EXHIBIT 4.3
FORM OF CLASS B 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 (the "Aggregate
Warrant Number") fully paid and non-assessable Common Shares, par value $1.00
per share ("Common Shares"), of the Company during the period beginning, with
respect to each Installment (as defined below), on the date of the vesting of
such Installment (each a "Vesting Date") and ending, with respect to each
Installment, on the tenth anniversary of the Vesting Date with respect to such
Installment (the "Exercise Period").
The Common Shares within each Installment shall be purchased at a
purchase price per Common Share, subject to the provisions of Paragraph 3
hereof, equal to (a) $20 (the "Price to Public") until September 1, 2001, if
applicable and (b) $18.50 during the balance of the Exercise Period (in each
case 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
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Shares or other securities or property at the time deliverable upon the exercise
of this Warrant. This Warrant is herein called the "Warrant."
1. VESTING OF WARRANTS. Each of the 5 successive one-year periods
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commencing on _________, 1997 (the "Issue Date") and ending on the day before
the first 5 anniversary dates thereof is referred to below as an "Anniversary
Period". During each Anniversary Period 20% of the Aggregate Number of Warrants
(an "Installment") shall be eligible to become vested. Any Warrants that are
eligible to become vested during a particular Anniversary Period but that do not
become vested during that Anniversary Period shall be eligible to become vested
in the subsequent Anniversary Periods, in additional to the Installment for that
subsequent Anniversary Period. Any Warrants that are unvested following the
fifth Anniversary Period shall be forfeited and shall no longer be deemed to be
outstanding, without any further action on the part of the Company. In the
event of a Change of Control of the Company, all unvested Warrants shall
immediately and automatically vest. The Installments that are available for
vesting during any particular Anniversary Period shall become vested if, on each
trading day of any 20 consecutive trading days during such Anniversary Period,
(a) the change in the Market Price (as defined in Section 3.1) of the Common
Shares from the Floor Price (the "Market Price Change"), expressed as a
percentage, exceeds (or in the event that the Market Price Change and the
Wilshire Index Change (as defined below) are both negative, is less than) (b)
the change in the Wilshire Index from the Wilshire Index Floor (the "Wilshire
Index Change"), expressed as a percentage, plus 5.0%.
For purposes of this Paragraph 1, the following terms have the
following meanings:
"Change of Control" means the acquisition by any person, entity or
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"group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more, in the
aggregate, of either the voting power of the then outstanding Common Shares or
the combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; provided, however, that
if such acquisition results in whole or in part from a transfer of any Common
Shares or other voting securities by the Holder hereof, such acquisition shall
not constitute a Change of Control unless such transfer is effected pursuant to
an offer by such acquiror to purchase all of the Company's outstanding Common
Shares.
"Floor Price" means the Price to Public.
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"Wilshire Index Floor" means the closing quotation of the Wilshire
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5000 Index as of the date hereof, as prepared by Wilshire Associates, Inc. and
as reported on Bloomberg Financial Markets.
"Wilshire Index" as of any day means the average closing quotation of
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the Wilshire 5000 Index for the 15 consecutive trading days concluding on such
day.
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"Wilshire 5000 Index" means the index of that name prepared by
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Wilshire Associates, Inc., as reported on Bloomberg Financial Markets or, in the
event the Wilshire 5000 Index is no longer published, a comparable index
selected in good faith by the Board of Directors of the Company providing a
broad-based measurement of the changes in stock market conditions.
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
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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.
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 adjustments.
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 such
day on the
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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 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
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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, 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
subparagraphs (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 terms hereof.
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(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.
(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.
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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 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
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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 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;
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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 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
validity of the action so taken by the Corporation.
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) 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,
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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 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 Officer's 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
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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, 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
----------------------
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 (which 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 the Common Shares issuable upon exercise of
this Warrant (the "Underlying 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
13
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 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 the 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(a) and (b) 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 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
14
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.
9. NO RIGHTS TO VOTE OR RECEIVE DIVIDENDS OR OTHER DISTRIBUTIONS.
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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 firsts-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.
15
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:
Dated:
Attest:
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[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)
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Address
In the presence of
-------------------------------
[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 Xxxxxx as specified on the face of
the Warrant)
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Address
