PXRE GROUP LTD
MATERIAL CONTRACTS
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>9
<FILENAME>b317102ex10-31.txt
<DESCRIPTION>MATERIAL CONTRACTS
<TEXT>
<PAGE>

                             JOINT VENTURE AGREEMENT


                                     BETWEEN


                            BF&M PROPERTIES LIMITED


                                      AND


                                 PXRE GROUP LTD






                                DATED: June 2001





                             CONYERS DILL & PEARMAN
                             BARRISTERS & ATTORNEYS
                                Clarendon House
                                2 Church Street
                                P.O. Box HM 666
                                 Hamilton HM CX
                                     Bermuda
                                    d.636466



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THIS AGREEMENT is made the 20th day of June 2001



BETWEEN:-

(1)      BF&M PROPERTIES LIMITED, a Bermuda local company having its registered
         office at 112 Pitts Bay Road, Pembroke, Bermuda ("BF&M");

(2)      PXRE GROUP LTD., a Bermuda exempted company having is registered office
         at 2 Church Street, Hamilton, Bermuda ("PXRE");

         (BF&M and PXRE are sometimes hereinafter collectively referred to as
         "the Parties")

WHEREAS:

         (A)      The Parties wish hereby to agree to establish a local Bermuda
                  company (hereinafter the "Company") which shall construct an
                  office building on the Property to be leased to the Parties,
                  affiliated parties and third parties as set out herein;

         (B)      BF&M intends to transfer and convey the Property into the
                  Company on certain terms and conditions in order to assist the
                  joint venture hereinafter described;

         (C)      Each of the Parties will subscribe for shares in the Company
                  with a view to BF&M holding 60% and PXRE holding 40% of the
                  shares of the Company as described herein;

         (D)      PXRE intends to arrange the payment and loan of sufficient
                  funds to the Company for the construction of the Office
                  Premises;

         (E)      The Parties have agreed to enter into this Agreement to govern
                  their respective rights in relation to the before recited
                  matters.

NOW in consideration of the premises It is HEREBY AGREED AS FOLLOWS:-

1.       INTERPRETATION

         1.1      In this Agreement where the context so admits:-

                  the "Act" means the Companies Act 1981 of Bermuda.


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                                    Page -2-


                  "Architects" means the firm of architects doing business in
                  Bermuda known as OBM Limited.

                  "Bermudian" means Bermudian as described in section 113 of the
                  Act. "Board of Directors" or "Board" means the Board of
                  Directors of the Company as elected or appointed from time to
                  time.

                  "Bye-laws" means the Bye-laws of the Company as amended from
                  time to time.

                  "Company" means the Company incorporated in accordance with
                  Clause 2.1 of this Agreement.

                  "Completion Date" means the date that the Architects and the
                  Department of Planning issue a Certificate of Occupancy
                  certifying that the Office Premises are available for
                  occupancy.

                  "Development" means the construction on the Property of an
                  office building of the size and specifications and design
                  described in the latest working drawings drawn by the
                  Architects dated March 8, 2000 and attached hereto as Exhibit
                  A.

                  "Leases" means the leases to be granted by the Company in
                  accordance with Clause 15.

                  "Office Premises" means the office building to be constructed
                  on the Property pursuant to the Development.

                  "Option Value" means the value of the Office Premises
                  (excluding the land) as determined by a Certified Chartered
                  Surveyor, the identity of whom shall be agreed between BF&M
                  and PXRE, within four weeks after the exercise by BF&M of the
                  option to purchase all of the Shares of the Company held by
                  PXRE as provided in Clause 8 hereof.

                  The "Property" means ALL THAT lot of land described in the
                  Schedule hereto.

                  "Shares" means common shares of the Company of BD$1.00 par
                  value each.

         1.2      References to statutory provisions shall be construed as
                  reference to those provisions as respectively amended or
                  re-enacted or as their application is modified by other
                  provisions from time to time (whether before or after the date
                  hereof).

         1.3      In this Agreement, words denoting the plural include the
                  singular and vice versa, and words denoting the masculine
                  include the feminine.

         1.4      Headings are inserted for convenience only and shall not
                  affect the construction of this document.


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         1.5      Covenants, warranties and representations shall be separate
                  and independent and save as expressly provided shall not be
                  limited by reference to any other covenant, warranty or
                  representation or provision in this Agreement.

2.       THE COMPANY

         2.1      (a)      BF&M procured the incorporation of a local Bermuda
                           company (the "Company") on 21 March 2001 with the
                           capacity to own the Property and to undertake the
                           Development.

                  (b)      The initial authorised share capital of the Company
                           consists of 12,000 Shares. Immediately following
                           execution of this Agreement the authorized share
                           capital of the Company shall be increased to 20,000
                           Shares.

                  (c)      All of the authorised and issued Shares shall rank
                           equally in all respects as to voting rights, rights
                           to receive dividends and distributions of capital
                           upon a winding up of the Company;

                  (d)      The Company shall pay any and all stamp duty on the
                           authorised share capital and on any share premium out
                           of the subscription proceeds received for the issue
                           of Shares.

         2.2      The name of the Company is "Barr's Bay Properties Limited" or
                  such other name as the Parties may agree from time to time.

3.       BF&M

         BF&M hereby agrees to:

                  (a)      subscribe for 12,000 Shares of BD$1.00 par value
                           each in the Company and pay up the nominal value of
                           such shares in the amount of BD$12,000.00 in cash in
                           consideration of the issue to it of the 12,000 Shares
                           of the Company credited as fully paid; and


                  (b)      transfer and convey all of its right, title and
                           interest in the Property into the Company as a
                           contribution to surplus immediately following
                           execution of this Agreement by PXRE.

4.       PXRE

         PXRE hereby agrees to:

                  (a)      subscribe for 8,000 Shares of BD$1.00 par value each
                           in the Company and pay up the nominal value of such
                           shares in the amount of BD$8,000.00 in cash in
                           consideration of the issue to it of the 8,000 Shares
                           of the Company credited as fully paid; and


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                                    Page -4-



                  (b)      pay D$866.667.00 to the Company as a contribution to
                           surplus immediately following the issue to it of the
                           8,000 Shares of the Company.

5.       RESTRICTION OF ASSIGNMENT, SALE OR TRANSFER OF INTEREST AND SHARES


         5.1      Each of the Parties hereby mutually convenants with the other
                  that it shall not assign, sell or transfer, pledge or
                  hypothecate or otherwise dispose of or encumber any of their
                  respective Shares nor assign, sell, transfer, pledge or
                  hypothecate or otherwise dispose of or encumber any right or
                  rights to or in any property rights, voting rights, or other
                  interest (whether legal or equitable) which may be attached to
                  the Shares or otherwise arising by virtue of the Party (or its
                  nominee) being a shareholder of the Company except as
                  expressly permitted by this Clause 5.

         5.2      Either Party may transfer all (but not less than all) their
                  Shares to any company with which it is affiliated or which is
                  a subsidiary of it ("affiliated") and "subsidiary" in this
                  Clause 5 having the meanings set out in section 86 of the Act)
                  without the consent of the other. Any such transfer of Shares
                  to any affiliated or subsidiary company as permitted by this
                  Clause 5.2, shall be subject to the condition that the
                  transferee first agrees with the other Party in writing to be
                  bound by the terms of this Agreement and, in the case of any
                  such transfer by PXRE, such transfer shall be subject to a
                  further condition that PXRE shall guarantee in writing in a
                  form acceptable to BF&M the performance by the transferee of
                  its obligations under this Agreement.

         5.3      (a)      If a Party (the "Selling Shareholder") at any time
                           receives a bona fide offer from a third party with
                           whom it deals at arms' length to purchase all, but
                           not less than all, of the Shares owned by the Selling
                           Shareholder and if the Selling Shareholder wishes to
                           accept such offer, the Selling Shareholder shall
                           immediately give notice in writing (the "First
                           Notice") to the other Party (the "Remaining
                           Shareholder") informing the Remaining Shareholder
                           that the Selling Shareholder wishes to accept such
                           offer and attaching a copy of such offer and offering
                           to sell all of the Shares which are the subject of
                           such offer (the "Offered Shares") to the Remaining
                           Shareholder upon the same terms and conditions
                           specified in the offer attached to the First Notice,
                           provided that if PXRE is the Remaining Shareholder
                           they may purchase or identify a Bermudian purchaser
                           to purchase the Shares.

                  (b)      Within 30 days of the giving of the First Notice (the
                           "Acceptance Date"), the Remaining Shareholder may
                           give notice in writing (the "Purchase Notice") to the
                           Selling Shareholder indicating that the Remaining
                           Shareholder wishes to purchase the Offered Shares on
                           the terms and conditions set forth in the offer
                           attached to the First Notice. On receipt of a
                           Purchase Notice, the Selling Shareholder shall be
                           bound to sell, and the Remaining Shareholder shall be
                           bound to purchase all of the Offered



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                                    Page -5-


                           Shares on the terms and conditions specified in the
                           offer attached to the First Notice.

                  (c)      If the Remaining Shareholder has not delivered a
                           Purchase Notice by the Acceptance Date, the Selling
                           Shareholder shall be entitled to sell all, but not
                           less than all, the Offered Shares to such third
                           party, but on terms no more favorable to the
                           purchaser than were detailed to the Remaining
                           Shareholder in the First Notice. If the Offered
                           Shares are sold to the said third party, such sale
                           shall be completed one hundred and twenty days after
                           the giving of the First Notice, provided that if such
                           sale is not completed within such time period the
                           Offered Shares shall again become subject to the
                           provisions of this section and so on from time to
                           time.

                  (d)      Any purchase and sale as between the Selling
                           Shareholder and the Remaining Shareholder shall be
                           completed on the sixtieth day after the giving of the
                           First Notice. The closing shall take place at the
                           offices of the Selling Shareholder and the purchase
                           price for the Offered Shares to be purchased and sold
                           shall be paid in the manner provided by the terms of
                           the offer attached to the First Notice against
                           delivery of certificates representing the Offered
                           Shares together with a duly signed instrument of
                           transfer and resignations of those directors of the
                           Company nominated by the Selling Shareholder.

         5.4      Either Party shall each be entitled to assign, sell, transfer,
                  pledge or hypothecate or otherwise dispose of their respective
                  Shares or interests arising out of their status as a
                  shareholder free of any restriction under the terms of this
                  Agreement if prior written consent for such assignment, sale,
                  transfer, pledge, hypothecation or disposal is given by the
                  other Party.

         5.5      The Parties agree to exercise their voting rights in the
                  Company so as to procure that the Company shall not assign,
                  sell, transfer or dispose of the Property or the Office
                  Premises without the written consent of both Parties.

6.       BOARD OF DIRECTORS AND BUILDING COMMITTEE

         6.1      The Board of Directors of the Company shall consist of 5
                  (five) directors of whom 2 (two) may be nominated by PXRE and
                  the remainder shall be nominated by BF&M and both Parties
                  undertake to vote their Shares to ensure the election of all
                  such nominees.

         6.2      (a)      The Parties shall procure the formation of a Building
                           Committee of the Board of Directors consisting of 2
                           members, one member of which shall be a director
                           nominated by PXRE and one member of which shall be a
                           director nominated by BF&M, which committee shall be
                           responsible for the management and administration of
                           the Development.


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                  (b)      The Building Committee shall meet whenever necessary
                           to consider the progress of the construction of the
                           Development and to make any decisions and take such
                           actions as are necessary to expedite in an efficient
                           manner the completion of the Development.

7.       CONSTRUCTION LOANS AND PROMISSORY NOTES

         7.1      PXRE agrees that it shall lend or it shall cause one of its
                  subsidiaries or affiliates (which shall remain a subsidiary or
                  affiliate of PXRE for the duration of the period that the
                  mortgage(s) to be granted pursuant to clause 7.2 hereof remain
                  outstanding or PXRE shall cause such subsidiary or affiliate
                  to assign such mortgage(s) to another PXRE subsidiary or
                  affiliate prior to any disposition of such entity by PXRE) to
                  lend to the Company from time to time such funds as are
                  necessary to finance the complete construction of the Office
                  Premises as contemplated by this Agreement (hereinafter the
                  "Loans") provided that such Loans in the aggregate shall not
                  exceed BD$7,000,000.00 (seven million dollars) PXRE shall
                  advance or cause to be advanced a Loan to the Company upon
                  being given not less than 30 days written notice that the
                  Company requires the same. Such notice shall specify the date
                  of advance and the amount of the Loan (subject always to the
                  limit on the aggregate amount of all Loans as set out above).
                  The Company shall submit such a request only if the Building
                  Committee (to be constituted in accordance with clause 6.2)
                  has approved the same.

         7.2      Each Loan made to the Company by or on behalf of PXRE shall be
                  evidenced by a promissory note from the Company for the amount
                  of the Loan which shall bear interest at a variable rate to be
                  fixed initially on the date of issue of such promissory note
                  and thereafter on the first day of each calendar quarter being
                  the lower of 7% per annum and 2% less than the average of the
                  prevailing per annum first mortgage rates of banks and deposit
                  companies in Bermuda on such date. Interest shall accrue on
                  each Loan from the date of drawdown and shall be due and
                  payable on the last day of each calendar quarter commencing
                  one year after completion of the Office Premises but only to
                  the extent that the Company has cash surplus to its needs
                  arising from income in excess of all operating expenses.
                  Repayments of principal of Loans will commence 30 days after
                  the first calendar quarter in which the Company has cash
                  surplus to its needs arising from income in excess of all
                  operating expenses (including payments of interest), subject
                  to approval of the Building Committee of the amount of all
                  such payments of principal, which shall be reviewed on a
                  quarterly basis. Notwithstanding the foregoing, such
                  repayments will commence no later than 2 years following the
                  completion of the Office Premises and all Loans shall be fully
                  repaid no later than 20 years from the date of the first
                  principal payment. The principal and interest of the first
                  Loan shall be secured by a first mortgage on the Property upon
                  terms mutually agreeable to the Parties and each subsequent
                  Loan shall be secured by a further charge on the Property.




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         7.3      The Parties agree that the costs of construction of the Office
                  Premises shall be financed, firstly, out of the subscription
                  monies of BD$20,000 (twenty thousand dollars) to be paid into
                  the Company by BF&M and PXRE less the costs of the
                  incorporation of the Company, secondly, out of BD$866,667.00
                  (eight hundred sixty-six thousand six hundred sixty-seven
                  dollars) of the contribution to surplus to be paid into the
                  Company by PXRE and thereafter out of the monies loaned to the
                  Company pursuant to section 7.2. It is the intention of the
                  Parties that the amount of capital paid in on account of the
                  Shares to be issued to BF&M and PXRE less the costs of the
                  incorporation of the Company together with the contribution to
                  surplus and Loans to be made by PXRE pursuant to this
                  Agreement shall be sufficient to enable the Office Premises to
                  be constructed. It is understood and agreed that in the event
                  any further funding shall be required by the Company, PXRE
                  shall have the option but not the obligation of providing such
                  additional funding upon terms mutually acceptable to PXRE and
                  BF&M. In the event (i) PXRE elects not to make such additional
                  financing available to the Company; or (ii) PXRE's additional
                  financing terms are not acceptable to BF&M, it is understood
                  and agreed that all such additional funding required by the
                  Company to complete construction of the Office Premises shall
                  be obtained from institutional or private lenders upon terms
                  and conditions (including the giving of any mortgage security
                  upon the Property) normally applicable to similar building
                  construction projects in Bermuda.

         7.4      The Parties shall procure that:

                  (a)      the Board of Directors, as soon as practical after
                           the transfer of the Property to the Company, pass
                           resolutions authorising the borrowing from PXRE or
                           one of its subsidiaries or affiliates of such sum or
                           sums of money as may be necessary to finance the
                           construction of the Office Premises;

                  (b)      the resolutions referred to in sub-paragraph (a)
                           above shall provide that no further borrowing shall
                           be made by the Company from any other company, person
                           or incorporated body or entity without the prior
                           written approval of PXRE;

                  (c)      the Board of Directors shall specifically approve by
                           resolution each tranche of the Loans prior to each
                           borrowing and shall cause the Company to issue a
                           promissory note for each such additional tranche.

         7.5      Upon the full repayment of any amounts outstanding under the
                  Loans in accordance with the terms of the promissory notes,
                  the promissory notes shall be cancelled and returned to the
                  Company.

8.       Repayment of Loans - Share Purchase Option

         At any time after the full repayment of the Loans by the Company, BF&M
         shall have the right upon 60 days prior written notice to PXRE to
         purchase all of the Shares held by PXRE at a purchase price calculated
         as follows:



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                  A+ 0.4 (B-C)

                  where:-

                  A        is the aggregate subscription price paid by PXRE for
                           its Shares and contributed surplus paid in by PXRE;

                  B        is the Option Value; and

                  C        is the original cost of the Development.

9.       RETAINED EARNINGS

         9.1      The Parties agree that cash arising from income in excess of
                  all operating expenses shall firstly be applied to the
                  repayment of the Loans in accordance with Clause 7.2.

         9.2      The Parties agree to procure that the Board of Directors will
                  adopt a policy of not declaring dividends or making any
                  distributions to shareholders prior to the full repayment of
                  the Loans in accordance with the terms of the promissory
                  notes.

10.      BF&M COVENANTS, REPRESENTATIONS AND WARRANTIES

         10.1     BF&M hereby covenants, represents and warrants that:

                  (a)      it is duly organised and validly existing as a local
                           company in good standing under the laws of the
                           Islands of Bermuda;

                  (b)      it is the sole legal and beneficial holder of good
                           and marketable title to the Property free and clear
                           of all encumbrances whatsoever;

                  (c)      it has taken all necessary corporate action and has
                           obtained all of the necessary consents and
                           permissions from the Bermuda Monetary Authority and
                           has taken all other action required to authorise the
                           execution, delivery and performance of this Agreement
                           so that when duly executed by or on behalf of BF&M,
                           this Agreement will constitute the valid and binding
                           obligations of BF&M in accordance with the terms
                           hereof.

         10.2     To the intent that BF&M is now and shall at all times be
                  Bermudian so that the Company is able to carry on the business
                  contemplated in this Agreement without a licence under the
                  Act, BF&M hereby warrants, represents and covenants that BF&M
                  shall as and when applicable take all necessary steps in order
                  to ensure BF&M is at the date hereof and will continue to be
                  at least 80% beneficially owned by Bermudians as required by
                  the Act.


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11.      PXRE COVENANTS, REPRESENTATIONS AND WARRANTIES

         11.1     PXRE hereby covenants, represents and warrants that:

                  (a)      it is duly organised and validly existing as an
                           exempted company in good standing under the laws of
                           Bermuda;

                  (b)      it has taken all corporate and other actions required
                           to authorise the execution, delivery and performance
                           of this Agreement so that when duly executed by or on
                           behalf of PXRE, this Agreement will constitute the
                           valid and binding obligations of PXRE in accordance
                           with the terms hereof;

         11.2     PXRE shall be responsible to obtain all governmental and
                  regulatory consents and permissions required for the issue of
                  Shares by the Company to PXRE including the permission of the
                  Controller of Foreign Exchange.

12.      MUTUAL COVENANTS

         12.1     Each of the Parties covenants with the other as separate
                  covenants that it will exercise its voting rights as a
                  shareholder of the Company to procure that:-

                  (a)      The Company at all times complies with the provisions
                           of its bye-laws as amended from time to time by
                           resolution of the Company in general meeting;

                  (b)      except as contemplated by this Agreement, the Company
                           shall not issue any shares, amend its Memorandum of
                           Association, incur any major liability or obligation,
                           encumber its assets, or commence any new type of
                           business, other than for the purposes of constructing
                           the Office Premises, or managing the rental thereof
                           and any related business.

                  (c)      it will, as soon as practicable after the date
                           hereof, exercise its voting rights as a shareholder
                           and use its best endeavours to procure that:

                           (i)      the Company adopts Bye-laws in a form which
                                    gives effect to the provisions of this
                                    Agreement;

                           (ii)     the Company will obtain a building permit
                                    from the Department of Planning which
                                    enables the Company to complete the
                                    Development in accordance with terms hereof.

         12.2     Subject to the discretion of the Court, the Parties agree that
                  their respective covenants in this Clause 12 are given in
                  contemplation of injunctive relief and of specific performance
                  as suitable remedies and that failing such discretionary
                  remedies they shall procure that the Company is wound up in
                  accordance with the Act.


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13.      PROPERTY COVENANTS

         BF&M hereby covenants, represents and warrants that:

         (a)      it has good and marketable title to the Property free from any
                  encumbrance and that there are appurtenant to the Property all
                  rights and easements necessary for its use and enjoyment;

         (b)      it will transfer the aforesaid good and marketable title of
                  the Property to the Company as described in Clause 3;

         (c)      all restrictions, conditions and convenants affecting the
                  Property will have been observed and performed up to the date
                  of transfer of the Property to the Company.

14.      THE DEVELOPMENT

         The Parties shall procure that:

         (a)      The Company appoints and employs the Architects as its
                  architects in Bermuda in relation to the Development;

         (b)      The Company applies for a final building permit and all other
                  permits necessary for the Company lawfully to complete the
                  Development as soon as practical following the transfer of the
                  Property to the Company;

         (c)      The Company appoints the Building Committee in accordance with
                  Clause 6.2 (a) of this Agreement as its duly authorised
                  representative with authority to act on behalf of the Company
                  in relation to all dealings and negotiations with the
                  Architects and to procure that the Building Committee use its
                  best endeavours to arrange for and/or supervise all other
                  necessary development activities such as:

                  (i)      preparation of a space program and interior adjacency
                           requirements;

                  (ii)     development of a basic informational package for the
                           Architects, identifying project scope and budget;

                  (iii)    selection of consultant for complete interior fit-up
                           package, including design development, working
                           drawings and specifications;

                  (iv)     final review of all submissions to the Planning
                           Department and other relevant authorities to be made
                           by the Architects on behalf of the Company;

                  (v)      approval of all utility and special consulting
                           contracts;

                  (vi)     determination of the construction contracts form,
                           selection of all building contractors,
                           subcontractors, inspectors and special consultants,
                           and approval of all invoices in connection with the
                           entire development phase; and



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                                   Page -11-


                  (vii)    actions and all other things required to effect
                           completion of the Development and related matters.

15.      THE LEASES

         15.1     The portion of the Office Premises to be leased to BF&M will
                  include the two basement levels. In the event that BF&M does
                  not require all of the space in the two basement levels of the
                  Office Premises, such surplus will be first made available to
                  PXRE.

         15.2     The portion of the Office Premises to be leased to PXRE will
                  include the ground floor (i.e. at the level of Pitts Bay
                  Road), the second floor of Office Premises and any space which
                  the Company is permitted to develop above the second floor. A
                  separate entrance will be constructed giving access to such
                  ground floor and above areas for the exclusive use of PXRE
                  (and any permitted sub-lessees).

         15.3     Each of the Parties shall procure that the Company grants
                  leases to each of the Parties of such portion of the Office
                  Premises as shall be agreed by the Parties prior to the
                  commencement of construction which shall be upon, inter alia,
                  the following terms:-

                  (a)      the Leases granted to PXRE and BF&M shall each be for
                           a term of 5 years commencing on and from the
                           Completion Date with an option on the part of the
                           lessee to renew for two further terms of 5 years
                           each;

                  (b)      all leases will be at market rates as determined from
                           time to time and will be in the usual commercial form
                           including that all maintenance charges relative to
                           the interior of the building will be charged to the
                           lessees based on the percentage such lessees occupies
                           of the net rental floor space in the building. Each
                           lessee will be responsible to decorate and fit out
                           the interior of the lease premises (with the Company
                           being responsible for the fitting out of common use
                           areas, if any).

                  (c)      the rent and service charge payable under each Lease
                           shall be calculated and paid as provided in the
                           agreed Lease save that the Parties and the Company
                           may agree to vary these rents from time to time.

         15.4     If for any reason any one of the Parties would prefer that all
                  or any part of the Office Premises which it lets from the
                  Company be instead let directly or sublet with the prior
                  written consent of BF&M (such consent not to be unreasonably
                  withheld) to a third party, then at either Party's request,
                  the Parties shall procure that the Board of Directors
                  authorise the grant of such letting and enter into any deeds
                  or documents as shall be required in order to let such part of
                  the Office Premises to the relevant third party.


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                                   Page -12-


         15.5     Notwithstanding the provisions of Clause 15.4, no leases shall
                  be granted by the Company to any third party unless both of
                  the Parties agree and approve in writing the identity of the
                  proposed third party lessee.

         15.6     The Office Premises shall be used solely as business offices
                  and all leases shall contain appropriate restrictions on use.

16.      SUPERVENING ILLEGALITY

         In the event that at any time any applicable law, rule, regulation or
         government policy is such that any or all of the provisions of this
         Agreement and the schedules hereto are void or unenforceable the
         parties hereto shall make their best endeavours to renegotiate the
         matters referred to hereunder with the intent that their respective
         rights and obligations shall approximate, as near as practicable their
         rights and obligations under this Agreement and the schedules hereto on
         the assumption that no part of this Agreement and the schedules hereto
         is void or unenforceable.

17.      TERMINATION

         17.1     "Termination Event" means the occurrence or non-occurrence of
                  any of the following:

                  (a)      The Company is not incorporated and duly organized in
                           accordance with the terms of this Agreement by 30th
                           June, 2001;

                  (b)      Either Party fails to perform or observe any of the
                           provisions, terms, conditions covenants and/or
                           provisions of this Agreement and does not remedy such
                           failure within 60 days of notice from the other Party
                           requiring it to do so;

                  (c)      Failure by the Company to observe any of the
                           provisions, terms, covenants and/or conditions of
                           this Agreement or the promissory notes and does not
                           remedy such failure within 60 days of notice from one
                           of the Parties requiring it to do so;

                  (d)      Any event or condition referred to in the promissory
                           notes occurs or fails to occur so that as a result
                           thereof, the indebtedness included therein may be
                           declared due and payable prior to the date on which
                           such indebtedness would otherwise become due and
                           payable;

                  (e)      Failure by the Company to pay any indebtedness for
                           borrowed money due at final maturity pursuant to a
                           demand by PXRE under any promissory notes issued in
                           accordance with this Agreement;

                  (f)      If any representation or warranty made in writing to
                           either Party by either Party or in connection with
                           the making of the Loans, or any certificate,
                           statement or report made or delivered in compliance
                           with this


<PAGE>


                                   Page -13-


                           Agreement, shall have been false or misleading in any
                           material respect when made or delivered to either
                           Party;

                  (g)      If the Company commences or is subject to proceedings
                           for the winding-up or dissolution or liquidation of
                           the Company, whether involuntary or voluntary;

                  (h)      If the Company issues Shares or either Party
                           transfers or attempts to transfer Shares in
                           contravention of any provision or provisions of this
                           Agreement;

                  (i)      The final building permit in respect of the
                           Development has not been granted, remains subject to
                           appeal or is ineffective for the purposes of this
                           Agreement 365 days after the date of execution of
                           this Agreement;

                  (j)      Any tests conducted by engineers, surveyors,
                           geologists or other experts relating to the quality
                           and condition of the Property, including matters
                           relating to the subsurface thereof which reveals
                           anything that materially adversely affects the
                           Development which is known by either Party and has
                           not been disclosed in writing to the non-knowing
                           Party prior to the execution hereof;

                  (k)      The plans referred in the definition of Development
                           are not approved by the appropriate governmental
                           authorities and such approval has not been granted or
                           remains subject to appeal by September 30, 2001;

         17.2     On the happening of a Termination Event either Party may elect
                  to have BF&M purchase PXRE's Shares in the Company, if it has
                  any provided that in the event BF&M shall have caused the
                  Termination Event, only PXRE shall be entitled to elect to
                  have BF&M purchase PXRE's shares in the Company and in the
                  event PXRE shall have caused the Termination Event, only BF&M
                  shall be entitled to have BF&M purchase PXRE's shares in the
                  Company.

         17.3     After the happening of a Termination Event, if either Party
                  wishes to exercise its right under Clause 17.2 it shall give
                  the other Party notice in writing of such election in
                  accordance with clause 18 within 60 days of the Termination
                  Event.

18.      SHARE ACQUISITION OR WINDING UP

         18.1     In the event that either Party wishes to exercise its rights
                  under Clause 17.2 hereof it (the "First Party") shall give
                  notice in writing of its offer (the "Offer Notice") to buy (in
                  the case of BF&M) or sell (in the case of PXRE) the Shares
                  owned by PXRE, specifying in the Offer Notice the price at
                  which it is prepared to buy or sell, as the case may be,
                  provided that such price shall not be in excess of the amount
                  which would be calculated in accordance with Clause 8.

         18.2     Within 30 days of the date on which the Offer Notice is given,
                  the Party given the Offer Notice (the "Second Party") may by
                  notice in writing to the First Party:


<PAGE>


                                   Page -14-


                  (a)      accept the offer in the Offer Notice; or

                  (b)      indicate that it requires that the price be
                           determined by arbitration and shall in such notice
                           nominate one arbitrator who has accepted the
                           reference.

                  If the Second Party fails to give notice in accordance with
                  either paragraph (a) or paragraph (b) above it shall be deemed
                  to have accepted the Offer Notice, and the purchase and sale
                  of the PXRE Shares shall be completed in accordance with the
                  terms and conditions set out in the Offer Notice.

         18.3     In the event that the Second Party gives notice pursuant to
                  Clause 18(2)(b), the First Party shall within 30 days of the
                  date of such notice nominate an arbitrator who has accepted
                  such reference and by this Agreement BF&M and PXRE submit to
                  arbitration by two arbitrators (one appointed by each of them)
                  pursuant to the Arbitration Act 1986 of the Islands of
                  Bermuda. The arbitrators shall determine the price to be paid
                  by BF&M for PXRE's Shares in the Company on the basis of a
                  willing vendor and purchaser and taking account of the market
                  value of the Office Premises and any other assets of the
                  Company at the date of the Notice, provided that the price
                  shall not be in excess of the amount which would be calculated
                  in accordance with Clause 8.

         18.4     The price of PXRE's Shares offered under Clause 18.2(b) shall
                  be deemed to have become payable on the 90th day after the
                  date on which the Offer Notice was given and thereafter shall
                  bear interest at 7% per annum.

         18.5     If the price to be paid for any Shares is determined by
                  arbitration, a contract for the sale and purchase of these
                  Shares shall be deemed to have come into effect on the date
                  the award of the arbitrators becomes final and is no longer
                  the subject of appeal; and, unless otherwise agreed, any
                  contract for the sale and purchase of shares pursuant to this
                  clause shall be completed within 7 days of the date of the
                  contract and shall be deemed to contain a provision that the
                  Shares are sold free and clear of all liens charges and
                  encumbrances and together with all rights (including dividends
                  or other distributions) attaching to them on and from the date
                  of the Offer Notice.

         18.6     PXRE shall have no obligation to make the Loans after
                  completion of the sale of its Shares in accordance with this
                  Clause 18.

19.      ARBITRATION

         Should any dispute arise between the parties in respect of and
         concerning matters remaining to be agreed in respect of any matters to
         be interpreted under this Agreement (and including the determination of
         the price of shares offered for sale under [Section 18] hereof), any
         such dispute may be referred to arbitration pursuant to the provisions
         of the Arbitration Act 1986 of Bermuda and each of the Parties hereby
         submits to the jurisdiction of the arbitrator or arbitrators appointed
         in accordance therewith; and the arbitration hearing shall be conducted
         in Bermuda.



<PAGE>


                                   Page -15-


20.      COSTS

         Each Party to this Agreement shall pay its own legal costs of and
         incidental to this Agreement and the obligations hereby undertaken. The
         Parties shall share the costs of stamp duty, all governmental fees of
         preparation of building plans, architect plans, architect models,
         demolition costs, estimates and all costs related to the planning of
         the construction of the Office Premises which are incurred prior to
         incorporation of the Company in the following proportions:

         PXRE as to 40%
         BF&M as to 60%

         After the incorporation of the Company, all such costs shall be paid by
         the Company. The Company shall also be responsible for the costs of its
         incorporation and any costs associated with the mortgage(s) to secure
         the Loans referred to in Clauses 7.1 and 7.2 hereof.

21.      INSOLVENCY

         Each of the Parties hereby covenants with the others as separate
         covenants that in the event that the Company is unable to pay its debts
         as and when they fall due and that this position arises other than by
         reason of failure of the Parties or the Company to comply with the
         provisions of this Agreement, the leases of the Office Premises to be
         granted in accordance with this Agreement or the promissory notes, they
         shall procure that the Company is wound up.

22.      BOOKS OF ACCOUNT

         Each of the parties hereby covenants with the others, as separate
         covenants, that it shall procure that accurate books and accounts shall
         be kept by the Company in accordance with the Act, showing all of its
         assets, liabilities, operations, transactions and financial condition;
         and that as soon as practicable after the end of each fiscal year of
         the Company (but in no event later than one hundred and twenty days
         after the end of any fiscal year), a general accounting and audit shall
         be made by chartered accountants in Bermuda, covering all matters and
         things customarily included in such accounts and audits, and a full
         detailed statement shall be furnished by the Company to the Parties
         hereto. At any time following receipt of the Company's detailed
         statement either Party or their authorized representative shall be
         entitled to inspect the books and records of the Company.

23.      NOTICES

         All notices, acceptances, agreements, requests, demands, consents,
         waivers and other communications required or otherwise given under any
         of the provisions of this Agreement shall be in writing and shall be
         deemed to have been duly given and received if delivered by hand to the
         address of the addressee as follows:


<PAGE>


                                   Page -16-


         If to PXRE, at:

         99 Front Street
         Hamilton HM 12
         Attention: Jeffrey L. Radke

         If to BF&M, at:

         112 Pitts Bay Road
         Pembroke HM 08
         Attention: John Wight

         or to such other address and with such other copies as the address may
         have specified in a written notice duly given to the sender.

24.      MANAGEMENT OF THE OFFICE PREMISES

         The Parties hereto hereby agree and declare that they shall use their
         best endeavours to ensure that the management of the Office Premises
         after completion shall continue to be the responsibility of the
         Building Committee of the Board of the Company.

25.      NAME OF OFFICE PREMISES

         The business name of the Office Premises shall be "PXRE House" until
         PXRE disposes of all of its beneficial interest in the Company or
         ceases to be the primary tenant.

26.      INSURANCE

         The Parties agree to procure that the Company obtain an insurance
         program from BF&M General Insurance Company Limited to cover the
         Company against all appropriate insurable risks within reasonable
         limits both in respect of the period of construction and thereafter.

27.      PROVISIONS RELATING TO THIS AGREEMENT

         27.1     This Agreement shall be binding upon and enure for the benefit
                  of the respective successors of the Parties named herein but
                  shall not be assignable save as permitted or required under
                  the Bye-laws or this Agreement. Nothing in this Agreement,
                  express or implied, is intended to confer on any other person
                  not a party hereto any right or remedy under or by reason of
                  this Agreement.

         27.2     This Agreement (together with any documents referred to
                  herein) supersedes any prior negotiations and agreements
                  (written or oral) and constitutes the whole of the agreement
                  among all of the parties hereto and no variations, amendments
                  or alterations to this Agreement shall be effective unless
                  made in writing by the Parties.


<PAGE>


                                   Page -17-


         27.3     No failure to exercise any right or remedy under this
                  Agreement shall constitute a waiver of any right or remedy and
                  no exercise of any right or remedy shall constitute a waiver
                  of any other right or remedy.

         27.4     For the avoidance or doubt it is hereby agreed and declared
                  that all obligations hereunder are several.

         27.5     Notwithstanding that any document referred to herein is stated
                  to be scheduled or annexed hereto, it need not be so scheduled
                  or annexed provided that a copy of it is annotated as being
                  the document referred to in this Agreement and such annotating
                  is executed by or on behalf of each of the parties hereto.

         27.6     Each of the Parties hereto hereby agrees that it shall not
                  make any statement to the media regarding any matter
                  contemplated in this Agreement save after reasonable
                  consultation with the other Party and that in making any such
                  statement or publishing any material relevant to any matter
                  contemplated by this Agreement, it shall have due regard for
                  the reasonable interests of the other parties.

         27.7     Nothing in this Agreement shall constitute or be deemed to
                  constitute a partnership between the Parties and none of them
                  shall have any authority to bind the others in any way.

         27.8     It is acknowledged and agreed that this Agreement may be
                  executed by the Parties in counterparts.

28.      TERMINATION

         This Agreement shall terminate, after PXRE acquires Shares, upon either
         Party ceasing to hold Shares in the Company as a result of any
         transaction permitted by the terms of this Agreement, provided that
         such termination shall be without prejudice to any obligations or
         rights of either Party which have accrued prior to such termination and
         shall not effect any provision which is expressly or by implication to
         come into effect on or to continue in effect after such termination.

29.      GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
         the laws of the Islands of Bermuda and the Parties hereby submit (save
         where arbitration is expressly provided for) to the non-exclusive
         jurisdiction of the Supreme Court of Bermuda.


<PAGE>



                                   Page -18-


IN WITNESS whereof the Parties hereto have caused this Agreement to be executed
in duplicate under seal the day and year first above written.




THE COMMON SEAL OF BF&M PROPERTIES  )
LIMITED was hereunto affixed        )
in the presence of:-  Ducilia Veloso)



Director                                                              STAMP

/s/ Glenn Titterton



Secretary                                                             STAMP

/s/ N. John Wight



THE COMMON SEAL OE PXRE GROUP LTD.  )
was hereunto affixed in the         )
presence of:-                       )



Executive Vice-President

/s/ Jeffrey Radke



Secretary

/s/ David Doyle


                                                      (Stamp Duty to be affixed)





<PAGE>


                                   Page -19-







                                    SCHEDULE


ALL THAT certain parcel of land situate in Pembroke Parish in the Islands of
Bermuda delineated on the plan (prepared by Jones Waddington Ltd. Surveyors of
Hamilton, Bermuda and being Drawing No. LS 6550 dated September 2000) annexed
hereto and thereon outlined in Red and containing in area 0.050 of an Hectare
and bounded NORTHERLY by the Public Road delineated on the Plan and designated
thereon as and known as "Pitts Bay Road" and there measuring on a straight line
from West to East 14.93 metres EASTERLY by land of BF&M Limited and there
measuring 34.83 metres SOUTH-EASTERLY and SOUTHERLY by the Waters of Hamilton
Harbour and there measuring on two straight lines from East to West 1.13 metres
and 15.26 metres and WESTERLY by other land now or lately in the possession of
the heirs or devisees of James Falconer Smith deceased and there measuring 30.14
metres OR HOWEVER OTHERWISE the said parcel of land may be bounded may measure
or ought to be described TOGETHER WITH the building thereon erected known as
"Scarborough", 110 Pitts Bay Road, Pembroke (Grid Ref: 3/18 3148 7376) and all
other houses buildings fixtures walls fences ways rights-of-way rights lights
liberties privileges easements advantages and appurtenances whatsoever to the
said parcel of land belonging or in anywise appertaining or usually held or
enjoyed therewith or reputed as part thereof or appurtenant thereto.



</TEXT>
</DOCUMENT>
