Attached files
file | filename |
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EX-3.4 - EX-3.4 - Spectrum Brands Holdings, Inc. | y92285exv3w4.htm |
EX-31.2 - EX-31.2 - Spectrum Brands Holdings, Inc. | y92285exv31w2.htm |
EX-31.1 - EX-31.1 - Spectrum Brands Holdings, Inc. | y92285exv31w1.htm |
EX-10.5 - EX-10.5 - Spectrum Brands Holdings, Inc. | y92285exv10w5.htm |
EX-32.1 - EX-32.1 - Spectrum Brands Holdings, Inc. | y92285exv32w1.htm |
EX-10.3 - EX-10.3 - Spectrum Brands Holdings, Inc. | y92285exv10w3.htm |
EX-32.2 - EX-32.2 - Spectrum Brands Holdings, Inc. | y92285exv32w2.htm |
EX-10.2 - EX-10.2 - Spectrum Brands Holdings, Inc. | y92285exv10w2.htm |
10-Q - FORM 10-Q - Spectrum Brands Holdings, Inc. | y92285e10vq.htm |
Exhibit 3.5
Execution Version
CERTIFICATE OF DESIGNATION
OF SERIES A-2 PARTICIPATING CONVERTIBLE PREFERRED STOCK
OF
HARBINGER GROUP INC.
OF SERIES A-2 PARTICIPATING CONVERTIBLE PREFERRED STOCK
OF
HARBINGER GROUP INC.
The undersigned, Francis T. McCarron, Executive Vice President of Harbinger Group Inc.
(including any successor in interest, the Company), a corporation organized and existing
under the General Corporation Law of the State of Delaware (the DGCL), does hereby
certify, in accordance with Sections 103 and 151 of the DGCL, that the following resolutions were
duly adopted by its Board of Directors (the Board) on July 28, 2011:
WHEREAS, the Companys Certificate of Incorporation (the Certificate of
Incorporation), authorizes 10,000,000 shares of preferred stock, par value $0.01 per share
(the Preferred Stock), issuable from time to time in one or more series;
WHEREAS, the Certificate of Incorporation authorizes the Board to provide by resolution for
the issuance of the shares of Preferred Stock in one or more series, the number of shares in each
series, the voting powers, if any, and such designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and restrictions thereof;
WHEREAS, the Board desires, pursuant to its authority as aforesaid, to designate a new series
of Preferred Stock, set the number of shares constituting such series, and the voting powers,
designations, preferences and relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof;
WHEREAS, on May 13, 2011, the Company issued 280,000 shares of Series A Participating
Convertible Preferred Stock of the Company, par value $0.01 per share (the Existing Series A
Preferred Stock), to certain Persons (such Persons, the Existing Holders), which
Existing Series A Preferred Stock was designated by the Board pursuant to the Certificate of
Designation of Series A Participating Convertible Preferred Stock of Harbinger Group Inc., dated as
of May 12, 2011 (the Existing Series A Certificate of Designation); and
WHEREAS, it is the Companys intention that the Existing Series A Preferred Stock and the
Series A-2 Preferred Stock shall have equivalent powers, preferences, rights and privileges, other
than with respect to (x) terms and provisions specifically applicable to, or for the benefit of,
the Fortress Investor and/or its Affiliates, and (y) the Conversion Price and the conversion price
of the Existing Series A Preferred Stock.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby designates a new series of
Preferred Stock, consisting of the number of shares set forth herein, with the voting powers,
designations, preferences and relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions relating to such series as follows:
SECTION 1. Number; Designation; Rank.
(a) This series of convertible participating preferred stock is designated as the Series A-2
Participating Convertible Preferred Stock (the Series A-2 Preferred Stock). The maximum
number of shares constituting the Series A-2 Preferred Stock is 120,000 shares, par value $0.01 per
share.
(b) The Series A-2 Preferred Stock ranks, with respect to the payment of dividends, redemption
payments, rights (including as to the distribution of assets upon liquidation, dissolution or
winding-up of the Company) or otherwise:
(i) senior in preference and priority to the Common Stock and each other class or series of
Capital Stock of the Company, except for (x) any class or series of Capital Stock hereafter issued
in compliance with the terms hereof and the terms of which expressly provide that it will rank
senior to or on parity, without preference or priority, with the Series A-2 Preferred Stock with
respect to the payment of dividends, redemption payments, rights (including as to the distribution
of assets) upon liquidation, dissolution or winding-up of the Company, or otherwise (collectively
with the Common Stock, the Junior Securities) or (y) the Existing Series A Preferred
Stock;
(ii) on parity, without preference and priority, with (x) the Existing Series A Preferred
Stock, and (y) each other class or series of Capital Stock of the Company hereafter issued in
compliance with the terms hereof and the terms of which expressly provide that it will rank on
parity, without preference or priority, with the Series A-2 Preferred Stock with respect to the
payment of dividends, redemption payments, rights (including as to the distribution of assets) upon
liquidation, dissolution or winding-up of the Company, or otherwise (collectively, the Parity
Securities); and
(iii) junior in preference and priority to each other class or series of Preferred Stock or
any other Capital Stock of the Company hereafter issued in compliance with the terms hereof and the
terms of which expressly provide that it will rank senior in preference or priority to the Series
A-2 Preferred Stock with respect to the payment of dividends, redemption payments, rights
(including as to the distribution of assets) upon liquidation, dissolution or winding-up of the
Company or otherwise (collectively, Senior Securities).
SECTION 2. Dividends.
(a) Cash Dividends. Holders shall be entitled to receive, out of funds legally
available for the payment of dividends to the Companys stockholders under Delaware law, on each
Preferred Share, cumulative cash dividends at a per annum rate of 8.00% on the amount of the
Purchase Price (Cash Dividends). Such Cash Dividends shall begin to accrue and be
cumulative from the Issue Date. Cash Dividends shall be payable quarterly with respect to each
Dividend Period in arrears on the first Dividend Payment Date after such Dividend Period. If and
to the extent that the Company does not for any reason (including because there are insufficient
funds legally available for the payment of dividends) pay the entire Cash Dividend payable for a
particular
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Dividend Period in cash on the applicable Dividend Payment Date for such period (whether or
not there are funds of the Company legally available for the payment of dividends to the Companys
stockholders under Delaware law or such dividends are declared by the Board), during the period in
which such Cash Dividend remains unpaid, an additional accreting dividend (the Cash Accretion
Dividends) shall accrue and be payable at an annual rate equal to the Dividend Rate on the
amount of the unpaid Cash Dividend through the daily addition of such Cash Accretion Dividends to
the Purchase Price (whether or not such Cash Accretion Dividends are declared by the Board).
(b) Accreting Dividends. In addition to the Cash Dividend, for each Dividend Period
beginning on or after the Issue Date, the Holders shall be entitled to receive on each Preferred
Share additional dividends at the per annum rates set forth in this SECTION 2(b) (the Basic
Accreting Dividends and, together with the Cash Accretion Dividends, the Participating
Accretion Dividends and the In-Kind Participating Dividends, the Accreting Dividends; the
Accreting Dividends, together with the Cash Dividend and the Participating Dividends, the
Dividends). Basic Accreting Dividends shall accrue and be cumulative from the Issue
Date. Basic Accreting Dividends shall be payable quarterly with respect to each Dividend Period in
arrears on the first Dividend Payment Date after such Dividend Period by the addition of such
amount to the Purchase Price, whether or not declared by the Board. Such Basic Accreting Dividend
for any Dividend Period shall be at a per annum rate (the Accreting Dividend Rate)
determined as follows:
(i) If Net Asset Value as of the last day of any Dividend Period is less than 120% of the May
13 NAV, a per annum rate of 4.00% of the Purchase Price for the next succeeding Dividend Period;
(ii) If Net Asset Value as of the last day of any Dividend Period is equal to or greater than
120% and less than or equal to 140% of the May 13 NAV, a per annum rate of 2.00% of the Purchase
Price for the next succeeding Dividend Period; and
(iii) If Net Asset Value as of the last day of any Dividend Period is greater than 140% of the
May 13 NAV, no additional per annum rate for the next succeeding Dividend Period;
provided, however, that the Basic Accreting Dividend with respect to the period from the
Original Issue Date to September 30, 2011 shall be payable at a per annum rate of 4.00% of the
Purchase Price.
(c) Participating Cash Dividends. If the Company declares, makes or pays any cash
dividend or distribution in respect of all or substantially all holders of Common Stock (a
Common Dividend), each Holder shall receive a dividend (in addition to the Dividends
provided for by SECTION 2(a) and SECTION 2(b)) in respect of each Preferred Share held thereby, in
an amount equal to the product of (x) the amount of such Common Dividend paid per share of Common
Stock, multiplied by (y) the number of shares of Common Stock issuable if such Preferred Share had
been converted into shares of Common Stock immediately prior to the record date for such Common
Dividend (such amount per share of Preferred Stock, the Participating Cash Dividend). Participating Cash Dividends shall be
payable to Holders on the record date for such Common
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Dividend at the same time and in the same
manner as the Common Dividend triggering such Participating Cash Dividend is paid. If and to the
extent that the Company does not for any reason pay the entire Participating Cash Dividend when the
Common Dividend is paid to the holders of Common Stock, during the period in which such
Participating Cash Dividend remains unpaid, an additional accreting dividend (the
Participating Accretion Dividends) shall accrue and be payable at an annual rate equal to
the Dividend Rate on the amount of the unpaid Participating Cash Dividend through the daily
addition of such Participating Accretion Dividends to the Purchase Price (whether or not such
Participating Accretion Dividends are declared by the Board).
(d) In-Kind Participating Dividends. If the Company distributes shares of its Capital
Stock, evidences of its indebtedness or other assets, securities or property, to all or
substantially all holders of Common Stock (an In-Kind Common Dividend), including without
limitation any spin-off of one or more subsidiaries or businesses of the Company but excluding: (I)
dividends or distributions referred to in SECTIONS 5(g)(i)(A) and 5(g)(i)(B); and (II) cash
dividends with respect to which Holders are entitled to Participating Cash Dividends, then the
Holders shall receive in such distribution or other transaction, at the same time and in the same
manner as holders of Common Stock, the same type and amount of consideration (the In-Kind
Participating Dividend and, collectively with the Participating Cash Dividend, the
Participating Dividends) as Holders would have received if, immediately prior to the
record date of such In-Kind Common Dividend, they had held the number of shares of Common Stock
issuable upon conversion of the Preferred Shares. To the extent that the Company establishes or
adopts a stockholder rights plan or agreement (i.e., a poison pill), the Company shall ensure
that the Holders will receive, as an In-Kind Participating Dividend, rights under the stockholder
rights plan or agreement with respect to any shares of Common Stock that at the time of such
distribution would be issuable upon conversion of the Preferred Shares. If and to the extent that
the Company does not for any reason pay the entire In-Kind Participating Dividend when the Common
Dividend is paid to the holders of Common Stock, during the period in which such In-Kind
Participating Dividend remains unpaid, an additional accreting dividend (the In-Kind Accretion
Dividends) shall accrue and be payable at an annual rate equal to the Dividend Rate on the
amount of the unpaid In-Kind Participating Dividend through the daily addition of such In-Kind
Accretion Dividends to the Purchase Price (whether or not such In-Kind Accretion Dividends are
declared by the Board).
(e) Dividends (other than Participating Dividends) payable on the Series A-2 Preferred Stock
in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months. The amount of Dividends (other than Participating Dividends) payable on the
Series A-2 Preferred Stock on any date prior to the end of a Dividend Period, and for the initial
Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day
months, and actual days elapsed over a 30-day month.
(f) Cash Dividends and Accreting Dividends that are payable on Series A-2 Preferred Stock on
any Dividend Payment Date will be payable to Holders of record on the applicable record date, which
shall be the fifteenth (15th) calendar day before the applicable Dividend Payment Date,
or, with respect to any Cash Dividends not paid on the scheduled Dividend Payment Date therefor,
such record date fixed by the Board (or a duly authorized committee of the
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Board) that is not more than sixty (60) nor less than ten (10) days prior to such date on
which such accrued and unpaid Cash Dividends are to be paid (each such record date, a Dividend
Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date
whether or not such day is a Business Day.
(g) The quarterly dividend periods with respect to Cash Dividends and Accreting Dividends
shall commence on and include January 1, April 1, July 1 and October 1 (other than the initial
Dividend Period, which shall commence on and include the Issue Date) and shall end on and include
the last calendar day of the calendar quarter ending March 31, June 30, September 30 and December
31 preceding the next Dividend Payment Date (a Dividend Period).
SECTION 3. Liquidation Preference.
(a) Upon any Liquidation Event, each Preferred Share entitles the Holder thereof to receive
and to be paid out of the assets of the Company legally available for distribution to the Companys
stockholders, before any distribution or payment may be made to a holder of any Junior Securities,
an amount in cash per share equal to the greater of: (i) 150% of the sum of (A) the Purchase Price,
plus (B) all accrued and unpaid Dividends (including, without limitation, accrued and unpaid Cash
Dividends and accrued and unpaid Accreting Dividends for the then current Dividend Period), if any,
on such share to the extent not included in the Purchase Price (such sum, after the 150% multiplier
and as adjusted, the Regular Liquidation Preference), and (ii) an amount equal to the
amount the Holder of such share would have received upon such Liquidation Event had such Holder
converted such Preferred Share into Common Stock (or Reference Property, to the extent applicable)
immediately prior thereto (the Participating Liquidation Preference, and such greater
amount, the Liquidation Preference).
(b) If upon any such Liquidation Event, the assets of the Company legally available for
distribution to the Companys stockholders are insufficient to pay the Holders the full Liquidation
Preference and the holders of all Parity Securities the full liquidation preferences to which they
are entitled, the Holders and the holders of such Parity Securities will share ratably in any such
distribution of the assets of the Company in proportion to the full respective amounts to which
they are entitled.
(c) After payment to the Holders of the full Liquidation Preference to which they are
entitled, the Holders as such will have no right or claim to any of the assets of the Company.
(d) The value of any property not consisting of cash that is distributed by the Company to the
Holders will equal the Fair Market Value thereof on the date of distribution.
(e) No holder of Junior Securities shall receive any cash upon a Liquidation Event unless the
entire Liquidation Preference in respect of the Preferred Shares has been paid in cash. To the
extent that there is insufficient cash available to pay the entire Liquidation Preference in
respect of the Preferred Shares and any liquidation preference in respect of Parity Securities in
full in cash upon a Liquidation Event, the Holders and the holders of such Parity Securities will share
ratably in
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any cash available for distribution in proportion to the full respective amounts to
which they are entitled upon such Liquidation Event.
SECTION 4. Voting Rights.
(a) The Holders are entitled to vote on all matters on which the holders of shares of Common
Stock are entitled to vote and, except as otherwise provided herein or by law, the Holders shall
vote together with the holders of shares of Common Stock as a single class. As of any record date
or other determination date, each Holder shall be entitled to the number of votes such Holder would
have had if all Preferred Shares held by such Holder on such date had been converted into shares of
Common Stock immediately prior thereto, except that:
(i) at no time shall a Holder have voting rights pursuant to SECTION 4(a) or otherwise in
respect of more than 9.9% of the Total Current Voting Power unless such Holder has received any
approvals from the Insurance Regulatory Authorities required to be obtained by such Holder in order
for such Holder to possess voting rights in respect of the Company in excess of 9.9% of the Total
Current Voting Power; and
(ii) in the event that any Holder would be required to file any Notification and Report Form
pursuant to the HSR Act as a result of the receipt of any Accreting Dividends by such Holder, the
voting rights of such Holder pursuant to this Section 4(a) shall not be increased as a result of
such Holders receipt of such Accreting Dividends unless and until such Holder and the Company
shall have made their respective filings under the HSR Act and the applicable waiting period shall
have expired or been terminated in connection with such filings. The Company shall make all
required filings and reasonably cooperate with and assist such Holder in connection with the making
of such filing and obtaining the expiration or termination of such waiting period and shall be
reimbursed by such Holder for any reasonable and documented out-of-pocket costs incurred by the
Company in connection with such filings and cooperation.
(b) In addition to the voting rights provided for by SECTION 4(a) and any voting rights to
which the Holders may be entitled to under law:
(i) for so long as any Preferred Shares, shares of Existing Series A Preferred Stock, or
shares of Additional Permitted Preferred Stock are outstanding, the Company may not, directly or
indirectly, take any of the following actions (including by means of merger, consolidation,
reorganization, recapitalization or otherwise) without the prior written consent of the Majority
Holders:
(A) amend the Certificate of Incorporation (excluding for this purpose this Certificate of
Designation) or the By-Laws of the Company (including by means of merger, consolidation,
reorganization, recapitalization or otherwise), in each case, in a manner adverse to the Holders;
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(B) create or issue any (x) Senior Securities or (y) except as permitted under SECTION 8(b)
and otherwise by this Certificate of Designation, Parity Securities or Additional Permitted
Preferred Stock;
(C) incur, or permit any Subsidiary Guarantor to incur, any Debt (excluding any Debt incurred
to refinance the Senior Notes) not otherwise permitted by the terms of the Indenture;
(D) make, or permit any Subsidiary Guarantor to make, any Asset Sales not otherwise permitted
by the terms of the Indenture;
(E) make, or to the extent within the Companys control, permit any of its Subsidiaries to
make, any Restricted Payments not otherwise permitted by the terms of the Indenture;
(F) create a new Subsidiary of the Company not in existence on the Original Issue Date for the
primary purpose of issuing Equity Securities of such Subsidiary or incurring Debt the proceeds of
which will, directly or indirectly, be used to make dividends or other distributions or payments of
cash to holders of the Companys Capital Stock other than the Holders; provided, that for the
avoidance of doubt, the foregoing shall not prohibit dividends or other distributions to the
Company; or
(G) agree to do, directly or indirectly, any of the foregoing actions set forth in clauses (A)
through (F), unless such agreement expressly provides that the Companys obligation to undertake
any of the foregoing is subject to the prior approval of the Majority Holders; and
(ii) for so long as any Preferred Shares, shares of Existing Series A Preferred Stock, or
shares of Additional Permitted Preferred Stock are outstanding, neither the Company nor, to the
extent within the Companys control, any of its Subsidiaries may, directly or indirectly, take any
of the following actions (including by means of merger, consolidation, reorganization,
recapitalization or otherwise) without the prior written consent of each of the Holders:
(A) make any repurchase, redemption or other acquisition for value of Preferred Shares, shares
of Existing Series A Preferred Stock or shares of Additional Permitted Preferred Stock, unless such
redemption is made on the same terms and on a pro rata basis among all Holders (other than Holders
that are granted an equal opportunity to participate in such transaction but elect not to do so);
or
(B) agree to do, directly or indirectly, any of the foregoing actions set forth in clause (A),
unless such agreement expressly provides that the Companys obligation to undertake any of the
foregoing is subject to the prior approval of each of the Holders; and
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(iii) for so long as any Preferred Shares are outstanding, the Company may not, directly or
indirectly, take any of the following actions (including by means of merger,
consolidation, reorganization, recapitalization or otherwise) without the prior written
consent of the Series A-2 Majority Holders:
(A) amend, repeal, alter or add, delete or otherwise change the powers, preferences, rights or
privileges of the Series A-2 Preferred Stock;
(B) effect any stock split or combination, reclassification or similar event with respect to
the Series A-2 Preferred Stock; or
(C) agree to do, directly or indirectly, any of the foregoing actions set forth in clauses (A)
and (B), unless such agreement expressly provides that the Companys obligation to undertake any of
the foregoing is subject to the prior approval of the Series A-2 Majority Holders; and
(iv) for so long as any Preferred Shares are outstanding, neither the Company nor, to the
extent within the Companys control, any of its Subsidiaries may, directly or indirectly, take any
of the following actions (including by means of merger, consolidation, reorganization,
recapitalization or otherwise) without the prior written consent of each of the holders of
Preferred Shares:
(A) amend, repeal, alter or add, delete or otherwise change the powers, preferences, rights or
privileges of the Series A-2 Preferred Stock set forth in the Specified Sections (including by
means of merger, consolidation, reorganization, recapitalization or otherwise) in a manner adverse
to the holders of Preferred Shares (whether by means of an amendment or other change to the
Specified Sections or by means of an amendment or other change to any definitions used in the
Specified Sections or any other terms of this Certificate of Designation affecting the Specified
Sections); or
(B) agree to do, directly or indirectly, any of the foregoing actions set forth in clause (A),
unless such agreement expressly provides that the Companys obligation to undertake any of the
foregoing is subject to the prior approval of each of the holders of Preferred Shares.
(c) The agreements of the Company in SECTION 4(b) insofar as they govern or purport to govern
conduct concerning any Subsidiary of the Company are being made by the Company solely in its
capacity as the controlling shareholder of such Subsidiary and not in any fiduciary capacity of it
or any of the Subsidiarys officers or directors, and nothing herein shall require the Company to
act in any way that would cause any shareholder, director or officer of any such Subsidiary to act
in a manner that would violate legally imposed fiduciary duties applicable to any such shareholder,
director or officer.
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(d) Notwithstanding anything to the contrary contained in SECTION 4(b), the Holders shall have
no voting or consent rights (but will continue to have voting rights to the extent set forth in
SECTION 4(a)) in connection with any FS/OM Permitted Activities.
(e) Notwithstanding anything to the contrary contained in this SECTION 4, the Company may not,
directly or indirectly, take any action otherwise approved pursuant to Section
4(b) if such action would have a materially adverse and disproportionate effect on the powers,
preferences, rights, limitations, qualifications and restrictions or privileges of any Holder with
respect to any shares of Series A-2 Preferred Stock held by any Holder, without the prior approval
of such Holder.
(f) Written Consent. Any action as to which a class vote of the holders of Preferred
Stock, or the holders of Preferred Stock and Common Stock voting together, is required pursuant to
the terms of this Certificate of Designation may be taken without a meeting, without prior notice
and without a vote, if a consent or consents in writing, setting forth the action so taken, shall
be signed by the holders of outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Company.
SECTION 5. Conversion. Each Preferred Share is convertible into shares of Common
Stock (or Reference Property, to the extent applicable) as provided in this SECTION 5, except that
Preferred Shares may not be converted into Common Stock with respect to any Holder to the extent
that, following such conversion, such Holder would Beneficially Own more than 9.9% of the Companys
outstanding Common Stock until the receipt by such Holder of any approvals from the Insurance
Regulatory Authorities required to be obtained by such Holder in order for such Holder to
Beneficially Own in excess of 9.9% of the Companys outstanding Common Stock.
Notwithstanding anything to the contrary herein, if any of the approvals from the Insurance
Regulatory Authorities required to be obtained by a Holder in order for such Holder to Beneficially
Own in excess of 9.9% of the Companys outstanding Common Stock have not been obtained at (x) a
time when the Company desires to exercise its right to convert shares of Series A-2 Preferred Stock
pursuant to SECTION 5(b) or (y) the Maturity Date in connection with the automatic conversion of
the shares of Series A-2 Preferred Stock pursuant to SECTION 5(c), the Company will not be entitled
to convert any Holders Series A-2 Preferred Stock (and, in the case of SECTION 5(c), the Series
A-2 Preferred Stock shall not automatically convert) to the extent conversion would cause such
Holder to Beneficially Own more than 9.9% of the Companys outstanding Common Stock (any such
shares of Series A-2 Preferred Stock that are not converted as a result of the foregoing
limitation, the Regulated Shares). From and after the date of the conversions
contemplated by SECTIONS 5(b) or 5(c), as applicable, each Regulated Share shall have no rights,
powers, preferences or privileges other than the right to (i) convert into Common Stock if and when
the approvals from the Insurance Regulatory Authorities required to be obtained by such Holder in
order for such Holder to Beneficially Own in excess of 9.9% of the Companys outstanding Common
Stock have been obtained and (ii) receive dividends and distributions pursuant to SECTIONS 2(c) and
2(d).
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(a) Conversion at the Option of Holders of Series A-2 Preferred Stock. Subject to
SECTION 5(b) hereof, each Holder is entitled to convert, at any time and from time to time, at the
option and election of such Holder, any or all outstanding Preferred Shares held by such Holder and
receive therefor the property described in SECTION 5(d) upon such conversion. In order to convert
Preferred Shares into shares of Common Stock (or Reference Property, to the extent applicable), the
Holder must surrender the certificates representing such Preferred Shares at the office of the
Companys transfer agent for the Series A-2 Preferred Stock (or at the principal office of the
Company, if the Company serves as its own transfer agent), together with (x) written notice
that such Holder elects to convert all or part of the Preferred Shares represented by such
certificates as specified therein, (y) a written instrument or instructions of transfer or other
documents and endorsements reasonably acceptable to the transfer agent or the Company, as
applicable (if reasonably required by the transfer agent or the Company, as applicable), and (z)
funds for any stock transfer, documentary, stamp or similar taxes, if payable by the Holder
pursuant to SECTION 5(f)(i). Except as provided in SECTION 5(b) and in SECTION 5(c), the date the
transfer agent or the Company, as applicable, receives such certificates, together with such notice
and any other documents and amounts required to be paid by the Holder pursuant to this SECTION 5,
will be the date of conversion (the Conversion Date).
(b) Conversion at the Option of the Company. Beginning on the third (3rd)
anniversary of May 13, 2011, the Company shall have the right, at its option, to cause all shares
of Series A-2 Preferred Stock to be automatically converted (without any further action by the
Holder and whether or not the certificates representing the Preferred Shares are surrendered), in
whole but not in part, into the property described in SECTION 5(d) within eight (8) Business Days
of any day (the Forced Conversion Trigger Date) on which all of the Company Conversion
Conditions are satisfied from time to time. The Company may exercise its option under this SECTION
5(b) by providing the Holders with a notice, which notice shall specify that the Company is
exercising the option contemplated by this SECTION 5(b), the Forced Conversion Trigger Date and the
Conversion Date on which the conversion shall occur (which Conversion Date shall be not less than
four (4) Business Days following the date such notice is provided to the Holders); provided that,
once delivered, such notice shall be irrevocable, unless the Company obtains the written consent of
the Series A-2 Majority Holders. For the avoidance of doubt, (x) the Holders shall continue to
have the right to convert their Preferred Shares pursuant to SECTION 5(a) until and through the
Conversion Date contemplated in this SECTION 5(b) and (y) if any Preferred Shares are converted
pursuant to SECTION 5(a), such Preferred Shares shall no longer be converted pursuant to this
SECTION 5(b) and the Companys notice delivered to the Holders pursuant to this SECTION 5(b) shall
automatically terminate with respect to such Preferred Shares. Notwithstanding the foregoing, any
notice delivered by the Company under this SECTION 5(b) in accordance with SECTION 10(g) shall be
conclusively presumed to have been duly given at the time set forth therein, whether or not such
Holder of Preferred Shares actually receives such notice, and neither the failure of a Holder to
actually receive such notice given as aforesaid nor any immaterial defect in such notice shall
affect the validity of the proceedings for the conversion of the Preferred Shares as set forth in
this SECTION 5(b). The Company shall issue a press release for publication on the Dow Jones News
Service or Bloomberg Business News (or if either such service is not available, another broadly
disseminated news or press release service selected by the Company) prior to the opening of
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business on the first Business Day following any date on which the Company provides notice to
Holders pursuant to this SECTION 5(b) announcing the Companys election to convert Preferred Shares
pursuant to this SECTION 5(b).
(c) Automatic Conversion on Maturity Date. In the event that any Holder has not
elected to have its Preferred Shares redeemed by the Company on the Maturity Date (as defined
herein) pursuant to SECTION 6(a), then such Holders Preferred Shares shall be automatically
converted (without any further action by the Holder and whether or not the certificates
representing the Preferred Shares are surrendered), in whole and not in part, into the property
described in
SECTION 5(d), effective as of the Maturity Date, which shall be deemed to be the Conversion
Date for purposes of this SECTION 5(c). As promptly as practicable (but in no event more than
five (5) Business Days) following the Maturity Date, the Company shall deliver a notice to any
Holder whose Preferred Shares have been converted by the Company pursuant to this SECTION 5(c),
informing such Holder of the number of shares of Common Stock into which such Preferred Shares have
been converted, together with certificates evidencing such shares of Common Stock. Notwithstanding
the foregoing, any notice delivered by the Company in compliance with this SECTION 5(c) shall be
conclusively presumed to have been duly given, whether or not such Holder of Preferred Shares
actually receives such notice, and neither the failure of a Holder to actually receive such notice
given as aforesaid nor any immaterial defect in such notice shall affect the validity of the
proceedings for the conversion of the Preferred Shares as set forth in this SECTION 5(c). The
Company shall issue a press release for publication on the Dow Jones News Service or Bloomberg
Business News (or if either such service is not available, another broadly disseminated news or
press release service selected by the Company) prior to the opening of business on the first
Business Day following the Maturity Date announcing the aggregate number of Preferred Shares being
converted pursuant to this SECTION 5(c) and the number of shares of Common Stock issuable in
connection therewith, as well as the aggregate number of Preferred Shares redeemed on the Maturity
Date and the purchase price paid by the Company therefor.
(d) Amounts Received Upon Conversion. Upon a conversion of Preferred Shares pursuant
to SECTION 5(a), (b) or (c), the Holder of such converted Preferred Shares shall, subject to the
limitations and adjustments pursuant to the first paragraph of SECTION 5, receive in respect of
each Preferred Share:
(i) a number of shares of Common Stock (or Reference Property, to the extent applicable) equal
to the amount (the Conversion Amount) determined by dividing (A) the Purchase Price for
the Preferred Share to be converted by (B) the Conversion Price in effect at the time of
conversion; provided that, notwithstanding the foregoing, if the Company has elected to convert all
Preferred Shares pursuant to SECTION 5(b) and the Public Float Hurdle is not met on the Forced
Conversion Trigger Date, then each Holder may elect, by delivery of a notice to the Company no
later than the close of business on the Business Day immediately prior to the Conversion Date, to
receive, in lieu of Common Stock (or Reference Property, to the extent applicable), cash equal to
the Conversion Amount multiplied by the Thirty Day VWAP as of the close of business on the Business
Day immediately preceding the Conversion Date, which cash amount shall be delivered to the electing
Holders within forty-five (45) calendar days of the date that
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the last Holder electing to receive
cash pursuant to this SECTION 5(d)(i) has provided the Company with notice thereof;
(ii) cash in an amount equal to the amount of any accrued but unpaid Cash Dividends and
Participating Cash Dividends (to the extent not included in the Purchase Price) on the Preferred
Shares being converted; provided that, to the extent the Company is prohibited by law or by
contract from paying such amount, then the Company shall provide written notice to the applicable
Holder of such inability to pay, and at the written election of the Holder (which written election
shall be delivered to the Company within five (5) Business Days of receipt of such written notice
from the Company), the Company shall either pay such amount as soon as payment is no longer so
prohibited or issue Common Stock (or Reference Property, to the extent applicable) in the
manner specified in SECTION 5(d)(i) as if the amount of such accrued but unpaid Cash Dividends
and Participating Cash Dividends were added to the Purchase Price;
(iii) a number of shares of Common Stock (or Reference Property, to the extent applicable)
equal to the amount determined by dividing (A) the amount of any accrued but unpaid Accreting
Dividends (to the extent not included in the Purchase Price) on the Preferred Shares being
converted by (B) the Conversion Price in effect at the time of Conversion; and
(iv) any accrued and unpaid In-Kind Participating Dividends.
Notwithstanding the foregoing, in the event any Holder would be required to file any Notification
and Report Form pursuant to the HSR Act as a result of the conversion of any Preferred Shares into
the property described above in this Section 5(d), at the option of such Holder upon written notice
to the Company, the effectiveness of such conversion shall be delayed (only to the extent necessary
to avoid a violation of the HSR Act), until such Holder shall have made such filing under the HSR
Act and the applicable waiting period shall have expired or been terminated; provided, however,
that in such circumstances such Holder shall use commercially reasonable efforts to make such
filing and obtain the expiration or termination of such waiting period as promptly as reasonably
practical and the Company shall make all required filings and reasonably cooperate with and assist
such Holder in connection with the making of such filing and obtaining the expiration or
termination of such waiting period and shall be reimbursed by such Holder for any reasonable and
documented out-of-pocket costs incurred by the Company in connection with such filings and
cooperation. Notwithstanding the foregoing, if the conversion of any Preferred Share is delayed
pursuant to the preceding sentence at (x) a time when the Company desires to exercise its right to
convert shares of Series A-2 Preferred Stock pursuant to SECTION 5(b) or (y) the Maturity Date in
connection with the automatic conversion of the shares of Series A-2 Preferred Stock pursuant to
SECTION 5(c), from and after the date of the conversions contemplated by SECTIONS 5(b) or 5(c), as
applicable, such Preferred Share not then converted shall have no rights, powers, preferences or
privileges other than the rights provided by this paragraph and the right to (i) convert into
Common Stock if and when such Holder shall have made such filing under the HSR Act and the waiting
period in connection with such filing under the HSR Act shall have expired or been terminated and
(ii) receive dividends and distributions pursuant to SECTIONS 2(c) and 2(d).
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(e) Fractional Shares. No fractional shares of Common Stock (or fractional shares in
respect of Reference Property, to the extent applicable) will be issued upon conversion of the
Series A-2 Preferred Stock. In lieu of fractional shares, the Company shall pay cash in respect of
each fractional share equal to such fractional amount multiplied by the Thirty Day VWAP as of the
closing of business on the Business Day immediately preceding the Conversion Date. If more than
one Preferred Share is being converted at one time by the same Holder, then the number of full
shares issuable upon conversion will be calculated on the basis of the aggregate number of
Preferred Shares converted by such Holder at such time.
(f) Mechanics of Conversion.
(i) As soon as reasonably practicable after the Conversion Date, or in the case of Regulated
Shares, the date on which the Holder thereof provides evidence to the Company
that such Holder has obtained the approvals from the Insurance Regulatory Authorities required
to be obtained by such Holder to Beneficially Own in excess of 9.9% of the Companys outstanding
Common Stock, (and in any event within four (4) Trading Days after either such date), the Company
shall issue and deliver to such Holder one or more certificates for the number of shares of Common
Stock (or Reference Property, to the extent applicable) to which such Holder is entitled, together
with, at the option of the Holder, a check or wire transfer of immediately available funds for
payment of fractional shares and any payment required by SECTION 5(d)(ii) in exchange for the
certificates representing the converted Preferred Shares (including any Regulated Shares). Such
conversion will be deemed to have been made on the Conversion Date, or in the case of Regulated
Shares, the date on which the Holder thereof provides evidence to the Company that such Holder has
obtained the approvals from the Insurance Regulatory Authorities required to be obtained by such
Holder to Beneficially Own in excess of 9.9% of the Companys outstanding Common Stock, and the
Person entitled to receive the shares of Common Stock (or Reference Property, to the extent
applicable) issuable upon such conversion shall be treated for all purposes as the record holder of
such shares of Common Stock (or Reference Property, to the extent applicable) on such date. The
delivery of the Common Stock upon conversion of Preferred Shares (including any Regulated Shares)
shall be made, at the option of the applicable Holder, in certificated form or by book-entry. Any
such certificate or certificates shall be delivered by the Company to the appropriate Holder on a
book-entry basis or by mailing certificates evidencing the shares to the Holders at their
respective addresses as set forth in the conversion notice. In cases where fewer than all the
Preferred Shares represented by any such certificate are to be converted, a new certificate shall
be issued representing the unconverted Preferred Shares (or Regulated Shares). The Company shall
pay any documentary, stamp or similar issue or transfer tax due on the issue of Common Stock (or
Reference Property, to the extent applicable) upon conversion or due upon the issuance of a new
certificate for any Preferred Shares (or Regulated Shares) not converted to the converting Holder;
provided that the Company shall not be required to pay any such amounts, and any such amounts shall
be paid by the converting Holder, in the event that such Common Stock or Preferred Shares are
issued in a name other than the name of the converting Holder.
(ii) For the purpose of effecting the conversion of Preferred Shares (including any Regulated
Shares), the Company shall: (A) at all times reserve and keep available,
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free from any preemptive
rights, out of its treasury or authorized but unissued shares of Common Stock (or Reference
Property, to the extent applicable) the full number of shares of Common Stock (or Reference
Property, to the extent applicable) deliverable upon the conversion of all outstanding Preferred
Shares (including Regulated Shares) after taking into account any adjustments to the Conversion
Price from time to time pursuant to the terms of this SECTION 5 and any increases to the Purchase
Price from time to time and assuming for the purposes of this calculation that all outstanding
Preferred Shares are held by one holder) and (B) without prejudice to any other remedy at law or in
equity any Holder may have as a result of such default, take all actions reasonably required to
amend its Certificate of Incorporation, as expeditiously as reasonably practicable, to increase the
authorized and available amount of Common Stock (or Reference Property, to the extent applicable)
if at any time such amendment is necessary in order for the Company to be able to satisfy its
obligations under this SECTION 5. Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of the shares of Common Stock (or Reference
Property, to the extent applicable) issuable upon conversion of the Series A-2 Preferred Stock, the
Company will take any corporate action which may be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of Common Stock (or
Reference Property, to the extent applicable) upon the conversion of all outstanding Preferred
Shares at such adjusted Conversion Price.
(iii) From and after the Conversion Date, or in the case of Regulated Shares, the date on
which the Holder thereof provides evidence to the Company that such Holder has obtained the
approvals from the Insurance Regulatory Authorities required to be obtained by such Holder to
Beneficially Own in excess of 9.9% of the Companys outstanding Common Stock, the Preferred Shares
(including any Regulated Shares) converted on such date, will no longer be deemed to be outstanding
and all rights of the Holder thereof including the right to receive Dividends, but excluding the
right to receive from the Company the Common Stock (or Reference Property, to the extent
applicable) or any cash payment upon conversion, and except for any rights of Holders (including
any voting rights) pursuant to this Certificate of Designation which by their express terms
continue following conversion or, for the avoidance of doubt, rights which by their express terms
continue following conversion pursuant to any of the other Transaction Agreements (as defined in
the Securities Purchase Agreement) shall immediately and automatically cease and terminate with
respect to such Preferred Shares (including any Regulated Shares); provided that, in the event that
a Preferred Share or Regulated Share is not converted due to a default by the Company or because
the Company is otherwise unable to issue the requisite shares of Common Stock (or Reference
Property, to the extent applicable), such Preferred Share or Regulated Share will, without
prejudice to any other remedy at law or in equity any Holder may have as a result of such default,
remain outstanding and will continue be entitled to all of the rights attendant to such Preferred
Share or Regulated Share (as the case may be) as provided herein.
(iv) If the conversion is in connection with any sale, transfer or other disposition of the
shares of Common Stock (or Reference Property, to the extent applicable) issuable upon conversion
of Preferred Shares made pursuant to the Tag-Along Agreement (as defined in the Securities Purchase
Agreement), the conversion may, at the option of any Holder tendering Preferred Shares for
conversion, be conditioned upon the closing of such sale, transfer or the disposition of the
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shares of Common Stock (or Reference Property, to the extent applicable) issuable upon conversion of such
Preferred Shares, in which event such conversion of such Preferred Shares shall not be deemed to
have occurred until immediately prior to the closing of such sale, transfer or other disposition.
(v) The Company shall comply with all federal and state laws, rules and regulations and
applicable rules and regulations of the Exchange on which shares of the Common Stock (or Reference
Property, to the extent applicable) are then listed. If any shares of Common Stock (or Reference
Property, to the extent applicable) to be reserved for the purpose of conversion of Preferred
Shares require registration with or approval of any Person or group (as such term is defined in
Section 13(d)(3) of the Exchange Act) under any federal or state law or the rules and regulations
of the Exchange on which shares of the Common Stock (or Reference Property, to the extent
applicable) are then listed before such shares may be validly issued or delivered upon conversion,
then the Company will, as expeditiously as reasonably practicable, use commercially reasonable
efforts to secure such registration or approval, as the case may be. So long as any Common Stock
(or Reference Property, to the extent applicable) into which the Preferred Shares are then
convertible is then listed on an Exchange, the Company will list and keep listed on any such
Exchange, upon official notice of issuance, all shares of such Common Stock (or Reference
Property, to the extent applicable) issuable upon conversion.
(vi) All shares of Common Stock (or Reference Property, to the extent applicable) issued upon
conversion of the Preferred Shares (including any Regulated Shares) will, upon issuance by the
Company, be duly and validly issued, fully paid and nonassessable, not issued in violation of any
preemptive or similar rights arising under law or contract and free from all taxes, liens and
charges with respect to the issuance thereof, and the Company shall take no action which will cause
a contrary result.
(g) Adjustments to Conversion Price.
(i) The Conversion Price shall be subject to the following adjustments:
(A) Common Stock Dividends or Distributions. If the Company issues shares of Common Stock as
a dividend or distribution on shares of Common Stock, or if the Company effects a share split or
share combination with respect to shares of Common Stock, the Conversion Price will be adjusted
based on the following formula:
where,
CP0 = the Conversion Price in effect immediately prior to the open of business on
the Ex-Date for such dividend or distribution, or the open of business on the effective date of
such share split or share combination, as the case may be;
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CP1 = the Conversion Price in effect immediately after the open of business on the
Ex-Date for such dividend or distribution, or the open of business on the effective date of such
share split or share combination, as the case may be;
OS0 = the number of shares of Common Stock outstanding immediately prior to the
open of business on the Ex-Date for such dividend or distribution, or the open of business on the
effective date of such share split or share combination, as the case may be; and
OS1 = the number of shares of Common Stock outstanding immediately after such
dividend or distribution, or such share split or share combination, as the case may be.
Any adjustment made under this SECTION 5(g)(i)(A) shall become effective immediately after the open
of business on the Ex-Date for such dividend or distribution, or immediately after the open of
business on the effective date for such share split or share combination. If any dividend or
distribution of the type described in this SECTION 5(g)(i)(A) is declared but not so paid or made,
or any share split or combination of the type described in this SECTION 5(g)(i)(A) is announced but
the outstanding shares of Common Stock are not split or combined, as the case may be, the
Conversion Price shall be immediately readjusted, effective as of the date the Board determines not
to pay such dividend or distribution, or not to split or combine the outstanding shares of Common
Stock, as the case may be, to the Conversion Price that would then be in effect if such dividend,
distribution, share split or share combination had not been declared or announced.
(B) Rights, Options or Warrants on Common Stock. If the Company distributes to all or
substantially all holders of its Common Stock any rights, options or warrants entitling them, for a
period expiring not more than sixty (60) days immediately following the record date of such
distribution, to purchase or subscribe for shares of Common Stock at a price per share less than
the average of the Daily VWAP of the Common Stock over the ten (10) consecutive Trading Day period
ending on the Trading Day immediately preceding the Ex-Date for such distribution, the Conversion
Price will be adjusted based on the following formula:
where,
CP0 = the Conversion Price in effect immediately prior to the open of business on
the Ex-Date for such distribution;
CP1 = the Conversion Price in effect immediately after the open of business on the
Ex-Date for such distribution;
OS0 = the number of shares of Common Stock outstanding immediately prior to the
open of business on the Ex-Date for such distribution;
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X = the number of shares of Common Stock equal to the aggregate price payable to exercise all
such rights, options or warrants divided by the average of the Daily VWAP of the Common Stock over
the ten (10) consecutive Trading Day period ending on the Trading Day immediately preceding the
Ex-Date for such distribution; and
Y = the total number of shares of Common Stock issuable pursuant to all such rights, options
or warrants.
Any adjustment made under this SECTION 5(g)(i)(B) will be made successively whenever any such
rights, options or warrants are distributed and shall become effective immediately after the open
of business on the Ex-Date for such distribution. To the extent that shares of Common Stock are
not delivered prior to the expiration of such rights, options or warrants, the Conversion Price
shall be readjusted following the expiration of such rights to the Conversion Price that would then
be in effect had the decrease in the Conversion Price with respect to the distribution of such
rights, options or warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. If such rights, options or warrants are not so distributed, the
Conversion Price shall be immediately readjusted, effective as of the date the Board determines not
to make such distribution, to the Conversion Price that would then be in effect if such
distribution had not occured.
In determining whether any rights, options or warrants entitle the holders to subscribe for or
purchase shares of Common Stock at less than such average of the Daily VWAP for the ten (10)
consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Date for
such distribution, and in determining the aggregate offering price of such shares of the Common
Stock, there shall be taken into account any consideration received by the Company for such rights,
options or warrants and any amount payable on exercise or conversion thereof, the fair market value
of such consideration, if other than cash, to be reasonably determined by the Board in good faith.
(C) Tender Offer or Exchange Offer Payments. If the Company or any of its Subsidiaries makes
a payment in respect of a tender offer or exchange offer for Common Stock, if the aggregate value
of all cash and any other consideration included in the payment per share of Common Stock (as
reasonably determined in good faith by the Board) exceeds the average of the Daily VWAP of the
Common Stock over the ten (10) consecutive Trading Day period commencing on, and including, the
Trading Day next succeeding the date on which such tender offer or exchange offer expires, the
Conversion Price will be decreased based on the following formula:
where,
CP1 = the Conversion Price in effect immediately after the close of business on the
last Trading Day of the ten (10) consecutive Trading Day period commencing on, and including, the
Trading Day next succeeding the date such tender or exchange offer expires;
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CP0 = the Conversion Price in effect immediately prior to the close of business on
the last Trading Day of the ten (10) consecutive Trading Day period commencing on, and including,
the Trading Day next succeeding the date such tender or exchange offer expires;
OS0 = the number of shares of Common Stock outstanding immediately prior to the
date such tender or exchange offer expires;
SP1 = the average of the Daily VWAP of the Common Stock over the ten (10)
consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the
date such tender or exchange offer expires;
AC = the aggregate value of all cash and any other consideration (as reasonably determined in
good faith by the Board) paid or payable for shares purchased in such tender or exchange offer; and
OS1 = the number of shares of Common Stock outstanding immediately after the date
such tender or exchange offer expires (after giving effect to such tender offer or exchange offer
and excluding fractional shares).
The adjustment to the Conversion Price under this SECTION 5(g)(i)(C) will occur at the close
of business on the tenth (10th) Trading Day immediately following, but excluding, the
date such tender or exchange offer expires; provided that, for purposes of determining the
Conversion Price, in respect of any conversion during the ten (10) Trading Days immediately
following, but
excluding, the date that any such tender or exchange offer expires, references within this
SECTION 5(g)(i)(C) to ten (10) consecutive Trading Days shall be deemed replaced with such lesser
number of consecutive Trading Days as have elapsed between the date such tender or exchange offer
expires and the relevant conversion date.
(D) Common Stock Issued at Less than Conversion Price. If, after the Original Issue Date, the
Company issues or sells any Common Stock (or Option Securities or Convertible Securities, to the
extent set forth in this SECTION 5(g)(i)(D)), other than Excluded Stock, for no consideration or
for consideration per share less than the Conversion Price in effect as of the date of such
issuance or sale, the Conversion Price in effect immediately prior to each such issuance or sale
will (except as provided below) be adjusted at the time of such issuance or sale based on the
following formula:
where,
CP1 = the Conversion Price in effect immediately following such issuance or sale;
CP0 = the Conversion Price in effect immediately prior to such issuance or sale;
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OS0 = the number of shares of Common Stock outstanding immediately prior to
such issuance or sale (treating for this purpose as outstanding all shares of Common Stock issuable
upon the conversion or exchange of (x) all Preferred Shares issued on the Original Issue Date, (y)
all shares of Existing Series A Preferred Stock and Additional Permitted Preferred Stock and (z)
all convertible, exchangeable or exercisable Equity Securities of the Company not listed in (x) or
(y) if the conversion price, exercise price or exchange price applicable to such Equity Securities
of the Company is below Market Value on the determination date) outstanding immediately prior to
such issuance or sale;
X = the number of shares of Common Stock that the aggregate consideration received by the
Company for the number of shares of Common Stock so issued or sold would purchase at a price per
share equal to CP0; and
Y = the number of additional shares of Common Stock so issued.
For the purposes of any adjustment of the Conversion Price pursuant to this SECTION
5(g)(i)(D), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the amount of the consideration
received by the Company shall be deemed to be the amount of the cash proceeds received by the
Company for such Common Stock after deducting therefrom any discounts or commissions allowed, paid
or incurred by the Company for any underwriting or otherwise in connection with the issuance and
sale thereof
(2) In the case of the issuance of Common Stock (otherwise than upon the conversion of shares
of Capital Stock or other securities of the Company) for a consideration in whole or in part other
than cash, including securities acquired in exchange therefor (other than securities by their terms
so exchangeable), the consideration other than cash shall be deemed to be the fair market value
thereof as reasonably determined by the Board in good faith.
(3) For the avoidance of doubt, the provisions of this SECTION 5(g)(i)(D) shall apply to any
issuance of Additional Permitted Preferred Stock that are Convertible Securities and meet the
criteria for requiring an adjustment under this SECTION 5(g)(i)(D).
(4) In the case of (A) the issuance of Option Securities (whether or not at the time
exercisable) or (B) the issuance of Convertible Securities (whether or not at the time so
convertible or exchangeable):
i) the issuance of Option Securities shall be deemed the issuance of all shares of Common
Stock deliverable upon the exercise of such Option Securities;
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ii) such Option Securities shall be deemed to be issued for a consideration equal to the value
of the consideration (determined in the manner provided in SECTION 5(g)(i)(D)(1) and (2)), if any,
received by the Company for such Option Securities, plus the exercise price, strike price or
purchase price provided in such Option Securities for the Common Stock covered thereby;
iii) the issuance of Convertible Securities shall be deemed the issuance of all shares of
Common Stock deliverable upon conversion of, or in exchange for, such Convertible Securities;
iv) such Convertible Securities shall be deemed to be issued for a consideration equal to the
value of the consideration (determined in the manner provided in SECTION 5(g)(i)(D)(1) and (2) and
excluding any cash received on account of accrued interest or accrued dividends), if any, received
by the Company for such Convertible Securities, plus the value of the additional consideration
(determined in the manner provided in SECTION 5(g)(i)(D)(1) and (2)) to be received by the Company
upon the conversion or exchange of such Convertible Securities, if any;
v) upon any change in the number of shares of Common Stock deliverable upon exercise of any
Option Securities or Convertible Securities or upon any change in the consideration to be received
by the Company upon the exercise, conversion or exchange of such securities, the Conversion Price
then in effect shall be readjusted to such Conversion Price as would have been in effect had such
change been in effect, with respect to any Option Securities or Convertible Securities outstanding
at the time of the change, at the time such Option Securities or Convertible Securities originally
were issued;
vi) upon the expiration or cancellation of Option Securities (without exercise), or the
termination of the conversion or exchange rights of Convertible Securities (without conversion or
exchange), if the Conversion Price shall have been adjusted upon the issuance of such expiring,
canceled or terminated securities, the Conversion Price shall be readjusted to such Conversion
Price as would have been obtained if, at the time of the original issuance of such Option
Securities or Convertible Securities, the expired, canceled or terminated Option Securities or
Convertible Securities, as applicable, had not been issued;
vii) if the Conversion Price shall have been fully adjusted upon the issuance of any such
options, warrants, rights or convertible or exchangeable securities, no further adjustment of the
Conversion Price shall be made for the actual issuance of Common Stock upon the exercise,
conversion or exchange thereof; and
viii) if any issuance of Common Stock, Option Securities or Convertible Securities would also
require an adjustment pursuant to any other adjustment provision of this SECTION 5(g)(i), then only
the adjustment most favorable to the Holders shall be made.
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(ii) If the Company issues rights, options or warrants that are only exercisable upon the
occurrence of certain triggering events (each, a Trigger Event), then the Conversion
Price will not be adjusted pursuant to SECTION 5(g)(i)(B) until the earliest Trigger Event occurs,
and the Conversion Price shall be readjusted to the extent any of these rights, options or warrants
are not exercised before they expire (provided, however, that, for the avoidance of doubt, if such
Trigger Event would require an adjustment pursuant to SECTION 5(g)(i)(D), such adjustment pursuant
to SECTION 5(g)(i)(D) shall be made at the time of issuance of such rights, options or warrants in
accordance with such Section).
(iii) Notwithstanding anything in this SECTION 5(g) to the contrary, if a Conversion Price
adjustment becomes effective pursuant to any of clauses (A), (B) or (C) of this SECTION 5(g)(i) on
any Ex-Date as described above, and a Holder that converts its Preferred Shares on or after such
Ex-Date and on or prior to the related record date would be treated as the record holder of shares
of Common Stock as of the related Conversion Date based on an adjusted Conversion Price for such
Ex-Date and participate on an adjusted basis in the related dividend, distribution or other event
giving rise to such adjustment, then, notwithstanding the foregoing Conversion Price adjustment
provisions, the Conversion Price adjustment relating to such Ex-Date will not be made for such
converting Holder. Instead, such Holder will be treated as if such Holder were the record owner of
the shares of Common Stock on an un-adjusted basis and participate in the related dividend,
distribution or other event giving rise to such adjustment.
Notwithstanding anything in this SECTION 5(g) to the contrary, no adjustment under SECTION 5(g)(i)
need be made to the Conversion Price unless such adjustment would require a decrease of at least 1%
of the Conversion Price then in effect. Any lesser adjustment shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment, if any, which, together
with any adjustment or adjustments so carried forward, shall amount to a decrease of at least 1% of
such Conversion Price; provided that, on the date of any conversion of the Preferred Shares
pursuant to SECTION 5, adjustments to the Conversion Price will be made with respect to any such
adjustment carried forward that has not been taken into account before such date. In addition, at
the end of each year, beginning with the year ending December 31, 2011, the Conversion Price shall
be adjusted to give effect to any adjustment or adjustments so carried forward, and such
adjustments will no longer be carried forward and taken into account in any subsequent adjustment.
(iv) Adjustments Below Par Value. The Company shall not take any action that would
require an adjustment to the Conversion Price such that the Conversion Price, as adjusted to give
effect to such action, would be less than the then-applicable par value per share of the Common
Stock, except that the Company may undertake a share split or similar event if such share split
results in a corresponding reduction in the par value per share of the Common Stock such that the
as-adjusted new Conversion Price per share would not be below the new as-adjusted par value per
share of the Common Stock following such share split or similar transaction and the Conversion
Price is adjusted as provided under SECTION 5(g)(i)(A) and any other applicable provision of
SECTION 5(g).
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(v) Reference Property. In the case of any Going Private Event or recapitalization,
reclassification or change of the Common Stock (other than changes resulting from a subdivision,
combination or reclassification described in SECTION 5(g)(i)(A)), a consolidation, merger or
combination involving the Company, a sale, lease or other transfer to a third party of all or
substantially all of the assets of the Company (or the Company and its Subsidiaries on a
consolidated basis), or any statutory share exchange, in each case as a result of which the Common Stock
would be converted into, or exchanged for, stock, other securities, other property or assets
(including cash or any combination thereof) (any of the foregoing, a Transaction), then,
at the effective time of the Transaction, the right to convert each Preferred Share will be changed
into a right to convert such Preferred Share into the kind and amount of shares of stock, other
securities or other property or assets (including cash or any combination thereof) (the
Reference Property) that a Holder would have received in respect of the Common Stock
issuable upon conversion of such Preferred Shares immediately prior to such Transaction. In the
event that holders of Common Stock have the opportunity to elect the form of consideration to be
received in the Transaction, the Company shall make adequate provision whereby the Holders shall
have a reasonable opportunity to determine the form of consideration into which all of the
Preferred Shares, shares of Existing Series A Preferred Stock and shares of Additional Permitted
Preferred Stock, treated as a single class, shall be convertible from and after the effective date
of the Transaction. For so long as the Fortress Investor Group owns a number of shares of Existing
Series A Preferred Stock equal to or greater than 50% of the Initial Preferred Share Amount, such
determination shall be made by the Fortress Investor; thereafter, any such election shall be made
by the Majority Holders. Any such determination by the Holders shall be subject to any limitations
to which all holders of Common Stock are subject, such as pro rata reductions applicable to any
portion of the consideration payable in the Transaction, and shall be conducted in such a manner as
to be completed at approximately the same time as the time elections are made by holders of Common
Stock. The provisions of this SECTION 5(g)(v) and any equivalent thereof in any such securities
similarly shall apply to successive Transactions. The Company shall not become a party to any
Transaction unless its terms are in compliance with the foregoing.
(vi) Rules of Calculation; Treasury Stock. All calculations will be made to the
nearest one-hundredth of a cent or to the nearest one-ten thousandth of a share. Except as
explicitly provided herein, the number of shares of Common Stock (or Reference Property, to the
extent applicable) outstanding will be calculated on the basis of the number of issued and
outstanding shares of Common Stock (or Reference Property, to the extent applicable), not including
shares held in the treasury of the Company. The Company shall not pay any dividend on or make any
distribution to shares of Common Stock (or Reference Property, to the extent applicable) held in
treasury.
(vii) No Duplication. If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described in this SECTION 5 in a manner such that such
adjustments are duplicative, only one adjustment (which shall be the adjustment most favorable to
the Holders) shall be made.
(viii) Notice of Record Date. In the event of:
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(A) any event described in SECTION 5(g)(i)(A), (B), (C) or (D);
(B) any Transaction to which SECTION 5(g)(v) applies;
(C) the dissolution, liquidation or winding-up of the Company; or
(D) any other event constituting a
Change of Control or a Going Private Event;
then the Company shall mail to the Holders at their last addresses as shown on the records of the
Company, at least twenty (20) days prior to the record date specified in (A) below or twenty (20)
days prior to the date specified in (B) below, as applicable, a notice stating:
(A) the record date for the dividend, other distribution, stock split or combination or, if a
record is not to be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, other distribution, stock split or combination; or
(B) the date on which such reclassification, change, dissolution, liquidation, winding-up or
other event constituting a Transaction, Change of Control or Going Private Event, or any
transaction which would result in an adjustment pursuant to SECTION 5(g)(i)(D), is estimated to
become effective or otherwise occur, and the date as of which it is expected that holders of Common
Stock of record will be entitled to exchange their shares of Common Stock for Reference Property,
other securities or other property deliverable upon such reclassification, change, liquidation,
dissolution, winding-up, Transaction, Change of Control or Going Private Event or that such
issuance of Common Stock, Option Securities or Convertible Securities is anticipated to occur.
(ix) Certificate of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this SECTION 5, the Company at its expense shall
as promptly as reasonably practicable compute such adjustment or readjustment in accordance with
the terms hereof and furnish to each Holder a certificate, signed by an officer of the Company (in
his or her capacity as such and not in an individual capacity), setting forth (A) the calculation
of such adjustments and readjustments in reasonable detail, (B) the facts upon which such
adjustment or readjustment is based, (C) the Conversion Price then in effect, and (D) the number of
shares of Common Stock (or Reference Property, to the extent applicable) and the amount, if any, of
Capital Stock, other securities or other property (including but not limited to cash and evidences
of indebtedness) which then would be received upon the conversion of a Preferred Share.
(x) No Upward Revisions to Conversion Price. For the avoidance of doubt, except in
the case of a reverse share split or share combination resulting in an adjustment under SECTION
5(g)(i)(A) effected with the approvals, if any, required pursuant to SECTION 4(b), in no event
shall any adjustment be made pursuant to this SECTION 5 that results in an increase in the
Conversion Price.
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SECTION 6. Redemption.
(a) Redemption at Option of Holder on Maturity Date. Each Holder shall have the right
to require the Company to redeem such Holders Preferred Shares, in whole or in part, on the
seventh (7th) anniversary of May 13, 2011 (the Maturity Date) at a price per
share payable, subject to SECTION 6(e), in cash and equal to the Redemption Price. At any time
during the period beginning on the thirtieth (30th) calendar day prior to the Maturity
Date (the Holder Redemption Notice Period), each Holder may deliver written notice to the
Company notifying the Company of such Holders election to require the Company to redeem all or a
portion of such Holders Preferred Shares on the Maturity Date (the Election Notice). No
later than thirty (30) calendar days prior to the commencement of the Holder Redemption Notice
Period, the Company shall deliver a notice to each Holder including the following information: (A)
informing the Holder of the Maturity Date and such Holders right to elect to have all or a portion
of its Preferred Shares redeemed by Company on the Maturity Date, (B) the Redemption Price payable
with respect to each share of Series A-2 Preferred Stock on the Maturity Date in connection with
any such redemption (to the extent the Redemption Price is known or can be calculated, and to the
extent not capable of being calculated, the manner in which such price will be determined); (C)
that any certificates representing Preferred Shares which a Holder elects to have redeemed must be
surrendered for payment of the Redemption Price at the office of the Company or any redemption
agent located in New York City selected by the Company therefor together with any written
instrument or instructions of transfer or other documents and endorsements reasonably acceptable to
the redemption agent or the Company, as applicable (if reasonably required by the redemption agent
or the Company, as applicable); (D) that, upon a Holders compliance with clause (C), payment of
the Redemption Price with respect to any Preferred Shares to be made on the Maturity Date will be
made to the Holder within five (5) Business Days of the Maturity Date to the account specified in
such Holders redemption election notice; (E) that any Holder may withdraw its Election Notice with
respect to all or a portion of its Preferred Shares at any time prior to 5:00 p.m. (New York City
time) on the Business Day immediately preceding the Maturity Date; and (F) the number of shares of
Common Stock (or, if applicable, the amount of Reference Property) and the amount of cash, if any,
that a Holder would receive upon conversion of a Preferred Share if a Holder does not elect to have
its Preferred Shares redeemed. The Company shall issue a press release for publication
on the Dow Jones News Service or Bloomberg Business News (or if either such service is not
available, another broadly disseminated news or press release service selected by the Company)
prior to the opening of business on the first Business Day following any date on which the Company
provides notice to Holders pursuant to this SECTION 6(a) disclosing the right of Holders to have
the Company redeem Preferred Shares pursuant to this SECTION 6(a).
(b) Optional Redemption by the Company. On and after the third (3rd)
anniversary of May 13, 2011, the Company may, at its option, redeem all (but not less than all) of
the outstanding Preferred Shares for cash equal to the Redemption Price. If the Company elects to
redeem the Preferred Shares pursuant to this SECTION 6(b), the Company shall deliver a notice of
redemption to the Holders not less than thirty (30) or more than sixty (60) calendar days prior to
the date specified for redemption (the Optional Redemption Date), which notice shall
include: (A) the Optional Redemption Date; (B) the Redemption Price; (C) that on the Optional
Redemption Date, if
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the Holder has not previously elected to convert Preferred Shares into Common
Stock, each Preferred Share shall automatically and without further action by the Holder thereof
(and whether or not the certificates representing such Preferred Shares are surrendered) be
redeemed for the Redemption Price; (D) that payment of the Redemption Price will be made to the
Holder within five (5) business days of the Redemption Date to the account specified by such Holder
to the Company in writing; (E) that the Holders right to elect to convert its Preferred Shares
will end at 5:00 p.m. (New York City time) on the Business Day immediately preceding the Optional
Redemption Date; and (F) the number of shares of Common Stock (or, if applicable, the amount of
Reference Property) and the amount of cash, if any, that a Holder would receive upon conversion of a Preferred Share if a Holder elect to convert
its Preferred Shares prior to the Optional Redemption Date. Notwithstanding the foregoing, any
notice delivered by the Company under this SECTION 6(b) in accordance with SECTION 10(g) shall be
conclusively presumed to have been duly given at the time set forth therein, whether or not such
Holder of Preferred Shares actually receives such notice, and neither the failure of a Holder to
actually receive such notice given as aforesaid nor any immaterial defect in such notice shall
affect the validity of the proceedings for the redemption of the Preferred Shares as set forth
herein. The Company shall issue a press release for publication on the Dow Jones News Service or
Bloomberg Business News (or if either such service is not available, another broadly disseminated
news or press release service selected by the Company) prior to the opening of business on the
first Business Day following any date on which the Company provides notice to Holders pursuant to
this SECTION 6(b) announcing the Companys election to redeem Preferred Shares pursuant to this
SECTION 6(b).
(c) Redemption at Option of the Holder upon a Change of Control.
(i) If a Change of Control occurs, each Holder shall have the right to require the Company to
redeem its Preferred Shares pursuant to a Change of Control Offer, which Change of Control Offer
shall be made by the Company in accordance with Section 6(c)(ii). In such Change of Control Offer,
the Company will offer a payment (such payment, a Change of Control Payment) in cash per
Preferred Share equal to the sum of (x) 101% of the Purchase Price, and (y) accrued and unpaid
Dividends thereon, if any, to the extent not included in the Purchase Price (including, without
limitation, accrued and unpaid Cash Dividends and accrued and unpaid Accreting Dividends for the
then current Dividend Period).
(ii) Within thirty (30) days following any Change of Control, the Company will mail a notice
(a Change of Control Offer) to each Holder describing the transaction or transactions
that constituted such Change of Control and offering to redeem the Preferred Shares on the date
specified in such notice (the Change of Control Payment Date), which date shall be no
earlier than thirty (30) days and no later than sixty-one (61) days from the date such notice is
mailed. In addition, such Change of Control Offer shall further state: (A) the amount of the
Change of Control Payment; (B) that the Holder may elect to have all or any portion of its
Preferred Shares redeemed pursuant to the Change of Control Offer, (C) that any Preferred Shares to
be redeemed must be surrendered for payment of the Change of Control Payment at the office of the
Company or any redemption agent selected by the Company therefor together with any written
instrument or instructions of transfer or other documents and endorsements reasonably acceptable to
the
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redemption agent or the Company, as applicable (if reasonably required by the redemption agent
or the Company, as applicable); (D) that, upon a Holders compliance with clause (C), payment of
the Change of Control Payment with will be made to the Holder on the Change of Control Payment Date
to the account specified by such Holder to the Company in writing; (E) the date and time by which
the Holder must make its election, (F) that any Holder may withdraw its election notice with
respect to all or a portion of their Preferred Shares at any time prior to 5:00 p.m. (New York City
time) on the Business Day immediately preceding the Change of Control Payment Date; and (G) the
amount and type of property that the Holder would receive in connection with such Change of Control
if the Holder elects to convert its Preferred Shares in connection with the Change of Control. The
Company shall issue a press release for publication on the Dow Jones News Service or Bloomberg
Business News (or if either such service is not available, another broadly disseminated news or
press release service selected by the Company) prior to the opening of business on the first
Business Day following any date on which the Company provides notice to Holders pursuant to this
SECTION 6(c) disclosing the right of Holders to have the Company redeem Preferred Shares pursuant
to this SECTION 6(c).
(iii) On the Change of Control Payment Date, the Company will, to the extent lawful: (A)
accept for payment all Preferred Shares validly tendered pursuant to the Change of Control Offer;
and (B) make a Change of Control Payment to each Holder that validly tendered Preferred Shares
pursuant to the Change of Control Offer.
(iv) Notwithstanding anything to the contrary contained in this SECTION 6(c), the Company
shall not be required to consummate the repurchase of Preferred Shares contemplated by this SECTION
6(c) unless and until the Company has repurchased the Senior Notes as required by the Indenture
with regard to the Change of Control (provided, however, that the failure to repurchase Preferred
Shares at any time required by this SECTION 6(c), even if such repurchase cannot be made as a
result of this clause (iv), will constitute a Specified Breach Event).
(v) If at any time prior to consummation of a transaction that would constitute a Change of
Control, the Company has publicly announced (whether by press release, SEC filing or otherwise)
such transaction or prospective transaction or the entry by the Company into any definitive
agreement with respect thereto, the Company shall, within five (5) Business Days of the issuance of
such public announcement, deliver a written notice to each Holder notifying them of the same and
the anticipated date of consummation of such transaction.
(vi) The Company will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer and makes the Change of Control Payment
in the manner, at the times and otherwise in compliance with the requirements set forth herein
applicable to a Change of Control Offer made by the Company and purchases all Preferred Shares
validly tendered under such Change of Control Offer.
(vii) A Change of Control Offer may be made in advance of a Change of Control, conditional
upon such Change of Control, if a definitive agreement is in place for the Change of Control at the
time of making of the Change of Control Offer.
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(d) Notwithstanding anything in this SECTION 6 to the contrary, each Holder shall retain the
right to elect to convert any Preferred Shares to be redeemed at any time prior to 5:00 p.m. (New
York City time) on the Business Day immediately preceding any Redemption Date. Any Preferred
Shares that a Holder elects to convert prior to the Redemption Date shall not be redeemed pursuant
to this SECTION 6.
(e) Insufficient Funds. Any redemption of the Preferred Shares pursuant to this
SECTION 6 shall be payable out of any cash legally available therefor, provided, however, that,
other than in respect of a redemption pursuant to SECTION 6(b) (which the Company may only
effectuate to the extent it has sufficient cash legally available therefor), if there is not a
sufficient amount of cash legally available to pay the Redemption Price in full in cash, then the
Company may pay that portion of the Redemption Price with respect to which it does not have cash
legally available therefor out of the remaining assets of the Company legally available therefor
(valued at the fair market value thereof on the date of payment, as reasonably determined in good
faith by the Board). If the Company anticipates not having sufficient cash legally available for a
redemption pursuant to SECTION 6(a) or SECTION 6(c), the redemption notice delivered to Holders
shall so specify, and indicate the nature of the other assets expected to be distributed and the
fair market value of the same as reasonably determined by the Board as aforesaid. At the time of
any redemption pursuant to this SECTION 6, the Company shall take all actions required or permitted
under Delaware law to permit the redemption of the Preferred Shares, including, without limitation,
through the revaluation of its assets in accordance with Delaware law, to make cash funds (and to
the extent cash funds are insufficient, other assets) legally available for such redemption. In
connection with any redemption pursuant to SECTION 6(c), to the extent that Holders elect to have
their Preferred Shares redeemed and the Company has insufficient funds to redeem such Preferred
Shares (after taking into account the amount of any repurchase obligations the Company has or
expects to have under the Senior Notes (or any other Debt ranking senior to the Series A-2
Preferred Stock), Senior Securities or any Parity Securities resulting from the same facts and
circumstances as the Change of Control hereunder), the Company shall use any available funds to
redeem a portion of such Preferred Shares and Parity Securities (if any are being redeemed) ratably
in proportion to the full respective amounts to which they are entitled; provided, however, that
the failure for any reason to redeem all Preferred Shares required to be redeemed under SECTION
6(c) when required shall constitute a Specified Breach Event.
(f) Mechanics of Redemption.
(i) The Company (or a redemption agent on behalf of the Company, as applicable) shall pay the
applicable Redemption Price on the Redemption Date or the required payment date therefor upon
surrender of the certificates representing the Preferred Shares to be redeemed and receipt of any
written instrument or instructions of transfer or other documents and endorsements reasonably
acceptable to the redemption agent or the Company, as applicable, to the extent required by
SECTIONS 6(a), 6(b) and 6(c); provided that, if such certificates are lost, stolen or destroyed,
the Company may require an affidavit certifying to such effect and, if requested, an agreement
indemnifying the Company from any losses incurred in connection therewith, in each
case, in form and substance reasonably satisfactory to the Company, from such Holder prior to paying such
amounts.
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(ii) Following any redemption of Preferred Shares on any Redemption Date, the Preferred Shares
so redeemed will no longer be deemed to be outstanding and all rights of the Holder thereof shall
cease, including the right to receive Dividends; provided, however, that any rights of Holders
pursuant to this Certificate of Designation that by their terms survive redemption of the Preferred
Shares and, for the avoidance of doubt, any rights that survive pursuant to any of the other
Transaction Agreements (as defined in the Securities Purchase Agreement), shall survive in
accordance with their terms. The foregoing notwithstanding, in the event that a Preferred Share is
not redeemed by the Company when required, such Preferred Share will remain outstanding and will
continue to be entitled to all of the powers, designations, preferences and other rights (including
but not limited to the accrual and payment of dividends and the conversion rights) as provided
herein.
SECTION 7. Specified Breach Events.
(a) The following events shall constitute Specified Breach Events:
(i) an Event of Default has occurred and is continuing under the Indenture; or an event of
default has occurred and is continuing with respect to any other indenture, credit agreement or
similar documentation related to an aggregate of $25,000,000 or more in principal amount of
indebtedness of the Company for borrowed money incurred after the Original Issue Date; provided
that, a Specified Breach Event shall cease to exist once the underlying event of default in respect
of such indebtedness has been waived or cured or such indebtedness has been repaid;
(ii) any Significant Subsidiary fails to repay any indebtedness for borrowed money within any
applicable grace period after final maturity or the acceleration of any indebtedness for borrowed
money of a Significant Subsidiary because of a default, in each case where the total amount of such
unpaid or accelerated indebtedness exceeds $25,000,000; provided that, such a Specified Breach
Event shall cease to exist once the underlying event of default in respect of such indebtedness has
been waived or cured or such indebtedness has been repaid;
(iii) the Company fails to declare and pay any Cash Dividends or Accreting Dividends due on
any Dividend Payment Date and such failure continues for a period of ninety (90) days; provided
that, any such Specified Breach Event shall cease to exist once all Cash Dividends and Accreting
Dividends in arrears through the end of the most recently completed Dividend Period have been
declared and paid in full;
(iv) the Company fails to comply with the Cash Maintenance Ratio covenant set forth in SECTION
8(a) for a period of ninety (90) days; provided that, any such Specified Breach Event shall cease
to exist on the date that an officer of the Company executes a certificate, which shall be sent to
the Holders, certifying to facts showing that the Company is in compliance with such covenant for a
subsequent fiscal quarter;
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(v) the Company defaults in the performance of, or breaches the covenants contained in, the
following sections of this Certificate of Designation or the Securities Purchase Agreement and such
default or breach, if curable, is not cured within ninety (90) days: SECTION 2(c) (Participating
Cash Dividends); SECTION 2(d) (In-Kind Participating Dividends); the proviso contained in SECTION
5(d)(i) (Amounts Received Upon Conversion); SECTION 6(a) (Redemption at Option of Holder on
Maturity Date); SECTION 6(c) (Redemption at Option of Holder Upon a Change of Control) (including,
without limitation, any delay or failure to repurchase the Preferred Shares as a result of
provisions of SECTION 6(c)(iv)); and SECTION 8(b) (Issuance of Additional Preferred Stock); and
(vi) if the Company voluntarily delists its Common Stock so that the Common Stock ceases to be
listed on at least one (1) Exchange or the Company shall take any action with the intent to cause
the Common Stock to cease to be listed on at least one (1) Exchange, except, in either case, in
connection with (A) a Going Private Event, (B) a merger or consolidation involving
the Company or (C) a sale by the Company of all or substantially all of its consolidated
assets, in each case where such transaction is authorized in accordance with the terms set forth
in, or not prohibited by, this Certificate of Designation and where none of the transaction
consideration consists of Common Stock that is listed on an Exchange; provided that, such a
Specified Breach Event shall cease to exist upon the Common Stock again being listed on at least
one (1) Exchange.
(b) Upon a Specified Breach Event and during any time that a Specified Breach Event is
continuing, the Company (which, for the avoidance of doubt shall not be deemed to include any
Subsidiaries of the Company except to the extent specified below) shall be prohibited from:
(i) making, and to the extent within the Companys control, permitting any of its Subsidiaries
to make, any Restricted Payments (other than repurchases of shares of Common Stock in connection
with the termination of an employees, officers or directors service to the Company or any of its
Subsidiaries otherwise permitted pursuant to the terms of this Certificate of Designation
(including, without limitation, SECTION 4, if applicable));
(ii) for so long as the Indenture limits the Companys ability to incur subordinated
indebtedness, incurring any subordinated indebtedness (including for this purpose, Additional
Permitted Preferred Stock or Parity Securities) pursuant to SECTION 4.06(b)(3) of the Indenture (or
a similar provision) to the extent the Company could not do so if the Preferred Shares and any
Parity Securities were assumed to be subordinated indebtedness for the purposes of the Indenture;
(iii) incurring, and to the extent within the Companys control, permitting any Intermediate
Holding Company from incurring, any Debt (which term shall include, for this purpose, Senior
Securities, Additional Permitted Preferred Stock and Parity Securities and shall exclude, in the
case of any Intermediate Holding Company, Debt permitted to be incurred under the Indenture and
incurred to finance acquisitions of businesses or operating assets to be held by a Portfolio
Company in which such Intermediate Holding Company holds an equity interest or to refinance other
indebtedness of such Intermediate Holding Company or any of its Subsidiaries (but only in such
amount as is necessary to pay the acquisition purchase price or pay the refinanced
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indebtedness, as the case may be, together with any fees and expenses related thereto) if after giving effect to
such incurrence, the Collateral Coverage Ratio would be less than 1.0:1.0;
(iv) entering, and to the extent within the Companys control, permitting any of its
Subsidiaries from entering, into any agreement for the purchase of any debt or Equity Securities of
any Portfolio Company of any Harbinger Affiliate from any Harbinger Affiliate; and
(v) entering, and to the extent within the Companys control, permitting any of its
Subsidiaries to enter, into any agreement for the sale by the Company of Equity Securities of any
Portfolio Company of the Company to any Harbinger Affiliate;
provided, however, that clauses (iv) and (v) shall in no way limit or restrict (x) any FS/OM
Permitted Activities or (y) the sale or contribution by a Harbinger Affiliate to the Company or any
Subsidiary of the Company of shares of Capital Stock of Spectrum on commercially reasonable terms
at prevailing market prices using the Thirty Day VWAP for the purpose of ensuring that the
Companys holdings in Spectrum do not constitute investment securities under the Investment Company Act of
1940, as amended.
Notwithstanding anything to the contrary in this SECTION 7(b), the agreements of the Company in
this SECTION 7(b) insofar as they govern or purport to govern conduct concerning any Subsidiary of
the Company are being made by the Company solely in its capacity as the controlling shareholder of
such Subsidiary and not in any fiduciary capacity of it or any of the Subsidiarys officers or
directors, and nothing herein shall require the Company to act in any way that would cause any
shareholder, director or officer of any such Subsidiary to act in a manner that would violate
legally imposed fiduciary duties applicable to any such shareholder, director or officer.
(c) Subject to applicable law and compliance with the rules of The New York Stock Exchange and
the Insurance Regulatory Authorities (including the requirement that an individual appointed as a
Specified Breach Director not be found at any time or from time to time to be untrustworthy by
the Insurance Regulatory Authorities), upon a Specified Breach Event and during any time that a
Specified Breach Event is continuing, upon the Companys receipt of a written notice from the
Fortress Investor (at any time when the Fortress Investor Group owns a number of shares of Existing
Series A Preferred Stock equal to or greater than 50% of the Initial Preferred Share Amount) or
from the Majority Holders (at any time when the Fortress Investor Group owns a number of shares of
Existing Series A Preferred Stock less than 50% of the Initial Preferred Share Amount), the Company
shall, notwithstanding any other provision of this Certificate of Designation, increase the size of
the Board by one (1) directorship (or at any time when the Purchaser Director (as defined in the
Existing Series A Certificate of Designation) is not serving on the Board, two (2) directorships)
(a Specified Breach Director) and the Specified Breach Director(s) shall be elected as
set forth in this section; provided that as a condition precedent to the election of a Specified
Breach Director, the Fortress Investor or the Majority Holders, as applicable, shall be required to
provide to the Company the duly executed and delivered written resignation of the Person to be
elected as a Specified Breach Director, providing that effective immediately and automatically
(without any further action by any Person) upon the earlier to occur of (x) the expiration of the
applicable Breach Period or (y) the number of Fortress Representatives being reduced pursuant to
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SECTION 8(c) of the Existing Series A Certificate of Designation, such Specified Breach Director
shall resign from the Board. For the avoidance of doubt, no Specified Breach Director shall be
elected to the Board unless the written resignation referred to in the preceding sentence is
delivered to the Company prior thereto. A Specified Breach Director need not be an independent
director of the Board pursuant to the rules of the Exchange on which the Companys Common Stock is
then traded. Subject to applicable law and compliance with the rules of The New York Stock
Exchange and the Insurance Regulatory Authorities (including the requirement that an individual
appointed as a Specified Breach Director not be found at any time or from time to time to be
untrustworthy by the Insurance Regulatory Authorities), the Fortress Investor (at any time when
the Fortress Investor Group owns a number of shares of Existing Series A Preferred Stock equal to
or greater than 50% of the Initial Preferred Share Amount) or the Majority Holders (at any time
when the Fortress Investor Group owns a number of shares of Existing Series A Preferred Stock less
than 50% of the Initial Preferred Share Amount) shall be entitled to nominate and elect the
Specified Breach Director(s) (which nominees shall be reasonably acceptable to any governance or
nominating committee of the Board (or the Board if no such committee then exists)). At any time
when the Fortress Investor Group owns a number of shares of Existing Series
A Preferred Stock less than 50% of the Initial Preferred Share Amount, the Specified Breach
Directors shall be elected (i) by the written consent of the Majority Holders or (ii) at a special
meeting of the Holders (which shall be called by the Secretary of the Company at the request of any
Holder) to be held within thirty (30) days of the occurrence of the Specified Breach Event, or, if
the Specified Breach Event occurs less than sixty (60) days before the date fixed for the next
annual meeting of the Companys stockholders, at such annual meeting. At any meeting at which the
Specified Breach Director(s) will be elected, the Specified Breach Director(s) shall be elected by
the holders of a majority of the shares of Existing Series A Preferred Stock held by the Fortress
Investor Group (at any time when the Fortress Investor Group owns a number of shares of Existing
Series A Preferred Stock equal to or greater than 50% of the Initial Preferred Share Amount) or by
the Majority Holders (at any time when the Fortress Investor Group owns a number of shares of
Existing Series A Preferred Stock less than 50% of the Initial Preferred Share Amount). The
Specified Breach Director(s) will serve until there ceases to be any Preferred Shares or shares of
Existing Series A Preferred Stock outstanding or until no Specified Breach Event exists or is
continuing, whichever occurs earliest (the Breach Period) and, upon the expiration of an
applicable Breach Period, the director seat(s) held by the Specified Breach Director(s) shall be
automatically eliminated and the size of the Board shall be reduced accordingly. If there is a
vacancy in the office of a Specified Breach Director during a Breach Period, then the vacancy may
only be filled by a nominee (which nominees shall be reasonably acceptable to any governance or
nominating committee of the Board (or the Board if no such committee then exists)) upon the written
consent or vote of the Fortress Investor (at any time when the Fortress Investor Group owns a
number of shares of Existing Series A Preferred Stock equal to or greater than 50% of
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the Initial Preferred Share Amount) or the Majority Holders (at any time when the Fortress Investor Group owns
a number of shares of Existing Series A Preferred Stock less than 50% of the Initial Preferred
Share Amount. Each Specified Breach Director will be entitled to one (1) vote on any matter with
respect to which the Board votes. During the Breach Period, any Specified Breach Director may be
removed at any time with or without cause by, and shall not be removed otherwise than by, the
written consent or vote of the Fortress Investor (at any time when the Fortress Investor Group owns
a number of shares of Existing Series A Preferred Stock equal to or greater than 50% of the Initial
Preferred Share Amount) or the Majority Holders (at any time when the Fortress Investor Group owns
a number of shares of Existing Series A Preferred Stock less than 50% of the Initial Preferred
Share Amount). If after the appointment of a Specified Breach Director the applicable Breach
Period expires, if so requested by the Company, the Investor shall promptly cause to resign, and
take all other action reasonably necessary, or reasonably requested by the Company, to cause the
prompt removal of, such Specified Breach Director. The Investor Director (as defined in the
Existing Series A Certificate of Designation), if any, the Additional Preferred Directors (as
defined in the Existing Series A Certificate of Designation), if any and the Specified Breach
Directors (if any), shall be spread as evenly as practicable among the classes of directors.
Notwithstanding anything to the contrary contained in this SECTION 7(c), no Specified Breach
Directors shall be appointed (whether or not a Specified Breach Event has occurred and is
continuing) during any period when Additional Preferred Directors have been appointed to the Board.
(d) Whether or not a Specified Breach Event has occurred and is continuing under SECTION
7(a)(iii), if the Company fails to declare and pay Dividends (other than Participating Dividends)
due on any Dividend Payment Date or Participating Dividends when dividends are paid to the holders
of Common Stock, then until such accrued and unpaid Dividends are paid, the
Company shall be prohibited from (i) declaring, paying or setting apart for payment, any
dividends or other distributions on the Common Stock or other Junior Securities, (ii) redeeming,
purchasing or otherwise acquiring for any consideration any Common Stock or Junior Securities and
(iii) declaring, paying or setting apart for payment, any dividends or other distributions on any
Parity Securities; provided that, dividends or distributions otherwise prohibited by clause (iii)
may be declared, paid or set aside on a pro rata basis among the Preferred Shares and the shares of
Parity Securities in proportion to the amounts to which they are entitled.
(e) Notwithstanding any other provisions of this Certificate of Designation or the Securities
Purchase Agreement, if at any time (i) the number of Fortress Representatives to which the Fortress
Investor is then entitled (collectively, the Fortress Director Representation Amount)
exceeds (ii) the number (the Proportionate Representation Amount) equal to, rounded up to
the nearest whole number (A) the percentage of the Companys Voting Stock held by the Fortress
Investor Group (assuming, for such purposes, that any securities held by the Fortress Investor
Group and convertible, exchangeable or exercisable for Voting Stock of the Company are so
converted, exchanged or exercised), divided by (B) the number of votes applicable to all Voting
Stock of the Company (assuming, for such purposes, that any securities held by the Fortress
Investor Group and convertible, exchangeable or exercisable for Voting Stock of the Company are so
converted, exchanged or exercised), multiplied by (C) the total number of seats on the Board, then,
unless not required pursuant to the rules of The New York Stock Exchange or any other stock
exchange on which the Companys Common Stock may then be listed, the Fortress Director
Representation Amount and, if necessary, the number of Fortress Representatives shall be reduced
until the Fortress Director Representation Amount and the number of Appointed Directors equals the
greater of one and the Proportionate Representation Amount;
provided, however, that the Fortress Director Representation Amount and the number of Fortress
Representatives shall thereafter again be increased from time to time if and to the extent that, at
such
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time, the Fortress Investor would be entitled to appoint such additional Fortress
Representatives and the appointment of such additional Fortress Representatives would not cause the
Fortress Director Representation Amount to exceed the Proportionate Representation Amount. Any
vacancy created on the Board as a result of the operation of the foregoing procedures shall be
required to be filled by the Company by an individual who is independent as defined in Section
303A of The New York Stock Exchange Listed Company Manual and who is not, nor ever has been, an
employee of the Company, any of its Subsidiaries, any Harbinger Affiliate or any Portfolio Company
of any Harbinger Affiliate.
SECTION 8. Covenants.
(a) Cash Maintenance Ratio. During the period beginning on the Original Issue Date
and ending on March 31, 2012, the Company shall not permit, on the last day of each fiscal quarter
ending on or prior to March 31, 2012, the ratio of the Companys Cash Equivalents to Fixed Charges
for the prior four (4) quarters then ended to be less than 1.0 to 1.0 (the Cash Maintenance
Ratio); provided that, for the first three (3) fiscal quarters ending after the Original Issue
Date, the actual amount of Fixed Charges incurred since the Original Issue Date shall be annualized
to reflect a full year of 365 days.
(b) Issuance of Additional Preferred Stock. After the date hereof, the Company may
issue additional shares of Series A-2 Preferred Stock or Parity Securities provided that the
aggregate purchase price of all outstanding shares of Series A-2 Preferred Stock and Parity
Securities may not, except to the extent set forth in the second sentence following this sentence,
exceed $400.0 million. For purposes hereof, the term Additional Permitted Preferred
Stock shall mean the $280 million of Series A Preferred Stock issued on May 12, 2011 together
with the $120 million of Series A-2 Preferred Stock issued on the Original Issue Date. The Company
shall not, on or after the Original Issue Date, issue any (x) Parity Securities in excess of the
Additional Permitted Preferred Stock authorized by the first sentence of this SECTION 8(b) or (y)
Senior Securities unless one of the following conditions (the Incurrence Based Issuance
Limits) is satisfied (and, in the case of Senior Securities, subject to receipt of the
required approval of the Majority Holders and, if applicable, the Fortress Investor, as set forth
under SECTIONS 4(b)(i)(B) and 4(b)(ii)(A) of the Existing Series A Certificate of Designation):
(i) if the Companys Total Secured Debt is less than $400.0 million, the Pro Forma Collateral
Coverage Ratio after such issuance would be greater than the number equal to (x) the collateral
coverage ratio set forth in Section 4.18 of the Indenture (or a successor provision) applicable at
times when the Companys Total Secured Debt outstanding is less than $400.0 million less (y) 0.5
(which, for example, means the Pro Forma Collateral Coverage Ratio exceeds 1.5 to 1.0 as of the
date hereof because the collateral coverage ratio set forth in the Indenture as in effect on the
date hereof is 2.0 to 1.0); or
(ii) if the Companys Total Secured Debt is equal to or greater than $400.0 million, the Pro
Forma Collateral Coverage Ratio after such issuance would be greater than the number equal to (x)
the collateral coverage ratio set forth in Section 4.18 of the Indenture (or a successor provision)
applicable at times when the Companys Total Secured Debt outstanding is
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equal to or greater than $400.0 million, the
Pro Forma Collateral Coverage Ratio after such issuance would be greater than the number equal to
(x) the collateral coverage ratio set forth in Section 4.18 of the Indenture (or a successor
provision) applicable at times when the Companys Total Secured Debt outstanding is equal to or
greater than $400.0 million less (y) 0.5 (which, for example, means the Pro Forma Collateral
Coverage Ratio exceeds 2.0 to 1.0 as of the date hereof because the collateral coverage ratio set
forth in the Indenture as in effect on the date hereof is 2.5 to 1.0).
Notwithstanding the foregoing, the Incurrence Based Issuance Limits shall cease to apply, and
the conditions in the foregoing clauses (i) and (ii) shall be deemed satisfied, from and after the
first date on which both (x) the Company Conversion Conditions and (y) the Public Float Hurdle are
satisfied.
For the avoidance of doubt, no Series A-2 Preferred Stock or Parity Securities shall be
issuable or deemed issued pursuant to the third sentence of this SECTION 8(b) unless and until the
aggregate issue price of the Existing Series A Preferred Stock issued on May 13, 2011, plus the
Series A-2 Preferred Stock issued on the Original Issue Date, plus the aggregate issue price of
Additional Permitted Preferred Stock issued or deemed issued pursuant to the first sentence of this
SECTION 8(b) equals $400 million.
Any Parity Securities or Senior Securities issued after the Original Issue Date pursuant to
the third sentence of this SECTION 8(b), are referred to herein as the Additional Preferred
Securities).
(c) Use of Proceeds from Preferred Shares. The Company shall not, within 180 days
after May 13, 2011, (i) make any Restricted Payments, or (ii) redeem or repurchase any of the
Senior Notes; provided that, notwithstanding the foregoing, the Company may pursuant to this
covenant (x) (a) repurchase or redeem Equity Securities of the Company or any securities that are
linked to Equity Securities of the Company held by employees of the Company upon such employees
termination, death or disability, (b) repurchase Equity Securities of the Company deemed to occur
upon the exercise of stock options or warrants if the Equity Securities represent all or a portion
of the exercise price thereof (or related withholding taxes) and (c) make Restricted Payments to
allow the customary payment of cash in lieu of the issuance of fractional shares upon the exercise
of options or warrants or upon the conversion or exchange of Equity Securities of the Company; and
(y) make Restricted Payments or redeem or repurchase any of the Senior Notes to the extent that the
funds used to make such Restricted Payments or to redeem or repurchase any of the Senior Notes, as
applicable, consist of either dividend proceeds from operations received by the Company from
earnings of its Subsidiaries or proceeds from an initial public offering of F&G (as defined in the
Securities Purchase Agreement) or a Subsidiary thereof. For the avoidance of doubt, to the extent
any of the foregoing actions are subject to any other covenants or conditions pursuant to any other
provisions of this Certificate of Designation (including, without limitation, SECTION 4), such
action shall be required to comply with such other provisions.
(d) Certificates. The Company shall promptly, and in no event later than 30 days
after the last day of any calendar quarter, furnish to each Holder a certificate of an officer of
the Company setting forth, as of the end of such calendar quarter the Cash Maintenance Ratio and
the calculation of the same (provided that the Company shall not be obligated to provide the
information required by this sentence from and after such time as the covenant in SECTION 8(a)
ceases to be applicable).
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(i) The Company shall promptly, and in no event later than the 30th day after the first day of
a Dividend Period for which the Accreting Dividend rate has been adjusted pursuant to SECTION 2(b),
furnish to each Holder a certificate of an officer of the Company setting forth, as of the end of
the prior Dividend Period the Net Asset Value as of the end of such prior Dividend Period and the
calculation of the same.
(ii) If the Company issues any Additional Preferred Securities pursuant to SECTION 8(b), the
Company shall promptly, and in no event later than five (5) days after the date of such issuance,
furnish to each Holder a certificate of an officer of the Company setting forth, to the extent
required to be complied with in connection with such issuance, the amount of Total Secured Debt and
the Collateral Coverage Ratio as of the date of such issuance, the Pro Forma Collateral Coverage
Ratio after giving effect to such issuance, and the calculations relating to the same;
(iii) If the Company takes any action, which pursuant to this Certificate of Designation
requires the Public Float Hurdle to be met, the Company shall promptly, and in no event later than
five (5) days after the date of such action, furnish to each Holder a certificate of an officer of
the Company setting forth, to the extent required to be complied with in connection with such
action, the Public Market Capitalization as of the date of such action and an analysis of the
Public Float Hurdle.
SECTION 9. Additional Definitions. For purposes of these resolutions, the following
terms shall have the following meanings:
(a) Affiliate means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common control with, such
Person.
(b) Asset Sale shall have the meaning set forth in the Indenture.
(c) Beneficial Owner has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular
person (as that term is used in Section 13(d)(3) of the Exchange Act), such person shall be
deemed to have beneficial ownership of all securities that such person has the right to acquire
by conversion or exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms Beneficially Owns and
Beneficially Owned shall have a corresponding meaning.
(d) Business Day means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or obligated to close.
(e) Capital Stock means, with respect to any Person, any and all shares of stock of
a corporation, partnership interests or other equivalent interests (however designated, whether
voting or non-voting) in such Persons equity, entitling the holder to receive a share of the
profits and losses, and a distribution of assets, after liabilities, of such Person.
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(f) Cash Equivalents means:
(i) United States dollars, or money in other currencies received in the ordinary course of
business;
(ii) U.S. Government Obligations or certificates representing an ownership interest in U.S.
Government Obligations with maturities not exceeding one year from the date of acquisition;
(iii) (A) demand deposits, (B) time deposits and certificates of deposit with maturities of
one year or less from the date of acquisition, (C) bankers acceptances with maturities not
exceeding one year from the date of acquisition, and (D) overnight bank deposits, in each case with
any bank or trust company organized or licensed under the laws of the United States or any state
thereof having capital, surplus and undivided profits in excess of $500 million whose short-term
debt is rated A-2 or higher by S&P or P-2 or higher by Moodys;
(iv) repurchase obligations with a term of not more than seven (7) days for underlying
securities of the type described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above;
(v) commercial paper rated at least P-1 by Moodys or A-1 by S&P and maturing within six (6)
months after the date of acquisition; and
(vi) money market funds at least 95% of the assets of which consist of investments of the type
described in clauses (i) through (v) above.
(g) Certificate of Designation means this certificate of designation for the Series
A-2 Preferred Stock, as such shall be amended from time to time.
(h) Change of Control shall have the meaning set forth in the Existing Indenture;
provided, however, that references to Permitted Holders therein shall be deemed to refer to the
Harbinger Affiliates, the Fortress Investor and their respective Affiliates.
(i) Collateral Coverage Ratio means, as of any determination date, the Collateral
Coverage Ratio as set forth in the Indenture, except that (x) all assets of the Company and the
Guarantors (as defined in the Indenture) (including Excluded Property (as defined in the
Indenture)) shall be considered to be Collateral whether or not pledged to secure indebtedness of
the Company or its Subsidiaries and (y) clause (ii) of such definition shall be deemed to refer to
all Debt (as defined in the Indenture), whether or not secured by liens on the Collateral, and
the term Debt shall further be deemed to include all outstanding Preferred Shares and all
outstanding Parity Securities and Senior Securities (including any shares of Preferred Stock that
would be outstanding after taking into account the consummation of the proposed issuance of
Preferred Stock). In the event that any version of the Indenture no longer contains a Collateral
Coverage Ratio (or substantially similar test), then the term Collateral Coverage Ratio shall be
deemed to refer to the definition of Collateral Coverage Ratio (or such substantially similar
definition) set
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forth in the last version of the Indenture containing such ratio; provided,
however, that if the Company no longer has any indebtedness outstanding, then any covenants
utilizing the Collateral Coverage Ratio shall no longer be in effect (subject to the 365-day
reinstatement and related non-circumvention provisions of the last sentence contained in the
definition of the term Indenture herein).
(j) Common Stock means the shares of common stock, par value $0.01 per share, of the
Company or any other Capital Stock of the Company into which such Common Stock shall be
reclassified or changed.
(k) Company Conversion Conditions means the following: (i) the Thirty Day VWAP
exceeds 150% of the then applicable Conversion Price (as defined in the Existing Series A
Certificate of Designation) of the Existing Series A Preferred Stock; and (ii) the Daily VWAP
exceeds 150% of the then applicable Conversion Price (as defined in the Existing Series A
Certificate of Designation) of the Existing Series A Preferred Stock for at least twenty (20)
Trading Days out of the thirty (30) Trading Days used to calculate the Thirty Day VWAP in clause
(i) of this definition.
(l) control (including, with correlative meanings, the terms controlling,
controlled by and under common control with) with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by contract or
otherwise. For the avoidance of doubt, as of the date hereof (but without precluding a different
determination as of any date subsequent to the date hereof dependent on the relevant facts and
circumstances at such time), the Company shall not be considered to control Spectrum.
(m) Conversion Price means initially $7.00, as adjusted from time to time as
provided in SECTION 5.
(n) Convertible Securities means securities by their terms convertible into or
exchangeable for Common Stock or options, warrants or rights to purchase such convertible or
exchangeable securities.
(o) Daily VWAP means the volume-weighted average price per share of Common Stock (or
per minimum denomination or unit size in the case of any security other than Common Stock) as
displayed under the heading Bloomberg VWAP on the Bloomberg page for the <equity> AQR
page corresponding to the ticker for such Common Stock or unit (or its equivalent successor if
such page is not available) in respect of the period from the scheduled open of trading until the
scheduled close of trading of the primary trading session on such Trading Day (or if such
volume-weighted average price is unavailable, the market value of one share of such Common Stock
(or per minimum denomination or unit size in the case of any security other than Common Stock) on
such Trading Day. The volume weighted average price shall be determined without regard to
after-hours trading or any other trading outside of the regular trading session trading hours.
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(p) Debt shall have the meaning set forth in the Indenture.
(q) Dividend Payment Date means January 15, April 15, July 15 and October 15 of each
year, commencing on July 15, 2011; provided that, if any such Dividend Payment Date would otherwise
occur on a day that is not a Business Day, such Dividend Payment Date shall instead be the
immediately succeeding Business Day.
(r) Dividend Rate means for any Dividend Period, 8.00% plus the applicable Accreting
Dividend Rate for such Dividend Period.
(s) Equity Securities means, with respect to any Person: (i) shares of Capital
Stock of such Person, (ii) any rights, options, warrants or similar securities to subscribe for,
purchase or otherwise acquire any shares of the Capital Stock of such Person, and (iii) Capital
Stock or other securities (including debt securities) directly or indirectly convertible into or
exercisable or exchangeable for any shares of Capital Stock of such Person.
(t) Exchange means the NASDAQ Global Market, the NASDAQ Global Select Market, The
New York Stock Exchange or any of their respective successors.
(u) Exchange Act means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
(v) Excluded Stock means: (i) shares of Common Stock issued by the Company in an
event subject to, and for which the Conversion Price is subject to adjustment pursuant to, SECTION
5(g)(i)(A); (ii) Option Securities or shares of Common Stock (including upon exercise of Option
Securities) issued to any director, officer or employee pursuant to compensation arrangements
approved by the Board in good faith and otherwise permitted to be issued, or not prohibited, by any
other provision of this Certificate of Designation; (iii) the issuance of shares of Common Stock
upon conversion of the Preferred Shares or upon the exercise or conversion of Option Securities and
Convertible Securities of the Company outstanding on the Original Issue Date or otherwise
permitted to be issued, or not prohibited, by any other provision of this Certificate of
Designation; and (iv) Common Stock that becomes issuable in connection with, or as a result of,
accretions to the face amount of, or payments in kind with respect to, Preferred Shares, Option
Securities and Convertible Securities of the Company outstanding on the Original Issue Date or
otherwise permitted to be issued, or not prohibited, by any other provision of this Certificate of
Designation.
(w) Ex-Date means the first date on which the Common Stock trades on the applicable
exchange or in the applicable market, regular way, without the right to receive the issuance,
dividend or distribution in question from the Company or, if applicable, from the seller of the
Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by
such exchange or market.
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(x) Existing Indenture means the indenture, dated as of November 15, 2010, by and
between the Company and Wells Fargo Bank, National Association, as trustee, governing the Senior
Notes, as in effect on the Original Issue Date.
(y) Fair Market Value shall have the meaning set forth in the Indenture, provided
that, the initial Fair Market Value of all Investments of the Company shall be deemed to be the
purchase price paid by the Company therefor and the Fair Market Value of Harbinger F&G on May 13,
2011 shall be deemed to be $350.0 million, provided, further, that for purposes of the calculation
of Net Asset Value, the Fair Market Value of any Investment of the Company shall be valued twice
per annum at the end of the same two fiscal quarters as provided in the Indenture (or, if the
Indenture shall cease to be in effect or shall provide for valuations at times other than twice per
annum, then at the end of the same two fiscal quarters as provided in the then most recent
Indenture).
(z) Fixed Charges means, without duplication, the sum of (i) cash interest payments
on the Senior Notes, (ii) cash interest payments on other indebtedness for borrowed money, (iii)
Cash Dividends payable on the Preferred Shares, and (iv) cash dividends payable on Parity
Securities and Senior Securities.
(aa) Fortress Investor means CF Turul LLC, a Delaware limited liability company, or
its successor.
(bb) Fortress Investor Group means the Fortress Investor, its Affiliates and its
managed funds.
(cc) Fortress Representatives shall mean any Investor Director, Additional Preferred
Directors, Specified Default Directors, Director Replacement Observer and Fortress Board Observer,
in each case as defined in the Existing Series A Certificate of Designation.
(dd) Front Street Re means, collectively, FS Holdco Ltd. (Cayman), Front Street
Holdings Ltd (Cayman) and Front Street Re Ltd. (Bermuda), and their respective successors.
(ee) Front Street Specified Affiliate means FS Holdco Ltd., Front Street Re, Ltd.
and any of their respective Subsidiaries and successors and any other Subsidiary of FS Holdco Ltd.
formed to conduct a reinsurance business.
(ff) FS/OM Permitted Activities means:
(i) any reinsurance transaction entered into by any Front Street Specified Affiliate that is
approved by a committee of independent directors of the Company (including without limitation the
appointment of a Harbinger Affiliate as investment manager of any assets underlying such
transaction, the investment of any such assets in debt or equity securities issued by, or the
purchase of assets or investments from, any Harbinger Affiliate, or the formation of any
subsidiaries to implement such transaction);
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(ii) asset management activity of any Harbinger F&G Affiliate that are (x) conducted on
customary market terms, (y) conducted in the ordinary course of business and on terms that are
substantially economically similar (in the aggregate) to the terms in effect as of the date of this
Agreement with respect to the asset management activities conducted on behalf of Harbinger F&G
Affiliates by Goldman Sachs Asset Management and Barrow, Hanley, Mewhinney & Strauss (regardless of
whether such asset management activities are conducted by the Company or any of its Subsidiaries
(including, any Harbinger F&G Affiliates) or any Harbinger Affiliate), or (z) approved by a
committee of independent directors of the Company (including without limitation the appointment of
a Harbinger Affiliate as the investment manager for such assets, the investment of any such assets
in debt or equity securities issued by, or the purchase of assets or investments from, any
Harbinger Affiliate or the formation of any subsidiary to implement such transaction); and
(iii) asset management activity of any other financial services company that is a Subsidiary
of the Company (including without limitation the appointment of a Harbinger Affiliate as the
investment manager for such assets, the investment of any such assets in debt or equity securities
issued by, or the purchase of assets or investments from, any Harbinger Affiliate or
the formation of any Subsidiary to implement such transaction) (other than the asset
management activities described in clause (ii) above) that are either in the ordinary course of
business or approved by a committee of independent directors of the Company; provided, such
asset management activities do not include operating as a hedge fund or private equity business
(unless such activities are managed by a Subsidiary of the Company and not by any Harbinger
Affiliate); provided further, that reinsurance activities shall not, for this purpose, be
considered a hedge fund or private equity business operation.
(gg) Going Private Event means either: (A) the Company or any Harbinger Affiliate
entering into a plan of merger or other agreement or arrangement providing for the acquisition of
the Company by any Harbinger Affiliate in a transaction subject to Rule 13e-3 of the Exchange Act
or (ii) a Harbinger Affiliate launching a tender offer subject to Rule 13e-3 of the Exchange Act
for the outstanding shares of Common Stock not held by the Harbinger Affiliates.
(hh) Governmental Entity shall mean any United States or non-United States federal,
state or local government, or any agency, bureau, board, commission, department, tribunal or
instrumentality thereof or any court, tribunal, or arbitral or judicial body.
(ii) Harbinger Affiliates means Philip A. Falcone, Harbinger Capital Partners, or
any limited partnership, limited liability company, corporation or other entity that is an
Affiliate of Philip A. Falcone or Harbinger Capital Partners (other than the Company and its
Subsidiaries).
(jj) Harbinger Capital Partners means, collectively, Harbinger Capital Partners LLC
and Harbinger Capital Partners II LP.
(kk) Harbinger F&G means Harbinger F&G, LLC (formerly known as Harbinger OM, LLC).
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(ll) Harbinger F&G Affiliate means Harbinger F&G and any of its Subsidiaries and any
of their respective successors.
(mm) hereof; herein and hereunder and words of similar import
refer to this Certificate of Designation as a whole and not merely to any particular clause,
provision, section or subsection.
(nn) Holders means the holders of outstanding Preferred Shares, shares of Existing
Series A Preferred Stock, and shares of Additional Permitted Preferred Stock as they appear in the
records of the Company.
(oo) HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations promulgated thereunder.
(pp) Independent Director means any director on the Board that is independent as
defined in Section 303A of The New York Stock Exchange Listed Company Manual, other than any
director that is employed by a Harbinger Affiliate.
(qq) Indenture means the indenture, dated as of November 15, 2010, by and between
the Company and Wells Fargo Bank, National Association, as trustee, governing the Senior Notes as
amended, supplemented or otherwise modified, and, in the event that the Senior Notes are refinanced
or replaced with indebtedness ranking senior to the Series A-2 Preferred Stock, shall be deemed to
refer to any agreement governing the terms of such indebtedness (provided, that in the event more
than one agreement would constitute an Indenture, with respect to any provision in this
Certificate of Designation incorporating a provision of the Indenture, the term Indenture shall
mean the agreement most favorable to the Holders with respect to such provision). Further, if at
any time the Company ceases to be a party to an Indenture, the terms hereof referring to the
provisions of the Indenture shall be suspended, except that if the Company enters into an
agreement regarding indebtedness ranking senior to the Series A-2 Preferred Stock within 365 days
of the termination of the last Indenture, then the term Indenture shall be deemed to refer to
such agreement and the provisions hereof that were previously suspended shall once again be
effective (provided, however, that if the Company directly or indirectly structures any financing
activity, or the timing thereof, with the purpose or intent of causing any such suspension with a
view towards thereafter entering into a new Indenture, then such suspension shall be deemed not to
have taken effect and the Company shall be deemed to have continued to be subject to the provisions
of the prior Indenture).
(rr) Initial Preferred Share Amount means 205,000 shares of Existing Series A
Preferred Stock, as adjusted for any splits, combinations, reclassifications or similar
adjustments.
(ss) Intermediate Holding Company means any Subsidiary of the Company that has no
assets other than Equity Interests in other Subsidiaries of the Company.
(tt) Insurance Regulatory Authorities means the Vermont Department of Banking,
Insurance, Securities and Health Care Administration, the New York State Insurance Department, the
Maryland Insurance Administration, the Bermuda Monetary Authority or any other
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Governmental Entity
regulating an insurance business of the Company or any of its controlled Affiliates.
(uu) Investment has the meaning ascribed to such term in the Indenture.
(vv) Investment Securities with respect to a Person means debt or equity securities
issued by such Person or similar obligations of, or participations in, such Person.
(ww) Issue Date means, with respect to a Preferred Share, the date on which such
share is first issued by the Company.
(xx) Lien means any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind (including any conditional sale or other title retention agreement or capital lease).
(yy) Liquidation Event means (i) the voluntary or involuntary liquidation,
dissolution or winding-up of the Company, (ii) the commencement by the Company of any case under
applicable bankruptcy, insolvency or other similar laws now or hereafter in effect, including
pursuant to Chapter 11 of the U.S. Bankruptcy Code, (iii) the consent to entry of an order for
relief in an involuntary case under applicable bankruptcy, insolvency or other similar laws now or
hereafter in effect, including pursuant to Chapter 11 of the U.S. Bankruptcy Code, and (iv)
the consent to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee or similar official of the Company, or any general assignment for the benefit of
creditors.
(zz) Majority Holders means Holders (other than the Company, its employees, its
Subsidiaries or Harbinger Affiliates) owning more than 50% of the Regular Liquidation Preference of
the issued and outstanding Preferred Shares, shares of Existing Series A Preferred Stock and shares
of Additional Permitted Preferred Stock, taken as a whole; provided that, for purposes of such
calculation, the Preferred Shares, shares of Existing Series A Preferred Stock and shares of
Additional Permitted Preferred Stock held by the Company, its employees, its Subsidiaries or any
Harbinger Affiliate shall be treated as not outstanding.
(aaa) Market Disruption Event means the occurrence or existence for more than one
half hour period in the aggregate on any scheduled Trading Day for the Common Stock (or Reference
Property, to the extent applicable) of any suspension or limitation imposed on trading (by reason
of movements in price exceeding limits permitted by the applicable Exchange or otherwise) in the
Common Stock (or Reference Property, to the extent applicable) or in any options, contracts or
future contracts relating to the Common Stock (or Reference Property, to the extent applicable),
and such suspension or limitation occurs or exists at any time before 4:00 p.m. (New York City
time) on such day.
(bbb) Market Value on any date means the closing sale price per share (or if no
closing sale price is reported, the average of the closing bid and ask prices or, if more than one
in either case, the average of the average closing bid and the average closing ask prices) on such
date as reported on the principal Exchange on which shares of the Common Stock are then listed. If
the
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Common Stock is not so listed or traded, the Market Value will be an amount reasonably
determined by the Board in good faith to be the fair value of the Common Stock.
(ccc) May 13 NAV means $893,520,931.
(ddd) Net Asset Value means the amount, valued twice per annum at the end of the
same two fiscal quarters as provided in the Indenture, equal to (A) the sum of (1) the Cash
Equivalents of the Company plus (2) the Fair Market Value of the Companys Investments (other than
Cash Equivalents), less (B) all liabilities of the Company determined in accordance with GAAP,
including those related to the Companys Investments to the extent not taken into account in the
calculation of the Fair Market Value of the Companys Investments; provided that for purposes
hereof, (i) the derivative attributable to the conversion feature in any series of Preferred Stock
will not be considered a liability of the Company, (ii) the face amount of any Series A-2 Preferred
Stock and any Parity Securities (as well as any cash dividends accrued thereon) will be considered
a liability of the Company, (iii) the amount of the fees and expenses paid by the Company on behalf
of itself or any third party in connection with the issuance of the first $400 million aggregate
purchase price of Existing Series A Preferred Stock, Series A-2 Preferred Stock and Additional
Preferred Securities will be included in the calculation of the Companys Cash Equivalents, in each
case upon the first calculation of Net Asset Value following payment of such fees or expenses, (iv)
the face amount of Preferred Stock that constitutes Senior Securities and dividends accrued thereon
will be considered a liability of the Company and (v) the face amount of Preferred Stock that is a
Junior Security and dividends accrued thereon will not be considered a liability of the Company;
provided, further, that at the option of the Company, Net Asset Value may be recalculated as of
December 31, 2011 solely for purposes of the Dividend Period(s) beginning on and after January 1,
2012.
(eee) Option Securities means options, warrants or other rights to purchase or
acquire Common Stock, as well as stock appreciation rights, phantom stock units and similar rights
whose value is derived from the value of the Common Stock.
(fff) Original Issue Date means Closing Date (as such term is defined in the
Securities Purchase Agreement).
(ggg) Person means any individual, corporation, limited liability company, limited
or general partnership, joint venture, association, joint-stock company, trust, unincorporated
organization, government, any agency or political subdivisions thereof or other Person as
contemplated by Section 13(d) of the Exchange Act.
(hhh) Portfolio Company means, with respect to a referent Person, any other Person
that issues Investment Securities if (i) such Investment Securities are the subject of an
investment by the referent Person, (ii) at least 10% of the class of Investment Securities are
Beneficially Owned by the referent Person and (iii) such Investment Securities are not (A) cash or
cash equivalents, (B) marketable direct obligations issued or unconditionally guaranteed by the
government of any OECD country, or issued by any agency thereof, maturing within one year from the
date of acquisition thereof, (C) money market instruments, commercial paper or other short-term
debt obligations having at the date of purchase by such Person the highest or second highest rating
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obtainable from either Standard & Poors Ratings Services or Moodys Investors Services, Inc., or
their respective successors, (D) interest bearing accounts at a registered broker-dealer, (E) money
market mutual funds, (F) certificates of deposit or similar financial instruments maturing within
one year from the date of acquisition thereof issued by commercial banks incorporated under the
laws of the United States, any state thereof, the District of Columbia, any other OECD country or
political subdivision thereof, each having at the date of acquisition by the Partnership combined
capital and surplus of not less than $100 million, or (G) overnight repurchase agreements with
primary U.S. Federal Reserve Bank dealers collateralized by direct U.S. Government obligations or
similar arrangements with the central banks of OECD countries.
(iii) Preferred Shares means the shares of Series A-2 Preferred Stock.
(jjj) Pro Forma Collateral Coverage Ratio means, with respect to a potential
issuance of shares of Additional Preferred Securities, the Collateral Coverage Ratio calculated to
give pro forma effect to the issuance of such Additional Preferred Securities.
(kkk) Public Float Hurdle means, as of any relevant measurement date, that the
Public Market Capitalization is greater than the aggregate Market Value of the shares of Common
Stock into which all issued and outstanding shares of Existing Series A Preferred Stock may be
converted.
(lll) Public Market Capitalization means, as of any relevant measurement date, the
aggregate Market Value of all issued and outstanding shares of Common Stock, other than shares of
Common Stock held by Harbinger Affiliates.
(mmm) Purchase Price means $1,000 per share, as the same may be increased pursuant
to SECTION 2; provided that, in connection with a Going Private Event, the Purchase Price shall be
adjusted to be an amount equal to the greater of (i) an amount equal to the Regular Liquidation
Preference (disregarding for the purposes of calculating the Regular Liquidation Preference the
last sentence of this definition) or (ii) the value of the consideration to be received per share
of Common Stock in such Going Private Event (reasonably determined in good faith by the Board).
Notwithstanding the foregoing, for purposes of determining Cash Dividends payable pursuant to
SECTION 2(a) and the Liquidation Preference payable upon a Liquidation Event pursuant to SECTION 3,
no adjustment to the Purchase Price pursuant to the first proviso of the preceding sentence shall
be taken into account.
(nnn) Redemption Date means the Maturity Date, any Optional Redemption Date or any
Change of Control Payment Date, as applicable.
(ooo) Redemption Price means with respect to each Preferred Share: (i) in
connection with a redemption pursuant to SECTION 6(a), the Purchase Price plus all accrued and
unpaid Dividends (to the extent not included in the Purchase Price, including, without limitation,
accrued and unpaid Cash Dividends and accrued and unpaid Accreting Dividends for the then current
Dividend Period), if any, on each Preferred Share to be redeemed, (ii) in connection with a
redemption pursuant to SECTION 6(b), 150% of the sum of the Purchase Price plus all accrued and
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unpaid Dividends (to the extent not included in the Purchase Price, including, without limitation,
accrued and unpaid Cash Dividends and accrued and unpaid Accreting Dividends for the then current
Dividend Period), if any, on each Preferred Share to be redeemed, or (iii) in connection with a
Change of Control, the Change of Control Payment.
(ppp) Restricted Payment means any dividend, distribution or other payment in
respect of the Common Stock or any Junior Securities, (other than, in the case of Junior
Securities, regularly scheduled dividend payments) or the repurchase, redemption or other
acquisition of any shares of Common Stock or any Junior Securities.
(qqq) Securities Purchase Agreement means that certain securities purchase
agreement, dated August 1, 2011 (as amended by First Amendment to Securities Purchase
Agreement, dated as of August 4, 2011), among the Company, Quantum Partners LP, a Cayman Islands
exempted limited partnership, JHL Capital Group Master Fund L.P., a Cayman Islands
exempted limited partnership, DDJ High Yield Fund, an entity organized under the laws of the
Province of Ontario, Canada, General Motors Hourly-Rate Employes Pension Trust 7N1H, a trust
maintained by General Motors Corporation, a Delaware corporation, General Motors Salaried Employes
Pension Trust 7N1I, a trust maintained by General Motors Corporation, Stichting Pensioenfonds
Hoogovens, a Dutch pension plan regulated by the Dutch Central Bank, Caterpillar Inc. Master
Retirement Trust, a trust maintained by Caterpillar, Inc., a Delaware corporation, J.C. Penney
Corporation, Inc. Pension Plan Trust, a trust maintained by J.C. Penney Corporation, Inc., a
Delaware corporation, Stichting Bewaarder Interpolis Pensioenen Global High Yield Pool, a Dutch
tax transparent pool of assets, Stichting Pensioenfonds voor Fysiotherapeuten, a Dutch pension
plan regulated by the Dutch Central Bank, Houston Municipal Employees Pension System, a pension
plan organized pursuant to Texas government code, UAW Retiree Medical Benefits Trust, a trust
consisting of three separate employees beneficiary associations, DDJ Distressed and Special
Situations Fund, L.P., a Delaware limited partnership, Russell Investment Company Russell Global
Opportunistic Credit Fund, a Massachusetts business trust, DDJ Capital Management Group Trust -
High Yield Investment Fund, a trust maintained by The Bank of New York Mellon, a New York State
chartered bank, as trustee, Luxor Capital Partners, LP, a Delaware limited partnership, Luxor
Wavefront, LP, a Delaware limited partnership, Luxor Capital Partners Offshore Fund, LP, a Cayman
Islands limited partnership, OC 19 Master Fund, L.P. LCG , a Cayman Islands limited partnership
and GAM Equity Six Inc., a British Virgin Islands company.
(rrr) Senior Notes means the 10.625% Senior Secured Notes Due November 15, 2015
issued under the Indenture.
(sss) Series A-2 Majority Holders means holders of Preferred Shares (other than the
Company, its employees, its Subsidiaries or Harbinger Affiliates) owning more than 50% of the
Regular Liquidation Preference of the issued and outstanding Preferred Shares; provided that, for
purposes of such calculation, the Preferred Shares held by the Company, its employees, its
Subsidiaries or any Harbinger Affiliate shall be treated as not outstanding.
(ttt) Significant Subsidiary means any Subsidiary, or group of Subsidiaries, that
would, taken together, be a significant subsidiary as defined in Article 1, Rule 1-02 (w)(1) or
(2) of
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Regulation S-X promulgated under the Securities Act of 1933, as amended, as such regulation
is in effect on the Original Issue Date.
(uuu) Specified Sections means SECTION 1(b), SECTION 2, SECTION 3, SECTION 4(a),
SECTION 4(b), SECTION 4(e), SECTION 5, SECTION 6, SECTION 8(d), SECTION 10(a), SECTION 10(b),
SECTION 10(c), SECTION 10(d), SECTION 10(f) or the definitions of Majority Holders or Series A-2
Majority Holders.
(vvv) Spectrum means Spectrum Brands Holdings, Inc., a Delaware corporation.
(www) Subsidiary means with respect to any Person, any corporation, association or
other business entity of which more than 50% of the outstanding Voting Stock is owned, directly or
indirectly, by, or of which more than 50% of the economic value accrues to, or, in the case of a
partnership, the sole general partner or the managing partner or the only general partners of which
are, such Person and one or more Subsidiaries of such Person (or a combination thereof). Unless
otherwise specified, Subsidiary means a Subsidiary of the Company.
(xxx) Subsidiary Guarantor means any entity that is a Guarantor pursuant to the
Indenture.
(yyy) Thirty Day VWAP means, with respect to a security, the average of the Daily
VWAP of such security for each day during a thirty (30) consecutive Trading Day period
ending immediately prior to the date of determination. Unless otherwise specified, Thirty
Day VWAP means the Thirty Day VWAP of the Common Stock.
(zzz) Total Secured Debt means, with respect to any Person, all outstanding Debt of
such Person that is secured by Liens on the assets of such Person.
(aaaa) Total Current Voting Power shall mean, with respect to any entity, at the
time of determination of Total Current Voting Power, the total number of votes which may be cast in
the general election of directors of such entity (or, in the event the entity is not a corporation,
the governing members, board or other similar body of such entity).
(bbbb) Trading Day means any day on which (i) there is no Market Disruption Event
and (ii) The New York Stock Exchange or, if the Common Stock (or Reference Property, to the extent
applicable) is not listed on The New York Stock Exchange, the principal national securities
exchange on which the Common Stock (or Reference Property, to the extent applicable) is listed and
is open for trading or, if the Common Stock (or Reference Property, to the extent applicable) is
not so listed, admitted for trading or quoted, any Business Day. A Trading Day only includes those
days that have a scheduled closing time of 4:00 p.m. (New York City time) or the then standard
closing time for regular trading on the relevant exchange or trading system.
(cccc) Transaction Agreements shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
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(dddd) U.S. Government Obligations means obligations issued or directly and fully
guaranteed or insured by the United States of America or by any agent or instrumentality thereof,
provided that the full faith and credit of the United States of America is pledged in support
thereof.
(eeee) Voting Stock means, with respect to any Person, Capital Stock of any class or
kind ordinarily having the power to vote for the election of directors, managers or other voting
members of the governing body of such Person.
(ffff) Each of the following terms is defined in the SECTION set forth opposite such term:
Term | Section | |
Accreting Dividend |
2(b) | |
Accreting Dividend Rate |
2(b) | |
Additional Preferred Securities |
8(b)(ii) | |
Additional Permitted Preferred Stock |
8(b) | |
Basic Accreting Dividend |
2(b) | |
Board |
Preamble | |
Breach Period |
7(c) | |
Cash Accretion Dividends |
2(a) | |
Cash Dividends |
2(a) | |
Cash Maintenance Ratio |
8(a) | |
Certificate of Incorporation |
Recitals | |
Change of Control Offer |
6(c)(ii) | |
Change of Control Payment |
6(c)(i) | |
Change of Control Payment Date |
6(c)(ii) | |
Common Dividend |
2(c) | |
Company |
Preamble | |
Conversion Amount |
5(d)(i) | |
Conversion Date |
5(a) | |
DGCL |
Preamble | |
Dividend Period |
2(g) | |
Dividend Record Date |
2(f) | |
Dividends |
2(b) | |
Election Notice |
6(a) | |
Existing Purchasers |
Recitals | |
Existing Series A Certificate of Designation |
Recitals | |
Existing Series A Preferred Stock |
Recitals | |
Forced Conversion Trigger Date |
5(b) | |
Fortress Director Representation Amount |
7(e) | |
Holder Redemption Notice Period |
6(a) | |
Incurrence Based Issuance Limits |
8(b) | |
In-Kind Accretion Dividends |
2(d) | |
In-Kind Common Dividend |
2(d) |
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Term | Section | |
In-Kind Participating Dividend |
2(d) | |
Junior Securities |
1(b)(i) | |
Liquidation Preference |
3(a) | |
Maturity Date |
6(a) | |
Optional Redemption Date |
6(b) | |
Parity Securities |
1(b)(ii) | |
Participating Accretion Dividends |
2(c) | |
Participating Cash Dividend |
2(c) | |
Participating Dividends |
2(d) | |
Participating Liquidation Preference |
3(a) | |
Preferred Stock |
Recitals | |
Proportionate Representation Amount |
8(e) | |
Reference Property |
5(g)(v) | |
Regular Liquidation Preference |
3(a) | |
Regulated Shares |
5 | |
Senior Securities |
1(b)(iii) | |
Series A-2 Preferred Stock |
1(a) | |
Specified Breach Director |
7(c) | |
Transaction |
5(g)(v) | |
Trigger Event |
5(g)(ii) |
SECTION 10. Miscellaneous. For purposes of this Certificate of Designation, the
following provisions shall apply:
(a) Share Certificates. If any certificates representing Preferred Shares shall be
mutilated, lost, stolen or destroyed, the Company shall issue, in exchange and in substitution for
and upon cancellation of the mutilated certificate, or in lieu of and substitution for the lost,
stolen or destroyed certificate, a new Preferred Share certificate of like tenor and representing
an equivalent number of Preferred Shares, but only upon receipt of evidence of such loss, theft or
destruction of such certificate and indemnity by the holder thereof, if requested, reasonably
satisfactory to the Company.
(b) Status of Cancelled Shares. Preferred Shares which have been converted, redeemed,
repurchased or otherwise cancelled shall be retired and, following the filing of any certificate
required by the DGCL, have the status of authorized and unissued shares of Preferred Stock, without
designation as to series, until such shares are once more designated by the Board as part of a
particular series of Preferred Stock of the Company.
(c) Severability. If any right, preference or limitation of the Series A-2 Preferred
Stock set forth in this Certificate of Designation is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other rights, preferences and
limitations set forth in this Certificate of Designation which can be given effect without the
invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in
full force and effect, and
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no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so expressed herein.
(d) Remedies.
(i) Except with respect to the Specified Breach Events specified in SECTIONS 7(a)(v) and
7(a)(vi), the remedies set forth in SECTIONS 7(b), 7(c) and 7(d) shall be the sole remedies
available to any Person upon the occurrence of a Specified Breach Event. In addition to the
remedies provided for in SECTIONS 7(b), 7(c) and 7(d), the Holders shall retain all rights and
remedies available to them at law or in equity as provided in SECTION 10(d)(ii) below in connection
with any Specified Breach Event specified in SECTIONS 7(a)(v) and 7(a)(vi). With respect to a
Specified Breach in SECTION 7(a)(iii), for the avoidance of doubt, Holders retain all rights and
remedies available at law or in equity as provided in SECTION 10(d)(ii) for any failure to pay any
Dividends when and to the extent required in connection with the conversion of any Preferred
Shares, in connection with a redemption of Preferred Shares on the Maturity Date, on an Optional
Redemption Date or in connection with a Change of Control, upon any Liquidation Event or otherwise
in connection with the redemption, repayment, repurchase, retirement, conversion or maturity of
Preferred Shares, and such events do not constitute a Specified Breach within the meaning of
SECTION 7(a)(iii)).
(ii) The Company acknowledges that the obligations imposed on it in this Certificate of
Designation are special, unique and of an extraordinary character, and irreparable damages, for
which money damages, even if available, would be an inadequate remedy, would occur in the event
that the Company does not perform the provisions of this Agreement in accordance with
its specified terms or otherwise breaches such provisions. Except as specifically provided in
SECTION 10(d)(i), the Holders shall be entitled to seek an injunction, specific performance and
other equitable relief to prevent breaches of this Certificate of Designation and to seek to
enforce specifically the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled, at law or in equity, including without limitation money damages.
(e) Renunciation under DGCL Section 122(17). Pursuant to Section 122(17) of the
Delaware General Corporation Law, the Company renounces any interest or expectancy of the Company
in, or being offered an opportunity to participate in, business opportunities that are presented to
one or more of the Specified Breach Directors other than any business opportunities that are
presented to any such Specified Breach Director solely in their capacity as a director of the
Company.
(f) Headings. 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.
(g) Notices. All notices or communications in respect of Preferred Stock shall be in
writing and shall be deemed delivered (a) three (3) Business Days after being sent by registered or
certified mail, return receipt requested, postage prepaid, (b) one (1) Business Day after being
sent via a reputable nationwide overnight courier service guaranteeing next business day delivery,
(c) on the date of delivery if delivered personally, or (d) if by facsimile, upon written
confirmation of receipt
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by facsimile. Notwithstanding the foregoing, if Preferred Stock is issued
in book-entry form through The Depository Trust Company or any similar facility, such notices may
be given to the beneficial holders of Preferred Stock in any manner permitted by such facility.
(h) Other Rights. The shares of Preferred Stock shall not have any rights,
preferences, privileges or voting powers or relative, participating, optional or other special
rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or
in the Certificate of Incorporation or as provided by applicable law and regulation.
[Rest of page intentionally left blank.]
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designation to be executed by a
duly authorized officer of the Company as of August 5, 2011.
HARBINGER GROUP INC. | ||||||
By: Name: |
/s/ Francis T. McCarron
|
|||||
Title: | Executive Vice President & Chief Financial Officer |
[SIGNATURE PAGE TO CERTIFICATE OF DESIGNATION]