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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Transnational Re Corporation
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(Exact name of registrant as specified in its charter)
August 22, 1996
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Date of Report (Date of earliest event reported)
Delaware 0-22376 13-3731572
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(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
399 Thornall Street, Fourteenth Floor, Edison, NJ 08837
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(Address of principal executive offices) (Zip Code)
(908) 906-8100
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On August 22, 1996, Transnational Re Corporation (the "Company")
and PXRE Corporation ("PXRE"), pursuant to the recommendations of the Board of
Directors of the Company, and a special committee comprised of its independent
directors, and the Board of Directors of PXRE, respectively, entered into a
definitive Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to
the Merger Agreement, the Company will merge with and into PXRE, after which the
Company will cease to exist, and PXRE will continue as the surviving corporation
(the "Merger"). A copy of the Merger Agreement is attached hereto as Exhibit 2
and is incorporated herein by reference.
Under the Merger Agreement, each share of Common Stock of the Company
will be exchanged for 1.0575 shares of Common Stock of PXRE and cash in lieu of
fractional shares.
The transaction is subject to stockholder and regulatory approval and
certain other conditions and is expected to close in the fourth quarter of 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
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Number Exhibit
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2 Agreement and Plan of Merger, dated as of August 22,
1996, between Transnational Re Corporation and PXRE
Corporation.
99 Press Release, dated August 22, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TRANSNATIONAL RE CORPORATION
Dated: August 22, 1996 By: /s/ Gerald L. Radke
--------------------
Gerald L. Radke
Chairman, President and
Chief Executive Officer
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EXHIBIT INDEX
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<CAPTION>
Exhibit No. Exhibit Page
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<C> <S> <C>
2 Agreement and Plan of Merger, dated as of
August 22, 1996, between Transnational Re
Corporation and PXRE Corporation.
99 Press Release, dated August 22, 1996.
</TABLE>
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AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 22, 1996
BETWEEN
TRANSNATIONAL RE CORPORATION
AND
PXRE CORPORATION
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TABLE OF CONTENTS
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Page
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ARTICLE 1 THE MERGER....................................................................1
Section 1.1. The Merger.............................................................1
Section 1.2. Closing................................................................2
Section 1.3. Effective Time.........................................................2
Section 1.4. Effects of the Merger..................................................2
Section 1.5. Certificate of Incorporation; By-laws..................................2
Section 1.6. Directors and Officers of the Surviving Corporation....................3
ARTICLE 2 EFFECT OF THE MERGER ON THE SECURITIES
OF THE CONSTITUENT CORPORATIONS...............................................3
Section 2.1. Effect on Capital Stock................................................3
Section 2.2. Exchange of Certificates...............................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES................................................8
Section 3.1. Representations and Warranties of PXRE.................................8
Section 3.2. Representations and Warranties of Transnational.......................17
ARTICLE 4 COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER..............................................................25
Section 4.1. Certain Covenants.....................................................25
ARTICLE 5 ADDITIONAL AGREEMENTS........................................................30
Section 5.1. Preparation of Form S-4, the PXRE Proxy Statement and the
Transnational Proxy Statement.........................................30
Section 5.2. Meetings of Stockholders..............................................30
Section 5.3. Legal Requirements to Merger..........................................31
Section 5.4. Access to Information.................................................31
Section 5.5. Best Efforts..........................................................31
Section 5.6. Benefit Plans.........................................................32
Section 5.7. Indemnification and Insurance.........................................32
Section 5.8. Public Announcements..................................................34
Section 5.9. No Solicitation, Etc..................................................34
Section 5.10. Consents, Approvals and Filings.......................................34
Section 5.11. Non-Interference, Etc.................................................35
Section 5.12. Affiliates............................................................35
Section 5.13. Listing...............................................................36
Section 5.14. Stockholder Litigation................................................36
Section 5.15. Dividends.............................................................36
Section 5.16. Amendment to Management Agreement.....................................36
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ARTICLE 6 CONDITIONS PRECEDENT.........................................................37
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger............37
Section 6.2. Conditions to Obligations of Transnational............................38
Section 6.3. Conditions to Obligations of PXRE.....................................39
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER............................................40
Section 7.1. Termination...........................................................40
Section 7.2. Effect of Termination.................................................42
Section 7.3. Amendment.............................................................42
Section 7.4. Extension; Waiver.....................................................42
Section 7.5. Procedure for Termination, Amendment, Extension or Waiver;
Role of the Special Committee up to the Effective Time................43
ARTICLE 8 GENERAL PROVISIONS...........................................................43
Section 8.1. Nonsurvival of Representations and Warranties.........................43
Section 8.2. Fees and Expenses.....................................................43
Section 8.3. Definitions...........................................................44
Section 8.4. Interpretation........................................................44
Section 8.5. Notices...............................................................44
Section 8.6. Counterparts..........................................................46
Section 8.7. Entire Agreement; Third-Party Beneficiaries...........................46
Section 8.8. Governing Law.........................................................46
Section 8.9. Assignment............................................................46
Section 8.10. Enforcement...........................................................46
Section 8.11. Severability..........................................................47
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 22, 1996 between
TRANSNATIONAL RE CORPORATION, a Delaware corporation ("Transnational"), and PXRE
CORPORATION, a Delaware corporation ("PXRE").
W I T N E S S E T H :
WHEREAS, the Board of Directors of Transnational, based upon the
unanimous recommendation of the special committee of the independent directors
of Transnational (the "Special Committee"), and the Board of Directors of PXRE
deem it advisable and in the best interests of their respective stockholders to
consummate, and have unanimously approved, the merger of Transnational with and
into PXRE upon the terms and subject to the conditions set forth herein (the
"Merger");
WHEREAS, the Board of Directors of Transnational in 1993 approved the
transaction which resulted in PXRE's wholly-owned subsidiary PXRE Reinsurance
Company ("PXRE Reinsurance") becoming an interested stockholder in Transnational
in accordance with the provisions of Section 203 of the Delaware General
Corporation Law (the "DGCL") ;
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, immediately following the Effective Time (as hereinafter
defined), PXRE will contribute or cause to be contributed to PXRE Reinsurance
all of the shares of capital stock of Transnational Reinsurance Company
("Transnational Reinsurance"); and
WHEREAS, Transnational and PXRE desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Transnational
shall be merged with and into
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PXRE at the Effective Time. Upon the Effective Time, the separate existence of
Transnational shall cease, and PXRE shall continue as the surviving corporation
(the "Surviving Corporation").
SECTION 1.2. CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 7.1 and subject to the satisfaction or waiver of each of the
conditions set forth in Article 6, the closing of the Merger (the "Closing")
will take place at 10:00 a.m. on the date (the "Closing Date") that is the
second business day following the date on which the last to be fulfilled or
waived of the conditions set forth in Article 6 shall be fulfilled or waived in
accordance with this Agreement, at the offices of Morgan, Lewis & Bockius LLP,
101 Park Avenue, New York, New York 10178, unless another date, time or place is
agreed to in writing by the parties hereto.
SECTION 1.3. EFFECTIVE TIME. The parties hereto will file with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
on the date of the Closing (or on such other later date as Transnational and
PXRE may agree) a certificate of merger or other appropriate documents, prepared
and executed in accordance with the relevant provisions of the DGCL, and make
all other filings and recordings required under the DGCL in connection with the
Merger. The Merger shall become effective upon the filing of the certificate of
merger with the Delaware Secretary of State, or at such later time as is
specified in the certificate of merger (the "Effective Time").
SECTION 1.4. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 259 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of Transnational shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Transnational
shall become the debts, liabilities and duties of the Surviving Corporation, all
as provided under the DGCL.
SECTION 1.5. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) The Restated Certificate of Incorporation of PXRE (the "PXRE
Charter"), as in effect immediately prior to the Effective Time (as amended as
provided for in Section 1.5(b) below), shall from and after the Effective Time,
be the certificate of incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
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(b) Prior to the Effective Time, Paragraphs A and C of Article IV
of the PXRE Charter may, subject to the requisite approval by PXRE's
stockholders, be amended (the "PXRE Charter Amendment") to read as follows:
"A. Authorized Capital Stock. The aggregate number of shares
which the Corporation shall have authority to issue is 40,500,000 shares,
consisting of:
1. 500,000 shares of Serial Preferred Stock (par value $.01 per
share); and
2. 40,000,000 shares of Common Stock (par value $.01 per share)
. . .
C. Common Stock. The total number of shares of Common Stock the
Corporation has authority to issue is 40,000,000 shares, par value of $.01 per
share."
(c) The by-laws of PXRE (the "PXRE By-laws") as in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
SECTION 1.6. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
(a) The directors of PXRE immediately prior to the Effective Time
shall be the directors of the Surviving Corporation until their respective
successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with the PXRE Charter and the PXRE By-laws,
or as otherwise provided by applicable law.
(b) The officers of PXRE immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until their respective
successors are duly appointed and qualified or until their earlier death,
resignation or removal in accordance with the PXRE Charter and the PXRE By-laws,
or as otherwise provided by applicable law.
ARTICLE 2
EFFECT OF THE MERGER ON THE SECURITIES
OF THE CONSTITUENT CORPORATIONS
SECTION 2.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Transnational Class A
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Common Stock, par value $.01 per share (the "Transnational Class A Stock"), any
shares of Transnational Class B Common Stock, par value $.01 per share
("Transnational Class B Stock"; and together with the Transnational Class A
Stock, "Transnational Common Stock") or any other shares of capital stock of
Transnational:
(a) Cancellation of Transnational Treasury Stock and Certain
PXRE-Owned Stock. Each share of Transnational Class A Stock issued and
outstanding immediately prior to the Effective Time that is owned by
Transnational or any subsidiary of Transnational or by PXRE or any subsidiary of
PXRE shall automatically be canceled and retired and shall cease to exist, and
no Common Stock, par value $.01 per share, of PXRE ("PXRE Common Stock"), cash
or other consideration shall be delivered or deliverable in exchange therefor.
(b) Conversion of Transnational Common Stock. Subject to Section
2.2(f), (i) each share of Transnational Class A Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 2.1(a) above, but including shares referred to in
Section 5.6(b)) and (ii) each share of Transnational Class B Stock issued and
outstanding immediately prior to the Effective Time shall, as a matter of law,
be converted into the right to receive 1.0575 validly issued, fully paid and
non-assessable shares of PXRE Common Stock (the "Stock Consideration"). The
Stock Consideration and any cash to be paid in accordance with Section 2.2(f) in
lieu of fractional shares of PXRE Common Stock are referred to collectively as
the "Merger Consideration".
(c) Transnational Stock Options. At the Effective Time, each
outstanding stock option (each, a "Director Option") to purchase Transnational
Class A Stock granted under the Transnational Re Corporation Director Stock
Option Plan, whether vested or unvested, shall be deemed to constitute an option
to acquire, on the same terms and conditions as were applicable under such
Director Option, the same number of shares of PXRE Common Stock as the holder of
such Director Option would have been entitled to receive pursuant to the Merger
had such holder exercised such Director Option in full (whether or not actually
exercisable) immediately prior to the Effective Time ("Assumed Option"). Each
Assumed Option shall have an exercise price per share equal to (y) the aggregate
exercise price for the shares of Transnational Class A Stock deemed otherwise
purchasable pursuant to such Director Option divided by (z) the number of full
shares of PXRE Common Stock that are subject to such Assumed Option.
(d) Cancellation and Retirement of Transnational Common Stock. As
of the Effective Time, all certificates representing shares of Transnational
Common Stock, other than certificates representing shares to be canceled in
accordance with Section 2.1(a), issued and outstanding immediately prior to the
Effective Time, shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Transnational Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section 2.2,
without interest.
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(e) PXRE shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of PXRE Common Stock issuable upon
exercise of any Assumed Options. As soon as practicable after the Effective
Time, PXRE shall file a registration statement on Form S-3 or Form S-8, as the
case may be (or any successor or other appropriate forms), or another
appropriate form with respect to the shares of PXRE Common Stock subject to
Assumed Options. PXRE shall use its best efforts to maintain the effectiveness
of such registration statements (and maintain the current status of the
prospectuses contained therein) for so long as such Assumed Options remain
outstanding.
SECTION 2.2. EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. As of the Effective Time, PXRE shall deposit
with a bank or trust company designated by PXRE and reasonably satisfactory to
Transnational (the "Exchange Agent"), for the benefit of the holders of shares
of Transnational Common Stock, certificates representing shares of PXRE Common
Stock representing the aggregate Stock Consideration (such certificates,
together with any dividends or distributions with respect to such certificates,
being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. As soon as practicable after the
Effective Time, each holder of an outstanding certificate or certificates which
prior thereto represented shares of Transnational Common Stock (except holders
of shares of Transnational Class A Stock to be canceled in accordance with
Section 2.1(a) above) shall, upon surrender to the Exchange Agent of such
certificate or certificates and acceptance thereof by the Exchange Agent, be
entitled to a certificate representing that number of whole shares of PXRE
Common Stock (and cash in lieu of fractional shares of PXRE Common Stock as
contemplated by Section 2.2(f) below) which the aggregate number of shares of
Transnational Common Stock previously represented by such certificate or
certificates surrendered shall have been converted into the right to receive
pursuant to Section 2.1(b) of this Agreement. The Exchange Agent shall accept
such certificates upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. If the Merger Consideration (or any
portion thereof) is to be delivered to any person other than the person in whose
name the certificate representing shares of Transnational Common Stock
surrendered in exchange therefor is registered, it shall be a condition to such
exchange that the certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes required by
reason of the payment of such consideration to a person other than the
registered holder of the certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. After the Effective Time, there shall be no further transfer on the
records of Transnational or its transfer agent of certificates representing
shares of Transnational Common Stock and if such certificates are presented to
Transnational for transfer, they shall be canceled against delivery of the
Merger Consideration as hereinabove provided. Until surrendered as contemplated
by this Section 2.2(b), each certificate representing shares of Transnational
Common Stock (other than certificates representing shares of
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Transnational Class A Stock to be canceled in accordance with Section 2.1(a)
above) shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Merger Consideration, without any
interest thereon, as contemplated by Section 2.1. No interest will be paid or
will accrue on any cash payable as Merger Consideration.
(c) Letter of Transmittal. Promptly after the Effective Time (but
in no event more than 5 days thereafter), the Surviving Corporation shall
require the Exchange Agent to mail to each record holder of certificates that
immediately prior to the Effective Time represented shares of Transnational
Common Stock which have been converted pursuant to Section 2.1, a form of letter
of transmittal and instructions for use in surrendering such certificates and
receiving the Merger Consideration to which such holder shall be entitled
pursuant to Section 2.1.
(d) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to PXRE Common Stock with a record
date after the Effective Time shall be paid to the holder of any certificate
that immediately prior to the Effective Time represented shares of Transnational
Common Stock which have been converted pursuant to Section 2.1 ("Converted TREX
Shares"), until the surrender for exchange of such certificate in accordance
with this Article 2. Following surrender for exchange of any such certificate,
there shall be paid to the holder of such certificate, without interest, (i) at
the time of such surrender, the amount of dividends or other distributions with
a record date after the Effective Time theretofore paid or payable with respect
to the number of whole shares of PXRE Common Stock into which the shares of
Transnational Common Stock represented by such certificate immediately prior to
the Effective Time were converted pursuant to Section 2.1 and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time, but prior to such surrender, and with a
payment date subsequent to such surrender, payable with respect to such whole
shares of PXRE Common Stock.
(e) No Further Ownership Rights in Transnational. The Merger
Consideration paid upon the surrender for exchange of certificates representing
shares of Transnational Common Stock in accordance with the terms of this
Article 2 shall be deemed to have been issued and paid in full satisfaction of
all rights pertaining to the shares of Transnational Common Stock theretofore
represented by such certificates, subject, however, to the Surviving
Corporation's obligations (if any) to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared by Transnational on such shares of Transnational Common Stock in
accordance with the terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective Time.
(f) No Fractional Shares.
(i) No certificates or scrip representing fractional
shares of PXRE Common Stock shall be issued upon the surrender for
exchange of certificates that
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immediately prior to the Effective Time represented shares of
Transnational Common Stock which have been converted pursuant to Section
2.1, and such fractional share interests will not entitle the owner
thereof to vote or to any rights as a stockholder of PXRE. No
Transnational stockholder shall be entitled to receive cash in lieu of
fractional shares in an amount greater than the value of one full share
of PXRE Common Stock.
(ii) Notwithstanding any other provisions of this
Agreement, each holder of shares of Transnational Common Stock who would
otherwise have been entitled to receive a fraction of a share of PXRE
Common Stock (after taking into account all certificates delivered by
such holder) pursuant to Section 2.1 shall receive, in lieu thereof,
cash (without interest) in an amount equal to (x) such fractional part
of a share of PXRE Common Stock multiplied by (y) the closing price of a
share of PXRE Common Stock on the trading day immediately preceding the
Closing Date. PXRE shall provide the Exchange Agent with the necessary
cash for such payments as and when it is needed.
(g) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the certificates representing
Converted TREX Shares for 180 days after the Effective Time shall be delivered
to PXRE, upon demand, and any holders of Converted TREX Shares who have not
theretofore complied with this Article 2 shall thereafter look only to PXRE for
payment of their claim for any Merger Consideration and any dividends or
distributions with respect to PXRE Common Stock.
(h) No Liability. None of Transnational, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any shares, cash, dividends or distributions payable from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any certificates representing Converted TREX Shares
shall not have been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration in
respect of such certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 3.1(c))), any such shares, cash,
dividends or distributions payable in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF PXRE. PXRE represents and
warrants to Transnational as follows:
(a) Organization, Standing and Corporate Power. PXRE and each
subsidiary of PXRE is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate or other power and
authority to carry on its business as now being conducted. PXRE and each
subsidiary of PXRE is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have or reasonably be
expected to have a material adverse effect on the business, financial condition
or results of operations of PXRE and its subsidiaries taken as a whole or a
material adverse effect on the ability of PXRE to consummate any of the
transactions contemplated hereby (a "PXRE Material Adverse Effect"). PXRE has
delivered to Transnational complete and correct copies of the PXRE Charter and
the PXRE By-laws and the certificate of incorporation and by-laws, or other
organizational documents, of its subsidiaries, in each case as currently in
effect.
(b) Capital Structure. As of the date hereof, the authorized
capital stock of PXRE consists of (i) 20,000,000 shares of PXRE Common Stock of
which, as of the close of business on August 19, 1996, 8,773,375 shares were
issued and outstanding and 244,476 shares were held in treasury; and (ii)
500,000 shares of Serial Preferred Stock, par value $.01 per share, of which no
shares are issued and outstanding. At the close of business on August 19, 1996,
833,334 shares of PXRE Common Stock were reserved for issuance pursuant to
PXRE's stock option, stock purchase, deferred stock and restricted stock plans
of which 405,523 shares were reserved for issuance upon the exercise of employee
and director options ("PXRE Stock Options") outstanding on such date. Except as
set forth above, at the close of business on August 19, 1996, no (x) shares of
capital stock or other equity or voting securities of PXRE, (y) securities of
PXRE convertible into or exchangeable for shares of capital stock or equity or
voting securities of PXRE, or (z) options or other rights to acquire from PXRE,
or obligations of PXRE to issue, any capital stock, equity or voting securities
or securities convertible into or exchangeable for capital stock or equity or
voting securities of PXRE, were issued, reserved for issuance or outstanding.
All outstanding shares of capital stock of PXRE are, and all shares of PXRE
Common Stock which may be issued (i) pursuant to this Agreement or (ii) pursuant
to the exercise of outstanding PXRE Stock Options will be, when issued, duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights. No bonds, debentures, notes or other indebtedness of PXRE or
any subsidiary of PXRE having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters
8
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on which the stockholders of PXRE or any subsidiary of PXRE may vote are issued
or outstanding. Section 3.1(b) of the Disclosure Schedule lists each subsidiary
of PXRE and, except for the capital stock of such subsidiaries and the other
ownership interests listed in Section 3.1(b) of the Disclosure Schedule, PXRE
does not own, directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, joint venture or other entity
(excluding portfolio investments made in the ordinary course of business in
accordance with the PXRE Investment Guidelines (as defined below) or the
investment guidelines in effect at the time such investment was made). Except as
disclosed in Section 3.1(b) of the Disclosure Schedule, all the outstanding
shares of capital stock or other ownership interests of each subsidiary of PXRE
have been duly authorized, validly issued and are fully paid and non-assessable
and are owned by PXRE, by one or more wholly-owned subsidiaries of PXRE or by
PXRE and one or more such wholly-owned subsidiaries, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens"). Except as set forth above or in
Section 3.1(b) of the Disclosure Schedule, there are not any securities,
options, warrants, rights, commitments or agreements of any kind to which PXRE
or any subsidiary is a party or by which any of them is bound or of any of them
obligating any of them to issue, sell or deliver, or repurchase, redeem or
otherwise acquire, or convertible into or exchangeable for, or otherwise
entitling any person to acquire from any of them, shares of capital stock or
other equity or voting securities of any of them or securities convertible into
or exchangeable for any such capital stock or equity or voting securities, or
obligating any of them to issue, sell, deliver, grant, extend or enter into any
such security, option, warrant, right, commitment or agreement. Except as
disclosed in Section 3.1(b) of the Disclosure Schedule, neither PXRE nor any
subsidiary of PXRE is a party to or bound by any agreement, proxy or other
arrangement restricting the transfer of PXRE Common Stock or affecting the
voting of any shares of capital stock of PXRE or any subsidiary.
(c) Authority; Noncontravention. PXRE has the requisite corporate
power and authority to enter into this Agreement and, subject to the approval of
this Agreement and the transactions contemplated hereby by the requisite vote of
the holders of PXRE Common Stock (the "PXRE Stockholder Approval"), PXRE has all
requisite corporate power and authority to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
PXRE and the consummation by PXRE of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of PXRE,
subject to the PXRE Stockholder Approval. This Agreement has been duly executed
and delivered by PXRE and, assuming this Agreement constitutes the valid and
binding agreement of Transnational, constitutes a valid and binding obligation
of PXRE, enforceable against PXRE in accordance with its terms, except as the
same may be limited by or subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally, and subject to general principles of equity. Except as disclosed in
Section 3.1(c) of the Disclosure Schedule, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions hereof will not, (i) subject to the
PXRE Stockholder Approval, conflict with any of the provisions of the PXRE
Charter or the PXRE By-laws or of the certificate of
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incorporation, by-laws or other organizational documents of any subsidiary of
PXRE, (ii) subject to the matters referred to in the next sentence, conflict
with, result in a breach of or default (with or without notice or lapse of time,
or both) under, give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or require
the consent of any person under, any indenture or other agreement, permit,
franchise, license or other instrument or undertaking to which PXRE or any of
its subsidiaries is a party or by which PXRE or any of its subsidiaries or any
of their assets is bound or affected or held by PXRE or any of its subsidiaries,
(iii) subject to the PXRE Stockholder Approval and the matters referred to in
the next sentence, contravene any statute, law, ordinance, rule, regulation,
order, judgment, injunction, decree, determination or award applicable to PXRE
or any of its subsidiaries or any of their respective properties or assets, or
(iv) result in the creation of any Lien on any property or asset of PXRE or any
of its subsidiaries, which, in the case of clauses (ii), (iii) and (iv) above,
singly or in the aggregate, could reasonably be expected to have a PXRE Material
Adverse Effect. No consent, approval or authorization of, or declaration or
filing with, or notice to, any court or governmental or regulatory authority or
agency, domestic or foreign (a "Governmental Entity") is required by or with
respect to PXRE or its subsidiaries in connection with the execution and
delivery of this Agreement by PXRE or the consummation by PXRE or its
subsidiaries of the transactions contemplated hereby, except for (i) the filing
of premerger notification and report forms under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") with respect to the Merger,
(ii) approvals, filings and/or notices required under insurance regulatory laws
as specified in Section 3.1(c) of the Disclosure Schedule, (iii) the filing with
the Securities and Exchange Commission (the "SEC") of a registration statement
on Form S-4 in connection with the issuance of PXRE Common Stock in the Merger
(the "Form S-4"), of the PXRE Proxy Statement (as defined in Section 3.1(e)) and
of such reports or other filings under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (iv) the filing
and recordation of the certificate of merger as required under the DGCL and the
filing of appropriate documents with the Department of State or other relevant
authorities of other states in which Transnational is qualified to do business,
as required by the corporation laws of such states, (v) the filing with the
Secretary of State of the State of Delaware of a Certificate of Amendment to
PXRE's Restated Certificate of Incorporation relating to the PXRE Charter
Amendment, (vi) such other consents, approvals, authorizations, declarations,
filings or notices as are set forth in Section 3.1(c) of the Disclosure
Schedule, (vii) any applicable filings under state securities or "blue sky" laws
and (viii) such other consents, approvals, authorizations, declarations, filings
or notices the failure to obtain or make which, in the aggregate, would not have
a PXRE Material Adverse Effect.
(d) SEC Documents; Financial Statements.
(i) PXRE has filed all required reports, schedules, forms,
statements and other documents with the SEC since January 1, 1994 (such
reports, schedules, forms, statements and other documents, together with
all registration statements filed by PXRE or its subsidiaries with the
SEC since January 1, 1994, in each case, as such documents
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have been amended since the time of their filing, collectively, the
"PXRE SEC Documents"). As of their respective filing dates (or, if
amended, as of the date of the filing of such amendment) the PXRE SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such PXRE SEC Documents. None
of the PXRE SEC Documents as of such dates contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of PXRE
included in the PXRE SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, and fairly present, in
all material respects, in conformity with United States generally
accepted accounting principles ("GAAP") (except, in the case of
unaudited consolidated quarterly statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) the consolidated
financial position of PXRE and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
quarterly statements, to normal year-end audit adjustments). Except (w)
as disclosed in Section 3.1(d)(i) of the Disclosure Schedule, (x)
liabilities disclosed or provided for in the consolidated balance sheet
of PXRE and its subsidiaries (the "PXRE Balance Sheet") as of June 30,
1996 (the "Balance Sheet Date"), (y) liabilities under or related to
this Agreement and the transactions contemplated hereby, and (z)
liabilities and obligations incurred in the ordinary course of business
substantially consistent with past practice since the Balance Sheet
Date, neither PXRE nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent,
determined, determinable or otherwise), other than liabilities and
obligations which would not individually or in the aggregate reasonably
be expected to have a PXRE Material Adverse Effect.
(ii) The Annual Statement for the year ended December 31,
1995, together with all exhibits and schedules thereto, and any
actuarial opinion, affirmation or certification filed in connection
therewith, and any Quarterly Statements for periods ended after January
1, 1996, together with all exhibits and schedules thereto, with respect
to PXRE Reinsurance, in each case as filed with the applicable
Governmental Entities charged with supervision of insurance companies
("Insurance Regulators") in its jurisdiction of domicile, were prepared
in conformity with statutory accounting practices prescribed or
permitted by such Insurance Regulator ("SAP") applied on a consistent
basis (except as expressly set forth in the notes, exhibits or schedules
thereto) and present fairly, to the extent required by and in conformity
with SAP, the statutory financial condition of PXRE Reinsurance at their
respective dates and the results of operations, changes in capital and
surplus and cash flow of PXRE Reinsurance for each of the periods then
ended. Except as disclosed in Section 3.1(d)(ii) of the Disclosure
Schedule,
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since December 31, 1993 no deficiencies or violations material to the
financial condition of PXRE Reinsurance have been asserted by any
Insurance Regulator.
(e) Transaction Documents. The Form S-4 will not, at the time the
Form S-4 becomes effective under the Securities Act or at the time any amendment
or supplement thereto becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading. The proxy statement
relating to the approval by the stockholders of PXRE of the matters referred to
in the first sentence of Section 5.2 (the "PXRE Proxy Statement") will not, at
the date it is first mailed to PXRE's stockholders or at the time of the PXRE
Stockholders Meeting (as defined in Section 5.2), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. None of the information
supplied or to be supplied by PXRE for inclusion or incorporation by reference
in the proxy statement relating to the approval by the stockholders of
Transnational of the matters referred to in the second sentence of Section 5.2
(the "Transnational Proxy Statement") will, at the date it is first mailed to
Transnational's stockholders or at the time of the Transnational Stockholders
Meeting (as defined in Section 5.2), contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Form S-4 and the PXRE Proxy
Statement will comply as to form in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder. Notwithstanding the foregoing, no representation or
warranty is made by PXRE in this Section 3.1(e) with respect to information
supplied by the Special Committee specifically for inclusion or incorporation by
reference in the Form S-4, the PXRE Proxy Statement or the Transnational Proxy
Statement.
(f) Absence of Certain Changes or Events. Except as disclosed (x)
in the PXRE SEC Documents filed and publicly available after December 31, 1995
and prior to the date of this Agreement (the "Filed PXRE SEC Documents") or (y)
in Section 3.1(f) of the Disclosure Schedule, since January 1, 1996, PXRE and
each of its subsidiaries has conducted its business only in the ordinary course
substantially consistent with past practice. Except as disclosed in Section
3.1(f) of the Disclosure Schedule, since the Balance Sheet Date, there has not
been (i) a PXRE Material Adverse Change (as defined in Section 6.2(c)), or any
event or condition that individually or in the aggregate could reasonably be
expected to result in a PXRE Material Adverse Change; (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of PXRE's outstanding capital stock,
other than the declaration and payment of regular quarterly dividends on PXRE
Common Stock or any repurchase, redemption or other acquisition by PXRE or any
of its subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, PXRE or any subsidiary thereof;
(iii) any split, combination or reclassification of any of its outstanding
capital stock or any issuance or the authorization of any issuance of any other
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securities in respect of, in lieu of or in substitution for shares of its
outstanding capital stock; (iv) any material change in accounting methods,
principles or practices by PXRE or any of its subsidiaries except for any such
change required by reason of a concurrent change in GAAP; (v) any amendment of
any material term of any outstanding security of PXRE or any subsidiary; (vi)
any incurrence, assumption or guarantee by PXRE or any subsidiary of any
indebtedness for borrowed money (other than pursuant to existing line of credit
arrangements, additional line of credit arrangements not exceeding $10 million
and letters of credit and related agreements in the ordinary course of business
substantially consistent with past practice); (vii) any creation or assumption
by PXRE or any subsidiary of any Lien on any material asset other than in the
ordinary course of business substantially consistent with past practice; (viii)
any making of any material loan, advance or capital contributions to or
investment in any person other than loans, advances or capital contributions to
or investments in wholly-owned subsidiaries and other than portfolio investments
made pursuant to the investment guidelines approved by the Board of Directors of
PXRE (the "PXRE Investment Guidelines"), a copy of which has been delivered to
the Special Committee; (ix) any transaction or commitment made, or any contract
or agreement entered into, by PXRE or any subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by PXRE or any subsidiary of any contract or other right, in
either case, material to PXRE and its subsidiaries taken as a whole, other than
transactions and commitments in the ordinary course of business substantially
consistent with past practice and those contemplated by this Agreement; (x) any
entry by PXRE or a subsidiary into any contract limiting its right at any time
on or after the date of this Agreement to engage in, or to compete with any
person in, any business conducted by PXRE or its subsidiaries, including,
without limitation, any contract which includes exclusivity provisions
restricting the geographical area in which, or the method by which, any such
business may be conducted; (xi) any entry by PXRE or a subsidiary into any
acquisition, joint venture, partnership or similar agreement or arrangement
which is material to PXRE and its subsidiaries taken as a whole; or (xii) any
grant or increase of any severance or termination pay to any director, officer
or employee of PXRE or any of its subsidiaries which is material to PXRE and its
subsidiaries taken as a whole or any increase in any compensation, bonus or
other benefits payable to directors, officers or employees of PXRE or any of its
subsidiaries other than in the ordinary course of business substantially
consistent with past practice.
(g) Taxes.
(i) Each of PXRE and its subsidiaries has filed all tax
returns and reports required to be filed by it or requests for
extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such failures to
file or to have extensions granted that remain in effect individually or
in the aggregate would not have a PXRE Material Adverse Effect. All tax
returns filed by PXRE and each of its subsidiaries are complete and
accurate except to the extent that such failure to be complete and
accurate would not have a PXRE Material Adverse Effect. PXRE and each of
its subsidiaries has paid (or PXRE has paid on the subsidiaries' behalf)
all taxes shown as due on such returns, and the most recent financial
statements contained in the Filed
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PXRE SEC Documents reflect an adequate reserve, in accordance with GAAP,
for all taxes payable by PXRE and its subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements.
(ii) Except as set forth in Section 3.1(g) of the
Disclosure Schedule, no deficiencies for any taxes have been proposed,
asserted or assessed against PXRE or any of its subsidiaries that are
not adequately reserved for, except for deficiencies that individually
or in the aggregate would not have a PXRE Material Adverse Effect, and
no requests for waivers of the time to assess any such taxes have been
granted or are pending.
(iii) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, sales, excise,
employment, payroll, withholding and other taxes, tariffs or
governmental charges of any nature whatsoever.
(h) Compliance with Applicable Laws. Each of PXRE and its
subsidiaries has in full force and effect all federal, state, local and foreign
governmental approvals, authorizations, certificates, consents, filings,
franchises, licenses, notices, permits and rights (collectively, "Permits"),
including without limitation all Permits of or issued by all Insurance
Regulators, and has made all declarations and filings with all Insurance
Regulators and other Governmental Entities, necessary for it to own, lease or
operate its properties and assets and to carry on its business as now conducted,
and there has occurred no default under any such Permit, except for the failure
of Permits to be in full force and effect, for failures to make filings or
declarations, and for defaults under Permits which failure or default
individually or in the aggregate would not have a PXRE Material Adverse Effect.
None of such Permits contains any restriction that is materially burdensome to
PXRE or any of its subsidiaries. PXRE and its subsidiaries are in material
compliance with all such Permits and, to the knowledge of PXRE, no event has
occurred which would lead PXRE to reasonably expect the revocation or
termination of any such Permit or any material impairment of the rights of the
holder thereof. Except as disclosed in the Filed PXRE SEC Documents or in
Section 3.1(h) of the Disclosure Schedule, PXRE and its subsidiaries are in
compliance with all, and there have been no violations of any, applicable
statutes, laws, ordinances, rules, regulations and orders of any Governmental
Entity (including, without limitation, Insurance Regulators), except for such
noncompliance or violation which individually or in the aggregate has not had
and would not reasonably be expected to have a PXRE Material Adverse Effect.
Except as disclosed in Section 3.1(h) of the Disclosure Schedule and except for
routine examinations by Insurance Regulators, no investigation by any federal,
state, local or foreign Governmental Entity with respect to PXRE or any of its
subsidiaries is pending or, to the knowledge of PXRE, threatened, other than, in
each case, those the outcome of which, as far as reasonably can be foreseen,
will not have a PXRE Material Adverse Effect. Neither PXRE nor any of its
subsidiaries has received any notice from any Insurance Regulator concerning any
alleged material violation of any Permit or any insurance laws or regulations or
notice of any proposed proceeding to revoke any material Permit or any notice to
the effect that
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any additional material Permit from any Insurance Regulator is needed to be
obtained by PXRE or its subsidiaries.
(i) Voting Requirements. The affirmative vote of holders of a
majority of the outstanding shares of PXRE Common Stock entitled to vote thereon
at the PXRE Stockholders Meeting with respect to this Agreement and the Merger
and the issuance of Common Stock in connection with the Merger is the only vote
of the holders of any class or series of PXRE's capital stock necessary to
approve this Agreement and the transactions contemplated by this Agreement
(other than the approval of the PXRE Charter Amendment). Approval of the PXRE
Charter Amendment will require the affirmative vote of both (i) holders of
two-thirds of the shares of PXRE Common Stock present in person or represented
by proxy at the PXRE Stockholders Meeting and (ii) holders of a majority of the
shares of PXRE Common Stock present in person or represented by proxy at the
PXRE Stockholders Meeting excluding shares beneficially owned or controlled,
directly or indirectly, by any person who as of the record date respecting the
PXRE Stockholders Meeting is the beneficial owner of five percent or more of the
then issued and outstanding shares of PXRE Common Stock.
(j) Opinion of Financial Advisor. PXRE has received the written
opinion of Dillon, Read & Co. Inc., the financial advisor to PXRE, to the effect
that, as of the date of this Agreement, the Merger is fair to PXRE and its
stockholders from a financial point of view.
(k) Brokers. No broker, investment banker, financial advisor or
other person, other than Dillon, Read & Co. Inc., the fees and expenses of which
will be paid by PXRE, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
PXRE or its subsidiaries.
(l) Litigation. Except as disclosed in the Filed PXRE SEC
Documents or in Section 3.1(l) of the Disclosure Schedule, there is no suit,
action, investigation or arbitration pending or, to the knowledge of PXRE,
threatened against or affecting PXRE or any of its subsidiaries before any
court, arbitrator, Insurance Regulator or other Governmental Entity that, (i)
individually or in the aggregate, could reasonably be expected to have a PXRE
Material Adverse Effect or to impair the ability of PXRE to perform its
obligations under this Agreement or (ii) in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the Merger or any of the other
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction or order of any Governmental Entity or arbitrator outstanding against
PXRE or any of its subsidiaries having, or which could reasonably expected to
have, any such effect.
(m) PXRE's Knowledge as to Transnational Representations; Other
Developments Regarding Transnational. To the knowledge of PXRE, the statements
and matters set forth in Section 3.2 hereof are true and correct in all material
respects as of the date of this Agreement. From December 31, 1995 to the date of
this Agreement, there has not been any material favorable development or set of
circumstances relating to or affecting the business or
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prospects of Transnational and its subsidiaries that has not been disclosed in
the Filed Transnational SEC Documents (as defined in Section 3.2(f)) or
otherwise disclosed to the Special Committee.
(n) Representations Relating To Tax-Free Status of the Merger.
(i) PXRE has no plan or intention to reacquire any of its
Common Stock to be issued in the Merger which would adversely affect the
qualification of the Merger as a "reorganization" within the meaning of
Section 368(a)(1)(A) of the Code.
(ii) PXRE has no plan or intention to sell or otherwise
dispose of any of the assets of Transnational or its subsidiaries
acquired in the Merger, except for dispositions made in the ordinary
course of business substantially consistent with past practice and the
contribution to PXRE Reinsurance of all of the shares of capital stock
of Transnational Reinsurance.
(iii) For a period of two years following the Closing
Date, PXRE will cause a corporation controlled by it to continue the
active conduct of the historic business of Transnational's subsidiaries
or to use a significant portion of the historic business assets of
Transnational's subsidiaries in a business.
(iv) PXRE is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
(v) The payment of cash in lieu of fractional shares of
PXRE Common Stock is solely for the purpose of avoiding the expense and
inconvenience to PXRE of issuing fractional shares and does not
represent separately bargained-for consideration. The total cash
consideration that will be paid in the transaction to the Transnational
stockholders instead of issuing fractional shares of PXRE Common Stock
will not exceed one percent of the total consideration that will be
issued in the transaction to the Transnational stockholders in exchange
for their shares of Transnational Common Stock.
(o) ERISA.
(i) For purposes of this Agreement, the following terms
shall have the following definitions: "ERISA" shall mean the Employee
Retirement Income Security Act of 1974; "ERISA Affiliate" of any person
shall mean any other person which, together with such person, would be
treated as a single employer under Section 414 of the Code; and "PXRE
Employee Plan" shall mean any "employee benefit plan", as defined in
Section 3(3) of ERISA, which (x) is subject to any provision of ERISA
and (y) is maintained, administered or contributed to by PXRE or any of
its subsidiaries and covers any employee or former employee of PXRE or
any of its subsidiaries or under which PXRE or any of its subsidiaries
has any liability.
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(ii) Neither PXRE nor any ERISA Affiliate of PXRE has (i)
engaged in, or is a successor or parent corporation to an entity that
has engaged in, a transaction described in Sections 4069 or 4212(c) of
ERISA or (ii) incurred, or reasonably expects to incur prior to the
Effective Time, (A) any liability under Title IV of ERISA arising in
connection with the termination of, or a complete or partial withdrawal
from, any plan covered or previously covered by Title IV of ERISA or (B)
any liability under Section 4971 of the Code that in either case could
exceed $5,000,000. Nothing done or omitted to be done and no transaction
or holding of any asset under or in connection with any PXRE Employee
Plan has or will make PXRE or any of its subsidiaries, or any officer or
director of PXRE or any of its subsidiaries, subject to any liability
under Title I of ERISA or liable for any tax pursuant to Section 4975 of
the Code that in either case could exceed $5,000,000.
(iii) With respect to each PXRE Employee Plan which is
intended to be qualified under Section 401(a) of the Code, PXRE has
received a favorable determination letter that the plan is so qualified
and that each trust forming a part thereof is exempt from tax pursuant
to Section 501(a) of the Code and, to the knowledge of PXRE, no event
has occurred since the date of such determination that would adversely
affect such qualification and exemption. PXRE has furnished to
Transnational copies of the most recent Internal Revenue Service
determination letters with respect to each such Plan. To the knowledge
of PXRE, each PXRE Employee Plan has been maintained in all material
respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to
such Plan.
(iv) Neither PXRE nor any of its subsidiaries has any
current or projected liability in respect of post-employment (including
post-retirement) health or medical or life insurance benefits for
retired, former or current employees of PXRE or any of its subsidiaries,
except as required to avoid excise tax under Section 4980B of the Code.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF TRANSNATIONAL.
Transnational represents and warrants to PXRE (1) to the effect set forth in the
TREX Category A Statements (as defined below), and (2) that none of the TREX
Category B Statements (as defined below) is untrue or incorrect in any material
respect by virtue of any affirmative action taken or thing done by the Board of
Directors of Transnational since May 10, 1996 or by the Special Committee.
Except as set forth above in this Section 3.2, Transnational makes no
representation or warranty to PXRE in connection with this Agreement or the
transactions contemplated hereby.
As used herein, "TREX Category A Statements" means each of the
statements and matters set forth in Sections 3.2(b)(A) (but excluding
information as to shares issued and outstanding or held in treasury), 3.2(c)(A),
3.2(c)(B)(i)(x), 3.2(e), 3.2(f)(B)(ii)(x), 3.2(g), 3.2(j),
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and 3.2(k). As used herein, "TREX Category B Statements" means all of the
statements and matters set forth below in this Section 3.2 other than TREX
Category A Statements.
(a) Organization, Standing and Corporate Power. Transnational and
each subsidiary of Transnational is a corporation, partnership or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate or
other power and authority to carry on its business as now being conducted.
Transnational and each subsidiary of Transnational is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not have or reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of Transnational and its
subsidiaries taken as a whole or a material adverse effect on the ability of
Transnational to consummate any of the transactions contemplated hereby (a
"Transnational Material Adverse Effect").
(b) Capital Structure. (A) The authorized capital stock of
Transnational consists of 20,000,000 shares of Transnational Class A Stock of
which, as of the close of business on August 19, 1996, 5,365,400 shares were
issued and outstanding and 384,600 shares were held in treasury, 5,000,000
shares of Transnational Class B Common Stock of which, as of the close of
business on August 19, 1996, 1,535,948 shares were issued and outstanding, and
5,000,000 shares of Serial Preferred Stock, par value $.01 per share, of which
no shares are issued. (B) At the close of business on August 19, 1996, (i)
1,535,948 shares of Transnational Class A Stock were reserved for issuance upon
conversion of outstanding shares of Transnational Class B Stock and (ii) 106,000
shares of Transnational Class A Stock were reserved for issuance pursuant to
Transnational's stock option and deferred stock plans of which 3,000 shares were
reserved for issuance upon the exercise of Director Options outstanding on such
date. Except as set forth above, at the close of business on August 19, 1996, no
(x) shares of capital stock or other equity or voting securities of
Transnational , (y) securities of Transnational convertible into or exchangeable
for shares of capital stock or equity or voting securities of Transnational, or
(z) options or other rights to acquire from Transnational, or obligations of
Transnational to issue, any capital stock, equity or voting securities or
securities convertible into or exchangeable for capital stock or equity or
voting securities of Transnational, were issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of Transnational are duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights. No bonds, debentures, notes or other indebtedness of
Transnational having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which the
stockholders of Transnational may vote are issued or outstanding. (C) Section
3.2(b) of the Disclosure Schedule lists each subsidiary of Transnational and,
except for the capital stock of such subsidiaries and the other ownership
interests listed in Section 3.2(b) of the Disclosure Schedule, Transnational
does not own, directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, joint venture or other entity
(excluding portfolio investments made in the ordinary course of business in
accordance with Transnational's
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investment guidelines). Except as disclosed in Section 3.2(b) of the Disclosure
Schedule, all the outstanding shares of capital stock or other ownership
interests of each subsidiary of Transnational have been duly authorized, validly
issued and are fully paid and non-assessable and are owned by Transnational, by
one or more wholly-owned subsidiaries of Transnational or by Transnational and
one or more such wholly-owned subsidiaries, free and clear of all Liens. (D)
Except as set forth above or in Section 3.2(b) of the Disclosure Schedule, there
are not any securities, options, warrants, rights, commitments or agreements of
any kind to which Transnational or any of its subsidiaries is a party or by
which any of them is bound or of any of them obligating any of them to issue,
sell or deliver, or repurchase, redeem or otherwise acquire, or convertible into
or exchangeable for, or otherwise entitling any person to acquire from any of
them, shares of capital stock or other equity or voting securities of any of
them or securities convertible into or exchangeable for any such capital stock
or equity or voting securities, or obligating any of them to issue, sell,
deliver, grant, extend or enter into any such security, option, warrant, right,
commitment or agreement. Except as disclosed in Section 3.2(b) of the Disclosure
Schedule, neither Transnational nor any of its subsidiaries is a party to or
bound by any agreement, proxy or other arrangement restricting the transfer of
Transnational Common Stock or affecting the voting of any shares of capital
stock of Transnational or any of its subsidiaries.
(c) Authority; Noncontravention. (A) Transnational has the
requisite corporate power and authority to enter into this Agreement and,
subject to the approval of this Agreement and the Merger by the requisite vote
of the holders of Transnational Common Stock (the "Transnational Stockholder
Approval"), Transnational has all requisite corporate power and authority to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Transnational and the consummation by
Transnational of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Transnational,
subject to the Transnational Stockholder Approval. This Agreement has been duly
executed and delivered by Transnational and, assuming this Agreement constitutes
the valid and binding agreement of PXRE, constitutes a valid and binding
obligation of Transnational, enforceable against Transnational in accordance
with its terms, except as the same may be limited by or subject to any
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and subject to general
principles of equity. (B) Except as disclosed in Section 3.2(c) of the
Disclosure Schedule, the execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, (i) subject to the
Transnational Stockholder Approval, conflict with any of the provisions of (x)
the Restated Certificate of Incorporation of Transnational (the "Transnational
Charter") or the by-laws of Transnational (the "Transnational By-laws") or (y)
the certificate of incorporation, by-laws or other organizational documents of
any subsidiary of Transnational, (ii) subject to the matters referred to in the
next sentence, conflict with, result in a breach of or default (with or without
notice or lapse of time, or both) under, give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture or other
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agreement, permit, franchise, license or other instrument or undertaking to
which Transnational or any of its subsidiaries is a party or by which
Transnational or any of its subsidiaries or any of their assets is bound or
affected or held by Transnational or any of its subsidiaries, (iii) subject to
the Transnational Stockholder Approval and the matters referred to in the next
sentence, contravene any statute, law, ordinance, rule, regulation, order,
judgment, injunction, decree, determination or award applicable to Transnational
or any of its subsidiaries or any of their respective properties or assets, or
(iv) result in the creation of any Lien on any property or asset of
Transnational or any of its subsidiaries, which, in the case of clauses (ii),
(iii) and (iv) above, singly or in the aggregate, could reasonably be expected
to have a Transnational Material Adverse Effect. No consent, approval or
authorization of, or declaration or filing with, or notice to, any Governmental
Entity is required by or with respect to Transnational or its subsidiaries in
connection with the execution and delivery of this Agreement by Transnational or
the consummation by Transnational or its subsidiaries of any of the transactions
contemplated by this Agreement, except for (i) the filing of premerger
notification and report forms under the HSR Act with respect to the Merger, (ii)
approvals, filings and/or notices required under insurance regulatory laws,
(iii) the filing with the SEC of the Transnational Proxy Statement and such
reports or other filings under the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement, (iv)
the filing and recordation of the certificate of merger as required under the
DGCL and the filing of appropriate documents with the Department of State or
other relevant authorities of other states in which Transnational is qualified
to do business, as required by the corporation law of such states, (v) such
other consents, approvals, authorizations, declarations, filings or notices as
are set forth in Section 3.2(c) of the Disclosure Schedule, (vi) any applicable
filings under state takeover laws and (vii) such other consents, approvals,
authorizations, declarations, filings or notices the failure to obtain or make
which, in the aggregate, would not have a Transnational Material Adverse Effect.
(d) SEC Documents; Financial Statements.
(i) Transnational has filed all required reports,
schedules, forms, statements and other documents with the SEC since
January 1, 1994 (such reports, schedules, forms, statements and other
documents, together with all registration statements filed by
Transnational or its subsidiaries with the SEC since January 1, 1994, in
each case, as such documents have been amended since the time of their
filing, collectively, the "Transnational SEC Documents"). As of their
respective filing dates (or, if amended, as of the date of the filing of
such amendment), the Transnational SEC Documents complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Transnational SEC
Documents. None of the Transnational SEC Documents as of such dates
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of
Transnational
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included in the Transnational SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, and
fairly present, in all material respects, in conformity with GAAP
(except, in the case of unaudited consolidated quarterly statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
the consolidated financial position of Transnational and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments). Except (w) as disclosed in Section
3.2(d)(i) of the Disclosure Schedule, (x) liabilities disclosed or
provided for in the consolidated balance sheet of Transnational and its
subsidiaries (the "Transnational Balance Sheet") as of the Balance Sheet
Date, (y) liabilities under or related to this Agreement and the
transactions contemplated hereby, and (z) liabilities and obligations
incurred in the ordinary course of business substantially consistent
with past practice since the Balance Sheet Date, neither Transnational
nor any of its subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent, determined, determinable
or otherwise), other than liabilities and obligations which would not
individually or in the aggregate reasonably be expected to have a
Transnational Material Adverse Effect.
(ii) The Annual Statement for the year ended December 31,
1995, together with all exhibits and schedules thereto, and any
actuarial opinion, affirmation or certification filed in connection
therewith, and any Quarterly Statements for periods ended after January
1, 1996, together with all exhibits and schedules thereto, with respect
to Transnational Reinsurance as filed with the applicable Insurance
Regulator in its jurisdiction of domicile, were prepared in conformity
with SAP applied on a consistent basis (except as expressly set forth in
the notes, exhibits or schedules thereto) and present fairly, to the
extent required by and in conformity with SAP, the statutory financial
condition of Transnational Reinsurance at their respective dates and the
results of operations, changes in capital and surplus and cash flow of
Transnational Reinsurance for each of the periods then ended. Except as
disclosed in Section 3.2(d)(ii) of the Disclosure Schedule, since
December 31, 1993 no deficiencies or violations material to the
financial condition of Transnational Reinsurance have been asserted by
any Insurance Regulator.
(e) Transaction Documents. None of the information supplied or to
be supplied by the Special Committee relating to the transactions contemplated
hereby for inclusion or incorporation by reference in the Form S-4 will, at the
time the Form S-4 becomes effective under the Securities Act or at the time any
amendment or supplement thereto becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading. None of
the information supplied or to be supplied by the Special Committee relating to
the transactions contemplated hereby for inclusion or incorporation by reference
in the PXRE Proxy Statement will, at the date it is first
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mailed to PXRE's stockholders or at the time of the PXRE Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they are made, not misleading.
None of the information supplied or to be supplied by the Special Committee
relating to the transactions contemplated hereby for inclusion or incorporation
by reference in the Transnational Proxy Statement will, at the date it is first
mailed to Transnational's stockholders or at the time of the Transnational
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Transnational Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder. Notwithstanding the foregoing, no
representation or warranty is made by Transnational in this Section 3.2(e) with
respect to any other information included or incorporated by reference in the
Form S-4, the PXRE Proxy Statement or the Transnational Proxy Statement.
(f) Absence of Certain Changes or Events. Except as disclosed (x)
in the Transnational SEC Documents filed and publicly available after December
31, 1995 and prior to the date of this Agreement (the "Filed Transnational SEC
Documents") or (y) in Section 3.2(f) of the Disclosure Schedule, since January
1, 1996, (A) Transnational and each of its subsidiaries has conducted its
business only in the ordinary course substantially consistent with past
practice. (B) Except as disclosed in Section 3.2(f) of the Disclosure Schedule,
since the Balance Sheet Date, there has not been (i) a Transnational Material
Adverse Change (as defined in Section 6.3(c)), or any event or condition that
individually or in the aggregate could reasonably be expected to result in a
Transnational Material Adverse Change; (ii) (x) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of Transnational's outstanding capital stock,
other than the declaration and payment of regular quarterly dividends of up to
$.05 per share on Transnational Common Stock or (y) any repurchase, redemption
or other acquisition by Transnational or any of its subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, Transnational or any subsidiary thereof; (iii) any split,
combination or reclassification of any of its outstanding capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its outstanding capital stock;
(iv) any material change in accounting methods, principles or practices by
Transnational or any of its subsidiaries except for any such change required by
reason of a concurrent change in GAAP; (v) any amendment of any material term of
any outstanding security of Transnational or any subsidiary; (vi) any
incurrence, assumption or guarantee by Transnational or any subsidiary of any
indebtedness for borrowed money (other than pursuant to existing line of credit
arrangements and letters of credit and related agreements); (vii) any creation
or assumption by Transnational or any subsidiary of any Lien on any material
asset other than in the ordinary course of business substantially consistent
with past practice; (viii) any making of any material loan, advance or capital
contributions to or investment in any person other than loans, advances or
capital contributions to or investments in wholly-owned subsidiaries and other
than portfolio
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investments made pursuant to the investment guidelines approved by the Board of
Directors of Transnational (the "Transnational Investment Guidelines"); (ix) any
transaction or commitment made, or any contract or agreement entered into, by
Transnational or any subsidiary relating to its assets or business (including
the acquisition or disposition of any assets) or any relinquishment by
Transnational or any subsidiary of any contract or other right, in either case,
material to Transnational and its subsidiaries taken as a whole, other than
transactions and commitments in the ordinary course of business substantially
consistent with past practice and those contemplated by this Agreement; (x) any
entry by Transnational or a subsidiary into any contract limiting its right at
any time on or after the date of this Agreement to engage in, or to compete with
any person in, any business conducted by Transnational or its subsidiaries,
including, without limitation, any contract which includes exclusivity
provisions restricting the geographical area in which, or the method by which,
any such business may be conducted; (xi) any entry by Transnational or a
subsidiary into any acquisition, joint venture, partnership or similar agreement
or arrangement which is material to Transnational and its subsidiaries taken as
a whole; or (xii) any grant or increase of any severance or termination pay to
any director, officer or employee of Transnational or any of its subsidiaries
which is material to Transnational and its subsidiaries taken as a whole or any
increase in any compensation, bonus or other benefits payable to directors,
officers or employees of Transnational or any of its subsidiaries, in their
capacities as directors, officers or employees of Transnational or any of its
subsidiaries, other than in the ordinary course of business substantially
consistent with past practice.
(g) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of the Transnational Class A Stock and the
Transnational Class B Stock, voting as a single class, entitled to vote thereon
at the Transnational Stockholders Meeting with respect to this Agreement and the
Merger is the only vote of the holders of any class or series of Transnational's
capital stock necessary to approve this Agreement and the transactions
contemplated by this Agreement.
(h) Taxes.
(i) Each of Transnational and its subsidiaries has filed
all tax returns and reports required to be filed by it or requests for
extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such failures to
file or to have extensions granted that remain in effect individually or
in the aggregate would not have a Transnational Material Adverse Effect.
All tax returns filed by Transnational and each of its subsidiaries are
complete and accurate except to the extent that such failure to be
complete and accurate would not have a Transnational Material Adverse
Effect. Transnational and each of its subsidiaries has paid (or
Transnational has paid on the subsidiaries' behalf) all taxes shown as
due on such returns, and the most recent financial statements contained
in the Filed Transnational SEC Documents reflect an adequate reserve, in
accordance with GAAP, for all taxes payable by Transnational and its
subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements.
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(ii) Except as set forth in Section 3.2(h) of the
Disclosure Schedule, no deficiencies for any taxes have been proposed,
asserted or assessed against Transnational or any of its subsidiaries
that are not adequately reserved for, except for deficiencies that
individually or in the aggregate would not have a Transnational Material
Adverse Effect, and no requests for waivers of the time to assess any
such taxes have been granted or are pending.
(i) Compliance with Applicable Laws. Except as otherwise known to
PXRE, Transnational and each of its subsidiaries has in full force and effect
all Permits, including without limitation all Permits of or issued by all
Insurance Regulators, and has made all declarations and filings with all
Insurance Regulators and other Governmental Entities, necessary for it to own,
lease or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except for
the failure of Permits to be in full force and effect, for failures to make
filings or declarations, and for defaults under Permits which failure or default
individually or in the aggregate would not have a Transnational Material Adverse
Effect. None of such Permits contains any restriction that is materially
burdensome to Transnational or any of its subsidiaries. Transnational and its
subsidiaries are in material compliance with all such Permits and, except as
disclosed in Section 3.2(i) of the Disclosure Schedule, to the knowledge of PXRE
no event has occurred which would lead PXRE to reasonably expect the revocation
or termination of any such Permit or any material impairment of the rights of
the holders thereof. Except as disclosed in the Filed Transnational SEC
Documents or in Section 3.2(i) of the Disclosure Schedule, or otherwise known to
PXRE, Transnational and its subsidiaries are in compliance with all, and there
have been no violations of any applicable statutes, laws, ordinances, rules,
regulations and orders of any Governmental Entity (including, without
limitation, Insurance Regulators), except for such noncompliance or violation
which individually or in the aggregate has not had and would not reasonably be
expected to have a Transnational Material Adverse Effect. Except as disclosed in
Section 3.2(i) of the Disclosure Schedule or otherwise known to PXRE, and except
for routine examinations by Insurance Regulators, no investigation by any
federal, state, local or foreign Governmental Entity with respect to
Transnational or any of its subsidiaries is pending or to the knowledge of PXRE
threatened, other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a Transnational Material Adverse
Effect. Neither Transnational nor any of its subsidiaries has received any
notice from any Insurance Regulator concerning any alleged material violation of
any Permit or any insurance laws or regulations or notice of any proposed
proceeding to revoke any material Permit or any notice to the effect that any
additional material Permit from any Insurance Regulator is needed to be obtained
by Transnational or its subsidiaries.
(j) Opinion of Financial Advisor. Transnational has received the
written opinion of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
the financial advisor to the Special Committee, to the effect that, as of the
date of this Agreement, the Merger Consideration is fair to the holders of
Transnational Class A Stock from a financial point of view.
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(k) Brokers. No broker, investment banker, financial advisor or
other person, other than DLJ, the fees and expenses of which will be paid by
Transnational, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Transnational
or its subsidiaries by action of its Special Committee or Board of Directors.
(l) Litigation. Except as disclosed in the Filed Transnational
SEC Documents or in Section 3.2(l) of the Disclosure Schedule, or otherwise
known to PXRE, there is no suit, action, investigation or arbitration pending
or, to the knowledge of Transnational, threatened against or affecting
Transnational or any of its subsidiaries before any court, arbitrator, Insurance
Regulator or other Governmental Entities that, (i) individually or in the
aggregate, could reasonably be expected to have a Transnational Material Adverse
Effect or to impair the ability of Transnational to perform its obligations
under this Agreement, or (ii) in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the Merger or any of the other transactions
contemplated by this Agreement, nor is there any judgment, decree, injunction or
order of any Governmental Entity or arbitrator outstanding against Transnational
or any of its subsidiaries having, or which could reasonably be expected to
have, any such effect.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER
SECTION 4.1. CERTAIN COVENANTS.
(a) Conduct of Business of PXRE. During the period from the date
of this Agreement to the Effective Time, PXRE shall, and shall cause its
subsidiaries to, carry on their respective businesses only in the ordinary
course of business substantially consistent with past practice and, to the
extent consistent therewith, use all reasonable best efforts to preserve intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with agents,
insureds, reinsureds and others having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Effective Time, except as expressly
contemplated by this Agreement, PXRE shall not, and shall not permit any of its
subsidiaries to, without the prior written consent of Transnational (by action
of the Special Committee):
(i) (x) except as described in Section 4.1(a)(i) of the
Disclosure Schedule, declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property) in respect
of, any of PXRE's outstanding capital stock or (y) split, combine or
reclassify any of PXRE's outstanding capital stock or issue or authorize
the
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issuance of any other securities in respect of, in lieu of or in
substitution for shares of its outstanding capital stock or (z) except
as described in Section 4.1(a)(i) of the Disclosure Schedule, purchase,
redeem or otherwise acquire any shares of outstanding capital stock or
other securities of PXRE or its subsidiaries or any rights, warrants or
options to acquire any such shares or securities;
(ii) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(and there has been no such issuance, sale, grant, pledge or other
encumbrance since June 30, 1996) other than any such issuance pursuant
to (x) the exercise of stock options outstanding on the date hereof or
(y) any arrangements disclosed in Section 4.1(a)(ii) of the Disclosure
Schedule;
(iii) except for the PXRE Charter Amendment, amend its
certificate of incorporation, by-laws or other comparable charter or
organizational documents;
(iv) merge or consolidate with any other person (other
than a merger or consolidation of a subsidiary of PXRE with a
wholly-owned subsidiary of PXRE) or acquire (by merger, consolidation,
acquisition of assets or otherwise) (x) any corporation, partnership,
joint venture, association or other business organization or division
thereof or (y) any assets that are material, individually or in the
aggregate, to PXRE and its subsidiaries taken as a whole, except in the
ordinary course of business substantially consistent with past practice
and purchases of investment assets in accordance with the PXRE
Investment Guidelines;
(v) sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of (or agree to any of the
foregoing) any of its properties or assets that are material,
individually or in the aggregate, to PXRE and its subsidiaries, except
in the ordinary course of business substantially consistent with past
practice and sales of investment assets in the ordinary course of
business;
(vi) (x) incur any indebtedness for borrowed money or
guarantee or otherwise become responsible for any such indebtedness of
another person other than pursuant to existing line of credit
arrangements (and additional line of credit arrangements not exceeding
$10 million) of PXRE or its subsidiaries and letters of credit and
related agreements of PXRE or its subsidiaries in each case in the
ordinary course of business substantially consistent with past practice;
or (y) except as described in Section 4.1(a)(vi) of the Disclosure
Schedule, make any material loans, advances or capital contributions to,
or investments in, any other person, other than to PXRE or to any direct
or indirect wholly-owned subsidiary of PXRE and other than purchases of
investment assets in accordance with the PXRE Investment Guidelines;
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(vii) except as described in Section 4.1(a)(vii) of the
Disclosure Schedule and except for any other actions which, individually
or in the aggregate, do not materially increase the obligations and
liabilities of PXRE, (x) enter into, adopt, amend (except as may be
required by law) or terminate any employee benefit plan or any
agreement, arrangement, plan or policy between PXRE and one or more of
its directors, officers or employees or (y) increase in any manner the
compensation or fringe benefits (including severance benefits) of any
director, officer or employee or pay any benefit not required by any
plan and arrangement as in effect as of the date hereof;
(viii) settle or compromise any derivative suit or other
litigation or claim arising out of the transactions contemplated hereby,
or any other litigation or claim involving PXRE if the settlement
thereof involves payment of in excess of $100,000 (other than undisputed
claims for contractual benefits under any reinsurance contract under
which PXRE is the reinsurer); provided, that Transnational will not
unreasonably withhold its consent to any such settlement or compromise;
(ix) make any material change in accounting methods,
principles or practices used by PXRE or any of its subsidiaries except
for any such change required by reason of a concurrent change in GAAP;
(x) take any action that requires the approval of its
stockholders;
(xi) take or allow to be taken or fail to take any action
which act or omission would jeopardize qualification of the Merger as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Code;
(xii) take any action that would, or would be reasonably
likely to, result in any of the representations and warranties of PXRE
or Transnational set forth in this Agreement not being true in all
material respects as of or at any time prior to the Effective Time or in
any of the conditions to the Merger set forth in Article 6 not being
satisfied;
(xiii) agree in writing or otherwise to take any of the
actions prohibited by this Section 4.1(a).
(b) Conduct of Business of Transnational. During the period from
the date of this Agreement to the Effective Time, PXRE shall cause PXRE
Reinsurance to take all action within its authority as Manager under the
Management Agreement dated November 8, 1993 between PXRE Reinsurance,
Transnational and Transnational Reinsurance (as amended to date, the "Management
Agreement") to cause Transnational and its subsidiaries to carry on their
respective businesses only in the ordinary course of business substantially
consistent with past practice and, to the extent consistent therewith, use all
reasonable best efforts to preserve intact their current business organizations
and preserve their relationships with agents, insureds,
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reinsureds and others having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Effective Time (and
the Special Committee shall not take any affirmative action that would cause
Transnational or its subsidiaries to breach the foregoing provisions of this
clause (b)). Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Effective Time, PXRE shall cause PXRE
Reinsurance to take all action within its authority as Manager under the
Management Agreement so that Transnational and its subsidiaries shall not
(without the prior written consent of the Special Committee), and the Special
Committee shall not (without the prior written consent of PXRE) take any
affirmative action that would cause Transnational or its subsidiaries to, except
as expressly contemplated by this Agreement:
(i) (x) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, stock or property) in
respect of, any outstanding capital stock of Transnational, except for
Transnational's regular quarterly dividends of up to $.05 per share, or
(y) split, combine or reclassify any of Transnational's outstanding
capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its
outstanding capital stock or (z) purchase, redeem or otherwise acquire
any shares of outstanding capital stock or other securities of
Transnational or its subsidiaries or any rights, warrants or options to
acquire any such shares or securities;
(ii) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
other than any such issuance pursuant to (x) the exercise of stock
options outstanding on the date hereof or (y) any arrangements disclosed
in Section 4.1(b)(ii) of the Disclosure Schedule;
(iii) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents;
(iv) merge or consolidate with any other person (other
than a merger or consolidation of a subsidiary of Transnational with a
wholly-owned subsidiary of Transnational) acquire (by merger,
consolidation, acquisition of assets or otherwise) (x) any corporation,
partnership, joint venture, association or other business organization
or division thereof or (y) any assets that are material, individually or
in the aggregate, to Transnational and its subsidiaries taken as a
whole, except in the ordinary course of business substantially
consistent with past practice and purchases of investment assets in
accordance with the Transnational Investment Guidelines;
(v) sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of (or agree to any of the
foregoing) any of its properties or assets that are material,
individually or in the aggregate, to Transnational and its
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subsidiaries, except in the ordinary course of business substantially
consistent with past practice and sales of investment assets in the
ordinary course of business;
(vi) (x) incur any indebtedness for borrowed money or
guarantee or otherwise become responsible for any such indebtedness of
another person other than pursuant to existing line of credit
arrangements of Transnational or its subsidiaries and letters of credit
and related agreements of Transnational or its subsidiaries in each case
in the ordinary course of business substantially consistent with past
practice; or (y) except as described in Section 4.1(b)(vi) of the
Disclosure Schedule make any loans, advances or capital contributions
to, or investments in, any other person, other than to Transnational or
to any direct or indirect wholly-owned subsidiary of Transnational and
other than purchases of investment assets in accordance with the
Transnational Investment Guidelines;
(vii) (x) enter into, adopt, amend (except as may be
required by law) or terminate any employee benefit plan or any
agreement, arrangement, plan or policy between Transnational and one or
more of its directors, officers or employees or (y) increase in any
manner the compensation or fringe benefits (including but not limited to
severance benefits) of any director, officer or employee or pay any
benefit not required by any plan and arrangement as in effect as of the
date hereof;
(viii) settle or compromise any derivative suit or other
litigation or claim arising out of the transactions contemplated hereby,
or any other litigation or claim involving Transnational if the
settlement thereof involves payment of in excess of $100,000 (other than
undisputed claims for contractual benefits under any reinsurance
contract under which Transnational is the reinsurer); provided, that
PXRE will not unreasonably withhold its consent to any such settlement
or compromise;
(ix) make any material change in accounting methods,
principles or practices used by Transnational or any of its subsidiaries
except for any such change required by reason of a concurrent change in
GAAP;
(x) take any action that requires the approval of its
stockholders;
(xi) take or allow to be taken or fail to take any action
which act or omission would jeopardize qualification of the Merger as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Code;
(xii) take any action that would, or would be reasonably
likely to, result in any of Transnational's representations and
warranties set forth in this Agreement not being true in all materials
respects as of or at any time prior to the Effective Time or in any of
the conditions to the Merger set forth in Article 6 not being satisfied;
or
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(xiii) agree in writing or otherwise to take any of the
actions prohibited by this Section 4.1(b).
ARTICLE 5
ADDITIONAL AGREEMENTS
SECTION 5.1. PREPARATION OF FORM S-4, THE PXRE PROXY STATEMENT AND THE
TRANSNATIONAL PROXY STATEMENT.
(a) As soon as practicable following the date of this Agreement,
PXRE and Transnational jointly shall prepare and file with the SEC a proxy
statement/prospectus (which shall be the PXRE Proxy Statement and the
Transnational Proxy Statement) and PXRE shall promptly prepare and file with the
SEC the Form S-4. PXRE shall use its best efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after such filing.
PXRE shall also take, in consultation with Transnational and its counsel, any
action (other than qualifying to do business in any jurisdiction in which it is
not now so qualified) required to be taken under any applicable state securities
laws in connection with the issuance of PXRE Common Stock in the Merger and
Transnational shall furnish all information concerning Transnational and the
holders of Transnational Common Stock as may be reasonably requested in
connection with such action.
(b) As soon as practicable after the Form S-4 is declared
effective by the SEC, (x) PXRE shall prepare, in consultation with Transnational
and its counsel, proxy or consent solicitation materials based upon and
incorporating the PXRE Proxy Statement and shall cause such materials to be
mailed to PXRE's stockholders as promptly as practicable thereafter; and (y)
Transnational shall prepare, in consultation with PXRE and its counsel, proxy or
consent solicitation materials based upon and incorporating the Transnational
Proxy Statement and shall cause such materials to be mailed to Transnational's
stockholders as promptly as practicable thereafter.
SECTION 5.2. MEETINGS OF STOCKHOLDERS. PXRE will take all actions
necessary in accordance with applicable law and the PXRE Charter and PXRE
By-laws to convene as promptly as practicable a meeting of its stockholders (the
"PXRE Stockholders Meeting") to consider and vote upon the approval of this
Agreement and the Merger and the issuance of PXRE Common Stock in connection
with the Merger in accordance with the rules of the Nasdaq National Market
("NASDAQ"). The approval of the PXRE Charter Amendment shall also be considered
at the PXRE Stockholders Meeting; provided, however, that stockholder approval
of the PXRE Charter Amendment shall not be a condition to either party's
obligation to effect the Merger. Transnational will take all actions necessary
in accordance with applicable law and the Transnational Charter and
Transnational By-laws to convene as promptly as practicable a
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meeting of its stockholders (the "Transnational Stockholders Meeting") to
consider and vote upon the approval of this Agreement and the Merger. Each of
PXRE and Transnational will, through its Board of Directors, subject to
compliance with their respective fiduciary duties to stockholders as advised by
counsel, recommend to its stockholders approval of such matters; provided, that
(x) at any time prior to the PXRE Stockholders Meeting, the Board of Directors
of PXRE, or (y) at any time prior to the Transnational Stockholders Meeting
either the Special Committee or the Board of Directors of Transnational, as the
case may be, each in accordance with its fiduciary duties to stockholders as
advised by counsel may revoke, modify or qualify its recommendation with respect
to this Agreement and the Merger. As long as the Board of Directors of
Transnational and the Special Committee recommend approval of this Agreement and
the Merger (and such recommendation has not been revoked, modified or
qualified), at the Transnational Stockholders Meeting PXRE shall vote or cause
to be voted in favor of approval and adoption of this Agreement all of its
shares of Transnational Class B Stock. Notwithstanding anything contained in
this Agreement to the contrary, any action by the Board of Directors of PXRE or
of Transnational permitted by this Section 5.2 shall not constitute a breach of
this Agreement by PXRE or Transnational, as the case may be.
SECTION 5.3. LEGAL REQUIREMENTS TO MERGER. Each of PXRE and
Transnational will take, or cause to be taken, all reasonable actions necessary
to comply promptly with all legal requirements which may be imposed on it with
respect to the Merger and will promptly cooperate with and furnish information
to the other in connection with any such requirements imposed upon any of them
or any of their subsidiaries in connection with the Merger. Each of PXRE and
Transnational will, and will cause its subsidiaries to, take all reasonable
actions necessary to obtain (and will cooperate with each other in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be
obtained by PXRE or Transnational or any of their respective subsidiaries in
connection with the Merger or the taking of any action contemplated by this
Agreement.
SECTION 5.4. ACCESS TO INFORMATION. Upon reasonable notice, each of PXRE
and Transnational shall (and shall cause each of its subsidiaries to) afford to
the officers, employees, accountants, counsel, financial and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of PXRE and Transnational
shall (and shall cause each of its subsidiaries to) furnish promptly to the
other (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of the federal securities laws and (ii) all other information concerning its
business, properties and personnel as PXRE or Transnational, as the case may be,
may reasonably request.
SECTION 5.5. BEST EFFORTS. Upon the terms and subject to the conditions
and other agreements set forth in this Agreement, each of the parties agrees to
use its best efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the
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other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement.
SECTION 5.6. BENEFIT PLANS.
(a) Prior to the Effective Time, Transnational shall seek to
amend the Transnational Re Corporation Officer Incentive Plan (the "Incentive
Plan") (and obtain the agreement of participants in the Incentive Plan to such
amendment) (x) to provide that the computation of net profits for purposes of
the 1996 bonus pool will be based on the sum of the net profits of Transnational
and its subsidiaries for the period ending on the last day of the last full
calendar quarter ending on or prior to the Effective Time plus the net profits
of Transnational Reinsurance for any subsequent calendar quarter(s) of 1996,
without regard to any expenses of the Merger, any charges for any annual bonus
pool, or any contingent fee payable to PXRE Reinsurance, all as computed in
accordance with GAAP; and (y) to provide that the Merger will not be deemed to
be a termination of employment for any participant in the Incentive Plan and
that the vested percentage of participants in the 1994, 1995 and 1996 bonus
pools shall be determined based on their years and months of employment with
Transnational prior to the Merger plus their years and months of employment with
the Surviving Corporation after the Merger.
(b) The parties shall cause the Transnational Re Non-Employee
Director Deferred Stock Plan to be amended to provide that all shares with
respect to which rights have been granted to participants therein shall be
deemed issued to such participants immediately prior to the Effective Time.
SECTION 5.7. INDEMNIFICATION AND INSURANCE.
(a) PXRE shall indemnify each person who is on the date of this
Agreement, or has been at any time prior to such date, or who becomes prior to
the Effective Time, an officer or director (the "Indemnified Party") of
Transnational or any of its subsidiaries against all losses, claims, damages,
liabilities, costs and expenses (including attorney's fees and expenses),
judgments, fines, losses, and amounts paid in settlement in connection with any
actual or threatened action, suit, claim, proceeding or investigation (each a
"Claim") to the extent that any such Claim is based on, or arises out of, (i)
the fact that such person is or was a director or officer of Transnational or
any of its subsidiaries at any time prior to the Effective Time (or is or was
serving as a member of the Special Committee at any time prior to or at the
Effective Time) or is or was serving at the request of Transnational or any of
its subsidiaries as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise at any time prior to the Effective
Time, or (ii) this Agreement or any of the transactions contemplated hereby, or
(iii) Claims relating to the facts specified in the lawsuit captioned Crandon
Capital Partners v. Kimmel et al., Civil Action No. 14998, Delaware Chancery
Court, in each case to the extent that any such Claim pertains to any matter or
fact arising, existing, or occurring prior to or at the
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Effective Time (or pertains to any act or function of the Special Committee
relating to this Agreement or the transactions contemplated hereby whether
arising, existing, or occurring prior to or at the Effective Time), regardless
of whether such Claim is asserted or claimed prior to, at or after the Effective
Time (the matters described in clauses (i), (ii) and (iii) the "Merger
Matters"), to the fullest extent permitted by Delaware law (including provisions
relating to advancement of expenses incurred in the defense of any Claim).
(b) PXRE agrees that all limitations or exculpation of
liabilities existing in favor of an Indemnified Party as provided in the
Transnational Charter and the Transnational By-laws as in effect as of the date
hereof shall continue in full force and effect with respect to Merger Matters,
without any amendment thereto, to the extent such rights are consistent with the
DGCL.
(c) In the event PXRE or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, in each such case, to the extent necessary to
effectuate the purposes of this Section 5.7, proper provision shall be made so
that the successors and assigns of PXRE assume the obligations set forth in this
Section 5.7 and none of the actions described in clause (i) or (ii) shall be
taken until such provision is made.
(d) PXRE shall cause to be maintained, for a period of not less
than six years from the Effective Time, Transnational's current directors' and
officers' liability insurance policy to the extent that it provides coverage for
events occurring prior to the Effective Time and acts by or functions of the
Special Committee prior to or at the Effective Time (the "D&O Insurance") for
all present and former directors and officers of Transnational or any subsidiary
thereof, so long as the annual premium therefor would not be in excess of 200%
of the last annual premium paid for the D&O Insurance prior to the date of this
Agreement (200% of such premium, the "Maximum Premium"); provided, however, that
PXRE may, in lieu of maintaining such existing D&O Insurance as provided above,
cause no less favorable coverage to be provided under any policy maintained for
the benefit of the directors and officers of PXRE or any of its subsidiaries. If
the existing D&O Insurance expires, is terminated or canceled by the insurer or
if the annual premium would exceed the Maximum Premium during such six-year
period, PXRE shall use its best efforts to obtain, in lieu of such D&O
Insurance, such comparable directors' and officers' liability insurance as can
be obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium and on terms and conditions no less advantageous
than the existing D&O Insurance (or if coverage provided under any directors'
and officers' liability insurance policy maintained for the benefit of PXRE's
directors and officers is no less favorable than the existing D&O Insurance,
then even if the premium for such PXRE policy exceeds the Maximum Premium, PXRE
shall include the present and former directors and officers of Transnational and
its subsidiaries as covered persons under such PXRE policy provided such
inclusion shall not increase the premium for such PXRE policy). To the extent
that after giving effect to the preceding sentence such comparable insurance is
not commercially available, with
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the consent of such persons, PXRE shall provide self-insurance. Section 5.7(d)
of the Disclosure Schedule sets forth the amount of the Maximum Premium.
SECTION 5.8. PUBLIC ANNOUNCEMENTS. Transnational, on the one hand, and
PXRE, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement without the consent of the other party (such
consent not to be unreasonably withheld), except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or any arrangements with NASDAQ.
SECTION 5.9. NO SOLICITATION, ETC. Transnational shall not (nor will it
permit any of its officers, directors, agents or affiliates to) directly or
indirectly solicit, encourage (including by way of providing any non-public
information concerning Transnational or its subsidiaries to any person),
initiate or participate in any negotiations or discussions, or enter into (or
authorize) any agreement or agreement in principle, or announce any intention to
do any of the foregoing, with respect to any offer or proposal to acquire all or
a substantial part of its or its subsidiaries' business and properties or any of
its or its subsidiaries' capital stock whether by merger, purchase of assets,
tender offer or otherwise (all such actions being referred to herein as
"Acquisition Transactions"); provided, that nothing contained in this Section
5.9 shall prohibit the Special Committee, to the extent required by its
fiduciary duties under applicable law as advised by counsel, from providing
information to, participating in negotiations or discussions with, entering into
any agreement or transaction with, or announcing any intention to do any of the
foregoing with, any party that makes an unsolicited inquiry or proposal relating
to an Acquisition Transaction. Transnational shall promptly notify PXRE of the
receipt of any inquiry or proposal which it may receive in respect of any
Acquisition Transaction, including the identity of the person making such
inquiry or proposal and, unless advised by counsel that there is a significant
risk that such action would constitute a breach of the Special Committee's
fiduciary duties, the material terms and conditions thereof and any changes
therein. PXRE agrees that the Special Committee may provide to any such party
that makes an unsolicited inquiry or proposal respecting an Acquisition
Transaction any change in the terms of this Agreement proposed by PXRE in
response to such unsolicited inquiry or proposal; provided, that the Special
Committee has disclosed to PXRE the identity of the person making such inquiry
or proposal and the material terms and conditions of such proposed Acquisition
Transaction and any changes therein.
SECTION 5.10. CONSENTS, APPROVALS AND FILINGS.
(a) PXRE and Transnational will make and cause their respective
subsidiaries to make all necessary filings, as soon as practicable, including,
without limitation, those required under the HSR Act, the Securities Act, the
Exchange Act, state securities laws and state insurance laws in order to
facilitate prompt consummation of the Merger and the other transactions
contemplated by this Agreement. In addition, PXRE and Transnational will each
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use their best efforts, and will cooperate fully with each other (i) to comply
as promptly as practicable with all governmental requirements applicable to the
Merger and the other transactions contemplated by this Agreement and (ii) to
obtain as promptly as practicable all necessary permits, orders or other
consents, approvals or authorizations of Governmental Entities and consents or
waivers of all third parties necessary or advisable for the consummation of the
Merger and the other transactions contemplated by this Agreement. In connection
with the foregoing, each of PXRE and Transnational shall use its best efforts to
provide such information and communications to Governmental Entities as such
Governmental Entities may reasonably request.
(b) Each of the parties shall provide to the other party copies
of all applications and other documents in advance of filing or submission of
such applications and other documents to Governmental Entities in connection
with this Agreement.
SECTION 5.11. NON-INTERFERENCE, ETC.
(a) Neither party hereto, nor any of their respective
subsidiaries, shall take any action, directly or indirectly, intended to, or
which such party reasonably believes would, result in (i) any of the other
party's representations and warranties set forth in this Agreement not being
true and correct in all material respects as of the Closing Date, (ii) any of
the other party's covenants not being performed, or (iii) any of the conditions
to such party's obligations to consummate the transactions contemplated by this
Agreement not being satisfied. Without limiting the foregoing, no breach of any
covenant, agreement, representation or warranty of Transnational in this
Agreement shall be deemed to have occurred to the extent caused directly or
indirectly by reason of any act or omission by PXRE or its subsidiaries as
Manager under the Management Agreement or by any employee or officer of PXRE who
is also an officer of Transnational.
(b) Each party shall give prompt notice to the other of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 5.12. AFFILIATES. At least 30 days prior to the Closing Date,
Transnational and PXRE shall agree as to persons who are, at the time the Merger
is submitted for approval to the stockholders of Transnational, "affiliates" of
Transnational for purposes of Rule 145 under the Securities Act. Transnational
shall use its best efforts to cause each such person to deliver to PXRE on or
prior to the Closing Date a letter (an "Affiliate Letter") to the effect that
such person will not offer to sell, sell or otherwise dispose of any shares of
PXRE Common Stock issued in
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the Merger, except pursuant to an effective registration statement, in
compliance with Rule 145, as amended from time to time, or in a transaction
which, in the opinion of legal counsel satisfactory to PXRE, is exempt from the
registration requirements of the Securities Act. PXRE shall not be required to
maintain the effectiveness of the Form S-4 for the purpose of resale of PXRE
Common Stock by such affiliates and the certificates representing PXRE Common
Stock received by such affiliates in the Merger shall bear a customary legend
regarding applicable Securities Act restrictions and the provisions of this
Section 5.12.
SECTION 5.13. LISTING. PXRE shall use its best efforts to cause the
shares of PXRE Common Stock to be issued to holders of Transnational Class A
Stock pursuant to this Agreement to be approved for trading on NASDAQ, or, if
any shares of PXRE Common Stock are listed on the New York Stock Exchange
("NYSE"), to be listed on the NYSE, in each case subject to official notice of
issuance, prior to the Effective Time.
SECTION 5.14. STOCKHOLDER LITIGATION. No settlement of any stockholder
litigation against Transnational and its directors relating to the transactions
contemplated by this Agreement shall be agreed to without PXRE's consent, which
shall not be unreasonably withheld. No settlement of any stockholder litigation
against PXRE and its directors relating to the transactions contemplated by this
Agreement shall be agreed to without Transnational's consent, which shall not be
unreasonably withheld.
SECTION 5.15. DIVIDENDS. After the date of this Agreement, each of PXRE
and Transnational shall coordinate with the other the payment of dividends with
respect to the PXRE Common Stock and Transnational Common Stock and the record
dates and payment dates relating thereto, it being the intention of the parties
hereto that holders of PXRE Common Stock and Transnational Common Stock shall
not receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their shares of PXRE Common Stock and/or
Transnational Common Stock or any shares of PXRE Common Stock that any such
holder receives in exchange for any such shares of Transnational Common Stock in
the Merger.
SECTION 5.16. AMENDMENT TO MANAGEMENT AGREEMENT.
(a) In the event that this Agreement is terminated by
Transnational pursuant to Section 7.1(f)(i) or pursuant to Section 7.1(h), then
effective upon such termination, Section 2.2 of the Management Agreement will
hereby be deemed amended by deleting the date "December 31, 1998" in the fourth
line thereof and replacing it with "December 31, 2000".
(b) In the event that the amendment to the Management Agreement
referred to in Section 5.16(a) above becomes effective, then upon such
effectiveness, Section 8.1(b) of the
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Management Agreement will hereby be deemed amended by adding the following
parenthetical immediately prior to the semi-colon at the end of such Section
8.1(b):
"(or at any time after December 31, 1998 by Transnational by
action of its Board, upon one year's advance written notice to
the Manager)".
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the stockholders of
PXRE and Transnational by the requisite vote in accordance with applicable law.
(b) Governmental and Regulatory Consents. All filings required to
be made prior to the Effective Time with, and all consents, approvals, permits
and authorizations required to be obtained prior to the Effective Time from,
Governmental Entities in each case that are set forth in Section 6.1(b) of the
Disclosure Schedule, in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by PXRE
and Transnational will have been made or obtained (as the case may be), and such
consents, approvals, permits and authorizations shall be subject to no
conditions other than (i) conditions customarily imposed by insurance regulatory
authorities or (ii) other conditions that would not reasonably be expected to
have a PXRE Material Adverse Effect or a Transnational Material Adverse Effect.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have otherwise expired.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated hereby
shall be in effect; provided, however, that the party invoking this condition
shall have used reasonable efforts to have any such order or injunction vacated.
(e) Form S-4, etc. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or proceedings
by the SEC seeking a stop order.
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(f) Third-Party Consents. All consents and waivers of third
parties to the consummation of the Merger and the other transactions
contemplated hereby that are set forth in Section 6.1(f) of the Disclosure
Schedule and other than those referred to in Section 6.1(b) shall have been
obtained, other than those which, if not obtained, would not have a PXRE
Material Adverse Effect or a Transnational Material Adverse Effect.
(g) Listing. The shares of PXRE Common Stock issuable to holders
of Transnational Class A Stock pursuant to this Agreement shall have been
approved for trading on NASDAQ or, if any shares of PXRE Common Stock are then
listed on the NYSE, shall have been listed on the NYSE, in either case subject
to official notice of issuance.
SECTION 6.2. CONDITIONS TO OBLIGATIONS OF TRANSNATIONAL. The obligations
of Transnational to effect the Merger are further subject to the following
conditions:
(a) Representations and Warranties. The representations and
warranties of PXRE set forth in this Agreement that are qualified as to
materiality shall be true and correct and the representations and warranties of
PXRE set forth in this Agreement that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date, except
to the extent any such representation and warranty speaks as of an earlier date,
in which event such representation and warranty shall be true and correct, or
true and correct in all material respects, as applicable, as of such date, and
Transnational shall have received a certificate signed on behalf of PXRE by the
chief executive officer and the chief financial officer of PXRE to such effect.
(b) Performance of Obligations of PXRE. PXRE shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Transnational shall have
received a certificate signed on behalf of PXRE by the chief executive officer
and the chief financial officer of PXRE to such effect.
(c) No Material Adverse Change. Since June 30, 1996, there shall
have been no PXRE Material Adverse Change, and no event or condition which
individually or in the aggregate could reasonably be expected to result in a
PXRE Material Adverse Change. For purposes of this Agreement, "PXRE Material
Adverse Change" means any material adverse change in the business, financial
condition or results of operations of PXRE and its subsidiaries taken as a
whole, other than any such change resulting from (i) any decrease in written or
earned premiums, (ii) any decrease in the value of portfolio investments and
(iii) any losses under reinsurance or retrocessional agreements (other than
where PXRE Reinsurance is the cedant) in respect of catastrophic events
occurring after the date hereof which losses, individually or in the aggregate,
do not result in a decrease of more than 50% of consolidated stockholders equity
of PXRE and its subsidiaries, as determined in accordance with GAAP, on an
after-tax basis, from the amount thereof as of June 30, 1996.
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(d) Tax Opinions. Transnational shall have received an opinion of
its special tax counsel, Davis Polk & Wardwell, in form and substance
satisfactory to Transnational, dated the Effective Time, to the effect that
Transnational and its stockholders (except to the extent such stockholders
receive cash in lieu of fractional shares) will recognize no gain or loss for
federal income tax purposes as a result of consummation of the Merger and in
connection with the delivery of its opinion pursuant to this Section 6.2(d),
Davis Polk & Wardwell may request certificates of officers of Transnational and
PXRE. In addition, PXRE shall have received the opinion described in Section
6.3(d).
(e) Fairness Opinion. The written opinion of DLJ, dated the date
hereof, to the effect that the Merger Consideration to be received by the
holders of Transnational Class A Common Stock is fair to such holders from a
financial point of view, shall not have been withdrawn or amended or modified in
any material respect prior to the Closing Date.
(f) Accountant's Comfort Letters. Transnational shall have
received "comfort" letters from Price Waterhouse LLP dated the date of the
mailing of the Transnational Proxy Statement and the Effective Time and
addressed to Transnational, in each case satisfactory to Transnational and
customary in form and substance for such letters delivered in connection with
transactions similar to those contemplated by this Agreement.
SECTION 6.3. CONDITIONS TO OBLIGATIONS OF PXRE. The obligations of PXRE
to effect the Merger are further subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of Transnational set forth in this Agreement that are qualified as to
materiality shall be true and correct and the representations and warranties of
Transnational set forth in this Agreement that are not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except to the extent any such representation and warranty speaks as of an
earlier date, in which event such representation and warranty shall be true and
correct, or true and correct in all material respects, as applicable, as of such
date, and PXRE shall have received a certificate signed on behalf of
Transnational by a duly authorized representative of Transnational to such
effect.
(b) Performance of Obligations of Transnational. Transnational
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and PXRE
shall have received a certificate signed on behalf of Transnational by a duly
authorized representative of Transnational to such effect.
(c) No Material Adverse Change. Since June 30, 1996, there shall
have been no Transnational Material Adverse Change, and no event or condition
which individually or in the aggregate could reasonably be expected to result in
a Transnational Material Adverse Change. For purposes of this Agreement,
"Transnational Material Adverse Change" means any material adverse change in the
business, financial condition or results of operations of Transnational and
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its subsidiaries taken as a whole, other than any such change resulting from (i)
any decrease in written or earned premiums, (ii) any decrease in the value of
portfolio investments and (iii) any losses under reinsurance or retrocessional
agreements (other than where Transnational Reinsurance is the cedant) in respect
of catastrophic events occurring after the date hereof which losses,
individually or in the aggregate, do not result in a decrease of more than 50%
of consolidated stockholders equity of Transnational and its subsidiaries, as
determined in accordance with GAAP, on an after-tax basis, from the amount
thereof as of June 30, 1996.
(d) Tax Opinions. PXRE shall have received an opinion of its
special tax counsel, Morgan, Lewis & Bockius LLP, in form and substance
satisfactory to PXRE, dated the Effective Time, to the effect that PXRE and its
stockholders will recognize no gain or loss for federal income tax purposes as a
result of consummation of the Merger and in connection with the delivery of its
opinion pursuant to this Section 6.3(d), Morgan, Lewis & Bockius LLP may request
certificates of officers of PXRE and Transnational. In addition, Transnational
shall have received the opinion described in Section 6.2(d).
(e) Fairness Opinion. The written opinion of Dillon, Read & Co.
Inc., dated the date hereof, to the effect that the Merger is fair to PXRE and
its stockholders from a financial point of view, shall not have been withdrawn
or amended or modified in any material respect prior to the Closing Date.
(f) Accountant's Comfort Letters. PXRE shall have received
"comfort" letters from Price Waterhouse LLP dated the date of the mailing of the
PXRE Proxy Statement and the Effective Time and addressed to PXRE, in each case
satisfactory to PXRE and customary in form and substance for such letters
delivered in connection with transactions similar to those contemplated by this
Agreement.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement and the Merger by the stockholders of PXRE and/or
Transnational):
(a) by mutual written consent of Transnational and PXRE;
(b) by written notice by either Transnational or PXRE:
(i) if the Merger shall not have been consummated on or
before June 30, 1997 (the "End Date"), unless the failure to consummate
the Merger is the result of a
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willful and material breach of this Agreement by the party seeking to
terminate this Agreement; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable;
(c) by PXRE, if there shall have been a material breach of any
material representation, warranty, covenant or agreement on the part of
Transnational such that the conditions set forth in Section 6.3(a) or 6.3(b)
would be incapable of being satisfied by the End Date (or as otherwise
extended); provided, however, that if any such breach is curable by
Transnational through the exercise of its reasonable best efforts and for so
long as Transnational shall be using its reasonable best efforts to cure such
breach, PXRE may not terminate this Agreement pursuant to this Section 7.1(c);
(d) by Transnational, if there shall have been any material
breach of any material representation, warranty, covenant or agreement on the
part of PXRE such that the conditions set forth in Section 6.2(a) or 6.2(b)
would be incapable of being satisfied by the End Date (or as otherwise
extended); provided, however, that if any such breach is curable by PXRE through
the exercise of its reasonable best efforts and for so long as PXRE shall be
using its reasonable best efforts to cure such breach, Transnational may not
terminate this Agreement pursuant to this Section 7.1(d);
(e) by PXRE, (i) if the approval of the stockholders of
Transnational contemplated by this Agreement shall not have been obtained by
reason of the failure to obtain the required vote at the Transnational
Stockholders Meeting or any adjournment thereof or (ii) if the approval of the
stockholders of PXRE contemplated by this Agreement (other than the approval of
the PXRE Charter Amendment) shall not have been obtained by reason of the
failure to obtain the required vote at the PXRE Stockholders Meeting or any
adjournment thereof;
(f) by Transnational, (i) if the approval of the stockholders of
PXRE contemplated by this Agreement (other than the approval of the PXRE Charter
Amendment) shall not have been obtained by reason of the failure to obtain the
required vote at the PXRE Stockholders Meeting or any adjournment thereof or
(ii) if the approval of the stockholders of Transnational contemplated by this
Agreement shall not have been obtained by reason of the failure to obtain the
required vote at the Transnational Stockholders Meeting or any adjournment
thereof;
(g) by PXRE, if, prior to the Transnational Stockholders Meeting,
the Special Committee or the Board of Directors of Transnational shall have
withdrawn, or modified or changed in any manner adverse to PXRE its approval or
recommendation of this Agreement or the Merger;
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(h) by Transnational, if, prior to the PXRE Stockholders Meeting,
the Board of Directors of PXRE shall have withdrawn, or modified or changed in
any manner adverse to Transnational its approval or recommendation of this
Agreement or the Merger; or
(i) by Transnational if a corporation, partnership, person or
other entity or group shall have made a bona fide proposal for an Acquisition
Transaction which the Special Committee believes, and advises the Board of
Directors of Transnational, is superior to the Merger from a financial point of
view to the stockholders of Transnational; provided that the provisions of
Section 5.9 shall not have been breached.
Upon a termination of this Agreement pursuant to this Section 7.1, all amounts,
if any, payable pursuant to Section 8.2(b) shall be paid promptly in accordance
with the provisions of Section 8.2(b).
SECTION 7.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either PXRE or Transnational as provided in Section 7.1, written
notice thereof shall promptly be given to the other party specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of PXRE or Transnational, other than Sections 3.1(k),
3.2(k), 5.16 and 7.2 and Article 8; provided, however, that nothing contained in
this Section or elsewhere in this Agreement shall relieve or limit upon
termination of this Agreement any party from any liability resulting from any
willful and material breach of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
SECTION 7.3. AMENDMENT. Subject to the applicable provisions of the
DGCL, at any time prior to the Effective Time, the parties hereto may amend this
Agreement; provided, however, that after approval of the Merger by the
stockholders of Transnational and/or PXRE, no amendment shall be made that by
law requires the approval of Transnational's stockholders or PXRE's
stockholders, as the case may be, without the approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
SECTION 7.4. EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to Section 7.3, waive compliance with any of the agreements or conditions of the
other parties contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
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SECTION 7.5. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER;
ROLE OF THE SPECIAL COMMITTEE UP TO THE EFFECTIVE TIME.
(a) A termination of this Agreement pursuant to Section 7.1, an
amendment of this Agreement pursuant to Section 7.3 or an extension or waiver
pursuant to Section 7.4 shall, in order to be effective, require in the case of
Transnational, action by the Special Committee or the duly authorized designee
of the Special Committee and in the case of PXRE, action by its Board of
Directors or the duly authorized designee of its Board of Directors.
(b) The Special Committee (and the directors of Transnational who
serve on the Special Committee) shall continue to function and act in such
capacity from the date of this Agreement until the Effective Time with respect
to all matters relating to Transnational in connection with this Agreement and
the transactions contemplated hereby.
ARTICLE 8
GENERAL PROVISIONS
SECTION 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement (including the exhibits and
schedules hereto) or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, other than the representations and warranties
set forth in Section 3.1(n) which shall survive until the third anniversary of
the Effective Time. This Section 8.1 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Time, including but not limited to Section 5.7 and the Affiliate Letters
delivered pursuant to Section 5.12.
SECTION 8.2. FEES AND EXPENSES.
(a) Except as set forth in Section 8.2(b) and except for expenses
incurred in printing the Transnational Proxy Statement, the PXRE Proxy Statement
and the Form S-4, as well as the filing fees relating thereto, which costs shall
be shared equally by PXRE and Transnational, whether or not the Merger is
consummated, each party hereto shall pay its own fees and expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
(b) In the event that this Agreement is terminated by PXRE
pursuant to Section 7.1(c) or Section 7.1(e)(i) or by Transnational pursuant to
Section 7.1(f)(ii) or the End Date occurs in circumstances where the condition
in Section 6.2(e) only has not been satisfied or waived, Transnational agrees
that it will reimburse PXRE for all documented, reasonable out-of-pocket
expenses (not to exceed $1,000,000) incurred by PXRE in connection with this
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Agreement, the Merger and the transactions contemplated by this Agreement. In
the event that this Agreement is terminated by Transnational pursuant to Section
7.1(d) or Section 7.1(f)(i) or by PXRE pursuant to Section 7.1(e)(ii) or the End
Date occurs in circumstances where the condition in Section 6.3(e) only has not
been satisfied or waived, PXRE agrees that it will reimburse Transnational for
all documented, reasonable out-of-pocket expenses (not to exceed $1,000,000)
incurred by Transnational in connection with this Agreement, the Merger and the
transactions contemplated by this Agreement. Such payment shall be as liquidated
damages and not as a penalty, shall be in lieu of any other remedies (other than
in the circumstances contemplated by the proviso to Section 7.2), and shall be
made by wire transfer of immediately available funds promptly after receipt of
appropriate documentation.
SECTION 8.3. DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person; provided,
that with respect to PXRE, the word "affiliate" shall not include Transnational
or its subsidiaries and, with respect to Transnational, the word "affiliate"
shall not include PXRE or its subsidiaries;
(b) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(c) a "subsidiary" of any person means another person 50% or more
of the total combined voting power of all classes of capital stock or other
voting interests of which, or 50% or more of the equity securities of which, is
owned directly or indirectly by such first person; and
(d) the term "otherwise known to PXRE" means information actually
known after reasonable inquiry by one or more senior officers of PXRE and the
term "to the knowledge of PXRE" means to the actual knowledge after reasonable
inquiry of one or more senior officers of PXRE.
SECTION 8.4. INTERPRETATION. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.5. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by facsimile (with confirmation of
receipt) or overnight courier (providing proof of delivery)
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to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Transnational, to
Transnational Re Corporation
399 Thornall Street, 14th Floor
Edison, NJ 08837
Attention: President
Telephone No.: 908-906-8100
Facsimile No.: 908-906-9157
with copies to:
Mr. Thomas H. Fox
1112 Northport Point
Northport, MI 49670
and
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: Richard J. Sandler
Telephone No.: 212-450-4224
Facsimile No.: 212-450-5528
(b) If to PXRE, to
PXRE Corporation
399 Thornall Street, 14th Floor
Edison, NJ 08837
Attention: President
Telephone No.: 908-906-8100
Facsimile No.: 908-906-9157
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with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178-0060
Attention: F. Sedgwick Browne
Telephone No.: 212-309-6825
Facsimile No.: 212-309-6273
SECTION 8.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 8.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This
Agreement, the confidentiality letter agreements between PXRE and Transnational
each dated June 26, 1996 and the other agreements referred to herein constitute
the entire agreement, and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter of
this Agreement. This Agreement is not intended to confer upon any person other
than the parties hereto any rights or remedies.
SECTION 8.8. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.9. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment that is not
consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.10. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or any state court sitting in the City of
Wilmington, Delaware (any such federal or state court, a "Delaware Court"), in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Delaware Court in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement and
(b) agrees that it will
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not attempt to deny or defeat such personal jurisdiction or venue by motion or
other request for leave from any such Delaware Court.
SECTION 8.11. SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
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IN WITNESS WHEREOF, Transnational and PXRE have caused this
Agreement to be signed by their respective officers or other representatives
thereunto duly authorized, all as of the date first written above.
TRANSNATIONAL RE CORPORATION
By: /s/ Thomas H. Fox
_____________________________________
Name: Thomas H. Fox
Title: Chairman, Special Committee
of the Board of Directors
PXRE CORPORATION
By: /s/ Gerald L. Radke
_____________________________________
Name: Gerald L. Radke
Title: Chairman of the Board,
President and Chief
Executive Officer
As to Section 5.16 only:
TRANSNATIONAL REINSURANCE COMPANY
By: /s/ Gerald L. Radke
_____________________________________
Name: Gerald L. Radke
Title: Chairman of the Board,
President and Chief
Executive Officer
PXRE REINSURANCE COMPANY
By: /s/ Gerald L. Radke
_____________________________________
Name: Gerald L. Radke
Title: Chairman of the Board,
President and Chief
Executive Officer
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Exhibit 99
FOR IMMEDIATE RELEASE Contact: Sanford M. Kimmel
Senior Vice President,
Treasurer and Chief
Financial Officer
(908) 906-8100
PXRE CORPORATION AND
TRANSNATIONAL RE CORPORATION
SIGN MERGER AGREEMENT
Edison, New Jersey (August 22, 1996): PXRE Corporation (Nasdaq/NM:PXRE)
and Transnational Re Corporation (Nasdaq/NM:TREX) today announced that they have
signed a definitive Agreement and Plan of Merger, pursuant to which
Transnational Re will merge with and into PXRE. After the merger is consummated,
Transnational Re will cease to exist and PXRE will continue as the surviving
corporation. As a result of the merger, Transnational Re's reinsurance
subsidiary, Transnational Reinsurance Company, will become a subsidiary of PXRE
Reinsurance Company, the reinsurance underwriting subsidiary of PXRE.
Under the merger agreement, each share of Common Stock of Transnational
Re will be exchanged for 1.0575 shares of PXRE common stock and cash in lieu of
fractional shares.
The merger was deemed advisable and in the best interests of
stockholders of the respective companies by the Board of Directors of
Transnational Re, based on the unanimous recommendation of a special committee
composed of its independent directors, and by the Board of Directors of PXRE. In
approving the merger agreement, and in considering the merger proposal from a
financial point of view, the PXRE Board of Directors was advised by Dillon, Read
& Co. Inc. and the Transnational Re Board of Directors was advised by Donaldson,
Lufkin & Jenrette Securities Corporation.
Commenting on the proposed merger, PXRE's Chairman, President and Chief
Executive Officer, Gerald L. Radke, said, "This strategic combination is a very
positive development for us. It will increase our size and financial strength
substantially and enhance our presence in a rapidly consolidating industry."
Thomas H. Fox, Chairman of the Special Committee of the Board of
Directors of Transnational Re stated that "The merger with PXRE is in the best
interests of Transnational Re's current public stockholders and will enable them
to participate in the future growth of the combined entity."
The transaction is subject to stockholder and regulatory approval and
certain other conditions and is expected to close in the fourth quarter of 1996.
PXRE provides reinsurance products and services to a national and
international market place, with principal emphasis on commercial and personal
property risks. Transnational Re specializes in brokered property retrocessional
reinsurance and marine and aviation retrocessional reinsurance in the United
States and international markets with a primary focus on catastrophe
retrocessional coverages. Transnational Re also writes marine and aviation
reinsurance as well as facultative excess of loss reinsurance. Transnational Re
and its reinsurance subsidiary, Transnational Reinsurance Company, operate under
a management agreement with PXRE Reinsurance Company.
