Document:

Prepared by MERRILL CORPORATION

 

EXHIBIT 10.1

 

 

 

4SIGMA (BERMUDA) LTD.

 

 

BONDHOLDERS CONVERSION AGREEMENT

 

 

 

 

THIS AGREEMENT is made on November 8, 2001

BETWEEN

(1)         4SIGMA (BERMUDA) LTD. (the "Issuer");

and

(2)         THE  PARTIES  NAMED IN SCHEDULE 2  (the "Preference  Share  Subscribers").

WHEREAS

(A)        The Issuer has issued to the Preference

Share Subscribers (a) USD 450,000 in aggregate principal amount of 8 per cent.

convertible bonds due 30 June 2003 pursuant to a subscription agreement

dated 23 March 2001 and (b) USD 800,000 in aggregate principal amount of

8 per cent. convertible bonds due 30 June 2003 pursuant to a rights

offer document dated 25 May 2001 (together, the "Bonds").

(B)         The Preference Share Subscribers intend

to convert the Bonds (including accrued interest) which they hold into 8% class

E non-voting redeemable and convertible preference shares of nominal value of

USD0.01 each (the "Preference Shares"), the terms of

which are substantially set out in the Term Sheet.  This shall take effect by way of issue of Preference Shares by

the Issuer to the relevant Preference Share Subscribers in accordance with the

terms herein in return for transfer of the Bonds by the Preference Share

Subscribers to the Issuer.

IT IS AGREED  as follows:

1.         INTERPRETATION

1.1       Definitions

In this Agreement

the following expressions have the following meanings:

"Assets"

means all the undertaking, property, assets, rights and revenues whatsoever of

the Issuer, present and future, wherever situated in the world, and includes

each and any of them.

"Bond

Certificate" means a certificate representing one or more

Bonds.

"Closing Date"

means such later date as the parties hereto may agree.

"Intellectual

Property Rights" means all patents, trade marks, service marks

(including any goodwill associated with them), all brands and trade names, all

copyrights and rights in the nature of copyright, database rights, design

rights and registered designs and documented trade secrets and know-how and all

other intellectual property rights now or in the future owned or enjoyed by the

Issuer, all applications for the protection of any such rights in any part of

the world and the benefit of all agreements and licences now or in the future

entered into or enjoyed by the Issuer relating to the use of exploitation of

any such rights.

"Land"

means includes freehold and leasehold land and immovable property and in each

case all buildings and structures upon and all things affixed (including trade

and tenant's fixtures) thereto.

"Preference

Share Certificate" means a certificate representing one or more

Preference Shares.

"Preference

Share Issue Price" means an issue price for each Preference

Share of USD1.00 (that is, one Preference Share for each USD1.00 in aggregate

principal amount of Bonds except that fractions of Preference Shares shall not

be delivered and no compensation shall be payable in respect of any

non-delivery of a fraction of a Preference Share).

"Term

Sheet"

means the term sheet as set out in Schedule 1 hereto.

1.2       Statutes

Any reference

in this Agreement to a statute, any provision thereof or to any statutory

instrument, order or regulation made thereunder shall be construed as a

reference to such statute, provision, statutory instrument, order or regulation

as the same may have been, or may from time to time be, amended or re-enacted.

2.             

SUBSCRIPTION, ISSUE AND ALLOTMENT

2.1           Undertaking to issue and allot Preference Shares

The Issuer

undertakes to the Preference Share Subscribers that, subject to and in

accordance with the provisions of this Agreement, the Preference Shares will be

issued and allotted to the Preference Share Subscribers on the Closing Date.

2.2          Undertaking to subscribe Preference Shares

Each

Preference Share Subscriber undertakes to the Issuer that, subject to and in

accordance with the provisions of this Agreement, it will on the Closing Date

subscribe for such number of Preference Shares as is set out against its name

in Schedule 2 at the Preference Share Issue Price and transfer to the

Issuer the aggregate principal amount of Bonds as set out against its name in

Schedule 2 as payment of the Preference Share Issue Price for each such

Preference Share.

2.3       Cancellation of Bonds

Upon the transfer of the

Bonds to the Issuer pursuant to Clause 2.2 above, the Issuer shall, in

accordance with the terms and conditions of the Bonds, cancel such Bonds and

the Issuer shall not reissue or resell such Bonds.

3.         SELLING RESTRICTIONS

Each party hereto

acknowledges, represents, warrants and undertakes as set out in Schedule 3.

4.           CLOSING

4.1         Closing

The closing of the issue

("Closing")

shall take place on the Closing Date, whereupon:

4.1.1         Delivery of Shares: The Issuer shall

deliver to each Preference Share Subscriber the Preference Shares to which such

Preference Share Subscriber is entitled (by appropriate entry in the share

register and the furnishing to such Subscriber the relevant Preference Share

Certificate).

4.1.2         Payment of issue proceeds: Subject to

Clause 4.2 (Conditions

precedent), each Preference Share Subscriber shall pay for its

respective Preference Shares by the surrender of the relevant Bond Certificate

with the endorsed form of transfer duly completed, at the registered office of

the Issuer together with such evidence as the Issuer may reasonably require to

prove the title of the relevant Preference Share Subscriber and the authority

of the individuals who have executed the form of transfer and the Issuer shall

instruct its registrars to amend the register maintained by each of them in

relation to the Bonds so that the Bonds are shown as having been transferred to

the Issuer and cancelled.

4.2       Conditions precedent

Each Preference Share

Subscriber shall only be under an obligation to subscribe and pay for the

Preference Shares if (a) all other Preference Share Subscribers duly subscribe

and pay for the Preference Shares at the Closing, (b) the Issuer has fully

performed all of its obligations hereunder and (c) all authorisations, consents

and approvals required by the Issuer for or in connection with the creation,

issue and allotment of the Preference Shares have been obtained and are in full

force and effect.

5.           PROXIES AND WAIVER

5.1       Proxies

Each of Jörg Menten,

Roman Schenk and Dietrich Nord hereby irrevocably appoints Gerald Möller as his

proxy with respect to all voting rights under all shares in the Issuer owned by

each of them respectively and agrees further to execute any proxy forms, deeds

or any other documents to give effect to such appointment under Bermudan law.

5.2         Waivers

Solely for the purpose

of giving effect to this Agreement and the subscription agreement dated on or

about the date of this Agreement between the Issuer, ESG Re Limited and HMI

Partners L.L.C. relating to the issue of up to 3,000,000 Preference Shares (the

"Subscription

Agreement"), each Preference Share Subscriber hereby

irrevocably waives:

(a)             all class rights with respect to

any preference shares which it owns;

(b)            all pre-emption rights relating to

and which may affect the issue and allotment of Preference Shares herein and

under the Subscription Agreement; and

(c)             all pre-emption rights with respect

to any Ordinary Shares which it owns.

If such class rights or

pre-emption rights would otherwise be breached by the issue of Preference

Shares, each Subscriber further agrees to execute any documents and to vote in

favour of, or sign written resolutions to pass, any resolutions required to

give effect to such waiver.

6.           NEGATIVE

PLEDGE

The Issuer shall not,

for as long as any Preference Shares are outstanding, without the prior written

consent of the Preference Share Subscribers:

(a)             create, or agree or attempt to

create, or permit to subsist any mortgage, fixed or floating charge, pledge or

other security of any kind (including any security conferring power to convert

a floating charge into a fixed charge in relation to any Asset) or any trust

over any Asset, or permit any lien (other than a lien arising by operation of

law in the ordinary course of the Issuer's business) to arise or subsist over

any Asset;

(b)            sell, assign, lease, licence or

sub-license, or grant any interest in any of its Land or Intellectual Property

Rights, or purport to do any such act, or part with possession or ownership of

them, or allow any third party access or the right to use any copy of any of

its Intellectual Property Rights.

7.           SURVIVAL

The provisions of this

Agreement shall continue in full force and effect notwithstanding the

completion of the arrangements set out herein for the issue and allotment of

the Preference Shares and regardless of any investigation by any party hereto.

8.           TIME

Any date or period

specified herein may be postponed or extended by mutual agreement among the

parties but, as regards any date or period originally fixed or so postponed or

extended, time shall be of the essence.

9.           NOTICES

9.1         Addresses for notices

All notices and other

communications hereunder shall be made in writing and in English (by letter or

fax) and shall be sent as follows:

9.1.1         If to the Issuer, to it at:

4sigma

(Bermuda) Ltd.

Cedar House

41 Cedar

Avenue

Hamilton HM

12

Bermuda

Fax:                          00-1-441-292-8666

Attention:                

Shari L. Simons

with a copy

to:

4sigma

Limited

c/o Clifford Chance Punder

Cecilienallee 6-040474 Dusseldorf

Germany

Fax:                          + 49-211-43-555-600

Attention:                

Herbert Palmberger

9.1.2         If to any Preference Share Subscriber,

to it at its address for the time being for the giving of notices to it by the

Issuer in its capacity as a shareholder of the Issuer.

9.2         Effectiveness

Every notice or other

communication sent in accordance with Clause 9.1 shall be effective upon

receipt by the addressee.

10.         LAW AND  JURISDICTION

10.1       Governing law

This Agreement is

governed by, and shall be construed in accordance with, the laws of Bermuda.

10.2       Jurisdiction

Each party hereto agrees

that the courts of Bermuda shall have jurisdiction to hear and determine any

suit, action or proceedings, and to settle any disputes, which may arise out of

or in connection with this Agreement (respectively, "Proceedings" and "Disputes")

and, for such purposes, irrevocably submits to the jurisdiction of such courts.

10.3       Appropriate forum

Each party hereto

irrevocably waives any objection which it might now or hereafter have to the

courts of Bermuda being nominated as the forum to hear and determine any

Proceedings and to settle any Disputes, and agrees not to claim that any such

court is not a convenient or appropriate forum.

10.4       Non-exclusivity

The submission to the

jurisdiction of the courts of Bermuda shall not (and shall not be construed so

as to) limit the right of any party hereto to take Proceedings in any other

court of competent jurisdiction, nor shall the taking of Proceedings in any one

or more jurisdictions preclude the taking of Proceedings in any other

jurisdiction (whether concurrently or not) if and to the extent permitted by

law.

AS WITNESS the hands of the duly authorised representatives of the

parties hereto the day and year first before written.

SCHEDULE 1

TERM SHEET

(1)       Description

of E Shares

There shall be created a

class E convertible non voting redeemable preference shares of US$0.01 each in

the Company ("E Share" or "E Shares").

(2)       Definitions

Terms used in this

Schedule, unless otherwise defined, shall have the meanings given to them in

the Bye-laws of the Company.

(3)       Dividends

(a)             The holders of the E Shares will be

entitled to receive dividends at the rate of 8% per annum on the amount paid up

or credited as paid up thereon (together with any premium paid at the date of

issue) (the "E Fixed Dividend").   Dividends on the E Shares shall be

cumulative and shall accrue and be compounded daily.

(b)            No dividend will be paid on the A

Shares, the Ordinary Shares, the B Shares, the C Shares or the D Shares unless

and until all accrued and unpaid dividends have been paid on the E Shares.

(4)       Capital

Subject at all times to

any relevant insolvency laws or regulations in Bermuda and/or other applicable

jurisdictions, in the event of a winding up of the Company or upon a reduction

or return of capital, the holders of E Shares shall be entitled in priority to

the holders of Ordinary Shares, A Shares, B Shares, C Shares and D Shares out

of the assets of the Company remaining after payments of its debts and

liabilities and of the costs, charges and expenses of such winding up or

reduction or return of capital an amount per E Share equal to the sum of (a)

the amount paid up or credited as being paid up on such E Share (including the

premium (if any)) and (b) any accrued but unpaid E Fixed Dividend.

(5)       Conversion

of E Shares to Ordinary Shares

(a)             At the option of any holder of E

Shares, each of the E Shares held by such member and which such member wishes

to convert shall be converted into and re-designated as one Ordinary Share.

(b)            All accrued and unpaid E Fixed

Dividends with respect to any E Shares being converted shall concurrently be

converted into Ordinary Shares at the rate of one Ordinary Share to every

US$1.00, provided that the Company shall not issue fractions of Ordinary Shares

but shall round any fractional amounts due to any member up or down to the

nearest whole Ordinary Share (0.5 being rounded up).

(c)             To effect such conversion, the

relevant member shall deliver to the Company a notice setting out the number of

E Shares to be converted and enclosing the share certificate(s) relating to

such E Shares.  The Company shall effect

such conversions within 7 days of receipt of such conversion notice and shall

immediately upon such conversion issue to the relevant members share

certificates for the total number of Ordinary Shares converted from the E

Shares and the E Fixed Dividends (if any).

(d)            The Ordinary Shares resulting from

the conversion shall rank for the full amount of all dividends on the Ordinary

Shares paid by reference to a record date after, or declared or resolved to be

paid after, the date of conversion corresponding to the proportion of the whole

period in respect of which dividends are declared or resolved to be paid during

which the Ordinary Shares have existed.

(6)       Voting

The holders of the E

Shares shall have no right to vote other than as a class with respect to (a)

any rights of such E Shares in accordance with the Bye-laws in which case the

provisions relating to class meetings contained in the Bye-Laws shall apply and

(b) any resolution relating to any merger, reorganisation, amalgamation or

business combination of the Company.

(7)       Redemption

(a)             The Company shall redeem all the E

Shares on the earlier of:

(i)        1 October 2006; or

(ii)       the occurrence of an Event.

(b)            At least seven days (or such lesser

period as shall be agreed between the Company and the holders of 75% of the E

Shares) prior to redemption of any shares under Paragraph (a) above, the

Company shall give notice to the relevant Shareholders specifying the total

amount of shares to be redeemed, the number of such holder's shares to be

redeemed and the applicable redemption date and place at which the certificates

of such shares are to be procured for the redemption.  Upon such redemption date each of the Shareholders to which such

notice was addressed shall be bound to deliver to the Company at such place the

certificates for such of the shares concerned as are held by it.  Upon delivery of the certificates the

Company shall pay to such holder the amount due to him in respect of such

redemption.  If any certificate so

delivered to the Company includes any shares not to be redeemed on the relevant

date, a new certificate for such shares shall be issued free of charge to the

holder delivering such certificate to the Company.

(c)             On such redemption the holders of

the E Shares redeemed shall be paid the amount paid-up or credited as paid-up

on the E Shares (including the premium (if any)) together with a sum equal to

any arrears on deficiency or accruals of dividend (whether earned or declared

or not) calculated to and including the date of such redemption.

(8)       Pre-emption

Rights

(a)             The Company shall not allot any

equity securities on any terms to a person unless it has made an offer (an

"Offer")

to each holder of E Shares, on the same or more favourable terms, of a

proportion of those securities which is equal (or as nearly as practicable

equal) to the proportion of (i) the nominal value of Ordinary Shares which

would be held by such holder if it exercised fully its option to convert all

its E Shares into Ordinary Shares to (ii) the nominal value of all outstanding

Ordinary Shares plus such number of Ordinary Shares outstanding as would be

issued if all the holders of E Shares fully exercised their options to convert

their E Shares into Ordinary Shares. For this purpose, the Directors shall

determine the number of Ordinary Shares into which the E Shares would convert

on the basis of Paragraph (5) above. 

The Company shall not allot any of those securities to a person unless

the period during which any such offer may be accepted has expired or the

Company has received notice of the acceptance or refusal of every offer so

made.

(b)            At least 10 days prior to the date

of the proposed issue of equity securities, the Company shall make an Offer in

writing to the holders of the E Shares either personally or by post to him at

the address for the time being for the giving of notices to him by the Company

in his capacity as a Shareholder of the Company.  The Offer must state a period of not less than 10 days during

which it may be accepted and the offer shall not be withdrawn before the end of

such period.

 

SCHEDULE 2

BOND HOLDINGS/PREFERENCE

SHARE COMMITMENTS

	

  Preference Share 

  	

   

  	

  Aggregate

  	

   

  	

  Accrued

  	

   

  	

  Total

  	

   

  	

  Number of

  	

   

  
	

  Subscriber

  	

   

  	

  Principal Amount

  	

   

  	

  Interest

  	

   

  	

  (USD)

  	

   

  	

  Preference

  	

   

  
	

   

  	

   

  	

  of Bonds (USD)

  	

   

  	

  (USD)

  	

   

  	

   

  	

   

  	

  Shares

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  ESG Re Limited

  	

   

  	

  854,545.45

  	

   

  	

  30,176.84

  	

   

  	

  884,722.29

  	

   

  	

  884,722

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Head Company Profit Sharing Plan

  	

   

  	

  5,340.91

  	

   

  	

  188.61

  	

   

  	

  5,529.52

  	

   

  	

  5,530

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  HMI Partners L.L.C.

  	

   

  	

  315,113.64

  	

   

  	

  11,127.71

  	

   

  	

  326,241.35

  	

   

  	

  326,241

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Jörg Menten

  	

   

  	

  7,500

  	

   

  	

  332.05

  	

   

  	

  7,832.05

  	

   

  	

  7,832

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Gerald Möller

  	

   

  	

  30,000

  	

   

  	

  1,121.10

  	

   

  	

  31,121.10

  	

   

  	

  31,121

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Dietrich Nord

  	

   

  	

  15,500

  	

   

  	

  560.55

  	

   

  	

  15,560.55

  	

   

  	

  15,561

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Roman Schenk

  	

   

  	

  15,000

  	

   

  	

  560.55

  	

   

  	

  15,560.55

  	

   

  	

  15,561

  	

   

  

 

SCHEDULE 3       

SELLING

RESTRICTIONS

1.         General

Each party hereto

acknowledges that no action has been or will be taken in any jurisdiction by

the Issuer or any Preference Share Subscriber that would permit a public

offering of the Preference Shares, or possession or distribution of any

offering material in relation thereto, in any country or jurisdiction where

action for that purpose is required. Each party hereto undertakes to each other

party hereto that it will comply with all applicable laws and regulations in

each country or jurisdiction in which it purchases, offers, sells or delivers

the Preference Shares or has in its possession or distributes such offering

material, in all cases at its own expense.

2.         United States

The Preference Shares

have not been and will not be registered under the United States Securities Act

of 1933, as amended, and may not be offered or sold within the United States

except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the United States Securities Act of 1933, as

amended. Each party hereto represents, warrants and undertakes to each other

party hereto that neither it nor any of its affiliates (including any person

acting on behalf of any party hereto or any of its affiliates) has offered or

sold, or will offer or sell, any Preference Shares in any circumstances which

would require the registration of any of the Preference Shares under the United

States Securities Act of 1933, as amended, or the registration of the Issuer,

the Preference Shares under the United States Investment Company Act of 1940,

as amended. Terms used in this paragraph have the meanings given to them in the

United States Securities Act of 1933, as amended, and the regulations

thereunder.

3.         Bermuda

The Issuer has applied

for and secured the consent of the Bermuda Monetary Authority (the "Authority")

to the issuance to the Preference Share Subscribers of the Preference Shares.

In granting such consent, the Authority accepts no responsibility for the

financial soundness of any proposal or for the correctness of any statements

made or opinions expressed with respect to the Preference Shares or the Issuer.

Any transfer of the Preference Shares will also require the consent of the

Authority.

4.         Germany

Each Preference Share

Subscriber confirms that it has complied and will comply with the Securities

Sales Prospectus Act (the "Act") of the Federal Republic of

Germany (Wertpapier-Verkaufsprospektgesetz).  Each Preference Share Subscriber further

represents, warrants and undertakes that it has not engaged in, and will not

engage in, a public offering (öffentliches Angebot) within the meaning

of the Act with respect to any Preference Share otherwise than in accordance

with all applicable legal and regulatory requirements.

SIGNATURES

	

  The Issuer

  	

   

  
	

  4SIGMA

  (BERMUDA) LTD.

  
	

  By:

  	

  s/Gerald Möller

  	

  By:

  
	

   

  	

  GERALD MÖLLER

  
	

  The Preference Share

  Subscribers

  
	

  ESG

  RE LIMITED

  
	

  By:

  	

  s/Margaret L. Webster

  
	

   

  	

  Corporate Secretary

  
	

   

  	

   

  
	

  HEAD

  COMPANY PROFIT SHARING PLAN

  
	

  By:

  	

  s/John C Head III

  
	

   

  	

  Trustee

  
	

   

  	

   

  
	

  HMI

  PARTNERS L.L.C.

  
	

  By:

  	

  s/John C Head III

  
	

   

  	

   

  
	

   

  	

   

  
	

  JÖRG

  MENTEN

  
	

  s/Jörg

  Menten

  
				

______________________________________________________________________

GERALD MÖLLER

 

______________________________________________________________________

DIETRICH NORD

 

______________________________________________________________________

ROMAN SCHENK

 

______________________________________________________________________

 

4SIGMA (BERMUDA) LTD.

8 PER CENT NON-VOTING

REDEEMABLE 

AND CONVERTIBLE PREFERENCE SHARES

 

SUBSCRIPTION AGREEMENT

 

THIS AGREEMENT is made on November 8, 2001

BETWEEN

(1)           4SIGMA

(BERMUDA) LTD. (the "Issuer"); 

and

(2)           THE PARTIES

NAMED IN SCHEDULE 2 (each, a "Subscriber").

WHEREAS

The Issuer has

authorised the creation and issue of 5,000,000 8% class E non-voting redeemable

and convertible preference shares of nominal value of USD0.01 each (the "Preference

Shares"), the terms of which are substantially set out in the

Term Sheet, of which 3,000,000 will be issued for cash.  Each of the Subscribers intends to make

further investments in the Issuer by agreeing to subscribe for the Preference

Shares in the terms set out herein.

IT IS AGREED as follows:

1.         INTERPRETATION

1.1      Definitions

In this Agreement the

following expressions have the following meanings:

“Availability Period” means

the period from and including the date hereof to 31 December 2002 (inclusive).

“Business Day” means a day on

which banks are generally open for business in Bermuda and the United States.

“Commitment” means, in

relation to each Subscriber, the number of Preference Shares opposite its name

in Schedule 2.

“Issue Notice” means a notice

in writing substantially in the form set out in Schedule 4.

“Issue Price” means USD1.00

per Preference Share.

“Minimum Number” means 100,000

Preference Shares.

“Share Certificate” means a

certificate representing one or more Preference Shares.

“Subscription Date” means the

Business Day stated as such in the relevant Issue Notice, provided that such

day may not be less than two Business Days after the date on which the Issue

Notice is received by each Subscriber.

“Term Sheet” means the term

sheet set out in Schedule 1.

“Total Commitment” means

3,000,000 Preference Shares.

1.2       Statutes

Any reference in this

Agreement to a statute, any provision thereof or to any statutory instrument,

order or regulation made thereunder shall be construed as a reference to such

statute, provision, statutory instrument, order or regulation as the same may

have been, or may from time to time be, amended or re-enacted.

2.         SUBSCRIPTION, ISSUE AND ALLOTMENT

2.1       Undertaking to subscribe

Each of the Subscribers,

severally and not jointly, undertakes to the Issuer that, subject to and in

accordance with the provisions of this Agreement, it will on each Subscription

Date during the Availability Period, subscribe and pay for such number of

Preference Shares required by the Issue Notice provided that:

(i)              the

total number of Preference Shares to be issued on that Subscription Date shall

not be less than the Minimum Number and shall be in multiples of 100,000

(representing USD100,000);

(ii)            the

number of Preference Shares to be subscribed by each Subscriber shall be in the

same proportion to the total number of Preference Shares to be issued on that

Subscription Date as such Subscriber’s Commitment be as to the Total

Commitment;

(iii)           the

total number of Preference Shares subscribed by each Subscriber shall not

exceed its respective Commitment; and

(iv)           the

issue of the relevant Issue Notice by the Issuer is duly authorised by the

unanimous approval of the board of directors of the Issuer.

2.2       Undertaking to issue and allot

The Issuer undertakes to

each Subscriber that, subject to and in accordance with the provisions of this

Agreement, such number of Preference Shares as set out in the relevant Issue

Notice will be issued and allotted to the Subscriber on each Subscription Date.

3.         SELLING

RESTRICTIONS

Each party hereto

acknowledges, represents, warrants and undertakes as set out in Schedule 3.

4.         CLOSING

4.1       Closing

The closing of each

issue shall take place on the relevant Subscription Date, whereupon:

4.1.1          Delivery of

Preference Shares: The Issuer shall deliver to the Subscribers the

relevant Preference Shares (by appropriate entry in the share register and

furnishing to each Subscriber the Share Certificate in respect of the relevant

Preference Shares).

4.1.2          Payment of

issue proceeds: Subject to Clause 4.2, each Subscriber shall pay for

the relevant Preference Shares by credit transfer in United States dollars to

such account as the Issuer has designated to the Subscribers in the relevant

Issue Notice or otherwise as agreed between the Issuer and the Subscribers.

4.2       Conditions precedent

Each Subscriber shall only be under an obligation to

subscribe and pay for the Preference Shares on a Subscription Date if (a) the

Issuer has fully performed all of its obligations hereunder and (b) all

authorisations, consents and approvals required by the Issuer for or in

connection with the creation, issue and allotment of the Preference Shares have

been obtained and are in full force and effect, as of the relevant Subscription

Date.

5.         DISCHARGE

The Subscribers shall be

discharged from their obligation to subscribe for the Preference Shares

hereunder upon the occurrence of the following events:

(i)        any action,

step or legal proceeding, threatened or otherwise, is taken by the Issuer or

any other person for the winding-up, dissolution, administration or

re-organisation (whether by way of voluntary arrangement, scheme of arrangement

or otherwise) or for the appointment, threatened or otherwise, of a liquidator,

receiver, administrator, administrative receiver, conservator, custodian,

trustee or similar officer of it or any of its subsidiaries or of any or all of

its revenues and assets or that of any subsidiary;

(ii)       the

admission of any of the Issuer’s ordinary shares to listing and trading on a

recognised stock exchange; or

(iii)      the sale of

all or substantially all of the Issuer’s shares or assets.

6.         SURVIVAL

The provisions of this

Agreement shall continue in full force and effect notwithstanding the

completion of the arrangements set out herein for the issue and allotment of

the Preference Shares and regardless of any investigation by any party hereto.

7.         TIME

Any date or period

specified herein may be postponed or extended by mutual agreement among the

parties but, as regards any date or period originally fixed or so postponed or

extended, time shall be of the essence.

 

8.         NOTICES

8.1       Addresses for notices

All notices and other

communications hereunder shall be made in writing and in English (by letter or

fax) and shall be sent as follows:

8.1.1          If to

the Issuer, to it at:

4sigma

(Bermuda) Ltd.

Cedar House

41 Cedar

Avenue

Hamilton HM

12

Bermuda

Fax:                          00-1-441-292-8666

Attention:                

Shari L. Simons

with a copy

to:

4sigma

Limited

c/o Clifford Chance Punder

Cecilienallee 6-040474 Dusseldorf

Germany

 

Fax:                          + 49-211-43-555-600

Attention:                

Herbert Palmberger

8.1.2          If to

the Subscriber, to it at its address for the time being for the giving of

notices to it by the Issuer in its capacity as a shareholder of the Issuer.

8.2       Effectiveness

Every notice or other

communication sent in accordance with Clause 8.1 shall be effective upon

receipt by the addressee.

9.         LAW

AND JURISDICTION

9.1       Governing law

This Agreement is

governed by, and shall be construed in accordance with, the laws of Bermuda.

9.2       Jurisdiction

Each party hereto agrees

that the courts of Bermuda shall have jurisdiction to hear and determine any

suit, action or proceedings, and to settle any disputes, which may arise out of

or in connection with this Agreement (respectively, “Proceedings” and “Disputes”)

and, for such purposes, irrevocably submits to the jurisdiction of such courts.

9.3       Appropriate forum

Each party hereto

irrevocably waives any objection which it might now or hereafter have to the

courts of Bermuda being nominated as the forum to hear and determine any

Proceedings and to settle any Disputes, and agrees not to claim that any such

court is not a convenient or appropriate forum.

9.4       Non-exclusivity

The submission to the

jurisdiction of the courts of Bermuda shall not (and shall not be construed so

as to) limit the right of any party hereto to take Proceedings in any other

court of competent jurisdiction, nor shall the taking of Proceedings in any one

or more jurisdictions preclude the taking of Proceedings in any other

jurisdiction (whether concurrently or not) if and to the extent permitted by

law.

 

AS WITNESS the hands of the duly authorised representatives of the

parties hereto the day and year first before written.

 

 

SCHEDULE

1

Term Sheet

(1)       Description

of E Shares

There shall be created a

class E convertible non voting redeemable preference shares of US$0.01 each in

the Company ("E Share" or "E Shares").

(2)       Definitions

Terms used in this

Schedule, unless otherwise defined, shall have the meanings given to them in

the Bye-laws of the Company.

(3)       Dividends

(a)             The

holders of the E Shares will be entitled to receive dividends at the rate of 8%

per annum on the amount paid up or credited as paid up thereon (together with

any premium paid at the date of issue) (the “E Fixed Dividend”).   Dividends on the E Shares shall be

cumulative and shall accrue and be compounded daily.

(b)             No

dividend will be paid on the A Shares, the Ordinary Shares, the B Shares, the C

Shares or the D Shares unless and until all accrued and unpaid dividends have

been paid on the E Shares.

(4)       Capital

Subject at all times to

any relevant insolvency laws or regulations in Bermuda and/or other applicable

jurisdictions, in the event of a winding up of the Company or upon a reduction

or return of capital, the holders of E Shares shall be entitled in priority to

the holders of Ordinary Shares, A Shares, B Shares, C Shares and D Shares out

of the assets of the Company remaining after payments of its debts and liabilities

and of the costs, charges and expenses of such winding up or reduction or

return of capital an amount per E Share equal to the sum of (a) the amount paid

up or credited as being paid up on such E Share (including the premium (if

any)) and (b) any accrued but unpaid E Fixed Dividend.

(5)       Conversion

of E Shares to Ordinary Shares

(a)             At the option of any holder of E

Shares, each of the E Shares held by such member and which such member wishes

to convert shall be converted into and re-designated as one Ordinary Share.

(b)            All accrued and unpaid E Fixed

Dividends with respect to any E Shares being converted shall concurrently be

converted into Ordinary Shares at the rate of one Ordinary Share to every

US$1.00, provided that the Company shall not issue fractions of Ordinary Shares

but shall round any fractional amounts due to any member up or down to the

nearest whole Ordinary Share (0.5 being rounded up).

(c)             To effect such conversion, the

relevant member shall deliver to the Company a notice setting out the number of

E Shares to be converted and enclosing the share certificate(s) relating to

such E Shares.  The Company shall effect

such conversions within 7 days of receipt of such conversion notice and shall

immediately upon such conversion issue to the relevant members share

certificates for the total number of Ordinary Shares converted from the E

Shares and the E Fixed Dividends (if any).

(d)            The Ordinary Shares resulting from

the conversion shall rank for the full amount of all dividends on the Ordinary Shares

paid by reference to a record date after, or declared or resolved to be paid

after, the date of conversion corresponding to the proportion of the whole

period in respect of which dividends are declared or resolved to be paid during

which the Ordinary Shares have existed.

(6)       Voting

The holders of the E

Shares shall have no right to vote other than as a class with respect to (a)

any rights of such E Shares in accordance with the Bye-laws in which case the

provisions relating to class meetings contained in the Bye-Laws shall apply and

(b) any resolution relating to any merger, reorganisation, amalgamation or

business combination of the Company.

(7)       Redemption

(a)           The

Company shall redeem all the E Shares on the earlier of:

(i)        1 October 2006; or

(ii)       the occurrence of an Event.

(b)             At

least seven days (or such lesser period as shall be agreed between the Company

and the holders of 75% of the E Shares) prior to redemption of any shares under

Paragraph (a) above, the Company shall give notice to the relevant Shareholders

specifying the total amount of shares to be redeemed, the number of such

holder's shares to be redeemed and the applicable redemption date and place at

which the certificates of such shares are to be procured for the redemption.  Upon such redemption date each of the

Shareholders to which such notice was addressed shall be bound to deliver to

the Company at such place the certificates for such of the shares concerned as

are held by it.  Upon delivery of the

certificates the Company shall pay to such holder the amount due to him in

respect of such redemption.  If any

certificate so delivered to the Company includes any shares not to be redeemed

on the relevant date, a new certificate for such shares shall be issued free of

charge to the holder delivering such certificate to the Company.

(c)                   

On such

redemption the holders of the E Shares redeemed shall be paid the amount

paid-up or credited as paid-up on the E Shares (including the premium (if any))

together with a sum equal to any arrears on deficiency or accruals of dividend

(whether earned or declared or not) calculated to and including the date of

such redemption.

 

(8)       Pre-emption

Rights

(a)           The

Company shall not allot any equity securities on any terms to a person unless

it has made an offer (an “Offer”) to each holder of E Shares, on the

same or more favourable terms, of a proportion of those securities which is

equal (or as nearly as practicable equal) to the proportion of (i) the nominal

value of Ordinary Shares which would be held by such holder if it exercised

fully its option to convert all its E Shares into Ordinary Shares to (ii) the

nominal value of all outstanding Ordinary Shares plus such number of Ordinary

Shares outstanding as would be issued if all the holders of E Shares fully exercised

their options to convert their E Shares into Ordinary Shares. For this purpose,

the Directors shall determine the number of Ordinary Shares into which the E

Shares would convert on the basis set out in Paragraph (5) above.  The Company shall not allot any of those

securities to a person unless the period during which any such offer may be

accepted has expired or the Company has received notice of the acceptance or

refusal of every offer so made.

(b)             At

least 10 days prior to the date of the proposed issue of equity securities, the

Company shall make an Offer in writing to the holders of the E Shares either

personally or by post to him at the address for the time being for the giving

of notices to him by the Company in his capacity as a Shareholder of the

Company.  The Offer must state a period

of not less than 10 days during which it may be accepted and the offer shall

not be withdrawn before the end of such period.

 

SCHEDULE

2

Commitments

	

  Subscriber

  	

   

  	

  Number

  of 

  	

   

  	

  Commitments 

  	

   

  
	

   

  	

   

  	

  Preference

  Shares

  	

   

  	

  (USD)

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  ESG Re Limited

  	

   

  	

  1,800,000

  	

   

  	

  1,800,000

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  HMI Partners L.L.C.

  	

   

  	

  1,200,000

  	

   

  	

  1,200,000

  	

   

  

 

SCHEDULE

3 

SELLING RESTRICTIONS

1.         General

Each party hereto

acknowledges that no action has been or will be taken in any jurisdiction by

the Issuer or each Subscriber that would permit a public offering of the

Preference Shares, or possession or distribution of any offering material in

relation thereto, in any country or jurisdiction where action for that purpose

is required. Each party hereto undertakes to each other party hereto that it

will comply with all applicable laws and regulations in each country or

jurisdiction in which it purchases, offers, sells or delivers the Preference

Shares or has in its possession or distributes such offering material, in all

cases at its own expense.

2.         United States

The Preference Shares

have not been and will not be registered under the United States Securities Act

of 1933, as amended, and may not be offered or sold within the United States

except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the United States Securities Act of 1933, as

amended. Each party hereto represents, warrants and undertakes to each other

party hereto that neither it nor any of its affiliates (including any person

acting on behalf of any party hereto or any of its affiliates) has offered or

sold, or will offer or sell, any Preference Shares in any circumstances which

would require the registration of any of the Preference Shares under the United

States Securities Act of 1933, as amended, or the registration of the Issuer,

the Preference Shares under the United States Investment Company Act of 1940,

as amended. Terms used in this paragraph have the meanings given to them in the

United States Securities Act of 1933, as amended, and the regulations

thereunder.

3.         Bermuda

The Issuer has applied

for and secured the consent of the Bermuda Monetary Authority (the "Authority")

to the issuance to each Subscriber of the Preference Shares. In granting such

consent, the Authority accepts no responsibility for the financial soundness of

any proposal or for the correctness of any statements made or opinions

expressed with respect to the Preference Shares or the Issuer. Any transfer of

the Preference Shares will also require the consent of the Authority.

4.         Germany

Each

Subscriber confirms that it has complied and will comply with the Securities

Sales Prospectus Act (the “Act”) of the Federal Republic of Germany (Wertpapier-Verkaufsprospektgesetz).

Each Subscriber further represents, warrants and undertakes that it has not

engaged in, and will not engage in, a public offering (öffentliches Angebot)

within the meaning of the Act with respect to any Preference Share otherwise

than in accordance with all applicable legal and regulatory requirements.

 

SCHEDULE 4

Issue

Notice

[on letterhead of the Issuer]

To:      ESG Re Ltd

HMI Partners L.L.C.

Dated:

Dear Sirs,

1.         We

refer to the agreement (the "Subscription Agreement") dated [insert date

of Subscription Agreement] 2001 between us, ESG Re Ltd and HMI

Partners L.L.C. relating to the issue of up to 3,000,000 Preference Shares.

2.         Terms

used here have the meaning given to them in the Subscription Agreement.

3.         We

hereby give you notice that, pursuant to the Subscription Agreement on [insert

Subscription Date], we wish to issue [•] Preference Shares, of which

you will subscribe for [•].

4.             We

confirm that our board of directors have unanimously approved the issuing of

this Issue Notice.

Yours faithfully

 

 

.......................................

Authorised Signatory

for and on behalf of 

4sigma (Bermuda) Ltd.

SIGNATURES

The Issuer

	

  4SIGMA

  (BERMUDA) LTD.

  	

   

  
	

  By:

  	

  s/Gerald Möller

  	

  By:

  
	

   

  	

   

  	

   

  
	

  The Subscribers

  	

   

  
	

  ESG

  RE LIMITED

  	

   

  
	

  By:

  	

  s/Margaret L. Webster

  	

   

  
	

   

  	

  Corporate Secretary

  	

   

  
	

   

  	

   

  	

   

  
	

  HMI

  PARTNERS L.L.C.

  	

   

  
	

  By:

  	

  s/John C Head IIIPrepared by MERRILL CORPORATION

Exhibit 4.6

 

	

  [LOGO UNION

  BANK OF CALIFORNIA]

  	

  ENERGY CAPITAL SERVICES

  

 

 

 

 

 

September 21, 2001

 

 

 

Edge Petroleum Corporation

Edge Petroleum Exploration

Company

Edge Petroleum Operating

Company, Inc.

2100 Texaco Heritage Plaza

Houston, Texas 77002

Attention: Mr. Mike Long

 

Gentlemen:

 

Reference is hereby made to

that certain Second Amended and Restated Credit Agreement in the amount of

$25.0 million by and among Edge Petroleum Corporation , Edge Petroleum

Exploration Company and Edge Petroleum Operating Company, Inc. as Borrowers and

Union Bank of California, N.A. as Agent and Lender dated as of October 6, 2000

(the “Credit Agreement”). All capitalized terms herein shall have the meaning

assigned to such terms in the Credit Agreement unless otherwise defined herein.

 

The purpose of this letter is

to inform you that the Agent and sole Lender has redetermined the Borrowing

Base and the amount of the monthly Borrowing Base reduction pursuant to Section

2.10 of the Credit Agreement. Effective immediately, the Borrowing Base shall

remain at the amount of $14.0 million and the monthly Borrowing Base reduction

shall be zero. Both such figures shall be effective until the next

redetermination thereof pursuant to Section 2.10 of the Credit Agreement.

 

All other terms and conditions

contained in the Credit Agreement remain unchanged and in full force and

effect.

 

If you are in agreement with

the forgoing please evidence your agreement by executing this letter in the

space provided and returning one fully-executed counterpart to the undersigned.

 

	

  Sincerely,

  
	

   

  
	

  /s/ Damien

  G. Meiburger

  
	

  Damien G.

  Meiburger

  
	

  Senior Vice

  President

  

 

ACCEPTED and AGREED

This 24 day of September, 2001

 

 

	

   

  
	

   

  
	

  /s/ Michael

  G. Long

  

Authorized Officer on behalf of

Edge Petroleum Corporation,

Edge Petroleum Exploration

Company and Edge Petroleum Operating Company, Inc.

 

 

 

 

 

 

4200 LINCOLN PLAZA, 500 NORTH AKARD, DALLAS,

TEXAS 75201

214 922 4200                Fax 214 922 4209

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