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FORM OF STOCK PURCHASE WARRANT

Warrant Agreement

FORM OF STOCK PURCHASE WARRANT | Document Parties: JAMES RIVER GROUP, INC You are currently viewing:
This Warrant Agreement involves

JAMES RIVER GROUP, INC

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Title: FORM OF STOCK PURCHASE WARRANT
Governing Law: Delaware     Date: 5/3/2005

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                         FORM OF STOCK PURCHASE WARRANT

THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
SUCH
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
PLEDGE OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES
LAWS.

                                   DATE OF ORIGINAL ISSUANCE:
____________, 2003

NO. ______                   JAMES RIVER GROUP, INC.

     THIS CERTIFIES THAT, for value received, the Holder (as
hereafter defined)
is entitled to purchase from the Company up to a total of
____________ shares of
common stock, par value $0.01 per share (the "Common Stock"), of
the Company at
an exercise price equal to $100 per share of Common Stock (as
adjusted from time
to time as provided in Section 5, the "Exercise Price"), at any
time and from
time to time from and after the date hereof and through and
including
________________ (the "Expiration Date"), and subject to the
following terms and
conditions:

     1. Exercise Period. This Warrant shall be exercisable in whole
or in part,
commencing on the date hereof, and shall expire and no longer be
exercisable
after the Expiration Date.

     2. Method of Exercise; Payment.

          (a) Cash Exercise. The purchase rights represented by
this Warrant may
be exercised by the Holder, in whole or in part, by the surrender
of this
Warrant (with the notice of exercise form attached hereto as
Attachment A duly
executed) at the principal office of the Company, and by the
payment to the
Company, by certified cashier's or other check of an amount equal
to the
aggregate Exercise Price for the number of shares of Common Stock
being
purchased.

          (b) Net Exercise. In lieu of exercising this Warrant
pursuant to
Section 2(a) above, the Holder may elect to receive, without the
payment by the
Holder of any additional consideration, shares of Common Stock
equal to the
value of this Warrant (or the portion thereof being canceled) by
surrender of
this Warrant at the principal office of the Company together with
notice of such
election, in which event the Company shall issue to the Holder a
number of
shares of Common Stock of the Company computed using the following
formula:

          X = Y (A-B)
              -------
                 A




Where X = the number of shares of Stock to be issued to the Holder
pursuant to
          this net exercise.

      Y = the number of shares in respect of which the net issue
election is
          made.

      A = the fair market value of one share of Common Stock at the
time the net
          issue election is made.

      B = the Exercise Price (as adjusted to the date of the net
issuance).

          (c) Fair Market Value. For purposes of Section 2(b), the
fair market
value of one share of Common Stock as of a particular date shall be
determined
as follows: (i) if traded on a securities exchange or through the
Nasdaq
National Market, the value shall be deemed to be the average of the
closing
prices, as reported by Bloomberg L.P., or the successor to its
function of
reporting stock prices, of the securities on such exchange over the
ten (10) day
period ending three (3) days prior to the net exercise election;
(ii) if traded
over-the-counter, the value shall be deemed to be the average of
the closing bid
or sale prices (whichever is applicable), as reported by Bloomberg
L.P., or the
successor to its function of reporting stock prices over the ten
(10) day period
ending three (3) days prior to the net exercise; and (iii) if there
is no active
public market, the value shall be the fair market value thereof, as
determined
in good faith by the Board of Directors of the Company.

          (d) Stock Certificates. In the event of any exercise of
purchase
rights represented by this Warrant, certificates for the number of
shares of
Common Stock so purchased shall be delivered to the Holder as soon
as
practicable thereafter, and, unless this Warrant has been fully
exercised or has
expired, a new Warrant representing the shares with respect to
which this
Warrant shall not have been exercised shall also be issued to the
Holder within
such time.

     3. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the
Company of evidence reasonably satisfactory to it of the loss,
theft,
destruction or mutilation of this Warrant, and in case of loss,
theft or
destruction, of indemnity or security reasonably satisfactory to
it, and upon
reimbursement to the Company of all reasonable expenses incidental
thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the
Company will
make and deliver a new Warrant of like tenor and dated as of such
cancellation,
in lieu of this Warrant.

     4. Stock Fully Paid; Reservation of Shares. All of the Common
Stock
issuable upon the exercise of the rights represented by this
Warrant will, upon
issuance and receipt of the Exercise Price therefor, be duly and
validly issued,
fully-paid and nonassessable, and free from all taxes, liens and
charges with
respect to the issue thereof. During the period within which the
rights
represented by this Warrant may be exercised, the Company shall at
all times
have authorized and reserved for issuance a sufficient number of
shares of its
Common Stock to provide for the exercise of the rights represented
by this
Warrant.

     5. Adjustment of Exercise Price and Number of Shares. The
Exercise Price
and number of shares of Common Stock issuable upon exercise of this
Warrant are
subject to adjustment from time to time as set forth in this
Section 5.

          (a) Stock Dividends, Subdivisions and Combinations. If
the Company at
any time or from time to time while this Warrant is outstanding (i)
pays a stock
dividend on its


                                       -2-




Common Stock or otherwise makes a distribution on any class of
capital stock
that is payable in shares of Common Stock, (ii) effects a
subdivision of the
outstanding Common Stock or (iii) combines the outstanding shares
of Common
Stock, then in each such case the Exercise Price shall be
multiplied by a
fraction of which the numerator shall be the number of shares of
Common Stock
outstanding immediately before such event and of which the
denominator shall be
the number of shares of Common Stock outstanding immediately after
such event.
Any adjustment of the Exercise Price under this paragraph (a) shall
become
effective at the close of business on the date the subdivision or
combination
becomes effective.

          (b) Reclassification, Exchange and Substitution. If the
Common Stock
shall be changed into the same or a different number of shares of
any other
class or classes of stock, whether by recapitalization,
reclassification or
otherwise (other than a subdivision or combination of shares, stock
dividend,
reorganization, merger, consolidation or sale of assets as provided
for
elsewhere in this Section 5), then the Holder shall have the right
thereafter to
receive, upon exercise of this Warrant, the same amount and kind of
securities,
cash or property as it would have been entitled to receive upon the
occurrence
of such transaction if it had been, immediately prior to such
transaction, the
holder of the number of shares of Common Stock then issuable upon
exercise in
full of this Warrant.

          (c) Reorganizations, Mergers, Consolidations or Sales of
Assets. If
the Company shall be a party to any transaction, including without
limitation, a
merger, consolidation, sale of all or substantially all of the
Company's assets,
or a reorganization, reclassification or recapitalization of the
capital stock
of the Company, but excluding any transaction for which provision
for adjustment
is otherwise made in this Section 5 (each of the foregoing being
referred to as
a "Transaction"), in each case, as a result of which shares of
Common Stock are
converted into the right to receive stock, securities or other
property
(including cash or any combination thereof), then the Holder shall
have the
right thereafter to receive, upon exercise of this Warrant, the
same amount and
kind of securities, cash or property as it would have been entitled
to receive
upon the occurrence of such Transaction if it had been, immediately
prior to
such Transaction, the holder of the number of Shares of Common
Stock then
issuable upon exercise in full of this Warrant (the "Alternate
Consideration").
For purposes of any such exercise, the determination of the
Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration
based on the
amount of Alternate Consideration issuable in respect of one share
of Common
Stock in such Transaction, and the Company shall apportion the
Exercise Price
among the Alternate Consideration in a reasonable manner reflecting
the relative
value of any different components of the Alternate Consideration.
If holders of
Common Stock are given any choice as to the securities, cash or
property to be
received in a Transaction, then the Holder shall be given the same
choice as to
the Alternate Consideration it receives upon any exercise of this
Warrant
following such Transaction. The Company shall not effect any
Transaction (other
than a consolidation or merger in which the Company is the
continuing
corporation) unless prior to or simultaneously with the
consummation thereof,
the successor entity or purchaser shall provide that such successor
or surviving
entity shall comply with the provisions of this paragraph (c) and
insuring that
the Warrant (or any such replacement security) will be similarly
adjusted upon
any subsequent transaction analogous to a Transaction. The
provisions of this
paragraph (c) shall similarly apply to successive Transactions.


                                       -3-




          (d) Issuances at Less than the Exercise Price. While any
portion of

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