Document:

exv10w31

Exhibit 10.31

SECURITY AGREEMENT

     THIS SECURITY AGREEMENT (this “Agreement”), dated as of November 1, 2010, and
effective as of the Effective Date (defined below), is made and given by UNIVERSAL ELECTRONICS
INC., a corporation organized under the laws of the State of Delaware (the “Grantor”), to
U.S. BANK NATIONAL ASSOCIATION, a national banking association (the “Secured Party”).

RECITALS

     A. The Grantor and the Secured Party have entered into a Amended and Restated Credit Agreement
dated as of November 1, 2010 (as the same may hereafter be amended, supplemented, extended,
restated, or otherwise modified from time to time, the “Credit Agreement”) pursuant to
which the Secured Party has agreed to extend to the Grantor certain credit accommodations
consisting of a revolving credit and a term loan to finance in part the Acquisition (Enson) (as
defined in the Credit Agreement).

     B. It is a condition precedent to the obligation of the Secured Party to extend credit
accommodations pursuant to the terms of the Credit Agreement that this Agreement be executed and
delivered by the Grantor.

     C. The Grantor finds it advantageous, desirable and in its best interests to comply with the
requirement that it execute and deliver this Security Agreement to the Secured Party.

     NOW, THEREFORE, in consideration of the premises and to induce the Secured Party to enter into
the Credit Agreement and to extend credit accommodations to the Grantor thereunder, the Grantor
hereby agrees with the Secured Party for the Secured Party’s benefit as follows:

     Section 1. Defined Terms.

     1(a) As used in this Agreement, the following terms shall have the meanings indicated:

     “Account” means a right to payment of a monetary obligation, whether or
not earned by performance, (i) for property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be
rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a
secondary obligation incurred or to be incurred, (v) for energy provided or to be
provided, (vi) for the use or hire of a vessel under a charter or other contract,
(vii) arising out of the use of a credit or charge card or information contained on
or for use with the card, or (viii) as winnings in a lottery or other game of chance
operated, sponsored, licensed or authorized by a State or governmental unit of a
State, or person licensed or authorized to operate the game by a State or
governmental unit of a State. The term includes health-care insurance receivables.

     “Account Debtor” means a Person who is obligated on or under any
Account, Chattel Paper, Instrument or General Intangible.

 

 

     “Chattel Paper” means a record or records that evidence both a monetary
obligation and a security interest in specific goods, a security interest in
specific goods and software used in the goods, a security interest in specific goods
and license of software used in the goods, a lease of specific goods, or a lease of
specific goods and license of software used in the goods.

     “Collateral” means all property and rights in property now owned or
hereafter at any time acquired by the Grantor in or upon which a Security Interest
is granted to the Secured Party by the Grantor under this Agreement.

     “Deposit Account” means any demand, time, savings, passbook or similar
account maintained with a bank.

     “Document” means a document of title or a warehouse receipt.

     “Effective Date” means November 8, 2010, unless the Grantor satisfies
all of the conditions set forth in Article III of the Credit Agreement on or before
November 8, 2010, in which case this Agreement shall never take effect and shall be
null and void.

     “Equipment” means all machinery, equipment, motor vehicles, furniture,
furnishings and fixtures, including all accessions, accessories and attachments
thereto, and any guaranties, warranties, indemnities and other agreements of
manufacturers, vendors and others with respect to such Equipment.

     “Event of Default” has the meaning given to such term in Section 18.

     “Financing Statement” has the meaning given to such term in Section 4.

     “Fixtures” means goods that have become so related to particular real
property that an interest in them arises under real property law.

     “General Intangibles” means any personal property (other than goods,
Accounts, Chattel Paper, Deposit Accounts, Documents, Instruments, Investment
Property, Letter of Credit Rights, and money) including things in action, contract
rights, payment intangibles, software, corporate and other business records,
inventions, designs, patents, patent applications, service marks, trademarks,
tradenames, trade secrets, internet domain names, engineering drawings, good will,
registrations, copyrights, licenses, franchises, customer lists, tax refund claims,
royalties, licensing and product rights, rights to the retrieval from third parties
of electronically processed and recorded data and all rights to payment resulting
from an order of any court.

     “Instrument” means a negotiable instrument or any other writing that
evidences a right to the payment of a monetary obligation and is not itself a
security agreement or lease and is of a type that is transferred in the ordinary
course of business by delivery with any necessary endorsement or assignment.

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     “Inventory” means goods, other than farm products, that are leased by a
person as lessor, are held by a person for sale or lease or to be furnished under a
contract of service, are furnished by a person under a contract of service, or
consist of raw materials, work in process, or materials used or consumed in a
business or incorporated or consumed in the production of any of the foregoing and
supplies, in each case wherever the same is located, whether in transit, on
consignment, in retail outlets, warehouses, terminals or otherwise, and all property
the sale, lease or other disposition of which has given rise to an Account and that
has been returned to the Grantor or repossessed by the Grantor or stopped in
transit.

     “Investment Property” means a security, whether certificated or
uncertificated, a security entitlement, a securities account and all financial
assets therein, a commodity contract or a commodity account.

     “Letter of Credit Right” means a right to payment or performance under
a letter of credit, whether or not the beneficiary has demanded or is at the time
entitled to demand payment or performance.

     “Lien” means any security interest, mortgage, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device (including
the interest of the lessors under capitalized leases), in, of or on any assets or
properties of the Person referred to.

     “Obligations” means (a) all indebtedness, liabilities and obligations
of the Grantor to the Secured Party of every kind, nature or description under the
Credit Agreement, including the Grantor’s obligation on any promissory note or notes
under the Credit Agreement and any note or notes hereafter issued in substitution or
replacement thereof, (b) all liabilities of the Grantor under this Agreement, and
(c) any and all other liabilities and obligations of the Grantor to the Secured
Party of every kind, nature and description, whether direct or indirect or hereafter
acquired by the Secured Party from any Person, absolute or contingent, regardless of
how such liabilities arise or by what agreement or instrument they may be evidenced,
and in all of the foregoing cases whether due or to become due, and whether now
existing or hereafter arising or incurred.

     “Person” means any individual, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or other
capacity.

     “Security Interest” has the meaning given such term in Section 2.

     1(b) All other terms used in this Agreement that are not specifically defined herein
shall have the meaning assigned to such terms in Article 9 of the Uniform Commercial Code as
in effect in the State of California

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     1(c) Unless the context of this Agreement otherwise clearly requires, references to the
plural include the singular, references to the singular include the plural, and “or” has the
inclusive meaning represented by the phrase “and/or.” The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” The words
“hereof,” “herein,” and “hereunder” and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision. References to Sections are
references to Sections in this Agreement unless otherwise provided.

     Section 2. Grant of Security Interest. As security for the payment and performance of
all of the Obligations, the Grantor hereby grants to the Secured Party a security interest (the
“Security Interest”) in all of the Grantor’s right, title, and interest in and to the
following, whether now or hereafter owned, existing, arising or acquired and wherever located:

     2(a) All Accounts.

     2(b) All Chattel Paper.

     2(c) All Deposit Accounts.

     2(d) All Documents.

     2(e) All Equipment.

     2(f) All Fixtures.

     2(g) All General Intangibles.

     2(h) All Instruments.

     2(i) All Inventory.

     2(j) All Investment Property.

     2(k) All Letter of Credit Rights.

     2(l) To the extent not otherwise included in the foregoing, all other rights to the
payment of money, including rents and other sums payable to the Grantor under leases, rental
agreements and other Chattel Paper; all books, correspondence, credit files, records,
invoices, bills of lading, and other documents relating to any of the foregoing, including,
without limitation, all tapes, cards, disks, computer software, computer runs, and other
papers and documents in the possession or control of the Grantor or any computer bureau from
time to time acting for the Grantor; all rights in, to and under all policies insuring the
life of any officer, director, stockholder or employee of the Grantor, the proceeds of which
are payable to the Grantor; all accessions and additions to, parts and appurtenances of,
substitutions for and replacements of any of the foregoing; and all proceeds (including
insurance proceeds) and products thereof.

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     Section 3. Grantor Remains Liable. Anything herein to the contrary notwithstanding,
(a) the Grantor shall remain liable under the Accounts, Chattel Paper, General Intangibles and
other items included in the Collateral to the extent set forth therein to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the
exercise by the Secured Party of any of the rights hereunder shall not release the Grantor from any
of its duties or obligations under the Accounts or any other items included in the Collateral, and
(c) the Secured Party shall have no obligation or liability under Accounts, Chattel Paper, General
Intangibles and other items included in the Collateral by reason of this Agreement, nor shall the
Secured Party be obligated to perform any of the obligations or duties of the Grantor thereunder or
to take any action to collect or enforce any claim for payment assigned hereunder.

     Section 4. Title to Collateral. The Grantor has (or will have at the time it acquires
rights in Collateral hereafter acquired or arising) and shall maintain so long as the Security
Interest may remain outstanding, title to each item of Collateral (including the proceeds and
products thereof), free and clear of all Liens except the Security Interest and except Liens
permitted by the Credit Agreement. The Grantor shall not license any Collateral. The Grantor
shall defend the Collateral against all claims or demands of all Persons (other than the Secured
Party) claiming the Collateral or any interest therein. As of the date of execution of this
Security Agreement, no effective financing statement or other similar document used to perfect and
preserve a security interest under the laws of any jurisdiction (a “Financing Statement”)
covering all or any part of the Collateral is on file in any recording office, except such as may
have been filed (a) in favor of the Secured Party relating to this Agreement, or (b) to perfect
Liens permitted by the Credit Agreement.

     Section 5. Disposition of Collateral. The Grantor shall not sell, lease or otherwise
dispose of, or discount or factor with or without recourse, any Collateral, except for sales of
items of Inventory in the ordinary course of business and dispositions of Equipment that are
immediately replaced with comparable replacement equipment.

     Section 6. Names, Offices, Locations, Jurisdiction of Organization. The Grantor’s
legal name (as set forth in its constituent documents filed with the appropriate governmental
official or agency) is as set forth in the opening paragraph hereof. The jurisdiction of
organization of the Grantor is the state of Delaware, and the organizational number of the Grantor
is set forth on the signature page of this Agreement. The Grantor shall from time to time at the
request of the Secured Party provide the Secured Party with current good standing certificates
and/or state-certified constituent documents from the appropriate governmental officials. The
chief place of business and chief executive office of Grantor are located at its address set forth
on the signature page hereof. The Grantor shall not locate or relocate any item of Collateral into
any jurisdiction in which an additional Financing Statement would be required to be filed to
maintain the Secured Party’s perfected security interest in such Collateral. The Grantor shall not
change its name, the location of its chief place of business and chief executive office or its
corporate structure (including without limitation, its jurisdiction of organization) unless the
Secured Party has been given at least 30 days’ prior written notice thereof and the Grantor has
executed and delivered to the Secured Party such Financing Statements and other instruments
required or appropriate to continue the perfection of the Security Interest.

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     Section 7. Rights to Payment. Except as the Grantor otherwise advises the Secured
Party in writing, each Account, Chattel Paper, Document, General Intangible and Instrument
constituting or evidencing Collateral is (or, in the case of all future Collateral, will be when
arising or issued) the valid, genuine and legally enforceable obligation of the Account Debtor or
other obligor named therein or in the Grantor’s records pertaining thereto as being obligated to
pay or perform such obligation. Without the Secured Party’s prior written consent, the Grantor
shall not agree to any modifications, amendments, subordinations, cancellations or terminations of
the obligations of any such Account Debtors or other obligors except in the ordinary course of
business and in amounts not exceeding $10,000 per Account Debtor or other obligor in any calendar
year. The Grantor shall perform and comply in all material respects with all its obligations under
any items included in the Collateral and exercise promptly and diligently its rights thereunder.

     Section 8. Further Assurances; Attorney-in-Fact.

     8(a) From time to time, at its expense, the Grantor shall promptly execute and deliver
all further instruments and documents, and take all further action, that may be necessary or
that the Secured Party may reasonably request, in order to perfect and protect the Security
Interest or to enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral (but any failure to request or assure that the
Grantor execute and deliver such instrument or documents or to take such action shall not
affect or impair the validity, sufficiency or enforceability of this Agreement and the
Security Interest, regardless of whether any such item was or was not executed and delivered
or action taken in a similar context or on a prior occasion). Without limiting the
generality of the foregoing, the Grantor shall, promptly and from time to time at the
request of the Secured Party: (i) execute and file such Financing Statements or
continuation statements in respect thereof, or amendments thereto, and such other
instruments or notices (including fixture filings with any necessary legal descriptions as
to any goods included in the Collateral that the Secured Party determines might be deemed to
be fixtures, and instruments and notices with respect to vehicle titles), as may be
necessary or desirable, or as the Secured Party may request, in order to perfect, preserve,
and enhance the Security Interest; (ii) obtain from any bailee holding any item of
Collateral an acknowledgement, in form satisfactory to the Secured Party that such bailee
holds such collateral for the benefit of the Secured Party; (iii) obtain from any securities
intermediary, or other party holding any item of Collateral, control agreements in form
satisfactory to the Secured Party (iv) and deliver and pledge to the Secured Party, all
Instruments and Documents, duly indorsed or accompanied by duly executed instruments of
transfer or assignment, with full recourse to the Grantor, all in form and substance
satisfactory to the Secured Party; (v) obtain waivers, in form satisfactory to the Secured
Party, of any claim to any Collateral from any landlords or mortgagees of any property where
any Inventory or Equipment is located.

     8(b) The Grantor hereby authorizes the Secured Party to file one or more Financing
Statements or continuation statements in respect thereof, and amendments thereto, relating
to all or any part of the Collateral without the signature of the Grantor where permitted by
law. The Grantor irrevocably waives any right to notice of any such filing. A photocopy or
other reproduction of this Agreement or any Financing Statement

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covering the Collateral or any part thereof shall be sufficient as a Financing
Statement where permitted by law.

     8(c) The Grantor shall furnish to the Secured Party from time to time statements and
schedules further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Secured Party may reasonably request, all in
reasonable detail and in form and substance reasonably satisfactory to the Secured Party.

     8(d) In furtherance, and not in limitation, of the other rights, powers and remedies
granted to the Secured Party in this Agreement, the Grantor hereby appoints the Secured
Party the Grantor’s attorney-in-fact, with full authority in the place and stead of Grantor
and in the name of Grantor or otherwise, from time to time in the Secured Party’s good faith
discretion, to take any action (including the right to collect on any Collateral) and to
execute any instrument that the Secured Party may reasonably believe is necessary or
advisable to accomplish the purposes of this Agreement, in a manner consistent with the
terms hereof.

     Section 9. Taxes and Claims. The Grantor shall promptly pay all taxes and other
governmental charges levied or assessed upon or against any Collateral or upon or against the
creation, perfection or continuance of the Security Interest, as well as all other claims of any
kind (including claims for labor, material and supplies) against or with respect to the Collateral,
except to the extent (a) such taxes, charges or claims are being contested in good faith by
appropriate proceedings, (b) such proceedings do not involve any material danger of the sale,
forfeiture or loss of any of the Collateral or any interest therein and (c) such taxes, charges or
claims are adequately reserved against on the Grantor’s books in accordance with generally accepted
accounting principles.

     Section 10. Books and Records. The Grantor shall keep and maintain at its own cost
and expense satisfactory and complete records of the Collateral, including a record of all payments
received and credits granted with respect to all Accounts, Chattel Paper and other items included
in the Collateral.

     Section 11. Inspection, Reports, Verifications. The Grantor shall at all reasonable
times permit the Secured Party or its representatives to examine or inspect any Collateral, any
evidence of Collateral and the Grantor’s books and records concerning the Collateral, wherever
located. The Grantor shall from time to time when requested by the Secured Party furnish to the
Secured Party a report on its Accounts, Chattel Paper, General Intangibles and Instruments, naming
the Account Debtors or other obligors thereon, the amount due and the aging thereof. The Secured
Party or its designee is authorized to contact Account Debtors and other Persons obligated on any
such Collateral from time to time to verify the existence, amount and/or terms of such Collateral.

     Section 12. Notice of Loss. The Grantor shall promptly notify the Secured Party of
any loss of or material damage to any material item of Collateral or of any substantial adverse
change, known to Grantor, in any material item of Collateral or the prospect of payment or
performance thereof.

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     Section 13. Insurance. The Grantor shall keep the Inventory and Equipment insured
against “all risks” for the full replacement cost thereof subject to a deductible not exceeding
$10,000 and with an insurance company or companies satisfactory to the Secured Party, the policies
to protect the Secured Party as its interests may appear, with such policies or certificates with
respect thereto to be delivered to the Secured Party at its request. Each such policy or the
certificate with respect thereto shall provide that such policy shall not be canceled or allowed to
lapse unless at least 30 days’ prior written notice is given to the Secured Party.

     Section 14. Lawful Use; Fair Labor Standards Act. The Grantor shall use and keep the
Collateral, and shall require that others use and keep the Collateral, only for lawful purposes,
without violation of any federal, state or local law, statute or ordinance. All Inventory of the
Grantor as of the date of this Agreement that was produced by the Grantor or with respect to which
the Grantor performed any manufacturing or assembly process was produced by the Grantor (or such
manufacturing or assembly process was conducted) in compliance in all material respects with all
requirements of the Fair Labor Standards Act, and all Inventory produced, manufactured or assembled
by the Grantor after the date of this Agreement will be so produced, manufactured or assembled, as
the case may be.

     Section 15. Action by the Secured Party. If the Grantor at any time fails to perform
or observe any of the foregoing agreements, the Secured Party shall have (and the Grantor hereby
grants to the Secured Party) the right, power and authority (but not the duty) to perform or
observe such agreement on behalf and in the name, place and stead of the Grantor (or, at the
Secured Party’s option, in the Secured Party’s name) and to take any and all other actions that the
Secured Party may reasonably deem necessary to cure or correct such failure (including, without
limitation, the payment of taxes, the satisfaction of Liens, the procurement and maintenance of
insurance, the execution of assignments, security agreements and Financing Statements, and the
indorsement of instruments); and the Grantor shall thereupon pay to the Secured Party on demand the
amount of all monies expended and all costs and expenses (including reasonable attorneys’ fees and
legal expenses) incurred by the Secured Party in connection with or as a result of the performance
or observance of such agreements or the taking of such action by the Secured Party, together with
interest thereon from the date expended or incurred at the highest lawful rate then applicable to
any of the Obligations, and all such monies expended, costs and expenses and interest thereon shall
be part of the Obligations.

     Section 16. Insurance Claims. As additional security for the payment and performance
of the Obligations, the Grantor hereby assigns to the Secured Party any and all monies (including
proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other
rights of the Grantor with respect to, any and all policies of insurance now or at any time
hereafter covering the Collateral or any evidence thereof or any business records or valuable
papers pertaining thereto. At any time, whether before or after the occurrence of any Event of
Default, the Secured Party may (but need not), in the Secured Party’s name or in Grantor’s name,
execute and deliver proofs of claim, receive all such monies, indorse checks and other instruments
representing payment of such monies, and adjust, litigate, compromise or release any claim against
the issuer of any such policy. Notwithstanding any of the foregoing, so long as no Event of
Default exists the Grantor shall be entitled to all insurance proceeds with respect to Equipment or
Inventory provided that such proceeds are applied to the cost of replacement Equipment or
Inventory.

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     Section 17. The Secured Party’s Duties. The powers conferred on the Secured Party
hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon
it to exercise any such powers. The Secured Party shall be deemed to have exercised reasonable
care in the safekeeping of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to the safekeeping that the Secured Party accords its own property of
like kind. Except for the safekeeping of any Collateral in its possession and the accounting for
monies and for other properties actually received by it hereunder, the Secured Party shall have no
duty, as to any Collateral, as to ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the
Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any Persons or any other rights pertaining to any
Collateral. The Secured Party will take action in the nature of exchanges, conversions,
redemptions, tenders and the like requested in writing by the Grantor with respect to the
Collateral in the Secured Party’s possession if the Secured Party in its reasonable judgment
determines that such action will not impair the Security Interest or the value of the Collateral,
but a failure of the Secured Party to comply with any such request shall not of itself be deemed a
failure to exercise reasonable care with respect to the taking of any necessary steps to preserve
rights against any Persons or any other rights pertaining to any Collateral.

     Section 18. Default. Each of the following occurrences shall constitute an “Event of
Default” under this Agreement: (a) the Grantor fails to observe or perform any covenant or
agreement applicable to the Grantor under this Agreement; (b) any representation or warranty made
by the Grantor in this Agreement or any schedule, exhibit, supplement or attachment hereto or in
any financial statements, reports, or certificates heretofore or at any time hereafter submitted by
or on behalf of the Grantor to the Secured Party proves to have been false or materially misleading
when made; or (c) any “Event of Default” occurs under the Credit Agreement.

     Section 19. Remedies on Default. Upon an Event of Default and at any time thereafter:

     19(a) The Secured Party may exercise and enforce any and all rights and remedies
available upon default to a secured party under Article 9 of the Uniform Commercial Code as
in effect in the State of California

     19(b) The Secured Party shall have the right to enter upon and into and take possession
of all or such part or parts of the properties of the Grantor, including lands, plants,
buildings, Equipment, Inventory and other property as may be necessary or appropriate in the
judgment of the Secured Party to permit or enable the Secured Party to manufacture,
produce, process, store or sell or complete the manufacture, production, processing,
storing or sale of all or any part of the Collateral, as the Secured Party may elect, and to
use and operate said properties for said purposes and for such length of time as the
Secured Party may deem necessary or appropriate for said purposes without the payment of any
compensation to Grantor therefor. The Secured Party may require the Grantor to, and the
Grantor shall, at its expense and upon request of the Secured Party forthwith, assemble all
or part of the Collateral as directed by the Secured Party and make

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it available to the Secured Party at a place or places to be designated by the Secured
Party.

     19(c) Any disposition of Collateral may be in one or more parcels at public or private
sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit, or for future
delivery, and upon such other terms as the Secured Party may reasonably believe are
commercially reasonable. The Secured Party shall not be obligated to dispose of Collateral
regardless of notice of sale having been given, and the Secured Party may adjourn any public
or private sale from time to time by announcement made at the time and place fixed therefor,
and such disposition may, without further notice, be made at the time and place to which it
was so adjourned.

     19(d) The Secured Party is hereby granted a license or other right to use, without
charge, all of the Grantor’s property, including, without limitation, all of the Grantor’s
labels, trademarks, copyrights, patents and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of, advertising for sale
and selling any Collateral, and the Grantor’s rights under all licenses and all franchise
agreements shall inure to the Secured Party’s benefit until the Obligations are paid in
full.

     19(e) If notice to the Grantor of any intended disposition of Collateral or any other
intended action is required by law in a particular instance, such notice shall be deemed
commercially reasonable if given in the manner specified for the giving of notice in Section
24 at least ten calendar days prior to the date of intended disposition or other action, and
the Secured Party may exercise or enforce any and all other rights or remedies available by
law or agreement against the Collateral, against the Grantor, or against any other Person or
property. The Secured Party (i) may dispose of the Collateral in its then present condition
or following such preparation and processing as the Secured Party deems commercially
reasonable, (ii) shall have no duty to prepare or process the Collateral prior to sale,
(iii) may disclaim warranties of title, possession, quiet enjoyment and the like, and (iv)
may comply with any applicable state or federal law requirements in connection with a
disposition of the Collateral and none of the foregoing actions shall be deemed to adversely
affect the commercial reasonableness of the disposition of the Collateral.

     Section 20. Remedies as to Certain Rights to Payment. Upon the occurrence of an Event
of Default and at any time thereafter the Secured Party may notify any Account Debtor or other
Person obligated on any Accounts or other Collateral that the same have been assigned or
transferred to the Secured Party and that the same should be performed as requested by, or paid
directly to, the Secured Party, as the case may be. The Grantor shall join in giving such notice,
if the Secured Party so requests. The Secured Party may, in the Secured Party’s name or in the
Grantor’s name, demand, sue for, collect or receive any money or property at any time payable or
receivable on account of, or securing, any such Collateral or grant any extension to, make any
compromise or settlement with or otherwise agree to waive, modify, amend or change the obligation
of any such Account Debtor or other Person. If any payments on any such Collateral are received by
the Grantor after an Event of Default has occurred, such payments shall be held in trust by the
Grantor as the property of the Secured Party and shall not be commingled with any

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funds or property of the Grantor and shall be forthwith remitted to the Secured Party for
application on the Obligations.

     Section 21. Application of Proceeds. All cash proceeds received by the Secured Party
in respect of any sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Secured Party, be held by the Secured Party as collateral
for, or then or at any time thereafter be applied in whole or in part by the Secured Party against,
all or any part of the Obligations (including, without limitation, any expenses of the Secured
Party payable pursuant to Section 24).

     Section 22. Costs and Expenses; Indemnity. The Grantor shall pay or reimburse the
Secured Party on demand for all reasonable out-of-pocket expenses paid or incurred by the Secured
Party, including in each case all filing and recording costs and fees, taxes, charges and
disbursements of outside counsel to the Secured Party (determined on the basis of such counsel’s
generally applicable rates, which may be higher than the rates such counsel charges the Secured
Party in certain matters) and/or the allocated costs of in-house counsel incurred from time to
time, in connection with the creation, perfection, protection, satisfaction, foreclosure,
collection or enforcement of the Security Interest and the preparation, administration,
continuance, amendment or enforcement of this Agreement, and all such costs and expenses shall be
part of the Obligations. The Grantor shall indemnify and hold the Secured Party harmless from and
against any and all claims, losses and liabilities (including reasonable attorneys’ fees) growing
out of or resulting from this Agreement and the Security Interest (including enforcement of this
Agreement) or the Secured Party’s actions pursuant hereto, except claims, losses or liabilities
resulting from the Secured Party’s gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction. Any liability of the Grantor to indemnify and hold
the Secured Party harmless pursuant to the preceding sentence shall be part of the Obligations.
The obligations of the Grantor under this Section shall survive any termination of this Agreement.

     Section 23. Waivers; Remedies; Marshalling. This Agreement can be waived, modified,
amended, terminated or discharged, and the Security Interest can be released, only explicitly in a
writing signed by the Secured Party. A waiver so signed shall be effective only in the specific
instance and for the specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any rights and remedies available to the Secured Party. All rights and
remedies of the Secured Party shall be cumulative and may be exercised singly in any order or
sequence, or concurrently, at the Secured Party’s option, and the exercise or enforcement of any
such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any
other. The Grantor hereby waives all requirements of law, if any, relating to the marshalling of
assets that would be applicable in connection with the enforcement by the Secured Party of its
remedies hereunder, absent this waiver.

     Section 24. Notices. Any notice or other communication to any party in connection
with this Agreement shall be in writing and shall be sent by manual delivery, facsimile
transmission, overnight courier or United States mail (postage prepaid) addressed to such party at
the address specified on the signature page hereof, or at such other address as such party
specifies to the other party hereto in writing. All periods of notice shall be measured from the
date of delivery if manually delivered, from the date of sending if sent by facsimile transmission,

11

 

from the first business day after the date of sending if sent by overnight courier, or from
four days after the date of mailing if mailed.

     Section 25. Grantor Acknowledgments. The Grantor hereby acknowledges that (a) it has
been advised by counsel in the negotiation, execution and delivery of this Agreement, (b) the
Secured Party has no fiduciary relationship to the Grantor, the relationship being solely that of
debtor and creditor, and (c) no joint venture exists between the Grantor and the Secured Party.

     Section 26. Continuing Security Interest; Assignments under Credit Agreement. This
Agreement shall (a) create a continuing security interest in the Collateral and shall remain in
full force and effect until payment in full of the Obligations and the expiration of the
obligations, if any, of the Secured Party to extend credit accommodations to the Grantor, (b) be
binding upon the Grantor, its successors and assigns, and (c) inure to the benefit of, and be
enforceable by, the Secured Party and its successors, transferees, and assigns. Without limiting
the generality of the foregoing clause (c), the Secured Party may assign or otherwise transfer all
or any portion of its rights and obligations under the Credit Agreement to any other Persons to the
extent and in the manner provided in the Credit Agreement and may similarly transfer all or any
portion of its rights under this Security Agreement to such Persons.

     Section 27. Termination of Security Interest. Upon payment in full of the Obligations
and the expiration of any obligation of the Secured Party to extend credit accommodations to the
Grantor, the Security Interest shall terminate. Upon any such termination, the Secured Party will
return to the Grantor such of the Collateral then in the possession of the Secured Party as have
not been sold or otherwise applied pursuant to the terms hereof and execute and deliver to the
Grantor such documents as the Grantor reasonably requests to evidence such termination. Any
reversion or return of Collateral upon termination of this Agreement and any instruments of
transfer or termination shall be at the expense of the Grantor and shall be without warranty by, or
recourse on, the Secured Party. As used in this Section, “Grantor” includes any assigns of
Grantor, any Person holding a subordinate security interest in any of the Collateral or whoever
else may be lawfully entitled to any part of the Collateral.

     Section 28. Governing Law and Construction. THE VALIDITY, CONSTRUCTION, AND
ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. Whenever possible, each provision of this Agreement and any other statement,
instrument or transaction contemplated hereby or relating hereto shall be interpreted so as to be
effective and valid under such applicable law, but if any provision of this Agreement or any other
statement, instrument or transaction contemplated hereby or relating hereto is held to be
prohibited or invalid under such applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement or any other statement, instrument, or transaction
contemplated hereby or relating hereto.

12

 

     Section 29. Consent to Jurisdiction. AT THE OPTION OF THE SECURED PARTY, THIS
AGREEMENT MAY BE ENFORCED IN ANY FEDERAL OR STATE COURT SITTING IN ORANGE COUNTY, CALIFORNIA OR LOS
ANGELES COUNTY, CALIFORNIA, AND THE GRANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IF THE GRANTOR
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SECURED PARTY AT ITS
OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

     Section 30. Waiver of Notice and Hearing. THE GRANTOR HEREBY WAIVES ALL RIGHTS TO A
JUDICIAL HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE SECURED PARTY OF ITS RIGHTS TO POSSESSION
OF THE COLLATERAL WITHOUT JUDICIAL PROCESS OR OF ITS RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON THE
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. THE GRANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND THIS AGREEMENT.

     Section 31. Waiver of Jury Trial. EACH OF THE GRANTOR AND THE SECURED PARTY, BY ITS
ACCEPTANCE OF THIS AGREEMENT, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 32. Judicial Reference Agreement.

     32(a) Any and all disputes, claims, and controversies arising out of this Agreement or
the transactions contemplated thereby (including, but not limited to, actions arising in
contract or tort and any claims by the Grantor against the Secured Party related in any way
to the Security Interest or the Obligations) (individually, a “Dispute”) that are
brought before a forum in which pre-dispute waivers of the right to trial by jury are
invalid under applicable law shall be subject to the terms of this Section 32.

     32(b) Any and all Disputes shall be heard by a referee and resolved by judicial
reference pursuant to California Code of Civil Procedure Sections 638 et seq. The referee
shall be a retired California state court judge or an attorney licensed to practice law in
the State of California with at least 10 years’ experience practicing commercial law.
Neither the Grantor nor the Secured Party shall seek to appoint a referee that may be
disqualified pursuant to California Code of Civil Procedure Section 641 or 641.2 without the
prior written consent of the other party. If the Secured Party and the Grantor are unable
to agree upon a referee within 10 calendar days after one party serves a written

13

 

notice of intent for judicial reference upon the other party, then the referee will be
selected by the court in accordance with California Code of Civil Procedure Section 640(b).

     32(c) The referee shall render a written statement of decision and shall conduct the
proceedings in accordance with the California Code of Civil Procedure, the Rules of Court,
and California Evidence Code, except as otherwise specifically agreed by the parties and
approved by the referee. The referee’s statement of decision shall set forth findings of
fact and conclusions of law. The decision of the referee shall be entered as a judgment in
the court in accordance with the provisions of California Code of Civil Procedure Sections
644 and 645. The decision of the referee shall be appealable to the same extent and in the
same manner that such decision would be appealable if rendered by a judge of the superior
court.

     32(d) Nothing in this Section 32 shall be deemed to apply to or limit the right of the
Secured Party (i) to exercise self-help remedies such as (but not limited to) setoff, (ii)
to foreclose judicially or nonjudicially against any real or personal property collateral,
or to exercise judicial or nonjudicial power of sale rights, (iii) to obtain from a court
provisional or ancillary remedies (including, but not limited to, injunctive relief, a writ
of possession, prejudgment attachment, a protective order, or the appointment of a
receiver), or (iv) to pursue rights against any party in a third-party proceeding in any
action brought against the Secured Party (including actions in bankruptcy court). The
Secured Party may exercise the rights set forth in the foregoing clauses (i) through (iv),
inclusive, before, during, or after the pendency of any judicial reference proceeding.
Neither the exercise of self-help remedies nor the institution or maintenance of an action
for foreclosure or provisional or ancillary remedies or the opposition to any such
provisional remedies shall constitute a waiver of the right of any party, including, but not
limited to, the claimant in any such action, to require submission to judicial reference of
the merits of the Dispute occasioning resort to such remedies. No provision in the Loan
Documents regarding submission to jurisdiction and/or venue in any court is intended or
shall be construed to be in derogation of the provisions in any Loan Document for judicial
reference of any of Dispute.

     32(e) If a Dispute includes multiple claims, some of which are found not subject to
this Section 32, the Parties shall stay the proceedings of such Dispute or the part or parts
thereof not subject to this Section 32 until all other Disputes or parts thereof are
resolved in accordance with this Section 32. If there are Disputes by or against multiple
parties, some of which are not subject to this Section 32, the Grantor and the Secured Party
shall sever the Disputes subject to this Section 32 and resolve them in accordance with this
Section 32. During the pendency of any Dispute that is submitted to judicial reference in
accordance with this Agreement, each of the parties to such Dispute shall bear equal shares
of the fees charged and costs incurred by the referee in performing the services described
in this Section 32. The compensation of the referee shall not exceed the prevailing rate
for like services. The prevailing party shall be entitled to reasonable court costs and
legal fees, including customary attorney fees, expert witness fees, paralegal fees, the fees
of the referee, a reimbursement of fees and costs paid during the pendency of a dispute in
accordance with this Section 32(d), and other reasonable costs

14

 

and disbursements charged to the party by its counsel, in such amount as the Referee
determines.

     32(f) In the event of any challenge to the legality or enforceability of this Section
32, the prevailing party shall be entitled to recover the costs and expenses from the
non-prevailing party, including reasonable attorneys’ fees, incurred by it in connection
with such challenge.

     32(g) THIS SECTION 32 CONSTITUTES A “REFERENCE AGREEMENT” BETWEEN THE BORROWER AND THE
BANK WITHIN THE MEANING OF AND FOR PURPOSES OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
638.

     Section 33. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.

     Section 34. General. All representations and warranties in this Agreement or in any
other agreement between the Grantor and the Secured Party shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the Obligations. The Grantor waives
notice of the acceptance of this Agreement by the Secured Party. Captions in this Agreement are
for reference and convenience only and shall not affect the interpretation or meaning of any
provision of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

15

 

     IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above written.

	 	 	 	 	 
	 	UNIVERSAL ELECTRONICS INC.

 	 
	 	By 	 	 
	 	 	Title 	  	 
	 	 	 	 

Address for Grantor:

6101 Gateway Drive

Cypress, CA 90630

Fax (714) 820-1151

Grantor’s Tax ID # 2108379

Address for the Secured Party:

U.S. Bank National Association

4100 Newport Place, Suite 900

Newport Beach, California 92660

Fax (949) 863-2335

Signature Page to Security Agreementexv4w4

Exhibit 4.4

SYMETRA FINANCIAL CORPORATION

(formerly Occum Acquisition Corp.)

Warrant Certificate

	 	 	 

	Certificate No.: W-17

	 	Date: 10/04/2010
	 
	Warrant Holder: Sirius International Holdings (NL) B.V.

	 	Warrant Shares: 9,487,872

This Certificate is issued to the Warrant Holder and for the number of Warrant Shares identified
above, pursuant to:

	 	 	 	 	 	 	 

	    X    	 	Assignment of prior Warrant Holder: White Mountains Re (NL) B.V.
	 
	 	 	 	 	 	 
	 

	 	Other:	 	 	 	 
	 
 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

and replaces Certificate No. W-16

All other terms and conditions of the Warrant dated July 29, 2004, attached hereto remain the same.

Recorded on Symetra Financial Corporation’s Warrant Ledger.

	 	 	 	 	 	 	 

	 

	 	By:
	 	/s/ Julie M. Bodmer
 

Julie M. Bodmer
	 	 
	 

	 	 	 	Assistant Secretary	 	 

 

 

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933 (THE “SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS (I) (A) A REGISTRATION
STATEMENT IS IN EFFECT UNDER THE SECURITIES ACT WITH RESPECT TO SUCH SECURITIES, OR (B) A WRITTEN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY IS PROVIDED TO THE COMPANY TO THE EFFECT
THAT NO SUCH REGISTRATION IS REQUIRED, AND (II) THE TRANSFEREE IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) OF REGULATION D UNDER THE SECURITIES ACT.

IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS ATTACHING TO THESE SECURITIES ARE
SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED HEREIN AND THE SHAREHOLDERS AGREEMENT DATED AS OF
MARCH 8, 2004 (THE “SHAREHOLDERS AGREEMENT”), AS IT MAY BE AMENDED FROM TIME TO TIME, WHICH
ARE AVAILABLE FOR EXAMINATION BY HOLDERS OF SECURITIES AT THE REGISTERED OFFICE OF THE COMPANY. THE
HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE, BY ACQUIRING AND HOLDING SUCH SECURITIES,
SHALL BE DEEMED A PARTY TO SUCH SHAREHOLDERS AGREEMENT FOR ALL PURPOSES AND SHALL BE REQUIRED TO
AGREE IN WRITING TO BE BOUND BY AND PERFORM ALL OF THE TERMS AND PROVISIONS OF SUCH SHAREHOLDERS
AGREEMENT, ALL AS MORE FULLY PROVIDED THEREIN. IN ADDITION, ANY TRANSFEREE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE SHALL BE DEEMED TO BE A PARTY TO SUCH SHAREHOLDERS AGREEMENT FOR
ALL PURPOSES AND SHALL BE REQUIRED BY THE TRANSFEROR TO AGREE IN WRITING TO ACQUIRE AND HOLD SUCH
SECURITIES SUBJECT TO ALL OF THE TERMS OF SUCH SHAREHOLDERS AGREEMENT, ALL AS MORE FULLY PROVIDED
THEREIN, WHICH TERMS ARE TO BE ENFORCED BY THE SHAREHOLDERS OF THE COMPANY.

OCCUM ACQUISITION CORP.

WARRANT

	 	 	 
	Certificate No.: W - 2

	 	Date: July 29, 2004

          FOR CONSIDERATION RECEIVED, Occum Acquisition Corp., a Delaware corporation (the
“Company”), hereby grants to White Mountains Re Group, Ltd. (the “Warrant Holder”)
this warrant certificate (this “Warrant”) to purchase, in accordance with the terms set
forth herein, 1,090,560 shares (the “Warrant Shares”) of the Company’s common shares,
initially having a par value of U.S. $0.01 per share (the “Common Shares”), at a price per
share equal to U.S. $100, as adjusted from time to time

 

 

 2

pursuant to Section 2 hereof (the “Exercise Price”) but at no time shall the Exercise Price
be less than the then current par value of any share to be issued pursuant hereto.

          This Warrant is issued pursuant to a letter agreement, dated as of March 8, 2004, between the
Company and the Warrant Holder.

          This Warrant is subject to the following provisions:

          SECTION 1. Warrant Terms. (a) This Warrant is for the purchase of the Warrant Shares
at the Exercise Price.

          (b) This Warrant shall expire on the tenth anniversary of the date hereof (the “Expiration
Date”). The Warrant exercise procedure set forth in Section 3 hereof must be commenced by the
Warrant Holder by 3:30 p.m. New York City time on such Expiration Date.

          SECTION 2. Anti-dilution Provisions. In order to prevent dilution of the purchase
rights granted under Section 1 hereof, the Exercise Price shall be subject to adjustment from time
to time pursuant to this Section 2; provided, however, that under no circumstances
will the Exercise Price be less than the then current par value of any share to be issued under
this Warrant.

          (a) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price, the following shall be applicable:

     (1) Share Dividend, Subdivision or Consolidation/Combination of Common
Shares. If the Company, at any time while this Warrant is outstanding, (A) shall pay a
stock or bonus share dividend on its Common Shares or pay any other distribution in Common
Shares, (B) subdivide the class of Common Shares into a larger number of shares or (C)
consolidate/combine the class of Common Shares into a smaller number of shares, then the
Exercise Price thereafter shall be determined by multiplying the Exercise Price by a
fraction (x) the numerator of which shall be the number of Common Shares (excluding
treasury shares, if any) issued and outstanding before such event and (y) the denominator
of which shall be the number of Common Shares (excluding treasury shares, if any) issued
and outstanding after such event. Any adjustment made pursuant to this Section 2(a)(l)
shall become effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision or combination.

     (2) Issuance of Additional Common Shares. In case the Company at any time or
from time to time after the date hereof shall issue or sell additional Common Shares,
other than any issuance to which Section 2(a)(l) shall apply, without consideration or
for a consideration per share less than the Fair Market Value of the Common Shares on the
day immediately prior to such issue or sale, then, and in each such case, subject to
Section 2(b)(iv), the Exercise Price shall be

 

3

reduced, concurrently with such issue or sale, to a price determined by
multiplying such Exercise Price by a fraction

     (x) the numerator of which shall be (i) the number of Common Shares
outstanding immediately prior to such issue or sale plus (ii) the number of Common
Shares which the aggregate consideration received by the Company for the total
number of such additional Common Shares so issued or sold would purchase at such
Fair Market Value of the Common Shares, and

     (y) the denominator of which shall be the number of Common Shares
outstanding immediately after such issue or sale;

provided that for the purposes of this Section 2(a)(2), treasury shares shall not be deemed
to be outstanding.

     (3)
Dividends and Distributions. In case the Company at any time
or from time to time after the date hereof shall declare, order, pay or make a dividend or other
distribution (including any distribution of other or additional stock or other securities
or property or options, warrants or other rights to purchase Common Shares or Convertible
Securities (as hereinafter defined) (other than options granted to employees of the
Company) (collectively, “Assets”) by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common Shares, other than a
dividend payable in additional Common Shares (which is the subject of Section 2(a)(l)
hereof), then, and in each such case, the Company shall make the same dividend or
distribution to Warrant Holders as it makes to holders of Common Shares pro rata based on
the number of Common Shares for which such Warrants are then exercisable, and the Exercise
Price shall not be adjusted in respect thereof.

     (4)
Consolidation, Merger, etc.

          (A)
Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company after the date hereof (i) shall
consolidate with or merge into any other Person (as hereinafter defined) and
shall not be the continuing or surviving corporation of such consolidation or
merger, (ii) shall permit any other Person to consolidate with or merge into the
Company and the Company shall be the continuing or surviving Person but, in
connection with such consolidation or merger, the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, (iii) shall transfer all or substantially all of its
properties or assets to any other Person, (iv) shall effect a capital
reorganization or reclassification of the Common Shares (other than a capital
reorganization or reclassification resulting in an adjustment to the Exercise
Price as provided in another paragraph of this Section 2), or (v) shall effect
any other transaction in which the Common Shares are

 

4

changed into or exchanged for stock or other securities of any other Person, then, except and
insofar as otherwise provided in Section 2(a)(4)(C) in the case of each such transaction, proper
provision shall be made so that, upon the basis and the terms and in the manner provided in this
Warrant, the holder of this Warrant, upon the exercise hereof at any time after the consummation of
such transaction, shall be entitled to receive (at the aggregate Exercise Price in effect at the
time of such consummation for all Common Shares issuable upon such exercise immediately prior to
such consummation), in lieu of the Common Shares issuable upon such exercise prior to such
consummation, the amount of securities, cash or other property to which such holder would actually
have been entitled as a shareholder upon such consummation if such holder had exercised the rights
represented by this Warrant immediately prior thereto. As used herein, “Person” shall mean
an individual, company, corporation, limited liability company, firm, partnership, trust, estate,
unincorporated association or other entity.

     (B) Assumption of Obligations. Notwithstanding anything contained in this Warrant or
in the Shareholders Agreement to the contrary, the Company will not effect any of the transactions
described in Sections 2(a)(4)(A)(i)-(v) unless, prior to the consummation thereof, each Person
(other than the Company) which may be required to deliver any stock, securities, cash or property
upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered
to, and reasonably satisfactory to, the holder of this Warrant, the obligations of the Company
under this Warrant (and if the Company shall survive the consummation of such transaction, such
assumption shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant). Nothing in this Section 2(a)(4) shall be deemed to
authorize the Company to enter into any transaction not otherwise permitted by the Shareholders
Agreement or the By-laws.

     (C) Qualifying Transactions. (1) In the event that, after the date hereof, the Company
shall effect a transaction of the type contemplated by subparagraph (A) above and in connection
therewith (x) the Common Shares are exchanged in whole or in part for cash (other than cash in lieu
of fractional shares), securities (other than Voting Common Stock (as defined below)) or other
property (collectively, “Non-Common Consideration”) and (y) the Per Share Value (as defined
below) exceeds the Subscription Price (as defined below) (any such transaction being referred to
herein as a “Qualifying Transaction”), then (i) the holder of this Warrant shall receive,
upon the consummation of the Qualifying Transaction, an amount in cash equal to the Intrinsic Value
Amount (as defined below) and (ii) if any portion of the consideration to be received by holders of
Common Shares in such Qualifying Transaction consists of Voting Common Stock (as defined below),
the holder of the Warrant, upon the exercise hereof at any time after the consummation of such

 

5

Qualifying Transaction, shall be entitled to receive, at the aggregate
exercise price determined pursuant to subparagraph (C)(3) below, the number
of shares of Voting Common Stock determined pursuant to subparagraph (C)(3)
below.

     (2) Certain Definitions. For purposes of this Section 2(a)(4), the
following terms have the following meanings:

          “Per Share Value” means the average value of the consideration to be received in
respect of each outstanding Common Share pursuant to the Qualifying Transaction as determined by
mutual agreement of the Independent Directors (as defined in Section 2(b)(ii) below) and the
holders of not less than 50% in interest of all outstanding warrants to purchase Common Shares
containing this provision, or, if they shall fail to agree, by an Investment Bank.

          “Subscription Price” means U.S. $100.00; provided, however, that such
amount shall be (i) adjusted in an appropriate and proportionate manner consistent with the
provisions for adjusting the Exercise Price in Section 2(a)(l) for any events that require an
adjustment in the Exercise Price pursuant to such section and (ii) reduced by an amount equal to
the pre-tax value (determined pursuant to Section 2(b)(i)) per Common Share of any dividend or
other distribution described in Section 2(a)(3).

          “Voting Common Stock” means, as to any issuer, (i) voting equity securities of such
issuer having no preference as to dividends or in a liquidation over any other securities of such
issuer, (ii) nonvoting equity securities of such issuer which are in all other respects identical
to, and are expected to have, after completion of the Qualifying Transaction, liquidity
substantially equivalent to or greater than, the outstanding voting equity securities of such
issuer that would fit the description in the preceding clause (i), or (iii) securities convertible
into or exchangeable for the voting or nonvoting securities described in clause (i) or (ii).

          “Intrinsic Value Amount” means (i) the Applicable Black-Scholes Value minus (ii) the
Applicable Reduction, if any.

          “Applicable Black-Scholes Value” shall mean the product of (i) the Black-Scholes
Value and (ii) the Non-Common Stock Portion.

          “Non-Common Stock Portion” means (i) one minus (ii) the Common Stock Portion.

          “Common Stock Portion” means the quotient obtained by dividing (i) the total value of
the shares of Voting Common Stock to be issued in respect of the outstanding Common Shares
pursuant to the Qualifying Transaction by (ii) the total value of the shares of Voting Common
Stock and Non-Common Consideration to be issued in respect of the outstanding Common Shares
pursuant to the Qualifying Transaction, in each case as determined by mutual agreement of the
Independent Directors and the holders of not less than 50% in interest of all outstanding warrants
to purchase Common Shares containing this provision, or, if they shall fail to agree, by an
Investment Bank.

 

6

          “Applicable Reduction” means the product of (i) the Reduction Amount and (ii)
the Non-Common Stock Portion.

          “Reduction Amount” means the product of (i) the Discount Factor and (ii) the
amount by which (x) the Black-Scholes Value exceeds (y) the Total Spread.

          “Discount Factor” means (A) one minus (B) the quotient obtained by dividing
(i) the amount by which (x) the Per Share Value exceeds (y) the Subscription Price by (ii)
the amount by which (x) the Hurdle Price exceeds (y) the Subscription Price;
provided, that if the quotient determined pursuant to clause (B) is greater than
one, such quotient shall be deemed to be one.

          “Total Spread” means the product of (i) the total number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to the completion of the Qualifying
Transaction and (ii) the Spread.

          “Spread” means the amount by which (i) the Per Share Value exceeds (ii) the
Subscription Price; provided, however, that in the event the Subscription
Price exceeds the Per Share Value, the Spread shall be deemed to be zero.

          “Hurdle Price” means U.S. $ 155.00; provided, however, that
such amount shall be (i) adjusted in an appropriate and proportionate manner consistent
with the provisions for adjusting the Exercise Price in Section 2(a)(l) for any events
that require an adjustment in the Exercise Price pursuant to such section and (ii) reduced
by an amount equal to the pre-tax value (determined pursuant to Section 2(b)(i)) per
Common Share of any dividend or other distribution described in Section 2(a)(3).

          “Investment Bank” means an independent nationally-recognized U.S. investment
banking firm selected by the Independent Directors with the consent of the holders of not
less than 50% in interest of all outstanding warrants to purchase Common Shares containing
this provision (which consent shall not be unreasonably withheld), the fees and expenses
of which shall be shared equally by the Company on the one hand and such holders on the
other.

          “Black-Scholes Value” means the value of this Warrant immediately prior to
consummation of the Qualifying Transaction, as calculated by an Investment Bank, using
the Black-Scholes calculation method for valuing options and the following assumptions:

	 	 	 
	     Volatility =

	 	 25%
	 
	 	 
	     Risk Free Rate =

	 	the then current effective U.S. Federal
government interest rate for a bond or
note with a remaining time to maturity
equal to the Term of the Warrant then
in effect
	 
	 	 
	     Dividend Yield =

	 	 0%

 

7

	 	 	 
	     Exercise Price =

	 	the Exercise Price in effect
immediately prior to the
consummation of the Qualifying
Transaction
	 
	 	 
	     Term of the Warrant =

	 	the lesser of five years and the
remaining term of the Warrant,
measured from the date of
completion of the Qualifying
Transaction to the Expiration
Date

The underlying security price for purposes of the Black-Scholes calculation shall be the Per
Share Value.

          Exhibit C to this Warrant contains examples illustrating certain of the
calculations required by this Section 2(a)(4)(C).

     (3) Voting Common Stock Consideration. In the event of a Qualifying
Transaction in which any portion of the consideration to be received by holders of
Common Shares in such Qualifying Transaction consists of Voting Common Stock, then
proper provision shall be made so that, upon the basis and the terms and in the
manner provided in this Warrant, the holder of this Warrant, upon the exercise hereof
at any time after the consummation of such Qualifying Transaction, shall be entitled
to receive (at the aggregate exercise price determined pursuant to this subparagraph
(3)) a number of shares of Voting Common Stock equal to the product of (i) the
product of (x) the aggregate number of Warrant Shares purchasable pursuant to this
Warrant immediately prior to the completion of the Qualifying Transaction and (y) the
Common Stock Portion and (ii) the Calculated Exchange Ratio. The aggregate exercise
price of this Warrant after the consummation of such Qualifying Transaction shall be
equal to the product of (i) the aggregate Exercise Price of this Warrant for the
number of Warrant Shares purchasable pursuant to this Warrant immediately prior to
the completion of the Qualifying Transaction and (ii) the Common Stock Portion.

For purposes of this subparagraph (3):

          “Calculated Exchange Ratio” means the quotient obtained by dividing (i) the Per
Share Value by (ii) the Average Closing Price of the Voting Common Stock.

          “Average Closing Price” means (a) the average of the closing prices per share
of the Voting Common Stock on the national securities exchange or automated quotation system
on which such stock is then listed for the 10 consecutive trading days immediately preceding
the closing date of the Qualifying Transaction, or (b) if such Voting Common Stock is not so
listed, the fair market value per share of such Voting Common Stock, determined by mutual
agreement of the Independent Directors and the holders of not less than 50% in interest of
all outstanding warrants to purchase Common Shares containing this provision, or, if they
shall fail to agree, by an Investment Bank.

     (4) Cancelation of Warrant. In the event of a Qualifying Transaction
in which the Common Stock Portion is zero, then the holder of this Warrant shall
surrender this Warrant at the time of payment of the Intrinsic Value Amount,

 

8

whereupon this Warrant shall be canceled and all rights hereunder shall expire. In the event
of a Qualifying Transaction in which the Common Stock Portion is more than zero, then the
holder of this Warrant shall surrender this Warrant at the time of payment of the Intrinsic
Value Amount in exchange for a warrant of like tenor representing the right to purchase the
number of shares of Voting Common Stock determined pursuant to Section 2(a)(4)(C)(3) at the
aggregate exercise price as determined pursuant to Section 2(a)(4)(C)(3).

     (5)
Cash Elections; etc. In the event that the type of consideration to be
received per Common Share in a Qualifying Transaction is subject to the election
of the holders thereof, such election permits such holder to elect to receive Voting
Common Stock and there is no limitation on the number of shares of Voting
Common Stock to be issued in the Qualifying Transaction, then (i) after the
consummation of such transaction this Warrant shall be exercisable solely for
Voting Common Stock, (ii) such transaction shall not be deemed to constitute a
Qualifying Transaction and (iii) the provisions of Section 2(a)(4)(A) shall apply.

     (6) All Reasonable Efforts. In the case of a Qualifying Transaction in
which any portion of the consideration to be received by the holders of Common
Shares consists of Voting Common Stock, the holder of this Warrant and the
Company shall use all reasonable efforts to cause this Warrant to become
exercisable solely for Voting Common Stock and, if the Person who shall be
issuing Voting Common Stock in such transaction agrees in writing that this
Warrant shall be exercisable solely for Voting Common Stock, then (i) such
transaction shall not be deemed to constitute a Qualifying Transaction and (ii) the
provisions of Section 2(a)(4)(A) shall apply.

          (b) Other Provisions Applicable to Adjustments Under This Section. The following
provisions shall be applicable to the making of adjustments to the number of Warrant Shares for
which the Warrant is exercisable provided for in this Section 2.

     (i) Adjustment in Number of Warrant Shares. Upon each adjustment of the
Exercise Price pursuant to Sections 2(a)(l) or 2(a)(2), the number of Common Shares for
which this Warrant is exercisable shall be adjusted by multiplying the number of Common
Shares for which this Warrant was exercisable prior to such adjustment by a fraction (i)
whose numerator is the Exercise Price in effect immediately prior to such adjustment and
(ii) whose denominator is the Exercise Price in effect immediately after such
adjustment.

     (ii) Computation of Asset Value and Fair Market Value for Purposes of Section
2. To the extent that the Company shall distribute Assets other than cash, except as
herein otherwise expressly provided, then the value of such Assets shall be determined
by mutual agreement of the Independent Directors and the holders of not less than 50% in
interest of all outstanding warrants to purchase Common Shares containing this
provision, or, if they shall fail to agree, by an Investment Bank. The “Fair Market
Value” of the Common Shares at any given time shall mean (a) if the Common Shares
are listed on a

 

9

securities exchange (or quoted in a securities quotation system), the average closing sale price of
the Common Shares on such exchange (or in such quotation system), or, if the Common Shares are
listed on (or quoted in) more than one exchange (or quotation system), the average closing sale
price of the Common Shares on the principal securities exchange (or quotation system) on which the
Common Shares are then traded, or, if the Common Shares are not then listed on a securities
exchange (or quotation system) but are traded in the over-the-counter market, the average of the
latest bid and asked quotations for the Common Shares in such market, in each case for the last
five trading days immediately preceding the day on which such Fair Market Value is determined in
accordance with the applicable provision of this Section 2 or (b) if no such closing sales prices
or quotations are available because such shares are not publicly traded or otherwise, the fair
value of such shares as determined by mutual agreement of the Independent Directors and the holders
of not less than 50% in interest of all outstanding warrants to purchase Common Shares containing
this provision, or, if they shall fail to agree, by an Investment Bank. As used herein, the term
“Independent Director” shall mean each member of the Board of Directors of the Company that
is not (x) a director, officer or employee of any Warrant Holder or any affiliate of any Warrant
Holder, (y) the holder of a 10% or greater equity interest in any Warrant Holder or any affiliate
of any Warrant Holder or (z) a member of the immediate family of any director, officer or employee
of any Warrant Holder or any holder of a 10% or greater equity interest in any such Warrant Holder
or any affiliate of any Warrant Holder.

     (iii) When Adjustment To Be Made. The adjustments required by this Section 2 shall be
made whenever and as often as any specified event requiring an adjustment shall occur. For the
purpose of any adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

     (iv) Fractional Interest: Rounding. In computing adjustments under this Section 2,
fractional interests in Common Shares shall be taken into account to the nearest 1/10th of a
share, and adjustments in the Exercise Price shall be made to the nearest $ .001.

     (v) Certain Exclusions. No adjustment in the number of Common Shares purchasable
under this Warrant or the Exercise Price therefor shall be made as a result of (x) any adjustment
in the number of Common Shares purchasable under any other Warrant or the exercise price
thereunder, or (y) for the issuance of any employee stock options or any Common Shares issuable
under employee stock options, employee stock purchase plans, or any other form of equity based
compensation granted to employees of the Company.

     (vi) Computation of Consideration. For the purposes of this Section 2,

 

10

     (A) the consideration for the issue or sale of any additional Common Shares shall,
irrespective of the accounting treatment of such consideration,

     (x) insofar as it consists of cash, be computed at the net amount of cash received by
the Company,

     (y) insofar as it consists of property (including securities) other than cash, be
computed at the fair value thereof at the time of such issue or sale, as determined by
mutual agreement of the Independent Directors and the holders of not less than 50% in
interest of all outstanding warrants to purchase Common Shares containing adjustment
provisions of like tenor to the applicable adjustment provision contained in this Warrant,
or, if they shall fail to agree, by an Investment Bank, and

     (z) in case additional Common Shares are issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both, be the
portion of such consideration so received, computed as provided in clauses (x) and (y)
above, allocable to such additional Common Shares, all as determined in good faith by
mutual agreement of the Independent Directors and the holders of not less than 50% in
interest of all outstanding warrants to purchase Common Shares containing adjustment
provisions of like tenor to the applicable adjustment provision
contained in this Warrant,
or, if they shall fail to agree, by an Investment Bank;

     (B) additional Common Shares deemed, pursuant to Section 2(c), to have been issued, relating
to Options and Convertible Securities, shall be deemed to have been issued for a consideration per
share determined by dividing

     (x) the total amount, if any, received and receivable by the Company as consideration
for the issue, sale, grant or assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional consideration (as set forth in
the instruments relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration to protect against dilution) payable to the
Company upon the exercise in full of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such consideration as
provided in the
foregoing subdivision (A),

 

11

by

     (y) the maximum number of Common Shares (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities; and

     (C) additional Common Shares deemed to have been issued pursuant to Section
2(a)(l), relating to stock dividends, stock splits, etc., shall be deemed to have
been issued for no consideration.

          (c) Treatment of Options and Convertible Securities. In case the Company at any time
or from time to time after the date hereof shall issue, sell, grant or assume, or shall fix a
record date for the determination of holders of any class of securities of the Company other than
the Common Shares entitled to receive, any (x) options, warrants or other rights to purchase Common
Shares (other than options granted to employees) or Convertible Securities (as defined below)
(“Options”) or (y) securities convertible into or exchangeable for Common Shares
(“Convertible Securities”), then, and in each such case, the maximum number of additional
Common Shares (as set forth in the instrument relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such number) issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed for purposes of Section 2(a)(2) to be additional
Common Shares issued as of the time of such issue, sale, grant or assumption or, in case such a
record date shall have been fixed, as of the close of business on such record date (or, if the
Common Shares trade on an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading); provided, however, that such additional Common Shares shall not be deemed
to have been issued unless the consideration per share (determined pursuant to section 2(b)(vi))
would be less than the Fair Market Value on the date immediately prior to such issue, sale, grant
or assumption or immediately prior to the close of business on such record date (or, if the Common
Shares trade on an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be, and provided further that in any such case in which
additional Common Shares are deemed to be issued:

     (i) no further adjustment of the Exercise Price shall be made upon the subsequent
issue or sale of Convertible Securities or Common Shares upon the exercise of such
Options or the conversion or exchange of such Convertible Securities;

     (ii) if such Options or Convertible Securities by their terms provide, with the
passage of time or otherwise, for any increase or decrease in the consideration payable
to the Company, or decrease or increase in the number of additional Common Shares
issuable, upon the exercise, conversion or exchange thereof (by change of rate or
otherwise), the Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the

 

12

record date, or date prior to the commencement of ex-dividend trading, as the case may be, with
respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options, or the rights of conversion or exchange under such Convertible Securities,
which are outstanding at such time;

     (iii) upon the expiration (or purchase by the Company and cancellation or retirement) of any
such Options which shall not have been exercised or the expiration of any rights of conversion or
exchange under any such Convertible Securities which (or purchase by the Company and cancellation
or retirement of any such Convertible Securities the rights of conversion or exchange under which)
shall not have been exercised, the Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date prior to the commencement of
ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration (or such cancellation or retirement, as the case may
be), be recomputed as if:

     (A) in the case of Options for Common Shares or Convertible Securities, the only
additional Common Shares issued or sold were the additional Common Shares, if any, actually
issued or sold upon the exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was (x) an amount equal to
(1) the consideration actually received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus (2) the consideration
actually received by the Company upon such exercise, minus (3) the consideration paid by
the Company for any purchase of such Options which were not exercised, or (y) an amount
equal to (1) the consideration actually received by the Company for the issue or sale of
all such Convertible Securities which were actually converted or exchanged, plus (2) the
additional consideration, if any, actually received by the Company upon such conversion or
exchange, minus (3) the consideration paid by the Company for any purchase of such
Convertible Securities the rights of conversion or exchange under which were not exercised,
and

     (B) in the case of Options for Convertible Securities, only the Convertible
Securities, if any, actually issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such Options, and the consideration
received by the Company for the additional Common Shares deemed to have then been issued
was an amount equal to (x) the consideration actually received by the Company for the
issue, sale, grant or assumption of all such Options, whether or not exercised, plus (y)
the consideration deemed to have been received by the Company (pursuant to section
2(b)(vi)) upon the issue or sale of such Convertible Securities with respect to which such
Options

 

13

were actually exercised, minus (z) the consideration paid by the Company for any
purchase of such Options which were not exercised;

     (iv) no readjustment pursuant to subdivision (ii) or (iii) above shall have the
effect of increasing the Exercise Price by an amount in excess of the amount of the
adjustment thereof originally made in respect of the issue, sale, grant or assumption of
such Options or Convertible Securities; and

     (v) in the case of any such Options which expire by their terms not more than 30
days after the date of issue, sale, grant or assumption thereof, no adjustment of the
Exercise Price shall be made until the expiration or exercise of all such Options,
whereupon such adjustment shall be made in the manner provided in subdivision (iii)
above.

          (d) Other Dilutive Events. In case any event shall occur as to which the provisions of
Section 2 are not strictly applicable but the failure to make any adjustment would not fairly
protect the purchase rights (including the rights provided under Section 2(a)(4)(C)) represented by
this Warrant in accordance with the essential intent and principles of such Sections, then, in each
such case, the Independent Directors of the Company shall appoint an Investment Bank, which shall
give its opinion upon the adjustment, if any, on a basis consistent with the essential intent and
principles established in Section 2, necessary to preserve, without dilution, the purchase rights
represented by this Warrant. Upon receipt of such opinion, the Company will promptly mail a copy
thereof to the holder of this Warrant and shall make the adjustments described therein.

          (e) Notices. Immediately upon any adjustment of the Exercise Price, the Company shall
give, or cause to be given, written notice thereof, executed by the Chief Financial Officer (or, if
none, the Chief Executive Officer or President) of the Company, to the Warrant Holder, setting
forth in reasonable detail and certifying the event requiring the adjustment, the method by which
the adjustment was calculated, the number of Warrant Shares for which the Warrant is exercisable
and the Exercise Price after giving effect to such adjustment. The Company shall keep at its
registered office copies of all such written notices and cause the same to be available for
inspection during normal business hours by the Warrant Holder. The Company shall give, or cause to
be given, written notice to the Warrant Holder at least 10 days prior to the date on which the
Company closes its books or takes a record (i) with respect to any dividend or distribution upon
Common Shares, (ii) with respect to any pro rata subscription offer to holders of Common Shares or
(iii) for determining rights to vote with respect to any transaction described in Section 2(a)(4),
dissolution or liquidation. The Company shall also give, or cause to be given, written notice to
the Warrant Holder at least 10 days prior to the date on which any transaction described in Section
2(a)(4) shall take place.

          SECTION 3. Exercise of Warrant. (a) Exercise Procedure. The Warrant Holder
may exercise all or a portion of this Warrant for all or a portion of the Warrant Shares at any
time and from time to time commencing after the date hereof until 3:30 p.m. New York City time, on
the Expiration Date by irrevocably surrendering at the

 

14

registered office of the Company this Warrant and a completed Exercise Agreement (substantially in
the form of Exhibit A attached hereto) setting forth the number of Warrant Shares being exercised,
and by paying the Exercise Price in one of the following manners:

     (i) Cash Exercise. The Warrant Holder shall deliver to the Company by wire
transfer of immediately available funds an amount equal to the Exercise Price per
Warrant Share exercised in the Exercise Agreement; or

     (ii) Cashless Exercise. After the date of issuance of this Warrant, if the
Common Shares are listed on a national securities exchange, automated quotation system
or are available for sale in the over-the-counter market, the Warrant Holder shall have
the right to surrender this Warrant to the Company (including that portion of the
Warrant in payment of the Exercise Price to effect such cashless exercise) together with
a notice of cashless exercise, in which event the Company shall exchange such portion of
the Warrant subject to the Exercise Agreement, as the circumstances require in order for
such number of Common Shares to be issued, determined as follows:

X = Y multiplied by (A-B)/A where:

X = the number of Common Shares to be issued to the Warrant Holder

Y = the number of Warrant Shares with respect to which this Warrant
is being exercised in the Exercise Agreement

A = the average of the per share Market Price of the Common Shares for
the five (5) trading days immediately prior to (but not including) the
date of exercise (but not less than the then par value of the Common
Shares)

B = the Exercise Price

If the foregoing calculation results in a negative number, then no Warrant Shares shall be issued.

For purposes of Rule 144 promulgated under the Securities Act only, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to
have been acquired and the full purchase price therefor paid by the Warrant Holder, and the
holding period for the Warrant Shares shall be deemed to have been commenced on the issue date to
the extent permitted by Rule 144.

For purposes hereof, “Market Price” means on any particular date (i) the closing bid
price per Common Share on such date on the national securities exchange or automated quotation
system on which the Common Shares are then listed or if there is no such price on such date, then
the closing bid price on such exchange or quotation system on the date nearest preceding such
date, or (ii) if the Common Shares are not then listed on a national

 

15

securities exchange or automated quotation system, the closing bid price for each Common
Share in the over-the-counter market, as reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date.

          (b) The Company shall cause certificates for the Warrant Shares to be issued in the name of
and delivered to the Warrant Holder, or subject to the transfer restrictions referred to in the
legend endorsed hereon, as the Warrant Holder may direct, as soon as practicable and in any event
within ten (10) business days after receipt by the Company of the items required by Section 3(a)
for the respective method or methods of exercise. Unless this Warrant has expired or all of the
purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant,
substantially identical hereto, representing the rights formerly represented by this Warrant which
have not expired or been exercised and shall, within such 10-business-day period, deliver such new
Warrant to such Warrant Holder.

          (c) Any Warrant Shares issuable upon the proper exercise of this Warrant shall be deemed to
have been issued to the Warrant Holder on the date the Company receives the completed Exercise
Agreement and payment of the Exercise Price, if any, and the Warrant Holder shall be deemed for all
purposes to have become the record holder of such Common Shares on such date.

          (d) The issuance of certificates for the Warrant Shares shall be made without charge to the
Warrant Holder for any issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of the Warrant Shares.

          (e) The Company shall at all times reserve and keep available such number of authorized but
unissued Common Shares, solely for the purpose of issuance upon exercise of this Warrant, as are
issuable upon exercise of this Warrant. All Warrant Shares shall, when issued, be duly and validly
issued, fully paid and nonassessable (meaning that no further sums are required to be paid by the
holders thereof in connection with the issue thereof) and free from all taxes, liens and charges.
The Company shall take such actions as may be necessary to ensure that the Warrant Shares may be so
issued without violation of any applicable law or governmental regulation or any requirements of
any securities exchange upon which its shares may be listed (except for official notice of issuance
which shall be immediately delivered by the Company upon each such issuance).

          (f) Without prejudice to the rights of the Warrant Holders as signatory to the Shareholders
Agreement as set forth in Section 5 hereof, the Company shall have the option, in its sole
discretion, to deliver Warrant Shares which are (i) subject to the securities law transfer
restrictions referred to in the legend endorsed hereon or (ii) subject to a registration statement
filed under the Securities Act.

          SECTION 4. Warrant Transfer Restrictions. Subject to the transfer conditions
referred to in the legend endorsed hereon, this Warrant and all rights

 

16

hereunder are transferable, in whole or in part, without charge to the Warrant Holder, upon
surrender of this Warrant with a properly executed Assignment (substantially in the form of Exhibit
B hereto) at the registered office of the Company; provided, however, that (i) such
transfer shall comply with Section 2 of the Shareholders Agreement and (ii) prior to such transfer,
the transferee shall enter into the Shareholders Agreement with the Company.

          SECTION 5. Shareholders Agreement; Registration Rights. The Warrant Holder, as
signatory to the Shareholders Agreement, shall have the rights set forth in Section 3 of the
Shareholders Agreement with respect to this Warrant and any Warrant Shares issued hereunder.

          SECTION 6. Amendment and Waiver. Except as otherwise provided herein, the provisions
of this Warrant may be amended only if the Company has obtained the written consent of the Warrant
Holder and a majority of the Independent Directors has approved the amendment.

          SECTION 7. Descriptive Headings. The descriptive headings of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant.

          SECTION 8. Definitions. Terms used in this Warrant unless otherwise defined herein
shall have the meaning ascribed to them in the Shareholders Agreement.

          SECTION 9. Governing Law. This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the courts of New York for the
adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that (i) it is not personally subject to the
jurisdiction of any such court, and/or (ii) that such suit, action or proceeding is not brought in
the proper forum. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Warrant and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law.

          SECTION 10. Complete Agreement; Severability. Except as otherwise expressly set forth
herein, this Warrant embodies the complete agreement and understanding among the parties hereto
with respect to the subject matter hereof and supersedes and preempts any prior understandings,
agreements or representations by or among the parties, written or oral, which may have related to
the subject matter hereof in any way. In case any provision of this Warrant shall be invalid,
illegal or unenforceable, such invalidity, illegality, or unenforceability shall not in any way
affect or impair any other provision of this Warrant.

 

17

          SECTION 11. Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, facsimile, or air courier
guaranteeing overnight delivery.

	 	 	 
	          If to the Company:

	 	Occum Acquisition Corp.
	 

	 	370 Church Street
	 

	 	Guilford, CT 06437
	 

	 	Attention: Reid Campbell, Treasurer
	 
	 	 
	          With a copy to:

	 	Cravath, Swaine & Moore LLP
	 

	 	825 Eighth Avenue
	 

	 	New York, New York 10019
	 

	 	Attention: William J. Whelan, III, Esq.
	 
	 	 
	          If to the Warrant Holder:

	 	White Mountains Re Group, Ltd.
	 

	 	[                                              ]

          All such notices and communications shall be deemed to have been duly given when delivered by
hand, if personally delivered; five business days after the date of deposit in the U.S. mail, if
mailed by first-class air mail; when receipt is acknowledged by the recipient facsimile machine, if
sent by facsimile; and three business days after being delivered to a next-day air courier.

 

18

          IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officer and to be dated the date of issuance
hereof.

	 	 	 	 	 
	 	OCCUM ACQUISITION CORP.,

 	 
	 	      By  	/s/ Kernan V. Oberting
 	 
	 	 	Name:  	Kernan V. Oberting     	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	Accepted and Agreed to:	 	 
	 
	 	 	 	 
	WHITE MOUNTAINS RE GROUP, LTD.,	 	 
	 
	 	 	 	 
	By:

	 	/s/ Dennis Beaulieu
 

Name: Dennis Beaulieu
	 	 
	 

	 	Title: Vice President	 	 

 

EXHIBIT A

EXERCISE AGREEMENT

To: OCCUM ACQUISITION CORP.

The undersigned hereby: (1) irrevocably elects to subscribe for and offers to purchase                      Common
Shares of Occum Acquisition Corp., pursuant to Warrant No. W-2 heretofore issued to                      on July
29, 2004; (2) [choose either (a) or (b)] (a) encloses a payment of $100 per share (as adjusted pursuant
to the provisions of the Warrant) which reflects a payment pursuant to Section 3(a)(i) of the
Warrant; or (b) elects a cashless exercise pursuant to Section 3(a)(ii) of the Warrant (as adjusted
pursuant to the provisions of the Warrant) and requests that a certificate for the relevant number
of Common Shares be issued in the name of the undersigned and delivered to the undersigned at the
address specified below.

	 	 	 	 	 
	Dated:

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Address:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	          By	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

 

EXHIBIT B

ASSIGNMENT

Subject to Section 2 of the Shareholders Agreement, for value received,                                         
hereby sells, assigns and transfers all of the rights of the
undersigned under the attached Warrant (Certificate No.: W-2) with respect to the number of
Common Shares subject to such Warrant as set forth below, unto:

	 	 	 	 	 
	Names of Assignee	 	Address	 	No. of Shares
	 
	 
	 
	 
	 	 	 	 	 

	 	 	 	 	 
	Dated:

	 	Signature	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Witness	 	 
	 

	 	 	 	 

 

EXHIBIT C

The following two examples illustrate certain of the calculations in Section 2(a)(4)(C) of the
Warrant. These examples assume that the Warrant is for 100 shares; the Exercise Price is $100.00
per share; the Subscription Price is $100.00; and the Hurdle Price is $155.00.

Example A

Per Share Value: $140.00 

Non-Common Stock
Portion: 0.30

Average Closing Price: $47.00

Spread: $40.00

Total Spread: $4,000.00

Black Scholes Value: $4,500.00

Applicable Black-Scholes Value = $4,500.00 x .30 = $ 1,350.00

Applicable Reduction = Reduction Amount (136.35) x .30 = $40.90

Reduction Amount = Discount Factor (.2727) x $500.00 = $136.35

Discount Factor = (x) One minus (y) .7273 - .2727

Intrinsic Value Amount = $1,309.10

Post-merger Warrant = 208.51 shares at aggregate exercise price of $7,000.00 (in-the-money value = $2,800.00)

Example B

Per Share Value: $300.00

Non-Common Stock Portion: 0.40

Average Closing Price: $97.00

Spread: $200.00

Total Spread: $20,000.00

Black-Scholes Value: $23,000.00

Applicable Black-Scholes Value = $23,000.00 x .40 = $9,200.00

Applicable Reduction = Reduction Amount (0) x.40 = $0

Reduction Amount = Discount Factor (0) x $3,000.00 = $0

Discount Factor = (x) One minus (y) [$200.00/55 = 3.6364 but not more than one] = 0 

Intrinsic Value
Amount = $9,200.00

Post-merger Warrant = 185.567 shares at aggregate exercise price of $6,000.00 (in-the-money value = $12,000.00)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}]]