EXHIBIT 10.5
PXRE GROUP LTD.
17,500 Capital Securities
Fixed/Floating Rate Capital Securities
(Liquidation Amount $1,000.00 per Capital Security)
PLACEMENT AGREEMENT
--------------------
April 25, 2003
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
PXRE Group Ltd., incorporated and existing under the laws of Bermuda
(the "Company"), and its financing subsidiary, PXRE Capital Statutory Trust II,
a Connecticut statutory trust (the "Trust," and hereinafter together with the
Company, the "Offerors"), hereby confirm their agreement (this "Agreement") with
you as placement agents (the "Placement Agents"), as follows:
Section 1. Issuance and Sale of Securities.
1.1 Introduction. The Offerors propose to issue and sell at the Closing
(as defined in Section 2.3.1 hereof) 17,500 of the Trust's Fixed/Floating Rate
Capital Securities, with a liquidation amount of $1,000.00 per capital security
(the "Capital Securities"), to I-Preferred Term Securities II, Ltd., a company
with limited liability established under the laws of the Cayman Islands (the
"Purchaser") pursuant to the terms of a Subscription Agreement entered into, or
to be entered into on or prior to the Closing Date (as defined in Section 2.3.1
hereof), between the Offerors and the Purchaser (the "Subscription Agreement"),
the form of which is attached hereto as Exhibit A and incorporated herein by
this reference.
1.2 Operative Agreements. The Capital Securities shall be fully and
unconditionally guaranteed on a subordinated basis by the Company with respect
to distributions and amounts payable upon liquidation, redemption or repayment
(the "Guarantee") pursuant and subject to the Guarantee Agreement (the
"Guarantee Agreement"), to be dated as of the Closing Date and executed and
delivered by the Company and U.S. Bank National Association ("U.S. Bank"), as
trustee (the "Guarantee Trustee"), for the benefit from time to time of the
holders of the Capital Securities. The entire proceeds from the sale by the
Trust to the holders of the Capital Securities shall be combined with the entire
proceeds from the sale by the Trust to the Company of its common securities (the
"Common Securities"), and shall be used by the Trust to purchase $18,042,000.00
in principal amount of the Fixed/Floating Rate Junior Subordinated Deferrable
Interest Debentures (the "Debentures") of the Company. The Capital Securities
and the Common Securities for the Trust shall be issued pursuant to an Amended
and Restated Declaration of Trust among U.S. Bank, as institutional trustee (the
"Institutional Trustee"), the Administrators named therein, and the Company, to
be dated as of the Closing Date and in substantially the form heretofore
delivered to the Placement Agents (the "Trust Agreement"). The Debentures shall
be issued pursuant to an Indenture (the "Indenture"), to be dated as of the
Closing Date, between the Company and U.S. Bank, as indenture trustee (the
"Indenture Trustee"). The documents identified in this Section 1.2 and in
Section 1.1 are referred to herein as the "Operative Documents."
1.3 Rights of Purchaser. The Capital Securities shall be offered and
sold by the Trust directly to the Purchaser without registration of any of the
Capital Securities, the Debentures or the Guarantee under the Securities Act of
1933, as amended (the "Securities Act"), or any other applicable securities laws
in reliance upon exemptions from the registration requirements of the Securities
Act and other applicable securities laws. The Offerors agree that this Agreement
shall be incorporated by reference into the Subscription Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under this Agreement and shall be entitled to enforce obligations
of the Offerors under this Agreement as fully as if the Purchaser were a party
to this Agreement. The Offerors and the Placement Agents have entered into this
Agreement to set forth their understanding as to their relationship and their
respective rights, duties and obligations.
1.4 Legends. Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act, the Capital Securities and Debentures certificates shall each contain a
legend as required pursuant to any of the Operative Documents.
Section 2. Purchase of Capital Securities.
2.1 Exclusive Rights; Purchase Price. From the date hereof until the
Closing Date (which date may be extended by mutual agreement of the Offerors and
the Placement Agents), the Offerors hereby grant to the Placement Agents the
exclusive right to arrange for the sale of the Capital Securities to the
Purchaser at a purchase price of $1,000.00 per Capital Security.
2.2 Subscription Agreement. The Offerors hereby agree to evidence their
acceptance of the subscription by countersigning a copy of the Subscription
Agreement and returning the same to the Placement Agents.
2.3 Closing and Delivery of Payment.
2.3.1 Closing; Closing Date. The sale and purchase of the Capital
Securities by the Offerors to the Purchaser shall take place at a closing (the
"Closing") at the offices of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., at 10:00
a.m. (New York City time) on May 15, 2003, or such other business day as may be
agreed upon by the Offerors and the Placement Agents (the "Closing Date");
provided, however, that in no event shall the Closing Date occur later than May
22, 2003 unless consented to by the Purchaser. Payment by the Purchaser shall be
payable in the manner set forth in the Subscription Agreement and shall be made
prior to or on the Closing Date.
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2.3.2 Delivery. The certificate for the Capital Securities shall
be in definitive form, registered in the name of the Purchaser and in the
aggregate amount of the Capital Securities purchased by the Purchaser.
2.3.3 Transfer Agent. The Offerors shall deposit the certificate
representing the Capital Securities with the Institutional Trustee or other
appropriate party prior to the Closing Date.
2.4 Placement Agents' Fees and Expenses.
2.4.1 Placement Agents' Compensation. Because the proceeds from
the sale of the Capital Securities shall be used to purchase the Debentures from
the Company, the Company shall pay an aggregate of $30.00 for each $1,000.00 of
principal amount of Debentures sold to the Trust (excluding the Debentures
related to the Common Securities purchased by the Company). Of this amount,
$15.00 for each $1,000.00 of principal amount of Debentures shall be payable to
FTN Financial Capital Markets and $15.00 for each $1,000.00 of principal amount
of Debentures shall be payable to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. Such amount
shall be delivered to the Institutional Trustee or such other person designated
by the Placement Agents on the Closing Date and shall be allocated between and
paid to the respective Placement Agents as directed by the Placement Agents.
2.4.2 Costs and Expenses. Whether or not this Agreement is
terminated or the sale of the Capital Securities is consummated, the Company
hereby covenants and agrees that it shall pay or cause to be paid (directly or
by reimbursement) all reasonable costs and expenses incident to the performance
of the obligations of the Offerors under this Agreement, including all fees,
expenses and disbursements of counsel and accountants for the Offerors; the
reasonable costs and charges of any trustee, transfer agent or registrar and the
reasonable fees and disbursements of counsel to any trustee, transfer agent or
registrar in each case only to the extent reasonably attributable to the
Debentures and the Capital Securities; all reasonable expenses incurred by the
Offerors incident to the preparation, execution and delivery of the Trust
Agreement, the Indenture, and the Guarantee; and all other reasonable costs and
expenses incident to the performance of the obligations of the Company hereunder
and under the Trust Agreement.
2.5 Failure to Close. If any of the conditions to the Closing specified
in this Agreement shall not have been fulfilled to the satisfaction of the
Placement Agents or if the Closing shall not have occurred on or before 10:00
a.m. (New York City time) on May 22, 2003, then each party hereto,
notwithstanding anything to the contrary in this Agreement, shall be relieved of
all further obligations under this Agreement without thereby waiving any rights
it may have by reason of such nonfulfillment or failure; provided, however, that
the obligations of the parties under Sections 2.4.2, 7.5 and 9 shall not be so
relieved and shall continue in full force and effect.
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Section 3. Closing Conditions. The obligations of the Purchaser and the
Placement Agents on the Closing Date shall be subject to the accuracy, at and as
of the Closing Date, of the representations and warranties of the Offerors
contained in this Agreement, to the accuracy, at and as of the Closing Date, of
the statements of the Offerors made in any certificates pursuant to this
Agreement, to the performance by the Offerors of their respective obligations
under this Agreement, to compliance, at and as of the Closing Date, by the
Offerors with their respective agreements herein contained, and to the following
further conditions:
3.1 Opinions of Counsel. On the Closing Date, the Placement Agents
shall have received the following favorable opinions, each dated as of the
Closing Date: (a) from ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, special United States
counsel for the Offerors and addressed to the Purchaser and the Placement Agents
in substantially the form set forth on Exhibit B-1-A attached hereto and
incorporated herein by this reference, (b) from ▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇,
special Bermuda counsel for the Offerors and addressed to the Purchaser and the
Placement Agents in substantially the form set forth on Exhibit B-1-B attached
hereto and incorporated herein by this reference, (c) from Chancery ▇▇▇▇▇▇▇▇,
special Barbados counsel to the Offerors and addressed to the Purchaser and the
Placement Agents in substantially the form set forth on Exhibit B-1-C attached
hereto and incorporated herein by this reference, (d) from in-house legal
counsel to the Company and addressed to the Purchaser and the Placement Agents
in substantially the form set forth on Exhibit B-1-D attached hereto and
incorporated herein by this reference, (e) from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, special
Connecticut counsel to the Offerors and addressed to the Purchaser, the
Placement Agents and the Offerors, in substantially the form set forth on
Exhibit B-2 attached hereto and incorporated herein by this reference, and (f)
from LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., special tax counsel to the
Offerors, and addressed to the Placement Agents and the Offerors, in
substantially the form set forth on Exhibit B-3 attached hereto and incorporated
herein by this reference, subject to the receipt by LeBoeuf, Lamb, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P. of a representation letter from the Company in the form set forth
in Exhibit B-3 completed in a manner reasonably satisfactory to LeBoeuf, Lamb,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. (collectively, the "Offerors' Counsel Opinions"). In
rendering the Offerors' Counsel Opinions, counsel to the Offerors may rely as to
factual matters upon certificates or other documents furnished by officers,
directors and trustees of the Offerors (copies of which shall be delivered to
the Placement Agents and the Purchaser) and by government officials, and upon
such other documents as counsel to the Offerors may, in their reasonable
opinion, deem appropriate as a basis for the Offerors' Counsel Opinions. Counsel
to the Offerors may specify the jurisdictions in which they are admitted to
practice and that they are not admitted to practice in any other jurisdiction
and are not experts in the law of any other jurisdiction. If the Offerors'
counsel is not admitted to practice in the State of New York, the opinion of
Offerors' counsel may assume, for purposes of the opinion, that the laws of the
State of New York are substantively identical, in all respects material to the
opinion, to the internal laws of the state in which such counsel is admitted to
practice. Such Offerors' Counsel Opinions shall not state that they are to be
governed or qualified by, or that they are otherwise subject to, any treatise,
written policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
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3.2 Officer's Certificate. At the Closing Date, the Purchaser and the
Placement Agents shall have received certificates from the Chief Executive
Officer of the Company, dated as of the Closing Date, stating that (a) the
representations and warranties of the Offerors set forth in Section 5 hereof are
true and correct as of the Closing Date and that the Offerors have complied with
all agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Date, (b) since the date of this Agreement
the Offerors have not incurred any liability or obligation, direct or
contingent, or entered into any material transactions, other than in the
ordinary course of business, which is material to the Offerors, and (c) covering
such other matters as the Placement Agents may reasonably request.
3.3 Administrator's Certificate. At the Closing Date, the Purchaser and
the Placement Agents shall have received a certificate of one or more
Administrators of the Trust, dated as of the Closing Date, stating that the
representations and warranties of the Trust set forth in Section 5 are true and
correct as of the Closing Date and that the Trust has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.
3.4 Purchase Permitted by Applicable Laws; Legal Investment. The
purchase of and payment for the Capital Securities as described in this
Agreement and pursuant to the Subscription Agreement shall (a) not be prohibited
by any applicable law or governmental regulation, (b) not subject the Purchaser
or the Placement Agents to any penalty or, in the reasonable judgment of the
Purchaser and the Placement Agents, other onerous conditions under or pursuant
to any applicable law or governmental regulation, and (c) be permitted by the
laws and regulations of the jurisdictions to which the Purchaser and the
Placement Agents are subject.
3.5 Consents and Permits. The Company and the Trust shall have received
all consents, permits and other authorizations, and made all such filings and
declarations, as may be required from any person or entity pursuant to any law,
statute, regulation or rule (federal, state, local and foreign), or pursuant to
any agreement, order or decree to which the Company or the Trust is a party or
to which either is subject, in connection with the transactions contemplated by
this Agreement.
3.6 Sale of Purchaser Securities. The Purchaser shall have sold
securities issued by the Purchaser in an amount such that the net proceeds of
such sale shall be (i) available on the Closing Date and (ii) in an amount
sufficient to purchase the Capital Securities and all other capital or similar
securities contemplated in agreements similar to this Agreement and the
Subscription Agreement.
3.7 Information. Prior to or on the Closing Date, the Offerors shall
have furnished to the Placement Agents such further information, certificates,
opinions and documents addressed to the Purchaser and the Placement Agents,
which the Placement Agents may reasonably request, including, without
limitation, a complete set of the Operative Documents or any other documents or
certificates required by this Section 3; and all proceedings taken by the
Offerors in connection with the issuance, offer and sale of the Capital
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to the Placement Agents.
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If any condition specified in this Section 3 shall not have been
fulfilled when and as required in this Agreement, or if any of the opinions or
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Placement Agents, this
Agreement may be terminated by the Placement Agents by notice to the Offerors at
any time at or prior to the Closing Date. Notice of such termination shall be
given to the Offerors in writing or by telephone or facsimile confirmed in
writing.
Section 4. Conditions to the Offerors' Obligations. The obligations of the
Offerors to sell the Capital Securities to the Purchaser and consummate the
transactions contemplated by this Agreement shall be subject to the accuracy, at
and as of the Closing Date, of the representations and warranties of the
Placement Agents contained in this Agreement and to the following further
conditions:
4.1 Executed Agreement. The Offerors shall have received from the
Placement Agents an executed copy of this Agreement.
4.2 Fulfillment of Other Obligations. The Placement Agents shall have
fulfilled all of their other obligations and duties required to be fulfilled
under this Agreement prior to or at the Closing.
Section 5. Representations and Warranties of the Offerors. Except as set forth
on the Disclosure Schedule (as defined in Section 11.1) attached hereto, if any,
the Offerors jointly and severally represent and warrant to the Placement Agents
and the Purchaser as of the date hereof and as of the Closing Date as follows:
5.1 Securities Law Matters; Authorizations.
(a) Neither the Company nor the Trust, nor any of their
"Affiliates" (as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), nor any person acting on any of their behalf (other than the
Placement Agents) has, directly or indirectly, made offers or sales of any
security, or solicited offers to buy any security, under circumstances that
would require the registration under the Securities Act of any of the Capital
Securities, the Guarantee or the Debentures (collectively, the "Securities") or
any other securities to be issued, or which may be issued, by the Purchaser.
(b) Neither the Company nor the Trust, nor any of their
Affiliates, nor any person acting on its or their behalf (other than the
Placement Agents) has (i) offered for sale or solicited offers to purchase the
Securities, (ii) engaged or will engage, in any "directed selling efforts"
within the meaning of Regulation S under the Securities Act ("Regulation S")
with respect to the Securities, or (iii) engaged in any form of offering,
general solicitation or general advertising (within the meaning of Regulation D)
in connection with any offer or sale of any of the Securities.
(c) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
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(d) Neither the Company nor the Trust is or, after giving effect
to the offering and sale of the Capital Securities and the consummation of the
transactions described in this Agreement, will be an "investment company" or an
entity "controlled" by an "investment company," in each case within the meaning
of Section 3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), without regard to Section 3(c) of the Investment
Company Act.
(e) Neither the Company nor the Trust has paid or agreed to pay to
any person or entity (other than the Placement Agents) any compensation for
soliciting another to purchase any of the Securities.
(f) No authorization, approval, consent, order, registration or
qualification of or with any court or governmental authority or agency
(including, without limitation, any insurance regulatory agency or body and the
Bermuda Monetary Authority) is required in connection with the offering and sale
of the Securities or the Guarantee hereunder, or the consummation by the Company
or the Trust of any other transaction contemplated hereby, except such as have
been obtained and made under the federal securities laws or state insurance laws
and such as may be required under state or foreign securities or Blue Sky laws.
5.2 Organization, Standing and Qualification of the Trust. The Trust
has been duly created and is validly existing in good standing as a statutory
trust under the Connecticut Statutory Trust Act (the "Statutory Trust Act") with
the power and authority to own property and to conduct the business it transacts
and proposes to transact and to enter into and perform its obligations under the
Operative Documents. The Trust is duly qualified to transact business as a
foreign entity and is in good standing in each jurisdiction in which such
qualification is necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the Trust. The Trust is not
a party to or otherwise bound by any agreement other than the Operative
Documents. The Trust is and will, under current law, be classified for federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation.
5.3 Trust Agreement. The Trust Agreement has been duly authorized by
the Company and, on the Closing Date, will have been duly executed and delivered
by the Company and the Administrators of the Trust, and, assuming due
authorization, execution and delivery by the Institutional Trustee, will be a
valid and binding obligation of the Company and such Administrators, enforceable
against them in accordance with its terms, subject to (a) applicable bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation and other laws
relating to or affecting creditors' rights generally, and (b) general principles
of equity (regardless of whether considered and applied in a proceeding in
equity or at law) ("Bankruptcy and Equity"). Each of the Administrators of the
Trust is an employee or a director of the Company or of a subsidiary of the
Company and has been duly authorized by the Company to execute and deliver the
Trust Agreement.
5.4 Guarantee Agreement and the Indenture. Each of the Guarantee and
the Indenture has been duly authorized by the Company and, on the Closing Date
will have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Guarantee Trustee, in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture, will
be a valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to Bankruptcy and Equity.
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5.5 Capital Securities and Common Securities. The Capital Securities
and the Common Securities have been duly authorized by the Trust Agreement and,
when issued and delivered against payment therefor on the Closing Date to the
Purchaser, in the case of the Capital Securities, and to the Company, in the
case of the Common Securities, will be validly issued and represent undivided
beneficial interests in the assets of the Trust. None of the Capital Securities
or the Common Securities is subject to preemptive or other similar rights. On
the Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance.
5.6 Debentures. The Debentures have been duly authorized by the Company
and, at the Closing Date, will have been duly executed and delivered to the
Indenture Trustee for authentication in accordance with the Indenture, and, when
authenticated in the manner provided for in the Indenture and delivered against
payment therefor by the Trust, will constitute valid and binding obligations of
the Company entitled to the benefits of the Indenture enforceable against the
Company in accordance with their terms, subject to Bankruptcy and Equity.
5.7 Power and Authority. This Agreement has been duly authorized,
executed and delivered by the Company and the Trust and constitutes the valid
and binding obligation of the Company and the Trust, enforceable against the
Company and the Trust in accordance with its terms, subject to Bankruptcy and
Equity.
5.8 No Defaults. The Trust is not in violation of the Trust Agreement
or, to the knowledge of the Administrators, any provision of the Statutory Trust
Act. The execution, delivery and performance by the Company or the Trust of this
Agreement or the Operative Documents to which it is a party, and the
consummation of the transactions contemplated herein or therein and the use of
the proceeds therefrom, will not conflict with or constitute a breach of, or a
default under, or result in the creation or imposition of any lien, charge or
other encumbrance upon any property or assets of the Trust, the Company or any
of the Company's Significant Subsidiaries (as defined in Section 5.10 hereof)
pursuant to any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Trust, the Company or any of its Significant
Subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of any of them is subject, except for a conflict,
breach, default, lien, charge or encumbrance which could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect nor will
such action result in any violation of the Trust Agreement or the Statutory
Trust Act or require the consent, approval, authorization or order of any court
or governmental agency or body. As used herein, the term "Material Adverse
Effect" means any one or more effects that individually or in the aggregate are
material and adverse to the Offeror's ability to consummate the transactions
contemplated herein or in the Operative Documents or any one or more effects
that individually or in the aggregate are material and adverse to the condition
(financial or otherwise), earnings, affairs, business prospects or results of
operations of the Company and its Significant Subsidiaries taken as whole,
whether or not occurring in the ordinary course of business.
5.9 Organization, Standing and Qualification of the Company. The
Company has been duly incorporated and is validly existing as a company in good
standing under the laws of Bermuda, with all requisite corporate power and
authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of the Company
to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.
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5.10 Subsidiaries of the Company. Each of the Company's significant
subsidiaries (as defined in Section 1-02(w) of Regulation S-X to the Securities
Act (the "Significant Subsidiaries")) is listed in Exhibit C attached hereto and
incorporated herein by this reference. Each Significant Subsidiary has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction in which it is chartered or organized, with all requisite power and
authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign entity in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of any such
Significant Subsidiaries to be so qualified would not, singly or in the
aggregate, have a Material Adverse Effect. All of the issued and outstanding
shares of capital stock of the Significant Subsidiaries (a) have been duly
authorized and are validly issued, (b) are fully paid and nonassessable, and (c)
are wholly owned, directly or indirectly, by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, restriction upon voting
or transfer, preemptive rights, claim, equity or other defect.
5.11 Permits. The Company and each of its Significant Subsidiaries have
all requisite power and authority, and all necessary authorizations, approvals,
orders, licenses (including, without limitation, but only to the extent required
by applicable state laws, insurance licenses from the insurance departments of
the various jurisdictions where the Significant Subsidiaries write insurance
business (the "Insurance Licenses")), certificates and permits, including those
that are necessary to own or lease their respective properties (collectively,
"Permits"), of and from regulatory or governmental officials, bodies and
tribunals that are material to the Company and its Significant Subsidiaries
taken as a whole and are necessary to conduct the business now operated by them;
the Company and its Significant Subsidiaries are in compliance with the terms
and conditions of all such Insurance Licenses and Permits, except where the
failure so to comply would not, singly or in the aggregate, result in a Material
Adverse Effect; all of the Insurance Licenses and Permits are valid and in full
force and effect, except where the invalidity of such Insurance Licenses and
Permits or the failure of such Insurance Licenses and Permits to be in full
force and effect would not result in a Material Adverse Effect; and neither the
Company nor any of its Significant Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Insurance
Licenses and Permits which, singly or in the aggregate, may reasonably be
expected to result in a Material Adverse Effect.
5.12 Conflicts, Authorizations and Approvals. Neither the Company nor
any of its Significant Subsidiaries is in violation of its respective articles
or certificate of incorporation, charter or by-laws or similar organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which either the
Company or any of its Significant Subsidiaries is a party, or by which it or any
of them may be bound or to which any of the property or assets of the Company or
any of its Significant Subsidiaries is subject, the effect of which violation or
default in performance or observance would have, singly or in the aggregate, a
Material Adverse Effect.
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5.13 Financial Statements.
(a) The consolidated balance sheets of the Company and all of its
Significant Subsidiaries as of December 31, 2001 and December 31, 2002, and
related consolidated income statements and statements of changes in
shareholders' equity for the 3 years ended December 31, 2002 together with the
notes thereto (the "Financial Statements"), copies of each of which have been
provided to the Placement Agents, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be disclosed therein) and fairly present in all material respects the
financial position and the results of operations and changes in shareholders'
equity of the Company and all of its Significant Subsidiaries as of December 31,
2002 and for the periods indicated (subject, in the case of interim financial
statements, to normal year-end adjustments, none of which shall be material).
The books and records of the Company and all of its Significant Subsidiaries
have been, and are being, maintained in all material respects in accordance with
generally accepted accounting principles and any other applicable legal and
accounting requirements and reflect only actual transactions.
(b) The statutory financial statements as of December 31, 2001 and
December 31, 2002 (the "Statutory Financial Statements") of each of the
Company's U.S. insurance subsidiaries have for each relevant period been
prepared in accordance with accounting practices prescribed or permitted by the
National Association of Insurance Commissioners, and with respect to each
insurance subsidiary, the appropriate Insurance Department of the state of
domicile of such insurance subsidiary, and such accounting practices have been
applied on a consistent basis throughout the periods involved.
(c) Since December 31, 2002, there has been no material adverse
change or development with respect to the financial condition or earnings of the
Company and all of its Significant Subsidiaries, taken as a whole.
(d) The accountants of the Company who certified the Financial
Statements are independent public accountants of the Company and its Significant
Subsidiaries within the meaning of the Securities Act and the rules and
regulations thereunder.
5.14 Regulatory Enforcement Matters. Neither the Company nor any of its
Significant Subsidiaries is subject or is party to, or has received any notice
or advice that any of them may become subject or party to, any investigation
with respect to, any cease-and-desist order, agreement, consent agreement,
memorandum of understanding or other regulatory enforcement action, proceeding
or order with or by, or is a party to any commitment letter or similar
undertaking to, or is subject to any directive by, or has been since January 1,
2001, a recipient of any supervisory letter from, or since January 1, 2001, has
adopted any board resolutions at the request of, any agency charged with the
supervision or regulation of insurance companies (a "Regulatory Agency") that
currently restricts in any material respect the conduct of their business or
that in any material manner relates to their capital adequacy, their ability or
authority to pay dividends or make distributions to their shareholders or make
payments of principal or interest on their debt obligations, their management or
their business (each, a "Regulatory Agreement"), nor has the Company or any of
its Significant Subsidiaries been advised since January 1, 2001, by any
Regulatory Agency that it is considering issuing or requesting any such
Regulatory Agreement. There is no material unresolved violation, criticism or
exception by any Regulatory Agency with respect to any report or statement
relating to any examinations of the Company or any of its Significant
Subsidiaries.
10
5.15 No Material Change. Since December 31, 2002, there has been no
material adverse change or development with respect to the condition (financial
or otherwise), earnings, affairs, business prospects or results of operations of
the Company or its Significant Subsidiaries on a consolidated basis, whether or
not arising in the ordinary course of business.
5.16 No Undisclosed Liabilities. Neither the Company nor any of its
Significant Subsidiaries has any material liability, whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its Significant Subsidiaries giving rise to any such liability),
except (i) for liabilities set forth in the Financial Statements, Statutory
Financial Statements and any reports filed under the Exchange Act (as defined
below), respectively, (ii) normal fluctuation in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business of
the Company and all of its Significant Subsidiaries since the date of the most
recent balance sheet included in the Financial Statements and Statutory
Financial Statements, respectively, and (iii) as may be specifically disclosed
in writing to the Placement Agents.
5.17 Litigation. No charge, investigation, action, suit or proceeding
(including, without limitation, any proceeding to revoke or deny renewal of any
Insurance Licenses) is pending or, to the knowledge of the Offerors, threatened,
against or affecting the Company or its Significant Subsidiaries or any of their
respective properties before or by (i) any court wherein an unfavorable
decision, ruling or finding could reasonably be expected to have, singly or in
the aggregate, a Material Adverse Effect, or (ii) any regulatory, administrative
or governmental official, commission, board, agency or other authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding could
reasonably be expected to have, singly or in the aggregate, a Material Adverse
Effect.
5.18 Deferral of Interest Payments on Debentures. The Company has no
present intention to exercise its option to defer payments of interest on the
Debentures as provided in the Indenture. The Company believes that the
likelihood that it would exercise its right to defer payments of interest on the
Debentures as provided in the Indenture at any time during which the Debentures
are outstanding is remote because, among other things, of the restrictions that
would be imposed on the Company's ability to declare or pay dividends or
distributions on, or to redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's share capital and on the Company's ability
to make any payments of principal, interest or premium on, or repay, repurchase
or redeem, any of its debt securities that rank pari passu in all respects with,
or junior in interest to, the Debentures.
11
5.19 Consent to Jurisdiction and Venue. The Company has validly and
irrevocably submitted to the nonexclusive jurisdiction of any New York Court (as
defined below) with respect to suits, actions or proceedings arising out of or
in connection with violations of United States federal securities laws relating
to offers and sales of the Capital Securities, has validly and irrevocably
waived, to the fullest extent permitted by law, any objections that it may now
or hereafter have to the laying of venue of any such suit, action or proceeding
brought in any New York Court based on or arising under this Agreement or any
claims that any such suit, action or proceeding brought in any New York Court
has been brought in an inconvenient forum, and has duly and irrevocably
appointed CT Corporation System in New York, New York as its agent to receive
service of process with respect to actions arising out of or in connection with
any such suit, action or proceeding; and service of process effected in the
manner set forth in Section 11 of this Agreement will be effective under the
laws of Bermuda to confer personal jurisdiction over the Company.
Section 6. Representations and Warranties of the Placement Agents. Each
Placement Agent represents and warrants to the Offerors as to itself (but not as
to the other Placement Agent) as follows:
6.1 Organization, Standing and Qualification.
(a) FTN Financial Capital Markets is a division of First Tennessee
Bank, N.A., a national banking association duly organized, validly existing and
in good standing under the laws of the United States, with full power and
authority to own, lease and operate its properties and conduct its business as
currently being conducted. FTN Financial Capital Markets is duly qualified to
transact business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property or conducts its business so as
to require such qualification and in which the failure to so qualify would,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business, prospects or results of
operations of FTN Financial Capital Markets.
(b) ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
with full power and authority to own, lease and operate its properties and
conduct its business as currently being conducted. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
is duly qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
6.2 Power and Authority. Each Placement Agent has all requisite power
and authority to enter into this Agreement, and this Agreement has been duly and
validly authorized, executed and delivered by each Placement Agent and
constitutes the legal, valid and binding agreement of each Placement Agent,
enforceable against each Placement Agent in accordance with its terms, subject
to Bankruptcy and Equity and except as any indemnification or contribution
provisions thereof may be limited under applicable securities laws.
6.3 General Solicitation. In the case of the offer and sale of the
Capital Securities, no form of general solicitation or general advertising was
used by either Placement Agent or their representatives including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or broadcast over television or
radio or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. Neither Placement Agent nor their
representatives have engaged or will engage in any "directed selling efforts"
within the meaning of Regulation S with respect to the Capital Securities.
12
6.4 Purchaser. Each Placement Agent has made such reasonable inquiry as
is necessary to determine that the Purchaser is acquiring the Capital Securities
for its own account, that the Purchaser does not intend to distribute the
Capital Securities in contravention of the Securities Act or any other
applicable securities laws, and that the Purchaser is not a "U.S. person" as
that term is defined under Rule 902 of the Securities Act.
6.5 Qualified Purchasers. Each Placement Agent has not offered or sold
and will not arrange for the offer or sale of the Capital Securities except (i)
in an offshore transaction complying with Rule 903 of Regulation S, or (ii) to
those such Placement Agent reasonably believes are "accredited investors" (as
defined in Rule 501 of Regulation D), or (iii) in any other manner that does not
require registration of the Capital Securities under the Securities Act. In
connection with each such sale, each Placement Agent has taken or will take
reasonable steps to ensure that the Purchaser is aware that (a) such sale is
being made in reliance on an exemption under the Securities Act, and (b) future
transfers of the Capital Securities will not be made except in compliance with
applicable securities laws.
6.6. Offering Circulars. Neither Placement Agent nor their
representatives will include any non-public information about the Company, the
Trust or any of their affiliates in any registration statement, prospectus,
offering circular or private placement memorandum used in connection with any
purchase of Capital Securities, any issuance of securities by the Purchaser or
otherwise without the prior written consent of the Trust and the Company.
Section 7. Covenants of the Offerors. The Offerors covenant and agree with the
Placement Agents and the Purchaser as follows:
7.1 Compliance with Representations and Warranties. During the period
from the date of this Agreement to the Closing Date, the Offerors shall use
their best efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 5 hereof to be true as of
the Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date.
7.2 Sale and Registration of Securities. The Offerors and their
Affiliates shall not nor shall any of them permit any person acting on their
behalf (other than the Placement Agents), to directly or indirectly (a) sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) that would or could be integrated
with the sale of the Capital Securities in a manner that would require the
registration under the Securities Act of the Securities, or (b) make offers or
sales of any such Security, or solicit offers to buy any such security, under
circumstances that would require the registration of any of such securities
under the Securities Act.
7.3 Use of Proceeds. The Trust shall use the proceeds from the sale of
the Capital Securities to purchase the Debentures from the Company.
13
7.4 Investment Company. The Offerors shall not engage, or permit any
subsidiary to engage, in any activity which would cause it or any subsidiary to
be an "investment company" under the provisions of the Investment Company Act.
7.5 Reimbursement of Expenses. If the sale of the Capital Securities
provided for herein is not consummated (a) because any condition set forth in
Section 3 hereof is not satisfied, or (b) because of any refusal, inability or
failure on the part of the Company or the Trust to perform any agreement herein
or comply with any provision hereof other than by reason of a breach by the
Placement Agents, the Company shall reimburse the Placement Agents upon demand
for all of their pro rata share of out-of-pocket expenses (including reasonable
fees and disbursements of counsel) in an amount not to exceed $50,000.00 that
shall have been incurred by them in connection with the proposed purchase and
sale of the Capital Securities. Notwithstanding the foregoing, the Company shall
have no obligation to reimburse the Placement Agents for their out-of-pocket
expenses if the sale of the Capital Securities fails to occur because the
condition set forth in Section 3.6 is not satisfied or because either of the
Placement Agents fails to fulfill a condition set forth in Section 4.
7.6 Directed Selling Efforts, Solicitation and Advertising. In
connection with any offer or sale of any of the Securities, the Offerors shall
not, nor shall either of them permit any of their Affiliates or any person
acting on their behalf, other than the Placement Agents, to, (a) engage in any
"directed selling efforts" within the meaning of Regulation S, or (b) engage in
any form of general solicitation or general advertising (as defined in
Regulation D).
7.7 Compliance with Rule 144A(d)(4) under the Securities Act. So long
as any of the Securities are outstanding and are "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, the Offerors will,
during any period in which they are not subject to and in compliance with
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the Offerors are not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act,
provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon the
request of such holder or prospective purchaser in connection with any proposed
transfer, any information required to be provided by Rule 144A(d)(4) under the
Securities Act, if applicable. This covenant is intended to be for the benefit
of the holders, and the prospective purchasers designated by such holders, from
time to time of such restricted securities. The information provided by the
Offerors pursuant to this Section 7.7 will not, at the date thereof, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
7.8 Quarterly Reports. Within 50 days of the end of each of the first
three calendar year quarters and within 75 days of the end of each calendar year
during which the Debentures are issued and outstanding, the Offerors shall
submit to The Bank of New York a completed quarterly report in the form attached
hereto as Exhibit D. The Offerors acknowledge and agree that The Bank of New
York and its successors and assigns is a third party beneficiary of this Section
7.8.
14
Section 8. Covenants of the Placement Agents. The Placement Agents covenant and
agree with the Offerors that, during the period from the date of this Agreement
to the Closing Date, the Placement Agents shall use their best efforts and take
all action necessary or appropriate to cause their representations and
warranties contained in Section 6 to be true as of Closing Date, after giving
effect to the transactions contemplated by this Agreement, as if made on and as
of the Closing Date. The Placement Agents further covenant and agree not to
engage in hedging transactions with respect to the Capital Securities unless
such transactions are conducted in compliance with the Securities Act.
Section 9. Indemnification.
9.1 Indemnification Obligation. The Offerors shall jointly and
severally indemnify and hold harmless the Placement Agents and the Purchaser and
each of their respective agents, employees, officers and directors and each
person that controls either of the Placement Agents or the Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and agents, employees, officers and directors or any such controlling person of
either of the Placement Agents or the Purchaser (each such person or entity, an
"Indemnified Party") from and against any and all losses, claims, damages,
judgments, liabilities or expenses, joint or several, to which such Indemnified
Party may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Offerors), insofar as such losses, claims, damages,
judgments, liabilities or expenses (or actions in respect thereof) arise out of,
or are based upon, or relate to, in whole or in part, (a) any untrue statement
or alleged untrue statement of a material fact contained in any information
(whether written or oral) or documents executed in favor of, furnished or made
available to the Placement Agents or the Purchaser by the Offerors, or (b) any
omission or alleged omission to state in any information (whether written or
oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchaser by the Offerors a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse each Indemnified Party for any legal and other expenses as such
expenses are reasonably incurred by such Indemnified Party in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, judgment, liability, expense or action described in this Section 9.1. In
addition to their other obligations under this Section 9, the Offerors hereby
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of, or based upon, or
related to the matters described above in this Section 9.1, they shall reimburse
each Indemnified Party on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Indemnified Party
shall promptly return such amounts to the Offerors together with interest,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by First
Tennessee Bank, N.A. (the "Prime Rate"). Any such interim reimbursement payments
that are not made to an Indemnified Party within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request.
15
9.2 Conduct of Indemnification Proceedings. Promptly after receipt by
an Indemnified Party under this Section 9 of notice of the commencement of any
action, such Indemnified Party shall, if a claim in respect thereof is to be
made against the Offerors under this Section 9, notify the Offerors in writing
of the commencement thereof; but, subject to Section 9.4, the omission to so
notify the Offerors shall not relieve them from any liability pursuant to
Section 9.1 which the Offerors may have to any Indemnified Party unless and to
the extent that the Offerors did not otherwise learn of such action and such
failure by the Indemnified Party results in the forfeiture by the Offerors of
substantial rights and defenses. In case any such action is brought against any
Indemnified Party and such Indemnified Party seeks or intends to seek indemnity
from the Offerors, the Offerors shall be entitled to participate in, and, to the
extent that they may wish, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party; provided, however, if the defendants in
any such action include both the Indemnified Party and the Offerors and the
Indemnified Party shall have reasonably concluded that there may be a conflict
between the positions of the Offerors and the Indemnified Party in conducting
the defense of any such action or 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 Offerors, the Indemnified Party shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party.
Upon receipt of notice from the Offerors to such Indemnified Party of their
election to so assume the defense of such action and approval by the Indemnified
Party of counsel, the Offerors shall not be liable to such Indemnified Party
under this Section 9 for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof unless (a) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso in the preceding
sentence (it being understood, however, that the Offerors shall not be liable
for the expenses of more than one separate counsel representing the Indemnified
Parties who are parties to such action), or (b) the Offerors shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel of such
Indemnified Party shall be at the expense of the Offerors.
9.3 Contribution. If the indemnification provided for in this Section 9
is required by its terms, but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an Indemnified Party under Section 9.1
in respect of any losses, claims, damages, judgments, liabilities or expenses
referred to herein or therein, then the Offerors shall contribute to the amount
paid or payable by such Indemnified Party as a result of any losses, claims,
damages, judgments, liabilities or expenses referred to herein (a) in such
proportion as is appropriate to reflect the relative benefits received by the
Offerors, on the one hand, and the Indemnified Party, on the other hand, from
the offering of such Capital Securities, or (b) if the allocation provided by
clause (a) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (a)
above but also the relative fault of the Offerors, on the one hand, and the
Placement Agents, on the other hand, in connection with the statements or
omissions or inaccuracies in the representations and warranties herein or other
breaches which resulted in such losses, claims, damages, judgments, liabilities
or expenses, as well as any other relevant equitable considerations. The
respective relative benefits received by the Offerors, on the one hand, and the
Placement Agents, on the other hand, shall be deemed to be in the same
proportion, in the case of the Offerors, as the total price paid to the
16
Offerors for the Capital Securities sold by the Offerors to the Purchaser (net
of the compensation paid to the Placement Agents hereunder, but before deducting
expenses), and in the case of the Placement Agents, as the compensation received
by them, bears to the total of such amounts paid to the Offerors and received by
the Placement Agents as compensation. The relative fault of the Offerors and the
Placement Agents shall be determined by reference to, among other things,
whether the untrue statement or alleged untrue statement of a material fact or
the omission or alleged omission of a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Offerors or the Placement Agents and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The provisions set forth in Section 9.2 with respect
to notice of commencement of any action shall apply if a claim for contribution
is made under this Section 9.3; provided, however, that no additional notice
shall be required with respect to any action for which notice has been given
under Section 9.2 for purposes of indemnification. The Offerors and the
Placement Agents agree that it would not be just and equitable if contribution
pursuant to this Section 9.3 were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in this Section 9.3. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages, judgments,
liabilities or expenses referred to in this Section 9.3 shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. In no event shall the liability of the
Placement Agents hereunder be greater in amount than the dollar amount of the
compensation (net of payment of all expenses) received by the Placement Agents
upon the sale of the Capital Securities giving rise to such obligation. No
person found 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 found guilty of such fraudulent misrepresentation.
9.4 Additional Remedies. The indemnity and contribution agreements
contained in this Section 9 are in addition to any liability that the Offerors
may otherwise have to any Indemnified Party.
9.5 Additional Indemnification. The Company shall indemnify and hold
harmless the Trust against all loss, liability, claim, damage and expense
whatsoever, as due from the Trust under Sections 9.1 through 9.4 hereof.
Section 10. Rights and Responsibilities of Placement Agents.
10.1 Reliance. In performing their duties under this Agreement, the
Placement Agents shall be entitled to rely upon any notice, signature or writing
which they shall in good faith believe to be genuine and to be signed or
presented by a proper party or parties. The Placement Agents may rely upon any
opinions or certificates or other documents delivered by the Offerors or their
counsel or designees to either the Placement Agents or the Purchaser.
10.2 Rights of Placement Agents. In connection with the performance of
their duties under this Agreement, the Placement Agents shall not be liable for
any error of judgment or any action taken or omitted to be taken unless the
Placement Agents were grossly negligent or engaged in willful misconduct in
connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agents to expend or risk their own funds
or otherwise incur any financial liability on behalf of the Purchaser in
connection with the performance of any of their duties hereunder. The Placement
Agents shall be under no obligation to exercise any of the rights or powers
vested in them by this Agreement.
17
Section 11. Miscellaneous.
11.1 Disclosure Schedule. The term "Disclosure Schedule," as used
herein, means the schedule, if any, attached to this Agreement that sets forth
items the disclosure of which is necessary or appropriate as an exception to one
or more representations or warranties contained in Section 5 hereof. The
Disclosure Schedule shall be arranged in paragraphs corresponding to the section
numbers contained in Section 5. Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the immediately preceding sentence, the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure Schedule
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein unless the representation or warranty has to do with the
existence of the document or other item itself. Information provided by the
Company in response to any due diligence questionnaire shall not be deemed part
of the Disclosure Schedule and shall not be deemed to be an exception to one or
more representations or warranties contained in Section 5 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 11.1.
11.2 Notices. Prior to the Closing, and thereafter with respect to
matters pertaining to this Agreement only, all notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier or overnight air courier guaranteeing next
day delivery:
if to the Placement Agents, to:
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
18
with a copy to:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
and
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: 212-839-5599
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
if to the Offerors, to:
PXRE Group Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
All such notices and communications shall be deemed to have been duly
given (a) at the time delivered by hand, if personally delivered, (b) five
business days after being deposited in the mail, postage prepaid, if mailed, (c)
when answered back, if telexed, (d) the next business day after being
telecopied, or (e) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next day delivery. From and after the
Closing, the foregoing notice provisions shall be superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Company, and their respective counsel, may change their respective
notice addresses from time to time by written notice to all of the foregoing
persons.
19
11.3 Parties in Interest, Successors and Assigns. Except as expressly
set forth herein, this Agreement is made solely for the benefit of the Placement
Agents, the Purchaser and the Offerors and any person controlling the Placement
Agents, the Purchaser or the Offerors and their respective successors and
assigns; and no other person shall acquire or have any right under or by virtue
of this Agreement. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties.
11.4 Counterparts. This Agreement may be executed 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.
11.5 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS
OF LAWS) OF THE STATE OF NEW YORK, EXCEPT WITH RESPECT TO AUTHORIZATION AND
EXECUTION BY OR ON BEHALF OF THE COMPANY WHICH ARE REQUIRED TO BE GOVERNED BY
THE LAWS OF BERMUDA.
11.7 Submission to Jurisdiction; Appointment of Agent for Service. In
further consideration of the agreement of the Placement Agents herein contained,
the Company agrees and covenants as follows:
The Company irrevocably agrees that any legal suit, action or
proceeding against the Company brought by any Placement Agent arising out of or
based upon this Agreement or the transactions contemplated hereby may be
instituted in any United States Federal or state court in the Borough of
Manhattan, The City of New York, State of New York (a "New York Court"), and
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any such proceeding and irrevocably submits to the
non-exclusive jurisdiction of such courts in any such suit, action or
proceeding. The Company irrevocably waives any immunity to jurisdiction to which
it may otherwise be entitled or become entitled (including immunity to
pre-judgment attachment and execution) in any legal suit, action or proceeding
against it arising out of this Agreement or the transactions contemplated hereby
which is instituted in any New York Court or in any foreign court. To the extent
permitted by law, the Company hereby waives any objection to the enforcement by
any competent foreign court of any judgment validly obtained in any such
proceeding. The Company designates and appoints CT Corporation System, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as its authorized agent (the
"Authorized Agent") upon which process may be served in any such action arising
out of or based on this Agreement or the transactions contemplated hereby which
may be instituted in any New York Court by any Placement Agent, expressly
consents to the non-exclusive jurisdiction of any such court in respect of any
such action, and waives any other requirements of or objections to personal
jurisdiction with respect thereto. The Company represents and warrants that its
Authorized Agent has agreed to act as said agent for service of process and the
Company agrees to take any and all action, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment in
full force and effect as aforesaid. Service of process upon the Authorized Agent
and written notice of such service of process to it shall be
20
deemed, in every respect, effective service of process upon the Company.
Notwithstanding the foregoing, any action based on this Agreement or the
transactions contemplated hereby may be instituted by any Placement Agent in any
competent foreign court.
The provisions of this Section 11.7 shall survive any termination of
this Agreement, in whole or in part.
11.8 Judgment Currency. In respect of any judgment or order given or
made for any amount due hereunder that is expressed and paid in currency (the
"judgment currency") other than United States dollars, the party against whom
such judgment or order has been given or made will indemnify each party in whose
favor such judgment or order has been given or made (the "Indemnitee") against
any loss incurred by the Indemnitee as a result of any variation as between (i)
the rate of exchange at which the United States dollar amount is converted into
the judgment currency for the purpose of such judgment or order and (ii) the
rate of exchange at which the Indemnitee is able to purchase United States
dollars with the amount of the judgment currency actually received by such
Indemnitee. The foregoing indemnity shall constitute a separate and independent
obligation of the Company and the Placement Agents and shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term "rate of exchange" shall include any reasonable premiums and costs of
exchange payable in connection with the purchase of or conversion into United
States dollars.
11.9 Waiver of Immunity. To the extent that the Company has or
hereafter may acquire any immunity (sovereign or otherwise) from any legal
action, suit or proceeding, from jurisdiction of any court or from set-off or
any legal process (whether service or notice, attachment in aid or otherwise)
with respect to itself or any of its property, the Company hereby irrevocably
waives and agrees not to plead or claim such immunity in respect of its
obligations under this Agreement.
11.10 Entire Agreement. This Agreement, together with the other
Operative Documents and the other documents delivered in connection with the
transactions contemplated by this Agreement, are intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, together with the other Operative Documents
and the other documents delivered in connection with the transaction
contemplated by this Agreement, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
11.11 Severability. In the event that any one or 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, it
being intended that all of the Placement Agents', the Purchaser's and Offerors'
rights and privileges shall be enforceable to the fullest extent permitted by
law.
21
11.12 Survival. The Placement Agents and the Offerors, respectively,
agree that the representations, warranties and agreements made by each of them
in this Agreement and in any certificate or other instrument delivered pursuant
hereto shall remain in full force and effect and shall survive the delivery of,
and payment for, the Capital Securities.
Signatures appear on the following page
22
If this Agreement is satisfactory to you, please so indicate by signing
the acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with its
terms.
Very truly yours,
PXRE GROUP LTD.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
PXRE CAPITAL STATUTORY TRUST II
By:
--------------------------------------------------
Name:
------------------------------------------------
Title: Administrator
CONFIRMED AND ACCEPTED,
as of the date first set forth above
FTN FINANCIAL CAPITAL MARKETS,
a division of First Tennessee Bank, N.A.,
as a Placement Agent
By:
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title Managing Director
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
a New York corporation, as a Placement Agent
By:
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
23
EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
PXRE CAPITAL STATUTORY TRUST II
PXRE GROUP LTD.
SUBSCRIPTION AGREEMENT
[CLOSING], 2003
THIS SUBSCRIPTION AGREEMENT (this "Agreement") made among PXRE Capital
Statutory Trust II (the "Trust"), a statutory trust created under the
Connecticut Statutory Trust Act (Chapter 615 of Title 34 of the Connecticut
General Statutes, Section 500, et seq.), PXRE Group Ltd., a Bermuda company,
with its principal offices located at Swan Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, (▇▇▇ "Company" and, collectively with the Trust, the
"Offerors"), and I-Preferred Term Securities II, Ltd. (the "Purchaser").
RECITALS:
1. The Trust desires to issue [NUMBER OF CAPITAL SECURITIES] of its
Fixed/Floating Rate Capital Securities (the "Capital Securities"), liquidation
amount $1,000.00 per Capital Security, representing an undivided beneficial
interest in the assets of the Trust (the "Offering"), to be issued pursuant to
an Amended and Restated Declaration of Trust (the "Declaration") by and among
the Company, U.S. Bank National Association ("U.S. Bank"), the administrators
named therein, and the holders (as defined therein), which Capital Securities
are to be guaranteed by the Company with respect to distributions and payments
upon liquidation, redemption and otherwise pursuant to the terms of a Guarantee
Agreement between the Company and U.S. Bank, as trustee (the "Guarantee"); and
2. The proceeds from the sale of the Capital Securities will be
combined with the proceeds from the sale by the Trust to the Company of its
common securities, and will be used by the Trust to purchase an equivalent
amount of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures
of the Company (the "Debentures") to be issued by the Company pursuant to an
indenture to be executed by the Company and U.S. Bank, as trustee (the
"Indenture"); and
3. In consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF CAPITAL SECURITIES
1.1. Upon the execution of this Agreement, the Purchaser hereby agrees
to purchase from the Trust [NUMBER OF CAPITAL SECURITIES] Capital Securities at
a price equal to $1,000.00 per Capital Security (the "Purchase Price") and the
Trust agrees to sell such Capital Securities to the Purchaser for said Purchase
Price. The rights and preferences of the Capital Securities are set forth in the
Declaration. The Purchase Price is payable in immediately available funds on
[CLOSING], 2003, or such other business day as may be designated by the
Purchaser, but in no event later than [LAST CLOSING], 2003 (the "Closing Date").
The Offerors shall provide the Purchaser wire transfer instructions no later
than 1 day following the date hereof.
24
1.2. The certificate for the Capital Securities shall be delivered by
the Trust on the Closing Date to the Purchaser or its designee.
1.3. The Placement Agreement, dated [PRICING], 2003 (the "Placement
Agreement"), among the Offerors and the Placement Agents identified therein
includes certain representations and warranties, covenants and conditions to
closing and certain other matters governing the Offering. The Placement
Agreement is hereby incorporated by reference into this Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce the
obligations of the Offerors under such Placement Agreement as fully as if the
Purchaser were a party to such Placement Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1. The Purchaser understands and acknowledges that the Capital
Securities, the Debentures and the Guarantee have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not be
offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any other
applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.
2.2. The Purchaser represents, warrants and certifies that (i) it is
not a "U.S. person" as such term is defined in Rule 902 under the Securities
Act, (ii) it is not acquiring the Capital Securities for the account or benefit
of any such U.S. person, (iii) the offer and sale of Capital Securities to the
Purchaser constitutes an "offshore transaction" under Regulation S of the
Securities Act, and (iv) it will not engage in hedging transactions with regard
to the Capital Securities unless such transactions are conducted in compliance
with the Securities Act and the Purchaser agrees to the legends and transfer
restrictions set forth on the Capital Securities certificate.
2.3. The Purchaser represents and warrants that it is purchasing the
Capital Securities for its own account, for investment, and not with a view to,
or for offer or sale in connection with, any distribution thereof in violation
of the Securities Act or other applicable securities laws, subject to any
requirement of law that the disposition of its property be at all times within
its control and subject to its ability to resell such Capital Securities
pursuant to an effective registration statement under the Securities Act or
under Rule 144A or any other exemption from registration available under the
Securities Act or any other applicable Securities law.
A-2
2.4. The Purchaser represents and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties specified herein, and to consummate the transactions contemplated
herein and it has full right and power to subscribe for Capital Securities and
perform its obligations pursuant to this Agreement.
2.5. The Purchaser, a Cayman Islands Company whose business includes
issuance of certain notes and acquiring the Capital Securities and other similar
securities, represents and warrants that it has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of purchasing the Capital Securities, has had the opportunity to ask
questions of, and receive answers and request additional information from, the
Offerors and is aware that it may be required to bear the economic risk of an
investment in the Capital Securities.
2.6. The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental body, agency or court having jurisdiction over the
Purchaser, other than those that have been made or obtained, is necessary or
required for the performance by the Purchaser of its obligations under this
Agreement or to consummate the transactions contemplated herein.
2.7. The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.
2.8. The Purchaser represents and warrants that (i) the Purchaser is
not in violation or default of any term of its Memorandum of Association or
Articles of Association, of any provision of any mortgage, indenture, contract,
agreement, instrument or contract to which it is a party or by which it is bound
or of any judgment, decree, order, writ or, to its knowledge, any statute, rule
or regulation applicable to the Purchaser which would prevent the Purchaser from
performing any material obligation set forth in this Agreement; and (ii) the
execution, delivery and performance of and compliance with this Agreement, and
the consummation of the transactions contemplated herein, will not, with or
without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or the suspension, revocation, impairment, forfeiture or non-renewal of any
permit, license, authorization or approval applicable to the Purchaser, its
business or operations or any of its assets or properties which would prevent
the Purchaser from performing any material obligations set forth in this
Agreement.
2.9. The Purchaser represents and warrants that the Purchaser is an
exempted company with limited liability duly incorporated, validly existing and
in good standing under the laws of the jurisdiction where it is organized, with
full power and authority to perform its obligations under this Agreement.
2.10. The Purchaser understands and acknowledges that the Company will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agrees that, if any of the
acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it
shall promptly notify the Company.
A-3
2.11. The Purchaser understands that no public market exists for any of
the Capital Securities, and that it is unlikely that a public market will ever
exist for the Capital Securities.
ARTICLE III
MISCELLANEOUS
3.1. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:
To the Offerors: PXRE Group Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
Attention: Chief Financial Officer
Fax: ▇▇▇-▇▇▇-▇▇▇▇
To the Purchaser: I-Preferred Term Securities II, Ltd.
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇ House
South Church Street
▇▇▇▇▇▇ Town, Grand Cayman
Cayman Islands
Attention: The Directors
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Unless otherwise expressly provided herein, notices shall be deemed to
have been given on the date of mailing, except notice of change of address,
which shall be deemed to have been given when received.
3.2. This Agreement shall not be changed, modified or amended except by
a writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
3.3. Upon the execution and delivery of this Agreement by the
Purchaser, this Agreement shall become a binding obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.
A-4
3.4. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW,
EXCEPT WITH RESPECT TO AUTHORIZATION AND EXECUTION BY OR ON BEHALF OF THE
COMPANY WHICH ARE REQUIRED TO BE GOVERNED BY THE LAWS OF BERMUDA.
3.5. The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
3.6. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
3.7. In the event that any one or 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, it
being intended that all of the Offerors' and the Purchaser's rights and
privileges shall be enforceable to the fullest extent permitted by law.
Signatures appear on the following page
A-5
IN WITNESS WHEREOF, I have set my hand the day and year first written
above.
I-PREFERRED TERM SECURITIES II, LTD.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the
day and year first written above.
PXRE GROUP LTD.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
PXRE CAPITAL STATUTORY TRUST II
By:
----------------------------------------
Name:
--------------------------------------
Title: Administrator
▇-▇
▇▇▇▇▇▇▇ ▇-▇-▇
FORM OF COMPANY COUNSEL OPINION
[__________], 2003
I-Preferred Term Securities II, Ltd.
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇ House
South House
South Church Street
▇▇▇▇▇▇ Town, Grand Cayman
Grand Cayman Islands
British West Indies
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Fixed/ Floating Rate Junior Subordinated Deferrable Interest Debentures
due 2033 of PXRE Group, Ltd.
Ladies and Gentlemen:
We have acted as special United States counsel for PXRE Group, Ltd., a Bermuda
company (the "Company") and PXRE Capital Statutory Trust II, a Connecticut
statutory trust (the "Trust"), in connection with the issuance by the Company of
$[AMOUNT OF DEBENTURES] aggregate principal amount of its junior subordinated
deferrable interest debentures (the "Debentures") and the issuance by the Trust
of [NUMBER OF CAPITAL SECURITIES] Fixed/Floating Rate Capital Securities
(liquidation amount of $1,000 per security) of the Trust (the "Capital
Securities").
This opinion is furnished to you pursuant to Section 3.1(a) of the Placement
Agreement, dated [__________], 2003 (the "Placement Agreement"), among the
Trust, the Company, and FTN Financial Capital Markets and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc. (the "Placement Agents"). Capitalized terms not otherwise defined
herein have the respective meanings given to them in the Placement Agreement.
B-1-A-1
I-Preferred Term Securities II, Ltd.
FTN Financial Capital Markets
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
_____________, 2003
Page 2
In connection with this opinion, we have examined originals, or copies certified
or otherwise identified to our satisfaction, of minutes of meetings of the
Company's Board of Directors; the Placement Agreement; the Amended and Restated
Declaration of Trust dated as of [__________], 2003 (the "Declaration"), among
the Institutional Trustee (as defined therein), the Administrators (as defined
therein), the Company, as sponsor, and the holders from time to time of
undivided beneficial interests in the Trust; the Indenture dated as of
[_________], 2003 (the "Indenture"), between the Company and U.S. Bank National
Association (the "Trustee"); the Debentures; the Capital Securities; the
Guarantee Agreement dated as of [____ ], 2003 (the "Guarantee"), between the
Company and U.S. Bank National Association as trustee for the benefit of the
Holders (as defined therein); and the Subscription Agreement dated [____ ], 2003
(the "Subscription Agreement" and together with the Placement Agreement, the
Declaration, the Indenture, the Debentures, the Capital Securities and the
Guarantee, sometimes referred to hereinafter as the "Transaction Documents"),
among the Company, the Trust and I-Preferred Term Securities II, Ltd. (the
"Purchaser"); and such certificates of public officials, certificates of
officers of the Company, corporate records, documents and other certificates,
opinions and instruments, and have made such other investigations, as we have
deemed relevant and necessary as a basis for the opinions hereinafter expressed.
For purposes of the opinions expressed herein, we have assumed the genuineness
of all signatures, the legal capacity of all natural persons executing
agreements, instruments or documents, the completeness and authenticity of all
records and documents submitted to us as originals and the conformity with the
originals of all records and documents submitted to us as copies. The opinions
are subject to the qualification that we have relied, as to matters of fact
(including determinations with respect to the question of materiality to the
Company and its subsidiaries including, without limitation, PXRE Corporation, a
Delaware corporation ("PXRE Corporation")), to the extent we deem proper, on the
representations and warranties in the Placement Agreement, certificates of
officers or other representatives of the Company, the Trust and PXRE Corporation
and certificates of public officials.
We have also assumed for purposes of this opinion that (i) each of the parties
to the Transaction Documents (a) is validly existing and in good standing in the
respective jurisdiction of its organization and has satisfied all applicable
governmental requirements and other laws and requirements, in each case to the
extent necessary for its execution, delivery and performance of the respective
Transaction Documents to which it is a party, (b) has the requisite corporate,
company or partnership power and authority, respectively, to act with respect to
the authorization, execution, delivery and performance of such documents and
agreements to which it is a party, and (c) has duly and validly authorized,
executed and delivered each of such documents and agreements to which it is a
party; and (ii) each of the Transaction Documents to which the Company is a
party constitutes a valid and binding agreement of the Company under the laws of
Bermuda.
B-1-A-2
I-Preferred Term Securities II, Ltd.
FTN Financial Capital Markets
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
_____________, 2003
Page 3
The opinions expressed below are limited to the laws of the State of New York,
the federal laws of the United States and the General Corporation Law of the
State of Delaware. The opinions expressed below in Paragraph 1 as to the due
qualification and good standing of PXRE Corporation are based solely upon our
review of certificates issued by public officials and by officers of PXRE
Corporation or the Company, and the opinions expressed below in Paragraph 1 as
to the ownership of stock are based solely upon our review of PXRE Corporation's
stock register. We call to your attention the fact that the Declaration
specifies in Section 13.2 that it is governed by the law of the State of
Connecticut and that our opinion in Paragraph 3 is given as if the Declaration
were instead governed by the internal laws of the State of New York. We express
no opinion as to the securities or "Blue Sky" laws of any jurisdiction other
than the federal securities laws of the United States. Whenever our opinion is
indicated to be "known to us" or "to the best of our knowledge", we are
referring only to the actual knowledge of those of our attorneys who have
represented the Company in connection with the transactions contemplated by the
Placement Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
1. PXRE Corporation is validly existing as a corporation in good standing under
the laws of the State of Delaware, with full corporate power and authority to
own its properties and conduct its business as presently conducted in all
material respects. To the best of our knowledge, all outstanding shares of
capital stock of PXRE Corporation have been duly authorized and validly issued,
and are fully paid and non-assessable and owned of record by PXRE Reinsurance
(Barbados) Ltd.
2. The issuance, sale and delivery of the Debentures by the Company and the
issuance, sale and delivery of the Capital Securities by the Trust do not give
rise to any rights to subscribe for or to purchase any shares of capital stock
or equity securities of PXRE Corporation pursuant to the corporate Articles of
Incorporation, Charter or By-Laws of PXRE Corporation, or, to the best of our
knowledge, any agreement or other instrument to which PXRE Corporation is a
party.
3. Each of the Placement Agreement, the Indenture, the Subscription Agreement,
the Declaration and the Guarantee is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnification and contribution thereunder may be limited by
applicable law or the public policy underlying such laws and except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
4. Assuming (a) the Debentures are authenticated in accordance with the terms of
the Indenture and (b) the Debentures are delivered to and paid for by the Trust
pursuant to the Placement Agreement, the Debentures constitute legally valid and
binding obligations of the Company, entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
B-1-A-3
I-Preferred Term Securities II, Ltd.
FTN Financial Capital Markets
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
_____________, 2003
Page 4
5. To the best of our knowledge, PXRE Corporation is not in breach or violation
of, or default under, with or without notice or lapse of time or both, its
Articles of Incorporation, Charter or By-Laws. The execution, delivery and
performance of the Transaction Documents and the consummation of the
transactions contemplated thereby do not and will not (i) conflict with,
constitute a material breach or violation of, or constitute a material default
under, with or without notice or lapse of time or both, any of the terms,
provisions or conditions of (A) the Articles of Incorporation, Charter or
By-Laws of PXRE Corporation, or (B) to the best of our knowledge, any material
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease, franchise, license or any other material agreement or instrument to which
PXRE Corporation is a party or by which it or any of its properties may be
bound, or (C) any judgment, order or decree of any court, regulatory body,
administrative agency, governmental body or arbitrator in jurisdictions covered
by this opinion and known to us and binding on PXRE Corporation which, in the
case of each of (A), (B) or (C) above, is material to the Company and its
subsidiaries on a consolidated basis or (ii) pursuant to any material contract,
indenture or other material agreement or instrument, result in the creation or
imposition of any material lien, claim, charge, encumbrance or restriction upon
any property or assets of PXRE Corporation.
6. Assuming the accuracy of the representations and warranties and compliance
with the agreements of the Placement Agents and the Purchaser contained in the
Placement Agreement, the Subscription Agreement, the Indenture and the
Declaration, as applicable, registration of the Capital Securities, the
Guarantee and the Debentures under the Securities Act of 1933, as amended, is
not required for the offer and sale of the Capital Securities by the Trust to
the Purchaser. No opinion is expressed with respect to any re-offer or resale of
the Capital Securities by the Purchaser or any sale by the Purchaser of its
securities.
7. Neither the Company nor the Trust is, and after giving effect to the offering
and sale of the Capital Securities and the consummation of the transactions
described in the Placement Agreement will be, an "investment company" or entity
"controlled" by an "investment company", in each case within the meaning of
Section 3(a) of the Investment Company Act, without regard to Section 3(c) of
such Act.
The foregoing opinions are given as of the date hereof and we assume no
obligation to update or supplement them to reflect any facts or circumstances
which may hereafter come to our attention or any changes in laws which may
hereafter occur.
This letter is rendered at the request of the Company and is for the sole
benefit of, and may be relied upon only by, the Placement Agents and the
Purchaser.
Very truly yours,
▇-▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇-▇
FORM OF ▇▇▇▇▇▇▇, ▇▇▇▇ AND ▇▇▇▇▇▇▇ OPINION
B-1-B1
April , 2003
To the Persons listed in the Schedule DIRECT LINE:
annexed hereto E-MAIL: ▇▇▇▇▇▇@▇▇▇.▇▇
OUR REF: DJD/aet/
YOUR REF:
Dear Sirs
PXRE Group Ltd. (the "Company")
We have acted as special legal counsel in Bermuda to the Company in connection
with a Private Placement Agreement dated April , 2003 (the "Placement
Agreement"), between the Company and PXRE Capital Statutory Trust II (the
"Trust"), and FTN Financial Capital Markets and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
(the "Placement Agents").
For the purposes of giving this opinion, we have examined the following
documents:
(i) an electronic copy (with facsimile execution signature pages) of the
Placement Agreement;
(ii) an electronic copy (with facsimile execution signature pages) of the
Subscription Agreement dated as of April , 2003, by and among the
Company, the Trust and I-Preferred Term Securities I, Ltd. (the
"Subscription Agreement");
(iii) an electronic copy (with facsimile execution signature page) of the
Junior Subordinated Debenture ("Debenture");
(iv) an electronic copy (with facsimile execution signature pages) of an
Indenture dated as of April , 2003 by and among the Company and State
Street Bank & Trust Company of Connecticut, National Association,
relating to the Floating Rate Junior Subordinated Deferrable Interest
Debentures ("Indenture");
(v) an electronic copy (with facsimile execution signature pages) of an
Amended and Restated Declaration of Trust by and among the Trustee, the
Company and, as Administrators ("Trust Agreement"); and
B-1-B-2
(vi) an electronic copy (with facsimile execution signature pages) dated as
of April , 2003, of a Guarantee Agreement by and among the Company and
State Street Bank & Trust Company of Connecticut, National Association
("Guarantee Agreement").
The documents listed in items (i) through (vi) above are herein sometimes
collectively referred to as the "Documents" (which term does not include any
other instrument or agreement whether or not specifically referred to therein or
attached as an exhibit or schedule thereto).
We have also reviewed the memorandum of association and the bye-laws of the
Company, each certified by the Secretary of the Company on April , 2003,
resolutions adopted by the unanimous written consent of the board of directors
of the Company dated as of March 18, 2003, (the "Minutes"), and such other
documents and made such enquiries as to questions of law as we have deemed
necessary in order to render the opinion set forth below.
We have assumed (a) the genuineness and authenticity of all signatures and the
conformity to the originals of all copies (whether or not certified) examined by
us and the authenticity and completeness of the originals from which such copies
were taken, (b) that where a document has been examined by us in draft form, it
will be or has been executed in the form of that draft, and where a number of
drafts of a document have been examined by us all changes thereto have been
marked or otherwise drawn to our attention, (c) the capacity, power and
authority of each of the parties to the Documents, other than the Company, to
enter into and perform its respective obligations under the Documents, (d) the
due execution and delivery of the Documents by each of the parties thereto,
other than the Company, (e) the accuracy and completeness of all factual
representations made in the Documents and other documents reviewed by us, (f)
that the resolutions contained in the Minutes remain in full force and effect
and have not been rescinded or amended, (g) that the Company is entering into
the Documents pursuant to its business of a holding company, (h) that there is
no provision of the law of any jurisdiction, other than Bermuda, which would
have any implication in relation to the opinions expressed herein, (i) the
validity and binding effect under the laws of the State of New York, in the
United States of America (the "Foreign Laws") of the Documents which are
expressed to be governed by such Foreign Laws in accordance with their
respective terms, (j) the validity and binding effect under the Foreign Laws of
the submission by the Company pursuant to the Documents to the non-exclusive
jurisdiction of the courts of the State of New York, in the United States of
America (the "Foreign Courts"), (k) that none of the parties to the Documents
has carried on or will carry on activities, other than the performance of its
obligations under the Documents, which would constitute the carrying on of
investment business in or from within Bermuda and that none of the parties to
the Documents, other than the Company, will perform its obligations under the
Documents in or from within Bermuda, (l) that on the date of entering into the
Documents the Company is and after entering into the Documents will be able to
pay its liabilities as they become due.
B-1-B-3
The obligations of the Company under the Documents (a) will be subject to the
laws from time to time in effect relating to bankruptcy, insolvency,
liquidation, possessory liens, rights of set off, reorganisation, amalgamation,
moratorium or any other laws or legal procedures, whether of a similar nature or
otherwise, generally affecting the rights of creditors, (b) will be subject to
statutory limitation of the time within which proceedings may be brought, (c)
will be subject to general principles of equity and, as such, specific
performance and injunctive relief, being equitable remedies, may not be
available, (d) may not be given effect to by a Bermuda court, whether or not it
was applying the Foreign Laws, if and to the extent they constitute the payment
of an amount which is in the nature of a penalty and not in the nature of
liquidated damages. Notwithstanding any contractual submission to the
jurisdiction of specific courts, a Bermuda court has inherent discretion to stay
or allow proceedings in the Bermuda courts.
We express no opinion as to the enforceability of any provision of the Documents
which provides for the payment of a specified rate of interest on the amount of
a judgment after the date of judgment or which purports to ▇▇▇▇▇▇ the statutory
powers of the Company.
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is to be governed by and
construed in accordance with the laws of Bermuda and is limited to and is given
on the basis of the current law and practice in Bermuda. This opinion is issued
solely for your benefit and is not to be relied upon by any other person, firm
or entity or in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion that:
1. The Company is duly incorporated and existing under the laws of Bermuda
and has full corporate power to own or lease its properties and to
carry on business in Bermuda as a holding company.
2. The Company has the necessary corporate power and authority to enter
into and perform its obligations under the Documents. The execution and
delivery of the Documents by the Company and the performance by the
Company of its obligations thereunder will not violate the memorandum
of association or bye-laws of the Company nor any applicable law,
regulation, order or decree in Bermuda.
3. The Company has taken all corporate action required to authorise its
execution, delivery and performance of the Documents. The Documents
have been duly executed and delivered by or on behalf of the Company,
and constitute the valid and binding obligations of the Company in
accordance with the terms thereof.
4. The issuance, sale and delivery of the Debentures by the Company and
the issuance, sale and delivery of the Capital Securities by the Trust
do not give rise to any pre-emptive or other rights to subscribe for or
to purchase any common shares of the Company pursuant to the Company's
memorandum of association or bye-laws.
B-1-B-4
5. No order, consent, approval, licence, authorisation, filing
registration or qualification with, or validation of, or exemption by
any government or public body or authority of Bermuda or any
sub-division thereof is required to authorise or is required in
connection with the execution, delivery, performance and enforcement of
the Documents, except such as have been duly obtained in accordance
with Bermuda law.
6. The choice of the Foreign Laws as the governing law of the Documents is
a valid choice of law and would be recognised and given effect to in
any action brought before a court of competent jurisdiction in Bermuda,
except for those laws (i) which such court considers to be procedural
in nature, (ii) which are revenue or penal laws or (iii) the
application of which would be inconsistent with public policy, as such
term is interpreted under the laws of Bermuda. The submission in the
Documents to the non-exclusive jurisdiction of the Foreign Courts is
valid and binding upon the Company.
7. The courts of Bermuda would recognise as a valid judgment, a final and
conclusive judgment in personam obtained in the Foreign Courts against
the Company based upon the Documents under which a sum of money is
payable (other than a sum of money payable in respect of multiple
damages, taxes or other charges of a like nature or in respect of a
fine or other penalty) and would give a judgment based thereon provided
that (a) such courts had proper jurisdiction over the parties subject
to such judgment, (b) such courts did not contravene the rules of
natural justice of Bermuda, (c) such judgment was not obtained by
fraud, (d) the enforcement of the judgment would not be contrary to the
public policy of Bermuda, (e) no new admissible evidence relevant to
the action is submitted prior to the rendering of the judgment by the
courts of Bermuda and (f) there is due compliance with the correct
procedures under the laws of Bermuda.
8. There is no income or other tax of Bermuda imposed by withholding or
otherwise on any payment to be made to or by the Company pursuant to
the Documents.
9. The obligations of the Company under the Documents will rank at least
pari passu in priority of payment with all other unsecured
unsubordinated indebtedness of the Company, other than "Senior
Indebtedness" (as that term is defined in the Indenture) and
indebtedness which is preferred by virtue of any provision of the laws
of Bermuda of general application.
10. The Documents will not be subject to ad valorem stamp duty in Bermuda
and no registration, documentary, recording, transfer or other similar
tax, fee or charge is payable in Bermuda in connection with the
execution, delivery, filing, registration or performance of the
Documents.
11. Based solely upon a search of the Cause Book of the Supreme Court of
Bermuda conducted on [ ], 2003 (which would not reveal details of
proceedings which have been filed but not actually entered in the Cause
Book at the time of our search), there are no judgments against the
Company, nor any legal or governmental proceedings pending in Bermuda
to which the Company is subject.
B-1-B-5
12. Based solely on a search of the public records in respect of the
Company maintained at the offices of the Registrar of Companies on [ ],
2003 (which would not reveal details of matters which have not been
lodged for registration or have been lodged for registration but not
actually registered at the time of our search) and a search of the
Cause Book of the Supreme Court of Bermuda conducted at on [ ], 2003
(which would not reveal details of proceedings which have been filed
but not actually entered in the Cause Book at the time of our search),
no steps have been, or are being, taken in Bermuda for the appointment
of a receiver or liquidator to, or for the winding-up, dissolution,
reconstruction or reorganisation of, the Company, though it should be
noted that the public files maintained by the Registrar of Companies do
not reveal whether a winding-up petition or application to the Court
for the appointment of a receiver has been presented and entries in the
Cause Book may not specify the nature of the relevant proceedings.
Yours faithfully
B-1-B-6
SCHEDULE
PXRE Group Ltd.
Clarendon House
Church Street
Hamilton
Bermuda
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇
I-Preferred Term Securities I, Ltd.
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇ House
South Church Street
▇▇▇▇▇▇ Town, Grand Cayman
Cayman Islands
B-1-B-7
EXHIBIT B-1-C
-------------
FORM OF BARBADOS COUNSEL OPINION
--------------------------------
Chancery ▇▇▇▇▇▇▇▇
ATTORNEYS-AT-LAW
CHANCERY HOUSE, HIGH STREET
BRIDGETOWN, BARBADOS
WEST INDIES
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇.▇▇., (Econ.), M.A., Ph.D., Q.C. TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
of the Middle Temple, Barrister-at-Law TELECOPIER: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. FERRPXRE BarbadosA, LL.B., (Hons.)
Associate
▇▇▇▇ ▇. ▇▇▇▇▇, LL.B., (Hons.), LL.M.
Associate
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, B.A., LL.B., ▇.▇▇.
Associate
▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, B.A. (Hons.), LL.B., (Hons.)
Associate
▇▇▇▇▇▇ ▇. ▇▇▇▇, LL.B., (Hons.)
Associate
▇▇▇▇▇ A.R. ▇▇▇▇▇▇
Solicitor and Attorney-at-Law
April [___], 2003
Matter No: 2030099
I-Preferred Term Securities II, Ltd. FTN Financial Capital Markets
c/o Maples Finance Limited ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
P. O. Box 1093 GT Memphis
Queensgate House Tennessee ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.▇.
▇▇▇▇▇▇ Town, Grand Cayman
Cayman Islands
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
New York 10019
U.S.A.
Ladies and Gentlemen:
Re: PXRE Reinsurance (Barbados) Ltd.
------------------------------------
- Issue of Preferred Trust Securities
-------------------------------------
We have been asked to provide this legal opinion in connection with the
offer, issue and sale by PXRE Group Ltd. ("PXRE Group") and PXRE Capital
Statutory Trust II, (the "Trust"), of $[____________] aggregate principal amount
of Fixed/Floating Rate Capital Securities (the "Capital Securities"), to
I-Preferred Term Securities II, Ltd., a company with limited liability
established under the laws of the Cayman Islands (the "Purchaser") pursuant to
the terms of a Placement Agreement (the "Placement Agreement"), dated as of
_________, 2003 between the PXRE Group and the Trust (together, the "Offerors"),
and FTN Financial Capital Markets and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. (together,
the "Placement Agents").
B-1-C-1
April [___], 2003 Page 2
Matter No: 2030099
We have acted as special Barbados counsel to PXRE Reinsurance
(Barbados) Ltd. ("PXRE Barbados"), a wholly-owned subsidiary of PXRE Group, and
as such a Significant Subsidiary of PXRE Group under the Placement Agreement.
This legal opinion is given pursuant to section 3.1(c) of the Placement
Agreement. Capitalised terms used and not otherwise defined herein have the
meanings ascribed to such terms in the Placement Agreement.
In connection therewith, and in respect of the issue of the Capital
Securities, we have examined originals or copies identified to our satisfaction
of the following documents:
(i) the Placement Agreement;
(ii) the officer's certificate (the "Officer's Certificate"),
issued on behalf of PXRE Group and PXRE Barbados by duly
authorised officers of each of PXRE Group and PXRE Barbados
confirming inter alia that PXRE Group has not entered into any
agreement or other arrangement by which the execution,
delivery and performance of the Placement Agreement and the
Operative Documents and the consummation of the transactions
contemplated by the Placement Agreement and the Operative
Documents results in the creation or imposition of any
material lien, claim, charge, encumbrance or restriction upon
any property or assets of PXRE Barbados;
(iii) (a) the certificate and articles of incorporation (the
"Corporate Instruments") of PXRE Barbados, (b) the By-Laws
(the "By-Laws"), of PXRE Barbados, (c) the insurance licence
issued by the Supervisor of Insurance (Barbados) and the
business plan, issued and adopted respectively, pursuant to
the Insurance Act of the laws of Barbados, and filed with the
Office of the Supervisor of Insurance (Barbados), (the
business plan together with the insurance licence the
"Insurance Licence"), and (d) the share register (the "Share
Registers") of PXRE Barbados; and
(iv) a certificate of Good Standing issued under the hand of the
Registrar of Corporate Affairs (Barbados).
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity and completeness of all
documents submitted to us as originals, and the conformity to original documents
of all documents submitted to us as notarial, true, certified, conformed,
photostatic or telecopied copies thereof; and the completeness and accuracy of
all facts set forth in official public records and certificates and other
documents issued by public officials.
B-1-C-2
April [___], 2003 Page 3
Matter No: 2030099
We have also assumed, as a basis for the opinions hereafter expressed,
that neither the Offerors nor the Placement Agents will sell or otherwise
distribute any Capital Securities in Barbados.
In rendering the opinions set forth herein, we have relied (without
independent check or verification) as to certain matters of fact solely upon the
Officer's Certificate.
We are qualified to practise law only in Barbados and have made no
investigation of laws of any jurisdiction other than the laws of Barbados. We
express no opinion as to the laws of any jurisdiction other than Barbados, and
the opinions hereinafter expressed are limited to the laws of Barbados in effect
on the date hereof.
Based upon the foregoing and subject to the limitations, qualifications
and assumptions set forth herein, it is our opinion that:-
1. PXRE Barbados is a body corporate duly organised, validly existing and
in good standing under the laws of Barbados and has full corporate
power and authority necessary to own or lease its properties and to
conduct its business as now being conducted in all material respects.
2. All issued and outstanding shares in the capital of PXRE Barbados have
been duly and validly authorised and issued, are fully paid and
non-assessable and are registered in the name of PXRE Group.
3. The issuance, sale and delivery of the Debentures by PXRE Group and the
issuance, sale and delivery of Capital Securities by the Trust do not
give rise to any right of any person to subscribe for or purchase any
shares in the capital of PXRE Barbados under the Corporate Instruments
or By-Laws, or to the best of our knowledge under any agreement or
other instrument by which PXRE Barbados is bound.
4. To the best of our knowledge, PXRE Barbados is not in breach or
violation of, or default under (with or without notice or the lapse of
time, or both) its Corporate Instruments, By-Laws or Insurance Licence.
5. The execution, delivery and performance of the Placement Agreement and
the Operative Documents by PXRE Group, and the consummation of the
transactions contemplated by the Placement Agreement and the Operative
Documents do not and will not:
(a) result in the creation or imposition of any material lien,
claim, charge, encumbrance or restriction upon any property or
assets of PXRE Barbados;
B-1-C-3
April [___], 2003 Page 4
Matter No: 2030099
(b) conflict with, constitute a material breach or violation of,
or constitute a material default under (with or without notice
or lapse of time or both), any of the terms provisions or
conditions of its Corporate Instruments, By-Laws or Insurance
Licence;
(c) to the best of our knowledge, conflict with, constitute a
material breach or violation of, or constitute a material
default under (with or without notice or lapse of time or
both), any of the terms provisions or conditions of any
material contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease, franchise, license or any other
agreement or instrument to which PXRE Barbados is a party or
by which it or any of its properties may be bound and which is
material to PXRE Barbados; or
(d) to the best of our knowledge, conflict with, constitute a
material breach or violation of, or constitute a material
default under (with or without notice or lapse of time or
both), any order, decree, judgement, franchise, license,
permit, rule or regulation of any court, arbitrator,
government or governmental agency or instrumentality, in
Barbados or elsewhere as known to us having jurisdiction over
PXRE Barbados or any of its properties and which is material
to PXRE Barbados.
6. To the best of our knowledge, there are no pending or threatened
actions, suits, proceedings or investigations of any kind or any orders
of any nature, including arbitration proceedings and actions or
proceedings of or before any governmental authority of Barbados to
which PXRE Barbados is a party or is subject, or by which PXRE Barbados
or any of its properties is bound.
For the purpose of our opinion, the terms "to the best of our
knowledge" means that, except for such investigations or inquiries of proper
executive officers of the Company, and in the public registers in Barbados, we
have not made any further investigations or inquiries, but we have not in the
course of acting for the Company, acquired any knowledge or received any
information to cause us to believe that the statements qualified by that
expression are not correct.
B-1-C-4
April [___], 2003 Page 5
Matter No: 2030099
This opinion is intended solely for the benefit of the persons to whom
it is addressed, in connection with certain aspects of the transactions
contemplated by the Placement Agreement and the Operative Documents. This
opinion may be relied upon, quoted and referred to by ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius
LLP, for the purpose of their rendering legal opinions in connection with the
Placement Agreement and the Operative Documents and the transactions
contemplated thereby. Subject thereto, this opinion is not to be transmitted to
any other person, nor is it to be relied upon by any of the persons to whom it
is addressed or by any other person for any other purpose, or quoted or referred
to in any public document or filed with any governmental agency or other person
without prior written consent.
Yours very truly,
Chancery ▇▇▇▇▇▇▇▇
per:
ACF:est
B-1-C-5
EXHIBIT B-1-D
-------------
FORM OF IN-HOUSE COUNSEL OPINION
--------------------------------
[CLOSING], 2003
I-Preferred Term Securities II, Ltd.
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇ House
South Church Street
▇▇▇▇▇▇ Town, Grand Cayman
Grand Cayman Islands
British West Indies
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Fixed/Floating Rate Junior Deferrable Interest Debentures due 2033
of PXRE Group, Ltd.
Ladies and Gentlemen:
I am the General Counsel of PXRE Reinsurance Company, a Connecticut
corporation ("PXRE Reinsurance") and have acted as counsel to PXRE Group, Ltd.,
a Bermuda company (the "Company"), and PXRE Reinsurance Ltd., a Bermuda company
("PXRE Bermuda"), and, in connection with the issuance by the Company of
$[AMOUNT OF DEBENTURES] aggregate principal amount of its junior subordinated
deferrable interest debentures (the "Debentures") and the issuance by PXRE
Capital Statutory Trust II, a Connecticut statutory trust (the "Trust"), of
[NUMBER OF CAPITAL SECURITIES] Fixed/Floating Rate Capital Securities
(liquidation amount of $1,000 per security) of the Trust (the "Capital
Securities").
This opinion is furnished to you pursuant to Section 3.1(d) of the
Placement Agreement dated [_________], 2003 (the "Placement Agreement"), among
the Trust, the Company, and FTN Financial Capital Markets and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc. (the "Placement Agents"). Capitalized terms used but not defined
herein shall have the respective meanings assigned to such terms in the
Placement Agreement.
B-1-D-1
April [___], 2003 Page 2
Matter No: 2030099
In my capacity as such counsel, I have examined originals or copies of
such records, agreements, certificates, documents and other instruments as in my
judgment are necessary or appropriate to render the opinions expressed herein.
These records, agreements, certificates, documents and instruments include the
following:
1. the Placement Agreement;
2. The Amended and Restated Declaration of Trust dated as of [______], 2003,
among the Institutional Trustee (as defined therein), the Administrators (as
defined therein), the Company, as sponsor, and the holders from time to time of
undivided beneficial interests in the Trust;
3. the Indenture dated as of [________], 2003, between the Company and U.S. Bank
National Association;
4. the Debentures;
5. the Capital Securities;
6. the Guarantee Agreement dated as of [_________], 2003, between the Company
and U.S. Bank National Association as trustee for the benefit of the holders (as
defined therein); and
7. the Subscription Agreement dated [_______], 2003 (the Subscription Agreement,
among the Company, the Trust and I-Preferred Term Securities II, Ltd. (the
"Purchaser").
The documents described in subsections (i)-(viii) above are
individually referred to herein as a "Transaction Document" and collectively
referred to herein as the "Transaction Documents".
For purposes of the opinions expressed herein, I have assumed
the genuineness of all signatures, the legal capacity of all natural persons
executing agreements, instruments or documents, the completeness and
authenticity of all records and documents submitted to me as originals and the
conformity with the originals of all records and documents submitted to me as
copies. The opinions (other than the opinions expressed in paragraph 3) are
subject to the qualification that I have relied, as to matters of fact
(including determinations with respect to the question of materiality to the
Company and its subsidiaries), to the extent I deem proper, on the
representations and warranties in the Placement Agreement, certificates of
officers or other representatives of the Company, the Trust and PXRE Reinsurance
and certificates of public officials.
Based on the foregoing, and subject to the limitations, qualifications,
assumptions and exceptions set forth herein, I am of the opinion that as of the
date hereof:
(a) PXRE Reinsurance, is validly existing as a corporation in good standing
under the laws of the State of Connecticut, with full corporate power and
authority to own its properties and conduct its business as presently conducted
in all material respects. To the best of my knowledge, all outstanding shares of
capital stock of PXRE Reinsurance have been duly authorized and validly issued,
and are fully paid and non-assessable and owned of record by PXRE Corporation, a
Delaware corporation.
B-1-D-2
April [___], 2003 Page 3
Matter No: 2030099
(b) The issuance, sale and delivery of the Debentures by the Company and the
issuance, sale and delivery of the Capital Securities by the Trust do not give
rise to any rights to subscribe for or to purchase any shares of capital stock
or equity securities of PXRE Reinsurance pursuant to the corporate Articles of
Incorporation, Charter or By-Laws of PXRE Reinsurance, or, to the best of my
knowledge, any agreement or other instrument to which PXRE Reinsurance is a
party.
(c) To the best of my knowledge, none of PXRE Reinsurance, the Trust, the
Company and PXRE Bermuda is in breach or violation of, or default under, with or
without notice or lapse of time or both, its Articles of Incorporation, Charter,
By-Laws or the Trust Agreement. The execution, delivery and performance of the
Transaction Documents and the consummation of the transactions contemplated
thereby do not and will not (i) conflict with, constitute a material breach or
violation of, or constitute a material default under, with or without notice or
lapse of time or both, any of the terms, provisions or conditions of (A) the
Articles of Incorporation, Charter or By-Laws of PXRE Reinsurance, or (B) to the
best of my knowledge, any material contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease, franchise, license or any other material
agreement or instrument to which PXRE Reinsurance, the Company or PXRE Bermuda
is a party or by which any of them or any of their respective properties may be
bound, or (C) any judgment, order or decree of any court, regulatory body,
administrative agency, governmental body or arbitrator in jurisdictions covered
by this opinion and known to me and binding on PXRE Reinsurance, the Company or
PXRE Bermuda which, in the case of each of (A), (B) or (C) above, is material to
the Company and its subsidiaries on a consolidated basis or (ii) pursuant to any
material contract, indenture or other material agreement or instrument, result
in the creation or imposition of any material lien, claim, charge, encumbrance
or restriction upon any property or assets of PXRE Reinsurance, the Company or
PXRE Bermuda.
(d) To the best of my knowledge, (i) no action, suit or proceeding at law or
in equity is pending or threatened to which the Company or its Significant
Subsidiaries are or may be a party, and (ii) no action, suit or proceeding is
pending or threatened against or affecting the Company or its Significant
Subsidiaries or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding could
reasonably be expected to have a material adverse effect on the consummation of
the transactions contemplated by the Transaction Documents or the issuance and
sale of the Capital Securities as contemplated therein or the condition
(financial or otherwise), earnings, affairs, business, or results of operations
of the Company and its Significant Subsidiaries on a consolidated basis.
B-1-D-3
April [___], 2003 Page 4
Matter No: 2030099
This opinion is rendered only to the Placement Agents and the Purchaser
and is solely for their benefit in connection with the transactions pursuant to
the Placement Agreement. This opinion may not be relied upon by the Placement
Agents or the Purchaser for any other purpose without my prior written consent.
This opinion may not be relied upon, for any purpose, by any other person, firm
or corporation other than the Placement Agents and the Purchaser.
Very truly yours,
▇-▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF CONNECTICUT COUNSEL OPINION
-----------------------------------
TO THE PARTIES LISTED
ON SCHEDULE I HERETO
Ladies and Gentlemen:
We have acted as special counsel in the State of Connecticut (the
"State") for PXRE Capital Statutory Trust II (the "Trust"), a Connecticut
statutory trust formed pursuant to the Amended and Restated Declaration of Trust
(the "Trust Agreement") dated as of the date hereof, among PXRE Group Ltd., a
Bermuda corporation (the "Sponsor"), U.S. Bank National Association, a national
banking association ("U.S. Bank"), in its capacity as Institutional Trustee (the
"Institutional Trustee"), and ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, each,
an individual, (each, an "Administrator") in connection with the issuance by the
Trust to the Holders (as defined in the Trust Agreement) of its capital
securities (the "Capital Securities") pursuant to the Placement Agreement dated
as of [PRICING], 2003 (the "Placement Agreement"), the issuance by the Trust to
the Sponsor of its Common Securities, pursuant to the Trust Agreement and the
acquisition by the Trust from the Sponsor of Debentures, issued pursuant to the
Indenture dated as of the date hereof (the "Indenture").
The Institutional Trustee has requested that we deliver this opinion to
you in accordance with Section 3.1(b) of the Placement Agreement. Capitalized
terms not otherwise defined herein shall have the meanings specified in, or
defined by reference in or set forth in the Operative Documents (as defined
below).
Our representation of the Trust has been as special counsel for the
limited purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied, with your permission, entirely upon (i)
the representations and warranties of the parties set forth in the Operative
Documents, and (ii) certificates delivered to us by the management of U.S. Bank,
and have assumed, with your permission, without independent inquiry, the
accuracy of those representations, warranties and certificates.
We have examined the following documents to which the Trust is a party,
each of which is dated the date hereof, unless otherwise noted:
(i) the Trust Agreement;
(ii) the Placement Agreement;
(iii) the Subscription Agreement;
(iv) the Certificate of Common Securities;
B-2-1
(v) the Certificate of Capital Securities;
(vi) the Guarantee Agreement;
(vii) the Certificate of Trust filed with the
Secretary of State of the State of
Connecticut dated [FILE DATE], 2003; and
(viii) a Certificate of Legal Existence for the
Trust obtained from the Secretary of State
of the State of Connecticut dated
[CERTIFICATE DATE], 2003 (the "Certificate
of Legal Existence").
The documents referenced in subparagraphs (i) through (vii) above are
hereinafter referred to collectively as the "Operative Documents."
We have also examined originals, or copies, certified or otherwise
identified to our satisfaction, of such other corporate and public records and
agreements, instruments, certificates and other documents as we have deemed
necessary or appropriate for the purposes of rendering this opinion. For
purposes of our opinion rendered in paragraph 1 below, with respect to the legal
existence of the Trust, our opinion relies entirely upon and is limited by the
Certificate of Legal Existence, which is attached hereto as Exhibit A.
We have assumed, with your permission, the genuineness of all
signatures (other than those on behalf of U.S. Bank, the Guarantee Trustee,
Indenture Trustee, Institutional Trustee and the Trust), the conformity of the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
those individuals executing documents on behalf of U.S. Bank, the Guarantee
Trustee, Indenture Trustee, Institutional Trustee and the Trust).
When an opinion set forth below is given to the best of our knowledge,
or to our knowledge, or with reference to matters of which we are aware or which
are known to us, or with another similar qualification, the relevant knowledge
or awareness is limited to the actual knowledge or awareness of the individual
lawyers in the firm who have participated directly and substantively in the
specific transactions to which this opinion relates and without any special or
additional investigation undertaken for the purposes of this opinion except as
indicated herein.
For the purposes of this opinion we have made such examination of law
as we have deemed necessary. The opinions expressed below are limited solely to
the internal substantive laws of the State (as applied by courts located in the
State without regard to choice of law) and we express no opinion as to the laws
of any other jurisdiction. To the extent to which this opinion deals with
matters governed by or relating to the laws of any other state or jurisdiction,
we have assumed, with your permission, that the Operative Documents are governed
by the internal substantive laws of the State.
B-2-2
We express no opinion as to (i) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to the obligations of any
applicable guarantor, joint obligor, surety, accommodation party, or other
secondary obligor or any provisions of the Trust Agreement with respect to
indemnification or contribution, and (ii) the accuracy or completeness of any
exhibits or schedules to the Operative Documents. No opinion is given herein as
to the choice of law or internal substantive rules of law that any court or
other tribunal may apply to the transactions contemplated by the Operative
Documents. No opinion is expressed herein as to the application or effect of
federal securities laws or as to the securities or so-called "Blue Sky" laws of
Connecticut or of any other state or other jurisdiction.
Our opinion, with your permission, is further subject to the following
exceptions, qualifications and assumptions:
(a) We have assumed without any independent investigation that
(i) each party to the Operative Documents, other than U.S. Bank, the
Guarantee Trustee, Indenture Trustee, Institutional Trustee and the
Trust, as applicable, at all times relevant thereto, is validly
existing and in good standing under the laws of the jurisdiction in
which it is organized, and is qualified to do business and in good
standing under the laws of each jurisdiction where such qualification
is required generally or necessary in order for such party to enforce
its rights under such Operative Documents, (ii) each party to the
Operative Documents, at all times relevant thereto, had and has the
full power, authority and legal right under its certificate of
incorporation, partnership agreement, by-laws, and other governing
organizational documents, and the applicable corporate, partnership, or
other enterprise legislation and other applicable laws, as the case may
be (other than U.S. Bank, the Guarantee Trustee, Indenture Trustee,
Institutional Trustee or the Trust) to execute, deliver and to perform
its obligations under, the Operative Documents, and (iii) each party to
the Operative Documents other than U.S. Bank, the Guarantee Trustee,
Indenture Trustee, Institutional Trustee or the Trust has duly executed
and delivered each of such agreements and instruments to which it is a
party and that the execution and delivery of such agreements and
instruments and the transactions contemplated thereby have been duly
authorized by proper corporate or other organizational proceedings as
to each such party.
(b) We have assumed without any independent investigation (i)
that the Institutional Trustee, the Sponsor and the Administrators have
received the agreed to and stated consideration for the incurrence of
the obligations applicable to it under the Trust Agreement and each of
the other Operative Documents, (ii) that each of the Operative
Documents (other than the Trust Agreement) is a valid, binding and
enforceable obligation of each party thereto other than the Trust, U.S.
Bank and the Institutional Trustee, as applicable, and (iii) for the
purposes of this opinion letter, we herein also assume that each of the
Operative Documents (other than the Trust Agreement) constitutes a
valid, binding and enforceable obligation of U.S. Bank, the Guarantee
Trustee and the Indenture Trustee, as applicable under Connecticut and
federal law (as to which such matters we are delivering to you a
separate opinion letter on this date, which is subject to the
assumptions, qualifications and limitations set forth therein).
B-2-3
(c) The enforcement of any obligations of U.S. Bank, the
Sponsor and the Administrators, as applicable, under the Trust
Agreement and the obligations of the Trust under the other Operative
Documents may be limited by the receivership, conservatorship and
supervisory powers of depository institution regulatory agencies
generally, as well as by bankruptcy, insolvency, reorganization,
moratorium, marshaling or other laws and rules of law affecting the
enforcement generally of creditors' rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors'
rights); and we express no opinion as to the status under any
fraudulent conveyance laws or fraudulent transfer laws of any of the
obligations of U.S. Bank, the Sponsor, the Administrators or the Trust
under any of the Operative Documents.
(d) We express no opinion as to the enforceability of any
particular provision of the Trust Agreement or the other Operative
Documents relating to remedies after default.
(e) We express no opinion as the availability of any specific
or equitable relief of any kind.
(f) The enforcement of any rights may in all cases be subject
to an implied duty of good faith and fair dealing and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(g) We express no opinion as to the enforceability of any
particular provision of any of the Operative Documents relating to (i)
waivers of rights to object to jurisdiction or venue, or consents to
jurisdiction or venue, (ii) waivers of rights to (or methods of)
service of process, or rights to trial by jury, or other rights or
benefits bestowed by operation of law, (iii) waivers of any applicable
defenses, setoffs, recoupments, or counterclaims, (iv) waivers or
variations of provisions which are not capable of waiver or variation
under Sections 1-102(3), 9-501(3) or other provisions of the Uniform
Commercial Code ("UCC") of the State, (v) the grant of powers of
attorney to any person or entity, or (vi) exculpation or exoneration
clauses, indemnity clauses, and clauses relating to releases or waivers
of unmatured claims or rights.
(h) We express no opinion as to the effect of events
occurring, circumstances arising, or changes of law becoming effective
or occurring, after the date hereof on the matters addressed in this
opinion letter, and we assume no responsibility to inform you of
additional or changed facts, or changes in law, of which we may become
aware.
(i) We express no opinion as to any requirement that any party
to the Operative Documents (or any other persons or entities
purportedly entitled to the benefits thereof) qualify or register to do
business in any jurisdiction in order to be able to enforce its rights
thereunder or obtain the benefits thereof.
B-2-4
Based upon the foregoing and subject to the limitations and
qualifications set forth herein, we are of the opinion that:
8. The Trust has been duly formed and is validly existing as a statutory trust
under the Connecticut Statutory Trust Act, Chapter 615 of Title 34 of the
Connecticut General Statutes, Section 500, et seq. (the "Act").
9. The Trust Agreement constitutes a valid and binding obligation of U.S. Bank
and the Institutional Trustee enforceable against U.S. Bank and the
Institutional Trustee in accordance with the terms thereof.
10. The Trust Agreement constitutes a valid and binding obligation of the
Sponsor and the Administrators, enforceable against the Sponsor and the
Administrators in accordance with its terms.
11. The Trust has the requisite trust power and authority to (a) execute and
deliver, and to perform its obligations under, the Operative Documents, and (b)
perform its obligations under such Operative Documents.
12. Each of the Operative Documents to which the Trust is a party constitutes a
valid and binding obligation of the Trust, enforceable against the Trust in
accordance with the terms thereof.
13. The Capital Securities have been duly authorized by the Trust under the
Trust Agreement, and the Capital Securities, when duly executed and delivered to
the Holders in accordance with the Trust Agreement, the Placement Agreement and
the Subscription Agreement, will be validly issued, fully paid and nonassessable
and will evidence undivided beneficial interests in the assets of the Trust and
will be entitled to the benefits of the Trust Agreement.
14. The Common Securities have been duly authorized by the Trust Agreement, and
the Common Securities, when duly executed and delivered to the Company in
accordance with the Trust Agreement, the Placement Agreement and the
Subscription Agreement and delivered and paid for in accordance therewith, will
be validly issued, fully paid and nonassessable (subject to Section 9.1(b) of
the Trust Agreement which provides that the Holders of Common Securities are
liable for debts and obligations of the Trust to the extent such debts and
obligations are not satisfied out of the Trust's assets) and will evidence
undivided beneficial interests in the assets of the Trust and will be entitled
to the benefits of the Trust Agreement.
15. Neither the execution, delivery or performance by the Trust of the Operative
Documents, the consummation by the Trust of the transactions contemplated
thereby, nor compliance by the Trust with any of the terms and provisions
thereof, (a) violates the Trust Agreement, or, to the best of our knowledge,
contravenes or will contravene any provision of, or constitutes a default under,
or results in any breach of, or results in the creation of any lien (other than
as permitted under the Operative Documents) upon property of the Trust under,
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, license or other agreement or
instrument, in each case known to us, to which it is a party or by which it is
bound, or (b) violates any applicable Connecticut law governing the Trust, or,
to the best of our knowledge, any judgment or order of any court or other
tribunal, in each case known to us, applicable to or binding on it.
B-2-5
16. No consent, approval, order or authorization of, giving of notice to, or
registration with, or taking of any other action in respect of, any Connecticut
governmental authority regulating the Trust is required for the execution,
delivery, validity or performance of, or the carrying out by, the Trust of any
of the transactions contemplated by the Operative Documents, other than any such
consent, approval, order, authorization, registration, notice or action as has
been duly obtained, given or taken.
17. The Holders, as the beneficial holders of the Capital Securities, will be
entitled to the same limitation of personal liability extended to shareholders
of domestic corporations organized under the laws of the State.
18. Under the Trust Agreement, the issuance of the Capital Securities is not
subject to preemptive rights.
19. Assuming that the Trust will not be taxable as a corporation for federal
income tax purposes, but rather will be classified for such purposes as a
grantor trust, the Trust will not be subject to any tax, fee or other government
charge under the laws of the State of Connecticut or any political subdivision
thereof.
This opinion is rendered solely for the benefit of those institutions
listed on Schedule I hereto and their successors and assigns in connection with
the transactions contemplated by the Operative Documents and may not be used or
relied upon by any other person or for any other purpose.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
B-2-6
SCHEDULE I
----------
U.S. Bank National Association
FTN Financial Capital Markets
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
I-Preferred Term Securities II, Ltd.
I-Preferred Term Securities II, Inc.
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
PXRE Group Ltd.
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
EXHIBIT A TO EXHIBIT B-2
------------------------
CERTIFICATE OF LEGAL EXISTENCE
------------------------------
See attached
------------
EXHIBIT B-3
-----------
FORM OF TAX COUNSEL OPINION
---------------------------
[CLOSING], 2003
PXRE Group Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇ Capital Statutory Trust II
c/o PXRE Group Ltd.
Swan Building
26 Victoria Street
▇▇▇▇▇▇▇▇, HM12, Bermuda
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
We are acting as special United States tax counsel to PXRE Group Ltd.,
a corporation organized and existing under the laws of Bermuda (the "Company"),
and to PXRE Capital Statutory Trust II, a statutory trust created under the laws
of Connecticut (the "Trust"), in connection with the proposed issuance of (i)
Fixed/Floating Rate Capital Securities, liquidation amount $1,000.00 per Capital
Security (the "Capital Securities") of the Trust, pursuant to the terms of the
Amended and Restated Declaration of Trust dated as of the date hereof by and
among the Company, U.S. Bank National Association, as institutional trustee, and
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, as Administrators (the "Trust
Agreement"), (ii) Fixed/Floating Rate Common Securities, liquidation amount
$1,000 per common security (the "Common Securities") of the Trust, pursuant to
the terms of the Trust Agreement, (iii) Fixed/Floating Rate Junior Subordinated
Deferrable Interest Debentures (the "Corresponding Debentures") of the Company
issued pursuant to the terms of an Indenture dated as of the date hereof from
the Company to U.S. Bank National Association, as trustee (the "Indenture"),
which Corresponding Debentures are to be sold by the Company to the Trust, and
(iv) the Guarantee Agreement of the Company with respect to the Capital
Securities dated as of the date hereof (the "Guarantee") between the Company and
U.S. Bank National Association, as guarantee trustee. The Capital Securities,
the Common Securities and the Corresponding Debentures are to be issued as
contemplated by the Offering Circular (the "Offering Circular") dated [_______],
2003 prepared by I-Preferred Term Securities II, Ltd., an entity formed under
the Companies Law of the Cayman Islands, and I-Preferred Term Securities II,
Inc., a Delaware corporation.
B-3-1
In formulating our opinions, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of documents, corporate
records and other instruments as we have deemed necessary or appropriate for
purposes of this opinion including (i) the Offering Circular, (ii) the
Indenture, (iii) the form of the Corresponding Debentures attached as an exhibit
to the Indenture, (iv) the Trust Agreement, (v) the Guarantee, and (vi) the
forms of Capital Securities Certificate and Common Securities Certificate
attached as exhibits to the Trust Agreement (collectively the "Documents").
Furthermore, we have relied upon certain representations made by the Company and
upon the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP as to certain matters of Connecticut
law.
In such examination, we have assumed the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified photostatic copies, the authenticity of
the originals of such latter documents, the genuineness of all signatures and
the correctness of all representations made therein. We have further assumed
that there are no agreements or understandings contemplated therein other than
those contained in the Documents.
In rendering our opinions, we have assumed that the transactions
described in or contemplated by the Documents have been or will be carried out
strictly in accordance with the Documents, and that such Documents accurately
reflect the material facts of such transactions. Any variance in the facts may
result in United States federal income tax consequences that differ from those
reflected in the opinions set forth herein. Our opinion is also based on the
Internal Revenue Code of 1986, as amended, (the "Code"), Treasury regulations,
administrative rulings, judicial decisions, and other applicable authorities.
The statutory provisions, regulations and interpretations on which our opinion
is based are subject to change, possibly retroactively. In addition, there can
be no assurance that the Internal Revenue Service will not take positions
contrary to those stated in our opinion.
Subject to the foregoing, under current law and based upon the facts,
assumptions and qualifications contained herein, it is our opinion that:
The Corresponding Debentures will be classified as indebtedness of the
Company for United States federal income tax purposes.
The Trust will be characterized as a grantor trust and not as an
association taxable as a corporation for United States federal income
tax purposes.
The opinions we express herein are limited solely to matters governed
by the federal income tax laws of the United States. Our opinion is provided
solely to you as a legal opinion only, and not as a guaranty or warranty, and is
limited to the specific transactions, documents, and matters described above. No
opinion may be implied or inferred beyond that which is expressly stated in this
letter.
B-3-2
We express no opinion with respect to any matter not specifically
addressed by the foregoing opinions, including state or local tax consequences,
or any federal, state, or local issue not specifically referred to and discussed
above including, without limitation, the effect on the matters covered by this
opinion of the laws of any other jurisdiction.
We are furnishing this opinion letter to you solely for your benefit in
connection with the issuance of the Capital Securities, the Common Securities
and the Corresponding Debentures. Copies of this opinion letter may be provided
for the benefit of [RATING AGENCY]. No other person may rely upon this opinion
letter or the opinions set forth herein. We disclaim any obligation to update
this opinion for events occurring or coming to our attention after the date
hereof.
Very truly yours,
B-3-3
PXRE GROUP LTD.
[CLOSING], ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ A.N. ▇▇▇▇
Re: Representations Concerning the Issuance of Fixed/Floating Rate
Junior Subordinated Deferrable Interest Debentures (the
"Corresponding Debentures") to PXRE Capital Statutory Trust II
(the "Trust") and Sale of the Trust Securities of the Trust
Dear Sirs:
In accordance with your request, PXRE Group Ltd. (the "Company") hereby
makes the following representations in connection with the preparation of your
opinion letter as to the United States federal income tax consequences of the
issuance by the Company of the Corresponding Debentures to the Trust and the
sale of the Trust Securities.
The Company hereby represents that:
1) The sole assets of the Trust will be the Corresponding
Debentures, any interest paid on the Corresponding Debentures to
the extent not distributed, proceeds of the Corresponding
Debentures, or any of the foregoing.
2) The Company intends to use the net proceeds from the sale of the
Corresponding Debentures for general corporate purposes.
3) The Trust was not formed to conduct any trade or business and is
not authorized to conduct any trade or business. The Trust exists
for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) using the proceeds from the sale of Trust
Securities to acquire the Corresponding Debentures, and (iii)
engaging only in activities necessary or incidental thereto.
4) The Trust was formed to facilitate direct investment in the
assets of the Trust, and the existence of multiple classes of
ownership is incidental to that purpose. There is no intent to
provide holders of such interests in the Trust with diverse
interests in the assets of the Trust.
5) The Company intends to create a debtor-creditor relationship
between the Company, as debtor, and the Trust, as a creditor,
upon the issuance and sale of the Corresponding Debentures to the
Trust by the Company. The Company will (i) record and at all
times continue to reflect the Corresponding Debentures as
indebtedness on its separate books and records for financial
accounting purposes, and (ii) treat the Corresponding Debentures
as indebtedness for all United States federal, state and local
income tax purposes.
B-3-4
6) During each year, the Trust's income will consist solely of
payments made by the Company with respect to the Corresponding
Debentures. Such payments will not be derived from the active
conduct of a financial business by the Trust. Both the Company's
obligation to make such payments and the measurement of the
amounts payable by the Company are defined by the terms of the
Corresponding Debentures. Neither the Company's obligation to
make such payments nor the measurement of the amounts payable by
the Company is dependent on income or profits of the Company or
any affiliate of the Company.
7) The Company has reviewed projections of earnings, cash flow,
capital and surplus and other relevant financial and economic
data relating to the Company and its affiliates. Based on the
current and estimated net cash flow and the projections of
earnings, cash flow, capital and surplus of the Company and its
affiliates, the Company believes its net cash flow will be in
excess of the amount of principal and interest required to be
paid in accordance with the terms of the Corresponding Debentures
and the Company expects that it will be able to make, and will
make, timely payment of principal and interest in accordance with
the terms of the Corresponding Debentures with available capital
or accumulated net cash flow.
8) The principal insurance operating subsidiary of the Company has
received either a financial strength rating of at least B+ with a
neutral or positive outlook from A.M. Best Company, Inc., or an
investment grade financial strength rating from either Standard &
Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc. or Fitch Ratings.
9) The terms and conditions of the Corresponding Debentures,
including the interest rate, were determined on an arm's length
basis.
10) The Company presently has no intention to defer interest payments
on the Corresponding Debentures, and it considers the likelihood
of such a deferral to be remote because among other things, if it
were to exercise its right to defer payments of interest with
respect to the Corresponding Debentures, it would not be
permitted to declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with
respect to, any capital stock of the Company or any affiliate of
the Company (other than payments of dividends or distributions to
the Company) or make any payment of principal of or interest or
premium, if any, on or repay, repurchase, or redeem any debt
securities of the Company or any affiliate of the Company that
rank pari passu in all respects with or junior in interest to the
Corresponding Debentures, in each case subject to limited
exceptions stated in Section 2.11 of the Indenture to be entered
into in connection with the issuance of the Corresponding
Debentures.
11) Immediately after the issuance of the Corresponding Debentures,
the debt-to-equity ratio of the Company (as determined for
financial accounting purposes) will be no higher than three to
one (3 : 1). The Company has no plan or intention to issue debt
that would cause such ratio to exceed three to one (3 : 1). For
purposes of this paragraph 11, (i) the Corresponding Debentures
will be treated as debt and payments thereon will be treated as
interest, (ii) other debt (as determined for financial accounting
purposes) shall include both short-term and long-term
indebtedness of the Company, and (iii) equity (as determined for
financial accounting purposes) shall include capital stock,
preferred stock, if any, paid-in surplus and retained earnings of
the Company.
B-3-5
12) To the best of our knowledge, the Company's subsidiaries are
currently in compliance with all applicable federal, state, and
local capital requirements, except to the extent that failure to
comply with any such requirements would not have a material
adverse effect on the Company and its subsidiaries.
13) For purposes hereof, you may rely on the representations made by
the Company in Sections 5.16 and 5.17 of the Placement Agreement
dated as of [PRICING], 2003, by and among FTN Financial Capital
Markets, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., the Trust and the
Company.
14) The Company will not issue any class of common stock or preferred
stock senior in rights (such as payment rights and liquidation
preference) to the Corresponding Debentures during their term.
15) The Internal Revenue Service has not challenged the interest
deduction on any class of the Company's subordinated debt in the
last ten (10) years on the basis that such debt constitutes
equity for federal income tax purposes.
The above representations are accurate as of the date hereof and will
continue to be accurate through the issuance of the Trust Securities, unless you
are otherwise notified by us in writing. The undersigned understands that you
will rely on the foregoing in connection with rendering certain legal opinions,
and possesses the authority to make the representations set forth in this letter
on behalf of the Company. Capitalized terms used and not defined herein shall
have the meanings assigned in the Indenture dated as of [CLOSING], 2003 between
the Company and U.S. Bank National Association as debenture trustee.
Very truly yours,
PXRE Group Ltd.
By:
----------------------------------------
Name:
Title:
B-3-6
EXHIBIT C
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SIGNIFICANT SUBSIDIARIES
------------------------
PXRE Reinsurance Ltd.
PXRE Reinsurance Company
PXRE Reinsurance (Barbados) Ltd.
PXRE Corporation
EXHIBIT D
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FORM OF QUARTERLY REPORT
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I-Preferred Term Securities II, Ltd.
▇/▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇▇
CDO ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
CDO Relationship Manager
PLEASE COMPLETE FOR THE PRINCIPAL INSURANCE OPERATING SUBSIDIARY
As of Year End _______, 20__
NAIC Risk Based Capital Ratio (authorized control level) _________ %
As of [March 31, June 30, September 30, or December 31,] 20___
Total Policyholders' Surplus $__________
Consolidated Debt to Total Policyholders' Surplus ___________%
Total Assets $__________
NAIC Class 1 & 2 Rated Investments to Total Fixed Income Investments ___________%
NAIC Class 1 & 2 Rated Investments to Total Investments ___________%
Return on Policyholders' Surplus ___________%
For Property & Casualty Companies
Expense Ratio ___________%
Loss and LAE Ratio ___________%
Combined Ratio ___________%
Net Premiums Written (annualized) to Policyholders' Surplus ___________%
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NAIC Risk Based Capital Ratio-P&C (Total Adjusted Capital/Authorized Control Level Risk-Based
Capita/)/2
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NAIC Risk Based Capital Ratio-Life ((Total Adjusted Capital-Asset Valuation Reserve)/Authorized
Control Level Risk-Based Capita/)/2
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Total Capital and Surplus-Life Common Capital Stock + Preferred Capital Stock + Aggregate
Write-Ins for other than special surplus funds + Surplus Notes
+Gross Paid-In and Contributed Surplus + Aggregate Write-Ins
for Special Surplus Funds + Unassigned Funds (Surplus) -
Treasury Stock
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Total Capital and Surplus-P&C Aggregate Write-Ins for Special Surplus Funds + Common Capital
Stock + Preferred Capital Stock + Aggregate Write-Ins for other
than special surplus funds + Surplus Notes +Gross Paid-In and
Contributed Surplus + Unassigned Funds (Surplus) - Treasury
Stock
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Total Class 1 & 2 Rated Investments to Total (Total Class 1 + Total Class 2 Rated Investments)/Total Fixed
Fixed Income Investments Income Investments
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Total Class 1 & 2 Rated Investments to Total Investments (Total Class 1 + Total Class 2 Rated Investments)/Total
Investments
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Total Assets Total Assets
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Return on Policyholders' Surplus Net Income/Policyholders' Surplus
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Expense Ratio Other Underwriting Expenses Incurred/Net premiums Earned
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Loss and LAE Ratio (Losses Incurred + Loss Expenses Incurred)/Net Premiums Earned
---------------------------------------------------------------------------------------------------------------------------------
Combined Ratio Expense Ratio + Loss and LAE Ratio
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Net Premiums Written (annualized) to Policyholders' Surplus Net Premiums Written/Policyholders' Surplus
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