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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 1996 Commission File Number 0-15428
PXRE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1183996
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
399 THORNALL STREET, 14TH FLOOR
EDISON, NJ 08837
TELEPHONE: (908) 906-8100
(Address including zip code, and telephone number, including area code
of registrant's principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: COMMON STOCK, PAR
VALUE $0.01 PER SHARE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 21, 1997 computed by reference to the closing price of
the stock as of the close of business on March 21, 1997 was $338,104,066. As of
March 21, 1997, 13,929,504 shares of the registrant's common stock were issued
and outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<S> <C>
Part III Portions of PXRE Corporation's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on June 5, 1997.
Part IV Portions of PXRE Corporation's Proxy Statement dated May 3, 1995.
Part IV Portions of PXRE Corporation's Proxy Statement dated April 22, 1994.
Part IV Portions of PXRE Corporation's Proxy Statement dated April 23, 1993
Part IV Portions of PXRE Corporation's Proxy Statement dated April 12, 1991.
Part IV Portions of PXRE Corporation's Proxy Statement dated April 13, 1990.
</TABLE>
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PART I
ITEM 1. BUSINESS
INTRODUCTION
PXRE Corporation ("PXRE"), through its wholly-owned subsidiary PXRE
Reinsurance Company ("PXRE Reinsurance"), 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. See
"Business--Retrocession Agreements."
PXRE was organized in July 1986 as a Delaware corporation by Phoenix
Home Life Mutual Insurance Company ("Phoenix Home Life") to succeed, through
PXRE Reinsurance, to the property and casualty reinsurance business carried on
since 1982 by Phoenix General Insurance Company, formerly a wholly-owned
subsidiary of Phoenix Home Life. As of March 21, 1997, Phoenix Home Life owned
less than 5% of the outstanding common stock of PXRE.
In November 1993, PXRE sponsored the initial public offering of
Transnational Re Corporation ("TREX") to raise capital and take advantage of
favorable conditions in the worldwide retrocessional reinsurance market. PXRE,
through PXRE Reinsurance, retained a 21% ownership position in TREX and had
responsibility for the day-to-day operations of TREX, including all the
reinsurance operations of its subsidiary, Transnational Reinsurance Company
("Transnational Reinsurance"). TREX and Transnational Reinsurance had no paid
employees.
On December 11, 1996, PXRE completed the merger of TREX with and into
PXRE (the "Merger"), pursuant to which each share of common stock of TREX 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 TREX 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 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 TREX (including Transnational Reinsurance) has been included in PXRE's
consolidated results of operations from the date of acquisition.
INDUSTRY BACKGROUND
Primary insurers and certain reinsurers (also known as ceding companies)
purchase reinsurance principally to reduce their liability on individual risks,
to protect themselves against
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catastrophic losses and to enhance their ratio of total net liabilities to
capital and surplus. In consideration for providing reinsurance, PXRE receives a
share of the premiums written by the ceding company. In certain instances, PXRE
in turn purchases reinsurance protection from other reinsurers pursuant to
retrocession agreements and surrenders to such reinsurers a portion of the
premiums it receives from ceding companies.
There are two principal types of reinsurance: facultative reinsurance
and treaty reinsurance. In facultative reinsurance, the reinsurer separately
underwrites each individual risk. In treaty reinsurance, the reinsurer and the
ceding company negotiate a contractual arrangement which reinsures a specified
portion of a type or category of risk. In the underwriting of treaty
reinsurance, the reinsurer does not separately evaluate each individual risk
assumed, as it must in the underwriting of facultative reinsurance, and in
general depends on the original underwriting decisions made by the ceding
company.
Treaty reinsurance can be written on either a pro rata or an excess of
loss basis. In pro rata reinsurance, the reinsurer agrees, in return for a
percentage of the premiums, to share in a proportional amount of the losses up
to the limit, if any, of the reinsurance agreement. Premiums that the ceding
company pays to the reinsurer are proportional to the premiums that the ceding
company receives, and the reinsurer generally pays the ceding company a ceding
commission to reimburse the ceding company for the expenses incurred in
obtaining the business. In excess of loss treaty reinsurance, the reinsurer
indemnifies the ceding company for a portion of the losses on underlying
policies which exceed a specified loss retention amount up to an amount
specified in the reinsurance agreement. Premiums paid by the ceding company for
excess of loss coverage may not be directly proportional to the premiums on the
underlying policies because the reinsurer does not assume a proportional share
of the underlying risk.
Excess of loss treaty reinsurance can, in turn, be written on a per risk
or catastrophe basis. Per risk excess of loss reinsurance protects the ceding
company against a loss resulting from a single risk or location. Catastrophe
excess of loss reinsurance protects a ceding company from an accumulation of a
large number of related losses resulting from a variety of risks which may occur
in a given catastrophe, and hence is a highly volatile business.
Retrocessional reinsurance is reinsurance provided by one reinsurer (the
retrocessionaire) to another reinsurer (the ceding company or retrocedent) who
purchases retrocessional reinsurance for reasons similar to those that cause a
primary insurer to purchase reinsurance: principally to reduce its liability on
individual risks, to protect itself against catastrophic losses and to maintain
acceptable regulatory ratios. In consideration for providing reinsurance, a
retrocessionaire receives a share of the premiums written by the ceding company.
While PXRE's retrocessional coverage focuses on the property market, PXRE also
writes marine and aviation retrocessional reinsurance.
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CORPORATE STRATEGY
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 had 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 both 1996 and
1995, catastrophe-related coverages represented approximately 68% of PXRE's
gross premiums written, as compared to 69% in 1994.
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 both 1996 and
1995, international reinsurance (principally the United Kingdom, Continental
Europe, Australia and Asia) represented approximately 71% of gross written
premiums, compared to approximately 64% in 1994. See Note 12 of Notes to
Consolidated Financial Statements.
PXRE's catastrophe retrocessional facilities and associated net
exposures have fluctuated with PXRE's commitment and withholding of its
underwriting capacity.
BUSINESS WRITTEN
Substantially all of the reinsurance that PXRE currently writes is on
property risks, both commercial and personal, and marine and aviation risks.
(Although PXRE has written some casualty
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reinsurance in the past, it substantially reduced its writing of such
reinsurance in 1986 and currently confines its casualty reinsurance activities
to the marine and aviation business.) Catastrophe coverage by its nature
protects both commercial and personal property risks since such coverage
protects a ceding company from an accumulation of individual losses (commercial
and personal) arising from a catastrophic event. The majority of PXRE's pro rata
and risk excess business is written on commercial property risks.
Treaty reinsurance represents the major portion of PXRE's reinsurance
portfolio. PXRE typically participates in treaties with other reinsurers. PXRE
occasionally will underwrite 100% of a treaty, but it usually underwrites a
substantially smaller percentage. PXRE believes that underwriting treaty
reinsurance on this basis potentially involves less risk in the long-term than
underwriting facultative reinsurance on the basis of an independent re-analysis
of underwritten risks, due to the fact that the risks which generally are
available for facultative reinsurance are usually more difficult to assess and
often protect against more hazardous exposures than those available for treaty
reinsurance. Emphasis on treaty reinsurance also allows PXRE to maintain a
smaller staff than would be necessary to write the same volume of facultative
reinsurance.
PXRE's mix of business on a gross premiums written basis is set forth in
the following table for the periods indicated:
DISTRIBUTION OF GROSS PREMIUMS WRITTEN
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1996 1995 1994
-------------- -------------- --------------
Type of Business Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------
(in thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C>
Reinsurance:
Treaty:
Catastrophe-Related $ 78,013 68.2% $105,985 68.2% $122,990 68.5%
Pro Rata 3,126 2.7 3,427 2.2 6,132 3.4
Marine & Aviation 15,619 13.7 26,155 16.8 31,176 17.3
Risk Excess 9,278 8.1 10,894 7.0 11,163 6.2
Facultative 8,312 7.3 8,919 5.8 8,225 4.6
Primary Insurance -- -- -- -- (2) --
-------- ----- -------- ----- -------- -----
Total $114,348 100.0% $155,380 100.0% $179,684 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
Catastrophe-related coverages experienced substantial improvements in
pricing and other terms 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, PXRE has been moving to
layers of risk that are less affected by competitive pressures, or reducing
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commitments when necessary, which has resulted in the contraction in premium
volume for catastrophe-related coverages since 1994.
In late 1992, management decided to deemphasize pro rata and risk excess
business because competition among reinsurers for such business and the levels
of premium rates charged by primary insurers for property insurance had
adversely impacted the profitability of such business. In addition, pro rata and
risk excess business incurred substantial losses from Hurricane Andrew in 1992
reflecting the vulnerability of these lines of business to a major catastrophic
event.
PXRE also writes marine and aviation reinsurance, although its premium
volume for these coverages has been contracting since 1994 in response to
increasing competition.
Facultative reinsurance premium volume has not changed significantly
during the period and represented approximately 7% of PXRE's gross premiums
written for 1996, up from 6% and 5% in 1995 and 1994, respectively, due to the
contraction in premium volumes of other types of business.
RETROCESSIONAL AGREEMENTS
The following table sets forth certain information regarding the volume
of premiums PXRE has ceded to other reinsurers pursuant to retrocessional
agreements for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1996 1995 1994
--------- --------- ---------
(in thousands)
<S> <C> <C> <C>
Gross premiums written $114,348 $155,380 $179,684
Reinsurance premiums ceded:
Managed business participants 21,238 26,774 29,842
Catastrophe coverage 5,427 6,180 12,602
TREX management agreement (1) 19,965 24,790 28,722
-------- --------- --------
Total reinsurance premiums ceded 46,630 57,744 71,166
-------- --------- --------
Net premiums written $ 67,718 $ 97,636 $108,518
======== ========= ========
</TABLE>
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(1) Consists of premiums written by PXRE and retroceded to Transnational
Reinsurance as required by the management agreement to which such
companies were parties prior to the Merger. See "Business--Management
Agreement."
PXRE has been able to increase its underwriting commitments and to
generate management fee income by retroceding some of its underwritten risks to
other reinsurers through various retrocessional arrangements whereby it manages
business for such participants. In 1996, PXRE was a party to three such
arrangements. The first such arrangement, which is subject to renewal each
January 1 and which has been renewed effective January 1, 1997, is referred to
as the AMA. The AMA is a pool consisting of a number of insurance companies (the
"Pool"), for which PXRE acts as reinsurance manager. In 1996, the Pool was
comprised of Merrimack Mutual Fire Insurance Company, Pennsylvania Lumbermens
Mutual Insurance Company and NRMA Insurance Limited.
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For 1997, Auto-Owners Insurance Company has been added to the Pool. It is PXRE's
policy that in order to join the Pool, companies must have a rating by A.M. Best
Company, Inc. ("A.M. Best") of "A-" or better, other than foreign companies,
most of which (including the foreign participant in the AMA) are not rated by
A.M. Best, an independent insurance industry rating organization which rates
insurance companies upon factors of concern to policyholders. Under the terms of
the agreements governing the Pool, if a participating company's rating falls
below "A-", it generally will be required to withdraw from the Pool in the
following year. PXRE receives, as reinsurance manager, a commission of 5% of
premiums ceded, as well as a contingent profit commission equal to a percentage
of any ultimate underwriting profits in connection with the reinsurance ceded.
The contingent profit commission is paid over a three-year period and is subject
to adjustment based on cumulative experience.
The second such retrocessional arrangement, which was renewed effective
January 1, 1997, is with Trenwick America Reinsurance Corporation ("Trenwick
Group"). PXRE receives, as reinsurance manager, a management fee of 5% of
premiums ceded, as well as a contingent profit commission equal to a percentage
of any ultimate underwriting profits in connection with the reinsurance ceded.
The contingent profit commission is paid over a three-year period and is subject
to adjustment based on cumulative experience. Trenwick Group is currently rated
"A+ (Superior)" by A.M. Best.
The third such retrocessional arrangement is with Investors Reinsurance
Ltd., a Barbados reinsurer ("Investors Re"), pursuant to which PXRE has agreed
to offer to cede to Investors Re in each of the years 1996 through 2000 a quota
share of PXRE's business. The quota share to be ceded to Investors Re in each
such year will vary based upon, among other things, the volume of business
written by PXRE, subject to a minimum annual cession. Pursuant to this
arrangement, PXRE receives an override commission of 4.2% of premiums ceded as
well as a profit commission equal to a percentage of the net profits in respect
of the reinsurance ceded. Because Investors Re is not licensed in any
jurisdiction in the United States, the retrocessional arrangement provides that
a trust fund must be maintained and/or letters of credit established by
Investors Re for the benefit of PXRE to secure Investors Re's obligations.
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The following table sets forth PXRE's earned commissions from
retrocessionaires pursuant to its three managed business arrangements (not
including Transnational Reinsurance) for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1996 1995 1994
------ ------ -----
(in thousands)
<S> <C> <C> <C>
Commission $1,043 $1,376 $1,532
Contingent profit commission(1) 2,477 1,515 2,096
------ ------ ------
Total $3,520 $2,891 $3,628
====== ====== ======
</TABLE>
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(1) Contingent profit commission is paid over a three-year period and is
subject to adjustment based on cumulative experience under the AMA and
Trenwick Group arrangements and is paid annually under the arrangement
with Investors Re.
In the past, PXRE has entered into other retrocessional arrangements
providing catastrophic protection. In recent years, PXRE reduced, upon renewal,
its own catastrophe retrocessional facilities and has borne the associated
increase in net exposures. As the cost of catastrophe retrocessional facilities
has declined since 1995, PXRE has again commenced selectively purchasing such
coverage, although PXRE did not purchase any significant catastrophe
retrocessional coverage in 1995 or 1996.
PXRE has a committee consisting of its chief executive officer and
senior underwriting executives responsible for the selection of reinsurers as
managed business participants or as participating reinsurers in the catastrophe
coverage protecting PXRE. Proposed reinsurers are evaluated at least annually
based on consideration of a number of factors including the management,
financial statements and the historical experience of the reinsurer. This
procedure is followed whether or not a rating has been assigned to a proposed
reinsurer by any rating organization. All reinsurers, whether obtained through
direct contact or the use of reinsurance intermediaries, are subject to approval
by PXRE.
At December 31, 1996, estimated losses recoverable (including incurred
but not reported losses) from retrocessionaires were $18,065,000 including
$2,432,000 of paid loss recoverables. Since its inception, PXRE has had minimal
amounts of uncollectible reinsurance. It may not be appropriate to extrapolate
future experience from such historical experience. In the event that
retrocessionaires are unable to meet their contractual obligations, PXRE would
be liable for such defaulted amounts.
MANAGEMENT AGREEMENT
From November 8, 1993 until the Merger, PXRE Reinsurance was party to a
management agreement (the "Management Agreement") with TREX and Transnational
Reinsurance.
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Under the Management Agreement, PXRE Reinsurance had responsibility for
the day-to-day operations of TREX and Transnational Reinsurance, including all
the reinsurance operations of Transnational Reinsurance. TREX and Transnational
Reinsurance did not have any operating properties, systems or paid employees.
Pursuant to the Management Agreement, PXRE Reinsurance provided all the
operating facilities, systems, equipment and management and clerical employees
required to conduct the businesses of TREX and Transnational Reinsurance.
Following the Merger, Transnational Reinsurance is no longer writing any new
reinsurance business. Premiums ceded to Transnational Reinsurance in 1996 and
prior years will be retained by PXRE Reinsurance upon renewal in 1997.
Transnational Reinsurance paid PXRE Reinsurance an annual basic
management fee under the Management Agreement equal to 5% of gross premiums
written (including reinstatement premiums less return premiums) of Transnational
Reinsurance and its consolidated subsidiaries (if any) as reflected in
Transnational Reinsurance's statutory quarterly and annual statements filed with
state insurance authorities. TREX and Transnational Reinsurance also paid all
expenses directly attributable to them, including a proportionate share of PXRE
Reinsurance's rental expenses with respect to office space based on gross
premiums written for the management year. PXRE's earned management fees from
Transnational Reinsurance pursuant to the Management Agreement were $2,512,000,
$3,526,000 and $3,364,000 for 1996, 1995 and 1994, respectively.
LOSS LIABILITIES AND CLAIMS
PXRE establishes losses and loss expense liabilities (to cover expenses
related to settling claims, including legal and other fees) to provide for the
ultimate cost of settlement and administration of claims for losses, including
claims that have been reported to it by its reinsureds and claims for losses
that have occurred but have not yet been reported to PXRE. Under United States
generally accepted accounting principles ("GAAP"), PXRE is not permitted to
establish loss reserves until an event which may give rise to a claim occurs.
For reported losses, PXRE first establishes liabilities when it receives
notice of the claim. It is PXRE's general policy to establish liabilities for
reported losses in an amount equal to the liability set by the reinsured. In
certain instances, PXRE will conduct an investigation to determine if the amount
established by the reinsured is appropriate or if it should be adjusted.
For incurred but not reported losses, a variety of methods have been
developed in the insurance industry for use in determining such liabilities. In
general, these methods involve the extrapolation of reported loss data to
estimate ultimate losses. PXRE's loss calculation methods generally rely upon a
projection of ultimate losses based upon the historical patterns of reported
loss development. Additionally, PXRE makes provision through its liabilities for
incurred but not reported losses for any identified deficiencies in the
liabilities for reported losses set by its reinsureds.
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The following table provides a reconciliation of beginning and ending
loss and loss expense liabilities under GAAP for the fiscal years ended December
31, 1996, 1995 and 1994. PXRE does not discount such liabilities; that is, it
does not calculate them on a present value basis.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Gross GAAP liability for losses and
loss expenses at beginning of year..................... $72,719 $81,836 $71,739
Less: Gross reserves of subsidiary
at date subsidiary was sold............................ -- -- 297
Add: Gross provision for losses and loss expenses--
Occurring in current year.............................. 27,327 43,388 85,805
Occurring in prior years............................... 10,510 5,982 6,746
------- -------- -------
Total gross provision(1)............................. 37,837 49,370 92,551
------- -------- -------
Less: Gross payments for losses and loss expenses--
Occurring in current year.............................. 6,469 16,886 44,337
Occurring in prior years............................... 42,698 41,601 37,820
------- -------- -------
Total gross payments................................. 49,167 58,487 82,157
------- -------- -------
Gross GAAP liability for losses
and loss expenses at end of year....................... $61,389 $72,719 $81,836
Add: Gross reserves of TREX
at date of Merger(2).................................. 9,589 -- --
------- ------- -------
Total gross liability................................ $70,978 $72,719 $81,836
======= ======= =======
Ceded GAAP liability for losses
and loss expenses at end of year....................... (27,154) (28,295) (35,788)
Net GAAP liability for losses
and loss expenses at end of year....................... $43,824 $44,424 $46,048
======= ======= =======
Foreign currency adjustment.............................. (145) (86) (124)
======= ======= =======
Gross SAP liability for losses and
loss expenses at end of year........................... $70,833 $72,633 $81,712
======= ======= =======
</TABLE>
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(1) The GAAP provision for losses and loss expenses includes net foreign
currency exchange (losses) gains of ($41,000), $39,000 and ($338,000)
for 1996, 1995 and 1994, respectively.
(2) Liabilities assumed from TREX at December 11, 1996.
The following table presents the development of PXRE's GAAP balance
sheet liability for losses and loss expenses for the period 1986 through 1996
for PXRE and its predecessor. The top line of the table shows the liabilities at
the balance sheet date for each of the indicated years. This reflects the
estimated amounts of losses and loss expenses for claims arising in that year
and all prior years that are unpaid at the balance sheet date, including losses
incurred but not yet reported to PXRE. The upper portion of the table shows the
cumulative amounts subsequently paid as of successive years with respect to the
liability. The lower portion of the table shows the reestimated amount of
previously recorded liability based on experience as of the end of each
succeeding year. The estimates change as more information becomes known about
the frequency and severity of claims for individual years. A redundancy
(deficiency) exists when the reestimated liability at each December 31 is less
(greater) than the prior liability estimate. The "cumulative redundancy
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(deficiency)" depicted in the table, for any particular calendar year,
represents the aggregate change in the initial estimates over all subsequent
calendar years.
Each amount in the table below includes the effects of all changes in
amounts for prior periods. For example, if a loss determined in 1989 to be
$150,000 was first reserved in 1986 at $100,000, the $50,000 deficiency (actual
loss minus original estimate) would be included in the cumulative redundancy
(deficiency) in each of the years 1986-1988 shown below. This table does not
present accident or policy year development data.
Loss and loss expense liabilities for December 31, 1996, 1995, 1994,
1993, 1992 and 1991 are presented on a gross basis (excluding the effects of
losses recoverable from retrocessionaires). Loss and loss expense liabilities
for December 31, 1990 and prior periods are stated on a net basis (after
deduction for losses recoverable from retrocessionaires) because gross incurred
but not reported liability data were not developed by PXRE at any date prior to
December 31, 1991 as it was not required for statutory reporting purposes.
Furthermore, it is not practicable for PXRE currently to reconstruct this
information.
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<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -----
(in thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liabilities for losses and
loss expenses........... $70,978 $72,719 $81,836 $71,442 $88,668 $62,664 $31,632 $37,963 $34,627 $30,301 $23,671
Cumulative amount of
liability paid through:
One year later.......... 42,698 41,601 37,820 59,773 35,575 15,688 18,421 16,183 11,416 9,597
Two years later......... 58,968 54,400 79,926 48,393 25,466 28,178 21,597 19,107 12,212
Three years later....... 60,850 89,519 52,301 29,066 31,852 23,779 20,673 16,564
Four years later........ 94,261 55,022 30,117 33,980 24,689 21,280 17,175
Five years later........ 56,976 31,528 34,434 25,980 21,783 17,574
Six years later......... 32,137 35,408 26,085 22,632 17,821
Seven years later....... 36,003 26,531 22,724 18,584
Eight years later....... 27,167 22,955 18,745
Nine years later........ 23,435 19,139
Ten years later......... 19,083
Liabilities reestimated as of:
One year later.......... 83,228 87,818 78,188 101,423 67,165 33,874 37,211 31,863 28,663 20,688
Two years later......... 87,750 76,902 103,632 62,262 33,726 37,800 29,506 26,765 19,549
Three years later....... 74,683 105,165 62,827 33,488 36,588 27,944 25,354 19,185
Four years later........ 103,801 63,032 33,682 36,881 27,480 23,829 19,370
Five years later........ 62,593 34,310 37,023 27,751 23,604 19,000
Six years later......... 33,777 37,667 27,878 23,874 18,838
Seven years later....... 37,166 28,063 23,898 19,207
Eight years later....... 27,959 24,018 19,448
Nine years later........ 23,954 19,603
Ten years later......... 19,507
Gross cumulative redundancy
(deficiency) through
December 31, 1996:
Amount.................. (10,509) (5,914) (3,241) (15,133) 71 NA NA NA NA NA
Percentage.............. (14%) (7%) (5%) (17%) 0% NA NA NA NA NA
Retrocessional recoveries. 7,260 2,467 1,924 3,515 (1,584) NA NA NA NA NA
Net cumulative redundancy
(deficiency) through
December 31, 1996:
------ ------ ------ ------- ------ ------ --- ----- ----- -----
Amount.................. (3,249) (3,447) (1,317) (11,618) (1,513) (2,145) 797 6,668 6,347 4,164
Percentage.............. (7%) (7%) (3%) (33%) (4%) (7%) 2% 19% 21% 18%
</TABLE>
-12-
<PAGE>
<PAGE>
During 1996, PXRE incurred development from prior year losses amounting
to $3,249,000 primarily due to Hurricanes Marilyn and Luis. During 1995, PXRE
incurred development from prior year losses amounting to $4,311,000 primarily as
a result of losses from the Northridge earthquake. During 1994, PXRE incurred
development from prior year losses amounting to $3,261,000 primarily as a result
of marine pro rata losses and 1993 Midwest flood activity. During 1993, PXRE's
management strengthened the liability for incurred but not reported losses
occurring in prior years by $10,499,000, of which approximately $5,394,000 was
the result of additional information received with respect to Hurricanes Andrew
and Iniki and approximately $3,330,000 was the result of losses under a number
of pro rata reinsurance treaties. During 1992, PXRE's management strengthened
the liability for incurred but not reported losses occurring in prior years by
$2,355,000 of which $2,036,000 was the result of additional information received
with respect to losses under a number of pro rata reinsurance treaties. In 1991,
PXRE's management strengthened the liability for losses and loss expenses
occurring in prior years by $2,242,000, of which $1,196,000 was due to
unfavorable development experienced on PXRE's marine and aviation reinsurance
business. PXRE commenced writing marine and aviation reinsurance in 1988 and
estimated the amounts of losses and loss expenses for claims on such business
during 1988 and subsequent periods based on cumulative experience as of such
time. As more information became available, prior estimates were revised.
Approximately $740,000 of the balance of the liability strengthening in 1991 was
attributable to changes in 1991 in the loss amounts applicable to catastrophes
which occurred in 1989 and 1990,years impacted by high levels of catastrophe
loss activity. Management of PXRE believes that the strengthening of reserves in
fiscal years 1991 through 1996 is attributable to the factors described above
and not to any material changes in reserving methods or assumptions. Management
of PXRE further believes that the cumulative reserve redundancies during the
period 1986 through 1989 demonstrated by the above table was attributable
principally to significant changes in primary insurance rates commencing in 1985
and a favorable change in loss activity during the period.
PXRE's management believes that its overall liability for losses and
loss expenses at December 31, 1996, is adequate. In contrast to casualty losses,
which frequently are slow to be reported and may 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 time period.
However, the estimation of losses for catastrophe reinsurers is inherently less
reliable than for reinsurers of risks which have an established historical
pattern of losses. In addition, insured events which occur near the end of a
reporting period, as well as, with respect to PXRE's retrocessional book of
business, the significant delay in losses being reported to insurance carriers,
reinsurers and finally retrocessionaires, require PXRE to make estimates of
losses based on limited information from ceding companies and based on its own
underwriting data. Because of the inherent uncertainty in the reserving process,
as well as PXRE's writings of a small amount of casualty reinsurance, there is a
risk that PXRE's liability for losses and loss expenses could prove to be
inadequate in any year, with a consequent adverse impact on future earnings and
stockholders' equity. Moreover, such risk could be exacerbated to the extent
management of PXRE forgoes catastrophe retrocessional coverage. Also, conditions
and trends that have affected reserve
-13-
<PAGE>
<PAGE>
development in the past may not necessarily occur in the future. Accordingly, it
would not be appropriate to extrapolate future redundancies or deficiencies
based on the foregoing.
INVESTMENTS
PXRE's management has established general procedures and guidelines for
its investment portfolio and oversees investment management carried out by
Phoenix Duff & Phelps Corporation ("Phoenix Duff & Phelps"), a public
majority-owned subsidiary of Phoenix Home Life. Although these investment
guidelines stress conservation of principal, diversification of risk, and
liquidity, investments are subject to market-wide risks and fluctuations, as
well as to risk inherent in particular securities. As at December 31,1996,
PXRE's investment portfolio consisted primarily of fixed maturities and
short-term investments. In 1994, PXRE's Board of Directors approved a resolution
allowing PXRE to invest up to 15% of its consolidated net worth in equities. As
at December 31, 1996, PXRE had invested $6,850,000 in equity securities. The
investment policies and all investments of PXRE are approved by its Board of
Directors.
The following table summarizes the investments of PXRE at December
31, 1996 and 1995:
ANALYSIS OF INVESTMENTS
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
------------------- -------------------
Amount Percent Amount Percent
------ ------- ------ -------
(in thousands, except percentages)
<S> <C> <C> <C> <C>
Fixed maturities (at amortized cost):
United States government securities $180,519 39.2% $165,406 62.9%
United States government agency
mortgage and asset-backed securities 87,861 19.1 50,942 19.3
Other mortgage and asset-backed securities 55,314 12.0
Obligations of states and political
subdivisions 70,268 15.2 -- --
-------- ----- -------- -----
Total fixed maturities 393,962 85.5 216,348 82.2
Equity securities (at cost) 6,850 1.5 5,000 1.9
Short-term investments 59,792 13.0 41,722 15.9
-------- ----- -------- -----
Total investments $460,604 100.0% $263,070 100.0%
======== ===== ======== =====
</TABLE>
In 1995, PXRE sold its holdings of municipal bonds and reinvested the
proceeds principally in treasury securities. In 1996, PXRE acquired municipal
bonds from TREX as part of the assets and liabilities received as a result of
the Merger.
-14-
<PAGE>
<PAGE>
The following table indicates the composition of PXRE's fixed maturity
investments (at amortized cost), including short-term investments, by time to
maturity at December 31, 1996 and 1995:
COMPOSITION OF INVESTMENTS BY MATURITY
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
------------------- -------------------
Amount Percent Amount Percent
------ ------- ------ -------
(in thousands, except percentages)
<S> <C> <C> <C> <C>
Maturity(1)
- -----------
One year or less $ 89,868 19.8% $50,694 19.7%
Over 1 year through 5 years 151,500 33.4 89,860 34.8
Over 5 years through 10 years 58,449 12.9 66,574 25.8
Over 10 years through 20 years 10,762 2.4 -- --
--------- ----- -------- -----
310,579 68.5 207,128 80.3
United States government agency
and other mortgage and asset-backed 143,175 31.5 50,942 19.7
securities --------- ----- -------- -----
Total $453,754 100.0% $258,070 100.0%
========= ===== ========= =====
</TABLE>
- ----------
(1) Based on stated maturity dates with no prepayment assumptions.
The average market yield to maturity of PXRE's fixed maturities
portfolio at December 31, 1996 and December 31, 1995 was 5.7% and 5.3%,
respectively. At December 31, 1996, the fair value of PXRE's fixed maturities
portfolio exceeded its amortized cost by $589,000. At December 31, 1995, the
fair value of PXRE's fixed maturities portfolio exceeded its amortized cost by
$5,009,000.
-15-
<PAGE>
<PAGE>
The following table indicates the composition of PXRE's fixed maturities
portfolio (at amortized cost), excluding short-term investments, by rating at
December 31, 1996 and 1995:
COMPOSITION OF FIXED MATURITIES PORTFOLIO BY RATING
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
------------------- -------------------
Amount Percent Amount Percent
------ ------- ------ -------
(in thousands, except percentages)
<S> <C> <C> <C> <C>
Ratings(1)
United States government securities $180,519 45.8% $ 165,406 76.5%
United States government agency
mortgage and asset-backed 87,861 22.3 50,942 23.5
securities
Other mortgage and asset-backed
securities
Aaa and/or AAA 50,318 12.8 -- --
Baa2 and/or BBB 4,996 1.3 -- --
Obligations of states and political
subdivisions
Aaa and/or AAA 30,726 7.8 -- --
Aa and/or AA 37,511 9.5 -- --
A1 and/or A 2,031 0.5 -- --
-------- ----- -------- -----
Total $393,962 100.0% $216,348 100.0%
======== ===== ======== =====
</TABLE>
- ----------------
(1) Ratings as assigned by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"), respectively. Such ratings are
generally assigned upon the issuance of the securities, subject to revision
on the basis of ongoing evaluations.
PXRE's management continually evaluates the composition of the
investment portfolio and repositions the portfolio in response to market
conditions in order to improve returns while maintaining liquidity and superior
credit quality. Consistent with the foregoing, in the first quarter of 1997,
PXRE began to further diversify its investment portfolio by reducing its
investments in U.S. government securities and increasing its investment in
equity securities and other types of debt securities.
MARKETING
In the United States, PXRE currently reinsures both national and
regional insurance and reinsurance companies headquartered mainly in the
Northeast and Midwest. PXRE also provides reinsurance for international
insurance and reinsurance companies principally headquartered in the United
Kingdom, Continental Europe, Australia, and Asia.
PXRE obtains most of its facultative business and substantially all of its
treaty business through reinsurance intermediaries which represent reinsureds
in negotiations for the purchase of reinsurance. None of the reinsurance
intermediaries through which PXRE obtains business are authorized to arrange
any business in the name of PXRE without PXRE's approval. PXRE pays such
intermediaries or brokers commissions based on the amount of premiums and type
of business
-16-
<PAGE>
<PAGE>
ceded. These payments constitute part of PXRE's total acquisition costs and are
included in its underwriting expenses. PXRE generally pays reinsurance brokerage
fees believed to be comparable to industry norms.
Approximately 21.1% and 14.9% of gross premiums written in fiscal year
1996 were arranged through the worldwide branch offices of Guy Carpenter &
Company, Inc., a subsidiary of Marsh & McLennan Companies, Inc. and Alexander
Howden Reinsurance Brokers Ltd., respectively. The commissions paid by PXRE to
these intermediaries are generally at the same rates as those paid to other
intermediaries.
COMPETITION
The reinsurance industry is highly competitive and is undergoing a
variety of challenging developments. The industry has in recent years moved
toward greater consolidation as ceding companies have placed increased
importance on size and financial strength in the selection of reinsurers.
Additionally, reinsurers are tapping new markets and complementing their range
of traditional reinsurance products with innovative new products which bring
together capital markets and reinsurance experience. PXRE competes with numerous
major international and domestic reinsurance and insurance companies. These
competitors, many of which have substantially greater financial, marketing and
management resources than PXRE, include independent reinsurance companies,
subsidiaries, or affiliates of established worldwide insurance companies,
reinsurance departments of certain commercial insurance companies, and
underwriting syndicates. PXRE also may face competition from new market entrants
or from market participants that determine to devote greater amounts of capital
to the types of business written by PXRE.
Although PXRE obtains most of its facultative business and substantially
all of its treaty business through reinsurance intermediaries or brokers, it
competes indirectly with reinsurers who obtain business directly from primary
insurers because PXRE's brokers must compete with direct reinsurers for business
to be forwarded to PXRE. PXRE therefore competes both with reinsurers that
obtain business directly from reinsureds and with reinsurers that obtain their
business through intermediaries and brokers.
Competition in the types of reinsurance business which PXRE underwrites
is based on many factors, including the perceived overall financial strength of
the reinsurers, premiums charged, other terms and conditions, A.M. Best rating,
service offered, speed of service (including claims payment), and perceived
technical ability and experience of staff. The number of jurisdictions in which
a reinsurer is licensed or authorized to do business is also a factor. PXRE
Reinsurance is licensed, accredited, or otherwise authorized or permitted to
conduct reinsurance business in all states (except Arkansas, Hawaii, Kansas,
Oklahoma, Vermont, and Washington) and the District of Columbia and Puerto Rico.
In December 1996, after the announcement of the Merger, A.M. Best
affirmed PXRE Reinsurance's rating of "A (Excellent)". Management believes that
this rating enhances the
-17-
<PAGE>
<PAGE>
competitive position of PXRE Reinsurance. A.M. Best is an independent insurance
rating organization whose ratings are based on an analysis of the financial
condition and operating performance of an insurance or reinsurance company as
they relate to the industry in general. These ratings represent an independent
opinion of a company's financial strength and ability to meet its obligations to
policyholders, although such ratings may not reflect the considerations
applicable to an investment in an insurance or reinsurance company. A.M. Best
reviews its ratings at least annually and there can be no assurance that this
rating will be maintained in the future.
OTHER OPERATIONS
In March 1995, PXRE and TREX entered into a joint venture
arrangement to trade in catastrophe futures and option contracts on the Chicago
Board of Trade (the "CBOT"). As a result of the Merger, this venture is now
wholly-owned by PXRE, which has committed $5 million to it. Although the venture
has developed a number of trading strategies, the low level of activity in the
CBOT market for catastrophe futures has kept trade volume to a minimum through
December 31, 1996.
In December 1996, PXRE completed its investment in Lloyd's, 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.
The syndicate will employ the same underwriting philosophy as PXRE and will
expand and contract its writings according to the adequacy of pricing for given
exposures. In the current competitive environment, the syndicate is not expected
to utilize its full underwriting capacity. In connection with the capitalization
of the syndicate, PXRE has placed on deposit $42,975,000 of U.S. government
securities as collateral for Lloyd's. In addition, PXRE obtained a letter of
credit for the benefit of Lloyd's in the amount of $15,355,000, which is
collateralized by U.S. government securities in approximately the same amount.
Management of PXRE anticipates that the results of the syndicate will be
reported on a quarter lag.
REGULATION
PXRE, PXRE Reinsurance and Transnational Reinsurance are subject to
regulation under the insurance statutes of various states, including
Connecticut, the domiciliary state of PXRE Reinsurance and Transnational
Reinsurance. The regulation and supervision to which PXRE Reinsurance and
Transnational Reinsurance is subject relate primarily to the standards of
solvency that must be met and maintained, licensing requirements 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
-18-
<PAGE>
<PAGE>
required to be filed, and reserves for losses, and other purposes. In general,
such regulation is for the protection of the reinsureds and, ultimately, their
policyholders, rather than investors.
In addition, PXRE, PXRE Reinsurance and Transnational Reinsurance are
subject to regulation by state insurance authorities under the insurance
statutes and insurance holding company statutes of various states, including
Connecticut. These laws and regulations vary from state to state, but generally
require an insurance holding company and insurers and reinsurers that are
subsidiaries of an insurance holding company to register with the state
regulatory authorities and to file with those authorities certain reports
including information concerning their capital structure, ownership, financial
condition, and general business operations. Moreover, PXRE Reinsurance and
Transnational Reinsurance may not enter into certain transactions, including
certain reinsurance agreements, management agreements, and service contracts,
with members of its insurance holding company system, unless it has first
notified the Connecticut Insurance Commissioner of its intention to enter into
any such transaction and the Connecticut Insurance Commissioner has not
disapproved of such transaction within the period specified by the Connecticut
insurance statute. Among other things, such transactions are subject to the
requirements that their terms be fair and reasonable, charges or fees for
services performed be reasonable and the interests of policyholders not be
adversely affected.
State laws also require prior notice or regulatory agency approval of
direct or indirect changes in control of an insurer, reinsurer, or its holding
company, and of certain significant intercorporate transfers of assets within
the holding company structure.An investor who acquires shares representing or
convertible into more than 10% of the voting power of the securities of PXRE
would become subject to at least some of such regulations, would be subject to
approval by the Connecticut Insurance Commissioner prior to acquiring such
shares, and would be required to file certain notices and reports with the
Commissioner prior to such acquisition.
The principal sources of cash for the payment of operating expenses,
debt service obligations, and dividends by PXRE are the receipt of dividends and
net tax allocation payments from PXRE Reinsurance and Transnational Reinsurance.
Under the Connecticut insurance laws, the maximum amount of dividends or other
distributions that PXRE Reinsurance may declare or pay to PXRE, and that
Transnational Reinsurance may declare or pay to PXRE Reinsurance, within any
twelve-month period, without regulatory approval, is limited to the lesser of
(a) earned surplus or (b) the greater of 10% of policyholder surplus at December
31 of the preceding year, or 100% of net income for the twelve-month period
ended December 31 of the preceding year, all determined in accordance with
statutory accounting principles ("SAP"). Accordingly, the Connecticut insurance
laws could limit the amount of dividends available for distribution by PXRE
Reinsurance or Transnational Reinsurance without prior regulatory approval,
depending upon a variety of factors outside the control of PXRE, including the
frequency and severity of catastrophe and other loss events and changes in the
reinsurance market, in the insurance regulatory environment and in general
economic conditions. The maximum amount of dividends or distributions that PXRE
Reinsurance may declare and pay in 1997, without regulatory approval, is
$40,013,000. During 1996, $21,000,000 in dividends were paid by PXRE Reinsurance
to PXRE. The maximum amount of
-19-
<PAGE>
<PAGE>
dividends or distributions that Transnational Reinsurance may declare and pay in
1997, without regulatory approval, is $21,874,000. During 1996, $5,000,000 in
dividends were paid by Transnational Reinsurance to TREX and $16,500,000 in
dividends were paid by Transnational Reinsurance to PXRE Reinsurance. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
Additionally, Connecticut adopted, effective September 28, 1994,
regulations respecting certain minimum capital requirements, for property and
casualty companies, based upon a model adopted by the National Association of
Insurance Commissioners (the "NAIC"). The risk-based capital regulations provide
for the use of a formula to measure statutory capital and surplus needs based on
the risk characteristics of a company's products and investment portfolio to
identify weakly capitalized companies. As at December 31, 1996, PXRE
Reinsurance's surplus and Transnational Reinsurance's surplus substantially
exceeded their respective calculated risk-based capital.
In addition, 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 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.
The NAIC's Insurance Regulatory Information System ("IRIS") was
developed by a committee of state insurance regulators and is primarily intended
to assist state insurance departments in executing their statutory mandates to
oversee the financial condition of insurance companies operating in their
respective states. IRIS identifies eleven industry ratios and specifies "usual
values" for each ratio. Departure from the usual values on four or more of the
ratios can lead to inquiries from individual state insurance commissioners as to
certain aspects of an insurer's business. For the years ended December 31, 1996,
1995 and 1994, PXRE Reinsurance's results were within the usual values for each
of the 11 ratios, except for one ratio in each of 1996 and 1994. PXRE's
management believes these ratios fell outside the usual range in 1996 due to the
increase in surplus after Transnational Reinsurance became a wholly-owned
subsidiary of PXRE Reinsurance and in 1994 due largely to PXRE Reinsurance's
expansion of net premiums written resulting from rate increases on new and
renewal catastrophe-related business and financing transactions which
-20-
<PAGE>
<PAGE>
generated capital to support these writings. During this period, Transnational
Reinsurance's results were within the usual values for each of the 11 ratios.
EMPLOYEES
PXRE employs 53 full-time employees. None of PXRE's employees is
represented by a labor union, and management considers its relationship with its
employees to be excellent.
ITEM 2. PROPERTIES
PXRE leases a total of approximately 28,400 square feet of office space
in Edison, New Jersey (PXRE's corporate headquarters), New York, New York (a
satellite office), London, England and Brussels, Belgium. The Edison, New Jersey
lease, which covers approximately 24,000 square feet of office space, was signed
in 1994 and is for a term of 15 years at a fixed annual rent of approximately
$370,000 (inclusive of basic electricity) and additional rents on account of
PXRE's proportionate share of increases in building operating expenses and
property taxes over calendar year 1994.
ITEM 3. PENDING LEGAL PROCEEDINGS
PXRE is not a party to any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Merger and an amendment to the Restated Certificate of Incorporation
of PXRE were submitted to a vote of the stockholders of PXRE, and approved, at a
special stockholders' meeting held December 9, 1996.
-21-
<PAGE>
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since December 31, 1996, PXRE's common stock has been listed on the New
York Stock Exchange under the symbol "PXT". Prior to December 31, 1996, PXRE's
common stock was traded on The NASDAQ Stock Market under the symbol "PXRE". The
following table sets forth for the periods indicated the high and low bid
quotations for PXRE's common stock as reported by NASDAQ and cash dividends per
share of common stock declared and subsequently paid:
<TABLE>
<CAPTION>
Bid Price
------------
High Low Dividends
<S> <C> <C> <C>
1995:
First Quarter 28.75 21.75 0.15
Second Quarter 26.50 21.00 0.15
Third Quarter 29.75 23.50 0.15
Fourth Quarter 27.50 22.75 0.18
1996:
First Quarter 28.00 24.00 0.18
Second Quarter 27.00 23.75 0.18
Third Quarter 24.50 22.25 0.18
Fourth Quarter 25.50 22.875 0.21
</TABLE>
These prices represent quotations by dealers and do not include markups,
markdowns, or commissions, and do not necessarily represent actual transactions.
As of March 21, 1997, there were 13,929,504 shares of the common stock issued
and outstanding, which shares were held by approximately 150 shareholders of
record and, based on PXRE's best information, in excess of 2,200 beneficial
owners of the common stock. See Notes 10 and 11 of Notes to Consolidated
Financial Statements for information with respect to shares reserved for
issuance under employee benefit and stock option plans.
Beginning in the fourth quarter of 1989, PXRE has each quarter declared
and subsequently paid cash dividends on its common stock. The dividend rate,
which initially was $0.05 per share, was increased in the fourth quarter of 1993
to $0.075 per share, in the fourth quarter of 1994 to $0.15 per share, in the
fourth quarter of 1995 to $0.18 per share, and in the fourth quarter of 1996 to
$0.21 per share.
The payment of dividends on the common stock is subject to the
discretion of the Board of Directors which will consider, among other factors,
PXRE's operating results, overall financial
-22-
<PAGE>
<PAGE>
condition, capital requirements and general business conditions. There can be no
assurance that dividends will be paid in the future.
As a holding company, PXRE is largely dependent upon dividends and
net tax allocation payments from PXRE Reinsurance and Transnational Reinsurance
to pay dividends to PXRE's shareholders. PXRE Reinsurance and Transnational
Reinsurance are subject to state laws that may restrict their ability to
distribute dividends. In addition, certain covenants in the indenture governing
PXRE's Senior Notes may restrict PXRE's ability to pay dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Business--Regulation" for
further information concerning restrictions contained in the indenture governing
PXRE's Senior Notes and under state insurance law.
-23-
<PAGE>
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
(1) (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 TREX and
cumulative effect of accounting change 45,047 52,027 46,388 33,569 (7,615)
Equity in net earnings of TREX(4) 3,898 5,948 4,141 84 --
Income tax provision (benefit) 15,644 18,189 15,700 11,008 (3,322)
-------- -------- -------- -------- --------
Net 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
======== ======== ======= ======== ========
Net income (loss) available to common
stockholders (before cumulative
effect of accounting change) $ 33,301 $ 39,187 $32,824 $ 20,589 $ (5,712)
======== ======== ======= ======== ========
</TABLE>
-24-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
(1) (2)(3)(4)(5) (2)(3)(5)
---- ---- ---- ------------ --------
(in thousands, except per share data and ratios)
<S> <C> <C> <C> <C> <C>
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:
Net 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:
Net 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 $ 0.72 $ 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%
======= ======= ======= ======= ========
As of December 31,
---------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
BALANCE SHEET DATA:
Cash and investments $467,078 $269,089 $231,789 $248,949 $ 81,994
Total assets 543,324 393,465 353,794 349,251 205,484
Losses and loss expenses 70,977 72,719 81,836 71,442 88,668
Note 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 TREX. The Merger has been
accounted for as a purchase. Accordingly, TREX 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 TREX amounting to $3,898,000. Fully diluted
average shares outstanding reflects the shares issued to holders
-25-
<PAGE>
<PAGE>
of TREX common shares in connection with the Merger. Included in
management fee was $2,512,000, $3,526,000 and $3,364,000 in 1996, 1995
and 1994, respectively, earned from TREX prior to the Merger.
(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 TREX of 5,750,000 shares of Class A common stock at
$20.00 per share was declared effective. In conjunction with the
formation of TREX and registration of TREX's Class A common stock in
the Offering, all of the outstanding capital stock of Transnational
Reinsurance was contributed by PXRE Reinsurance to TREX in exchange for
the issuance of 1,535,848 shares of TREX's Class B common stock which
caused PXRE Reinsurance's holdings of TREX'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 TREX immediately after the Offering. Thereafter, TREX,
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 TREX 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.
-26-
<PAGE>
<PAGE>
(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.
-27-
<PAGE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
PXRE provides reinsurance products and services to a domestic and
international marketplace, with principal emphasis on commercial and personal
property risks and marine and aviation risks, and with a particular focus on
catastrophe-related coverages.
PXRE exercises discipline in committing and withholding its
underwriting capacity and altering its mix of business to concentrate its
underwriting capacity at any given point in time on those types of businesses
where management believes that above average underwriting results can be
achieved. PXRE has been pursuing a strategy of focusing on catastrophe-related
coverages in both the international and domestic markets.
PXRE also generates management fee income by managing business for
other insurers and reinsurers, either by accepting additional amounts of
coverage on underwritten risks and retroceding such additional amounts to
participants through various retrocessional arrangements or, in one case, until
the Merger with TREX described below, by managing the underwriting and other
day-to-day operations of a publicly-owned reinsurance group.
At December 31, 1996, PXRE was a party to three such
retrocessional arrangements. One such arrangement is with a group of insurers
referred to as the AMA; another is with Trenwick Group; and a third arrangement
is with Investors Re, a Barbados reinsurer. Under these arrangements, PXRE cedes
some of its underwritten risks to the participants, subject to maximum aggregate
liabilities per reinsurance program. PXRE receives a management fee or
commission of 5% of premiums ceded (4.2% for Investors Re) and a percentage of
any ultimate underwriting profits in connection with the reinsurance ceded.
Under the arrangements with these participants, such percentage of ultimate
underwriting profits is subject to adjustment based on cumulative experience.
Future management fee income is dependent upon the amount of business ceded to
the participants and the profitability of that business.
In the past, PXRE has entered into other retrocessional
arrangements providing catastrophic protection. In recent years, PXRE has
reduced, upon renewal, its own catastrophe retrocessional facilities and has
borne the associated increase in net exposures. As the cost of catastrophe
retrocessional facilities has declined since 1995, PXRE has again commenced
selectively purchasing such coverage, although PXRE did not purchase any
significant catastrophe retrocessional coverage in 1995 or 1996.
In November 1993, PXRE sponsored the initial public offering of
TREX to raise capital and take advantage of favorable conditions in the
worldwide retrocessional reinsurance market. PXRE, through PXRE Reinsurance,
retained a 21% ownership position in TREX and had responsibility for the
day-to-day operations of TREX, including all the reinsurance operations of its
subsidiary,
-28-
<PAGE>
<PAGE>
Transnational Reinsurance under the Management Agreement. TREX and Transnational
Reinsurance had no paid employees.
Under the terms of the Management Agreement, Transnational
Reinsurance shared in certain specified business of PXRE that was classified as
property retrocessional reinsurance business, marine and aviation retrocessional
reinsurance or marine and aviation reinsurance and facultative reinsurance.
Transnational Reinsurance was also entitled to share similarly in other property
reinsurance business, if any, which PXRE, from time-to-time, proposed that
Transnational Reinsurance underwrite and which Transnational Reinsurance's Board
of Directors approved.
Transnational Reinsurance paid PXRE an annual basic management fee
under the Management Agreement equal to 5% of gross premiums written (including
reinstatement premiums less return premiums) of Transnational Reinsurance and
its consolidated subsidiaries (if any) as reflected in Transnational
Reinsurance's statutory quarterly and annual statements filed with state
insurance authorities. TREX and Transnational Reinsurance also paid all expenses
directly attributable to them, including a proportionate share of PXRE's rental
expenses with respect to office space based on gross premiums written for the
management year and time spent by officers and employees of PXRE in connection
with the preparation of reports filed by TREX with the SEC and proxy materials
and annual reports sent to TREX shareholders.
On December 11, 1996, PXRE completed the Merger of TREX with and
into PXRE, pursuant to which each share of common stock of TREX 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 TREX 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 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 TREX (including
Transnational Reinsurance) has been included in PXRE's consolidated results of
operation from the date of acquisition.
CERTAIN RISKS AND UNCERTAINTIES
As a reinsurer principally of property and catastrophe related
coverages in both the international and domestic markets, PXRE's operating
results in any given period depend to a large extent on the number and magnitude
of natural and man-made catastrophes such as hurricanes, windstorms, floods,
earthquakes, spells of severely cold weather, fires and explosions.
The estimation of losses for catastrophe reinsurers is inherently
less reliable than for reinsurers of risks which have an established historical
pattern of losses. In addition, insured events which occur near the end of a
reporting period, as well as with respect to PXRE's retrocessional book of
business, the significant delay in losses being reported to insurance carriers,
reinsurers and
-29-
<PAGE>
<PAGE>
finally retrocessionaires, require PXRE to make estimates of losses based on
limited information from ceding companies and based on its own underwriting
data. Because of the uncertainty in the process of estimating its losses from
insured events, there is a risk that PXRE's liabilities for losses and loss
expenses could prove to be inadequate, with a consequent adverse impact on
future earnings and stockholders' equity. Additionally, as a consequence of its
emphasis on property reinsurance, PXRE may forgo potential investment income
because property losses are typically settled within a shorter period of time
than casualty losses.
PXRE maintains only minimal catastrophe retrocessional coverage. In view
of the increased underwritings of catastrophe related reinsurance and the net
exposure being retained by PXRE, the occurrence of one or more major
catastrophes in any given period (such as Hurricanes Andrew and Iniki in 1992
and the Northridge Earthquake in 1994) could have a material adverse impact on
PXRE's results of operations and financial condition and result in substantial
liquidation of investments and outflows of cash as losses are paid.
As PXRE underwrites risks from a large number of insurers based on
information generally supplied by reinsurance brokers, there is a risk of
developing a concentration of exposure to loss in certain geographic areas prone
to specific types of catastrophes. PXRE has developed systems and software tools
to monitor and manage the accumulation of its exposure to such losses.
Management has established guidelines for maximum tolerable losses from a single
or multiple catastrophic event based on historical data; however, no assurance
can be given that these maximums will not be exceeded in some future
catastrophe.
Premiums on reinsurance business assumed are recorded as earned on a pro
rata basis over the contract period based upon estimated subject premiums.
Management must estimate the subject premiums associated with the treaties in
order to determine the level of earned premiums for a reporting period. Such
estimates are based on information from brokers which can be subject to change
as new information becomes available. Because of the inherent uncertainty in
this process, there is the risk that premiums and related receivable balances
may turn out to be higher or lower than reported.
Although PXRE's investment guidelines stress conservation of principal,
diversification of risk, and liquidity, investments are subject to market-wide
risks and fluctuations, as well as to risk inherent in particular securities.
Accordingly, the estimated fair value of PXRE's investments does not necessarily
represent the amount which could be realized upon future sale particularly if
PXRE were required to liquidate a substantial portion of its portfolio to fund
catastrophic losses.
Premium receivables and loss reserves include business denominated in
currencies other than U.S. dollars. PXRE is exposed to the possibility of
significant claims in currencies other than U.S. dollars. While PXRE holds
positions denominated in foreign currencies to mitigate, in part, the effects of
currency fluctuations on its results of operations, it currently does not hedge
its currency exposures before a catastrophic event which may produce a claim.
-30-
<PAGE>
<PAGE>
PXRE relies primarily on cash dividends and net tax allocation payments
from its subsidiaries PXRE Reinsurance and Transnational Reinsurance to pay its
operating expenses, to meet its debt service obligations and to pay common stock
dividends to PXRE's stockholders. The payment of dividends by PXRE Reinsurance
to PXRE, and by Transnational Reinsurance to PXRE Reinsurance, is subject to
limits imposed under the insurance laws and regulations of Connecticut, the
state of incorporation and domicile of PXRE Reinsurance and Transnational
Reinsurance, as well as certain restrictions arising in connection with PXRE's
outstanding indebtedness.
In the event the amount of dividends available, together with other
sources of funds, are not sufficient to permit PXRE to meet its debt service,
other obligations and to pay cash dividends, it would be necessary to obtain the
approval of the Connecticut Insurance Commissioner prior to the payment of
additional dividends by PXRE Reinsurance (or Transnational Reinsurance). If such
approval were not obtained, PXRE would have to adopt one or more alternatives,
such as refinancing or restructuring its indebtedness or seeking additional
equity. There can be no assurance that any of these strategies could be effected
on satisfactory terms, if at all.
The reinsurance business is increasingly competitive and is undergoing a
variety of challenging developments. The industry has in recent years moved
toward greater consolidation as ceding companies have placed increased
importance on size and financial strength in the selection of reinsurers.
Additionally, reinsurers are tapping new markets and complementing their range
of traditional reinsurance products with innovative new products which bring
together capital markets and reinsurance experience. PXRE competes with numerous
major international and domestic reinsurance and insurance companies, many of
which have substantially greater financial, marketing and management resources
than PXRE.
COMPARISON OF 1996 AND 1995
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 Decrease
---- ---- --------
(in thousands) %
<S> <C> <C> <C>
Gross premiums written $114,348 $155,380 (26.4)
Ceded premiums:
--------------
Managed business participants 21,238 26,774 (20.7)
TREX Management Agreement 19,965 24,790 (19.5)
Catastrophe coverage 5,427 6,180 (12.2)
-------- --------
Total reinsurance premiums
ceded 46,630 57,744 (19.2)
-------- --------
Net premiums written $ 67,718 $ 97,636 (30.6)
======== ========
</TABLE>
-31-
<PAGE>
<PAGE>
Gross premiums written for 1996 decreased 26.4% to $114,348,000 from
$155,380,000 for 1995. Net premiums earned for the year ended December 31, 1996,
decreased 25.1% to $72,796,000 from $97,142,000 in the year-earlier period. Net
premiums written for the year ended December 31, 1996, decreased 30.6% to
$67,718,000 from $97,636,000 for the corresponding period of 1995. Gross
written, net written and net earned premium for 1996 declined from prior-year
levels reflecting the increasingly competitive business environment. PXRE
continued its planned response to this situation by withdrawing capacity from
areas of coverage not offering appropriate compensation for the exposure.
Management anticipates that this trend will continue during 1997, although
business written by PXRE's newly-established Lloyd's syndicate (PG Butler
Syndicate 1224) is expected to partially cushion reductions elsewhere in PXRE's
business. Net premiums written and earned were also adversely affected by a
$3,798,000 reduction in reinstatement premiums resulting from a reduced level of
loss activity in 1996, as well as by $2,522,000 of cessions related to the new
retrocessional arrangement with Investors Re.
Premiums ceded by PXRE to its managed business participants decreased
20.7% to $21,238,000 for 1996 compared with $26,774,000 for 1995. The decrease
in premiums ceded to these programs was due to the decrease in the amount of
premiums written by PXRE. During 1996, prior to the Merger, PXRE ceded
$19,965,000 of premiums compared to $24,790,000 during the twelve months of 1995
to Transnational Reinsurance in lieu of direct reinsurance writings by
Transnational Reinsurance. In 1997, premiums which prior to the Merger would
have been ceded to Transnational Reinsurance will be retained in the
consolidated PXRE results. Management fee income from all sources for 1996
decreased to $6,032,000 from $6,417,000 in 1995. The decrease reflected lower
premium volume, offset, in part, by an improvement in the profitability of
business ceded to managed business participants. Included in management fee
income was $2,512,000 earned from TREX in 1996 prior to the Merger and
$3,526,000 in 1995.
Ceded premiums for catastrophe programs for 1996 decreased 12.2% to
$5,427,000 from $6,180,000 for the comparable period of 1995 primarily because
of the lower cost of coverage purchased.
The underwriting results of a property and casualty insurer are
discussed frequently by reference to its loss ratio, underwriting expense ratio
and combined ratio. The loss ratio is the result of dividing losses and loss
expenses incurred by net premiums earned. The underwriting expense ratio is the
result of dividing underwriting expenses (reduced by management fees, if any) by
net premiums written for purposes of SAP and net premiums earned for purposes of
GAAP. The combined ratio is the sum of the loss ratio and the underwriting
expense ratio. A combined ratio under 100% indicates underwriting profits and a
combined ratio exceeding 100% indicates underwriting losses. The combined ratio
does not reflect the effect of investment income on operating results. The
ratios discussed below have been calculated on a GAAP basis.
The loss ratio was 25.5% for 1996 compared with 35.7% for 1995.
Catastrophe losses were $18,487,000 gross and $9,166,000 net for 1996 and prior
accident years as compared with $28,439,000 gross and $20,073,000 net for 1995
and prior accident years.
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<PAGE>
<PAGE>
Significant catastrophe and risk losses affecting the year ended
December 31, 1996 loss ratio are as follows:
<TABLE>
<CAPTION>
AMOUNT OF LOSSES
----------------
LOSS EVENT GROSS NET
- ---------- ----- ---
(in thousands)
<S> <C> <C>
Hurricanes Marilyn and Luis $8,064 $2,995
Hurricane Fran 4,218 2,827
Northridge earthquake 1,646 1,438
Eurotunnel fire 1,260 1,022
Credit Lyonnais fire 2,669 723
</TABLE>
Significant catastrophe and risk losses affecting the year ended
December 31, 1995 loss ratio are as follows:
<TABLE>
<CAPTION>
AMOUNT OF LOSSES
----------------
LOSS EVENT GROSS NET
- ---------- ----- ---
(in thousands)
<S> <C> <C>
Hurricane Marilyn $13,463 $9,886
Northridge earthquake 8,899 6,030
Hurricane Luis 5,119 3,710
Milliken factory fire 7,314 5,932
</TABLE>
The provision for losses and loss expenses includes the effect of
foreign exchange movements on PXRE's liability for losses and loss expenses,
resulting in a foreign currency exchange loss of $41,000 for 1996 compared to a
gain of $39,000 for 1995.
During 1996, PXRE experienced a deficiency of $3,249,000, net, for prior
year losses and loss expenses primarily due to Hurricanes Marilyn and Luis. The
loss ratio for 1995 was unfavorably affected by increases to reserves of
$4,311,000, net, for prior year losses and loss expenses primarily from the 1994
Northridge earthquake.
The underwriting expense ratio was 26.2% for 1996 compared with 18.6%
for 1995. The increase was substantially due to the increased operating expenses
discussed below and the decline in premiums earned. As a result of the above,
the combined ratio was 51.7% for 1996 compared with 54.3% for 1995.
Other operating expenses increased to $12,262,000 for 1996 from
$11,237,000 in 1995. The operating expense increase for 1996 primarily reflects
an increase of $301,000 related to changes in benefit plans, additional staff
salaries, increased incentive compensation and other related benefits.
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<PAGE>
<PAGE>
Included in other operating expenses were foreign currency exchange gains of
$143,000 for 1996 compared to gains of $196,000 for 1995.
Interest expense decreased to $6,957,000 in 1996 from $7,143,000
in 1995 due to PXRE Reinsurance's purchase of $3,050,000 par value of its parent
company's 9.75% Senior Notes during the second and third quarters of 1996 at an
average price of 106.1%.
Net investment income for 1996 increased 13.9% to $16,782,000 from
$14,730,000 for 1995. The increase in net investment income was caused by an
increase in average investments for 1996 compared with the previous year, as
well as an increase in PXRE's pre-tax investment yield to 6.4% for 1996 compared
to 5.9% for 1995, both calculated using amortized cost and investment income
before investment expenses. The increase in pre-tax investment yield primarily
reflects the redeployment of PXRE's tax-exempt investment portfolio into taxable
securities, including some higher yielding mortgage and asset-backed securities,
in the fourth quarter of 1995 and throughout 1996. Net realized investment gains
for 1996 were $94,000 compared with net realized gains of $85,000 for 1995. PXRE
recorded directly to equity a $3,214,000 after-tax unrealized decrease in the
value of its investment portfolio during 1996, reflecting the effect of an
increase in interest rates during the first half of 1996.
The net effects of foreign currency exchange fluctuations were
gains of $102,000 in 1996 and gains of $235,000 for 1995. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
Net income for the year ended December 31, 1996 includes
$3,898,000 which represents PXRE's approximately 22.1% equity share of TREX's
net earnings through December 11, 1996 as compared with $5,948,000 representing
PXRE's approximately 21.9% share of TREX's net earnings in 1995. Net income for
1996 also reflects $1,253,000 attributable to 100% of incremental earnings
following the Merger on December 11, 1996 through the end of the year.
For the reasons discussed above, net income was $33,301,000 for
the year ended December 31, 1996 compared to net income of $39,786,000 for the
year ended December 31, 1995. Primary net income per common share was $3.68 for
1996 compared to net income per common share of $4.74 for 1995 (after provision
for cumulative dividends of $598,900 on the Series A Preferred Stock) based on
average shares outstanding of 9,046,000 in 1996 and 8,275,000 in 1995. The
change in the number of primary shares outstanding relates to the conversion of
the preferred shares outstanding to common shares in the second quarter of 1995.
Fully diluted net income per common share was $3.68 for 1996 compared to net
income per common share of $4.48 for 1995 based on average shares outstanding of
9,060,000 in 1996 and 8,874,000 in 1995. The change in the number of fully
diluted shares outstanding relates to the 1.0575 shares of PXRE common stock
exchanged for each share of common stock of TREX in connection with the Merger.
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<PAGE>
<PAGE>
COMPARISON OF 1995 AND 1994
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1995 1994 Decrease
---- ---- --------
(in thousands) %
<S> <C> <C> <C>
Gross premiums written $155,380 $179,684 (13.5)
Ceded premiums:
Managed business participants 26,774 29,842 (10.3)
TREX Management Agreement 24,790 28,722 (13.7)
Catastrophe coverage 6,359 12,183 (47.8)
Other (179) 419 (142.7)
-------- --------
Total reinsurance premiums ceded 57,744 71,166 (18.9)
-------- --------
Net premiums written $ 97,636 $108,518 (10.0)
======== ========
</TABLE>
Net premiums written for the year ended December 31, 1995, decreased
10.0% to $97,636,000 from $108,518,000 for the corresponding period of 1994.
Gross premiums written for 1995 decreased 13.5% to $155,380,000 from
$179,684,000 for 1994. Net premiums earned for the year ended December 31, 1995,
decreased 12.2% to $97,142,000 from $110,601,000 in the year-earlier period.
Gross written, net written and net earned premium decreased in 1995 which
reflected PXRE's planned response to the trend of increased competition in the
property catastrophe reinsurance market experienced since the end of 1994 and to
loss activity in the aviation business. In response to these pressures during
1995, PXRE continued to accept some price concessions when consistent with
exposures, moved to layers of risk that were less affected by competitive
pressures, or reduced commitments where warranted.
Premiums ceded by PXRE to its managed business participants decreased
10.3% to $26,774,000 for 1995 compared with $29,842,000 for 1994. The decrease
in premiums ceded to these programs was due to the decrease in the amount and
percentage of gross premiums written by PXRE on behalf of the managed business
participants. During 1995, pursuant to the Management Agreement, PXRE also ceded
$24,790,000 of premiums compared to $28,722,000 during the corresponding period
of 1994 to Transnational Reinsurance in lieu of direct reinsurance writings by
Transnational Reinsurance. Management fee income from all sources for 1995
decreased to $6,417,000 from $6,992,000 in 1994. The decrease reflected loss
activity that resulted in decreased profitability of business managed for other
companies.
Ceded premiums for catastrophe programs for 1995 decreased 47.8% from
the comparable period of 1994 primarily because of the lower level of ceded
reinstatement premiums resulting from the reduced level of loss activity in 1995
and management's decision to commute certain reinsurance coverages subsequent to
the first quarter of 1994.
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<PAGE>
<PAGE>
The loss ratio was 35.7% for 1995 compared with 47.6% for 1994. The loss
ratio for 1995 reflected incurred catastrophe losses of $28,439,000 gross and
$20,073,000 net for 1995 and prior accident years as compared with $69,833,000
gross and $37,213,000 net for 1994 and prior accident years.
Significant catastrophe and risk losses affecting the year ended
December 31, 1995 loss ratio are outlined in "Comparison of 1996 and 1995."
Significant catastrophe losses affecting the year ended December
31, 1994 loss ratio are as follows:
<TABLE>
<CAPTION>
AMOUNT OF LOSSES
----------------
LOSS EVENT GROSS NET
- ---------- ----- ---
(in thousands)
<S> <C> <C>
Northridge earthquake $42,709 $21,180
Three satellite losses 12,045 8,022
Four aircraft losses 10,600 5,138
</TABLE>
The provision for losses and loss expenses includes the effect of
foreign exchange movements on PXRE's liability for losses and loss expenses,
resulting in a foreign currency exchange gain of $39,000 for 1995 compared to a
loss of $338,000 for 1994.
During 1995, PXRE experienced a deficiency of $4,311,000, net, for prior
year losses and loss expenses primarily from the 1994 Northridge earthquake. The
loss ratio for 1994 was unfavorably affected by increases to reserves of
$3,261,000, net, for prior year losses and loss expenses.
The underwriting expense ratio was 18.6% for 1995 compared with 14.8%
for 1994. The increase was substantially due to the effect of a provision for
contingent commissions related to the low level of losses incurred. As a result
of the above, the combined ratio was 54.3% for 1995 compared with 62.4% for
1994.
Other operating expenses increased to $11,237,000 for 1995 from
$8,365,000 in 1994. The operating expense increase for 1995 primarily reflects
an increase of $1,653,000 related to changes in benefit plans, additional staff
salaries, increased incentive compensation and other related benefits. Also
contributing to the increases were additional costs of $216,000 under a new
lease in Edison, New Jersey, and an increase in depreciation expense from the
capital expenditures of $3,200,000 for PXRE's new facilities including additions
to electronic data processing equipment. Included in other operating expenses
were foreign currency exchange gains of $196,000 for 1995 compared to gains of
$1,156,000 for 1994.
Interest expense decreased to $7,143,000 in 1995 from $7,789,000 in 1994
due to repurchase of $5,300,000 par value of PXRE's 9.75% Senior Notes, at
prices from 99.25 to 99.625 during the fourth
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<PAGE>
<PAGE>
quarter of 1994 and the repurchase of $1,925,000 par value of Senior Notes at
prices ranging from 104.625 to 105.0 during the third quarter of 1995. The loss
on repurchase was not material.
Net investment income for 1995 increased 6.8% to $14,730,000 from
$13,786,000 for 1994. The increase in net investment income was caused by a 5.0%
increase in average investments for 1995 compared with the previous year, as
well as an increase in PXRE's pre-tax investment yield to 5.9% for 1995 compared
to 5.8% for 1994. Net realized investment gains for 1995 were $85,000 compared
with net realized losses of $1,164,000 for 1994. PXRE recorded directly to
equity a $9,759,000 after-tax unrealized increase in the value of its investment
portfolio during 1995, resulting from the decline in interest rates during 1995.
The net effects of foreign currency exchange fluctuations were losses of
$235,000 in 1995 and gains of $818,000 for 1994. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
Net income for the year ended December 31, 1995 included $5,948,000
which represents PXRE's approximately 21.9% equity share of TREX's net earnings
as compared with $4,141,000 representing PXRE's approximately 21.2% share of
TREX's net earnings in 1994. The change in the equity in TREX's earnings
reflects the higher level of TREX's net income and the change in PXRE's
ownership. The change in PXRE's ownership of TREX resulted from the repurchase
by TREX of 270,100 shares of its publicly owned Class A shares during 1995.
For the reasons discussed above, net income was $39,786,000 for the year
ended December 31, 1995 compared to net income of $34,829,000 for the year ended
December 31, 1994. Primary net income per common share was $4.74 for 1995 (after
provision for cumulative dividends of $598,900 on the Series A Preferred Stock)
compared to net income per common share of $4.89 for 1994 (after provision for
cumulative dividends of $2,005,000 on the Series A Preferred Stock) based on
average shares outstanding of 8,275,000 in 1995 and 6,710,000 in 1994. The
change in the number of shares outstanding relates primarily to the conversion
of all the remaining convertible preferred shares to common shares in May 1995.
Fully diluted net income per common share was $4.48 for 1995 compared to $3.94
for 1994 based on average shares outstanding of 8,874,000 in 1995 and 8,847,000
in 1994.
LIQUIDITY AND CAPITAL RESOURCES
PXRE relies primarily on cash dividends and net tax allocation payments
from its subsidiaries PXRE Reinsurance and Transnational Reinsurance to pay its
operating expenses and income taxes, to meet its debt service obligations and to
pay dividends to PXRE stockholders. The payment of dividends by PXRE Reinsurance
to PXRE and by Transnational Reinsurance to PXRE Reinsurance is subject to
limits imposed under the insurance laws and regulations of Connecticut, the
state of incorporation and domicile of PXRE Reinsurance and Transnational
Reinsurance, as well as certain restrictions arising in connection with PXRE
Senior Notes discussed below. Under the Connecticut insurance law, the maximum
amount of dividends or other distributions that PXRE Reinsurance may declare or
pay to PXRE, and that Transnational Reinsurance may declare or pay to PXRE
Reinsurance, within any twelve-month period, without regulatory approval, is
limited to the lesser of (a) earned surplus or (b) the greater of 10% of
policyholders' surplus at December 31 of the preceding year or 100% of net
income for the twelve-
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<PAGE>
<PAGE>
month period ending December 31 of the preceding year, all determined in
accordance with SAP. Accordingly, the Connecticut insurance laws could limit the
amount of dividends available for distribution by PXRE Reinsurance or
Transnational Reinsurance without prior regulatory approval, depending upon a
variety of factors outside the control of PXRE, including the frequency and
severity of catastrophe and other loss events and changes in the reinsurance
market, in the insurance regulatory environment and in general economic
conditions. The maximum amount of dividends or distributions that PXRE
Reinsurance may declare and pay in 1997, without regulatory approval, is
$40,013,000. During 1996, $21,000,000 in dividends were paid by PXRE Reinsurance
to PXRE Corporation. The maximum amount of dividends or distributions that
Transnational Reinsurance may declare and pay in 1997, without regulatory
approval, is $21,874,000. During 1996, $5,000,000 in dividends were paid by
Transnational Reinsurance to TREX and $16,500,000 in dividends were paid by
Transnational Reinsurance to PXRE Reinsurance.
Other sources of funds available to PXRE include investments retained by
PXRE to provide support for debt service on its Senior Notes. Net tax allocation
payments by PXRE Reinsurance and Transnational Reinsurance are also expected to
be a source of funds available to PXRE.
In the event the amount of dividends available, together with other
sources of funds, are not sufficient to permit PXRE to meet its debt service and
other obligations and to pay cash dividends, it would be necessary to obtain the
approval of the Connecticut Insurance Commissioner prior to the payment of
additional dividends by PXRE Reinsurance (or Transnational Reinsurance). If such
approval were not obtained, PXRE would have to adopt one or more alternatives,
such as refinancing or restructuring its indebtedness or seeking additional
equity. There can be no assurance that any of these strategies could be effected
on satisfactory terms, if at all. In the event that PXRE were unable to generate
sufficient cash flow and were otherwise unable to obtain funds necessary to meet
required payments of principal and interest on its indebtedness, PXRE could be
in default under the terms of the agreements governing such indebtedness. In the
event of such default, the holders of such indebtedness could elect to declare
all of the funds borrowed thereunder to be due and payable together with accrued
and unpaid interest.
In August 1993, PXRE completed a public offering of $75,000,000
principal amount of 9.75% Senior Notes due August 15, 2003. Interest is payable
on the Senior Notes semi-annually. Interest expense, including amortization of
debt offering costs, for 1996 in respect of the Senior Notes amounted to
approximately $6,957,000. Interest expense associated with the Senior Notes will
amount to approximately $6,559,000 for 1997. On and after August 15, 1998, the
Senior Notes may be redeemed at the option of PXRE, in whole or in part, at
redemption prices (expressed as percentages of the principal amount), plus
accrued and unpaid interest to the date fixed for redemption, of 103.656% at
August 15, 1998, declining to 100% at August 15, 2001 and thereafter. The
Indenture governing the Senior Notes contains covenants which, among other
things, limit the ability of PXRE and its Restricted Subsidiaries (including
PXRE Reinsurance): (a) to incur additional indebtedness (except for the
incurrence of Permitted Indebtedness and the incurrence of other Indebtedness by
PXRE in circumstances where no
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<PAGE>
<PAGE>
Default or Event of Default exists and the Consolidated Fixed Charge Coverage
Ratio of PXRE would be greater than 2:1 after giving effect to the incurrence)
and, in the case of the Restricted Subsidiaries, to issue preferred stock; (b)
to pay dividends, repurchase stock and to make certain other Restricted Payments
(other than, among other things, if no Default or Event of Default exists (x)
Restricted Payments after August 31, 1993, not exceeding in the aggregate the
sum of $3,000,000 plus 50% of Consolidated Net Income (or minus 100% of any
loss) from such date (with certain adjustments), plus the amounts of certain
equity proceeds and certain reductions in Investments in Unrestricted
Subsidiaries, provided, that at the time of such Restricted Payment the
Consolidated Fixed Charge Coverage Ratio is greater than 2.0, and (y) in
addition to permitted Restricted Payments referred to in clause (x), the payment
of cash dividends on Qualified Capital Stock after August 31, 1993 of up to an
aggregate of $6,000,000, provided, that such dividends on common stock do not
exceed $0.25 per share in any year); (c) to sell or permit the issuance of any
stock of PXRE Reinsurance or any other Principal Insurance Subsidiary; (d) to
sell or transfer other assets (other than for at least Fair Market Value and
generally for not less than 75% in cash or Cash Equivalents); (e) to create
liens upon the properties or assets of PXRE or its Restricted Subsidiaries; or
(f) to engage in any business other than the insurance and reinsurance
businesses and other businesses incidental and related thereto. The Indenture
also provides that within 30 days after a Change of Control of PXRE, PXRE will
offer to purchase all the Senior Notes then outstanding at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of such purchase.
PXRE's Board of Directors has authorized the repurchase of Senior Notes
in negotiated or open market transactions. By December 31, 1995, PXRE or PXRE
Reinsurance had purchased $7,225,000 principal amount of Senior Notes. In 1996,
PXRE Reinsurance purchased $3,050,000 principal amount of PXRE's Senior Notes.
Since January 1, 1997, PXRE has repurchased $24,900,000 principal amount of
Senior Notes at an average price of 107.6%.
PXRE files federal income tax returns for itself and all of its direct
or indirect domestic subsidiaries that satisfy the stock ownership requirements
for consolidation for federal income tax purposes (collectively, the
"Subsidiaries"). PXRE is party to an Agreement Concerning Filing of Consolidated
Federal Income Tax Returns (the "Tax Allocation Agreement") pursuant to which
each Subsidiary makes tax payments to PXRE in an amount equal to the federal
income tax payment that would have been payable by such Subsidiary for such year
if it had filed a separate income tax return for such year. PXRE is required to
provide for payment of the consolidated federal income tax liability for the
entire group. If the aggregate amount of tax payments made in any tax year by a
Subsidiary is less than (or greater than) the annual tax liability for such
Subsidiary on a stand-alone basis for such year, such Subsidiary will be
required to make up such deficiency (or receive a credit if payments exceed the
separate return tax liability) to PXRE.
The primary sources of liquidity for PXRE Reinsurance are net cash flow
from operating activities (including interest income from investments), the
maturity or sale of investments, borrowings, capital contributions, advances
from PXRE and, subsequent to the Merger, dividends from Transnational
Reinsurance. Funds are applied primarily to the payment of claims, operating
expenses and income taxes
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<PAGE>
<PAGE>
and to the purchase of fixed maturity and short-term investments. Premiums are
typically received in advance of related claim payments.
Net cash flow provided by operations was $28,033,000 during 1996
compared with net cash flow provided by operations of $32,412,000 and
$30,988,000 during 1995 and 1994, respectively, due to the effects of timing
of collection of receivables and reinsurance recoverables and payments of
losses.
PXRE's management has established general procedures and guidelines for
its investment portfolio and oversees investment management carried out by
Phoenix Duff & Phelps, a public majority-owned subsidiary of Phoenix Home Life.
Although these investment guidelines stress conservation of principal,
diversification of risk and liquidity, investments are subject to market-wide
risks and fluctuations, as well as to risk inherent in particular securities. As
at December 31, 1996, 98.3% of PXRE's investment portfolio (at fair value)
consisted of fixed maturities and short-term investments, while the balance was
in equity securities. The investment policies and all investments of PXRE are
approved by its Board of Directors.
Of PXRE's fixed maturities portfolio at December 31, 1996, 98.7% of the
fair value was in obligations rated "A1" or "A" or better by Moody's or S&P,
respectively, or in government or government-backed securities. Mortgage and
asset-backed securities (principally GNMAs) accounted for 36.1% of fixed
maturities based on fair value at December 31, 1996. PXRE has no investments in
real estate or commercial mortgage loans. The average market yield to maturity
of PXRE's fixed maturities portfolio at December 31, 1996 and 1995 was 5.7% and
5.3%, respectively.
Fixed maturity investments are reported at fair value, with the net
unrealized gain or loss, net of tax, reported as a separate component of
stockholders' equity. PXRE recorded directly to equity a $3,214,000 after-tax
unrealized decrease in the value of its investment portfolio during 1996
reflecting an increase in interest rates during the period. Short-term
investments are carried at amortized cost which approximates fair value. PXRE's
short-term investments, principally high-grade commercial paper, were
$59,792,000 at December 31, 1996 compared to $41,722,000 at December 31, 1995.
The increase at December 31, 1996 was principally due to short-term investments
acquired in the Merger.
During the fourth quarter of 1996, PXRE raised the quarterly dividend on
its common stock from $0.18 per share to $0.21 per share. The increase in the
dividend will result in an annual additional outlay of approximately $993,000,
based on the shares outstanding prior to the Merger. An additional annual outlay
of $4,771,000 will result from the shares exchanged as a result of the Merger.
Book value per share was $25.63 at December 31, 1996, based on shares
outstanding of approximately 13,954,000.
In April 1995, PXRE's Board of Directors authorized the purchase of up
to 700,000 shares of its common stock from time to time in open market or
private block purchase transactions. Since inception of this purchase plan
through December 31, 1996, PXRE purchased 531,400 of the 700,000 shares at a
cost of $12,538,000.
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<PAGE>
<PAGE>
In March 1995, PXRE and TREX entered into a joint venture arrangement to
trade in catastrophe futures and options contracts on the Chicago Board of
Trade. The venture is now wholly-owned by PXRE, which has committed $5.0 million
to this venture. Although the joint venture has developed a number of trading
strategies, the low level of activity in the CBOT market for catastrophe futures
has kept trade volume to a minimum through December 31, 1996.
PXRE may be subject to gains and losses resulting from currency
fluctuations because substantially all of its investments are denominated in
U.S. dollars, while some of its net liability exposure is in currencies other
than U.S. dollars. PXRE holds, and expects to continue to hold, currency
positions and has made, and expects to continue to make, investments
denominated in foreign currencies to mitigate, in part, the effects of currency
fluctuations on its results of operations. Currency holdings and investments
denominated in foreign currencies do not constitute a material portion of
PXRE's investment portfolio and, in the opinion of PXRE's management, are
sufficiently liquid for its needs.
In December 1996, PXRE completed an investment in Lloyd's, forming a new
syndicate (PG Butler Syndicate 1224) and a presence in London. 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. In connection with the capitalization of the syndicate, PXRE has
placed on deposit $42,975,000 of U.S. government securities as collateral for
Lloyds. In addition, PXRE issued a letter of credit for the benefit of Lloyds in
the amount of $15,355,000, which is collateralized by U.S. government securities
in approximately the same amount.
All amounts classified as reinsurance recoverable at December 31, 1996,
are considered by management of PXRE to be collectible in all material respects.
INCOME TAXES
PXRE's effective tax rate for 1996, 1995 and 1994 was 32.0%, 31.4% and
31.1%, respectively, which differs from the statutory rate principally due to
tax-exempt income, state and local taxes and tax on undistributed earnings of
unconsolidated affiliates. The change in the effective rate in 1996 reflects the
higher relative proportion of underwriting income compared to tax-exempt
municipal bond income.
SUBSEQUENT EVENT
In January 1997, PXRE completed a $100 million offering of 8.85% Capital
Trust Pass-through Securities'sm' (TRUPS'sm') through PXRE Capital Trust I in
an institutional private placement. Proceeds of the transaction will be used for
general corporate purposes, which may include the redemption or the purchase,
from time-to-time, in the open market or in privately negotiated transactions or
otherwise, of outstanding indebtedness and common stock of PXRE. The consent of
holders of PXRE's Senior Notes to certain amendments to the Indenture governing
the Senior Notes was obtained in connection with this offering.
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<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-K contains various forward-looking statements and
includes assumptions concerning PXRE's operations, future results and prospects.
Statements included herein which are not historical in nature are intended to
be, and are hereby identified as, "forward-looking statements" for purposes of
the safe harbor provided by Section 21E of the Exchange Act. These forward-
looking statements are based on current expectations and are subject to risk and
uncertainties. PXRE cautions the reader that actual results or events could
differ materially from those set forth or implied by the forward-looking
statements and related assumptions, depending on the outcome of certain
important factors including the following: (i) significant catastrophe losses,
the timing and extent of which are difficult to predict; (ii) changes in the
level of competition in the reinsurance or primary insurance markets that impact
the volume or profitability of the property-casualty reinsurance business
(these changes include, but are not limited to, the intensification of price
competition, the entry of new competitors, existing competitors exiting the
market and the development of new products by new and existing competitors);
(iii) changes in the demand for reinsurance, including changes in the amount of
ceding companies' retentions; (iv) adverse development on loss reserves related
to business written in prior years; (v) lower than estimated retrocessional
recoveries on unpaid losses, including the effects of losses due to a decline
in the creditworthiness of PXRE's retrocessionaires; (vi) increases in interest
rates, which cause a reduction in the market value of PXRE's interest rate
sensitive investments, including its fixed income investment portfolio; and
(vii) decreases in interest rates causing a reduction of income earned on net
cash flow from operations and the reinvestment of the proceeds from sales, calls
or maturities of existing investments.
In addition to the factors outlined above that are directly related to
PXRE's business, PXRE is also subject to general business risks, including, but
not limited to, adverse state, federal or foreign legislation and regulation,
adverse publicity or news coverage, changes in general economic factors and the
loss of key employees.
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed as part of this Form 10-K:
<TABLE>
<CAPTION>
Page
----
<S> <C>
PXRE Corporation:
Report of Independent Accountants F-1
Consolidated Balance Sheets
at December 31, 1996 and 1995 F-2
Consolidated Statements of Income
for the years ended December 31,
1996, 1995 and 1994 F-3
Consolidated Statements of
Stockholders' Equity for the years
ended December 31, 1996, 1995 and 1994 F-4
Consolidated Statements of Cash Flow
for the years ended December 31,
1996, 1995 and 1994 F-5
Notes to Consolidated Financial
Statements F-6
</TABLE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No disclosure hereunder is required as PXRE has not changed its
accountants during the 24 months preceding December 31, 1996.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item 10 is contained in PXRE's Proxy
Statement, which information is incorporated herein by reference and which Proxy
Statement will be filed within 120 days of the end of PXRE's 1996 fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is contained in PXRE's Proxy
Statement, which information is incorporated herein by reference and which Proxy
Statement will be filed within 120 days of the end of PXRE's 1996 fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is contained in PXRE's Proxy
Statement, which information is incorporated herein by reference and which Proxy
Statement will be filed within 120 days of the end of PXRE's 1996 fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item 13 is contained in PXRE's Proxy
Statement, which information is incorporated herein by reference and which Proxy
Statement will be filed within 120 days of the end of PXRE's 1996 fiscal year.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
1. The following documents are filed as part of this Form 10-K:
(1) Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
PXRE Corporation:
Report of Independent Accountants F-1
Consolidated Balance Sheets at
December 31, 1996 and 1995 F-2
Consolidated Statements of Income for the years
ended December 31, 1996, 1995 and 1994 F-3
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1996, 1995 and 1994 F-4
Consolidated Statements of Cash Flow for the years
ended December 31, 1996, 1995 and 1994 F-5
Notes to Consolidated Financial Statements F-6
(2) Financial Statements Schedules
Schedule I - Summary of Investments
(The information required by this Schedule is presented
in the financial statements and the notes thereto included
in this Form 10-K.) ---
Schedule II - Condensed Financial Information of Registrant F-27
Schedule III - Supplementary Insurance Information F-28
Schedule IV - Reinsurance
(The information required by this Schedule is presented
in the financial statements and the notes thereto included
in this form 10-K.) ---
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Schedule VI -- Supplemental Information Concerning
Property/Casualty Insurance Operations F-28
Report of Independent Accountants on the Financial Statement
Schedules and Consent of Independent Accountants F-29
All other financial statement schedules have been omitted
as inapplicable.
</TABLE>
(3) Exhibits
(3) Certificate of Incorporation and By-laws of PXRE Corporation. The
Restated Certificate of Incorporation and By-laws of PXRE Corporation were
previously filed with PXRE's Registration Statement on Form S-1 dated August 29,
1986, as amended by Amendment No. 1 thereto dated February 19, 1987 and by
Amendment No. 2 thereto dated March 25, 1987 (File No. 33-8406), as Exhibits 3.1
and 3.2 thereto, and are incorporated herein by reference. The Certificate of
Designations designating the Series A Cumulative Convertible Preferred Stock of
PXRE Corporation was previously filed with PXRE's Registration Statement on Form
S-2 dated February 21, 1992, as amended by Amendment No. 1 thereto dated April
1, 1992 and by Amendment No. 2 thereto dated April 13, 1992 and by Amendment No.
3 thereto dated April 23, 1992 (File No. 33-45893) as Exhibit 4.5 thereto, and
is incorporated herein by reference. The Certificate of Amendment dated May 20,
1993 to PXRE's Restated Certificate of Incorporation was previously filed with
PXRE's Registration Statement on Forms S-8 and S-3 dated June 3, 1993 (File No.
33-63768) as Exhibit 4.3 thereto, and is incorporated herein by reference. The
Certificate of Amendment dated May 19, 1994 to PXRE's Restated Certificate of
Incorporation was previously filed as Exhibit 3 to the Annual Report on Form
10-K of PXRE for the fiscal year ended December 31, 1994 (File No. 0-15428), and
is incorporated herein by reference. The Certificate of Amendment dated December
9, 1996 to PXRE's Restated Certificate of Incorporation was previously filed
with PXRE's Registration Statement on Form S-3 dated January 3, 1997 (File No.
333-19207), and is incorporated herein by reference. The Certificate of Merger
of Transnational Re Corporation into PXRE Corporation, dated December 11, 1996,
is attached hereto as Exhibit 3. Article IV, Section 1 of the By-laws of PXRE
Corporation, as amended on June 8, 1995, was previously filed as Exhibit 3 to
the Annual Report on Form 10-K of PXRE for the fiscal year ended December 31,
1995 (File No. 0-15428), and is incorporated herein by reference.
(4) Instruments Defining the Rights of Security Holders.
4.1 Trust Indenture, dated as of August 31, 1993, between PXRE, as
issuer, 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).
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4.2 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 of PXRE due 2003
(attached hereto as Exhibit 4.2).
4.3 Indenture, dated as of January 29, 1997, between PXRE and First
Union National Bank, as Trustee (attached hereto as Exhibit 4.3).
4.4 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 (attached hereto as
Exhibit 4.4).
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 (attached hereto as Exhibit
4.5).
4.6 Capital Securities Guarantee Agreement, dated as of January 29,
1997, between PXRE and First Union National Bank, as Guarantee Trustee (attached
hereto as Exhibit 4.6).
4.7 Common Securities Guarantee Agreement, dated as of January 29, 1997,
executed by PXRE (attached hereto as Exhibit 4.7).
(10) Material Contracts. The material contracts of PXRE are as follows:
10.1 Registration Rights Agreement, dated January 29, 1997, among PXRE,
PXRE Capital Trust I and Salomon Brothers Inc, as Representative of the Initial
Purchasers (attached hereto as Exhibit 10.1).
10.2 Purchase Agreement among PXRE, PXRE Capital Trust I and Salomon
Brothers Inc, as Representative of the Initial Purchasers, dated January 24,
1997 (attached hereto as Exhibit 10.2).
10.3 PXRE Reinsurance Company Management Agreement among PXRE
Reinsurance and, among others, Merrimack Mutual Fire Insurance Company
("Merrimack"), Pennsylvania Lumbermens Mutual Insurance Company ("Pennsylvania
Lumbermens"), and NRMA Insurance Limited ("NRMA") (Exhibit 10.1 to PXRE's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991 (File No.
0-15428), and incorporated herein by reference); letter dated November 28, 1990
from Pennsylvania Lumbermens confirming reduced participation (Exhibit 10.7 to
PXRE's Form S-2 Registration Statement dated February 21, 1992, as amended by
Amendment No. 1 thereto dated April 1, 1992 and by Amendment No. 2 thereto dated
April 13, 1992 and by Amendment No. 3 thereto dated April 23, 1992 (File No.
33-45893), and incorporated herein by reference); and cover notes respecting
January 1997 renewals by Merrimack, Pennsylvania Lumbermens and NRMA and cover
note respecting participation commencing January 1, 1997 by Auto-Owners
Insurance Company (attached hereto as Exhibit 10.3).
-47-
<PAGE>
<PAGE>
10.4 Tax Settlement Agreement dated June 21, 1991 between PXRE
Corporation, PXRE Reinsurance Company and PM Holdings, Inc. (Exhibit 10.2 to the
Annual Report on Form 10-K of PXRE for the fiscal year ended December 3, 1991
(File No. 0-15428), and incorporated herein by reference).
10.5 Investment Advisory Agreement between PXRE Reinsurance Company and
Phoenix Investment Counsel, Inc., dated February 25, 1987 and effective as of
January 1, 1987 (Exhibit 10.10 to Amendment No. 1 dated February 19, 1987 to
PXRE's Form S-1 Registration Statement dated August 29, 1986, as subsequently
amended by Amendment No. 2 thereto dated March 25, 1987 (File No. 33-8406), and
incorporated herein by reference).
10.6 Amendment to Investment Advisory Agreement between PXRE Reinsurance
Company and Phoenix Investment Counsel, Inc., effective retroactively as of
January 1, 1987 (Exhibit 10.3 to the Annual Report on Form 10-K of PXRE for the
fiscal year ended December 31, 1991 (File No. 0-15428), and incorporated herein
by reference).
10.7 Amendment No. 2 to Investment Advisory Agreement between PXRE
Reinsurance Company and Phoenix Investment Counsel, Inc., effective as of
November 1, 1989. (Exhibit 10.4 to the Annual Report on Form 10-K of PXRE for
the fiscal year ended December 31, 1991 (File No. 0-15428), and incorporated
herein by reference).
10.8 Amended and Restated Agreement Concerning Filing of Consolidated
Federal Income Tax Returns dated as of August 23, 1993 between PXRE and PXRE
Reinsurance (Exhibit 10.8 to the Annual Report on Form 10-K of PXRE for the
fiscal year ended December 31, 1993 (File No. 0-15428), and incorporated herein
by reference).
10.9 Employee Stock Purchase Plan, as amended (Appendix A to PXRE's
Proxy Statement dated April 23, 1993, and incorporated herein by reference).(M)
10.10 Executive Long-Term Bonus Plan (Exhibit 10.6 to PXRE's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991 (File No.
0-15428), and incorporated herein by reference) and Amendment thereto made as of
August 22, 1991 (Exhibit 10.14 to PXRE's Form S-2 Registration Statement dated
February 21, 1992, as amended by Amendment No. 1 thereto dated April 1, 1992 and
by Amendment No. 2 thereto dated April 13, 1992 and by Amendment No. 3 thereto
dated April 23, 1992 (File No. 33-45893), and incorporated herein by
reference).(M)
10.11 Executive Severance Plan (Exhibit 10.1 to the Annual Report on
Form 10-K of PXRE for the fiscal year ended December 31, 1989 (File No.
0-15428), and incorporated herein by reference).
10.12 1988 Stock Option Plan, as amended (Exhibit A to the first
Prospectus forming part of PXRE's Form S-8 and S-3 Registration Statement dated
June 21, 1990 (File No. 33-35521), and incorporated herein by reference).(M)
(M) indicates a management contract or compensatory plan or arrangement in which
the directors and/or executive officers of PXRE participate.
-48-
<PAGE>
<PAGE>
10.13 1987 Stock Option Plan, as amended (Appendix B to PXRE's Proxy
Statement dated April 13, 1990, and incorporated herein by reference).(M)
10.14 Non-Employee Director Deferred Stock Plan (Appendix A to PXRE's
Proxy Statement dated April 12, 1991, and incorporated herein by reference).(M)
10.15 Restated Employee Annual Incentive Bonus Plan, as amended
(Appendix A to PXRE's Proxy Statement dated April 22, 1994, and incorporated
herein by reference).(M)
10.16 1992 Officer Incentive Plan, as amended (Appendix B to PXRE's
Proxy Statement dated April 22, 1994 and incorporated herein by reference).(M)
10.17 Quota Share Retrocessional Agreement between PXRE Reinsurance and
Trenwick America Reinsurance Corporation (Exhibit 10.21 to the Annual Report on
Form 10-K of PXRE for the fiscal year ended December 31, 1993 (File No.
0-15428), and incorporated herein by reference).
10.18 Management Agreement dated as of November 8, 1993 among PXRE
Reinsurance, Transnational Re Corporation and Transnational Reinsurance Company
(Exhibit 10.22 to the Annual Report on Form 10-K of PXRE for the fiscal year
ended December 31, 1993 (File No. 0-15428), and incorporated herein by
reference), as amended by Amendment No. 1 thereto, dated December 1, 1994
(Exhibit 10.21 to the Annual Report on Form 10-K of PXRE for the fiscal year
ended December 31, 1994 (File No. 0-15428), and incorporated herein by
reference).
10.19 Aggregate Excess of Loss Reinsurance Agreement dated as of
November 8, 1993 between PXRE Reinsurance, as reinsurer, and Transnational
Reinsurance Company, as reinsured (Exhibit 10.23 to the Annual Report on Form
10-K of PXRE for the fiscal year ended December 31, 1993 (File No. 0-15428), and
incorporated herein by reference).
10.20 Services Agreement dated as of December 11, 1996 between PXRE
Reinsurance Company and Transnational Reinsurance Company (attached hereto as
Exhibit 10.20).
10.21 Addendum No. 2 dated November 10, 1994 to the PXRE Group Amended
and Restated Agreement Concerning Filing of Consolidated Federal Income Tax
Returns (Exhibit 10.22 to the Annual Report on Form 10-K of PXRE for the fiscal
year ended December 31, 1994 (File No. 0-15428), and incorporated herein by
reference).
10.22 Addendum No. 3 dated as of December 11, 1996 to the PXRE Group
Amended and Restated Agreement Concerning Filing of Consolidated Federal Income
Tax Returns (attached hereto as Exhibit 10.22).
10.23 Amendment dated August 1994 to the Severance Plan for Certain
Executives of PXRE Corporation (Exhibit 10.23 to the Annual Report on Form 10-K
of PXRE for the fiscal year ended December 31, 1994 (File No. 0-15428), and
incorporated herein by reference).(M)
(M) indicates a management contract or compensatory plan or arrangement in which
the directors and/or executive officers of PXRE participate.
-49-
<PAGE>
<PAGE>
10.24 Lease dated May 9, 1994 between Thornall Associates and PXRE
Corporation (Exhibit 10.24 to the Annual Report on Form 10-K of PXRE for the
fiscal year ended December 31, 1994 (File No. 0-15428), and incorporated herein
by reference).
10.25 Director Stock Option Plan (Appendix A to PXRE's Proxy Statement
dated May 3, 1995, and incorporated herein by reference).(M)
10.26 Amendment No. 3 to Investment Advisory Agreement between PXRE
Reinsurance Company and Phoenix Investment Counsel, Inc. effective June 1, 1995
(Exhibit 10.26 to the Annual Report on Form 10-K of PXRE for the fiscal year
ended December 31, 1995 (File No. 0-15428), and incorporated herein by
reference).
10.27 Agreement and Plan of Merger dated as of August 22, 1996 between
PXRE and Transnational Re Corporation, as amended by Amendment No. 1 dated as of
September 27, 1996 and Amendment No. 2 dated as of October 24, 1996 (Annex A to
PXRE's Form S-4 Registration Statement dated October 30, 1996 (File No.
333-15087), and incorporated herein by reference).
10.28 Amended and Restated Investment Advisory Agreement between
Transnational Reinsurance Company and Phoenix Investment Counsel, Inc., dated
November 8, 1993 (Exhibit 10.4 to Transnational Re Corporation's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 (File No. 0-22376) and
incorporated herein by refernece), as amended by the Amendment thereto,
effective June 1, 1995 (Exhibit 10.11 to Transnational Re Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 (File No.
0-22376) and incorporated herein by reference).
10.29 Investment Management Agreement, effective January 29, 1997
between PXRE Corporation and Phoenix Investment Counsel, Inc. (attached hereto
as Exhibit 10.29).
(11) Statement re computation of earnings per share (attached hereto as
Exhibit 11).
(12) Statement re computation of ratios (attached hereto as Exhibit 12).
(21) List of Subsidiaries. At December 31, 1996, PXRE had the following
subsidiaries: PXRE Reinsurance Company, a Connecticut insurance company;
Transnational Reinsurance Company, a Connecticut insurance company; PXRE Ltd.,
an English company (the sole member of PG Butler Syndicate 1224 at Lloyd's);
PXRE Managing Agency Ltd. (the managing agency for PG Butler Syndicate 1224 at
Lloyd's); PXRE Trading Corporation, a Delaware corporation; TREX Trading
Corporation, a Delaware corporation; PX/TX Associates, a Delaware general
partnership (of which PXRE Trading and TREX Trading are the only partners); and
CAT Fund, L.P., a Delaware limited partnership (of which PX/TX Associates is the
sole general partner and PXRE Trading and TREX Trading are the only limited
partners). (See the discussion in this Form 10-K under the captions
"Business--Management Agreement" and "--Other Operations" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations.")
(M) indicates a management contract or compensatory plan or arrangement in which
the directors and/or executive officers of PXRE participate.
-50-
<PAGE>
<PAGE>
(23) Consents of Experts and Counsel. The consent of Price Waterhouse
LLP, independent accountants to PXRE, is included as part of Item 14(a)(2) of
this Form 10-K.
(24) Power of Attorney. Copies of the powers of attorney executed by
each of Robert W. Fiondella, Franklin D. Haftl, Bernard Kelly, Wendy Luscombe,
Edward P. Lyons, Philip R. McLoughlin, David W. Searfoss, Donald H. Trautlein
and Wilson Wilde are attached hereto as Exhibit 24.
(27) Financial Data Schedule. Exhibit 27 included in electronic filing
only.
(28) Information from reports furnished to state insurance regulatory
authorities. Filed in paper under cover of Form SE.
(b) Current Reports.
None.
(c) See Item 14(a)(3) above.
(d) See Item 14(a)(2) above.
-51-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, PXRE Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PXRE CORPORATION
By:/s/ Gerald L. Radke
-------------------
Gerald L. Radke
Its Chairman of the Board,
President and Chief
Executive Officer
Date: March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of PXRE
Corporation and in the capacity and on the dates indicated:
By:/s/ Gerald L. Radke By:/s/ Sanford M. Kimmel
---------------------- ---------------------
Gerald L. Radke Sanford M. Kimmel
Its Chairman of the Board, Its Senior Vice President,
President and Chief Treasurer and Chief
Executive Officer Financial Officer
(Principal Executive (Principal Financial
Officer) and Director Officer and Principal
Accounting Officer)
Date: March 26, 1997 Date: March 26, 1997
By*_______________________ By*______________________
Robert W. Fiondella Franklin D. Haftl
Director Director
Date: March 26, 1997 Date: March 26, 1997
-52-
<PAGE>
<PAGE>
By*_______________________ By*______________________
Bernard Kelly Wendy Luscombe
Director Director
Date: March 26, 1997 Date: March 26, 1997
By*_______________________ By*_______________________
Edward Lyons Philip R. McLoughlin
Director Director
Date: March 26, 1997 Date: March 26, 1997
By*_______________________ By*______________________
David W. Searfoss Donald H. Trautlein
Director Director
Date: March 26, 1997 Date: March 26, 1997
By*______________________
Wilson Wilde
Director
Date: March 26, 1997
*By:/s/ Gerald L. Radke
____________________
Gerald L. Radke
Attorney-in-Fact
-53-
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
PXRE CORPORATION
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, of stockholders' equity and of cash
flow present fairly, in all material respects, the financial position of PXRE
Corporation and its subsidiaries at December 31, 1996 and 1995, and the results
of their operations and their cash flow for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
February 13, 1997
F-1
<PAGE>
<PAGE>
PXRE CONSOLIDATED BALANCE SHEETS
CORPORATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
1996 1995
---- ----
<S> <C> <C> <C>
Assets Investments:
Fixed maturities, available for sale, at fair value
(amortized cost $393,962,000 and $216,348,000,
respectively) $394,551,703 $221,356,767
Equity securities, at fair value (cost $6,850,000
and $5,000,000) 7,796,392 5,172,428
Short-term investments 59,791,879 41,721,656
------------ ------------
Total investments 462,139,974 268,250,851
Cash 4,938,481 838,548
Accrued investment income 5,046,899 3,343,505
Receivables:
Unreported premiums 16,849,578 23,376,727
Balances due from intermediaries and brokers 6,279,368 6,335,593
Other receivables 9,281,392 6,793,881
Reinsurance recoverable 18,065,126 34,097,408
Ceded unearned premiums 3,728,424 5,433,030
Deferred acquisition costs 1,449,050 1,564,926
Income tax recoverable 2,204,026 479,473
Deferred income tax recoverable 3,586,489 0
Investment in equity of TREX 0 36,003,384
Receivable from affiliates 0 446,799
Other assets 9,755,399 9,119,750
------------ ------------
Total assets $543,324,206 $396,083,875
============ ============
Liabilities Losses and loss expenses $70,977,449 $72,718,914
Unearned premiums 11,042,260 13,685,391
Reinsurance balances payable 4,635,449 14,346,394
Notes payable 64,725,000 67,775,000
Deferred income tax payable 0 3,653,102
Contingent commission payable 12,772,478 2,618,438
Excess of fair market value of net assets of TREX 7,942,374 0
Other liabilities 13,551,418 10,124,460
------------ ------------
Total liabilities 185,646,428 184,921,699
------------ ------------
Stockholders' Common stock, $.01 par value -- 40,000,000 and
equity 20,000,000 shares authorized; 14,705,782 and
8,983,896 shares issued 147,058 89,839
Additional paid-in capital 252,978,182 117,668,048
Net unrealized appreciation on investments, net of
deferred income tax expense of $306,000 and
$1,813,000 568,405 3,782,500
Retained earnings 118,705,257 91,882,834
Treasury stock at cost (750,876 and 238,755 shares) (14,090,289) (1,719,459)
Restricted stock at cost (53,279 and 34,000 shares) (630,835) (541,586)
------------ ------------
Total stockholders' equity 357,677,778 211,162,176
------------- ------------
Total liabilities and stockholders' equity $543,324,206 $396,083,875
============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
<PAGE>
PXRE CONSOLIDATED STATEMENTS OF INCOME
CORPORATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C> <C>
Revenues Net premiums earned $ 72,795,454 $ 97,141,693 $110,601,155
Net investment income 16,782,371 14,729,566 13,786,304
Net realized investment gains
(losses) 94,158 85,302 (1,163,963)
Management fees: Non-affiliate 3,519,703 2,891,128 3,627,699
TREX 2,512,303 3,526,213 3,364,117
------------ ------------- ------------
Total revenues 95,703,989 118,373,902 130,215,312
------------ ------------- ------------
Losses and Losses and loss expenses incurred 18,563,608 34,716,270 52,647,445
expenses Commissions and brokerage 12,873,668 13,251,070 15,025,774
Other operating expenses 12,261,949 11,236,843 8,365,035
Interest expense 6,957,057 7,143,097 7,789,213
------------ ------------- ------------
Total expenses 50,656,282 66,347,280 83,827,467
------------ ------------- ------------
Income before income taxes
and equity in net
earnings of TREX 45,047,707 52,026,622 46,387,845
Equity in net earnings of TREX 3,897,568 5,947,956 4,141,219
Income tax provision 15,644,000 18,189,000 15,700,000
------------ ------------- ------------
Net income $ 33,301,275 $ 39,785,578 $ 34,829,064
============ ============= ============
Preferred stock dividend $ 0 $ 598,928 $ 2,004,800
============ ============= ============
Net income available to common
stockholders $ 33,301,275 $ 39,186,650 $ 32,824,264
============ ============= ============
Per share Primary:
Net income $ 3.68 $ 4.74 $ 4.89
============ ============= ============
Average shares outstanding 9,046,332 8,275,125 6,709,823
============ ============= ============
Fully diluted:
Net income $ 3.68 $ 4.48 $ 3.94
============ ============= ============
Average shares outstanding 9,060,022 8,873,785 8,847,045
============ ============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
<PAGE>
PXRE CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CORPORATION YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
ADDITIONAL APPRECIATION TOTAL
PREFERRED COMMON PAID-IN (DEPRECIATION) RETAINED RESTRICTED TREASURY STOCKHOLDERS'
STOCK STOCK CAPITAL ON INVESTMENTS EARNINGS STOCK STOCK EQUITY
----- ----- ------- -------------- -------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January l, 1994 $100 $67,849 $114,336,608 $ 2,667,621 $27,584,795 $ 0 $(1,966,743) $142,690,230
Net income 34,829,064 34,829,064
Issuance of common stock 1,367 2,551,761 2,553,128
Issuance of treasury stock 106,056 106,056
Issuance of restricted stock (283,550) (283,550)
Dividends:
Preferred stock (2,004,800) (2,004,800)
Common stock (2,475,211) (2,475,211)
Change in fair value for the (7,788,344) (7,788,344)
year net
Equity in net change in TREX
depreciation (855,631) (855,631)
----------------------------------------------------------------------------------------------------
Balance at December 31, 1994 $100 $ 69,216 $116,888,369 $(5,976,354) $ 57,933,848 $(283,550) $ (1,860,687) $166,770,942
Net income 39,785,578 39,785,578
Conversion of preferred stock (100) (20,260) (20,360)
Issuance of common stock 20,623 692,869 713,492
Issuance of treasury stock 141,228 141,228
Issuance of restricted stock (499,005) (499,005)
Amortization of restricted stock 240,969 240,969
Dividends:
Preferred stock (598,928) (598,928)
Common stock (5,237,664) (5,237,664)
Change in fair value for the 8,488,420 8,488,420
year, net
Equity in net change in TREX
appreciation 1,270,434 1,270,434
Other 107,070 107,070
----------------------------------------------------------------------------------------------------
Balance at Deccmber 31, 1995 $ O $ 89,839 $117,668,048 $ 3,782,500 $ 91,882,834 $(541,586) $ (1,719,459) $211,162,176
Net income 33,301,275 33,301,275
Issuance of common stock 417 823,192 823,609
Issuance of common stock in
TREX merger 56,802 134,304,932 134,361,734
Issuance of treasury stock 166,745 166,745
Repurchase of treasury stock (12,537,575) (12,537,575)
Issuance of restricted stock (501,027) (501,027)
Amortization of restricted
stock 411,778 411,778
Dividends paid to common
stockholders (6,478,852) (6,478,852)
Change in fair value for the
year, net (2,799,292) (2,799,292)
Equity in net change in TREX
depreciation (414,803) (414,803)
Other 182,010 182,010
----------------------------------------------------------------------------------------------------
Balance at December 31, 1996 $ O $147,058 $252,978,182 $ 568,405 $118,705,257 $(630,835) $(14,090,289) $357,677,778
====================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
<PAGE>
PXRE CONSOLIDATED STATEMENTS OF CASH FLOW
CORPORATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C> <C>
Cash flow Net income $ 33,301,275 $ 39,785,578 $ 34,829,064
from operating Adjustments to reconcile net income to
activities net cash provided by operating activities:
Losses and loss expenses (12,964,561) (9,116,644) 10,393,119
Unearned premiums (5,077,857) 691,911 (2,280,603)
Deferred acquisition costs 1,284,615 (701,788) 760,020
Receivables 14,313,128 (3,177,725) (8,687,535)
Reinsurance balances payable (3,431,682) (18,467) 4,458,381
Reinsurance recoverable 4,511,644 11,306,688 (10,270,669)
Income tax recoverable 1,126,162 477,805 2,993,492
Equity in net earnings of affiliate (3,574,171) (5,849,161) (4,090,535)
Other (1,455,299) (985,918) 2,883,752
------------- ------------- -------------
Net cash provided by operating activities 28,033,254 32,412,279 30,988,486
------------- ------------- -------------
Cash flow Cost of fixed maturity investments (83,760,831) (176,462,916) (70,376,940)
from investing Fixed maturity investments matured/disposed 62,189,176 171,764,371 50,306,999
activities Payable for securities (2,496,232) 2,496,232 (28,493,966)
Cost of equity securities (1,849,539) (5,000,000) 0
Investment in joint venture 0 (2,000,000) 0
Cash acquired from merger with TREX 1,260,611 0 0
Net change in short-term investments 22,485,844 (14,909,109) 24,042,715
------------- ------------- -------------
Net cash used by investing activities (2,170,971) (24,111,422) (24,521,192)
------------- ------------- -------------
Cash flow Proceeds from issuance of common stock 489,327 335,355 1,443,460
from financing Cash dividends paid to preferred stockholders 0 (933,061) (2,004,800)
activities Cash dividends paid to common stockholders (6,478,852) (5,237,664) (2,475,211)
Repurchase of debt (3,235,250) (2,016,188) (5,274,750)
Cost of treasury stock (12,537,575) 0 0
------------- ------------- -------------
Net cash used by financing activities (21,762,350) (7,851,558) (8,311,301)
------------- ------------- -------------
Net change in cash 4,099,933 449,299 (1,844,007)
Cash, beginning of period 838,548 389,249 2,233,256
------------- ------------- -------------
Cash, end of period $ 4,938,481 $ 838,548 $ 389,249
============= ============= =============
Supplemental disclosure of cash flow information
Non cash investing and financing activities:
Fair value of assets acquired $ 161,130,734 $ 0 $ 0
Liabilities assumed 28,496,767 0 0
------------- ------------- -------------
Stock issued in merger with TREX $ 132,633,967 $ 0 $ 0
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
<PAGE>
PXRE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CORPORATION YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND CONSOLIDATION
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP"). These
statements reflect the consolidated operations of PXRE Corporation and its
subsidiaries (collectively referred to as "PXRE"), PXRE Reinsurance Company
("PXRE Reinsurance"), PXRE Trading Corporation ("PXRE Trading"), PXRE Ltd. and
PXRE Managing Agency Limited. In addition, following the merger of PXRE and
Transnational Re Corporation ("TREX") as described further in Note 2, the
consolidated operations include Transnational Reinsurance Company
("Transnational Reinsurance") and TREX Trading Corporation ("TREX Trading")
since December 11, 1996. During the two years ended December 31, 1995 and 1994
and the period up to December 11, 1996, PXRE owned approximately 21% of TREX,
which in turn owned 100% of Transnational Reinsurance, and accounted for this
investment under the equity method. Following the merger, Transnational
Reinsurance became a wholly-owned subsidiary of PXRE Reinsurance. All material
transactions between the consolidated companies have been eliminated in
preparing these consolidated financial statements.
Certain reclassifications have been made for 1995 and 1994 to conform
with the 1996 presentation.
INVESTMENT AT EQUITY
Investments in affiliated companies (20% to 50% owned) are accounted for
under the equity method.
PREMIUMS ASSUMED AND CEDED
Premiums on reinsurance business assumed are recorded as earned on a pro
rata basis over the contract period based on estimated subject premiums.
Adjustments based on actual subject premium are recorded once ascertained. The
portion of premiums written relating to unexpired coverages at the end of the
period is recorded as unearned premiums. Reinsurance premiums ceded are recorded
as incurred on a pro rata basis over the contract period.
DEFERRED ACQUISITION COSTS
Acquisition costs consist of commissions and brokerage expenses incurred
in connection with contract issuance, net of acquisition costs ceded. These
costs are deferred and amortized over the period in which the related premiums
are earned. Deferred acquisition costs are reviewed periodically to determine
that they do not exceed recoverable amounts after allowing for anticipated
investment income. Amortization of acquisition costs amounted to $12,874,000,
$13,251,000 and $15,026,000 in 1996, 1995 and 1994, respectively.
F-6
<PAGE>
<PAGE>
MANAGEMENT FEES
Management fees are recorded as earned under various arrangements
whereby PXRE Reinsurance acts as underwriting manager for other insurers and
reinsurers, including TREX up to the date of the merger, as discussed in Note 2.
These fees are initially based on premium volume, but are adjusted through
contingent profit commissions related to underwriting results measured over a
period of years.
LOSSES AND LOSS EXPENSE LIABILITIES
Liabilities for losses and loss expenses are established in amounts
estimated to settle incurred losses. Losses and loss expense liabilities are
based on individual case estimates provided for reported losses for known events
and estimates of incurred but not reported losses. Losses and loss expense
liabilities are necessarily based on estimates and the ultimate liabilities may
vary from such estimates. Any adjustments to these estimates are reflected in
income when known.
Reinsurance recoverable on paid losses and reinsurance recoverable on
unpaid losses are reported as assets. Reinsurance recoverable on paid losses
represents amounts recoverable from retrocessionaires at the end of the period
for gross losses previously paid. Provisions are established for all reinsurance
recoveries which are considered doubtful.
INVESTMENTS
Fixed maturity investments and equity securities are considered
available for sale and are reported at fair value. Unrealized losses, as a
result of temporary changes in fair value during the period such investments are
held, are reflected net of income taxes in stockholders' equity. Unrealized
losses which are not temporary are charged to operations. Short-term
investments, which have an original maturity of one year or less, are carried at
amortized cost which approximates fair value. Realized gains or losses on
disposition of investments are determined on the basis of specific
identification. The amortization of premiums and accretion of discount for fixed
maturity investments is computed utilizing the interest method. The effective
yield under the interest method is adjusted for anticipated prepayments.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair values of certain assets and liabilities are disclosed in the notes
to the consolidated financial statements based on published market values, if
available, or estimates based upon fair values of similar issues. Fair values
are reported in Notes 5 and 6.
LEASEHOLD IMPROVEMENTS, FURNITURE AND EQUIPMENT AND OTHER ASSETS
Leasehold improvements, furniture and equipment, included in other
assets, are carried at depreciated cost. Depreciation and amortization are
calculated on a straight-line method principally over 15 years. Acquired
insurance licenses are carried at amortized cost.
F-7
<PAGE>
<PAGE>
DEBT ISSUANCE COSTS
Debt issuance costs of $2,850,000 associated with the August 1993
issuance of Senior Notes are being amortized over the term of the related debt
on a straight-line method. Such amortization expense amounted to $338,000,
$324,000 and $456,000 in 1996, 1995 and 1994, respectively, including the pro
rata charge of $84,000 and $59,000 relating to $3,050,000 and $1,925,000 of
repurchased debt in 1996 and 1995, respectively.
EXCESS OF FAIR MARKET VALUE OF NET ASSETS OF BUSINESS ACQUIRED OVER COST
The excess of fair market value of net assets of TREX business acquired
over cost is amortized on a straight-line basis over three years. The
amortization recorded in 1996 was $145,000.
FOREIGN EXCHANGE
Foreign currency assets and liabilities are translated at the exchange
rate in effect at the balance sheet date. Resulting gains and losses are
reflected in income for the period.
FEDERAL INCOME TAXES
Deferred tax assets and liabilities reflect the expected future tax
consequences of temporary differences between carrying amounts and the tax bases
of PXRE's assets and liabilities.
EARNINGS PER SHARE
Primary earnings per share are determined by dividing net earnings
(after deducting cumulative preferred stock dividends) by the weighted average
number of shares outstanding of common stock and common stock equivalents. On a
fully diluted basis, both net earnings and shares outstanding were adjusted to
assume the conversion of convertible preferred stock from the date of issue,
unless the effect of the assumed conversion was anti-dilutive.
STOCK-BASED COMPENSATION
Effective January 1, 1996, PXRE adopted Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No.
123"). SFAS No. 123 establishes a "fair value based method" of accounting for
all stock options, but allows for the continued application of the intrinsic
value concept under existing accounting rules prescribed by Accounting
Principles Board Opinion No. 25 ("APB"). PXRE will continue to value its stock
options using the guidance of APB 25 and, as required by SFAS No. 123, discloses
in Note 11 to the consolidated financial statements, net income and earnings per
share had PXRE valued its stock options using the fair value based method.
F-8
<PAGE>
<PAGE>
2. ACQUISITION
On December 11, 1996, PXRE merged with TREX. Pursuant to the merger
agreement, each share of common stock of TREX has been canceled, and holders of
shares of common stock of TREX exchanged each such share for 1.0575 shares of
PXRE common stock and cash in lieu of fractional shares. The merger has been
accounted for using the purchase method of accounting, and, accordingly, the
purchase price has been allocated to the assets purchased and the liabilities
assumed based upon the fair values at the date of merger. The value assigned to
the PXRE common stock issued was $129,738,000. This includes a deferred tax
adjustment for the liability previously provided by PXRE with respect to its
investment in TREX which is no longer required and reduces the purchase price
allocated, as well as transaction costs. The excess of the fair value of the net
assets acquired over the purchase price, amounting to approximately $8,087,000,
has been recorded as negative goodwill and is being amortized on a straight-line
basis over 3 years.
The net income of TREX has been included in PXRE's consolidated results
of operations from the date of acquisition and amounted to $1,253,000 in 1996.
On the basis of a pro forma consolidation of the results of operations as if the
acquisition had taken place at the beginning of 1996 rather than December 11,
1996, consolidated net revenues would have been $153,410,000 for 1996.
Consolidated pro forma net income and fully diluted net income per share would
have been $49,706,000 and $3.44 in 1996. Such pro forma amounts are not
necessarily indicative of what the actual consolidated results of net income
might have been if the merger had been effective at the beginning of 1996.
Summarized financial information for TREX at December 31, 1995 included
total assets of $202,441,298, total stockholders' equity of $164,870,961,
revenues of $79,123,597 and net income of $27,267,276.
MANAGEMENT AGREEMENT
Under the Management Agreement between TREX, Transnational Reinsurance
and PXRE Reinsurance, Transnational Reinsurance paid PXRE Reinsurance an annual
basic management fee equal to 5% of Transnational Reinsurance's gross written
premiums. TREX was also required to reimburse PXRE for all expenses directly
attributable to it. This agreement terminated upon the merger.
3. BUSINESS, RISKS AND OTHER MATTERS
PXRE, through its wholly-owned subsidiaries PXRE Reinsurance and
Transnational Reinsurance, from December 11, 1996, provides treaty and
facultative reinsurance to primary insurers and reinsurers on commercial and
personal property risks, and marine and aviation risks. Its newly formed
London-based managing agency, which will oversee the affairs of PXRE's newly
formed underwriting syndicate at Lloyd's-PG Butler Syndicate 1224, will extend
PXRE's underwriting opportunities in these and other similar short-tail lines of
business. PXRE also conducts trade operations in catastrophe futures and option
contracts on the Chicago Board of Trade ("CBOT"), although the low level of
activity in the CBOT market for catastrophe futures has kept trade volume to a
minimum through December 31, 1996.
F-9
<PAGE>
<PAGE>
PXRE solicits its treaty and facultative reinsurance business from the
worldwide reinsurance brokerage market, committing and withholding its
underwriting capacity and altering its mix of business to focus on business
where management believes that above average underwriting results can be
achieved. To supplement its underwriting capacity and generate management fee
income, PXRE manages business for other insurers and reinsurers through
retrocessional agreements and management agreements. In recent years, PXRE has
been pursuing a strategy of focusing on catastrophe related coverages and
diversifying its exposures by writing a substantial amount of international
reinsurance. See "Certain Risks and Uncertainties" in Management's Discussion
and Analysis of Financial Condition and Results of Operations for further
information regarding PXRE's business and risks affecting these consolidated
financial statements.
4. UNDERWRITING PROGRAMS
Premiums written and earned for the years ended December 31, 1996, 1995
and 1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Premiums written
Assumed $114,347,965 $155,380,180 $179,685,909
Direct 0 0 (1,630)
Ceded: Managed business participants (21,237,657) (26,773,867) (29,841,808)
Catastrophe coverage (5,427,393) (6,180,126) (12,601,642)
TREX management agreement (19,965,317) (24,790,377) (28,722,490)
------------ ------------ ------------
Total reinsurance premiums ceded (46,630,367) (57,744,370) (71,165,940)
------------ ------------ ------------
Net premiums written $ 67,717,598 $ 97,635,810 $108,518,339
============ ============ ============
1996 1995 1994
---- ---- ----
Premiums earned
Assumed $120,727,383 $154,155,712 $180,296,809
Direct 0 0 (1,630)
Ceded (47,931,929) (57,014,019) (69,694,024)
------------ ------------ ------------
Net premiums earned $ 72,795,454 $ 97,141,693 $110,601,155
============ ============ ============
</TABLE>
Substantially all premiums written were assumed through reinsurance
brokers or intermediaries. In 1996, 1995 and 1994, two, two and one reinsurance
intermediaries, respectively, individually accounted for more than 10% of gross
premiums written, and collectively accounted for approximately 36%, 34% and 21%
of gross premiums written, respectively.
Under the terms of the management agreement described in Note 2, PXRE
retroceded $19,965,000, $24,790,000 and $28,722,000 of premiums written to
Transnational Reinsurance in 1996, 1995 and 1994, respectively.
F-10
<PAGE>
<PAGE>
In the past, PXRE has entered into retrocessional arrangements providing
catastrophe protection. In recent years, PXRE reduced, upon renewal, its own
catastrophe excess of loss retrocessional facilities (and associated premiums
ceded) and has borne the associated increase in net exposures while pursuing
various retrocessional arrangements whereby it manages business for
participants. As the cost of catastrophe retrocessional facilities has declined
since 1995, PXRE has again commenced selectively purchasing such coverage,
although PXRE did not purchase any significant retrocessional coverage in 1996
or 1995. In the event that retrocessionaires are unable to meet their
contractual obligations, PXRE would be liable for such defaulted amounts.
The components of reinsurance recoverable as stated in the December 31,
1996 and 1995 consolidated balance sheets are as follows:
1996 1995
---- ----
Losses and loss expense liabilities $15,633,287 $28,242,045
Loss payments 2,431,839 5,855,363
----------- -----------
$18,065,126 $34,097,408
=========== ===========
The components of losses and loss expenses incurred as shown in the
December 31, 1996, 1995 and 1994 consolidated statements of income are as
follows:
1996 1995 1994
---- ---- ----
Assumed $ 37,837,120 $ 49,370,127 $ 92,550,583
Ceded (19,273,512) (14,653,857) (39,903,138)
------------ ------------ ------------
Net $ 18,563,608 $ 34,716,270 $ 52,647,445
============ ============ ============
Activity in the losses and loss expense liability for the years ended
December 31, 1996, 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net balance January 1 $ 44,424,388 $ 46,044,699 $ 43,460,531
Plus reinsurance recoverables 28,294,526 35,790,859 27,981,908
------------ ------------ ------------
Gross balance at January 1 72,718,914 81,835,558 71,442,439
------------ ------------ ------------
Gross reserves of TREX at date
of acquisition 9,588,507 - -
Incurred related to:
Current year 27,327,387 43,388,163 85,804,406
Prior years 10,509,733 5,981,969 6,746,180
------------ ------------ ------------
Total incurred 37,837,120 49,370,132 92,550,586
------------ ------------ ------------
Paid related to:
Current year 6,468,736 16,885,840 44,337,530
Prior years 42,698,356 41,600,936 37,819,937
------------ ------------ ------------
Total paid 49,167,092 58,486,776 82,157,467
------------ ------------ ------------
Gross balance at December 31 $ 70,977,449 $ 72,718,914 $ 81,835,558
============ ============ ============
</TABLE>
F-11
<PAGE>
<PAGE>
As a result of changes in estimates of insured events in prior years,
the net provision for losses and loss expenses increased by approximately
$3,249,000 in 1996 primarily due to Hurricanes Marilyn and Luis; $4,311,000 in
1995 primarily due to the Northridge earthquake; and $3,261,000 in 1994
primarily due to marine pro rata experience.
5. INVESTMENTS
The amortized cost, gross unrealized gains, gross unrealized losses and
estimated fair value of investments in fixed maturities and equity securities as
of December 31, 1996 and 1995 are shown below:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
1996
United States government securities $180,519,485 $ 1,570,671 $ 876,482 $181,213,674
United States government agency
mortgage and asset-backed securities 87,861,645 1,515,801 2,743,510 86,633,936
Other mortgage and asset-backed
securities 55,313,776 645,089 252,128 55,706,737
Obligations of states and political
subdivisions 70,267,795 810,409 80,848 70,997,356
------------ ------------ ------------ ------------
Total fixed maturities $393,962,701 $ 4,541,970 $ 3,952,968 $394,551,703
============ ============ ============ ============
Equity securities $ 6,849,538 $ 946,854 $ 0 $ 7,796,392
============ ============ ============ ============
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
1995
United States government securities $165,405,594 $ 5,855,375 $ 0 $171,260,969
United States government agency
mortgage and asset-backed securities 50,942,612 12,419 859,233 50,095,798
------------ ------------ ------------ ------------
Total fixed maturities $216,348,206 $ 5,867,794 $ 859,233 $221,356,767
============ ============ ============ ============
Equity securities $ 5,000,000 $ 172,428 $ 0 $ 5,172,428
============ ============ ============ ============
</TABLE>
F-12
<PAGE>
<PAGE>
Proceeds, gross realized gains, and gross realized losses from sales of
fixed maturity investments before maturity date or securities that prepay and
from sales of equity securities were as follows:
1996 1995 1994
---- ---- ----
Proceeds
Fixed maturities $ 54,359,191 $126,497,804 $21,562,415
============ ============ ===========
Equity securities $ 1,532,961 $ 0 $ 0
============ ============ ===========
Gross Gains
Fixed maturities $ 540,687 $ 2,303,300 $ 0
Equity securities 85,711 0 0
------------ ------------ -----------
626,398 2,303,300 0
Gross Losses
Fixed maturities (532,240) (2,217,998) (1,163,963)
------------ ------------ ------------
Net realized gains (losses) $ 94,158 $ 85,302 $(1,163,963)
============ ============ ============
NET INVESTMENT INCOME
The components of net investment income were as follows:
1996 1995 1994
---- ---- ----
Fixed maturity investments $ 15,642,139 $ 12,896,608 $ 12,259,456
Equity securities 42,062 76,704 0
Short-term investments 1,744,703 2,019,693 1,639,348
------------ ------------ ------------
17,428,904 14,993,005 13,898,804
Less investment expenses 646,533 263,439 112,500
------------ ------------ ------------
Net investment income $ 16,782,371 $ 14,729,566 $ 13,786,304
============ ============ ============
INVESTMENT EXPENSES
Investment expenses primarily represent fees paid to Phoenix Duff &
Phelps Corporation, a public majority-owned subsidiary of Phoenix Home Life
Mutual Insurance Company which owned 4.6% of the outstanding common stock of
PXRE at December 31, 1996.
F-13
<PAGE>
<PAGE>
INVESTMENT MATURITY DISTRIBUTIONS
The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1996 by contractual maturity date is shown below.
Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Maturity Cost % Value %
-------- ---- --- ----- ---
<S> <C> <C> <C> <C>
One year or less $ 30,076,318 7.6 $ 30,168,502 7.7
Over 1 through 5 years 151,500,011 38.5 151,634,979 38.4
Over 5 through 10 years 58,449,075 14.8 59,322,226 15.0
Over 10 through 20 years 10,761,876 2.7 11,085,323 2.8
------------ ----- ------------ -----
250,787,280 63.6 252,211,030 63.9
United States government agency and
other mortgage and asset-backed
securities 143,175,421 36.4 142,340,673 36.1
------------ ----- ------------ -----
Total $393,962,701 100.0 $394,551,703 100.0
============ ===== ============ =====
</TABLE>
In addition to fixed maturities, PXRE held $59,791,879 and $41,721,656
of short-term investments at December 31, 1996 and 1995, respectively, comprised
principally of high-grade commercial paper with original maturities of one year
or less.
RESTRICTED ASSETS
Under the terms of certain reinsurance agreements, irrevocable letters
of credit in the amount of $2,933,000 were issued at December 31, 1996, in
respect of reported loss reserves and unearned premiums. Investments with a par
value of $4,000,000 have been pledged as collateral with issuing banks. In
addition, securities with a par value of $8,122,000 at December 31, 1996 were on
deposit with various state insurance departments in order to comply with
insurance laws.
PXRE, in connection with the startup of PXRE Ltd.'s Syndicate No. 1224,
has placed on deposit $42,975,000 of United States government securities as
collateral for Lloyd's of London. In addition, PXRE issued a letter of credit
for the benefit of Lloyd's of London in the amount of $15,355,000 at a cost of
25 basis points. The letter of credit is collateralized by United States
government securities of approximately the same amount.
F-14
<PAGE>
<PAGE>
6. NOTES PAYABLE AND CREDIT ARRANGEMENTS
In August 1993, PXRE completed a public offering of $75,000,000 of 9.75%
Senior Notes due August 15, 2003. The net balance outstanding, after
repurchases, at December 31, 1996 and 1995, amounting to $64,725,000 and
$67,775,000, respectively, is carried at par which approximates fair market
value. Interest is payable on the Senior Notes semi-annually commencing February
15, 1994. The notes are redeemable on or after August 15, 1998 at the option of
PXRE, initially at 103.656%, declining to 100% at August 15, 2001 and
thereafter, plus accrued and unpaid interest. The Indenture governing the Senior
Notes contains certain covenants which, among other things, limit the ability of
PXRE (a) to incur certain additional indebtedness and, in the case of the
Restricted Subsidiaries (as defined), to issue preferred stock; (b) to pay
dividends, repurchase stock and to make certain other Restricted Payments (as
defined); (c) to sell or transfer other assets; (d) to create liens; or (e) to
engage in any business other than the insurance and reinsurance businesses and
other businesses incidental and related thereto. In addition, the Indenture does
not permit PXRE to sell or issue any stock of PXRE Reinsurance or any other
Principal Insurance Subsidiary. The Indenture also provides that in the event of
a Change of Control, PXRE will offer, within 30 days, to purchase all the Senior
Notes then outstanding at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any.
PXRE Reinsurance has a $10,000,000 unsecured line of credit facility at
the lending bank's base rate. At December 31, 1996, no amount was outstanding
under this line of credit. No commitment fee was required for this facility.
Interest and commitment fees paid, were $6,469,000, $6,728,000 and
$7,354,000 for 1996, 1995 and 1994, respectively.
7. INCOME TAXES
The components of the provision for income taxes for the years ended
December 31, 1996, 1995 and 1994 are as follows:
1996 1995 1994
---- ---- ----
Current
Federal $14,310,000 $15,265,000 $10,607,000
State and local 319,000 374,000 293,000
Foreign 539,000 2,109,000 3,899,000
----------- ----------- -----------
15,168,000 17,748,000 14,799,000
Deferred 476,000 441,000 901,000
----------- ----------- -----------
Income tax provision $15,644,000 $18,189,000 $15,700,000
=========== =========== ===========
Income taxes paid $15,730,000 $16,507,000 $10,246,000
=========== =========== ===========
F-15
<PAGE>
<PAGE>
The income tax provision for each of the years presented differs from
the amounts determined by applying the applicable U.S. statutory federal income
tax rate to pre-tax income as a result of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Income taxes at statutory rates $15,767,000 $18,209,000 $16,235,000
Tax-exempt interest income (48,000) (1,086,000) (1,520,000)
Adjustments of prior years' items 102,000 244,000 266,000
Foreign tax provision 1,022,000 2,109,000 3,899,000
Foreign tax credit utilized (1,105,000) (2,284,000) (3,412,000)
State and local provision,
net of federal benefit 207,000 243,000 191,000
Excess of fair market value of
net assets of TREX over cost (51,000) 0 0
Other, net
(250,000) 754,000 41,000
----------- ---------- -----------
Total income tax provision $15,644,000 $18,189,000 $15,700,000
=========== =========== ===========
</TABLE>
The significant components of the net deferred tax provision (benefit)
for the years ended December 31, 1996, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Discounted losses and loss expenses $ 330,000 $ 108,000 $ (762,000)
Unearned premiums 277,000 (62,000) 153,000
Deferred acquisition costs (213,000) 220,000 (266,000)
Deferred compensation and benefits (75,000) (266,000) 0
Unrealized foreign exchange (42,000) (4,000) 168,000
Foreign tax credit carryforward (157,000) (893,000) 0
Capital loss carryforward 47,000 0 0
Discount on long-term bonds, net 149,000 618,000 0
Appreciation on undistributed
earnings of affiliate 139,000 692,000 0
Accrued ceded premiums 0 37,000 1,588,000
Other, net 21,000 (9,000) 20,000
---------- ---------- ----------
Total deferred tax provision $ 476,000 $ 441,000 $ 901,000
========== ========== ==========
</TABLE>
F-16
<PAGE>
<PAGE>
The significant components of the net deferred income tax asset
(liability) are as follows:
1996 1995
Deferred tax asset: ---- ----
Discounted losses and loss expenses $ 2,193,000 $ 1,952,000
Unearned premiums 510,000 598,000
Deferred compensation and benefits 1,434,000 343,000
Foreign tax credit carryforward 1,050,000 893,000
Capital loss carryforward 356,000 61,000
Other, net 248,000 50,000
----------- -----------
Total deferred income tax asset 5,791,000 3,897,000
----------- -----------
Deferred income tax liability:
Deferred acquisition costs (501,000) (522,000)
Tax effect of net unrealized
appreciation on investments (538,000) (1,813,000)
Unrealized foreign exchange (133,000) (198,000)
Discount on long-term bonds, net (960,000) (628,000)
Appreciation on undistributed
earnings of affiliate 0 (692,000)
Gain from sale of subsidiary 0 (3,697,000)
Other, net (72,000) 0
----------- -----------
Total deferred income tax liability (2,204,000) (7,550,000)
----------- -----------
Net deferred income tax asset (liability) $ 3,587,000 $(3,653,000)
=========== ===========
8. LEASES AND RENTALS
Rental expenses for operating leases, principally with respect to office
space and equipment, amounted to $939,000, $1,190,000 and $923,000 in 1996, 1995
and 1994, respectively.
Future net minimum rental payments under non-cancelable operating leases
aggregate $7,430,000 as follows: 1997--$672,000; 1998--$596,000; 1999--$520,000;
2000--$502,000; and thereafter $5,140,000.
9. STOCKHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS
STOCKHOLDERS' EQUITY
Authorized and issued common stock (1 cent par value) of PXRE consisted
of 40,000,000 and 14,705,782 shares as of December 31, 1996 and 20,000,000 and
8,983,896 as of December 31, 1995, respectively.
In addition, at December 31, 1996, there were 500,000 shares of serial
preferred stock (1 cent par value) authorized and none outstanding. The Board of
Directors is authorized to determine the terms of each series of preferred stock
which may be issued. During the second quarter of 1992, PXRE completed an
offering of 1,059,800 depositary shares, each representing 1/100 of a share of
PXRE's Series A Cumulative Preferred Stock. Each depositary share paid dividends
at an annual rate of 8% on its $25 per share liquidation value and was
redeemable at the option of PXRE on or after May 1, 1995.
F-17
<PAGE>
<PAGE>
PXRE exercised its option to redeem PXRE's Series A Preferred Stock (and
the related depositary shares) on May 1, 1995. At December 31, 1994, there were
10,009 shares of Series A Preferred Stock (1,000,900 depositary shares)
outstanding. During the second quarter of 1995, all of the outstanding shares of
Series A Preferred Stock were converted into shares of PXRE's common stock,
resulting in the issuance of approximately 1,760,000 shares of PXRE's common
stock. Each depositary share had a conversion price of $12.29 per depositary
share and was valued for conversion purposes at $25.00, resulting in
approximately 2.0342 shares of common stock for each depositary share converted.
DIVIDEND RESTRICTIONS
The Insurance Department of the State of Connecticut, in which PXRE
Reinsurance is domiciled, recognizes as net income and surplus (stockholders'
equity) those amounts determined in conformity with statutory accounting
practices ("SAP") prescribed or permitted by the department, which differ in
certain respects from GAAP. The amount of statutory capital and surplus at
December 31 and statutory net income of PXRE Reinsurance for the periods then
ended, as filed with insurance regulatory authorities are as follows:
1996 1995 1994
---- ---- ----
PXRE Reinsurance
Statutory capital and surplus $400,133,000 $250,231,000 $211,988,000
Statutory net income $ 35,436,000 $ 37,996,000 $ 33,538,000
PXRE Reinsurance is subject to state regulatory restrictions which limit
the maximum amount of annual dividends or other distributions, including loans
or cash advances, available to stockholders without prior approval of the
Insurance Commissioner of the State of Connecticut.
As of December 31, 1996, the maximum amount of dividends and other
distributions which may be made by PXRE Reinsurance during 1997 without prior
approval is limited to approximately $40,013,000. Accordingly, the remaining
amount of its capital and surplus is considered restricted.
Under the terms of the Senior Notes, dividends to PXRE stockholders in
any year are limited as described in Note 6.
F-18
<PAGE>
<PAGE>
10. EMPLOYEE BENEFITS
BENEFIT PLANS
Effective January 1, 1993, PXRE adopted a non-contributory defined
benefit pension plan covering all employees with one year or more of service and
who had attained age 21. Benefits are generally based on years of service and
compensation. PXRE funds the plan in amounts not less than the minimum statutory
funding requirement nor more than the maximum amount that can be deducted for
Federal income tax purposes.
PXRE also sponsors a supplemental executive retirement plan. This plan
is nonqualified and provides certain key employees benefits in excess of normal
pension benefits.
The net pension expenses for the company-sponsored plans included the
following components at December 31, based on a January 1, valuation date (the
latest actuarial estimate):
1996 1995 1994
---- ---- ----
Service cost of benefits earned $254,748 $185,584 $71,909
Interest cost on projected benefit obligations 194,999 268,173 8,578
Return on plan assets (747) (633) (156)
Net amortization of deferred prior service cost 112,338 166,318 (202)
-------- -------- -------
Pension expense $561,338 $619,442 $80,129
======== ======== =======
The following table sets forth the funded status of the plans and
amounts recognized in the consolidated balance sheets:
1996 1995
---- ----
Actuarial present value of benefit obligations:
Vested benefits $ 1,229,468 $ 1,071,776
Non vested 176,466 48,568
----------- -----------
Accumulated benefit obligation 1,405,934 1,120,344
Effect of future salary increases 1,512,094 1,380,611
----------- -----------
Projected benefit obligation 2,918,028 2,500,955
Plan assets at fair value 26,076 11,507
----------- -----------
Funded status (2,891,952) (2,489,448)
Unrecognized net gain 159,862 140,969
Unrecognized prior service cost 1,355,864 1,519,769
----------- -----------
Accrued pension liability $(1,376,226) $ (828,710)
=========== ===========
The assumptions used in computing the information above were as follows:
1996 1995
---- ----
Discount rate-pension expense 7.5% 7.0%
Expected long-term rate of return 8.0% 8.0%
Future compensation growth rate 5.0% 5.0%
F-19
<PAGE>
<PAGE>
EMPLOYEE STOCK PURCHASE PLAN
PXRE maintains an Employee Stock Purchase Plan under which it has
reserved 36,832 shares of its common stock for issuance to PXRE personnel. The
price per share is the lesser of 85% of the fair market value at either the date
granted or the date exercised. Under the plan 4,946, 3,768 and 3,388 shares of
PXRE common stock were issued for total consideration of approximately $103,000,
$84,000 and $74,000 in 1996, 1995 and 1994, respectively.
11. STOCK OPTIONS AND GRANTS
During 1987, PXRE granted six officers options to purchase shares of
common stock. All of these options are currently exercisable and expire on March
25, 1997. At December 31, 1996, 161,550 of these options had been exercised.
PXRE adopted in 1988, a plan which provides for the grant of incentive
stock options and non-qualified stock options to officers and key employees.
Options granted under the 1988 Stock Option Plan have a term of 10 years and
become exercisable in four equal annual installments. The exercise price for
options granted pursuant to the plan must be equal to or exceed the fair market
value of the common stock on the date the option is granted. At December 31,
1996, 261,834 options had been exercised under the 1988 Stock Option Plan. In
1992, the Board of Directors resolved to freeze the 1988 Stock Option Plan as of
December 31, 1992, so that no further options could be granted thereafter under
this plan.
In 1992, a Restated Employee Annual Incentive Bonus Plan was approved.
Incentive compensation is based in part on return on equity compared to a target
return on equity and in part on the discretion of the Restated Bonus Plan
Committee. In 1996 and 1995, $1,673,000 and $1,757,000, respectively, was
incurred under this plan. In addition, 30% of any bonus granted to certain
levels of employees is paid in restricted shares of common stock. As of December
31, 1996, 54,163 restricted shares had been granted under this plan.
In 1992, PXRE adopted a 1992 Officer Incentive Plan which provides for
the grant of incentive stock options, non-qualified stock options and awards of
shares of common stock subject to certain restrictions. Options granted under
the plan have a term of 10 years and generally become exercisable in four equal
annual installments commencing one year from the date of grant. The exercise
price for the incentive stock options must be equal to or exceed the fair market
value of the common stock on the date the option is granted. The exercise price
for the non-qualified options may be less than, equal to, or greater than the
fair market value of the common stock on the date of grant, but not less than
50% of such fair market value. As of December 31, 1996, 235,913 options and no
shares of restricted stock had been granted under this plan.
F-20
<PAGE>
<PAGE>
Information regarding the option plans described above is as follows:
Number Option Price
of Shares Per Share Range
Outstanding at December 31, 1993 377,093 $ 8.00 - $25.00
Options granted 56,330 $23.875
Options exercised 130,541 $ 8.00 - $13.00
Options canceled 1,486 $ 8.75 - $25.00
-------
Outstanding at December 31, 1994 301,396 $ 8.00 - $25.00
Options granted 64,621 $24.875
Options exercised 22,528 $ 8.75 - $25.00
Options canceled 589 $23.875 - $25.00
-------
Outstanding at December 31, 1995 342,900 $ 8.00 - $25.00
Options granted 73,748 $24.75
Options exercised 36,659 $ 8.75 - $25.00
Options canceled 6,966 $23.875 - $25.00
-------
Outstanding at December 31, 1996 373,023 $ 8.00 - $25.00
=======
Total authorized common stock reserved for grants of stock options and
restricted stock under the above plans is 833,830 shares. Total shares of
214,429 relate to stock options which are exercisable at December 31, 1996, at
exercise prices between $8.00 and $25.00. All options become exercisable upon a
change of control of PXRE as defined by the plans.
In 1995, PXRE adopted a non-employee Director Stock Option Plan which
provides for an annual grant of 1,000 options per director from 1995 to 2005
inclusive. Options granted under the plan have a term of 10 years from the date
of grant and are exercisable in three equal annual installments commencing one
year from the date of grant. The exercise price of the options is the fair
market value on the date of grant. As of December 31, 1996, 16,000 options were
granted and 2,667 were exercisable.
As discussed in Note 1, PXRE adopted SFAS No. 123 as of January 1, 1996.
As permitted by SFAS No. 123, PXRE has elected to continue to account for its
stock option plans under the accounting rules prescribed by APB 25, under which
no compensation costs are recognized as an expense. Had compensation costs for
the stock options been determined using the fair value method of accounting as
recommended by SFAS No. 123, net income and earnings per share for 1996 and 1995
would have been reduced to the following pro forma amounts:
1996 1995
---- ----
Net income
As reported $33,301,275 $39,785,578
Pro forma 33,028,582 39,642,572
Primary income per share
As reported $3.68 $4.74
Pro forma 3.65 4.72
Fully diluted income per share
As reported $3.68 $4.48
Pro forma 3.65 4.47
F-21
<PAGE>
<PAGE>
Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
The fair value of each option granted in 1996 and 1995 was estimated on
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions: risk-free interest of 5.94% for 1996 and
7.58% for 1995; expected lives of 5 years for 1996 and 1995; expected volatility
of 36.25% for 1996 and 40.73% for 1995; and expected dividend yield of 3.03% for
1996 and 2.53% for 1995.
A summary of the status of the employee and director stock option plans
at December 31, 1996, 1995 and 1994 and changes during the years then ended is
presented below:
<TABLE>
<CAPTION>
1996 1995
------------------------- -------------------------
Weighted Weighted
Average Average
Shares Exercise Price Shares Exercise Price
<S> <C> <C> <C> <C>
Options outstanding at beginning of year 350,900 16.93 301,396 14.66
Options granted 81,748 24.77 72,621 24.70
Options exercised 36,659 10.52 22,528 11.22
Options canceled 6,966 24.58 589 24.45
------- -------
Options outstanding at end of year 389,023 19.04 350,900 16.93
------- -------
Options exercisable at end of year 217,069 14.62 200,386 12.48
------- -------
Weighted average fair value per share of options granted 24.77 24.70
</TABLE>
Options outstanding at December 31, 1996 included 149,736 options with
exercise prices ranging from $8.00 to $13.00 per share and a weighted average
remaining contractual life of 4.08 years and 239,287 options with exercise
prices ranging from $23.25 to $25.00 per share and a weighted average remaining
contractual life of 7.49 years. Options exercisable at December 31, 1996
included 149,736 options with a weighted average remaining contractual life of
4.08 years and 67,333 options with a weighted average remaining contractual life
of 6.74 years.
In 1990, PXRE adopted a non-employee Director Deferred Stock Plan
granting 2,000 shares of its common stock to each non-employee Board member at
the time specified in the plan. The 10,000 shares of stock granted to Board
members who are not employees of PXRE or Phoenix Home Life Mutual Insurance
Company will be issued to Board members at or after their retirement according
to the option selected from those defined in the Plan. The 6,000 shares granted
to Board members who are employees of Phoenix Home Life Mutual Insurance Company
were issued on August 24, 1993. Increases and (decreases) to the obligations
under the Plan amounted to $(17,500), $(25,000) and $65,750 in 1996, 1995 and
1994, respectively.
F-22
<PAGE>
<PAGE>
12. SEGMENT INFORMATION
PXRE operates in one significant industry segment: property and casualty
reinsurance. Domestic gross premiums written represent U.S. based risks written
by U.S. based reinsureds. All other gross premiums written are considered
international (principally the United Kingdom, Continental Europe, Australia and
Asia).
<TABLE>
<CAPTION>
1996 % 1995 % 1994 %
---- - ---- - ---- -
<S> <C> <C> <C> <C> <C> <C>
Gross premiums written:
Domestic $ 32,594,000 29 $ 44,824,000 29 $ 64,857,000 36
International 81,754,000 71 110,556,000 71 114,827,000 64
------------ --- ------------ --- ------------ ---
$114,348,000 100 $155,380,000 100 $179,684,000 100
============ === ============ === ============ ===
</TABLE>
PXRE has offices in New Jersey, Brussels and London. The following table
shows net premiums earned, operating profit and the aggregate carrying amount of
identifiable assets by operational area:
U.S. Foreign
Operations Operations Consolidated
---------- ---------- ------------
1996
Net premiums earned $ 65,276,931 $ 7,518,523 $ 72,795,454
Operating profit before interest
expense, income taxes and
corporate expenses $ 49,036,857 $ 3,435,216 $ 52,472,073
Identifiable assets $501,902,023 $41,422,183 $543,324,206
1995
Net premiums earned $ 84,368,246 $12,773,447 $ 97,141,693
Operating profit before interest
expense, income taxes and
corporate expenses $ 52,145,099 $ 6,610,747 $ 58,755,846
Identifiable assets $362,484,683 $33,599,192 $396,083,875
13. QUARTERLY CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED)
The following are unaudited quarterly results of operations on a
consolidated basis for the years ended December 31, 1996 and 1995. Quarterly
results necessarily rely heavily on estimates. This and certain other factors,
such as catastrophic losses, call for caution in drawing specific conclusions
from quarterly results. Due to changes in the number of average shares
outstanding, quarterly earnings per share may not add to the total for the year.
The common stock price ranges are bid quotations as reported by the New
York Stock Exchange at December 31, 1996, and by the NASDAQ National Market
System in prior periods.
F-23
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
1996
Net premiums written $ 25,346,471 $ 10,740,389 $ 21,783,058 $ 9,847,680
============ ============ ============ ============
Revenues:
Net premiums earned $ 19,420,401 $ 17,099,362 $ 17,793,201 $ 18,482,490
Net investment income 3,911,470 4,198,688 4,065,756 4,606,457
Realized investment (losses) gains (74,937) (100,752) (44,575) 314,422
Management fees: Non-affiliate 1,765,398 632,341 868,581 253,382
TREX 706,828 634,933 674,342 496,200
------------ ------------ ------------ ------------
Total revenues 25,729,160 22,464,572 23,357,305 24,152,951
------------ ------------ ------------ ------------
Losses and expenses:
Losses and loss expenses incurred 4,939,674 4,160,747 6,072,159 3,391,028
Commissions and brokerage 3,555,589 3,083,632 3,015,707 3,218,740
Other operating expenses 3,184,722 3,341,610 2,623,326 3,112,290
Interest expense 1,717,123 1,887,115 1,713,471 1,639,348
------------ ------------ ------------ ------------
Total expenses 13,397,108 12,473,104 13,424,663 11,361,406
------------ ------------ ------------ ------------
Income before income taxes and
equity in net earnings of TREX 12,332,052 9,991,468 9,932,642 12,791,545
Equity in net earnings of TREX 1,293,188 690,932 1,159,611 753,837
Income tax provision 4,316,000 3,497,000 3,477,000 4,354,000
------------ ------------ ------------ ------------
Net income $ 9,309,240 $ 7,185,400 $ 7,615,253 $ 9,191,382
============ ============ ============ ============
Primary earnings per common share:
Net income $ 1.05 $ .81 $ 0.86 0.95
============ ============ ============ ============
Average shares outstanding 8,862,762 8,878,482 8,820,090 9,633,984
============ ============ ============ ============
Fully diluted earnings per common share:
Net income $ 1.05 $ .81 $ 0.86 $ 0.95
============ ============ ============ ============
Average shares outstanding 8,881,863 8,878,482 8,820,090 9,640,439
============ ============ ============ ============
Dividends paid per common share $ 0.18 $ 0.18 $ 0.18 $ 0.21
Price Range of Common Stock:
High $ 28.00 $ 27.00 $ 24.50 $ 25.50
Low $ 24.00 $ 23.75 $ 22.25 $ 22.875
</TABLE>
F-24
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
1995
Net premiums written $ 35,802,653 $ 17,706,219 $ 28,815,447 $ 15,311,490
============ ============ ============ ============
Revenues:
Net premiums earned $ 23,556,101 $ 25,142,048 $ 24,320,379 $ 24,123,165
Net investment income 3,427,447 3,503,210 3,874,380 3,924,529
Realized investment (losses) gains 0 (768,280) 282,068 571,515
Management fees: TREX 822,944 849,319 924,618 929,332
Non-affiliate 1,198,196 477,956 730,669 484,307
------------ ------------ ------------ ------------
Total revenues 29,004,688 29,204,253 30,132,114 30,032,848
------------ ------------ ------------ ------------
Losses and expenses:
Losses and loss expenses incurred (1) 10,750,624 4,249,959 12,050,871 7,664,815
Commissions and brokerage 2,903,343 3,663,308 3,159,969 3,524,450
Other operating expenses 1,869,649 3,191,706 3,007,294 3,168,196
Interest expense 1,752,711 1,779,218 1,891,543 1,719,625
------------ ------------ ------------ ------------
Total expenses 17,276,327 12,884,191 20,109,677 16,077,086
------------ ------------ ------------ ------------
Income before income taxes and
equity in net earnings of TREX 11,728,361 16,320,062 10,022,437 13,955,762
Equity in net earnings of TREX 1,259,231 1,786,463 1,406,155 1,496,107
Income tax provision 4,114,000 5,656,000 3,555,000 4,864,000
------------ ------------ ------------ ------------
Net income $ 8,873,592 $ 12,450,525 $ 7,873,592 $ 10,587,869
============ ============ ============ ============
Preferred stock dividend $ 501,200 $ 98,478 $ 0 $ 0
============ ============ ============ ============
Net income available to
common stockholders $ 8,372,392 $ 12,352,047 $ 7,873,592 $ 10,587,869
============ ============ ============ ============
Primary earnings per common share:
Net income $ 1.19 $ 1.48 $ 0.89 $ 1.19
============ ============ ============ ============
Average shares outstanding 7,050,633 8,341,774 8,860,923 8,876,496
============ ============ ============ ============
Fully diluted earnings per common share:
Net income $ 1.00 $ 1.41 $ 0.89 $ 1.19
============ ============ ============ ============
Average shares outstanding 8,851,874 8,842,170 8,887,193 8,881,911
============ ============ ============ ============
Dividends paid per common share $ 0.15 $ 0.15 $ 0.15 $ 0.18
Price Range of Common Stock:
High $ 28.75 $ 26.50 $ 29.75 $ 27.50
Low $ 21.75 $ 21.00 $ 23.50 $ 22.75
</TABLE>
(1) The losses and loss expenses incurred during the third and fourth
quarters, reflect the release of approximately $3,055,000 and $750,000,
respectively, of loss provisions recorded for the Kobe earthquake in the
first quarter.
F-25
<PAGE>
<PAGE>
14. SUBSEQUENT EVENT
In January 1997, PXRE completed a $100 million offering of 8.85% Capital
Trust Pass-through Securities (TRUPS sm) through PXRE Capital Trust I in an
institutional private placement. Proceeds of the transaction will be used for
general corporate purposes, which may include the redemption or the purchase,
from time-to-time, in the open market or in privately negotiated transactions or
otherwise, of outstanding indebtedness and common stock of PXRE.
The consent of holders of PXRE's Senior Notes to certain amendments to
the Indenture governing the Senior Notes was obtained in connection with this
offering.
F-26
<PAGE>
<PAGE>
Schedule II
Parent Company Information
PXRE Corporation's summarized financial information (parent company only)
is as follows:
December 31,
1996 1995
------------ ------------
BALANCE SHEET
Assets
Short-temm investments $ 18,499,162 $ 14,223,322
Cash 448,154 68,947
Other receivables 167,656 100,600
Receivable from TREX 0 55,630
Receivable from subsidiaries 0 5,220,116
Income tax recoverable 3,420,931 862,112
Equity in subsidiaries 409,691,515 257,321,826
Deferred income tax benefits 940,912 0
Other assets 7,411,113 6,133,635
------------ ------------
Total assets $440,579,443 $283,986,188
============ ============
Liabilities
Note payable $ 69,700,000 $ 69,700,000
Payable to subsidiaries 293,977 0
Excess of fair market value over cost 7,942,374 0
Other liabilities 4,965,314 3,124,012
------------ ------------
Total liabilities 82,901,665 72,824,012
------------ ------------
Stockholders' equity 357,677,778 211,162,176
------------ ------------
Total liabilities and stockholders' equity $440,579,443 $283,986,188
============ ============
<TABLE>
<CAPTION>
INCOME STATEMENT Years ended December 31,
-----------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Interest earned $ 131,928 $ 1,102,447 $ 947,488
Realized gain on investment 0 0 25,250
Interest expense (7,063,730) (7,063,857) (7,774,994)
Other operating expenses (1,671,164) (872,681) (1,140,025)
------------ ------------ ------------
Loss before tax benefit (8,602,966) (6,834,091) (7,942,281)
Income tax benefit 3,146,456 2,432,000 2,771,000
------------ ------------ ------------
(5,456,510) (4,402,091) (5,171,281)
Equity in earnings of subsidiary 38,757,785 44,187,669 40,000,345
------------ ------------ ------------
Net income $ 33,301,275 $ 39,785,578 $ 34,829,064
============ ============ ============
CASH FLOW STATEMENT
Cash from operating activities:
Net income $ 33,301,275 $ 39,785,578 $ 34,829,064
Adjustments to reconcile net income to cash
provided by operating acitvities:
Equity in earnings of subsidiaries (38,757,785) (44,187,669) (40,000,345)
Cash dividends from subsidiaries 21,000,000 6,000,000 12,000,000
Receivable from TREX (334,422) (55,630) 364,996
Investment income receivable 0 0 165,950
Intercompany accounts 5,421,549 2,214,333 (11,597,441)
Deferred income taxes (741,980) 0 4,608
Income tax (recoverable) payable (3,218,458) (2,566,935) 12,514,287
Other 2,030,968 (2,024,244) (121,526)
------------ ------------ ------------
Net cash provided (used) by operating activities 18,701,147 (834,567) 8,159,593
------------ ------------ ------------
Cash flow from investing activities:
Investment in equity of PXRE Trading Corporation 0 (2,500,000) 0
Net change in short-term investments 205,160 (8,202,595) 2,750,199
Proceeds from sale of fixed maturity investments 0 17,626,750 0
Cost of fixed maturity investments 0 0 (2,961,029)
------------ ------------ ------------
Net cash provided (used) by investing activities 205,160 6,924,155 (210,830)
------------ ------------ ------------
Cash flow from financing activities:
Proceeds from issuance of common stock 489,327 335,355 1,443,460
Cash dividends paid to common stockholders (6,478,852) (5,237,664) (2,475,211)
Cash dividends paid to preferred stockholders 0 (933,061) (2,004,800)
Repurchase of debt 0 0 (5,274,750)
Cost of treasury stock (12,537,575) 0 0
------------ ------------ ------------
Net cash used by financing activities (18,527,100) (5,835,370) (8,311,301)
------------ ------------ ------------
Net change in cash 379,207 254,218 (362,538)
Cash, beginning of period 68,947 (185,271) 177,267
------------ ------------ ------------
Cash, end of period $ 448,154 $ 68,947 $ (185,271)
============ ============ ============
</TABLE>
F-27
<PAGE>
<PAGE>
Schedule III
PXRE CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Future
policy
benefits, Other
losses, policy
Segment- Deferred claims and claims and
property policy loss Unearned benefits
and acquisition expenses premiums payable Premium
casualty cost (caption (caption (caption revenue
insurance (caption 7) 13-a-1) 13-a-2) 13-a-3) (caption 1)
--------- ----------- -------- -------- ------- -----------
<C> <C> <C> <C> <C> <C>
1996 $1,449,000 $70,977,000 $11,042,000 $ 0 $ 72,796,000
1995 1,565,000 72,719,000 13,685,000 $ 0 97,142,000
1994 863,000 81,836,000 12,263,000 $ 0 110,601,000
<CAPTION>
Column G Column H Column I Column J Column K
-------- -------- -------- -------- --------
Benefits, Amortiza-
claims, tion of
Net losses and deferred
investment settlement policy Other
income expenses acquisition operating Premiums
(caption 2) (caption 4) costs expense written
----------- ----------- ----- ------- -------
<C> <C> <C> <C> <C> <C>
1996 $16,782,000 $18,564,000 $12,874,000 $12,262,000 $67,718,000
1995 14,730,000 34,716,000 13,251,000 11,237,000 97,636,000
1994 13,786,000 52,647,000 15,026,000 8,365,000 108,518,000
</TABLE>
Schedule VI
PXRE CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION CONCERNING
PROPERTY-CASUALTY INSURANCE OPERATIONS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Reserves for
unpaid
Deferred claims Discount,
Affiliation policy and claim if any
with acquisition adjustment deducted in Unearned Earned
registrant costs expenses Column C premiums premiums
---------- ----- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C>
Consolidated
1996 Property $1,449,000 $70,977,000 $ 0 $11,042,000 $ 72,796,000
1995 Casualty 1,565,000 72,719,000 0 13,685,000 97,142,000
1994 Entities 863,000 81,836,000 0 12,263,000 110,601,000
<CAPTION>
Column G Column H Column I Column J Column K
-------- -------- -------- -------- --------
Claims and Claim Amortiza-
adjustment expenses tion of Paid
incurred related to deferred claims
Net (1) (2) policy and claim
investment Current Prior acquisi- adjustment Premiums
income year years tion costs expenses written
------ ---- ----- ---------- -------- -------
<C> <C> <C> <C> <C> <C> <C>
1996 $16,782,000 $15,315,000 $3,249,000 $12,874,000 $28,753,000 $ 67,718,000
1995 14,730,000 30,405,000 4,311,000 13,251,000 36,337,000 97,636,000
1994 13,786,000 49,385,000 3,262,000 15,026,000 50,061,000 108,518,000
</TABLE>
F-28
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON THE FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of PXRE Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 13, 1997 appearing on page F-1 of PXRE Corporation's Annual
Report on Form 10-K for the year ended December 31, 1996, also included an audit
of the Financial Statement Schedules listed in Item 14(a) of this Form 10-K. In
our opinion, these Financial Statement Schedules present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.
PRICE WATERHOUSE LLP
New York, New York
February 13, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8/S-3 (Nos. 33-35521
and 33-63768), Form S-8 (No. 33-82908) and Form S-8(No. 333-4897) of PXRE
Corporation of our report dated February 13, 1997 appearing on page F-1 of this
Form 10-K. We also consent to the incorporation by reference of our report on
the Financial Statement Schedules which appears above.
PRICE WATERHOUSE LLP
New York, New York
March 26, 1997
F-29
<PAGE>
<PAGE>
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
3 Restated Certificate of Incorporation and By-laws of
PXRE Corporation (Exhibits 3.1 and 3.2 to PXRE's
Registration Statement on Form S-1 dated August 29,
1986, as amended by Amendment No. 1 thereto dated
February 19, 1987 and by Amendment No. 2 thereto
dated March 25, 1987 (File No. 33-8406) and
incorporated herein by reference); Certificate of
Designations designating the Series A Cumulative
Convertible Preferred Stock of PXRE Corporation
(Exhibit 4.5 to PXRE's Registration Statement on Form
S-2 dated February 21, 1992, as amended by Amendment
No. 1 thereto dated April 1, 1992 and by Amendment
No. 2 thereto dated April 13, 1992 and by Amendment
No. 3 thereto dated April 23, 1992 (File No.
33-45893) and incorporated herein by reference);
Certificate of Amendment dated May 20, 1993 to PXRE's
Restated Certificate of Incorporation (Exhibit 4.3 to
PXRE's Registration Statement on Forms S-8 and S-3
dated June 3, 1993 (File No. 33-63768) and
incorporated herein by reference); Certificate of
Amendment dated May 19, 1994 to PXRE's Restated
Certificate of Incorporation (Exhibit 3 to the Annual
Report on Form 10-K of PXRE for the fiscal year ended
December 31, 1994 (File No. 0-15428) and incorporated
herein by reference; Certificate of Amendment dated
December 9, 1996 to PXRE's Restated Certificate of
Incorporation (Exhibit 4.5 to PXRE Registration
Statement on Form S-3 dated January 3, 1997 (File No.
333-19207), and incorporated herein by reference);
Article IV, Section 1 of the By-laws of PXRE
Corporation, as amended on June 8, 1995, (Exhibit 3
to the Annual Report on Form 10-K of PXRE for the
fiscal year ended December 31, 1995 (File No.
0-15428), and incorporated herein by reference. The
Certificate of Merger of
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
<PAGE>
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
Transnational Re Corporation into PXRE Corporation,
dated December 11, 1996. *
4.1 Trust Indenture, dated as of August 31, 1993, between
PXRE, as issuer, 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).
4.2 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 of
PXRE due 2003.*
4.3 Indenture, dated as of January 29, 1997, between PXRE
and First Union National Bank, as Trustee.*
4.4 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.*
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.*
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
- 2 -
<PAGE>
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
4.6 Capital Securities Guarantee Agreement, dated as of
January 29, 1997, between PXRE and First Union
National Bank, as Guarantee Trustee.*
4.7 Common Securities Guarantee Agreement, dated as of
January 29, 1997, executed by PXRE.*
10.1 Registration Rights Agreement, dated January 29,
1997, among PXRE, PXRE Capital Trust I and Salomon
Brothers Inc, as Representative of the Initial
Purchasers.*
10.2 Purchase Agreement among PXRE, PXRE Capital Trust I
and Salomon Brothers Inc, as Representative of the
Initial Purchasers, dated January 24, 1997.*
10.3 PXRE Reinsurance Company Management Agreement among
PXRE Reinsurance and, among others, Merrimack Mutual
Fire Insurance Company ("Merrimack"), Pennsylvania
Lumbermens Mutual Insurance Company ("Pennsylvania
Lumbermens"), and NRMA Insurance Limited ("NRMA")
(Exhibit 10.1 to PXRE's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991 (File No.
0-15428), and incorporated herein by reference);
letter dated November 28, 1990 from Pennsylvania
Lumbermens confirming reduced participation (Exhibit
10.7 to PXRE's Form S-2 Registration Statement dated
February 21, 1992, as amended by Amendment No. 1
thereto dated April 1, 1992 and by Amendment No. 2
thereto dated April 13, 1992 and by Amendment No. 3
thereto dated April 23, 1992 (File No. 33-45893), and
incorporated herein by reference). Cover notes
respecting January 1997 renewals by Merrimack,
Pennsylvania
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
- 3 -
<PAGE>
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
Lumbermens and NRMA and cover note respecting
participation commencing January 1, 1997 by Auto-
Owners Insurance Company.*
10.4 Tax Settlement Agreement dated June 21, 1991 between
PXRE Corporation, PXRE Reinsurance Company and PM
Holdings, Inc. (Exhibit 10.2 to the Annual Report on
Form 10-K of PXRE for the fiscal year ended December
3, 1991 (File No. 0-15428), and incorporated herein
by reference).
10.5 Investment Advisory Agreement between PXRE
Reinsurance Company and Phoenix Investment Counsel,
Inc., dated February 25, 1987 and effective as of
January 1, 1987 (Exhibit 10.10 to Amendment No. 1
dated February 19, 1987 to PXRE's Form S-1
Registration Statement dated August 29, 1986, as
subsequently amended by Amendment No. 2 thereto dated
March 25, 1987 (File No. 33-8406), and incorporated
herein by reference).
10.6 Amendment to Investment Advisory Agreement between
PXRE Reinsurance Company and Phoenix Investment
Counsel, Inc., effective retroactively as of January
1, 1987 (Exhibit 10.3 to the Annual Report on Form
10-K of PXRE for the fiscal year ended December 31,
1991 (File No. 0-15428), and incorporated herein by
reference).
10.7 Amendment No. 2 to Investment Advisory Agreement
between PXRE Reinsurance Company and Phoenix
Investment Counsel, Inc., effective as of November 1,
1989. (Exhibit 10.4 to the Annual Report on Form 10-K
of PXRE for the fiscal year ended
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
- 4 -
<PAGE>
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
December 31, 1991 (File No. 0-15428), and
incorporated herein by reference).
10.8 Amended and Restated Agreement Concerning Filing of
Consolidated Federal Income Tax Returns dated as of
August 23, 1993 between PXRE and PXRE Reinsurance
(Exhibit 10.8 to the Annual Report on Form 10-K of
PXRE for the fiscal year ended December 31, 1993
(File No. 0-15428), and incorporated herein by
reference).
10.9 Employee Stock Purchase Plan, as amended (Appendix A
to PXRE's Proxy Statement dated April 23, 1993, and
incorporated herein by reference).(M)
10.10 Executive Long-Term Bonus Plan (Exhibit 10.6 to
PXRE's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991 (File No. 0-15428), and
incorporated herein by reference) and Amendment
thereto made as of August 22, 1991 (Exhibit 10.14 to
PXRE's Form S-2 Registration Statement dated February
21, 1992, as amended by Amendment No. 1 thereto dated
April 1, 1992 and by Amendment No. 2 thereto dated
April 13, 1992 and by Amendment No. 3 thereto dated
April 23, 1992 (File No. 33-45893), and incorporated
herein by reference).(M)
10.11 Executive Severance Plan (Exhibit 10.1 to the Annual
Report on Form 10-K of PXRE for the fiscal year ended
December 31, 1989 (File No. 0-15428), and
incorporated herein by reference).
10.12 1988 Stock Option Plan, as amended (Exhibit A to the
first Prospectus forming part of PXRE's Form S-8 and
S-3 Registration
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
- 5 -
<PAGE>
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
Statement dated June 21, 1990 (File No. 33-35521),
and incorporated herein by reference).(M)
10.13 1987 Stock Option Plan, as amended (Appendix B to
PXRE's Proxy Statement dated April 13, 1990, and
incorporated herein by reference).(M)
10.14 Non-Employee Director Deferred Stock Plan (Appendix A
to PXRE's Proxy Statement dated April 12, 1991, and
incorporated herein by reference).(M)
10.15 Restated Employee Annual Incentive Bonus Plan, as
amended (Appendix A to PXRE's Proxy Statement dated
April 22, 1994, and incorporated herein by
reference).(M)
10.16 1992 Officer Incentive Plan, as amended (Appendix B
to PXRE's Proxy Statement dated April 22, 1994 and
incorporated herein by reference).(M)
10.17 Quota Share Retrocessional Agreement between PXRE
Reinsurance and Trenwick America Reinsurance
Corporation (Exhibit 10.21 to the Annual Report on
Form 10-K of PXRE for the fiscal year ended December
31, 1993 (File No. 0-15428), and incorporated herein
by reference).
10.18 Management Agreement dated as of November 8, 1993
among PXRE Reinsurance, Transnational Re Corporation
and Transnational Reinsurance Company (Exhibit 10.22
to the Annual Report on Form 10-K of PXRE for the
fiscal year ended December 31, 1993 (File No.
0-15428), and incorporated herein by
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
- 6 -
<PAGE>
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
reference), as amended by Amendment No. 1 thereto,
dated December 1, 1994 (Exhibit 10.21 to the Annual
Report on Form 10-K of PXRE for the fiscal year ended
December 31, 1994 (File No. 0-15428), and
incorporated herein by reference).
10.19 Aggregate Excess of Loss Reinsurance Agreement dated
as of November 8, 1993 between PXRE Reinsurance, as
reinsurer, and Transnational Reinsurance Company, as
reinsured (Exhibit 10.23 to the Annual Report on Form
10-K of PXRE for the fiscal year ended December 31,
1993 (File No. 0-15428), and incorporated herein by
reference).
10.20 Services Agreement dated as of December 11, 1996
between PXRE Reinsurance Company and Transnational
Reinsurance Company.*
10.21 Addendum No. 2 dated November 10, 1994 to the PXRE
Group Amended and Restated Agreement Concerning
Filing of Consolidated Federal Income Tax Returns
(Exhibit 10.22 to the Annual Report on Form 10-K of
PXRE for the fiscal year ended December 31, 1994
(File No. 0-15428), and incorporated herein by
reference).
10.22 Addendum No. 3 dated as of December 11, 1996 to the
PXRE Group Amended and Restated Agreement Concerning
Filing of Consolidated Federal Income Tax Returns.*
10.23 Amendment dated August 1994 to the Severance Plan for
Certain Executives of PXRE Corporation (Exhibit 10.23
to the Annual Report on Form 10-K of PXRE for the
fiscal year ended
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
- 7 -
<PAGE>
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
December 31, 1994 (File No. 0-15428), and
incorporated herein by reference).(M)
10.24 Lease dated May 9, 1994 between Thornall Associates
and PXRE Corporation (Exhibit 10.24 to the Annual
Report on Form 10-K of PXRE for the fiscal year ended
December 31, 1994 (File No. 0-15428), and
incorporated herein by reference).
10.25 Director Stock Option Plan (Appendix A to PXRE's
Proxy Statement dated May 3, 1995, and incorporated
herein by reference).(M)
10.26 Amendment No. 3 to Investment Advisory Agreement
between PXRE Reinsurance Company and Phoenix
Investment Counsel, Inc. (predecessor of Phoenix Duff
& Phelps) effective June 1, 1995 (Exhibit 10.26 to
the Annual Report on Form 10-K of PXRE for the fiscal
year ended December 31, 1995 (File No. 0-15428), and
incorporated herein by reference).
10.27 Agreement and Plan of Merger dated as of August 22,
1996 between PXRE and Transnational Re Corporation,
as amended by Amendment No. 1 dated as of September
27, 1996 and Amendment No. 2 dated as of October 24,
1996 (Annex A to PXRE's Form S-4 Registration
Statement dated October 30, 1996 (File No.
333-15087), and incorporated herein by reference).
10.28 Amended and Restated Investment Advisory Agreement
between Transnational Reinsurance Company and Phoenix
Investment Counsel, Inc. dated November 8, 1993
(Exhibit 10.4 to the Annual Report on Form 10-K of
Transnational Re Corporation for the fiscal
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
- 8 -
<PAGE>
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
year ended December 31, 1993 (File No. 0-22376) and
incorporated herein by reference) as amended by the
Amendment thereto, effecive June 1, 1995 (Exhibit
10.11 to the Annual Report on Form 10-K of
Transnational Re Corporation for the fiscal year
ended Decembr 31, 1995 (File No. 0-22376), and
incorporated herein by reference).
10.29 Investment Management Agreement, effective January
29, 1977 between PXRE Corporation and Phoenix
Investment Counsel, Inc.*
11 Statement re computation of earnings per share.*
12 Statement re computation of ratios.*
21 List of Subsidiaries of PXRE. (Included as part of
Item 14(a)(3) of this Form 10-K.)
23 Consent of Price Waterhouse LLP, independent
accountants to PXRE. (Included as part of Item
14(a)(2) of this Form 10-K.)
24 Powers of Attorney.*
27 Financial Data Schedule (electronic filing only).*
28 Information from reports furnished to state insurance
regulatory authorities.
(Filed in paper under cover of Form SE.)
- ------------------------------
* Filed herewith.
(M) Indicates a management contract or compensatory plan or
arrangement in which the directors and/or executive officers of
PXRE participate.
- 9 -
STATEMENT OF DIFFERENCES
The British pound sterling sign shall be expressed as ............'L'
The service mark symbol shall be expressed as ....................'sm'
<PAGE>
<PAGE>
CERTIFICATE OF MERGER
of
TRANSNATIONAL RE CORPORATION
A Delaware Corporation
INTO
PXRE CORPORATION
A Delaware Corporation
Pursuant to Section 251(c) of the
Delaware General Corporation Law
PXRE Corporation, a Delaware corporation, which desires to merge
(the "Merger") with Transnational Re Corporation, a Delaware corporation, hereby
certifies as follows:
FIRST: The name and state of incorporation of each of the
constituent corporations (the "Constituent Corporations") in the Merger is as
follows:
Name State of Incorporation
---- ----------------------
Transnational Re Corporation Delaware
PXRE Corporation Delaware
SECOND: The Agreement and Plan of Merger dated as of August 22,
1996, as amended by Amendment No. 1 dated as of September 27, 1996 and Amendment
No. 2 dated as of October 24, 1996, between Transnational Re Corporation, a
Delaware corporation, and PXRE Corporation, a Delaware corporation (the "Merger
Agreement"), has been approved, adopted, certified, executed and acknowledged by
each of the Constituent Corporations in accordance with the requirements of
Section 251 of the Delaware General Corporation Law.
THIRD: The Surviving Corporation shall be PXRE Corporation, a
Delaware corporation (the "Surviving Corporation").
FOURTH: The Certificate of Incorporation of PXRE Corporation, as
in effect immediately prior to the effective time of the Merger, shall be the
certificate of incorporation of the Surviving Corporation.
FIFTH: The executed Merger Agreement is on file at the principal
place of business of the Surviving Corporation. The address of the principal
place of business of the Surviving Corporation is 399 Thornall Street,
Fourteenth Floor, Edison, New Jersey 08837.
<PAGE>
<PAGE>
SIXTH: A copy of the Merger Agreement will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of either
Constituent Corporation.
SEVENTH: The Merger shall become effective upon the filing of
this Certificate of Merger with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, PXRE Corporation, a Delaware corporation, has
caused this Certificate of Merger to be signed by its Chairman of the Board,
President and Chief Executive Officer, as of this 11th day of December, 1996.
PXRE CORPORATION
By: /s/ Gerald L. Radke
---------------------------------
Name: Gerald L. Radke
Title: Chairman of the Board, President
and Chief Executive Officer
<PAGE>
<PAGE>
================================================================================
PXRE CORPORATION
(FORMERLY NAMED PHOENIX RE CORPORATION)
AND
STATE STREET BANK AND TRUST COMPANY,
AS SUCCESSOR TRUSTEE
---------
SUPPLEMENTAL INDENTURE
Dated as of January 24, 1997
----------
to
the Indenture dated as of August 31, 1993
between Phoenix Re Corporation
(now named PXRE Corporation) and
State Street Bank and Trust Company,
as successor Trustee to
The First National Bank of Boston, as Trustee, relating to
$75 million Original Aggregate Principal Amount
of 9 3/4% Senior Notes due 2003
================================================================================
<PAGE>
<PAGE>
SUPPLEMENTAL INDENTURE
THIS SUPPLEMENTAL INDENTURE (the "Supplemental Indenture") is
made as of the 24th day of January, 1997, between PXRE CORPORATION (formerly
named Phoenix Re Corporation) (the "Company") and STATE STREET BANK AND TRUST
COMPANY, as successor Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company and The First National Bank of Boston, as
Trustee, heretofore executed and delivered an Indenture, dated as of August 31,
1993 (the "Indenture"); and
WHEREAS, the Trustee has succeeded The First National Bank of
Boston, as Trustee; and
WHEREAS, pursuant to the Indenture, the Company issued and the
Trustee authenticated and delivered $75 million aggregate principal amount of
the Company's 9 3/4% Senior Notes due 2003 (the "Notes"); and
WHEREAS, Section 9.2 of the Indenture provides that with the
consent of the Holders of not less than a majority in aggregate principal amount
of the Notes at the time outstanding (the "Requisite Consents"), the Company,
when authorized by a resolution of its Board of Directors, and the Trustee may
enter into an amended or supplemental Indenture; and
WHEREAS, the Company has obtained the Requisite Consents to amend
the Indenture in certain respects; and
WHEREAS, this Supplemental Indenture has been duly authorized by
all necessary corporate action on the part of the Company;
NOW, THEREFORE, the Company and the Trustee agree as follows for
the equal and ratable benefit of the Holders of the Notes:
ARTICLE 1
AMENDMENTS TO CERTAIN PROVISIONS OF THE INDENTURE
SECTION 1.01 AMENDMENT OF CERTAIN SECTIONS OF THE INDENTURE.
Subject to Section 2.01 hereof, the Indenture is hereby amended by adding
thereto the following in Section 4.23:
"SECTION 4.23 1997 Securities Offering.
Notwithstanding any covenant or other provision to the contrary
contained in this Indenture, for purposes hereof, the following provisions shall
apply in relation to the issuance by PXRE Capital Trust I, a statutory business
trust created under the laws of the State of Delaware and controlled by the
Company (the "Trust"), of up to $100,000,000 liquidation amount of Capital Trust
Pass-through Securities'sm' (TRUPS'sm') and related transactions, as further
described in the Company's Consent Solicitation Statement dated January 17, 1997
(the "Solicitation Statement"), a copy of which is on file with the Trustee
(terms defined in the Solicitation Statement being used herein as so defined);
provided, that the Trust engages in no activities other than issuing the Trust
Securities, applying the proceeds thereof to purchase an equal principal amount
of the
<PAGE>
<PAGE>
Subordinated Debentures and engaging in those other activities necessary or
incidental thereto, which may include participating in the Exchange Offer:
(a) The Capital Securities shall be deemed to be debt securities
(and not Preferred Stock) with terms and provisions identical to the
Subordinated Debentures. Without limiting the generality of the foregoing, this
paragraph (a) shall have the effect that (i) so long as the Company holds all
the outstanding Common Securities and no other Capital Stock of the Trust is
outstanding, the Trust shall be a Wholly Owned Subsidiary of the Company, (ii)
periodic distributions on the Capital Securities shall be deemed to be interest
and not dividends and shall be included in Consolidated Interest Expense of the
Company, and (iii) redemption of the Capital Securities at maturity of the
Subordinated Debentures will not constitute a Restricted Payment.
(b) The Indebtedness represented by the Capital Securities shall
be deemed to be Indebtedness permitted to be incurred under Section 4.9;
provided, that (A) no Default or Event of Default shall have occurred and be
continuing at the time of the proposed incurrence thereof or shall occur as a
result of such proposed incurrence, and (B) after giving effect to such proposed
incurrence the Company's Consolidated Fixed Charge Coverage Ratio would be
greater than 2.0 to 1.0.
(c) A redemption of the Subordinated Debentures and the Trust
Securities upon a Tax Event or an Investment Company Event will not constitute a
Restricted Payment; provided, that such redemptions either (a) occur on or prior
to December 31, 1997, or (b) the Company, upon completion of such redemptions,
would be able to incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under paragraph (a) of Section 4.8.
(d) Neither a Tax Event Maturity Advancement nor a payment of the
Subordinated Debentures and redemption of the Capital Securities at the advanced
maturity of the Subordinated Debentures effected thereby shall be deemed to
involve a Restricted Payment or otherwise be restricted by the Indenture.
(e) A redemption of the Offered Securities in exchange for the
Exchange Securities pursuant to the Exchange Offer shall not be deemed to
involve a Restricted Payment or otherwise be restricted by the Indenture.
(f) A redemption of the Trust Securities by distribution of the
Subordinated Debentures to the holders of the Trust Securities upon a
termination of the Trust shall not constitute a Restricted Payment or an
incurrence of Indebtedness by the Company.
(g) The incurrence by the Company of obligations under the
Guarantees and its obligations to pay the costs, expenses, debts and other
obligations of the Trust (other than with respect to the Trust Securities), to
the extent constituting Indebtedness for purposes of the Indenture, will be
considered as part of (but not increasing the amount of) the Indebtedness
represented by the Capital Securities.
(h) Section 4.15 shall not be violated by the terms of the
Declaration, which terms provide that during the continuance of a Declaration
Event of Default the rights of the Company as a holder 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."
-2-
<PAGE>
<PAGE>
ARTICLE 2
MISCELLANEOUS
SECTION 2.01 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution
and delivery of this Supplemental Indenture by the Company and the Trustee, the
Indenture shall be supplemented in accordance herewith, and this Supplemental
Indenture shall form a part of the Indenture for all purposes, and every Holder
of Securities heretofore or hereafter authenticated and delivered under the
Indenture shall be bound thereby.
SECTION 2.02 INDENTURE REMAINS IN FULL FORCE AND EFFECT. Except
as supplemented hereby, all provisions in the Indenture shall remain in full
force and effect.
SECTION 2.03 INDENTURE AND SUPPLEMENTAL INDENTURE CONSTRUED
TOGETHER. This Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.04 CONFIRMATION AND PRESERVATION OF INDENTURE. The
Indenture as supplemented by this Supplemental Indenture is in all respects
confirmed and preserved.
SECTION 2.05 CONFLICT WITH TRUST INDENTURE ACT. If any provision
of this Supplemental Indenture limits, qualifies or conflicts with any provision
of the TIA that is required under the TIA to be part of and govern any provision
of this Supplemental Indenture, the provision of the TIA shall control. If any
provision of this Supplemental Indenture modifies or excludes any provision of
the TIA that may be so modified or excluded, the provision of the TIA shall be
deemed to apply to the Indenture as so modified or to be excluded by this
Supplemental Indenture, as the case may be.
SECTION 2.06 SEVERABILITY. In case any provision in this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.07 TERMS DEFINED IN THE INDENTURE. All capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Indenture.
SECTION 2.08 HEADINGS. The Article and Section headings of this
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered a part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.09 BENEFITS OF SUPPLEMENTAL INDENTURE, ETC. Nothing in
this Supplemental Indenture or the Notes, express or implied, shall give to any
Person, other than the parties hereto and thereto and their successors hereunder
and thereunder and the Holders of the Notes, any benefit of any legal or
equitable right, remedy or claim under the Indenture, this Supplemental
Indenture or the Notes.
SECTION 2.10 SUCCESSORS. All agreements of the Company in this
Supplemental Indenture shall bind its successors. All agreements of the Trustee
in this Supplemental Indenture shall bind its successors.
-3-
<PAGE>
<PAGE>
SECTION 2.11 TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals
contained herein shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness.
SECTION 2.12 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
In entering into this Supplemental Indenture, the Trustee shall be entitled to
the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 2.13 GOVERNING LAW. The internal law of the State of New
York shall govern and be used to construe this Supplemental Indenture.
SECTION 2.14 COUNTERPART ORIGINALS. The parties may sign any
number of copies of this Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date and year first above
written.
PXRE CORPORATION
By: /s/ Gerald L. Radke
------------------------------------
Name: Gerald L. Radke
Title: Chairman of the Board, President
and Chief Executive Officer
STATE STREET BANK AND TRUST COMPANY, as
successor Trustee
By: /s/ Ruth A. Smith
------------------------------------
Name: Ruth A. Smith
Title: Vice President
-4-
<PAGE>
<PAGE>
================================================================================
PXRE CORPORATION
as Issuer
INDENTURE
Dated as of January 29, 1997
FIRST UNION NATIONAL BANK
as Trustee
SUBORDINATED DEBT SECURITIES
================================================================================
<PAGE>
<PAGE>
TIE-SHEET
---------
of provisions of Trust Indenture Act of 1939 with Indenture dated as of January
29, 1997 between PXRE Corporation, as Issuer, and First Union National Bank, as
Trustee:
ACT SECTION INDENTURE SECTION
310(a)(1) ............................................ 6.09
(a)(2) .............................................. 6.09
310(a)(3) ............................................ N.A.
(a)(4) .............................................. N.A.
310(b) ............................................... 6.08; 6.10(a)(b) and (d)
310(c) ............................................... N.A.
311(a) and (b) ....................................... 6.13
311(c) ............................................... N.A.
312(a) ............................................... 4.01; 4.02(a)
312(b) and (c) ....................................... 4.02(b) and (c)
313(a) ............................................... 4.04(a)
313(b)(1) ............................................ N.A.
313(b)(2) ............................................ 4.04(a)
313(c) ............................................... 4.04(a)
313(d) ............................................... 4.04(b)
314(a) ............................................... 4.03
314(b) ............................................... N.A.
314(c)(1) and (2) .................................... 13.06
314(c)(3) ............................................ N.A.
314(d) ............................................... N.A.
314(e) ............................................... 13.06
314(f) ............................................... N.A.
315(a)(c) and (d) .................................... 6.01
315(b) ............................................... 5.08
315(e) ............................................... 5.09
316(a)(1) ............................................ 5.01; 5.07
316(a)(2) ............................................ Omitted
316(a) last sentence ................................. 7.04
316(b) ............................................... 5.04
317(a) ............................................... 5.02
317(b) ............................................... 3.04(a)
318(a) ............................................... 13.08
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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Parties......................................................................................1
Recitals.....................................................................................1
Authorization of Indenture...................................................................1
Compliance with Legal Requirements...........................................................1
Purpose of and Consideration for Indenture...................................................1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................................1
Affiliate.....................................................................2
Authenticating Agent..........................................................2
Bankruptcy Law................................................................2
Board of Directors............................................................2
Board Resolution..............................................................2
Business Day..................................................................2
Capital Securities............................................................2
Capital Securities Guarantee..................................................2
Certificate...................................................................2
Common Securities.............................................................2
Common Securities Guarantee...................................................3
Company.......................................................................3
Custodian.....................................................................3
Debt Security or Debt Securities..............................................3
Debt Security Register........................................................3
Declaration...................................................................3
Default.......................................................................3
Depositary....................................................................3
Event of Default..............................................................3
Exchange Act..................................................................3
Global Security...............................................................3
Indenture.....................................................................3
Institutional Trustee.........................................................4
Interest......................................................................4
Interest Payment Date.........................................................4
Mortgage......................................................................4
Officers' Certificate.........................................................4
Opinion of Counsel............................................................4
Original Issue Date...........................................................4
Original Issue Discount Security..............................................4
Person........................................................................5
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Predecessor Security..........................................................5
Principal Office of the Trustee...............................................5
PXRE Trust....................................................................5
Responsible Officer...........................................................5
Restricted Securities Legend..................................................6
Securities Act................................................................6
Securityholder, holder of Debt Securities.....................................6
Senior Indebtedness...........................................................6
Subsidiary....................................................................6
Trust Indenture Act...........................................................7
Trust Securities..............................................................7
Trustee.......................................................................7
Yield to Maturity.............................................................7
ARTICLE II
DEBT SECURITIES
SECTION 2.01. Forms Generally...............................................................7
SECTION 2.02. Form of Trustee's Certificate of Authentication...............................8
SECTION 2.03. Amount Unlimited; Issuable in Series..........................................8
SECTION 2.04. Authentication and Dating....................................................10
SECTION 2.05. Date and Denomination of Debt Securities.....................................11
SECTION 2.06. Execution of Debt Securities.................................................13
SECTION 2.07. Exchange and Registration of Transfer of Debt Securities.....................13
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Debt Securities.........................16
SECTION 2.09. Temporary Debt Securities....................................................17
SECTION 2.10. Cancellation of Debt Securities Paid, etc....................................17
SECTION 2.11. Global Securities............................................................17
SECTION 2.12. CUSIP Numbers................................................................18
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest...................................19
SECTION 3.02. Offices for Notices and Payments, etc........................................19
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office...........................20
SECTION 3.04. Provision as to Paying Agent.................................................20
SECTION 3.05. Certificate to Trustee.......................................................21
SECTION 3.06. Compliance with Consolidation Provisions.....................................21
SECTION 3.07. Limitation on Dividends......................................................21
SECTION 3.08. Covenants as to PXRE Trusts..................................................22
SECTION 3.09. Calculation of Original Issue Discount.......................................22
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ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
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SECTION 4.01. Securityholders' Lists.......................................................22
SECTION 4.02. Preservation and Disclosure of Lists.........................................23
SECTION 4.03. [Reserved]...................................................................24
SECTION 4.04. Reports by the Trustee.......................................................24
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT
SECTION 5.01. Events of Default............................................................25
SECTION 5.02. Payment of Debt Securities on Default; Suit Therefor.........................27
SECTION 5.03. Application of Moneys Collected by Trustee...................................29
SECTION 5.04. Proceedings by Securityholders...............................................29
SECTION 5.05. Proceedings by Trustee.......................................................30
SECTION 5.06. Remedies Cumulative and Continuing...........................................30
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by Majority of
Securityholders.......................................................31
SECTION 5.08. Notice of Defaults...........................................................31
SECTION 5.09. Undertaking to Pay Costs.....................................................32
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.......................................32
SECTION 6.02. Reliance on Documents, Opinions, etc.........................................33
SECTION 6.03. No Responsibility for Recitals, etc..........................................35
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or
Registrar May Own Debt Securities.....................................35
SECTION 6.05. Moneys to be Held in Trust...................................................35
SECTION 6.06. Compensation and Expenses of Trustee.........................................35
SECTION 6.07. Officers' Certificate as Evidence............................................36
SECTION 6.08. Conflicting Interest of Trustee..............................................36
SECTION 6.09. Eligibility of Trustee.......................................................36
SECTION 6.10. Resignation or Removal of Trustee............................................37
SECTION 6.11. Acceptance by Successor Trustee..............................................38
SECTION 6.12. Succession by Merger, etc....................................................39
SECTION 6.13. Limitation on Rights of Trustee as a Creditor................................40
SECTION 6.14. Authenticating Agents........................................................40
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders....................................................41
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SECTION 7.02. Proof of Execution by Securityholders........................................42
SECTION 7.03. Who Are Deemed Absolute Owners...............................................42
SECTION 7.04. Debt Securities Owned by Company Deemed Not Outstanding......................42
SECTION 7.05. Revocation of Consents; Future Holders Bound.................................43
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.........................................................43
SECTION 8.02. Call of Meetings by Trustee..................................................44
SECTION 8.03. Call of Meetings by Company or Securityholders...............................44
SECTION 8.04. Qualifications for Voting....................................................44
SECTION 8.05. Regulations..................................................................44
SECTION 8.06. Voting.......................................................................45
SECTION 8.07. Quorum; Actions..............................................................45
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent of Securityholders...................46
SECTION 9.02. Supplemental Indentures with Consent of Securityholders......................48
SECTION 9.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures.......49
SECTION 9.04. Notation on Debt Securities..................................................49
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be Furnished to
Trustee...............................................................50
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.............................50
SECTION 10.02. Successor Corporation to be Substituted.....................................50
SECTION 10.03. Opinion of Counsel to be Given to Trustee...................................51
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture......................................................51
SECTION 11.02. Deposited Moneys to be Held in Trust by Trustee.............................52
SECTION 11.03. Paying Agent to Repay Moneys Held...........................................52
SECTION 11.04. Return of Unclaimed Moneys..................................................52
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ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Debt Securities Solely Corporate Obligations..................52
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors..................................................................53
SECTION 13.02. Official Acts by Successor Corporation......................................53
SECTION 13.03. Surrender of Company Powers.................................................53
SECTION 13.04. Addresses for Notices, etc..................................................53
SECTION 13.05. Governing Law...............................................................54
SECTION 13.06. Evidence of Compliance with Conditions Precedent............................54
SECTION 13.07. Non-Business Days...........................................................54
SECTION 13.08. Trust Indenture Act to Control..............................................54
SECTION 13.09. Table of Contents, Headings, etc............................................55
SECTION 13.10. Execution in Counterparts...................................................55
SECTION 13.11. Separability................................................................55
SECTION 13.12. Assignment..................................................................55
SECTION 13.13. Acknowledgment of Rights....................................................55
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND OPTIONAL SINKING FUND
SECTION 14.01. Applicability of Article....................................................56
SECTION 14.02. Notice of Redemption; Selection of Debt Securities..........................56
SECTION 14.03. Payment of Debt Securities Called for Redemption............................57
SECTION 14.04. Mandatory and Optional Sinking Fund.........................................57
ARTICLE XV
SUBORDINATION OF DEBT SECURITIES
SECTION 15.01. Agreement to Subordinate....................................................59
SECTION 15.02. Default on Senior Indebtedness; Standstill..................................60
SECTION 15.03. Liquidation; Dissolution; Bankruptcy........................................61
SECTION 15.04. Subrogation.................................................................62
SECTION 15.05. Trustee to Effectuate Subordination.........................................63
SECTION 15.06. Notice by the Company.......................................................63
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness.......................64
SECTION 15.08. Subordination May Not Be Impaired...........................................65
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THIS INDENTURE, dated as of January 29, 1997, between PXRE
Corporation, a Delaware corporation (hereinafter sometimes called the
"Company"), and First Union National Bank, a national banking association, as
trustee (hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue from time to time of its subordinated unsecured debentures,
notes or other evidence of indebtedness to be issued in one or more series (the
"Debt Securities") up to such principal amount or amounts as may from time to
time be authorized in accordance with the terms of this Indenture and, to
provide the terms and conditions upon which the Debt Securities are to be
authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; and
WHEREAS, all acts and things necessary to make this Indenture a
valid agreement according to its terms, have been done and performed;
NOW, THEREFORE, This Indenture Witnesseth:
In consideration of the premises, and the purchase of the Debt
Securities by the holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective holders from
time to time of the Debt Securities or of a series thereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.01. All other terms used in
this Indenture which are defined in the Trust Indenture Act, or which are by
reference therein defined in the Securities Act, shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in the Trust Indenture Act and the Securities
Act as in force at the date of this Indenture as originally executed. All
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles and the term "generally accepted accounting principles" means such
accounting principles as are generally accepted at the time of any computation.
The words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision.
"Additional Provisions" shall have the meaning specified in
Section 15.01.
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"Affiliate" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding with power to vote
10% or more of the outstanding voting securities or other ownership interests of
the specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any executive officer or director of the specified Person,
and (f) if the specified Person is an individual, any entity of which the
specified Person is an executive officer, director or general partner.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" shall mean the board of directors or the
executive committee or any other duly authorized designated officers of the
Company.
"Board Resolution" shall mean a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" shall mean, with respect to any series of Debt
Securities, any day other than a 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.
"Capital Securities" shall mean undivided beneficial interests in
the assets of a PXRE Trust which rank pari passu with Common Securities issued
by such PXRE Trust; provided, however, that upon the occurrence of an Event of
Default (as defined in the Declaration with respect to such PXRE Trust), the
rights of holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of such Capital Securities.
"Capital Securities Guarantee" shall mean, in respect of any PXRE
Trust, any guarantee that the Company may enter into with First Union National
Bank or other Persons that operates directly or indirectly for the benefit of
holders of Capital Securities of such PXRE Trust.
"Certificate" shall mean a certificate signed by any one of the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company.
"Common Securities" shall mean undivided beneficial interests in
the assets of a PXRE Trust which rank pari passu with Capital Securities issued
by such PXRE Trust; provided,
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however, that upon the occurrence of an Event of Default (as defined in the
Declaration with respect to such PXRE Trust), the rights of holders of such
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of holders
of such Capital Securities.
"Common Securities Guarantee" shall mean, in respect of any PXRE
Trust, any guarantee that the Company may enter into with any Person or Persons
and that operates directly or indirectly for the benefit of holders of Common
Securities of such PXRE Trust.
"Company" shall mean PXRE Corporation, a Delaware corporation,
and, subject to the provisions of Article X, shall include its successors and
assigns.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Debt Security" or "Debt Securities" shall have the meaning
stated in the first recital of this Indenture and more particularly means any
debt security or debt securities, as the case may be, authenticated and
delivered under this Indenture.
"Debt Security Register" shall have the meaning specified in
Section 2.07.
"Declaration," with respect to a PXRE Trust, shall mean the
Amended and Restated Declaration of Trust of such PXRE Trust.
"Default" means any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Depositary" shall mean, with respect to Debt Securities of any
series for which the Company shall determine that such Debt Securities will be
issued as a Global Security, The Depository Trust Company, New York, New York,
another clearing agency, or any successor registered as a clearing agency under
the Exchange Act, or other applicable statute or regulation, which, in each
case, shall be designated by the Company pursuant to either Section 2.03 or
2.11.
"Event of Default" shall mean any event specified in Section
5.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Global Security" shall mean, with respect to any series of Debt
Securities, a Debt Security executed by the Company and delivered by the Trustee
to the Depositary or pursuant to the Depositary's instruction, all in accordance
with the Indenture, which shall be registered in the name of the Depositary or
its nominee.
"Indenture" shall mean this instrument as originally executed or,
if amended or supplemented as herein provided, as so amended or supplemented, or
both, and shall include the form and terms of particular series of Debt
Securities established as contemplated hereunder.
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"Institutional Trustee" has the meaning set forth in the
Declaration of the applicable PXRE Trust.
"Interest" shall mean, when used with respect to noninterest
bearing Debt Securities, interest payable after maturity.
"Interest Payment Date," when used with respect to any
installment of interest on a Debt Security of a particular series, shall mean
the date specified in such Debt Security or in a Board Resolution or in an
indenture supplemental hereto with respect to such series as the fixed date on
which an installment of interest with respect to Debt Securities of that series
is due and payable.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Officers' Certificate" shall mean a certificate signed by the
Chairman of the Board, the President, any Executive Vice-President, any Senior
Vice-President, or any Vice President, and by the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 13.06 if and to
the extent required by the provisions of such Section.
"Opinion of Counsel" shall mean an opinion in writing signed by
legal counsel, who may be an employee of or counsel to the Company, or may be
other counsel satisfactory to the Trustee. Each such opinion shall include the
statements provided for in Section 13.06 if and to the extent required by the
provisions of such Section.
"Original Issue Date" of any Debt Security (or any portion
thereof) shall mean the earlier of (a) the date of such Debt Security or (b) the
date of any Debt Security (or portion thereof) for which such Debt Security was
issued (directly or indirectly) on registration of transfer, exchange or
substitution.
"Original Issue Discount Security" shall mean any Debt Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the maturity thereof pursuant
to Section 5.01.
The term "outstanding," when used with reference to Debt
Securities, shall, subject to the provisions of Section 7.04, mean, as of any
particular time, all Debt Securities authenticated and delivered by the Trustee
or the Authenticating Agent under this Indenture, except
(a) Debt Securities theretofore canceled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;
(b) Debt Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been
deposited in trust with the Trustee or
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with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act
as its own paying agent); provided that, if such Debt Securities, or
portions thereof, are to be redeemed prior to maturity thereof, notice
of such redemption shall have been given as provided in Article Fourteen
or provision satisfactory to the Trustee shall have been made for giving
such notice; and
(c) Debt Securities paid pursuant to Section 2.08 or in lieu of
or in substitution for which other Debt Securities shall have been
authenticated and delivered pursuant to the terms of Section 2.08 unless
proof satisfactory to the Company and the Trustee is presented that any
such Debt Securities are held by bona fide holders in due course.
In determining whether the holders of the requisite principal
amount of outstanding Debt Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of an Original Issue Discount Security that shall be deemed to be
outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the maturity thereof pursuant to Section 5.01.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Debt Security means
every previous Debt Security evidencing all or a portion of the same debt as
that evidenced by such particular Debt Security; and, for the purposes of this
definition, any Debt Security authenticated and delivered under Section 2.08 in
lieu of a lost, destroyed or stolen Debt Security shall be deemed to evidence
the same debt as the lost, destroyed or stolen Debt Security.
"Principal Office of the Trustee," or other similar term, shall
mean the office of the Trustee, at which at any particular time its corporate
trust business shall be principally administered.
"PXRE Trust" shall mean a Delaware business trust, or any other
similar trust created for the purpose of issuing Capital Securities in
connection with the issuance of Debt Securities under this Indenture of which
the Company is the sponsor.
"Responsible Officer," when used with respect to the Trustee,
shall mean the chairman and vice chairman of the board of directors, the
chairman or vice chairman of the executive committee of the board of directors,
the president, any vice president, any assistant vice president, the cashier,
any assistant cashier, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any senior trust officer, any trust officer, the
controller, any assistant controller or any other officer or assistant officer
of the Trustee customarily performing functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
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"Restricted Securities Legend" shall have the meaning specified
in Section 2.07.
"Securities Act" shall mean the Securities Act.
"Securityholder," "holder of Debt of Debt Securities ,"
or other similar terms, shall mean any Person in whose name at the time a
particular Debt Security is registered on the register kept by the
Company or the Trustee for that purpose in accordance with the terms hereof.
"Senior Indebtedness" means, with respect to the Company (except
any other obligations which by their express terms specifically rank pari passu
with or junior to the Debt Securities) (i) all obligations of the Company
(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, as amended, between the Company and 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 proceedings ("Post-Petition
Interest"), (ii) all obligations of the Company (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 the
Company for money borrowed and (B) indebtedness evidenced by securities,
debentures, notes, bonds or other similar instruments issued by the Company,
including, without limitation, any current or future indebtedness under any
indenture (other than this Indenture) to which the Company is a party; (iii) all
capital lease obligations of the Company; (iv) all obligations of the Company
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Company and all obligations of the Company under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (v) all obligations of the Company 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
the Company 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 the Company
(whether or not such obligation is assumed by the Company), 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 Debt Securities, (2) any
indebtedness between or among the Company or any Affiliate of the Company, (3)
any series of Debt Securities issued pursuant to this Indenture and guarantees
in respect of any such series of 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.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person
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or by one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries, (ii) any general partnership, joint venture or similar entity, at
least a majority of the outstanding partnership or similar interests of which
shall at the time be owned by such Person, or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii)
any limited partnership of which such Person or any of its Subsidiaries is a
general partner. For the purposes of this definition, "voting stock" means
shares, interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person,
other than shares, interests, participations or other equivalents having such
power only by reason of the occurrence of a contingency.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939
as in force at the date of execution of this Indenture, except as provided in
Section 9.03.
"Trust Securities" Trust Securities shall mean Common Securities
and Capital Securities of a PXRE Trust.
"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article VI hereof,
shall also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of Debt Securities shall
mean the trustee with respect to that series.
"Yield to Maturity" shall mean the yield to maturity on a series
of Debt Securities, calculated at the time of issuance of such series of Debt
Securities, or if applicable, at the most recent redetermination of interest on
such series and calculated in accordance with accepted financial practice.
ARTICLE II
DEBT SECURITIES
SECTION 2.01. Forms Generally.
The Debt Securities of each series shall be in substantially the
form as shall be established by or pursuant to a Board Resolution and as set
forth in an Officers' Certificate of the Company or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with any law or with any rules made pursuant thereto or with any rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the Debt
Securities.
In the event the Debt Securities are issued in definitive form
pursuant to this Indenture, such Debt Securities shall be typed, printed,
lithographed or engraved on steel
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engraved borders or may be produced in any other manner, all as determined by
the officers executing such Debt Securities, as evidenced by their execution of
such Debt Securities.
SECTION 2.02. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication on all Debt
Securities shall be in substantially the following form:
This is one of the Debt Securities of the series designated
therein referred to in the within-mentioned Indenture.
First Union National Bank, as Trustee
By________________________________
Authorized Officer
SECTION 2.03. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Debt Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Debt Securities may be issued in one or more series up to the
aggregate principal amount of Debt Securities of that series from time to time
authorized by or pursuant to a Board Resolution of the Company or pursuant to
one or more indentures supplemental hereto. Prior to the initial issuance of
Debt Securities of any series, there shall be established in or pursuant to a
Board Resolution of the Company and set forth in an Officers' Certificate of the
Company or established in one or more indentures supplemental:
(1) the title of the Debt Securities of the series (which
shall distinguish Debt Securities of the series from all other Debt
Securities);
(2) any limit upon the aggregate principal amount of the
Debt Securities of the series which may be authenticated and delivered
under this Indenture (except for Debt Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Debt Securities of the series pursuant to Section 2.07,
2.08, 2.09, 9.04 or 14.03);
(3) the date or dates on which the principal of and
premium, if any, on the Debt Securities of the series is payable;
(4) the rate or rates at which the Debt Securities of the
series shall bear interest, if any, or the method by which such interest
may be determined, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest shall be
payable or the manner of determination of such Interest Payment Dates
and the record dates for the determination of holders to whom interest
is payable on any such Interest Payment Dates;
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(5) the place or places where the principal of, and
premium, if any, and any interest on Debt Securities of the series shall
be payable;
(6) the right, if any, to extend the interest payment
periods and the duration of such extension;
(7) the price or prices at which, the period or periods
within which and the terms and conditions upon which Debt Securities of
the series may be redeemed, in whole or in part, at the option of the
Company, pursuant to any sinking fund or otherwise;
(8) the obligation, if any, of the Company to redeem,
purchase or repay Debt Securities of the series pursuant to any sinking
fund or analogous provisions or at the option of a Securityholder
thereof and the price or prices at which and the period or periods
within which, and the terms and conditions upon which Debt Securities of
the series shall be redeemed, purchased or repaid, in whole or in part,
pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Debt Securities of the
series shall be issuable;
(10) if other than the principal amount thereof, the
portion of the principal amount of Debt Securities of the series which
shall be payable upon declaration of acceleration of the maturity
thereof pursuant to Section 5.01 or provable in bankruptcy pursuant to
Section 5.02;
(11) any Events of Default with respect to the Debt
Securities of a particular series, if not set forth herein;
(12) the form of the Debt Securities of the series
including the form of the certificate of authentication of such series;
(13) any trustee, authenticating or paying agents, warrant
agents, transfer agents or registrars with respect to the Debt
Securities of such series;
(14) whether the Debt Securities of the series shall be
issued in whole or in part in the form of one or more Global Securities
and, in such case, the Depositary for such Global Security or
Securities, and whether beneficial owners of interests in any such
Global Securities may exchange such interests for other Debt Securities
of such series in the manner provided in Section 2.07, and the manner
and the circumstances under which and the place or places where any such
exchanges may occur if other than in the manner provided in Section
2.07, and any other terms of the series relating to the global nature of
the Global Securities of such series and the exchange, registration or
transfer thereof and the payment of any principal thereof, or interest
or premium, if any, thereon;
(15) if the Debt Securities of the series are issued
pursuant to an exemption from registration under the Securities Act; and
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(16) any other terms of the series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Debt Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to such resolution of the Board of Directors or in any such
indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution of the Company, a copy of an appropriate record
of such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate of the Company setting forth the terms of the series.
SECTION 2.04. Authentication and Dating.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debt Securities of any
series executed by the Company to the Trustee for authentication, and the
Trustee shall thereupon authenticate and make available for delivery said Debt
Securities to or upon the written order of the Company, signed by its Chairman
of the Board of Directors, the President, one of its Executive Vice Presidents,
one of its Senior Vice Presidents or one of its Vice Presidents and by its
Secretary, any Assistant Secretary, Treasurer or Controller, without any further
action by the Company hereunder. In authenticating such Debt Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Debt Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.01) shall be fully protected in relying upon:
(1) a copy of any Board Resolution or Resolutions relating
thereto and, if applicable, an appropriate record of any action taken
pursuant to such resolution, in each case certified by the Secretary or
an Assistant Secretary of the Company as the case may be;
(2) an executed supplemental indenture, if any;
(3) an Officers' Certificate setting forth the form and
terms of the Debt Securities if and as required pursuant to Sections
2.01 and 2.03, respectively; and
(4) an Opinion of Counsel prepared in accordance with
Section 13.06 which shall also state:
(a) that the form of such Debt Securities has been established
by or pursuant to a resolution of the Board of Directors or by a
supplemental indenture as permitted by Section 2.01 in conformity with
the provisions of this Indenture;
(b) that the terms of such Debt Securities have been established
by or pursuant to a resolution of the Board of Directors or by a
supplemental indenture as permitted by Section 2.03 in conformity with
the provisions of this Indenture;
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(c) that such Debt Securities, when authenticated and delivered
by the Trustee and issued by the Company in each case in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company;
(d) that all laws and requirements in respect of the execution
and delivery by the Company of the Debt Securities, have been complied
with and that authentication and delivery of the Debt Securities by the
Trustee will not violate the terms of the Indenture; and
(e) such other matters as the Trustee may reasonably request.
The Trustee shall have the right to decline to authenticate and
deliver any Debt Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or vice presidents shall determine
that such action would expose the Trustee to personal liability to existing
holders.
SECTION 2.05. Date and Denomination of Debt Securities.
The Debt Securities shall be issuable as registered Debt
Securities without coupons and in such denominations as shall be specified as
contemplated by Section 2.03. In the absence of any such specification with
respect to the Debt Securities of any series, the Debt Securities of such series
shall be issuable in the denominations of $1,000 and any multiple thereof. The
Debt Securities shall be numbered, lettered, or otherwise distinguished in such
manner or in accordance with such plans as the officers executing the same may
determine with the approval of the Trustee as evidenced by the execution and
authentication thereof.
Every Debt Security shall be dated the date of its
authentication, shall bear interest, if any, from such date and shall be payable
on such dates, in each case, as contemplated by Section 2.03. The interest
installment on any Security that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date for Debt Securities of that series
shall be paid to the Person in whose name said Debt Security (or one or more
Predecessor Securities) is registered at the close of business on the regular
record date for such interest installment. In the event that any Debt Security
of a particular series or portion thereof is called for redemption and the
redemption date is subsequent to a regular record date with respect to any
Interest Payment Date and prior to such Interest Payment Date, interest on such
Debt Security will be paid upon presentation and surrender of such Debt Security
as provided in Section 14.03.
Any interest on any Debt Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date for a Debt
Security of the same series (herein called "Defaulted Interest") shall forthwith
cease to be payable to the registered holder on the relevant regular record date
by virtue of having been such holder; and such Defaulted Interest shall be paid
by the Company, at its election, as provided in clause (1) or clause (2) below:
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(1) The Company may make payment of any Defaulted Interest
on Securities to the Persons in whose names such Debt Securities (or
their respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Debt Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to
be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date
for the payment of such Defaulted Interest which shall not be more than
15 nor less than ten days prior to the date of the proposed payment and
not less than ten days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first class
postage prepaid, to each Securityholder at his or her address as it
appears in the Debt Security Register, not less than ten days prior to
such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the
Persons in whose names such Debt Securities (or their respective
Predecessor Securities) are registered on such special record date and
shall be no longer payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest
on any Debt Securities in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
In respect of any series of Debt Securities in which the right to extend the
interest payment periods has been provided pursuant to Section 2.03(6), any
interest scheduled to become payable on an Interest Payment Date occurring
during a valid extension of an interest payment period shall not be Defaulted
Interest and shall be payable on such other date as may be specified in the
terms of such Debt Securities.
Unless otherwise set forth in a Board Resolution of the Company
or one or more indentures supplemental hereto establishing the terms of any
series of Debt Securities pursuant to Section 2.01 hereof, the term "regular
record date" as used in this Section with respect to a series of Debt Securities
with respect to any Interest Payment Date for such series shall mean either the
fifteenth day of the month immediately preceding the month in
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which an Interest Payment Date established for such series pursuant to Section
2.01 hereof shall occur, if such Interest Payment Date is the first day of a
month, or the last day of the month immediately preceding the month in which an
Interest Payment Date established for such series pursuant to Section 2.01
hereof shall occur, if such Interest Payment Date is the fifteenth day of a
month, whether or not such date is a Business Day.
Subject to the foregoing provisions of this Section, each Debt
Security of a series delivered under this Indenture upon transfer of or in
exchange for or in lieu of any other Debt Security of such series shall carry
the rights to interest accrued and unpaid, and to accrue, that were carried by
such other Debt Security.
SECTION 2.06. Execution of Debt Securities.
The Debt Securities shall be signed in the name and on behalf of
the Company by the manual or facsimile signature of its Chairman of the Board of
Directors, the President, one of its Executive Vice Presidents, one of its
Senior Vice Presidents or one of its Vice Presidents and by the manual or
facsimile signature of its Secretary, any Assistant Secretary, Treasurer or
Controller, under its corporate seal which may be affixed thereto or printed,
engraved or otherwise reproduced thereon, by facsimile or otherwise, and which
need not be attested. Only such Debt Securities as shall bear thereon a
certificate of authentication substantially in the form herein before recited,
executed by the Trustee or the Authenticating Agent by the manual signature of
an authorized signatory, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. Such certificate by the Trustee or the
Authenticating Agent upon any Debt Security executed by the Company shall be
conclusive evidence that the Debt Security so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
In case any officer of the Company who shall have signed any of
the Debt Securities shall cease to be such officer before the Debt Securities so
signed shall have been authenticated and delivered by the Trustee or the
Authenticating Agent, or disposed of by the Company, such Debt Securities
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Debt Securities had not ceased to be such officer of the
Company; and any Debt Security may be signed on behalf of the Company by such
Persons as, at the actual date of the execution of such Debt Security, shall be
the proper officers of the Company, although at the date of the execution of
this Indenture any such person was not such an officer.
SECTION 2.07. Exchange and Registration of Transfer of Debt
Securities.
Subject to Section 2.03(14), Debt Securities of any series may be
exchanged for a like aggregate principal amount of Debt Securities of the same
series of other authorized denominations. Debt Securities to be exchanged may be
surrendered at the principal corporate trust office of the Trustee or at any
office or agency to be maintained by the Company for such purpose as provided in
Section 3.02, and the Company shall execute, the Company or the Trustee shall
register and the Trustee or the Authenticating Agent shall authenticate and make
available for delivery in exchange therefor the Debt Security or Debt Securities
which the Securityholder making the exchange shall be entitled to receive.
Subject to Section 2.03(14), upon due presentment for registration of transfer
of any Debt Security of any series at the principal
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corporate trust office of the Trustee or at any office or agency of the Company
maintained for such purpose as provided in Section 3.02, the Company shall
execute, the Company or the Trustee shall register and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in the
name of the transferee or transferees a new Debt Security or Debt Securities of
the same series for a like aggregate principal amount. Registration or
registration of transfer of any Debt Security by the Trustee or by any agent of
the Company appointed pursuant to Section 3.02, and delivery of such Debt
Security, shall be deemed to complete the registration or registration of
transfer of such Debt Security.
The Company shall cause to be kept, at the office or agency
maintained for the purpose of registration of transfer and for exchange as
provided in Section 3.02, a register (the "Debt Security Register") for each
series of Debt Securities issued hereunder in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
and transfer of all Debt Securities as in this Article Two provided. Such
register shall be in written form or in any other form capable of being
converted into written form within a reasonable time.
All Debt Securities presented for registration of transfer or for
exchange or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by, the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration
of transfer of Debt Securities, but the Company or the Trustee may require
payment of a sum sufficient to cover any tax, fee or other governmental charge
that may be imposed in connection therewith.
The Company or the Trustee shall not be required to exchange or
register a transfer of (a) any Debt Security for a period of 15 days next
preceding the date of selection of Debt Securities of such series for
redemption, or (b) any Debt Securities of any series selected, called or being
called for redemption in whole or in part, except in the case of any Debt
Securities of any series to be redeemed in part, the portion thereof not so to
be redeemed.
Notwithstanding the foregoing, if pursuant to Section 2.03, a
series of Debt Securities are issued pursuant to an exemption from registration
under the Securities Act, such Debt Securities may not be transferred except in
compliance with the restricted securities legend set forth below (the
"Restricted Securities Legend"), unless otherwise determined by the Company in
accordance with applicable law:
THE DEBT SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS DEBT SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. THE
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HOLDER OF THIS DEBT SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH DEBT SECURITY PRIOR TO THE DATE WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
PXRE CORPORATION (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS DEBT SECURITY OR ANY PREDECESSOR OF THIS DEBT SECURITY (THE "RESALE
RESTRICTIONS TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE DEBT SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE DEBT
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH
MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS DEBT SECURITY AGREES THAT
IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. DEBT SECURITIES OWNED BY A
PURCHASER THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN
BOOK-ENTRY FORM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER
THE RESALE RESTRICTIONS TERMINATION DATE. THE DEBT SECURITIES WILL BE ISSUED AND
MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT
LESS THAN $100,000 (AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF). ANY
SUCH TRANSFER OF DEBT SECURITIES IN A BLOCK HAVING AN AGGREGATE PRINCIPAL 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
DEBT SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF
PAYMENTS ON SUCH DEBT SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO
INTEREST WHATSOEVER IN SUCH DEBT SECURITIES.
Prior to any distribution of the Debt Securities to the holders
of Capital Securities in accordance with the related Declaration, the Company
and the Trustee shall enter into a supplemental indenture pursuant to Article IX
to provide for transfer procedures and restrictions
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with respect to the Debt Securities substantially similar to those contained in
the Declaration with respect to Capital Securities of the corresponding series
to the extent applicable in the circumstances existing at the time of such
distribution for purposes of assuring, if applicable, that no registration of
such Debt Securities is required under the Securities Act.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Debt
Securities.
In case any temporary or definitive Debt Security shall become
mutilated or be destroyed, lost or stolen, the Company shall execute, and upon
its request the Trustee shall authenticate and deliver, a new Debt Security of
the same series bearing a number not contemporaneously outstanding, in exchange
and substitution for the mutilated Debt Security, or in lieu of and in
substitution for the Debt Security so destroyed, lost or stolen. In every case
the applicant for a substituted Debt Security shall furnish to the Company and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Company and the Trustee evidence to their
satisfaction of the destruction, loss or theft of such Debt Security and of the
ownership thereof.
The Trustee may authenticate any such substituted Debt Security
and deliver the same upon the written request or authorization of any officer of
the Company. Upon the issuance of any substituted Debt Security, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Debt Security which has matured or is about to mature or
has been called for redemption in full shall become mutilated or be destroyed,
lost or stolen, the Company may, instead of issuing a substitute Debt Security,
pay or authorize the payment of the same (without surrender thereof except in
the case of a mutilated Debt Security) if the applicant for such payment shall
furnish to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless and, in case of destruction, loss
or theft, evidence satisfactory to the Company and to the Trustee of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substituted Debt Security of any series issued pursuant to
the provisions of this Section 2.08 by virtue of the fact that any such Debt
Security is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Debt
Security shall be found at any time, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Debt
Securities of the same series duly issued hereunder. All Debt Securities shall
be held and owned upon the express condition that, to the extent permitted by
applicable law, the foregoing provisions are exclusive with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debt Securities
and shall preclude any and all other rights or remedies notwithstanding any law
or statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
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SECTION 2.09. Temporary Debt Securities.
Pending the preparation of definitive Debt Securities of any
series, the Company may execute and the Trustee shall authenticate and make
available for delivery temporary Debt Securities that are typed, printed or
lithographed. Temporary Debt Securities shall be issuable in any authorized
denomination, and substantially in the form of the definitive Debt Securities
but with such omissions, insertions and variations as may be appropriate for
temporary Debt Securities, all as may be determined by the Company. Every such
temporary Debt Security shall be executed by the Company and be authenticated by
the Trustee upon the same conditions and in substantially the same manner, and
with the same effect, as the definitive Debt Securities. Without unreasonable
delay the Company will execute and deliver to the Trustee or the Authenticating
Agent definitive Debt Securities and thereupon any or all temporary Debt
Securities of such series may be surrendered in exchange therefor, at the
principal corporate trust office of the Trustee or at any office or agency
maintained by the Company for such purpose as provided in Section 3.02, and the
Trustee or the Authenticating Agent shall authenticate and make available for
delivery in exchange for such temporary Debt Securities a like aggregate
principal amount of such definitive Debt Securities. Such exchange shall be made
by the Company at its own expense and without any charge therefor except that in
case of any such exchange involving a registration of transfer the Company may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in relation thereto. Until so exchanged, the
temporary Debt Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Debt Securities of the same
series authenticated and delivered hereunder.
SECTION 2.10. Cancellation of Debt Securities Paid, etc.
All Debt Securities surrendered for the purpose of payment,
redemption, exchange or registration of transfer, shall, if surrendered to the
Company or any paying agent, be surrendered to the Trustee and promptly canceled
by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be
promptly canceled by it, and no Debt Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. All
Debt Securities canceled by any Authenticating Agent shall be delivered to the
Trustee. The Trustee shall deliver all canceled Debt Securities to the Company.
If the Company shall acquire any of the Debt Securities, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Debt Securities unless and until the same are
surrendered to the Trustee for cancellation.
SECTION 2.11. Global Securities.
(a) If the Company shall establish pursuant to Section 2.03 that
the Debt Securities of a particular series are to be issued as a Global
Security, then the Company shall execute and the Trustee shall, in accordance
with Section 2.04, authenticate and deliver, a Global Security that (i) shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all or a specified portion of the outstanding Debt
Securities of such series, (ii) shall be registered in the name of the
Depositary or its nominee, (iii) shall be delivered by the
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Trustee to the Depositary or pursuant to the Depositary's instruction and (iv)
shall bear a legend substantially to the following effect: "Except as otherwise
provided in Section 2.11 of the Indenture, this Security may be transferred, in
whole but not in part, only to another nominee of the Depositary or to a
successor Depositary or to a nominee of such successor Depositary."
(b) Notwithstanding the provisions of Section 2.07, the Global
Security of a series may be transferred, in whole but not in part and only in
the manner provided in Section 2.07, only to another nominee of the Depositary
for such series, or to a successor Depositary for such series selected or
approved by the Company or to a nominee of such successor Depositary.
(c) If at any time the Depositary for a series of the Debt
Securities notifies the Company that it is unwilling or unable to continue as
Depositary for such series or if at any time the Depositary for such series
shall no longer be registered or in good standing under the Exchange Act, or
other applicable statute or regulation, and a successor Depositary for such
series is not appointed by the Company within 90 days after the Company receives
such notice or becomes aware of such condition, as the case may be, this Section
2.11 shall no longer be applicable to the Debt Securities of such series and the
Company will execute, and subject to Section 2.07, the Trustee will authenticate
and make available for delivery the Debt Securities of such series in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security
of such series in exchange for such Global Security. In addition, the Company
may at any time determine that the Debt Securities of any series shall no longer
be represented by a Global Security and that the provisions of this Section 2.11
shall no longer apply to the Debt Securities of such series. In such event the
Company will execute and subject to Section 2.07, the Trustee, upon receipt of
an Officers' Certificate evidencing such determination by the Company, will
authenticate and make available for delivery the Debt Securities of such series
in definitive registered form without coupons, in authorized denominations, and
in an aggregate principal amount equal to the principal amount of the Global
Security of such series in exchange for such Global Security. Upon the exchange
of the Global Security for such Debt Securities in definitive registered form
without coupons, in authorized denominations, the Global Security shall be
canceled by the Trustee. Such Debt Securities in definitive registered form
issued in exchange for the Global Security pursuant to this Section 2.11(c)
shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such Debt
Securities to the Depositary for delivery to the Persons in whose names such
Debt Securities are so registered.
SECTION 2.12. CUSIP Numbers.
The Company in issuing the Debt Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Securityholders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Debt Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Debt Securities, and any such
redemption shall not be
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affected by any defect in or omission of such numbers. The Company will promptly
notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series
of Debt Securities that it will duly and punctually pay or cause to be paid the
principal of and premium, if any, and interest on each of the Debt Securities of
that series at the place, at the respective times and in the manner provided in
such Debt Securities. At the option of the Company, each installment of interest
on the Debt Securities of any series may be paid (i) by mailing checks for such
interest payable to the order of the holders of Debt Securities entitled thereto
as they appear on the registry books of the Company or (ii) if so specified with
respect to the Debt Securities of such series as contemplated by Section 2.03,
by wire transfer to any account with a banking institution located in the United
States designated by such Person to the paying agent in writing no later than
the related record date.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Debt Securities remain outstanding, the
Company will maintain in the Borough of Manhattan, The City of New York, or
Newark, New Jersey, an office or agency where the Debt Securities of each series
may be presented for payment, an office or agency where the Debt Securities of
that series may be presented for registration of transfer and for exchange as is
provided for in this Indenture and an office or agency where notices and demands
to or upon the Company in respect of the Debt Securities of that series or of
this Indenture may be served. The Company will give to the Trustee written
notice of the location of any such office or agency and of any change of
location thereof. Until otherwise designated from time to time by the Company in
a notice to the Trustee, or specified as contemplated by Section 2.03, such
office or agency for all of the above purposes shall be the office or agency of
the Trustee. In case the Company shall fail to maintain any such office or
agency in the Borough of Manhattan, The City of New York, or shall fail to give
such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the corporate
trust office of the Trustee in Newark, New Jersey.
In addition to any such office or agency, the Company may from
time to time designate one or more other offices or agencies outside the Borough
of Manhattan, The City of New York, where the Debt Securities may be presented
for registration of transfer and for exchange in the manner provided in this
Indenture, and the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in the Borough of Manhattan,
The City of New York, or Newark, New Jersey, for the purposes above mentioned.
The Company will give to the Trustee prompt written notice of any such
designation or rescission thereof.
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SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Debt Securities of any series, it will cause such
paying agent to execute and deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provision of this Section
3.04,
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest, if any, on the
Debt Securities of such series (whether such sums have been paid to it by the
Company or by any other obligor on the Debt Securities of such series) in trust
for the benefit of the holders of the Debt Securities of such series;
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Debt Securities of such series) to make
any payment of the principal of and premium, if any, or interest, if any, on the
Debt Securities of such series when the same shall be due and payable; and
(3) that it will, at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such paying agent,
(b) If the Company shall act as its own paying agent, it will, on
or before each due date of the principal of and premium, if any, or interest, if
any, on the Debt Securities of any series, set aside, segregate and hold in
trust for the benefit of the holders of the Debt Securities of such series a sum
sufficient to pay such principal, premium or interest so becoming due and will
notify the Trustee of any failure to take such action and of any failure by the
Company (or by any other obligor under the Debt Securities of such series) to
make any payment of the principal of and premium, if any, or interest, if any,
on the Debt Securities of such series when the same shall become due and
payable.
Whenever the Company shall have one or more paying agents for any
series of Debt Securities, it will, on or prior to each due date of the
principal of and premium, if any, or interest, if any, on any Debt Securities of
such series, deposit with a paying agent a sum sufficient to pay the principal,
premium or interest so becoming due, such sum to be held in trust for the
benefit of the Persons entitled thereto and (unless such paying agent is the
Trustee) the Company shall promptly notify the Trustee of its action or failure
to act.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or
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more or all series of Debt Securities hereunder, or for any other reason, pay,
or direct any paying agent to pay to the Trustee all sums held in trust for any
such series by the Company or any such paying agent, such sums to be held by the
Trustee upon the trusts herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section
3.04 is subject to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, so long as Debt Securities of
any series are outstanding hereunder, a Certificate stating that in the course
of the performance by the signers of their duties as officers of the Company
they would normally have knowledge of any default by the Company in the
performance of any covenants contained herein, stating whether or not they have
knowledge of any such default and, if so, specifying each such default of which
the signers have knowledge and the nature thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Debt Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other company unless the
provisions of Article X hereof are complied with.
SECTION 3.07. Limitation on Dividends.
If Debt Securities of a series are initially issued to a PXRE
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such PXRE Trust (regardless of whether Debt Securities continue to
be held by such trust) and (i) there shall have occurred and be continuing any
event that would constitute an Event of Default, (ii) the Company shall be in
default with respect to its payment of any obligations under a Capital
Securities Guarantee or a Common Securities Guarantee with respect to securities
issued by such trust, or (iii) the Company shall have given notice of its
election to defer payments of interest on the Debt Securities of such series by
extending the interest payment period as provided herein and such period, or any
extension thereof, shall be continuing, then (a) the Company shall not declare
or pay any dividend on, make a 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 the Company's capital stock or rights to acquire
such capital stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Company's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of the
Company's capital stock or rights to acquire such capital stock for another
class or series of the Company's capital stock or rights to acquire such
capital stock, (iii) the purchase of fractional interests in shares of the
Company'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 the Company's capital stock or rights to
acquire such
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capital stock, in each case with the Company's capital stock or rights to
acquire such capital stock), or make any guarantee payments (other than payments
under the Guarantee or the Common Securities Guarantee) with respect to the
foregoing, and (b) the Company shall not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company that rank pari passu with or junior
to the Debt Securities of such series.
SECTION 3.08. Covenants as to PXRE Trusts.
In the event Debt Securities of a series are initially issued to
a PXRE Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such PXRE Trust, for so long as such Trust Securities remain
outstanding, the Company will (i) maintain 100% ownership directly or indirectly
of the Common Securities of such PXRE Trust; provided, however, that any
permitted successor of the Company under this Indenture may succeed to the
Company's ownership of such Common Securities, (ii) use its reasonable efforts
to cause such PXRE Trust (a) to remain a statutory business trust, except in
connection with a distribution of Debt Securities of such series to the holders
of such Trust Securities in liquidation of such Trust, the redemption of all of
the Trust Securities of such PXRE Trust or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such PXRE Trust, and (b)
to otherwise continue to be classified as a grantor trust for United States
federal income tax purposes, (iii) use its reasonable efforts to cause each
holder of Trust Securities issued by such Trust to be treated as owning an
undivided beneficial interest in the Debt Securities of such series issued to
such PXRE Trust, and (iv) use its reasonable efforts to cause the Trust to
continue not to be classified as an investment company for purposes of the
Investment Company Act of 1940, as amended.
SECTION 3.09. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of
each calendar year a written notice specifying the amount of original issue
discount (including daily rates and accrual periods), if any, accrued on
outstanding Debt Securities as of the end of such year.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee:
(a) on each regular record date for each series of Debt
Securities, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Securityholders of such series of Debt Securities as
of such record date (and on dates to be determined pursuant to Section 2.03 for
non-interest bearing securities in each year); and
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(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished; except that no such lists need be furnished under this
Section 4.01 so long as the Trustee is in possession thereof by reason of its
acting as Debt Security registrar for such series.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of each series of Debt Securities (1) contained in the most recent list
furnished to it as provided in Section 4.01 or (2) received by it in the
capacity of Debt Securities registrar (if so acting) hereunder. The Trustee may
destroy any list furnished to it as provided in Section 4.01 upon receipt of a
new list so furnished.
(b) In case three or more holders of Debt Securities of any
series (hereinafter referred to as "applicants") apply in writing to the Trustee
and furnish to the Trustee reasonable proof that each such applicant has owned a
Debt Security of such series for a period of at least six months preceding the
date of such application, and such application states that the applicants desire
to communicate with other holders of Debt Securities of such series or with
holders of all Debt Securities with respect to their rights under this Indenture
or under such Debt Securities and is accompanied by a copy of the form of proxy
or other communication which such applicants propose to transmit, then the
Trustee shall within five Business Days after the receipt of such application,
at its election, either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance with the provisions
of subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number
of holders of such series or all Debt Securities, as the case may be,
whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with the provisions of subsection (a)
of this Section 4.02, and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access
to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Debt Securities,
as the case may be, whose name and address appear in the information preserved
at the time by the Trustee in accordance with the provisions of subsection (a)
of this Section 4.02 a copy of the form of proxy or other communication which is
specified in such request with reasonable promptness after a tender to the
Trustee of the material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless within five days after
such tender, the Trustee shall mail to such applicants and file with the
Securities and Exchange Commission, if permitted or required by applicable law,
together with a copy of the material to be mailed, a written statement to the
effect that, in the opinion of the Trustee, such mailing would be contrary to
the best interests of the holders of Debt Securities of
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such series or all Debt Securities, as the case may be, or would be in violation
of applicable law. Such written statement shall specify the basis of such
opinion. If said Commission, as permitted or required by applicable law, after
opportunity for a hearing upon the objections specified in the written statement
so filed, shall enter an order refusing to sustain any of such objections or if,
after the entry of an order sustaining one or more of such objections, said
Commission shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter an order so declaring, the
Trustee shall mail copies of such material to all such Securityholders with
reasonable promptness after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of any obligation or duty to
such applicants respecting their application.
(c) Each and every holder of Debt Securities, by receiving and
holding the same, agrees with Company and the Trustee that neither the Company
nor the Trustee nor any paying agent shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the holders
of Debt Securities in accordance with the provisions of subsection (b) of this
Section 4.02, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b).
SECTION 4.03. [Reserved]
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the
Trustee shall, within 60 days after each May 15 following the date of this
Indenture deliver to Securityholders a brief report, dated as of such May 15,
which complies with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange, if any, upon which the Securities are listed, with the Commission, if
required by applicable law, and with the Company. The Company will promptly
notify the Trustee when the Debt Securities are listed on any stock exchange.
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ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
UPON AN EVENT OF DEFAULT
SECTION 5.01. Events of Default.
The following Events of Default with respect to Debt Securities
of any series or such other events as may be established with respect to the
Debt Securities of that series as contemplated by Section 2.03 hereof shall be
"Events of Default" with respect to Debt Securities of that series:
(a) the Company defaults in the payment of any interest upon any
Debt Securities of that series when it becomes due and payable, and continuance
of such default for a period of 30 days; provided, however, that a valid
extension of an interest payment period by the Company in accordance with the
terms of such Debt Securities shall not constitute a default in the payment of
interest for this purpose; or
(b) the Company defaults in the payment of all or any part of the
principal of (or premium, if any, on) any Debt Securities of that series as and
when the same shall become due and payable either at maturity, upon redemption
(including redemption for any sinking fund), by declaration or otherwise; or
(c) the Company defaults with respect to indebtedness for money
borrowed resulting in acceleration of such indebtedness having an aggregate
principal amount in excess of $25 million and such acceleration is not rescinded
or annulled within 30 days after there has been given, by registered or
certified mail, to the Company by the Trustee (provided that a Responsible
Officer of the Trustee has actual knowledge of such event) or to the Company and
the Trustee by the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of that series, a written notice specifying such
acceleration and stating that such Notice is a "Notice of Default" hereunder; or
(d) the Company defaults in the performance of, or breaches, any
of its covenants or warranties in this Indenture or in the terms of that series
of Debt Securities established as contemplated in this Indenture (other than a
covenant or warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with), and continuance of such default or
breach for a period of 90 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the holders of at least 25% in aggregate principal amount of the outstanding
Debt Securities of that series, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(e) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
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substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(f) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or the admission
by the Company or any of its subsidiaries in writing of its inability to pay its
debts generally as they become due; or
(g) as to Debt Securities of any series issued to a PXRE Trust,
such PXRE Trust shall have voluntarily or involuntarily dissolved, wound-up its
business or otherwise terminated its existence except in connection with (i) the
distribution of the Debt Securities of such series to holders of such Trust
Securities in liquidation of their interests in such PXRE Trust, (ii) the
redemption of all of the outstanding Trust Securities of such PXRE Trust or
(iii) certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of such PXRE Trust.
Subject to Article XV, if an Event of Default occurs and is
continuing with respect to any series of Debt Securities, then, and in each and
every such case, unless the principal of all of the Debt Securities of that
series shall have already become due and payable, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the Debt
Securities of that series then outstanding hereunder, by notice in writing to
the Company (and to the Trustee if given by Securityholders), may declare the
entire principal (or, if the Debt Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all Debt Securities of that series and the interest
accrued thereon, if any, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable.
Subject to Section 15.02, the foregoing provisions, however, are
subject to the condition that if, at any time after the principal (or, if the
Debt Securities are Original Issue Discount Securities, such portion of the
principal as may be specified in the terms thereof) of the Debt Securities of
any series (or of all the Debt Securities, as the case may be) shall have been
so declared due and payable, and before any judgment or decree for the payment
of the moneys due shall have been obtained or entered as hereinafter provided,
the Company shall pay or shall deposit with the Trustee a sum sufficient to pay
all matured installments of interest upon all the Debt Securities of such series
(or of all the Debt Securities, as the case may be) and the principal of and
premium, if any, on any and all Debt Securities of such series (or of all the
Debt Securities, as the case may be) which shall have become due otherwise than
by acceleration (with interest upon such principal and premium, if any, and, to
the extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest, at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) specified
in the Debt Securities of such series (or at the respective rates of interest or
Yields to Maturity of
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all the Debt Securities, as the case may be), to the date of such payment or
deposit) and such amount as shall be sufficient to cover reasonable compensation
to the Trustee and each predecessor Trustee, their respective agents, attorneys
and counsel, and all other expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith, and if any and all Events of Default under this
Indenture, other than the non-payment of the principal of or premium, if any, on
Debt Securities which shall have become due by acceleration, shall have been
cured, waived or otherwise remedied as provided herein -- then and in every such
case the holders of a majority in aggregate principal amount of the Debt
Securities of such series (or of all the Debt Securities, as the case may be)
then outstanding, by written notice to the Company and to the Trustee, may waive
all defaults with respect to that series (or with respect to all Debt
Securities, as the case may be, in such case, treated as a single class) and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the holders of the Debt Securities shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the Trustee and the holders of the
Debt Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Debt Securities on Default; Suit
Therefor.
The Company covenants that (a) in case default shall be made in
the payment of any installment of interest upon any of the Debt Securities of
any series as and when the same shall become due and payable, and such default
shall have continued for a period of 30 days, or (b) in case default shall be
made in the payment of the principal of or premium, if any, on any of the Debt
Securities of any series as and when the same shall have become due and payable,
whether at maturity of the Debt Securities of that series or upon redemption or
by declaration or otherwise -- then, upon demand of the Trustee, the Company
will pay to the Trustee, for the benefit of the holders of the Debt Securities
of that series the whole amount that then shall have become due and payable on
all such Debt Securities of that series for principal and premium, if any, or
interest, or both, as the case may be, with interest upon the overdue principal
and premium, if any, and (to the extent that payment of such interest is
enforceable under applicable law) upon the overdue installments of interest at
the rate or Yield to Maturity (in the case of Original Issue Discount
Securities) borne by the Debt Securities of that series; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses or liabilities incurred by the
Trustee hereunder other than through its negligence or bad faith. In case the
Company shall fail forthwith to pay such amounts upon such demand, the Trustee,
in its own name and as trustee of an express trust, shall be entitled and
empowered to institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may
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enforce any such judgment or final decree against the Company or any other
obligor on such Debt Securities and collect in the manner provided by law out of
the property of the Company or any other obligor on such Debt Securities
wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Debt
Securities of any series under Title 11, United States Code, or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the property of the Company or such other obligor, or in the case of any other
similar judicial proceedings relative to the Company or other obligor upon the
Debt Securities of any series, or to the creditors or property of the Company or
such other obligor, the Trustee, irrespective of whether the principal of the
Debt Securities of any series shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand pursuant to the provisions of this Section 5.02, shall be
entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal and interest
(or, if the Debt Securities of that series are Original Issue Discount
Securities such portion of the principal amount as may be specified in the terms
of that series) owing and unpaid in respect of the Debt Securities of such
series and, in case of any judicial proceedings, to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for reasonable compensation to
the Trustee and each predecessor Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities incurred, and
all advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Securityholders allowed in such
judicial proceedings relative to the Company or any other obligor on the Debt
Securities of any series, or to the creditors or property of the Company or such
other obligor, unless prohibited by applicable law and regulations, to vote on
behalf of the holders of the Debt Securities or any series in any election of a
trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings, and to collect and receive any moneys or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee
except as a result of negligence or bad faith.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debt Securities of any series or the rights of any
holder thereof or to authorize the Trustee to vote in respect of the claim of
any Securityholder in any such proceeding.
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All rights of action and of asserting claims under this
Indenture, or under any of the Debt Securities, may be enforced by the Trustee
without the possession of any of the Debt Securities, or the production thereof
at any trial or other proceeding relative thereto, and any such suit or
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall be for the ratable
benefit of the holders of the Debt Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the holders of the Debt Securities, and it shall not be necessary to make any
holders of the Debt Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the several Debt Securities in respect of
which moneys have been collected, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to such series and reasonable compensation to the Trustee, its
agents, attorneys and counsel, and of all other expenses and liabilities
incurred, and all advances made, by the Trustee, its agents, attorneys and
counsel except as a result of the Trustee's negligence or bad faith;
Second: To the payment of all Senior Indebtedness of the Company
if and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon
Debt Securities of such series for principal (and premium, if any), and interest
on the Debt Securities of such series, in respect of which or for the benefit of
which money has been collected, ratably, without preference or priority of any
kind, according to the amounts due on such Debt Securities for principal (and
premium, if any) and interest, respectively; and
Fourth: The balance, if any, to the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Debt Security of any series shall have any right
by virtue of or by availing of any provision of this Indenture to institute any
suit, action or proceeding in equity or at law upon or under or with respect to
this Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof with
respect to the Debt Securities of such series specifying such Event of Default,
as hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Debt Securities of that series then
outstanding shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the
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Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the 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, it being understood and
intended, and being expressly covenanted by the taker and holder of every Debt
Security with every other taker and holder and the Trustee, that no one or more
holders of Debt Securities of any series shall have any right in any manner
whatever by virtue of or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of any other holder of Debt Securities
of such series, or to obtain or seek to obtain priority over or preference to
any other such holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
holders of Debt Securities of the applicable series.
Notwithstanding any other provisions in this Indenture, however,
the right of any holder of any Debt Security to receive payment of the principal
of (and premium, if any) and interest, if any, on such Debt Security, on or
after the same shall have become due and payable, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such holder. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 5.05. Proceedings by Trustee.
In case of an Event of Default hereunder the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
Except as otherwise provided in Section 2.08, all powers and
remedies given by this Article V to the Trustee or to the Securityholders shall,
to the extent permitted by law, be deemed cumulative and not exclusive of any
other powers and remedies available to the Trustee or the holders of the Debt
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to such series, and no delay or omission of
the Trustee or of any holder of any of the Debt Securities to exercise any right
or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.04, every power and remedy given by this Article V or by
law to the Trustee or to the Securityholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
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SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Debt Securities of any or all series affected (voting as one class) at the time
outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee with respect to such series;
provided, however, that (subject to the provisions of Section 6.01) the Trustee
shall have the right to decline to follow any such direction if the Trustee
shall determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully be
taken or if the Trustee in good faith by its board of directors or trustees,
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or proceedings so directed
would involve the Trustee in personal liability. Prior to any declaration
accelerating the maturity of any series of the Debt Securities, or of all the
Debt Securities, as the case may be, the holders of a majority in aggregate
principal amount of the Debt Securities of that series at the time outstanding
may on behalf of the holders of all of the Debt Securities of such series waive
(or modify any previously granted waiver of) any past default or Event of
Default, including any default or Event of Default the conditions for the
occurrence of which are established pursuant to Section 2.03, and its
consequences, except a default (a) in the payment of principal of, premium, if
any, or interest on any of the Debt Securities, (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of the
holder of each Debt Security affected, or (c) default of the covenants contained
in Section 3.08; provided, however, that if the Debt Securities of such series
are held by a PXRE Trust or a trustee of such trust, such waiver or modification
to such waiver shall not be effective until the holders of a majority in
liquidation preference of Trust Securities of the applicable PXRE Trust shall
have consented to such waiver or modification to such waiver; provided, further,
that if the consent of the holder of each outstanding Debt Security is required,
such waiver shall not be effective until each holder of the Trust Securities of
the applicable PXRE Trust shall have consented to such waiver. Upon any such
waiver, the default covered thereby shall be deemed to be cured for all purposes
of this Indenture and the Company, the Trustee and the holders of the Debt
Securities of such series shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
Whenever any default or Event of Default hereunder shall have been waived as
permitted by this Section 5.07, said default or Event of Default shall for all
purposes of the Debt Securities of that series (or of all Securities, as the
case may be) and this Indenture be deemed to have been cured and to be not
continuing.
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after the occurrence of a
default with respect to the Debt Securities of any series, mail to all
Securityholders of that series, as the names and addresses of such holders
appear upon the Debt Security Register, notice of all defaults with respect to
that series known to the Trustee, unless such defaults shall have been cured
before the
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giving of such notice (the term "defaults" for the purpose of this Section 5.08
being hereby defined to be the events specified in clauses (a), (b), (c), (d),
(e) and (f) of Section 5.01, not including periods of grace, if any, provided
for therein, and irrespective of the giving of written notice specified in
clause (c) of Section 5.01); and provided that, except in the case of default in
the payment of the principal of, premium, if any, or interest on any of the Debt
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interests of the
Securityholders of such series; and provided further, that in the case of any
default of the character specified in Section 5.01(c) no such notice to
Securityholders of such series shall be given until at least 60 days after the
occurrence thereof but shall be given within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Debt
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders of any series, holding in the aggregate more than 10% in
principal amount of the Debt Securities of that series outstanding, or to any
suit instituted by any Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Debt Security against the
Company on or after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of any series of Debt Securities
issued hereunder, the Trustee, prior to the occurrence of an Event of Default
with respect to Debt Securities of that series and after the curing or waiving
of all Events of Default which may have occurred, with respect to Debt
Securities of that series, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default with respect to the Debt Securities of a series has occurred (which has
not been cured or waived) the Trustee shall exercise such of the rights and
powers vested in it by this 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.
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No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect
to Debt Securities of a series and after the curing or waiving of all Events of
Default with respect to that series which may have occurred
(1) the duties and obligations of the Trustee with respect
to Debt Securities of such series shall be determined solely by the
express provisions of this Indenture, and the Trustee shall not be
liable except for the performance of such duties and obligations with
respect to such series as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this
Indenture against the Trustee, and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; but, in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.07, relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or liability is not reasonably assured to it under
the terms of this Indenture or adequate indemnity against such risk is not
reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request,
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consent, order, bond, note, debenture or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default with respect to a series of the Debt
Securities (that has not been cured or waived) to exercise with respect to Debt
Securities of that series such of the rights and powers vested in it by this
Indenture, and to 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;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, coupon or other paper or document, unless requested in writing to do
so by the holders of not less than a majority in principal amount of the
outstanding Debt Securities of the series affected thereby; provided, however,
that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expense or liability as a
condition to so proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
(including any Authenticating Agent) or attorneys, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent or
attorney appointed by it with due care.
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SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Debt Securities (except
in the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Debt Securities. The Trustee
and the Authenticating Agent shall not be accountable for the use or application
by the Company of any Debt Securities or the proceeds of any Debt Securities
authenticated and delivered by the Trustee or the Authenticating Agent in
conformity with the provisions of this Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Debt Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Debt Security registrar, in its individual or any
other capacity, may become the owner or pledgee of Debt Securities with the same
rights it would have if it were not Trustee, Authenticating Agent, paying agent,
transfer agent or Debt Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys received
by the Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee and any paying agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company . So long as no Event of Default shall have occurred and be continuing,
all interest allowed on any such moneys shall be paid from time to time upon the
written order of the Company, signed by the Chairman of the Board of Directors,
the President, one of its Executive Vice Presidents, one of its Senior Vice
Presidents, a Vice President, the Treasurer or Controller of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Company and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Company will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify each of the Trustee or any predecessor
Trustee (and its officers, agents, directors and employees) for, and to hold it
harmless against, any and all loss, damage, claim, liability or expense
including taxes (other than taxes based on the income of the Trustee) incurred
without negligence or bad faith on the part of the Trustee and arising out of or
in connection with the acceptance or administration of this trust,
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including the costs and expenses of defending itself against any claim of
liability in the premises. The obligations of the Company under this Section
6.06 to compensate and indemnify the Trustee and to pay or reimburse the Trustee
for expenses, disbursements and advances shall constitute additional
indebtedness hereunder. Such additional indebtedness shall be secured by a lien
prior to that of the Debt Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the holders of particular Debt Securities.
Without prejudice to any other rights available to the Trustee
under applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d), Section
5.01(e) or Section 5.01(f), the expenses (including the reasonable charges and
expenses of its counsel) and the compensation for the services are intended to
constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency or other similar law. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity.
The provisions of this Section shall survive the termination of
this Indenture and the removal or resignation of the Trustee.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02, whenever
in the administration of the provisions of this Indenture the Trustee shall deem
it necessary or desirable that a matter be proved or established prior to taking
or omitting any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken or omitted by
it under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and
the Company shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act, subject to the penultimate paragraph of such
section.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia or a corporation
or other Person permitted to act as trustee by the Securities and Exchange
Commission authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000)
and subject to supervision or examination by federal, state, territorial, or
District of Columbia
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authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 6.09 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent records of condition so published.
The Company may not, nor may any person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed,
may at any time resign with respect to one or more or all series of Debt
Securities by giving written notice of such resignation to the Company and by
mailing notice thereof to the holders of the applicable series of Debt
Securities at their addresses as they shall appear on the Debt Security
Register. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor trustee or trustees with respect to the applicable series by
written instrument, in duplicate, executed by order of its Board of Directors,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed with respect to any series of Debt Securities and have accepted
appointment within 30 days after the mailing of such notice of resignation to
the affected Securityholders, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee, or any
Securityholder who has been a bona fide holder of a Debt Security or Debt
Securities of the applicable series for at least six months may, subject to the
provisions of Section 5.09, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor Trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(b) In case at any time any of the following shall occur --
(1) the Trustee shall fail to comply with the provisions of
Section 6.08 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Debt Security or
Debt Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, the
Company may remove the Trustee and appoint a successor Trustee by
written instrument,
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in duplicate, executed by order of the Board of Directors, one copy of
which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee, or, subject to the provisions of Section
5.09, any Securityholder who has been a bona fide holder of a Debt
Security or Debt Securities of the applicable series for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint successor Trustee.
(c) Upon prior written notice to the Company and the Trustee, the
holders of a majority in aggregate principal amount of the Debt Securities of
any series at the time outstanding may at any time remove the Trustee with
respect to such series and nominate a successor Trustee with respect to the
applicable series of Debt Securities, which shall be deemed appointed as
successor Trustee with respect to the applicable series unless within ten
Business Days after such nomination the Company objects thereto, in which case
the Trustee so removed or any Securityholder of the applicable series, upon the
terms and conditions and otherwise as in subsection (a) of this Section 6.10
provided, may petition any court of competent jurisdiction for an appointment of
a successor Trustee with respect to such series.
(d) Any resignation or removal of the Trustee and appointment of
a successor Trustee pursuant to any of the provisions of this Section 6.10 shall
become effective upon acceptance of appointment by the successor Trustee as
provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor Trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Company and to its predecessor Trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring Trustee with respect to all or any
applicable series shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations with respect to such series of its predecessor
hereunder, with like effect as if originally named as Trustee herein; but,
nevertheless, on the written request of the Company or of the successor Trustee,
the Trustee ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of Section 6.06, execute and deliver an instrument
transferring to such successor Trustee all the rights and powers of the Trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee thereunder. Upon
request of any such successor Trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor Trustee all such rights and powers. Any Trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such Trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.
If a successor Trustee is appointed with respect to the Debt
Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Debt Securities of any
applicable series shall execute and deliver an indenture
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supplemental hereto which shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Debt Securities of any series as to
which the predecessor Trustee is not retiring shall continue to be vested in the
predecessor Trustee, and shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the Trust hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be Trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee.
No successor Trustee shall accept appointment as provided in this
Section 6.11 unless at the time of such acceptance such successor Trustee shall
be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
Upon acceptance of appointment by a successor Trustee as provided
in this Section 6.11, the Company shall mail notice of the succession of such
Trustee hereunder to the holders of Debt Securities of any applicable series at
their addresses as they shall appear on the Debt Security Register. If the
Company fails to mail such notice within ten Business Days after the acceptance
of appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Company.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture any of the Debt Securities of any series
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee,
and deliver such Debt Securities so authenticated; and in case at that time any
of the Debt Securities of any series shall not have been authenticated, any
successor to the Trustee may authenticate such Debt Securities either in the
name of any predecessor hereunder or in the name of the successor Trustee; and
in all such cases such certificates shall have the full force which it is
anywhere in the Debt Securities of such series or in this Indenture provided
that the certificate of the Trustee shall have; provided, however, that the
right to adopt the certificate of authentication of any predecessor Trustee or
authenticate Debt Securities of any series in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
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SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by the
Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Debt Securities
of any series issued upon exchange or transfer thereof as fully to all intents
and purposes as though any such Authenticating Agent had been expressly
authorized to authenticate and deliver Debt Securities of such series; provided
that the Trustee shall have no liability to the Company for any acts or
omissions of the Authenticating Agent with respect to the authentication and
delivery of Debt Securities of any series. Any such Authenticating Agent shall
at all times be a corporation organized and doing business under the laws of the
United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $5,000,000 and being subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.14 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 6.14 without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign with respect to
one or more or all series of Debt Securities by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent with respect to one or more or
all series of Debt Securities by giving written notice of termination to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section 6.14, the
Trustee may, and upon the request of the Company shall, promptly appoint a
successor Authenticating Agent with respect to the applicable series eligible
under this Section 6.14, shall give written notice of such appointment to the
Company and shall
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mail notice of such appointment to all holders of the applicable series of Debt
Securities as the names and addresses of such holders appear on the Debt
Security Register. Any successor Authenticating Agent with respect to all or any
series upon acceptance of its appointment hereunder shall become vested with all
rights, powers, duties and responsibilities with respect to such series of its
predecessor hereunder, with like effect as if originally named as Authenticating
Agent herein.
The Company agrees to pay to any Authenticating Agent from time
to time reasonable compensation for its services. Any Authenticating Agent
shall have no responsibility or liability for any action taken by it as such in
accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Debt Securities of any
or all series may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action) the fact that at the time of taking any such action the holders of such
specified percentage have joined therein may be evidenced (a) by any instrument
or any number of instruments of similar tenor executed by such Securityholders
in person or by agent or proxy appointed in writing, or (b) by the record of
such holders of Debt Securities voting in favor thereof at any meeting of such
Securityholders duly called and held in accordance with the provisions of
Article Eight, or (c) by a combination of such instrument or instruments and any
such record of such a meeting of such Securityholders or (d) by any other method
the Trustee deems satisfactory.
If the Company shall solicit from the Securityholders of any
series any request, demand, authorization, direction, notice, consent, waiver or
other action or revocation of the same, the Company may, at its option, as
evidenced by an Officers' Certificate, fix in advance a record date for such
series for the determination of Securityholders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other action or
revocation of the same, but the Company shall have no obligation to do so. If
such a record date is fixed, such request, demand, authorization, direction,
notice, consent, waiver or other action or revocation of the same may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of outstanding Debt Securities of that series have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other action or revocation of the same, and for that purpose the
outstanding Debt Securities of that series shall be computed as of the record
date; provided, however, that no such authorization, agreement or consent by
such Securityholders on the record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
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SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05, proof
of the execution of any instrument by a Securityholder or his agent or proxy
shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Debt Securities shall be proved by
the Debt Security Register or by a certificate of the Debt Security registrar.
The Trustee may require such additional proof of any matter referred to in this
Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any Debt
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Security registrar may deem the person in whose name
such Debt Security shall be registered upon the Debt Security Register to be,
and may treat him as, the absolute owner of such Debt Security (whether or not
such Debt Security shall be overdue) for the purpose of receiving payment of or
on account of the principal of, premium, if any, and (subject to Section 2.05)
interest on such Debt Security and for all other purposes; and neither the
Company nor the Trustee nor any Authenticating Agent nor any paying agent nor
any transfer agent nor any Security registrar shall be affected by any notice to
the contrary. All such payments so made to any holder for the time being or upon
his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Debt Security.
SECTION 7.04. Debt Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Debt Securities have concurred in any direction, consent or
waiver under this Indenture, Debt Securities which are owned by the Company or
any other obligor on the Debt Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Debt Securities shall be disregarded and
deemed not to be outstanding for the purpose of any such determination; provided
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Debt Securities which the
Trustee actually knows are so owned shall be so disregarded. Debt Securities so
owned which have been pledged in good faith may be regarded as outstanding for
the purposes of this Section 7.04 if the pledgee shall establish to the
satisfaction of the Trustee the pledgee's right to vote such Debt Securities and
that the pledgee is not the Company or any such other obligor or Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In the case of a dispute as
to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee.
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SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Debt Securities specified
in this Indenture in connection with such action, any holder (in cases where no
record date has been set pursuant to Section 7.01) or any holder as of an
applicable record date (in cases where a record date has been set pursuant to
Section 7.01) of a Debt Security (or any Debt Security issued in whole or in
part in exchange or substitution therefor) the serial number of which is shown
by the evidence to be included in the Debt Securities the holders of which have
consented to such action may, by filing written notice with the Trustee at the
Principal Office of the Trustee and upon proof of holding as provided in Section
7.02, revoke such action so far as concerns such Debt Security (or so far as
concerns the principal amount represented by any exchanged or substituted Debt
Security). Except as aforesaid any such action taken by the holder of any Debt
Security shall be conclusive and binding upon such holder and upon all future
holders and owners of such Debt Security, and of any Debt Security issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Debt Security or any Debt Security issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders of any or all series may be called
at any time and from time to time pursuant to the provisions of this Article
Eight for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or
to give any directions to the Trustee, or to consent to the waiving of any
default hereunder and its consequences, or to take any other action authorized
to be taken by Securityholders pursuant to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of such Debt
Securities under any other provision of this Indenture or under applicable law.
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SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders of
any or all series to take any action specified in Section 8.01, to be held at
such time and at such place in the Borough of Manhattan, The City of New York,
as the Trustee shall determine. Notice of every meeting of the Securityholders
of any or all series, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be
mailed to holders of Debt Securities of each series affected at their addresses
as they shall appear on the Debt Securities Register for each series affected.
Such notice shall be mailed not less than 20 nor more than 180 days prior to the
date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of the
Board of Directors, or the holders of at least 10% in aggregate principal amount
of the Debt Securities of any or all series, as the case may be, then
outstanding, shall have requested the Trustee to call a meeting of
Securityholders of any or all series, as the case may be, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or such Securityholders
may determine the time and the place in said Borough of Manhattan for such
meeting and may call such meeting to take any action authorized in Section 8.01,
by mailing notice thereof as provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a Person
shall (a) be a holder of one or more Debt Securities with respect to which the
meeting is being held or (b) a Person appointed by an instrument in writing as
proxy by a holder of one or more such Debt Securities. The only Persons who
shall be entitled to be present or to speak at any meeting of Securityholders
shall be the Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Debt Securities
and of the appointment of proxies, and in regard to the appointment and duties
of inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting,
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as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
majority vote of the meeting.
Subject to the provisions of Section 7.04, at any meeting each
holder of Debt Securities with respect to which such meeting is being held or
proxy therefor shall be entitled to one vote for each $1,000 principal amount
(in the case of Original Issue Discount Securities, such principal amount to be
determined as provided in the definition "outstanding") of Debt Securities held
or represented by him; provided, however, that no vote shall be cast or counted
at any meeting in respect of any Debt Security challenged as not outstanding and
ruled by the chairman of the meeting to be not outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of Debt Securities held
by him or instruments in writing as aforesaid duly designating him as the Person
to vote on behalf of other Securityholders. Any meeting of Securityholders duly
called pursuant to the provisions of Section 8.02 or 8.03 may be adjourned from
time to time by a majority of those present, whether or not constituting a
quorum, and the meeting may be held as so adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of holders
of Debt Securities with respect to which such meeting is being held shall be by
written ballots on which shall be subscribed the signatures of such holders or
of their representatives by proxy and the serial number or numbers of the Debt
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more Persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was mailed as provided in Section 8.02. The record
shall show the serial numbers of the Debt Securities voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
SECTION 8.07. Quorum; Actions.
The Persons entitled to vote a majority in principal amount of
the Debt Securities of a series shall constitute a quorum for a meeting of
Securityholders of such series; provided, however, that if any action is to be
taken at such meeting with respect to a consent, waiver, request, demand,
notice, authorization, direction or other action which may be given by the
holders of not less than a specified percentage in principal amount of the Debt
Securities of a series, the Persons holding or representing such specified
percentage in principal amount of the
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Debt Securities of such series will constitute a quorum. In the absence of a
quorum within 30 minutes of the time appointed for any such meeting, the meeting
shall, if convened at the request of Securityholders of such series, be
dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the permanent chairman of the meeting prior
to the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the permanent chairman of the meeting
prior to the adjournment of such adjourned meeting. Notice of the reconvening of
any adjourned meeting shall be given as provided in Section 8.02, except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the Debt Securities of such series which shall
constitute a quorum.
Except as limited by the proviso in the first paragraph of
Section 9.02, any resolution presented to a meeting or adjourned meeting duly
reconvened at which a quorum is present as aforesaid may be adopted by the
affirmative vote of the Holders of a majority in principal amount of the Debt
Securities of that series; provided, however, that, except as limited by the
proviso in the first paragraph of Section 9.02, any resolution with respect to
any consent, waiver, request, demand, notice, authorization, direction or other
action which this Indenture expressly provides may be given by the holders of
not less than a specified percentage in principal amount of the Debt Securities
of a series may be adopted at a meeting or an adjourned meeting duly reconvened
and at which a quorum is present as aforesaid only by the affirmative vote of
the holders of a not less than such specified percentage in principal amount of
the Debt Securities of that series.
Any resolution passed or decision taken at any meeting of holders
of Debt Securities of any series duly held in accordance with this Section shall
be binding on all the Securityholders of such series, whether or not present or
represented at the meeting.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent of
Securityholders.
The Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect), without the consent of the
Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company,
pursuant to Article X hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the holders of all
or any series of Debt Securities (and if such
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covenants are to be for the benefit of less than all series of Debt Securities
stating that such covenants are expressly being included for the benefit of such
series) as the Board of Directors and the Trustee shall consider to be for the
protection of the holders of such Debt Securities, and to make the occurrence,
or the occurrence and continuance, of a default in any of such additional
covenants, restrictions or conditions a default or an Event of Default
permitting the enforcement of all or any of the several remedies provided in
this Indenture as herein set forth; provided, however, that in respect of any
such additional covenant, restriction or condition such supplemental indenture
may provide for a particular period of grace after default (which period may be
shorter or longer than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such default or may limit the remedies
available to the Trustee upon such default;
(c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture; provided that any such action shall not
adversely affect the interests of the holders of the Debt Securities of any
series;
(d) to add to, delete from, or revise the terms of Debt
Securities of any series as required by Section 2.07, including, without
limitation, any terms relating to the issuance, exchange, registration or
transfer of Debt Securities, including to provide for transfer procedures and
restrictions substantially similar to those applicable to the Capital Securities
relating to such series (for purposes of assuring that no registration of Debt
Securities of a series subject to transfer restrictions is required under the
Securities Act); provided that any such action shall not adversely affect the
interests of the holders of the Debt Securities of any series then outstanding
(it being understood, for purposes of this proviso, that transfer restrictions
on Debt Securities of a series substantially similar to those that were
applicable to Capital Securities of the related series shall not be deemed to
adversely affect the holders of the Debt Securities);
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debt Securities of one or
more series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.11;
(f) to make any change (other than as elsewhere provided in
this paragraph) that does not adversely affect the rights of any Securityholder
in any material respect; or
(g) to provide for the issuance of and establish the form and
terms and conditions of the Debt Securities of any series, to establish the form
of any certifications required to be furnished pursuant to the terms of this
Indenture or any series of Debt Securities, or to add to the rights of the
holders of any series of Debt Securities.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any
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property thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed by the Company and the Trustee without the consent
of the holders of any of the Debt Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. Supplemental Indentures with Consent of
Securityholders.
With the consent (evidenced as provided in Section 7.01) of the
holders of not less than a majority in aggregate principal amount of the Debt
Securities at the time outstanding of all series affected by such supplemental
indenture (voting as a class), the Company and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act, then in effect,
applicable to indentures qualified thereunder) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the holders of the Debt Securities of each series so affected;
provided, however, that no such supplemental indenture shall without the consent
of the holders of each Debt Security then outstanding and affected thereby (i)
extend the fixed maturity of any Debt Security of any series, or reduce the
principal amount thereof or any premium thereon, or reduce the rate or extend
the time of payment of interest thereon, or reduce any amount payable on
redemption thereof or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the Debt
Securities, or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof pursuant to Section 5.01 or the amount thereof provable in bankruptcy
pursuant to Section 5.02, or impair or affect the right of any Securityholder to
institute suit for payment thereof or impair the right of repayment, if any, at
the option of the holder, or (ii) reduce the aforesaid percentage of Debt
Securities the holders of which are required to consent to any such supplemental
indenture; provided, further, that if the Debt Securities of such series are
held by a PXRE Trust or a trustee of such trust, such supplemental indenture
shall not be effective until the holders of a majority in liquidation preference
of Trust Securities of the applicable Trust shall have consented to such
supplemental indenture; provided further, that if the consent of the
Securityholder of each outstanding Debt Security is required, such supplemental
indenture shall not be effective until each holder of the Trust Securities of
the applicable PXRE Trust shall have consented to such supplemental indenture.
A supplemental indenture which changes or eliminates any covenant
or other provision of this Indenture which has expressly been included solely
for the benefit of one or more particular series of Debt Securities, or which
modifies the rights of Securityholders of such series with respect to such
covenant or provision, shall be deemed not to affect the rights under this
Indenture or the Securityholders of any other series.
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Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders of all series affected thereby as
their names and addresses appear upon the Debt Security Register. Any failure of
the Trustee to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 9.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions of
this Article IX shall comply with the Trust Indenture Act, as then in effect to
the extent applicable to indentures qualified under the Trust Indenture Act.
Upon the execution of any supplemental indenture pursuant to the provisions of
this Article IX, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Debt Securities of each series affected thereby
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Debt Securities.
Debt Securities of any series authenticated and delivered after
the execution of any supplemental indenture affecting such series pursuant to
the provisions of this Article IX may bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company or the Trustee shall so determine, new Debt Securities of any series so
modified as to conform, in the opinion of the Trustee and the Board of Directors
of the Company, to any modification of this Indenture contained in any such
supplemental indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Debt Securities of any series then outstanding.
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SECTION 9.05. Evidence of Compliance of Supplemental Indenture to
be Furnished to Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02,
may receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant hereto complies with
the requirements of this Article IX. The Trustee may receive an Opinion of
Counsel as conclusive evidence that any supplemental indenture executed pursuant
to this Article IX is authorized or permitted by, and conforms to, the terms of
this Article IX and that it is proper for the Trustee under the provisions of
this Article IX to join in the execution thereof.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in the Debt Securities of
any series shall prevent any consolidation or merger of the Company with or into
any other corporation or corporations (whether or not affiliated with the
Company) or successive consolidations or mergers in which the Company or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or other disposition of the property of the Company or its
successor or successors as an entirety, or substantially as an entirety, to any
other corporation (whether or not affiliated with the Company, or its successor
or successors) authorized to acquire and operate the same; provided, however,
that the Company hereby covenants and agrees that, upon any such consolidation,
merger (where the Company is not the surviving corporation), sale, conveyance,
transfer or other disposition, the due and punctual payment of the principal of
(and premium, if any) and interest on all of the Debt Securities of all series
in accordance with the terms of each series, according to their tenor, and the
due and punctual performance and observance of all the covenants and conditions
of this Indenture with respect to each series or established with respect to
such series to be kept or performed by the Company, shall be expressly assumed
by supplemental indenture (which shall conform to the provisions of the Trust
Indenture Act, as then in effect, applicable to indentures qualified thereunder)
satisfactory in form to the Trustee executed and delivered to the Trustee by the
entity formed by such consolidation, or into which the Company shall have been
merged, or by the entity which shall have acquired such property.
SECTION 10.02. Successor Corporation to be Substituted.
In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
corporation, by supplemental indenture, executed and delivered to the Trustee
and reasonably satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the Debt
Securities and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed or observed by the
Company, such successor corporation shall succeed to and be substituted for the
Company, with the same effect as if it had
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been named herein as the Company, and thereupon the predecessor corporation
shall be relieved of any further liability or obligation hereunder or upon the
Debt Securities. Such successor corporation thereupon may cause to be signed,
and may issue either in its own name or in the name of PXRE Corporation, any or
all of the Debt Securities issuable hereunder which theretofore shall not have
been signed by the Company and delivered to the Trustee or the Authenticating
Agent; and, upon the order of such successor corporation instead of the Company
and subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee or the Authenticating Agent shall authenticate and
deliver any Debt Securities which previously shall have been signed and
delivered by the officers of the Company, to the Trustee or the Authenticating
Agent for authentication, and any Debt Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Trustee or
the Authenticating Agent for that purpose. All the Debt Securities so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Debt Securities theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such Debt Securities had been issued at
the date of the execution hereof.
SECTION 10.03. Opinion of Counsel to be Given to Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02,
may receive an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or other disposition, and any assumption,
permitted or required by the terms of this Article X complies with the
provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Debt Securities theretofore authenticated (other than any Debt
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.08) and not theretofore canceled,
or (b) all the Debt Securities not theretofore canceled or delivered to the
Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds, which shall be immediately due and payable, sufficient
to pay at maturity or upon redemption all of the Debt Securities (other than any
Debt Securities which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.08) not theretofore canceled
or delivered to the Trustee for cancellation, including principal and premium,
if any, and interest due or to become due to such date of maturity or redemption
date, as the case may be, but excluding, however, the amount of any moneys for
the payment of principal of, and premium, if any, or interest on the Debt
Securities (1) theretofore repaid to the Company in accordance with the
provisions of Section 11.04, or (2) paid to any state or to the District of
Columbia pursuant to its unclaimed property or similar laws, and if in either
case the Company shall also pay or cause to be paid all other sums
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payable hereunder by the Company, then this Indenture shall cease to be of
further effect except for the provisions of Sections 2.05, 2.07, 2.08, 3.01,
3.02, 3.04, 6.06, 6.10 and 11.04 hereof shall survive until such Debt Securities
shall mature and be paid. Thereafter, Sections 6,06, 6.10 and 11.04 shall
survive, and the Trustee, on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture, the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee in connection with this Indenture or the Debt
Securities.
SECTION 11.02. Deposited Moneys to be Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys deposited
with the Trustee pursuant to Section 11.01 shall be held in trust and applied by
it to the payment, either directly or through any paying agent (including the
Company if acting as its own paying agent), to the holders of the particular
Debt Securities for the payment of which such moneys have been deposited with
the Trustee, of all sums due and to become due thereon for principal, and
premium, if any, and interest.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys
then held by any paying agent of the Debt Securities (other than the Trustee)
shall, upon demand of the Company, be repaid to it or paid to the Trustee, and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying
agent for payment of the principal of, and premium, if any, or interest on Debt
Securities and not applied but remaining unclaimed by the holders of Debt
Securities for two years after the date upon which the principal of, and
premium, if any, or interest on such Debt Securities, as the case may be, shall
have become due and payable, shall be repaid to the Company by the Trustee or
such paying agent on written demand; and the holder of any of the Debt
Securities shall thereafter look only to the Company for any payment which such
holder may be entitled to collect and all liability of the Trustee or such
paying agent with respect to such moneys shall thereupon cease.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Debt Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest on any Debt Security, or for any claim based thereon or
otherwise in respect thereof, and no
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recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture, or in any such Debt Security,
or because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation of the
Company, either directly or through the Company or any successor corporation of
the Company, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Debt Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in this
Indenture contained by the Company shall bind its successors and assigns whether
so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company as the case may be, and
thereupon such power so surrendered shall terminate both as to the Company, and
as to any successor corporation.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Debt Securities on the Company may be given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company, with the Trustee for the
purpose) to the Company, 339 Thornall Street, Fourteenth Floor, Edison, NJ
08837, Attention: Treasurer, or such other address as may be designated by the
Company by notice duly given to the Trustee in accordance with this Section
13.04. Any notice, direction, request or demand by any Securityholder or the
Company to or upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or made in writing at the office of the
Trustee, addressed to the Trustee, 755 Broad Street, Newark, NJ 07102,
Attention: Corporate Trust Department, or such other address as may be
designated by the Trustee by notice
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duly given to the Company in accordance with this Section 13.04. When this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.
SECTION 13.05. Governing Law.
This Indenture and each Debt Security shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be governed by and construed in accordance with the laws of said State,
without regard to conflict of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07. Non-Business Days.
Subject to Section 2.03, in any case where the date of payment of
interest on or principal of the Debt Securities will be any day other than a
Business Day, the payment of such interest on or principal of the Debt
Securities need not be made on such date but may be made on the next succeeding
day which is a Business Day, with the same force and effect as if made on the
date of payment (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, with
the same force and effect as if made on the date of payment.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
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SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles
and sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument, and all signatures need not appear
on any one counterpart.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Debt Securities of any series shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Indenture or of such Debt Securities, but this Indenture and such Debt
Securities shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company or in connection with a transaction or
series of transactions consummated in compliance with Article X hereof, provided
that, in the event of any such assignment other than in connection with Article
X hereof where there is a successor to the Company, the Company will remain
liable for all such obligations. Subject to the foregoing, this Indenture is
binding upon and inures to the benefit of the parties hereto and their
respective successors and assigns. This Indenture may not otherwise be assigned
by the parties thereto.
SECTION 13.13. Acknowledgment of Rights.
The Company acknowledges that, with respect to any Debt
Securities held by any PXRE Trust or a trustee of such trust, if the
Institutional Trustee of such trust fails to enforce its rights under this
Indenture as the holder of the series of Debt Securities held as the assets of
such PXRE Trust any holder of Capital Securities may institute legal proceedings
directly against the Company to enforce such Institutional Trustee's rights
under this Indenture without first instituting any legal proceedings against
such Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Company to pay interest (or premium, if
any) or principal on the applicable series of Debt Securities on the date such
interest (or premium, if any) or principal is otherwise payable (or in the case
of redemption, on the redemption date), the Company acknowledges that a holder
of record of Capital Securities of the PXRE Trust that purchased the applicable
series of Debt Securities may directly institute a proceeding for
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enforcement of payment to such holder of the principal of (or premium, if any)
or interest on the applicable series of Debt Securities having a principal
amount equal to the aggregate liquidation amount of the Capital Securities of
such holder on or after the respective due date specified in the applicable
series of Debt Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Applicability of Article.
The provisions of this Article shall be applicable to the Debt
Securities of any series which are redeemable before their maturity or to any
sinking fund for the retirement of Debt Securities of a series except as
otherwise specified as contemplated by Section 2.03 for Debt Securities of such
series.
SECTION 14.02. Notice of Redemption; Selection of Debt
Securities.
In case the Company shall desire to exercise the right to redeem
all, or, as the case may be, any part of the Debt Securities of any series in
accordance with their terms, it shall fix a date for redemption and shall mail a
notice of such redemption at least 30 and not more than 60 days prior to the
date fixed for redemption to the holders of Debt Securities of such series so to
be redeemed as a whole or in part at their last addresses as the same appear on
the Debt Security Register. Such mailing shall be by first class mail. The
notice if mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice. In any
case, failure to give such notice by mail or any defect in the notice to the
holder of any Debt Security of a series designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Debt Security of such series.
Each such notice of redemption shall specify the CUSIP number of
the Debt Securities to be redeemed, the date fixed for redemption, the
redemption price at which Debt Securities of such series are to be redeemed, the
place or places of payment, that payment will be made upon presentation and
surrender of such Debt Securities, that interest accrued to the date fixed for
redemption will be paid as specified in said notice, and that on and after said
date interest thereon or on the portions thereof to be redeemed will cease to
accrue. If less than all the Debt Securities of such series are to be redeemed
the notice of redemption shall specify the numbers of the Debt Securities of
that series to be redeemed. In case any Debt Security of a series is to be
redeemed in part only, the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
date fixed for redemption, upon surrender of such Debt Security, a new Debt
Security or Debt Securities of that series in principal amount equal to the
unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying
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agents an amount of money sufficient to redeem on the redemption date all the
Debt Securities so called for redemption at the appropriate redemption price,
together with accrued interest to the date fixed for redemption.
If all, or less than all, the Debt Securities of a series are to
be redeemed, the Company will give the Trustee notice not less than 45 nor more
than 60 days, respectively, prior to the redemption date as to the aggregate
principal amount of Debt Securities of that series to be redeemed and the
Trustee shall select, in such manner as in its sole discretion it shall deem
appropriate and fair, the Debt Securities of that series or portions thereof (in
integral multiples of $1,000, except as otherwise set forth in the applicable
form of Debt Security) to be redeemed.
SECTION 14.03. Payment of Debt Securities Called for Redemption.
If notice of redemption has been given as provided in Section
14.02 or Section 14.04, the Debt Securities or portions of Debt Securities of
the series with respect to which such notice has been given shall become due and
payable on the date and at the place or places stated in such notice at the
applicable redemption price, together with interest accrued to the date fixed
for redemption, and on and after said date (unless the Company shall default in
the payment of such Debt Securities at the redemption price, together with
interest accrued to said date) interest on the Debt Securities or portions of
Debt Securities of any series so called for redemption shall cease to accrue. On
presentation and surrender of such Debt Securities at a place of payment
specified in said notice, the said Debt Securities or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption.
Upon presentation of any Debt Security of any series redeemed in
part only, the Company shall execute and the Trustee shall authenticate and make
available for delivery to the holder thereof, at the expense of the Company, a
new Debt Security or Debt Securities of such series of authorized denominations,
in principal amount equal to the unredeemed portion of the Debt Security so
presented.
SECTION 14.04. Mandatory and Optional Sinking Fund.
The minimum amount of any sinking fund payment provided for by
the terms of Debt Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of Debt Securities of any series is herein referred to as an
"optional sinking fund payment." The last date on which any such payment may be
made is herein referred to as a "sinking fund payment date."
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any Debt Securities of a series in cash, the Company may
at its option (a) deliver to the Trustee Debt Securities of that series
theretofore purchased by the Company and (b) may apply as a credit Debt
Securities of that series which have been redeemed either at the election of the
Company pursuant to the terms of such Debt Securities or through the application
of optional sinking fund payments pursuant to the next succeeding paragraph, in
each case in satisfaction of all or any part of any mandatory sinking fund
payment, provided that such Debt Securities have
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not been previously so credited. Each such Debt Security so delivered or applied
as a credit shall be credited at the sinking fund redemption price for such Debt
Securities and the amount of any mandatory sinking fund shall be reduced
accordingly. If the Company intends so to deliver or credit such Debt Securities
with respect to any mandatory sinking fund payment it shall deliver to the
Trustee at least 60 days prior to the next succeeding sinking fund payment date
for such series (a) a certificate signed by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer of the Company specifying the
portion of such sinking fund payment, if any, to be satisfied by payment of cash
and the portion of such sinking fund payment, if any, which is to be satisfied
by delivering and crediting such Debt Securities and the basis for such credit
and stating that such Debt Securities have not been previously so credited and
(b) any Debt Securities to be so delivered. All Debt Securities so delivered to
the Trustee shall be canceled by the Trustee and no Debt Securities shall be
authenticated in lieu thereof. If the Company fails to deliver such certificate
and Debt Securities at or before the time provided above, the Company shall not
be permitted to satisfy any portion of such mandatory sinking fund payment by
delivery or credit of Debt Securities.
At its option the Company may pay into the sinking fund for the
retirement of Debt Securities of any particular series, on or before each
sinking fund payment date for such series, any additional sum in cash as
specified by the terms of such series of Debt Securities. If the Company intends
to exercise its right to make any such optional sinking fund payment, it shall
deliver to the Trustee at least 60 days prior to the next succeeding sinking
fund payment date for such series a certificate signed by the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer of the Company
stating that the Company intends to exercise such optional right and specifying
the amount which the Company intends to pay on such sinking fund payment date.
If the Company fails to deliver such certificate at or before the time provided
above, the Company shall not be permitted to make any optional sinking fund
payment with respect to such sinking fund payment date. To the extent that such
right is not exercised in any year it shall not be cumulative or carried forward
to any subsequent year.
If the sinking fund payment or payments (mandatory or optional)
made in cash plus any unused balance of any preceding sinking fund payments made
in cash shall exceed $50,000 (or a lesser sum if the Company shall so request)
with respect to the Debt Securities of any particular series, it shall be
applied by the Trustee or one or more paying agents on the next succeeding
sinking fund payment date to the redemption of Debt Securities of such series at
the sinking fund redemption price together with accrued interest to the date
fixed for redemption. The Trustee shall select, in the manner provided in
Section 14.02, for redemption on such sinking fund payment date a sufficient
principal amount of Debt Securities of such series to absorb said cash, as
nearly as may be, and the Trustee shall, at the expense and in the name of the
Company, thereupon cause notice of redemption of Debt Securities of such series
to be given in substantially the manner and with the effect provided in Sections
14.02 and 14.03 for the redemption of Debt Securities of that series in part at
the option of the Company, except that the notice of redemption shall also state
that the Debt Securities of such series are being redeemed for the sinking fund.
Any sinking fund moneys not so applied or allocated by the Trustee or any paying
agent to the redemption of Debt Securities of that series shall be added to the
next cash sinking fund payment received by the Trustee or such paying agent and,
together with such
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payment, shall be applied in accordance with the provisions of this Section
14.04. Any and all sinking fund moneys held by the Trustee or any paying agent
on the maturity date of the Debt Securities of any particular series, and not
held for the payment or redemption of particular Debt Securities of such series,
shall be applied by the Trustee or such paying agent, together with other
moneys, if necessary, to be deposited sufficient for the purpose, to the payment
of the principal of the Debt Securities of that series at maturity.
On or before each sinking fund payment date, the Company shall
pay to the Trustee or to one or more paying agents in cash a sum equal to all
interest accrued to the date fixed for redemption on Debt Securities to be
redeemed on the next following sinking fund payment date pursuant to this
Section.
Neither the Trustee nor any paying agent shall redeem any Debt
Securities of a series with sinking fund moneys, and the Trustee shall not mail
any notice of redemption of Debt Securities for such series by operation of the
sinking fund, during the continuance of a default in payment of interest on such
Debt Securities or of any Event of Default (other than an Event of Default
occurring as a consequence of this paragraph), except that if the notice of
redemption of any Debt Securities shall theretofore have been mailed in
accordance with the provisions hereof, the Trustee or any paying agent shall
redeem such Debt Securities if cash sufficient for that purpose shall be
deposited with the Trustee or such paying agent for that purpose in accordance
with the terms of this Article XIV. Except as aforesaid, any moneys in the
sinking fund for such series at the time when any such default or Event of
Default shall occur and any moneys thereafter paid into the sinking fund shall,
during the continuance of such default or Event of Default, be held as security
for the payment of all such Debt Securities; provided, however, that in case
such Event of Default or default, shall have been cured or waived as provided
herein, such moneys shall thereafter be applied on the next succeeding sinking
fund payment date on which such moneys may be applied pursuant to the provisions
of this Section 14.04.
ARTICLE XV
SUBORDINATION OF DEBT SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of Debt
Securities issued hereunder and under any supplemental indenture or by any Board
Resolution ("Additional Provisions") by such Securityholder's acceptance thereof
likewise covenants and agrees, that all Debt Securities shall be issued subject
to the provisions of this Article XV; and each holder of a Debt Security,
whether upon original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions.
The payment by the Company of the principal of, and premium, if
any, and interest on all Debt Securities issued hereunder and under any
Additional Provisions shall, to the extent and in the manner hereinafter set
forth, be subordinated and junior in right of payment to the prior payment in
full of all Senior Indebtedness of the Company, whether outstanding at the date
of this Indenture or thereafter incurred.
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No provision of this Article XV shall prevent the occurrence of
any default or Event of Default hereunder.
The subordinization provisions of this Article XV shall be for
the benefit of (and may be relied upon by) any present or future holders of
Senior Indebtedness of the Company and may be enforced directly by such holders.
SECTION 15.02. Default on Senior Indebtedness; Standstill.
Upon the maturity of any Senior Indebtedness, by lapse of time,
acceleration or otherwise, no payment (whether in cash, securities or other
property) shall be made by or on behalf of the Company on account of the
principal of, premium, if any, or accrued and unpaid interest on the Debt
Securities unless and until all principal of, premium, if any, interest on and
other amounts due on such Senior Indebtedness shall first have been paid in full
in cash.
Upon the occurrence of any default in the payment of any
obligation on or with respect to any Senior Indebtedness, whether with respect
to scheduled payments or amounts due upon acceleration or otherwise, or upon the
occurrence of any other default with respect to Senior Indebtedness that
entitles the holders thereof to accelerate such Senior Indebtedness (any of the
foregoing, a "Senior Indebtedness Default"), then, in each case, no payment
(whether in cash, securities or other property) shall be made by or on behalf of
the Company on account of principal of, or premium, if any, or accrued and
unpaid interest on the Debt Securities unless and until (i) all Senior
Indebtedness Defaults shall have been cured or waived or shall have ceased to
exist or (ii) such Senior Indebtedness (as to which such defaults have arisen)
shall have been discharged or paid in full in cash.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraphs of this Section 15.02, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear (pro rata as to
each of such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders, as calculated by the Company), but only to
the extent that the holders of the Senior Indebtedness (or their representative
or representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.
Upon the occurrence of any Senior Indebtedness Default, unless
and until (i) all Senior Indebtedness Defaults shall have been cured or waived
or shall have ceased to exist or (ii) such Senior Indebtedness (as to which such
defaults have arisen) shall have been discharged or paid in full in cash, any
declaration that all or any portion of the unpaid principal amount of the Debt
Securities shall be due and payable pursuant to the provisions of this Indenture
and the Debt Securities hereof shall not be effective and the Trustee and the
holders of Debt Securities shall not initiate any judicial action to seek or
enforce collection of any amounts by the Company owing with respect to the Debt
Securities or any guaranty thereof (including without limitation
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initiating a filing of a petition for relief under the Bankruptcy Law) until the
earliest to occur of the following:
(a) any insolvency, bankruptcy, receivership, assignment for the
benefit of creditors, reorganization, arrangement with creditors or similar
proceeding of the Company, whether or not pursuant to the bankruptcy laws, or
any dissolution, winding up, liquidation or marshalling of the assets and
liabilities of the Company;
(b) the acceleration of the maturity of any Senior Indebtedness
or the initiation of any judicial proceedings by the holders of the Senior
Indebtedness to collect any Senior Indebtedness; and
(c) the expiration of five (5) Business Days following delivery
of notice to the Company of an intent to accelerate or pursue remedies, as the
case may be, if payments with respect to the Debt Securities have been
restricted under this Section 15.02 for more than two hundred forty (240) days
in the immediately preceding three hundred sixty-five (365) consecutive day
period.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal (and premium, if any) or interest on the Debt
Securities; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Securityholders or the Trustee would be entitled to receive from the
Company, except for the provisions of this Article XV, shall be paid by the
Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Securityholders
or by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the benefit of holders of such Senior Indebtedness,
before any payment or distribution is made to the Securityholders or to the
Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness is paid in full, or provision is made for
such payment in money in accordance with its terms, such
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payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness of the Company, remaining
unpaid to the extent necessary to pay such Senior Indebtedness in full in money
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XV with respect
to the Debt Securities to the payment of all Senior Indebtedness of the Company,
that may at the time be outstanding, provided that (i) such Senior Indebtedness
is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article X of this Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 15.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article X of this Indenture. Nothing in Section 15.02 or in this Section
15.03 shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.06 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness of the
Company, the Securityholders shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of cash, property
or securities of the Company, applicable to such Senior Indebtedness until the
principal of (and premium, if any) and interest on the Debt Securities shall be
paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any cash, property
or securities to which the Securityholders or the Trustee would be entitled
except for the provisions of this Article XV, and no payment over pursuant to
the provisions of this Article XV to or for the benefit of the holders of such
Senior Indebtedness by Securityholders or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness of the Company,
and the holders of the Debt Securities be deemed to be a payment or distribution
by the Company to or on account of such Senior Indebtedness. It is understood
that the provisions of this Article XV are and are intended solely for the
purposes of defining the relative rights
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of the holders of the Debt Securities, on the one hand, and the holders of such
Senior Indebtedness, on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture, any Additional Provisions or in the Debt Securities is intended to or
shall impair, as between the Company, its creditors other than the holders of
Senior Indebtedness of the Company, and the holders of the Debt Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Debt Securities the principal of (and premium, if any) and
interest on the Debt Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holders of the Debt Securities and creditors of the
Company, other than the holders of Senior Indebtedness of the Company, nor shall
anything herein or therein (subject to Section 15.02) prevent the Trustee or the
holder of any Debt Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article XV of the holders of such Senior Indebtedness in respect of
cash, property or securities of the Company, received upon the exercise of any
such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders, for
the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article XV.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XV and appoints the Trustee such Securityholder's
attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee at the Principal Office of the Trustee of any fact known
to the Company that would prohibit the making of any payment of monies to or by
the Trustee in respect of the Debt Securities pursuant to the provisions of this
Article XV. Notwithstanding the provisions of this Article XV or any other
provision of this Indenture or any Additional Provisions, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the Debt
Securities pursuant to the provisions of this Article XV, unless and until a
Responsible Officer of the Trustee at the Principal Office of the Trustee shall
have received written notice thereof from the Company or a
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holder or holders of Senior Indebtedness or from any trustee therefor; and
before the receipt of any such written notice, the Trustee, subject to the
provisions of Article VI of this Indenture, shall be entitled in all respects to
assume that no such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section 15.06 at least two
Business Days prior to the date upon which by the terms hereof any money may
become payable for any purpose (including, without limitation, the payment of
the principal of (or premium, if any) or interest on any Debt Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purposes for which they were received, and shall not be affected by any notice
to the contrary that may be received by it within two Business Days prior to
such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee or representative on behalf of such
holder), to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article XV, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article XV, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article XV in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture or any Additional Provisions shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture or any Additional Provisions
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of such Senior Indebtedness and, subject to the provisions of
Article VI of this Indenture, the Trustee shall not be liable to any holder of
such Senior Indebtedness if it shall pay over or deliver to Securityholders, the
Company or any other Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.06.
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SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company, or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company, with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Debt Securities to the holders
of such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company, and any other Person.
First Union National Bank hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions herein above set
forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed by their respective officers thereunto duly authorized, as of the day
and year first above written.
PXRE CORPORATION
By: /s/ Gerald L. Radke
--------------------------------
Name: Gerald L. Radke
Title: President
FIRST UNION NATIONAL BANK, as Trustee
By: /s/ Rick Barnes
--------------------------------
Name: Rick Barnes
Title: Assistant Vice President
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------------------------------------
FIRST SUPPLEMENTAL INDENTURE
between
PXRE CORPORATION, as Issuer,
and
FIRST UNION NATIONAL BANK, as Trustee
Dated as of January 29, 1997
------------------------------------
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS..............................................................2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES...........................4
ARTICLE III
REDEMPTION OF THE DEBENTURES.............................................9
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD....................................13
ARTICLE V
EXPENSES AND GUARANTEE..................................................14
ARTICLE VI
FORM OF DEBENTURE.......................................................15
ARTICLE VII
MISCELLANEOUS...........................................................25
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FIRST SUPPLEMENTAL INDENTURE, dated as of January 29, 1997 (the
"First Supplemental Indenture"), between PXRE Corporation, a Delaware
corporation (the "Company") and First Union National Bank, as trustee (the
"Trustee"), under the Indenture dated as of January 29, 1997 between the Company
and the Trustee (as supplemented hereby and as may be supplemented from time to
time, the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the issuance of the Company's unsecured junior
subordinated debt securities to be issued from time to time in one or more
series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company
desires to provide for the establishment of a series of its Debt Securities to
be known as 8.85% Junior Subordinated Deferrable Interest Debentures due 2027
(the "Initial Debentures"), and to provide for, if and when issued in exchange
for the Initial Debentures pursuant to the Indenture and the Registration
Agreement (as defined herein), a series of its Debt Securities to be known as
8.85% Junior Subordinated Deferrable Interest Debentures due 2027 (the "Exchange
Debentures" and together with the Initial Debentures, the "Debentures"), the
form and substance of each such series of Debentures and the terms, provisions
and conditions thereof to be set forth as provided in the Indenture and this
First Supplemental Indenture;
WHEREAS, PXRE Capital Trust I, a Delaware statutory business
trust (the "Trust"), has offered for sale pursuant to an exemption from the
registration requirements of the Securities Act of 1933, $100,000,000 aggregate
liquidation amount of 8.85% Capital Trust Pass-through Securities (the "Initial
Capital Securities"), representing undivided beneficial interests in the assets
of the Trust and proposes to invest the proceeds from such offering, together
with the proceeds of the issuance and sale by the Trust to the Company of its
common securities, in $103,093,000 aggregate principal amount of the Debentures;
WHEREAS, pursuant to the Registration Agreement, the Trust may
offer and issue 8.85% Capital Trust Pass-through Securities (the "Exchange
Capital Securities" and together with the Initial Capital Securities, the
"Capital Securities") in exchange for the Initial Capital Securities; and
WHEREAS, the Company has requested that the Trustee execute and
deliver this First Supplemental Indenture; all requirements necessary to make
this First Supplemental Indenture a valid instrument in accordance with its
terms, and to make the Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company, have been performed; and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects;
NOW THEREFORE, in consideration of the purchase and acceptance of
the Initial Debentures by the holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of each series of
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when
used in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture
has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or
Article of this First Supplemental Indenture;
(e) headings are for convenience of reference only and do not
affect interpretation;
(f) the following terms have the meanings given to them in the
Declaration: (i) Business Day; (ii) Capital Security Certificate; (iii) Clearing
Agency; (iv) Delaware Trustee; (v) Depositary; (vi) Distribution; (vii)
Institutional Trustee; (viii) Purchase Agreement; (ix) Redemption Tax Opinion;
(x) Redemption Investment Company Opinion; (xi) Administrators; (xii)
Securities; (xiii) Tax Event; and (xiv) Investment Company Event;
(g) the following terms have the meanings given to them in this
Section 1.1(g):
"Additional Interest" shall have the meaning set forth in Section
2.5(c).
"Adjusted Treasury Rate" shall have the meaning set forth in
Section 3.1(b).
"Call Price" shall have the meaning set forth in Section 3.2.
"Comparable Treasury Issue" shall have the meaning set forth in
Section 3.1(b).
"Comparable Treasury Price" shall have the meaning set forth in
Section 3.1(b).
"Compounded Interest" shall have the meaning set forth in Section
4.1.
"Declaration" means the Amended and Restated Declaration of Trust
of the Trust, dated as of January 29, 1997.
"Deferred Interest" shall have the meaning set forth in Section
4.1.
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"Dissolution Event" means that the Trust is to be dissolved in
accordance with the Declaration, and the Debentures held by the Institutional
Trustee are to be distributed to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
"Extension Period" shall have the meaning set forth in Section
4.1.
"Global Debenture" shall have the meaning set forth in Section
2.4(a)(i).
"interest" shall include all interest payable on a series of
Debentures including any Additional Interest, Compounded Interest and Special
Payments, if applicable.
"Make-Whole Amount" shall have the meaning set forth in Section
3.1(b).
"Maturity Date" means February 1, 2027.
"Non-Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.4(a)(ii).
"Quotation Agent" shall have the meaning set forth in Section
3.1(b).
"Record Date" shall have the meaning set forth in the Debentures.
"Registration Agreement" means the Registration Rights Agreement,
dated January 29, 1997, relating to the Debentures and the other securities
described therein among the Company, the Trust and the initial purchasers named
therein.
"Reference Treasury Dealer" shall have the meaning set forth in
Section 3.1(b).
"Reference Treasury Dealer Quotations" shall have the meaning set
forth in Section 3.1(b).
"Registered Exchange Offer" has the meaning set forth in the
Registration Agreement.
"Shelf Registration Event" has the meaning set forth in Section
2.5(e)(ii).
"Special Payment" has the meaning set forth in Section
2.5(e)(iii).
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"Tax Contingency" means that the Company shall determine in good
faith that there is a reasonable likelihood that, or a material uncertainty as
to whether, consummation of the Registered Exchange Offer would result in an
adverse tax consequence to the Company.
"Treasury Rate" shall have the meaning set forth in Section
3.1(b).
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1
The Initial Debentures and the Exchange Debentures are hereby
authorized as two series of Debt Securities. The aggregate principal amount of
Debentures outstanding at any time shall not exceed $103,093,000 (except as set
forth in Section 2.03 of the Indenture). Upon receipt of a written order of the
Company for the authentication and delivery of a series of Debentures and
satisfaction of the requirements of Section 2.04 of the Indenture, the Trustee
shall authenticate (a) Initial Debentures for original issuance in an aggregate
principal amount not to exceed $103,093,000 (except as set forth in Section
2.03(2) of the Indenture) or (b) Exchange Debentures for issuance pursuant to a
Registered Exchange Offer for Initial Debentures in a principal amount equal to
the principal amount of Initial Debentures exchanged in such Registered Exchange
Offer.
The Initial Debentures shall be issued pursuant to an exemption
from registration under the Securities Act and the Restricted Securities Legend
shall appear thereon, unless otherwise determined by the Company in accordance
with applicable law. The Initial Debentures may not be transferred except in
compliance with the Restricted Securities Legend set forth in Section 2.07 of
the Indenture, unless otherwise determined by the Company in accordance with
applicable law. The Initial Debentures shall be issued in minimum denominations
of $100,000 and any integral multiples of $1,000 in excess thereof, and the
Exchange Debentures shall be issuable in minimum denominations of $1,000 and any
integral multiples of $1,000 in excess thereof.
SECTION 2.2
At the Maturity Date, the Debentures shall mature and the
principal thereof shall be due and payable together with all accrued and unpaid
interest thereon including Compounded Interest, Additional Interest and Special
Payments, if any.
SECTION 2.3
Except as provided in Section 2.4, Debentures of a series shall
be issued in fully registered certificated form without interest coupons.
Principal and interest on Debentures of a series issued in certificated form
will be payable, the transfer of such Debentures will be registrable and such
Debentures will be exchangeable for Debentures of such series bearing identical
terms and provisions at the office or agency of the Company in the Borough of
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Manhattan, The City of New York, or Newark, New Jersey, which office or agency
shall initially be the corporate trust office of the Trustee; provided, however,
that payment of interest may be made at the option of the Company by check
mailed to the holder of any Debenture at such address as shall appear in the
Debt Security Register for such series of Debentures or by wire transfer to an
account appropriately designated by such holder. Notwithstanding the foregoing,
so long as the holder of any Debentures of a series is the Institutional
Trustee, the payment of the principal of (and premium, if any) and interest
(including Compounded Interest, Additional Interest and Special Payments, if
any) on the Debentures held by the Institutional Trustee will be made at such
place and to such account as may be designated by the Institutional Trustee in
writing by notice to the Company.
SECTION 2.4
(a) In connection with a Dissolution Event,
(i) except as provided in clause (ii) of this sentence,
Debentures of a series in certificated form may be presented to the
Trustee by the Institutional Trustee in exchange for a Global Security
for such series in an aggregate principal amount equal to the aggregate
principal amount of all outstanding Debentures of such series (a "Global
Debenture"), to be registered in the name of The Depository Trust
Company, New York, New York, or its nominee (hereby designated to be the
Depositary for Debentures of such series), and delivered by the Trustee
to the Depositary or its custodian for crediting to the accounts of the
Depositary's participants pursuant to the instructions of the
Administrators of the Trust, which instructions shall be provided in
accordance with the terms of the Declaration; the Company upon any such
presentation shall execute a Global Debenture for such series in such
aggregate principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with the Indenture and this
First Supplemental Indenture; payments on the Debentures of a series
issued as a Global Debenture will be made to the Depositary;
(ii) if any Capital Securities of a series are not held by
the Clearing Agency or its nominee ("Non-Book-Entry Capital
Securities"), the Debentures in certificated form of the series held by
the Institutional Trustee corresponding to such Capital Securities of
such series may be presented to the Trustee by the Institutional Trustee
and any Capital Security Certificate which represents such
Non-Book-Entry Capital Securities will be deemed to represent beneficial
interests in Debentures so presented to the Trustee by the Institutional
Trustee having an aggregate principal amount equal to the aggregate
liquidation amount of such Non-Book-Entry Capital Securities until such
Capital Security Certificates are presented to the Debt Security
registrar for transfer or reissuance at which time such Capital Security
Certificates will be canceled and a Debenture of the series previously
held by the Trust registered in the name of the holder of the Capital
Security Certificate or the transferee of the holder of such Capital
Security Certificate, as the case may be, with an aggregate principal
amount equal to the aggregate liquidation amount of the Capital Security
Certificate canceled, will be executed by the Company and delivered to
the Trustee for authentication and delivery in
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accordance with the Indenture and this First Supplemental Indenture;
upon issue of such Debentures of such series, Debentures of such series
with an equivalent aggregate principal amount that were presented by the
Institutional Trustee to the Trustee will be deemed to have been
canceled; and
(iii) prior to the distribution of Debentures of a series
held by the Institutional Trustee to the holders of Securities of the
Trust, the Company and the Trustee shall enter into a supplemental
indenture pursuant to Article IX of the Indenture to provide for
transfer procedures and restrictions with respect to such Debentures of
such series substantially similar to those contained in the Declaration
with respect to Capital Securities of the corresponding series to the
extent applicable in the circumstances existing at the time of
distribution of Debentures of such series in connection with a
Dissolution Event for purposes of assuring that no registration of
Debentures of such series is required under the Securities Act.
(b) A Global Debenture may be transferred, in whole but not in
part, only 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 selected or approved by the Company or to a nominee of such
successor Depositary.
(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the Depositary
shall no longer be registered or in good standing under the Exchange Act or
other applicable statute or regulation, and a successor Depositary is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, the Company will
execute, and, subject to Article II of the Indenture, the Trustee, upon written
notice from the Company, will authenticate and make available for delivery,
Debentures of each series in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture of such series in exchange for such
Global Debenture. In addition, the Company may at any time determine that the
Debentures of a series shall no longer be represented by a Global Debenture. In
such event the Company will execute, and subject to Section 2.07 of the
Indenture, the Trustee, upon receipt of an Officers' Certificate evidencing such
determination by the Company, will authenticate and deliver Debentures of such
series in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Debenture of such series in exchange for such Global
Debenture. A Global Debenture shall also be exchangeable for Debentures in
definitive form upon the occurrence of an Event of Default. Upon the exchange of
a Global Debenture for Debentures in definitive registered form without coupons,
in authorized denominations, such Global Debenture shall be canceled by the
Trustee. Such Debentures in definitive registered form issued in exchange for
such Global Debenture shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Debentures to the Depositary for delivery to the Persons in
whose names such Debentures are so registered.
6
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SECTION 2.5
(a) The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable for any
period shorter than a full semiannual period for which interest is computed,
will be computed on the basis of the actual number of days elapsed in such a
period (assuming each full month elapsed in such period consists of 30 days). In
the event that any date on which interest is payable on the Debentures of a
series is not a Business Day, then payment of interest 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 date.
(b) The indebtedness evidenced by all Debentures of a series is
subordinate and junior in right of payment to the prior payment in full of all
present and future Senior Indebtedness and pari passu in right of payment with
all Debentures of each other series.
(c) If, at any time while the holder of any Debentures of a
series is the Institutional Trustee, the Trust is 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, the Company shall pay as additional interest
("Additional Interest") on the Debentures held by the Institutional Trustee,
such additional amounts as shall be required so that the net amounts received
and retained by the Trust after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust and the
Institutional Trustee would have received had no such taxes, duties, assessments
or other governmental charges been imposed.
(d) If an Initial Debenture is exchanged in a Registered Exchange
Offer prior to the Record Date for the first Interest Payment Date following
such exchange, accrued and unpaid interest, if any, on such Initial Debenture,
up to but not including the date of issuance of the Exchange Debenture or
Exchange Debentures issued in exchange for such Initial Debenture, shall be paid
on the first Interest Payment Date for such Exchange Debenture or Exchange
Debentures to the Securityholder or Securityholders of such Exchange Debenture
or Exchange Debentures on the first Record Date with respect to such Exchange
Debenture or Exchange Debentures. If an Initial Debenture is exchanged in a
Registered Exchange Offer subsequent to the Record Date for the first Interest
Payment Date following such exchange but on or prior to such Interest Payment
Date, then any such accrued and unpaid interest with respect to such Initial
Debenture and any accrued and unpaid interest on the Exchange Debenture or
Exchange Debentures issued in exchange for such Initial Debenture, through the
day before such Interest Payment Date, shall be paid on such Interest Payment
Date to the Securityholder of such Initial Debenture on such Record Date.
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(e) The following terms relate to Special Payments:
(i) Except as described in paragraph (ii), in the event
that either (A) the Exchange Offer Registration Statement (as such term
is defined in the Registration Agreement) is not filed with the
Securities and Exchange Commission (the "Commission") on or prior to the
120th day following the Closing Date (as such term is defined in the
Registration Agreement), (B) the Exchange Offer Registration Statement
is not declared effective by the Commission on or prior to the 180th day
following the Closing Date or (C) the Registered Exchange Offer is not
consummated or a Shelf Registration Statement (as such term is defined
in the Registration Agreement) is not declared effective by the
Commission on or prior to the 210th day following the Closing Date,
interest shall accrue on the Initial Debentures (in addition to the
stated interest on Initial Debentures) from and including the next day
following each of (1) such 120-day period in the case of clause (A)
above, (2) such 180-day period in the case of clause (B) above and (3)
such 210-day period in the case of clause (C) above. In each case, such
additional interest shall accrue at a rate per annum equal to 0.25% of
the principal amount of the Initial Debentures (determined daily). The
aggregate amount of additional interest payable pursuant to the above
provisions will in no event exceed 0.50% per annum of the principal
amount of the Initial Debentures (determined daily). Upon (X) the filing
of the Exchange Offer Registration Statement or the occurrence of a
Shelf Registration Event if applicable, after the 120-day period
described in clause (A) above, (Y) the effectiveness of the Exchange
Offer Registration Statement (or the filing of a Shelf Registration
Statement in the Event of a Shelf Registration Event, if applicable)
after the 180-day period described in clause (B) above or (Z) the
consummation of the Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after the 210-day period
described in clause (C) above (or the effectiveness of a Shelf
Registration Statement after the 240-day period specified below, in the
event of a Shelf Registration Event, if applicable), the additional
interest payable on the Initial Debentures, with respect to such clause
(A), (B) or (C), as the case may be, from the date of such filing,
effectiveness or consummation, as the case may be, shall cease to
accrue, and all accrued and unpaid Special Payments as of the occurrence
of (x), (y) and (z) shall be paid to the Holders of Initial Debentures
on the next Interest Payment Date.
(ii) In the event that on or before the 120th day
following the Closing Date, applicable law or applicable interpretations
of the staff of the Commission do not permit the Company and the Trust
to effect the Registered Exchange Offer, or if a Tax Contingency exists
(each, a "Shelf Registration Event"), then clauses (A) and (1) of
paragraph (i) shall not apply. To the extent that such a Shelf
Registration Event exists and the Company has filed a Shelf Registration
Statement covering resales of the Initial Debentures by the 180th day
following the Closing Date, then clauses (B) and (2) of paragraph (i)
shall not apply, and to the extent a Shelf Registration Event exists on
the 210th day following the Closing Date, the period specified in
clauses (C) and (3) of paragraph (i) will be 240 days.
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(iii) In the event that a Shelf Registration Statement is
declared effective pursuant to the terms of the Registration Agreement,
if the Company or the Trust fails to keep such Shelf Registration
Statement continuously effective for the period required by the
Registration Agreement, then from the next day following such time as
the Shelf Registration Statement is no longer effective until the
earlier of (A) the date that the Shelf Registration Statement is again
deemed effective, (B) the date that is the third anniversary of the
effective date (or, in the case of a Shelf Registration Statement filed
at the request of an Initial Purchaser (as such term is defined in the
Registration Agreement), the first anniversary of the effective date) or
(C) the date as of which all of the Initial Debentures are sold pursuant
to the Shelf Registration Statement or may be sold without registration
pursuant to Rule 144 under the Securities Act, interest shall accrue on
the Initial Debentures (in addition to the stated interest on the
Initial Debentures) at a rate per annum equal to 0.25% of the principal
amount of the Initial Debentures (determined daily).
(iv) Any additional interest that accrues with respect to
the Initial Debentures as provided in this paragraph is referred to as a
"Special Payment." For all purposes of the Indenture, this Supplemental
Indenture and the Initial Debentures, a Special Payment shall be treated
as interest and shall be payable in arrears on the same Interest Payment
Dates and to the Securityholders of record on the same record dates as
would be the case for stated interest.
SECTION 2.6
If at any time the holder of all Debentures of a series ceases to
be the Institutional Trustee and, at such time, the Capital Securities issued
by the Trust are rated by at least one nationally recognized statistical rating
agency, then the Company shall use its best efforts to obtain from at least one
nationally recognized statistical rating agency a rating for the Debentures of
such series.
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1
(a) If, at any time, a Tax Event should occur and be continuing,
the Company shall have the right to advance the stated maturity of the
Debentures 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
the Company experienced in such matters, after advancing the maturity date,
interest payable by the Company on the Debentures 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 the Company receives an opinion (a
"Redemption Tax Opinion") of a nationally recognized independent tax counsel to
the Company experienced in such matters, that, as a result
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of such Tax Event, there is more than an insubstantial risk that the Company
would be precluded from deducting the interest on the Debentures for United
States federal income tax purposes, even if a Tax Event Maturity Advancement
were effected, the Company shall have the right at any time, within 90 days
following the occurrence of such Tax Event, upon not less than 30 days' nor more
than 60 days' notice, to redeem the Debentures held by the Institutional
Trustee, 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 Price"), provided that (i) if at the time there is
available to the Company or the Trust the opportunity to eliminate, within the
90 Day Period and before any such notice is given, the adverse effects of such
Tax Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no adverse
effect on the Company, the Trust or the holders of the Securities and (ii) such
notice has not been given, the Company or the Trust shall pursue such
ministerial action in lieu of redemption. If Debentures are only partly redeemed
pursuant to this Section 3.1(a), Debentures shall be redeemed pro rata or by lot
or by any other method utilized by the Trustee. The Tax Event Redemption Price
shall be paid prior to 3:00 p.m., New York City time, on the date of such
redemption or such earlier time as the Company determines, provided that the
Company shall deposit with the Trustee an amount sufficient to pay the Tax Event
Redemption Price by 10:00 a.m., New York City time, on the date the Tax Event
Redemption Price is to be paid.
(b) Upon the occurrence of an Investment Company Event, the
Company shall have the right within 90 days following the occurrence of such
Investment Company Event, upon not less than 30 days' nor more than 60 days'
notice to redeem the Debentures, in whole or in part, for cash at (i) the
Make-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 (the "Investment Company Event
Redemption Price"). If Debentures are only partly redeemed pursuant to this
Section 3.1(b), Debentures shall be redeemed pro rata or by lot or by any other
method utilized by the Trustee. The Investment Company Event Redemption Price
shall be paid prior to 3:00 p.m., New York City time, on the date of such
redemption or such earlier time as the Company determines, provided that the
Company shall deposit with the Trustee an amount sufficient to pay the
Investment Company Event Redemption Price by 10:00 a.m., New York City time, on
the date the Investment Company Event Redemption price is to be paid.
The "Make-Whole Amount" will be equal to the greater of (i) 100% of the
principal amount of the Debentures to be redeemed 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 of such
Debentures on February 1, 2007, together with the present values of scheduled
payments of interest on such Debentures 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 less (b) accrued and unpaid interest on such Debentures
to the date of redemption.
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"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"), the Company
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 the
Company.
"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.
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"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) 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.
SECTION 3.2
Subject to the provisions of Article XIV of the Indenture, and in
addition to the rights set forth in Section 3.1 of this First Supplemental
Indenture, except as otherwise may be specified in this First Supplemental
Indenture, the Company shall have the right to redeem the Debentures, in whole
or in part, from time to time, on or after February 1, 2007, at the call prices
(expressed as a percentage of principal amount per Debenture being redeemed)
specified below:
If redeemed during the 12-month period:
Beginning February 1, Call Price
--------------------- ----------
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
and thereafter at 100% of the principal amount (each, a "Call Price"), plus in
each case accrued and unpaid interest thereon to the date of redemption.
Any redemption pursuant to the preceding paragraph will be made
upon not less than 30 days' nor more than 60 days' notice to the holder of the
relevant Debentures, at the Call Price plus any accrued and unpaid interest to
the date of such redemption. If Debentures are only partially redeemed pursuant
to this Section 3.2, Debentures shall be redeemed pro rata or by lot or by any
other method utilized by the Trustee. The Call Price (plus accrued and unpaid
interest, if any) shall be paid prior to 3:00 p.m., New York City time, on the
date of such redemption or at such earlier time as the Company determines,
provided that the Company shall deposit with the Trustee an amount sufficient to
pay the Call Price (plus accrued and unpaid interest, if any) by 10:00 a.m., New
York City time, on the date such Call Price is to be paid.
The Debentures are not entitled to the benefit of any sinking
fund.
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ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1
The Company shall have the right, at any time and from time to
time during the term of the Debentures, to defer payments of interest by
extending the interest payment period of the Debentures of a series for a period
not exceeding 10 consecutive semiannual periods (the "Extension Period"), during
which Extension Period no interest shall be due and payable; provided that (i)
no Extension Period may extend beyond the Maturity Date and (ii) no Extension
Period may commence or be extended so long as the Company is in default in the
payment of any interest upon any Debentures of such series or has not paid all
Deferred Interest from a prior completed Extension Period. To the extent
permitted by applicable law, interest on the Debentures of a series, the payment
of which has been deferred because of the extension of the interest payment
period pursuant to this Section 4.1, will bear interest thereon at a rate equal
to the original interest rate borne by the principal of the Debentures (without
regard to any increase or increases from time to time in respect of Additional
Interest or Special Payments, if any), compounded semiannually for each
semiannual period of the Extension Period ("Compounded Interest"). At the
termination of an Extension Period for the Debentures of a series or, if not an
Interest Payment Date, on the Interest Payment Date immediately following
termination of such Extension Period for the Debentures of such series, the
Company shall pay all interest accrued and unpaid on the Debentures, including
any Additional Interest and Compounded Interest (together, "Deferred Interest"),
which Deferred Interest shall be payable to the holders of the Debentures of
such series in whose names the Debentures are registered in the Debt Security
Register on the record date for the payment of interest on such Interest Payment
Date. Before the termination of Company may further extend such period, provided
that such period together with all such previous and further consecutive
extensions thereof shall not exceed 10 consecutive semiannual periods, or extend
beyond the Maturity Date. Upon the termination of any Extension Period and upon
the payment of all Deferred Interest then due, the Company may commence a new
Extension Period, subject to the foregoing requirements.
SECTION 4.2
(a) If the Institutional Trustee is the only registered holder of
the Debentures of a series at the time the Company initiates an Extension
Period, the Company shall give written notice to the Administrators, the
Institutional Trustee and the Trustee of its initiation of such Extension Period
one Business Day before the earlier of (i) the date on which distributions on
the Capital Securities of the corresponding series are payable, or (ii) the date
the Administrators are required to give notice to holders of the Capital
Securities of the corresponding series (or any national securities exchange or
other organization on which such Capital Securities are listed, if any) of the
record date or the distribution payment date, in each case with respect to
distributions on the Securities the payment of which is being deferred.
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(b) If the Institutional Trustee is not the only registered
holder of the Debentures of a series at the time the Company initiates an
Extension Period, the Company shall give the holders of the Debentures of such
series and the Trustee written notice of its initiation of such Extension Period
at least ten Business Days before the earlier of (i) the next succeeding
Interest Payment Date, or (ii) the date the Company is required to give notice
to holders of the Debentures of such series (or any national securities exchange
or other organization on which the Capital Securities of the corresponding
series are listed, if any) of the record or payment date of such interest, in
each case with respect to interest payments the payment of which is being
deferred.
ARTICLE V
EXPENSES AND GUARANTEE
SECTION 5.1
In connection with the offering, sale and issuance of the
Debentures of a series and in connection with the sale of any Securities by the
Trust, the Company, in its capacity as borrower with respect to the Debentures
of such series, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of Debentures of such series, including commissions to the underwriters
payable pursuant to the Purchase Agreement and compensation of the Trustee (and
its agents, attorneys or counsel) under the Indenture in accordance with the
provisions of Section 6.06 of the Indenture;
(b) pay all debts and other obligations (other than with respect
to the Securities) and costs and expenses of the Trust (including, without
limitation, costs and expenses relating to the organization of the Trust, the
offering, sale and issuance of the Securities (including commissions to the
underwriters in connection therewith), the fees and expenses of the
Institutional Trustee (and its agents, attorneys or counsel), the Delaware
Trustee and each Administrator, the costs and expenses relating to the operation
of the Trust, including, without limitation, reasonable costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets of the Trust);
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration or the Purchase Agreement or
the Registration Agreement; and
(d) pay any and all taxes, duties, assessments or governmental
charges of whatever nature and all liabilities, costs and expenses with respect
thereto (other than United States withholding taxes attributable to the Trust or
assets of the Trust) to which the Trust may become subject.
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SECTION 5.2
Upon termination of the Declaration or the removal or resignation
of the Delaware Trustee or the Institutional Trustee, as the case may be,
pursuant to Section 5.7 of the Declaration, the Company shall pay to the
Delaware Trustee or the Institutional Trustee, as the case may be, all amounts
owing to the Delaware Trustee or the Institutional Trustee, as the case may be,
under Sections 10.4 and 10.6 of the Declaration accrued to the date of such
termination, removal or resignation.
ARTICLE VI
FORM OF DEBENTURE
The Debentures and the Trustee's certificate of authentication to
be endorsed thereon are to be substantially in the following forms and are
expressly made a part of this First Supplemental Indenture:
(FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT: This
Debenture is a Global Debenture within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depositary or a nominee of a
Depositary. This Debenture is exchangeable for Debentures of this series
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Indenture, and no transfer of this
Debenture (other than a transfer of this Debenture as a whole 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) may be registered except in limited circumstances.
Unless this Debenture is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any Debenture of this series issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
The Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
[IF THIS DEBENTURE IS ONE OF A SERIES ORIGINALLY ISSUED PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AS SPECIFIED
PURSUANT TO SECTION 2.03 OF THE INDENTURE, INSERT THE FOLLOWING UNLESS OTHERWISE
DETERMINED BY THE COMPANY -- THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS DEBENTURE NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY
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BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER OF THIS DEBENTURE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH DEBENTURE PRIOR TO THE DATE WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
PXRE CORPORATION (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS DEBENTURE (OR ANY PREDECESSOR OF THIS DEBENTURE) (THE "RESALE
RESTRICTIONS TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE DEBENTURES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
DEBENTURE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH
MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS DEBENTURE AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS. DEBENTURES OWNED BY A PURCHASER
THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN
BOOK-ENTRY FORM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER
AFTER THE RESALE RESTRICTIONS TERMINATION DATE. DEBENTURES WILL BE ISSUED AND
MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT
LESS THAN $100,000 (AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF). ANY
SUCH TRANSFER OF DEBENTURES IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF
LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH DEBENTURES FOR
ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF PAYMENTS ON SUCH
DEBENTURES, AND SUCH
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TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH DEBENTURES.]
No. _________________
PXRE CORPORATION
8.85% JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURE DUE 2027
PXRE CORPORATION, a Delaware corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to and all capitalized terms which are not defined herein are used herein as
defined in the Indenture), for value received, hereby promises to pay to
____________ or registered assigns, the principal sum of ________________
Dollars ($_________ ) on February 1, 2027, and to pay interest on said principal
sum from January 29, 1997, or from the most recent interest payment date (each
such date, an "Interest Payment Date") to which interest has been paid or duly
provided for, semiannually (subject to deferral as set forth herein) in arrears
on February 1 and August 1 of each year commencing August 1, 1997, at the rate
of 8.85% per annum until the principal hereof shall have become due and payable,
and on any overdue principal and premium, if any, and (without duplication and
to the extent that payment of such interest is enforceable under applicable law)
on any overdue installment of interest at the same rate per annum compounded
semiannually. The amount of interest payable on any Interest Payment Date shall
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 this Debenture is not a Business
Day, then payment of 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. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debenture (or one or more Predecessor
Securities) is registered at the close of business on the Record Date for such
interest installment, [which shall be the close of business on the Business Day
next preceding such Interest Payment Date]. [IF PURSUANT TO THE PROVISIONS OF
THE INDENTURE THE DEBENTURES OF THIS SERIES ARE NO LONGER REPRESENTED SOLELY BY
A GLOBAL DEBENTURE, SUBSTITUTE THE FOLLOWING FOR THE FOREGOING BRACKETED TEXT --
which shall be the close of business on the 15th Business Day next preceding
such Interest Payment Date.] Any such interest installment not punctually paid
or duly provided for shall forthwith cease to be payable to the registered
holders on such Record Date and may be paid to the Person in whose name this
Debenture (or one or more Predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered holders
of this series of Debentures not less than 10 days prior to such special record
date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Debentures of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in the Indenture. In the event the
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Debentures of this series are issued in non-book entry form, the principal of
(and premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered holder at such address
as shall appear in the Debt Security Register or by wire transfer to an account
appropriately designated by the holder hereof. Notwithstanding the foregoing, so
long as the holder of this Debenture is the Institutional Trustee, the payment
of the principal of (and premium, if any) and interest on this Debenture will be
made at such place and to such account as may be designated by the Institutional
Trustee.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness and subject to certain
limitations on the ability to pursue remedies upon default, and this Debenture
is issued subject to the provisions of the Indenture with respect thereto. Each
holder of this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his, its or
her behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination so provided and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each holder hereof, by his
or her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
If this Debenture is exchanged in a Registered Exchange Offer
prior to the Record Date for the first Interest Payment Date following such
exchange, accrued and unpaid interest, if any, on this Debenture, up to but not
including the date of issuance of the Exchange Debenture or Exchange Debentures
issued in exchange for this Debenture, shall be paid on the first Interest
Payment Date for such Exchange Debenture or Exchange Debentures to the
Securityholder or Securityholders of such Exchange Debenture or Exchange
Debentures on the first Record Date with respect to such Exchange Debenture or
Exchange Debentures. If this Debenture is exchanged in a Registered Exchange
Offer subsequent to the Record Date for the first Interest Payment Date
following such exchange but on or prior to such Interest Payment Date, then any
such accrued and unpaid interest with respect to this Debenture and any accrued
and unpaid interest on the Exchange Debenture or Exchange Debentures issued in
exchange for this Debenture, through the day before such Interest Payment Date,
shall be paid on such Interest Payment Date to the Securityholder of this
Debenture on such Record Date.
If 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, the Company shall pay as additional interest on the Debentures held
by the Institutional Trustee 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
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Institutional Trustee would have received had no such taxes, duties, assessments
or other governmental charges been imposed. [IF THIS DEBENTURE IS AN INITIAL
DEBENTURE INSERT -- In addition, the interest rate payable on the Debentures of
this series is subject to increase as provided in the Indenture if, pursuant to
the Registration Agreement, except as provided in the following paragraph,
either (A) the Exchange Offer Registration Statement (as such term is defined in
the Registration Agreement) is not filed with the Securities and Exchange
Commission (the "Commission") on or prior to the 120th day following the Closing
Date (as such term is defined in the Registration Agreement), (B) the Exchange
Offer Registration Statement is not declared effective by the Commission on or
prior to the 180th day following the Closing Date or (C) the Registered Exchange
Offer (as such term is defined in the Registration Agreement) is not consummated
or a Shelf Registration Statement (as such term is defined in the Registration
Agreement) is not declared effective by the Commission on or prior to the 210th
day following the Closing Date.
If a Shelf Registration Event shall exist on or before the 120th
day following the date of original issuance of the Debentures, the Company and
the Trust may, at the Company's option and cost, in lieu of the commencement of
the Exchange Offer, file and use their best efforts to cause to be declared
effective a Shelf Registration Statement covering resales of the Initial
Debentures and use their best efforts to keep effective the Shelf Registration
Statement until three years after its effective date. To the extent that such a
Shelf Registration Event exists on the 120th day following the Closing Date,
then clause (A) of the preceding paragraph shall not apply. To the extent that
such a Shelf Registration Event exists and the Company has filed a Shelf
Registration Statement covering resales of the Initial Debentures by the 180th
day following the Closing Date, then clause (B) of the preceding paragraph shall
not apply, and to the extent a Shelf Registration Event exists on the 210th day
following the Closing Date, the period specified in clause (C) of the preceding
paragraph will be 240 days. The interest rate payable on the Debentures of this
series is also subject to adjustment in certain circumstances if a Shelf
Registration Statement filed pursuant to the Registration Agreement is not kept
continuously effective for a specified period, as provided in the Indenture.]
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
PXRE CORPORATION
By:______________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated
therein referred to in the within-mentioned Indenture.
Dated ________________
FIRST UNION NATIONAL BANK, as Trustee
By_____________________________________
Authorized Officer
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(REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debt
Securities of the Company, all issued or to be issued in one or more series
under and pursuant to an Indenture dated as of January 29, 1997, duly executed
and delivered between the Company and First Union National Bank, as Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture dated as of
January 29, 1997, between the Company and the Trustee (the Indenture as so
supplemented and as may be supplemented from time to time, the "Indenture"), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of this series
of Debt Securities (referred to herein as the "Debentures") of which this
Debenture is a part. The summary of the terms of this Debenture contained herein
does not purport to be complete and is qualified by reference to the Indenture.
By the terms of the Indenture, the Debt Securities are issuable in series that
may vary as to amount, date of maturity, rate of interest and in other respects
as provided in the Indenture. This series of Debentures is limited in aggregate
principal amount as specified in said First Supplemental Indenture.
Upon the occurrence and continuation of a Tax Event or an
Investment Company Event, in certain circumstances, this Debenture may become
due and payable, in whole, or in part, a) in the case of a Tax Event, at a
redemption price equal to 100% of the principal amount being redeemed and b) in
the case of an Investment Company Event (i) at the Make-Whole Amount in the case
of 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, together
with any accrued and unpaid interest thereon, which shall be paid prior to 3:00
p.m., New York City time, on the date of such redemption or at such earlier time
as the Company determines. The Company shall also have the right to redeem this
Debenture at the option of the Company, in whole or in part, at any time or from
time to time on or after February 1, 2007 (an "Optional Redemption"), at the
call price (expressed as a percentage of the principal amount being redeemed)
specified below:
If redeemed during the 12-month period:
Beginning February 1, Call Price
--------------------- ----------
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
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and thereafter at 100% of the principal amount (each, a "Call Price"), plus in
each case accrued and unpaid interest thereon to the date of redemption.
Any redemption pursuant to the preceding paragraph will be made
upon not less than 30 days' nor more than 60 days' notice, at the Call Price,
plus any accrued and unpaid interest to the date of such redemption. If the
Debentures are only partially redeemed by the Company, the Debentures will be
redeemed pro rata or by lot or by any other method utilized by the Trustee;
provided that if, at the time of redemption, the Debentures are registered as a
Global Debenture, the Depositary shall determine the principal amount of such
Debentures held by each of its direct participants to be redeemed in accordance
with its procedures.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for the unredeemed portion hereof will be
issued in the name of the holder hereof upon the cancellation hereof.
In case an Event of Default shall have occurred and be
continuing, the principal of all of the Debentures may be declared (and upon
such declaration shall become) due and payable, in the manner, with the effect
and subject to the conditions provided in the Indenture, including the
subordination provisions thereof.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debt Securities of any series at the time
outstanding affected thereby, as specified in the Indenture, to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of the Debt Securities; provided, however, that no such supplemental indenture
shall among other things, without the consent of the holders of each Debt
Security then outstanding and affected thereby (i) extend the fixed maturity of
any Debt Securities of any series, 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 Debt
Securities payable in any coin or currency other than that provided in the Debt
Securities, or impair or affect the right of any holder of Debt Securities to
institute suit for the payment thereof, or (ii) reduce the aforesaid percentage
of Debt Securities, the holders of which are required to consent to any such
supplemental indenture; provided, further, that if the Debt Securities of such
series are held by a PXRE Trust or a trustee of such trust, such supplemental
indenture shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the applicable Trust shall have consented to
such supplemental indenture; provided further, that if the consent of the
Securityholder of each outstanding Debt Security is required, such supplemental
indenture shall not be effective until each holder of the Trust Securities of
the applicable PXRE Trust shall have consented to such supplemental indenture.
The Indenture also contains provisions permitting the holders of a majority in
aggregate principal amount of the Debt Securities of a series at the time
outstanding affected thereby as provided in the Indenture, on behalf of all of
the holders of the Debt
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Securities of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default in
the payment of the principal of or premium, if any, or interest on any of the
Debt Securities of such series. Any such consent or waiver by the registered
holder of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Debenture and of any Debenture issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debenture at the time and place and at the
rate and in the money herein prescribed.
The Company shall have the right, subject to certain conditions,
at any time during the term of the Debentures and from time to time to extend
the interest payment period of the Debentures for up to 10 consecutive
semiannual periods (each, an "Extension Period") as provided in the Indenture.
Notwithstanding the foregoing, no Extension Period may extend beyond the
maturity date of the Debentures. In the event that the Company exercises its
right to extend an interest payment period, then during any Extension Period,
subject to certain exceptions as provided in the Indenture, (i) the Company
shall not declare or pay any 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, or make any
guarantee payments (other than payments on the Capital Securities Guarantee or
the Common Securities Guarantee for the Trust) with respect to the foregoing and
(ii) the Company 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 the Company that rank pari passu with or junior to the Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the requirements
contained in the Indenture.
As provided in the Indenture and subject to certain limitations
herein and therein set forth, this Debenture is transferable by the registered
holder hereof on the Debt Security Register of the Company, upon surrender of
this Debenture for registration of transfer at the office or agency of the
Trustee in the City and State of New York or in Newark, New Jersey accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Debentures of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
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Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and the Debt Security registrar may deem and treat the
registered holder hereof as the absolute owner hereof (whether or not this
Debenture shall be overdue and notwithstanding any notice of ownership or
writing hereon) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any Authenticating Agent
nor any paying agent nor any transfer agent nor any Debt Security registrar
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, the
premium, if any, on or the interest on this Debenture, or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, stockholder, officer or director, past,
present or future, as such, of the Company or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
The Debentures of this series are issuable only in registered
form without coupons. A Global Debenture is exchangeable for Debentures in
definitive form only under certain limited circumstances set forth in the
Indenture. As provided in the Indenture and subject to certain limitations
herein and therein set forth, Debentures of this series are exchangeable for a
like aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the holder surrendering the same.
[IF THIS DEBENTURE IS AN INITIAL DEBENTURE INSERT -- The
Debentures of this series are issuable only in minimum denominations of $100,000
and any integral multiple of $1,000 in excess thereof. The Debentures of this
series may be transferred only in blocks having an aggregate principal amount of
not less than $100,000. Any transfer of Debentures of this series in a block
having an aggregate principal amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any transferee of Debentures of this
series having an aggregate principal amount of less than $100,000 shall be
deemed not to be the holder of such Debentures for any purpose, including, but
not limited to, the receipt of payments on such Debentures, and such transferee
shall be deemed to have no interest whatsoever in such Debentures.]
All terms used in this Debenture that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1
The Indenture, as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
SECTION 7.2
The recitals herein contained are made by the Company and not by
the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this First Supplemental Indenture.
SECTION 7.3
This First Supplemental Indenture and each Debenture shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be governed by and construed in accordance with the laws of
said State, without regard to conflict of laws principles thereof.
SECTION 7.4
In case any one or more of the provisions contained in this First
Supplemental Indenture or in a series of Debentures shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
First Supplemental Indenture or of such series of the Debentures, but this First
Supplemental Indenture and such series of the Debentures shall be construed as
if such invalid or illegal or unenforceable provision had never been contained
herein or therein.
This First Supplemental Indenture may be executed in any number
of counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument, and all signatures need not
appear on any one counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, as of the day and year first above
written.
PXRE CORPORATION
By: /s/ Gerald L. Radke
-------------------------------
Name: Gerald L. Radke
Title: President
FIRST UNION NATIONAL BANK, as Trustee
By: /s/ Rick Barnes
-------------------------------
Name: Rick Barnes
Title: Assistant Vice President
26
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==============================================
AMENDED AND RESTATED DECLARATION
OF TRUST
PXRE CAPITAL TRUST I
Dated as of January 29, 1997
==============================================
<PAGE>
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust Indenture
Act of 1939, as amended Section of Declaration
- ----------------------- ----------------------
310(a) 5.3(a)
310(c) Inapplicable
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(f) Inapplicable
315(a) 3.9(b)
315(c) 3.9(a)
315(d) 3.9(a)
316(a) Annex I
316(b) Annex I
316(c) 3.6(e)
_____________________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
PXRE CAPITAL TRUST I
January 29, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated
and effective as of January 29, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein), the Administrators (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the Trust to be
issued pursuant to this Declaration;
WHEREAS, the Delaware Trustee, the Administrators and the Sponsor
established PXRE Capital Trust I (the "Trust"), a business trust under the
Delaware Business Trust Act pursuant to a Declaration of Trust dated as of
January 21, 1997 (the "Original Declaration"), and a Certificate of Trust filed
with the Secretary of State of the State of Delaware on January 21, 1997, for
the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees, Administrators and the Sponsor, by
this Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Administrators and the Institutional Trustee declare that all assets contributed
to the Trust will be held in trust for the benefit of the holders, from time to
time, of the securities representing undivided beneficial interests in the
assets of the Trust issued hereunder, subject to the provisions of this
Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
-----------
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
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(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Administrative Action" has the meaning set forth in paragraph
4(c) of Annex I.
"Administrators" means each of Gerald L. Radke, Sanford M. Kimmel
and Joan L. Cadd solely in such Person's capacity as Administrator of the Trust
created and continued hereunder and not in such Person's individual capacity, or
such Administrator's successor in interest in such capacity, or any successor
appointed as herein provided.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(b) such Person shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of such Person of any substantial part of its property, or
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shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.
"Book Entry Interest" means a beneficial interest in one or more
Global Capital Securities, ownership and transfers of which shall be maintained
and made through book entries by a Clearing Agency as described in Section 9.2.
"Business Day" means 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 any applicable law to
close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Capital Securities Guarantee" means the guarantee agreement to
be dated as of January 29, 1997, of the Sponsor in respect of the Capital
Securities.
"Capital Securities" means the Initial Capital Securities and
Exchange Capital Securities.
"Capital Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Certificate" means any certificate evidencing Securities.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Capital Security and which shall
undertake to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the "Closing Date" under the Purchase
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section 7.1(a).
3
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"Common Securities Guarantee" means the guarantee agreement to be
dated as of January 29, 1997 of the Sponsor in respect of the Common Securities.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-3.
"Company Indemnified Person" means (a) any Administrator; (b)
any Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at 765 Broad Street, Newark,
N.J. 07102.
"Covered Person" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means PXRE Corporation, a Delaware
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means First Union National Bank, a national
banking association, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the Initial Debentures and Exchange
Debentures.
"Definitive Capital Securities" means Initial Definitive Capital
Securities and Exchange Definitive Capital Securities.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Depositary" means, with respect to the Capital Securities, DTC,
or another Clearing Agency.
"Direct Action" has the meaning set forth in Section 3.8(e).
"Distribution" has the meaning set forth in Annex I.
"Distribution Payment Date" has the meaning set forth in Annex I.
"DTC" means The Depository Trust Company, New York, New York, the
initial Clearing Agency.
4
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"Event of Default" in respect of the Securities means an
Indenture Event of Default has occurred and is continuing in respect of the
Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Exchange Capital Securities" has the meaning specified in
Section 7.1(a).
"Exchange Capital Security Certificate" means a certificate
representing an Exchange Capital Security substantially in the form of Exhibit
A-2.
"Exchange Certificate" means a Common Security Certificate or an
Exchange Capital Security Certificate.
"Exchange Debentures" means 8.85% Junior Subordinated Deferrable
Interest Debentures due 2027 to be issued by the Debenture Issuer under the
Indenture to be exchanged with the Initial Debentures pursuant to the
Registration Rights Agreement.
"Exchange Definitive Capital Securities" means any Exchange
Securities in definitive form issued by the Trust.
"Exchange Global Capital Securities" means any Exchange Capital
Securities in global form issued by the Trust.
"Exchange Securities" means Common Securities and Exchange
Capital Securities.
"Extension Period" has the meaning set forth in paragraph 2(b) of
Annex I.
"Fiduciary Indemnified Person" shall mean the Institutional
Trustee, the Delaware Trustee, any Affiliate of the Institutional Trustee or the
Delaware Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee and the Delaware Trustee.
"Global Capital Securities" means any Initial Global Capital
Securities and Exchange Global Capital Securities.
"Holder" means a Person in whose name a Certificate representing
a Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"IAI" has the meaning set forth in Section 7.3(c).
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
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"Indenture" means the Indenture dated as of January 29, 1997,
among the Debenture Issuer and the Debenture Trustee, as supplemented by any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Indenture Event of Default" means an Event of Default as defined
in the Indenture.
"Initial Capital Securities" has the meaning specified in Section
7.1(a).
"Initial Capital Security Certificate" means a certificate
representing an Initial Capital Security substantially in the form of Exhibit
A-1.
"Initial Certificate" means a Common Security Certificate or an
Initial Capital Security Certificate.
"Initial Debentures" means 8.85% Junior Subordinated Deferrable
Interest Debentures due 2027 to be issued by the Debenture Issuer under the
Indenture to be held by the Institutional Trustee or, upon a dissolution of the
Trust, the Depositary or the Holder, as the case may be, a specimen certificate
for such series of Debentures being Exhibit D.
"Initial Definitive Capital Securities" means any Restricted
Definitive Capital Security and any other Initial Capital Securities in
definitive form issued by the Trust.
"Initial Global Capital Securities" means any Rule 144A Global
Security and any other Initial Capital Securities in global form issued by the
Trust.
"Initial Securities" means Common Securities and the Initial
Capital Securities.
"Institutional Trustee" means the Trustee identified in Section
5.3(e) or any successor duly appointed hereunder meeting the eligibility
requirements set forth in Section 5.3.
"interest" means any interest due on the Debentures including any
Compounded Interest, Special Payment and Additional Interest (as each such terms
are defined in the Indenture).
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in paragraph
4(c) of Annex I.
"Legal Action" has the meaning set forth in Section 3.8(e).
"Liquidation" has the meaning set forth in paragraph 3 of Annex
I.
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"Liquidation Distribution" has the meaning set forth in paragraph
3 of Annex I.
"Majority in liquidation amount of the Securities" means, except
as provided in the terms of the Capital Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Capital Securities or Holders
of outstanding Common Securities voting separately as a class, who are the
record owners of more than 50% of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in paragraph 4(c)
of Annex I.
"Offering Memorandum" has the meaning set forth in Section 3.6.
"Officers' Certificates" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for it in this Declaration shall include:
(a) a statement that each officer signing the Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 7.2.
"Payment Amount" has the meaning set forth in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Property Account" has the meaning set forth in Section 3.8(c).
"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
"Purchase Agreement" means the Purchase Agreement for the
offering and sale of Capital Securities in the form of Exhibit E.
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"QIBs" has the meaning set forth in Section 7.3(a)(i).
"Quorum" means a majority of the Administrators or, if there are
only two Administrators, both of them.
"Redemption Distribution Notice" has the meaning set forth in
paragraph 4(e) of Annex I.
"Redemption Price" has the meaning set forth in paragraph 4(a) of
Annex I.
"Redemption Tax Opinion" has the meaning set forth in paragraph
4(c) of Annex I.
"Registered Exchange Offer" has the meaning as set forth in the
Registration Rights Agreement.
"Registrar" has the meaning set forth in Section 7.2.
"Registration Rights Agreement" means the Registration Rights
Agreement relating to the Securities in the form of Exhibit F.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Relevant Trustee" has the meaning set forth in Section 5.7.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or other officer of the Corporate Trust Office of the Institutional Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Restricted Capital Securities" means Rule 144A Global Capital
Securities and Restricted Definitive Capital Securities.
"Restricted Definitive Capital Securities" has the meaning set
forth in Section 7.3(c).
"Restricted Securities Legend" has the meaning set forth in
Section 9.2(g).
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Global Capital Security" has the meaning set forth in
Section 7.3(a).
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"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Capital
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and
the Capital Securities Guarantee.
"Sponsor" means PXRE Corporation, a Delaware corporation, and
shall include its successors and assigns (subject to Article X of the
Indenture), in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in paragraph 4(c) of Annex
I.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Capital Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"25% in liquidation amount of the Securities" means, except as
provided in the terms of the Capital Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of 25% or more of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Transfer Agent" has the meaning set forth in Section 7.2.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees
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in accordance with the provisions hereof, and references herein to a Trustee or
the Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trust Property" means (a) the Debentures, (b) any cash on
deposit in, or owing to, the Property Account and (c) all proceeds and rights in
respect of the foregoing and any other property and assets for the time being
held or deemed to be held by the Institutional Trustee pursuant to the trusts of
this Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application.
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(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee which is
a trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
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(a) Each of the Sponsor and the Administrators on behalf of the
Trust shall provide the Institutional Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Administrators on behalf of the Trust shall be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Institutional
Trustee by the Sponsor and the Administrators on behalf of the Trust, and (ii)
at any other time, within 30 days of receipt by the Trust of a written request
therefor, a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Institutional Trustee. The Institutional Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity) provided
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that the Institutional Trustee may destroy any List of Holders previously given
to it on receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee. Within 60 days
after May 15 of each year, the Institutional Trustee shall provide to the
Holders of the Capital Securities such reports as are required by ss. 313 of the
Trust Indenture Act, if any, in the form and in the manner provided by ss. 313
of the Trust Indenture Act. The Institutional Trustee shall also comply with the
requirements of ss. 313(d) of the Trust Indenture Act. The Sponsor shall
promptly notify the Institutional Trustee when the Capital Securities are listed
on any stock exchange.
SECTION 2.4 Periodic Reports to Institutional Trustee. Each of
the Sponsor and the Administrators on behalf of the Trust shall provide to the
Institutional Trustee such documents, reports and information as required by ss.
314 (if any) and the compliance certificate required by ss. 314 of the Trust
Indenture Act in the form, in the manner and at the times required by ss. 314 of
the Trust Indenture Act and an Officers' Certificate as to its compliance with
all conditions and covenants under this Declaration, on an annual basis.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrators on behalf of the Trust shall provide
to the Institutional Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Declaration that relate to any of the
matters set forth in ss. 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to ss. 314(c)(1) may be
given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver. (a) The Holders of a
Majority in liquidation amount of Capital Securities may, by vote or consent, on
behalf of the Holders of all of the Capital Securities, waive any past Event of
Default in respect of the Capital Securities and its consequences, provided
that, if the underlying Indenture Event of Default:
(i) is not waivable under the Indenture, the Event of
Default under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, such Event of
Default under this Declaration may only be waived by the vote or
consent of the Holders of at least the proportion in liquidation
amount of the Capital Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu
of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
Indenture Event of Default shall cease to exist, and any Event of Default
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with respect to the Capital Securities arising therefrom shall be deemed to have
been cured, for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other default or Event of Default with respect to
the Capital Securities or impair any right consequent thereon. Any waiver by the
Holders of the Capital Securities of an Event of Default with respect to the
Capital Securities shall also be deemed to constitute a waiver by the Holders of
the Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
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 of any remedy available to the Institutional Trustee
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee, including the right to direct the Institutional Trustee to exercise the
remedies available to it as holder of the Debentures; provided, however, that
(subject to the provisions of Section 3.9) the Institutional Trustee shall have
the right to decline to follow any such direction if the Institutional Trustee
shall determine that the action so directed would be unjustly prejudicial to the
Holders not taking part in such direction or if the Institutional Trustee, being
advised by counsel, determines that the action or proceeding so directed may not
lawfully be taken or if the Institutional Trustee, in good faith, by its board
of directors or trustees, executive committee, or a trust committee of directors
or trustees and/or Responsible Officers, shall determine that the action or
proceedings so directed would involve the Institutional Trustee in personal
liability.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote or consent, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that if the underlying Indenture Event
of Default:
(i) is not waivable under the Indenture, the Event of
Default under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived under the Indenture, such Event of Default under this
Declaration may only be waived by the vote or consent of the
Holders of at least the proportion in liquidation amount of the
Common Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding;
provided, further, that, notwithstanding (i) or (ii) above, each
Holder of Common Securities will be deemed to have waived any
such Indenture Event of Default and all Events of Default with
respect to the Common Securities and their consequences until all
Events of Default with respect to the Capital Securities have
been cured, waived or otherwise eliminated, and until such 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 the Capital Securities will have the right to direct
the Institutional Trustee in accordance with the terms of the
Securities. The foregoing provisions
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of this Section 2.6(b) shall be in lieu of ss.ss. 316(a)(1)(A)
and 316(a)(1)(B) of the Trust Indenture Act and ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are
hereby expressly excluded from this Declaration and the
Securities, as permitted in the Trust Indenture Act. Subject to
the foregoing provisions in this Section 2.6(b), upon such
waiver, any such Indenture Event of Default shall cease to exist,
and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured, for every
purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect
to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Indenture Event of Default by the
Institutional Trustee at the direction of the Holders of the Capital Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Events of Default; Notice. (a) The Institutional
Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders of the Securities,
notices of all defaults with respect to the Securities actually known to a
Responsible Officer of the Institutional Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Indenture Event of Default,
not including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided, however, that, except for a
default in the payment of principal of (or premium, if any) or interest on any
of the Debentures, the Institutional Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Institutional Trustee
in good faith determines that the withholding of such notice is in the interests
of the Holders of the Capital Securities.
(b) The Institutional Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 5.01(a) and 5.01(b) of the
Indenture; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible
Officer of the Institutional Trustee charged with the
administration of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name. The Trust is named "PXRE Capital Trust I," as
such name may be modified from time to time by the Administrators following
written notice to the Holders
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of Securities. The Trust's activities may be conducted under the name of the
Trust or any other name deemed advisable by the Administrators.
SECTION 3.2 Office. The address of the principal office of the
Trust is c/o PXRE Corporation, 399 Thornall Street, Edison, New Jersey 08837. On
ten (10) Business Days written notice to the Holders of Securities, the
Administrators may designate another principal office.
SECTION 3.3 Purpose. The exclusive purposes and functions of the
Trust are (a) to issue and sell Securities representing undivided beneficial
interests in the assets of the Trust, (b) investing the gross proceeds from such
sale to acquire the Debentures and (c) except as otherwise limited herein, to
engage in only those other activities necessary or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by a Trustee
in accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein with
respect to accomplishing the purposes of the Trust and are not intended be
trustees or fiduciaries with respect to the Trust or the Holders. The
Institutional Trustee shall have the right, but shall not be obligated except as
provided in Section 3.6, to perform those duties assigned to the Administrators.
SECTION 3.5 Title to Property of the Trust. Except as provided in
Section 3.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.
SECTION 3.6 Powers and Duties of the Trustees and the
Administrators. (a) The Institutional Trustee and the Administrators shall
conduct the affairs of the Trust in accordance with the terms of this
Declaration. Subject to the limitations set forth in paragraph (b) of this
Section, and in accordance with the following provisions (i) and (ii), the
Institutional Trustee and the Administrators shall have the authority to enter
into all transactions and agreements determined by the Institutional Trustee to
be appropriate in exercising the authority, express or implied, otherwise
granted to the Institutional Trustee or the Administrators, as the case may be,
under this Declaration, and to perform all acts in furtherance thereof,
including without limitation, the following:
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(i) Each Administrator shall have the power and authority to act
on behalf of the Trust with respect to the following matters:
(A) the issuance and sale of the Securities;
(B) to cause the Trust to enter into, and to execute and
deliver on behalf of the Trust, such agreements as may be
necessary or desirable in connection with the purposes and
function of the Trust, including the Registration Agreement, the
Purchase Agreement and agreements with the Depositary and the
Paying Agent;
(C) assisting in the compliance with the Securities Act,
applicable state securities or blue sky laws, and the Trust
Indenture Act;
(D) to execute and file one or more registration
statements relating to the Capital Securities contemplated by the
Registration Rights Agreement and the preparation and filing of
all periodic and other reports and other documents pursuant to
the foregoing;
(E) if and at such time determined by the Sponsor,
assisting in the designation of the Capital Securities for
trading on any national stock exchange or the Nasdaq Stock
Market's National Market;
(F) the sending of notices (other than notices of
default), and other information regarding the Securities and the
Debentures to the Holders in accordance with this Declaration;
(G) the consent to the appointment of a Paying Agent,
Transfer Agent and Registrar in accordance with this Declaration
which consent shall not be unreasonably withheld;
(H) execution of the Securities in accordance with this
Declaration;
(I) execution and delivery of closing certificates,
pursuant to the Purchase Agreement and the application for a
taxpayer identification number;
(J) unless otherwise determined by the Institutional
Trustee or the holders of a Majority of the outstanding Capital
Securities or Common Securities or as otherwise required by the
Business Trust Act or the Trust Indenture Act, to execute on
behalf of the Trust (either acting alone or together with any or
all of the Administrators) any documents that the Administrators
have the power to execute pursuant to this Declaration;
(K) the taking of any action incidental to the foregoing
as the Institutional Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this
Declaration for the benefit of the Holders (without consideration
of the effect of any such action on any particular Holder);
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(L) execution and delivery of letters or documents to, or
instruments with DTC relating to the Capital Securities;
(M) to establish a record date with respect to all actions
to be taken hereunder that require a record date be established,
including and with respect to, for the purposes of ss. 316(c) of
the Trust Indenture Act, Distributions, voting rights,
redemptions and exchanges, and to issue relevant notices to the
Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(N) to duly cause to be prepared and filed all applicable
tax returns and tax information reports that are required to be
filed with respect to the Trust on behalf of the Trust; and
(O) to the extent provided in this Declaration, the
winding up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of
Delaware.
(ii) As among the Trustees and the Administrators, the
Institutional Trustee shall have the power, duty and authority to act on
behalf of the Trust with respect to the following matters:
(A) the establishment of the Property Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal (and premium, if
any) and any other payments made in respect of the Debentures in
the Property Account;
(D) the distribution through the Paying Agent of amounts
owed to the Holders in respect of the Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default and other
information regarding the Securities and the Debentures to the
Holders in accordance with this Declaration;
(G) the distribution of the Trust Property in accordance
with the terms of this Declaration; and
(H) after any Event of Default (provided that such Event
of Default is not by or with respect to the Institutional
Trustee) the taking of any action incidental to the foregoing as
the Institutional Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this
Declaration and protect
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and conserve the Trust Property for the benefit of the Holders
(without consideration of the effect of any such action on any
particular Holder).
(iii) The Institutional Trustee shall have the power and
authority to act on behalf of the Trust with respect to any of the
duties, liabilities, powers or the authority of the Administrators set
forth in Section 3.6(a)(i)(E), (F) and (H) herein but shall not have a
duty to do any such act unless specifically requested to do so in
writing by the Sponsor, and shall then be fully protected in acting
pursuant to such written request; and in the event of a conflict between
the action of the Administrators and the action of the Institutional
Trustee, the action of the Institutional Trustee shall prevail.
(b) So long as this Declaration remains in effect, the Trust (or
the Institutional Trustee or Administrators acting on behalf of the Trust) shall
not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the Institutional
Trustee nor the Administrators may cause the Trust subject to the other
provisions of the Declaration to (i) acquire any investments or engage in any
activities not authorized by this Declaration, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust
Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected to
cause the Trust to fail or cease to qualify as a "grantor trust" for United
States Federal income tax purposes, (iv) incur any indebtedness for borrowed
money or issue any other debt or (v) take or consent to any action that would
result in the placement of a lien on any of the Trust Property. The
Institutional Trustee shall at the sole cost and expense of the Trust defend all
claims and demands of all Persons at any time claiming any lien on any of the
Trust Property adverse to the interest of the Trust or the Holders in their
capacity as Holders.
(c) In connection with the issue and sale of the Capital
Securities, the Sponsor shall have the right and responsibility to assist the
Trust with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the Sponsor in furtherance of the following prior to the date
of this Declaration are hereby ratified and confirmed in all respects):
(i) the preparation by the Trust of an offering memorandum (the
"Offering Memorandum") in relation to the Capital Securities, including
any amendments or supplements thereto and the taking of any action
necessary to obtain an exemption from the Securities Act;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the advice
to the Trustees and the Administrators of actions they must take on
behalf of the Trust, and the preparation for execution and filing of any
documents to be executed and filed by the Trust or on behalf of the
Trust, as the Sponsor deems necessary or advisable in order to comply
with the applicable laws of any such States in connection with the sale
of the Capital Securities;
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(iii) the negotiation of the terms of, and the execution and
delivery of, the Purchase Agreement providing for the sale of the
Capital Securities; and
(iv) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators, the Institutional Trustee, the Sponsor and the Holders of a
majority of the Common Securities are authorized and directed to conduct the
affairs of the Trust and to operate the Trust so that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act, or fail to be classified as a grantor trust for United
States Federal income tax purposes and so that the Debentures will be treated as
indebtedness of the Sponsor for United States Federal income tax purposes. In
this connection, the Institutional Trustee, the Sponsor 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 this Declaration,
as amended from time to time, and, in the case of the Sponsor, the Certificate
of Incorporation of the Sponsor, as the same may be amended and/or restated from
time to time, that each of the Institutional Trustee, the Sponsor and the
Holders of a majority of Common Securities determines in its discretion to be
necessary or desirable for such purposes, as long as such action does not
adversely affect the interests of the Holders of the Capital Securities in any
material respect or vary the terms of the Securities.
(e) All expenses incurred by the Administrators or the Trustees
pursuant to this Section 3.6 shall be reimbursed by the Sponsor, and the
Trustees shall have no obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
(g) Legal title to all Trust Property shall be vested at all
times in the Institutional Trustee (in its capacity as such) and shall be held
and administered by the Institutional Trustee for the benefit of the Trust and
neither the Administrator nor the Holders in accordance with this Declaration.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Institutional Trustee shall cause the Trust not
to, engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not and the Institutional Trustee
shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities (excluding Additional Interest);
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
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(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever
other than as expressly provided herein;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration (including Annex
I), (A) direct the time, method and place of exercising any trust or
power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of counsel to the effect that
such modification will not cause more than an insubstantial risk that
for United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Institutional Trustee. (a)
The legal title to the Debentures shall be owned by and held of record in the
name of the Institutional Trustee in trust for the benefit of the Holders of the
Securities. The right, title and interest of the Institutional Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Institutional Trustee in accordance with Section 5.7. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
with regard to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its
right, title and interest in the Debentures to the Administrators or to
the Delaware Trustee (if the Institutional Trustee does not also act as
Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Account") in the name of and under the
exclusive control of the Institutional Trustee, and maintained in the
Institutional Trustee's trust department, on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in
respect of the Debentures held by the Institutional Trustee, deposit
such funds into the Property Account and make payments to the Holders of
the Capital Securities and Holders of the Common Securities from the
Property Account in accordance with Section 6.1. Funds in the Property
Account shall be held uninvested until disbursed in accordance with this
Declaration. The Property Account shall be an account that is maintained
with a banking institution the rating on whose long-term unsecured
indebtedness is at least equal to the rating assigned to the Capital
Securities by a "nationally recognized statistical rating
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organization", as that term is defined for purposes of Rule 436(g)(2) under the
Securities Act;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Capital Securities and
the Common Securities to the extent the Debentures are redeemed or
mature; and
(iii) upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities, engage in
such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities upon
the occurrence of certain circumstances pursuant to the terms of the
Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) Subject to limitations on the ability to pursue remedies set
forth in the Indenture, the Institutional Trustee may bring or defend, pay,
collect, compromise, arbitrate, resort to legal action, or otherwise adjust
claims or demands of or against the Trust ("Legal Action") which arise out of or
in connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or the Institutional Trustee's duties
and obligations under this Declaration or the Trust Indenture Act; provided,
however, that if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Debenture Issuer to pay interest or
principal (or premium, if any) on the Debentures on the date such interest or
principal (or premium, if any) is otherwise payable (or in the case of
redemption, on the redemption date), then, subject to limitations on the ability
to pursue remedies set forth in the Indenture, a Holder of Capital Securities
may directly institute a proceeding for enforcement of payment to such Holder of
the principal of (or premium, if any) or interest on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of Capital Securities to the extent of any payment made by the
Debenture Issuer to such Holder of Capital Securities in such Direct Action;
provided, however, that no Holder of the Common Securities may exercise any such
right of subrogation so long as an Event of Default with respect to the Capital
Securities has occurred and is continuing.
(f) The Institutional Trustee shall continue to serve as a
Trustee until either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders of Securities pursuant to the
terms of the Securities; or
(ii) a successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7.
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(g) The Institutional Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to this Declaration (including Annex I) and the terms of such
Securities.
The Institutional Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Institutional Trustee shall not
take any action that is inconsistent with the purposes and functions of the
Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Trustees
and Administrators.
(a) The Institutional Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6), the Institutional
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) The duties and responsibilities of the Trustees and the
Administrators shall be as provided by this Declaration and, in the case of the
Institutional Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Declaration shall require the Trustees or
Administrators to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
satisfactory to them against such risk or liability is not reasonably assured to
them. Whether or not therein expressly so provided, every provision of this
Declaration relating to the conduct or affecting the liability of or affording
protection to the Trustees or Administrators shall be subject to the provisions
of this Article. Nothing in this Declaration shall be construed to release (i)
an Administrator or Institutional Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct or (ii)
the Delaware Trustee from liability for its own grossly negligent action, its
own grossly negligent failure to act or its own willful misconduct. To the
extent that, at law or in equity, a Trustee or an Administrator has duties and
liabilities (including fiduciary duties) relating thereto to the Trust or to the
Holders, such Administrator or Trustee shall not be liable to the Trust or to
any Holder for such Trustee's or Administrator's good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of the Administrators or
Trustees otherwise existing at law or in equity, are agreed by the Sponsor and
the Holders to replace such other duties and liabilities of the Administrators
or Trustees.
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(c) All payments made by the Institutional Trustee or a Paying
Agent in respect of the Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the
Institutional Trustee or a Paying Agent to make payments in accordance with the
terms hereof. Each Holder, by its acceptance of a Security, agrees that it will
look solely to the revenue and proceeds from the Trust Property to the extent
legally available for distribution to it as herein provided and that the
Trustees and the Administrators are not personally liable to it for any amount
distributable in respect of any Security or for any other liability in respect
of any Security. This Section 3.9(c) does not limit the liability of the
Trustees expressly set forth elsewhere in this Declaration or, in the case of
the Institutional Trustee, in the Trust Indenture Act. This Section 3.9(c) does
not limit the ability of a Holder to pursue a Direct Action pursuant to Section
3.8(e).
(d) No provision of this Declaration shall be construed to
relieve the Institutional Trustee from liability with respect to matters that
are within the authority of the Institutional Trustee under this Declaration for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) the Institutional Trustee shall not be liable for any error
or judgment made in good faith by an authorized officer of the
Institutional Trustee, unless it shall be proved that the Institutional
Trustee was negligent in ascertaining the pertinent facts;
(ii) the Institutional Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Capital Securities or the Common
Securities, as applicable, relating to 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 the
Institutional Trustee under this Declaration;
(iii) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Property Account shall be to deal with such property in a similar
manner as the Institutional Trustee deals with similar property for its
own account, subject to the protections and limitations on liability
afforded to the Institutional Trustee under this Declaration and the
Trust Indenture Act;
(iv) the Institutional Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Sponsor; and money held by the Institutional Trustee need not
be segregated from other funds held by it except in relation to the
Property Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law;
and
(v) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for the default or misconduct of the
Administrators or the Sponsor.
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SECTION 3.10 Certain Rights of Institutional Trustee. Subject to
the provisions of Section 3.9:
(a) the Institutional Trustee may conclusively rely and shall
fully be protected in acting or refraining from acting in good faith upon any
resolution, opinion of counsel, certificate, written representation of a Holder
or transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) if (i) in performing its duties under this Declaration the
Institutional Trustee is required to decide between alternative courses of
action, or (ii) in construing any of the provisions of this Declaration the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Capital Securities are entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's opinion as to the course of action to be taken
and the Institutional Trustee shall take such action, or refrain from taking
such action, as the Institutional Trustee in its sole discretion shall deem
advisable and in the best interests of the Holders, in which event the
Institutional Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;
(d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be established
before undertaking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and rely upon an Officers'
Certificate as to factual matters (other than the interpretation of this
Declaration) which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Administrators;
(e) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Institutional Trustee may consult with counsel (which
counsel may be counsel to the Sponsor or any of its Affiliates) and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon and in accordance with such advice; the Institutional
Trustee shall have the right at any time to seek instructions concerning the
administration of this Declaration from any court of competent jurisdiction;
(g) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any of the Holders pursuant to this Declaration, unless
such Holders shall have offered to the Institutional Trustee
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security or indemnity reasonably satisfactory to it against the costs, expenses
and liabilities which might be incurred by it in compliance with such request or
direction;
(h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Institutional Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(i) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys and the Institutional Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent or attorney appointed with due care by it
hereunder;
(j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder
the Institutional Trustee (i) may request instructions from the Holders of the
Securities which instructions may not be given by the Holders of the same
proportion in liquidation amount of the Securities as would be entitled to
direct the Institutional Trustee under the terms of the 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 fully protected in acting in accordance with such instructions;
(k) except as otherwise expressly provided in this Declaration,
the Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration;
(l) when the Institutional Trustee incurs expenses or renders
services in connection with a Bankruptcy Event, such expenses (including the
fees and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law or
law relating to creditors rights generally;
(m) except as set forth in Section 2.7(b)(i), the Institutional
Trustee shall not be charged with knowledge of an Event of Default unless a
Responsible Officer of the Institutional Trustee obtains actual knowledge of
such event or the Institutional Trustee receives written notice of such event
from Holders holding more than a majority of Capital Securities (based upon
liquidation amount);
(n) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action; and
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(o) no provision of this Declaration shall be deemed to impose
any duty or obligation on the Institutional Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Institutional
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty, including, but not limited to, those
powers and authorities described in Sections 3.4 and 3.6.
SECTION 3.11 Delaware Trustee. Notwithstanding any other
provision of this Declaration other than Section 5.2, the Delaware Trustee shall
not be entitled to exercise any powers, nor shall the Delaware Trustee have any
of the duties and responsibilities of any of the Trustees or the Administrators
described in this Declaration. Except as set forth in Section 5.2, the Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of ss. 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents. Subject to the provisions of
Section 3.11, unless otherwise determined in writing by the Institutional
Trustee, and except as otherwise required by the Business Trust Act, the
Institutional Trustee, or any one or more of the Administrators, as the case may
be, is authorized to execute on behalf of the Trust any documents that the
Trustees or the Administrators, as the case may be, have the power and authority
to execute pursuant to Section 3.6.
SECTION 3.13 Not Responsible for Recitals or Issuance of
Securities. The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Debentures or the Securities.
SECTION 3.14 Duration of Trust. The Trust, unless terminated
pursuant to the provisions of Article VIII hereof, shall have existence for
fifty-five (55) years from the Closing Date.
SECTION 3.15 Mergers. (a) 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 in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Administrators and
without the consent of the Institutional Trustee, the Delaware Trustee or the
Holders of the Securities, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) if the Trust is not the Survivor, such successor entity (the
"Successor Entity") either:
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(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so that the Successor Securities rank the same as
the Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Institutional Trustee expressly appoints a trustee of
the Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the holder of the Debentures;
(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 the 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 the Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of such
Holders' interests in the Successor Entity as a result of such merger,
consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose substantially identical
to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Institutional Trustee has 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 Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the Successor
Entity);
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to
be classified as a grantor trust for United States federal income
tax purposes; and
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(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Securities Guarantees.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or to 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 Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
(d) The Administrators shall have furnished the Delaware Trustee
at least 5 Business Days prior written notice of the consummation of any merger,
consolidation, amalgamation or replacement: provided that failure to provide
such notice shall not affect the validity of any such transaction.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities. The Sponsor
will purchase all of the Common Securities issued by the Trust, in an amount at
least equal to 3% of the capital of the Trust, at the same time as the Capital
Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor. In connection with
the issue and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare and distribute the Offering Memorandum in relation
to the Capital Securities, including any supplements and amendments thereto;
(b) to determine the States in which to take appropriate action
to qualify or register for sale all or part of the Capital Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) to prepare for filing and request the Administrators to cause
the filing by the Trust, as may be appropriate, of an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing or quotation upon notice of issuance of any Capital
Securities; and
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(d) to negotiate the terms of and cause the Administrators to
execute on behalf of the Trust, the Purchase Agreement, the Registration Rights
Agreement and other related agreements providing for the sale of the Capital
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees. The number of Trustees initially
shall be two (2), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Capital Securities voting as a class at a meeting of
the Holders of the Capital Securities; provided, however, that, that there shall
be a Delaware Trustee if required by Section 5.2; and there shall always be one
Trustee who shall be the Institutional Trustee, and such Trustee may also serve
as Delaware Trustee if it meets the applicable requirements, in which case
Section 3.11 shall have no application to such entity in its capacity as
Institutional Trustee.
SECTION 5.2 Delaware Trustee. If required by the Business Trust
Act, one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware;
or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law, including ss.3807 of the Business Trust Act.
SECTION 5.3 Institutional Trustee; Eligibility. (a) There shall
at all times be one Trustee which shall act as Institutional Trustee which
shall:
(i) not be an Affiliate of the Sponsor or any Person involved in
the organization or operation of the Sponsor;
(ii) not offer or provide credit enhancement to the Sponsor; and
(iii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S.
dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually,
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pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section
5.3(a)(iii), the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.7(c).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Declaration.
(d) The Indenture, the Debt Securities (as defined therein)
issued or to be issued thereunder, the Declaration, the Securities issued or to
be issued hereunder and the Capital Securities Guarantees and Common Securities
Guarantees in connection therewith (including the Capital Securities Guarantee
in connection herewith) shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the proviso contained in ss. 310(b)(1)
of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be: First Union
National Bank.
SECTION 5.4 Certain Qualifications of the Delaware Trustee
Generally. The Delaware Trustee shall be either a natural person who is at least
21 years of age or a legal entity that shall act through one or more Authorized
Officers.
SECTION 5.5 Administrators. The initial Administrators shall be:
Gerald L. Radke, Sanford M. Kimmel and Joan L. Cadd.
Except where a requirement for action by a specific number of
Administrators is expressly set forth in this Declaration and except with
respect to any action the taking of which is the subject of a meeting of the
Administrators any action required or permitted to be taken by the
Administrators may be taken by, and any power of the Administrators may be
exercised by, or with the consent of, any one such Administrators.
SECTION 5.6 Delaware Trustee. The initial Delaware Trustee shall
be:
First Union Bank of Delaware,
SECTION 5.7 Appointment, Removal and Resignation of Trustees and
Administrators. (a) No resignation or removal of any Trustee (the "Relevant
Trustee") and no appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of this Section 5.7.
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Subject to the immediately preceding paragraph and Section 5.7(e)
below, a Relevant Trustee may resign at any time by giving written notice
thereof to the Holders. Unless an Event of Default shall have occurred and be
continuing, a successor Relevant Trustee shall be appointed by the Holders of a
Majority in liquidation amount of the Common Securities. If an Event of Default
shall have occurred and is continuing, the Institutional Trustee will appoint a
successor. If appointing a successor, the Institutional Trustee shall request
from at least three Persons meeting the eligibility requirements set forth in
this Declaration, its expenses and charges to serve as the successor Relevant
Trustee on a form provided by the Administrators, and select the Person who
agrees to the lowest expense and charges. If the Institutional Trustee fails to
appoint a successor, then the Holders of at least 25% in liquidation amount of
the Capital Securities may appoint a successor. If the instrument of acceptance
by the successor Trustee required by Section 5.7 shall not have been delivered
to the Relevant Trustee within 60 days after the giving of such notice of
resignation, the Relevant Trustee may petition, at the expense of the Trust, any
court of competent jurisdiction for the appointment of a successor Relevant
Trustee. The Institutional Trustee shall have no liability for the selection of
such successor pursuant to this Section 5.7.
Unless an Event of Default shall have occurred and be continuing,
the Institutional Trustee or the Delaware Trustee, or both of them, may be
removed by the act of the Holders of a Majority in liquidation amount of the
Common Securities, at any time. If an Event of Default has occurred and is
continuing, the Institutional Trustee or the Delaware Trustee, or both of them,
may be removed by the act of the Holders of a Majority in liquidation amount of
the Capital Securities.
If any Trustee shall be removed by the Holders of outstanding
Capital Securities, the Holders of Capital Securities, by act of the Holders of
at least 25% in liquidation amount of the Capital Securities then outstanding
delivered to the retiring Relevant Trustee, shall promptly appoint a successor
Relevant Trustee or Trustees, and such successor Trustee shall comply with the
applicable requirements of this Section 5.7. If no successor Relevant Trustee
shall have been so appointed by the Capital Securityholders and accepted
appointment in the manner required by this Section 5.7 any Holder who has been a
Holder of Securities for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.
The Institutional Trustee shall give notice of each resignation
and each removal of a Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 5.7(b) and shall give notice to the
Sponsor. Each notice shall include the name of the successor Relevant Trustee
and the address of its Corporate Trust Office if it is the Institutional
Trustee.
Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or
becomes incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the Institutional Trustee following
the procedures in this Section 5.7 (with the successor being a Person who
satisfies the eligibility requirement for a Delaware Trustee set forth in this
Declaration).
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(b) In case of the appointment hereunder of a successor Relevant
Trustee, the retiring Relevant Trustee and each successor Relevant Trustee with
respect to the Trust Securities shall execute and deliver an amendment hereto
wherein each successor Relevant Trustee shall accept such appointment and which
(a) shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Securities and the Trust and (b) shall add to or change any of the provisions of
this Declaration as shall be necessary to provide for or facilitate the
administration of the Trust by more than one Relevant Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust of any successor Relevant Trustee such retiring Relevant
Trustee shall duly assign, transfer and deliver to such successor Relevant
Trustee all Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Securities and the Trust.
(c) If no successor Institutional Trustee or successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.7 within 60 days after delivery of an instrument of resignation or
removal, the Institutional Trustee or Delaware Trustee resigning or being
removed, as applicable, may petition any court of competent jurisdiction for
appointment of a successor Institutional Trustee or successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a successor Institutional Trustee or successor Delaware Trustee,
as the case may be.
(d) No Institutional Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any successor Institutional Trustee or
successor Delaware Trustee, as the case may be.
(e) Holders of the Capital Securities will have no right to
appoint or remove the Administrators, who may be appointed, removed or replaced
solely by the Sponsor as the holder of all of the Common Securities of the
Trust.
SECTION 5.8 Vacancies Among Trustees. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
the Trustees or, if there are more than two, a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with an a Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the number of Trustees shall
occur, until such vacancy is filled by the appointment of a Trustee in
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accordance with Section 5.7, the Institutional Trustee shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by this Declaration.
SECTION 5.10 Meetings of the Trustees and the Administrators.
Meetings of the Administrators shall be held from time to time upon the call of
any Administrator. Regular meetings of the Administrators may be held at a time
and place fixed by resolution of the Administrators. Notice of any in-person
meetings of the Administrators shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier) not less
than 48 hours before such meeting. Notice of any telephonic meetings of the
Administrators or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The
presence (whether in person or by telephone) of an Administrator at a meeting
shall constitute a waiver of notice of such meeting except where the
Administrator attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been lawfully
called or convened. Unless provided otherwise in this Declaration, any action of
the Administrators may be taken at a meeting by vote of a majority of the
Administrators present (whether in person or by telephone) and eligible to vote
with respect to such matter, provided that a Quorum is present, or without a
meeting by the unanimous written consent of the Administrators. Meetings of the
Administrators shall be held from time to time upon the call of any
Administrator.
SECTION 5.11 Delegation of Power. (a) Any Trustee or
Administrator may, by power of attorney consistent with applicable law, delegate
to any other natural person over the age of 21 his or her power for the purpose
of executing any documents contemplated in Section 3.6; and
(b) the Trustees and Administrators shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Trustees or Administrators, or otherwise as the
Trustees or Administrators, as the case may be, may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 5.12 Conversion, Consolidation or Succession to Business.
Any Person into which the Institutional Trustee or the Delaware Trustee, as the
case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any Person succeeding to all or substantially
all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee
or the Delaware Trustee, as the case may be, hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided such Person shall be otherwise qualified and eligible under this
Article.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of interest (including
any Compounded Interest and Special Payments), premium, if any, and/or principal
on the Debentures held by the Institutional Trustee (the amount of any such
payment being a "Payment Amount"), the Institutional Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution of the Payment Amount to Holders (a "Distribution").
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities. (a) The
Administrators shall on behalf of the Trust issue one series of capital
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "Initial Capital
Securities") and to be exchanged pursuant to the Registration Rights Agreement
for a second series of Capital Securities (the "Exchange Capital Securities" and
together with the initial series of Capital Securities, the "Capital
Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities"). The Trust shall issue no securities
or other interests in the assets of the Trust other than the Capital Securities
and the Common Securities and the aggregate liquidation amount of all series of
Securities issued by the Trust and outstanding at any time shall not exceed
$103,093,000. The Capital Securities rank pari passu and payment thereon shall
be made Pro Rata with the Common Securities except that, where an Event of
Default has occurred and is continuing, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Capital Securities.
(b) The Certificates shall be signed on behalf of the Trust by
one or more Administrators. Such signature shall be the manual signature of any
present or any future Administrator. In case any Administrator of the Trust who
shall have signed any of the Securities shall cease to be such Administrator
before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Administrator; and any Certificate may be
signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be an Administrator of the Trust, although at
the date of the execution and delivery of the Declaration any such person was
not such an Administrator. A Capital Security shall not be valid until
authenticated by the manual signature of an authorized officer of the
Institutional Trustee. Such signature shall be conclusive evidence that the
Capital Security has
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been authenticated under this Declaration. Upon written order of the Trust
signed by one Administrator, the Institutional Trustee shall authenticate the
Capital Securities for original issue. The Institutional Trustee may appoint an
authenticating agent acceptable to the Trust to authenticate the Capital
Securities. A Common Security need not be so authenticated.
(c) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a
Capital Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration and the Capital Securities
Guarantee.
SECTION 7.2 Paying Agent, Transfer Agent and Registrar. The Trust
shall maintain in Newark, New Jersey an office or agency where the Capital
Securities may be presented for payment ("Paying Agent"), and an office or
agency where Securities may be presented for registration of transfer (the
"Transfer Agent"). The Trust shall keep or cause to be kept at such office or
agency a register for the purpose of registering Securities and transfers and
exchanges of Securities, such register to be held by a registrar (the
"Registrar"). The Trust may appoint the Paying Agent, the Registrar, the
Transfer Agent and may appoint one or more additional paying agents or one or
more co-Registrars, or one or more co-Transfer Agents in such other locations as
it shall determine. The term "Paying Agent" includes any additional paying
agent, the term "Registrar" includes any additional registrar or co-Registrar
and the term "Transfer Agent" includes any additional transfer agent. The Trust
may change any Paying Agent without prior notice to any Holder. The Trust shall
notify the Institutional Trustee of the name and address of any Paying Agent,
Transfer Agent and Registrar not a party to this Declaration. The Trust has
appointed the Institutional Trustee to act as Paying Agent, Transfer Agent and
Registrar for the Capital Securities and the Common Securities. The Trust or any
of its Affiliates may act as Paying Agent or Registrar.
SECTION 7.3 Form and Dating. The Initial Capital Securities and
the Institutional Trustee's certificate of authentication shall be substantially
in the form of Exhibit A-1, the Exchange Capital Securities and the
Institutional Trustee's certificate of authentication shall be substantially in
the form of Exhibit A-2 and the Common Securities shall be substantially in the
form of Exhibit A-3, each of which is hereby incorporated in and expressly made
a part of this Declaration. Certificates may be typed, printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrators, as conclusively evidenced by their execution thereof. The
Securities may have letters, numbers, notations or other marks of identification
or designation and such legends or endorsements required by law, stock exchange
rule, the Depositary, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
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legend not contained in Exhibit A-1, A-2 or A-3 to the Institutional Trustee in
writing. Each Capital Security shall be dated the date of its authentication.
The terms and provisions of the Securities set forth in Annex I and the forms of
Securities set forth in Exhibits A-1, A-2 and A-3 are part of the terms of this
Declaration and to the extent applicable, the Institutional Trustee, the
Delaware Trustee, the Administrators and the Sponsor, by their execution and
delivery of this Declaration, expressly agree to such terms and provisions and
to be bound thereby. Initial Capital Securities will be issued only in blocks
having a stated liquidation amount of not less than $100,000. The Exchange
Capital Securities will be issued only in blocks having a stated liquidation
amount of not less than $1,000.
(a) Global Capital Securities.
(i) The Initial Capital Securities are being offered and sold by
the Trust pursuant to the Purchase Agreement. Securities offered and sold to
Qualified Institutional Buyers ("QIBs") in reliance on Rule 144A as provided in
the Purchase Agreement, shall be issued in the form of one or more permanent
global Securities in definitive, fully registered form without distribution
coupons with the appropriate global legends and the Restricted Securities Legend
(each, a "Rule 144A Global Capital Security"), which shall be deposited on
behalf of the purchasers of the Capital Securities represented thereby with the
Institutional Trustee, at its New Jersey office, as custodian for the
Depositary, and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Trust and authenticated by the Institutional
Trustee as hereinafter provided. The number of Capital Securities represented by
the Rule 144A Global Capital Security may from time to time be increased or
decreased by adjustments made on the records of the Institutional Trustee and
the Depositary or its nominee as hereinafter provided.
(ii) In the event the Initial Global Security is tendered in a
Registered Exchange Offer, it shall be exchanged for interests in a single,
permanent global security in definitive, fully registered form without
distribution coupons. Upon issuance such Exchange Global Security shall be
deposited on behalf of the holders of the Exchange Capital Securities
represented thereby with the Institutional Trustee, at its New Jersey office, as
custodian for the Depositary, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Trust and authenticated by the
Institutional Trustee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only
to Global Capital Securities as may be authorized by the Trust to be deposited
with or on behalf of the Depositary. The Trust shall execute and the
Institutional Trustee shall, in accordance with this Section 7.3, authenticate
and deliver initially one or more Global Capital Securities that (a) shall be
registered in the name of Cede & Co. or other nominee of the Depositary and (b)
shall be delivered by the Institutional Trustee to the Depositary or pursuant to
the Depositary's instructions, held by the Institutional Trustee as custodian
for the Depositary. Clearing Agency Participants shall have no rights under this
Declaration with respect to any Global Capital Security held on their behalf by
the Depositary or by the Institutional Trustee as the custodian of the
Depositary or under such Global Capital Security, and the Depositary may be
treated by the Trust, the Institutional Trustee and any agent of the Trust or
the Institutional Trustee as the
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absolute owner of such Global Capital Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Institutional Trustee or any agent of the Trust or the Institutional Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and the
Clearing Agency Participants, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Capital Security.
(c) Definitive Capital Securities.
(i) Except as provided in Section 7.5 and Section 9.2(e), owners
of beneficial interests in the Rule 144A Global Capital Security will not be
entitled to receive physical delivery of Definitive Capital Securities.
Purchasers of Initial Securities who are institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act)
("IAIs"), but are not QIBs will receive Initial Capital Securities in the form
of individual certificates in definitive, fully registered form without
distribution coupons and with the Restricted Securities Legend ("Restricted
Definitive Capital Securities"); provided, however, that upon transfer of such
Restricted Definitive Capital Securities to a QIB, such Restricted Definitive
Capital Securities will, unless the Rule 144A Global Capital Security has
previously been exchanged, be exchanged for an interest in a Rule 144A Capital
Global Security pursuant to the provisions set forth in Section 9.2. Restricted
Definitive Securities will bear the Restricted Securities Legend unless removed
in accordance with this Section 7.3 or Section 9.2.
(ii) In the event Initial Definitive Capital Securities are
tendered in a Registered Exchange Offer, they will be exchanged for certificated
securities in definitive, fully registered form, without coupons and without the
Restricted Securities Legend; or, at the option of the Holder, as an interest in
the Exchange Global Capital Security issued pursuant to Section 7.1(a).
SECTION 7.4 Mutilated, Destroyed, Lost or Stolen Certificates.
If: (a) any mutilated Certificates should be surrendered to the Registrar, or if
the Registrar shall receive evidence to their satisfaction of the destruction,
loss or theft of any Certificate; and
(b) there shall be delivered to the Registrar and the
Administrators such security or indemnity as may be required by them to keep
each of them harmless; then, in the absence of notice that such Certificate
shall have been acquired by a bona fide purchaser, an Administrator on behalf of
the Trust shall execute (and in the case of a Capital Security Certificate, the
Institutional Trustee shall authenticate) and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination. In connection with the issuance of any new
Certificate under this Section 7.4, the Registrar or the Administrators may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Certificate
issued pursuant to this Section shall constitute conclusive evidence of an
ownership interest in the relevant Securities, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.
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SECTION 7.5 Temporary Securities.
Until definitive Securities are ready for delivery, the Trust may
prepare and, in the case of the Capital Securities, the Institutional Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in form of definitive Securities but may have variations that the
Trust considers appropriate for temporary Securities. Without unreasonable
delay, the Trust shall prepare and, in the case of the Capital Securities, the
Institutional Trustee shall authenticate definitive Securities in exchange for
temporary Securities.
SECTION 7.6 Cancellation.
The Trust at any time may deliver Securities to the Institutional
Trustee for cancellation. The Registrar shall forward to the Institutional
Trustee any Securities surrendered to them for registration of transfer,
redemption or payment. The Institutional Trustee shall promptly cancel all
Securities surrendered for registration of transfer, payment, replacement or
cancellation and shall dispose of canceled Securities as the Trust directs. The
Trust may not issue new Securities to replace Securities that it has paid or
redeemed or that have been delivered to the Institutional Trustee for
cancellation.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust. (a) The Trust
shall dissolve:
(i) unless earlier terminated, on January 21, 2052, the
expiration of the term of the Trust;
(ii) upon a Bankruptcy Event with respect to the Sponsor, the
Trust or the Debenture Issuer;
(iii) (other than in connection with a merger, consolidation or
similar transaction not prohibited by the Indenture, this Declaration or
the Securities Guarantees, as the case may be) upon the filing of a
certificate of dissolution or its equivalent with respect to the
Sponsor; upon the consent of Holders of a Majority in liquidation amount
of the 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 the Sponsor and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iv) upon the distribution to the Holders of the Securities of
the Debentures, upon exercise of the right of the holder of all of the
outstanding Common Securities to dissolve the Trust as provided in Annex
I hereto;
(v) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor, the Trust or the Debenture
Issuer;
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(vi) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
or
(vii) before the issuance of any Securities, with the consent of
all of the Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), and after satisfaction of liabilities to
creditors of the Trust (whether by payment or by making reasonable provision for
payment thereof), and subject to the terms set forth in Annex I, the
Administrators shall terminate the Trust by filing a certificate of cancellation
with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 General. (a) Where Capital Securities are presented
to the Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal number of Capital Securities represented by different
certificates, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfer and exchanges, the Trust shall issue and the Institutional Trustee
shall authenticate Capital Securities at the Registrar's request.
(b) Upon issuance of the Common Securities, the Sponsor shall
acquire and retain direct or indirect beneficial and record ownership of the
Common Securities and for so long as the Securities remain outstanding, the
Sponsor shall maintain direct or indirect 100% ownership of the Common
Securities, provided, however, that any permitted successor of the Sponsor under
the Indenture may succeed to the Sponsor's ownership of the Common Securities.
(c) Capital Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities, provided, however, that Initial Capital
Securities may be transferred only in blocks having a stated liquidation amount
of not less than $100,000 (i.e., 100 Capital Securities) and the Exchange
Capital Securities may be transferred only in blocks having a stated liquidation
amount of $1,000. Any transfer or purported transfer of any Security not made in
accordance with this Declaration shall be null and void and will be deemed to be
of no legal effect whatsoever and any such transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
(d) The Trustees shall provide for the registration of Securities
and of transfers of Securities, which will be effected without charge but only
upon payment (with such indemnity as
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the Trustees may require) in respect of any tax or other governmental charges
that may be imposed in relation to it. Upon surrender for registration of
transfer of any Securities, the Trustees shall cause one or more new Securities
to be issued in the name of the designated transferee or transferees. Every
Security surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Security surrendered for registration of transfer shall be canceled by the
Trustees. A transferee of a Security shall be entitled to the rights and subject
to the obligations of a Holder hereunder upon the receipt by such transferee of
a Security. By acceptance of a Security, each transferee shall be deemed to have
agreed to be bound by this Declaration.
(e) The Trust shall not be required (i) to issue, register the
transfer of, or exchange any Capital Securities during a period beginning at the
opening of business 15 days before the day of any selection of Capital
Securities for redemption 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 redeemed, or (ii) to register the
transfer or exchange of any Capital Security so selected for redemption in whole
or in part, except the unredeemed portion of any Capital Security being redeemed
in part.
SECTION 9.2 Transfer Procedures and Restrictions.
(a) General.
(i) If Initial Capital Securities are issued upon the
transfer, exchange or replacement of Initial Capital Securities
bearing the Restricted Securities Legend, or if a request is made
to remove such Restricted Securities Legend on Initial Capital
Securities, the Initial Capital Securities so issued shall bear
the Restricted Securities Legend, or the Restricted Securities
Legend shall not be removed, as the case may be, unless there is
delivered to the Trust such satisfactory evidence, which may
include an opinion of counsel licensed to practice law in the
State of New York, as may be reasonably required by the Trust,
that neither the legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof
comply with the provisions of Rule 144A or Rule 144 under the
Securities Act or, with respect to Restricted Capital Securities,
that such Securities are not "restricted" within the meaning of
Rule 144 under the Securities Act. Upon provision of such
satisfactory evidence, the Institutional Trustee, at the written
direction of the Trust, shall authenticate and deliver Capital
Securities that do not bear the legend.
(ii) If a transfer of Initial Capital Securities is made
pursuant to an effective Shelf Registration Statement, the
Restricted Securities Legend shall be removed from such Initial
Capital Securities so transferred at the request of the Holder.
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(iii) Any Initial Capital Securities which are presented
to the Registrar for exchange pursuant to a Registered Exchange
Offer shall be exchanged for Exchange Capital Securities of equal
liquidation amount upon surrender to the Registrar of the Initial
Capital Securities to be exchanged in accordance with the terms
of the Registered Exchange Offer; provided that the Initial
Capital Securities so surrendered for exchange are duly endorsed
and accompanied by a letter of transmittal or written instrument
of transfer in form satisfactory to the Institutional Trustee and
the Registrar and duly executed by the Holder thereof or such
Holder's attorney who shall be duly authorized in writing to
execute such document on the behalf of such Holder.
(b) Transfer and Exchange of Definitive Capital Securities. When
Initial Definitive Capital Securities or Exchange Definitive Capital Securities
are presented to the Registrar
(x) to register the transfer of such Initial Definitive Capital
Securities or Exchange Definitive Capital Securities, or
(y) to exchange such Initial Definitive Capital Securities or
Exchange Definitive Capital Securities for an equal number of Initial
Definitive Capital Securities or Exchange Definitive Capital Securities,
respectively, of another number,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Capital Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Trust and the Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) in the case of Initial Definitive Capital Securities
that are Restricted Definitive Capital Securities, are being
transferred or exchanged pursuant to an effective registration
statement under the Securities Act or pursuant to clause (A) (B),
(C) or (D) below, and are accompanied by the following additional
information and documents, as applicable:
(A) if such Restricted Definitive Capital
Securities are being delivered to the Registrar by a
Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that
effect;
(B) if such Restricted Definitive Capital
Securities are being transferred pursuant to an exemption
from registration in accordance with Rule 144 under the
Securities Act: (i) a certification to that effect and
(ii) if the Trust so requests, evidence reasonably
satisfactory to the Trust as to the compliance with the
restrictions set forth in the Restricted Securities
Legend;
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(C) if such Restricted Definitive Capital
Securities are transferred to QIBs in accordance with Rule
144A under the Securities Act, the transferee QIBs must
take delivery of their interests in the Capital Securities
in the form of a beneficial interest in the Rule 144A
Global Capital Security in accordance with Section 9.2(c);
or
(D) if such Restricted Definitive Capital
Securities are being transferred to a Person who is an
IAI, but it is not a QIB, upon the delivery of a
certificate by the transferee IAI substantially in the
form of Exhibit B hereto and such other opinion,
certification and/or other information as may be
reasonably required by the Trust or the Sponsor, the
Institutional Trustee shall cancel or cause to be canceled
such Restricted Definitive Securities being transferred
and concurrently therewith, the Trust shall issue and the
Institutional Trustee shall authenticate, upon written
order of any Administrator, an appropriate number of
Restricted Definitive Capital Securities.
(c) Restrictions on Transfer of an Initial Definitive Capital
Security for a Beneficial Interest in an Initial Global Capital Security. An
Initial Definitive Capital Security may not be exchanged for a beneficial
interest in an Initial Global Capital Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Institutional Trustee of an
Initial Definitive Capital Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trust, together with:
(i)if such Initial Definitive Capital Security is a Restricted
Capital Security, certification, substantially in the form set forth of
Exhibit C hereto, that such Definitive Capital Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the
Institutional Trustee to make, or to direct the Depositary to make, an
adjustment on its books and records with respect to such Initial Global
Capital Security to reflect an increase in the number of the Initial
Capital Securities represented by the Initial Global Capital Security,
then the Institutional Trustee shall cancel such Initial Definitive Capital
Security and cause, or direct the Depositary to cause, the aggregate number of
Initial Capital Securities represented by the Global Capital Security to be
increased accordingly. If no Initial Global Capital Securities are then
outstanding, the Trust shall issue and the Institutional Trustee shall
authenticate, upon written order of any Administrator, an appropriate number of
Initial Capital Securities in global form.
(d) Transfer and Exchange of Global Capital Securities. The
transfer and exchange of Initial Global Capital Securities or Exchange Global
Capital Securities or beneficial interests therein shall be effected through the
Depositary, in accordance with this Declaration
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(including applicable restrictions on transfer set forth in the Restricted
Securities Legend) and the procedures of the Depositary therefor.
Notwithstanding any other provisions of this Declaration, a Global Capital
Security may not be transferred as a whole except by the Depositary to a nominee
of the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.
(e) Transfer of a Beneficial Interest in a Global Capital
Security for a Definitive Capital Security.
(i) Any Person having a beneficial interest in an Initial Global
Capital Security that is being transferred or exchanged pursuant to an
effective registration statement under the Securities Act or pursuant to
clause (A) or (B) below may upon request, and if accompanied by the
information specified below, exchange such beneficial interest for an
Initial Definitive Capital Security or Exchange Capital Security, as the
case may be, representing the same number of Initial Capital Securities
or Exchange Definitive Capital Securities, as the case may be. Upon
receipt by the Institutional Trustee from the Depositary or its nominee
on behalf of any Person having a beneficial interest in an Initial
Global Capital Security or an Exchange Global Security, as the case may
be, of written instructions or such other form of instructions as is
customary for the Depositary or the Person designated by the Depositary
as having such a beneficial interest in such Global Capital Security and
in the case of an Initial Global Security the following additional
information and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act: (i) a
certification to that effect from the transferee or
transferor and (ii) if the Trust so requests, additional
evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the
Restricted Securities Legend; or
(B) if such beneficial interest is being
transferred to a Person who is an IAI, but is not a QIB,
upon the delivery of a certificate by the transferee IAI
substantially in the form of Exhibit B hereto and such
other opinion, certification and/or other information as
may be reasonably required by the Trust and the Sponsor,
then the Institutional Trustee will cause, in accordance with the
standing instructions and procedures of the Depositary, the aggregate
liquidation amount of the Global Capital Security to be reduced on its
books and records and, following such reduction, the Trust will issue
and the Institutional Trustee will authenticate, upon written order of
any Administrator, an appropriate number of Definitive Capital
Securities.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this
Section 9.2(e) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from
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Clearing Agency Participants or indirect participants or otherwise,
shall instruct the Institutional Trustee. The Institutional Trustee
shall deliver such Capital Securities to the Persons in whose names such
Capital Securities are so registered in accordance with the instructions
of the Depositary.
(f) Authentication of Definitive Capital Securities. If at any
time:
(i) the Depositary notifies the Trust that the Depositary is
unwilling or unable to continue as Depositary for the Global Capital
Securities and a successor Depositary for the Global Capital Securities
is not appointed by the Trust at the direction of the Sponsor within 90
days after delivery of such notice; or
(ii) the Trust, in its sole discretion, notifies the
Institutional Trustee in writing that it elects to cause the issuance of
Definitive Capital Securities under this Declaration,
then the Trust will execute, and the Institutional Trustee, upon receipt of a
written order of the Trust signed by one Administrator requesting the
authentication and delivery of Definitive Capital Securities to the Persons
designated by the Trust, will authenticate and deliver Definitive Capital
Securities, in an aggregate principal amount equal to the principal amount of
Global Capital Securities, in exchange for such Global Capital Securities.
(g) Legend.
Except as permitted by Section 9.2(a), each Initial Capital
Security certificate evidencing the Rule 144A Global Capital Securities and the
Restricted Definitive Capital Securities (and all Initial Capital Securities
issued in exchange therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH PXRE CORPORATION (THE
"COMPANY") OR PXRE CAPITAL TRUST I (THE "TRUST") OR ANY AFFILIATE OF THE COMPANY
OR THE TRUST WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) (THE "RESALE RESTRICTIONS TERMINATION DATE") ONLY (A) TO THE COMPANY
OR THE TRUST, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
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AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT
IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY A PURCHASER
THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN BOOK-ENTRY FORM.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTIONS TERMINATION DATE.
(h) Cancellation or Adjustment of Global Capital Security. At
such time as all beneficial interests in a Global Capital Security have either
been exchanged for Definitive Capital Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be returned to the
Depositary for cancellation or retained and canceled by the Institutional
Trustee. At any time prior to such cancellation, if any beneficial interest in a
Global Capital Security is exchanged for Definitive Capital Securities, Capital
Securities represented by such Global Capital Security shall be reduced and an
adjustment shall be made on the books and records of the Institutional Trustee
(if it is then the Securities Custodian for such Global Capital Security) with
respect to such Global Capital Security, by the Institutional Trustee to reflect
such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Capital Securities.
(i)To permit registrations of transfers and exchanges, the Trust
shall execute and the Institutional Trustee shall authenticate
Definitive Capital Securities and Global Capital Securities at the
Registrar's request;
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
or the Sponsor may require) in respect of any tax or other governmental
charge that may be imposed in relation to it;
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(iii) The Registrar shall not be required to register the
transfer of or exchange of (A) any Capital Security during a period
beginning at the opening of business 15 days before the day of any
selection of any Capital Security for redemption set forth in the terms
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 redeemed, and (B) any Capital
Security so selected for redemption in whole or in part, except the
unredeemed portion of any Capital Security being redeemed in part; or
(iv) All Capital Securities issued upon any transfer or exchange
pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such transfer or
exchange.
SECTION 9.3 Deemed Security Holders. The Trust, the
Administrators, the Trustees, the Paying Agent, the Transfer Agent or the
Registrar may treat the Person in whose name any Certificate shall be registered
on the books and records of the Trust as the sole holder of such Certificate and
of the Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Trustees, the
Paying Agent, the Transfer Agent or the Registrar shall have actual or other
notice thereof.
SECTION 9.4 Notices to Clearing Agency. Whenever a notice or
other communication to the Capital Security Holders is required under this
Declaration, unless and until Definitive Capital Securities shall have been
issued to the beneficial owners of Capital Securities pursuant to Section 9.2(e)
or Section 9.2(f), the Administrators shall give all such notices and
communications specified herein to be given to the Capital Security Holders to
the Clearing Agency, and shall have no notice obligations to the beneficial
owners of Capital Securities.
SECTION 9.5 Appointment of Successor Clearing Agency. If any
Clearing Agency elects to discontinue its services as securities depositary with
respect to the Capital Securities, the Institutional Trustee, in its sole
discretion, appoint a successor Clearing Agency with respect to such Capital
Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability. (a) Except as expressly set forth in this
Declaration, the Securities Guarantees and the terms of the Securities, the
Sponsor shall not be:
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(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all
of the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the
Holders of the Capital Securities shall 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; provided,
however, that the Holder of Common Securities shall be liable for all the debts
and obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust's assets.
SECTION 10.2 Exculpation. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions;
provided, however, notwithstanding anything herein to the contrary, none of the
Delaware Trustee or its officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees and agents shall be liable for
any such loss, damage or claim unless incurred by reason of such Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care by or on
behalf of the Trust, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty. (a) To the extent that, at law or in
equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict
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the duties and liabilities of an Indemnified Person otherwise existing at law or
in equity (other than the duties imposed on the Institutional Trustee under the
Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of the Indemnified Person.
(b) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 Indemnification. (a) (i) The Sponsor shall
indemnify, to the full extent permitted by law, any Indemnified 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 Trust) by reason
of the fact that he is or was an Indemnified Person against expenses (including
reasonable attorneys' fees and expenses), 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 Trust,
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 Indemnified 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 Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted by
law, any Indemnified 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 Trust to procure a judgment in its favor by
reason of the fact that he is or was an Indemnified Person against
expenses (including reasonable attorneys' fees and expenses) 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 Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware 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
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of the case, such person is fairly and reasonably entitled to indemnity
for such expenses which such Court of Chancery or such other court shall
deem proper.
(iii) To the extent that an Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4 (a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full
extent permitted by law, against expenses (including reasonable
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(iv) Any indemnification of an Administrator under paragraphs (i)
and (ii) of this Section 10.4(a) (unless ordered by a court) shall be
made by the Sponsor only as authorized in the specific case upon a
determination that indemnification of the Indemnified Person is proper
in the circumstances because he has met the applicable standard of
conduct set forth in paragraphs (i) and (ii). Such determination shall
be made (1) by the Administrators by a majority vote of a Quorum
consisting of such Administrators who were not parties to such action,
suit or proceeding, (2) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) To the fullest extent permitted by law, expenses (including
reasonable attorneys' fees and expenses) incurred by an Indemnified
Person in defending a civil, criminal, administrative or investigative
action, suit or proceeding referred to in paragraphs (i) and (ii) of
this Section 10.4 (a) shall be paid by the Sponsor in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to
be indemnified by the Sponsor as authorized in this Section 10.4 (a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor
if a determination is reasonably and promptly made (i) by the
Administrators by a majority vote of a Quorum of disinterested
Administrators, (ii) if such a Quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion or (iii) the Common
Security Holder of the Trust, that, based upon the facts known to the
Administrators, counsel or the Common Security Holder at the time such
determination is made, such Indemnified Person acted in bad faith or in
a manner that such Person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal
proceeding, that such Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful. In no event shall any advance
be made in instances where the Administrators, independent legal counsel
or the Common Security Holder reasonably determine that such Person
deliberately breached his duty to the Trust or its Common or Capital
Security Holders.
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(vi) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 10.4 (a)
shall not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the
Sponsor or Capital Security Holders of the Trust or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office. All rights to indemnification under this
Section 10.4(a) shall be deemed to be provided by a contract between the
Sponsor and each Indemnified Person who serves in such capacity at any
time while this Section 10.4 (a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any Person who is or was an Indemnified Person
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
Sponsor would have the power to indemnify him against such liability
under the provisions of this Section 10.4 (a).
(viii) For purposes of this Section 10.4 (a), references to "the
Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any Person who is or was
a director, trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity as a
director, trustee, officer, employee or agent of another entity, shall
stand in the same position under the provisions of this Section 10.4 (a)
with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 10.4(a) shall, unless otherwise
provided when authorized or ratified, continue as to a Person who has
ceased to be an Indemnified Person and shall inure to the benefit of the
heirs, executors and administrators of such a Person. This Section 10.4
shall survive the termination of this Declaration.
SECTION 10.5 Outside Businesses. Any Covered Person, the Sponsor,
the Delaware Trustee and the Institutional Trustee (subject to Section 5.3(c))
may engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or the
Institutional Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware
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Trustee and the Institutional Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
or may act as depositary for, trustee or agent for, or act on any committee or
body of holders of, securities or other obligations of the Sponsor or its
Affiliates.
SECTION 10.6 Compensation; Fees. The Sponsor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) including compensation for services rendered up to
the time of any removal or resignation of such Trustee; and
(b) except as otherwise expressly provided herein, to reimburse
the Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision of
this Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to, in the case of the
Institutional Trustee, its negligence or bad faith or, in the case of the
Delaware Trustee, its gross negligence or bad faith.
To the fullest extent permitted by law, the parties intend that
the provisions of Section 3561 of Title 12 of the Delaware Code shall not apply
to the Trust and that the compensation payable hereby shall not be subject to
review by any court of competent jurisdiction, whether pursuant to Section 3560
of Title 12 of the Delaware Code or otherwise.
The provisions of this Section 10.6 shall survive the dissolution
of the Trust and the termination of this Declaration and the removal or
resignation of any Trustee.
No Trustee may claim any lien or charge on any property of the
Trust as a result of any amount due pursuant to this Section 10.6.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters. (a) At all times during
the existence of the Trust, the Administrators shall keep, or cause to be kept,
full books of account, records and supporting documents, which shall reflect in
reasonable detail each transaction of the Trust. The books of account shall be
maintained on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied. The books of account and
the records of the Trust shall be examined by and reported upon as of the end of
each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Administrators.
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(b) The Administrators shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust, including a
balance sheet of the Trust as of the end of such Fiscal Year, and the related
statements of income or loss.
(c) The Administrators shall cause to be duly prepared and
delivered to each of the Holders of Securities any annual United States federal
income tax information statement required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Administrators shall endeavor
to deliver all such statements within 30 days after the end of each Fiscal Year
of the Trust.
(d) The Sponsor shall cause to be duly prepared and filed an
annual United States federal income tax return on a Form 1041 or such other form
required by United States federal income tax law, and any other annual income
tax returns required to be filed by the Sponsor on behalf of the Trust with any
state or local taxing authority.
SECTION 11.3 Banking. The Trust shall maintain one or more bank
accounts in the name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.
SECTION 11.4 Withholding. The Trust and the Administrators shall
comply with all withholding requirements under United States federal, state and
local law. The Trust shall request, and the Holders shall provide to the Trust,
such forms or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations and forms as
shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Administrators
shall file required forms with applicable jurisdictions and, unless an exemption
from withholding is properly established by a Holder, shall remit amounts
withheld with respect to the Holder to applicable jurisdictions. To the extent
that the Trust is required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a Distribution in the amount of the withholding to the
Holder. In the event of any claimed overwithholding, Holders shall be limited to
an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments. (a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities, this Declaration may
only be amended by a written instrument approved and executed by
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(i) the Institutional Trustee; and
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) Notwithstanding any other provision of this Article XII, no
amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless the Institutional Trustee shall have first received
(A) an Officers' Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms
of the Securities); and
(ii) if the result of such amendment would be to
(A) cause the trust to fail to continue to be classified
for purposes of United States federal income taxation as a
grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture
Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act.
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the powers,
preferences or special rights of any Holder of Securities may be effected only
with such additional requirements as may be set forth in Annex I hereto.
(d) In addition to and notwithstanding any other provision in
this Declaration, without the consent of each affected Holder, this Declaration
may not be amended to (i) change the amount or timing of any distribution on the
Securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the Securities as of a specified date or (ii) restrict
the right of a Holder to institute suit for the enforcement of any such payment
on or after such date.
(e) Sections 3.15(c), 9.1(b) and 9.1(c) and this Section 12.1
shall not be amended without the consent of all of the Holders of the
Securities.
(f) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.
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(g) the rights of the holders of the Capital Securities under
Article V to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Capital Securities.
(h) Subject to Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to modify, eliminate and add to any provision of this
Declaration to such extent as may be necessary to ensure that the Trust
will not be required to register as an "investment company" under the
Investment Company Act and that the Trust will be classified for United
States federal income tax purposes at all times as a grantor trust; and
(v) to modify, eliminate and add to any provision of this
Declaration to such extent as may be necessary; provided, however, that
no such modification, elimination or addition shall adversely affect the
powers, preferences or special rights of Holders of Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by
Written Consent. (a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrators (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any. The Administrators shall
call a meeting of the Holders of such class if directed to do so by the Holders
of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrators one or more calls
in a writing stating that the signing Holders of Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Holders of Securities calling a meeting shall specify in
writing the Certificates held by the Holders of Securities exercising the right
to call a meeting and only those Securities represented by such Certificates
shall be counted for purposes of determining whether the required percentage set
forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders
of Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which
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the Capital Securities are listed or admitted for trading, if any, such
vote, consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of Securities
owning not less than the minimum amount of Securities in liquidation
amount that would be necessary to authorize or take such action at a
meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders of Securities entitled
to vote who have not consented in writing. The Administrators may
specify that any written ballot submitted to the Security Holder for the
purpose of taking any action without a meeting shall be returned to the
Trust within the time specified by the Administrators;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders of the Securities were
stockholders of a Delaware corporation; each meeting of the Holders of
the Securities shall be conducted by the Administrators or by such other
Person that the Administrators may designate; and
(iii) unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Capital Securities are then listed for
trading, if any, otherwise provides, the Administrators, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise
of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional
Trustee. The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each successor Institutional Trustee represents and warrants to the Trust and
the Sponsor at the time of the successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee, that:
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(a) the Institutional Trustee is a national banking
association with trust powers and authority to execute and deliver, and
to carry out and perform its obligations under the terms of, this
Declaration;
(b) the execution, delivery and performance by the
Institutional Trustee of the Declaration has been duly authorized by all
necessary corporate action on the part of the Institutional Trustee.
This Declaration has been duly executed and delivered by the
Institutional Trustee, and it constitutes a legal, valid and binding
obligation of the Institutional Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity
(regardless of whether considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of this
Declaration by the Institutional Trustee does not conflict with or
constitute a breach of the charter or by-laws of the Institutional
Trustee; and
(d) no consent, approval or authorization of, or
registration with or notice to, any state or federal banking authority
is required for the execution, delivery or performance by the
Institutional Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee, that:
(a) The Delaware Trustee is a national banking association
or a Delaware banking corporation with trust powers, and is duly
organized and validly existing, with power and authority to execute and
deliver, and to carry out and perform its obligations under the terms
of, this Declaration.
(b) The Delaware Trustee has been authorized to perform
its obligations under the Certificate of Trust and this Declaration.
This Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
(c) No consent, approval or authorization of, or
registration with or notice to, any Delaware state or federal banking
authority is required for the execution, delivery or performance by the
Delaware Trustee of this Declaration.
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity
which has its principal place of business in the
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State of Delaware and, in either case, a Person that satisfies for the Trust the
requirements of Section 3807 of the Business Trust Act.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices. All notices provided for in this
Declaration shall be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrators at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
PXRE Corporation
399 Thornall Street
Edison, New Jersey 08837
Attention: Treasurer
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to the
Holders of the Securities):
First Union Bank of Delaware
One Rodney Square
920 King Street, 1st Floor
Wilmington, Delaware 19801-7475
Attention: Stephen J. Kaba
(c) if given to the Institutional Trustee, at the Institutional
Trustee's mailing address set forth below (or such other address as the
Institutional Trustee may give notice of to the Holders of the Securities):
First Union National Bank
765 Broad Street
Newark, New Jersey 07102
Attention: Corporate Trust Department
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
PXRE Corporation
399 Thornall Street
Edison, New Jersey 08837
Attention: Treasurer
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(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 Governing Law. This Declaration and the rights of
the parties hereunder shall be governed by and interpreted in accordance with
the laws of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to the principles of conflict of laws of the State
of Delaware or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the State of Delaware; provided, however,
that there shall not be applicable to the Trust, the Trustees or this
Declaration any provision of the laws (statutory or common) of the State of
Delaware pertaining to trusts (other than the Business Trust Act) that relate to
or regulate, in a manner inconsistent with the terms hereof (a) the filing with
any court or governmental body or agency of trustee accounts or schedules of
trustee fees and charges, (b) affirmative requirements to post bonds for
trustees, officers, agents or employees of a trust, (c) the necessity for
obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (d) fees or other sums
payable to trustees, officers, agents or employees of a trust, (e) the
allocation of receipts and expenditures to income or principal, (f) restrictions
or limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner of
holding or investing trust assets or (g) the establishment of fiduciary or other
standards of responsibility or limitations on the acts or powers of trustees
that are inconsistent with the limitations or liabilities or authorities and
powers of the Trustees as set forth or referenced in this Declaration. Section
3540 of Title 12 of the Delaware Code shall not apply to the Trust.
SECTION 14.3 Intention of the Parties. It is the intention of the
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.4 Headings. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns. Whenever in this Declaration
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
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SECTION 14.6 Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 14.7 Counterparts. This Declaration may contain more than
one counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees and Administrators to any
of such counterpart signature pages. All of such counterpart signature pages
shall be read as though one, and they shall have the same force and effect as
though all of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to
be executed as of the day and year first above written.
FIRST UNION BANK OF DELAWARE
as Delaware Trustee
By: /s/ Stephen J. Kaba
----------------------------
Name: Stephen J. Kaba
Title Vice President
FIRST UNION NATIONAL BANK
as Institutional Trustee
By: /s/ Rick Barnes
----------------------------
Name: Rick Barnes
Title: Assistant Vice President
PXRE CORPORATION,
as Sponsor
By: /s/ Gerald L. Radke
--------------------------------
Name: Gerald L. Radke
Title: President
/s/ Gerald L. Radke
---------------------------------
, as Administrator
/s/ Sanford M. Kimmel
---------------------------------
, as Administrator
/s/ Joan Cadd
---------------------------------
, as Administrator
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ANNEX I
TERMS OF
8.85% CAPITAL TRUST PASS-THROUGH SECURITIES 'sm' (TRUPS 'sm')*
Pursuant to Section 7.1 of the Amended and Restated Declaration
of Trust, dated as of January 29, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in the
Declaration, as defined in the Offering Memorandum):
1. Designation and Number. (a) Capital Securities. 100,000
Capital Securities of PXRE Capital Trust I (the "Trust"), with an aggregate
stated liquidation amount with respect to the assets of the Trust of one hundred
million dollars ($100,000,000) and a stated liquidation amount with respect to
the assets of the Trust of $1,000 per Capital Security, are hereby designated
for the purposes of identification only as "8.85% Capital Trust Pass-through
Securities"'sm' (the "Capital Securities"). The Capital Security Certificates
evidencing the Capital Securities shall be substantially in the form of Exhibit
A-1 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Capital Securities are listed,
if any.
(b) Common Securities. 3,093 Common Securities of the Trust (the
"Common Securities"). The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions. (a) Distributions payable on each Security will
be fixed at a rate per annum of 8.85% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee. Except as set
forth below in respect of an Extension Period, Distributions in arrears for more
than one semiannual period will bear interest thereon compounded semiannually at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded distributions payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Trust has funds legally
available therefor. The amount of Distributions payable for any period will be
computed for any
_____________________
* Salomon Brothers Inc has filed applications with the United States Patent
and Trademark Office for the registration of the "Capital Trust
Pass-through Securities" and the "TruPS" service marks.
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full semiannual period on the basis of a 360-day year of twelve 30-day months
and the actual number of days elapsed per 30-day month.
(b) Distributions on the Securities will be cumulative, will
accrue from January 29, 1997, and will be payable, subject to extension of
distribution payment periods as described herein, semiannually in arrears on
February 1, and August 1 of each year, commencing on August 1, 1997 (each a
"Distribution Payment Date") when, as and if available for payment. The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period (each an "Extension
Period") at any time and from time to time on the Debentures, subject to the
conditions described below, although such interest would continue to accrue on
the Debentures 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 Securities will also be deferred (though such
distributions would continue to accrue at the distribution rate of 8.85% per
annum, compounded semiannually to the extent permitted by law) during any
Extension Period. Such right to extend any interest payment period in respect of
the Debentures is limited to Extension Periods, each not exceeding 10
consecutive semiannual periods, provided, however, that no Extension Period
shall be initiated while accrued interest from a prior, completed Extension
Period is unpaid or while the Debenture Issuer is in default in the payment of
interest that has become due and payable on the Debentures; and, provided,
further, that no Extension Period shall extend beyond the date of maturity of
the Debentures. In the event that the Debenture Issuer exercises this right,
then, during any Extension Period (a) the Debenture Issuer 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 the Debenture Issuer of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Debenture Issuer's capital stock or rights to acquire
such capital stock or the exchange or conversion of one class or series of the
Debenture Issuer's capital stock or rights to acquire such capital stock for
another class or series of the Debenture Issuer's capital stock or rights to
acquire such capital stock, (iii) the purchase of fractional interests in shares
of the Debenture Issuer'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 the Debenture Issuer's capital stock or
rights to acquire such capital stock, in each case with the Debenture Issuer's
capital stock or rights to acquire such capital stock), or make guarantee
payments (other than payments under the Capital Securities Guarantee and the
Common Securities Guarantee) with respect to the foregoing, and (b) the
Debenture Issuer shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by the
Debenture Issuer that rank pari passu with or junior to such Debentures. Prior
to the termination of any such Extension Period in respect of the Debentures,
the Debenture Issuer may further extend the interest payment period; provided
that each such Extension Period in respect of the Debentures, together with all
such previous and further extensions thereof, may not exceed 10 consecutive
semiannual periods or extend beyond the maturity of the Debentures. Upon the
termination of any Extension Period of the Debentures and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements. If Distributions are deferred, the
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Distributions due 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 the Securities as
they appear on the books and records of the Trust on the record date immediately
preceding such date. Distributions on the 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 of the Trust. The Trust's funds available for Distribution to the
Holders of the Securities will be limited to payments received from the
Debenture Issuer. The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Securities Guarantees.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates.
(i) While the Capital Securities are held solely in book-entry
only form, the relevant record dates shall be one Business Day prior to
the relevant payment dates which payment dates correspond to the
interest payment dates on the Debentures. Such Distributions will be
paid through the Institutional Trustee who will hold amounts received in
respect of the Debentures in the Property Account for the benefit of the
Holders of the Securities. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in
respect of the Capital Securities will be made as described below.
The Depository Trust Company ("DTC") will act as securities
depository for the Capital Securities. Distributions on the Capital
Securities held in book-entry form will be made to DTC in immediately
available funds. Participants in DTC include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). 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 direct or
indirect custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). 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 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 the
Company, 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.
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. The
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relevant record dates for the Common Securities shall be the same record
dates as for the Capital Securities.
(ii) At any time when the Capital Securities are not held solely
in book-entry only form, the relevant record dates shall be selected by
the Administrators, which dates shall be 15 days before the relevant
payment dates. Payments in respect of Capital Securities held in
registered definitive form will be made by check to the Holder entitled
thereto. Distributions payable on any Securities that are not punctually
paid on any Distribution Payment Date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, as the case
may be, when due (taking into account any Extension Period), will cease
to be payable to the Person in whose name such Securities are registered
on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are
registered on the special record date or other specified date determined
in accordance with the Indenture. If any date on which Distributions are
payable on the Securities is not a Business Day, then payment of the
Distribution 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.
(d) In the event that there is any money or other property held
by or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust
(each a "Liquidation") other than in connection with a redemption of the
Debentures, the Holders of the Securities on the date of such Liquidation, will
be entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities, after paying or making reasonable provision to pay all
claims and obligations of the Trust in accordance with Section 3808(e) of the
Business Trust Act, an amount equal to the aggregate of the stated liquidation
amount of $1,000 per Security plus accrued and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"), unless
in connection with such Liquidation, Debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with identical
premium to, if any, such Securities, with an interest rate equal to the Coupon
Rate of, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on, and having the same record date as, such
Securities, after the payment or the making of reasonable provision to pay all
claims and obligations of the Trust in accordance with Section 3808(e) of the
Business Trust Act, shall be distributed on a Pro Rata basis to the Holders of
the Securities in exchange for such Securities, except in the case of a
Liquidation occurring on expiration of the term of the Trust where all of the
Debentures have been paid in full. Upon any such Liquidation of the Trust
involving a distribution of the Debentures, if at the time of such Liquidation,
the Capital Securities were rated by at least one nationally-recognized rating
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organization, the Debenture Issuer will use its reasonable best efforts to
obtain from at least one nationally recognized statistical rating organization a
rating for the Debentures.
The Sponsor, as the Holder of all of the outstanding Common
Securities, has the right at any time to dissolve the Trust (including without
limitation upon the occurrence of a Tax Event or an Investment Company Event)
and, after the payment or the making of reasonable provision to pay all claims
and obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act, cause the Debentures to be distributed to the Holders of the
Securities on a Pro Rata basis.
The Trust shall dissolve (i) unless earlier terminated, on
January 21, 2052, the expiration of the term of the Trust, (ii) upon a
Bankruptcy Event with respect to the Sponsor, Trust or the Debenture Issuer,
(iii) (other than in connection with a merger, consolidation or similar
transaction not prohibited by the Indenture, this Declaration or the Securities
Guarantees, as the case may be) upon the filing of a certificate of dissolution
or its equivalent with respect to the Sponsor; upon the consent of the Holders
of a Majority in liquidation amount of the 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 the Sponsor and the expiration of 90 days
after the date of revocation without a reinstatement thereof, (iv) upon the
distribution to the Holders of the Securities of the Debentures, 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) upon the entry of a decree
of a judicial dissolution of the Sponsor, the Trust or the Debenture Issuer,
(vi) when all of the Securities shall have been called for redemption and the
amounts necessary for redemption thereof shall have been paid to the Holders in
accordance with the terms of the Securities, or (vii) before the issuance of any
Securities, with the consent of all of the Institutional Trustee, the
Administrators and the Sponsor. 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 with the Secretary of
State of the State of Delaware.
If a Liquidation of the Trust occurs as described in clause (i),
(ii), (iii) or (v) in the immediately preceding paragraph, the Trust shall be
liquidated by the Trustees as expeditiously as such Trustees determine to be
possible by distributing, after the payment or the making of reasonable
provision to pay all claims and obligations of the Trust in accordance with
Section 3808(e) of the Business Trust Act, to the Holders of the Securities, the
Debentures on a Pro Rata basis, unless such distribution is determined by the
Institutional Trustee 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
the Holders, after satisfaction of liabilities of creditors of the Trust, an
amount equal to the Liquidation Distribution except in the case of clause (i)
where the Debentures have been paid in full. An early Liquidation of the Trust
pursuant to clause (iv) above shall occur if the Institutional Trustee
determines that such Liquidation is possible by distributing, after the payment
or the making of reasonable provision to pay all claims and obligations of the
Trust in accordance with Section 3808(e) of the Business Trust Act, to the
Holders of the Securities on a Pro Rata basis, the Debentures, and such
distribution occurs.
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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 the Securities shall be paid on a Pro Rata basis, except that if
an Event of Default has occurred and is continuing, the Capital Securities shall
have a preference over the Common Securities with regard to such amounts.
After the date for any distribution of the Debentures upon
dissolution of the Trust, (i) the Securities of the Trust will be deemed to be
no longer outstanding, (ii) the Depositary or its nominee, as the record holder
of the Capital Securities, will receive a registered security in global form or
certificates representing the Debentures to be delivered upon such distribution,
and (iii) any certificates representing the Capital Securities not held by the
Depositary or its nominee will be deemed to represent undivided beneficial
interests in such of the Debentures as have an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to the distribution rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance.
4. Redemption and Distribution. (a) If the Debenture Issuer
redeems the Debentures, the Trust shall redeem, on a Pro Rata basis, Securities
with an aggregate liquidation amount equal to the aggregate principal amount of
Debentures so redeemed at a redemption price (the "Redemption Price") equal to
(i) $1,000 per Security, in the case of a redemption upon the occurrence of a
Tax Event, (ii) in an amount per Security equal to the Make-Whole Amount for a
corresponding $1,000 principal amount of Debentures, in the case of a redemption
upon the occurrence of an Investment Company Event prior to February 1, 2007, or
(iii) an amount per Security equal to the product of $1,000 and the applicable
percentage used to determine the Call Price for the Debentures being redeemed,
in the case of an Optional Redemption of Debentures or a redemption upon the
occurrence of an Investment Company Event on or after February 1, 2007, in each
case together with accrued and unpaid Distributions thereon to the date of the
redemption, as described below, including Special Payments.
The Debentures may be redeemed by the Debenture Issuer, in whole
or in part, at any time and from time to time on or after February 1, 2007, at
the call prices specified below:
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If redeemed during the
12-month period
beginning, February 1, Call Price
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%
and thereafter at 100% of the principal amount of the Debentures (in each case,
a "Call Price"), together, in each case, with accrued and unpaid Distributions
thereon to the date fixed for redemption provided, however, that Holders of the
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption (other than at the stated maturity of the Debentures).
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be as described in Section
4(e)(ii) below.
(c) Tax Event Redemption and Investment Company Event Redemption.
(i) If, at any time, a Tax Event (as defined below) should
occur and be continuing, the Debenture Issuer shall have the right to
advance the stated maturity of the Debentures 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 the Debenture
Issuer experienced in such matters, after advancing the maturity date,
interest payable by the Debenture Issuer on the Debentures 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 the Debenture Issuer receives an opinion (a "Redemption
Tax Opinion") of a nationally recognized independent tax counsel to the
Debenture Issuer experienced in such matters that, as a result of such
Tax Event, there is more than an insubstantial risk that the Debenture
Issuer would be precluded from deducting the interest on the Debentures
for United States federal income tax purposes, even if a Tax Event
Maturity Advancement were effected, the Debenture Issuer shall have the
right at any time, within 90 days following the occurrence of such Tax
Event, upon not less than 30 days' nor more than 60 days' notice to
redeem the Debentures, 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
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the date of redemption, provided that (i) if at the time there is available to
the Debenture Issuer or the Trust the opportunity to eliminate, within such 90
day period and before any such notice is given, the adverse effects of such Tax
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no adverse
effect on the Debenture Issuer, the Trust or the holders of the Securities and
(ii) such notice has not been given, the Debenture Issuer or the Trust shall
pursue such ministerial action in lieu of redemption. If Debentures are only
partly redeemed pursuant to this Section 4(c), Debentures shall be redeemed pro
rata or by lot or by any other method utilized by the Institutional Trustee.
"Tax Event" means the receipt by the Administrators of an opinion
of a nationally recognized independent tax counsel to the Debenture
Issuer 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 Debentures or subject to
more than a de minimis amount of other taxes, duties or other
governmental charges, (b) any portion of interest payable by the
Debenture Issuer to the Trust on the Debentures is not, or within 90
days of the date thereof will not be, deductible by the Debenture Issuer
for United States federal income tax purposes, or (c) the Debenture
Issuer could become liable to pay, on the he Debentures, any Additional
Interest (as defined in the Indenture).
(ii) Upon the occurrence of an Investment Company Event
(as defined below), the Debenture Issuer shall have the right within 90
days following the occurrence of such Investment Company Event, upon not
less than 30 days' nor more than 60 days' notice to redeem the
Debentures, in whole or in part, for cash at (i) the Make-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. If Debentures are only
partly redeemed pursuant to this Section 4(c), Debentures shall be
redeemed pro rata or by lot or by any other method utilized by the
Institutional Trustee.
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"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, which
Change in 1940 Act Law becomes effective or is announced, enacted or
promulgated on or after January 24, 1997.
The "Make-Whole Amount" will be equal to the greater of (i)
100% of the principal amount of the Debentures to be redeemed 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 of such Debentures on February 1, 2007, together with the
present values of scheduled payments of interest 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 Debentures 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
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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"), the Debenture Issuer 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 the Debenture Issuer.
"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) 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.
(d) The Trust may not redeem fewer than all the outstanding
Capital Securities unless all accrued and unpaid Distributions have been paid on
all Capital Securities for all semiannual Distribution periods terminating on or
before the date of redemption.
(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution
of Debentures in exchange for, the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail to
each Holder of Securities to be redeemed or exchanged not fewer than 30
nor more than 60 days before the date fixed for redemption or exchange
thereof which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(e)(i), a Redemption/Distribution Notice shall
be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of such Securities. Each
Redemption/Distribution Notice shall be
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addressed to the Holders of such Securities at the address of each such
Holder appearing on the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing thereof with respect to
any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Capital Securities; provided,
however, that, in respect of Capital Securities registered in the name
of and held of record by the Depositary or its nominee (or any successor
Clearing Agency or its nominee), the Capital Securities shall be
redeemed in accordance with the procedures of the Depositary (which may
include redemption by lot), and the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or Person
on whose behalf such nominee holds such Securities) in accordance with
the procedures applied by such Clearing Agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives
a Redemption/ Distribution Notice, which notice may only be issued if
the Debentures are redeemed as set out in this Section 4 (which notice
will be irrevocable), then (A) with respect to the Capital Securities,
while the Capital Securities are in book-entry only form, provided that
the Debenture Issuer has paid the Institutional Trustee a sufficient
amount of cash in connection with the related redemption or maturity of
the Debentures, the Institutional Trustee will deposit irrevocably with
the Depositary or its nominee (or successor Clearing Agency or its
nominee), by 12:00 noon, New York City time, on the redemption date,
funds sufficient to pay the applicable Redemption Price with respect to
the Capital Securities and will give such Depositary irrevocable
instructions and authority to pay the Redemption Price to the Holders of
the Capital Securities, and (B) with respect to Capital Securities
issued in definitive form and Common Securities, provided that the
Debenture Issuer has paid the Institutional Trustee a sufficient amount
of cash in connection with the related redemption or maturity of the
Debentures, the Institutional Trustee will pay the relevant Redemption
Price to the Holders of such 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 a Redemption/Distribution Notice 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 Securities so called for redemption and all rights of
Holders of such Securities so called for redemption will cease, except
the right of the Holders of such Securities to receive the applicable
Redemption Price specified in Section 4(a), but without interest on such
Redemption Price. If any date fixed for redemption of Securities is not
a Business Day, then payment of any such redemption price 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 falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any
Securities is improperly withheld or refused and not paid either by the
Trust or by the Sponsor as guarantor pursuant to the relevant Securities
Guarantee,
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Distributions on such 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 of any redemption of Capital Securities issued by
the Trust in part, the Trust shall not be required to (i) issue,
register the transfer of or exchange any 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 Capital
Securities so selected for redemption, in whole or in part, except for
the unredeemed portion of any Capital Securities being redeemed in part.
(iv) Redemption/Distribution Notices shall be sent by the
Administrators on behalf of the Trust to (A) in respect of the Capital
Securities, the Depositary or its nominee (or any successor Clearing
Agency or its nominee) if the Global Capital Securities have been issued
or, if Definitive Capital Securities have been issued, to the Holders
thereof, and (B) in respect of the Common Securities, to the Holder
thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws),
provided the acquiror is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of 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.
5. Voting Rights - Capital Securities. (a) Except as provided
under Sections 5(b) and 7 and as otherwise required by law and the Declaration,
the Holders of the Capital Securities will have no voting rights. The
Administrators are required to call a meeting of the Holders of the Capital
Securities if directed to do so by Holders of at least 10% in liquidation amount
of the Capital Securities.
(b) Subject to the limitations on the ability to pursue remedies
set forth in the Indenture and to the requirements of obtaining a tax opinion by
the Institutional Trustee in certain circumstances set forth in the last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Capital Securities, voting separately as a class, may direct, subject to the
last paragraph of Section 2.6(a) of the Declaration, 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 the Institutional
Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) exercise the remedies available
under the Indenture as the holder of the Debentures, (ii) waive any past default
that is waivable under the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures 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 Debentures
where such consent shall be required, provided, however, that, where a consent
or action under the Indenture would require the consent or act of the holders of
greater than a majority in principal amount of Debentures (a "Super Majority")
affected thereby, the Institutional Trustee
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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 Debentures outstanding. If the
Institutional Trustee fails to enforce its rights under the Debentures 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
fullest extent permitted by law, a Holder of the Capital Securities may
institute a legal proceeding directly against the Debenture Issuer to enforce
the Institutional Trustee's rights under the Debentures 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 Indenture). Notwithstanding the foregoing, if an Event of Default
has occurred and is continuing and such event is attributable to the failure of
the Debenture Issuer to pay interest or principal (or premium, if any) on the
Debentures on the date the interest or principal (or premium, if any) is
payable, as deferred pursuant to a valid Extension Period, if applicable (or in
the case of redemption, the redemption date), then a Holder of record of Capital
Securities may directly institute a proceeding for enforcement of payment, on or
after the respective due dates specified in the Debentures, to such Holder
directly of the principal of (or premium, if any) or interest on the Debentures
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 Debentures unless (x) such defaults
have 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 the Capital Securities, except where the default
relates to the payment of principal of (or premium, if any) or interest on any
of the Debentures. Such notice shall state that such Indenture Event of Default
also constitutes an Event of Default hereunder. Except 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.
If any series of Debt Securities is held by a PXRE Trust or a
trustee of such trust, any supplemental indenture shall not be effective until
the Holders of a Majority in liquidation amount of Securities of the applicable
PXRE Trust shall have consented to such supplemental indenture and provided that
if the consent of a Security Holder of each outstanding Debt Security is
required, such supplemental indenture shall not be effective until each holder
of the Securities of the applicable PXRE Trust shall have consented (voting
together as a single class) to such supplemental indenture.
In the event the consent of the Institutional Trustee is required
under the Indenture with respect to any amendment, modification or termination
of the Indenture, the Institutional Trustee shall request the direction of the
Holders of the 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 the Securities
voting together as a single class; provided, however, that where a consent under
the Indenture
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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
Debentures outstanding. The Institutional Trustee shall not take any such action
in accordance with the directions of the Holders of the 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 Event of Default hereunder. Any required approval or
direction of Holders of Capital Securities may be given at a separate meeting of
Holders of Capital Securities convened for such purpose, at a meeting of the
Holders of Securities in the Trust 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 Capital
Securities. Each such notice will include a statement setting forth (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 the Capital Securities will be required for
the Trust to redeem and cancel Capital Securities or to distribute the
Debentures in accordance with the Declaration and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled
to vote or consent under any of the circumstances described above, the Capital
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not entitle the Holder thereof to vote or consent and shall, for purposes of
such vote or consent, be treated as if such Capital Securities were not
outstanding.
Holders of Capital Securities will have no rights to appoint or
remove the Administrators, who may be appointed, removed or replaced solely by
the Holder of all of the Common Securities of the Trust. Under certain
circumstances as more fully described in the Declaration, Holders of Capital
Securities have the right to vote to appoint, remove or replace the
Institutional Trustee.
6. Voting Rights - Common Securities. (a) Except as provided
under Sections 6(b), 6(c) and 7 and as otherwise required by law and the
Declaration, the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Administrators.
(c) Subject to Section 2.6 of the Declaration and only after each
Event of Default (if any) with respect to the Capital Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a
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Majority in liquidation amount of the Common Securities, voting separately as a
class, may 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 the Institutional Trustee under the Declaration, including
(i) directing the time, method, place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive
any past default and its consequences that is waivable under the Indenture, or
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable, provided, however, that, where a
consent or action under the Indenture would require a Super Majority, 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 liquidation
amount of the Common Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding. Notwithstanding
this Section 6(c), the Institutional Trustee shall not revoke any action
previously authorized or approved by a vote or consent of the Holders of the
Capital Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action described in (i), (ii) or (iii) above, unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights under the Declaration, any
Holder of Common Securities may institute a legal proceeding directly against
any Person to enforce the Institutional Trustee's rights under the Declaration,
without first instituting a legal proceeding against the Institutional Trustee
or any other Person.
If any series of Debt Securities is held by a PXRE Trust or a
trustee of such trust, any supplemental indenture shall not be effective until
the Holders of a Majority in liquidation amount of Securities of the applicable
PXRE Trust shall have consented to such supplemental indenture and provided that
if the consent of a Security Holder of each outstanding Debt Security is
required, such supplemental indenture shall not be effective until each holder
of the Securities of the applicable PXRE Trust shall have consented (voting
together as a single class) to such supplemental indenture.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of the Holders of Securities in the Trust or pursuant to
written consent. The Administrators will cause a notice of any meeting at which
Holders of Common 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 Common Securities. Each such notice will include a statement setting
forth (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.
I-15
<PAGE>
<PAGE>
No vote or consent of the Holders of the Common Securities will
be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture. (a) In addition to
any requirements under Section 12.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Trustees otherwise propose to
effect, (i) any action that would adversely affect the powers, preferences or
special rights of the Securities, whether by way of amendment to the Declaration
or otherwise, or (ii) the dissolution, winding-up or termination of the Trust,
other than as described in Section 8.1 of the Declaration, then the Holders of
outstanding 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 Securities, affected thereby; provided, however, 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 Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
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 the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
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 the
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
(c) Notwithstanding the foregoing, no amendment or modification
may be made to a 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, (ii) reduce or otherwise adversely affect the
powers of the Institutional Trustee or (iii) cause the Trust to be deemed an
"investment company" which is required to be registered under the Investment
Company Act.
(d) Notwithstanding any provision of the Declaration, the right
of any Holder of Capital Securities to receive payment of distributions and
other payments upon redemption or otherwise, on or after their respective due
dates, or to institute a 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. For the protection and enforcement of the foregoing
provision, each and every Holder of Capital Securities shall be entitled to such
relief as can be given either at law or equity.
I-16
<PAGE>
<PAGE>
8. Pro Rata. A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each Holder of the Capital Securities
pro rata according to the aggregate liquidation amount of Capital Securities
held by the relevant Holder relative to the aggregate liquidation amount of all
Capital Securities outstanding, and only after satisfaction of all amounts owed
to the Holders of the Capital Securities, to each Holder of Common Securities
pro rata according to the aggregate liquidation amount of Common Securities held
by the relevant Holder relative to the aggregate liquidation amount of all
Common Securities outstanding. In any such proration, the Trust may make such
adjustments as may be appropriate in order that only Securities in denominations
of $1,000 or integral multiples thereof shall be redeemed.
9. Ranking. The Capital Securities rank pari passu and payment
thereon shall be made Pro Rata with the Common Securities except that, where an
Event of Default has occurred and is continuing, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities with the result that no payment of any
Distribution on, or Redemption Price of, any Common Security, and no other
payment on account of redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all outstanding Capital Securities for all distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all outstanding
Capital Securities then called for redemption, shall have been made or provided
for, and all funds immediately available to the Institutional Trustee shall
first be applied to he payment in full in cash of all Distributions on, or the
redemption Price of, Capital Securities then due and payable.
10. Acceptance of Securities Guarantee and Indenture. Each Holder
of Capital Securities and Common Securities, by the acceptance of such
Securities, agrees to the provisions of the Capital Securities Guarantee and the
Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights. The Holders of the Securities shall
have no preemptive or similar rights to subscribe for any additional securities.
12. Miscellaneous. These terms constitute a part of the
Declaration. The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-17
<PAGE>
<PAGE>
EXHIBIT A-1
FORM OF INITIAL CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[Include the following Restricted Securities Legend on all
Capital Securities, including Rule 144A Global Capital Securities and Restricted
Definitive Capital Securities, unless otherwise determined by the Sponsor in
accordance with applicable law ----THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH PXRE
CORPORATION (THE "COMPANY") OR PXRE CAPITAL TRUST I (THE "TRUST") OR ANY
AFFILIATE OF THE COMPANY OR THE TRUST WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTIONS TERMINATION DATE") ONLY
(A) TO THE COMPANY OR THE TRUST, (B) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT
IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY A PURCHASER
THAT IS
A-1-1
<PAGE>
<PAGE>
NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN BOOK-ENTRY FORM.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTIONS TERMINATION DATE.]
[Include if Capital Security is in the form of a Restricted
Definitive Capital Security -- IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER
INFORMATION AS MAY BE REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.]
[Include if Capital Security is in global form and The Depository
Trust Company is the Clearing Agency -- UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[Include if Capital Security is in global form -- TRANSFERS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO
BELOW.]
A-1-2
<PAGE>
<PAGE>
Certificate Number Number of Capital Securities
CUSIP NO ___________
Certificate Evidencing Capital Securities
of
PXRE CAPITAL TRUST I
8.85% Capital Pass-through Securities'sm' (TRUPS'sm')
(liquidation amount $1,000 per Capital Security)
PXRE CAPITAL TRUST I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
designated the 8.85% Capital Trust Pass-through Securities'sm' (liquidation
amount $1,000 per Capital Security) (the "Capital Securities"). Subject to the
Declaration (as defined below), the Capital Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are issued pursuant to,
and shall in all respects be subject to, the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of January 29, 1997, among
Gerald L. Radke, Sanford M. Kimmel and Joan L. Cadd as Administrators, First
Union Bank of Delaware, as Delaware Trustee, First Union National Bank, as
Institutional Trustee, PXRE Corporation and the holders from time to time of
undivided beneficial interests in the assets of the Trust, as Sponsor, including
the designation of the terms of the Capital Securities as set forth in Annex I
to the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Capital Securities Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Capital Securities Guarantee and the
Indenture to the Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this Security, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.
A-1-3
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this
29th day of January, 1997.
PXRE CAPITAL TRUST I
By:________________________________
Name:
Title: Administrator
By:________________________________
Name:
Title: Administrator
A-1-4
<PAGE>
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
Dated:_________________
FIRST UNION NATIONAL BANK, as the
Institutional Trustee
By:_____________________________
Name:
Title:
A-1-5
<PAGE>
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of 8.85% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than a
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded interest and any Special Payments (but excluding Additional Interest)
(each as defined in the Indenture) payable on the Debentures unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the extent
the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full semiannual
Distribution period on the basis of a 360-day year of twelve 30-day months and
the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semiannually in arrears on February 1 and August 1 of each
year, commencing on August 1, 1997. The Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
(each an "Extension Period") at any time and from time to time on the
Debentures, subject to certain conditions, although such interest would continue
to accrue on the Debentures 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 would continue to accrue at the
distribution rate of 8.85% per annum, compounded semiannually to the extent
permitted by law) during any Extension Period. Such right to extend any
extension period is limited to Extension Periods, each not exceeding 10
consecutive semiannual periods, provided, however, that no Extension Period
shall be initiated while accrued interest from a prior, completed Extension
Period is unpaid or while the Debenture Issuer is in default in the payment of
interest that has become due and payable on the Debentures; and, provided,
further, that no Extension Period shall extend beyond the date of maturity of
the Debentures. Prior to the termination of any such Extension Period in respect
of the Debentures, the Debenture Issuer may further extend the interest payment
period; provided that each such Extension Period in respect of the Debentures,
together with all such previous and further extensions thereof, may not exceed
10 consecutive . If Distributions are deferred, the Distributions due 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 the Capital Securities as they appear on the books
and records of the Trust on the record date immediately preceding such date.
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
A-1-6
<PAGE>
<PAGE>
Property Account of the Trust. The Trust's funds available for distribution to
the Holders of the Securities will be limited to payments received from the
Debenture Issuer. The payment of Distributions out of moneys held by the Trust
is guaranteed by the Sponsor pursuant to the Capital Securities Guarantee. This
Security may be transferred only in blocks having a stated liquidation amount of
not less than $100,000 (i.e., 100 Securities). Any transfer or purported
transfer of any Security not made in accordance with this Declaration shall be
null and void and will be deemed to be of no legal effect whatsoever and any
such transferee shall be deemed not to be the holder of such Security for any
purpose, including but not limited to the receipt of Distributions on such
Security, and such transferee shall be deemed to have no interest whatsoever in
such Capital Security.
The Capital Securities shall be redeemable as provided in the
Declaration.
A-1-7
<PAGE>
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
(Insert assignee's social security or tax identification number)
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
(Insert address and zip code of assignee) and irrevocably
appoints
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:_______________________________________________
Signature:__________________________________________
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee:*_______________________________________
_________________
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Security registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Security registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-1-8
<PAGE>
<PAGE>
EXHIBIT A-2
FORM OF EXCHANGE CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[Include if Capital Security is in global form and The Depository
Trust Company is the Clearing Agency -- UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[Include if Capital Security is in global form -- TRANSFERS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO
BELOW.]
Certificate Number Number of Capital Securities
CUSIP NO ___________
Certificate Evidencing Capital Securities
of
PXRE CAPITAL TRUST I
8.85% Capital Pass-through Securities'sm' (TRUPS'sm')
(liquidation amount $1,000 per Capital Security)
PXRE CAPITAL TRUST I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
designated the 8.85% Capital Trust Pass-through Securities'sm' (liquidation
amount $1,000 per Capital Security) (the "Capital Securities"). Subject to the
Declaration (as defined below), the Capital Securities are transferable on the
books and records of the Trust, in person or
A-2-1
<PAGE>
<PAGE>
by a duly authorized attorney, upon surrender of this Certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued pursuant to, and shall in all respects
be subject to, the provisions of the Amended and Restated Declaration of Trust
of the Trust dated as of January 29, 1997, among Gerald L. Radke, Sanford M.
Kimmel and Joan L. Cadd as Administrators, First Union Bank of Delaware, as
Delaware Trustee, First Union National Bank, as Institutional Trustee, PXRE
Corporation and the holders from time to time of undivided beneficial interests
in the assets of the Trust, as Sponsor, including the designation of the terms
of the Capital Securities as set forth in Annex I to the Declaration, as the
same may be amended from time to time (the "Declaration"). Capitalized terms
used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Capital Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Capital Securities Guarantee and the Indenture to the Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this Security, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.
IN WITNESS WHEREOF, the Trust has executed this certificate this
29th day of January, 1997.
PXRE CAPITAL TRUST I
By:________________________________
Name:
Title: Administrator
By:________________________________
Name:
Title: Administrator
A-2-2
<PAGE>
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
Dated:_________________
FIRST UNION NATIONAL BANK, as the
Institutional Trustee
By:______________________________
Name:
Title:
A-2-3
<PAGE>
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of 8.85% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than a
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded interest (but excluding any Additional Interest, as defined in the
Indenture), payable on the Debentures unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Trust has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full semiannual Distribution period on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed per 30-day
month.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semiannually in arrears on February 1 and August 1 of each
year, commencing on August 1, 1997. The Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
(each an "Extension Period") at any time and from time to time on the
Debentures, subject to certain conditions, although such interest would continue
to accrue on the Debentures 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 would continue to accrue at the
distribution rate of 8.85% per annum, compounded semiannually to the extent
permitted by law) during any Extension Period. Such right to extend any
extension period is limited to Extension Periods, each not exceeding 10
consecutive semiannual periods, provided, however, that no Extension Period
shall be initiated while accrued interest from a prior, completed Extension
Period is unpaid or while the Debenture Issuer is in default in the payment of
interest that has become due and payable on the Debentures; and, provided,
further, that no Extension Period shall extend beyond the date of maturity of
the Debentures. Prior to the termination of any such Extension Period in respect
of the Debentures, the Debenture Issuer may further extend the interest payment
period; provided that each such Extension Period in respect of the Debentures,
together with all such previous and further extensions thereof, may not exceed
10 consecutive . If Distributions are deferred, the Distributions due 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 the Capital Securities as they appear on the books
and records of the Trust on the record date immediately preceding such date.
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
A-2-4
<PAGE>
<PAGE>
Property Account of the Trust. The Trust's funds available for distribution to
the Holders of the Securities will be limited to payments received from the
Debenture Issuer. The payment of Distributions out of moneys held by the Trust
is guaranteed by the Sponsor pursuant to the Capital Securities Guarantee. The
Capital Securities will be issued only in blocks having a stated liquidation
amount of not less than $1,000.
The Capital Securities shall be redeemable as provided in the
Declaration.
A-2-5
<PAGE>
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
(Insert assignee's social security or tax identification number)
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
(Insert address and zip code of assignee) and irrevocably
appoints
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:_________________________________________________
Signature:____________________________________________
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee:*______________________________________
___________________
* Signature must be guaranteed by an "eligible guarantor institution" thta is
a bank, stockbroker, savgins and loan association or credit union meeting
the requirements of the Security registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Security registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-2-6
<PAGE>
<PAGE>
EXHIBIT A-3
FORM OF COMMON SECURITY CERTIFICATE
[THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN
EFFECTIVE REGISTRATION STATEMENT.]
[THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.]
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
PXRE CAPITAL TRUST I
PXRE CAPITAL TRUST I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that PXRE
Corporation (the "Holder") is the registered owner of common securities of the
Trust representing undivided beneficial interests in the assets of the Trust
(the "Common Securities"). The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued pursuant to, and shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of January 29, 1997, among Gerald L. Radke, Sanford M. Kimmel and Joan L.
Cadd, as Administrators, First Union Bank of Delaware, as Delaware Trustee,
First Union National Bank, as Institutional Trustee, PXRE Corporation as Sponsor
and the holders from time to time of undivided beneficial interest in the assets
of the Trust including the designation of the terms of the Common Securities as
set forth in Annex I to the Declaration, as the same may be amended from time to
time (the "Declaration"). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Common Securities Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Common Securities Guarantee
and the Indenture to the Holder without charge upon written request to the
Sponsor at its principal place of business.
As set forth in the Declaration, where an Event of Default has
occurred and is continuing, the rights of Holders of Common Securities to
payment in respect of Distributions and payments upon Liquidation, redemption or
otherwise are subordinated to the rights of payment of Holders of the Capital
Securities.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A-3-1
<PAGE>
<PAGE>
By acceptance of this Certificate, the Holder agrees to treat,
for United States federal income tax purposes, the Debentures as indebtedness
and the Common Securities as evidence of undivided beneficial ownership in the
Debentures.
This Common Security is governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.
IN WITNESS WHEREOF, the Trust has executed this certificate this
29th day of January, 1997.
PXRE CAPITAL TRUST I
By:___________________________
Name:
Title: Administrator
By:___________________________
Name:
Title: Administrator
A-3-2
<PAGE>
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be identical
in amount to the Distributions payable on each Capital Security, which is at a
rate per annum of 8.85% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than one
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded interest and any Special Payments (but excluding Additional Interest)
(each as defined in the Indenture) payable on the Debentures unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the extent
the Trust has funds available therefor. The amount of Distributions payable for
any period will be computed for any full semiannual Distribution period on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed per 30-day month.
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semiannually in arrears on February 1 and August 1 of each
year, commencing on August 1, 1997. The Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
(each an "Extension Period") at any time and from time to time on the
Debentures, subject to certain conditions, although such interest would continue
to accrue on the Debentures 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 Common Securities will also
be deferred (though such Distributions would continue to accrue at the
Distribution rate of 8.85% per annum, compounded semiannually to the extent
permitted by law) during any Extension Period. Such right to extend any
extension period is limited to Extension Periods, each not exceeding 10
consecutive semiannual periods, provided, however, that no Extension Period
shall be initiated while accrued interest from a prior, completed Extension
Period is unpaid or while the Debenture Issuer is in default in the payment of
interest that has become due and payable on the Debentures; and, provided,
further, that no Extension Period shall extend beyond the date of maturity of
the Debentures. Prior to the termination of any such Extension Period in respect
of the Debentures, the Debenture Issuer may further extend the interest payment
period; provided that each such Extension Period in respect of the Debentures,
together with all such previous and further extensions thereof, may not exceed
10 consecutive semiannual periods or extend beyond the maturity of the
Debentures. Upon the termination of any Extension Period of the Debentures and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements. If Distributions are
deferred, the Distributions due 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 the
Common Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date. Distributions on the Common
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
A-3-3
<PAGE>
<PAGE>
Distributions in the Property Account of the Trust. The Trust's funds available
for distribution to the Holders of the Common Securities will be limited to
payments received from the Debenture Issuer. The payment of Distributions out of
moneys held by the Trust is guaranteed by the Guarantor pursuant to the Common
Securities Guarantee.
The Common Securities shall be redeemable as provided in the
Declaration.
A-3-4
<PAGE>
<PAGE>
EXHIBIT B
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY IAIs
__________, 199__
PXRE Corporation
PXRE Capital Trust I
c/o PXRE Corporation
Re: Purchase of $1,000 stated liquidation amount of 8.85% Capital Trust
Pass-through Securities'sm' (TruPS)'sm' (the "Capital Securities") of PXRE
Capital Trust I (the "Trust")
------------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our purchase of the Capital Securities we
confirm that:
1. We understand that the 8.85% Capital Trust Pass-through
Securities'sm' (the "Capital Securities"), of PXRE Capital Trust I (the "Trust")
(including the guarantee (the "Guarantee") by PXRE Corporation ("PXRE") executed
in connection therewith) and the 8.85% Junior Subordinated Deferrable Interest
Debentures due 2027 (the "Subordinated Debt Securities") of PXRE (the Capital
Securities, the Guarantee and the Subordinated Debt Securities together being
referred to herein as "Offered Securities") have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws, and may not be offered or sold except as permitted in the
following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing the Offered Securities that, if, prior to
the date which is three years after the later of the date of original issue of
the Offered Securities and the last date on which PXRE, the Trust or any
affiliate of PXRE or the Trust was the owner of such Offered Securities (the
"Resale Restriction Termination Date"), we decide to offer, sell or otherwise
transfer any such Offered Securities, such offer, sale or transfer will be made
only (a) to PXRE or the Trust, (b) pursuant to an effective registration
statement under the Securities Act, (c) so long as the Offered Securities are
eligible for resale pursuant to Rule 144A under the Securities Act, to a person
we reasonably believe is a qualified institutional buyer under Rule 144A (a
"QIB") that purchases for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) to an institutional "accredited investor" with the meaning of subparagraph
(a) (1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring
Offered ecurities for its own account or for the account of such an
institutional accredited investor for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution thereof in
violation of the Securities Act, or (e) pursuant to another available exemption
from the registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirements of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and to compliance with any applicable state securities laws.
The
B-1
<PAGE>
<PAGE>
foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Offered
Securities is proposed to be made pursuant to clause (d) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Trust and PXRE,
which shall provide as applicable, among other things, that the transferee is an
institutional "accredited investor" within the meaning of subparagraph (a) (1),
(2), (3) or (7) of Rule 501 under the Securities Act that is acquiring such
Securities for investment urposes and not for distribution in violation of the
Securities Act. We acknowledge on our behalf and on behalf of any investor
account for which we are purchasing Offered Securities that the Trust and PXRE
reserve the right prior to any offer, sale or other transfer pursuant to clauses
(d) or (e) prior to the Resale Restriction Termination Date of the Offered
Securities to require the delivery of any opinion of counsel, certifications
and/or other information satisfactory to the Trust and PXRE. We understand that
the certificates for any Offered Security that we receive will bear a legend
substantially to the effect of the foregoing.
2. We are an institutional "accredited investor" with the meaning
of subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities Act
purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Offered Securities for
investment purposes and not with view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Offered Securities, and
we and any account for which we are acting are each able to bear the economic
risks of our or its investment.
3. We are acquiring the Offered Securities purchased by us for
our own account (or for one or more accounts as to each of which we exercise
sole investment discretion and have authority to make, and do make, the
statements contained in this letter) and not with a view to any distribution of
the Offered Securities, subject, nevertheless, to the understanding that the
disposition of our property will at all times be and remain within our control.
4. We acknowledge that (a) none of PXRE, the Trust, or the
Initial Purchasers (as defined in the Offering Memorandum dated January 24, 1997
relating to the Offered Securities (the "Final Memorandum") nor any person
acting on behalf of PXRE, the Trust or the Initial Purchasers has made any
representation to us with respect to PXRE, the Trust or the offer or sale of any
Offered Securities and (b) any information we desire concerning PXRE, the Trust
and the Offered Securities or any other matter relevant to our decision to
purchase the Offered Securities (including a copy of the Final Memorandum) is or
has been made available to us.
5. In the event that we purchase any Capital Securities (or
receive any Subordinated Debt Securities upon the liquidation of the Trust), we
will acquire and hold such Capital Securities having an aggregate stated
liquidation amount of not less than $100,000 or such Subordinated Debt
Securities having an aggregate principal amount not less than $100,000, for our
own account and for each separate account for which we are acting.
B-2
<PAGE>
<PAGE>
6. We acknowledge that we (A) are not ourselves, and are not
acquiring Offered Securities with "plan assets" of an 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") (each, a "Plan"), or an entity whose underlying assets
include "plan assets" by reason of any Plan's investment in the entity (a "Plan
Asset Entity") or (B)(1) are ourselves, or are acquiring Offered Securities with
the assets of an "investment fund" (within the meaning of Part V(b) of PTCE
84-14) managed by a "qualified professional asset manager" (within the meaning
of Part V(a) of PTCE 84-14 which has made or properly authorized the decision
for such fund to purchase Offered Securities), under circumstances such that
PTCE 84-14 is applicable to the purchase and holding of such Offered Securities,
(2) are ourselves, or are acquiring Offered Securities with the assets of, a
Plan managed by an "in-house asset manager" (within the meaning of Part IV(a) of
PTCE 96-23) which has made or properly authorized the decision for such Plan to
purchase Offered Securities, under circumstances such that PTCE 96-23 is
applicable to the purchase and holding of such Offered Securities, (3) are an
insurance company pooled separate account purchasing Offered Securities pursuant
to Part I of PTCE 90-1 or a bank collective investment fund purchasing Offered
Securities pursuant to Part I of PTCE 91-38, and in either case no Plan owns
more than 10% of the assets of such account or collective fund (when aggregated
with other Plans of the same employer (or its affiliates) or employee
organization) or (4) are an insurance company using the assets of its general
account to purchase the Offered Securities pursuant to Part I of PTCE 95-60, in
which case the reserves and liabilities for the general account contracts held
by or on behalf of any Plan, together with any other Plans maintained by the
same employer (or its affiliates) or employee organization, do not exceed 10% of
the total reserves and liabilities of the insurance company general account
(exclusive of separate account liabilities), plus surplus as set forth in the
National Association of Insurance Commissioners Annual Statement filed with the
state of domicile of the insurer.
7. We acknowledge that PXRE, the Trust, the Initial Purchasers
and others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations, warranties and agreements and agree that if
any of the acknowledgments, representations, warranties and agreements made by
us herein with respect to our purchase of the Offered Securities are no longer
accurate, we shall promptly notify the Initial Purchasers. If it is acquiring
any Capital Securities as a fiduciary or agent for one or more investor
accounts, it represents that it has full power to make the foregoing
acknowledgments, representations, warranties and agreements on behalf of each
such investor account.
Very truly yours,
-----------------------------------
(Name of Purchaser)
By:________________________________
Date:_______________________________
B-3
<PAGE>
<PAGE>
Upon transfer, the Offered Securities would be registered in the
name of the new beneficial owner as follows.
Name:__________________________________________________________________________
Address:_______________________________________________________________________
Taxpayer ID Number:
B-4
<PAGE>
<PAGE>
EXHIBIT C
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED FOR QIBs
__________, 199__
PXRE Corporation
PXRE Capital Trust I
c/o PXRE Corporation
Re: Purchase of $1,000 stated liquidation amount of 8.85% Capital Trust
Pass-through Securities'sm' (TRUPS)'sm' (the "Capital Securities") of PXRE
Capital Trust I (the "Trust")
-----------------------------
Reference is hereby made to the Amended and Restated Declaration
dated as of January 29, 1997 (the "Declaration") among Gerald L. Radke, Sanford
M. Kimmel and Joan L. Cadd, as Administrators, First Union Bank of Delaware, as
Delaware Trustee, First Union National Bank, as Institutional Trustee, PXRE
Corporation as Sponsor and the holders from time to time of undivided beneficial
interest in the assets of the Trust. Capitalized terms used but not defined
herein shall have the meanings given them in the Declaration.
This letter relates to $_______ aggregate liquidation amount of
Capital Securities which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Capital Securities in exchange for
an equivalent beneficial interest in the Rule 144A Global Capital Security.
In connection with such request, and in respect to such Capital
Securities, the transferor does hereby certify that such Capital Securities are
being transferred in accordance with (i) the transfer restrictions set forth in
the Capital Securities and (ii) Rule 144A under the United States Securities Act
of 1933, as amended ("Rule 144A"), to a transferee that the Transferor
reasonably believes is purchasing the Capital Securities for its own account or
an account with respect to which the transferee exercises sole investment
discretion and the transferee and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A, in a transaction meeting the
requirements of Rule 144A and in accordance with applicable securities laws of
any state of the United States or any other jurisdiction.
C-1
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<PAGE>
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
_______________________________
(Name of Transferor)
By:____________________________
Name:
Title:
Date:__________________________
C-2
<PAGE>
<PAGE>
================================================================================
CAPITAL SECURITIES GUARANTEE AGREEMENT
PXRE Capital Trust I
Dated as of January 29, 1997
================================================================================
<PAGE>
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust Indenture Section of Capital Securities Guarantee
Act of 1939, as amended Agreement
310(a) ................................................................. 4.1(a)
310(b) ................................................................. 4.1(c)
310(c) ........................................................... Inapplicable
311(a) ................................................................. 2.2(a)
311(b) ................................................................. 2.2(b)
311(c) ........................................................... Inapplicable
312(a) ................................................................. 2.2(a)
312(b) ................................................................. 2.2(b)
313 .................................................................... 2.3
314(a) ................................................................. 2.4
314(b) ........................................................... Inapplicable
314(c) ................................................................. 2.5
314(d) ........................................................... Inapplicable
314(f) ........................................................... Inapplicable
315(a) ................................................................. 3.1(b)
315(b) ................................................................. 2.7
315(c) ................................................................. 3.1(a)
315(d) ................................................................. 3.1(a)
316(a) ......................................................... 5.4(a), 2.6
- -------------
* This Cross-Reference Table does not constitute part of this Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
i
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
CROSS-REFERENCE TABLE* ......................................................................i
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation..................................................2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................................4
SECTION 2.2 Lists of Holders of Securities..................................................5
SECTION 2.3 Reports by the Guarantee Trustee................................................5
SECTION 2.4 Periodic Reports to Guarantee Trustee...........................................5
SECTION 2.5 Evidence of Compliance with Conditions Precedent................................5
SECTION 2.6 Events of Default; Waiver.......................................................6
SECTION 2.7 Events of Default; Notice.......................................................6
SECTION 2.8 Conflicting Interests...........................................................6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee......................................6
SECTION 3.2 Certain Rights of Guarantee Trustee.............................................8
SECTION 3.3 Not Responsible for Recitals or Issuance of Capital Securities Guarantee.......10
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.................................................10
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee......................11
ARTICLE V
GUARANTEE
SECTION 5.1 Capital Securities Guarantee...................................................12
SECTION 5.2 Waiver of Notice and Demand....................................................12
SECTION 5.3 Obligations Not Affected.......................................................12
ii
</TABLE>
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<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 5.4 Rights of Holders..............................................................13
SECTION 5.5 Guarantee of Payment...........................................................13
SECTION 5.6 Subrogation....................................................................14
SECTION 5.7 Independent Obligations........................................................14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.....................................................14
SECTION 6.2 Ranking........................................................................15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination....................................................................15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation....................................................................16
SECTION 8.2 Indemnification................................................................16
SECTION 8.3 Compensation; Reimbursement of Expenses........................................16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.........................................................17
SECTION 9.2 Amendments.....................................................................17
SECTION 9.3 Notices........................................................................17
SECTION 9.4 Benefit........................................................................18
SECTION 9.5 Governing Law..................................................................18
</TABLE>
iii
<PAGE>
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Capital Securities Guarantee"),
dated as of January 29, 1997, is executed and delivered by PXRE Corporation, a
Delaware corporation (the "Guarantor"), and First Union National Bank, a
national banking association, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of PXRE Capital Trust I, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of January 29, 1997, among the Administrators and
trustees named therein, PXRE Corporation, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof securities, having an aggregate liquidation
amount of up to $100,000,000, designated the 8.85% Capital Trust Pass-through
Securities'sm' (the "Initial Capital Securities") and may issue in the future,
pursuant to the Registration Rights Agreement (as defined in the Declaration)
securities solely to be exchanged for Initial Capital Securities, with terms
that are substantially identical (except that such securities will not have
provisions relating to transfer restrictions and will not contain provisions for
a Special Payment (as defined in the Indenture) under certain circumstances) to
those of the Initial Capital Securities (the "Exchange Capital Securities" and
together with the Initial Capital Securities, the "Capital Securities");
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Capital Securities Guarantee, to pay to the Holders
of Capital Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Capital Securities Guarantee for the benefit of the
holders of the Common Securities (as defined in the Declaration) of the Issuer,
except that if an Event of Default (as defined in the Declaration), has occurred
and is continuing, the rights of holders of the Common Securities to receive
Guarantee Payments under the Common Securities Guarantee are subordinated to the
rights of Holders of Capital Securities to receive Guarantee Payments under this
Capital Securities Guarantee;
NOW, THEREFORE, in consideration of the purchase by each Holder
of Capital Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Capital Securities
Guarantee for the benefit of the Holders.
<PAGE>
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Capital Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Capital Securities Guarantee
but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee
has the same meaning throughout;
(c) all references to "the Capital Securities Guarantee" or "this
Capital Securities Guarantee" are to this Capital Securities Guarantee
as modified, supplemented or amended from time to time;
(d) all references in this Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Capital
Securities Guarantee, unless otherwise specified;
(e) capitalized terms used in this Capital Securities Guarantee
have the same meanings ascribed to such terms in the Declaration unless
otherwise defined in this Capital Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Guarantee Agreement is located at 765 Broad Street, Newark,
New Jersey 07102.
"Covered Person" means any Holder or beneficial owner of Capital
Securities.
"Debentures" means the junior subordinated debentures of the PXRE
Corporation designated the 8.85% Junior Subordinated Deferrable Interest
Debentures due 2027, held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.
"Declaration Event of Default" means an "Event of Default" as
defined in the Declaration.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Capital Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be paid on
such Capital Securities to the extent the Issuer shall have funds available
therefor in
2
<PAGE>
<PAGE>
accordance with the terms of the Declaration, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds available therefor in
accordance with the Declaration, with respect to any Capital Securities called
for redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Capital
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions on the Capital
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").
"Guarantees" means the Common Securities Guarantee and this
Capital Securities Guarantee, collectively.
"Guarantee Trustee" means First Union National Bank, a national
banking association, until a Successor Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Capital Securities
Guarantee and thereafter means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate
of the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Guarantee Trustee.
"Indenture" means the Indenture dated as of January 29, 1997,
among the Guarantor and First Union National Bank, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the Institutional Trustee of the
Issuer.
"Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.
"Majority in liquidation amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Capital
Securities, voting together as a class, but separately from the holders of
Common Securities, of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Capital Securities then outstanding.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Capital Securities Guarantee shall
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include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee,
including any vice president, any assistant vice president, any assistant
secretary, the treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Securities" means the Common Securities and the Capital
Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that would be required to be part
of this Capital Securities Guarantee if this Capital Securities
Guarantee were qualified under the Trust Indenture Act and shall, to the
extent applicable, be governed by such provisions; and
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(b) if and to the extent that any provision of this Capital
Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Guarantee Trustee (i) within
14 days after each record date for payment of Distributions, a list, in
such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders of the Capital Securities ("List of
Holders") as of such record date, provided that the Guarantor shall not
be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to
the Guarantee Trustee by the Guarantor, and (ii) at any other time
within 30 days of receipt by the Guarantor of a written request by the
Guarantee Trustee for a List of Holders as of a date no more than 14
days before such List of Holders is given to the Guarantee Trustee. The
Guarantee Trustee may destroy any List of Holders previously given to it
on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee
Within 60 days after May 15 of each year, the Guarantee Trustee
shall provide to the Holders of the Capital Securities such reports as are
required by Section 313(a) of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313 (d) of the Trust
Indenture Act. The Guarantor will notify the Guarantee Trustee if and when any
Capital Securities are listed on any stock exchange.
SECTION 2.4 Periodic Reports to Guarantee Trustee
The Guarantor shall provide to the Guarantee Trustee such
documents, reports and information (if any) as required by Section 314 and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Guarantee Trustee such
evidence of compliance with any conditions precedent provided for in this
Capital Securities Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.
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SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and shall be
deemed to have been cured, for every purpose of this Capital Securities
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
SECTION 2.7 Events of Default; Notice
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Capital Securities, notices of all Events
of Default actually known to a Responsible Officer of the Guarantee
Trustee, unless such defaults have been cured before the giving of such
notice, provided, however, that the Guarantee Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of
the Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Capital
Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer of the Guarantee Trustee
charged with the administration of this Capital Securities Guarantee
shall have obtained actual knowledge, thereof.
SECTION 2.8 Conflicting Interests
The Indenture, the Debt Securities (as defined therein) issued or
to be issued thereunder, the Declaration, the Trust Securities issued or to be
issued thereunder and the Capital Securities Guarantee and Common Securities
Guarantee in connection therewith shall be deemed to be specifically described
in this Capital Securities Guarantee for the purposes of clause (i) of the
proviso contained in Section 310(b)(1) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the
Guarantee Trustee for the benefit of the Holders of the Capital
Securities, and the Guarantee Trustee shall not transfer this Capital
Securities Guarantee to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 5.4 (b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Successor Guarantee Trustee. The
right, title and interest of the Guarantee Trustee shall automatically
vest in any Successor Guarantee Trustee, and such vesting
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and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment
of such Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Guarantee Trustee has occurred and is continuing, the
Guarantee Trustee shall enforce this Capital Securities Guarantee for
the benefit of the Holders of the Capital Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are
specifically set forth in this Capital Securities Guarantee, and no
implied covenants shall be read into this Capital Securities Guarantee
against the Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Guarantee Trustee, the
Guarantee Trustee shall exercise such of the rights and powers vested in
it by this Capital Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be
construed to relieve the Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express
provisions of this Capital Securities Guarantee, and the
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Capital Securities
Guarantee, and no implied covenants or obligations shall
be read into this Capital Securities Guarantee against the
Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Capital
Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform
to the requirements of this Capital Securities Guarantee;
(ii) the Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of
the Guarantee Trustee, unless it
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shall be proved that such Responsible Officer of the Guarantee
Trustee or the Guarantee Trustee was negligent in ascertaining
the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less
than a Majority in liquidation amount of the Capital Securities
relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee
Trustee under this Capital Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee
shall require the Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds is not
reasonably assured to it under the terms of this Capital
Securities Guarantee or indemnity, reasonably satisfactory to the
Guarantee Trustee, against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Capital Securities Guarantee shall be sufficiently evidenced
by an Officers' Certificate.
(iii) Whenever, in the administration of this Capital
Securities Guarantee, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Guarantee Trustee
(unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
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(v) The Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect
to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees. The
Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee from
any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Capital
Securities Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Guarantee Trustee
such security and indemnity, reasonably satisfactory to the
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the Guarantee
Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested
by the Guarantee Trustee; provided, however, that nothing
contained in this Section 3.2(a) (vi) shall be taken to relieve
the Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers
vested in it by this Capital Securities Guarantee.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see
fit.
(viii) The Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or
attorneys, and the Guarantee Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Guarantee Trustee or its
agents hereunder shall bind the Holders of the Capital
Securities, and the signature of the Guarantee Trustee or its
agents alone shall be sufficient and effective to perform any
such action. No third party shall be required to inquire as to
the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Capital
Securities Guarantee, both of which shall be conclusively
evidenced by the Guarantee Trustee's or its agent's taking such
action.
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(x) Whenever in the administration of this Capital
Securities Guarantee the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the
Guarantee Trustee (i) may request instructions from the Holders
of a Majority in liquidation amount of the Capital Securities,
(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 in
accordance with such instructions.
(xi) The Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Capital Securities Guarantee.
(b) No provision of this Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be
illegal or in which the Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law to perform any such act or
acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Guarantee Trustee shall
be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Capital Securities
Guarantee
The recitals contained in this Capital Securities Guarantee shall
be taken as the statements of the Guarantor, and the Guarantee Trustee does not
assume any responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Capital Securities
Guarantee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually,
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pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of
this Section 4.1(a) (ii), the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee
(a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except
during an Event of Default.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Guarantee Trustee has been appointed
and has accepted such appointment by written instrument executed by such
Successor Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor
Guarantee Trustee has been appointed and has accepted such appointment
by an instrument in writing executed by such Successor Guarantee Trustee
and delivered to the Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days
after delivery of an instrument of removal or resignation, the Guarantee
Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or
removal or resignation of the Guarantee Trustee pursuant to this Section
4.2, the Guarantor shall pay
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to the Guarantee Trustee all amounts owing to the Guarantee Trustee
under Sections 8.2 and 8.3 accrued to the date of such termination,
removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Capital Securities Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. Such
obligations will not be discharged except by payment of the Guarantee Payments
in full. The Guarantor's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Capital
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Capital
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Capital
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures or any extension of the maturity date of the
Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders
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pursuant to the terms of the Capital Securities, or any action on the
part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Capital Securities have the right to direct the time, method and place
of conducting of any proceeding for any remedy available to the
Guarantee Trustee in respect of this Capital Securities Guarantee or
exercising any trust or power conferred upon the Guarantee Trustee under
this Capital Securities Guarantee; provided however, that (subject to
Section 3.1) the Guarantee Trustee shall have the right to decline to
follow any such direction if the Guarantee Trustee shall determine that
the actions so directed would be unjustly prejudicial to the Holders not
taking part in such direction or if the Guarantee Trustee being advised
by counsel determines that the action or proceeding so directed may not
lawfully be taken or if the Guarantee Trustee in good faith by its board
of directors or trustees, executive committee or a trust committee of
directors or trustees and/or Responsible Officers shall determine that
the action or proceedings so directed would involve the Guarantee
Trustee in personal liability.
(b) Any Holder of Capital Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee
Trustee's rights under this Capital Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Guarantee Trustee
or any other Person. The Guarantor waives any right or remedy to require
that any such action be brought first against the Issuer or any other
Person before so proceeding directly against the Guarantor.
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SECTION 5.5 Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of payment
and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Capital Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Capital
Securities Guarantee, if, after giving effect to any such payment, any amounts
are due and unpaid under this Capital Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, if (i) the
Guarantor shall be in default with respect to its Guarantee Payments or other
obligations hereunder, (ii) there shall have occurred and be continuing an Event
of Default or an event of default under the Declaration, or (iii) the Guarantor
shall have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall be continuing, then (a) the Guarantor
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 the Guarantor's capital stock or rights to acquire such capital stock
(other than (i) purchases or acquisitions of shares of the Guarantor's capital
stock or rights to acquire such capital stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of the Guarantor's capital stock
or rights to acquire such capital stock or the exchange or conversion of one
class or series of the Guarantor's capital stock or rights to acquire such
capital stock for another class or series of the Guarantor's capital stock, or
rights to acquire any such stock, (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged;
(iv) dividends or distributions made on the Guarantor's capital stock or
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rights to acquire such capital stock, in each case with the Guarantor's capital
stock or rights to acquire such capital stock; or (v) make any guarantee
payments (other than payments under the Guarantees) with respect to the
foregoing and (b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Guarantor which rank pari passu with or junior to the
Debentures.
SECTION 6.2 Ranking
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined in the
Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital
Securities agrees to the foregoing provisions of this Capital Securities
Guarantee and the other terms set forth herein. The obligations of the Guarantor
pursuant to this Capital Securities Guarantee shall be junior and subordinate to
the obligations (the "Senior Obligations") of the Guarantor under any Senior
Indebtedness to the full extent that the Debt Securities (as defined in the
Indenture) are subordinated to Senior Indebtedness as described in, and in the
manner provided by, Article 15 of the Indenture. Without limiting the foregoing
and notwithstanding any other provision to the contrary contained herein, the
Guarantee Trustee and each Holder of Capital Securities by their acceptance
thereof agree for the benefit of the holders of the Senior Obligations as
follows: (i) not to initiate any judicial action or seek or enforce collection
(including without limitation initiating a filing of a petition for relief under
the Bankruptcy Law (as defined in the Indenture)) of any amounts owing by the
Guarantor against the Guarantor during any time that the Trustee under the
Indenture (the "Indenture Trustee") and/or the holders of Debentures are
prohibited from taking such actions pursuant to Section 15.02 of the Indenture
and (ii) to turn over any amounts received from the Guarantor to the extent the
Indenture Trustee and/or the holders of Debentures would be required to turn
over amounts under the terms of Article 15 of the Indenture.
Because the Guarantor is a holding company, the right of the
Guarantor 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 the Guarantor
may itself be recognized as a creditor of that subsidiary. Accordingly, the
Guarantor's obligations under the Guarantee will be effectively subordinated to
all existing and future liabilities of the Guarantor's subsidiaries, and
claimants should look only to the assets of the Guarantor for payments
thereunder. The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Guarantor, including Senior Indebtedness of the
Guarantor, under any indenture that the Guarantor may enter into in the future
or otherwise.
If a Declaration Event of Default has occurred and is continuing,
the rights of holders of the Common Securities of the Issuer to receive payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Capital Securities to receive Guarantee Payments.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Capital Securities Guarantee shall terminate (i) upon full
payment of the Redemption Price of all Capital Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Capital Securities
or (iii) upon full payment of the amounts payable in accordance with the
Declaration upon dissolution of the Issuer. Notwithstanding the foregoing, this
Capital Securities 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 the Capital Securities or under this
Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered
Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith
in accordance with this Capital Securities Guarantee and in a manner
that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Capital
Securities Guarantee or by law, except that an Indemnified Person shall
be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to
such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Issuer or the Guarantor and upon such
information, opinions, reports or statements presented to the Trust or
the Guarantor by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional or
expert competence and who, if selected by such Indemnified Person, has
been selected with reasonable care by such Indemnified Person, including
information, opinions, reports or statements as to the value and amount
of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions
to Holders of Capital Securities might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties
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hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Capital Securities Guarantee and the resignation
or removal of the Guarantee Trustee.
SECTION 8.3 Compensation; Reimbursement of Expenses
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust); and
(b) except as otherwise expressly provided herein, to reimburse
the Guarantee Trustee upon request for all reasonable documented expenses,
disbursements and advances incurred or made by it in accordance with any
provision of this Capital Securities Guarantee (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith.
The provisions of this Section 8.3 shall survive the termination
of this Capital Securities Guarantee and the resignation or removal of the
Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding. Except in connection with any merger
or consolidation of the Guarantor with or into another entity or any sale,
transfer or lease of the Guarantor's assets to another entity, in each case, to
the extent permitted under the Indenture, the Guarantor may not assign its
rights or delegate its obligations under this Capital Securities Guarantee
without the prior approval of the Holders of at least a Majority in liquidation
amount of the Capital Securities.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect
the rights of Holders of Capital Securities in any material respect (in which
case no consent of Holders will be required), this Capital Securities Guarantee
may only be amended with the prior approval of the Holders of at least a
Majority in liquidation amount of the Capital Securities. The provisions of the
Declaration with respect to amendments thereof apply to the giving of such
approval.
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SECTION 9.3 Notices
All notices provided for in this Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, or delivered by a
nationally recognized overnight courier service, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee
Trustee may give notice of to the Holders of the Capital Securities):
First Union National Bank
765 Broad Street
Newark, NJ 07102
Attention: Corporate Trust Department
Telecopy: (201) 430-2117
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Capital Securities and to the Guarantee
Trustee):
PXRE Corporation
399 Thornall Street
Fourteenth Floor
Edison, NJ 08837
Attention: Treasurer
Telecopy: (908) 906-9157
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178-0060
Attention: F. Sedgwick Browne
Telecopy: (212) 309-6273
(c) If given to any Holder of Capital Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received
in person, against written receipt, telecopied with receipt confirmed, or five
days after mailing by first class mail, postage prepaid except that if a notice
or other document is refused delivery or cannot be delivered because of a
changed address of which no notice was given, such notice or other document
shall be deemed to have been delivered on the date of such refusal or inability
to deliver.
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SECTION 9.4 Benefit
This Capital Securities Guarantee is solely for the benefit of
the Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.5 Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and
year first above written.
PXRE CORPORATION,
as Guarantor
By: /s/ Gerald L. Radke
-------------------------------
Name: Gerald L. Radke
Title: President
FIRST UNION NATIONAL BANK,
as Guarantee Trustee
By: /s/ Rick Barnes
-------------------------------
Name: Rick Barnes
Title: Assistant Vice President
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================================================================================
COMMON SECURITIES GUARANTEE AGREEMENT
PXRE Capital Trust I
Dated as of January 29, 1997
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
<S> <C>
SECTION 1.1 Definitions and Interpretation..................................................1
ARTICLE II
GUARANTEE
SECTION 2.1 Common Securities Guarantee.....................................................4
SECTION 2.2 Waiver of Notice and Demand.....................................................4
SECTION 2.3 Obligations Not Affected........................................................4
SECTION 2.4 Rights of Holders...............................................................5
SECTION 2.5 Guarantee of Payment............................................................5
SECTION 2.6 Subrogation.....................................................................5
SECTION 2.7 Independent Obligations.........................................................6
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions......................................................6
SECTION 3.2 Ranking.........................................................................7
ARTICLE IV
TERMINATION
SECTION 4.1 Termination.....................................................................7
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns..........................................................8
SECTION 5.2 Amendments......................................................................8
SECTION 5.3 Notices.........................................................................8
SECTION 5.4 Benefit.........................................................................9
SECTION 5.5 Governing Law...................................................................9
</TABLE>
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Common Securities Guarantee"),
dated as of January 29, 1997, is executed and delivered by PXRE Corporation, a
Delaware corporation (the "Guarantor"), for the benefit of the Holders (as
defined herein) from time to time of the Common Securities (as defined herein)
of PXRE Capital Trust I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of January 29, 1997, among the Administrators and
trustees named therein, PXRE Corporation, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof 3,093 shares of common securities, having a
par value of $1,000 per share (the "Common Securities");
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Capital Securities Guarantee") in substantially
identical terms to this Common Securities Guarantee for the benefit of the
holders of the Capital Securities (as defined in the Declaration) of the Issuer,
except that if an Event of Default (as defined in the Declaration) has occurred
and is continuing, the rights of Holders of the Common Securities to receive
Guarantee Payments under this Common Securities Guarantee are subordinated to
the rights of holders of Capital Securities to receive payments under the
Capital Securities Guarantee;
NOW, THEREFORE, in consideration of the purchase by each Holder
of Common Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Common Securities
Guarantee for the benefit of the Holders.
ARTICLE IARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Common Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Common Securities Guarantee
but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Common Securities Guarantee
has the same meaning throughout;
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(c) all references to "the Common Securities Guarantee" or "this
Common Securities Guarantee" are to this Common Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Common Securities Guarantee to
Articles and Sections are to Articles and Sections of this Common
Securities Guarantee, unless otherwise specified;
(e) capitalized terms used in this Common Securities Guarantee
have the same meanings ascribed to such terms in the Declaration unless
otherwise defined in this Common Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Capital Guarantee Payments" has the meaning set forth in Section
2.1.
"Covered Person" means any Holder or beneficial owner of Common
Securities.
"Debentures" means the junior subordinated debentures of the PXRE
Corporation designated the 8.85% Junior Subordinated Deferrable Interest
Debentures due 2027, held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.
"Declaration Event of Default" means an "Event of Default" as
defined in the Declaration.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Common Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be paid on
such Common Securities to the extent the Issuer shall have 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
(the "Redemption Price") to the extent the Issuer has funds available therefor
in accordance with the terms of the Declaration, with respect to any Common
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Common Securities as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Common Securities to the
date of payment, to the extent the Issuer shall have funds available therefor,
and (b) the amount of assets of the Issuer remaining available for distribution
to Holders in dissolution of the Issuer (in either case, the "Liquidation
Distribution").
"Guarantees" means the Capital Securities Guarantee and this
Common Securities Guarantee, collectively.
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"Holder" or "Holders" shall mean PXRE Corporation.
"Indenture" means the Indenture dated as of January 29, 1997,
among the Guarantor and First Union National Bank, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the Institutional Trustee of the
Issuer.
"Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.
"Majority in liquidation amount of the Common Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Common
Securities, voting together as a class, but separately from the holders of
Capital Securities, of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Common Securities then outstanding.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Common Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Securities" means the Common Securities and the Capital
Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
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ARTICLE II
GUARANTEE
SECTION 2.1 Common Securities Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert; provided,
however, if an Declaration Event of Default has occurred and is continuing, the
rights of Holders of Common Securities to receive Guarantee Payments are
subordinated to the rights of holders of Capital Securities to receive payments
under the Capital Securities Guarantee ("Capital Guarantee Payments"), with the
result that no Guarantee Payments shall be made unless payment in full in cash
of all accumulated and unpaid Capital Guarantee Payments on all outstanding
Capital Securities shall have been made or provided for, and all funds
immediately available to the Institutional Trustee shall first be applied to the
payment in full in cash of all such Capital Guarantee Payments then due and
payable. The Guarantor's obligation to make Guarantee Payments will not be
discharged except by payment of the Guarantee Payments in full. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 2.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Common
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 2.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Common Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Common Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Common
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any
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interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the
Common Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Common
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 2.4 Rights of Holders
Any Holder of Common Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Common
Securities Guarantee. The Guarantor waives any right or remedy to require that
any such action be brought first against the Issuer or any other Person before
so proceeding directly against the Guarantor.
SECTION 2.5 Guarantee of Payment
This Common Securities Guarantee creates a guarantee of payment
and not of collection.
SECTION 2.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Common Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Common Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Common
Securities Guarantee, if, after giving effect to any such payment, any amounts
are due and unpaid under this Common
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Securities Guarantee. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 2.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions
So long as any Common Securities remain outstanding, if (i) the
Guarantor shall be in default with respect to its Guarantee Payments or other
obligations hereunder, (ii) there shall have occurred and be continuing an Event
of Default or an event of default under the Declaration, or (iii) the Guarantor
shall have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall be continuing, then (a) the Guarantor
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 the Guarantor's capital stock or rights to acquire such capital stock
(other than (i) purchases or acquisitions of shares of the Guarantor's capital
stock or rights to acquire such capital stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of the Guarantor's capital stock
or rights to acquire such capital stock or the exchange or conversion of one
class or series of the Guarantor's capital stock or rights to acquire such
capital stock for another class or series of the Guarantor's capital stock, or
rights to acquire any such stock, (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged;
(iv) dividends or distributions made on the Guarantor's capital stock or rights
to acquire such capital stock, in each case with the Guarantor's capital stock
or rights to acquire such capital stock; or (v) make any guarantee payments
(other than payments under the Capital Securities Guarantee) with respect to the
foregoing and (b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Guarantor which rank pari passu with or junior to the
Debentures.
SECTION 3.2 Ranking
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined in the
Indenture) of the Guarantor. By their acceptance thereof, each Holder of Common
Securities agrees to the foregoing provisions of this Common Securities
Guarantee and the other terms set forth herein.
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Because the Guarantor is a holding company, the right of the
Guarantor 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 to the extent
the Guarantor may itself be recognized as a creditor of that subsidiary.
Accordingly, the Guarantor's obligations under the Guarantee will be effectively
subordinated to all existing and future liabilities of the Guarantor's
subsidiaries, and claimants should look only to the assets of the Guarantor for
payments thereunder. The Guarantee does not limit the incurrence or issuance of
other secured or unsecured debt of the Guarantor, including Senior Indebtedness
of the Guarantor, under any indenture that the Guarantor may enter into in the
future or otherwise.
If a Declaration Event of Default has occurred and is continuing,
the rights of holders of the Common Securities of the Issuer to receive
Guarantee Payments are subordinated to the rights of holders of Capital
Securities to receive Capital Guarantee Payments, with the result that no
Guarantee Payments shall be made unless payment in full in cash of all
accumulated and unpaid Capital Guarantee Payments on all outstanding Capital
Securities shall have been made or provided for, and all funds immediately
available to the Institutional Trustee shall first be applied to the payment in
full in cash of all such Capital Guarantee Payments then due and payable.
ARTICLE IV
TERMINATION
SECTION 4.1 Termination
This Common Securities Guarantee shall terminate (i) upon full
payment of the Redemption Price of all Common Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Common Securities or
(iii) upon full payment of the amounts payable in accordance with the
Declaration upon dissolution of the Issuer. Notwithstanding the foregoing, this
Common Securities Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any Holder of Common Securities must restore
payment of any sums paid under the Common Securities or under this Common
Securities Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns
All guarantees and agreements contained in this Common Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Common Securities then outstanding. Except in connection with any merger
or consolidation of the Guarantor with or into another entity or any sale,
transfer or lease of the Guarantor's assets to another entity, in each case, to
the extent permitted under the Indenture, the Guarantor may not assign its
rights or delegate its obligations under this Common Securities Guarantee
without the prior approval of the Holders of at least a Majority in liquidation
amount of the Common Securities.
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SECTION 5.2 Amendments
Except with respect to any changes that do not adversely affect
the rights of Holders of Common Securities in any material respect (in which
case no consent of Holders will be required), this Common Securities Guarantee
may only be amended with the prior approval of the Holders of at least a
Majority in liquidation amount of the Common Securities. The provisions of the
Declaration with respect to amendments thereof apply to the giving of such
approval.
SECTION 5.3 Notices
All notices provided for in this Common Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered against written receipt, telecopied, mailed by first class mail or
delivered by a nationally recognized overnight courier service, as follows:
(a) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Common Securities):
PXRE Corporation
399 Thornall Street
Fourteenth Floor
Edison, NJ 08837
Attention: Treasurer
Telecopy: (908) 906-9157
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178-0060
Attention: F. Sedgwick Browne
Telecopy: (212) 309-6273
(b) If given to any Holder of Common Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received
in person, against written receipt, telecopied with receipt confirmed, or five
days after mailing by first class mail, postage prepaid except that if a notice
or other document is refused delivery or cannot be delivered because of a
changed address of which no notice was given, such notice or other document
shall be deemed to have been delivered on the date of such refusal or inability
to deliver.
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SECTION 5.4 Benefit
This Common Securities Guarantee is solely for the benefit of the
Holders of the Common Securities and is not separately transferable from the
Common Securities.
SECTION 5.5 Governing Law
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
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THIS COMMON SECURITIES GUARANTEE is executed as of the day and
year first above written.
PXRE CORPORATION,
as Guarantor
By; /s/ Gerald L. Radke
-------------------------------
Name: Gerald L. Radke
Title: President
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PXRE CAPITAL TRUST I
$100,000,000 8.85% CAPITAL TRUST PASS-THROUGH SECURITIES'sm' (TRUPS'sm')
FULLY AND UNCONDITIONALLY GUARANTEED AS TO DISTRIBUTIONS
AND OTHER PAYMENTS BY
PXRE CORPORATION
REGISTRATION RIGHTS AGREEMENT
New York, New York
January 29, 1997
Salomon Brothers Inc
As Representative of the Initial Purchasers
Seven World Trade Center
New York, New York 10048
Dear Sirs:
PXRE Capital Trust I (the "Trust"), a statutory business trust
formed under the laws of the State of Delaware by PXRE Corporation (the
"Company"), proposes to issue and sell to the Initial Purchasers (the "Initial
Purchasers") named in the Purchase Agreement of even date herewith (the
"Purchase Agreement"), for whom you are acting as representative (the
"Representative"), the 8.85% Capital Trust Pass-through Securities (the "Capital
Securities") of the Trust. The issue and sale of the Capital Securities pursuant
to the Purchase Agreement is referred to herein as the "Initial Placement". The
Capital Securities, together with the guarantee of the Company with respect
thereto (the "Guarantee") and the 8.85% Junior Subordinated Deferrable Interest
Debentures due 2027 of the Company (the "Subordinated Debt Securities"), are
collectively referred to herein as the "Registrable Securities." As an
inducement to the Initial Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Initial Purchasers
thereunder, the Company and the Trust agree with you, (i) for the benefit of the
Initial Purchasers and (ii) for the benefit of the holders from time to time of
the Registrable Securities and the Exchange Securities (as defined below),
including the Initial Purchasers (each of the foregoing a "Holder" and together
the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following capitalized defined terms shall have the
following meanings:
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"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Capital Securities" has the meaning set forth in the preamble
hereto.
"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning set forth in the preamble hereto.
"DTC" means the Depository Trust Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" means the 1 year period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration
statement of the Company and the Trust on an appropriate form under the Act with
respect to the Registered Exchange Offer and all amendments and supplements to
such registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchange Securities" means the securities of the Company and the
Trust issued pursuant to a Registered Exchange Offer in the same aggregate
principal amount or in the same number or liquidation amount, as the case may
be, and containing terms that are identical in all material respects to the
terms of the Registrable Securities except (i) the Exchange Securities shall
have been registered for sale under the Act to Holders and (ii) the Special
Payment provisions and the transfer restrictions in the Registrable Securities
will be modified or eliminated, as appropriate, in the Exchange Securities.
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"Exchanging Dealer" means any Holder (which may include the
Initial Purchasers) which is a broker-dealer electing to exchange Registrable
Securities, acquired for its own account as a result of market-making activities
or other trading activities, for Exchange Securities.
"Final Offering Memorandum" means the final Offering Memorandum
issued in connection with the Initial Placement and dated as of January 24,
1997 relating to the Registrable Securities.
"Guarantee" has the meaning set forth in the preamble hereto.
"Holder" has the meaning set forth in the preamble hereto.
"Initial Placement" has the meaning set forth in the preamble
hereto.
"Initial Purchasers" has the meaning set forth in the preamble
hereto.
"Interest Payment Date" has the meaning set forth in Section 3(c)
hereof.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, including a prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities or the Exchange Securities covered by such Registration Statement,
and all amendments and supplements to the Prospectus including post-effective
amendments.
"Purchase Agreement" has the meaning set forth in the preamble
hereto.
"Registered Exchange Offer" means the offer to the Holders to
issue and deliver to such Holders, in exchange for the Registrable Securities, a
like principal amount, stated liquidation preference or number, as the case may
be, of the Exchange Securities.
"Registrable Securities" has the meaning set forth in the
preamble hereto.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Registrable
Securities or the Exchange Securities pursuant to the provisions of this
Agreement, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
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"Representative" has the meaning set forth in the preamble
hereto.
"Shelf Registration" means a registration effected pursuant to
Section 3 hereof.
"Shelf Registration Event" has the meaning set forth in Section
2(g) hereof.
"Shelf Registration Period" has the meaning set forth in Section
3(b) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company and the Trust pursuant to the provisions of Section 3
hereof which covers some or all of the Registrable Securities or Exchange
Securities, as applicable, on an appropriate form under Rule 415 under the Act,
or any similar rule that may be adopted by the Commission, and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Special Payment" has the meaning set forth in Section 3(c)
hereof.
"Subordinated Debt Securities" has the meaning set forth in the
preamble hereto.
"Tax Contingency" has the meaning set forth in Section 2(g)
hereof.
"Trust" has the meaning set forth in the preamble hereto.
"underwriter" means any underwriter of Registrable Securities or
Exchange Securities in connection with an offering thereof under a Shelf
Registration Statement.
2. Registered Exchange Offer; Resales of Exchange Securities by
Exchanging Dealers; Private Exchange. (a) The Company and the Trust shall
prepare and, not later than 120 days after the Closing Date, shall file with the
Commission the Exchange Offer Registration Statement with respect to the
Registered Exchange Offer. The Company and the Trust shall use their best
efforts to cause the Exchange Offer Registration Statement to become effective
under the Act within 180 days of the Closing Date. The Company and the Trust
shall use their best efforts to consummate the Registered Exchange Offer within
210 days of the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company and the Trust shall promptly as practicable commence the
Registered Exchange Offer, it being the objective of such Registered Exchange
Offer to enable each Holder electing to exchange Registrable Securities for
Exchange Securities (assuming that such Holder is not an Affiliate of the
Company within the meaning of the Act, acquires the Exchange Securities in the
ordinary course of such Holder's business and has no arrangements with any
person to participate in the distribution of the Exchange Securities) to trade
such Exchange Securities from and after their receipt without any limitations or
restrictions under the Act and without material restrictions under the
securities laws of a substantial proportion of the several states of the United
States.
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(c) In connection with the Registered Exchange Offer, the Company
and the Trust shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with
an appropriate letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less
than 30 days and not more than 45 days after the date notice
thereof is mailed to the Holders (or longer if required by
applicable law);
(iii) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of
Manhattan, The City of New York; and
(iv) comply in all material respects with all applicable
laws.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company and the Trust shall:
(i) accept for exchange and cancel all Registrable
Securities tendered and not validly withdrawn pursuant to the
Registered Exchange Offer; and
(ii) issue Exchange Securities to each exchanging Holder
in a principal amount, stated liquidation preference or number,
as the case may be, equal to the Registrable Securities accepted
for exchange from such Holder and canceled pursuant to the
Registered Exchange Offer.
(e) The Company, the Trust and the Initial Purchasers on behalf
of the Holders hereby acknowledge that, in order to effect a Registered Exchange
Offer, (i) the Company will be required to issue new subordinated debt
securities to the Trust in exchange for a like principal amount of Subordinated
Debt Securities and (ii) the Trust will be required to issue new capital
securities in exchange for a like amount of stated liquidation preference of
Capital Securities. The parties hereto acknowledge that the Guarantee by its
express terms covers the Exchange Securities corresponding to the Capital
Securities as well as such Capital Securities. The parties hereto further
acknowledge that the new subordinated debt securities, capital securities and
guarantee issuable as described in this paragraph, which collectively constitute
the Exchange Securities, shall be identical in all material respects to the
securities they replace, except that (x) such Exchange Securities shall be
registered for sale under the Act to Holders and (y) the Special Payment
provisions and the transfer restrictions in the securities being replaced by the
Exchange Securities will be modified or eliminated, as appropriate, in the
Exchange Securities.
(f) The Initial Purchasers, the Company and the Trust acknowledge
that, pursuant to interpretations by the Commission's staff of Section 5 of the
Act, and in the absence of an applicable exemption therefrom, each Exchanging
Dealer is required to deliver a Prospectus in
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connection with a sale of any Exchange Securities received by such Exchanging
Dealer pursuant to the Registered Exchange Offer in exchange for Registrable
Securities acquired for its own account as a result of market-making activities
or other trading activities. Accordingly, the Company and the Trust shall:
(i) include the information set forth in Annex A hereto on
the cover of the Exchange Offer Registration Statement, in Annex
B hereto in the forepart of the Exchange Offer Registration
Statement in a section setting forth details of the Exchange
Offer, and in Annex C hereto in the underwriting or plan of
distribution section of the Prospectus forming a part of the
Exchange Offer Registration Statement, and include the
information set forth in Annex D hereto in the Letter of
Transmittal delivered pursuant to the Registered Exchange Offer;
and
(ii) use their best efforts to keep the Exchange Offer
Registration Statement continuously effective under the Act
during the Exchange Offer Registration Period for delivery by
Exchanging Dealers in connection with sales of Exchange
Securities received pursuant to the Registered Exchange Offer, as
contemplated by Section 4(h) below.
(g) (i) In the event that applicable law or applicable
interpretations of the staff of the Commission do not permit the Company and the
Trust to effect the Registered Exchange Offer, or (ii) if the Company shall
determine in good faith that there is a reasonable likelihood that, or a
material uncertainty exists as to whether, consummation of the Registered
Exchange Offer would result in an adverse tax consequence to the Company (a "Tax
Contingency" and together with the event described in clause (i), each a "Shelf
Registration Event"), the Company and the Trust may elect, in lieu of the
commencement of such Registered Exchange Offer, to effect a Shelf Registration
of the Registrable Securities pursuant to Section 3 hereof.
3. Shelf Registration. (i) In the event of a Shelf Registration
Event, (ii) if for any other reason the Exchange Offer Registration Statement is
not declared effective by the Commission within 180 days of the Closing Date,
(iii) if any Initial Purchaser so requests with respect to Registrable
Securities held by it following consummation of the Registered Exchange Offer
other than "freely tradable" Exchange Securities, or (iv) if any Holder that is
a broker-dealer, is not an Affiliate of the Company or the Trust and is not
eligible to participate in the Registered Exchange Offer so requests with
respect to Registrable Securities held by it following the consummation of the
Registered Exchange Offer that are not "freely tradable" Exchange Securities (it
being understood that, for purposes of this Section 3, (x) the requirement that
an Initial Purchaser deliver a Prospectus containing the information required by
Items 507 and/or 508 of Regulation S-K under the Act in connection with sales of
Exchange Securities acquired in exchange for such Registrable Securities shall
result in such Exchange Securities being not "freely tradable" but (y) the
requirement that an Exchanging Dealer deliver a Prospectus in connection with
sales of Exchange Securities acquired in the Registered Exchange Offer in
exchange for Registrable Securities acquired as a result of market-making
activities or other trading activities shall not result in such Exchange
Securities being not "freely tradable"), the following provisions shall apply:
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(a) The Company and the Trust shall as promptly as practicable
file with the Commission and shall thereafter use their best efforts to cause to
be declared effective under the Act within (i) 210 days of the Closing Date, or
(ii) promptly as practicable in the event of a request by an Initial Purchaser,
a Shelf Registration Statement relating to the offer and sale of the Registrable
Securities or the Exchange Securities, as applicable, by the Holders from time
to time in accordance with the methods of distribution elected by such Holders
and set forth in such Shelf Registration Statement; provided, that with respect
to Exchange Securities received by an Initial Purchaser in exchange for
Registrable Securities constituting any portion of an unsold allotment, the
Company and the Trust may, if permitted by current interpretations by the
Commission's staff, file a post-effective amendment to the Exchange Offer
Registration Statement containing the information required by Regulation S-K
Items 507 and/or 508, as applicable, in satisfaction of their obligations under
this paragraph (a) with respect thereto, and any such Exchange Offer
Registration Statement, as so amended, shall be referred to herein as, and
governed by the provisions herein applicable to, a Shelf Registration Statement;
and provided further, that with respect to a Shelf Registration Statement
required pursuant to clause (ii) of the preceding paragraph, the consummation of
a Registered Exchange Offer shall relieve the Company and the Trust of their
obligations under this Section 3(a) but only in respect of their obligations
under such clause (ii); and provided further, that any Shelf Registration
required pursuant to clause (i) of the preceding paragraph shall be in lieu of
an Exchange Offer Registration.
(b) The Company and the Trust shall each use its best efforts to
keep the Shelf Registration Statement continuously effective in order to permit
the Prospectus forming part thereof to be usable by Holders for a period of
three years from the date the Shelf Registration Statement is declared effective
by the Commission (or a period of one year from the date the Shelf Registration
Statement is declared effective in the case of a Shelf Registration Statement
filed at the request of an Initial Purchaser) or such shorter period that will
terminate upon the earlier of the following (A) when all the Capital Securities
or Exchange Securities corresponding to such Capital Securities covered by the
Shelf Registration Statement have been sold pursuant to the Shelf Registration
Statement, (B) when all the Subordinated Debt Securities or the Exchange
Securities relating to such Subordinated Debt Securities issued to Holders in
respect of Capital Securities or Exchange Securities that had not been sold
pursuant to the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or (C) when in the written opinion of counsel to
the Company and the Trust, all outstanding Registrable Securities or Exchange
Securities held by persons that are not Affiliates of the Company or the Trust
may be resold without registration under the Act pursuant to Rule 144(k) under
the Act or any successor provision thereto (in any such case, such period being
called the "Shelf Registration Period"). Furthermore, the Company and the Trust
shall each use its best efforts, upon the effectiveness of the Shelf
Registration Statement, to promptly as practicable upon the request of any
Holder to take any action reasonably necessary to register the sale of any
Registrable Securities or Exchange Securities of such Holder and to identify
such Holder as a selling securityholder. The Company and the Trust shall be
deemed not to have used their best efforts to keep the Shelf Registration
Statement effective during the requisite period if either the Company or the
Trust voluntarily takes any action that would result in Holders of securities
covered thereby not being
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able to offer and sell such securities during that period, unless (i) such
action is required by applicable law, or (ii) such action is taken by the
Company in good faith and for valid business reasons (not including avoidance of
the Company's obligations hereunder), including the acquisition or divestiture
of assets, so long as the Company promptly thereafter complies with the
requirements of Section 4(l) hereof, if applicable.
(c) Except as described below, in the event that either (a) the
Exchange Offer Registration Statement is not filed with the Commission on or
prior to the 120th day following the Closing Date, (b) the Exchange Offer
Registration Statement is not declared effective on or prior to the 180th day
following the Closing Date or (c) the Exchange Offer is not consummated or a
Shelf Registration Statement with respect to the Registrable Securities is not
declared effective on or prior to the 210th day following the Closing Date,
interest will accrue (in addition to the stated interest on the Registrable
Securities) from and including the next day following each of (i) such 120-day
period in the case of clause (a) above, (ii) such 180-day period in the case of
clause (b) above, and (iii) such 210-day period in the case of clause (c) above.
In each case such additional interest (the "Special Payment") will be payable in
cash semiannually in arrears on each February 1 and August 1, (each an "Interest
Payment Date"), at a rate per annum equal to 0.25% of the principal amount or
liquidation amount, as applicable, of the Registrable Securities. The aggregate
amount of Special Payment payable pursuant to the above provisions will in no
event exceed 0.50% per annum of the principal amount or the liquidation amount,
as applicable, of the Registrable Securities.
(d) If a Shelf Registration Event shall exist on or before the
120th day following the Closing Date, then clauses (a) and (i) of the preceding
paragraph shall not apply. To the extent that such a Shelf Registration Event
exists and the Company has filed a Shelf Registration Statement covering resales
of the Registrable Securities by the 180th day following the Closing Date, then
clauses (b) and (ii) of the preceding paragraph shall not apply, and to the
extent a Shelf Registration Event exists on the 210th day following the Closing
Date, the period specified in clauses (c) and (iii) of the preceding paragraph
will be 240 days. Upon (x) the filing of the Exchange Offer Registration
Statement or the occurrence of a Shelf Registration Event, if applicable, as
described above, after the 120-day period described in clause (a) of the
preceding paragraph, (y) the effectiveness of the Exchange Offer Registration
Statement (if applicable) (or the filing of a Shelf Registration Statement, in
the event of a Shelf Registration Event, if applicable, as described above)
after the 180-day period described in clause (b) of the preceding paragraph or
(z) the consummation of the Exchange Offer or the effectiveness of a Shelf
Registration Statement after the 210-day period described in clause (c) of the
preceding paragraph (or the effectiveness of a Shelf Registration Statement
after the 240-day period specified above, in the event of a Shelf Registration
Event, if applicable, as described above), the Special Payment payable on the
Registrable Securities from the date of such filing, effectiveness or
consummation, as the case may be, will cease to accrue and all accrued and
unpaid Special Payments as of the occurrence of (x), (y) or (z) shall be paid to
the holders of the Registrable Securities on the next Interest Payment Date.
(e) In the event that a Shelf Registration Statement is declared
effective hereunder, if the Company or the Trust fails to keep such Shelf
Registration Statement continuously
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effective for the period required hereby, then from the next day following such
time as the Shelf Registration Statement is no longer effective until the
earlier of (i) the date that the Shelf Registration Statement is again deemed
effective, (ii) the date that is the third anniversary of the date the Shelf
Registration Statement was first declared effective by the Commission ("Initial
Effective Date") (or the date that is the first anniversary of the Initial
Effective Date if the Shelf Registration Statement is filed at the request of an
Initial Purchaser) or (iii) the date as of which all of the Registrable
Securities covered by the Shelf Registration Statement are sold pursuant thereto
or may sold without registration pursuant to Rule 144 under the Securities Act,
Special Payments shall accrue at a rate per annum equal to 0.25 % of the
principal amount or liquidation amount, as applicable, of the Registrable
Securities and shall be payable in cash, semiannually in arrears on each
Interest Payment Date; it being understood that after the Registered Exchange
Offer has been consummated, no Special Payments shall accrue in respect of
Registrable Securities.
4. Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Company and the Trust shall furnish to the Initial
Purchasers, prior to the filing thereof with the Commission, a copy of any
Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall reflect in each
such document, when so filed with the Commission, such comments as the Initial
Purchasers reasonably may propose unless advised by counsel that such comments
are not required to be included under applicable law, and subject in any event
to the comments of the Commission staff.
(b) The Company and the Trust shall ensure that (i) any
Registration Statement and any amendment thereto and any Prospectus forming part
thereof and any amendment or supplement thereto (and each document incorporated
therein by reference) complies in all material respects with the Act and the
Exchange Act and the respective rules and regulations thereunder, (ii) any
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any Registration
Statement, and any amendment or supplement to such Prospectus, does not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements, in the light of the circumstances
under which they were made, not misleading.
(c) (1) The Company and the Trust shall advise the Initial
Purchasers and, in the case of a Shelf Registration Statement, the Holders of
securities covered thereby, and, if requested by the Initial Purchasers or any
such Holder, confirm such advice in writing:
(i) when the Registration Statement and any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective; and
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(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus
included therein or for additional information.
(2) The Company and the Trust shall advise the Initial Purchasers
and, in the case of a Shelf Registration Statement, the Holders of securities
covered thereby, and, in the case of an Exchange Offer Registration Statement,
any Exchanging Dealer that has provided in writing to the Company a telephone or
facsimile number and address for notices, and, if requested by the Initial
Purchasers or any such Holder or Exchanging Dealer, confirm such advice in
writing of:
(i) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(ii) the receipt by the Company or the Trust of any
notification with respect to the suspension of the qualification
of the securities included therein for sale in any jurisdiction
or the initiation or threatening of any proceeding for such
purpose; and
(iii) the happening of any event that requires the making
of any changes in the Registration Statement or the Prospectus so
that, as of such date, the statements therein are not misleading
and do not omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case
of the Prospectus, in light of the circumstances under which they
were made) not misleading (which advice shall be accompanied by
an instruction to suspend the use of the Prospectus until the
requisite changes have been made).
(d) The Company and the Trust shall use their best efforts to
prevent the issuance, and if issued to obtain the withdrawal, of any order
suspending the effectiveness of any Registration Statement at the earliest
possible time.
(e) On or prior to the time that an Exchange Offer Registration
Statement or Shelf Registration Statement is first effective under the
Securities Act, the Company shall have used its reasonable best efforts to cause
the Capital Securities or Exchange Securities corresponding to such Capital
Securities, respectively, to be duly authorized for listing, subject in the case
of an Exchange Offer Registration Statement to official notice of issuance, on
the New York Stock Exchange as a fixed income security (or, if such listing is
unavailable, as an equity security) and thereafter shall maintain such listing;
or, in the alternative, the Company shall have taken such action reasonably
satisfactory to the Initial Purchasers as to have caused the Capital Securities
or Exchange Securities corresponding to such Capital Securities, respectively,
to be freely tradable to the same extent as if duly authorized for listing on
the New York Stock Exchange as described above, it being agreed that listing
such securities for quotation through the National Association of Securities
Dealers Automated Quotation system shall satisfy the requirements of this
subsection (e).
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(f) The Company and the Trust shall furnish to each Holder of
securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits filed therewith
(including those incorporated by reference).
(g) The Company and the Trust shall, during the Shelf
Registration Period, deliver to each Holder of securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company and the Trust each consent to the use of
the Prospectus or any amendment or supplement thereto by each of the selling
Holders of securities in connection with the offering and sale of the securities
covered by the Prospectus or any amendment or supplement thereto.
(h) The Company and the Trust shall furnish to each Exchanging
Dealer that so requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing, all exhibits
filed therewith (including those incorporated by reference).
(i) The Company and the Trust shall, during the Exchange Offer
Registration Period, promptly deliver to each Exchanging Dealer, without charge,
as many copies of the Prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as such Exchanging Dealer may
reasonably request for delivery by such Exchanging Dealer in connection with a
sale of Exchange Securities received by it pursuant to the Registered Exchange
Offer; and the Company and the Trust each consent to the use of the Prospectus
or any amendment or supplement thereto by any such Exchanging Dealer, as
aforesaid.
(j) Prior to the Registered Exchange Offer or any other offering
of securities pursuant to any Registration Statement, the Company and the Trust
shall register or qualify or cooperate with the Holders of securities included
therein and their respective counsel in connection with the registration or
qualification of such securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any such Holders reasonably request in writing
and do any and all other acts or things reasonably necessary or advisable to
enable the offer and sale in such jurisdictions of the securities covered by
such Registration Statement; provided, however, that in no event shall the
Company or the Trust be required to qualify generally to do business in any
jurisdiction where they are not then so qualified or to take any action which
would subject them to general service of process or to taxation in any such
jurisdiction where they are not then so subject or register as a securities
broker-dealer, agent or salesperson.
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(k) The Company and the Trust shall cooperate with the Holders of
Registrable Securities or Exchange Securities, as the case may be, to facilitate
the timely preparation and delivery within the times required by normal-way
settlement of certificates representing securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request prior to sales of securities
pursuant to such Registration Statement.
(l) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) of this Section 4, the Company and the Trust shall as promptly as
reasonably practicable prepare a post-effective amendment to any Registration
Statement or an amendment or supplement to the related Prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
securities included therein, the Prospectus will not include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(m) Not later than the effective date of any such Registration
Statement hereunder, the Company and the Trust shall provide a CUSIP number for
the Capital Securities or the Exchange Securities corresponding to the Capital
Securities, as the case may be, registered under such Registration Statement. In
the event of and at the time of any distribution of the Subordinated Debt
Securities to Holders, the Company and the Trust shall provide a CUSIP number
for the Subordinated Debt Securities or the Exchange Securities corresponding to
the Subordinated Debt Securities and provide the applicable trustee with
certificates for such securities, in a form eligible for deposit with DTC. The
Company and the Trust shall use their best efforts to cause the CUSIP Service
Bureau to issue the same CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, delivered pursuant to a Registration Statement
as was originally issued for the Registrable Securities.
(n) The Company and the Trust shall use their best efforts to
comply in all material respects with all applicable rules and regulations of the
Commission and shall make generally available to their security holders as soon
as reasonably practicable after the effective date of the applicable
Registration Statement an earnings statement satisfying the provisions of
Section 11(a) of the Act.
(o) The Company and the Trust shall use their best efforts to
cause the indenture relating to the Subordinated Debt Securities, the agreement
of the Company providing for the Guarantee and the declaration of trust of the
Trust pursuant to which the terms of the Capital Securities are established, or
any corresponding documents in respect of the Exchange Securities, as the case
may be, to be qualified under the Trust Indenture Act in a timely manner.
(p) The Company and the Trust may require each Holder of
securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company and the Trust such information regarding the Holder and the
distribution of such securities as the Company and the Trust may from time to
time reasonably require for inclusion in such Registration Statement.
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(q) The Company and the Trust shall, if requested, as promptly as
reasonably practicable, incorporate in a Prospectus supplement or post-effective
amendment to a Shelf Registration Statement, such information as the Managing
Underwriters reasonably agree should be included therein (unless advised by
counsel that such information is not required to be included under applicable
law) and shall make all required filings of such Prospectus supplement or
post-effective amendment as soon as reasonably practicable after they are
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(r) In the case of any Shelf Registration Statement, the Company
and the Trust shall enter into such agreements (including underwriting
agreements) and take all other reasonable appropriate actions in order to
expedite or facilitate the registration or the disposition of the Registrable
Securities or the Exchange Securities, as the case may be, to be registered
thereunder. In connection therewith, if an underwriting agreement is entered
into, the Company and the Trust shall cause the same to contain indemnification
provisions and procedures no less favorable than those set forth in Section 6
(or such other provisions and procedures acceptable to the Managing
Underwriters, if any), with respect to all parties to be indemnified pursuant to
Section 6.
(s) In the case of any underwritten offering under a Shelf
Registration Statement or at the request of an Initial Purchaser to the extent
that an Initial Purchaser has Registrable Securities or Exchange Securities
eligible for resale thereunder, the Company and the Trust shall (i) make
reasonably available for inspection by a representative of the Holders of a
majority of the securities to be registered thereunder, any Initial Purchaser
(if applicable) and any underwriter participating in any disposition pursuant to
such Registration Statement, and any attorney, accountant or other agent
retained by any such Holders, Initial Purchaser or underwriter all relevant
financial and other records, pertinent corporate documents and properties of the
Company, its subsidiaries and the Trust; (ii) cause the Company's officers,
directors and employees and the trustees of the Trust to supply all relevant
information reasonably requested by the representative of the Holders, the
Initial Purchaser (if applicable) or any such underwriter, attorney, accountant
or agent in connection with any such Registration Statement as is customary for
similar due diligence examinations; provided, however, that any information that
is designated in writing by the Company and the Trust, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by the Holders, the Initial Purchaser (if applicable) or any such
underwriter, attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such information
becomes available to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) make such representations and
warranties to the Holders of securities registered thereunder, the Initial
Purchaser (if applicable) and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in similar or
comparable primary underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions
of counsel to the Company and the Trust (who may be the general counsel of the
Company) and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters, if
any) addressed to each selling Holder, Initial Purchaser (if applicable) and the
underwriters, if any, covering such matters as are customarily covered in
opinions requested in similar or
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comparable underwritten offerings and such other matters as may be reasonably
requested by such Holders, Initial Purchaser (if applicable) and underwriters;
(v) obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each selling Holder of securities registered
thereunder, the Initial Purchaser (if applicable) and the underwriters, if any,
in customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with similar or comparable primary underwritten
offerings; and (vi) deliver such documents and certificates as may be reasonably
requested by any such Holders, the Initial Purchaser (if applicable) or the
Managing Underwriters, if any, including those to evidence compliance with
Section 4(l) and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company and the Trust. The
foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section
4(s) shall be performed at (A) the effectiveness of such Registration Statement
and each post-effective amendment thereto and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.
5. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the majority of the Holders of the Registrable Securities
or Exchange Securities, as the case may be, covered by such Shelf Registration
Statement to act as counsel for the Holders in connection therewith, and, in the
case of any Exchange Offer Registration Statement, will reimburse the Initial
Purchasers for the reasonable fees and disbursements of one firm or counsel
designated by such Initial Purchasers acting in connection therewith. Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to a Shelf Registration Statement or the sale of any
Exchange Securities by an Exchanging Dealer.
6. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Company agrees to indemnify and hold harmless the
Trust, each Holder of securities covered thereby (including each Initial
Purchaser and, with respect to any Prospectus delivery as contemplated in
Section 4(i) hereof, each Exchanging Dealer), the directors, officers, employees
and agents of each such Holder and each person who controls any such Holder
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (including all documents
incorporated by referenced therein) as originally filed or in any amendment
thereof, or in any preliminary prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein (in the case of any preliminary prospectus or
Prospectus in
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light of the circumstances under which they were made) a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder specifically for
inclusion therein, and except that the Company shall not be liable under the
provisions of this Section 6 with respect to any preliminary prospectus to the
extent that any such loss, claim, damage or liability results from the fact that
the Initial Purchasers or such selling Holder sold securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final Prospectus if the loss, claim, damage or
liability of the Initial Purchaser or such selling Holder results from an untrue
statement or alleged untrue statement or omission or alleged omission contained
in the preliminary prospectus which was corrected in such final Prospectus. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
The Company also agrees to indemnify or contribute to Losses of,
as provided in Section 6(d), any underwriters of Securities registered under a
Shelf Registration Statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Initial Purchasers and the selling Holders provided in
this Section 6(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 4(r)
hereof.
(b) Each Holder of securities covered by a Registration Statement
(including each Initial Purchaser and, with respect to any Prospectus delivery
as contemplated in Section 4(i) hereof, each Exchanging Dealer) severally agrees
to indemnify and hold harmless the Company, the Trust, their respective
directors, officers and trustees (including each officer or trustee of the
Company or the Trust who signs such Registration Statement), and each person who
controls the Company or the Trust within the meaning of either the Act or the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each such Holder, but only with reference to written information relating to
such Holder furnished to the Company by or on behalf of such Holder specifically
for inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in prejudice to the indemnifying party and (ii) will not, in any event, relieve
the indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
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indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) in the opinion
of counsel for the indemnified party, the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the named parties in any such action include
both the indemnified party and the indemnifying party and in the opinion of the
indemnified party's counsel there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall authorize the indemnified
party in writing to employ separate counsel at the expense of the indemnifying
party. Notwithstanding the foregoing, the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction
(except for local counsel from any other jurisdiction to the extent necessary
for the defense of such proceedings on behalf of the indemnified parties), be
liable for the fees and expenses of more than one separate firm for all such
indemnified parties. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in
no case shall any Initial Purchaser or any subsequent Holder of any Registrable
Security or Exchange Security be responsible, in the aggregate, for any amount
in excess of the purchase discount or commission applicable to such security, or
in the case of a Exchange Security, applicable to the Security which was
exchangeable into such Exchange Security, as set forth on the cover page of the
Final Offering Memorandum, nor shall any underwriter be responsible for any
amount in
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excess of the underwriting discount or commission applicable to the securities
purchased by such underwriter under the Registration Statement which resulted in
such Losses. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the indemnified party
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the sum of (x) the total net proceeds from the Initial
Placement (before deducting expenses) as set forth on the cover page of the
Final Offering Memorandum and (y) the total amount of additional interest which
the Company was not required to pay as a result of registering the securities
covered by the Registration Statement which resulted in such Losses. Benefits
received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions as set forth on the cover page of the Final
Offering Memorandum, and benefits received by any other Holders shall be deemed
to be equal to the value of receiving Registrable Securities or Exchange
Securities, as applicable, registered under the Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Registration Statement which resulted in such Losses. Relative fault shall
be determined by reference to whether any alleged untrue statement or omission
relates to information provided by the indemnifying party, on the one hand, or
by the indemnified party, on the other hand. The parties agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 6, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company and the Trust within the meaning of either the
Act or the Exchange Act, each officer of the Company or trustee of the Trust who
shall have signed the Registration Statement and each director of the Company or
trustee of the Trust shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph
(d).
(e) The provisions of this Section 6 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Company or the Trust or any of the officers, directors or controlling
persons referred to in Section 6 hereof, and will survive the sale by a Holder
of securities covered by a Registration Statement.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the Trust have
not, as of the date hereof, entered into, nor shall they, on or after the date
hereof, enter into, any agreement with respect to their securities that is
inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
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(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company and the Trust have
obtained the written consent of the Holders of at least a majority in
liquidation amount of the Capital Securities then outstanding (or, after the
consummation of any Exchange Offer in accordance with Section 2 hereof, of
Exchange Securities then outstanding); provided that, with respect to any matter
that directly or indirectly affects the rights of any Initial Purchaser
hereunder, the Company shall obtain the written consent of each such Initial
Purchaser against which such amendment, qualification, supplement, waiver or
consent is to be effective. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by the
majority of such Holders, determined on the basis of securities being sold
rather than registered under such Registration Statement.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery (against written
receipt), first-class mail, telex, telecopier, or courier guaranteeing overnight
delivery:
(i) if to a Holder, at the most current address given by
such Holder to the Company;
(ii) if to the Initial Purchasers, initially at the
respective addresses set forth in the Purchase Agreement; and
(iii) if to the Company or the Trust, initially at their
addresses set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given when received. The Initial Purchasers, the Company or the Trust by
notice to the others may designate additional or different addresses for
subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company and the Trust thereto, subsequent Holders of Registrable Securities
and/or Exchange Securities. The Company and the Trust hereby agree to extend the
benefits of this Agreement, subject to the specific terms hereof, to any Holder
of Registrable Securities and/or Exchange Securities and any such Holder may
specifically enforce the provisions of this Agreement as if an original party
hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be
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deemed to be an original and all of which taken together shall constitute one
and the same agreement.
(f) Headings. The headings in this agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in said State.
(h) Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified number, or percentage of principal amount of,
Registrable Securities or Exchange Securities is required hereunder, Registrable
Securities or Exchange Securities, as applicable, held by the Company or its
Affiliates (other than subsequent Holders of Registrable Securities or Exchange
Securities if such subsequent Holders are deemed to be Affiliates solely by
reason of their holdings of such Registrable Securities or Exchange Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
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Please confirm your agreement by having your authorized officer
sign a copy of this Registration Agreement in the space set forth below and
returning the signed copy to us.
Very truly yours,
PXRE CORPORATION
By: /s/ Gerald L. Radke
-----------------------------------
Name: Gerald L. Radke
Title: President
PXRE CAPITAL TRUST I
By: /s/ Gerald L. Radke
-----------------------------------
Name: Gerald L. Radke, as Administrator
By: /s/ Sanford M. Kimmel
------------------------------------
Name: Sanford M. Kimmel, as Administrator
Accepted:
SALOMON BROTHERS INC
By: /s/ Kevin M. White
---------------------------------
Name: Kevin M. White
Title: Associate
Date: January 29, 1997
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ANNEX A
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, the Company and the Trust believe that the Exchange 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 the Company 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 Exchange 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 Exchange
Securities and have no arrangement or understanding with any person to
participate in the distribution of such Exchange 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 Registrable Securities in exchange for
Exchange Securities, each holder, other than a broker-dealer, will represent to
the Company and the Trust that: (i) it is not an affiliate of the Company or the
Trust (as defined under Rule 405 of the Securities Act); (ii) any Exchange
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 Exchange Securities and has no arrangement or understanding
to participate in a distribution of the Exchange Securities.
Each broker-dealer that receives Exchange 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 Exchange 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 Exchange Securities received in exchange for Registrable
Securities where such Registrable Securities were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
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."
<PAGE>
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ANNEX B
Based on interpretations by the staff of the Commission as set forth in
no-action letters issued to third parties, the Company and the Trust believe
that holders of Registrable Securities (other than any holder that is an
"affiliate" of the Company or the Trust as defined under Rule 405 of the
Securities Act) who exchange their Registrable Securities for Exchange
Securities pursuant to the Exchange Offer may offer such Exchange Securities for
resale, resell such Exchange Securities and otherwise transfer such Exchange
Securities without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange 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 Exchange
Securities and have no arrangement or understanding with any person to
participate in the distribution of such Exchange 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. Each
broker-dealer that receives Exchange Securities for its own account in exchange
for Registrable Securities, where such Registrable 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 Exchange Securities. See "Plan of Distribution."
<PAGE>
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange 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 Exchange 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 Exchange Securities received
in exchange for Registrable Securities where such Registrable Securities were
acquired as a result of market-making activities or other trading activities.
The Company 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 , 199 , all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.
The Company and the Trust will not receive any proceeds from any sale
of Exchange Securities by broker-dealers. Exchange 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 Exchange
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
commissions or concessions from any such broker-dealer and/or the purchasers of
any such Exchange Securities. Any broker-dealer that resells Exchange 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 Exchange
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange 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 of which the Exchange Offer is
consummated, the Company 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. The
Company and the Trust have agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the Holders of the Registrable
Securities) other than commissions or concessions of any brokers or dealers and
will indemnify the Holders of the Registrable Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
[If applicable, add information required by Regulation S-K Items 507
and/or 508.]
<PAGE>
<PAGE>
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: __________________________________________________
Address: __________________________________________________
__________________________________________________
Rider B
The undersigned acknowledges that this Exchange Offer is being made by
the Company and the Trust based upon the Company's and Trust's understanding of
an interpretation by the staff of the Securities and Exchange Commission (the
"Commission") as set forth in no-action letters issued to third parties, that
the Exchange Securities issued in exchange for Registrable Securities by holders
thereof (other than to holders that are "affiliates" of the Company or the Trust
within the meaning of Rule 405 under the Securities Act), may be so issued
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that: (i) such holders are not affiliates of the
Company or the Trust within the meaning of Rule 405 under the Securities Act;
(ii) such Exchange Securities are acquired in the ordinary course of such
holders' business; and (iii) such holders are not engaged in, and do not intend
to engage in, a distribution of such Exchange Securities and have no arrangement
or understanding with any person to participate in the distribution of such
Exchange 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 other circumstances. If a holder of
Registrable Securities is an affiliate of the Company, or is engaged in or
intends to engage in a distribution of the Exchange Securities or has any
arrangement or understanding with respect to the distribution of
the Exchange Securities to be acquired pursuant to the Exchange Offer,
such holder could not rely on the applicable interpretations of the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Registrable Securities, it
represents that the Registrable Securities to be exchanged for Exchange
Securities were acquired by it as a result of market-making activities or other
trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Securities; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
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PXRE CAPITAL TRUST I
$100,000,000 8.85% Capital Trust Pass-through Securities`sm' (TruPS)`sm'
FULLY AND UNCONDITIONALLY GUARANTEED AS TO DISTRIBUTIONS
AND OTHER PAYMENTS BY
PXRE CORPORATION
PURCHASE AGREEMENT
New York, New York
January 24, 1997
Salomon Brothers Inc
As Representative of the Initial Purchasers
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
PXRE Corporation, a Delaware corporation (the "Company"), and
PXRE Capital Trust I, a Delaware statutory business trust (the "Trust"),
propose to sell to the parties named in Schedule I hereto (the "Initial
Purchasers"), for whom you (the "Representative") are acting as representative,
8.85% Capital Trust Pass-through Securities of the Trust, having a stated
liquidation amount of $1,000 per capital security (the "Capital Securities").
The Capital Securities will be fully and unconditionally
guaranteed by the Company with respect to distributions and amounts payable
upon liquidation, redemption or repayment (the "Capital Securities Guarantee")
pursuant to the Capital Securities Guarantee Agreement (the "Capital Securities
Guarantee Agreement") to be dated as of the Closing Date specified in Section 3
hereof and executed and delivered by the Company and First Union National Bank,
as trustee (the "Guarantee Trustee"), for the benefit of the holders from time
to time of the Capital Securities. The entire proceeds from the sale of the
Capital Securities will be combined with the entire proceeds from the sale by
the Trust to the Company of its common securities (the "Common Securities"),
and will be used by the Trust to purchase $103,093,000 principal amount of the
8.85% Junior Subordinated Deferrable Interest Debentures due 2027 of the
Company (the "Subordinated Debt Securities"). The Capital Securities and the
Common Securities will be issued pursuant to the amended and restated
declaration of trust (the "Declaration"), to be dated as of the Closing Date,
among the Company, as sponsor, the Administrators named therein (the
"Administrators"), First Union Bank of Delaware (the "Delaware Trustee"), First
Union National Bank (the "Institutional Trustee"), and the holders
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from time to time of undivided beneficial interests in the assets of the Trust.
The Common Securities will be fully and unconditionally guaranteed by the
Company with respect to distributions and amounts payable upon liquidation,
redemption or repayment (the "Common Securities Guarantee" and, together with
the Capital Securities Guarantee, the "Guarantees") pursuant to the Common
Securities Guarantee Agreement, to be dated as of the Closing Date (the "Common
Securities Guarantee Agreement" and, together with the Capital Securities
Guarantee Agreement, the "Guarantee Agreements"), executed and delivered by
the Company for the benefit of the holders from time to time of the Common
Securities of the Trust. The Subordinated Debt Securities will be issued
pursuant to an Indenture, to be dated as of the Closing Date, as supplemented
by the First Supplemental Indenture, to be dated as of the Closing Date (the
"Indenture"), between the Company and First Union National Bank, as trustee
(the "Indenture Trustee").
The Capital Securities, the Capital Securities Guarantee and
the Subordinated Debt Securities are collectively referred to herein as the
"Securities." This Agreement, the Indenture, the Declaration, the Guarantee
Agreements, the Securities and the Registration Rights Agreement (as defined
below) are referred to collectively as the "Operative Documents." Capitalized
terms used herein without definition have the respective meanings specified in
the Final Memorandum (as defined below).
The sale of the Capital Securities to the Initial Purchasers
will be made without registration of any of the Securities under the Securities
Act of 1933, as amended (the "Securities Act"), in reliance upon exemptions
from the registration requirements of the Securities Act. You have advised the
Company that the Initial Purchasers will offer and sell the Capital Securities
purchased by them hereunder in accordance with Section 4 hereof as soon as you
deem advisable. The Company, the Trust and the Initial Purchasers have entered
into a Registration Rights Agreement dated the date hereof (the "Registration
Rights Agreement") with respect to the Securities. If you are the only Initial
Purchaser, all references herein to the Representative shall be deemed to be to
the Initial Purchaser.
In connection with the sale of the Capital Securities, the
Company and the Trust have prepared a preliminary offering memorandum, dated
January 21, 1997 (including any and all exhibits thereto and any information
incorporated by reference therein, the "Preliminary Memorandum"), and a final
offering memorandum, dated January 24, 1997 (including any and all exhibits
thereto and any information incorporated by reference therein, the "Final
Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum sets
forth certain information concerning the Company, the Trust and the Securities.
Each of the Company and the Trust hereby confirms that it has authorized the
use of the Preliminary Memorandum and the Final Memorandum, and any amendment
or supplement thereto, in connection with the offer and sale of the Securities
by the Initial Purchasers. Unless stated to the contrary, all references herein
to the Final Memorandum are to the Final Memorandum at the Execution Time (as
defined below) and are not meant to include any amendment or supplement, or any
information incorporated by reference therein, subsequent to the Execution Time
and anyreferences herein to the terms "amend", "amendment" or "supplement" with
respect to the Final Memorandum shall be deemed to refer to and include any
information filed under the Securities Exchange Act of
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1934, as amended (the "Exchange Act"), subsequent to the Execution Time which
is incorporated by reference therein.
1. Representations and Warranties. The Company and the Trust
jointly and severally represent and warrant to, and agree with, each Initial
Purchaser as set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Final Memorandum, at the date
hereof, does not and at the Closing Date (as defined below) will not (and any
amendment or supplement thereto, at the date thereof and at the Closing Date,
will not), contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company and the Trust make no representation or warranty as to the
information contained in or omitted from the Preliminary Memorandum or the Final
Memorandum, or any amendment or supplement thereto, in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of the Initial Purchasers through the Representative specifically for inclusion
therein.
(b) Neither the Company nor the Trust, nor any of their
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), nor any person acting on its or their behalf has, directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security, under circumstances that would require the registration of any of the
Securities under the Securities Act.
(c) Neither the Company nor the Trust, nor any of their
Affiliates, nor any person acting on its or their behalf has engaged in any form
of general solicitation or general advertising (within the meaning of Regulation
D) in connection with any offer or sale of any of the Securities.
(d) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(e) Neither the Company nor the Trust is an "investment company"
or an entity "controlled" by an "investment company," in each case within the
meaning of Section 3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(f) The Company is subject to and in full compliance, in all
material respects, with the reporting requirements of Section 13 or Section
15(d) of the Exchange Act.
(g) Neither the Company nor the Trust has paid or agreed to pay
to any person any compensation for soliciting another to purchase any of the
Securities (except as contemplated by this Agreement).
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(h) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act, 12 Del.
C. 3801, et seq. (the "Business Trust Act") with the power and authority to own
property and to conduct its business as described in the Final Memorandum and to
enter into and perform its obligations under the Operative Documents. The Trust
is duly qualified to transact business as a foreign entity and is in good
standing in each jurisdiction in which such qualification is necessary, except
where the failure to so qualify or be in good standing would not have a material
adverse effect on the Trust. The Trust is not a party to or otherwise bound by
any agreement other than the Operative Documents. The Trust is and will, under
current law, be classified for federal income tax purposes as a grantor trust
and not as an association taxable as a corporation.
(i) The Declaration has been duly authorized by the Company and,
on the Closing Date, will have been duly executed and delivered by the Company
and the Administrators, and, assuming due authorization, execution and delivery
by the Delaware Trustee and the Institutional Trustee, will be a valid and
binding obligation of the Company and such Administrators, enforceable against
them in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and to general principles of equity ("Bankruptcy and Equity"). Each of
the Administrators is an employee of the Company and has been duly authorized by
the Company to execute and deliver the Declaration.
(j) Each of the Guarantee Agreements and the Indenture has been
duly authorized by the Company and, on the Closing Date will have been duly
executed and delivered by the Company, and, assuming due authorization,
execution and delivery by the Guarantee Trustee, in the case of the Capital
Securities Guarantee, and by the Indenture Trustee, in the case of the
Indenture, will be a valid and binding obligation of the Company enforceable
against it in accordance with its terms, subject to Bankruptcy and Equity.
(k) The Capital Securities and the Common Securities have been
duly authorized by the Declaration and, when issued and delivered against
payment therefor on the Closing Date to the Initial Purchasers, in the case of
the Capital Securities, and to the Company, in the case of the Common
Securities, will be validly issued and represent undivided beneficial interests
in the assets of the Trust. The issuance of neither the Capital Securities nor
the Common Securities is subject to preemptive or other similar rights. On the
Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance.
(l) The Subordinated Debt Securities have been duly authorized by
the Company and, at the Closing Date, will have been duly executed and delivered
to the Indenture Trustee for authentication in accordance with the Indenture,
and, when authenticated in the manner provided for in the Indenture and
delivered against payment therefor by the Trust as described in the Final
Memorandum, will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture enforceable against the Company in
accordance with their terms, subject to Bankruptcy and Equity.
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(m) This Purchase Agreement and the Registration Rights Agreement
have been duly executed and delivered by the Company and the Trust.
(n) The Operative Documents will on the Closing Date conform in
all material respects to the descriptions thereof contained in the Final
Memorandum.
(o) The Trust is not in violation of the Declaration or any
provision of the Business Trust Act. The execution, delivery and performance of
the Operative Documents to which it is a party by the Company or the Trust, and
the consummation of the transactions contemplated herein or therein, will not
conflict with or constitute a breach of, or a default under, or result in the
creation or imposition of any lien, charge or other encumbrance upon any
property or assets of the Trust, the Company or any of the Company's
subsidiaries pursuant to any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Trust, the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of any of them is subject, except for a conflict,
breach, default, lien, charge or encumbrance which could not reasonably be
expected to have an adverse effect on the consummation of the transactions
contemplated herein or therein, nor will such action result in any violation of
the Declaration or the Business Trust Act or require the consent, approval,
authorization or order of any court or governmental agency or body.
(p) The information contained in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 under the captions
"Regulation" and "Pending Legal Proceedings" fairly summarizes in all material
respects the matters therein described.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, (a) the
Company and the Trust jointly and severally agree to sell to each Initial
Purchaser, and each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company and the Trust, Capital Securities with an aggregate
stated liquidation amount in the amount set forth opposite that Initial
Purchaser's name on Schedule I hereto at a purchase price equal to 99.509% of
the stated liquidation amount thereof. As compensation to the Initial Purchasers
for their commitments hereunder and in view of the fact that the proceeds from
the sale of the Capital Securities will be used to purchase Subordinated Debt
Securities of the Company, the Company will pay, on the Closing Date
concurrently with the purchases and sales pursuant to the preceding sentence, to
the Representative, for the accounts of the Initial Purchasers, a commission per
Capital Security equal to 1.0% of the stated liquidation amount thereof. Any
payment pursuant to this Section 2 shall be made by wire transfer in immediately
available funds to the U.S. account designated in writing by the party entitled
to receive such payment.
3. Delivery and Payment. Delivery of and payment for the Capital
Securities shall be made at 10:00 AM, New York City time, on January 29, 1997,
or such later date (not later than February 5, 1997) as the Representative shall
designate, which date and time may be postponed by agreement between the
Representative, on the one hand, and the Company and the Trust, on the other
hand, or as provided in Section 10 hereof (such date and time of delivery and
payment for the Capital Securities being herein called the "Closing Date").
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Delivery of the Capital Securities shall be made at such
location, and in such names and denominations, as the Representative shall
designate at least one business day in advance of the Closing Date. The Company
and the Trust agree to have the Capital Securities available for inspection and
checking by the Representative in New York, New York, not later than 1:00 PM on
the business day prior to the Closing Date. The closing for the purchase and
sale of the Capital Securities shall occur at the offices of Cleary, Gottlieb,
Steen & Hamilton, One Liberty Plaza, New York, New York 10006.
4. Offering by Initial Purchasers. It is understood that the
Initial Purchasers propose to offer the Capital Securities for sale as set forth
in the Final Memorandum. Each Initial Purchaser, severally and not jointly,
represents and warrants to and agrees with the Company and the Trust that:
(a) It has not offered or sold, and will not offer or sell, any
of the Securities except (i) to those it reasonably believes to be QIBs or
qualified institutional buyers (as defined in Rule 144A under the Securities
Act) and that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of any Capital Securities is aware
that such sale is being made in reliance on Rule 144A or (ii) to other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D) who provide to it and to the Company a letter in the form
of Exhibit A hereto.
(b) Neither it nor any person acting on its behalf has made or
will make offers or sales of any of the Securities by means of any form of
general solicitation or general advertising (within the meaning of Regulation
D).
5. Agreements. The Company and the Trust agree with each Initial
Purchaser that:
(a) The Company and the Trust will furnish to each Initial
Purchaser and to counsel for the Initial Purchasers, without charge, during the
period referred to in paragraph (c) below, as many copies of the Final
Memorandum and any amendments and supplements thereto as it may reasonably
request. The Company will pay the expenses of printing or other production of
all documents relating to the offering.
(b) Neither the Company nor the Trust will amend or supplement
the Final Memorandum, other than by filing documents under the Exchange Act
which are incorporated by reference therein, without the prior written consent
of the Representative, which will not be unreasonably withheld; provided,
however, that, prior to the completion of the distribution of the Capital
Securities by the Initial Purchasers (as determined by the Initial Purchasers on
advice of counsel), neither the Company nor the Trust will file any document
under the Exchange Act which is incorporated by reference in the Final
Memorandum unless, prior to such proposed filing, the Company or the Trust has
furnished the Representative with a copy of such document for its review and the
Representative has not reasonably objected to the filing of such document,
except that the Company can file any such document under the Exchange Act which
counsel to the Company shall advise the Company in writing is required in order
to comply with applicable
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law. The Company and the Trust will promptly advise the Representative and
provide a copy to the Representative when any document filed under the Exchange
Act which is incorporated by reference in the Final Memorandum shall have been
filed with the Securities and Exchange Commission (the "Commission").
(c) If at any time prior to the completion of the distribution of
the Capital Securities by the Initial Purchasers (as determined by the
Representative on advice of counsel), any event occurs as a result of which the
Final Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it should be necessary to amend or supplement
the Final Memorandum to comply with applicable law, the Company and the Trust
will promptly notify the Representative of the same and, subject to the
requirements of paragraph (b) of this Section 5, will prepare and provide to the
Representative pursuant to paragraph (a) of this Section 5 an amendment or
supplement which will correct such statement or omission or effect such
compliance.
(d) The Company and the Trust will use its best efforts to
arrange for the qualification of the Capital Securities for sale by the Initial
Purchasers under the laws of such jurisdictions as the Initial Purchasers may
reasonably designate and will maintain such qualifications in effect so long as
required for the sale of the Capital Securities; provided, however, that neither
the Company nor the Trust shall be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where they would
not otherwise be required to qualify but for this Section 5(d); (ii) file any
general consent to service of process; or (iii) subject themselves to taxation
in any jurisdiction if they are not already so subject. The Company or the
Trust, as the case may be, will promptly advise the Representative of the
receipt by the Company or the Trust, as the case may be, of any notification
with respect to the suspension of the qualification of the Capital Securities
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(e) Neither the Company nor the Trust will, nor will either of
them permit any of its Affiliates to, resell any Capital Securities that have
been acquired by either of them.
(f) Neither the Company nor the Trust will, nor will either of
them permit any of its Affiliates, nor any person acting on its or their behalf,
to, directly or indirectly, make offers or sales of any security, or solicit
offers to buy any security, under circumstances that would require the
registration of any of the Securities under the Securities Act.
(g) Neither the Company nor the Trust will, nor will either of
them permit any of its Affiliates, nor any person acting on its or their behalf,
to, engage in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with any offer or sale of any of the
Securities.
(h) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, each of the
Company and the Trust will, during any period in which it is not subject to and
in compliance with Section 13 or 15(d) of the
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Exchange Act or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request of
such holder or prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the Securities Act. This covenant is intended to be for
the benefit of the holders, and the prospective purchasers designated by such
holders, from time to time of such restricted securities. The information
provided by the Company and the Trust pursuant to this Section 5(h) will not, at
the date thereof, contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(i) The Company and the Trust will cooperate with the
Representative and use their best efforts to permit the Capital Securities to be
eligible for clearance and settlement through The Depository Trust Company.
(j) Neither the Company nor the Trust will, until 90 days
following the Closing Date, without the prior written consent of the
Representative, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, directly or indirectly, (i) any trust certificates or
other securities of the Trust other than the sale of the Common Securities to
the Company or the sale of the Capital Securities to the Initial Purchasers as
contemplated by this Agreement, (ii) any securities that are substantially
similar to the Securities or (iii) any other securities convertible into, or
exercisable or exchangeable for, any of (i) or (ii), or enter into an agreement,
or announce an intention, to do any of the foregoing.
6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase the Capital Securities shall
be subject to theaccuracy of the representations and warranties on the part of
the Company and the Trust contained herein as of the date and time that this
Agreement is executed (the "Execution Time") and the Closing Date, to the
accuracy of the statements of the Company and the Trust made in any certificates
pursuant to the provisions hereof, to the performance by the Company and the
Trust of their obligations hereunder and to the following additional conditions:
(a) The Company shall have furnished to the Representative the
opinion of Morgan, Lewis & Bockius LLP, counsel to the Company, dated the
Closing Date, addressed to the Initial Purchasers to the effect that:
(i) each of the Company and PXRE Reinsurance Company and
Transnational Reinsurance Company (individually, a "Subsidiary" and
collectively, the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct its
business as described in the Final Memorandum; and the Company is
duly qualified to do business as a foreign corporation and is in good
standing under the laws of the States of New Jersey and New York,
which are the only jurisdictions in which the Company owns or leases
any material real properties or conducts any material business and
which requires such
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qualifications and in which the failure to be so qualified would have
a material adverse effect on the business or condition (financial or
otherwise) of the Company and its subsidiaries taken as a whole; and
PXRE Reinsurance Company is duly licensed and in good standing under
the insurance laws of the States of Connecticut, New York and New
Jersey, and Transnational Reinsurance Company is duly licensed and in
good standing under the insurance laws of the States of Connecticut
and New Jersey.
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Final Memorandum and based solely on a review of the stock books
of each of such Subsidiaries, as identified to such counsel as being
true and correct by the Company, and on a certificate of an executive
officer of the Company, and without any further independent
verification, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any pledge, security
interest, claim, lien or other encumbrance (other than covenants
under the Indenture dated as of August 31, 1993 (the "Senior Note
Indenture") between the Company and State Street Bank and Trust
Company (as Successor Trustee to The First National Bank of Boston),
as Successor Trustee (the "Senior Note Trustee") relating to the
Company's 9-3/4% Senior Notes due 2003 (the "Senior Notes")); and
based solely on a review of the stock book of the Trust, as
identified to such counsel as being true and correct by the
Administrators, and a certificate of an executive officer of the
Company, and without any further independent verification, all issued
and outstanding Common Securities of the Trust are owned by the
Company either directly or through wholly owned subsidiaries free and
clear of any pledge, security interest, claim, lien or other
encumbrance (other than covenants under the Senior Note Indenture);
(iii) each of the Indenture and the Guarantee Agreements
has been duly authorized, executed and delivered by the Company, and
(in the case of the Indenture and the Capital Securities Guarantee,
respectively, assuming it is duly authorized, executed and delivered
by the Indenture Trustee and the Guarantee Trustee, respectively)
constitutes a legal, valid and binding instrument of the Company
enforceable against the Company in accordance with its terms, subject
to Bankruptcy and Equity; the Subordinated Debt Securities have been
duly and validly authorized and delivered to the Indenture Trustee
for authentication in accordance with the Indenture, and when
authenticated by the Indenture Trustee in accordance with the
provisions of the Indenture and delivered to and paid for by the
Trust, will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with its terms, subject to
Bankruptcy and Equity;
(iv) this Purchase Agreement and the Registration Rights
Agreement have been duly authorized, executed and delivered by the
Company;
(v) the Declaration has been duly authorized, executed
and delivered by the Company and the Administrators;
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(vi) to the knowledge of such counsel, no consent,
approval, authorization or order of any court or governmental agency
or body is required for the consummation of the transactions
contemplated herein or in the Operative Documents, in connection with
the purchase and sale of the Capital Securities by the Initial
Purchasers or the purchase of the Subordinated Debt Securities by the
Trust and such other approvals (specified in such opinion) as have
been obtained, except (i) such as may be required by the securities,
insurance securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities, (ii) such as
may be required by the Securities Act and the securities, insurance
securities or Blue Sky laws of the various states in connection with
an exchange offer for, or registration of, the Securities pursuant to
the Registration Rights Agreement and (iii) such as may be required
as a result of any facts or circumstances relating solely to the
Initial Purchasers;
(vii) neither the issue and sale of the Capital
Securities or the Subordinated Debt Securities, the execution and
delivery of the Operative Documents by the Company or the Trust and
the consummation of any other of the transactions therein
contemplated in any Operative Document nor the fulfillment of the
terms thereof will conflict with, result in a breach or violation of,
or constitute a default under the charter or by-laws of the Company
or any of its Subsidiaries, the terms of any material indenture,
mortgage, deed of trust, bank loan or credit agreement known to such
counsel and to which the Company or any of its Subsidiaries is a
party or bound or any judgment, order or decree of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its
Subsidiaries known to such counsel, or any provision of applicable
law known to such counsel to be applicable to the Company or any of
its Subsidiaries, except for such conflicts, breaches, violations or
defaults which are not, in the aggregate, material to the Company and
its subsidiaries taken as a whole and which do not adversely affect
the consummation of the transactions contemplated in this Agreement
and the Operative Documents, except (i) required compliance with the
securities, insurance securities or Blue Sky laws of the various
states in connection with the offer and sale of the Securities; (ii)
required compliance with the Securities Act and the securities,
insurance securities or Blue Sky laws of the various states in
connection with the exchange offer for, or registration of, the
Securities pursuant to the Registration Rights Agreement, (iii) any
rights to indemnity and contribution may be limited by federal and
state securities laws and public policy considerations; and (iv) as
may result from any facts or circumstances relating solely to the
Initial Purchasers;
(viii) the statements in the Final Memorandum under the
headings "Description of the Capital Securities," Description of the
Guarantee" and "Description of the Subordinated Debt Securities",
insofar as such statements purport to summarize certain provisions of
the Operative Documents, provide a fair summary in all material
respects of such provisions;
(ix) neither the Company nor the Trust is an "investment
company" or an entity "controlled" by an "investment company," in
each case within the meaning of
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Section 3(a) of the Investment Company Act and the rules and
regulations thereunder; and
(x) assuming the accuracy of the representations and
warranties of the Company, the Trust and the Initial Purchasers and
compliance with the agreements of the Company, the Trust and the
Initial Purchasers contained herein, no registration of any of the
Securities under the Securities Act is required for the offer and
sale by the Initial Purchasers of the Capital Securities in the
manner contemplated by this Agreement and the Indenture, the
Declaration and the Capital Securities Guarantee are not required to
be qualified under the Trust Indenture Act of 1939, it being
understood that no opinion is expressed as to any subsequent resale
of any Securities.
Such counsel shall also state that they have no reason to believe
that at the Execution Time the Final Memorandum (except for any
financial statements and schedules and other statistical data, as
to which such counsel need not express any belief) contained an
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading or
that the Final Memorandum (except for any financial statements and
schedules and other statistical data, as to which such counsel need
not express any belief) at the Closing Date contains an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; it
being understood that counsel may state that their belief is based
upon their participation in conferences with officers and
representatives of the Company and the Representative, counsel for
the Initial Purchasers, and representatives of the independent
accountants of the Company at which the contents of the Final
Memorandum (and any amendment or supplement thereto) and related
matters were discussed, and that they are not passing upon, and do
not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Final Memorandum and have
made no independent check or verification thereof, except for those
made under subparagraph (viii) above and clause (B) of the
penultimate paragraph of this subsection (a), insofar as they relate
to legal matters or documents therein described.
In addition, such counsel shall furnish to the Representative an
opinion, dated the Closing Date (A) containing such assumptions,
qualifications and limitations as shall be reasonably acceptable to
the Representative and its counsel to the effect that (i) the Trust
will be characterized as a grantor trust for U.S. federal income tax
purposes and not as a partnership or as an association subject to tax
as a corporation; and (ii) for U.S. federal income tax purposes the
Subordinated Debt Securities will constitute indebtedness of the
Company; and (B) to the effect that the statements made in the Final
Memorandum under the captions "United States Federal Income Taxation"
and "ERISA Considerations," insofar as they purport to describe the
material United States Federal income tax consequences of the
purchase, ownership and disposition of Subordinated Debt Securities
and Capital Securities fairly summarize in all material respects
the matters therein described.
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In rendering such opinions, such counsel may (A) state that its
opinion is limited to the laws of the State of New York, the
corporate laws of the State of Delaware and the Federal laws of the
United States and (B) rely as to matters involving the application of
laws of any jurisdiction other than the States of New York and
Delaware or the United States, to the extent deemed proper and
specified in such opinion, upon the opinion of other counsel of good
standing believed to be reliable and who are satisfactory to counsel
for the Initial Purchasers and as to matters of fact, to the extent
deemed proper, on certificates of responsible officers of the Company
and public officials. References to the Final Memorandum in this
paragraph (a) include any supplements thereto at the Closing Date.
(b) The Representative shall have received the opinion of Potter
Anderson & Corroon, special Delaware counsel for the Company and the Trust,
dated the Closing Date, addressed to the Initial Purchaser to the effect that:
(i) the Trust has been duly created and is validly
existing in good standing as a business trust under the Business
Trust Act;
(ii) under the Business Trust Act and the Declaration,
the Trust has the trust power and authority (A) to own its properties
(including, without limitation, the Subordinated Debt Securities) and
conduct its business, (B) to execute and deliver, and to perform its
obligations under, each of the agreements to which it is a party, and
(C) to issue and perform its obligations under the Capital Securities
and Common Securities, all as described in the Declaration;
(iii) the Declaration constitutes a valid and binding
obligation of the Company, the Delaware Trustee, the Institutional
Trustee and the Administrators, enforceable against the Company, the
Delaware Trustee, the Institutional Trustee and the Administrators,
respectively, in accordance with its terms;
(iv) under the Business Trust Act and the Declaration,
the execution and delivery by the Trust of each of the agreements to
which it is a party, and the performance by the Trust of its
obligations thereunder, have been duly authorized by all necessary
action on the part of the Trust;
(v) the Capital Securities (A) have been duly authorized
by the Declaration, and (B) will represent valid and fully paid and,
subject to the qualifications set forth in number (viii) below,
non-assessable undivided beneficial interests in the assets of the
Trust;
(vi) once duly and validly issued in accordance with the
Declaration, the Capital Securities will entitle the holders of
Capital Securities to the benefits of the Declaration;
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(vii) the Common Securities (A) have been duly
authorized by the Declaration, and (B) will represent valid and fully
paid undivided beneficial interests in the assets of the Trust;
(viii) the holders of the Capital Securities, as
beneficial owners of the Capital Securities, 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
the 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
evidencing the Capital Securities and Common Securities and the
issuance of replacement certificates evidencing the Capital
Securities and Common Securities, (B) provide security or indemnity
in connection with requests of or directions to the Institutional
Trustee to exercise its rights and powers under the Declaration, and
(C) provide indemnity in connection with violations of the
Declaration or Federal or state securities laws arising from
transfers or exchanges of certificates evidencing the Capital
and Common Securities and the issuance of replacement
certificates evidencing the Capital and Common Securities;
(ix) under the Business Trust Act and the Declaration,
the issuance of the Capital Securities and Common Securities is not
subject to preemptive rights;
(x) no authorization, approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body of the State of Delaware is required for the issuance and sale
of the Capital Securities and Common Securities or the consummation
by the Trust of the transactions contemplated by the agreements to
which it is a party;
(xi) assuming that the Trust is treated as a grantor
trust or partnership for Federal income tax purposes, the holders of
the Capital Securities and Common Securities (other than those
holders of the Capital Securities and Common Securities who reside or
are domiciled in the State of Delaware) will have no liability for
income taxes imposed by the State of Delaware solely as a result of
their participation in the Trust, and the Trust will not be liable
for any income tax imposed by the State of Delaware;
(xii) the (A) purchase of the Subordinated Debt
Securities by the Trust, (B) the distribution of the Debentures by
the Trust in the circumstances contemplated by the Declaration, and
(C) the execution, delivery and performance by the Trust of each of
the agreements to which it is a party and the consummation of the
transactions contemplated thereunder, will not conflict with or
result in a breach or violation of any of the terms or provisions of
the Certificate of Trust or the Declaration or any statute, order,
rule or regulation the State of Delaware or any governmental agency
or body of the State of Delaware having jurisdiction over the Trust
or any of its properties, or, based solely on a litigation search
dated no earlier than the day immediately preceding the Closing Date,
of court dockets for active cases in the Courts of Chancery, Courts
of Common Pleas and
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Superior Courts of the State of Delaware in and for Kent, Sussex and
New Castle Counties, Delaware, and of the United States District
Court sitting in the State of Delaware (the "Litigation Search"),
any consent or order of any court; and
(xiii) based solely on the Litigation Search, there is no
legal or governmental proceeding pending against the Trust.
(c) The Representative shall have received the opinion of Riker,
Danzig, Scherer, Hyland & Perretti, counsel for the Guarantee Trustee, the
Institutional Trustee and the Indenture Trustee, dated the Closing Date, to the
effect that:
(i) First Union National Bank is a national banking
association with trust powers duly organized and validly existing in
good standing as a banking corporation under the laws of the United
States of America with all necessary power and authority to execute,
deliver and carry out and perform its obligations under the terms of
the Capital Securities Guarantee Agreement, the Declaration and the
Indenture;
(ii) the execution, delivery and performance by First
Union National Bank of the Capital Securities Guarantee Agreement,
the Declaration and the Indenture have been duly authorized by all
necessary corporate action on the part of First Union National Bank
and each of the Capital Securities Guarantee Agreement, the
Declaration and the Indenture has been duly executed and delivered by
First Union National Bank, and constitutes the legal, valid and
binding obligation of First Union National Bank, enforceable against
First Union National Bank in accordance with its terms (subject to
Bankruptcy and Equity);
(iii) the execution, delivery and performance of the
Capital Securities Guarantee Agreement, the Declaration and the
Indenture by First Union National Bank do not conflict with or
constitute a breach of the charter or by-laws of First Union National
Bank; and
(iv) to the best of such counsel's knowledge, no consent,
approval or authorization of, or registration with or notice to, any
governmental authority or agency of the State of New Jersey or the
United States of America governing the banking or trust powers of
First Union National Bank is required for the execution, delivery or
performance by First Union National Bank of the Capital Securities
Guarantee Agreement, the Declaration and the Indenture.
(d) The Representative shall have received the opinion of Morris,
James, Hitchens & Williams, counsel for the Delaware Trustee, to the effect
that:
(i) the Delaware Trustee is a Delaware banking
corporation with trust powers validly existing in good standing as a
banking corporation under the laws of the State of Delaware, with all
necessary power and authority to execute, deliver and perform its
obligations under the Declaration;
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(ii) the execution, delivery and performance by the
Delaware Trustee of the Declaration has been duly authorized by all
necessary corporate action on the part of the Delaware Trustee and
the Declaration has been duly executed and delivered by the Delaware
Trustee;
(iii) the execution, delivery and performance of the
Declaration by the Delaware Trustee do not conflict with or
constitute a breach of the charter or by-laws of the Delaware
Trustee; and
(iv) no consent, approval or authorization of, or
registration with or notice to, any governmental authority or agency
of the State of Delaware or the United States of America governing
the banking or trust powers of the Delaware Trustee is required for
the execution, delivery or performance by the Delaware Trustee of the
Declaration.
(e) The Representative shall have received from Cleary, Gottlieb,
Steen & Hamilton, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to the issuance and sale of the Capital
Securities, the Declaration, the Guarantee Agreements, the Indenture and the
Final Memorandum (together with any supplement thereto) and other related
matters as the Representative may reasonably require, and the Company and the
Trust shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Representative a
certificate of the Company, signed by the President and by the Chief Financial
Officer of the Company, dated the Closing Date, to the effect that the signers
of such certificate have carefully examined the Final Memorandum, any
supplement to the Final Memorandum and this Agreement and that to their
knowledge:
(i) the representations and warranties of the Company and
the Trust in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as if
made on the Closing Date and the Company and the Trust have complied
with all the agreements and satisfied all the conditions on either of
their part to be performed or satisfied at or prior to the Closing
Date; and
(ii) since the date of the most recent financial
statements included in the Final Memorandum (exclusive of any
supplement thereto), there has been no material adverse change in the
condition (financial or other), earnings, business or properties of
the Company and its subsidiaries, taken as a whole whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Final Memorandum (exclusive of
any supplement thereto).
(g) The Company shall have furnished to the Representative a
certificate of the Chief Compliance Officer of PXRE Reinsurance Company to the
effect that PXRE Reinsurance Company and Transnational Reinsurance Company have
obtained all necessary
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state insurance regulatory licenses and approvals under the laws of each
state in which they operate or do business, except where the failure to be
so licensed or approved would not, either singularly or in the aggregate, have a
material adverse effect on the business or condition (financial or otherwise) of
the Company and its subsidiaries, taken as a whole.
(h) At the Execution Time, Price Waterhouse LLP shall have
furnished to the Representative a letter or letters (which may refer to letters
previously delivered to the Representative), dated as of the Execution Time, in
form and substance satisfactory to the Representative and Price Waterhouse LLP,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules and pro forma financial statements, if
any, included or incorporated in the Final Memorandum and reported on
by them comply in form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited interim financial information as indicated in their
reports, if any, included or incorporated in the Final Memorandum;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would
not necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and executive and audit
committees of the Company and the Subsidiary; and inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company and its subsidiaries
as to transactions and events subsequent to the date of the most
recent audited financial statements in or incorporated in the Final
Memorandum, nothing came to their attention which caused them to
believe that:
(1) any unaudited financial statements included or
incorporated in the Final Memorandum do not comply in form in
all material respects with applicable accounting requirements
and with the published rules and regulations of the Commission
with respect to financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange Act; or said
unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated in the Final Memorandum;
(2) with respect to the period subsequent to the date of
the most recent financial statements (other than any capsule
information), audited or unaudited, in or incorporated in the
Final Memorandum, there were at a specified date not more
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than three business days prior to the date of the letter, (a)
any material change in the capital stock or increase in the
long-term debt of the Company and its subsidiaries or decreases
in the stockholders' equity, total assets or cash and
investments of the Company and its subsidiaries as compared with
the amounts shown on the most recent consolidated balance sheet
included or incorporated in the Final Memorandum, or (b) any
material decreases, as compared with the corresponding period in
theprior year in the consolidated gross and net premiums
written, the total or per share amounts of net income, income
before taxes or net investment income, except in all instances
for changes or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by the Company
as to the significance thereof unless said explanation is not
deemed necessary by the Representative; and
(3) the amounts included in any unaudited "capsule"
information included or incorporated in the Final Memorandum do
not agree with the amounts set forth in the unaudited financial
statements for the same periods or were not determined on a
basis substantially consistent with that of the corresponding
amounts in the audited financial statements included or
incorporated in the Final Memorandum;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which
is limited to accounting, financial or statistical information
derived from the general accounting records of the Company and its
subsidiaries) set forth in the Final Memorandum, including the
information included or incorporated in the Company's Annual Report
on Form 10-K, incorporated in the Final Memorandum, and the
information included or incorporated in the Company's Quarterly
Reports on Form 10-Q, incorporated in the Final Memorandum, agrees
with the accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation; and
(iv) if unaudited pro forma financial statements are
included or incorporated in the Final Memorandum, on the basis of a
reading of the unaudited pro forma financial statements included or
incorporated in the Final Memorandum (the "pro forma financial
statements"), carrying out certain specified procedures, inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters, and proving the arithmetic accuracy
of the application of the pro forma adjustments to the historical
amounts in the pro forma financial statements, nothing cameto their
attention which caused them to believe that the pro forma financial
statements do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements.
References to the Final Memorandum in this paragraph (h) include any amendment
or supplement thereto to the date of the letter. In addition, at the Closing
Date, Price Waterhouse
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LLP shall have furnished to the Representative a letter or letters, dated the
Closing Date, in form and substance satisfactory to the Representative, to the
effect set forth above.
(i) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph (h) of this
Section 6 or (ii) any change, or any development involving a prospective change,
in or affecting the business or properties of the Company and its subsidiaries
the effect of which, in any case referred to in clause (i) or (ii) above, is, in
the judgment of the Representative, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Capital Securities as contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereto).
(j) Subsequent to the Execution Time, there shall not have been
any decrease in the ratings of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act) or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such ratings that do
not indicate the direction of a possible change. The Capital Securities shall
have been assigned initial ratings as of the Execution Time of "ba1" from
Moody's Investors Services, Inc. and "BBB" from Standard & Poor's Rating
Services and there shall not have been any decrease in any such rating or any
notice given of any intended or potential decrease in any such rating or of a
possible change in any such ratings that do not indicate the direction of a
possible change.
(k) Prior to the Closing Date, the Company and the Trust shall
have furnished to the Representative such further information, certificates and
documents as the Representative may reasonably request.
(l) At the Closing Date, each of the Operative Documents shall
have been duly authorized, executed and delivered by each party thereto, and
copies thereof shall have been delivered to the Representative.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions, certificates and documents mentioned above
or elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representative and counsel for the
Initial Purchasers, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representative. Notice of such cancellation shall be given to the Company and
the Trust in writing or by telephone or telecopy confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the offices of counsel for the Initial Purchasers on the Closing
Date.
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7. Conditions to the Obligations of the Company. The obligations
of the Company and the Trust to sell the Capital Securities shall be subject to
the Company having received consents, which have not been revoked, from the
holders of at least a majority in aggregate principal amount of its Senior Notes
permitting the consummation of the transactions contemplated hereby, as more
fully described in the Consent Solicitation Statement of the Company, dated
January 17, 1997, as amended.
8. Reimbursement of Initial Purchasers' Expenses. If the sale of
the Capital Securities provided for herein is not consummated because any
condition to the obligations of the Initial Purchasers set forth in Section 6
hereof is not satisfied, because of any termination pursuant to Section 11 (i)
hereof because trading in any of the Company's securities shall have been
suspended by the Commission or the New York Stock Exchange, or because of any
refusal, inability or failure on the part of the Company or the Trust to perform
any agreement herein or comply with any provision hereof other than by reason of
a default by any of the Initial Purchasers, the Company will reimburse the
Initial Purchasers severally upon demand for all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Capital Securities, and the Company shall not then be under any liability to
any Initial Purchaser except as provided in Section 9 hereof.
9. Indemnification and Contribution. (a) The Company and the
Trust agree jointly and severally to indemnify and hold harmless each Initial
Purchaser, the directors, officers, employees and agents of each Initial
Purchaser and each person who controls any Initial Purchaser within the meaning
of either the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Memorandum, the Final Memorandum, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company and the Trust will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made in the Preliminary Memorandum or the Final Memorandum, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company and the Trust by or on behalf of
any Initial Purchaser through the Representative specifically for inclusion
therein; and except that the Company and the Trust shall not be liable under the
provisions of this Section 9 with respect to the Preliminary Memorandum to the
extent that any such loss, claim, damage or liability results from the fact that
the Initial Purchasers sold Capital Securities to a person to whom there was not
sent or given, at
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or prior to the written confirmations of such sale, a copy of the Final
Memorandum if the loss, claim, damage or liability of the Initial Purchasers
results from an untrue statement or alleged untrue statement or omission or
alleged omission contained in the Preliminary Memorandum which was corrected in
the Final Memorandum. This indemnity agreement will be in addition to any
liability which the Company or the Trust may otherwise have.
(b) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Section 9(a) hereunder.
(c) Each Initial Purchaser severally agrees to indemnify and hold
harmless the Company and the Trust, each of their directors, trustees, officers,
and each person who controls the Company or the Trust within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company and the Trust to each Initial Purchaser, but only
with reference to written information relating to such Initial Purchaser
furnished to the Company and the Trust by or on behalf of such Initial Purchaser
through the Representative specifically for inclusion in the Preliminary
Memorandum or the Final Memorandum (or in any amendment or supplement thereto).
This indemnity agreement will be in addition to any liability which any Initial
Purchaser may otherwise have. The Company and the Trust acknowledge that the
statements set forth in the final paragraph of the cover page and the statements
regarding the Initial Purchasers set forth in the second paragraph and the first
sentence of the second to last paragraph under the heading "Plan of
Distribution" in the Preliminary Memorandum and the Final Memorandum constitute
the only information furnished in writing by or on behalf of the Initial
Purchasers for inclusion in the Preliminary Memorandum or the Final Memorandum,
and the Representative confirms that such statements are correct.
(d) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve the indemnifying party from liability under paragraph (a), (b)
or (c) above unless and to the extent that the indemnifying party did not
otherwise learn of such action and such failure results in prejudice to the
indemnifying party and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a), (b) or (c) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) in the opinion of counsel for the
indemnified party, the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the named parties in any such action
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include both the indemnified party and the indemnifying party and in the opinion
of the indemnified party's counsel there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall authorize the indemnified
party in writing to employ separate counsel at the expense of the indemnifying
party. Notwithstanding the foregoing, the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction
(except for local counsel from any other jurisdiction to the extent necessary
for the defense of such proceedings on behalf of the indemnified parties), be
liable for the fees and expenses of more than one separate firm for all such
indemnified parties, which counsel shall be selected by the Representative on
behalf of the Initial Purchasers. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent.
(e) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 9 is unavailable to or insufficient to hold harmless
any indemnified party for any reason, the Company, the Trust and the Initial
Purchasers agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which the
Company, the Trust and one or more of the Initial Purchasers may be subject in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Trust and by the Initial Purchasers from the offering of the
Capital Securities; provided, however, that in no case shall any Initial
Purchaser (except as may be provided in any agreement among Initial Purchasers
relating to the offering of the Capital Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Capital Securities purchased by such Initial Purchaser hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company, the Trust and the Initial Purchasers shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Trust and of the Initial
Purchasers in connection with the statement or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company and the Trust shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses), and benefits received by
the Initial Purchasers shall be deemed to be equal to the total underwriting
discounts and commissions, in each case as set forth in the Final Memorandum.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Company, the Trust
or the Initial Purchasers. The Company, the Trust and the Initial Purchasers
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account
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of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (e), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person who controls an
Initial Purchaser within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of an Initial Purchaser shall have
the same rights to contribution as such Initial Purchaser, and each person who
controls the Company or the Trust within the meaning of either the Act or the
Exchange Act, each officer of the Company and each director of the Company and
each trustee and each officer of the Trust shall have the same rights to
contribution as the Company and the Trust, subject in each case to applicable
terms and conditions of this paragraph (e).
10. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Capital Securities
agreed to be purchased by such Initial Purchaser or Initial Purchasers hereunder
and such failure to purchase shall constitute a default in the performance of
its or their obligations under this Agreement, the remaining Initial Purchasers
shall be obligated severally to take up and pay for (in the respective
proportions which the liquidation amount of Capital Securities set forth
opposite their names in Schedule I hereto bears to the aggregate liquidation
amount of Capital Securities set forth opposite the names of all the remaining
Initial Purchasers) the Capital Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate liquidation amount of Capital
Securities which the defaulting Initial Purchaser or Initial Purchasers agreed
but failed to purchase shall exceed 10% of the aggregate stated liquidation
amount of Capital Securities set forth in Schedule I hereto, the remaining
Initial Purchasers shall have the right to purchase all, but shall not be under
any obligation to purchase any, of the Capital Securities, and if such
nondefaulting Initial Purchasers do not purchase all the Capital Securities,
this Agreement will terminate without liability to any nondefaulting Initial
Purchaser, the Company or the Trust. In the event of a default by any Initial
Purchaser as set forth in this Section 10, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Representative shall determine
in order that the required changes in the Final Memorandum or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Initial Purchaser of its liability, if any, to the
Company and the Trust and any nondefaulting Initial Purchaser for damages
occasioned by its default hereunder.
11. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Representative, by notice given to the Company
and the Trust prior to delivery of and payment for the Capital Securities, if
prior to such time (i) trading in any of the Company's securities shall have
been suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial
22
<PAGE>
<PAGE>
markets is such as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the offering or delivery of the
Capital Securities as contemplated by the Final Memorandum (exclusive of any
supplement thereto).
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company and the Trust or their respective officers or trustees on behalf of the
Company and the Trust and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Initial Purchaser, the Company or
the Trust or any of the officers, directors or controlling persons referred to
in Section 9 hereof, and will survive delivery of and payment for the Capital
Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
13. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered by hand-delivery (against written receipt) or by a courier
guaranteeing overnight delivery or telecopied and confirmed to it at Seven World
Trade Center, New York, New York 10048, attention of the Legal Department; if
sent to the Company or the Trust, will be mailed, delivered by hand-delivery
(against written receipt) or by a courier guaranteeing overnight delivery or
telecopied and confirmed to it at 399 Thornall Street, Fourteenth Floor, Edison,
NJ 08837, attention Treasurer, with a copy to Morgan, Lewis & Bockius LLP, 101
Park Avenue, New York, New York 10178, attention F. Sedgwick Browne.
14. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 9 hereof,
and no other person will have any right or obligation hereunder.
15. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW.
23
<PAGE>
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Trust and the Initial Purchasers.
Very truly yours,
PXRE CORPORATION
By: /s/ Gerald L. Radke
------------------------
Name: Gerald L. Radke
Title: President
PXRE CAPITAL TRUST I
By: /s/ Gerald L. Radke
------------------------
Name: Gerald L. Radke
as Administrator
By: /s/ Joan Cadd
------------------------
Name: Joan Cadd
as Administrator
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By: /s/ Kevin M. White
-----------------------
Name: Kevin M. White
Title: Associate
For itself and the other
Initial Purchasers named in
Schedule I to the foregoing
Agreement.
24
<PAGE>
<PAGE>
SCHEDULE I
Stated Liquidation
Amount of Capital
Securities To Be Purchased
-----------------------------
Initial Purchaser
- ------------------------------------------------
Salomon Brothers Inc ............................ $50,000,000
J.P. Morgan Securities Inc. ..................... 50,000,000
------------
Total.............................. $100,000,000
============
I
<PAGE>
<PAGE>
EXHIBIT A
Non-Distribution Letter for Purchasers
__________, 199__
Salomon Brothers Inc
as Representative of the Initial Purchasers
Seven World Trade Center
New York, New York 10048
PXRE Corporation
PXRE Capital Trust I
399 Thornall Street
Fourteenth Floor
Edison, NJ 08837
Re: Purchase of $100,000,000 stated liquidation amount of 8.85% Capital Trust
Pass-through Securities`sm' (TruPS)`sm' (the "Capital Securities") of PXRE
Capital Trust I (the "Trust")
------------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our purchase of the Capital Securities, we
confirm that:
1. We understand that the Capital Securities of the Trust
(including the guarantee (the "Guarantee") by PXRE Corporation ("PXRE") executed
in connection therewith) and the % Junior Subordinated Deferrable Interest
Debentures due 2027 (the "Subordinated Debt Securities") of PXRE (the Capital
Securities, the Guarantee and the Subordinated Debt Securities together being
referred to herein as "Offered Securities") have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws, and may not be offered or sold except as permitted in the
following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing the Offered Securities that, if, prior to
the date which is three years after the laterof the date of original issue of
the Offered Securities and the last date on which PXRE, the Trust or any
affiliate of PXRE or the Trust was the owner of such Offered Securities (the
"Resale Restriction Termination Date"), we decide to offer, sell or otherwise
transfer any such Offered Securities, such offer, sale or transfer will be made
only (a) to PXRE or the Trust, (b) pursuant to an effective registration
statement under the Securities Act, (c) so long as the Offered Securities are
eligible for resale pursuant to Rule 144A under the Securities Act, to a person
we reasonably believe is a qualified institutional buyer under Rule 144A (a
"QIB") that purchases for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) to an institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring
Offered Securities for its own account or for the account of such an
institutional accredited investor for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution thereof in
A-1
<PAGE>
<PAGE>
violation of the Securities Act, or (e) pursuant to another available exemption
from the registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirements of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and to compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Offered
Securities is proposed to be made pursuant to clause (d) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Trust and PXRE,
which shall provide as applicable, among other things, that the transferee is an
institutional "accredited investor" within the meaning of subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the Securities Act that is acquiring such
Securities for investment purposes and not for distribution in violation of the
Securities Act. We acknowledge on our behalf and on behalf of any investor
account for which we are purchasing Offered Securities that the Trust and PXRE
reserve the right prior to any offer, sale or other transfer pursuant to clauses
(d) or (e) prior to the Resale Restriction Termination Date of the Offered
Securities to require the delivery of any opinion of counsel, certifications
and/or other information satisfactory to the Trust and PXRE. We understand that
the certificates for any Offered Security that we receive will bear a legend
substantially to the effect of the foregoing.
2. We are an institutional "accredited investor" with the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act purchasing for our own account or for the account of such an
institutional "accredited investor," and we are acquiring the Offered Securities
for investment purposes and not with view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Offered Securities, and
we and any account for which we are acting are each able to bear the economic
risks of our or its investment.
3. We are acquiring the Offered Securities purchased by us
for our own account (or for one or more accounts as to each of which we exercise
sole investment discretion and have authority to make, and do make, the
statements contained in this letter) and not with a view to any distribution of
the Offered Securities, subject, nevertheless, to the understanding that the
disposition of our property will at all times be and remain within our control.
4. We acknowledge that (a) none of PXRE, the Trust, or the
Initial Purchasers (as defined in the Offering Memorandum dated January 24, 1997
relating to the Offered Securities (the "Final Memorandum")) nor any person
acting on behalf of PXRE, the Trust or the Initial Purchasers has made any
representation to us with respect to PXRE, the Trust or the offer or sale of any
Offered Securities and (b) any information we desire concerning PXRE, the Trust
and the Offered Securities or any other matter relevant to our decision to
purchase the Offered Securities (including a copy of the Final Memorandum) is or
has been made available to us.
5. In the event that we purchase any Capital Securities (or
receive any Subordinated Debt Securities upon the liquidation of the Trust), we
will acquire and hold such Capital Securities having an aggregate stated
liquidation amount of not less than $100,000 or
A-2
<PAGE>
<PAGE>
such Subordinated Debt Securities having an aggregate principal amount not less
than $100,000, for our own account and for each separate account for which we
are acting.
6. We acknowledge that we (A) are not ourselves, and are not
acquiring Offered Securities with "plan assets" of, an 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") (each, a "Plan"), or an entity whose underlying assets
include "plan assets" by reason of any Plan's investment in the entity (a "Plan
Asset Entity") or (B)(1) are ourselves, or are acquiring Offered Securities with
the assets of an "investment fund" (within the meaning of Part V(b) of PTCE
84-14) managed by a "qualified professional asset manager" (within the meaning
of Part V(a) of PTCE 84-14) which has made or properly authorized the decision
for such fund to purchase Offered Securities, under circumstances such that PTCE
84-14, is applicable to the purchase and holding of such Offered Securities, (2)
are ourselves, or are acquiring Offered Securities with the assets of, a Plan
managed by an "in-house asset manager" (within the meaning of Part IV(a) of PTCE
96-23) which has made or properly authorized the decision for such Plan to
purchase Offered Securities, under circumstances such that PTCE 96-23 is
applicable to the purchase and holding of such Offered Securities, (3) are an
insurance company pooled separate account purchasing Offered Securities pursuant
to Part I of PTCE 90-1 or a bank collective investment fund purchasing Offered
Securities pursuant to Part I of PTCE 91-38, and in either case no Plan owns
more than 10% of the assets of such account or collective fund (when aggregated
with other Plans of the same employer (or its affiliates) or employee
organization) or (4) are an insurance company using the assets of its general
account to purchase the Offered Securities pursuant to Part I of PTCE 95-60, in
which case the reserves and liabilities for the general account contracts held
by or on behalf of any Plan, together with any other Plans maintained by the
same employer (or its affiliates) or employee organization, do not exceed 10% of
the total reserves and liabilities of the insurance company general account
(exclusive of separate account liabilities), plus surplus as set forth in the
National Association of Insurance Commissioners Annual Statement filed with the
state of domicile of the insurer.
A-3
<PAGE>
<PAGE>
7. We acknowledge that PXRE, the Trust, the Initial
Purchasers and others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations, warranties and agreements and agree that if
any of the acknowledgments, representations, warranties and agreements made by
us herein with respect to our purchase of the Offered Securities are no longer
accurate, we shall promptly notify the Initial Purchasers.
Very truly yours,
-----------------------------------
(Name of Purchaser)
By:---------------------------------
Date:-------------------------------
Upon transfer, the Offered Securities would be registered in
the name of the new beneficial owner as follows.
Name:---------------------------------------------------------------------------
Address:------------------------------------------------------------------------
Taxpayer ID Number:
A-4
<PAGE>
<PAGE>
REASSURED: PXRE REINSURANCE COMPANY
PERIOD: Continuous from January 1, 1995, subject to 90 days written
notice of cancellation at December 31st any year.
Resigning at January 1, 1997.
TYPE: Quota Share Treaty.
CLASS: All business written by the Reassured.
TERRITORIAL
SCOPE: As per original business written by Reassured.
TREATY
DETAIL: Reassured will cede up to a maximum of $20,000,000 any one
program, for 100% on all business written and retained net.
COMMISSION: As original plus 5% override on Gross Written Premiums as
reimbursement for expenses.
PROFIT
COMMISSION: 25% of underwriting profits after commissions, including
override, Reinsurers Management Expense 5%. First
calculation to be for 1995 Underwriting Year. Subsequent
calculations to be on three year block basis.
REPORTS: Quarterly accounting reports and underwriting statistical
reports.
CASH LOSSES: Special cash request for individual losses and/or
catastrophe losses above $250,000.
GENERAL
CONDITIONS: Special Termination Clause as per wording
Access to Records.
Errors and Omissions
Insolvency Clause.
Arbitration Clause
Offset Clause
ACCEPTED 0.60% of 100% ($120,000 per program).
DATED January 14, 1997 COMPANY PENNSYLVANIA LUMBERMENS
MUTUAL INS. CO.
---------------
AUTHORIZED SIGNATURE /s/ Fred R. Phillips
------------------------------------
<PAGE>
<PAGE>
REASSURED: PXRE REINSURANCE COMPANY
PERIOD: Continuous from January 1, 1995, subject to 90 days written
notice of cancellation at December 31st any year.
Resigning at January 1, 1997.
TYPE: Quota Share Treaty.
CLASS: All business written by the Reassured.
TERRITORIAL
SCOPE: As per original business written by Reassured.
TREATY
DETAIL: Reassured will cede up to a maximum of $20,000,000 any one
program, for 100%, on all business written and retained net.
COMMISSION: As original plus 5% override on Gross Written Premiums as
reimbursement for expenses.
PROFIT
COMMISSION: 25% of underwriting profits after commissions, including
override, Reinsurers Management Expense 5%. First
calculation to be for 1995 Underwriting Year. Subsequent
calculations to be on three year block basis.
REPORTS: Quarterly accounting reports and underwriting statistical
reports.
CASH LOSSES: Special cash request for individual losses and/or
catastrophe losses above $250,000.
GENERAL
CONDITIONS: Special Termination Clause as per wording
Access to Records.
Errors and Omissions
Insolvency Clause.
Arbitration Clause
Offset Clause
ACCEPTED 1.54% of 100% ($308,000 per program).
DATED 7-1-97 COMPANY NRMA MUTUAL INSURANCE LIMITED
-----------------------------
AUTHORIZED SIGNATURE
------------------------------------
<PAGE>
<PAGE>
REASSURED: PXRE REINSURANCE COMPANY
PERIOD: Continuous from January 1, 1995, subject to 90 days written
notice of cancellation at December 31st any year.
Resigning at January 1, 1997.
TYPE: Quota Share Treaty.
CLASS: All business written by the Reassured.
TERRITORIAL
SCOPE: As per original business written by Reassured.
TREATY
DETAIL: Reassured will cede up to a maximum of $20,000,000 any one
program, for 100%, on all business written and retained net.
COMMISSION: As original plus 5% override on Gross Written Premiums as
reimbursement for expenses.
PROFIT
COMMISSION: 25% of underwriting profits after commissions, including
override, Reinsurers Management Expense 5%. First
calculation to be for 1995 Underwriting Year. Subsequent
calculations to be on three year block basis.
REPORTS: Quarterly accounting reports and underwriting statistical
reports.
CASH LOSSES: Special cash request for individual losses and/or
catastrophe losses above $250,000.
GENERAL
CONDITIONS: Special Termination Clause as per wording
Access to Records.
Errors and Omissions
Insolvency Clause.
Arbitration Clause
Offset Clause
ACCEPTED 1.54% of 100% ($308,000 per program).
DATED 1/13/97 COMPANY Merrimack Mutual Fire Ins. Co.
------------------------------
AUTHORIZED SIGNATURE
------------------------------------
<PAGE>
<PAGE>
REASSURED: PXRE REINSURANCE COMPANY
PERIOD: Continuous from January 1, 1995, subject to 90 days written
notice of cancellation at December 31st any year.
TYPE: Quota Share Treaty.
CLASS: All business written by the Reassured.
TERRITORIAL
SCOPE: As per original business written by Reassured.
TREATY
DETAIL: Reassured will cede up to a maximum of $20,000,000 any one
program, for 100%, on all business written and retained net.
COMMISSION: As original plus 5% override on Gross Written Premiums as
reimbursement for expenses.
PROFIT
COMMISSION: 25% of underwriting profits after commissions, including
override, Reinsurers Management Expense 5%. First
calculation to be for 1997 and 1998 Underwriting Years.
Subsequent calculations to be on three year block basis.
REPORTS: Quarterly accounting reports and underwriting statistical
reports.
CASH LOSSES: Special cash request for individual losses and/or
catastrophe losses above $250,000.
GENERAL
CONDITIONS: Special Termination Clause as per wording
Access to Records.
Errors and Omissions
Insolvency Clause.
Arbitration Clause
Offset Clause
ACCEPTED 0.75% of 100% ($150,000 per program).
DATED January 16, 1997 COMPANY Auto-Owners Ins. Co.
--------------------
AUTHORIZED SIGNATURE /s/ John A. Wallace
------------------------------------
<PAGE>
<PAGE>
SERVICES AGREEMENT
AGREEMENT, dated as of December 11, 1996, by and between PXRE
Reinsurance Company, a Connecticut corporation ("PXRE") and Transnational
Reinsurance Company, a Connecticut corporation ("Transnational").
W I T N E S S E T H :
WHEREAS, Transnational will, after the merger of PXRE Corporation and
Transnational Re Corporation, be a wholly-owned subsidiary of PXRE; and
WHEREAS, Transnational does not have any employees or facilities and the
parties to this Agreement believe that the business of Transnational would be
more efficiently and economically conducted by PXRE than by Transnational; and
WHEREAS, Transnational desires PXRE to provide, and PXRE has agreed to
provide to Transnational, the services of certain of its personnel, all upon the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:
1. Subject to the provisions of this Agreement, PXRE shall be
responsible for supervising and controlling all organizational, operational and
management functions of Transnational and its business, including without
limitation, the following:
(a) the exercise of general and active management of the day-to-day
operations of Transnational;
(b) the transaction of reinsurance business, including without
limitation, (x) the negotiation and execution of any and all binders,
policies, certificates, agreements and contracts of reinsurance
(including, without limitation, retrocessional reinsurance) in the name
of Transnational, (y) the collection of premiums on behalf of
Transnational and (z) the rejection, adjustment, settlement and payment
of claims and settlement of losses;
(c) the supervision of investment and portfolio management services
performed by third parties pursuant to investment management agreements;
(d) the maintaining of books and records of Transnational,
including adequate and correct accounts of the assets and business
transactions of Transnational; and
<PAGE>
<PAGE>
(e) the preparation and filing of reports required to be filed by
Transnational with appropriate governmental authorities, including
without limitation, annual, quarterly and other periodic filings with
insurance regulatory authorities and tax returns, and the payment of all
taxes and other fees which may be due and owing by Transnational.
2. PXRE shall provide Transnational with the services of such executive,
managerial, administrative and other personnel as may be necessary to conduct
Transnational's operations pursuant to this Agreement.
3. PXRE shall provide Transnational with such operational and
administrative facilities, data processing equipment and services, office
equipment, furnishings and fixtures, and such other support assets as may be
necessary or desirable for the operation and administration of Transnational's
business pursuant to this Agreement.
4. PXRE shall have the authority to appoint and remove, as it deems
appropriate from time to time, legal counsel, investment advisors, accountants,
auditors and actuaries of Transnational and to determine the reasonable fees
payable by Transnational to such persons for such services, subject to the
approval of the Board of Directors of Transnational with respect to the
appointment and removal of independent public accountants and actuaries.
5. PXRE shall conduct the business of Transnational only in the ordinary
course and in substantially the same manner as it conducts its own business,
subject to the exercise of its reasonable business judgment.
6. All costs and expenses incurred by PXRE for the employees, equipment,
facilities and other items provided by PXRE pursuant to this Agreement shall be
allocated as follows:
(a) all reinsurance losses, loss adjustment expenses and
underwriting expenses of Transnational, including, but not limited to,
all related claim adjustment services, commissions and brokerage
expenses, premiums on ceded retrocesssions (if any) and all other loss
adjustments and underwriting expenses to be reflected in the annual
statement to be filed with state insurance regulatory authorities, shall
be paid by Transnational;
(b) all investment expenses of Transnational shall be paid by
Transnational;
(c) all out-of-pocket expenses incurred by PXRE for goods and
services from third party vendors or other non-related parties which are
identifiable to Transnational shall be charged at cost to Transnational;
(d) all other expenses incurred by PXRE, including rent, salaries,
employee benefits and other general overhead expenses of PXRE,
reasonably and equitably determined by PXRE to be attributable to
Transnational for the services and facilities provided by PXRE to
Transnational pursuant to this Agreement, shall be charged at cost to
Transnational.
2
<PAGE>
<PAGE>
PXRE's determination of charges hereunder shall be conclusive as between the
parties, except that if Transnational objects to any such determination, it
shall so advise PXRE within thirty (30) days of receipt of notice of said
determination. In the event of a disagreement between the parties as to a fair
basis for allocating any amounts payable hereunder, the basis for allocation
shall be fairly fixed by an independent public accounting firm selected by
Transnational. Reimbursement for expenses due under this Agreement shall be due
and payable by Transnational within fifteen (15) days after request for payment
by PXRE, not less often than quarterly.
7. This Agreement shall remain in effect unless and until terminated by
either party giving at least sixty (60) days' prior written notice to the other
party.
8. This Agreement may not be assigned by either party without the prior
written consent of the other party hereto.
9. Any amendment or modification of this Agreement shall be in writing,
signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.
PXRE REINSURANCE COMPANY
By: /s/ Gerald L. Radke
--------------------------------
Name: Gerald L. Radke
Title: Chairman of the Board, President
and Chief Executive Officer
TRANSNATIONAL REINSURANCE COMPANY
By: /s/ Gerald L. Radke
--------------------------------
Name: Gerald L. Radke
Title: Chairman of the Board, President
and Chief Executive Officer
3
<PAGE>
<PAGE>
ADDENDUM NO. 3
TO THE
PXRE GROUP AMENDED AND RESTATED AGREEMENT
CONCERNING FILING OF CONSOLIDATED
FEDERAL INCOME TAX RETURNS
BETWEEN
PXRE CORPORATION ("PXRE")
AND
TRANSNATIONAL REINSURANCE COMPANY ("Transnational")
WHEREAS, Transnational is a wholly-owned subsidiary of PXRE
Reinsurance Company ("Reinsurance"), and Reinsurance is a wholly-owned
subsidiary of PXRE; and
WHEREAS, Transnational is, therefore, a member of the PXRE
affiliated group of corporations filing consolidated federal income tax returns
(the "PXRE Group") and has, by this Addendum No. 3 dated as of December 11, 1996
become a participant in the Amended and Restated Agreement dated as of August
23, 1993 between PXRE and Reinsurance establishing the terms pursuant to which
the PXRE Group files its consolidated federal income tax returns, and
NOW, THEREFORE, it is hereby agreed that Transnational shall be a
participant in the PXRE Group Amended and Restated Agreement Concerning Filing
of Consolidated Federal Income Tax Returns dated as of August 23, 1993 to which
this Addendum is annexed.
PXRE CORPORATION
By: /s/ Gerald L. Radke
--------------------------------
Name: Gerald L. Radke
Title: Chairman of the Board, President
and Chief Executive Officer
TRANSNATIONAL REINSURANCE COMPANY
By: /s/ Gerald L. Radke
--------------------------------
Name: Gerald L. Radke
Title: Chairman of the Board, President
and Chief Executive Officer
<PAGE>
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
Witnesseth this AGREEMENT, effective January 29, 1997 by and between the
undersigned PXRE CORPORATION (the "Client") and PHOENIX INVESTMENT COUNSEL, INC.
(the "Manager") a corporation organized pursuant to the laws of The Commonwealth
of Massachusetts, with its home office at 56 Prospect Street, Hartford,
Connecticut.
In consideration of the mutual covenants contained herein, the parties hereto
agree as follows:
1. APPOINTMENT OF MANAGER
Client hereby engages the Manager and delegates to the Manager the power
to manage (including the power to acquire or dispose of), in accordance with the
terms and conditions of this Agreement, the assets of the Account. The "Account"
shall mean the assets of the Client which are acceptable to the Manager and
which by notice given or caused to be given by the Client to the Manager are
placed in the Account, and the investments and reinvestments of, and all income
earned by, or distributions received with respect to, any assets in the Account,
subject to the provisions of paragraph 3 of this Agreement. The Client may make
any addition to or withdrawal from the Account at any time and in any amount
that the Client determines, so long as the Client promptly notifies the Manager
in writing of any addition to the Account and the amount of the addition, and so
long as the Client makes no withdrawal from the Account without first delivering
to the Manager within a reasonable time prior to the withdrawal, written notice
of the intended withdrawal and the amount of the withdrawal.
2. ACCEPTANCE BY MANAGER
The Manager hereby acknowledges and agrees to the engagement provided in
paragraph 1 hereof, and acknowledges and warrants that it is duly registered
with the Securities and Exchange Commission as an investment adviser under the
Investment Advisers Act of 1940.
3. INVESTMENT DIRECTION
The Client's fundamental investment policies and any applicable
investment guidelines are set forth in Part I of Schedule A attached hereto and
made a part hereof. The Client hereby directs the Manager to select investments
for the Account in compliance with such policies and in accordance with such
guidelines.
Unless and until notice in writing to the contrary is given or caused to
be given by the Client to the Manager, all interest payments and other
distributions with respect to any security or other property in the Account
shall be reinvested.
Upon receiving written notice from the Client that a specified cash
amount is required from the Account, the Manager shall liquidate such portion of
the Account as may be necessary to provide the specified cash amount. The
Manager shall in its sole discretion select the assets of the Account to be
liquidated in such event, provided that the investment guidelines set forth in
Schedule A shall be complied with to the extent possible after giving effect to
such liquidation. The directions contained herein may be modified at any time by
the Client by notice in writing to the Manager.
<PAGE>
<PAGE>
4. CUSTODY OF SECURITIES
The Client will establish and maintain a custody account with a
custodian ("Custodian") acceptable to the Manager for all assets in the Account.
The Custodian shall be such entity as the Client may designate from time to time
by notice given or caused to be given in writing to the Manager. The Client
agrees to give the Manager at least thirty (30) days' written notice of any
change of Custodian. The Client shall cause the Custodian to inform the Manager
promptly of all assets placed in such Account by the Client and to establish
reporting and accounting arrangements such that the Manager will be kept advised
as to the value of the investments (including cash and cash equivalents) held in
the Account.
5. MANAGER'S AUTHORITY
Subject to the provisions of paragraph 3 and Schedule A of this
Agreement, the Manager is authorized by the Client to invest, sell and reinvest
the assets of the Account as it deems appropriate. The Manager is not authorized
to take physical possession of the assets of the Account; and the Custodian
shall have sole responsibility for holding and safekeeping the assets. The
Custodian shall make settlement of purchases and sales of such assets upon
orders placed by the Manager pursuant to the Custodian's established operating
procedures. The Manager shall promptly notify the Custodian in writing of any
purchase or sale made for the Account.
The Manager shall select brokers and dealers for any purchase or sale of
assets of the Account. The Manager may, in the allocation of portfolio brokerage
business and the payment of brokerage commissions, consider the brokerage and
research services furnished the Manager by brokers and dealers, in accordance
with the provisions of Section 28(e) of the Securities Exchange Act of 1934, as
amended.
The Manager will not be required to take any action, or render any
advice, with respect to the voting of any of the securities in the Account and
Client agrees to be solely responsible for the voting of any such securities and
for any required recordkeeping with respect thereto.
6. DOCUMENTATION TO BE FURNISHED
The Manager shall keep accurate and detailed accounts of any
investments, receipts and disbursements, and other transactions hereunder, and
all such accounts and the books and records relating thereto shall be open to
inspection at all reasonable times by the Client and by any other person
entitled by law to inspect such records.
Upon written request, the Manager will make available to the Client any
information in the Manager's possession which may be required by the Client in
fulfilling any reporting, disclosure, or recordkeeping obligation imposed on the
Client by applicable law.
<PAGE>
<PAGE>
7. APPRAISAL; DETERMINATIONS OF VALUE
The Manager will provide the Client with an appraisal of the Account as
of the last day of each calendar quarter on which the New York Stock Exchange is
open (the "Appraisal Date") during the term of this Agreement. Such appraisal
shall include a written statement of each individual asset held in the Account
on the Appraisal Date. Common stock, preferred stock, voting trust certificates,
rights, warrants and other similar securities for which market quotations are
readily available are valued at market value, which is determined using the last
reported sale price, or, of no sales are reported, the last reported bid price.
Bonds, debentures, notes and other fixed income securities of similar nature,
whether or not traded on a national securities exchange, shall be valued in
accordance with any reasonable valuation method selected by the Manager which is
based on sales prices of the same or comparable securities on or reasonably
preceding the Appraisal Date. Other securities and all other assets will be
valued at fair market value as determined in good faith by the Manager.
8. COMPENSATION TO MANAGER
The Manager, as full compensation for services rendered under this
Agreement, shall be paid a fee as specified in Part II of Schedule A, as it may
be amended from time to time by the Manager upon thirty (30) days' written
notice to the Client. For purposes of the calculation of the fee, the value of
the securities in the Account shall be determined as of the Appraisal Date at
the end of each calendar quarter pursuant to paragraph 7 of this Agreement. If
the Manager shall serve for less than the whole of any calendar quarter, its
compensation shall be determined as provided above on the basis of the value of
the assets in the Account on the date of termination and shall be payable on a
pro rata basis for the period of the calendar quarter for which it has served as
Manager hereunder. The compensation of the Manager shall be paid by the Client
upon receipt of the Manager's statement for such compensation.
9. ASSIGNMENT
No assignment (as the term is defined in the Investment Adviser's Act of
1940) of this Agreement shall be made by the Manager without the written consent
of the Client.
10. RENEWAL AND TERMINATION
This Agreement shall be renewed automatically each year on the
anniversary of its effective date unless it is terminated. This Agreement may be
terminated either by the Client or by the Manager, by notice given to the other
party hereto, effective thirty (30) days after receipt of such notice. Such
termination shall be without the payment of any penalty and without liability of
any party to the others, except that the party required to pay compensation
under paragraph 8 shall remain liable for any accrued but unpaid compensation
due the Manager as of the date of termination. In addition, the Client may
terminate this Agreement without advance notice to the Manager if Client pays a
termination fee determined as if the Manager had continued to provide services
under this Agreement for a period of thirty (30) days after the termination
date. In such case, the termination date shall be the Appraisal Date for
purposes of computing the termination fee. Termination by either party shall not
have the effect of canceling orders to deposit or invest cash or to purchase or
sell securities or other property placed prior to the effectiveness of
termination. Termination of this Agreement for any reason shall not relieve the
Manager of liability or responsibility under this Agreement with respect to the
period prior to the effectiveness of the termination.
<PAGE>
<PAGE>
11. LIABILITY OF MANAGER
Client specifically acknowledges and agrees that except for loss
resulting from gross negligence, willful misfeasance, bad faith or reckless
disregard on the part of the Manager in performance of its duties hereunder,
neither Manager or any of the Manager's officers, directors, shareholders,
agents or employees shall be liable hereunder for any action taken or not taken
in providing services hereunder.
12. OTHER AGREEMENTS AND OBLIGATIONS
It is understood that the Manager may have advisory or other contracts
with other persons, firms, or organizations (some of which may have investment
policies similar to those of the Account) and may have other interests and
businesses. In these connections the Manager may acquire information of a
confidential nature. The Client agrees that the Manager shall not be required to
provide investment advice or take any other action on behalf of the Account with
respect to any particular investment if such action by the Manager would involve
a violation of law. All information and advice furnished by either party to this
Agreement shall be treated as confidential and shall not be disclosed to third
parties except as required by law.
The Manager may act as investment adviser to other clients and may give
advice, and take action, with respect to any of those clients that may differ
from the advice given, or the timing or nature of action taken, with respect to
the Account. The Manager shall have no obligation to purchase or sell for
Client, or to recommend for purchase or sale by Client, any security that the
Manager, its principals, affiliates or employees may purchase for themselves or
for any other clients.
13. NOTICES
All notices and instructions with respect to any matters contemplated by
this Agreement shall be deemed duly given when delivered in writing to the
addresses below or when deposited by first-class mail addressed as follows:
(a) To Client:
-----------------------------------------------------------
Sanford M. Kimmel, CFO
PXRE Corporation
399 Thornail Street
Fourteenth Floor
Edison, NJ 08837
(b) To the Custodian:
-----------------------------------------------------------
Sean M. Greeley
Global Investor Services
Chase Manhattan Bank
4 Chase Metro Tech Center, 18th Floor
Brooklyn, NY 11245
(c) To Manager:
-----------------------------------------------------------
Mr. Paul Atkins, Senior Vice President
Phoenix Investment Counsel, Inc.
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115
<PAGE>
<PAGE>
14. AUTHORITY TO PERFORM
Each of the parties to this Agreement hereby represents that it is duly
authorized and empowered to execute, deliver, and perform this Agreement and the
transactions contemplated hereby, that such actions do not conflict with or
violate any provision of law, regulation, or contract, deed of trust, agreement,
or other instrument to which it is a party or by which it is bound or to which
it is subject and that no consent of any person or government regulatory agency
to such party's performing its obligation under this Agreement is required which
has not been obtained, and that this Agreement is a valid and binding obligation
upon that party, enforceable in accordance with its terms.
15. GOVERNING LAW
The laws of the State of Connecticut shall control all matters relating
to this Agreement and shall apply to the extent not preempted by Federal law.
16. MISCELLANEOUS
The Client acknowledges receipt of Part II of the Manager's Form ADV as
required by Rule 204-3 under the Investment Adviser's Act of 1940, as amended,
more than forty-eight (48) hours prior to the date of execution of this
Agreement.
This Agreement is the entire agreement of the parties with respect to
management of the assets in the Account and subject to the terms of paragraph 8,
may not be amended except by a writing signed by the parties.
This Agreement shall be effective as of the day and year first above
written.
<TABLE>
<S> <C>
PXRE CORPORATION PHOENIX INVESTMENT COUNSEL, INC.
By: /s/ Sanford M. Kimmel By: /s/ Paul A. Atkins
--------------------- ------------------
Title: Senior Vice President, Treasurer & CFO Title: Senior Vice President
Date: January 29, 1997 Date: 1/28/97
</TABLE>
Attachment: Schedule A, Parts I and II
<PAGE>
<PAGE>
SCHEDULE A, PART I
INVESTMENT OBJECTIVES AND GUIDELINES
ATTACHMENT
PXRE STATEMENT OF INVESTMENT OBJECTIVES AND GUIDELINES
Dated: ____________________________________
<PAGE>
<PAGE>
SCHEDULE A, PART II
INVESTMENT MANAGER COMPENSATION
The Manager shall be paid a fee as specified below by the Client as full
compensation for services rendered under the Investment Manager Agreement
effective January 29, 1997.
Upon presentation of an invoice by the Manager, after the close of each quarter,
the Client shall pay the Manager a management fee which shall be calculated on
the value of the assets of the Account and paid at one-fourth of the following
annual fee rates:
All assets.......................................0.15%
For purposes of the calculation of the fee, the value of the securities
(including all cash and cash equivalents) in the Account shall be determined as
of the Appraisal Date at the end of each calendar quarter. If the Manager shall
serve for less than the whole of any calendar quarter, its compensation shall be
determined as provided above on the basis of the value of assets in the Account
on the date of termination and shall be payable on a pro rata basis for the
period of the calendar quarter for which it has served as Manager hereunder. In
the event funds are contributed to or withdrawn from the Account during the
calendar quarter, the amount of the management fee then due shall be prorated
proportionately.
<PAGE>
<PAGE>
Exhibit 11
PXRE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Income (loss) before cumulative
effect of accounting change $ 33,301 $ 39,786 $ 34,829 $ 22,645 $ (4,293)
Cumulative effect of accounting change 0 0 0 0 433
-------- -------- -------- -------- --------
Net income (loss) $ 33,301 $ 39,786 $ 34,829 $ 22,645 $ (3,860)
======== ======== ======== ======== ========
Dividends payable to preferred stockholders 0 (599) (2,005) (2,056) (1,419)
-------- -------- -------- -------- --------
Operating income (loss) available to
common stockholders (before cumulative
effect of accounting change) $ 33,301 $ 39,187 $ 32,824 $ 20,589 $ (5,712)
======== ======== ======== ======== ========
Net income (loss) available to common
stockholders $ 33,301 $ 39,187 $ 32,824 $ 20,589 $ (5,279)
======== ======== ======== ======== ========
Average number of shares of common stock
outstanding 8,946 8,153 6,570 5,933 3,851
Add:
Unissued Board of Directors stock grants 10 10 10 10 0
Assumed exercise of dilutive stock options
assuming average common stock
market price 90 112 130 227 0
-------- -------- -------- -------- --------
Average number of shares of common stock
and common stock equivalents outstanding 9,046 8,275 6,710 6,170 3,851
======== ======== ======== ======== ========
Primary income (loss) per common share
assuming exercise of common stock
equivalents before cumulative effect of
accounting change $ 3.68 $ 4.74 $ 4.89 $ 3.34 $ (1.48)
======== ======== ======== ======== ========
Primary income (loss) per common share
assuming exercise of common stock
equivalents $ 3.68 $ 4.74 $ 4.89 $ 3.34 $ (1.37)
======== ======== ======== ======== ========
Fully diluted income (loss) per common
share before cumulative effect of
accounting change $ 3.68 $ 4.48 $ 3.94 $ 2.70 $ (1.48)
======== ======== ======== ======== ========
Fully diluted income (loss) per
common share $ 3.68 $ 4.48 $ 3.94 $ 2.70 $ (1.37)
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<PAGE>
Exhibit 12
PXRE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED
CHARGES AND RATIO OF CONSOLIDATED EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED DIVIDENDS
(In thousands, except ratios)
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income $ 33,301 $ 39,786 $ 34,829 $ 22,645 $ (4,293)
Equity in earnings of minority interest (3,898) (5,948) (4,141) (84) 0
-------- -------- -------- -------- --------
Income before equity in earnings of
minority interest 29,403 33,838 30,688 22,561 (4,293)
Income taxes 15,644 18,189 15,700 11,008 (3,322)
-------- -------- -------- -------- --------
$ 45,047 $ 52,027 $ 46,388 $ 33,569 $ (7,615)
Fixed charges:
Interest expense 6,957 7,143 7,789 2,740 319
Appropriated portion (1/3) of rentals 365 397 308 279 271
-------- -------- -------- -------- --------
Total fixed charges 7,322 7,540 8,097 3,019 590
-------- -------- -------- -------- --------
Earnings before income taxes and fixed charges $ 52,369 $ 59,567 $ 54,485 $ 36,588 $ (7,025)
-------- -------- -------- -------- --------
Preferred dividend requirements $ 0 $ 599 $ 2,005 $ 2,056 $ 1,419
-------- -------- -------- -------- --------
Ratio of pre-tax income to net income 1.53 1.54 1.51 1.49 0.00
-------- -------- -------- -------- --------
Preferred dividend factor $ 0 $ 922 $ 3,028 $ 3,063 $ 1,419
Total fixed charges 7,322 7,540 8,097 3,019 590
-------- -------- -------- -------- --------
Total fixed charges and preferred dividends $ 7,322 $ 8,462 $ 11,125 $ 6,082 $ 2,009
-------- -------- -------- -------- --------
Ratio of earnings to fixed charges 7.15 7.90 6.73 12.12 (11.91)
-------- -------- -------- -------- --------
Ratio of earnings to combined fixed charges and
preferred dividends 7.15 7.04 4.90 6.02 (3.50)
-------- -------- -------- -------- --------
Deficiency in ratio 7,615
Deficiency in combined ratio 9,034
========
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ Robert W. Fiondella
Robert W. Fiondella
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ Franklin D. Haftl
Franklin D. Haftl
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ Bernard Kelly
Bernard Kelly
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as her true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as she might or could do
in person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ Wendy Luscombe
Wendy Luscombe
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ Edward P. Lyons
Edward P. Lyons
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ Philip R. McLoughlin
Philip R. McLoughlin
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ David W. Searfoss
David W. Searfoss
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ Donald H. Trautlein
Donald H. Trautlein
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of PXRE Corporation (the "Company"), hereby constitutes and appoints
Gerald L. Radke and Sanford M. Kimmel, and each of them singly, as his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, acting in the name and on behalf of the undersigned, to sign the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1996, and all amendments or supplements (if any) thereto, granting unto said
attorneys-in-fact and agents (and either of them) full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys in fact and
agents (and either of them), or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF I have hereunto set my hand this 21st day
of March, 1997.
/s/ Wilson Wilde
Wilson Wilde
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<DEBT-HELD-FOR-SALE> 393,961,474
<DEBT-CARRYING-VALUE> 394,551,703
<DEBT-MARKET-VALUE> 394,551,703
<EQUITIES> 7,796,392
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 462,139,974
<CASH> 4,938,481
<RECOVER-REINSURE> 18,065,126
<DEFERRED-ACQUISITION> 1,449,050
<TOTAL-ASSETS> 543,324,206
<POLICY-LOSSES> 70,977,449
<UNEARNED-PREMIUMS> 11,042,260
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 64,725,000
<COMMON> 147,058
0
0
<OTHER-SE> 357,530,720
<TOTAL-LIABILITY-AND-EQUITY> 543,324,206
72,795,454
<INVESTMENT-INCOME> 16,782,371
<INVESTMENT-GAINS> 94,158
<OTHER-INCOME> 6,032,006
<BENEFITS> 18,563,608
<UNDERWRITING-AMORTIZATION> 12,873,668
<UNDERWRITING-OTHER> 12,261,949
<INCOME-PRETAX> 45,047,707
<INCOME-TAX> 15,644,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,301,275
<EPS-PRIMARY> 3.68
<EPS-DILUTED> 3.68
<RESERVE-OPEN> 72,718,914
<PROVISION-CURRENT> 27,327,387
<PROVISION-PRIOR> 10,509,733
<PAYMENTS-CURRENT> 6,468,736
<PAYMENTS-PRIOR> 42,698,356
<RESERVE-CLOSE> 70,977,449
<CUMULATIVE-DEFICIENCY> 10,509,733
<PAGE>
