EXHIBIT 4.2
FORM OF CLASS A WARRANT
ESG RE LIMITED
THIS WARRANT AND THE UNDERLYING COMMON SHARES MAY NOT BE TRANSFERRED EXCEPT (I)
IN COMPLIANCE WITH THE PROVISIONS OF THE BYE-LAWS OF THE COMPANY AND ANY
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS AND (II) (A) PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
(B) IN COMPLIANCE WITH RULE 144 UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN AND IN COMPLIANCE WITH RULE 144A
UNDER THE ACT, (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE ACT OR (E) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
ACT IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. THIS WARRANT AND THE UNDERLYING COMMON
SHARES ARE SUBJECT TO CERTAIN ADDITIONAL RESTRICTIONS ON TRANSFER CONTAINED IN A
SUBSCRIPTION AGREEMENT AND THE COMPANY'S BYE-LAWS, COPIES OF WHICH ARE ON FILE
AT THE PRINCIPAL OFFICE OF THE COMPANY.
ESG RE LIMITED, a Bermuda corporation (the "Company"), hereby
certifies that, for value received, (the "Holder"), or
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company, at any time and from time to time in whole or in part an aggregate of
fully paid and non-assessable Common Shares, par value $1.00 per share
("Common Shares"), of the Company during the period beginning on the date of
issuance hereof (the "Issue Date") and ending on the tenth anniversary of the
Issue Date.
1. PURCHASE PRICE. Such Common Shares shall be purchased at a
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purchase price per Common Share, subject to the provisions of Paragraph 3
hereof, equal to $20 (as adjusted in accordance with the terms hereof, the
"Purchase Price"). The number and character of such Common Shares are subject
to adjustment as provided below, and the term "Common Shares" shall mean, unless
the context otherwise requires, the Common Shares or other securities or
property at the time deliverable upon the exercise of this Warrant. This
Warrant is herein called the "Warrant."
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2. EXERCISE OF WARRANT. The purchase rights evidenced by this
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Warrant shall be exercised by the Holder surrendering this Warrant, with the
form of subscription at the end hereof duly executed by such Holder (the
"Exercise Notice"), to the Company at its offices, 00 Xxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx Xxxxxx, Xxxxxxx, accompanied by payment as specified below of the
aggregate Purchase Price determined as of the Determination Date (as defined
below) of the Common Shares being purchased pursuant to such exercise. Payment
of the aggregate Purchase Price may be made, at the option of the Holder, (i) in
cash, (ii) by certified check or bank cashier's check payable to the order of
the Company in the amount of such Purchase Price, (iii) by delivering Common
Shares with an aggregate Market Price (as hereinafter defined) as of the day
prior to the Company's receipt of the Exercise Notice (the "Determination Date")
equal to the product of the Purchase Price and the number of Common Shares being
purchased, (iv) by the Company reducing, at the request of the Holder, the
number of Common Shares for which this Warrant is exercisable by a number of
Common Shares (the "Surrendered Shares") such that the product of (a) the Market
Price per Common Share as of the Determination Date less the Purchase Price in
effect on the Determination Date and (b) the number of Surrendered Shares equals
or exceeds the product of (x) the Purchase Price in effect on the Determination
Date and (y) the number of Common Shares being purchased, or any combination of
the methods of payment described in clauses (i) through (iv) above.
2.1 Partial Exercise. This Warrant may be exercised for less
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than the full number of Common Shares at the times called for hereby, in which
case the number of Common Shares receivable upon the exercise of this Warrant as
a whole, and the sum payable upon the exercise of this Warrant as a whole, shall
be proportionately reduced. Upon any such partial exercise, the Company at its
expense will forthwith issue to the holder hereof a new Warrant or Warrants of
like tenor calling for the number of Common Shares as to which rights have not
been exercised, such Warrant or Warrants to be issued in the name of the holder
hereof or his nominee (upon payment by such holder of any applicable transfer
taxes).
2.2 Delivery of Certificates for Common Shares on Conversion.
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As soon as practicable after the exercise of this Warrant and payment of the
Purchase Price, and in any event within ten (10) days thereafter, the Company,
at its expense, will cause to be issued in the name of and delivered to the
holder hereof a certificate or certificates for the number of fully paid and
non-assessable Common Shares or other securities or property to which such
Holder shall be entitled upon such exercise, plus, in lieu of any fractional
share to which such holder would otherwise be entitled, cash in an amount
determined in accordance with Paragraph 3.9 hereof. The Common Shares so
received shall be deemed to be issued to the Holder as the record owner of such
Common Shares as of the close of business on the date on which this Warrant is
surrendered and payment made for such Common Shares as aforesaid.
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3. ANTI-DILUTION PROVISIONS AND OTHER ADJUSTMENTS. In order to
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prevent dilution of the right granted hereunder, the Purchase Price shall be
subject to adjustment from time to time in accordance with this Paragraph 3.
Upon each adjustment of the Purchase Price pursuant to this Paragraph 3, the
registered holder hereof shall thereafter be entitled to acquire upon exercise
of this Warrant, at the Purchase Price resulting from such adjustment, the
number of the Company's Common Shares obtainable by multiplying the Purchase
Price in effect immediately prior to such adjustment by the number of the
Company's Common Shares acquirable upon conversion thereof immediately prior to
such adjustment and dividing the product thereof by the Purchase Price resulting
from such adjustment.
3.1 Adjustment for Issue or Sale of Common Shares at Less than
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90% of Market Price. Except as provided in Paragraph 3.2 or 3.5 below, if and
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whenever on or after the date of issuance hereof the Company shall issue or
sell, or shall in accordance with subparagraphs 3.1(1) to (9), inclusive, be
deemed to have issued or sold, other than any issuance or sale in connection
with an underwritten public offering, any Common Shares for a consideration per
share less than 90% of the Market Price in effect immediately prior to the time
of such issue or sale, then forthwith upon such issue or sale (the "Triggering
Transaction"), the Purchase Price shall, subject to subparagraphs (1) to (9) of
this Paragraph 3.1, be reduced to the Purchase Price (calculated to the nearest
tenth of a cent) determined by multiplying the Purchase Price in effect
immediately prior to the time of such issue or sale by a fraction, the numerator
of which shall be the sum of (x) the product of the Number of Common Shares
Deemed Outstanding immediately prior to such Triggering Transaction multiplied
by the Market Price immediately prior to such Triggering Transaction plus (y)
the total amount, if any, received or receivable at any time by the Company as
consideration for the issuance or sale of such Common Shares and the denominator
of which shall be the product of (x) the Number of Common Shares Deemed
Outstanding immediately after such issue or sale, multiplied by (y) the Market
Price immediately prior to such issue or sale.
For purposes of this Paragraph 3, the term "Number of Common Shares
Deemed Outstanding" at any given time shall mean the sum of (i) the number of
the Company's Common Shares outstanding at such time, and (ii) the number of the
Company's Common Shares deemed to be outstanding under subparagraphs 3.1(1) to
(9), inclusive, at such time. For purposes of this Agreement, the term "Market
Price" as of any day shall mean the average closing price of a Common Share or
other security for the 15 consecutive trading days concluding on the principal
national securities exchange on which the Common Shares or securities are listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the average of the reported bid and asked prices during
such 15 trading day period in the over-the-counter market as furnished by the
National Quotation Bureau, Inc., or, if such firm is not then engaged in the
business of reporting such prices, as furnished by any member of the National
Association of
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Securities Dealers, Inc. selected by the Company or, if the Common Shares or
securities are not publicly traded, the Market Price for such day shall be the
fair market value thereof determined in good faith by the Board of Directors of
the Company.
For purposes of determining the adjusted Purchase Price under this
Paragraph 3.1, the following subsections (1) to (9), inclusive, shall be
applicable:
(1) In case the Company at any time shall in any manner grant
(whether directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of, Common
Shares or any other securities convertible into or exchangeable for Common
Shares (such rights or options being herein called "Options" and such
convertible or exchangeable shares or securities being herein called
"Convertible Securities"), whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable and the price per share for which the Common Shares are
issuable upon exercise, conversion or exchange (determined by dividing (x)
the total amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Company upon the exercise
of all such Options, plus, in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (y) the total
maximum number of Common Shares issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities) shall be less
than 90% of the Market Price determined as of the date of such grant, then
the total maximum number of Common Shares issuable upon exercise of such
Options or conversion or exchange of all such Convertible Securities shall
(as of the date of the grant of such Option) be deemed to be outstanding
and to have been issued and sold by the Company for such price per share.
No adjustment of the Purchase Price shall be made upon exercise of such
Options or conversion or exchange of such Convertible Securities, except as
otherwise provided in subparagraph (3) below.
(2) In case the Company at any time shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
Common Shares are issuable upon such conversion or exchange (determined by
dividing (x) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (y) the total
maximum number of Common Shares issuable upon the conversion or exchange of
all such Convertible Securities) shall be less than the 90% of Market
Price,
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determined as of the date of such issue or sale, as the case may be, then
the total maximum number of Common Shares issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of the
issue or sale of such Convertible Securities) be deemed to be outstanding
and to have been issued and sold by the Company for such price per share.
No adjustment of the Purchase Price shall be made upon the actual issue of
such Common Shares upon exercise of the rights to exchange or convert under
such Convertible Securities, except as otherwise provided in subparagraph
(3) below.
(3) If the exercise price provided for in any Options referred to
in subparagraph (1), the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
subparagraph (1) or (2), or the rate at which any Convertible Securities
referred to in subparagraph (1) or (2) are convertible into or
exchangeable for Common Shares shall change at any time (other than under
or by reason of provisions designed to protect against dilution of the type
set forth in Paragraph 3.1 or 3.3), the Purchase Price in effect at the
time of such change shall forthwith be readjusted to the Purchase Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion or exchange rate, as the case
may be, at the time initially granted, issued or sold. If the exercise
price provided for in any Option referred to in subparagraph (1), the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in subparagraphs (1) or (2), or
the rate at which any Convertible Securities referred to in subparagraphs
(1) or (2) are convertible into or exchangeable for Common Shares, shall be
reduced at any time under or by reason of provisions with respect thereto
designed to protect against dilution, then in case of the delivery of
Common Shares upon the exercise of any such Option or upon conversion or
exchange of any such Convertible Security, the Purchase Price then in
effect hereunder shall forthwith be adjusted to such respective amount as
would have been obtained had such Option or Convertible Security never been
issued as to such Common Shares and had adjustments been made upon the
issuance of Common Shares delivered as aforesaid, but only if as a result
of such adjustment the Purchase Price then in effect hereunder is hereby
reduced and provided that there shall be no duplication of any adjustments
otherwise made in accordance with the term hereof.
(4) On the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities, the Purchase Price
then in effect hereunder shall forthwith be increased to the Purchase Price
which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination, never been
issued.
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(5) In case any Options shall be issued in connection with the
issue or sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to have
been issued without consideration.
(6) In case any Common Shares, Options or Convertible Securities
shall be issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the Company therefor. In case any Common Shares, Options or Convertible
Securities shall be issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Company shall
be the fair value of such consideration as determined in good faith by the
Board of Directors of the Company.
(7) The number of Common Shares outstanding at any given time
shall not include shares owned or held by or for the account of the
Company, and the disposition of any shares so owned or held shall be
considered an issue or sale of Common Shares for the purpose of this
Paragraph 3.1.
(8) In case the Company shall declare a dividend or make any
other distribution upon the shares of the Company payable in Common Shares,
Options, or Convertible Securities, then in such case any Common Shares,
Options or Convertible Securities, as the case may be, issuable in payment
of such dividend or distribution shall be deemed to have been issued or
sold without consideration.
(9) For purposes of this Paragraph 3.1, in case the Company shall
take a record of the holders of its Common Shares for the purpose of
determining holders entitled (x) to receive a dividend or other
distribution payable in Common Shares, Options or in Convertible
Securities, or (y) to subscribe for or purchase Common Shares, Options or
Convertible Securities, then such record date shall be deemed to be the
date of the issue or sale of the Common Shares deemed to have been issued
or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right or subscription or
purchase, as the case may be.
3.2 Dividends Not Paid Out of Earnings or Earned Surplus. In the
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event the Company shall declare a dividend upon the Common Shares (other than a
dividend covered by subparagraph 3.1(8)) payable otherwise than out of earnings
or earned surplus, determined in accordance with generally accepted accounting
principles, including the making of appropriate deductions for minority
interests, if any, in subsidiaries (herein referred to as "Liquidating
Dividends"), then, as soon as possible after the exercise of this Warrant, the
Company shall pay to the
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person exercising such Warrant an amount equal to the aggregate value at the
time of such exercise of all Liquidating Dividends which would have been payable
to such person had such person exercised this Warrant on the record date for
determining persons entitled to such Liquidating Dividend. For the purposes of
this Paragraph 3.2, a dividend other than in cash shall be considered payable
out of earnings or earned surplus only to the extent that such earnings or
earned surplus are charged an amount equal to the fair value of such dividend as
determined in good faith by the Board of Directors of the Company.
3.3 Subdivisions and Combinations. In case the Company shall at
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any time subdivide (other than by means of a dividend payable in Common Shares
covered by subparagraph 3.1(8)), its outstanding Common Shares into a greater
number of shares, the Purchase Price in effect immediately prior to such
subdivision shall be appropriately reduced, and, conversely, in case the
outstanding Common Shares of the Company shall be combined into a smaller number
of shares, the Purchase Price in effect immediately prior to such combination
shall be proportionately increased.
3.4 Reorganization, Reclassification, Consolidation, Merger or
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Sale of Assets. If any capital reorganization or reclassification of the
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capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Common
Shares shall be entitled to receive stock, securities, cash or other property
with respect to or in exchange for Common Shares, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holder of this Warrant shall have
the right to acquire and receive upon exercise hereof such common shares,
securities, cash or other property issuable or payable (as part of the
reorganization, reclassification, consolidation, merger or sale) with respect to
or in exchange for such number of outstanding Common Shares of the Company as
would have been received upon exercise of the Warrant at the Purchase Price then
in effect. The Company will not effect any such consolidation, merger or sale,
unless prior to the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume, by written instrument mailed or delivered
to the holder of this Warrant at the last address of such holder appearing on
the books of the Company, the obligation to deliver to such holder such common
shares, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase. In the event that pursuant to the
terms of this Paragraph 3.4, this Warrant becomes exercisable for securities
other than Common Shares, then the provisions of Section 3 shall apply to such
securities as though such securities were Common Shares. If a purchase, tender
or exchange offer is made to and accepted by the holders of more than 50% of the
outstanding Common Shares of the Company, the Company shall not effect any
consolidation, merger or sale with the person having made such offer or with any
Affiliate of such person, unless prior to the
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consummation of such consolidation, merger or sale the holder of this Warrant
shall have been given a reasonable opportunity to then elect to receive upon the
exercise of this Warrant either the common shares, securities or assets then
issuable with respect to the Common Shares of the Company or the common shares,
securities or assets, or the equivalent, issued to previous holders of the
Common Shares in accordance with such offer. For purposes hereof the term
"Affiliate" with respect to any given person shall mean any person controlling,
controlled by or under common control with the given person.
3.5 No Adjustment for Exercise of Certain Options, Warrants,
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Etc. The provisions of this Section 3 shall not apply to any Common Shares
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issued, issuable or deemed outstanding under subparagraphs 3.1(1) to (9)
inclusive: (i) to any person pursuant to any stock option, stock purchase or
similar plan or arrangement for the benefit of employees, consultants or
directors of the Company or its subsidiaries or (ii) pursuant to options,
warrants and conversion rights in existence on the date of issuance hereof.
3.6 Notices of Record Date, Etc. In the event that:
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(1) the Company shall declare any cash dividend upon its Common
Shares, or
(2) the Company shall declare any dividend upon its Common Shares
payable in common shares or make any special dividend or other distribution
to the holders of its Common Shares, or
(3) the Company shall offer for subscription pro rata to the
holders of its Common Shares any additional common shares of any class or
other rights, or
(4) there shall be any capital reorganization or reclassification
of the capital stock of the Company, including any subdivision or
combination of its outstanding Common Shares, or consolidation or merger of
the Company with, or sale of all or substantially all of its assets to,
another corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in connection with such event, the Company shall give to the holder of
this Warrant:
(i) at least ten (10) days prior written notice of the date on
which the books of the Company shall close or a record
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shall be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up; and
(ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at
least ten (10) days' prior written notice of the date when the same shall
take place.
Such notice in accordance with the foregoing clause (i) shall
also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Shares shall
be entitled thereto, and such notice in accordance with the foregoing
clause (ii) shall also specify the date on which the holders of Common
Shares shall be entitled to exchange their Common Shares for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the
case may be. Each such written notice shall be given by first class mail,
postage prepaid, addressed to the holder of this Warrant at the address of
such holder as shown on the books of the Company.
The failure to deliver any such notice shall not, however, affect the
capability of the action so taken by the Company.
3.7 Grant, Issue or Sale of Options, Convertible Securities, or
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Rights. If at any time or from time to time on or after the date of issuance
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hereof, the Company shall grant, issue or sell any Options, Convertible
Securities or rights to purchase property (the "Purchase Rights") pro rata to
the record holders of any class of Common Shares of the Company and such grants,
issuances or sales do not result in an adjustment of the Purchase Price under
Paragraph 3.1 hereof (other than by reason of the fact that the issuance of such
shares was at a Purchase Price equal to or greater than 90% of the then current
Market Price), then the holder of this Warrant shall be entitled to acquire
(within thirty (30) days after the later to occur of the initial exercise date
of such Purchase Rights or receipt by such holder of the notice concerning
Purchase Rights to which such holder shall be entitled under Paragraph 3.6) and
upon the terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could have
acquired if it had held the number of Common Shares acquirable upon
exercise of this Warrant immediately before the grant, issuance or sale of
such Purchase Rights; provided that if any Purchase Rights were distributed
to holders of Common Shares without the payment of additional consideration
by such holders, corresponding Purchase Rights shall be distributed to the
exercising holder of this warrant as soon as possible after such exercise
and it shall not be
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necessary for the exercising holder of this Warrant specifically to request
delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said thirty (30) day period,
the number of Common Shares or the amount of property which such holder
could have acquired upon such exercise at the time or times at which the
Company granted, issued or sold such expired Purchase Rights.
3.8 Adjustment by Board of Directors. If any event occurs as to
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which, in the opinion of the Board of Directors of the Company, the provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the rights of the holder of this Warrant in accordance with
the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
rights as aforesaid, but in no event shall any adjustment have the effect of
increasing the Purchase Price as otherwise determined pursuant to any of the
provisions of this Section 3 except in the case of a combination of shares of a
type contemplated in Paragraph 3.3 and then in no event to an amount larger than
the Purchase Price as adjusted pursuant to Paragraph 3.3.
3.9 Fractional Shares. The Company shall not issue fractions of
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Common Shares upon exercise of this Warrant or scrip in lieu thereof. If any
fraction of a Common Share would, except for the provisions of this Paragraph
3.9, be issuable upon exercise of this Warrant, the Company shall in lieu
thereof pay to the person entitled thereto an amount in cash equal to the
product of such fraction, calculated to the nearest one hundredth (1/100), and
the Market Price of a Common Share as of such date of exercise.
3.10 Officers' Statement as to Adjustments. Whenever the
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Purchase Price shall be adjusted as provided in Section 3 hereof, the Company
shall forthwith file at the office designated for the exercise of this Warrant,
a statement, signed by the Chairman of the Board, the President, any Vice
President or the Treasurer of the Company, showing in reasonable detail the
facts requiring such adjustment and the Purchase Price that will be effective
after such adjustment. The Company shall also cause a notice setting forth any
such adjustments to be sent by mail, first class, postage prepaid, to the record
holder of this Warrant at his or its address appearing on the Warrant register
of the Company. If such notice relates to an adjustment resulting from an event
referred to in Paragraph 3.6, such notice shall be included as part of the
notice required to be mailed and published under the provisions of Paragraph 3.6
hereof.
4. NO DILUTION OR IMPAIRMENT. The Company shall not, by amendment
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of its charter or through reorganization, consolidation, merger,
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dissolution, sale of assets or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder hereof against dilution or other impairment.
Without limiting the generality of the foregoing, the Company shall not increase
the par value of any Common Shares receivable upon the exercise of this Warrant
above the amount payable therefor upon such exercise, and at all times will take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable Common Shares upon the
exercise of this Warrant.
5. RESERVATION OF COMMON SHARES, ETC., ISSUABLE UPON EXERCISE OF
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WARRANTS. The Company shall at all times reserve and keep available out of its
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authorized but unissued Common Shares, solely for the issuance and delivery upon
the exercise of this Warrant and other similar Warrants, such number of its duly
authorized Common Shares as from time to time shall be issuable upon the
exercise of this Warrant and all other similar Warrants at the time outstanding.
6. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
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satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company shall issue, in lieu thereof, a new Warrant of
like tenor.
7. REMEDIES. The Company stipulates that the remedies at law of the
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holder of this Warrant in the event of any default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.
8. NEGOTIABILITY, ETC. This Warrant is issued upon the following
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terms, to all of which each taker or owner hereof consents and agrees:
(a) This Warrant and Common Shares underlying this Warrant (the
"Underlying Shares") may not be transferred except (i) in compliance with the
provisions of the By-laws of the Company and any applicable state securities or
"blue sky" laws and (ii)(a) pursuant to an effective registration under the
Securities Act of 1933, as amended (the "Act"), (b) in compliance with Rule 144
under the Act, (c) inside the United States to a "qualified institutional buyer"
as defined in and in compliance with Rule 144A under the Act, (d) outside the
United States in compliance with Rule 904 of Regulation S under the Act or (e)
inside the United States to an institutional "accredited investor" as defined in
Rule 501(a)(1), (2),(3) or (7) under the Act in a transaction which, in the
opinion of counsel reasonably satisfactory to the company, qualifies as an
exempt transaction under the
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Act and the rules and regulations promulgated thereunder. This Warrant and the
Underlying Shares are subject to certain additional restrictions on transfer
contained in a Subscription Agreement and the Company's Bye-laws, copies of
which are on file at the principal office of the Company.
The provisions of this Section 8 shall be binding upon any transferee of this
Warrant and upon each holder of Underlying Shares.
(b) Subject to limitations described in this Paragraph 8, title to
this Warrant may be transferred by endorsement (by the holder hereof executing
the form of assignment at the end hereof including guaranty of signature) and
delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery.
(c) Any person in possession of this Warrant properly endorsed and, if
not the original holder hereof, to whom possession was transferred in accordance
with the provisions of Paragraphs 8.1(a), (b) and (c) is authorized to represent
himself as absolute owner hereof and is granted power to transfer absolute title
hereto by endorsement and delivery hereof to a bona fide purchaser hereof for
value; each prior taker or owner waives and renounces all of his equities or
rights in this Warrant in favor of every such bona fide purchaser, and every
such bona fide purchaser shall acquire title hereto and to all rights
represented hereby.
(d) Until any this Warrant is transferred on the books of the Company,
the Company may treat the registered holder of this Warrant as the absolute
owner hereof for all purposes without being affected by any notice to the
contrary.
(e) The Company shall not be required to pay any Bermuda or U.S.
Federal or state transfer tax or charge that may be payable in respect of any
transfer involved in the transfer or delivery of this Warrant or the issuance or
conversion or delivery of certificates for Common Shares in a name other than
that of the registered holder of this Warrant or to issue or deliver any
certificates for Common Shares upon the exercise of this Warrant until any and
all such taxes and charges shall have been paid by the holder of this Warrant or
until it has been established to the Company's satisfaction that no such tax or
charge is due.
13
9. NO RIGHTS TO VOTE OR RECEIVE DIVIDENDS OR OTHER DISTRIBUTIONS.
-------------------------------------------------------------
Prior to the exercise of this Warrant, the holder hereof shall not be entitled
to any rights of a shareholder of the Company with respect to Common Shares for
which this Warrant shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
10. MAILING OF NOTICES, ETC. All notices and other communications
------------------------
from the Company to the holder of this Warrant shall be mailed by first-class
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last holder of this Warrant who shall have furnished an address
to the Company in writing.
11. CHANGE, WAIVER, ETC. The terms of this Warrant may not be
--------------------
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the holder of this Warrant against which enforcement of the
change, waiver, discharge or termination is sought.
ESG RE LIMITED
By:
--------------------------------------------
Name:
Title:
Accepted: _____________, 1997
[NAME OF XXXXXX]
By:
-------------------------
Name:
Title:
[To be signed only upon exercise of Warrant]
To ESG Re Limited
The undersigned, the holder of the within Warrant hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ___________ Common Shares of ESG Re Limited and herewith
makes payment of $________ therefor and/or requests that the number of Common
Shares for which the within Warrant is exercisable be reduced by ___________
Common Shares (in addition to the Common Shares being purchased) and/or delivers
___________ Common Shares, the aggregate of such payment being equal to the
aggregate purchase price for the Common Shares being purchased, and requests
that the certificates for the Common Shares being purchased be issued in the
name of, and be delivered to, ______________________ whose address is
___________________ ____________________________ .
Dated:
___________________________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant)
Address
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________ the within Warrant and appoints
___________________ attorney to transfer said right on the books of ESG Re
Limited with full power of substitution in the premises.
Dated:
_______________________
(Signature must conform in all respects
to name of Xxxxxx as specified on the
face of the Warrant)
Address
In the presence of
