EXHIBIT 4.1
EXECUTION COPY
SHARE PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 29, 2005
BY AND AMONG
PXRE GROUP LTD.
AND
THE PURCHASERS NAMED ON
EXHIBIT A HERETO
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS
1.1 Definitions....................................................................................1
ARTICLE II SALE AND PURCHASE OF COMPANY SECURITIES; CLOSING............................................7
2.1 Sale and Purchase of Company Securities........................................................7
2.2 The Closing....................................................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................8
3.1 Organization and Qualification.................................................................8
3.2 Authority......................................................................................8
3.3 Capitalization.................................................................................9
3.4 Subsidiaries; Joint Ventures..................................................................10
3.5 No Conflicts..................................................................................10
3.6 Brokers.......................................................................................11
3.7 Exemption from Registration...................................................................11
3.8 Litigation....................................................................................11
3.9 SEC Filings and Financial Statements..........................................................11
3.10 Events Subsequent to the Date of the Last Financial Statement.................................12
3.11 Absence of Undisclosed Liabilities............................................................12
3.12 Title to Assets, Properties and Rights........................................................13
3.13 Patents, Trademarks, Copyrights and Licenses..................................................13
3.14 Governmental Consents.........................................................................13
3.15 No Consent or Approval Required...............................................................14
3.16 Compliance with Laws..........................................................................15
3.17 Reinsurance Contracts; Retrocession Agreements................................................15
3.18 Loss Reserves; Actuarial Reports..............................................................16
3.19 Taxes.........................................................................................16
3.20 Employees.....................................................................................17
3.21 ERISA.........................................................................................17
3.22 Ordinary Course...............................................................................18
PAGE
3.23 Insurance.....................................................................................18
3.24 Statutory Statements..........................................................................18
3.25 Binding Authority.............................................................................18
3.26 Material Contracts............................................................................19
3.27 Affiliate Transactions........................................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER...........................................19
4.1 Organization; Power and Authority.............................................................19
4.2 No Conflicts..................................................................................20
4.3 Investor Representations......................................................................20
4.4 Additional Information........................................................................22
ARTICLE V SHAREHOLDER AND REGULATORY APPROVAL AND OTHER CONSENTS......................................22
5.1 Proxy Statement and Other Filings; Board Recommendations......................................22
5.2 Shareholder Meeting...........................................................................23
5.3 Other Authorizations; Consents................................................................24
5.4 Further Assurances............................................................................24
ARTICLE VI COMPANY COVENANTS..........................................................................25
6.1 Visits and Inspections........................................................................25
6.2 Maintenance of Books and Records; Financial Statements; Report; Etc...........................25
6.3 Use of Proceeds...............................................................................25
6.4 Shares Issuable Upon Mandatory Exchange.......................................................25
6.5 Public Offering...............................................................................25
ARTICLE 6A CONDITION OF THE PURCHASERS.................................................................25
6A.1 Standstill....................................................................................25
ARTICLE VII CONDITIONS TO CLOSING.....................................................................26
7.1 The Purchasers' Conditions....................................................................26
7.2 Company's Conditions..........................................................................28
ARTICLE VIII TERMINATION AND ABANDONMENT..............................................................29
8.1 Termination of Agreement and Abandonment of Transactions......................................29
ARTICLE IX MISCELLANEOUS..............................................................................29
9.1 Notices.......................................................................................29
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PAGE
9.2 Payment of Expenses...........................................................................30
9.3 Entire Agreement..............................................................................30
9.4 Survival of Covenants.........................................................................30
9.5 Further Assurances; Post-Closing Cooperation..................................................30
9.6 Waiver........................................................................................30
9.7 Amendment.....................................................................................30
9.8 Third Party Beneficiaries.....................................................................31
9.9 No Assignment; Binding Effect.................................................................31
9.10 Headings......................................................................................31
9.11 Invalid Provisions............................................................................31
9.12 Governing Law.................................................................................31
9.13 Waiver of Jury Trial..........................................................................31
9.14 Jurisdiction..................................................................................32
9.15 Construction..................................................................................32
9.16 Counterparts..................................................................................32
9.17 Publicity.....................................................................................32
9.18 Confidentiality...............................................................................32
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This SHARE PURCHASE AGREEMENT (as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof, this
"Agreement"), dated as of September 29, 2005, is made and entered into, by and
among PXRE Group Ltd., a Bermuda company (the "Company"), and each of the
Purchasers named on the signature page hereto (the "Purchasers" and each a
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Company desires to sell to the Purchasers and the
Purchasers desire to purchase from the Company, Series D Perpetual Preferred
Shares, par value $1.00 per share, upon the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following
defined terms shall have the meanings indicated below:
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through ownership of voting securities , by
contract or otherwise.
"Agreement" has the meaning ascribed to it in the forepart
hereof.
"Annual Report" has the meaning ascribed to it in Section
3.9(a).
"Assets and Properties" means, with respect to any Person, all
assets and properties of every kind, nature, character and description (whether
real, personal or mixed, whether tangible or intangible, whether absolute,
accrued, contingent, fixed or otherwise and wherever situated), including the
goodwill related thereto, operated, owned or leased by such Person, including
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory and goods.
"Balance Sheet" has the meaning ascribed to it in Section
3.10.
"Bermuda Approval" means the Bermuda Monetary Authority's
prior written approval of the issuance and transferability of the Company
Securities contemplated hereunder.
"Board of Directors" means the Board of Directors of the
Company.
"Business Day" means a day other than Saturday, Sunday or any
day on which banks located in Bermuda and the State of New York are authorized
or obligated to close.
"Closing" means the closing of the transactions contemplated
by Section 2.2.
"Closing Date" has the meaning ascribed to it in Section
2.2(a).
"Closing Date Purchaser" has the meaning ascribed to it in
Section 7.2(a).
"Common Shares" has the meaning ascribed to it in Section
3.3(a).
"Convertible Common Shares" has the meaning ascribed to it in
Section 3.3(a).
"Convertible Preferred Shares" has the meaning ascribed to it
in Section 3.3(a).
"Company" has the meaning ascribed to it in the forepart of
this Agreement.
"Company Securities" means, collectively, the Perpetual
Preferred Shares and the Common Shares issuable upon the mandatory exchange of
the Perpetual Preferred Shares.
"Contract" means any agreement (including licenses with
non-governmental Persons), lease, evidence of Indebtedness, mortgage, indenture,
security agreement or other instrument or contract, whether written or oral.
"Description of Stock" means the Description of Stock of the
Perpetual Preferred Shares in the form attached as Exhibit B hereto.
"Encumbrance" means any security interest, lien, pledge,
claim, charge, escrow, encumbrance, option, right of first offer, right of first
refusal, preemptive right, mortgage, indenture, security agreement or other
similar agreement, arrangement, contract, commitment, understanding or
obligation, whether written or oral and whether or not relating in any way to
credit or the borrowing of money.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to the Company, any
trade or business (whether or not incorporated) under common control with the
Company and which, together with the Company, are treated as a single employer
within the meaning of Sections 414(b) or (c) of the IRC, excluding each
Purchaser and each other Person which would not be an ERISA Affiliate if
Purchaser did not own any issued and outstanding shares of stock of the Company.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Exchange Conditions Precedent" means the affirmative vote of
the Company's existing shareholders (a) authorizing an additional 300,000,000
Common Shares; and (b) approving the exchange of the Perpetual Preferred Shares
into Common Shares.
"Financial Statements" has the meaning ascribed to it in
Section 3.9(b).
"GAAP" has the meaning ascribed to it in Section 3.9(b).
"Governmental Authorizations" has the meaning ascribed to it
in Section 3.14(a).
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official, department,
commission board or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision.
"Indebtedness" means (a) all indebtedness of the Company,
including the principal of, and premium, if any, and interest (including
interest accruing after the filing of a petition initiating any proceeding under
any state, federal or foreign bankruptcy laws, whether or not allowable as a
claim in such proceeding) on, all indebtedness, whether outstanding currently or
hereafter created (i) for borrowed money, (ii) for money borrowed by others and
guaranteed, directly or indirectly, by the Company, (iii) for money borrowed by
others for which the Company provides security, (iv) constituting purchase money
indebtedness the payment of which the Company is directly or contingently
liable, (v) under any lease of any real or personal property, which obligations
are capitalized on the Company's books in accordance with generally accepted
accounting principles or (vi) under any other arrangement under which
obligations are recorded as indebtedness on the Company's books in accordance
with generally accepted accounting principles and (b) any modifications,
refundings, deferrals, renewals or extensions of any such Indebtedness, or
securities, notes or other evidences of indebtedness issued in exchange for such
Indebtedness; provided that Indebtedness shall not include intercompany
indebtedness outstanding or hereafter created between the Company and any of its
direct or indirect wholly-owned Subsidiaries or between any two of more such
direct or indirect wholly-owned Subsidiaries of the Company.
"Intellectual Property" means trademarks and service marks
(whether registered or unregistered), trade names and designs, together with all
goodwill related to the foregoing; patents (including any continuations,
continuations in part, renewals and applications for any of the foregoing);
copyrights (including any registrations and applications therefor and whether
registered or unregistered); internet domain names; computer software;
databases; works of authorship; mask works; technology; trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, user interfaces, customer lists, inventions, discoveries, concepts,
ideas, techniques, methods, source codes, object codes, methodologies and, with
respect to all of the foregoing, related confidential data or information.
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"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company or
any Subsidiary.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Law" or "Laws" means, the common law and all federal, state,
local and foreign laws, rules and regulations, orders, judgments, decrees and
other determinations of the United States, any foreign country or any domestic
or foreign state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities (or contingencies that have not yet become liabilities) of a Person,
whether absolute, accrued, contingent (or based upon any contingency), known or
unknown, fixed or otherwise, or whether due or to become due.
"Material Adverse Effect" means a material adverse effect on
(x) the business, operations or financial position of any of the Company and its
Subsidiaries, taken as a whole, (y) the ability of the Company to perform in a
timely manner any of its obligations under this Agreement or any of the other
Operative Documents or any transaction contemplated hereby or thereby or (z) the
legality, validity or enforceability of this Agreement and the other Operative
Documents; provided, however, that any change, effect, event condition or
development, occurrence or state of facts resulting from or arising in
connection with the following shall not constitute a Material Adverse Effect for
purposes of this Agreement, the other Operative Documents and the transactions
contemplated hereby and thereby:
(i) the public announcement of this Agreement and the
transactions herein contemplated;
(ii) changes in Law, GAAP or SAP; or
(iii) changes in the value of the Company's fixed income
investment portfolio (for purposes of clarification,
investments in hedge funds and similar investments
are excluded from such investment portfolio)
resulting from changes in prevailing interest rates.
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Notwithstanding the foregoing, losses arising solely from a
single loss occurrence occurring after the date hereof but prior to the Closing
(after giving effect to any applicable reinsurance recoverable due to the
Company, any reinstatement premiums due to or payable by the Company and any
adjustments in profit and ceding commissions, in each case relating to such
losses) shall be excluded from the determination of whether a Material Adverse
Effect has occurred solely to the extent that such losses do not collectively
exceed $30 million in the aggregate on a net after-tax basis.
"Material Contracts" means (i) all of the Company's and its
Subsidiaries' Contracts which involve aggregate payments over the term of each
such Contract by or to the Company or its Subsidiaries of more than $5 million
or which extend for a term of more than a year from the date hereof, (ii) all of
the Company's and its Subsidiaries' material loan agreements, bank lines or
credit agreements, indentures, mortgages, deeds of trust, pledge and security
agreements, letters of credit or other debt instruments, (iii) all employment
contracts entered into by the Company or any of its Subsidiaries, (iv) any
guarantees of more than $5 million (individually) by the Company or any of its
Subsidiaries, (v) all non-competition and other similar agreements (including
without limitation those limiting the Company or any Affiliate thereof from
directly or indirectly engaging in any line of business, offering any products
or services or otherwise competing with any Person) and (vi) all other material
contracts not made in the ordinary course of business; provided that Material
Contracts shall not include reinsurance agreements or retrocessional agreements
entered into in the ordinary course of business of the Company and its
Reinsurance Subsidiaries.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which Company, any of its
Subsidiaries or any ERISA Affiliate is making, is obligated to make, has made or
been obligated to make, contributions on behalf of participants who are or were
employed by any of them.
"Operative Documents" means this Agreement, the Registration
Rights Agreement, all other agreements to be executed and delivered pursuant to
this Agreement between one or more Purchasers, on the one hand, and the Company,
on the other hand, the Description of Stock and all other documents,
certificates or instruments as may be contemplated hereby or thereby, as
modified or amended from time to time.
"Perpetual Preferred Shares" means the Series D Perpetual
Preferred Shares, in each case having the rights, restrictions, privileges and
preferences specified in the Description of Stock.
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company or partnership,
proprietorship, other business organization, trust, union, association or
Governmental or Regulatory Authority.
"Private Placement Memorandum" has the meaning ascribed to it
in Section 3.10.
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"Proxy Statement" means the proxy statement to be delivered to
the shareholders of the Company in connection with the special meeting of the
Company's shareholders to consider the proposals to (i) authorize an additional
300,000,000 Common Shares and (ii) approve the exchange of the Perpetual
Preferred Shares into Common Shares contained in the Description of Stock.
"Public Offering" means the offer for sale to the public in an
underwritten offering of Common Shares pursuant to an effective registration
statement filed under the Securities Act.
"Purchase Price" has the meaning ascribed to it in Section
2.1.
"Purchasers" has the meaning ascribed to it in the forepart of
this Agreement.
"Quarterly Report" has the meaning ascribed to it in Section
3.9(a).
"Reinsurance Agreements" has the meaning ascribed to it in
Section 3.17(a).
"Reinsurance Subsidiary" means each of PXRE Reinsurance Ltd.,
a company organized under the laws of Bermuda and a direct wholly-owned
subsidiary of the Company, and PXRE Reinsurance Company, an insurance company
organized under the laws of Connecticut and an indirect wholly-owned Subsidiary
of the Company.
"SAP" means, with respect to a reinsurance or insurance
company, the accounting procedures and practices prescribed or permitted from
time to time by the National Association of Insurance Commissioners and adopted
or promulgated by the insurance regulatory authority in the state in which such
reinsurance or insurance company is domiciled and employed in a consistent
manner throughout the periods involved; provided that, with respect to
reinsurance or insurance companies not domiciled in the United States, SAP shall
mean the accounting procedures and practices adopted or promulgated from time to
time by the insurance regulatory authority in the jurisdiction in which such
reinsurance or insurance company is domiciled.
"SEC" means the United States Securities and Exchange
Commission.
"SEC Document" means each report, schedule, registration
statement and definitive proxy statement filed by the Company with the SEC since
December 31, 2004.
"Securities Act" means the Securities Act of 1933, as amended,
of the United States of America and the rules and regulations of the SEC
thereunder.
"Series D Perpetual Preferred Shares" means the Series D
Exchangeable Non-Voting Preferred Shares, par value $1.00 per share, issued
pursuant to this Agreement and having the rights, restrictions, privileges and
preferences specified in the Description of Stock.
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"Shareholder Approval" means the Company's shareholders'
approval of the following matters, in each case as described in the Proxy
Statement: (i) the authorization of an additional 300,000,000 Common Shares and
(ii) the approval of the exchange of the Perpetual Preferred Shares into Common
Shares.
"Shareholders' Meeting" means the special meeting of the
Company's shareholders to be held by the Company in accordance with Section 5.2
hereof.
"Statutory Statements" means those statements of PXRE
Reinsurance Company prepared pursuant to, and in accordance with, the
requirements of applicable state insurance laws.
"Subsidiary" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interest in, or the voting control of, such Person, whether
or not existing on the date hereof.
"Taxes" has the meaning ascribed to it in Section 3.19(a).
"Tax Returns" has the meaning ascribed to it in Section
3.19(a).
"Transfer" means, directly or indirectly, any sale, transfer,
assignment, hypothecation, pledge or other disposition of any Company Securities
or any interests therein.
ARTICLE II
SALE AND PURCHASE OF COMPANY SECURITIES; CLOSING
2.1 Sale and Purchase of Company Securities. Subject to the
terms and conditions hereof and in reliance upon the representations and
warranties of the Purchasers and the Company contained herein or made pursuant
hereto, the Company agrees to sell to each of the Purchasers, and each Purchaser
severally agrees to purchase from the Company on the Closing Date, the number of
Perpetual Preferred Shares set forth opposite such Purchaser's name on Exhibit A
hereto. The aggregate principal purchase price to be paid to the Company by each
such Purchaser for such Perpetual Preferred Shares is specified opposite each
respective Purchaser's name on Exhibit A (such amount, the "Purchase Price").
2.2 The Closing.
(a) Subject to the terms and conditions hereof, the closing
(the "Closing") of the purchase and sale of the Perpetual Preferred Shares will
take place at the offices of Conyers Dill & Pearman, Clarendon House, Church
Street, Hamilton, Bermuda, or at such other place as the Company and Purchasers
shall mutually agree, at 10:00 A.M., Bermuda time, on the fifth Business Day
following the execution of this Agreement (the date and time of the Closing are
herein referred to as the "Closing Date").
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(b) Subject to the terms and conditions hereof, on the Closing
Date (i) the Company will deliver to the Purchasers the Perpetual Preferred
Shares by delivering to each Purchaser a certificate, registered in the name of
such Purchaser (or its designee, if any such designee is specified on Exhibit A)
and reflecting the number of Perpetual Preferred Shares purchased by such
Purchaser and (ii) each Purchaser will deliver to the Company, by wire transfer
to an account designated by the Company, an amount equal to the Purchase Price
for such Perpetual Preferred Shares in federal or other immediately available
funds. At the Closing, there shall be delivered to the placement agents' counsel
in New York, Simpson Thacher & Bartlett LLP, the certificates and other
agreements, documents and instruments to be delivered under Article VII hereof.
(c) The holders of the Perpetual Preferred Shares will be
entitled to the benefits of a registration rights agreement, to be dated October
5, 2005 (the "Registration Rights Agreement"), among the Company and the
Purchasers, substantially in the form of Exhibit C hereto. Pursuant to the
Registration Rights Agreement, as promptly as practicable following the special
Shareholders' meeting but in no event later than April 1, 2006, the Company
shall register with the SEC the resale of the Perpetual Preferred Shares, if the
Exchange Conditions Precedent are not satisfied, or (as applicable) the Common
Shares if the Exchange Conditions Precedent are satisfied.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchasers as
follows:
3.1 Organization and Qualification. The Company and each
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Company and each Subsidiary
is duly qualified and is authorized to do business and is in good standing as a
foreign corporation in each state or jurisdiction where the nature of its
business or the ownership of property make such qualification necessary, except
where the failure to be so qualified, individually or in the aggregate with all
such failures, would not and could not reasonably be expected to have a Material
Adverse Effect.
3.2 Authority.
(a) The Company has full power and authority to execute and
deliver this Agreement and the other Operative Documents, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby (subject to the Shareholder Approval and the
Bermuda Approval). The execution, delivery and performance by the Company of
this Agreement, and the consummation by it of the transactions contemplated
hereby and thereby have been, and the other Operative Documents will be, duly
and validly authorized by all necessary action by its Board of Directors, and no
other corporate action (other than the Shareholder Approval solely with respect
to the matters described in the definition of such term) is necessary to
authorize the execution, delivery and performance of this Agreement and the
other Operative Documents and the consummation by the Company of the
transactions contemplated hereby and thereby. This Agreement, has been, and on
the Closing Date, the other Operative Documents will be, duly and validly
executed and delivered by the Company. This Agreement, constitutes, and on the
Closing Date the other Operative Documents will constitute, legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally and by general
principles of equity.
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(b) The Special Capital Committee of the Board of Directors by
resolutions duly adopted at a meeting, duly called and held, has unanimously (i)
determined that this Agreement, the issuance and sale of the Company Securities
and the other transactions contemplated hereby are advisable and in the best
interests of the Company and its shareholders and (ii) has approved this
Agreement, the issuance and sale of the Company Securities and the other
transactions contemplated hereby.
3.3 Capitalization.
(a) The authorized capital stock of the Company consists of:
(i) 50,000,000 common shares, par value $1.00 per share (the "Common Shares"),
which include 20,000,000 convertible common shares (the "Convertible Common
Shares"), of which 22,357,955 Common Shares and 7,037,166 Convertible Common
Shares were issued and outstanding on September 26, 2005; and (ii) 10,000,000
preferred shares, par value $1.00 per share, of which 15,000 shares are
designated as Series A Preferred Shares (of which 10,000 shares are
sub-designated as A1 Preferred Shares and 5,000 shares are sub-designated as A2
Preferred Shares), 10,000 shares are designated as Series B Preferred Shares (of
which 6,666 2/3 shares are sub-designated as B1 Preferred Shares and 3,333 1/3
shares are sub-designated as B2 Preferred Shares) and 5,000 shares are
designated as Series C Preferred Shares (of which 3,333 2/3 shares are
sub-designated as C1 Preferred Shares and 1,666 1/3 shares are sub-designated as
C2 Preferred Shares) (of which 3,168.533 shares of A2 Preferred Shares,
1,588.492 shares of B2 Preferred Shares and 1,056.176 shares of C2 Preferred
Shares were issued and outstanding on September 26, 2005) (collectively, the
"Convertible Preferred Shares"). When issued, all Company Securities will be
duly authorized, validly issued, fully paid and non-assessable. As of the
Closing, the Perpetual Preferred Shares, the Series A Preferred Shares, the
Series B Preferred Shares, the Series C Preferred Shares and Common Shares shall
constitute the only equity securities of the Company outstanding other than as
disclosed in Schedule 3.3. All Common Shares issuable upon the mandatory
exchange of the Perpetual Preferred Shares will, when issued, be duly
authorized, validly issued, fully paid and non-assessable. None of the Company
Securities are subject to preemptive or similar rights.
(b) Except as set forth on Schedule 3.3, and as contemplated
by this Agreement and the other Operative Documents, no Common Shares are
reserved for issuance other than Common Shares reserved in accordance with
Section 6.4 hereof.
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(c) Except as set forth on Schedule 3.3, there are no
outstanding options, warrants, subscriptions, rights, convertible or
exchangeable securities or other agreements or plans under which the Company may
become obligated to issue, sell or transfer Common Shares or other capital stock
or equity securities of the Company.
(d) Except as set forth on Schedule 3.3, and except as
provided in the Investment Agreement, dated April 4, 2002, by and among the
Company and certain purchasers signatories thereto, there are no outstanding
registration rights with respect to any Common Shares or other capital stock or
equity securities of the Company.
(e) Except as set forth on Schedule 3.3, and except as
provided by the terms of the Company Securities, there are no anti-dilution
protections or other adjustment provisions in existence with respect to any
Common Shares or other capital stock or equity securities of the Company.
(f) Except as set forth on Schedule 3.3 or the Bye-laws of the
Company, there are no voting trusts, shareholder agreements, proxies or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the issuance, sale, redemption, registration, voting or
transfer or other disposition of Common Shares or other capital stock or equity
securities of the Company
3.4 Subsidiaries; Joint Ventures.
(a) The Company's only Subsidiaries are those set forth on
Schedule 3.4 hereto. The capital stock of such Subsidiaries is owned,
beneficially and of record and free and clear of all Encumbrances, by the
Company or a Subsidiary thereof as set forth on Schedule 3.4 hereto.
(b) All outstanding capital stock of the Subsidiaries has been
duly authorized and validly issued and is fully paid and non-assessable. There
are no outstanding options, warrants, subscriptions, rights, convertible
securities or other agreements or plans under which any Subsidiary may become
obligated to issue, sell or transfer any shares of its capital stock or other
securities.
(c) Except as set forth on Schedule 3.4, neither the Company
nor any of its Subsidiaries is engaged in any joint venture or partnership with
any other Person.
3.5 No Conflicts. Except as set forth on Schedule 3.5 hereto,
the execution and delivery by the Company of this Agreement and the other
Operative Documents, the performance by the Company of its obligations under
this Agreement and the other Operative Documents and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) result in a
violation of the Company's organizational documents, (ii) conflict with, or
constitute a default under, any Contract to which the Company or any Subsidiary
is a party, (iii) result in any violation of any Law or order, judgment or
decree of any court or Governmental or Regulatory Authority having jurisdiction
over the Company or any of its assets or properties or (iv) result in, or
require, the creation or imposition of any Encumbrance upon any of the assets or
properties of the Company, which, in the case of clause (ii), (iii) or (iv)
above, individually or in the aggregate, would or could reasonably be expected
to have a Material Adverse Effect.
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3.6 Brokers. Other than Goldman, Sachs & Co. and Banc of
America Securities LLC, no agent, broker, finder, investment banker, financial
advisor or other similar Person will be entitled to any fee, commission or other
compensation in connection with the transactions contemplated by this Agreement
or the other Operative Documents on the basis of any act or statement made or
alleged to have been made by the Company or any of its Affiliates, directors,
officers or other representatives.
3.7 Exemption from Registration. Assuming the accuracy on the
date hereof and on the Closing Date of the representations and warranties of
each Purchaser set forth in Section 4.3 below, (i) the issuance and the sale of
the Perpetual Preferred Shares to the Purchasers hereunder is, and (ii) the
mandatory exchange of the Perpetual Preferred Shares into the Common Shares
immediately upon the satisfaction of the Exchange Conditions Precedent will be,
exempt from the registration requirements of the Securities Act. Neither the
Company nor any Person authorized to act on the Company's behalf has taken any
action (including, without limitation, any offering of any securities of the
Company under circumstances which would require the integration of such offering
with the offering or issuance of the Company Securities under the Securities
Act) which could be reasonably expected to subject the offering, issuance or
sale of the Company Securities to the registration requirements of Section 5 of
the Securities Act.
3.8 Litigation. Except as set forth in Schedule 3.8, there are
no actions, suits, proceedings or investigations pending, or to the knowledge of
the Company or any of its Subsidiaries, threatened, against or affecting the
Company or any Subsidiary, other than those that, individually or in the
aggregate, would not and could not reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries are in compliance in all
material respects with (i) all orders or judgments issued by any Governmental or
Regulatory Authority with respect to the Company or any Subsidiary thereof and
(ii) all consent decrees and other agreements with any Governmental or
Regulatory Authority to which the Company or any Subsidiary thereof is a party
or by which any of their respective assets are bound.
3.9 SEC Filings and Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed by it pursuant to Section 13 or Section 15(d) of the
Exchange Act within the last 12 months on a timely basis or has received and
complied with a valid extension of time for filing. The Company has made
available to the Purchasers the Company's Annual Report on Form 10-K and Form
10-K/A for the fiscal year ended December 31, 2004 (the "Annual Report") and the
Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2005 and June 30, 2005 (the Quarterly Report for the fiscal quarter ended June
30, 2005 hereinafter referred to as the "Quarterly Report"). Except as set forth
on Schedule 3.9, all Company filings with the SEC from and after December 31,
2004 complied as to form and substance in all material respects with the rules
and regulations of the Commission under the Exchange Act on the respective date
of filing and as of such date (or if amended or superseded by a filing prior to
the date of this Agreement, on the date of such filing), and such filings did
not, and the Private Placement Memorandum does not, contain any untrue statement
of a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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(b) Except as set forth on Schedule 3.9, each of the
consolidated financial statements (including, in each case, any related notes
thereto) (collectively, the "Financial Statements") contained in the Annual
Report and the Quarterly Report (i) was prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be expressly
described in the notes thereto or, in the case of unaudited interim financial
statements, as may be permitted by the Commission on Form 10-Q under the
Exchange Act) and (ii) fairly presents in all material respects the consolidated
financial position of the Company as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements in the Quarterly Report
were or are subject to normal and recurring year-end adjustments, none of which
are reasonably expected to be material in nature.
3.10 Events Subsequent to the Date of the Last Financial
Statement. Except as otherwise disclosed in the SEC Documents, the Statutory
Statements, the Financial Statements or Schedule 3.10, since June 30, 2005,
except as contemplated by this Agreement, reflected on Schedule 3.10 or on the
balance sheet contained in the Quarterly Report (the "Balance Sheet") the
Company has not (i) sold, assigned, transferred or granted any exclusive license
with respect to any patent, trademark, trade name, service mark, copyright,
trade secret or other intangible asset necessary for the operation of its
business substantially as now conducted, (ii) suffered any loss of property
(other than in the ordinary course of business of the Company and its
Subsidiaries), or waived any right of substantial value to the Company or a
Subsidiary of the Company or (iii) entered into any commitment, obligation,
understanding or other arrangement, contingent or otherwise, to effect, directly
or indirectly, any of the foregoing. Except as otherwise disclosed in the SEC
Documents, the Statutory Statements, the Financial Statements or Schedule 3.10,
or in the Private Placement Memorandum (the "Private Placement Memorandum"),
dated the date hereof, relating to the Perpetual Preferred Shares, since June
30, 2005, no events have occurred which individually or in the aggregate have
had or could reasonably be expected to have a Material Adverse Effect.
3.11 Absence of Undisclosed Liabilities. Except as reflected
in the Annual Report or the Quarterly Report, reserved against in the financial
statements contained therein or in the notes thereto or otherwise disclosed in
the SEC Documents, the Statutory Statements, the Financial Statements or
Schedule 3.11, there are no Liabilities of, relating to or affecting the Company
or any Subsidiary of the Company or any of their respective Assets and
Properties, other than Liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 2004.
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3.12 Title to Assets, Properties and Rights. The Company (or a
Subsidiary of the Company) has good and marketable title (or a valid leasehold
interest) to all of the Assets and Properties (whether real, personal or mixed)
necessary for the conduct of the business of Company and its Subsidiaries
substantially as now conducted, free and clear of all Encumbrances, except for
(i) liens for current taxes, assessments and other governmental charges not yet
due and payable or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded for which reserves have
been established as required by GAAP or SAP; (ii) easements, covenants,
conditions and restrictions (whether or not of record) as to which no material
violation or encroachment exists or, if such violation or encroachment exists,
as to which the cure of such violation or encroachment would not materially
interfere with the conduct of the Company's business; (iii) any zoning or other
governmentally established restrictions or encumbrances; (iv) workers or
unemployment compensation liens arising in the ordinary course of business; (v)
carriers', landlords', mechanic's, materialman's, supplier's, vendor's or
similar liens arising in the ordinary course of business securing amounts which
are not delinquent, which remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, (vi) purchase money
liens on any office equipment hereafter acquired or the assumption of any lien
on such office equipment; or (vii) Encumbrances disclosed on Schedule 3.12 or
any minor imperfection of title or Encumbrances which, individually or in the
aggregate with other Encumbrances, do not and could not reasonably be expected
to materially impair the use or value of the Assets and Properties of the
Company and its Subsidiaries. Such Assets and Properties are in such operating
condition and repair as is suitable for the uses for which they are used in the
Company's business, are not subject to any condition which materially interferes
with the use thereof by the Company or a Subsidiary of Company, as the case may
be, and constitute all assets, properties, interests in properties and rights
necessary to permit the Company and its Subsidiaries to carry on their business
after the Closing substantially as conducted by the Company and its Subsidiaries
prior thereto.
3.13 Patents, Trademarks, Copyrights and Licenses. The Company
(or a Subsidiary) owns or has the right pursuant to a license to use all the
Intellectual Property necessary for the conduct of the business of the Company
and its Subsidiaries as now conducted. To the best knowledge of the Company,
neither the Company nor any Subsidiary has interfered with, infringed upon or
misappropriated any Intellectual Property rights of any Person, and except as
set forth on Schedule 3.13, neither the Company nor any Subsidiary has received
from any Person in the past two years any notice, charge, complaint, claim or
assertion thereof, and no such claim is impliedly threatened by an offer to
license from another Person under a claim of use.
3.14 Governmental Consents.
(a) The Company and each of its Subsidiaries has, and is in
good standing with respect to, all governmental consents, approvals, licenses
(including without limitation insurance licenses), authorizations, permits,
certificates, inspections and franchises (collectively, "Governmental
Authorizations") necessary to continue to conduct the business of the Company
and its Subsidiaries as now conducted and to own or lease and operate the Assets
and Properties necessary for the conduct by the Company and its Subsidiaries of
their business as now conducted, all of which are valid and in full force and
effect, except for such failures that, individually or in the aggregate, do not
have and could not reasonably be expected to have a Material Adverse Effect.
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(b) Each of the Reinsurance Subsidiaries is duly licensed,
authorized, approved or accredited (as required by the respective jurisdiction)
to conduct a reinsurance business in the jurisdictions listed on Schedule 3.14,
and is not transacting any insurance or reinsurance business in any jurisdiction
in which it is not so licensed, authorized, approved, accredited (as the case
may be) or otherwise permitted to transact such business.
(c) Except as set forth in Schedule 3.14:
(i) neither the Company nor any of its Subsidiaries has
received any notice, oral or written, (A) that it is required to obtain, or that
it is engaging in any activity that would require it to obtain, any Governmental
Authorization that it does not now possess or (B) that it is engaging in any
activity that would cause modification, limitation, non-renewal, revocation or
suspension of any Governmental Authorization and no action, inquiry,
investigation or proceeding looking to or contemplating any of the actions
specified in clauses (A) and (B) above is pending or, to the knowledge of the
Company, threatened;
(ii) all reports, statements, documents, registrations,
filings and submissions to state insurance regulatory authorities submitted or
made by the Company or its Subsidiaries complied in all material respects with
applicable Law in effect when filed, and in each instance were filed in all
material respects on a timely basis;
(iii) no material deficiencies have been asserted by any
such regulatory authority with respect to any such reports, statements,
documents, registrations, filings or submissions that have not been satisfied in
all material respects; and
(iv) the Company has made available for inspection by the
Purchasers all filings made by the Reinsurance Subsidiaries with any
Governmental or Regulatory Authority since December 31, 2003, including, without
limitation, each Statutory Statement, and any reports of examination, market
conduct studies or other reports relating to any Reinsurance Subsidiary issued
by any Governmental or Regulatory Authority since December 31, 2003.
3.15 No Consent or Approval Required. No consent, approval,
waiver, permit, order or authorization of, or declaration to or filing with, any
Person or Governmental or Regulatory Authority, and no consent under any permit
or any Contract is required by the Company or any of its Subsidiaries for the
valid authorization, execution and delivery by the Company of this Agreement,
the other Operative Documents or its consummation of the transactions
contemplated hereby and thereby, other than (i) those consents, approvals,
authorizations, declarations or filings which have been obtained or made, as the
case may be prior to the Closing Date, (ii) required filings with the SEC and
the New York Stock Exchange, (iii) the obtaining of the Bermuda Approval, (iv)
the Shareholder Approval and (v) the consents described on Schedule 3.15.
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3.16 Compliance with Laws. The Company and each of its
Subsidiaries has duly complied in all material respects with, and their Assets
and Properties, business operations and leaseholds used in connection with the
business of the Company and its Subsidiaries are in material compliance with,
the provisions of all Laws applicable to the Company and each of its
Subsidiaries, Assets and Properties and the conduct of their business, and there
have been no citations, notices or orders of noncompliance issued to the Company
or any of its Subsidiaries under or with respect to any such Law.
3.17 Reinsurance Contracts; Retrocession Agreements.
(a) Each retrocession and reinsurance agreement pursuant to
which a Reinsurance Subsidiary has ceded, transferred, reinsured or assumed any
obligations or liabilities under any reinsurance or insurance agreement with
respect to which such Reinsurance Subsidiary has booked any liability or
recoverable or under which such Reinsurance Subsidiary has any contingent
liabilities or rights (collectively, the "Reinsurance Agreements") is in full
force and effect. Each such Reinsurance Agreement is a valid and binding
agreement of the applicable Reinsurance Subsidiary, enforceable against such
Reinsurance Subsidiary in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)). To the knowledge of
the Company, each Reinsurance Agreement is a valid and binding obligation of
each other party thereto, enforceable against such party in accordance with the
terms of such Reinsurance Agreement (subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)).
(b) Except as noted on Schedule 3.17, no Reinsurance
Subsidiary, nor, to the knowledge of the Company, any other party to a
Reinsurance Agreement pursuant to which such Reinsurance Subsidiary has ceded,
transferred or reinsured any obligations or liabilities ("Retrocessional
Agreements") is in default in any material respect as to any provision thereof,
and no such Retrocession Agreement contains any provision providing that the
other party thereto may commute or, in the case of any Retrocession Agreement
whose term has not previously expired, terminate such Retrocession Agreement by
reason of the transactions contemplated by this Agreement or the other Operative
Documents. Except as set forth in Schedule 3.17, (i) to the knowledge of the
Company, none of the other parties to any such Retrocession Agreement is
insolvent or the subject of a rehabilitation, (ii) to the knowledge of the
Company, the financial condition of any such other party to a Retrocession
Agreement is not impaired to the extent that a default thereunder is reasonably
anticipated and (iii) no notice of intended cancellation or termination has been
received by the Company or any of its Subsidiaries from any of such other
parties.
15
3.18 Loss Reserves; Actuarial Reports. The reserves for
payment of benefits, losses, claims and expenses under all reinsurance and
retrocession agreements to which any Reinsurance Subsidiary is a party reflected
in, or included with, the financial statements set forth in the Statutory
Statements and Financial Statements (i) were computed in accordance with
Standards of Practice issued by the Actuarial Standards Board (including the
Casualty Actuarial Society's Statement of Principles Regarding Property and
Casualty Loss and Loss Adjustment Expense Reserves), (ii) are based on actuarial
assumptions that are consistent with the relevant contract provisions and (iii)
are in compliance with the requirements of applicable Law. The admitted assets
of each Reinsurance Subsidiary as determined under applicable Laws are in an
amount at least equal to the minimum amounts required by applicable Laws.
3.19 Taxes.
(a) The Company and each Subsidiary of the Company has filed
all material federal, state, local, foreign and other tax returns, statements,
forms and reports, and any other returns (including information returns),
statements, forms and reports ("Tax Returns") with all Governmental or
Regulatory Authorities required to be filed by it. The Company and each
Subsidiary has paid or caused to be paid, or duly reserved for in the Financial
Statements, all taxes, fees, assessments and other governmental charges or
levies (including interest and penalties) ("Taxes") that are material owed by
the Company and each Subsidiary of the Company. The Company and each Subsidiary
of the Company has withheld and paid all material Taxes required to have been
withheld and paid, including Taxes in connection with amounts paid or owing to
any employee, creditor, independent contractor or other third party. Neither the
Company nor any Subsidiary of the Company has any material liabilities for Taxes
other than those incurred in the ordinary course of business and in respect of
which adequate reserves are being maintained by it in accordance with GAAP or
SAP, as the case may be. There are no applicable Taxes, fees or other
governmental charges payable by the Company or any Subsidiary of the Company in
connection with the execution and delivery of this Agreement or the other
Operative Documents or in connection with any of the transactions contemplated
hereby or thereby (including without limitation the issuance of the Company
Securities as contemplated herein and therein).
(b) Except as set forth in Schedule 3.19, all material
deficiencies asserted or assessments made by any Governmental or Regulatory
Authority with respect to Taxes of the Company or any Subsidiary of the Company
have been paid or are being contested in good faith. Except as disclosed in
Schedule 3.19, (i) there are no action, suits, investigations, audits or claims
in progress by any Governmental or Regulatory Authority relating to Taxes of the
Company or any Subsidiary of the Company, (ii) no issue has been raised by
written inquiry of a Governmental or Regulatory Authority in any current or
prior examination which, by application of the same principles, would reasonably
be expected to result in a material proposed deficiency for any subsequent
taxable period, (iii) no claim has been made by a Governmental or Regulatory
Authority in a jurisdiction where the Company or any Subsidiary of the Company
does not file Tax Returns to the effect that the Company or such Subsidiary, as
applicable, is or may be subject to taxation by that jurisdiction, and (iv)
there are no outstanding waivers or comparable consents regarding the
application of any statute of limitations in respect of Taxes of the Company or
any Subsidiary of the Company.
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(c) None of the Company or any Subsidiary of the Company or
any of their respective directors or officers has received any written or, to
the knowledge of the Company, oral notice from any taxing authority that it
intends to conduct an audit or investigation of the Company or any Subsidiary of
the Company. The Company is not subject to any ruling of any taxing authority
(other than the assurance from the Minister of Finance of Bermuda under the
Exempted Undertakings Tax Protection Act, 1966 of Bermuda as described in
Amendment No. 1 to the Company's Registration Statement on Form S-3 filed with
the SEC in September of 2005).
(d) There are no material liens for Taxes of the Company or
any Subsidiary of the Company upon the assets of the Company or any Subsidiary
of the Company, except for liens arising as a matter of Law relating to current
Taxes not yet due.
3.20 Employees. The Company has complied in all respects with
all applicable laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, commitment or arrangement with any labor
union, and no labor union has requested or, to the knowledge of the Company, has
sought to represent any of the employees, representatives or agents of the
Company and there is no labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of the Company, threatened against or involving the
Company.
3.21 ERISA.
(a) Schedule 3.21 lists each defined benefit plan, within the
meaning of Section 3(35) of ERISA (whether or not subject to Title IV thereof),
maintained by the Company or any ERISA Affiliate within the last six years (or
with respect to which any of them could reasonably be expected to have any
liability), and copies of the most recent actuarial valuation report, if any,
with respect to any such plan has been made available to Purchaser. None of the
Company, any ERISA Affiliate or any organization to which any of them is a
successor or parent corporation (within the meaning of Section 4069(6) of ERISA)
has engaged in any transaction which is subject to Section 4069 of ERISA.
(b) Neither the Company nor any ERISA Affiliate has any
obligation to contribute to any Multiemployer Plan subject to Title IV of ERISA,
and there are no circumstances pursuant to which the Company or any ERISA
Affiliate could be assessed with withdrawal liability by any such Multiemployer
Plan under Section 4201 of ERISA.
17
(c) Schedule 3.21 lists each employee benefit plan maintained
by the Company or any Subsidiary and each such plan that is intended to be
qualified under Section 401 of the IRC has received a favorable determination as
to its qualified status from the Internal Revenue Service, and to the knowledge
of the Company, nothing has occurred with respect to the operation of any such
plan which could cause the loss of such qualification.
(d) Each employee benefit plan maintained by the Company or
any ERISA Affiliate has been maintained in accordance with its terms and with
all provisions of ERISA and the Code (including rules and regulations
thereunder) and other applicable Laws.
(e) Neither the Company nor any ERISA Affiliate has incurred
any liability under Section 4062, 4063 or 4064 of ERISA.
3.22 Ordinary Course. Except as set forth on Schedule 3.22,
since June 30, 2005, the Company and each of its Subsidiaries has conducted its
operations only in the ordinary course of business consistent with past
practice.
3.23 Insurance. A complete and correct list and copies of all
policies of insurance of any kind or nature covering the Company and its
Subsidiaries, including, without limitation, policies of life, fire, theft,
employee fidelity and other casualty and liability insurance, has been provided
to the Purchasers, and such policies are in full force and effect. Such policies
are in amounts customary for the industry in which Company or such Subsidiary
operates.
3.24 Statutory Statements.
(a) The Company has previously furnished to the Purchasers
true and complete copies of the following statutory statements, in each case
together with all exhibits, schedules and notes thereto and any affirmations and
certifications filed therewith (collectively, the "Statutory Statements"): (i)
the annual statement of each Reinsurance Subsidiary as at December 31 in each of
the years ended 2002, 2003 and 2004 (the "Annual Statements"); and (ii) the
quarterly statement of PXRE Reinsurance Company for the quarterly period ended
June 30, 2005 (the "Quarterly Statements").
(b) Except as set forth on Schedule 3.24, the Statutory
Statements (i) present fairly the statutory financial condition of each
Reinsurance Subsidiary for the periods therein specified, (ii) were prepared in
conformity with SAP, except as expressly set forth within the subject financial
statements and (iii) were correct in all material respects when filed, and there
were no material omissions therefrom. The Statutory Statements were compiled
from and are in accordance with the books and records of the Reinsurance
Subsidiaries.
3.25 Binding Authority. No reinsurance intermediary, agent,
manager or broker has the legal power or authority to bind any Reinsurance
Subsidiary with respect to any reinsurance or insurance contract.
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3.26 Material Contracts. Schedule 3.26 sets forth a list of
all Material Contracts of the Company and its Reinsurance Subsidiaries. Each
such Material Contract of the Company or any Reinsurance Subsidiary is a valid
and binding agreement of Company or its Subsidiaries (as the case may be)
enforceable against the Company or such Subsidiary in accordance with its terms
(subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity)), and neither the Company nor any of its Subsidiaries has any
knowledge that any Material Contract is not a valid and binding agreement
against the other parties thereto. The Company and each of its Subsidiaries has
fulfilled all material obligations required pursuant to the Material Contract to
have been performed by the Company or such Subsidiary on its part.
3.27 Affiliate Transactions. Except as set forth in the
Company's proxy statement for the year 2004 as filed with the SEC (the "2004
Proxy Statement") or the SEC Documents, since January 1, 2005, there have been
no transactions between the Company or any of its Subsidiaries and any director,
executive officer, shareholder or Affiliate of the Company or any of its
Subsidiaries or loans, guarantees or pledges to, by or for the Company or any of
its Subsidiaries from, to, by or for any of such persons, other than consulting
agreements involving aggregate consideration of less than $10,000. Other than as
set forth in the 2004 Proxy Statement or the SEC Documents, none of the
executive officers, or directors of the Company or any of its Subsidiaries, or
any spouse or relative of any of such persons, has been a director or officer
of, or has had any direct or indirect interest in, any person or business
enterprise which during such period has been a supplier, customer or sales agent
of the Company or any of its Subsidiaries or has competed with or been engaged
in any business of the kind being conducted by the Company or any of its
Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
Each Purchaser, severally and not jointly, hereby represents
and warrants to the Company as follows:
4.1 Organization; Power and Authority. Each Purchaser, is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and each Purchaser has full power and
authority to execute and deliver this Agreement and the other Operative
Documents to which it is a party and to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby
(subject to the Bermuda Approval). The execution and delivery by such Purchaser
of this Agreement and the performance by such Purchaser of its obligations
hereunder and thereunder have been, and the other Operative Documents to which
it is a party will be, duly and validly authorized by such Purchaser. This
Agreement has been duly and validly executed and delivered by such Purchaser and
constitute, and upon the execution and delivery by such Purchaser of the other
Operative Documents to which it is a party, such other Operative Documents will
constitute, legal, valid and binding obligations of such Purchaser enforceable
against it in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to the enforcement of creditors'
rights generally and by general principles of equity.
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4.2 No Conflicts. The execution, delivery and performance of
this Agreement and the other Operative Documents to which it is a party and the
consummation by such Purchaser of the transactions contemplated hereby and
thereby do not and will not conflict with, or constitute a default under, any
Contract to which such Purchaser is a party, or result in a violation of such
Purchaser's organizational documents or any order, judgment or decree of any
court or Governmental or Regulatory Authority having jurisdiction over such
Purchaser or any of its properties and, no consent, authorization or order of,
or filing or registration with, any Governmental or Regulatory Authority, except
for such filings as may be required by the Exchange Act and except for the
Bermuda Approval, is required by such Purchaser for the execution, delivery and
performance of this Agreement or any of the other Operative Documents to which
it is a party.
4.3 Investor Representations. Each Purchaser, severally and
not jointly, hereby represents and warrants to the Company, Goldman, Sachs & Co.
and Banc of America Securities LLC as follows:
(a) Such Purchaser is acquiring the Company Securities for its
own account as principal, for investment purposes only, and not for or with a
view to the resale, distribution or granting of a participation therein, in
whole or in part, in violation of the Securities Act or the securities laws of
any State applicable to such Purchaser.
(b) Such Purchaser acknowledges its understanding that the
offering and sale of the Company Securities has not been registered under the
Securities Act, on the basis of the exemption in Section 4(2) thereof relating
to transactions not involving a Public Offering, or any state securities laws.
Such Purchaser understands that the Company's reliance on the Section 4(2)
exemption is based on the representations herein made by the Purchasers. Such
Purchaser is an "Accredited Investor" as that term is defined in Regulation D
under the Securities Act.
(c) Such Purchaser acknowledges that it is familiar with the
limitations which are imposed by the Securities Act on any Transfer of an
interest in the Company Securities. Such Purchaser understands and acknowledges
that it may have to bear the economic risk of its investment in the Company
Securities for an indefinite period of time unless the Company Securities are
subsequently registered under the Securities Act , pursuant to Section 2.2(c) or
otherwise, or an exemption therefrom is available. Such Purchaser hereby agrees
that the Company Securities will not be transferred prior to the earlier of (x)
April 1, 2006 and (y) the date of the Shareholders' Meeting, and thereafter will
not be transferred other than (i) pursuant to a registration under the
Securities Act or pursuant to an exemption therefrom, (ii) in compliance with
any applicable state securities and insurance laws, and (iii) with prior Bermuda
Approval.
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(d) Such Purchaser acknowledges that Goldman, Sachs & Co. and
Banc of America Securities LLC have not provided, and will not be providing,
such Purchaser with any material regarding the Company Securities or the Company
except for the Private Placement Memorandum. In addition, such Purchaser
acknowledges that it has carefully reviewed the Private Placement Memorandum.
Such Purchaser has been given access to all information regarding the Company
and the business, condition and operations of the Company that such Purchaser
has requested in order to evaluate its investment in the Company Securities.
Such Purchaser has been given the opportunity to ask questions of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Company Securities and other matters
pertaining to such Purchaser's investment in the Company Securities. Such
Purchaser and its representatives have been solely responsible for Purchaser's
investigation of the Company and its management and business, for Purchaser's
own analysis of the merits and risks of its investment pursuant to this
Agreement, and for its own analysis of the fairness and desirability of the
terms of the investment.
(e) Such Purchaser acknowledges that Goldman, Sachs & Co. and
Banc of America Securities LLC make no representation or warranty, expressed or
implied, as to the accuracy or completeness of the information provided or to be
provided to such Purchaser by the Company, and nothing contained in any
documents provided to such Purchaser is, or shall be relied upon as, a promise
or representation by Goldman, Sachs & Co. or Banc of America Securities LLC.
(f) Such Purchaser acknowledges that an investment in the
Company Securities involves a high degree of risk. In making its decision to
purchase the Company Securities, (i) such Purchaser has such business and
financial experience as is required to give it the capacity to protect its own
interests in connection with the purchase of the Company Securities, (ii) such
Purchaser has not relied and will not rely on any investigation that Goldman,
Sachs & Co., Banc of America Securities LLC or any person acting on their behalf
may have conducted with respect to the Company Securities or the Company and
(iii) such Purchaser will make its own investment decision regarding the Company
Securities based on its own knowledge and investigation of the Company and the
Company Securities.
(g) Such Purchaser understands that the Company Securities
have not been registered under the Securities Act and may not be re-offered,
resold, pledged or otherwise transferred except pursuant to Rule 144 under the
Securities Act (if available) or pursuant to another applicable exemption under
the Securities Act, and that, in each case, such offer, sale, pledge or transfer
must be made in accordance with any applicable securities laws of any state of
the United States.
(h) Such Purchaser understands that Goldman, Sachs & Co. and
Banc of America Securities LLC do not make any representation as to the
availability of Rule 144 or any other exemption under the Securities Act for the
re-offer, resale, pledge or transfer of the Company Securities.
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(i) Such Purchaser understands that, unless and until
registered for sale under the Securities Act, the Company Securities will bear
the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THIS SECURITY MAY
NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT (i) PURSUANT TO (A) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR (B) AN APPLICABLE EXEMPTION
FROM REGISTRATION THEREUNDER AND UNDER APPLICABLE STATE SECURITIES LAWS AS TO
WHICH AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY SHALL HAVE BEEN
DELIVERED TO THE COMPANY AND (ii) WITH THE PRIOR WRITTEN APPROVAL OF THE BERMUDA
MONETARY AUTHORITY."
(j) Brokers. No agent, broker, finder, investment banker,
financial advisor or other similar Person will be entitled to any fee,
commission or other compensation in connection with any of the transactions
contemplated by this Agreement or the other Operative Documents on the basis of
any act or statement made or alleged to have been made by such Purchaser or any
of its Affiliates, directors, officers or other representatives.
4.4 Additional Information. No information provided in writing
by such Purchaser in connection with the preparation of the Proxy Statement
shall, at the time such information is provided, at the time of the mailing of
the Proxy Statement, on the date of the Shareholders' Meeting and on the Closing
Date, contain an 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 not misleading; provided however that the Purchasers shall
have the right to correct any untrue statements or omissions so long as such
correction is received by the Company within a reasonable period of time prior
to the mailing of the Proxy Statement.
ARTICLE V
SHAREHOLDER AND REGULATORY APPROVAL AND OTHER CONSENTS
5.1 Proxy Statement and Other Filings; Board Recommendations.
(a) Within ten (10) Business Days of the Closing Date, the
Company shall prepare and file with the SEC a preliminary Proxy Statement and
any necessary supplements and amendments thereto. Each of the parties hereto
shall use all commercially reasonable efforts to finalize the Proxy Statement as
promptly as practicable after the date hereof. Each of the Purchasers shall
cooperate with the Company in the preparation of the Proxy Statement and in the
preparation of any amendments or supplements thereto (including, if required by
Law or regulation of the SEC, the providing to the Company of information
concerning its business and financial statements and affairs). In addition, the
parties shall cooperate in the preparation of the Proxy Statement and any
amendments and supplements thereto. As promptly as practicable after it has been
determined by the Company that the Proxy Statement is final, the Proxy Statement
shall be mailed to the shareholders of Company. Each of the parties hereto shall
22
cause the Proxy Statement to comply in all material respects as to form and
substance with respect to such party with the applicable requirements of (i) the
Exchange Act, (ii) the Securities Act, (iii) the rules and regulations of the
New York Stock Exchange and (iv) Bermuda law. As promptly as practicable after
the date of this Agreement, each of Company and Purchasers will prepare and file
any other filings required to be filed by such party by it under the Exchange
Act, the Securities Act or any other federal, foreign or blue sky or related
Laws relating to the issuance of the Company Securities and the transactions
contemplated by this Agreement and the other Operative Documents. The Company
shall notify the Purchasers promptly upon the receipt of any comments from the
SEC or its staff or any other government officials relating to the Proxy
Statement or of any request by the SEC or its staff or any other government
officials for amendments or supplements to preliminary Proxy Statement or for
additional information and, except as may be prohibited by Law applicable to
such party, each party will supply the other with copies of all related
correspondence between such party or any of its representatives, on the one
hand, and the SEC or its staff or any other government officials, on the other
hand. Each of the Company and the Purchasers will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 5.1(a) to comply in all material respects with all applicable
requirements of Law.
(b) The Proxy Statement shall include a proposal that the
shareholders of the Company approve (i) the authorization of an additional
300,000,000 Common Shares, and (ii) the exchange of the Perpetual Preferred
Shares into Common Shares.
(c) Each of the Purchasers, on the one hand, and the Company,
on the other hand, shall promptly inform the other of any event which is
required to be set forth in an amendment or supplement to the Proxy Statement or
any other filing and the Company shall amend or supplement the Proxy Statement
to the extent required by Law to do so.
5.2 Shareholder Meeting.
(a) The Company shall take all action necessary, in accordance
with its Memorandum of Association, Bye-Laws and applicable Law, to call and
convene the Shareholders' Meeting as promptly as practicable after the date
hereof for the purpose of voting upon the matters included in the Proxy
Statement. The Company may adjourn or postpone the Shareholders' Meeting if, and
only if, the requisite number of Common Shares necessary to conduct business at
the Shareholders' Meeting are not represented, either in person or by proxy.
Without limiting the generality of the foregoing, the Company agrees that,
subject to its rights to terminate this Agreement pursuant to Section 9.1, its
obligations pursuant to the first sentence of this Section 5.2 shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of an offer to merge, amalgamate, consolidate, or
acquire substantially all of the assets of, the Company. The Company shall use
all commercially reasonable efforts to (i) hold the Shareholder's Meeting as
soon as practicable after the date hereof, (ii) solicit from its shareholders
proxies in favor of the proposals included in the Proxy Statement and (iii)
obtain a favorable vote at the Shareholder's Meeting on the proposals included
in the Proxy Statement.
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(b) The Board of Directors shall recommend that the Company's
shareholders vote in favor of adopting and approve the proposals described in
clauses (i) and (ii) Section 5.1(b) and the Proxy Statement shall include a
statement to such effect. The Board of Directors shall not withdraw or modify,
in a manner adverse to the Purchasers, the approval or recommendation by such
Board of Directors of this transaction contemplated hereby.
5.3 Other Authorizations; Consents.
(a) Each party hereto shall take all commercially reasonable
steps necessary or desirable, and proceed diligently and in good faith and shall
use all reasonable efforts to obtain, as promptly as practicable, (i) all
authorizations, consents, orders and approvals of all Governmental or Regulatory
Authorities that may be or become necessary for such party's execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and the other Operative Documents and (ii) all approvals and consents
(including, without limitation, those approvals, consents and authorizations
specified in Schedule 3.15) required under all Contracts to which the Company or
any of its Subsidiaries is a party (including, without limitation, all Contracts
involving indebtedness of the Company) to consummate the transactions
contemplated hereby. Each party will cooperate fully (including, without
limitation, by providing all information the other party reasonably requests)
with the other parties in promptly seeking to obtain all such authorizations,
consents, orders and approvals. Notwithstanding the foregoing, none of the
Purchasers nor any of their respective Affiliates shall have any obligation to
dispose of, hold separate or otherwise restrict its enjoyment of any of its
Assets and Properties.
(b) Each party hereto shall promptly inform the other party of
any communication from any Governmental or Regulatory Authority regarding any of
the transactions contemplated by this Agreement. If any party or Affiliate
thereof receives a request for additional information or documentary material
from any such Governmental or Regulatory Authority with respect to the
transactions contemplated hereby, then such party will endeavor in good faith to
make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request.
5.4 Further Assurances. The Company will, whenever and as
often as reasonably requested to do so by the Purchasers do, execute,
acknowledge and deliver any and all such other and further acts, assignments,
transfers and any instruments of further assurance, approvals and consents as
are necessary or proper in order to complete, ensure and perfect the sale,
transfer and conveyance to the Purchasers the Company Securities and the
consummation of the other transactions contemplated hereby.
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ARTICLE VI
COMPANY COVENANTS
6.1 Visits and Inspections. The Company shall permit
authorized representatives of each Purchaser, from time to time but only during
normal business hours, to visit and inspect the Assets and Properties of the
Company, inspect, audit and make extracts from the books and records of the
Company and its Subsidiaries, and discuss with the officers, employees and
independent accountants of the Company and its Subsidiaries, its business,
assets, liabilities, financial condition, business prospects and results of
operations.
6.2 Maintenance of Books and Records; Financial Statements;
Report; Etc. The Company shall keep, and cause its Subsidiaries to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with generally accepted accounting
principles reflecting all of its Subsidiaries' financial transactions. The
Company shall furnish to each Purchaser promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements, financial
statements or reports which the Company has made available to its shareholders
and copies of any regular, periodic and special reports or registration
statements which the Company files with the SEC or any Governmental or
Regulatory Authority which may be substituted therefor, or any national
securities exchange.
6.3 Use of Proceeds. The Company shall use the net proceeds
from the sale of the Perpetual Preferred Shares to expand its reinsurance
business in the lines of business currently conducted.
6.4 Shares Issuable Upon Mandatory Exchange. On and after the
Closing Date, the Company shall reserve and keep available, out of its
authorized and unissued stock, solely for the purpose of effecting the mandatory
exchange of the Perpetual Preferred Shares upon the satisfaction of the Exchange
Conditions Precedent, the full number of Common Shares as shall be sufficient to
effect the mandatory exchange of the Perpetual Preferred Shares from time to
time outstanding.
6.5 Public Offering. The Company will use its reasonable best
efforts to cause the Public Offering to be completed as promptly as practicable
after the date of this Agreement.
ARTICLE VIA
COVENANT OF THE PURCHASERS
6A.1 Standstill. Each of the Purchasers agrees, for itself and
each of its respective Affiliates, that during the period from the Closing Date
to the earlier of (i) the day immediately following the date of the Special
Shareholders' Meeting and (ii) April 1, 2006, the holders of the Perpetual
Preferred Shares shall refrain from (a) selling, pledging or otherwise
transferring, or entering into any agreement to sell, pledge or otherwise
transfer, any Perpetual Preferred Shares, (b) directly or indirectly selling
Perpetual Preferred Shares or Common Shares short, (c) directly or indirectly
engaging in hedging and similar transactions involving Perpetual Preferred
Shares or Common Shares or securities convertible into Common Shares, (d)
directly or indirectly initiating or participating in any proxy contest that
seeks control of the Company (provided that this shall not prohibit any holder
from exercising any voting rights it may have) and (e) directly or indirectly
making any offer to purchase the Company or any of its assets.
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 The Purchasers' Conditions. The obligations of each
Purchaser hereunder are subject to the following (all or any of which may be
waived in whole or in part by such Purchaser in its sole discretion):
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true, correct and
complete in all material respects on and as of the Closing Date (other than
those that are qualified by a reference to materiality or Material Adverse
Effect, which representations and warranties as so qualified shall have been
true, correct and complete in all respects), and any representations and
warranties made as of a specified date earlier than the Closing Date shall have
been true, correct and complete in all material respects on and as of such
earlier date (other than those that are qualified by a reference to materiality
or Material Adverse Effect, which representations and warranties as so qualified
shall have been true, correct and complete in all respects).
(b) Material Adverse Effect. Except as disclosed herein, in
the SEC Documents, the Statutory Statements or the Financial Statements, on the
date hereof there shall have been no event, occurrence, development or state of
circumstances that individually, or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect.
(c) Closing of the Pubic Offering. There shall have occurred
or, concurrent with the Closing hereunder, be occurring, a closing of the sale
of the Company's Common Shares offered pursuant to an underwritten public
offering commenced within several days' following the date of this Agreement and
valued in the aggregate at not less than $75,000,000.
(d) Performance. The Company shall have performed and
complied, in all material respects, with each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the Company at
or before the Closing.
26
(e) Officers' Certificates. The Purchasers shall have received
(i) a certificate, dated the Closing Date and executed by the Chief Executive
Officer of the Company certifying as to the matters covered by Sections 7.1(a)
and 7.1(d) hereof and (ii) a certificate, dated the Closing Date and executed by
the Secretary of the Company, each in form and substance as is customary for
transactions such as those contemplated by this Agreement.
(f) Delivery of Documents and Perpetual Preferred Shares. Each
Purchaser shall have received duly executed copies of the Operative Documents
and the Perpetual Preferred Shares purchased by such Purchaser hereunder.
(g) No Actions or Proceedings. No action, proceeding,
investigation, regulation or legislation (including, without limitation, any
temporary restraining order, preliminary or permanent injunction or other order)
shall have been instituted or issued by, or threatened or proposed before any,
Governmental or Regulatory Authority to enjoin, restrain or prohibit the
consummation of the transactions contemplated hereby or the other Operative
Documents, including, without limitation, the issuance of the Perpetual
Preferred Shares.
(h) Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to, any Governmental or Regulatory
Authority (including, without limitation, the Bermuda Approval and the other
consents, authorizations and approvals set forth in Section 3.15 and Schedule
3.15) necessary to permit the Purchasers and the Company to perform their
respective obligations under this Agreement and the other Operative Documents to
which they are a party, and to consummate the transactions contemplated hereby
and thereby shall have been duly obtained, made or given, shall be in form and
substance reasonably satisfactory to Purchasers and shall be in full force and
effect.
(i) No Change in Law. As of the Closing Date, there shall not
have been any change in any Law applicable to any Purchaser that would prevent
the performance of this Agreement or the consummation by such Purchaser of any
material aspect of the transactions contemplated hereby.
(j) Ratings. The Reinsurance Subsidiaries shall have a rating
of "A-" or higher from A.M. Best & Company and a rating of "A-" or higher from
Standard & Poor's and neither rating agency shall have publicly announced,
orally or in writing, a pending downgrade of the rating assigned to any
Reinsurance Subsidiary to a rating below "A-". For the avoidance of doubt, the
placing of such ratings on ratings watch, with or without negative implications,
shall not constitute a public announcement of a pending downgrade.
(k) Third Party Consents. All approvals, consents and waivers
necessary, or reasonably requested by the Purchasers (other than with respect to
any Governmental or Regulatory Authority and the Shareholder Approval),
including, without limitation, those listed on Schedule 8.1(l) to permit the
Purchasers and the Company to perform their respective obligations under this
Agreement and the other Operative Documents to which they are a party, and to
consummate the transactions contemplated hereby and thereby shall have been duly
obtained, made or given, shall be in form and substance reasonably satisfactory
to Purchasers and shall be in full force and effect.
27
(l) Opinions of Counsel. The Purchasers shall have received
opinions from Conyers Dill & Pearman, special Bermuda counsel for the Company,
and Sidley Austin Brown & Wood LLP, special U.S. counsel for the Company, as to
(i) the good standing of the Company, (ii) the due authorization of the Company
to enter into this Agreement, (iii) the validity of the Perpetual Preferred
Shares and (iv) the sale of the Perpetual Preferred Shares by the Company to the
Purchasers being exempt from registration under the Securities Act.
(m) Minimum Number of Perpetual Preferred Shares Being Sold.
The Company shall be selling at least 375,000 shares of the Perpetual Preferred
Shares pursuant to this Agreement at the Closing.
7.2 Company's Conditions. The obligations of the Company
hereunder are subject to the following (all or any of which may be waived in
whole or in part by the Company in its sole discretion):
(a) Payment. The Company shall have received full payment of
the Purchase Price from each Purchaser in consideration for the sale of the
Perpetual Preferred Shares being sold to such purchaser pursuant to this
Agreement at the Closing (each such Purchaser, a "Closing Date Purchaser")
(b) Delivery of Documents. The Company shall have received
duly executed copies of the Operative Documents from each Closing Date
Purchaser.
(c) Representations and Warranties. The representations and
warranties of each Closing Date Purchaser set forth in this Agreement shall be
true, correct and complete in all material respects on and as of the Closing
Date (other than those that are qualified by a reference to materiality or
Material Adverse Effect, which representations and warranties as so qualified
shall be true, correct and complete in all respects), and any representations
and warranties made as of a specified date earlier than the Closing Date shall
have been true, correct and complete in all material respects on and as of such
earlier date (other than those that are qualified by a reference to materiality
or Material Adverse Effect, which representations and warranties as so qualified
shall have been true, correct and complete in all respects).
(d) Performance. Each Closing Date Purchaser shall have
performed and complied, in all material respects, with each agreement, covenant
and obligation required by this Agreement to be so performed or complied with by
such Closing Date Purchaser at or before the Closing.
(e) Officers' Certificates. The Company shall have received
from each Closing Date Purchaser (i) a certificate, dated the Closing Date and
executed by an officer of such Closing Date Purchaser certifying as to the
matters covered by Sections 7.2(a) and 7.2(c) hereof, and (ii) a certificate,
dated the Closing Date and executed by the secretary or assistant secretary of
such Closing Date Purchaser each in form and substance as is customary for
transactions as those contemplated by this Agreement.
(f) No Actions or Proceedings. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, Governmental or Regulatory Authority or
legislative body to enjoin, restrain or prohibit the consummation of the
transactions contemplated hereby or by the Perpetual Preferred Shares.
28
(g) Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to, any Governmental or Regulatory
Authority (including, without limitation, the Bermuda Approval and the other
consents, authorizations and approvals set forth in Section 3.15 and Schedule
3.15) necessary to permit the Closing Date Purchasers and the Company to perform
their respective obligations under this Agreement and the Operative Agreements
to which they are a party, and to consummate the transactions contemplated
hereby and thereby shall have been duly obtained, made or given, and shall be in
full force and effect. The Company shall have obtained copies of all Consents
referred to in Schedule 3.15, which shall be in form and substance acceptable to
the Closing Date Purchasers and their counsel.
(h) No Change in Law. As of the Closing Date, there shall not
have been any change in any Law applicable to any Closing Date Purchaser that
would prevent the performance of this Agreement or the consummation by such
Closing Date Purchaser of any material aspect of the transactions contemplated
hereby.
(i) Minimum Number of Perpetual Preferred Shares Being Sold.
If any of the conditions set forth in Section 7.1 shall have not been satisfied
in accordance with its terms, one or more of the Purchasers of not fewer than an
aggregate of 187,500 shares of the Perpetual Preferred Shares shall have waived
each such condition in accordance with Section 9.6 and shall have agreed to
purchase such Perpetual Preferred Shares at the Closing.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Termination of Agreement and Abandonment of Transactions.
Anything herein to the contrary notwithstanding, this Agreement and the
transactions contemplated hereby may be terminated at any time before the
Closing if, and only if, there shall have occurred and be continuing a Material
Adverse Effect; provided however, this Agreement shall also terminate and be of
no further force and effect in the event that the Closing hereunder shall not
have occurred by October 30, 2005. Under such circumstances, the Purchasers
shall give written notice of termination to the Company.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission
against facsimile confirmation or mailed by prepaid first class certified mail,
return receipt requested, or mailed by nationally recognized overnight courier
prepaid, to the parties at the following addresses or facsimile numbers:
29
(a) If to the Company, to:
PXRE House
110 Pitts Bay Road
Pembroke HM 08
Bermuda
Facsimile No.: (441) 296-6162
Attn: Jeffrey L. Radke
with a copy to:
Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, NY 10019
Facsimile No.: (212) 839-5599
Attn: Jack I. Kantrowitz
(b) If to a Purchaser, as specified on Exhibit A:
All such notices, requests and other communications will (i) if delivered
personally against written receipt to the address as provided in this Section,
be deemed given upon delivery, (ii) if delivered by facsimile transmission to
the facsimile number as provided for in this Section, be deemed given upon
facsimile confirmation, (iii) if delivered by mail in the manner described above
to the address as provided for in this Section, be deemed given on the earlier
of the third Business Day following mailing or upon receipt and (iv) if
delivered by nationally recognized overnight courier to the address as provided
in this Section, be deemed given on the earlier of the first Business Day
following the date sent by such overnight courier or upon receipt (in each case
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice is to be delivered pursuant to
this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.
9.2 Payment of Expenses. The Company and the Purchasers will
each be responsible for the payment of their own respective costs and expenses
incurred in connection with the negotiations leading up to and the performance
of their respective obligations pursuant to this Agreement.
9.3 Entire Agreement. This Agreement and the other Operative
Documents supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof and contain the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof.
9.4 Survival of Covenants. The covenants and agreements of the
Company and Purchasers contained in this Agreement will survive the Closing.
30
9.5 Further Assurances; Post-Closing Cooperation. At any time
or from time to time after the Closing, the Company shall at its own cost and
expense execute and deliver to Purchasers such other documents and instruments,
provide such materials and information and take such other actions as Purchasers
may reasonably request to consummate the transactions contemplated by this
Agreement and the other Operative Documents and otherwise to cause the Company
to fulfill their obligations under this Agreement and the other Operative
Documents.
9.6 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
9.7 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
9.8 Third Party Beneficiaries. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors and assigns, and it is not the intention of the
parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other Person.
9.9 No Assignment; Binding Effect. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned (by operation of law
or otherwise) by the Company without the prior written consent of Purchasers, or
by any Purchaser without the prior written consent of the Company and any
attempt to do so will be void; provided that this Agreement shall in no event
prohibit or restrict in any manner the transferability of the Company
Securities; and provided, further, that any Purchaser may assign its rights
under this Agreement and the other Operative Documents (i) to any Affiliate of
such Purchaser subject to the prior consent of the Company, which consent may be
withheld by the Company only if such assignment would result or is reasonably
likely to result in material negative tax consequences to the Company or any of
its shareholders (it being understood that no such assignment shall relieve
assignor of its obligation hereunder) and (ii) to another Purchaser or any
Affiliate of another Purchaser subject to the prior consent of the Company,
which consent may be withheld by the Company only if such assignment would
result or is reasonably likely to result in material negative tax consequences
to the Company or any of its shareholders (it being understood that such
assignment will relieve assignor of its obligations hereunder). Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns.
9.10 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
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9.11 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance therefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
9.12 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
9.13 Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS AGREEMENT, THE OTHER OPERATIVE DOCUMENTS OR ANY DOCUMENTS
RELATED HERETO.
9.14 Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state courts of the State of New York located
in New York County and the United States Federal District Court of the Southern
District of New York for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or the subject matter hereof and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided however, that such consent to jurisdiction
is solely for the purpose referred to in this Section 9.14 and shall not be
deemed to be a general submission to the jurisdiction of said Courts other than
for such purpose.
9.15 Construction. The parties hereto agree that this
Agreement is the product of negotiation between sophisticated parties and
individuals, all of whom were represented by counsel, and each of whom had an
opportunity to participate in and did participate in, the drafting of each
provision hereof. Accordingly, ambiguities in this Agreement, if any, shall not
be construed strictly or in favor of or against any party hereto but rather
shall be given a fair and reasonable construction without regard to the rule of
contra proferentum.
32
9.16 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
9.17 Publicity. At all times at or before the Closing, the
parties hereto shall each consult with the other parties hereto before issuing
or making any reports, statements, or releases to the public with respect to
this Agreement or the other Operative Documents and the transactions
contemplated hereby and thereby and shall use good faith efforts to agree on the
text of a joint public report, statement, or release or shall use good faith
efforts to obtain the other parties' approval of the text of any public report,
statement, release to be made solely on behalf of a party.
9.18 Confidentiality.
(a) Any information delivered pursuant to the terms of this
Agreement or received in connection with the negotiation or preparation of this
Agreement or the other Operative Documents (including, without limitation, in
connection with the performance by the Purchasers of their due diligence) which
is known or should be known to the receiving party to be confidential shall be
kept confidential by the parties and shall not be divulged to third parties,
other than to the respective parties' affiliates, members, beneficial interest
holders and managers, accountants, attorneys and advisors (collectively,
"Representatives"); provided that each party shall be responsible for the
confidentiality of information given to its respective Representatives; and
provided further, that any party may disclose any information pursuant to any
legal requirement or any court, regulatory or governmental order, request or
requirement. Each party shall give the other parties notice of any required
legal or court, regulatory or governmental disclosure so that such other parties
may have an opportunity to seek to prevent or limit disclosure.
(b) The provisions of Section 9.18(a) shall not apply to
information that is (i) received by a party (or an Affiliate of such party) that
is or becomes generally available to the public other than as a result of a
breach by such party or any of its Affiliates of the provisions of Section
9.18(a), (ii) hereafter lawfully acquired by a party (or an Affiliate of such
party) on a non-confidential basis from a source that, to such party's knowledge
at the time, is not providing such information in violation of a confidentiality
or similar agreement with any Person or (iii) known to such party prior to
receipt thereof from the other party or its Affiliates.
[signature page to follow]
33
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
PXRE Group Ltd.
By: /s/ Robert P. Myron
--------------------
Name: Robert P. Myron
Title: SVP & Treasurer
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
ANCHORAGE CAPITAL MASTER OFFSHORE, LTD.
By: Anchorage Advisors, L.L.C.,
its advisor
By: Anchorage Advisors Management,
L.L.C., its Managing Member
By: /s/ Anthony Davis
---------------------------
Name: Anthony Davis
Title: Managing Member
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Cannell Capital LLC
By: /s/ J. Carlo Cannell
------------------------------
Name: J. Carlo Cannell
Title: Managing Member
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
CapZ PXRE Holdings, LLC
By: Capital Z Financial Services Private
Fund II, L.P., its Managing Member
By: Capital Z Partners, Ltd,
its ultimate general partner
By: /s/ Craig Fisher
--------------------------------------
Name: Craig Fisher
Title: General Counsel
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
CapZ PXRE Holdings Private, LLC
By: Capital Z Financial Services Private
Fund II, L.P., its Managing Member
By: Capital Z Partners, Ltd,
its ultimate general partner
By: /s/ Craig Fisher
------------------------------------
Name: Craig Fisher
Title: General Counsel
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
D.E. Shaw Investment Group, L.L.C.
By: D.E. Shaw & Co., L.P., as managing
member
By: /s/ Max Stone
--------------------------
Name: Max Stone
Title: Managing Director
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
D.E. Shaw Valence Portfolios, L.L.C.
By: D.E. Shaw & Co., L.P., as managing
member
By: /s/ Max Stone
-------------------------
Name: Max Stone
Title: Managing Director
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Endicott Management Company
By:/s/ Robert I. Usdan
--------------------------------------
Name: Robert I. Usdan
Title: Co-President
Endicott Partners, L.P.
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Endicott Management Company
By:/s/ Robert I. Usdan
--------------------------------------
Name: Robert I. Usdan
Title: Co-President
Endicott Partners II, L.P.
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Endicott Management Company
By:/s/ Robert I. Usdan
--------------------------------------
Name: Robert I. Usdan
Title: Co-President
Endicott Offshore Investors, Ltd.
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Endicott Management Company
By:/s/ Robert I. Usdan
--------------------------------------
Name: Robert I. Usdan
Title: Co-President
Engineers Joint Pension Plan & Trust
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Endicott Management Company
By:/s/ Robert I. Usdan
--------------------------------------
Name: Robert I. Usdar
Title: Co-President
International Bancshares Corporation
Employees Profit Sharing Plan & Trust
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Endicott Portfolio Management, LLC
By:/s/ Robert I. Usdar
--------------------------------------
Name: Robert I. Usdar
Title: Co-President
EHL Endicott Limited.
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Eton Park Capital Management, L.P.
By: /s/ Eric Mindich
------------------------------
Name: Eric Mindich
Title:
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
OZ Master Fund, Ltd.
By:/s/ Joel Frank
--------------------------------------
Name:
Title:
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Perry Partners, L.P.
By: /s/Michael Neus
------------------------------
Name: Perry Capital, L.L.C. as
investment advisor, by:
Name: Michael C. Neus
Title: General Counsel
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Perry Partners International, Inc.
By: /s/Michael Neus
---------------------------
Name: Perry Capital, L.L.C. as
investment advisor, by:
Name: Michael C. Neus
Title: General Counsel
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
RESERVOIR MASTER FUND, L.P.
by RMF GP, L.L.C., its general partner
by Reservoir PCA Fund, L.P., its sole member
by Reservoir Capital Group, L.L.C., its
general partner
By: /s/ Craig Huff
----------------------------------
Craig Huff
President
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Royal Capital Management, LLC
By: /s/ Yale Fergang
-------------------------------------
Name: Yale Fergang
Title: Managing Member
on behalf of
Royal Capital Value Fund, LP
Royal Capital Value Fund (QP), LP
Royal Cap Value Fund, Ltd.
and Seneca Capital, LP
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
SAB Capital Partners, L.P.
By: SAB Capital Advisors, L.L.C.,
General Partner
By: /s/ Brian Jackelow
-----------------------------------
Name: Brian Jackelow
Title: Chief Fianancial Officer
SAB Overseas Master Fund, L.P.
By: SAB Capital Advisors, L.L.C.,
General Partner
By: /s/ Brian Jackelow
------------------------------------
Name: Brian Jackelow
Title: Chief Fianancial Officer
IN WITNESS WHEREOF, this Share Purchase Agreement has been duly
executed and delivered by the duly authorized representative of each party
hereto as of the date first above written.
Scopia Partners LLC
by Scopia Management, Inc.,
Investment Manager
By:/s/ Matthew Sirovich
--------------------------------------
Name: Matthew Sirovich
Title: Executive Vice President
Scopia Partners QP LLC
by Scopia Management, Inc.,
Investment Manager
By:/s/ Matthew Sirovich
--------------------------------------
Name: Matthew Sirovich
Title: Executive Vice President
Scopia PX LLC
by Scopia Management, Inc.,
Investment Manager
By:/s/ Matthew Sirovich
--------------------------------------
Name: Matthew Sirovich
Title: Executive Vice President
Scopia Long LLC
By Scopia Management, Inc.,
Investment Manager
By:/s/ Matthew Sirovich
--------------------------------------
Name: Matthew Sirovich
Title: Executive Vice President
Scopia International Limited
by Scopia Management, Inc.,
Investment Manager
By:/s/ Matthew Sirovich
--------------------------------------
Name: Matthew Sirovich
Title: Executive Vice President
Scopia PX International Limited
by Scopia Management, Inc.,
Investment Manager
By:/s/ Matthew Sirovich
--------------------------------------
Name: Matthew Sirovich
Title: Executive Vice President
The Coast Fund L.P. by Scopia Management,
Inc., Investment Manager
By:/s/ Matthew Sirovich
--------------------------------------
Name: Matthew Sirovich
Title: Executive Vice President
EXHIBIT B
Description of Designations of Preferences and Rights
of the Perpetual Preferred Shares
EXHIBIT B
DESCRIPTION OF STOCK:
================================================================================
SERIES D PERPETUAL NON-VOTING PREFERRED SHARES
($1.00 PAR VALUE PER SHARE)
of
PXRE GROUP LTD.
================================================================================
TABLE OF CONTENTS
Page
1. General....................................................................1
(a) Designation and Number................................................1
(b) Priority..............................................................1
2. Certain Definitions........................................................1
3. Voting Rights..............................................................6
(a) General Voting Rights.................................................6
(b) Consent of Series D Perpetual Preferred Shares Required
For Variation of Rights and Restrictions..............................6
4. Dividend Rights............................................................8
(a) General...............................................................8
(b) PIK Dividends.........................................................8
(c) Dividend Preference...................................................8
5. Liquidation Rights.........................................................9
(a) Priority..............................................................9
(b) Notice of Liquidation................................................10
6. Exchange..................................................................10
(a) General..............................................................10
(b) Surrender and Exchange...............................................11
(c) Effective Date.......................................................11
(d) Share Certificates...................................................11
i
DESCRIPTION OF STOCK
The relative rights, preferences and restrictions granted to or imposed
upon the Series D Perpetual Non-Voting Preferred Shares, par value $1.00 per
share, created by PXRE Group Ltd. and upon the holders thereof are set forth
below.
1. General.
(a) Designation and Number. The designation of Preferred Shares created
by this resolution shall be the "Series D Perpetual Non-Voting Preferred Shares,
$1.00 par value per share," of the Company (hereinafter referred to as the
"Series D Perpetual Preferred Shares"), and the number of Series D Perpetual
Preferred Shares which the Company shall be authorized to issue shall be 375,000
shares.
(b) Priority. The Series D Perpetual Preferred Shares shall rank senior
to the Common Shares and all other capital shares of the Company (now or
hereafter authorized or issued) other than the Senior Stock, in each case as to
dividends and as to the surplus assets of the Company available for distribution
upon liquidation, dissolution and winding-up as provided herein.
2. Certain Definitions.
(a) For purposes of this Description of Stock, the following terms
shall have the meanings indicated (such definitions to be equally applicable to
both singular and plural forms of the terms defined):
"Adjusted Net Income (Loss)" means, as of any Adjustment Date, the
Net Income (or Net Loss) for the quarter ending on the Adjustment Date
adjusted downwards by the sum of any Capital Distributions on the
Common Shares and Perpetual Capital Distributions declared during the
quarter ending on the Adjustment Date.
"Adjustment Date" means, commencing with December 31, 2005, the
last day of each calendar quarter.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by or under common
control with, that Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms
"controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of that Person, whether through ownership of voting securities
or by contract or otherwise.
"Assets" of any Person means all assets and properties of every
kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the
goodwill related thereto, operated, owned or leased by such Person,
including cash, cash equivalents, investment assets, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles,
real estate, equipment, inventory and goods.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in The City of New York or Bermuda are
authorized or obligated by law or executive order to close.
"Class B Convertible Common Shares" means the Class B Convertible
Voting Common Shares, $1.00 par value per share, of the Company.
"Class C Convertible Common Shares" means the Class C Convertible
Voting Common Shares, $1.00 par value per share, of the Company.
"Closing" has the meaning ascribed to such term in the Purchase
Agreement.
"Closing Date" has the meaning ascribed to such term in the
Purchase Agreement.
"Common Shares" means the Common Shares of the Company, par value
$1.00, and shall also include any common shares of the Company
hereafter issued and outstanding and any shares of the Company of any
other class hereafter issued and outstanding that is not preferred as
to dividends or distribution of assets in liquidation over any other
class of shares of the Company and which has ordinary voting power for
the election of directors of the Company.
"Company" means PXRE Group Ltd.
"Company Securities" has the meaning ascribed to such term in the
Purchase Agreement.
"Date of Issuance" means the day upon which the Series D Perpetual
Preferred Shares are issued by the Company and sold to the Purchasers
pursuant to the Purchase Agreement.
"Description of Stock" means this Description of Stock, as amended,
modified or supplemented from time to time.
"Dividend Allocation Ratio" means, as of any Adjustment Date (or as
of the Date of Issuance, if applicable), the quotient of: (i) the
Aggregate Liquidation Preference on such Adjustment Date (or the Date
of Issuance, if applicable); divided by (ii) the difference of (a)
Shareholders' Equity on such Adjustment Date (or the Date of Issuance,
if applicable) minus (b) the Aggregate Liquidation Preference of such
Adjustment Date.
2
"Earnings Allocation Ratio" means, as of any Adjustment Date, the
quotient of: (x) the Aggregate Liquidation Preference on the
immediately preceding Adjustment Date; divided by (y) Shareholders'
Equity on the immediately preceding Adjustment Date.
"Exchange Conditions Precedent" means (i) the affirmative vote of
the Company's existing shareholders (a) authorizing an additional
300,000,000 Common Shares; and (b) approving the exchange of the Series
D Perpetual Preferred Shares into Common Shares.
"Exchange Ratio" means, at any time of determination, the fraction
of which the numerator is 1,000 and the denominator is 11; provided,
however, such denominator shall be subject to adjustment for any stock
split, issuance of stock dividends and other similar events in respect
of the Common Shares (or in respect of the Class B Convertible Common
Shares or Class C Convertible Common Shares to the extent applicable in
applying the terms of the proviso set forth in the first sentence of
Section 6(a) hereof) effected after September 29, 2005.
"GAAP" means United States generally accepted accounting
principles, consistently applied.
"Indebtedness" means (a) all indebtedness of the Company and its
subsidiaries, including the principal of, and premium, if any, and
interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign
bankruptcy laws, whether or not allowable as a claim in such
proceeding) on, all indebtedness, whether outstanding currently or
hereafter created (i) for borrowed money, (ii) for money borrowed by
one or more other Persons and guaranteed, directly or indirectly, by
the Company or any subsidiary thereof, (iii) for money borrowed by one
or more other Persons for which the Company or any subsidiary thereof
provides security, (iv) constituting purchase money indebtedness the
payment of which the Company or any subsidiary thereof is directly or
contingently liable, (v) under any lease of any real or personal
property, which obligations are capitalized on the consolidated books
of the Company and its subsidiaries in accordance with GAAP or (vi)
under any other arrangement under which obligations are recorded as
indebtedness on the consolidated books of the Company and its
subsidiaries in accordance with GAAP and (b) any and all modifications,
refundings, deferrals, renewals or extensions of any such indebtedness,
or securities, notes or other evidences of indebtedness issued in
exchange for such indebtedness. Without limiting the generality of the
foregoing, the term "Indebtedness" shall include the Trust Preferred
and any comparable securities of the Company or any subsidiary thereof
at any time outstanding; provided that Indebtedness shall not include
intercompany indebtedness outstanding or hereafter created between the
Company and any of its direct or indirect wholly-owned Subsidiaries (as
defined in the Purchase Agreement, but limited in this paragraph to
direct and indirect wholly owned subsidiaries) or between any two or
more such direct or indirect wholly owned Subsidiaries of the Company.
3
"Market Price" with respect to Common Shares, on any date, shall be
deemed to be the reported closing price on the last trading day ending
on the trading day before such date of determination. The reported
closing price for each day shall be the reported closing price on the
principal United States securities exchange or automated quotation
system on which the Common Shares are then listed or admitted to
trading. If the Common Shares are not then listed or admitted to
trading on any national securities exchange or automated quotation
system or if the closing price cannot be so determined, the Market
Price shall be determined (x) by the written agreement of the Company
and the respective holder and (y) in the event that no such agreement
is reached within twenty (20) days after the date of the event giving
rise to the need to determine the Market Price, (A) by an independent
appraiser of nationally recognized standing selected by the respective
holder and the Company or (B) if the respective holder and the Company
cannot agree on an appraiser within twenty (20) days after the date of
the event giving rise to the need to determine the Market Price, each
shall select an independent appraiser of nationally recognized standing
and the two appraisers shall designate a third independent appraiser of
nationally recognized standing, whose appraisal shall be determinative
of such value. The cost of such appraisal shall be borne by the
Company. The Company shall cooperate, and shall provide all necessary
information and assistance, to permit any determination under the
preceding clauses (x) and (y).
"Net Income (Net Loss)" means the net income (loss) reported on the
consolidated statements of income and comprehensive income of the
Company (after Capital Distributions on the Senior Stock but before any
Perpetual Capital Distributions or any PIK Dividends), prepared in
accordance with GAAP, filed periodically with the Company's Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q.
"Person" or "person" means an individual, corporation, partnership,
firm, association, joint venture, trust, unincorporated organization,
limited liability company, government, governmental body, agency,
political subdivision or other entity.
"PIK Dividend Value" means an amount equal to the product of: (x)
the number of Series D Perpetual Preferred Shares issued during the
immediately preceding calendar quarter; and (y) the Series D Perpetual
Preferred Liquidation Preference as of the immediately preceding
Adjustment Date.
"Public Offering" means the offer for sale to the public in an
underwritten offering of Common Shares pursuant to an effective
registration statement filed under the Securities Act.
"Public Offering Price" means the price per share at which Common
Shares were offered to the public and will be sold in the underwritten
Public Offering that is expected to be completed not later than October
21, 2005.
4
"Purchase Agreement" means the Share Purchase Agreement dated as of
September 29, 2005 by and among the Company and the Purchasers, as the
same may be amended from time to time.
"Purchase Price" means an amount equal to the lower of (i) $1,000
per share and (ii) the product of the Exchange Ratio multiplied by the
Public Offering Price.
"Purchasers" has the meaning ascribed to such term in the Purchase
Agreement.
"Quarterly Allocation" means, as of any Adjustment Date, an amount
equal to the product of: (x) the Adjusted Net Income (Loss) during the
preceding calendar quarter; and (y) the Earnings Allocation Ratio.
"Senior Stock" means only the Series A Preferred Shares, the Series
B Preferred Shares and the Series C Preferred Shares.
"Series A Preferred Shares" means the Series A Convertible Voting
Preferred Shares, par value $1.00 per share, of the Company, including
shares allocated as sub-series A1 Preferred Shares and A2 Preferred
Shares.
"Series B Preferred Shares" means the Series B Convertible Voting
Preferred Shares, par value $1.00 per share, of the Company, including
shares allocated as sub-series B1 Preferred Shares and B2 Preferred
Shares.
"Series C Preferred Shares" means the Series C Convertible Voting
Preferred Shares, par value $1.00 per share, of the Company, including
shares allocated as sub-series C1 Preferred Shares and C2 Preferred
Shares.
"Shareholders' Equity" means total shareholders' equity reported on
the consolidated balance sheets of the Company, prepared in accordance
with GAAP, and filed periodically with the Company's Annual Reports on
Form 10-K and Quarterly Reports on Form 10-Q.
"Trust Preferred" shall mean, collectively, (A) (i) the Junior
Subordinated Deferrable Interest Debentures due 2027 of PXRE
Corporation, (ii) the 8.85% Capital Trust Pass-through Securities of
PXRE Capital Trust I, (iii) the PXRE Corporation Guarantee with respect
to such Capital Trust Pass-through Securities; (B) (i) the Junior
Subordinated Deferrable Interest Debentures due May 15, 2033 of PXRE
Corporation, (ii) the 7.35% Fixed/Floating Capital Trust Pass-through
Securities of PXRE Capital Statutory Trust II, (iii) the PXRE
Corporation Guarantee with respect to such Capital Statutory Trust
Pass-through Securities; (C) (i) the Junior Subordinated Deferrable
Interest Debentures due May 23, 2033 of PXRE Corporation, (ii) the
9.75% Capital Trust Pass-through Securities of PXRE Capital Trust III,
(iii) the PXRE Corporation Guarantee with respect to such Capital Trust
Pass-through Securities; (D) (i) the Junior Subordinated Deferrable
Interest Debentures due October 29, 2033 of PXRE Corporation, (ii) the
7.70% Fixed/Floating Capital Trust Pass-through Securities of PXRE
Capital Statutory Trust IV, (iii) the PXRE Corporation Guarantee with
respect to such Capital Trust Pass-through Securities; and (E) (i) the
Junior Subordinated Deferrable Interest Debentures due September 30,
2033 of PXRE Corporation, (ii) the 7.58% Fixed/Floating Capital Trust
Pass-through Securities of PXRE Capital Statutory Trust V, and (iii)
the PXRE Corporation Guarantee with respect to such Capital Trust
Pass-through Securities.
5
(b) The following terms, when used in this Description of Stock, shall
have the meanings provided for such terms in the sections set forth below (such
definitions to be equally applicable to both singular and plural forms of the
terms defined):
Term Section(s)
---- ----------
Aggregate Liquidation Preference 5(a)(i)
Capital Distributions 4(a)
Companies Act 4(a)
Junior Stock 4(c)
Maximum Lawful Rate 4(c)
Perpetual Capital Distributions 4(a)
Series D Perpetual Preferred Liquidation Preference 5(a)(i)
Series D Perpetual Preferred Shares 1(a)(i)
(c) The words "hereof", "herein" and "hereunder" and other words of
similar import refer to this Description of Stock as a whole and not to
any particular Section or other subdivision.
(d) All dollar amounts referenced herein shall be denominated in
United States dollars.
3. Voting Rights.
(a) General Voting Rights. Except as set forth in Section 3(b) below,
the Series D Perpetual Preferred Shares shall have no right to vote on any
matter submitted to shareholders at an Annual or Special General Meeting of the
Company's shareholders.
(b) Consent of Series D Perpetual Preferred Shares Required For
Variation of Rights and Restrictions. So long as any Series D Perpetual
Preferred Shares remain issued and outstanding, unless the vote or consent of
the holders of a greater number of shares shall then be required by law
overriding the provisions herein, the affirmative vote or consent of the holders
of greater than 50% of all of the Series D Perpetual Preferred Shares at the
time issued and outstanding, voting as a class, given in person or by proxy
either in writing (as may be permitted by law and the Bye-Laws) or at any
special or annual meeting, shall be necessary to permit, effect or validate the
taking of any of the following actions by the Company:
(i) in any manner authorize, create, designate, issue or sell
any class or series of capital shares or rights, options, warrants
or other securities convertible into or exercisable or exchangeable
for capital shares or any debt security which by its terms is
convertible into or exchangeable for any equity security or has any
other equity feature or any security that is a combination of debt
and equity, which, in each case, as to the payment of dividends or
distribution of assets, including, without limitation,
distributions to be made upon a liquidation, dissolution or
winding-up of the Company, is pari passu with or is senior to the
Series D Perpetual Preferred Shares (including without limitation,
any shares of Series D Perpetual Preferred Shares (whether or not
junior as to dividends or liquidation preference) having earlier
mandatory redemption dates than the mandatory exchange date of the
Series D Perpetual Preferred Shares) or which in any manner
adversely affects the holders of the Series D Perpetual Preferred
Shares, or amend the terms of any existing class or series of
capital shares if the effect of such amendment would be to rank
such class or series senior to or pari passu with the Series D
Perpetual Preferred Shares as to dividends or distribution of
assets, including, without limitation, distributions to be made
upon a liquidation, dissolution or winding-up of the Company;
6
(ii) in any manner alter or change the terms, designations,
powers, preferences or relative, participating, optional or other
special rights, or the qualifications, limitations or restrictions,
of the Series D Perpetual Preferred Shares;
(iii) reclassify the shares of any class or series of capital
shares into shares of any class or series of capital shares (A)
ranking, either as to payment of dividends, distributions of Assets
or redemptions, including, without limitation, distributions to be
made upon a liquidation, dissolution or winding-up of the Company,
senior to or pari passu with the Series D Perpetual Preferred
Shares (including without limitation, any shares of Series D
Perpetual Preferred Shares (whether or not junior as to dividends
or liquidation preference) having earlier mandatory redemption
dates than the mandatory exchange date of the Series D Perpetual
Preferred Shares) or (B) which in any manner adversely affects the
rights of the holders of the Series D Perpetual Preferred Shares or
any powers, rights, privileges or preference appertaining to the
Common Shares, which such holders would have after mandatory
exchange of the Series D Perpetual Preferred Shares into Common
Shares;
(iv) take any action to cause any amendment, alteration or
repeal of any of the provisions of the Memorandum of Association or
Bye-Laws, if such amendment, alteration or repeal would have an
adverse effect on the rights, preferences or privileges of the
holders of the Series D Perpetual Preferred Shares or any powers,
rights, privileges or preference appertaining to Common Shares
which such holders would have after mandatory exchange of the
Series D Perpetual Preferred Shares into Common Shares (including,
without limitation, by granting voting rights to holders of bonds,
debentures or other obligations);
(v) any increase or decrease to the authorized number of Series
D Perpetual Preferred Shares or issue additional Series D Perpetual
Preferred Shares, except as required by the terms of this
Description of Stock;
(vi) any amalgamation, merger or sale of the Company unless the
aggregate purchase price paid to the Series D Perpetual Preferred
Shareholders equals the greater of (A) the Aggregate Liquidation
Preference and (B) the product of (x) the aggregate purchase price
paid to the Common Shareholders and (y) the Dividend Allocation
Ratio;
7
(vii) the sale or transfer of 25% or more of the Company's
Assets (other than the payment of reinsurance claims in the
ordinary course of business);
(viii) in any acquisition by the Company involving aggregate
consideration in excess of $100,000,000;
(ix) the voluntary delisting of the Common Shares or the Series
D Perpetual Preferred Shares from the New York Stock Exchange or
other nationally recognized securities exchange, as applicable;
(x) effect or attempt to effect a voluntary liquidation,
dissolution or winding up of the Company; or
(xi) an expansion by the Company into lines of business other
than continuing lines of business in which the Company is currently
involved.
4. Dividend Rights.
(a) General. For so long as the Series D Perpetual Preferred Shares
remain outstanding, the Company may not make, declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
(collectively, "Capital Distributions"), with respect to the Common Shares of
the Company, unless, subject to the Bermuda Companies Act of 1981 ("Companies
Act"), the Company simultaneously declares and pays a cash dividend or
distribution (the "Perpetual Capital Distributions") on the Series D Perpetual
Preferred Shares in an amount equal to such Capital Distribution multiplied by
the Dividend Allocation Ratio as of the Adjustment Date immediately preceding
the date of such Capital Distribution (or if an Adjustment Date shall have not
occurred prior to the date of such Capital Distribution, then as of the Date of
Issuance).
(b) PIK Dividends. If the Exchange Conditions Precedent are not met by
April 1, 2006, then, retroactively commencing on the Date of Issuance,
additional dividends on the Series D Perpetual Preferred Shares shall begin to
accrue at a rate of 15% per annum, increasing to a rate of 17% per annum on
April 1, 2007 and further increasing to a rate of 19% per annum on April 1,
2008, which rate shall be calculated on the basis of a year of 360 days
consisting of twelve 30-day months. Such additional dividends shall be paid on a
quarterly basis on each Adjustment Date in additional Series D Perpetual
Preferred Shares having a liquidation preference per share equal to the Series D
Perpetual Preferred Liquidation Preference as of the immediately preceding
Adjustment Date ("PIK Dividends"); provided, however, that with respect to any
retroactive payment of PIK Dividends made pursuant to this Section 4(b), such
retroactive payment shall be made on June 30, 2006.
8
(c) Dividend Preference. Any such dividend that is to be paid in PIK
Dividends shall be payable by delivery to such holders, at their respective
addresses as they appear in the stock register, of certificates representing the
appropriate number of duly authorized, validly issued, fully paid and
nonassessable shares of Series D Perpetual Preferred Shares to holders of Series
D Perpetual Preferred Shares. Any such dividend that is to be paid in Perpetual
Capital Distributions shall be payable by delivery of such amounts to such
holders at their respective addresses as they appear in the stock register.
Notwithstanding anything to the contrary set forth in this Section 4,
if at any time during which any Series D Perpetual Preferred Share remains
outstanding the dividend rate payable thereon exceeds the highest rate of
interest permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the dividend rate in respect of Series D Perpetual Preferred Shares
shall be equal to the Maximum Lawful Rate; provided, however, that if at any
time thereafter the dividend rate payable thereon is less than the Maximum
Lawful Rate, dividends shall continue to accrue thereon at the Maximum Lawful
Rate until such time as the total dividends earned are equal to the total
dividends which would have been earned had the dividend rate on such Series D
Perpetual Preferred Share been (but for the operation of this paragraph) the
dividend rate payable since the Closing.
The rights of the Series D Perpetual Preferred Shares shall rank senior
in all respects to the Common Shares and all other classes and series of capital
shares of the Company, including without limitation other classes and series of
preferred shares other than the Trust Preferred and Senior Stock (collectively,
"Junior Stock").
5. Liquidation Rights.
(a) Priority. In the event of any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary:
(i) before any payment or distribution of the Assets of the
Company (whether from paid in share capital, share premium or
surplus) shall be made to or set apart for the holders of Junior
Stock or any other shares of the Company other than the Trust
Preferred and the Senior Stock, the holders of the shares of Series
D Perpetual Preferred Shares shall be entitled to receive from the
Assets of the Company, payment in cash of an initial amount equal
to the Purchase Price (the "Series D Perpetual Preferred
Liquidation Preference"). Commencing as of December 31, 2005 and on
each Adjustment Date thereafter, the Series D Perpetual Preferred
Liquidation Preference shall be adjusted upward or downwards by an
amount equal to the quotient of: (v) the change in the Aggregate
Liquidation Preference as of such Adjustment Date; divided by (w)
the number of Series D Perpetual Preferred Shares outstanding. The
"Aggregate Liquidation Preference" shall initially be an amount
equal to the product of the Purchase Price multiplied by the number
of Series D Perpetual Preferred Shares issued upon Closing.
Commencing as of December 31, 2005 and on each Adjustment Date
thereafter, the Aggregate Liquidation Preference shall be adjusted
upward or downwards by an amount equal to the sum of: (x) the
Quarterly Allocation, plus (y) the PIK Dividend Value; provided
that; the Aggregate Liquidation Preference shall never be less than
the product of the Purchase Price multiplied by the number of
Series D Perpetual Preferred Shares issued upon Closing, plus the
aggregate PIK Dividends less the aggregate Perpetual Capital
Distributions. If the Assets distributable upon such liquidation,
dissolution or winding-up of the Company shall be insufficient to
permit payment to the respective holders of the shares of Series D
Perpetual Preferred Shares of the full preferential amounts as set
forth in this Section 5(a)(i), then such Assets shall be
distributed ratably among the shares of Series D Perpetual
Preferred Shares; and
9
(ii) any proceeds remaining after payment of the Series D
Perpetual Preferred Liquidation Preference shall be distributed
ratably among the Common Shares and other classes of shares of the
Company in accordance with the relevant rights and restrictions
thereof, if any.
(b) Notice of Liquidation. Subject to any other requirement under law,
written notice of any liquidation, dissolution or winding up of the Company,
stating the payment date or dates when and the place or places where the amounts
distributable in such circumstances shall be payable, shall be given (not less
than thirty (30) days prior to any payment date stated therein), to the holders
of record of the Series D Perpetual Preferred Shares at their respective
addresses as the same shall appear on the register of shareholders of the
Company.
6. Exchange. The following provisions are subject to compliance with
applicable law, and if the exercise of these rights would violate relevant law,
such rights set out below will be suspended until such rights can be exercised
in compliance with applicable law:
(a) General. Each Series D Perpetual Preferred Share outstanding shall
be mandatorily exchanged immediately upon satisfaction of the Exchange
Conditions Precedent into the number of whole Common Shares (rounded upwards or
downwards) equal to the Exchange Ratio, provided, however, that if (i) at the
time of such exchange, either a record holder of Series D Perpetual Preferred
Shares or an Affiliate thereof is also a record holder of Series B Preferred
Shares or Class B Convertible Common Shares, then such holder's Series D
Perpetual Preferred Shares shall be mandatorily exchanged into the number of
whole Class B Convertible Common Shares (rounded upwards or downwards) equal to
the Exchange Ratio (instead of such number of Common Shares) and (ii) at the
time of such exchange, either a record holder of Series D Perpetual Preferred
Shares or an Affiliate thereof is also a record holder of Series C Preferred
Shares or Class C Convertible Common Shares, then such holder's Series D
Perpetual Preferred Shares shall be mandatorily exchanged into the number of
whole Class C Convertible Common Shares (rounded upwards or downwards) equal to
the Exchange Ratio (instead of such number of Common Shares). The Common Shares,
Class B Convertible Common Shares or Class C Convertible Common Shares, as the
case may be, issuable upon mandatory exchange of the Series D Perpetual
Preferred Shares, when such Common Shares, Class Convertible B Common Shares or
Class C Convertible Common Shares, as the case may be, shall be issued in
accordance with the terms hereof, shall be duly authorized, validly issued,
fully paid and nonassessable Common Shares, Class B Convertible Common Shares or
Class C Convertible Common Shares, respectively.
10
(b) Surrender and Exchange. Each Series D Perpetual Preferred Share
will be exchanged by the holder once the Exchange Conditions Precedent have been
met by surrender of such Series D Perpetual Preferred Share, to the Company at
its office designated pursuant to the Bye-Laws of the Company. Such holder shall
thereupon be entitled to receive the number of Common Shares, Class B
Convertible Common Shares or Class C Convertible Common Shares, as the case may
be, specified in the exchange by Section 6(a) above. The Series D Perpetual
Preferred Shares shall be cancelled upon surrender.
(c) Effective Date. The exchange of Series D Perpetual Preferred Shares
pursuant to Section 6(c) hereof shall be deemed to have been effected
immediately prior to the close of business on the Business Day on which the
Exchange Conditions Precedent have been met and the Series D Perpetual Preferred
Shares shall have been surrendered to the Company as provided in Section 6(b)
hereof. On such day that the exchange of Series D Perpetual Preferred Shares is
deemed effected, the person or persons in whose name or names any certificate or
certificates for Common Shares, Class B Convertible Common Shares or Class C
Convertible Common Shares, as the case may be, are issuable upon such exchange,
as provided in this Section 6, shall be deemed to have become the holder or
holders of record of such Common Shares, Class B Convertible Common Shares or
Class C Convertible Common Shares, as the case may be.
(d) Share Certificates. As promptly as practicable after the exchange
of the Series D Perpetual Preferred Shares, and in any event within ten (10)
Business Days thereafter, the Company at its expense (including the payment by
it of any applicable issue, stamp or other taxes on the issue of the Common
Shares, Class B Convertible Common Shares or Class C Convertible Common Shares,
as the case may be, or on the share certificate therefor, other than any income
or capital gains taxes) will cause to be issued in the name of and delivered to
the holder thereof or as such holder may direct, a certificate or certificates
for the number of Common Shares, Class B Convertible Common Shares or Class C
Convertible Common Shares, as the case may be, to which such holder shall be
entitled upon such exchange on the effective date of such exchange.
11
7. Offer to Repurchase. If the Series D Perpetual Preferred Shares shall
have not been exchanged for Common Shares, Class B Convertible Common Shares or
Class C Convertible Common Shares, as the case may be, in accordance with
Section 6(a) prior to December 31, 2006, the Company shall use its reasonable
best efforts, subject to the conditions set forth below, in each calendar year
beginning with 2007 so long as no such mandatory exchange has occurred and the
Series D Perpetual Preferred Shares remain outstanding, to issue and sell in a
Public Offering a number of Common Shares sufficient to produce net proceeds in
an amount at least equal to $100,000,000, shall make an offer to holders of
outstanding Series D Perpetual Preferred Shares to purchase, on a pro rata
basis, Series D Perpetual Preferred Shares having up to $100,000,000 in Series D
Perpetual Preferred Liquidation Preference and shall purchase such Series D
Perpetual Preferred Shares from holders responding to such offer to purchase at
a price equal to the greater of (i) the Series D Perpetual Preferred Liquidation
Preference, and (ii) the product of the Exchange Ratio multiplied by the price
per Common Share realized by the Company in such Public Offering. However, the
Company will not be required to sell any Common Shares for such purpose if (i)
such use of proceeds from the sale of the Common Shares would have a negative
impact on the Company's then current credit ratings or (ii) the price per share
of any of the Common Shares would be less than 75% of the then existing Market
Price per share of the Common Shares.
12
EXHIBIT C
Form of Registration Rights Agreement
PXRE GROUP LTD.
SERIES D PERPETUAL PREFERRED SHARES
REGISTRATION RIGHTS AGREEMENT
To the Purchasers named in Exhibit A
to the Purchase Agreement
Ladies and Gentlemen:
PXRE Group Ltd., a Bermuda corporation (the "Company"), proposes to
issue and sell in a private placement pursuant to Section 4(2) of the Securities
Act (as defined below) (such issuance and sale, the "Initial Placement") to the
several parties named in Exhibit A to the Purchase Agreement (the "Initial
Purchasers") for whom you (the "Representatives") are acting as representatives,
upon the terms set forth in a purchase agreement dated September 29, 2005 (the
"Purchase Agreement"), $[ ] aggregate principal amount of its Series D Perpetual
Preferred Shares, par value $1.00 per share (the "Preferred Shares").
The Preferred Shares will be manditorily exchanged into Common
Shares, par value $1.00 per share, of the Company ("Common Shares"), upon the
satisfaction of certain conditions as set forth in the Private Placement
Memorandum.
As an inducement to you to enter into the Purchase Agreement and in
satisfaction of a condition to your obligations thereunder, the Company agrees
with you, (i) for your benefit and (ii) for the benefit of the holders from time
to time of the Preferred Shares and the Common Shares issuable upon conversion
of the Preferred Shares (including you), as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms have the respective
meanings set forth below:
Agreement: shall mean this Registration Rights Agreement among the Initial
Purchasers and the Company;
Commission: shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act;
Exchange Act: shall mean the Securities Exchange Act of 1934, as amended
and the rules and regulations of the Commission promulgated thereunder;
Holder: shall mean any holder of Registrable Securities;
Majority Holders: shall mean the Holders holding a majority of the then
outstanding Registrable Securities, provided, however, that Preferred Shares or
Common Shares for which Preferred Shares have been exchanged which have been
sold or otherwise transferred pursuant to the Shelf Registration Statement or
Company Registration Statement shall not be included in the calculation of the
Majority Holders;
Notice and Questionnaire: shall mean a Notice of Registration Statement
and Selling Shareholder Questionnaire substantially in the form of Exhibit A
hereto;
Person: shall mean an individual, partnership, joint-stock company,
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof;
Prospectus: shall mean the prospectus included in the Shelf Registration
Statement or Company Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Shelf Registration Statement or Company Registration
Statement, and all amendments and supplements to such prospectus, including all
documents filed after the date of such prospectus by the Company under the
Exchange Act and incorporated or deemed to be incorporated by reference in such
prospectus;
Registrable Securities: shall mean (A) the Preferred Shares, (B) the
Common Shares issuable upon conversion of the shares of Preferred Shares and (C)
any stock of the Company issued as a dividend or other distribution with respect
to, or in exchange for or in replacement of, the Preferred Shares or the Common
Shares issuable upon conversion of the Preferred Shares, provided, however, that
Registrable Securities shall not include securities in clauses (A), (B) or (C)
above which have been transferred pursuant to a Shelf Registration Statement or
Company Registration Statement;
Registration Expenses: shall mean all expenses incurred by the Company in
compliance with Section 2(a) and (b) hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, fees and expenses of one counsel for the Selling
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company) but shall exclude underwriting fees, discounts and expenses with
respect to the sale of the Registrable Securities;
Security, Securities: shall have the meaning set forth in Section 2(I) of
the Securities Act;
Securities Act: shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder;
Selling Expenses: shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for each of the Selling Holders other than fees and
expenses of one counsel for the Selling Holders;
2
Shelf Registration Statement: means a "shelf" registration statement of
the Company filed pursuant to the provisions of Section 2 hereof which covers
some or all of the Registrable Securities on Form S-3 or on another appropriate
form for an offering to be made on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act, or any similar rule that may be adopted by
the Commission, and all amendments and supplements to such registration
statement, including post-effective amendments, or any additional registration
statements filed because the Company could not obtain the withdrawal of a stop
order suspending the effectiveness of the Shelf Registration Statement or
pursuant to Section 2(a)(i)(2) hereof, in each case including the Prospectus
contained therein, all exhibits thereto and all documents incorporated or deemed
to be incorporated by reference therein.
SECTION 2. REGISTRATION RIGHTS
(a) Shelf Registration Statement.
(i) The Company shall prepare and file with the Commission
promptly following receipt of notice from the Holders (the "Demand
Notice") and in any event within 30 days the date of the Purchase
Agreement, a Shelf Registration Statement with respect to resales of the
Registrable Securities by the Holders from time to time in accordance with
the methods of distribution designated by such Holders and set forth in
such Shelf Registration Statement (subject to Section 2(d)(xviii) hereof)
and thereafter shall use their reasonable best efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act
within [ ] days after receipt of the Demand Notice. The Company shall
supplement or amend the Shelf Registration Statement if required by the
rules, regulations or instructions applicable to the registration form
used by the Company for the Shelf Registration Statement, or by the
Securities Act, the Exchange Act or the Commission.
(ii) (1) Each Holder wishing to sell Registrable Securities
pursuant to the Shelf Registration Statement and related Prospectus agrees
to deliver to the Company the Notice and Questionnaire, together with such
information as the Company shall reasonably request, to the Company at
least ten business days prior to the effectiveness of the Shelf
Registration Statement. The Company shall take action to name each Holder
as of the date that is five calendar days prior to the effectiveness of
the Shelf Registration Statement so that such Holder is named as a selling
security holder in the Shelf Registration Statement at the time of its
effectiveness and is permitted to deliver the Prospectus forming a part
thereof as of such time to purchasers of such Holder's Registrable
Securities in accordance with applicable law.
(2) After the Shelf Registration Statement has become
effective, the Company shall, upon the request of any Holder of
Registrable Securities, promptly send a Notice and Questionnaire to such
Holder. From and after the date on which the Shelf Registration Statement
has become effective, the Company shall (i) as promptly as is practicable
after the date a completed and signed Notice and Questionnaire and such
other information as the Company may reasonably request is delivered to
the Company by such holder, and in any event within [five] Business Days
after such date, prepare and file with the Commission (x) a supplement to
the Prospectus or, if required by applicable law regulation or decision of
the staff of the Commission, a post-effective amendment to the Shelf
Registration Statement, provided, however, that if and when requested by
the Holders of the Preferred Shares, each underwritten offering of Common
Shares shall be for not less than $50,000,000, and provided further that
the Company will not be required to prepare and file with the Commission a
prospectus supplement with respect to an underwritten offering of Common
Shares of under such Shelf Registration Statement, more frequently than
twice in any 12-month period, and (y) any other document required by
applicable law, so that the Holder delivering such Notice and
Questionnaire is named as a selling security holder in the Shelf
Registration Statement and is permitted to deliver the Prospectus to
purchasers of such Holder's Registrable Securities in accordance with
applicable law, and (ii) use their reasonable best efforts to cause any
such post-effective amendment to become effective under the Securities Act
as promptly as is practicable; provided, however, that if a Notice and
Questionnaire is delivered to the Company during a Blackout Event, the
Company shall not be obligated to take the actions set forth in clauses
(i) and (ii) until the termination of such Blackout Event.
3
No Holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement or any Company
Registration Statement as provided in Section 2(b) or to use the
Prospectus forming a part thereof for resales of Registrable Securities
unless such Holder has complied with the foregoing requirements and has
provided the information as requested by the Company in accordance with
this Agreement for such Holder to be named as a selling securityholder in
the Shelf Registration Statement (any such named Holder, a "Selling
Holder").
(iii) The Company shall use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective under the
Securities Act in order to permit the Prospectus forming a part thereof to
be usable, subject to Section 2(a)(iv) hereof, by all Selling Holders
until the earliest of (i) the second anniversary of the Initial Placement,
(ii) the date on which all the Registrable Securities may be sold by
non-affiliates ("affiliates" for such purpose having the meaning set forth
in Rule 144 under the Act) of the Company pursuant to paragraph (k) of
Rule 144 (or any successor provision) promulgated by the Commission under
the Securities Act, (iii) the date as of which all the Registrable
Securities have been transferred pursuant to Rule 144 under the Securities
Act (or any similar provision then in force) and (iv) such date as of
which all the Registrable Securities have been sold pursuant to the Shelf
Registration Statement (in any such case, such period being called the
"Shelf Registration Period").
The Company will, (x) subject to Section 2(a)(iv), prepare
and file with the Commission such amendments and post-effective amendments
to the Shelf Registration Statement as may be necessary to keep the Shelf
Registration Statement continuously effective for the Shelf Registration
Period, (y) subject to Section 2(a)(iv), cause the related Prospectus to
be supplemented by any required supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act and (z) comply in all material respects with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Shelf Registration Statement during the
applicable period in accordance with the intended methods of disposition
by the sellers thereof set forth in such Shelf Registration Statement as
so amended or such Prospectus as so supplemented.
4
(iv) If, in the reasonable good faith judgment of the
Company, any pending bankruptcy or insolvency, pending material merger,
acquisition, corporate reorganization, other material transaction or other
event or circumstance involving the Company or any of its affiliates makes
it imprudent for the Company to file a registration statement or to be in
registration (any such event, circumstance or transaction, a "Blackout
Event"), the Company shall not be obligated to effect (whether by filing a
registration statement, seeking effectiveness of a registration statement
or otherwise) any registration requested by Holders or affiliate thereof.
If the Company determines that a Blackout Event exists, any sale of
securities by any Holder or any affiliate thereof, shall be postponed
until the Blackout Event no longer exists, provided, however, that no such
postponement shall exceed 90 days. The Company may suspend the use of the
Prospectus for the duration of any Blackout Event.
(v) Underwriting. If the any of the Holders intend to
distribute the Registrable Securities by means of an underwriting, they
shall so advise the Company as part of their request made pursuant to
Section 2(a)(i).
(b) Company Registration Statement.
(i) If the Company shall determine to register any of its Common
Shares either for its own account or for the account of any other
shareholder (each such instance, a "Company Registration Statement" and
the period during which such Company Registration Statement is effective,
the "Company Registration Period"), other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
Rule 145 transaction under the Securities Act, or a registration on any
registration form which does not permit secondary sales or does not
include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, the Company will:
(1) promptly give to each of the Holders a written notice
thereof (which shall include a list of the jurisdictions in which
the Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and
(2) include in such Company Registration Statement (and any
related qualification under blue sky laws or other compliance), and
in any underwriting involved therein, the Registrable Securities
specified in a written request or requests made by the Holders
within [ ] days after receipt of the written notice from the Company
described in clause (1) above, except as set forth in Section
2(b)(ii) below. Such written request may specify all or a part of
the Holders' Registrable Securities. Each Holder wishing to sell
Registrable Securities pursuant to the Company Registration
Statement and related Prospectus agrees to deliver to the Company
the Notice and Questionnaire, together with such information as the
Company shall reasonably request, to the Company at least [five]
business days prior to the effectiveness of the Company Shelf
Registration Statement. Upon the delivery of the Notice and
Questionnaire, and such other information as the Company shall
reasonably request, to the Company, such Holder shall be deemed a
Selling Holder. In the event any Holder requests inclusion in a
Company Registration Statement pursuant to this Section 2(b) in
connection with a distribution of Registrable Securities to its
partners, the Company Registration Statement shall provide for the
resale by such partners, if requested by such Holder.
5
(ii) Underwriting. If the Company Registration Statement
of which the Company gives notice is for a registered public offering
involving an underwriting, the Company shall so advise each of the Holders
as a part of the written notice given pursuant to Section 2(b)(i)(1)
above. In such event, the right of each of the Holders to registration
pursuant to this Section 2(b) shall be conditioned upon such Holders'
participation in such underwriting and the inclusion of such Holders'
Registrable Securities in the underwriting to the extent provided herein.
The Holders whose shares are to be included in such registration shall
(together with the Company and the other stockholders distributing their
securities through such underwriting) enter into an underwriting agreement
in customary form with the representative of the underwriter or
underwriters selected for underwriting by the Company. Notwithstanding any
other provision of this Section 2(b), if the underwriter or underwriters
determine that marketing factors require a limitation on the number of
shares to be underwritten, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting
pursuant to Section 2(d)(xviii).
(c) Expenses of Registration. All Registration Expenses incurred in
connection with any Shelf Registration Statement or Company Registration
Statement , qualification or compliance pursuant to this Section 2 shall be
borne by the Company, and all Selling Expenses shall be borne by the Selling
Holders.
(d) Registration Procedures. In connection with the Shelf
Registration Statement or Company Registration Statement, the following
provisions shall apply, as applicable:
(i) The Company shall:
(1) furnish to the Selling Holders, prior to the filing
thereof with the Commission, a copy of the Shelf Registration
Statement or Company Registration Statement, and each amendment
thereof, and a copy of any Prospectus, and each amendment or
supplement thereto (excluding amendments caused by the filing of a
report under the Exchange Act), and shall use its reasonable best
efforts to reflect in each such document, when so filed with the
Commission, such comments as the Selling Holders reasonably and
promptly propose; and
6
(2) include information regarding the Selling Holders and
the methods of distribution they have designated for their
Registrable Securities provided to the Company in Notice and
Questionnaires as necessary to permit such distribution by the
methods specified therein.
(ii) Subject to Section 2(a)(iv), the Company shall ensure
that (i) each of the Shelf Registration Statement and Company Registration
Statement and any amendment thereto and any Prospectus forming a part
thereof and any amendment or supplement thereto comply in all material
respects with the Securities Act and the rules and regulations thereunder,
(ii) each of the Shelf Registration Statement or Company Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming a part of the
Shelf Registration Statement or Company Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that the Company makes no
representation with respect to information with respect to any
underwriter or any Holder required to be included in the Shelf
Registration Statement or Company Registration Statement or Prospectus
pursuant to the Securities Act or the rules and regulations thereunder and
which information is included therein in reliance upon and in conformity
with information furnished to the Company in writing by such underwriter
or Holder.
(iii) The Company, as promptly as reasonably practicable,
shall advise the Selling Holders:
(1) when the Shelf Registration Statement or Company
Registration Statement and any amendment thereto has been filed with
the Commission and when the Shelf Registration Statement or any
post-effective amendment thereto has become effective;
(2) of any request by the Commission following
effectiveness of the Shelf Registration Statement or Company
Registration Statement for amendments or supplements to the Shelf
Registration Statement or Company Registration Statement or the
Prospectus or for additional information (other than any such
request relating to a review of the Company's Exchange Act filings);
(3) of the determination by the Company that a
post-effective amendment to the Shelf Registration Statement or
Company Registration Statement would be appropriate;
(4) of the commencement or termination of (but not the
nature of or details concerning) any Blackout Event;
7
(5) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or
Company Registration Statement or the initiation of any proceedings
for that purpose;
(6) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities included in the Shelf Registration Statement or Company
Registration Statement for sale in any jurisdiction or the
initiation or threat of any proceeding for such purpose;
(7) of the happening of (but not the nature of or details
concerning) any event that requires the making of any changes in the
Shelf Registration Statement or Company Registration Statement or
the Prospectus so that, as of such date, the statements therein are
not misleading and the Shelf Registration Statement, Company
Registration Statement or the Prospectus, as the case may be, does
not include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading; and
(8) of the Company's suspension of the use of the
Prospectus as a result of any of the events or circumstances
described in paragraphs (2) through (7) above, and of the
termination of any such suspension.
(iv) The Company shall use its reasonable best efforts to obtain
the withdrawal of any order suspending the effectiveness of the Shelf
Registration Statement or Company Registration Statement or the lifting of
any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for offer or sale in any jurisdiction at
the earliest possible time.
(v) The Company shall promptly furnish to each Selling Holder,
without charge, at least one copy of the Shelf Registration Statement or
Company Registration Statement and any post-effective amendment thereto,
including all exhibits (including those incorporated by reference),
financial statements and schedules.
(vi) The Company shall, during the Shelf Registration Period or
Company Registration Period, promptly deliver to each Selling Holder and
any sales or placement agent or underwriters acting on their behalf,
without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in the Shelf Registration Statement or
Company Registration Statement (excluding documents incorporated by
reference), and any amendment or supplement thereto, as such person may
reasonably request; and, except as provided in Sections 2(a)(iv) and
2(d)(xvi) hereof, the Company consents to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto during
the Shelf Registration Period or Company Registration Period.
8
(vii) Prior to any offering of Registrable Securities pursuant
to the Shelf Registration Statement or the Company Registration Statement,
the Company shall cooperate with the Selling Holders and their respective
counsel in connection with the registration or qualification (or exemption
from such registration or qualification) of such Registrable Securities
for offer and sale, under the securities or blue sky laws of such
jurisdictions within the United States as any such Selling Holder
reasonably request and shall maintain such qualification in effect so long
as required and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by such Shelf Registration Statement or Company
Registration Statement; provided, however, that the Company will not be
required to (A) qualify generally to do business as a foreign corporation
or as a dealer in securities in any jurisdiction where it is not then so
qualified or to (B) take any action which would subject it to service of
process or taxation in any such jurisdiction where it is not then so
subject.
(viii) The Company shall cooperate with the Selling Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities sold pursuant to the Shelf
Registration Statement or Company Registration Statement free of any
restrictive legends and registered in such names as Selling Holders may
request.
(ix) Subject to the exceptions contained in (A) and (B) of
Section 2(d)(vii) hereof, the Company shall use its reasonable best
efforts to cause the Registrable Securities covered by the Shelf
Registration Statement or Company Registration Statement to be registered
with or approved by such other federal, state and local governmental
agencies or authorities, and self-regulatory organizations in the United
States as may be necessary to enable the Holders to consummate the
disposition of such Registrable Securities as contemplated by the Shelf
Registration Statement or the Company Registration Statement; without
limitation to the foregoing, the Company shall make all filings and
provide all such information as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") in connection with
the offering under the Shelf Registration Statement or the Company
Registration Statement of the Transfer Restricted Securities (including,
without limitation, such as may be required by NASD Rule 2710 or 2720),
and shall cooperate with each Holder in connection with any filings
required to be made with the NASD by such Holder in that regard.
(x) Upon the occurrence of any event described in Section
2(d)(iii) hereof, the Company shall as soon as reasonably practicable
prepare and file with the Commission a post-effective amendment to the
Shelf Registration Statement or Company Registration Statement or an
amendment or supplement to the related Prospectus or any document
incorporated therein by reference or file a document which is incorporated
or deemed to be incorporated by reference in such Shelf Registration
Statement or Prospectus, as the case may be, so that, as thereafter
delivered to purchasers of the Registrable Securities included therein,
the Shelf Registration Statement or Company Registration Statement and the
Prospectus, in each case as then amended or supplemented, will not include
an 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 the case of the Prospectus in light of the circumstances under
which they were made) not misleading and, in the case of a post-effective
amendment, use its reasonable best efforts to cause it to become effective
as promptly as practicable; provided that the Company's obligations under
this paragraph (x) shall be suspended if the Company has suspended the use
of the Prospectus in accordance with Section 2(a)(iv) hereof and given
notice of such suspension to Selling Holders, it being understood that the
Company's obligations under this Section 2(d)(x) shall be automatically
reinstated at the end of such Blackout Event.
9
(xi) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make
generally available to its Holders as soon as practicable but in any event
not later than [ ] days after the end of a 12-month period (or [ ] days,
if such period is a fiscal year) after (i) the effective date of the Shelf
Registration Statement or Company Registration Statement, (ii) the
effective date of each post-effective amendment to the Shelf Registration
Statement or Company Registration Statement, and (iii) the date of each
filing by the Company with the Commission of an Annual Report on Form 10-K
that is incorporated by reference or deemed to be incorporated by
reference in the Shelf Registration Statement or Company Registration
Statement, an earnings statement satisfying the provisions of Section
11(a) of the Act and Rule 158 promulgated by the Commission thereunder.
(xii) Upon request of the Majority Holders, the Company shall
cause all Registrable Securities issued (or, in the case of Common Shares
issuable upon conversion of the Preferred Shares) to be listed on each
securities exchange or quotation system on which the Common Shares are
then listed no later than the date the Shelf Registration Statement or the
Company Registration Statement is declared effective and, in connection
therewith, to make such filings as may be required under the Exchange Act
and to have such filings declared effective as and when required
thereunder.
(xiii) The Company may require each Holder of Registrable
Securities to be sold pursuant to the Shelf Registration Statement or
Company Registration Statement to furnish to the Company such information
regarding the Holder and the distribution of such Registrable Securities
sought by the Notice and Questionnaire and such additional information as
may, from time to time, be required by the Securities Act and the rules
and regulations promulgated thereunder, and the obligations of the Company
to any Holder hereunder shall be expressly conditioned on the compliance
of such Holder with such request.
(xiv) The Company, subject to the provisions of paragraph
(xviii) of this Section 2(d), shall enter into such customary agreements
(including underwriting agreements) and take all other appropriate actions
as may be reasonably requested in order to expedite or facilitate the
registration or the disposition of the Registrable Securities, and in
connection therewith, if an underwriting agreement is entered into, cause
the same to contain indemnification and contribution provisions and
procedures no less favorable than those set forth in Section 5. The plan
of distribution in the Shelf Registration Statement or the Company
Registration Statement and the Prospectus included therein shall permit
resales of Registrable Securities to be made by selling security holders
through underwriters, brokers and dealers, and shall also include such
other information as the Selling Holders may reasonably request.
10
(xv) In connection with an underwritten offering, if any, the
Company shall, if reasonably requested in writing by Majority Holders:
(1) make reasonably available for inspection during normal
business hours by any underwriter participating in any disposition
pursuant to such Shelf Registration Statement or Company
Registration Statement, and any attorney, accountant or other agent
retained by any such underwriter all relevant financial and other
records, pertinent corporate documents and properties of the Company
and their subsidiaries as is customary for due diligence
examinations in connection with public offerings; provided, however,
if the foregoing inspection would otherwise disrupt the Company's
conduct of its business, such inspection shall, to the greatest
extent practicable, be coordinated by the underwriters on behalf of
the other parties;
(2) cause the Company's officers, directors, employees,
accountants and auditors to supply, during normal business hours,
all relevant information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with any
such Shelf Registration Statement or Company Registration Statement
as is customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of
such information shall be kept confidential by the Holders or any
such underwriter, attorney, accountant or agent, unless disclosure
thereof is made in connection with a court, administrative or
regulatory proceeding or required by law, or such information has
become available to the public generally through the Company or
through a third party without an accompanying obligation of
confidentiality; provided, further, that if the foregoing
information gathering would otherwise disrupt the Company's conduct
of its business, such information gathering shall, to the greatest
extent practicable, be coordinated by the underwriters on behalf of
the other parties;
(3) deliver a letter, addressed to the Selling Holders and
the underwriters, if any, in which the Company shall make such
representations and warranties in form, substance and scope as are
customarily made by issuers to underwriters;
(4) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions, in form, scope and substance,
shall be reasonably satisfactory to the underwriters, if any)
addressed to each Selling Holder and the underwriters, if any,
covering such matters as are customarily covered in opinions
requested in public offerings;
11
(5) obtain "cold comfort" letters and updates thereof from
the current and former independent certified public accountants of
the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Shelf
Registration Statement or Company Registration Statement), addressed
to each Selling Holder (provided such Holder furnishes the
accountants, prior to the date such "cold comfort" letter is
required to be delivered, with such representations as the
accountants customarily require in similar situations) and the
underwriters, if any, in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection
with primary underwritten offerings; and
(6) deliver such documents and certificates as may be
reasonably requested by the Selling Holders or, in the case of an
underwritten offering, the underwriters, if any, including those to
evidence compliance with Section 2(d)(x) and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company.
The foregoing actions set forth in clauses (3), (4), (5) and (6) of
this Section 2(d)(xv) shall be performed at (A) the effectiveness of
such Shelf Registration Statement or Company Registration Statement
and each post-effective amendment thereto and (B) the closing under
any underwriting or similar agreement as and to the extent required
thereunder.
If any of the Registrable Securities covered by the Shelf
Registration Statement or Company Registration Statement are to be
sold in an underwritten offering, the underwriter or underwriters
and manager or managers that will manage each such offering will be
selected by the Majority Holders of such Registrable Securities
included in such offering and shall be reasonably acceptable to the
Company. No Holder of Registrable Securities may participate in any
underwritten offering unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder
to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
arrangements and other documents required under the terms of such
underwriting agreements. The Holders of Registrable Securities that
participate in an underwritten offering shall be required to pay on
a ratable basis all registration expenses associated with or arising
as a result of the underwritten offering, payable by such Holders
pursuant to Section 2 hereof.
(xvi) Each Selling Holder agrees that, upon receipt of notice of
the happening of an event described in Sections 2(d)(iii)(2) through and
including 2(d)(iii)(7), each Holder shall forthwith discontinue (and shall
cause its agents and representatives to discontinue) disposition of
Registrable Securities and will not resume disposition of Registrable
Securities until such Selling Holder has received copies of an amended or
supplemented Prospectus contemplated by Section 2(d)(x) hereof, or until
such Selling Holder is advised in writing by the Company that the use of
the Prospectus may be resumed or that the relevant Blackout Event has been
terminated, as the case may be; provided that the foregoing shall not
prevent the sale, transfer or other disposition of Registrable Securities
by a Selling Holder in a transaction which is exempt from, or not subject
to, the registration requirements of the Securities Act, so long as such
Selling Holder does not and is not required to deliver the applicable
Prospectus or the Shelf Registration Statement or Company Registration
Statement in connection with such sale, transfer or other disposition, as
the case may be; and provided, further, that the provisions of this
Section 2(d)(xvi) shall not prevent the occurrence of a registration
default.
12
(xvii) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as
a member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the NASD Rules) thereof, whether as a
Holder of such Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, the
Company shall assist such broker-dealer in complying with the NASD Rules,
including, without limitation, by:
(1) if the NASD Rules shall so require, engaging a
"qualified independent underwriter" (as defined in the NASD Rules)
to participate in the preparation of the Shelf Registration
Statement or Company Registration Statement, to exercise usual
standards of due diligence with respect thereto and, if any portion
of the offering contemplated by the Shelf Registration Statement or
Company Registration Statement is an underwritten offering or is
made through a placement or sales agent, to recommend the price of
such Registrable Securities;
(2) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters
provided in Section 3 hereof; and
(3) providing such information to such broker-dealer as
may be required in order for such broker-dealer to comply with the
requirements of the NASD Rules.
(xviii) Anything herein to the contrary notwithstanding, the
Company will not be required to pay the costs and expenses of, or to
participate in the marketing or "road show" presentations of, or agree to
indemnification or contribution agreements with respect to, more than two
underwritten offerings initiated at the request of the Majority Holders,
or to effect more than two underwritten offerings at the request of such
Holders. The Company will not be required to pay the costs and expenses
of, or to participate in the marketing or "road show" presentations of, an
underwritten offering unless the Majority Holders have requested that such
Registrable Securities be included in such an underwritten offering. Upon
receipt by the Company, from the Majority Holders of a request for an
underwritten offering, the Company will, within [10] days thereafter,
cause the Company to mail notice to all Holders of Registrable Securities
stating that: (i) the Company has received a request from the Holders of
the requisite amount of Registrable Securities to effect an underwritten
offering on behalf of such Holders; (ii) under the terms of this
Agreement, all Holders of Registrable Securities may include their
Registrable Securities in such underwritten offering, subject to the terms
and conditions set forth in this Agreement and subject to the right of the
underwriters to reduce, in light of market conditions and other similar
factors, the aggregate principal amount of Registrable Securities included
in such underwritten offering; (iii) all Holders electing to include
Registrable Securities in such underwritten offering must notify the
Company in writing of such election (the "Election"), and setting forth an
address and facsimile number to which such written elections may be sent
and the deadline (which shall be 12:00 midnight on the 10th calendar day
after such notice is mailed to Holders or, if not a Business Day, the next
succeeding Business Day (the "Deadline")) by which such elections must be
received by the Company; and (iv) setting forth such other instructions as
shall be necessary to enable Holders to include their Registrable
Securities in such underwritten offering. No Holder shall be entitled to
participate in an underwritten offering unless such Holder notifies the
Company of such Election by the Deadline. Notwithstanding anything to the
contrary contained herein, if the underwriters for an underwritten
offering to be effected pursuant to this Section 2(d)(xviii) advise the
Holders of the Registrable Securities to be included in such underwritten
offering that, because of the aggregate principal amount of Registrable
Securities that such Holders have requested be included in the
underwritten offering, the success of the offering would likely be
materially adversely affected by the inclusion of all Registrable
Securities requested to be included, then the principal amount of
Registrable Securities to be offered for the accounts of Holders shall be
reduced pro rata, according to the aggregate principal amount of
Registrable Securities requested for inclusion by each such Holder, to the
extent necessary to reduce the size of the offering to the size
recommended by the underwriter. Notwithstanding anything to the contrary
contained herein, neither the Company nor any Person, other than a Holder
Registrable Securities and only with respect to its Registrable
Securities, shall be entitled to include any securities in the
underwritten offering.
13
(e) Without the consent of the Majority Holders, the Company will
not grant rights to any other person with respect to the registration under the
Securities Act of the securities of the Company that are pari passu with, or
superior in any respect to, those rights granted to the Holders of the
Registrable Securities hereunder.
SECTION 3. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Holder of
Registrable Securities covered by the Shelf Registration Statement or
Company Registration Statement, the directors, officers, partners,
members, employees and agents of each such Holder and each person who
controls any such Holder within the meaning of either the Securities Act
or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement
or Company Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by any of them in connection
with defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to
any Holder to the extent that any such loss, claim, damage or liability
arises out of or is based upon (A) any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the Company
by or on behalf of any such Holder specifically for inclusion therein, (B)
use of the Shelf Registration Statement or Company Registration Statement
or the related Prospectus during a period when use of such Prospectus has
been suspended pursuant to Section 2(a)(iv) or Section 2(d)(xvi) hereof;
provided, in each case, that Holders received prior notice of such
suspension, or (C) if the Holder was required under applicable law to
deliver a Prospectus and fails to deliver a Prospectus, as then amended or
supplemented, provided that the Company shall have delivered to such
Holder such Prospectus, as then amended or supplemented. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
14
(b) Each Holder of Registrable Securities covered by the Shelf
Registration Statement or Company Registration Statement severally and not
jointly agrees to indemnify, hold harmless and reimburse
(i) the Company,
(ii) each of its directors,
(iii) each of its officers, and
(iv) each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act to the same extent as
the foregoing indemnity from the Company to each such Holder,
but only with reference to written information relating to such Holder
furnished to the Company by or on behalf of such Holder specifically for
inclusion in the documents referred to in the foregoing indemnity;
provided that the indemnity to be paid by each respective Holder shall not
exceed the net proceeds received by such Holder from the offer and sale of
its Registrable Securities.
This indemnity agreement shall be in addition to any liability which any
such Holder may otherwise have.
15
(c) Promptly after receipt by an indemnified party under this
Section 3 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 3, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it was not otherwise notified of
such action and such failure results in the forfeiture by the indemnifying
party of any rights or defenses. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth
below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in
an action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall bear
the reasonable fees, costs and expenses of such separate counsel if:
(i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would not be permissible under the
applicable standards of professional responsibility;
(ii) the actual or potential defendants in, or targets of, any
such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to
the indemnifying party and that representation of the indemnified
party by counsel chosen by the indemnifying party would be
inappropriate due to actual or potential differing interests among
the parties represented by such counsel;
(iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the
institution of such action; or
(iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying
party.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time
for all such indemnified party or parties. Neither an indemnifying party nor an
indemnified party will, without the prior written consent of the other parties,
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not such
other parties are actual or potential parties to such claim or action) unless
such settlement, compromise or consent includes an unconditional release of such
other parties from all liability arising out of such claim, action, suit or
proceeding. An indemnifying party shall not be liable for any losses, claims,
damages or liabilities by reason of any settlement of any action or proceeding
effected without such indemnifying party's prior written consent, which consent
will not be unreasonably withheld.
16
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 3 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party shall
have an obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses"), as incurred, to
which such indemnified party may be subject in such proportion as is appropriate
to reflect the relative benefits received by such indemnifying party, on the one
hand, and such indemnified party, on the other hand, from any sales of
Registrable Securities under the Shelf Registration Statement or Company
Registration Statement. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total net proceeds from the
Initial Placement of the Registrable Securities pursuant to the Purchase
Agreement (before deducting expenses). Benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions received in connection with the Initial Placement of the Registrable
Securities as set forth in the Purchase Agreement, and benefits received by any
other Holders shall be deemed to be equal to the value of receiving Registrable
Securities registered under the Securities Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Shelf Registration Statement or the Company Registration Statement which
resulted in such Losses. Relative fault shall be determined by reference to
whether any untrue statement or omission or alleged untrue statement or omission
relates to information provided by the indemnifying party, on the one hand, or
by the indemnified party, on the other hand, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The parties agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
3(d), no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 3, each person who controls a Holder within the meaning of either
the Securities Act or the Exchange Act and each director, officer, employee and
agent of such Holder shall have the same rights to contribution as such Holder,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act, each officer of the Company who signed the
Shelf Registration Statement or Company Registration Statement and each director
of the Company shall have the same rights to contribution as the Company, and
each person who controls an underwriter within the meaning of either the
Securities Act or the Exchange Act and each officer and director of each
underwriter shall have the same rights to contribution as such underwriter,
subject in each case to the applicable terms and conditions of this Section 3
(d).
17
(e) The provisions of this Section 3 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder, any
underwriter, the Company, or any of the officers, directors or controlling
persons referred to in Section 3 hereof, and will survive the sale by a Holder
of Registrable Securities covered by the Shelf Registration Statement or Company
Registration Statement.
SECTION 4. MISCELLANEOUS
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with
the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of the Majority Holders; provided that with respect to any
matter that directly or indirectly affects the exclusive rights of the
Initial Purchasers hereunder, the Company shall obtain the written consent
of each of the Initial Purchasers against which such amendment,
qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Registrable
Securities are being sold pursuant to the Shelf Registration Statement or
Company Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority Holders,
determined on the basis of the Registrable Securities being sold rather
than registered under such Shelf Registration Statement or Company
Registration Statement.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier, or air courier guaranteeing overnight delivery:
(i) if to the Initial Purchasers, initially at its address set
forth in the Purchase Agreement;
(ii) if to any other Holder, at the most current address of such
Holder maintained by the transfer agent for the Preferred Shares or
Common Shares, or, in the case of the Selling Holder, the address
set for in its Notice and Questionnaire; and
(iii) if to the Company, initially at the Company's address set
forth in the Purchase Agreement.
18
All such notices and communications shall be deemed to have been
duly given when received, if delivered by hand or air courier, and when sent, if
sent by first-class mail or telecopier.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders. The Company hereby agrees to extend the
benefits of this Agreement to any Holder and underwriter and any such Holder and
underwriter may specifically enforce the provisions of this Agreement as if an
original party hereto.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN SAID STATE.
(h) Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Preferred
Shares or the Common Shares issuable upon conversion of the Preferred Shares is
required hereunder, Preferred Shares or Common Shares issued upon conversion of
the Preferred Shares held by the Company or its affiliates (other than
subsequent Holders of Preferred Shares or the Common Shares issued upon
conversion of the Preferred Shares if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
19
(j) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Shelf Registration Period or
Company Registration Period, as applicable, except for any liabilities or
obligations under Sections 2(a)(iv), 2(c) or 3 to the extent arising prior to
the end of such Shelf Registration Period or Company Registration Period.
[signature page follows]
20
IN WITNESS WHEREOF, the undersigned has executed this Registration Rights
Agreement as of the date first above written.
PXRE GROUP LTD.
By:
-----------------------------
Name:
Title:
INITIAL PURCHASERS
By:
-----------------------------
Name:
Title:
EXHIBIT A
FORM OF SELLING SECURITY HOLDER NOTICE AND QUESTIONNAIRE
The undersigned beneficial holder of Series D Perpetual Preferred
Shares (the "Preferred Shares"), par value $1.00 per share, of PXRE Group Ltd.
("PXRE" or the "Company") or common shares, par value $1.00 per share, of the
Company issuable upon conversion of the Preferred Shares (together with the
Preferred Shares, the "Registrable Securities") of the Company understands that
the Company has filed or intends to file with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (the "Shelf
Registration Statement") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act"), of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement
(the "Registration Rights Agreement") dated as of October [ ], 2005 between the
Company and the initial purchasers named therein. The Registration Rights
Agreement is available from the Company upon request at the address set forth
below. All capitalized terms not otherwise defined herein shall have the meaning
ascribed thereto in the Registration Rights Agreement.
Each beneficial owner of Registrable Securities is entitled to the
benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Registrable Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Registrable Securities generally will be
required to be named as a selling securityholder in the related prospectus,
deliver a prospectus to purchasers of Registrable Securities and be bound by
those provisions of the Registration Rights Agreement applicable to such
beneficial owner (including certain indemnification provisions as described
below). Beneficial owners that do not complete this Notice and Questionnaire and
deliver it to the Company as provided below will not be named as selling
securityholders in the prospectus and therefore will not be permitted to sell
any Registrable Securities pursuant to the Shelf Registration Statement.
Beneficial owners are encouraged to complete and deliver this Notice and
Questionnaire prior to the effectiveness of the Shelf Registration Statement so
that such beneficial owners may be named as selling securityholders in the
related prospectus at the time of effectiveness. Upon receipt of a completed
Notice and Questionnaire from a beneficial owner following the effectiveness of
the Shelf Registration Statement, the Company will, as promptly as practicable
but in any event within five business days of such receipt, file such amendments
to the Shelf Registration Statement or supplements to the related prospectus as
are necessary to permit such holder to deliver such prospectus to purchasers of
Registrable Securities.
Certain legal consequences may arise from being named as selling
securityholders in the Shelf Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby gives notice to the Company of its intention to
sell or otherwise dispose of Registrable Securities beneficially owned by it and
listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the
Shelf Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.
The undersigned hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
QUESTIONNAIRE
1. (a) Full Legal Name of Selling Securityholder:
-----------------------------------------------------------------------
(b) Full legal name of Registered Holder (if not the same as (a) above)
through which Registrable Securities listed in (3) below are held:
-----------------------------------------------------------------------
(c) Full legal name of broker-dealer or other third party through which
Registrable Securities listed in (3) below are held:
-----------------------------------------------------------------------
(d) Full legal name of DTC Participant (if applicable and if not the
same as (b) or (c) above) through which Registrable Securities listed in (3)
below are held:
-----------------------------------------------------------------------
2. Address for Notices to Selling Securityholder:
Telephone:
-------------------------------------------------------------
Fax:
-------------------------------------------------------------------
Contact Person
---------------------------------------------------------
3. Beneficial Ownership of Registrable Securities:
Type and Principal Amount of Registrable Securities beneficially owned:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
2
Unless otherwise indicated in the space provided below, all Registrable
Securities listed in response to this Item (3) as listed above will be
included in the Shelf Registration Statement. If the undersigned does
not wish all such Registrable Securities to be so included, please
indicate below the amount of RegistrableSecurities to be included:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
4. Beneficial Ownership of Company securities owned by the Selling
Securityholder:
Except as set forth below in this Item (4), the undersigned is not the
beneficial or registered owner of any securities of the Company other
than the Registrable Securities listed above in Item (3).
Type and amount of other securities beneficially owned by the Selling
Securityholder (include CUSIP No(s). if applicable):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
5. Relationship with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, directors or principal equity holders (5% or more) has held
any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three
years.
State any exceptions here:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
3
6. Plan of Distribution:
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Registrable Securities listed above
in Item (3) pursuant to the Shelf Registration Statement only as
follows (if at all): Such Registrable Securities may be sold from time
to time directly by the undersigned or alternatively through
underwriters or broker-dealers or agents. If the Registrable Securities
are sold through underwriters or broker-dealers or agents, the Selling
Securityholder will be responsible for underwriting discounts or
commissions or agent's commissions. Such Registrable Securities may be
sold in one or more transactions at fixed prices, at prevailing market
prices at the time of sale, at varying prices determined at the time of
sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (i) on
any national securities exchange or quotation service on which the
Registrable Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise
than on such exchanges or services or in the over-the-counter market,
or (iv) through the writing of options. In connection with sales of the
Registrable Securities or otherwise, the undersigned may enter into
hedging transactions with broker-dealers, which may in turn engage in
short sales of the Registrable Securities, short and deliver
Registrable Securities to close out such short positions, or loan or
pledge Registrable Securities to broker-dealers that in turn may sell
such securities. The Selling Securityholder may pledge or grant a
security interest in some or all of the Registrable Securities owned by
it and, if it defaults in the performance of its secured obligations,
the pledgees or secured parties may offer and sell the Registrable
Securities from time to time pursuant to the prospectus. The Selling
Securityholder also may transfer and donate shares in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling securityholder for purposes
of the prospectus.
State any exceptions here:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company.
The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Securities Exchange Act of 1934, as amended,
and the rules thereunder relating to stock manipulation, particularly Regulation
M thereunder (or any successor rules or regulations) and the provisions of the
Securities Act of 1933, as amended, relating to prospectus delivery, in
connection with any offering of Registrable Securities pursuant to the Shelf
Registration Statement. The undersigned agrees that neither it nor any person
acting on its behalf will engage in any transaction in violation of such
provisions.
The Selling Securityholder hereby acknowledges its obligations under
the Registration Rights Agreement to indemnify and hold harmless certain persons
set forth therein.
Pursuant to the Registration Rights Agreement, the Company has agreed
under certain circumstances to indemnify the Selling Securityholders against
liabilities.
4
In accordance with the undersigned's obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Shelf Registration Statement remains effective. All notices hereunder and
pursuant to the Registration Rights Agreement shall be made in writing at the
address set forth below.
In the event any Selling Securityholder transfers all or any portion of
the Registrable Securities listed in Item 3 above after the date on which such
information is provided to the Company, the Selling Securityholder will notify
the transferee(s) at the time of transfer of its rights and obligations under
this Notice and Questionnaire and the Registration Rights Agreement.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and the
related prospectus. The undersigned understands that such information will be
relied upon by the Company without independent investigation or inquiry in
connection with the preparation or amendment of the Shelf Registration Statement
and the related prospectus.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its authorized agent.
Beneficial Owner
By:
----------------------------------
Name:
Title:
Dated:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO
PXRE CORPORATION
PXRE HOUSE
110 PITTS BAY ROAD
PEMBROKE HM 08
BERMUDA
FACSIMILE NO.: (441) 296-6162
ATTN: JEFFREY L. RADKE
5