EXHIBIT A
[FORM OF CONVERTIBLE SHAERS CERTIFICATE OF DESIGNATIONS]
CERTIFICATE OF DESIGNATIONS OF
1,000,000 SHARES OF 7.25% CONVERTIBLE CUMULATIVE PARTICIPATING PREFERRED SHARES
OF SCOTTISH RE GROUP LIMITED
Pursuant to Article [6] of the Articles of Association of the Company
SCOTTISH RE GROUP LIMITED, a Cayman Islands exempted company (the
"Company"), certifies that pursuant to the authority contained in clause [6] of
its Memorandum of Association and Article [6] of its Articles of Association,
the Board of Directors of the Company (the "Board of Directors"), on
___________, duly approved and adopted the following resolutions, which
resolutions remain in full force and effect on the date hereof:
RESOLVED, that the issue by the Company of 1,000,000 shares of the
Company's 7.25% Convertible Cumulative Participating Preferred Shares, par value
$0.01 per share, with an issue price and liquidation preference of $600 per
share (the "Stated Value") and designated "7.25% Convertible Cumulative
Participating Preferred Shares" (the "Preferred Shares") hereby is authorized
and approved;
RESOLVED FURTHER, that the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of the Preferred Shares, including the
number of authorized shares and dividend rate established hereby, are authorized
and approved as set forth in this Certificate of Designations.
Certain defined terms used in this Certificate of Designations have the
meaning assigned thereto in Section 12.
Section 1. Ranking. The Preferred Shares shall rank, with respect to
payment of dividends and distribution of assets upon a Liquidation Event: (i)
senior to the ordinary shares, par value $0.01 per share, of the Company (the
"Ordinary Shares"), whether now outstanding or hereafter issued, and to each
other class or series of shares of the Company established by the Board of
Directors after the date hereof, the terms of which do not expressly provide
that such class or series ranks senior to or pari passu with the Preferred
Shares as to payment of dividends and distribution of assets upon a Liquidation
Event (collectively referred to as "Junior Shares"); (ii) pari passu with each
class or series of shares of the Company (including any series of preferred
shares established after the date hereof by the Board of Directors), the terms
of which expressly provide that such class or series ranks pari passu with the
Preferred Shares as to payment of dividends and distribution of assets upon a
Liquidation Event (collectively referred to as "Parity Shares"); and (iii)
junior to each other class or series of the Company's securities outstanding on
the date of approval and adoption of this Certificate of Designations by the
Board
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of Directors that ranks senior to the Ordinary Shares, and to each class or
series of shares of the Company (including any series of preferred shares
established after the date of approval and adoption of this Certificate of
Designations by the Board of Directors), the terms of which expressly provide
that such class or series ranks senior to the Preferred Shares as to payment of
dividends and distribution of assets upon a Liquidation Event and all classes of
preferred shares of the Company issued and outstanding as of the date of
approval and adoption of this Certificate of Designations by the Board of
Directors (collectively referred to as "Senior Shares"). The Company's ability
to issue, authorize or increase the authorized amount of Parity Shares or Senior
Shares shall be subject to the provisions of Section 4.
Section 2. Dividends. Accretion Dividends. Subject to applicable law,
dividends on the Preferred Shares shall be cumulative and accrete daily on a
non-compounding basis, whether or not such dividends have been declared and
whether or not there are profits, surplus or other funds of the Company legally
available for the payment of dividends, at the rate per annum of 7.25% per share
on the Stated Value in effect at the date of the initial issuance of the
Preferred Shares (the "Issue Date"). Dividends pursuant to this Section 2(a)
will be made solely by increasing the Stated Value by the amount of the dividend
then due, without any further action by the Company. The amount of dividends
accreting will be computed on the basis of a 360-day year consisting of twelve
30-day months for actual days elapsed.
(b) Participation Rights in Ordinary Share Dividends. If the Company shall
fix a record date for the making of any dividend or distribution of any sort or
kind to holders of Ordinary Shares, including, without limitation, distributions
of evidences of Indebtedness, assets (including cash), other property or
Ordinary Shares or other securities in the Company or rights, options or
warrants with respect thereto, each Holder of Preferred Shares shall be entitled
to receive a distribution equal to the distribution such Holder would have been
entitled to receive if such Holder had exercised its right to convert all of its
Preferred Shares for Ordinary Shares pursuant to Section 6 immediately prior to
the dividend record date with respect to such dividend or distribution. The
payment made to Holders of Preferred Shares under the preceding sentence shall
be made concurrently with the dividend or distribution to the holders of
Ordinary Shares, and the accreted value of the Stated Value, as provided in
Section 2(a), above, shall be contemporaneously reduced to the extent of any
such dividend or distribution paid in cash or in property other than securities
of the Company or its Subsidiaries or rights, options or warrants with respect
thereto (which value, in the event of a distribution other than cash, shall be a
fair market value reasonably determined by the Company, subject to the
reasonable agreement of the Holders of Preferred Shares).
(c) No Other Dividend Rights. Other than as provided in this Section 2, (i)
no dividends shall be payable to the Holders of Preferred Shares and (ii) no
dividends or distributions shall be made on the Preferred Shares without the
same being paid to the holders of Ordinary Shares.
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Section 3. Liquidation Preference.
(a) Liquidation Event. In the event of any voluntary or involuntary
liquidation (in bankruptcy or otherwise), dissolution or winding-up of the
Company (each, a "Liquidation Event"), each Holder of Preferred Shares, by
reason of its ownership thereof, shall be entitled to receive out of the assets
of the Company available for distribution to shareholders of the Company, prior
and in preference to any payment or distribution of assets of the Company to the
holders of its Ordinary Shares or any other Junior Shares, but after any
distribution on any of the Company's Indebtedness or Senior Shares, an amount
equal to the greater of (i) the aggregate Liquidation Preference attributable to
the Preferred Shares held by such Holder, or (ii) the amount that such Holder
would have been entitled to receive with respect to such Liquidation Event if it
had exercised its right to convert all of its Preferred Shares into Ordinary
Shares pursuant to Section 6 immediately prior to such Liquidation Event. The
"Liquidation Preference" of the Preferred Shares shall be the initial Stated
Value thereof, as adjusted for (x) the accretion of dividends provided in
Section 2(a), above, subject to the provisions of Section 12(h) below, and (y)
any payment of dividends or distributions as provided in Section 2(b), above, in
each case through the date of payment of the Liquidation Preference.
(b) Change of Control.
(i) In addition to the rights of the holders of Preferred Shares under
Section 3(b)(ii), below, upon a Change of Control (as defined below) of the
Company, each Holder of Preferred Shares shall have the right, at such Holder's
option, to require the Company to redeem all or a portion of such Holder's
Preferred Shares at a price per Preferred Share equal to the Change of Control
Redemption Price. No sooner than 20 Business Days nor later than 10 Business
Days prior to the consummation of a Change of Control, but not prior to the
public announcement of such Change of Control, the Company shall deliver written
notice thereof via facsimile and overnight courier (a "Notice of Change of
Control") to each Holder of Preferred Shares. At any time during the period
beginning after receipt of a Notice of Change of Control (or, in the event a
Notice of Change of Control is not delivered at least 10 Business Days prior to
a Change of Control, at any time on or after the date which is 10 Business Days
prior to a Change of Control) and ending on the date of such Change of Control,
any Holder of the Preferred Shares then outstanding may require the Company to
redeem all or a portion of the holder's Preferred Shares then outstanding by
delivering written notice thereof via facsimile and overnight courier (a "Notice
of Redemption Upon Change of Control") to the Company, which Notice of
Redemption Upon Change of Control shall indicate (1) the number of Preferred
Shares that such Holder is submitting for redemption, and (2) the applicable
Change of Control Redemption Price. Upon the Company's receipt of a Notice(s) of
Redemption Upon Change of Control from any Holder of Preferred Shares, the
Company shall promptly, but in no event later than one (1) Business Day
following such receipt, notify each Holder of Preferred Shares by facsimile of
the Company's receipt of such Notice(s) of Redemption Upon Change of Control.
The Company shall deliver the applicable Change of Control Redemption Price
simultaneously with the consummation of the Change of Control and the relevant
Preferred Shares shall thereupon be redeemed and cancelled. Payments provided
for in this Section 3(b) shall have
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priority to payments to other shareholders (other than holders of Senior Shares)
in connection with a Change of Control. Subject to the Liquidation Preference
described in this Section 3(b)(i), upon a Change of Control, such number of
Preferred Shares that a Holder is submitting for redemption pursuant to the
Notice of Redemption Upon Change of Control shall be exchanged for the
consideration owing to the Holders of such Preferred Shares as a result of such
Change of Control.
(ii) In addition to the rights of the Holders of Preferred Shares
under Section 3(b)(i) and to the extent such Holder elects not to exercise all
or any portion of its rights thereunder, prior to the consummation of any (i)
sale of all or substantially all of the Company's assets to an acquiring Person
or (ii) other Change of Control following which the Company is not the surviving
entity, the Company will secure from the Person purchasing such assets or the
successor, or, if applicable, the parent of the successor, resulting from such
Change of Control (in each case, the "Acquiring Entity") a written agreement (in
form and substance reasonably satisfactory to the Holders of at least a majority
of the Preferred Shares then outstanding) to deliver to each Holder of Preferred
Shares in exchange for such shares, a security of the Acquiring Entity evidenced
by a written instrument substantially similar in form and substance to the
Preferred Shares, including, without limitation, having a ranking, stated value
and liquidation preference equal to the ranking, Stated Value and the
Liquidation Preference of the Preferred Shares held by such Holder at the time
of exchange, and otherwise reasonably satisfactory to the Holders of at least a
majority of the Preferred Shares then outstanding. In addition to the rights of
the holders of Preferred Shares under Section 3(b), prior to the consummation of
any other Change of Control, the Company shall make appropriate provision (in
form and substance reasonably satisfactory to the holders of at least a majority
of the Preferred Shares then outstanding) to insure that each of the Holders of
the Preferred Shares will thereafter have the right to acquire and receive in
lieu of or in addition to (as the case may be) the Ordinary Shares immediately
theretofore acquirable and receivable upon the conversion of such Holder's
Preferred Shares such shares of stock, securities or assets that would have been
issued or payable in such Change of Control with respect to or in exchange for
the number of Ordinary Shares which would have been acquirable and receivable
upon the conversion of such Holder's Preferred Shares as of the date of such
Change of Control (without taking into account any limitations or restrictions
on the convertibility of the Preferred Shares).
(c) Manner of Distribution. In the event the assets of the Company
available for distribution to Holders upon any Liquidation Event or Change of
Control of the Company shall be insufficient to pay in full all amounts to which
such Holders are entitled pursuant to this Section 3(a) or Section 3(b)(i), as
applicable, no such distribution shall be made on account of any Junior Shares
and no such distribution shall be made on account of any Parity Shares upon such
Liquidation Event or Change of Control unless proportionate amounts shall be
paid on account of the Preferred Shares, ratably, in proportion to the full
distributable amounts for which Holders and holders of any Parity Shares are
entitled upon such Liquidation Event or Change of Control, with amounts
allocable to each class or series of such shares determined on a pro rata basis
of the aggregate liquidation preference of the outstanding shares of each class
or series and accrued dividends to which each class or series is entitled. After
the payment to the Holders of
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the full preferential amounts provided for above, the Holders as such shall have
no right or claim to any of the remaining assets of the Company.
Section 4. Voting Rights. Except as may be otherwise provided in this
Certificate of Designations or required by law, the Preferred Shares shall be
entitled to notice of, attend and vote at all general meetings of the Company as
a single class with all other shareholders entitled to notice of, attend and
vote at such general meetings of the Company on the same terms as the holder of
an Ordinary Share. At any such general meeting, each Holder shall have the
number of votes for each Preferred Share held by such Holder equal to the whole
number of Ordinary Shares into which such Preferred Share may be converted
pursuant to Section 6 as of the record date for the vote. In addition to voting
rights specifically required by the Companies Law from time to time, Holders of
Preferred Shares have the right to vote on all matters voted upon by the holders
of Ordinary Shares. Each Holder of Preferred Shares shall be entitled to notice
of any general meeting of the Company.
(b) So long as any Preferred Shares are outstanding, in addition to any
other vote of shareholders of the Company required under applicable law or the
Memorandum of Association or Articles of Association of the Company, the prior
approval or written consent, in accordance with applicable law and the Articles
of Association and Memorandum of Association of the Company, of the Holders of a
majority in interest of the outstanding Preferred Shares (or, if a greater
percentage is required pursuant to applicable law, such greater percentage),
voting separately as a class, will be required for the Company, or for the
Company to permit any of its Subsidiaries, (i) to create, issue, authorize or
increase (including by way of a recapitalization) the authorized amount of, or
create, issue or authorize any obligation or security convertible into, or
exercisable or exchangeable for, or evidencing a right to purchase, any
Preferred Shares, Parity Shares or Senior Shares, or any preferred shares of any
Subsidiary of the Company, whether any such creation or authorization shall be
by means of amendment of the Memorandum of Association, Articles of Association
(whether by way of a certificate of designations or otherwise) or of this
Certificate of Designations or by merger, consolidation or otherwise or redeem
any Junior Shares or any Senior Shares or Parity Shares that are not outstanding
as of the date hereof other than in accordance with its terms, (ii) to approve
or make any amendment to the terms of the Preferred Shares or the Certificate of
Designations, (iii) for any amendment, alteration, change, repeal or waiver of
any provision of the Memorandum of Association or Articles of Association of the
Company, (iv) for any Change of Control or Liquidation Event, or for any
voluntary bankruptcy, insolvency or receivership other than a Liquidation Event
or to purchase or otherwise acquire, whether in one transaction or a series of
related transactions, all or substantially all of the assets of any Person (or
any division thereof) (or agree to do any of the foregoing), or permit any of
its Subsidiaries to do any of the foregoing, (v) to reclassify any authorized
shares of the Company into any Preferred Shares, Parity Shares, Senior Shares,
or any obligation or security convertible into or, exercisable or exchangeable
for, or evidencing a right to purchase any, Preferred Shares, Parity Shares or
Senior Shares, (vi) for any transaction that could or could reasonably be
expected to, individually or in the aggregate, adversely affect or impair the
rights, privileges or preferences of the Holders of the Preferred Shares in such
capacity, (vii) to create, incur, assume, guarantee, suffer to exist or
otherwise become or remain
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liable with respect to any Indebtedness in excess of $10,000,000 in aggregate,
or (viii) enter into any contract, agreement, commitment or understanding with
respect to any of the foregoing.
Section 5. Mandatory Conversion. On the ninth anniversary of the Issue Date
(the "Mandatory Conversion Date"), in accordance with and subject to applicable
law, each of the Preferred Shares shall automatically be converted into 150
Ordinary Shares, as adjusted pursuant to Section 7 and Section 8 (the
"Conversion Amount"), with any resulting fractional Ordinary Shares to be
settled in accordance with Section 13 (a "Mandatory Conversion").
(b) On and after the Mandatory Conversion Date, dividends will cease to
accrue on the Preferred Shares and all rights of Holders will terminate except
for the right to receive the number of whole Ordinary Shares issuable upon
conversion thereof at the Conversion Amount then in effect and cash in lieu of
any fractional Ordinary Shares, settled in accordance with Section 18.
Section 6. Conversion at the Option of the Holder. Each Preferred Share is
convertible, in whole or in part, at any time and form time to time, at the
option of the Holder thereof ("Optional Conversion"), and in accordance with and
subject to applicable law and this Certificate of Designations, into the number
of whole Ordinary Shares equal to the Conversion Amount then in effect, with any
resulting fractional Ordinary Shares to be settled in accordance with Section
13.
(b) The conversion right of a Holder shall be exercised by the Holder of
Preferred Shares by the surrender to the Company of the certificates
representing the Preferred Shares to be converted at any time during usual
business hours at its principal place of business or the offices of the Transfer
Agent, accompanied by written notice to the Company that the Holder elects to
convert all or a portion of the Preferred Shares represented by such certificate
and specifying the name or names (with address) in which a certificate or
certificates representing Ordinary Shares are to be issued and (if so required
by the Company or the Transfer Agent) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company or the Transfer Agent
duly executed by the Holder or its duly authorized legal representative and such
documentation necessary to give effect to the transfer under applicable law. The
date on which a Holder satisfies the foregoing requirements for conversion is
referred to herein as the "Conversion Date." Immediately prior to the close of
business on the Conversion Date, each converting Holder shall be deemed to be
the holder of record of the Ordinary Shares issuable upon conversion of such
Holder's Preferred Shares notwithstanding that the share register of the Company
may then be closed or that certificates representing such Ordinary Shares shall
not then be actually delivered to such Holder. On the Conversion Date all rights
with respect to the Preferred Shares so converted, including the rights, if any,
to receive notices, will terminate, except the rights of Holders thereof to (i)
receive certificates representing the number of whole Ordinary Shares into which
such Preferred Shares have been converted and cash, in lieu of any fractional
Ordinary Shares, in accordance with Section 13 hereof and (ii) exercise the
rights to which they are entitled as holders of Ordinary Shares.
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(c) The Company may, in accordance with and subject to applicable law and
the Company's Articles of Association, give effect to any conversion of
Preferred Shares contemplated by this Certificate of Designations by such of the
methods (or a combination thereof) described in Section 6(d) as the Board of
Directors (or any committee thereof) may in its discretion determine, provided
that any transaction pursuant to Section 6(d)(i) considered a redemption for
Cayman Islands law purposes shall be effected in a manner such that it is
considered a conversion, rather than a redemption, for United States securities
law purposes. For the purposes of Section 6(d)(i), the value due to a holder in
respect of a Preferred Share surrendered by the holder in respect of any
mandatory redemption of such Preferred Share in connection with a related
conversion into Ordinary Shares pursuant to Section 6(d)(i)(a) shall be such
amount as shall be required in order to subscribe the relevant number of
Ordinary Shares due to such holder in respect of such conversion.
(d) The Board of Directors or any committee thereof may in its discretion
determine to give effect to any conversion of Preferred Shares contemplated in
this Certificate of Designations by either of the following methods as it may
determine are appropriate (or a combination thereof):
(i) by redeeming mandatorily the converting Preferred Shares and in
consideration therefor issuing fully-paid Ordinary Shares in the relevant number
calculated by reference to the relevant provisions specified in the Certificate
of Designations to the holder whose Preferred Shares are being redeemed
(including without limitation (a) by way of the automatic application of any
value otherwise due to the holder of Preferred Shares in respect of the
mandatory redemption of the Preferred Shares towards the payment up of the
relevant amount of Ordinary Shares or (b) subject to shareholder resolution, by
declaring a capitalisation issue of fully paid up Ordinary Shares in the
relevant amounts in accordance with the Company's Articles of Association);
and/or
(ii) provided that the total nominal par value of the Preferred Shares
being converted is equal to the total nominal par value of the Ordinary Shares
into which they convert, by re-designating Preferred Shares as Ordinary Shares
and upon such redesignation, each such Preferred Share to be converted shall be
re-designated as an Ordinary Share of that class into which it is converted with
the rights, privileges, terms and obligations of such class and the converted
Ordinary Share shall thenceforth form part of the class of Ordinary Shares into
which it was converted for all purposes hereof).
In all such cases the form, manner, timing and execution of the conversion
shall, subject to the provisions set out in this Certificate of Designations,
occur in such ways as are determined by the Board of Directors or any committee
thereof.
Section 7. Adjustments in Respect of Indemnification. In case of any final
determination that any Holder of the Preferred Shares or any of its affiliates,
member, partners, directors, shareholders and their respective officers,
directors, employees, agents, advisers and representatives are entitled to
indemnification from the Company for Losses pursuant to Article IX of the
Securities Purchase Agreement, dated as of November 26, 2006 (the "Acquisition
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Agreement"), by and among the Company, MassMutual Capital Partners LLC and SRGL
Acquisition, LLC, other than in respect of any out-of-pocket fees and expenses
(which, pursuant to the terms of the Acquisition Agreement, shall be reimbursed
in cash), the Conversion Amount shall be increased to account for all such
Losses (as determined in accordance with and subject to the limitations in the
Acquisition Agreement) to a number of Ordinary Shares equal to the quotient of
the initial aggregate Stated Value of the Preferred Shares (i.e., $600,000,000)
divided by the Adjusted Conversion Price. Notwithstanding anything herein to the
contrary, the Company shall not effect and shall have no obligation to effect
any conversion of Preferred Shares, and no holder of Preferred Shares shall have
the right to convert any Preferred Shares, to the extent that after giving
effect to such conversion, the Company would be required to apply "push-down
accounting" under then current GAAP or securities laws, including the rules and
regulations promulgated by the Securities and Exchange Commission. For purposes
of this Section 7, in determining the number of outstanding Ordinary Shares, a
holder may rely on the number of outstanding Ordinary Shares as reflected in (1)
the Company's most recent Form 10-Q, Form 10-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement by the Company, or (3) any other notice by the Company or its
transfer agent setting forth the number of Ordinary Shares outstanding. Upon the
written request of any holder, the Company shall promptly, but in no event later
than three Business Days following the receipt of such notice, confirm in
writing to any such holder the number of Ordinary Shares then outstanding. In
any case, the number of outstanding Ordinary Shares shall be determined after
giving effect to conversions of Preferred Shares by such holder and its
affiliates since the date as of which such number of outstanding Ordinary Shares
was reported.
For purposes of this Section 7, the "Adjusted Conversion Price" shall mean
a fraction, (A) the numerator of which is the excess of (x) the product of (1)
the total number of Ordinary Shares outstanding on a fully diluted basis as of
the Issue Date, but excluding the Ordinary Shares into which the Preferred
Shares are then convertible, multiplied by (2) $4.00, over (y) the dollar amount
of all such diminutions in the value of, or other losses to, the Company
resulting in, or giving rise to, all such Losses (as determined in accordance
with and subject to the limitations in the Acquisition Agreement), and (B) the
denominator of which is the total number of Ordinary Shares outstanding on a
fully diluted basis as of the Issue Date, but excluding the Ordinary Shares into
which the Preferred Shares are then convertible.
Section 8. Anti-dilution Adjustments. In case outstanding Ordinary Shares
shall be subdivided, split recapitalized, reclassified or otherwise
re-constituted (by way of stock split, stock dividend or otherwise to the extent
not received by holders of Preferred Shares pursuant to Section 2(b)) into a
greater number of Ordinary Shares, the Conversion Amount in effect at the
opening of business on the day following the day upon which such subdivision,
split, recapitalization, reclassification or other reconstitution becomes
effective shall be proportionately increased, and, conversely, in case
outstanding Ordinary Shares shall be combined, recapitalized, reclassified or
otherwise re-constituted (by way of a combination, reverse stock split or
otherwise) into a smaller number of Ordinary Shares, the Conversion Amount in
effect at the opening of business on the day following the day upon which such
combination, recapitalization, reclassification or other reconstitution becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective
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immediately after the opening of business on the day following the day upon
which such subdivision, split, recapitalization, reclassification, combination
or other reconstitution becomes effective. If any event occurs of the type
contemplated by the provisions of this Section 8 but not expressly provided for
by such provisions then the Board of Directors will make an appropriate
adjustment in the Conversion Amount so as to protect the rights of the holders
of the Preferred Shares.
(b) Shareholder Rights Plans. Any shareholder rights plan adopted by the
Company shall provide that upon conversion of the Preferred Shares, to the
extent that the Holders receive Ordinary Shares, such Holders shall receive, in
addition to the whole Ordinary Shares and any cash for fractional Ordinary
Shares in accordance with Section 13, if any, the rights issued under such
shareholder rights plan the Company may establish, whether or not such rights
are separated from the Ordinary Shares prior to conversion.
(c) Notice of Adjustment. Whenever the Conversion Amount is adjusted in
accordance with Section 7 or this Section 8, the Company shall (i) compute the
Conversion Amount in accordance with Section 7 or this Section 8 and prepare and
transmit to the Transfer Agent an Officer's Certificate setting forth the
Conversion Amount, the method of calculation thereof in reasonable detail, and
the facts requiring such adjustment and upon which such adjustment is based,
which certificate shall be certified by the independent public accountants
regularly employed by the Company (and corrected, if such accountants determine
that the Company's certification is incorrect), and a copy of such certificates
mailed to each Holder of record of then outstanding Preferred Shares and filed
with the Company's Transfer Agent and (ii) as soon as practicable after the
occurrence of an event that requires an adjustment to the Conversion Amount
pursuant to Section 7 or this Section 8 (or if the Company is not aware of such
occurrence, as soon as practicable after becoming so aware), the Company or, at
the request and expense of the Company, the Transfer Agent shall provide a
written notice to the Holders of the occurrence of such event and a statement
setting forth in reasonable detail the method by which the adjustment to the
Conversion Amount was determined and setting forth the adjusted Conversion
Amount. The Company will give written notice to each Holder of Preferred Shares
at least ten (10) Business Days prior to the date on which the Company closes
its books or takes a record (1) with respect to any dividend or distribution
upon the Ordinary Shares, (2) with respect to any pro rata subscription offer to
holders of Ordinary Shares or (3) for determining rights to vote with respect to
any Change of Control. The Company will also give written notice to each Holder
of Preferred Shares upon the later of (x) ten (10) Business Days prior to the
date on which any Change of Control or Liquidation Event will take place, or (y)
the date upon which the Company becomes aware that such Change of Control or
Liquidation Event will take place.
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Section 9. Notices. When the Company is required, pursuant to this
Certificate of Designations, to give notice to Holders without specifying the
method of giving such notice, the Company shall do so by sending notice via
first class mail or by overnight courier to the Holders of record as of a
reasonably current date selected by the Board of Directors in its sole
discretion.
Section 10. Form. The Preferred Shares shall be issued in definitive, fully
registered form with, until such time as otherwise determined by the Company and
the Transfer Agent, the restricted share legend (the "Restricted Share Legend"),
as set forth on the form of Preferred Share Certificate attached hereto as
Exhibit A, which is hereby incorporated in and expressly made a part of the
terms of the Preferred Shares. Such certificated shares shall be registered in
the name or names of the Person or Persons specified by the Company in a written
instrument to the Transfer Agent.
(b) Each Preferred Share Certificate may have notations, legends or
endorsements required by applicable law or stock exchange rules. The Preferred
Share Certificates shall be deposited on behalf of the Holders represented
thereby with the Transfer Agent, at its New York office, as custodian for the
Holders, and registered in the name of the Holders or a nominee of the Holders,
duly executed by the Company and countersigned and registered by the Transfer
Agent as hereinafter provided.
(c) (i) An Officer shall sign the Preferred Share Certificates for the
Company, in accordance with the Company's Memorandum of Association and Articles
of Association and applicable law, by manual or facsimile signature.
(ii) If an Officer whose signature is on a Preferred Share Certificate
no longer holds that office at the time the Transfer Agent countersigns the
Preferred Share Certificate, the Preferred Share Certificate shall be valid
nevertheless.
(iii) A Preferred Share Certificate shall not be valid until an
authorized signatory of the Transfer Agent manually or by facsimile signature
countersigns such Preferred Share Certificate. The signature shall be conclusive
evidence that such Preferred Share Certificate has been duly authenticated. Each
Preferred Share Certificate shall be dated the date of its authentication.
Section 11. Transfer of Securities. The Preferred Shares, the Ordinary
Shares issuable upon conversion of the Preferred Shares and any Ordinary Shares
delivered as payment for a dividend pursuant to this Certificate of Designations
(collectively, the "Securities") have not been registered under the Securities
Act or any other applicable securities laws and may not be offered or sold
except in compliance with the registration requirements of the Securities Act
and any other applicable securities laws, or pursuant to an exemption from
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registration under the Securities Act and any other applicable securities laws,
or in a transaction not subject to such laws.
(b) Except in connection with a registration statement relating to the
Securities, if Preferred Shares in certificated form are delivered upon the
transfer, exchange or replacement of Preferred Shares bearing the Restricted
Share Legend, or if a request is made to remove such Restricted Share Legend on
Preferred Shares, the Preferred Shares so issued shall bear the Restricted Share
Legend and the Restricted Share Legend shall not be removed unless there is
delivered to the Company and the Transfer Agent such satisfactory evidence,
which may include an opinion of legal counsel licensed to practice law in the
State of New York, as may be reasonably required by the Company, that such
Preferred Shares are not "restricted securities" within the meaning of Rule 144
under the Securities Act. Upon provision of such satisfactory evidence, the
Transfer Agent, at the direction of the Company, shall countersign and deliver
Preferred Shares that do not bear the Restricted Share Legend.
(c) Ordinary Share Certificates issued upon a conversion of or dividend on
the Preferred Shares bearing the Restricted Share Legend shall be in physical
certificated form and bear the Restricted Share Legend. Transfers of such
Ordinary Shares held in certificated and global form may be effected in the same
manner as transfers of the Preferred Shares, mutatis mutandis.
(d) A Holder of Preferred Shares may transfer or assign some or all of the
Preferred Shares (including all accompanying rights hereunder) held by such
holder without the consent of the Board of Directors or the Company; provided
that such transfer or assignment is in compliance with applicable laws and
regulations and the Registration Rights and Shareholders Agreement and a duly
executed share transfer form, in a form reasonably satisfactory to the Company,
has been delivered to the Company.
(e) The Company shall maintain at its principal executive offices (or such
other office or agency of the Corporation as it may designate by notice to the
holders of the Preferred Shares), a register for the Preferred Shares, in which
the Company shall record the name and address of the persons in whose name the
Preferred Shares have been issued, and thereby recognize any properly made
transfer, as well as the name and address of each transferee. The Company may
treat the person in whose name any Preferred Share is registered on the register
as the owner and holder thereof for all purposes, notwithstanding any notice to
the contrary. Title to Ordinary Shares shall be determined from the Company's
register of members.
Section 12. Definitions. (a) "Acquiring Entity" has the meaning set forth
in Section 3(b)(ii).
(b) "Acquisition Agreement" has the meaning set forth in Section 7.
12
(c) "Adjusted Conversion Price" has the meaning set forth in Section 7.
(d) "Board of Directors" has the meaning set forth in the preamble hereof.
(e) "Business Day" means any day other than a Saturday or Sunday or any
other day on which banks in the City of New York are authorized or required by
law or executive order to close.
(f) "Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents however designated of corporate stock,
capital stock or other equity participations, including partnership interests,
whether general or limited, of such Person and any rights (other than debt
securities convertible or exchangeable into an equity interest), warrants or
options to acquire an equity interest in such Person.
(g) "Change of Control" means (i) the consolidation, merger, takeover,
conversion, recapitalization, reorganization, reclassification, consolidation or
other business combination of the Company with or into another Person (other
than (A) a consolidation, merger or other business combination in which holders
of the Company's voting power immediately prior to the transaction continue
after the transaction to hold, directly or indirectly, the voting power of the
surviving entity or entities necessary to elect a majority of the members of the
board of directors (or their equivalent if other than a corporation) of such
entity or entities, or (B) pursuant to a migratory merger effected solely for
the purpose of changing the jurisdiction of incorporation of the Company), (ii)
the sale, conveyance or exchange or transfer of all or substantially all of the
assets, property or business of the Company (other than in connection with the
voluntary or involuntary liquidation, dissolution or winding-up of the Company),
(iii) a purchase, tender or exchange offer made to and accepted by the holders
of more than 50% of the aggregate voting power of the outstanding Ordinary
Shares, (iv) a scheme of arrangement, change to the capital structure or other
reorganization of the Company resulting in the Company resulting in a change of
control (whether by ownership of voting securities, by contract or otherwise) of
the Company or (v) any other transaction which is effected in such a way that
holders of Ordinary Shares are entitled to receive (either directly or upon
subsequent liquidation) stock, securities, property (cash or otherwise) or
assets with respect to or in exchange for Ordinary Shares.
(h) "Change of Control Redemption Price" means, an amount equal to the
greater of (i) the aggregate Liquidation Preference attributable to the
Preferred Shares held by a specified Holder, plus an amount equal to the sum of
all accrued dividends through the earlier of (A) the date of payment of the
consideration payable upon a Change of Control, or (B) the fifth anniversary of
the Issue Date, or (ii) the amount that such Holder would have been entitled to
receive with respect to such Change of Control if it had exercised its right to
convert all or such portion of its Preferred Shares for Ordinary Shares pursuant
to Section 6 immediately prior to date of such Change of Control; provided that
a sale by one of the initial Investors to another by any means shall not
constitute a Change of Control.
13
(i) The "Closing Sale Price" on any date means the closing sale price per
share (or, if no closing sale price is reported, the average of the bid and ask
prices or, if more than one in either case, the average of the average bid and
the average ask prices) on that date as reported in the composite transactions
for the principal U.S. securities exchange on which the Ordinary Shares are
traded or, if the Ordinary Shares are not listed on a U.S. national or regional
securities exchange, as reported by the NASDAQ Stock Market. If the Ordinary
Shares are not listed for trading on a U.S. national or regional securities
exchange and not reported by the NASDAQ Stock Market on the relevant date, the
Closing Sale Price shall be the last quoted bid price for the Ordinary Shares in
the over-the-counter market on the relevant date as reported by the National
Quotation Bureau or similar organization. In the absence of such a quotation,
the Closing Sale Price of the Ordinary Shares will be an amount determined in
good faith by the Board of Directors to be the fair market value of such
Ordinary Shares, and such determination shall be conclusive.
(j) "Company" has the meaning set forth in the preamble hereof.
(k) "Companies Law" means the Companies Law (2004 Revision) of the Cayman
Islands.
(l) "Conversion Amount" has the meaning set forth in Section 5(a).
(m) "Conversion Date" has the meaning set forth in Section 6(b).
(n) "Dividend Date" has the meaning set forth in Section 2(a).
(o) "Dividend Period" has the meaning set forth in Section 2(a).
(p) "Dividend Record Date" has the meaning set forth in Section 2(a).
(q) "Dividend Record Date" has the meaning set forth in Section 2(a).
(r) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case, as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
(s) "ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
such Person is
14
a member and which would be deemed to be a "controlled group" within the meaning
of Sections 414(b), (c), (m) and (o) of the Internal Revenue Code.
(t) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(u) "GAAP" means generally accepted accounting principles in effect from
time to time in the United States, applied on a consistent basis.
(v) "Hedging Agreement" means any interest rate, foreign currency,
commodity or equity swap, collar, cap, floor or forward rate agreement, or other
agreement or arrangement designed to protect against fluctuations in interest
rates or currency, commodity or equity values (including, without limitation,
any option with respect to any of the foregoing and any combination of the
foregoing agreements or arrangements), and any confirmation executed in
connection with any such agreement or arrangement.
(w) "Holder" means the Person in whose name a Preferred Share is
registered.
(x) "Indebtedness" means, for any Person at the time of any determination,
without duplication, and without including any amounts owed by such Person to
the Company or any wholly-owned Subsidiary of the Company, the following
obligations, contingent or otherwise: (i) all obligations for borrowed money,
(ii) all obligations evidenced by notes, bonds, debentures, acceptances or
similar instruments, or arising out of letters of credit or bankers' acceptance
issued for such Person's account, (iii) all obligations, whether or not assumed,
secured by any issued Lien or payable out of the proceeds or production from any
property or assets now or hereafter owned or acquired by such Person other than
a Permitted Lien, (iv) the capitalized portion of lease obligations under
capitalized leases, (v) all obligations arising from installment purchases of
property or representing the deferred purchase price of property or services in
respect of which such Person liable, contingently or otherwise, as obligor or
otherwise, other than trade payables and other current liabilities incurred in
the ordinary course of business, (vi) all obligations of such Person upon which
interest charges are customarily paid or accrued, and (vii) any other
obligations, contingent or otherwise, of such Person that, in accordance, with
GAAP, should be classified upon the balance sheet of such Person as
indebtedness, other than trade payable and other current liabilities incurred in
the ordinary course of business.
(y) "Issue Date" has the meaning set forth in Section 2(a).
(z) "Junior Shares" has the meaning set forth in Section 1.
(aa) "Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in
15
the nature thereof), any sale of receivables with recourse against the Company
or any of its Subsidiaries, any filing or agreement to file a financing
statement as a debtor under the Uniform Commercial Code or any similar statute
of any jurisdiction other than to reflect ownership by a third Person of
property leased to the Company of any of its Subsidiaries under a lease that is
not in the nature of a conditional sale or title retention agreement.
(bb) "Liquidation Event" has the meaning set forth in Section 3(a).
(cc) "Liquidation Preference" has the meaning set forth in Section 3(a).
(dd) "Mandatory Conversion" has the meaning set forth in Section 5(a).
(ee) "Mandatory Conversion Date" has the meaning set forth in Section 5(a).
(ff) "Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any of the Corporation or any of its ERISA
Affiliates has contributed to, or has been obligated to contribute, at any time
during the preceding six (6) years.
(gg) "Notice of Change of Control" has the meaning set forth in Section
3(b)(i).
(hh) "Notice of Redemption Upon Change of Control" has the meaning set
forth in Section 3(b)(i).
(ii) "Officer" means the Chairman of the Board and President, Chief
Executive Officer, any Vice President, the Chief Financial Officer, the Chief
Accounting Officer, the Treasurer, any Assistant Treasurer, the Controller, any
Assistant Controller, the Secretary or any Assistant Secretary of the Company.
(jj) "Officer's Certificate" means a certificate signed by two Officers.
(kk) "Optional Conversion" has the meaning set forth in Section 6(a).
(ll) "Ordinary Shares" has the meaning set forth in Section 1.
(mm) "Parity Shares" has the meaning set forth in Section 1.
16
(nn) "Permitted Liens" means:
(A) Liens with respect to taxes, assessments and other governmental
charges or levies not yet due and payable or actively contested in good faith;
(B) deposits or pledges made in the ordinary course of business in
connection with, or to secure payment of, utilities or similar services,
workers' compensation, unemployment insurance, old age pensions or other social
security, governmental insurance and governmental benefits or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bid,
leases, government contracts, performance and return of money bonds and similar
obligations;
(C) purchase money Liens in any property acquired by the Company or
any of its Subsidiaries in the ordinary course of business to the extent
permitted by the Agreement;
(D) interests or title of a licensor, licensee, lessor or sublessor
under any license or lease permitted by this agreement;
(E) Liens in respect of property of the Company or any of its
Subsidiaries imposed by law which were incurred in the ordinary course of
business, such as warehousemen's, mechanic's, statutory landlord's,
materialmen's, carriers' or contractors' liens or encumbrances or any similar
lien or restriction for amounts not yet due and payable; and
(F) easements, rights-of-way, restrictions and other similar charges
and encumbrances or real property and minor defects or irregularities in the
title thereof that do not (X) secure obligations for the payment of money or (Y)
materially impair the value of such property or its use by the Company or any of
its Subsidiaries in the Ordinary course of business.
(oo) "Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization or government or
any agency or political subdivision thereof.
(pp) "Preferred Shares" has the meaning set forth in the preamble hereof.
(qq) "Restricted Share Legend" has the meaning set forth in Section 10(a).
17
(rr) "Securities" has the meaning set forth in Section 11(a).
(ss) "Securities Act" means the Securities Act of 1933, as amended.
(tt) "Senior Shares" has the meaning set forth in Section 1.
(uu) "Stated Value" has the meaning set forth in the preamble hereof.
(vv) "Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (A) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (B)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
(ww) "Trading Day" means a day during which (i) trading in the Ordinary
Shares generally occurs and (ii) a Closing Sale Price for the Ordinary Shares is
provided on The New York Stock Exchange or, if the Ordinary Shares are not
listed on The New York Stock Exchange, on the principal other U.S. national or
regional securities exchange on which the Ordinary Shares are listed or, if the
Ordinary Shares are not listed on a U.S. national or regional securities
exchange, on the principal other market on which the Ordinary Shares are then
traded.
(xx) "Transfer Agent" means _____________ unless and until a successor is
selected by the Company, and then such successor.
Section 13. Fractional Shares. No fractional Ordinary Shares shall be
issued to Holders. Subject to applicable law, in lieu of any fraction of an
Ordinary Share that would otherwise be issuable in respect of the aggregate
number of Preferred Shares surrendered by a Holder upon a conversion or issuable
to a Holder in respect of a share dividend payment made in Ordinary Shares, such
Holder shall have the right to receive an amount in cash (computed to the
nearest cent) equal to the same fraction of (a) in the case of any payment of a
share dividend, the Closing Sale Price on the Trading Day next preceding the
issuance of such Ordinary Shares or (b) in the case of Ordinary Shares issuable
upon conversion, the Closing Sale Price on the Trading Day next preceding the
date of conversion.
Section 14. Miscellaneous. The Company shall, so long as any of the
Preferred Shares are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued Ordinary Shares, solely for the
purpose of effecting the conversions of
18
the Preferred Shares, such number of Ordinary Shares as shall from time to time
be sufficient to effect the conversion of all of the Preferred Shares then
outstanding; provided that the number of Ordinary Shares so reserved shall at no
time be less than 130% of the number of Ordinary Shares for which the Preferred
Shares are at any time convertible (without regard to any limitations on
conversions). The initial number of Ordinary Shares reserved for conversions of
the Preferred Shares and each increase in the number of shares so reserved shall
be allocated pro rata among the Holders of the Preferred Shares based on the
number of Preferred Shares held by each Holder at the time of issuance of the
Preferred Shares or increase in the number of reserved shares, as the case may
be. In the event a Holder shall sell or otherwise transfer any of such Holder's
Preferred Shares, each transferee shall be allocated a pro rata portion of the
number of reserved Ordinary Shares reserved for such transferor. Any Ordinary
Shares reserved and allocated to any Person which ceases to hold any Preferred
Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata
based on the number of Preferred Shares then held by such Holders.
(b) The Company covenants that any Ordinary Shares issued upon conversion
of the Preferred Shares or issued in respect of a share dividend payment shall
be validly issued, fully paid and non-assessable.
(c) The Company shall pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of Ordinary Shares or
other securities or property upon conversion of the Preferred Shares pursuant
hereto.
(d) The Preferred Shares are perpetual and not redeemable, other than as
set forth in this Certificate of Designations.
(e) Whenever possible, each provision hereof shall be interpreted in a
manner as to be effective and valid under applicable law, but if any provision
hereof is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should determine that a
provision hereof would be valid or enforceable if a period of time were extended
or shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
(f) Preferred Shares may be issued in fractions of a share which shall
entitle the Holder, in proportion to such Holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and have
the benefit of all other rights of Holders of Preferred Shares.
(g) The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
19
(h) If any of the voting powers, preferences and relative, participating,
optional and other special rights of the Preferred Shares and qualifications,
limitations and restrictions thereof set forth herein is invalid, unlawful or
incapable of being enforced by reason of any rule of law or public policy, all
other voting powers, preferences and relative, participating, optional and other
special rights of Preferred Shares and qualifications, limitations and
restrictions thereof set forth herein which can be given effect without the
invalid, unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of Preferred Shares and
qualifications, limitations and restrictions thereof shall, nevertheless, remain
in full force and effect, and no voting powers, preferences and relative,
participating, optional or other special rights of Preferred Shares and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Preferred Shares and
qualifications, limitations and restrictions thereof unless so expressed herein.
(i) Preferred Shares that have been issued and reacquired in any manner,
including Preferred Shares purchased or converted, shall (upon compliance with
any applicable provisions of the laws of the Cayman Islands) be cancelled and
have the status of authorized but unissued preferred shares of the Company
undesignated as to series and may be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred shares of the
Company, provided that any issuance of such preferred shares must be in
compliance with the terms hereof.
(j) If any of the Preferred Share Certificates shall be mutilated, lost,
stolen or destroyed, the Company shall issue, in exchange and in substitution
for and upon cancellation of the mutilated Preferred Share Certificate, or in
lieu of and substitution for the Preferred Share certificate lost, stolen or
destroyed, a new Preferred Share Certificate of like tenor and representing an
equivalent amount of Preferred Shares, but only upon receipt of evidence of such
loss, theft or destruction of such Preferred Share Certificate and indemnity, if
requested, satisfactory to the Company and the Transfer Agent.
(k) The Company shall not, by amendment of its Memorandum of Association or
Articles of Association or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Preferred Shares set forth herein, but will at all times in
good faith assist in the carrying out of all terms and in the taking of all
action that may be necessary or appropriate in order to protect the rights of
the Holders of then outstanding Preferred Shares against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (i)
shall not increase the par value of any shares of stock receivable on the
conversion of Preferred Shares above the amount payable therefor on such
conversion and (ii) shall take all action that may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares on the conversion of all Preferred Shares from time to time
outstanding.
20
(l) The remedies provided in this Certificate of Designations shall be
cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a decree of specific
performance and/or other injunctive relief). No remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy.
Nothing herein shall limit a Holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designations. The Company covenants to each Holder of Preferred Shares that
there shall be no characterization concerning this instrument other than as
expressly provided herein. Amounts set forth or provided for herein with respect
to payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the holder thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holders of the
Preferred Shares and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any such breach
or threatened breach, the Holders of the Preferred Shares shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.
(m) No failure or delay on the part of a Holder of Preferred Shares in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
EXHIBIT A
IN WITNESS WHEREOF, the Board of Directors of the Company approved and resolved
the terms of the Preferred Shares as described in this Certificate of
Designations at their meeting of the _____ day of ______________.
SCOTTISH RE GROUP LIMITED
By: _____________________
Name:
Title:
ATTEST:
By: ___________________
Name:
Title:
22
EXHIBIT A
FORM OF PREFERRED SHARE CERTIFICATE
OF 7.25% CONVERTIBLE CUMULATIVE PARTICIPATING PREFERRED SHARES
OF SCOTTISH RE GROUP LIMITED
CUSIP: [ ]
CERTIFICATE NUMBER:
___________ SHARES
This represents and certifies that ____________ is the registered holder of
__________ fully paid and non-assessable 7.25% Convertible Cumulative
Participating Preferred Shares (Stated Value $600 per share) of Scottish Re
Group Limited (the "Company"), transferable, in accordance with and subject to
applicable law, upon the books of the Company by the holder hereof in person or
by the holder's duly authorized attorney upon surrender of this certificate
properly endorsed and such documentation necessary to give effect to the
transfer under applicable law. This certificate and the shares represented
hereby are issued and shall be held subject to all of the provisions of the
Memorandum of Association and Articles of Association of the Company and all
amendments thereto (copies of which are on file at the office of the Company),
to which the holder of this certificate, by acceptance hereof, accepts.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN EXEMPTION FROM SUCH
REGISTRATION UNDER SAID ACT.
IN WITNESS WHEREOF, Scottish Re Group Limited has executed this Certificate
as of the date set forth below.
SCOTTISH RE GROUP LIMITED
By:____________________________
Name:
Title:
By:______________________________
Name:
Title:
23
Dated:____________________________
TRANSFER AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the certificates representing 7.25%
Convertible Cumulative Participating Preferred Shares of
Scottish Re Group Limited
[ ],
as Transfer Agent,
By:________________________________
Name:
Title: Authorized Signatory
Dated: _____________________________
24
REVERSE OF THE SECURITY
The Company will furnish to any shareholder, upon request and without charge, a
full statement of the information required by the Companies Law (2004 Revision)
of the Cayman Islands with respect to the powers, designations, preferences and
relative, participating, optional, or other special rights of the 7.25%
Convertible Cumulative Participating Preferred Shares (Stated Value $600 per
share) and the qualifications, limitations or restrictions on those preferences
or rights of such preferred shares and each other class or series authorized to
be issued. Any such request must be made to the secretary of the Company or to
the Transfer Agent.
ASSIGNMENT
For Value Received, ___________ hereby sells, assigns and transfers unto
_________ (print or typewrite name, address and social security or other
identifying number of assignee) ______ shares represented by this Certificate,
and does hereby irrevocably constitute and appoint ________________ as attorney,
to transfer the said shares on the books of the within named Company with full
power of substitution in the premises.
Dated:_________________________
X_________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
25
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the
7.25% Convertible Cumulative Participating Preferred Shares)
The undersigned hereby irrevocably elects to convert (the "Conversion")
_______ 7.25% Convertible Cumulative Participating Preferred Shares (the
"Preferred Shares"), represented by share certificate No(s). ___ (the "Preferred
Share Certificates") into ordinary shares, par value $0.01 per share (the
"Ordinary Shares"), of Scottish Re Group Limited (the "Company") according to
the conditions of the Certificate of Designations describing the terms of the
Preferred Shares (the "Certificate of Designations"), as of the date written
below. No fee will be charged to the Holder for any conversion. A copy of each
Preferred Share Certificate is attached hereto (or evidence of loss, theft or
destruction thereof).
The undersigned represents and warrants that all offers and sales by the
undersigned of the Ordinary Shares issuable to the undersigned upon conversion
of the Preferred Shares shall be made pursuant to registration of the Ordinary
Shares under the Securities Act of 1933, as amended (the "Securities Act") or
pursuant to an exemption from registration under the Securities Act.
The Company is not required to issue Ordinary Shares until the original
Preferred Share Certificate(s) (or evidence of loss, theft or destruction
thereof) to be converted are received by the Company or its Transfer Agent. The
Company shall issue Ordinary Shares and deliver Ordinary Share Certificates to
an overnight courier not later than two business days following receipt of the
original Preferred Share Certificate(s) to be converted.
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in or pursuant to the Certificate of Designations.
Date of Conversion: __________________________________________
Applicable Conversion Amount: __________________________________
Number of 7.25% Convertible
Cumulative Participating Preferred Shares to be Converted: ___________________
Number of Ordinary Shares to be Issued: __________________
Signature: ______________________________________________________
Name: ___________________________________________________________
Address:(1) _____________________________________________________
Fax No.: ________________________________________________________
26
- -------------------------
(1) Address where Ordinary Shares and any other payments or certificates
shall be sent by the Company.