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USF&G CORPORATION
AND
_____________________________________
as Stock Warrant Agent
_____________________
STOCK WARRANT AGREEMENT
Dated as of __________________
_____________________
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TABLE OF CONTENTS*
PARTIES . . . . . . . . . . . . . . . . . . . . . . . .
RECITALS . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1. Appointment of Stock Warrant Agent. . . . 1
SECTION 2. Form of Stock Warrant Certificates . . . 1
SECTION 3. Execution of Stock Warrant Certificates 1
SECTION 4. Registration and Countersignature . . . 2
SECTION 5. Registration of Transfers and Exchanges 2
SECTION 6. Duration and Exercise of Stock Warrants 3
SECTION 7. Payment of Taxes . . . . . . . . . . . . 5
SECTION 8. Mutilated, Lost, Stolen or Destroyed . .
Stock Warrant Certificates . . . . . . . 5
SECTION 9. Reservation of Shares . . . . . . . . . 6
SECTION 10. Obtaining of Governmental Approvals and
Stock Exchange Listings; Registration
of Shares . . . . . . . . . . . . . . 6
SECTION 11. Adjustment of Exercise Price and Number
of Shares Purchasable or Number of
Stock Warrants . . . . . . . . . . . . 7
SECTION 12. Optional Reduction of Exercise Price . . 11
SECTION 13. Fractional Stock Warrants and Fractional
Shares . . . . . . . . . . . . . . . . 12
SECTION 14. Notices to Stock Warrant Holders . . . . 13
SECTION 15. Merger, Consolidation or Change of Name
of Stock Warrant Agent . . . . . . . . 14
SECTION 16. Stock Warrant Agent . . . . . . . . . . 15
__________________________
*This Table of Contents does not constitute a part of
this Agreement or have any bearing upon the interpretation
of any of its terms or provisions.
SECTION 17. Disposition of Proceeds of Exercise of
Stock Warrants . . . . . . . . . . . . 18
SECTION 18. Change of Stock Warrant Agent . . . . . 18
SECTION 19. Notices to Company and Stock Warrant
Agent . . . . . . . . . . . . . . . . 19
SECTION 20. Supplements and Amendments . . . . . . . 20
SECTION 21. Successors . . . . . . . . . . . . . . . 20
SECTION 22. Termination . . . . . . . . . . . . . . 20
SECTION 23. Governing Law . . . . . . . . . . . . . 20
SECTION 24. Benefits of this Agreement . . . . . . . 21
SECTION 25. Counterparts . . . . . . . . . . . . . . 21
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . .
EXHIBIT A. Form of Stock Warrant Certificate . . . 23
STOCK WARRANT AGREEMENT dated as of _________________,
199_, between USF&G CORPORATION, a Maryland corporation (the
"Company"), and _____________________, a banking association
organized under the laws of the State of ____________, as Stock
Warrant Agent (the "Stock Warrant Agent").
WHEREAS, the Company proposes to issue and sell stock
warrants ("Stock Warrants") to purchase shares of the Company's
common stock, $____ par value per share ("Common Stock"), each
whole Stock Warrant exercisable to purchase one share of Common
Stock (such shares which may be purchased upon the exercise of
Stock Warrants at any time being hereinafter referred to as the
"Shares"); and
WHEREAS, the Company desires the Stock Warrant Agent to
act on behalf of the Company, and the Stock Warrant Agent is
willing so to act, in connection with the issuance and exercise
of Stock Warrants and the registration, transfer, exchange and
replacement of Stock Warrant Certificates and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as
follows:
SECTION 1. Appointment of Stock Warrant Agent. The
Company hereby appoints the Stock Warrant Agent to act as agent
for the Company in accordance with the instructions set forth
hereinafter in this Agreement, and the Stock Warrant Agent hereby
accepts such appointment.
SECTION 2. Form of Stock Warrant Certificates. The
Stock Warrant Certificates to be delivered pursuant to this
Agreement shall be in registered form only and shall be
substantially in the form set forth in Exhibit A attached hereto,
and may have such letters, numbers or other marks of
identification or designation or such legends, summaries or
endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation under such
law.
SECTION 3. Execution of Stock Warrant Certificates.
Stock Warrant Certificates shall be signed on behalf of the
Company by its Chairman of the Board, President, an Executive
Vice President or a Vice President and shall be attested by its
Secretary or an Assistant Secretary under its corporate seal.
Each such signature upon the Stock Warrant Certificates may be in
the form of a facsimile signature of the present or any future
Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary. The Seal of the Company may be in the form
of a facsimile thereof and may be impressed, affixed, imprinted
or otherwise reproduced on the Stock Warrant Certificates.
If the Chairman of the Board or any officer of the
Company who shall have signed any of the Stock Warrant
Certificates shall cease to be such Chairman of the Board or
officer before the Stock Warrant Certificates so signed shall
have been countersigned by the Stock Warrant Agent and delivered
to or disposed of by the Company, such Stock Warrant Certificates
nevertheless may be countersigned and delivered to or disposed of
as though such person had not ceased to be such Chairman of the
Board or officer of the Company; and any Stock Warrant
Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Stock Warrant
Certificate, was such Chairman of the Board or officer although
at the date of this Stock Warrant Agreement any such person was
not such Chairman of the Board or officer.
In connection with the initial issuance of the Stock
Warrant Certificates, upon receipt of Stock Warrant Certificates
executed by the Company and a written order of the Company
executed by its Chairman of the Board, President, an Executive
Vice President, a Vice President, Secretary or Assistant
Secretary, the Stock Warrant Agent will countersign and deliver
Stock Warrant Certificates in accordance with the instructions
contained in such order.
Stock Warrant Certificates shall be dated the date of
countersignature by the Stock Warrant Agent.
SECTION 4. Registration and Countersignature. Stock
Warrant Certificates distributed as provided in Section 11 shall
be registered in the names of the record holders of the Stock
Warrant Certificates to whom they are to be distributed.
Stock Warrant Certificates shall be manually
countersigned by the Stock Warrant Agent and shall not be valid
for any purpose unless so countersigned.
The Company and the Stock Warrant Agent may deem and
treat the registered holder of a Stock Warrant Certificate as the
absolute owner thereof (notwithstanding any notation of ownership
or other writing thereon made by anyone), for the purpose of any
exercise thereof and any distribution to the holder thereof and
for all other purposes, and neither the Company nor the Stock
Warrant Agent shall be affected by any notice to the contrary.
SECTION 5. Registration of Transfers and Exchanges.
The Stock Warrant Agent shall from time to time register the
transfer of any outstanding Stock Warrant Certificates upon the
records to be maintained by it for that purpose, upon surrender
thereof duly endorsed, or accompanied (if so required by it) by a
written instrument or instruments of transfer in form
satisfactory to the Stock Warrant Agent, duly executed by the
registered holder or holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Stock Warrant
Certificate shall be issued to the transferee and the surrendered
Stock Warrant Certificate shall be canceled by the Stock Warrant
Agent. The Stock Warrant Agent shall destroy canceled Stock
Warrant Certificates and deliver a certificate of such
destruction to the Company.
One or more Stock Warrant Certificates may be exchanged
at the option of the holder thereof, when surrendered to the
Stock Warrant Agent at its office maintained for the purpose of
exchanging, transferring and exercising the Stock Warrants in the
Borough of Manhattan, The City of New York, State of New York
(the "Stock Warrant Agent Office") or at the office of any
successor Stock Warrant Agent as provided in Section 18 hereof,
for another Stock Warrant Certificate or other Stock Warrant
Certificates of like tenor and representing in the aggregate a
like number of Stock Warrants. Stock Warrant Certificates
surrendered for exchange or transfer shall be canceled by the
Stock Warrant Agent. Such canceled Stock Warrant Certificates
shall be destroyed by the Stock Warrant Agent and a certificate
of such destruction shall be delivered to the Company.
The Stock Warrant Agent is hereby authorized to
countersign, in accordance with the provisions of this Section 5
and of Section 4, and deliver the new Stock Warrant Certificates
required pursuant to the provisions of this Section and for the
purpose of any distribution of Stock Warrant Certificates
contemplated by Section 11.
SECTION 6. Duration and Exercise of Stock Warrants.
The Stock Warrants shall expire on (i) the close of business on
____________ or (ii) such earlier date after _______________ as
shall be determined by the Company and of which 90 days prior
notice to the registered holders of Stock Warrants and the Stock
Warrant Agent shall have been given in accordance with the
provisions of Sections 14 and 19 hereof, if the closing sale
price of the Company's Common Stock (New York Stock Exchange
composite transactions) shall be not less than 125 percent of the
then current Stock Warrant exercise price for 20 trading days in
a period of 30 consecutive trading days ending not more than 10
calendar days immediately prior to the date of such notice (such
date of expiration being herein referred to as the "Expiration
Date"). Each Stock Warrant may be exercised on any business day
prior to the close of business on the Expiration Date. After the
close of business on the Expiration Date, the Stock Warrants will
become wholly void and of no value.
No fractional Shares shall be issued upon surrender of
Stock Warrant Certificates but, in lieu of fractional Shares, the
registered holder of Stock Warrant Certificates may elect (a) to
be paid an amount in cash equal to the same fraction of the
current market value of a Share of Common Stock or (b) to have
the amount of the cash payment determined in (a) credited against
the Exercise Price payable for Shares to be received upon
exercise of the holder's whole Stock Warrants. For purposes of
(a) and (b), the current market value of Common Stock shall be
the closing price of a Share of Common Stock (determined pursuant
to the second sentence of Section 11(d)) on the last trading day
immediately prior to the day on which a Stock Warrant is
exercised.
Subject to the provisions of this Agreement, including
Section 11, the holder of each whole Stock Warrant shall have the
right to purchase from the Company (and the Company shall issue
and sell to such holder) one fully paid and nonassessable Share
at the initial exercise price (the "Exercise Price") of $_____
upon the surrender on any business day prior to the close of
business on the Expiration Date to the Stock Warrant Agent at the
Stock Warrant Agent Office of the Stock Warrant Certificate
evidencing such Stock Warrant, with the form of election to
exercise on the reverse thereof duly filled in and signed, and
upon payment of the Exercise Price in lawful money of the United
States of America by means of a certified or official bank check
payable to the Company.
The Stock Warrants evidenced by a Stock Warrant
Certificate shall be exercisable prior to the close of business
on the Expiration Date, at the election of the registered holder
thereof, either as an entirety or from time to time for part of
the number of Stock Warrants specified in the Stock Warrant
Certificates, but in no event shall any fractional Share be
issued with regard to such Stock Warrant Certificates. In the
event that less than all the Stock Warrant Certificates evidenced
by a Stock Warrant Certificate surrendered upon the exercise of
Stock Warrants are exercised at any time prior to the close of
business on the Expiration Date, a new Stock Warrant Certificate
or Certificates will be issued for the remaining number of Stock
Warrants. No adjustments shall be made for any cash dividends on
Shares issuable on the exercise of a Stock Warrant.
Subject to Section 7, upon such surrender of a Stock
Warrant Certificate, and payment of the Exercise Price, the Stock
Warrant Agent shall requisition from First Chicago Trust Company,
New York, New York the transfer agent for the Common Stock (the
"Transfer Agent"), for issuance and delivery to or upon the
written order of the registered holder of such Stock Warrant
Certificate and in such name or names as such registered holder
may designate, a certificate for the Share or Shares issuable
upon the exercise of the Stock Warrants evidenced by such Stock
Warrant Certificates. Such certificate shall be deemed to have
been issued and any person so designated to be named therein
shall be deemed to have become the holder of record of such Share
or Shares as of the date of the surrender of such Stock Warrant
Certificates and payment of the Exercise Price. The Stock
Warrant Agent is hereby authorized to countersign and deliver the
required new Stock Warrant Certificate or Certificates pursuant
to the provisions of this Section 6 and of Section 5.
All Stock Warrant Certificates surrendered upon exercise
of Stock Warrants shall be canceled by the Stock Warrant Agent.
Such canceled Stock Warrant Certificates shall then be destroyed
by the Stock Warrant Agent and a certificate of such destruction
shall be sent to the Company.
SECTION 7. Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of
Shares upon the exercise of Stock Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the
issue of any Stock Warrant Certificates or any certificates for
Shares in a name other than that of the registered holder of a
Stock Warrant Certificate surrendered upon the exercise of a
Stock Warrant, and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 8. Mutilated, Lost, Stolen or Destroyed Stock
Warrant Certificates. If any Stock Warrant Certificate is
mutilated, lost, stolen or destroyed, the Company may in its
discretion issue, and the Stock Warrant Agent shall countersign
and deliver, in exchange and substitution for and upon
cancellation of the mutilated Stock Warrant Certificate, or in
lieu of and substitution for the Stock Warrant Certificate lost,
stolen or destroyed, a new Stock Warrant Certificate of like
tenor and representing the same number of Stock Warrants, but
only upon receipt of evidence satisfactory to the Company and the
Stock Warrant Agent of such loss, theft or destruction of such
Stock Warrant Certificate and indemnity or bond, if requested,
also satisfactory to them. Applicants for such substitute Stock
Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company
or the Stock Warrant Agent may prescribe.
SECTION 9. Reservation of Shares. For the purpose
of enabling it to satisfy any obligation to issue Shares upon
exercise of Stock Warrants, the Company will at all times through
the close of business on the Expiration Date, reserve and keep
available, free from preemptive rights and out of its aggregate
authorized but unissued Common Stock, the number of Shares
deliverable upon the exercise of all outstanding Stock Warrants
and the Transfer Agent for such Common Stock are hereby
irrevocably authorized and directed at all times to reserve such
number of authorized and unissued shares of Common Stock as shall
be required for such purpose. The Company will deposit a copy of
this Agreement with such Transfer Agent. The Stock Warrant Agent
is hereby irrevocably authorized to requisition from time to time
from such Transfer Agent stock certificates issuable upon
exercise of outstanding Stock Warrants, and the Company will
supply such Transfer Agent with duly executed stock certificates
for such purpose.
Before taking any action which would cause an adjustment
pursuant to Section 11 reducing the Exercise Price below the then
par value (if any) of the Shares issuable upon exercise of the
Stock Warrants, the Company will take any corporate action which
may, in the opinion of its counsel (which may be counsel employed
by the Company), be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Shares at
the Exercise Price as so adjusted.
The Company covenants that all Shares issued upon
exercise of the Stock Warrants will, upon issuance in accordance
with the terms of this Agreement, be fully paid and nonassessable
and free from all preemptive rights and taxes, liens, charges and
security interests created by the Company with respect to the
issuance and holding thereof.
SECTION 10. Obtaining of Governmental Approvals and
Stock Exchange Listings; Registrations of Shares. The Company
from time to time will use its best efforts (i) to obtain and
keep effective any and all permits, consents and approvals of
governmental agencies and authorities and to file such documents
under federal and state securities laws, which may be or become
requisite in connection with the issuance, sale, transfer and
delivery of the Stock Warrant Certificates and the exercise of
the Stock Warrants; provided, however, if any such permits,
consents, approvals or documents are not so obtained or
effective, the Company will immediately notify the Stock Warrant
Agent; (ii) to have the Stock Warrants listed on the New York
Stock Exchange or on the principal United States securities
exchange or exchanges on which the Common Stock is listed; (iii)
immediately upon the issuance of Shares upon exercise of Stock
Warrants, to have such Shares listed on the New York Stock
Exchange or on the principal United States securities exchange or
exchanges on which the Common Stock is listed; and (iv)
immediately upon any adjustment in the number of Shares
purchasable upon exercise of the Stock Warrants to register such
Shares with the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
SECTION 11. Adjustment of Exercise Price and Number of
Shares Purchasable or Number of Stock Warrants. The Exercise
Price, the number of Shares purchasable upon the exercise of each
Stock Warrant and the number of Stock Warrants outstanding are
subject to adjustment from time to time upon the occurrence of
the events enumerated in this Section 11.
(a) If the Company shall at any time after the date of
this Agreement (i) declare a dividend on the Common Stock payable
in shares of Common Stock; (ii) subdivide the outstanding Common
Stock; (iii) combine the outstanding Common Stock into a smaller
number of shares; or (iv) issue any shares of its capital stock
in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation), the Exercise
Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and/or the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holders of any Stock Warrant exercised after such time
shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Stock Warrant had been
exercised immediately prior to such date, such Stock Warrant
holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) If the Company shall at any time after the date of
this Agreement issue rights or warrants to all holders of Common
Stock entitling them to subscribe for or purchase Common Stock
(or securities convertible into Common Stock) at a price per
share of Common Stock (or having a conversion price per share of
Common Stock, if a security convertible into Common Stock) that
is less than 95 percent of the then current market price per
share of Common Stock (as defined in Section 11(d)) on the record
date fixed for such issuance, the Exercise Price in effect after
such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of
shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so to be offered (or the
aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price and
of which the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of
additional shares of Common Stock to be offered for subscription
or purchase (or into which the convertible securities so to be
offered are initially convertible). If such subscription price
may be paid in consideration part or all of which shall be in a
form other than cash, the value of such consideration shall be
determined by the Board of Directors of the Company, whose
determination shall be conclusive. Shares of Common Stock owned
by or held for the account of the Company or any majority-owned
subsidiary shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and if such rights or
warrants are not so issued, the Exercise Price shall again be
adjusted to be the Exercise Price which would then be in effect
if such record date had not been fixed, but such subsequent
adjustments shall not affect the number of Shares issued upon any
exercise of Stock Warrants prior to the date such subsequent
adjustment is made.
(c) If the Company shall fix a record date for the
making of a distribution to all holders of Common Stock
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness or assets (excluding
(i) cash dividends or distributions paid from consolidated
earnings or consolidated earned surplus of the Company
(determined in accordance with generally accepted accounting
principles), or (ii) quarterly Common Stock dividends at the rate
of $.05 per share or increases therein out of consolidated net
income of the Company (determined in accordance with generally
accepted accounting principles) for the period from the end of
its most recent fiscal year to the date of the most recent
consolidated quarterly financial statements of the Company as of
the time of the declaration of the dividend, or subscription
rights or warrants (excluding those referred to in Section
11(b)), the Exercise Price in effect after such record date shall
be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, of which the
numerator shall be the current market price per share of Common
Stock (as defined in Section 11(d)) on such record date less the
fair market value (determined by the Board of Directors of the
Company, whose determination shall be conclusive, and described
in a statement filed with the Stock Warrant Agent) of the portion
of the assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants allocable to one share
of Common Stock and of which the denominator shall be such
current market price per share of Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed;
and if such distribution is not so made, the Exercise Price shall
again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed, but such
subsequent adjustment shall not affect the number of Shares
issued upon any exercise of Stock Warrants prior to the date such
subsequent adjustment is made.
(d) For the purpose of any computation under Section
11(b), (c) or as elsewhere referenced in this Agreement, the
current market price per share of Common Stock or Stock Warrants
on any date shall be deemed to be the average of the daily
closing prices, respectively, for the Common Stock and the Stock
Warrants, for the 30 consecutive trading days commencing 45
trading days before such date. The closing price for each day
shall be as reported as New York Stock Exchange composite
transactions.
(e) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least 1 percent in such price; provided, however,
that (x) any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken
into account in any subsequent adjustment and (y) notwithstanding
the provisions of this subsection, any adjustments in the
Exercise Price will be made not later than the third anniversary
of the occurrence of the event upon which such adjustment is
based. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one-hundredth of a Share, as
the case may be, but in no event shall the Company be obligated
to issue a fractional Share upon the exercise of any Stock
Warrant.
(f) In the event that at any time, as a result of an
adjustment made pursuant to Section 11(a), the holder of any
Stock Warrant thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than
shares of Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Stock Warrant shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Section 6, 7, 9, 10, 11(e),
11(j) and 13 with respect to the Shares shall apply on like terms
to any such other shares.
(g) In any case in which this Section 11 shall require
that an adjustment in the Exercise Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Stock Warrant exercised after such record date of
the Shares and other capital stock of the Company, if any,
issuable upon such exercise over and above the Shares and other
capital stock of the Company, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(h) Unless the Company has exercised its election to
adjust the number of Stock Warrants as provided in Section 11(i),
upon each adjustment of the Exercise Price as a result of the
calculations made in Section 11(a), (b) or (c), each Stock
Warrant outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at
the adjusted Exercise Price, that number of Shares (calculated to
the nearest hundredth) obtained by (A) multiplying the number of
Shares purchasable upon exercise of a Stock Warrant immediately
prior to such adjustment of the number of Shares by the Exercise
Price in effect immediately prior to such adjustment of the
Exercise Price and (B) dividing the product so obtained by the
Exercise Price in effect immediately after such adjustment of the
Exercise Price.
(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Stock
Warrants, in substitution for an adjustment in the number of
Shares purchasable upon the exercise of a Stock Warrant as
provided in Section 11(h). Each Stock Warrant outstanding after
such adjustment of the number of Stock Warrants shall be
exercisable for the same number of Shares as immediately prior to
such adjustment. Each Stock Warrant held of record prior to such
adjustment of the number of Stock Warrants shall become that
number of Stock Warrants (calculated to the nearest hundredth)
obtained by dividing the Exercise Price in effect prior to
adjustment of the Exercise Price by the Exercise Price in effect
after adjustment of the Exercise Price. The Company shall notify
the holder of Stock Warrants in the same manner as provided in
the first paragraph of Section 14, of its election to adjust the
number of Stock Warrants, indicating the record date for the
adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but shall
be at least 10 days later than the date of the notice. Upon each
adjustment of the number of Stock Warrants pursuant to this
subsection (i) the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Stock Warrants on
such record date Stock Warrant Certificates evidencing, subject
to Section 13, the additional Stock Warrants to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Stock
Warrant Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Stock Warrant Certificates evidencing all the Stock
Warrants to be issued, executed and registered in the manner
specified in Sections 4 and 5 (and which may bear, at the option
of the Company, the adjusted Exercise Price) and shall be
registered in the names of the holders of record of Warrant
Certificates on the record date specified in the public
announcement.
(j) In case of any capital reorganization of the
Company, or of any reclassification of the Common Stock (other
than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of subdivision or
combination), or in case of the consolidation of the Company with
or the merger of the Company into any other corporation or in
case of a statutory share exchange to which the Company is a
party (other than a consolidation, merger or share exchange in
which the Company is the continuing or successor corporation) or
of the sale of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation, each
Stock Warrant shall after such reorganization, reclassification,
consolidation, merger, share exchange or sale be exercisable upon
the terms and conditions specified in this Agreement, for the
number of shares of stock or other securities or property to
which a holder of the number of Shares purchasable (at the time
of such reorganization, reclassification, consolidation, merger,
share exchange or sale) upon exercise of such Stock Warrant would
have been entitled upon such reorganization, reclassification,
consolidation, merger, share exchange or sale; and in any such
case, if necessary, the provisions set forth in this Section 11
with respect to the rights and interests thereafter of the
holders of the Stock Warrants shall be appropriately adjusted so
as to be applicable, as early as may reasonably be, to any shares
of stock or other securities or Warrants. The subdivision or
combination of shares of Common Stock at any time outstanding
into a greater or lesser number of shares shall not be deemed to
be a reclassification of the Common Stock for the purposes of
this Section 11(j). The Company shall not effect any such
consolidation, merger, share exchange or sale, unless prior to or
simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such
consolidation, merger or share exchange or the corporation
purchasing such assets or other appropriate corporation or entity
shall assume, by written instrument executed and delivered to the
Stock Warrant Agent, the obligation to deliver to the holder of
each Stock Warrant such shares of stock, securities or assets as,
in accordance with the foregoing provisions, such holders may be
entitled to purchase under this Agreement.
SECTION 12. Optional Reduction of Exercise Price. The
Company may, at any time or from time to time, voluntarily reduce
the then current Exercise Price by an amount not in excess of 33
percent of such then current Exercise Price for such period or
periods of time as the Board of Directors of the Company may
determine; provided, however that each such period shall be at
least 30 days. In each such event, the Company shall prepare a
certificate of an officer of the Company stating (i) the election
of the Company to reduce the then current Exercise Price in
accordance with this Section 12; (ii) the period in which such
reduced Exercise Price shall be in effect; and (iii) that such
election is irrevocable during such period. The Company shall
mail a brief summary of the provisions of such certificate at
least 15 days prior to the date fixed for the commencement of any
period in which the reduced Exercise Price shall be in effect to
the Stock Warrant Agent at the address provided in Section 19
hereof and to each registered holder of Stock Warrant
Certificates at such Stock Warrant holder's address appearing on
the Stock Warrant register. Failure on the part of the holders
of Stock Warrant Certificates to receive such notice by mail, or
any defect therein, shall not affect the validity of the
reduction of the then current Exercise Price during such period.
During such period, any adjustment in the Exercise Price pursuant
to Section 11 hereof shall be made to the reduced Exercise Price
as provided by this Section 12 in the manner specified in such
Section 11. After the termination of such period, the Exercise
Price shall be such Exercise Price which would have been in
effect, as adjusted pursuant to the provisions of Section 11, had
there been no reduction in the Exercise Price pursuant to the
provisions of this Section 12. No reduction of the then current
Exercise Price pursuant to the provisions of this Section 12
shall be deemed for the purposes of Section 11 hereof to alter or
adjust the Exercise Price.
SECTION 13. Fractional Stock Warrants and Fractional
Shares. (a) The Company shall not be required to issue fractions
of Stock Warrants on any distribution of Stock Warrants to
holders of Stock Warrant Certificates pursuant to Section 11(i)
or to distribute Stock Warrant Certificates which evidence
fractional Stock Warrants. In lieu of such fractional Stock
Warrants, the registered holder of a Stock Warrant Certificate
with regard to which such a fractional Stock Warrant would
otherwise be issuable shall receive an amount in cash equal to
the same fraction of the current market value of a whole Stock
Warrant. For purposes of this Section 13(a), the current market
value of a Stock Warrant shall be determined under Section 11(d)
for the last trading day immediately prior to the date on which
such fractional Stock Warrant would have been otherwise issuable.
(b) Notwithstanding an adjustment pursuant to Section
11(h) in the number of Shares purchasable upon the exercise of a
Stock Warrant, the Company shall not be required to issue
fractions of Shares upon exercise of the Stock Warrants or to
distribute certificates which evidence fractional Shares. The
registered holders of Stock Warrant Certificates at the time such
Stock Warrants are exercised as herein provided may elect (i) to
receive an amount in cash equal to the same fraction of the
current market value of a share of Common Stock or (ii) to have
the cash payment credited against the Exercise Price of Shares to
be received upon exercise of whole Stock Warrants. Such election
shall be made on the form provided for such purpose by the
Company. For purposes of this Section 13(b), the current market
value of a share of Common Stock shall be as determined under
Section 11(d) for the last trading day immediately prior to the
date of such exercise.
SECTION 14. Notices to Stock Warrant Holders. Upon
adjustment of the Exercise Price pursuant to Section 11, the
Company within 20 calendar days thereafter shall (i) cause to be
filed with the Stock Warrant Agent a certificate of a firm of
independent public accountants of recognized standing selected by
the Company (who may be the regular auditors of the Company)
setting forth the Exercise Price after such adjustment and
setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based and setting
forth the number of Shares purchasable upon exercise of a Stock
Warrant after such adjustment in the Exercise Price, which
certificate shall be conclusive evidence of the correctness of
the matters set forth therein and (ii) cause to be given to each
of the registered holders of the Stock Warrant Certificates at
such Stock Warrant holder's address appearing on the Stock
Warrant register written notice of such adjustments by first-
class mail, postage prepaid. Where appropriate, such notice may
be given in advance and included as a part of the notice required
to be mailed under the other provisions of this Section 14.
If:
(a) the Company authorizes the issuance to all holders
of Common Stock or rights or warrants to subscribe for or
purchase capital stock of the Company or of any other
subscription rights or warrants; or
(b) the Company authorizes the distribution to all
holders of Common Stock of evidences of its indebtedness or
assets (excluding (i) cash dividends or distributions paid
from consolidated earnings or consolidated earned surplus of
the Company (determined in accordance with generally accepted
accounting principles), or (ii) quarterly Common Stock
dividends at the rate of $.05 per share or increases therein
out of consolidated net income of the Company (determined in
accordance with generally accepted accounting principles) for
the period from the end of its most recent fiscal year to the
date of the most recent consolidated quarterly financial
statements of the Company as of the time of the declaration of
the dividend, and (iii) dividends payable in Common Stock); or
(c) there is any consolidation, share exchange or merger
to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the conveyance
or transfer of the properties and assets of the Company
substantially as an entirety, or of any capital reorganization
or any reclassification of the Common Stock (other than a
change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a
subdivision or combination);
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company proposes to take any other action which
would require an adjustment of the Exercise Price pursuant to
Section 11;
the Company shall file with the Stock Warrant Agent and give to
each registered holder of a Stock Warrant Certificate at such
Stock Warrant holder's address appearing on the Stock Warrant
register, at least 20 calendar days (or 10 calendar days in any
case specified in clauses (a) or (b) above) prior to the
applicable record date hereinafter specified in (i) or (ii)
below, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares
of Common Stock to be entitled to receive any such rights,
warrants or distribution are to be determined or (ii) the date on
which any such consolidation, merger, share exchange, conveyance,
transfer, reorganization, reclassification, dissolution,
liquidation or winding up is expected to become effective, and
the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares
for securities or other property, if any, deliverable upon such
consolidation, share exchange, merger, conveyance, transfer,
reorganization, reclassification, dissolution, liquidation or
winding up. Failure to give the notice required by this Section
14 or any defect therein shall not affect the legality or
validity of any distribution, right, warrant, consolidation,
share exchange, merger, conveyance, transfer, reorganization,
reclassification, dissolution, liquidation or winding up or the
vote upon any action.
Nothing in this Agreement or in any Stock Warrant
Certificate shall be construed as conferring upon the holder
thereof the right to vote or to consent or to receive notice as a
stockholder in respect of the meetings of stockholders or the
election of directors of the Company or on any other matter, or
any rights whatsoever as a stockholder of the Company.
SECTION 15. Merger, Consolidation or Change of Name of
Stock Warrant Agent. Any corporation into which the Stock
Warrant Agent may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Stock Warrant Agent
shall be a party, or any corporation succeeding to the corporate
trust business of the Stock Warrant Agent, shall be the successor
to the Stock Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible
for appointment as a successor Stock Warrant Agent under the
provisions of Section 18. If at the time such successor to the
Stock Warrant Agent shall succeed under this Agreement, any of
the Stock Warrant Certificates shall have been countersigned but
not delivered, any such successor to the Stock Warrant Agent may
adopt the countersignature of the original Stock Warrant Agent;
and in case at that time any of the Stock Warrant Certificates
shall not have been countersigned, any successor to the Stock
Warrant Agent may countersign such Stock Warrant Certificates
either in the name of the predecessor Stock Warrant Agent or in
the name of the successor Stock Warrant Agent. In all such cases
such Stock Warrant Certificates shall have the full force
provided in the Stock Warrant Certificates and in this Agreement.
If at any time the name of the Stock Warrant Agent shall
be changed and at such time any of the Stock Warrant Certificates
shall have been countersigned but not delivered, the Stock
Warrant Agent whose name has changed may adopt the
countersignature under its prior name, and if at that time any
of the Stock Warrant Certificates shall not have been
countersigned, the Stock Warrant Agent may countersign such Stock
Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Stock Warrant Certificates shall
have the full force provided in the Stock Warrant Certificates
and in this Agreement.
SECTION 16. Stock Warrant Agent. The Stock Warrant
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Stock Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Stock
Warrant Certificates shall be taken as statements of the
Company, and the Stock Warrant Agent assumes no responsibility
for the correctness of any of the same except such statements
as describe the Stock Warrant Agent or action taken or to be
taken by it. Except as herein otherwise provided, the Stock
Warrant Agent assumes no responsibility with respect to the
execution, delivery or distribution of the Stock Warrant
Certificates.
(b) The Stock Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants
contained in this Agreement or in the Stock Warrant
Certificates to be complied with by the Company, nor shall the
Stock Warrant Agent at any time be under any duty or
responsibility to any holder of a Stock Warrant to make or
cause to be made any adjustment in the Exercise Price (except
that the Stock Warrant Agent shall receive the certificate of
the Company's independent accountants required to be delivered
in connection with any adjustment of the Exercise Price) or in
the number of Shares issuable upon exercise of the Stock
Warrants (except as instructed by the Company), or to
determine whether any facts exist which may require any such
adjustments, or with respect to the nature or extent of or
method employed in making any such adjustments when made.
(c) The Stock Warrant Agent may consult at any time with
counsel satisfactory to it (who may be counsel for the
Company) and the Stock Warrant Agent shall incur no liability
or responsibility to the Company or to any holder of any Stock
Warrant Certificate in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance
with the opinion or the advice of such counsel.
(d) The Stock Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Stock
Warrant Certificate for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties.
(e) The Company agrees (i) to pay to the Stock Warrant
Agent reasonable compensation for all services rendered by the
Stock Warrant Agent under this Agreement; (ii) to reimburse
the Stock Warrant Agent upon demand for all expenses, taxes
and governmental charges and other charges of any kind and
nature incurred by the Stock Warrant Agent in the execution of
its duties under this Agreement; and (iii) to indemnify the
Stock Warrant Agent and hold it harmless against any and all
losses, liabilities and expenses, including judgments, costs
and counsel fees, for anything done or omitted by the Stock
Warrant Agent arising out of or in connection with this
Agreement, except as a result of its negligence or bad faith.
(f) The Stock Warrant Agent shall be under no obligation
to institute any action, suit or legal proceeding or to take
any other action likely to involve expense unless the Company
or one or more registered holders of Stock Warrant
Certificates shall furnish the Stock Warrant Agent with
reasonable security and indemnity for any costs and expenses
which may be incurred. All rights of action under this
Agreement or under any of the Stock Warrants may be enforced
by the Stock Warrant Agent without the possession of any of
the Stock Warrant Certificates or the production thereof at
any trial or other proceeding relative thereto, and any such
action, suit or proceeding instituted by the Stock Warrant
Agent shall be brought in its name as Stock Warrant Agent, and
any recovery or judgment shall be for the ratable benefit of
the registered holders of the Stock Warrants, as their
respective rights or interests may appear.
(g) The Stock Warrant Agent, and any stockholder,
director, officer or employee thereof, may buy, sell or deal
in any of the Stock Warrants or other securities of the
Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not the Stock Warrant Agent under this
Agreement. Nothing herein shall preclude the Stock Warrant
Agent from acting in any other capacity for the Company or for
any other legal entity.
(h) The Stock Warrant Agent shall act hereunder solely
as agent for the Company, and its duties shall be determined
solely by the provisions hereof. The Stock Warrant Agent
shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement, except for its
own negligence or bad faith.
(i) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Stock Warrant Agent for the carrying out or performing of
the provisions of this Agreement.
(j) The Stock Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Stock Warrant Agent) or in respect of the
validity or execution of any Stock Warrant Certificate (except
its countersignature thereof); nor shall the Stock Warrant
Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of the Shares to be issued pursuant to this
Agreement or any Stock Warrant Certificate or as to whether
the Shares will, when issued, be validly issued, fully paid
and nonassessable or as to the Exercise Price or the number of
Shares issuable upon exercise of any Stock Warrant.
(k) The Stock Warrant Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the
Board, the President, any Executive Vice President or Vice
President, the Secretary or Assistant Secretary of the
Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be
liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer
or in good faith reliance upon any statement signed by any one
of such officers of the Company with respect to any fact or
matter (unless other evidence in respect thereof is herein
specifically prescribed) which may be deemed to be
conclusively proved and established by such signed statement.
(l) The Company will furnish to the Stock Warrant Agent,
upon request but not more often than annually, an opinion of
counsel (who may be counsel to the Company) acceptable to the
Stock Warrant Agent, to the effect that (i) a Registration
Statement under the Securities Act of 1933, as amended, is
then in effect with respect to the Shares issuable on the
exercise of the Stock Warrants and that the Prospectuses
hereinafter referred to comply as to form in all material
respects with the requirements of said Act and the rules and
regulations of the Securities and Exchange Commission
thereunder or (ii) a Registration Statement under said Act
with respect to the Shares issuable on the exercise of the
Stock Warrants is not required. If said opinion states that
such a Registration Statement is in effect, the Company will,
from time to time, furnish the Stock Warrant Agent with
current Prospectuses meeting the requirements of said Act and
all rules and regulations thereunder in sufficient quantity to
permit the Stock Warrant Agent to deliver a Prospectus to each
holder of a Stock Warrant upon exercise thereof. The Company
further agrees to pay all fees, costs and expenses in
connection with the preparation and delivery to the Stock
Warrant Agent of the foregoing opinions and Prospectuses.
SECTION 17. Disposition of Proceeds of Exercise of Stock
Warrants. The Stock Warrant Agent shall account promptly to the
Company with respect to Stock Warrants exercised and concurrently
pay to the Company all moneys received by the Stock Warrant Agent
on the purchase of Shares through the exercise of Stock Warrants.
SECTION 18. Change of Stock Warrant Agent. If the Stock
Warrant Agent shall resign (such resignation to become effective
not earlier than 30 days after the giving of written notice
thereof to the Company and the registered holders of Stock
Warrant Certificates) or shall become incapable of acting as
Stock Warrant Agent, the Company shall appoint a successor to the
Stock Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been so
notified in writing by the Stock Warrant Agent or by the
registered holder of a Stock Warrant Certificate (in the case of
incapacity), then the registered holder of any Stock Warrant
Certificate may apply to any court of competent jurisdiction for
the appointment of a successor to the Stock Warrant Agent.
Pending appointment of a successor to the Stock Warrant Agent,
either by the Company or by such a court, the duties of the Stock
Warrant Agent shall be carried out by the Company. Any successor
Stock Warrant Agent whether appointed by the Company or by such a
court shall be a bank or trust company, in good standing,
incorporated under the laws of the United States of America or
any state thereof, and having an office in the Borough of
Manhattan, The City of New York, State of New York, and shall
have at the time of its appointment as Stock Warrant Agent a
combined capital and surplus of at least 50 million dollars. As
soon as practicable after appointment of the successor Stock
Warrant Agent, the Company shall cause to be given to each of the
registered holders of the Stock Warrant Certificates at such
Stock Warrant holder's address appearing on the Stock Warrant
register written notice of the change in the Stock Warrant Agent
by first-class mail, postage prepaid. After appointment, the
successor Stock Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been
originally named as Stock Warrant Agent without further act or
deed; but the former Stock Warrant Agent shall deliver and
transfer to the successor Stock Warrant Agent any property at the
time held by it hereunder and execute and deliver, at the expense
of the Company, any further assurance, conveyance, act or deed
necessary for the purpose. Failure to give any notice provided
for in this Section 18, however, or any defect therein, shall not
affect the legality or validity of the removal of the Stock
Warrant Agent or the appointment of a successor Stock Warrant
Agent, as the case may be.
SECTION 19. Notices to Company and Stock Warrant Agent.
Any notice or demand authorized by this Agreement to be given or
made by the Stock Warrant Agent or by the registered holder of
any Stock Warrant Certificate to or on the Company shall be
sufficiently given or made if sent by mail, first class or
registered, postage prepaid, addressed (until another address is
filed in writing by the Company with the Stock Warrant Agent), as
follows:
USF&G Corporation
100 Light Street
Baltimore, Maryland 21202
Attention: Secretary
If the Company shall fail to maintain such office or
agency or shall fail to give such notice of the location or of
any change in the location thereof, presentations may be made and
notices and demands may be served at the corporate trust office
of the Stock Warrant Agent.
Any notice pursuant to this Agreement to be given by the
Company or by the registered holder of any Stock Warrant
Certificate to the Stock Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing by the Stock Warrant
Agent with the Company) to the Stock Warrant Agent as follows:
_______________________________
_______________________________
_______________________________
_______________________________
Notwithstanding the foregoing, no notice pursuant to this
Agreement shall be effective until received by the Stock Warrant
Agent.
SECTION 20. Supplements and Amendments. The Company and
the Stock Warrant Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Stock
Warrant Certificates in order to cure any ambiguity, manifest
error or other mistake in this Agreement, or to correct or
supplement any provision contained herein which may be defective
or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising
hereunder which the Company and the Stock Warrant Agent may deem
necessary or desirable and which shall not adversely affect,
alter or change the interest of the holders of Stock Warrant
Certificates.
SECTION 21. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Stock Warrant Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
SECTION 22. Termination. This Agreement shall terminate
at the close of business on the Expiration Date. Notwithstanding
the foregoing, this Agreement will terminate on any earlier date
if all Stock Warrants have been exercised. The provisions of
Section 16 shall survive such termination.
SECTION 23. Governing Law. This Agreement and each
Stock Warrant Certificate issued hereunder shall be deemed to be
a contract made under the laws of the State of New York and for
all purposes shall be construed in accordance with the laws of
such State.
SECTION 24. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Company, the Stock Warrant Agent and the
registered holders of the Stock Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the
Company, the Stock Warrant Agent and the registered holders of
the Stock Warrant Certificates.
SECTION 25. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above
written.
USF&G CORPORATION
By:_____________________
Title:
_________________________
as Stock Warrant Agent
By:______________________
Title:
EXHIBIT A
No. W-
(FORM OF STOCK WARRANT CERTIFICATE)
(FACE)
EXERCISABLE ON OR BEFORE __________________________
UNLESS SUCH DATE IS ACCELERATED BY THE COMPANY AS PROVIDED
IN THE STOCK WARRANT AGREEMENT REFERRED TO BELOW
Certificate for Stock Warrants
STOCK WARRANT CERTIFICATE
USF&G CORPORATION
This Stock Warrant Certificate certifies that or
registered assigns, is the registered holder of the number of
Stock Warrants (the "Stock Warrants") of USF&G Corporation, a
Maryland corporation (the "Company"), set forth elsewhere on this
certificate. Each Stock Warrant expires at the close of business
on , or such earlier date after
as shall be determined pursuant to the Stock Warrant Agreement
referred to on the reverse hereof, and entitles the holder to
purchase from the Company one fully paid and nonassessable share
of Common Stock, $____ par value, of the Company (the "Share") at
the initial exercise price (the "Exercise Price") of $
payable in lawful money of the United States of America by means
of a certified or official bank check payable to the Company upon
surrender of this Stock Warrant Certificate and payment of the
Exercise Price at the office or agency of the Stock Warrant Agent
in the Borough of Manhattan, The City of New York, State of New
York (the "Stock Warrant Agent Office"), but only subject to the
conditions set forth herein and in the Stock Warrant Agreement.
The Exercise Price and number of Shares purchasable upon exercise
of the Stock Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Stock Warrant
Agreement.
No Stock Warrant may be exercised after the close of
business on (i) or (ii) such earlier date, on
or subsequent to , as shall be determined by
the Company and of which 90 days prior notice shall have been
given to the registered holder hereof, if the closing sale price
for the Company's Common Stock shall be not less than 125 percent
of the then current Stock Warrant exercise price for 20 trading
days in a period of 30 consecutive trading days ending not more
than 10 calendar days immediately prior to the date of such
notice (such date of expiration, or such earlier date, is
hereafter referred to as the "Expiration Date"). After the close
of business on the Expiration Date, the Stock Warrants will
become wholly void and of no value.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS STOCK WARRANT CERTIFICATE SET FORTH ON THE REVERSE HEREOF
AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
This Stock Warrant Certificate shall not be valid unless
countersigned by the Stock Warrant Agent, as such term is used in
the Stock Warrant Agreement.
WITNESS the facsimile seal of the Company and the
facsimile signatures of its duly authorized officers.
USF&G CORPORATION
Dated:
By:_________________
Title:
Attest:_____________
Title:
(SEAL)
Countersigned:
___________________________
as Stock Warrant Agent
By:_________________________
Authorized Signature
(FORM OF STOCK WARRANT CERTIFICATE)
(REVERSE)
USF&G CORPORATION
The Stock Warrants evidenced by this Stock Warrant
Certificate are part of a duly authorized issue of Stock Warrants
expiring at the close of business on , unless such
date is accelerated at the option of the Company pursuant to the
Stock Warrant Agreement, to purchase shares of Common Stock,
$____ par value per share, of the Company in aggregate up to the
number of Stock Warrants evidenced by this Stock Warrant
Certificate, and are issued or to be issued pursuant to a Stock
Warrant Agreement dated as of (the "Stock Warrant
Agreement"), duly executed and delivered by the Company to
, as Stock Warrant Agent (the "Stock Warrant Agent").
The Stock Warrant Agreement is hereby incorporated by reference
and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Stock Warrant Agent, the
Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the Stock
Warrants.
Stock Warrants may be exercised to purchase Shares from
the Company on or before the close of business on the Expiration
Date, at the Exercise Price set forth on the face hereof, subject
to adjustment, as hereinafter referred to. The holder of Stock
Warrants evidenced by this Stock Warrant Certificate may exercise
them by surrendering the Stock Warrant Certificate, with the form
of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price at the
Stock Warrant Agent Office. If upon any exercise of Stock
Warrants evidenced hereby the number of Stock Warrants exercised
shall be less than the total number of Stock Warrants evidenced
hereby, there shall be issued to the holder hereof or such
holder's assignee a new Stock Warrant Certificate evidencing the
number of Stock Warrants not exercised. No adjustment shall be
made for any cash dividends on any Shares issuable upon exercise
of this Stock Warrant. After the close of business on the
Expiration Date, unexercised Stock Warrants shall become wholly
void and of no value.
The Stock Warrant Agreement provides that, upon the
occurrence of certain events, the Exercise Price set forth on the
face hereof may, subject to certain conditions, be adjusted. If
the Exercise Price is adjusted, the Stock Warrant Agreement
provides that, at the election of the Company, either (i) the
number of Shares purchasable upon the exercise of each Stock
Warrant shall be adjusted or (ii) each outstanding Stock Warrant
shall be adjusted to become a different number of Stock Warrants.
In the latter event, the Company will cause to be distributed to
registered holders of Stock Warrant Certificates either Stock
Warrant Certificates representing the additional Stock Warrants
issuable pursuant to the adjustment or substitute Stock Warrant
Certificates to replace all outstanding Stock Warrant
Certificates.
At any time or from time to time, the Company shall have
the right to reduce the then current Exercise Price by an amount
not in excess of 33 percent for a period or periods to be
determined by the Company, but in any event not less than 30
days. The Company shall make a public announcement of the
reduction in Exercise Price and shall mail a notice to each
registered holder of Stock Warrant Certificates.
The Company shall not be required to issue fractional
Stock Warrants or fractional Shares upon the exercise of Stock
Warrants or any certificates which evidence fractional Stock
Warrants or fractional Shares. In lieu of such fractional Stock
Warrants, the registered holder of a Stock Warrant Certificate
with regard to which a fractional Stock Warrant would otherwise
be issuable shall receive an amount in cash equal to the same
fraction of the current market value of a whole Stock Warrant (as
determined pursuant to the Stock Warrant Agreement). In lieu of
such fractional Shares the registered holders of the Stock
Warrant Certificates with regard to which such fractional Shares
would otherwise be issuable may elect, at the time of the
exercise of Stock Warrants, (i) to receive an amount in cash
equal to the same fraction of the current market value (as
determined pursuant to the Stock Warrant Agreement) of a full
Share or (ii) to credit such cash payment against the Exercise
Price of Shares to be received upon exercise of whole Stock
Warrants.
One or more Stock Warrant Certificates, when surrendered
at the Stock Warrant Agent Office by the registered holder
thereof in person or by legal representative or by attorney duly
authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Stock Warrant
Agreement, but without payment of any service charge, for another
Stock Warrant Certificate or Stock Warrant Certificates of like
tenor evidencing in the aggregate a like number of Stock
Warrants.
Upon due presentment for registration of transfer of this
Stock Warrant Certificate at the Stock Warrant Agent Office, a
new Stock Warrant Certificate or Stock Warrant Certificates of
like tenor and evidencing in the aggregate a like number of Stock
Warrants shall be issued to the transferee in exchange for this
Stock Warrant Certificate, subject to the limitations provided in
the Stock Warrant Agreement, without charge except for any tax or
other governmental charge imposed in connection therewith.
The Company and the Stock Warrant Agent may deem and
treat the registered holder hereof as the absolute owner of this
Stock Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone) for the purpose
of any exercise or exchange hereof and for all other purposes,
and neither the Company nor the Stock Warrant Agent shall be
affected by any notice to the contrary.
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Stock Warrant prior to
the close of business on the Expiration Date)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Stock Warrant Certificate, to purchase
_____ Shares and herewith tenders payment for such Shares in the
amount of $__________ in the form of a certified or official bank
check payable to the Company. The undersigned requests that a
certificate representing the Shares be registered in the name of
_____________________________ whose address is _____________________
and that such certificate be delivered to __________________________
whose address is _______________________. If said number of
Shares is less than all the Shares purchasable hereunder, the
undersigned requests that a new Stock Warrant Certificate
representing the right to purchase the balance of the Shares be
registered in the name of_________________ whose address is
___________________ and that such Stock Warrant Certificate be
delivered to _______________ whose address is ___________________.
In lieu of receipt of a fractional Share, if any, the undersigned
hereby elects (i) to receive a cash payment made to_______________
____ whose address is ___________________ and the check
representing payment thereof should be delivered to _______________
____ whose address is _______________ or (ii) elects to credit
the amount of such payment against the Exercise Price payable for
Shares to be received upon the exercise of Stock Warrants.
Dated:________________________ , 19__
______________________________________
Social Security or other Taxpayer's
Identification Number
Name of registered holder of Stock Warrant
Certificate:_______________________________
(Please print)
Address:___________________________________________________
___________________________________________________
Signature:_________________________________________________
Note: The above signature must correspond with the
name as written upon the face of this Stock
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever and if the certificate
representing the Shares or any Stock Warrant
Certificate representing Stock Warrants not
exercised is to be registered in a name other
than that in which this Stock Warrant
Certificate is registered, the signature of
the holder hereof must be guaranteed.
Signature Guaranteed:
(FORM OF ASSIGNMENT)
For value received hereby sells,
assigns and transfers unto the within Stock
Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
attorney, to transfer said Stock Warrant Certificate on
the books of the within-named Company, with full power of
substitution in the premises.
Dated:_________________________, 19__.
____________________________________________
Note: The above signature must correspond
with the name as written upon the
face of this Stock Warrant Certifi-
cate in every particular, without
alteration or enlargement or any
change whatever.
Signature Guaranteed: