
Description of the Capital Securities....................................................................................... 32
Description of the Guarantee................................................................................................ 47
Description of the Subordinated Debt Securities............................................................................. 49
Effect of Obligations Under the
Subordinated Debt Securities and the Guarantee............................................................................ 59
United States Federal Income Taxation....................................................................................... 60
Plan of Distribution........................................................................................................ 64
ERISA Considerations........................................................................................................ 65
Legal Matters............................................................................................................... 66
Experts..................................................................................................................... 66
</TABLE>
$100,000,000
PXRE CAPITAL TRUST I
8.85% CAPITAL TRUST
PASS-THROUGH SECURITIES'sm' (TRUPS'sm')
(LIQUIDATION AMOUNT $1,000
PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
PXRE CORPORATION
[LOGO]
--------------------------
PROSPECTUS
--------------------------
DATED APRIL 23, 1997
_____________________________ _____________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(i) Section 102(b)(7) of the General Corporation Law of the State of
Delaware 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 Amended and Restated
Certificate of Incorporation of PXRE contains a provision limiting the personal
liability of a director to PXRE and its stockholders for monetary damages for a
breach of fiduciary duty as a director to the full extent permitted by law.
(ii) Additionally, Section 145, 'Indemnification of Officers, Directors,
Employees and Agents; Insurance', of the General Corporation Law of the State of
Delaware provides as follows:
'(a) A corporation may 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 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), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
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 his 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 he 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 his conduct was unlawful.
(b) A corporation may 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
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he 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 director, officer, employee or agent 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, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him 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
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determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b) of this section.
Such determination shall be made (1) by a majority vote of the directors
who are not parties to such action, suit or proceeding, even though less
than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) 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 he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
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 his 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 him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him 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 as he
would have with respect to such constituent corporation if its separate
existence had continued.
(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 he 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).'
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(iii) Article VI of the Amended and Restated Certificate of Incorporation
of PXRE provides for indemnification of directors and officers of PXRE 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 and each of its directors, PXRE has undertaken to indemnify its
directors to the fullest extent permitted by Article VI of the Amended and
Restated Certificate of Incorporation of PXRE and applicable Delaware law.
(iv) There is in effect a Directors and Officers Liability and Corporation
Reimbursement Insurance Policy with Reliance Insurance Company. The policy
insures the directors and officers of PXRE 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 against loss for which PXRE is required to indemnify or for which
PXRE, 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 by
reason of the wrongful acts described above. The policy does not insure PXRE's
directors and officers against loss in connection with any claim relating to any
deliberately dishonest or fraudulent act or omission, any criminal or malicious
act or omission, any willful violation of law or any accounting for profits for
the purchase or sale of securities of PXRE within the meaning of Section 16(b)
of the Exchange Act. The combined limit of liability is $10,000,000 per policy
year for both directors' and officers' liability and corporate reimbursement
coverage.
(v) Under the Declaration, PXRE has agreed to indemnify each of the
Trustees of the Trust, and to hold the Trustees harmless against, any loss,
damage, claim, liability or expense incurred without negligence or bad faith on
the Trustees' part, arising out of or in connection with the acceptance or
administration of the Declaration, including the costs and expenses of defending
themselves against any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Declaration.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Indenture, dated as of January 29, 1997, between PXRE and First Union National Bank, as Trustee (Exhibit
4.3 to PXRE's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-15428),
and incorporated by reference herein).
4.2 First Supplemental Indenture, dated as of January 29, 1997, between PXRE and First Union National Bank,
as Trustee, in respect of PXRE's 8.85% Junior Subordinated Deferrable Interest Debentures due 2027
(Exhibit 4.4 to PXRE's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated by reference herein).
4.3 Form of PXRE's 8.85% Junior Subordinated Deferrable Interest Debentures due 2027 (included in the First
Supplemental Indenture filed as Exhibit 4.2 to this Registration Statement) (Exhibit 4.4 to PXRE's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-15428), and
incorporated by reference herein).
4.4 Certificate of Trust of PXRE Capital Trust I, dated January 21, 1997.**
4.5 Amended and Restated Declaration of Trust of PXRE Capital Trust I, dated as of January 29, 1997, among
PXRE, 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 PXRE's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 (File No. 0-15428), and incorporated by reference herein).
4.6 Form of Capital Security Certificate for PXRE Capital Trust I (included in the Amended and Restated
Declaration of Trust filed as Exhibit 4.5 to this Registration Statement) (Exhibit 4.5 to PXRE's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-15428), and incorporated by
reference herein).
</TABLE>
II-3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.7 Capital Securities Guarantee Agreement, dated as of January 29, 1997, between PXRE and First Union
National Bank, as Guarantee Trustee (Exhibit 4.6 to PXRE's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 (File No. 0-15428), and incorporated by reference herein).
4.8 Registration Rights Agreement, dated January 29, 1997, among PXRE, PXRE Capital Trust I and Salomon
Brothers Inc, as Representative of the Initial Purchasers (Exhibit 10.1 to PXRE's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 (File No. 0-15428), and incorporated by reference
herein).
4.9 Indenture, dated as of August 31, 1993, between PXRE and The First National Bank of Boston, as Trustee,
relating to $75,000,000 principal amount of 9.75% Senior Notes of PXRE due 2003 (Exhibit 4.1 to PXRE's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0-15428), and
incorporated herein by reference).
4.10 Supplemental Indenture, dated as of January 24, 1997, between PXRE and State Street Bank and Trust
Company, as Successor Trustee, relating to $75,000,000 original principal amount of 9.75% Senior Notes
due 2003 (Exhibit 4.2 to PXRE's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(File No. 0-15428), and incorporated by reference herein).
5.1 Opinion of Potter Anderson & Corroon as to the validity of the New Capital Securities to be issued by
PXRE Capital Trust I.*
5.2 Opinion of Morgan, Lewis & Bockius LLP as to the validity of the New Subordinated Debt Securities and
the New Guarantee to be issued by PXRE.*
8 Opinion of Morgan, Lewis & Bockius LLP regarding certain federal income tax matters.*
12 Statement of Computation of Ratios of Earnings to Fixed Charges (Exhibit 12 to PXRE's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-15428), and incorporated by reference
herein).
23.1 Consent of Price Waterhouse LLP.*
23.2 Consent of Potter Anderson & Corroon (included in Exhibit 5.1 to this Registration Statement).*
23.3 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.2 to this Registration Statement).*
23.4 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 8 to this Registration Statement).*
24 Powers of Attorney.**
25.1 Form T-1 Statement of Eligibility of First Union National Bank to act as trustee under the Indenture.**
25.2 Form T-1 Statement of Eligibility of First Union National Bank to act as trustee under the Amended and
Restated Declaration of Trust.**
25.3 Form T-1 Statement of Eligibility of First Union National Bank to act as trustee under the Guarantee for
the benefit of the holders of Capital Securities.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Exchange Agent Agreement.**
</TABLE>
- ------------
* Filed herewith
** Previously filed
ITEM 22. UNDERTAKINGS.
(a) Each of the undersigned registrants 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
II-4
<PAGE>
<PAGE>
Section 13(a) or 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.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of a
registrant pursuant to the foregoing provisions, or otherwise, each of the
undersigned registrants 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 a
registrant of expenses incurred or paid by a director, officer or controlling
person of a 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, each of the undersigned
registrants 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.
(c) Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the 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.
(d) Each of the undersigned registrants 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-5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Edison,
State of New Jersey, on April 23, 1997.
PXRE CORPORATION
(Registrant)
By /S/ GERALD L. RADKE
..................................
GERALD L. RADKE
CHAIRMAN OF THE BOARD, PRESIDENT,
CHIEF EXECUTIVE
OFFICER AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ GERALD L. RADKE Chairman of the Board, President, Chief April 23, 1997
......................................... Executive Officer and Director (Principal
GERALD L. RADKE Executive Officer)
/s/ SANFORD M. KIMMEL Senior Vice President, Treasurer and Chief April 23, 1997
......................................... Financial Officer (Principal Financial
SANFORD M. KIMMEL Officer)
/s/ JOAN L. CADD Vice President and Controller April 23, 1997
.........................................
JOAN L. CADD
* Director April 23, 1997
.........................................
ROBERT W. FIONDELLA
* Director April 23, 1997
.........................................
FRANKLIN D. HAFTL
* Director April 23, 1997
.........................................
BERNARD KELLY
* Director April 23, 1997
.........................................
WENDY LUSCOMBE
* Director April 23, 1997
.........................................
EDWARD P. LYONS
</TABLE>
II-6
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
* Director April 23, 1997
.........................................
PHILIP R. MCLOUGHLIN
* Director April 23, 1997
.........................................
DAVID W. SEARFOSS
* Director April 23, 1997
.........................................
DONALD H. TRAUTLEIN
* Director April 23, 1997
.........................................
WILSON WILDE
/S/ GERALD L. RADKE
*By .....................................
GERALD L. RADKE
ATTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Edison,
State of New Jersey, on April 23, 1997.
PXRE CAPITAL TRUST I
(Registrant)
By /S/ GERALD L. RADKE
..................................
GERALD L. RADKE
ADMINISTRATOR
By /S/ SANFORD M. KIMMEL
..................................
SANFORD M. KIMMEL
ADMINISTRATOR
II-8
STATEMENT OF DIFFERENCES
The British pound sterling sign shall be expressed as.......................'L'
The service mark symbol shall be expressed as..............................'sm'
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Indenture, dated as of January 29, 1997, between PXRE and First Union National Bank, as Trustee (Exhibit
4.3 to PXRE's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-15428),
and incorporated by reference herein).
4.2 First Supplemental Indenture, dated as of January 29, 1997, between PXRE and First Union National Bank,
as Trustee, in respect of PXRE's 8.85% Junior Subordinated Deferrable Interest Debentures due 2027
(Exhibit 4.4 to PXRE's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No.
0-15428), and incorporated by reference herein).
4.3 Form of PXRE's 8.85% Junior Subordinated Deferrable Interest Debentures due 2027 (included in the First
Supplemental Indenture filed as Exhibit 4.2 to this Registration Statement) (Exhibit 4.4 to PXRE's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-15428), and
incorporated by reference herein).
4.4 Certificate of Trust of PXRE Capital Trust I, dated January 21, 1997.**
4.5 Amended and Restated Declaration of Trust of PXRE Capital Trust I, dated as of January 29, 1997, among
PXRE, 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 PXRE's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 (File No. 0-15428), and incorporated by reference herein).
4.6 Form of Capital Security Certificate for PXRE Capital Trust I (included in the Amended and Restated
Declaration of Trust filed as Exhibit 4.5 to this Registration Statement) (Exhibit 4.5 to PXRE's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-15428), and incorporated by
reference herein).
4.7 Capital Securities Guarantee Agreement, dated as of January 29, 1997, between PXRE and First Union
National Bank, as Guarantee Trustee (Exhibit 4.6 to PXRE's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 (File No. 0-15428), and incorporated by reference herein).
4.8 Registration Rights Agreement, dated January 29, 1997, among PXRE, PXRE Capital Trust I and Salomon
Brothers Inc, as Representative of the Initial Purchasers (Exhibit 10.1 to PXRE's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 (File No. 0-15428), and incorporated by reference
herein).
4.9 Indenture, dated as of August 31, 1993, between PXRE and The First National Bank of Boston, as Trustee,
relating to $75,000,000 principal amount of 9.75% Senior Notes of PXRE due 2003 (Exhibit 4.1 to PXRE's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0-15428), and
incorporated herein by reference).
4.10 Supplemental Indenture, dated as of January 24, 1997, between PXRE and State Street Bank and Trust
Company, as Successor Trustee, relating to $75,000,000 original principal amount of 9.75% Senior Notes
due 2003 (Exhibit 4.2 to PXRE's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(File No. 0-15428), and incorporated by reference herein).
5.1 Opinion of Potter Anderson & Corroon as to the validity of the New Capital Securities to be issued by
PXRE Capital Trust I.*
5.2 Opinion of Morgan, Lewis & Bockius LLP as to the validity of the New Subordinated Debt Securities and
the New Guarantee to be issued by PXRE.*
8 Opinion of Morgan, Lewis & Bockius LLP regarding certain federal income tax matters.*
12 Statement of Computation of Ratios of Earnings to Fixed Charges (Exhibit 12 to PXRE's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-15428), and incorporated by reference
herein).
23.1 Consent of Price Waterhouse LLP.*
23.2 Consent of Potter Anderson & Corroon (included in Exhibit 5.1 to this Registration Statement).*
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
23.3 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.2 to this Registration Statement).*
23.4 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 8 to this Registration Statement).*
24 Powers of Attorney.**
25.1 Form T-1 Statement of Eligibility of First Union National Bank to act as trustee under the Indenture.**
25.2 Form T-1 Statement of Eligibility of First Union National Bank to act as trustee under the Amended and
Restated Declaration of Trust.**
25.3 Form T-1 Statement of Eligibility of First Union National Bank to act as trustee under the Guarantee for
the benefit of the holders of Capital Securities.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Exchange Agent Agreement.**
</TABLE>
- ------------
* Filed herewith
** Previously filed
<PAGE>
<PAGE>
EXHIBIT 5.1/
EXHIBIT 23.2
[Letterhead of Potter Anderson & Corroon]
April 23, 1997
PXRE Capital Trust I
c/o PXRE Corporation
399 Thornall Street
Edison, New Jersey 08837
Re: PXRE Capital Trust I
8.85% Capital Trust Pass-through Securities'sm' (TRUPS'sm')
Ladies and Gentlemen:
We have acted as special Delaware counsel for PXRE Capital Trust
I, a Delaware statutory business trust (the "Trust") in connection with the
matters set forth herein and that certain Amended and Restated Declaration of
Trust (the "Declaration") dated as of January 29, 1997, by and among PXRE
Corporation, as Sponsor, First Union Bank of Delaware, as Delaware Trustee,
First Union National Bank, as Institutional Trustee, and the Administrators
named therein. Initially capitalized terms used herein and not otherwise defined
are used herein as defined in the Declaration.
For purposes of giving the opinions hereinafter set forth, we
have examined only the following documents and have conducted no independent
factual investigations of our own:
1. The Certificate of Trust for the Trust, dated as of January
21, 1997 (the "Certificate"), as filed in the Office of the Secretary of State
of the State of Delaware (the "Secretary of State") on January 21, 1997;
2. The original declaration of trust of the Trust, dated as of
January 21, 1997, by and between PXRE Corporation, as Sponsor, First Union Bank
of Delaware, as Delaware Trustee
<PAGE>
<PAGE>
PXRE Capital Trust I
April 23, 1997
Page 2
and the Administrators named therein (the "Original Declaration");
3. The Declaration;
4. A Certificate of Good Standing for the Trust, dated as of
April 23, 1997, obtained from the Secretary of State; and
5. The Registration Statement on Form S-4 (the "Registration
Statement"), including a prospectus with respect to the Trust (the
"Prospectus"), relating to, among other things, an Exchange Offer (the "Exchange
Offer") involving the issuance by the Trust of the 8.85% Capital Trust
Pass-through Securities'sm' (TRUPS'sm') of the Trust representing preferred,
undivided beneficial interests in the assets of the Trust (each, a "New Capital
Security" and collectively, the "New Capital Securities"), to be offered in
exchange for the presently outstanding 8.85% Capital Trust Pass-through
Securities'sm' (TRUPS'sm') of the Trust (the "Old Capital Securities"), filed by
the Sponsor and the Trust with the Securities and Exchange Commission.
As to certain facts material to the opinions expressed herein, we
have relied upon the representations and warranties contained in the documents
examined by us all of which we have assumed to be true, complete and accurate in
all material respects. The documents referred to in paragraphs 1, 2, 3 and 5
above are hereinafter collectively referred to as the "Agreements."
Based upon the foregoing, and upon an examination of such
questions of law of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Business Trust Act.
2. The New Capital Securities, upon issuance pursuant to the
Exchange Offer, will represent valid, and, subject to the qualifications set
forth in number 3 below, fully paid and non-assessable undivided beneficial
interests in the assets of the Trust.
<PAGE>
<PAGE>
PXRE Capital Trust I
April 23, 1997
Page 3
3. The Holders of New Capital Securities, as beneficial owners of
New Capital Securities of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware, except
that the Holders of New Capital Securities may be obligated to (a) provide
indemnity and/or security in connection with and pay taxes or governmental
charges arising from transfers or exchanges of certificates representing New
Capital Securities and the issuance of replacement certificates representing New
Capital Securities, (b) provide security or indemnity in connection with
requests of or directions to the Property Trustee to exercise its rights and
powers under the Declaration, and (c) provide indemnity in connection with
violations of the Declaration or Federal or states securities laws arising from
transfers or exchanges of certificates representing New Capital Securities and
the issuance of replacement certificates representing New Capital Securities.
All of the foregoing opinions contained herein are subject to the
following assumptions, qualifications, limitations and exceptions:
a. The foregoing opinions are limited to the laws of the
State of Delaware presently in effect, excluding the securities laws thereof. We
have not considered and express no opinion on the laws of any other
jurisdiction, including, without limitation, federal laws and rules and
regulations relating thereto.
b. We have assumed the due execution and delivery by each
party listed as a party to each document examined by us. We have assumed further
the due authorization by each party thereto (exclusive of the Trust) of each
document examined by us, and that each of such parties (exclusive of the Trust)
has the full corporate, or trust or banking, power, authority, and legal right
to execute, deliver and perform each such document. We also have assumed that
each of the parties to each of the Agreements (exclusive of the Trust and the
Administrators) is a corporation, bank, national banking association or trust
company, validly existing and in good standing under the laws of their
respective jurisdictions of organization and that the Agreements to which they
are a party do not result in the breach of the terms of, and do not contravene
their respective constituent documents, any contractual restriction binding on
them or any law, rule or
<PAGE>
<PAGE>
PXRE Capital Trust I
April 23, 1997
Page 4
regulation applicable to them. In addition, we have assumed the legal capacity
of any natural persons who are parties to any of the documents examined by us.
c. We have assumed that all signatures on documents
examined by us are genuine, that all documents submitted to us as originals are
authentic and that all documents submitted to us as copies conform with the
originals.
d. We have assumed that the Original Declaration and the
Declaration collectively, constitute the entire agreement among each of the
respective parties thereto with respect to the subject matter thereof, including
with respect to the creation, operation, dissolution and winding up of the Trust
and that the Declaration and the Certificate are in full force and effect.
e. We have assumed that no event set forth in Article 8 of
the Declaration has occurred.
f. We have assumed that the New Capital Securities will be
issued and exchanged in accordance with the Declaration and the Prospectus. We
have further assumed the receipt of each Person to whom a New Capital Security
is to be issued by the Trust of a certificate for such New Capital Security and
the exchange by it of an equivalent liquidation amount of Old Capital Securities
in accordance with the Declaration and the Prospectus.
g. We note that we have not participated in the
preparation, and do not assume responsibility for the contents, of the
Registration Statement or the Prospectus.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Potter Anderson & Corroon
<PAGE>
<PAGE>
EXHIBIT 5.2/
EXHIBIT 23.3
MORGAN, LEWIS & BOCKIUS LLP
COUNSELORS AT LAW
101 PARK AVENUE
NEW YORK, NY 10178-0060
212-309-6000
FAX: 212-309-6273
April 23, 1997
PXRE Corporation
399 Thornall Street
14th Floor
Edison, New Jersey 08837
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to PXRE Corporation, a Delaware corporation
("PXRE"), and Sponsor of PXRE Capital Trust I, a Delaware statutory business
trust (the "Trust"), in connection with the Registration Statement on Form S-4
of PXRE and the Trust, as amended to date (the "Registration Statement"), filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), relating to (i) the proposed issuance by the
Trust of $100,000,000 aggregate liquidation amount of 8.85% Capital Trust
Pass-through Securities'sm' (TRUPS'sm') (the "New Capital Securities")
registered under the Securities Act in exchange for up to $100,000,000
liquidation amount of the Trust's outstanding 8.85% Capital Trust Pass-through
Securities'sm' (TRUPS'sm') (the "Old Capital Securities"); (ii) the proposed
issuance by PXRE to the Trust of $103,093,000 aggregate principal amount of
PXRE's 8.85% Junior Subordinated Deferrable Interest Debentures due 2027 of PXRE
(the "New Debt Securities"), registered under the Securities Act in exchange for
up to $103,093,000 aggregate principal amount of PXRE's 8.85% Junior
Subordinated Deferrable Interest Debentures due 2027 (the "Old Debt
Securities"); and (iii) PXRE's Guarantee of the New Capital Securities
registered under the Securities Act in exchange for PXRE's Guarantee
of the Old Capital Securities, all as more fully described in the Registration
Statement and the prospectus included as part of the Registration Statement.
The New Capital Securities will be issued under an Amended and Restated
Declaration of Trust, dated as of January 29, 1997, among PXRE, as Sponsor, the
Administrators thereof, First Union Bank of Delaware, as Delaware Trustee, and
First Union National Bank, as Institutional Trustee (the "Amended Declaration");
and the New Debt Securities will be issued under an Indenture, dated as of
January 29, 1997, between PXRE and First Union National Bank, as Trustee, as
amended by a First Supplemental Indenture, dated as of January 29, 1997, between
PXRE and First Union National Bank, as Trustee (the "Indenture").
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act.
<PAGE>
<PAGE>
In connection with rendering this opinion, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of such documents as we have deemed necessary or appropriate as a
basis for the opinions set forth herein, including without limitation, (i) the
Registration Statement (including the prospectus included as part of the
Registration Statement); (ii) the Restated Certificate of Incorporation of PXRE,
as amended to date; (iii) the By-Laws of PXRE, as amended to date; (iv) certain
resolutions of the Board of Directors of PXRE, certified by the Secretary of
PXRE, relating to the transactions contemplated by the Registration Statement
(including the prospectus included as part of the Registration Statement); (v) a
specimen certificate evidencing the New Debt Securities; (vi) a specimen
certificate evidencing the New Capital Securities; (vii) the Indenture; (viii)
the Capital Securities Guarantee Agreement, dated as of January 29, 1997, by
PXRE and First Union National Bank, as Guarantee Trustee (the "Guarantee
Agreement"); (ix) the Amended Declaration; and (x) such other certificates,
instruments and documents as we considered necessary or appropriate for the
purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than PXRE, we have assumed that such parties
had the power, corporate and other, to enter into and perform all obligations
thereunder and also have assumed the due authorization by all requisite action,
corporate and other, and execution and delivery by such parties of such
documents and the validity and binding effect thereof on such parties. As to any
facts material to the opinion expressed herein which we have not independently
established or verified, we have relied upon statements and representations of
officers and other representatives of PXRE and others and of public officials.
Based upon and subject to the foregoing, we are of the opinion that:
(1) PXRE is a corporation duly organized and validly existing under the
laws of the State of Delaware.
(2) The New Debt Securities have been duly authorized by all requisite
corporate action of PXRE and, when issued and authenticated in accordance with
the terms of the Indenture and delivered against surrender and cancellation of a
like aggregate principal amount of the Old Debt Securities as contemplated by
the Registration Statement, such New Debt Securities will constitute legal,
valid and binding obligations of PXRE entitled to the benefits of the Indenture
and enforceable against PXRE in accordance with their terms.
(3) The Guarantee Agreement has been duly authorized by all requisite
corporate action of PXRE and duly delivered, and constitutes a legal, valid and
binding obligation of PXRE, enforceable against PXRE in accordance with its
terms.
The opinions set forth in paragraphs 2 and 3 above with respect to
enforceability are subject to the effect of any applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, rehabilitation, liquidation,
conservatorship, receivership, moratorium or other similar laws relating to or
affecting creditors' rights generally and to the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
<PAGE>
<PAGE>
We are members of the Bar of the State of New York and we do not express
any opinion herein concerning any law other than the law of the State of New
York, the federal law of the United States and the Delaware General Corporation
Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the prospectus that is part of such Registration Statement. In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations promulgated thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE>
<PAGE>
EXHIBIT 8/
EXHIBIT 23.4
MORGAN, LEWIS & BOCKIUS LLP
Counselors at Law
101 Park Avenue
New York, NY 10178-0060
212-309-6000
Fax: 212-309-6273
April 23, 1997
PXRE Corporation
399 Thornall Street
14th Floor
Edison, New Jersey 08837
Re: Registration Statement on Form S-4
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Ladies and Gentlemen:
We have acted as special U.S. tax counsel to PXRE Corporation, a Delaware
corporation ("PXRE"), and Sponsor of PXRE Capital Trust I, a Delaware statutory
business trust (the "Trust"), in connection with the Registration Statement on
Form S-4 of PXRE and the Trust, as amended to date (the "Registration
Statement"), filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), relating to (i) the
proposed issuance by the Trust of $100,000,000 aggregate liquidation amount of
8.85% Capital Trust Pass-through Securities'sm' (TRUPS'sm') (the "New Capital
Securities") registered under the Securities Act in exchange for up to
$100,000,000 liquidation amount of the Trust's outstanding 8.85% Capital Trust
Pass-through Securities'sm' (TRUPS'sm') (the "Old Capital Securities"; and,
together with the New Capital Securities, the "Capital Securities"); (ii) the
proposed issuance by PXRE to the Trust of $103,093,000 aggregate principal
amount of PXRE's 8.85% Junior Subordinated Deferrable Interest Debentures due
2027 of PXRE (the "New Debt Securities"), registered under the Securities Act in
exchange for up to $103,093,000 aggregate principal amount of PXRE's 8.85%
Junior Subordinated Deferrable Interest Debentures due 2027 (the "Old Debt
Securities"; and, together with the New Debt Securities, the "Subordinated
Debt Securities"); and (iii) PXRE's Guarantee of the New Capital Securities
registered under the Securities Act in exchange for PXRE's Guarantee of the
Old Capital Securities, all as more fully described in the Registration
Statement and the prospectus included as part of the Registration Statement.
Except as otherwise specified, terms used herein have the meanings ascribed
to them in the Registration Statement.
It is our opinion that the statements made in the Registration Statement
under the caption "United States Federal Income Taxation," insofar as they
purport to describe the material United States federal income tax consequences
of the purchase, ownership and disposition of the Subordinated Debt Securities
and Capital Securities, fairly summarize in all material respects the matters
therein described.
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In giving the opinion expressed above, we have examined among other things
such documents as we have deemed necessary or appropriate as a basis for the
opinion set forth herein, including without limitation, (i) the final offering
memorandum, dated January 24, 1997, of PXRE and the Trust, relating to the sale
of the Old Capital Securities; (ii) the purchase agreement for the issuance and
sale of $100,000,000 aggregate liquidation amount of the Old Capital Securities
by the Trust; (iii) the Indenture; (iv) the Supplemental Indenture; (v) the
Common Securities Guarantee Agreement, dated as of January 29, 1997, executed by
PXRE as Guarantor; (vi) the Capital Securities Guarantee Agreement, dated as of
January 29, 1997, by PXRE and First Union National Bank, as Guarantee Trustee;
(vii) the Registration Rights Agreement, dated January 29, 1997, among PXRE, the
Trust and the Initial Purchasers; (viii) the Amended and Restated Declaration of
Trust, dated as of January 29, 1997, by First Union Bank of Delaware as Delaware
Trustee, First Union National Bank as Institutional Trustee, PXRE as Sponsor,
and the Administrators (as defined therein); (ix) the form of the Capital
Securities included as part of the Declaration; (x) the form of the Subordinated
Debt Securities included as part of the Supplemental Indenture; (xi) the
Registration Statement (including the prospectus included as part of the
Registration Statement); (xii) a specimen certificate evidencing the New Debt
Securities; (xiii) a specimen certificate evidencing the New Capital Securities;
and (xiv) such other certificates, instruments and documents as we considered
necessary or appropriate for the purposes of this opinion.
We have also examined originals, or copies satisfactory to us, of all such
corporate records, agreements, certificates, governmental orders, permits and
other documents as we have deemed relevant and necessary as a basis for the
opinions hereinafter expressed. In such examination we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity with the original documents of all documents
submitted to us as copies. As to any facts material to such opinions, we have
relied upon the statements and representations of officers or other
representatives of PXRE and the Trust and others and of public officials.
The opinion expressed above is based upon existing United States federal
income tax laws arising under the Internal Revenue Code of 1986, as amended,
Treasury regulations promulgated thereunder, administrative pronouncements and
judicial decisions as of the date hereof. 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.
The opinion expressed above 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 matters were contested, a court would agree with the opinion
set forth herein.
In giving the foregoing opinion, we express no opinion regarding any other
aspect of United States federal tax law or any aspect of state, local or foreign
tax law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the captions
"United States Federal Income Taxation" and "Legal Matters" in the prospectus
that is part of such Registration Statement. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations promulgated
thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to this Registration Statement on Form
S-4 of our reports dated February 13, 1997 appearing on pages F-1 and F-29 of
the Annual Report on Form 10-K of PXRE Corporation for the year ended December
31, 1996. We also consent to the incorporation by reference of our reports dated
February 13, 1996 appearing on pages F-1 and F-19 of the Annual Report on Form
10-K of Transnational Re Corporation for the year ended December 31, 1995. We
also consent to the reference to us under the caption "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
April 23, 1997
New York, New York
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