Document:

exv10w2

Exhibit 10.2

EXECUTION COPY

SECURITIES PURCHASE AGREEMENT

by and among

HARBINGER GROUP INC.,

QUANTUM PARTNERS LP,

DDJ HIGH YIELD FUND,

GENERAL MOTORS HOURLY-RATE EMPLOYES PENSION TRUST — 7N1H,

GENERAL MOTORS SALARIED EMPLOYES PENSION TRUST — 7N1I,

STICHTING PENSIOENFONDS HOOGOVENS,

CATERPILLAR INC. MASTER RETIREMENT TRUST,

J.C. PENNEY CORPORATION, INC. PENSION PLAN TRUST,

STICHTING BEWAARDER INTERPOLIS PENSIOENEN GLOBAL HIGH YIELD POOL,

STICHTING PENSIOENFONDS VOOR FYSIOTHERAPEUTEN,

HOUSTON MUNICIPAL EMPLOYEES PENSION SYSTEM,

UAW RETIREE MEDICAL BENEFITS TRUST,

DDJ DISTRESSED AND SPECIAL SITUATIONS FUND, L.P.,

RUSSELL INVESTMENT COMPANY — RUSSELL GLOBAL OPPORTUNISTIC CREDIT FUND,

DDJ CAPITAL MANAGEMENT GROUP TRUST — HIGH YIELD INVESTMENT FUND,

and

JHL CAPITAL GROUP MASTER FUND L.P.

August 1, 2011

     This Securities Purchase Agreement contains a number of representations and warranties
which the Company and the Purchasers have made to each other. The assertions embodied in those
representations and warranties are qualified by information in a confidential disclosure letter
that the Company and the Purchasers have exchanged in connection with signing the Securities
Purchase Agreement. The disclosure letter contains information that has been included

 

 

in the general prior public disclosures of the Company, as well as additional non-public
information. While we do not believe that this non-public information is required to be publicly
disclosed by the Company under the applicable securities laws, that information does modify,
qualify and create exceptions to the representations and warranties set forth in the Securities
Purchase Agreement. In addition, these representations and warranties were made as of the date of
the Securities Purchase Agreement. Information concerning the subject matter of the representations
and warranties may have changed since the date of the Securities Purchase Agreement, which
subsequent information may or may not be fully reflected in the public disclosures of the Company.
Moreover, representations and warranties are frequently utilized in Securities Purchase Agreements
as a means of allocating risks, both known and unknown, rather than to make affirmative factual
claims or statements. Accordingly, ONLY THE PARTIES TO THIS AGREEMENT SHOULD RELY ON THE
REPRESENTATIONS AND WARRANTIES AS CURRENT CHARACTERIZATIONS OF FACTUAL INFORMATION ABOUT THE
COMPANY OR THE PURCHASERS.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	SECURITIES PURCHASE AGREEMENT
	 	 	1	 
	 
	 	 	 	 
	1. Definitions
	 	 	2	 
	 
	 	 	 	 
	2. Authorization, Purchase and Sale of Shares
	 	 	13	 
	2.1 Authorization, Purchase and Sale
	 	 	13	 
	2.2 Closing
	 	 	13	 
	 
	 	 	 	 
	3. Representations and Warranties of the Company
	 	 	14	 
	3.1 Organization and Power
	 	 	14	 
	3.2 Capitalization
	 	 	14	 
	3.3 Authorization
	 	 	16	 
	3.4 Registration Requirements
	 	 	16	 
	3.5 No Conflict
	 	 	16	 
	3.6 Consents
	 	 	17	 
	3.7 Permits
	 	 	17	 
	3.8 SEC Reports; Financial Statements
	 	 	17	 
	3.9 Litigation
	 	 	20	 
	3.10 Absence of Certain Changes
	 	 	20	 
	3.11 Compliance with Law
	 	 	21	 
	3.12 Intellectual Property
	 	 	21	 
	3.13 Employee Benefits
	 	 	22	 
	3.14 Labor Relations
	 	 	23	 
	3.15 Taxes
	 	 	24	 
	3.16 NYSE
	 	 	25	 
	3.17 Investment Company Act
	 	 	25	 
	3.18 Brokers
	 	 	25	 
	3.19 Subsidiaries
	 	 	26	 
	3.20 Environmental Matters
	 	 	26	 
	3.21 Assets
	 	 	27	 
	3.22 Insurance
	 	 	28	 
	3.23 Material Contracts
	 	 	28	 
	3.24 Right of First Refusal; Stockholders Agreement; Voting and
Registration Rights
	 	 	29	 
	3.25 Anti-Takeover Statutes
	 	 	30	 
	3.26 No Additional Understandings
	 	 	30	 
	3.27 Spectrum and F&G.
	 	 	30	 
	3.28 No Other Representations and Warranties
	 	 	34	 
	 
	 	 	 	 
	4. Representations and Warranties of the Purchasers
	 	 	34	 
	4.1 Organization
	 	 	34	 
	4.2 Authorization
	 	 	34	 

 

 

	 	 	 	 	 
	 	 	Page	 
	4.3 No Conflict
	 	 	35	 
	4.4 Consents
	 	 	35	 
	4.5 Brokers
	 	 	35	 
	4.6 Purchase Entirely for Own Account
	 	 	35	 
	4.7 Investor Status
	 	 	35	 
	4.8 Securities Not Registered
	 	 	36	 
	4.9 Financing
	 	 	36	 
	4.10 Equity Securities of the Company
	 	 	36	 
	4.11 Indebtedness
	 	 	36	 
	 
	 	 	 	 
	5. Covenants
	 	 	37	 
	5.1 Regulatory Approval
	 	 	37	 
	5.2 Shares Issuable Upon Conversion
	 	 	38	 
	5.3 Commercially Reasonable Efforts; Further Assurances; Notification
	 	 	38	 
	5.4 Standstill
	 	 	39	 
	5.5 Participation Rights
	 	 	40	 
	5.6 Hedging Restrictions
	 	 	43	 
	5.7 Form 8-K.
	 	 	43	 
	5.8 Tax Characterization.
	 	 	44	 
	5.9 Confidential Information
	 	 	44	 
	5.10 Amendment to Certificate of Designation.
	 	 	45	 
	5.11 Most Favored Nation Status
	 	 	45	 
	 
	 	 	 	 
	6. Conditions Precedent
	 	 	45	 
	6.1 Conditions to the Obligation of the Purchasers to Consummate the Closing
	 	 	45	 
	6.2 Conditions to the Obligation of the Company to Consummate the Closing
	 	 	46	 
	 
	 	 	 	 
	7. Additional Covenants
	 	 	46	 
	7.1 Material Non-Public Information
	 	 	46	 
	7.2 Information Rights
	 	 	46	 
	 
	 	 	 	 
	8. Transfer Restrictions
	 	 	47	 
	 
	 	 	 	 
	9. Legends; Securities Act Compliance
	 	 	47	 
	 
	 	 	 	 
	10. Indemnification; Survival
	 	 	48	 
	10.1 Company Indemnification
	 	 	48	 
	10.2 Survival of Representations and Warranties
	 	 	48	 
	10.3 Purchaser Indemnification
	 	 	48	 
	10.4 Limitations
	 	 	49	 
	10.5 Procedures
	 	 	49	 
	10.6 Additional Limitations
	 	 	50	 
	10.7 Exclusive Remedies
	 	 	50	 

ii

 

	 	 	 	 	 
	 	 	Page	 
	11. Termination
	 	 	50	 
	11.1 Conditions of Termination
	 	 	50	 
	11.2 Effect of Termination
	 	 	50	 
	 
	 	 	 	 
	12. Miscellaneous Provisions
	 	 	50	 
	12.1 Public Statements or Releases
	 	 	50	 
	12.2 Interpretation
	 	 	51	 
	12.3 Notices
	 	 	51	 
	12.4 Severability
	 	 	54	 
	12.5 Governing Law; Jurisdiction; WAIVER OF JURY TRIAL
	 	 	55	 
	12.6 Specific Performance
	 	 	55	 
	12.7 Delays or Omissions; Waiver
	 	 	55	 
	12.8 Fees; Expenses
	 	 	56	 
	12.9 Assignment
	 	 	56	 
	12.10 No Third Party Beneficiaries
	 	 	56	 
	12.11 Counterparts
	 	 	56	 
	12.12 Entire Agreement; Amendments
	 	 	57	 
	12.13 Freedom to Pursue Opportunities
	 	 	57	 
	12.14 No Person Liability of Directors, Officers, Owners, Etc
	 	 	58	 
	12.15 Nature of Purchasers’ Obligations and Rights
	 	 	58	 

Annexes

			
	Annex A	 	Shares and Purchasers

	 	 	 
	Exhibits	 	 
	Exhibit A

	 	Form of Certificate of Designation
	Exhibit B

	 	Form of Registration Rights Amendment and Joinder
	Exhibit C

	 	Form of Tag-Along Agreement
	Exhibit D

	 	Form of Legal Opinion
	Exhibit E

	 	Form of Amendment to Certificate of Designation

iii

 

INDEX OF DEFINED TERMS

	 	 	 
	Term	 	Section
	Agreement
	 	Preamble
	Basket Amount
	 	10.4 
	Capitalization Date
	 	3.2(a) 
	Certificate of Designation
	 	Recitals
	Change
	 	1 
	Closing
	 	2.2(a) 
	Closing Date
	 	2.2(a) 
	Company
	 	Preamble
	Company Annual Report
	 	3.8(a) 
	Company Financial Statements
	 	3.8(c) 
	Company Indemnified Parties
	 	10.3 
	Company Indemnified Party
	 	10.3 
	Company Intellectual Property
	 	3.12(c) 
	Company SEC Filings
	 	3.8(a) 
	Confidential Information
	 	5.9(a) 
	Consent
	 	3.6 
	Contracts
	 	3.23(a)(v) 
	Convertible Preferred Stock
	 	Recitals
	DDJ
	 	4.10 
	DDJ Purchasers
	 	Preamble
	DGCL
	 	Recitals
	Disclosure Letter
	 	3 
	DTC
	 	9(b) 
	Environmental Permits
	 	3.20(a)(i) 
	ERISA Affiliate
	 	3.13(d) 
	Existing Certificate of Designation
	 	Recitals
	Existing Series A Preferred Stock
	 	Recitals
	Existing Series A Transaction Agreements
	 	Recitals
	First Amendment to the Certificate of Designation
	 	5.10 
	Foreign Benefit Plans
	 	3.13(f) 
	Form S-4
	 	3.8(a) 
	GAAP
	 	3.8(c) 
	Indemnified Party
	 	10.5 
	Indemnifying Party
	 	10.5 
	Insurance Regulatory Authorities
	 	5.1(b) 
	JHL Purchaser
	 	Preamble
	Law
	 	3.5 
	Laws
	 	3.5 
	Leased Real Property
	 	3.21(b) 
	Lien
	 	3.5 

iv

 

	 	 	 
	Term	 	Section
	Material Contract
	 	3.23(a) 
	New York Court
	 	12.5(b) 
	NYSE
	 	3.16(a) 
	F&G Financial Statements
	 	3.8(f) 
	Preferred Stock
	 	3.2(a) 
	Protected Information
	 	5.1(b) 
	Purchaser Adverse Effect
	 	4.3 
	Purchaser Indemnified Parties
	 	10.1 
	Purchaser Indemnified Party
	 	10.1 
	Registration Rights Agreement
	 	Recitals
	Registration Rights Amendment and Joinder
	 	Recitals
	Rule 144
	 	4.8(a) 
	Securities Exercise Notice
	 	5.5(b)(ii) 
	Securities Participation Amount
	 	5.5(a) 
	Securities Participation Right
	 	5.5(a) 
	Securities Participation Rights Notice
	 	5.5(b)(i) 
	Share
	 	2.1 
	Share Purchase Price
	 	2.1 
	SFM
	 	5.7 
	Shares
	 	2.1 
	Soros Purchaser
	 	Preamble
	Spectrum Financial Statements
	 	3.8(e) 
	Spectrum SEC Reports
	 	3.27(o) 
	Standstill Period
	 	5.4(a) 
	Survival Period
	 	10.2 
	Tag-Along Agreement
	 	Recitals
	Third Party Intellectual Property
	 	3.12(c) 
	Zap.Com Financial Statements
	 	3.8(d) 
	Zap.Com SEC Reports
	 	3.8(b) 

v

 

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated August 1, 2011, by and among Harbinger
Group Inc., Delaware corporation (the “Company”), Quantum Partners LP, a Cayman Islands exempted
limited partnership (the “Soros Purchaser”), JHL Capital Group Master Fund L.P., a Cayman
Islands exempted limited partnership (the “JHL Purchaser”), DDJ High Yield Fund, an
entity organized under the laws of the Province of Ontario, Canada, General Motors Hourly-Rate
Employes Pension Trust — 7N1H, a trust maintained by General Motors Corporation, a Delaware
corporation, General Motors Salaried Employes Pension Trust — 7N1I, a trust maintained by General
Motors Corporation, Stichting Pensioenfonds Hoogovens, a Dutch pension plan regulated by the Dutch
Central Bank, Caterpillar Inc. Master Retirement Trust, a trust maintained by Caterpillar, Inc., a
Delaware corporation, J.C. Penney Corporation, Inc. Pension Plan Trust, a trust maintained by J.C.
Penney Corporation, Inc., a Delaware corporation, Stichting Bewaarder Interpolis Pensioenen Global
High Yield Pool, a Dutch tax transparent pool of assets, Stichting Pensioenfonds voor
Fysiotherapeuten, a Dutch pension plan regulated by the Dutch Central Bank, Houston Municipal
Employees Pension System, a pension plan organized pursuant to Texas government code, UAW Retiree
Medical Benefits Trust, a trust consisting of three separate employees’ beneficiary associations,
DDJ Distressed and Special Situations Fund, L.P., a Delaware limited partnership, Russell
Investment Company — Russell Global Opportunistic Credit Fund, a Massachusetts business trust, and
DDJ Capital Management Group Trust — High Yield Investment Fund, a trust maintained by The Bank of
New York Mellon, a New York State chartered bank, as trustee (collectively, the “DDJ Purchasers”).

     WHEREAS, on May 13, 2011, the Company issued 280,000 shares of Series A Participating
Convertible Preferred Stock, par value $0.01 per share, of the Company (the “Existing Series A
Preferred Stock”) for a purchase price of $1,000 per share thereof;

     WHEREAS, in connection with the issuance of the Existing Series A Preferred Stock, the
Company, certain of the Harbinger Affiliates (as defined below) and the purchasers of the Existing
Series A Preferred Stock entered into a Securities Purchase Agreement, a Registration Rights
Agreement (as amended and supplemented by the Registration Rights Amendment and Joinder (as defined
below), the “Registration Rights Agreement”), a Corporate Opportunities Agreement, a Tag-Along
Agreement, and the Certificate of Designation of Series A Participating Convertible Preferred Stock
of Harbinger Group Inc. (the “Existing Certificate of Designation”), in each case dated as of May
12, 2011 (collectively, the “Existing Series A Transaction Agreements”);

     WHEREAS, the Company has authorized the issuance and sale of 75,000 shares of Series A-2
Participating Convertible Preferred Stock, par value $0.01 per share, of the Company (the
“Convertible Preferred Stock”), the rights, preferences and privileges of which are to be set forth
in a Certificate of Designation, in the form attached hereto as Exhibit A (the “Certificate
of Designation”), which shares of Convertible Preferred Stock shall be convertible into authorized
but unissued shares of Common Stock (as defined below);

 

 

     WHEREAS, subject to the terms and conditions set forth herein, the Company desires to issue
and sell to the several Purchasers, and the several Purchasers desire to purchase from the Company,
the Shares (as defined below);

     WHEREAS, the Board (as defined below) has (i) determined that it is in the best interests of
the Company and its stockholders, and declared it advisable, to enter into this Agreement and the
other Transaction Agreements (as defined below) to which the Company is a party providing for the
transactions contemplated hereby and thereby in accordance with the General Corporation Law of the
State of Delaware (the “DGCL”), upon the terms and subject to the conditions set forth herein, and
(ii) approved the execution, delivery and performance of this Agreement and the other Transaction
Agreements to which the Company is a party and the consummation of the transactions contemplated
hereby and thereby in accordance with the DGCL upon the terms and conditions contained herein and
therein;

     WHEREAS, each Purchaser has approved the execution, delivery and performance of this Agreement
and the other Transaction Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby in accordance with applicable law upon the terms and
conditions contained herein and therein; and

     WHEREAS, as a condition to the consummation of the transactions contemplated hereby, on the
Closing Date the Purchasers, the Company and/or certain of the Harbinger Affiliates and holders of
Existing Series A Preferred Stock will enter into (i) an amendment and joinder to the Registration
Rights Agreement in the form attached as Exhibit B hereto (the “Registration Rights
Amendment and Joinder”), and (ii) the Amended and Restated Tag-Along Side Letter in the form
attached as Exhibit C hereto (the “Tag-Along Agreement”).

     NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and
covenants herein contained, the parties hereto agree as follows:

     1. Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:

     “Accreting Dividends” shall have the meaning set forth in the Certificate of Designation.

     “Acquisition Date” means July 9, 2009.

     “Additional Permitted Preferred Stock” shall have the meaning set forth in the Certificate of
Designation.

     “Affiliate” means, with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under common control with,
such specified Person. Notwithstanding the foregoing, (i) none of the Company, its Subsidiaries or
its other controlled Affiliates, nor any Harbinger Affiliates shall be considered Affiliates of any
Purchaser, (ii) no Purchaser shall be considered an Affiliate of any Portfolio Company in which
such Purchaser or any of its Affiliates have made a debt or equity investment (provided, however,
that for purposes of Sections 5.4 and 5.6 hereof, a Purchaser shall be considered
an Affiliate of any such Portfolio Company if such Portfolio Company has received material
confidential information regarding the Company or any of its Subsidiaries from such

2

 

Purchaser or any of its Affiliates in violation of Section 5.10 (disregarding for this
purpose clause (v) of Section 5.10(a)), and (iii) no Purchaser shall be considered an
Affiliate of any other Purchaser or any of such other Purchaser’s Affiliates; provided,
however, that a Portfolio Company shall be deemed to be an Affiliate of a Purchaser if such
Purchaser, directly or indirectly, encouraged, directed or caused such Portfolio Company to take
any action that would have been prohibited by the terms of this Agreement if such Portfolio Company
had been an Affiliate of such Purchaser but for clause (ii) of this definition.

     “Agreement” shall have the meaning set forth in the preamble.

     “Antitrust Laws” means the HSR Act and any foreign antitrust Laws.

     “Basket Amount” shall have the meaning set forth in Section 10.4.

     “Beneficially Own,” “Beneficially Owned,” or “Beneficial Ownership” shall have the meaning set
forth in Rule 13d-3 of the rules and regulations promulgated under the Exchange Act;
provided, however, that, other than for purposes of the definition of “Hedging
Agreement”, a Person will be deemed to be the beneficial owner of any security which may be
acquired by such Person whether within 60 days or thereafter, upon the conversion, exchange or
exercise (without giving effect to any provision governing such security that would limit, reduce
or otherwise restrict the conversion, exchange or exercise features of such security) of any
rights, options, warrants or similar securities to subscribe for, purchase or otherwise acquire
such security; provided, further, that for purposes of Section 5.4, the
Convertible Preferred Stock shall be deemed to be convertible at any time notwithstanding the
limitations on conversion thereof contained in SECTION 5 of the Certificate of Designation.

     “Benefit Plans” with respect to any Person shall mean each material “employee benefit plan”
(within the meaning of Section 3(3) of ERISA), and all stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus, incentive, deferred
compensation, employee loan and all other employee benefit plans, agreements, programs, policies or
other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now
in effect or required in the future as a result of the transaction contemplated by this Agreement
or otherwise), whether formal or informal, oral or written, legally binding or not, under which any
employee of such Person or its Subsidiaries has any present or future right to benefits or which
are contributed to, sponsored by or maintained by the Person or any of its Subsidiaries.

     “Board” shall mean the Board of Directors of the Company.

     “Business Day” shall mean any day, other than a Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking institutions located
in the State of New York are authorized or required by Law or other governmental action to close.

     “Capitalization Date” shall have the meaning set forth in Section 3.2(a).

     “Certificate of Designation” shall have the meaning set forth in the recitals.

3

 

     “Closing” shall have the meaning set forth in Section 2.2.

     “Closing Date” shall have the meaning set forth in Section 2.2.

     “Code” shall mean the Internal Revenue Code of 1986, as amended.

     “Common Stock” shall mean the Common Stock, par value $0.01 per share, of the Company, or any
other shares of capital stock into which the Common Stock shall be reclassified or changed.

     “Company” shall have the meaning set forth in the preamble.

     “Company Annual Report” shall have the meaning set forth in Section 3.8(a).

     “Company Change in Control Event” means any transaction or series of transactions (as a result
of a tender offer, merger, consolidation, reorganization or otherwise) that results in, (i) the
sale, lease, exchange, conveyance, transfer or other disposition (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property or assets of the
Company and its Subsidiaries (taken as a whole) to any Person or “group” (within the meaning of
Section 13(d)(3) of the Exchange Act) (including any liquidation, dissolution or winding up of the
affairs of the Company, or any other distribution made, in connection therewith); (ii) any Person
or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) becoming the ultimate
Beneficial Owner, directly or indirectly, of 35% or more of the voting power of the Voting Stock of
the Company other than a Harbinger Affiliate or the Fortress Investor (as defined in the
Certificate of Designation) (aggregated with its Affiliates); provided, that such event
shall not be deemed a Change of Control so long as one or more Harbinger Affiliates shall
Beneficially Own more of the voting power of the Voting Stock of the Company than such person or
group; or (iii) the Continuing Directors ceasing to constitute a majority of the members of the
Board. For purposes of this definition, (x) any direct or indirect holding company of the Company
shall not itself be considered a Person for purposes of clause (ii) above or a “person” or “group”
for purposes of clause (ii) above, provided that no “person” or “group” (other than the
Harbinger Affiliates or another such holding company) Beneficially Owns, directly or indirectly,
more than 50% of the voting power of the voting stock of such company, and a majority of the voting
stock of such holding company immediately following it becoming the holding company of the Company
is Beneficially Owned by the Persons who Beneficially Owned the voting power of the Voting Stock of
the Company immediately prior to it becoming such holding company and (y) a Person shall not be
deemed to have beneficial ownership of securities subject to a stock purchase agreement, merger
agreement or similar agreement until the consummation of the transactions contemplated by such
agreement.

     “Company Financial Statements shall have the meaning set forth in Section 3.8(c).

     “Company Indemnified Party” shall have the meaning set forth in Section 10.3.

     “Company Intellectual Property” shall have the meaning set forth in Section 3.12(c).

     “Company Option” shall mean an option to acquire shares of Common Stock that was issued under
any Company Stock Plan.

4

 

     “Company SEC Filings” shall have the meaning set forth in Section 3.8(a).

     “Company Stock Plans” shall mean the plans listed on Section 1.2 of the Disclosure
Letter.

     “Company Voting Stock” shall mean securities of any class or kind ordinarily having the power
to vote generally for the election of Directors of the Company or its successor (including the
Common Stock and the Convertible Preferred Stock).

     “Confidential Information” shall have the meaning set forth in Section 5.9(a).

     “Consent” shall have the meaning set forth in Section 3.6.

     “Continuing Directors” means, as of any date of determination, any member of the Board who
was: (x) a member of the Board on the Closing Date; (y) nominated for election or elected pursuant
to any of the Transaction Agreements, or (z) nominated for election or elected to such Board with
the approval of the Harbinger Affiliates or a majority of the Continuing Directors who were members
of such Board at the time of such nomination or election.

     “Contracts” shall have the meaning set forth in Section 3.23(a)(v).

     “control” (including the terms “controlling” “controlled by” and “under common control with”)
with respect to any Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. For the avoidance of doubt, as of the
date hereof (but without precluding a different determination as of any date subsequent to the date
hereof dependent on the relevant facts and circumstances at such time), the Company shall not be
considered to control Spectrum.

     “Conversion Shares” shall mean the shares of Common Stock issuable upon the conversion of the
Convertible Preferred Stock as provided for in the Certificate of Designation.

     “Convertible Preferred Stock” shall have the meaning set forth in the recitals.

     “DDJ Purchasers” shall have the meaning set forth in the preamble.

     “DGCL” shall have the meaning set forth in the recitals.

     “Director” means any member of the Board.

     “Disclosure Letter” shall have the meaning set forth in Section 3.

     “DTC” shall have the meaning set forth in Section 9(b).

     “Environmental Law” shall mean any and all Laws relating to the protection of the environment
(including ambient air, surface water, groundwater or land) or natural resources and any other Laws
concerning human exposure to Hazardous Substances.

     “Environmental Permits” shall have the meaning set forth in Section 3.20(a)(i).

5

 

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     “ERISA Affiliate” shall have the meaning set forth in Section 3.13(d).

     “Equity Securities” shall mean, with respect to any Person, (i) shares of capital stock of, or
other equity or voting interest in, such Person, (ii) any securities convertible into or
exchangeable for shares of capital stock of, or other equity or voting interest in, such Person,
(iii) options, warrants, rights or other commitments or agreements to acquire from such Person, or
that obligates such Person to issue, any capital stock of, or other equity or voting interest in,
or any securities convertible into or exchangeable for shares of capital stock of, or other equity
or voting interest in, such Person, (iv) obligations of such Person to grant, extend or enter into
any subscription, warrant, right, convertible or exchangeable security or other similar agreement
or commitment relating to any capital stock of, or other equity or voting interest (including any
voting debt) in, such Person and (v) the capital stock of such Person.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and all of the
rules and regulations promulgated thereunder.

     “Existing Certificate of Designation” shall have the meaning set forth in the recitals.

     “Existing Series A Preferred Stock” shall have the meaning set forth in the recitals.

     “Existing Series A Transaction Agreements” shall have the meaning set forth in the recitals.

     “F&G” shall mean Fidelity & Guaranty Life Holdings, Inc., a Delaware corporation (f/k/a Old
Mutual U.S. Life Holdings, Inc.).

     “F&G Purchase Agreement” shall mean the First Amended and Restated Stock Purchase Agreement,
dated as of February 17, 2011, between OM Group (UK) Limited and Harbinger F&G.

     “F&G Financial Statements” shall have the meaning set forth in Section 3.8(f).

     “First Amendment to the Certificate of Designation” shall have the meaning set forth in
Section 5.10.

     “Foreign Benefit Plans” shall have the meaning set forth in Section 3.13(f).

     “Form S-4” shall have the meaning set forth in Section 3.8(a).

     “GAAP” shall have the meaning set forth in Section 3.8(c).

     “Governmental Entity” shall mean any United States or non-United States federal, state or
local government, or any agency, bureau, board, commission, department, tribunal or instrumentality
thereof or any court, tribunal, or arbitral or judicial body.

6

 

     “Harbinger Affiliate” shall mean any of Philip A. Falcone, Harbinger Capital Partners, or any
limited partnership, limited liability company, corporation or other entity that controls, is
controlled by, or is under common control with Philip A. Falcone or Harbinger Capital Partners
(other than the Company and its Subsidiaries).

     “Harbinger Capital Partners” shall mean Harbinger Capital Partners LLC and Harbinger Capital
Partners II LP, collectively.

     “Harbinger F&G” shall mean Harbinger F&G, LLC (f/k/a Harbinger OM, LLC).

     “Hazardous Substance” shall mean any substance, material or chemical that is characterized or
regulated under any Environmental Law as “hazardous,” a “pollutant,” “waste,” a “contaminant,”
“toxic” or words of similar meaning or effect, or that could result in liability under any
Environmental Law, and shall include petroleum and petroleum products, polychlorinated biphenyls,
lead, crystalline silica and asbestos.

     “Hedging Agreement” shall mean any swap, forward or option contract or any other agreement,
arrangement, contract or transaction that hedges the direct economic exposure to a decline in value
resulting from ownership by any Person of the Common Stock, the Convertible Preferred Stock or the
equity securities of any Subsidiary of the Company that are traded on a national securities
exchange, regardless of whether any such agreement, arrangement, contract or transaction is to be
settled by delivery of securities, in cash or otherwise; provided, however, that,
for the avoidance of doubt, in no event shall an agreement providing for (i) the direct Transfer of
Common Stock or Convertible Preferred Stock actually Beneficially Owned by such Person or (ii)
transactions involving an index-based portfolio of securities that includes Common Stock or common
equity securities of any Subsidiary (provided that the value of such Common Stock or common equity
securities of any Subsidiary, as applicable, in such portfolio is not more than 10% of the total
value of the portfolio of securities, or if the value of such Common Stock or common equity
securities of any Subsidiary, as applicable, is more than 10% of the total value of the portfolio
of securities, then such transaction was not entered into for purposes of hedging such Common Stock
or common equity securities of a Subsidiary, as applicable) be deemed a “Hedging Agreement”
hereunder.

     “Hedging Limitation Period” shall mean the period from the date hereof until the earlier of
(i) the twelve (12) month anniversary of the Closing or (ii) the occurrence of a Specified Breach
Event.

     “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
all of the rules and regulations promulgated thereunder.

     “Indemnified Party” shall have the meaning set forth in Section 10.5.

     “Indemnifying Party” shall have the meaning set forth in Section 10.5.

     “Insurance Regulatory Authorities” shall have the meaning set forth in Section 5.1(b).

     “Insurance Subsidiaries” shall have the meaning set forth in the F&G Purchase Agreement.

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     “Intermediate Holding Company Subsidiary” shall mean any Subsidiary of the Company that is a
holding company that holds equity interests in two (2) or more Portfolio Companies engaged in
unrelated lines of business; provided, however, that (w) Spectrum shall not be
considered an Intermediate Holding Company Subsidiary, (x) the reinsurance and insurance businesses
shall be considered to be a single line of business, (y) any Portfolio Company that operates in
more than one (1) Specified Industry shall be an Intermediate Holding Company Subsidiary and (z)
any Portfolio Company that operates in only one (1) Specified Industry shall not be an Intermediate
Holding Company Subsidiary.

     “Intellectual Property” shall mean all U.S. or foreign intellectual property, including (i)
patents, trademarks, service marks, trade names, domain names, other source indicators and the
goodwill of the business symbolized thereby, copyrights, works of authorship in any medium, designs
and trade secrets, (ii) applications for and registrations of such patents, trademarks, service
marks, trade names, domain names, copyrights and designs (“Registered Intellectual Property”),
(iii) inventions, processes, formulae, methods, schematics, technology, know-how, computer software
programs and applications, and (iv) other tangible or intangible proprietary or confidential
information and materials.

     “JHL” shall have the meaning set forth in Section 5.7.

     “JHL Purchaser” shall have the meaning set forth in the preamble.

     “Knowledge” shall mean, with respect to the Company, the knowledge of any of the Persons set
forth on Section 1.1 of the Disclosure Letter. Such individuals will be deemed to have
“knowledge” of a particular fact or other matter if (i) such individual has or at any time had
actual knowledge of such fact or other matter or (ii) a prudent individual would be expected to
discover or otherwise become aware of such fact or other matter in the course of conducting a
reasonably diligent review concerning the existence thereof with each employee of the Company or
any of its Subsidiaries who reports directly to such individual and who (x) has responsibilities or
(y) would reasonably be expected to have actual knowledge of circumstances or other information, in
each case, that would reasonably be expected to be pertinent to such fact or other matter.
Notwithstanding the foregoing, the Company will be deemed to have knowledge of any fact or matter
of which an officer of the Company has received written notice (whether in hard copy, digital or
electronic format).

     “Law” shall have the meaning set forth in Section 3.5.

     “Leased Real Property” shall have the meaning set forth in Section 3.21(b).

     “Legal Proceeding” shall mean any action, suit, litigation, petition, claim, arbitration,
proceeding (including any civil, criminal, administrative, investigative or appellate proceeding),
hearing, inquiry, or investigation by or before, or otherwise involving, any court or other
Governmental Entity or arbitral body.

     “Liability” shall mean any liability, obligation or commitment of any kind (whether accrued,
absolute, contingent, matured, unmatured or otherwise and whether or not required to be recorded or
reflected on a balance sheet prepared in accordance with GAAP).

8

 

     “Lien” shall have the meaning set forth in Section 3.5.

     “Losses” shall mean any and all actions, causes of action, suits, claims, liabilities, losses,
damages, penalties, judgments, costs and out-of-pocket expenses in connection therewith (including
reasonable attorneys’ fees and expenses), it being agreed that Losses may include any losses that
any Person deciding any dispute in respect thereof (whether a court, jury or other Person) may
determine are recoverable, including if so determined to be recoverable, losses that represent
diminution in value.

     “Material Adverse Effect” shall mean any fact, circumstance, event, change, effect, occurrence
or development (each, a “Change”) that, individually or in the aggregate with all other Changes,
has a material adverse effect on or with respect to the business, operations, assets (including
intangible assets), liabilities, results of operation or financial condition of the Company and its
Subsidiaries taken as a whole, provided, however, that a Material Adverse Effect
shall not include any Change (by itself or when aggregated or taken together with any and all other
Changes) (i) generally affecting the industries in which the Company and its Subsidiaries operate
or economic conditions in the United States (including changes in the capital or financial markets
generally); (ii) resulting from any outbreak or escalation of hostilities or acts of war or
terrorism, political instability or other national or international calamity, crisis or emergency,
or any governmental or other response to any of the foregoing, in each case whether or not
involving the United States; (iii) resulting from changes (or proposed changes) in Law or GAAP (or
authoritative interpretations thereof); (iv) resulting from changes in the market price or trading
volume of the Company’s or Spectrum’s securities or from the failure of the Company or any of its
Subsidiaries to meet projections, forecasts or estimates (it being understood that the causes
underlying such failure may be considered in determining whether a Material Adverse Effect has
occurred or would reasonably be expected to occur); (v) acts of God (including earthquakes, storms,
fires, floods and natural catastrophes), (vi) effects relating to or arising from the announcement
of the execution of this Agreement or the Existing Series A Transaction Agreements or the
transactions contemplated hereby or thereby or the identity of any Purchaser or a Purchaser’s
Affiliates, including the loss of any customers, suppliers or employees; (vii) effects resulting
from compliance with the terms and conditions of this Agreement or any other Transaction Agreement
to which the Company is a party by the Company or any of its Subsidiaries or consented to in
writing by a Purchaser, (viii) the seasonality of the business of the Company or any of its
Subsidiaries, or (ix) any breach of this Agreement by a Purchaser, except to the extent that, with
respect to clauses (i), (ii), (iii), (iv) and (v), the impact of such Changes is disproportionately
adverse to the Company and its Subsidiaries. For purposes of Sections 3.8(f),
3.8(g) and 3.27(q),it is expressly agreed that with respect to the historical
financial statements of F&G referenced therein, no error or omission or alleged error or omission
therein will be considered in determining whether a Material Adverse Effect has occurred unless and
then only to the extent such error or omission would have or would reasonably be expected to result
in a Fair Market Value (as defined in the Indenture) of F&G as of May 13, 2011 that is less than
$350 million and would otherwise constitute a Material Adverse Effect (and then only to the extent
the Fair Market Value of F&G as of May 13, 2011 is less than $350 million).

     “Material Contracts” shall have the meaning set forth in Section 3.23(a).

9

 

     “New York Court” shall have the meaning set forth in Section 12.5(b).

     “Notes” shall mean the Company’s 10.625% Senior Secured Notes due 2015.

     “NYSE” shall have the meaning set forth in the Section 3.16(a).

     “Participation Rights Fraction” shall mean, in the case of any Purchaser, a fraction, the
numerator of which is the product of (A) the number of shares of Common Stock held by such
Purchaser on a fully-diluted basis from either the Shares or the Common Stock issuable on
conversion of the Shares, as of such date, multiplied by (B) 0.75, and the denominator of which is
the number of shares of Common Stock then outstanding on a fully-diluted basis, as of such date.

     “Permitted Liens” means, (a) local, state and federal Laws, including, without limitation,
zoning or planning restrictions, and utility lines, easements, permits, covenants, conditions,
restrictions, rights-of-way, oil, gas or mineral leases of record and other restrictions or
limitations on the use of real property or irregularities in title thereto, which do not materially
impair the value of such properties or the continued use of such property for the purposes for
which the property is currently being used by the Company or any Subsidiary, (b) Liens for Taxes
not yet due and payable, that are payable without penalty or that are being contested in good faith
and for which adequate reserves have been recorded on the Company Financial Statements, (c) Liens
for carriers’, warehousemen’s, mechanics’, repairmen’s, workers’ and similar Liens incurred in the
ordinary course of business, consistent with past practice, in each case for sums not yet due and
payable or due but not delinquent or being contested in good faith by appropriate proceedings and
for which adequate reserves have been recorded on the Company Financial Statements, (d) Liens
incurred in the ordinary course of business, consistent with past practice, in connection with
workers’ compensation, unemployment insurance and other types of social security or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return of money bonds and similar obligations, which do not materially
impair the value of the underlying property or the continued use of such property for the purposes
for which the property is currently being used by the Company or any Subsidiary, (e) Liens granted
under equipment leases with third parties entered into in the ordinary course of business
consistent with past practice, (f) Liens permissible under any applicable loan agreements and
indentures, (g) restrictions arising under applicable securities Laws and (h) Liens securing the
Notes.

     “Person” shall mean an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture or any other
entity or organization.

     “Portfolio Company” shall have the meaning set forth in the Certificate of Designation.

     “Preferred Stock” shall have the meaning set forth in Section 3.2(a).

     “Protected Information” shall have the meaning set forth in Section 5.1(b).

     “Purchasers” means, collectively, the Soros Purchaser, the DDJ Purchasers and the JHL
Purchaser.

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     “Purchaser Adverse Effect” shall have the meaning set forth in the Section 4.3.

     “Purchaser Indemnified Party” shall have the meaning set forth in Section 10.1.

     “Registered Intellectual Property” shall have the meaning set forth in the definition of
“Intellectual Property”.

     “Registration Rights Agreement” shall have the meaning set forth in the recitals.

     “Registration Rights Amendment and Joinder” shall have the meaning set forth in the recitals.

     “Representatives” means, with respect to any Person, such Person’s Affiliates (other than any
Portfolio Company) and their respective directors, officers, employees, managers, trustees,
principals, stockholders, members, general or limited partners, agents and other representatives.

     “Rule 144” shall have the meaning set forth in Section 4.8(a).

     “SEC” shall mean the Securities and Exchange Commission.

     “Securities Act” shall mean the Securities Act of 1933, as amended, and all of the rules and
regulations promulgated thereunder.

     “Securities Exercise Notice” shall have the meaning set forth in Section 5.5(b)(ii).

     “Securities Participation Amount” shall have the meaning set forth in Section 5.5(a).

     “Securities Participation Right” shall have the meaning set forth in Section 5.5(a).

     “Securities Participation Rights Notice” shall have the meaning set forth in Section
5.5(b)(i).

     “SFM” shall have the meaning set forth in Section 5.7.

     “Shares” shall have the meaning set forth in Section 2.1.

     “Share Purchase Price” shall have the meaning set forth in the Section 2.1.

     “Significant Subsidiary” shall mean any Subsidiary or group of Subsidiaries that would, taken
together, be a “significant subsidiary” as defined in Article 1, Rule 1-02 (w)(1) or (2) of
Regulation S-X promulgated under the Securities Act, as such regulation is in effect from time to
time; provided, however, that Spectrum and its Subsidiaries shall be deemed not to
be Significant Subsidiaries of the Company for purposes of Section 3.

     “Soros Purchaser” shall have the meaning set forth in the preamble.

     “Specified Breach Event” shall have the meaning set forth in the Certificate of
Designation.

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     “Specified Industries” shall mean the consumer products, insurance and financial products,
agriculture, power generation and water and natural resources industries.

     “Spectrum” shall mean Spectrum Brands Holdings, Inc., a Delaware corporation.

     “Spectrum Financial Statements” shall have the meaning set forth in the Section
3.8(e).

     “Spectrum SEC Reports” shall have the meaning set forth in the Section 3.27(p).

     “Standstill Period” shall have the meaning set forth in Section 5.4(a).

     “Subsidiary” of any Person shall mean any corporation, partnership, joint venture, limited
liability company, trust or other form of legal entity (whether incorporated or unincorporated) of
which (or in which) more than 50% of (i) the Total Current Voting Power; (ii) the interest in the
capital or profits of such partnership, joint venture or limited liability company; or (iii) the
beneficial interest in such trust or estate; is, directly or indirectly, owned or controlled by
such Person, by such Person and one or more of its other Subsidiaries or by one or more of such
Person’s other Subsidiaries; provided, however, that Spectrum and F&G and their
respective Subsidiaries shall be deemed not to be Subsidiaries of the Company for purposes of
Section 3 (other than Sections 3.2, 3.8(e), 3.8(f), 3.8(g), 3.10(a), 3.23(a)(i),
3.23(a)(vii) and 3.26) or for purposes of the definition of “Benefit Plan”;
provided, further, however, that F&G and its Subsidiaries shall be deemed
to be Subsidiaries of the Company for purposes of Sections 3.19. For the avoidance of
doubt, Spectrum, F&G and their respective Subsidiaries shall be deemed to be Subsidiaries of the
Company for purposes of the definition of “Material Adverse Effect.”

     “Survival Period” shall have the meaning set forth in Section 10.2.

     “Tag-Along Agreement” shall have the meaning set forth in the recitals.

     “Tax Returns” shall mean returns, reports, information statements and other documentation
(including any additional or supporting material) filed or required to be filed in connection with
the calculation, determination, assessment or collection of any Tax, including any schedules or
amendments thereto.

     “Taxes” shall mean any and all taxes, levies, fees, imposts, duties and charges of whatever
kind (including any interest, penalties or additions to the tax imposed in connection therewith or
with respect thereto) imposed by any Governmental Authority, including, without limitation, taxes
imposed on, or measured by, income, franchise, profits or gross receipts, and any ad valorem, value
added, sales, use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers’ compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premium, windfall profits, transfer and
gains taxes and customs or duties.

     “Third Party Intellectual Property” shall have the meaning set forth in Section
3.12(c).

     “Total Current Voting Power” shall mean, with respect to any entity, at the time of
determination of Total Current Voting Power, the total number of votes which may be cast in the

12

 

general election of directors of such entity (or, in the event the entity is not a
corporation, the governing members, board or other similar body of such entity).

     “Transaction Agreements” shall mean this Agreement, the Certificate of Designation, the
Tag-Along Agreement, the Registration Rights Amendment and Joinder and the First Amendment to the
Certificate of Designation.

     “Transfer” shall mean the direct or indirect transfer, sale, assignment, exchange,
distribution, mortgage, pledge or disposition of any Equity Securities of the Company.

     “Treasury Regulation” shall mean the Treasury Regulations promulgated under the Code.

     “Voting Stock” shall mean securities of any class or kind ordinarily having the power to vote
generally for the election of (x) Directors of the Company or its successor (including the Common
Stock and the Convertible Preferred Stock) or (y) directors of any Subsidiary of the Company.

     “Wholly Owned Subsidiary” means (x) any Subsidiary of the Company of which the Company owns,
either directly or indirectly, 100% of the outstanding equity interests of such Subsidiary
(excluding qualifying shares held by directors), and (y) Zap.Com.

     “Zap.Com” shall mean Zap.Com Corporation, a corporation formed under the Laws of the State of
Nevada.

     “Zap.Com Financial Statements” shall have the meaning set forth in Section 3.8(d).

     “Zap.Com SEC Reports” shall have the meaning set forth in Section 3.8(b).

     2. Authorization, Purchase and Sale of Shares.

          2.1 Authorization, Purchase and Sale. Subject to and upon the terms and conditions of
this Agreement, the Company will issue and sell to the several Purchasers, and the several
Purchasers will purchase from the Company, at the Closing, the number of shares of Convertible
Preferred Stock set forth next to each such Purchaser’s name on Annex A (each, a “Share”
and collectively, the “Shares”). The purchase price per Share shall be $1,000 and the aggregate
purchase price (the “Share Purchase Price”) for the Shares shall be the amount set forth on
Annex A.

          2.2 Closing.

               (a) The closing of the purchase and sale of the Shares (the “Closing”) shall take place at the
offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New
York 10019 on August 5, 2011, following the satisfaction or waiver of each of the conditions set
forth in Section 6 (other than those conditions which, by their terms, are to be satisfied
or waived at the Closing), or at such other place or such other date as agreed to by the parties
hereto (the “Closing Date”).

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               (b) At the Closing:

                    (i) the Company shall deliver to each Purchaser one or more certificates representing the
Shares purchased by such Purchaser; and

                    (ii) each Purchaser shall deliver, or cause to be delivered, to the Company an amount equal to
the portion of the Share Purchase Price set forth next to such Purchaser’s name on Annex A
by wire transfer of immediately available funds to an account that the Company shall designate at
least one (1) Business Day prior to the Closing Date.

     3. Representations and Warranties of the Company. Except as set forth in the disclosure
letter delivered by the Company to the Purchasers on the date hereof (the “Disclosure Letter”) (it
being agreed that disclosure of any item in any section of the Disclosure Letter shall also be
deemed disclosure with respect to any other Section of this Agreement to which the relevance of
such item is reasonably apparent) or as disclosed in the Company SEC Filings, Spectrum SEC Reports
or the Zap.com SEC Reports, filed and publicly available prior to the date of this Agreement and
only as and to the extent disclosed therein (but excluding any risk factor disclosures contained
under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking
statements” disclaimer or any other statements that are similarly forward-looking), the Company
hereby represents and warrants to the Purchasers as follows:

          3.1 Organization and Power.

               (a) Each of the Company and its Subsidiaries is a legal entity duly organized, validly
existing and in good standing under the Laws of its respective jurisdiction of organization. Each
of the Company and its Subsidiaries has the requisite corporate power and authority to carry on its
respective business as it is presently being conducted and to own, lease or operate its respective
properties and assets, except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

               (b) Each of the Company and its Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation (or other legal entity) in each jurisdiction where the ownership,
leasing or operation of its assets or properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The
organizational or governing documents of the Company and each of its Subsidiaries are in full force
and effect. Neither the Company nor any Subsidiary is in violation of its organizational or
governing documents. The Company has delivered or made available to the Purchasers complete and
correct copies of the certificates of incorporation and bylaws or other constituent documents, as
amended to date and currently in full force and effect, of the Company and its Significant
Subsidiaries.

          3.2 Capitalization.

               (a) As of the date of this Agreement, the authorized shares of capital stock of the Company
consist of 500,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, par value
$0.01 per share (“Preferred Stock”). As of the close of business on July 22, 2011 (the
“Capitalization Date”), (i) 139,284,286 shares of Common Stock were issued

14

 

and outstanding, (ii) 6,273,241 shares of Common Stock were reserved for issuance under the
Company Stock Plans, (iii) 280,000 shares of Existing Series A Preferred Stock were issued and
outstanding, (v) a sufficient number of shares of Common Stock were reserved for issuance upon
conversion of the Existing Series A Preferred Stock, and (v) zero shares of Common Stock or
Preferred Stock were held by the Company as treasury shares. All outstanding shares of Common
Stock are validly issued, fully paid, nonassessable and free of preemptive or similar rights.
Since the Capitalization Date, the Company has not sold or issued or repurchased, redeemed or
otherwise acquired any shares of the Company’s capital stock (other than issuances pursuant to the
exercise of any Company Option or vesting of any share unit award that had been granted under any
Company Stock Plan, or repurchases, redemptions or other acquisitions pursuant to agreements
contemplated by a Company Stock Plan). No Subsidiary of the Company owns any Equity Securities of
the Company.

               (b) As of the Capitalization Date, with respect to the Company Stock Plans, (i) there were
404,833 shares of Common Stock underlying outstanding Company Options to acquire shares of Common
Stock, such outstanding Company Options having a weighted average exercise price per share as of
the Capitalization Date of $6.18, (ii) there were zero shares of Common Stock issuable upon the
vesting of outstanding share award units, and (iii) 5,868,408 additional shares of Common Stock
were reserved for issuance for future grants pursuant to the Company Stock Plans. All shares of
Common Stock reserved for issuance as noted in the foregoing sentence, when issued in accordance
with the respective terms thereof, are or will be validly issued, fully paid, nonassessable and
free of preemptive or similar rights. Each Company Option was granted with an exercise price per
share equal to or greater than the per share fair market value (as such term is used in Code
Section 409A and the regulations and other interpretive guidance issued thereunder) of the Common
Stock underlying such Company Option on the grant date thereof and was otherwise issued in material
compliance with applicable Law.

               (c) Except as set forth in this Section 3.2, as of the date of this Agreement, there
are no outstanding Equity Securities of the Company and no other obligations by the Company or any
of its Subsidiaries to make any payments based on the price or value of any Equity Securities of
the Company. Except as set forth in the Existing Series A Transaction Agreements, there are no
outstanding agreements of any kind which obligate the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Equity Securities of the Company.

               (d) Except as set forth in the Transaction Agreements, the Existing Series A Transaction
Agreements or in any registration rights agreements filed as exhibits to the Company’s SEC Reports,
neither the Company nor any of its Subsidiaries is a party to any agreement relating to the voting
of, requiring registration of, or granting any preemptive, anti-dilutive rights or rights of first
refusal or other similar rights with respect to any Equity Securities of the Company.

               (e) Upon the filing of the Certificate of Designation with the Secretary of State of the State
of Delaware, (i) the Convertible Preferred Stock will be duly authorized and (ii) a sufficient
number of Conversion Shares will have been duly authorized and validly reserved for issuance upon
conversion of the Shares in accordance with the Certificate of Designation. When the Shares are
issued and paid for in accordance with the provisions of this

15

 

Agreement and the Certificate of Designation, all such Shares will be duly authorized, validly
issued, fully paid, nonassessable and free of preemptive or similar rights except as set forth in
the Transaction Agreements. When Conversion Shares are issued in accordance with the provisions of
the Certificate of Designation all such Conversion Shares will be duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights.

          3.3 Authorization. The Company has all requisite corporate power to enter into each
of the Transaction Agreements to which it is a party and to consummate the transactions
contemplated by each of the Transaction Agreements to which it is a party and to carry out and
perform its obligations thereunder. All corporate action on the part of the Company, its officers
and directors necessary for the authorization of the Convertible Preferred Stock and the
authorization, execution, delivery and performance of the Transaction Agreements to which the
Company is a party has been taken. The execution, delivery and performance of the Transaction
Agreements to which the Company is a party by the Company and the issuance of the Common Stock upon
conversion of the Shares, in each case in accordance with their terms, and the consummation of the
other transactions contemplated herein do not require any approval of the Company’s stockholders.
Upon their respective execution by the Company and the other parties thereto and assuming that they
constitute legal and binding agreements of each Purchaser party thereto, each of the Transaction
Agreements to which the Company is a party will constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms, except that such
enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other similar Laws affecting or relating to creditors’ rights generally, and (b) is subject to
general principles of equity (regardless of whether considered in a proceeding in equity or at
Law).

          3.4 Registration Requirements. Subject to the accuracy of the representations made by
the Purchasers in Section 4, the offer, sale and issuance of the Shares and the conversion
of the Shares into Common Stock in accordance with the Certificate of Designation (i) has been and
will be made in compliance with applicable exemptions from the registration and prospectus delivery
requirements of the Securities Act and (ii) will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or qualification requirements
of all applicable Blue Sky laws.

          3.5 No Conflict. The execution, delivery and performance of the Transaction
Agreements to which the Company is a party by the Company, the issuance of the Shares and the
Common Stock upon conversion of the Shares and the consummation of the other transactions
contemplated hereby and by the other Transaction Agreements to which the Company is a party will
not (i) conflict with or result in any violation of any provision of the certificate of
incorporation or bylaws of the Company, or, upon its filing with the Secretary of State of the
State of Delaware, the Certificate of Designation, (ii) result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, require consent under, or give
rise to a right of termination, cancellation, modification or acceleration of any obligation or to
the loss of any benefit under any mortgage, Contract, purchase or sale order, instrument, permit,
concession, franchise, right or license binding upon the Company or any of its Subsidiaries or
result in the creation of any liens, claims, mortgages, encumbrances, pledges, security interests,
equities or charges of any kind (each, a “Lien”) upon any of the properties, assets or rights of
the Company or any of its Subsidiaries, except as would not, individually or in the aggregate,

16

 

reasonably be expected to have a Material Adverse Effect or to prevent or materially delay or
hinder the ability of the Company to perform its obligations under the Transaction Agreements, or
(iii) subject to the matters referred to in Section 3.6, conflict with or violate any
applicable material law, statute, code, ordinance, rule, regulation, or agency requirement of or
undertaking to or agreement with any Governmental Entity, including common law (collectively,
“Laws” and each, a “Law”) or any judgment, order, injunction or decree issued by any Governmental
Entity.

          3.6 Consents. No consent, approval, order, or authorization of, or filing or
registration with, or notification to (any of the foregoing being a “Consent”), any Governmental
Entity is required on the part of the Company or its Subsidiaries in connection with (a) the
execution, delivery or performance of the Transaction Agreements to which the Company is a party
and the consummation of the transactions contemplated hereby and thereby, or (b) the issuance of
the Shares or the issuance of the Common Stock upon conversion of the Shares in accordance with the
Certificate of Designation; other than (i) the filing of the Certificate of Designation with the
Secretary of State of the State of Delaware, (ii) the expiration or termination of any applicable
waiting periods under the Antitrust Laws with respect to performance under the Transaction
Agreements, or the consummation of transactions, in each case occurring after the Closing, (iii)
those to be obtained, in connection with the registration of the Shares under the Registration
Rights Agreement, under the applicable requirements of the Securities Act and any related filings
and approvals under applicable state securities laws, (iv) such filings as may be required under
any applicable requirements of the Exchange Act or the rules of the NYSE and (v) such Consents the
failure of which to make or obtain would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or to prevent or materially delay or hinder the ability
of the Company to perform its obligations under the Transaction Agreements.

          3.7 Permits. The Company and each of its Subsidiaries possess all permits, licenses,
authorizations, consents, approvals and franchises of Governmental Entities that are required to
conduct its business, except for such permits or licenses the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the
ability of the Company and its Subsidiaries, taken as a whole, to conduct their businesses
consistent with past practices.

          3.8 SEC Reports; Financial Statements.

               (a) The Company has filed all forms, reports and documents with the SEC that have been
required to be filed by it under applicable Laws since the Acquisition Date (collectively, with the
Registration Statement on Form S-4 (File No. 333-171924) as amended or superseded by a filing prior
to the date of this Agreement (the “Form S-4”), the “Company SEC Filings”), including the Annual
Report of the Company on Form 10-K for the fiscal year ended December 31, 2010, as amended through
the date of this Agreement (the “Company Annual Report”). Each Company SEC Filing complied as of
its filing date as to form in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as the case may be, each as in effect on the date such Company
SEC Filing was filed (and, if amended or superseded by a filing prior to the date of this
Agreement, on the date of such amended or superseded filing). As of its filing date (and, if
amended or superseded by a filing prior to the date of this Agreement, on the date of such amended
or superseded filing), each Company SEC

17

 

Filing did not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Other than Spectrum and Zap.Com, none of the Company’s
Subsidiaries is required to file any forms, reports or other documents with the SEC pursuant to
Sections 13(a) or 15(d) of the Exchange Act. Since the Acquisition Date, no executive officer of
the Company or Zap.Com has failed to make the certifications required by him or her under Section
302 and 906 of the Sarbanes Oxley Act of 2002 with respect to any Company SEC Filing or Zap.Com SEC
Report. There are no transactions that have occurred since the Acquisition Date that are required
to be disclosed in the Company SEC Filings pursuant to Item 404 of Regulation S-K that have not
been disclosed in the Company SEC Filings.

               (b) Zap.Com has filed all forms, reports and documents with the SEC that have been required to
be filed by it under applicable Laws since January 1, 2010 (the “Zap.Com SEC Reports”). Each
Zap.Com SEC Report complied as of its filing date, as to form in all material respects with the
applicable requirements of the Securities Act or the Exchange Act, as the case may be, each as in
effect on the date such Zap.Com SEC Report was filed (and, if amended or superseded by a filing
prior to the date of this Agreement, on the date of such amended or superseded filing). As of its
filing date (and, if amended or superseded by a filing prior to the date of this Agreement, on the
date of such amended or superseded filing), each Zap.Com SEC Report did not contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were made, not
misleading.

               (c) The consolidated financial statements (including all related notes and schedules) of the
Company and its Subsidiaries included in the Company SEC Filings and (collectively, the “Company
Financial Statements”) (i) comply as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, and (ii) fairly present, in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of the dates indicated and
the results of their operations and their cash flows for the periods therein specified, all in
accordance with United States generally accepted accounting principles applied on a consistent
basis (“GAAP”) throughout the periods therein specified (except as otherwise noted therein, and in
the case of quarterly financial statements except for the absence of footnote disclosure and
subject, in the case of interim periods, to normal year-end adjustments).

               (d) The financial statements (including all related notes and schedules) of Zap.Com included
in the Zap.Com SEC Reports (collectively, the “Zap.Com Financial Statements”) (i) comply as to form
in all material respects with the published rules and regulations of the SEC with respect thereto,
and (ii) fairly present, in all material respects, the consolidated financial position of Zap.Com
and its Subsidiaries as of the dates indicated and the results of their operations and their cash
flows for the periods therein specified, all in accordance with GAAP throughout the periods therein
specified (except as otherwise noted therein, and in the case of quarterly financial statements
except for the absence of footnote disclosure and subject, in the case of interim periods, to
normal year-end adjustments).

18

 

               (e) To the Company’s Knowledge, the financial statements (including all related notes and
schedules) of Spectrum included in the Spectrum SEC Reports (collectively, the “Spectrum Financial
Statements”) (i) comply as to form in all material respects with the published rules and
regulations of the SEC applicable with respect thereto, and (ii) fairly present, in all material
respects, the consolidated financial position of Spectrum and its Subsidiaries as of the dates
indicated and the results of their operations and their cash flows for the periods therein
specified, all in accordance with GAAP throughout the periods therein specified (except as
otherwise noted therein, and in the case of quarterly financial statements except for the absence
of footnote disclosure and subject, in the case of interim periods, to normal year-end
adjustments).

               (f) To the Company’s Knowledge, the financial statements (including all related notes and
schedules) of F&G included in the Form S-4 (collectively, the “F&G Financial Statements”) (i)
comply as to form in all material respects with the published rules and regulations of the SEC
applicable with respect thereto, and (ii) fairly present, in all material respects, the
consolidated financial position of F&G and its Subsidiaries as of the dates indicated and the
results of their operations and their cash flows for the periods therein specified, all in
accordance with GAAP throughout the periods therein specified (except as otherwise noted therein,
and in the case of quarterly financial statements except for the absence of footnote disclosure and
subject, in the case of interim periods, to normal year-end adjustments), except, in each case, as
would not and would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

               (g) Except as disclosed on Section 3.8(g) of the Disclosure Letter, there are no
Liabilities of the Company or any of its Subsidiaries of any kind whatsoever, other than: (i)
Liabilities disclosed and provided for in the Company Financial Statements, the Spectrum Financial
Statements, the F&G Financial Statements or in the Zap.Com Financial Statements; (ii) Liabilities
incurred in the ordinary course of business consistent with past practice; (iii) Liabilities
incurred in connection with the transactions contemplated by this Agreement, the other Transaction
Agreements or the Existing Series A Transaction Agreements, in each case to which the Company is a
party or (iv) Liabilities that would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

               (h) The Company’s principal executive officer and its principal financial officer have (i)
devised and maintained a system of internal accounting controls sufficient to provide reasonable
assurances regarding the reliability of financial reporting and preparation of financial statements
in accordance with GAAP, and have evaluated such system at the times required by the Exchange Act
and in any event no less frequently than at reasonable intervals and (ii) disclosed to the
Company’s management, auditors and the audit committee of the Board (x) all significant
deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the Company’s or any of its Subsidiaries’
(other than Spectrum, Harbinger F&G and their Subsidiaries, as to which no representation is made
pursuant to this clause (ii)(x)) ability to record, process, summarize and report financial
information and (y) any fraud, whether or not material, that involves management or other employees
who have a significant role in the internal controls of the Company, and the Company has provided
to the Purchasers copies of any written materials relating to the foregoing. To the Company’s
Knowledge, Spectrum’s principal

19

 

executive officer and its principal financial officer have disclosed to Spectrum’s management,
auditors and the audit committee of Spectrum’s board of directors (x) all significant deficiencies
and material weaknesses in the design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect Spectrum’s or any of its Subsidiaries’ ability to
record, process, summarize and report financial information and (y) any fraud, whether or not
material, that involves management or other employees who have a significant role in the internal
controls of Spectrum. As of the date of this Agreement, the Company has no Knowledge of any
material weaknesses in the internal controls over financial reporting of Harbinger F&G and its
Subsidiaries, that would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a 15 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information relating to the Company
and its Subsidiaries (other than Harbinger F&G and its Subsidiaries as to which the Company is in
the process of implementing its disclosure controls and procedures.) required to be included in the
Company’s periodic reports under the Exchange Act is made known to the Company’s principal
executive officer and its principal financial officer by others within those entities, and such
disclosure controls and procedures are sufficient to ensure that the Company’s principal executive
officer and its principal financial officer are made aware of such material information required to
be included in the Company’s periodic reports required under the Exchange Act. There are no
outstanding loans made by the Company or any of its Subsidiaries to any executive officer (as
defined in Rule 3b-7 under the Exchange Act) or director of the Company. Neither the Company,
since the Acquisition Date, nor any Subsidiary of the Company, since the date that the Company
acquired (either directly or indirectly) a majority of the outstanding capital stock of such
Subsidiary, has made any loans to any executive officer (as defined in Rule 3b-7 under the Exchange
Act) or director of the Company or any of its Subsidiaries.

          3.9 Litigation. Except as set forth on Section 3.9 of the Disclosure Letter,
there are no (i) investigations or, to the Knowledge of the Company, proceedings pending or
threatened by any Governmental Entity with respect to the Company or any of its Subsidiaries or any
of their properties or assets, (ii) Legal Proceedings pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries, or any of their respective
properties or assets, at Law or in equity that would reasonably be expected to result in liability
to the Company or its Subsidiaries in excess of $250,000, or (iii) orders, judgments or decrees of
any Governmental Entity against the Company or any of its Subsidiaries.

          3.10 Absence of Certain Changes. Since December 31, 2010 and except as disclosed on
Section 3.10 of the Disclosure Letter, the business of the Company and its Subsidiaries has
been conducted in the ordinary course of business consistent with past practices and there has not
been:

               (a) any Change which, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect;

               (b) any declaration, setting aside or payment of any dividend or other distribution with
respect to any shares of capital stock of the Company, or any repurchase,

20

 

redemption or other acquisition by the Company or any of its Subsidiaries of any outstanding
shares of capital stock or other securities of the Company or any of its Subsidiaries;

               (c) any incurrence, assumption or guarantee by the Company or any of its Subsidiaries of any
indebtedness for borrowed money in excess of $25,000, individually, or $100,000, in the aggregate,
or the repurchase, redemption or repayment of any indebtedness for borrowed money of the Company or
any of its Subsidiaries in excess of $25,000, individually, or $100,000, in the aggregate;

               (d) any event of default (or event which with notice, the passage of time or both, would
become an event of default) in the payment of any indebtedness for borrowed money in an aggregate
principal amount in excess of $100,000 by the Company or any of its Subsidiaries;

               (e) any change in any methods of accounting by the Company or any of its Subsidiaries, except
as may be appropriate to conform to changes in GAAP; or

               (f) any material Tax election made by the Company or any of its Subsidiaries or any settlement
or compromise of any material Tax liability by the Company or any of its Subsidiaries, except (i)
as required by applicable Law or (ii) with respect to any material Tax election, consistent with
elections historically made by the Company.

          3.11 Compliance with Law. The Company and each of its Subsidiaries are in compliance
with and are not in default under or in violation of, and have not received any written notices of
non-compliance, default or violation with respect to, any material Laws, in each case, except as,
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect or to materially delay or hinder the ability of the Company to perform its obligations under
the Transaction Agreements.

          3.12 Intellectual Property.

               (a) The Company and its Subsidiaries own, license, sublicense or otherwise possess legally
enforceable rights to use all Intellectual Property necessary to conduct the business of the
Company and its Subsidiaries, as currently conducted, free and clear of all Liens (other than
non-exclusive licenses granted in the ordinary course of business), except as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect, all Intellectual Property developed for the Company or any of its Subsidiaries by any
employees, contractors and consultants of the Company or any of its Subsidiaries is exclusively
owned by the Company or one of its Subsidiaries, free and clear of all Liens (other than
non-exclusive licenses granted in the ordinary course of business or Permitted Liens).

               (b) All Registered Intellectual Property owned by the Company or any of its Subsidiaries is
subsisting and has not expired or been cancelled or abandoned and, to the Company’s Knowledge, is
valid and enforceable, except, in each case, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. To the

21

 

Company’s Knowledge, no third party is infringing, violating or misappropriating any of the
Company Intellectual Property in any material respect.

               (c) The execution and delivery of the Transaction Agreements to which the Company is a party
by the Company and the consummation of the transactions contemplated hereby and thereby will not
result in the breach of, or create on behalf of any third party the right to terminate or modify,
(i) any license or other agreement relating to any Intellectual Property owned by the Company or
any of its Subsidiaries (the “Company Intellectual Property”), or (ii) any license, sublicense and
other agreement as to which the Company or any of its Subsidiaries is a party and pursuant to which
the Company or any of its Subsidiaries is authorized to use any third party Intellectual Property,
excluding generally commercially available, off-the-shelf software programs licensed for a license
fee of less than $50,000 in the aggregate (the “Third Party Intellectual Property”), except, in
either case, as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

               (d) The conduct of the business of the Company and its Subsidiaries has not infringed,
violated or constituted a misappropriation of any Intellectual Property of any third party and as
currently conducted does not infringe, violate or constitute a misappropriation of any Intellectual
Property of any third party, except, in either case, as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries (i) has received any written claim or notice alleging any such infringement,
violation or misappropriation, or (ii) has been or is subject to any settlement, order, decree,
injunction, or stipulation imposed by any Governmental Entity that may affect the use, validity or
enforceability of Company Intellectual Property.

               (e) The Company and its Subsidiaries take all reasonable actions to protect the Company
Intellectual Property and to protect and preserve the confidentiality of their trade secrets,
including disclosing trade secrets to a third party only where such third party is bound by a
confidentiality agreement, except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

          3.13 Employee Benefits.

               (a) Prior to the date hereof, a complete and correct copy of each Benefit Plan of the Company
has been delivered or otherwise made available to the Purchasers.

               (b) Except as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, with respect to any Benefit Plan of the Company, no Legal Proceeding has
been threatened, asserted, instituted, or, to the Knowledge of the Company, is anticipated (other
than non-material routine claims for benefits, and appeals of such claims), and, to the Knowledge
of the Company, no facts or circumstances exist that would give rise to any such Legal Proceeding.

               (c) Except as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, each Benefit Plan of the Company has been established and administered in
accordance with its terms, and in compliance with the applicable

22

 

provisions of ERISA, the Code and all other applicable laws, rules and regulations, and each
Benefit Plan of the Company that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination or opinion letter from the Internal Revenue Service to the
effect that such Benefit Plan of the Company is qualified under the Code and nothing has occurred
that would reasonably be expected to cause the loss of such qualification.

               (d) Except as set forth on Section 3.13(d) of the Disclosure Letter, neither the
Company, any of its Subsidiaries, nor any other entity which, together with the Company or any of
its Wholly Owned Subsidiaries would be treated as a single employer under Section 4001 of ERISA or
Section 414 of the Code (each such entity, an “ERISA Affiliate”) sponsors, maintains, contributes
to, or has had in the past six (6) years an obligation at any time to sponsor, maintain or
contribute to, or has any liability in respect of (i) any “defined benefit pension plan” (as
defined in Section 3(35) of ERISA), (ii) any “employee benefit plan” (as defined in Section 3(3) of
ERISA) subject to Section 412 of the Code or Section 302 of ERISA or Title IV of ERISA, including
any “multiemployer plan” (as defined in Section 4001(a)(15) of ERISA), (iii) any other plan which
is subject to Section 4063, 4064 or 4069 of ERISA, or (iv) any “employee pension benefit plan”
(within the meaning of Section 3(2) of ERISA) that is not intended to be qualified under Section
401(a) of the Code. Except as set forth in Section 3.13(d) of the Disclosure Letter, and
except as required by Section 4980B of the Code, no Benefit Plan of the Company provides any
retiree or post-employment medical, disability or life insurance benefits to any person. The
assets of any defined benefit pension plan equal or exceed the projected benefit obligation of such
plan, as determined using the actuarial assumptions used for purposes of the Company Financial
Statements.

               (e) Except as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, neither the execution of the Transaction Agreements nor the consummation
of the transactions contemplated hereby and thereby will (i) accelerate the time of payment or
vesting or increase the amount of compensation or benefits due to any Company employee, or (ii)
give rise to any other liability or funding obligation under any Benefit Plan of the Company or
otherwise, including liability for severance pay, unemployment compensation or termination pay.

               (f) Except as set forth on Section 3.13(f) of the Disclosure Letter, no Benefit Plan
of the Company is maintained outside the jurisdiction of the United States, or covers any employee
residing or working outside the United States (any such Benefit Plan the “Foreign Benefit Plans”).
Except as would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, all Foreign Benefit Plans that are required to be funded are fully funded, and with
respect to all other Foreign Benefit Plans, adequate reserves therefor have been established on the
accounting statements of the Company or its applicable Subsidiary.

          3.14 Labor Relations.

               (a) (i) Except as would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect or as set forth on Section 3.14 of the Disclosure Letter, no
Company employee is represented by a labor union or works council and, to the Knowledge of the
Company, no organizing efforts have been conducted within the last

23

 

three years or are now being conducted, (ii) neither the Company nor any of its Subsidiaries
is a party to any material collective bargaining agreement or other labor contract or collective
agreement, and (iii) neither the Company nor any of its Subsidiaries currently has, or, to the
Knowledge of the Company, is there now threatened, a strike, picket, work stoppage, work slowdown
or other material labor dispute.

               (b) (i) Each of the Company and its Subsidiaries has complied with all applicable laws
relating to the employment of labor, including all applicable laws relating to wages, hours,
collective bargaining, employment discrimination, civil rights, safety and health, workers’
compensation, pay equity and the collection and payment of withholding and/or social security
taxes, except as would not, individually or in the aggregate, have a Material Adverse Effect and
(ii) neither the Company nor any of its Subsidiaries has incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act or any similar state or local Law within the
last two years which remains unsatisfied.

          3.15 Taxes.

               (a) The Company and each of its Subsidiaries have filed all Tax Returns required to have been
filed as of the date hereof (or extensions have been duly obtained) and such Tax Returns are
correct and complete in all respects and have paid all Taxes required to have been timely paid by
them in full through the date hereof, except to the extent such Taxes are both (i) being challenged
in good faith and (ii) adequately provided for on the financial statements of the Company and its
Subsidiaries in accordance with GAAP, except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

               (b) Neither the Company nor any of its Subsidiaries has any current liability, and to the
Knowledge of the Company, there are no events or circumstances which would result in any liability,
for Taxes of any Person (other than the Company and its Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise, except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

               (c) None of the Company or any of its Subsidiaries is a party to, is bound by or has any
obligation under any Tax sharing or Tax indemnity agreement or similar Contract or arrangement
other than any such agreement or similar Contract or arrangement between the Company and any of its
Subsidiaries.

               (d) All Taxes required to be withheld, collected or deposited by or with respect to Company
and each of its Subsidiaries have been timely withheld, collected or deposited as the case may be,
and to the extent required, have been paid to the relevant taxing authority, except as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

               (e) No deficiencies for any Taxes have been proposed or assessed in writing against or with
respect to the Company or any of its Subsidiaries, and there is no outstanding audit, assessment,
dispute or claim concerning any Tax liability of the Company or any of its Subsidiaries pending or
raised by an authority in writing, except as would not,

24

 

individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
No written claim has been made by any Governmental Entity in a jurisdiction where neither the
Company nor any of its Subsidiaries files Tax Returns that the Company or any of its Subsidiaries
is or may be subject to taxation by that jurisdiction. Neither the Company nor any of its
Subsidiaries has granted any waiver of any federal, state, local or foreign statute of limitations
with respect to, or any extension of a period for the assessment of, any material Tax.

               (f) There are no Liens with respect to Taxes upon any of the assets or properties of either
the Company or any of its Subsidiaries, other than with respect to Taxes not yet delinquent, except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

               (g) No closing agreement pursuant to Section 7121 of the Code (or any similar provision of
state, local or foreign law) has been entered into by or with respect to the Company or any of its
Subsidiaries.

               (h) Neither the Company nor any of its Subsidiaries has participated in a “listed transaction”
within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

               (i) The representations and warranties expressly set forth in this Section 3.15 shall
be the only representations and warranties, express or implied, written or oral, with respect to
the subject matter contained in this Section 3.15.

          3.16 NYSE.

               (a) Shares of the Common Stock are registered pursuant to Section 12(b) of the Exchange Act
and are listed on The New York Stock Exchange (the “NYSE”), and there is no action pending by the
Company or any other Person to terminate the registration of the Common Stock under the Exchange
Act or to delist the Common Stock from NYSE, nor has the Company received any notification that the
SEC or the NYSE is currently contemplating terminating such registration or listing.

               (b) The shares of Common Stock issuable upon conversion of the Shares have been approved by
the NYSE for listing on the NYSE.

               (c) The representations and warranties expressly set forth in this Section 3.16 shall
be the only representations and warranties, express or implied, written or oral, with respect to
the subject matter contained in this Section 3.16.

          3.17 Investment Company Act(a) . The Company is not, nor immediately after the
Company’s receipt of the Share Purchase Price from the Purchasers, will the Company be, an
“investment company” within the meaning of, and required to be registered under, the Investment
Company Act of 1940, as amended.

          3.18 Brokers. Except for Jefferies & Company, Inc., the Company has not retained,
utilized or been represented by any broker or finder who is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this Agreement.

25

 

          3.19 Subsidiaries.

               (a) As of the date hereof, the Company has no Subsidiaries other than as listed in Exhibit
21.1 to the Company Annual Report and Harbinger F&G and any Subsidiaries thereof, which are listed
on Section 3.19 of the Disclosure Letter.

               (b) Except as set forth on Section 3.19 of the Disclosure Letter, all of the
outstanding shares of capital stock of, or other equity or voting interest in, each Subsidiary of
the Company (i) have been duly authorized, validly issued and are fully paid and nonassessable and
(ii) are owned, directly or indirectly, by the Company, free and clear of all Liens (other than
restrictions under applicable securities Laws and Liens securing the Notes).

          3.20 Environmental Matters.

               (a) Except as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or as set forth on Section 3.20 of the Disclosure Letter:

                    (i) The Company and its Subsidiaries and their respective operations are and have been in
compliance with all, and have not violated any, applicable Environmental Laws, which compliance
includes the possession and maintenance of, and compliance with, all permits, licenses,
authorizations, waivers, exemptions, registrations, consents, approvals and franchises from
Governmental Entities required under applicable Environmental Laws (“Environmental Permits”) for
the operation of the business of the Company and its Subsidiaries; the Company has no reason to
believe that any such Environmental Permits will be modified, revoked or otherwise made
ineffective, or will not be renewed on terms substantially the same as those currently in effect.

                    (ii) Neither the Company nor any of its Subsidiaries, nor any other entity for which the
Company or any of its Subsidiaries is responsible, has transported, produced, processed,
manufactured, generated, used, treated, handled, stored or disposed of any Hazardous Substances,
except in compliance with applicable Environmental Laws and in a manner that would not result in
liability under any applicable Environmental Law. No Hazardous Substance has been released by the
Company, the Subsidiaries, or to the Knowledge of the Company, by any other Person (including,
without limitation, any of the predecessors in interest to the Company or any of its Subsidiaries),
at, on, about or under (i) any property now or formerly owned, operated or leased by the Company,
its Subsidiaries or their respective predecessors in interest; or (ii) any property to which the
Company, its Subsidiaries or their respective predecessors in interest has sent waste;

                    (iii) Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company,
any of their respective predecessors in interest has exposed any employee or any third party to
Hazardous Substances in violation of, or in a manner that would result in liability under, any
applicable Environmental Law or tort law;

                    (iv) Neither, the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company,
any of their respective predecessors in interest, is a party to or the subject of any pending, or,
to the Knowledge of the Company, threatened, Legal Proceeding

26

 

alleging Liabilities under or noncompliance with any Environmental Law or seeking to impose
any financial responsibility for any investigation, cleanup, removal, containment or any other
remediation or compliance under any Environmental Law. Neither the Company nor any of its
Subsidiaries, nor, to the Knowledge of the Company, any of their respective predecessors in
interest, is subject to any orders, judgments or decrees or agreement by or with any Governmental
Entity or third party imposing any Liabilities with respect to any Environmental Laws or any
Hazardous Substances;

                    (v) There are no liabilities of any third party arising out of or related to Environmental
Laws or Hazardous Substances that the Company, its Subsidiaries or, to the Knowledge of the
Company, their respective predecessors in interest has expressly agreed to assume, to indemnify or
retain by contract or otherwise;

                    (vi) Neither the Company nor the Subsidiaries has received any notice, claim, subpoena, or
summons from any Person alleging: (i) any environmental liability relating to the Company, the
Subsidiaries, or their respective predecessors in interest; or (ii) any violation by the Company,
the Subsidiaries or their respective predecessors in interest of any Environmental Law;

                    (vii) Neither the Company nor any of its Subsidiaries has manufactured any products that are
not or were not in compliance with all Environmental Laws applicable to such products to be
imported, sold, or otherwise marketed in any jurisdiction in which such products are currently, or
have been, imported, sold, or otherwise marketed; and

                    (viii) None of the products currently or formerly manufactured, produced, distributed, sold,
leased, licensed, repaired, delivered, installed, conveyed or otherwise put into the stream of
commerce by the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any other
Person for which the Company or any of its Subsidiaries is responsible by contract or operation of
law, contains or has contained (i) asbestos; or (ii) any other Hazardous Substance that has
resulted in or would reasonably be expected to result in any liability to the Company or any of its
Subsidiaries.

               (b) As of the date hereof, all reports of environmental site assessments, reviews, audits,
investigations or similar evaluations, and any material documents in the possession or control of
the Company or any of its Subsidiaries concerning (i) environmental conditions at any facilities or
real property ever owned, operated or leased by the Company, the Subsidiaries or any of their
respective predecessors in interest; or (ii) any environmental liability of the Company, its
Subsidiaries or any of their respective predecessors in interest have been made available to the
Purchasers.

               (c) The representations and warranties expressly set forth in this Section 3.20 shall
be the only representations and warranties, express or implied, written or oral, with respect to
the subject matter contained in this Section 3.20.

          3.21 Assets.

               (a) The Company and its Subsidiaries have good and marketable title to all of its or their
real or personal properties (whether tangible or intangible), rights and assets,

27

 

except as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, in each case, free and clear of all Liens (other than Permitted Liens).
The properties and assets owned and leased by the Company and its Subsidiaries are sufficient to
carry on their businesses as they are now being conducted except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

               (b) Except as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, the Company or a Subsidiary of the Company has good and valid leasehold
interests in all of its leased properties, whether as lessee or sublessee (the “Leased Real
Property”), in each case, sufficient to conduct its respective businesses as currently conducted,
free and clear of all Liens (other than Permitted Liens), assuming the timely discharge of all
obligations owing under or related to Leased Real Property. Neither the Company nor any of its
Subsidiaries owns any real property.

          3.22 Insurance. The Company and its Subsidiaries have and maintain in effect policies
of insurance covering the Company, its Subsidiaries or any of their respective employees,
properties or assets, including policies of life, property, fire, workers’ compensation, products
liability, directors’ and officers’ liability and other casualty and liability insurance, that is
in a form and amount that is customarily carried by persons conducting business similar to that of
the Company and its Subsidiaries and which the Company reasonably believes are adequate for the
operation of its business. All such insurance policies are in full force and effect, no written
notice of cancellation has been received by the Company as of the date hereof and, to the Knowledge
of the Company, no such notice is imminent, and there is no existing default or event which, with
the giving of notice or lapse of time or both, would constitute a default, by any insured
thereunder, except for such defaults that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. There is no material claim pending under any of
such policies as to which coverage has been denied or disputed by the underwriters of such policies
and there has been no threatened termination of any such policies, except as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          3.23 Material Contracts.

               (a) Except as filed as an exhibit to the Company SEC Filings, Spectrum SEC Reports or Zap.com
SEC Reports, there are none of the following (each a “Material Contract”):

                    (i) Contracts restricting the payment of dividends upon, or the redemption, repurchase or
conversion of, the Convertible Preferred Stock or the Common Stock issuable upon conversion
thereof;

                    (ii) joint venture, partnership, limited liability or other similar Contract or arrangement
relating to the formation, creation, operation, management or control of any partnership or joint
venture that is material to the business of the Company and its Subsidiaries, taken as a whole;

28

 

                    (iii) any Contract relating to the acquisition or disposition of any business, stock or assets
that is material to the business of the Company and its Subsidiaries, taken as a whole, other than
in the ordinary course of business consistent with past practice;

                    (iv) Contracts containing any covenant (x) limiting the right of the Company or any of its
Subsidiaries to engage in any line of business or in any geographic area, or (y) prohibiting the
Company or any of its Subsidiaries from engaging in business with any Person or levying a fine,
charge or other payment for doing so;

                    (v) “material contracts” (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC, excluding any exhibits, schedules and annexes to such material contracts that are not required
to be filed with the SEC, and those agreements and arrangements described in Item 601(b)(10)(iii))
with respect to the Company and its Subsidiaries required to be filed with the SEC (the Material
Contracts, together with any lease, binding commitment, option, insurance policy, benefit plan or
other contract, agreement, instrument or obligation (whether oral or written) to which the Company
or any of its Subsidiaries may be bound, the “Contracts”);

                    (vi) Contracts relating to indebtedness for borrowed money of the Company or any of its
Subsidiaries in an amount exceeding $500,000;

                    (vii) Contracts that would be binding on the Purchasers or any of their Affiliates after the
Closing;

                    (viii) Contracts with any Governmental Entity that imposes any material obligation or
restriction on the Company or any of its Subsidiaries, taken as a whole; and

                    (ix) any material Contract with any current or former director, officer or employee.

               (b) Each Material Contract is valid and binding on the Company (and/or each such Subsidiary of
the Company party thereto) and, to the Knowledge of the Company, on each other party thereto, and
is in full force and effect, and neither the Company nor any of its Subsidiaries that is a party
thereto, nor, to the Knowledge of the Company, any other party thereto, is in breach of, or default
under, any such Material Contract, and no event has occurred that with notice or lapse of time or
both would constitute such a breach or default thereunder or would result in the termination
thereof or would cause or permit the acceleration or other change of any right or obligation of the
loss of any benefit thereunder by the Company or any of its Subsidiaries, or, to the Knowledge of
the Company, any other party thereto, except for such failures to be in full force and effect and
such breaches and defaults that would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

          3.24 Right of First Refusal; Stockholders Agreement; Voting and Registration
Rights. Except as set forth on Section 3.24 of the Disclosure Letter or as
provided for in this Agreement, the other Transaction Agreements or the Existing Series A
Transaction Agreements, no party has any right of first refusal, right of first offer, right of
co-sale, preemptive right, anti-dilution right or other similar right regarding Equity Securities of the Company.
Except as
set

29

 

forth on Section 3.24 of the Disclosure Letter, there are no provisions of the
Company’s organizational documents and no Material Contracts other than the Certificate of
Designation, this Agreement, the other Transaction Agreements or the Existing Series A Transaction
Agreements, which (a) may affect or restrict the voting rights of the Purchasers with respect to
the Shares in their capacity as stockholders of the Company, (b) restrict the ability of the
Purchasers, or any successor thereto or assignee or transferee thereof, to transfer the Shares, (c)
would adversely affect the Company’s or the Purchasers’ right or ability to consummate the
transactions contemplated by this Agreement or comply with the terms of the other Transaction
Agreements or the Certificates of Designation and the transactions contemplated hereby or thereby,
(d) require the vote of more than a majority of the Company’s issued and outstanding Common Stock
or require a separate class vote, voting together as a single class, to take or prevent any
corporate action (other than those matters expressly requiring a different vote under the
provisions of the DGCL) or (e) entitle any party to nominate or elect any director of the Company
or require any of the Company’s stockholders to vote for any such nominee or other person as a
director of the Company.

          3.25 Anti-Takeover Statutes. To the extent necessary, the Board has taken all
required actions so that the restrictions on business combinations set forth in Article IX, Section
(b) of the Company’s certificate of incorporation are not applicable to the Transaction Agreements
and the transactions contemplated hereby and thereby, including the acquisition of Beneficial
Ownership by the Purchasers of additional shares of voting stock of the Company pursuant to
additional issuances contemplated by the Certificate of Designation or through the exercise of the
Purchasers’ rights set forth in Section 5.5, and any other acquisition of Beneficial
Ownership by the Purchasers of additional shares of voting stock of the Company made in compliance
with Section 5.4. The Company has elected in its certificate of incorporation not to be
governed by Section 203 of the DGCL and no other state takeover statute or similar regulation
applies to or purports to apply to the Transaction Agreements and the transactions contemplated
hereby and thereby.

          3.26 No Additional Understandings. Other than the Transaction Agreements, (x) none of
the Company, its Subsidiaries or any of the Harbinger Affiliates is a party to any agreement or
other legally binding arrangement, whether oral or written, with any Purchaser or any Affiliate
thereof relating to the Shares or the transactions contemplated by the Transaction Agreements and
(y) none of the Purchasers or any of their Affiliates have been paid or are entitled to any
transaction or similar fees or compensation from the Company, any of its Subsidiaries, or any
Harbinger Affiliates (other than reimbursement of actual out-of-pocket costs and expenses as
provided in Section 12.8) in connection herewith or therewith.

          3.27 Spectrum and F&G.

               (a) As of the date hereof, the Company directly or indirectly owns 27,756,905 shares of common
stock of Spectrum free and clear of all Liens (other than restrictions under applicable securities
Laws and Liens securing the Notes).

               (b) Organization. Each of Spectrum and F&G and their respective Subsidiaries are
validly existing and in good standing under the laws of their respective
jurisdictions of organization; and each of them is duly qualified to do business as a foreign

30

 

corporation in good standing in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification, except where the failure to be so
qualified and in good standing would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

               (c) No Conflicts. The execution, delivery and performance of the Transaction
Agreements, the issuance of the Shares and the Common Stock upon conversion of the Shares and the
consummation of the other transactions contemplated hereby and by the other Transaction Agreements
will not (i) conflict with or result in any violation of any provision of the certificate of
incorporation or bylaws of Spectrum or Harbinger F&G or any of their respective Subsidiaries, (ii)
result in any breach or violation of, or default (with or without notice or lapse of time, or both)
under, require consent under, or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to the loss of any benefit under any mortgage, Contract, purchase
or sale order, instrument, permit, concession, franchise, right or license binding upon Spectrum or
Harbinger F&G or any of their respective Subsidiaries or result in the creation of any Lien upon
any of the properties, assets or rights of Spectrum or Harbinger F&G or any of their respective
Subsidiaries, or (iii) subject to the matters referred to in Section 3.27(d), conflict with
or violate any applicable Law or any judgment, order, injunction or decree issued by any
Governmental Entity, except in each case with respect to clauses (i), (ii) and (iii), as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or to
prevent or materially delay or hinder the ability of the Company to perform its obligations under
the Transaction Agreements.

               (d) No Consents. No Consent of any Governmental Entity is required on the part of
Spectrum or Harbinger F&G or any of their respective Subsidiaries in connection with (a) the
execution, delivery or performance of the Transaction Agreements party and the consummation of the
transactions contemplated hereby and thereby, or (b) the issuance of the Shares or the issuance of
the Common Stock upon conversion of the Shares in accordance with the Certificate of Designation;
other than (i) such filings as may be required under any applicable requirements of the Exchange
Act, and (ii) such Consents the failure of which to make or obtain would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect or to prevent or materially
delay or hinder the ability of the Company to perform its obligations under the Transaction
Agreements.

               (e) Permits. Each of Spectrum and its Subsidiaries possess all permits, licenses,
authorizations, consents, approvals and franchises of Governmental Entities that are required to
conduct its business, except for such permits or licenses the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

               (f) Litigation. To the Knowledge of the Company, except as disclosed on Section
3.27(f) of the Disclosure Letter, and except as disclosed in the Spectrum SEC Reports and the
disclosure schedules to the F&G Purchase Agreement, there are no (i) investigations or proceedings
pending or threatened by any Governmental Entity with respect to Spectrum or F&G or any of their
respective Subsidiaries or any of their properties or assets, (ii) Legal Proceedings pending or,
to the Knowledge of the Company, threatened against or affecting Spectrum or F&G or any of their
respective Subsidiaries, or any of their respective properties or
assets, at law or in equity, or (iii) orders, judgments or decrees of any Governmental Entity

31

 

against Spectrum or F&G or any of their respective Subsidiaries, except in the case of each of
clauses (i), (ii), and (iii), which would not reasonably be expected to have a Material Adverse
Effect.

               (g) Compliance with Law. Except as set forth on Section 3.27(g) of the
Disclosure Letter, each of Spectrum and F&G and each of their respective Subsidiaries are in
compliance with and are not in default under or in violation of, and have not received any written
notices of non-compliance, default or violation with respect to, any Laws, in each case, except as,
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.

               (h) Insurance. Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, each of Spectrum and F&G and each of their respective
Subsidiaries have and maintain in effect policies of insurance covering such entities, their
respective Subsidiaries or any of their respective employees, properties or assets, including
policies of life, property, fire, workers’ compensation, products liability, directors’ and
officers’ liability and other casualty and liability insurance, that is in a form and amount that
is customarily carried by persons conducting business similar to that of such entities and which
the Company reasonably believes are adequate for the operation of their respective businesses.

               (i) Intellectual Property. To the Knowledge of the Company, each of Spectrum and F&G
and their respective subsidiaries: (i) own, possess or can acquire on reasonable terms, adequate
trademarks, trade names and other rights to inventions, know how, patents, copyrights, confidential
information and other intellectual property (collectively, “intellectual property rights”)
necessary to conduct the business now operated by them, or presently employed by them, except where
the failure to own, possess or acquire such intellectual property rights would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) have not
received any written notice of infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

               (j) Benefit Plans. To the Knowledge of the Company, except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Benefit Plan of
Spectrum and Benefit Plan of F&G and their respective Subsidiaries has been established and
administered in accordance with its terms, and in compliance with the applicable provisions of
ERISA, the Code and all other applicable laws, rules and regulations.

               (k) Labor Matters. To the Knowledge of the Company, no labor dispute with the
employees of Spectrum or F&G, or any of their respective Subsidiaries, exists or is imminent,
except such labor disputes as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

               (l) Taxes. To the Knowledge of the Company, Spectrum, F&G and their respective
Subsidiaries have filed all Tax Returns that are required to be filed or have requested extensions
thereof (except in any case in which the failure so to file would not have a
Material Adverse Effect); and, to the Knowledge of the Company, Spectrum, F&G and their

32

 

respective Subsidiaries have paid all Taxes required to be paid by them, except for any such Taxes
currently being contested in good faith or as would not, individually or in the aggregate, have a
Material Adverse Effect.

               (m) Environmental Matters. To the Knowledge of the Company, none of Spectrum or F&G
or their respective Subsidiaries is in violation of any Environmental Law, owns or operates any
real property contaminated with any substance that is subject to any environmental laws, is liable
for any off site disposal or contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation, contamination, liability or claim would
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; nor to
the Knowledge of the Company is there any pending investigation which would reasonably be expected
to lead to such a claim.

               (n) Title to Property. To the Knowledge of the Company, each of Spectrum, F&G and
their respective Subsidiaries have good and marketable title in fee simple to all real property
owned by them, good title to all personal property owned by them and valid leasehold interests in
real and personal property being leased by them, in each case, as of the date hereof, free from all
liens, charges, encumbrances and defects, except (x) for Permitted Liens as such term is defined in
the Indenture, (y) for such as would not, individually or in the aggregate, reasonably be expected
to interfere in any material respect with the use made and proposed to be made of such property by
the Company and its Subsidiaries, or (z) for such as would not otherwise have a Material Adverse
Effect.

               (o) Spectrum SEC Compliance. To the Company’s Knowledge, Spectrum has filed all
forms, reports and documents with the SEC that have been required to be filed by it under
applicable Laws since October 1, 2009 (the “Spectrum SEC Reports”). To the Company’s Knowledge,
each Spectrum SEC Report complied as of its filing date, as to form in all material respects with
the applicable requirements of the Securities Act or the Exchange Act, as the case may be, each as
in effect on the date such Spectrum SEC Report was filed (and, if amended or superseded by a filing
prior to the date of this Agreement, on the date of such amended or superseded filing). To the
Company’s Knowledge, as of its filing date (and, if amended or superseded by a filing prior to the
date of this Agreement, on the date of such amended or superseded filing), each Spectrum SEC Report
did not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.

               (p) F&G. The acquisition contemplated by the F&G Purchase Agreement has been
consummated. Except as set forth on Section 3.27(p) of the Disclosure Letter, to the
Knowledge of the Company, there has not been any breach of the representations and warranties made
by OM Group (UK) Limited to Harbinger F&G in Article III of the F&G Purchase Agreement that has
given or would reasonably be expected to give rise to a claim for indemnification under the F&G
Purchase Agreement. Except as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, each of the Insurance Subsidiaries possess all permits,
licenses, authorizations, consents, approvals and franchises that are required by applicable Law to
conduct their business in the ordinary course of business.

33

 

               (q) Form S-4. To the Company’s Knowledge, as of its effective date (and, if
thereafter amended or superseded by a filing prior to the date of this Agreement, on the date of
such amended or superseded filing), the financial statements of Spectrum and its subsidiaries
incorporated by reference into the Form S-4, the financial statements of F&G and its subsidiaries
incorporated by reference into the Form S-4 and the information contained in Annexes A through E
included in the Form S-4 did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except as would not and would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

          3.28 No Other Representations and Warranties. Except for the representations and
warranties contained in Section 3 (including, or as qualified by, the Disclosure Letter),
the Company makes no other representation or warranty, express or implied, written or oral, and
hereby, to the maximum extent permitted by applicable Law, disclaims any such representation or
warranty, whether by the Company or any other Person, with respect to the Company or with respect
to any other information (including, without limitation, pro-forma financial information, financial
projections or other forward-looking statements) provided to or made available to any Purchaser in
connection with the transactions contemplated hereby. Neither the Company nor any other Person
will have or be subject to any liability or indemnification obligation to any Purchaser or any
other Person resulting from any other express or implied representation or warranty with respect to
the Company, unless any such information is expressly included in a representation or warranty
contained in Section 3 or in an applicable section of the Disclosure Letter.

     4. Representations and Warranties of the Purchasers. Each Purchaser represents and
warrants, severally and not jointly, to the Company as follows:

          4.1 Organization. Such Purchaser is a legal entity duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its organization.

          4.2 Authorization. Such Purchaser has all requisite corporate power to enter into
this Agreement and the other Transaction Agreements to which such Purchaser is a party and to
consummate the transactions contemplated by the Transaction Agreements to which such Purchaser is a
party and to carry out and perform its obligations thereunder. All corporate or member action on
the part of such Purchaser or the holders of the capital stock or other equity interests of such
Purchaser necessary for the authorization, execution, delivery and performance of the Transaction
Agreements to which such Purchaser is a party has been taken. Upon their respective execution by
such Purchaser and the other parties thereto and assuming that they constitute legal and binding
agreements of the Company, each of the Transaction Agreements to which such Purchaser is a party
will constitute a legal, valid and binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with its terms, except that such enforceability (a) may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting or
relating to creditors’ rights generally, and (b) is subject to general principles of equity
(regardless of whether considered in a proceeding in equity or at Law).

34

 

          4.3 No Conflict. The execution, delivery and performance of the Transaction
Agreements to which such Purchaser is a party by such Purchaser, the issuance of the Shares and the
Common Stock upon conversion of the Shares in accordance with the Certificate of Designation and
the consummation of the other transactions contemplated hereby will not (i) conflict with or result
in any violation of any provision of the certificate of incorporation or by-laws or other
equivalent organizational document, in each case as amended, of such Purchaser, (ii) result in any
breach or violation of, or default (with or without notice or lapse of time, or both) under,
require consent under, any Contract binding upon such Purchaser or (iii) subject to the matters
referred to in Section 4.4, conflict with or violate any applicable Laws or any judgment,
order, injunction or decree issued by any Governmental Entity, except in the case of each of
clauses (i), (ii) and (iii) as would not, individually or in the aggregate, be reasonably expected
to materially delay or hinder the ability of such Purchaser to perform its obligations under the
Transaction Agreements (with respect to each Purchaser, a “Purchaser Adverse Effect”).

          4.4 Consents. No Consent of any Governmental Entity is required on the part of such
Purchaser in connection with (a) the execution, delivery or performance of the Transaction
Agreements to which such Purchaser is a party and the consummation of the transactions contemplated
hereby and thereby, and (b) the issuance of the Shares or the issuance of the Common Stock upon
conversion of the Shares in accordance with the Certificate of Designation, other than (i) the
expiration or termination of any applicable waiting periods under the Antitrust Laws with respect
to the performance under the Transaction Agreements, or consummation of transactions, in each case
occurring after the Closing, (ii) those to be obtained, in connection with the registration of the
Shares under the Registration Rights Agreement, under the applicable requirements of the Securities
Act and any related filings and approvals under applicable state securities Laws, (iii) such
filings and approvals as may be required by any federal or state securities Laws, including
compliance with any applicable requirements of the Exchange Act, and (iv) such Consents the failure
of which to make or obtain would not, individually or in the aggregate, reasonably be expected to
have a Purchaser Adverse Effect.

          4.5 Brokers. Such Purchaser has not retained, utilized or been represented by any
broker or finder in connection with the transactions contemplated by this Agreement whose fees the
Company would be required to pay.

          4.6 Purchase Entirely for Own Account. Such Purchaser is acquiring the Shares for its
own account solely for the purpose of investment, not as nominee or agent, and not with a view to,
or for sale in connection with, any distribution of the Shares in violation of the Securities Act,
and such Purchaser has no present intention of selling, granting any participation in, or otherwise
distributing the same, in violation of the Securities Act. Such Purchaser has no present
agreement, undertaking, arrangement, obligation or commitment providing for the disposition of the
Shares.

          4.7 Investor Status. Such Purchaser certifies and represents to the Company that such
Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the
Securities Act. Such Purchaser’s financial condition is such that it is able to bear the risk of
holding the Shares for an indefinite period of time and the risk of loss of its entire investment.
Such Purchaser has been afforded the opportunity to receive information

35

 

from, and to ask questions of and receive answers from the management of, the Company
concerning this investment so as to allow it to make an informed investment decision prior to its
investment and has sufficient knowledge and experience in investing in companies similar to the
Company so as to be able to evaluate the risks and merits of its investment in the Company.

          4.8 Securities Not Registered.

               (a) Such Purchaser understands that the Shares and the Conversion Shares have not been
approved or disapproved by the SEC or by any state securities commission nor have the Shares or the
Conversion Shares been registered under the Securities Act, by reason of their issuance by the
Company in a transaction exempt from the registration requirements of the Securities Act, and that
the Shares and the Conversion Shares must continue to be held by such Purchaser unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from such registration.
Such Purchaser understands that the exemptions from registration afforded by Rule 144 under the
Securities Act (“Rule 144”) (the provisions of which are known to it) depend on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for sales only in
limited amounts.

               (b) The Shares and the Conversion Shares shall be subject to the restrictions contained
herein.

               (c) It is understood that the Shares and the Conversion Shares, and any securities issued in
respect thereof or in exchange therefor, may bear one or all of the legends set forth in
Section 9.

          4.9 Financing. Such Purchaser has (and at the Closing will have) an amount of cash
sufficient to enable it to consummate the transactions contemplated hereunder (including the
purchase of the Shares set forth next to such Purchaser’s name on Annex A) on the terms and
conditions set forth in this Agreement.

          4.10 Equity Securities of the Company. Such Purchaser does not Beneficially Own any
Equity Securities of the Company except, as of the Closing, the Shares. For the avoidance of doubt,
anything in this Section 4.10 to the contrary notwithstanding, the parties hereto
acknowledge, that all the representations and warranties made by the DDJ Purchaser in this
Section 4.10 are being made only with respect to the account managed by DDJ Capital
Management, LLC (“DDJ”) and shall not apply to any Shares that may be beneficially owned by the DDJ
Purchaser that are not held through such Account.

          4.11 Indebtedness. Except as disclosed to the Company in writing on or prior to the
date hereof, neither such Purchaser nor any of its Affiliates owns any debt securities or other
indebtedness issued by the Company or any of its Subsidiaries. For the avoidance of doubt, anything
in this Section 4.11 to the contrary notwithstanding, the parties hereto acknowledge, that
all the representations and warranties made by the DDJ Purchaser in this Section 4.11 are
being made only with respect to the account managed by DDJ and shall not apply to any Shares that
may be beneficially owned by the DDJ Purchaser that are not held through such Account.

36

 

     5. Covenants.

          5.1 Regulatory Approval.

               (a) [Reserved.]

               (b) To the extent a filing, notification or submission is to be made under applicable
insurance laws with the Vermont Department of Banking, Insurance, Securities and Health Care
Administration, the New York State Insurance Department, the Maryland Insurance Administration, the
Bermuda Monetary Authority or any other Governmental Entity regulating an insurance business of the
Company or any of its controlled Affiliates (the “Insurance Regulatory Authorities”) in connection
with the exercise by a Purchaser of its rights under the Transaction Agreements, upon the request
of such Purchaser, the Company shall reasonably cooperate and assist such Purchaser in the making
by it of any such filing, notification or submission with the Insurance Regulatory Authorities,
including by promptly furnishing any information or documentation as those authorities may
reasonably require or request from such Purchaser in connection with such filing, notification or
submission. Each Purchaser hereto shall promptly inform the Company (and vice versa) of any
meetings or hearings to be held with or before any Insurance Regulatory Authority regarding any of
the transactions contemplated by the Transaction Agreements applicable to such Purchaser, and shall
afford the Company or such Purchaser, as applicable, the opportunity to attend all such meetings
and hearings to the extent permitted by such Insurance Regulatory Authority and applicable Law,
except as to any portion of such meeting that addresses Protected Information (as defined below) of
such Purchaser. Each Purchaser shall permit the Company and their counsel (and vice versa) the
opportunity to review in advance, and comment upon, any proposed written communication to any
Insurance Regulatory Authority, and provide the Company or such Purchaser, as applicable, with
copies of all filings made by the Company or such Purchaser, as applicable, and all correspondence
between such Purchaser (or its advisors) or the Company with any Insurance Regulatory Authority and
any other information supplied by such Purchaser or the Company to, or received from, any Insurance
Regulatory Authority, in each case relating to the transactions contemplated by the Transaction
Agreements relating to such Purchaser, except to the extent prohibited by such Insurance Regulatory
Authority or applicable Law or in the event any Insurance Regulatory Authority requires or requests
a Purchaser or the Company or any of their Affiliates to provide or a Purchaser or the Company or
any of their Affiliates otherwise provides: (i) personal financial information, including, but not
limited to, any individual tax return or statement of net worth, or any other information that is
of a personal or private nature, about any individual who is an employee, officer, director,
general partner or limited partner (including the identity of any such limited partner) of such
party or any of its Affiliates, or (ii) information that is either confidential or constitutes a
trade secret of such party (the information described in the preceding clauses (i) and (ii),
“Protected Information”), such party shall have no obligation to provide to the other party, and
the other party shall have no right to review, such Protected Information, the other party shall
not seek Protected Information from any such Insurance Regulatory Authority, and in the event any
Insurance Regulatory Authority were to share such information with the other party, the other party
agrees upon discovering this fact, to cease accessing or reading any Protected Information, not to
disclose such information to any third party, and to return it (otherwise unread) to such party.
Subject to applicable Law, each Purchaser and the Company shall have the right to file Protected
Information separately from

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other correspondence, filings or communications, or to redact Protected Information from such
documents prior to sharing them with the other party.

               (c) Each Purchaser hereto shall promptly inform the Company (and vice versa) of any material
communication from the Insurance Regulatory Authorities or any other Governmental Entity regarding
any of the transactions contemplated by this Agreement relating to such Purchaser. If any
Purchaser or the Company or any Affiliate thereof receives a request for additional information or
documentation from any such Governmental Entity with respect to the transactions contemplated by
this Agreement relating to such Purchaser, then such party will endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and, if permitted by applicable Law, after
consultation with the other party, an appropriate response in compliance with such request;
provided, however, the foregoing shall not require any party to disclose or
otherwise provide any Protected Information.

          5.2 Shares Issuable Upon Conversion. The Company will at all times have reserved and
available for issuance such number of shares of Common Stock as shall be from time to time
sufficient to permit the conversion in full of the outstanding Shares into Common Stock, including
as may be adjusted for share splits, combinations or other similar transactions as of the date of
determination or due to the accrual of Accreting Dividends.

          5.3 Commercially Reasonable Efforts; Further Assurances; Notification.

               (a) Upon the terms and subject to the conditions set forth in this Agreement, each of the
Purchasers and the Company shall use commercially reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with the other parties or
parties hereto in doing, all things reasonably necessary, proper or advisable under applicable Law
to consummate and make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement and the other Transaction Agreements, including using commercially
reasonable efforts to: (i) cause the conditions to the Closing set forth in Section 6 to
be satisfied; (ii) obtain all necessary actions or non-actions, waivers, consents, approvals,
orders and authorizations from Governmental Entities and make all necessary registrations,
declarations and filings with Governmental Entities; and (iii) execute or deliver any additional
instruments reasonably necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement and the other Transaction Agreements.

               (b) Each party agrees to cooperate with each other and their respective officers, employees,
attorneys, accountants and other agents, and, generally, do such other reasonable acts and things
in good faith as may be reasonably necessary to effectuate the transactions contemplated by this
Agreement and the other Transaction Agreements, subject to the terms and conditions hereof and
thereof and compliance with applicable Law, including taking reasonable action to facilitate the
filing of any document or the taking of reasonable action to assist the other parties hereto in
complying with the terms hereof and thereof.

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          5.4 Standstill.

               (a) Each Purchaser hereby agrees that from Closing until the date that is the earlier of (i)
the date such Purchaser ceases to hold any Shares and (ii) three (3) years following the Closing
(the “Standstill Period”), such Purchaser shall not, and shall cause its Affiliates not to,
directly or indirectly:

                    (i) make, or in any way participate, directly or indirectly, in any “solicitation” of
“proxies” to vote (as such terms are used in the rules of the SEC), or seek to advise or influence
any Person (other than (x) such Purchaser or its Affiliates, or (y) in accordance with and
consistent with the recommendation of the Board) with respect to the voting of any Company Voting
Stock;

                    (ii) authorize or commence any tender offer or exchange offer for shares of Company Voting
Stock (for the avoidance of doubt, tendering into any tender offer or exchange offer not otherwise
violating this clause this Section 5.4(a)(ii) will not violate this Section
5.4(a)(ii));

                    (iii) form, join or in any way participate in a “group” as defined in Section 13(d)(3) of the
Exchange Act, for the purpose of voting, acquiring, holding, or disposing of any Company Voting
Stock;

                    (iv) submit to the Board a written proposal for or offer of (with or without conditions), any
merger, recapitalization, reorganization, business combination or other extraordinary transaction
involving the Company, or make any public announcement with respect to such proposal or offer;

                    (v) request the Company or any of its Affiliates, directly or indirectly, to amend or waive
any provision of this Section 5.4; or

                    (vi) enter into any arrangements with any third party concerning any of the foregoing.

               (b) If, at any time prior to the termination of the Standstill Period, (i) the Company has
entered into a definitive agreement, the consummation of which would result in a Company Change in
Control Event, (ii) any Person shall have commenced and not withdrawn a bona fide public tender or
exchange offer which if consummated would result in a Company Change in Control Event and the Board
has not recommended that the stockholders of the Company reject such offer within the time period
contemplated by Rule 14e 3 under the Exchange Act, or (iii) the Company files or consents to the
filing against the Company of a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, insolvency, reorganization or other similar Law, makes an assignment for
the benefit of creditors or consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to the Company or with respect to any substantial part or
its property, then, in each case, for so long as such condition continues to apply, the limitation
on the actions described in clauses (i), (ii), (iii), (iv), (v) and (vi) of Section 5.4(a)
(and any related acquisition of Beneficial Ownership by such Purchaser and/or their Affiliates)
shall not be applicable to such Purchaser.

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               (c) Anything in this Section 5.4 to the contrary notwithstanding, this Section
5.4 shall not be construed to prohibit or restrict (i) any actions taken by any designee,
nominee or appointee on the Board, in their capacities as a member of the Board and in compliance
with and subject to his or her fiduciary duties as a member of the Board or (ii) the Purchaser from
making non-public suggestions, recommendations and proposals regarding the future management of, or
business plans of, the Company to the Company’s management or its Board after the occurrence of a
Specified Breach Event (as defined in the Certificate of Designation) that would not require any
Person to publicly disclose such suggestions, recommendations or proposals.

               (d) Anything in this Section 5.4 to the contrary notwithstanding, this Section
5.4 shall not prohibit or restrict any activity of the Soros Purchaser in an account under the
discretionary investment management of a third-party investment adviser, provided that the Soros
Purchaser does not instruct or advise such third-party investment adviser to act in a manner that
would be considered a breach of the terms of this Section 5.4.

               (e) For the avoidance of doubt, anything in this Section 5.4 to the contrary
notwithstanding, the parties hereto acknowledge, that all the covenants made by the DDJ Purchaser
in this Section 5.4 are being made only with respect to the account managed by DDJ and
shall not apply to any Shares that may be beneficially owned by the DDJ Purchaser that are not held
through such Account.

          5.5 Participation Rights.

               (a) At any time prior to the fifth (5th) anniversary of the Closing Date, for so long as a
Purchaser (along with its Affiliates) owns at least 50% of the Shares issued to such Purchaser and
its Affiliates at the Closing, the Company shall not issue, or agree to issue, any Equity
Securities of the Company to any Person unless the Company offers such Purchaser the right (the
“Securities Participation Right”) to purchase in the aggregate up to the number of such Equity
Securities of the Company (the “Securities Participation Amount”) equal to the product of (x) the
total number of such offered shares of Equity Securities of the Company multiplied by (y) such
Purchaser’s Participation Rights Fraction, at the same price per security (payable in cash, except
to the extent that the consideration for such issuance is an exchange of Convertible Preferred
Stock) and otherwise upon the same terms and conditions as those offered to such Person in
accordance with the procedures set forth in this Section 5.5; provided that the
Securities Participation Rights shall not be applicable to the issuance of the following Equity
Securities of the Company: (i) an underwritten registered public offering of Common Stock for cash
(which shall exclude for this purpose any registered direct offering to one or more purchasers
(other than to or through brokers, dealers, underwriters or market makers, in each case purchasing
for resale to investors) in an aggregate amount greater than the lesser of $5 million and 1% of the
shares the Company’s Common Stock then outstanding), (ii) an issuance of equity or equity linked
securities pursuant to any director, officer or employee compensation arrangements approved by the
Board that is permitted, or not prohibited by, the Certificate of Designation, (iii) an issuance of
equity to a seller, or in the case of a merger, the shareholders of the target company, and the
employees or officers of any target company in connection with a bona fide merger, business
combination transaction or acquisition of stock or assets outside of

40

 

the ordinary course (other than any merger, business combination or acquisition transaction
involving a Harbinger Affiliate), (iv) a conversion of shares of one class of capital stock of the
Company into shares of another class of capital stock of the Company in accordance with the terms
of such securities, (v) a stock split or other subdivision or combination, or a stock dividend made
to all holders on a pro rata basis of any Equity Securities of the Company, (vi) an issuance of
Equity Securities of the Company that is incidental to and is issued as part of a debt financing
from a bank, institutional lender or similar financial institution, (vii) an issuance of Additional
Permitted Preferred Stock (as defined in the Certificate of Designation), or (viii) an issuance of
preferred stock that is not convertible into Common Stock (or Equity Securities of the Company that
are convertible into Common Stock) and non-voting (treating preferred stock that is entitled to
elect no more than two directors upon a default resulting from the failure to pay six (6) or more
consecutive quarterly dividends as non-voting for this purpose). For purposes of clarity, the
parties agree that the issuance of Conversion Shares shall not be subject to the Securities
Participation Rights. In no event will any Existing Series A Preferred Stock, Convertible Preferred
Stock or Additional Permitted Preferred Stock (or any Common Stock issuable in connection with the
conversion of any Existing Series A Preferred Stock, Convertible Preferred Stock or Additional
Permitted Preferred Stock) issued in connection with or as a result of accretions to the face
amount of, or payments in kind with respect to, any Existing Series A Preferred Stock, Convertible
Preferred Stock or Additional Permitted Preferred Stock, Option Securities and Convertible
Securities of the Company outstanding on the Closing or otherwise permitted to be issued, or not
prohibited, by the Certificate of Designation or the Existing Certificate of Designation be subject
to the Securities Participation Rights.

               (b) Securities Participation Rights Process.

                    (i) The Company shall send a written notice (the “Securities Participation Rights Notice”) to
each applicable Purchaser stating the number of Equity Securities of the Company to be offered, a
description of the terms of such Equity Securities of the Company if not Common Stock, the price
and terms on which it proposes to offer such Equity Securities of the Company (including a
description of any non-cash consideration sufficiently detailed to permit a valuation thereof), and
a reference to such Purchaser’s Securities Participation Rights hereunder.

                    (ii) Within ten (10) Business Days after the delivery of the Securities Participation Rights
Notice, each such Purchaser may elect by written notice to the Company (the “Securities Exercise
Notice”) to purchase such Equity Securities of the Company, at the price and on the terms specified
in the Securities Participation Rights Notice (or, if such price includes non-cash consideration,
an amount of cash equal to the fair market value of such non-cash consideration, except to the
extent that the consideration for such issuance is an exchange of Convertible Preferred Stock), up
to such Purchaser’s Securities Participation Amount (or, in the event that the offered securities
are preferred securities that are not convertible into Common Stock or Equity Securities of the
Company that are convertible into Common Stock, up to such Purchaser’s Preferred Participation
Amount). A Securities Exercise Notice shall constitute a binding agreement of such Purchaser to
purchase the amount of Equity Securities of the Company so specified at the price and other terms
set forth in the Securities Participation Rights Notice. Assuming delivery of the Securities
Participation Rights Notice in accordance with the terms hereof, the failure of any Purchaser to
respond within such ten (10)

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Business Day period shall be deemed a waiver of such Purchaser’s rights under this Section
5.5 with respect to the offering described in the applicable Securities Participation Rights
Notice. Notwithstanding anything to the contrary herein, at any time prior to the issuance of the
Equity Securities of the Company (whether or not a Securities Exercise Notice shall have been
delivered), the Company may elect (in its sole discretion), upon written notice to the applicable
Purchasers, not to issue such Equity Securities of the Company and rescind, in such event, the
applicable Securities Participation Rights Notice without liability to any Person hereunder.

                    (iii) Subject to the last sentence of this Section 5.5(b)(iii), the Company may offer
the Equity Securities of the Company specified in the Securities Participation Rights Notice in
excess of the Securities Participation Amount, if any, to any Person or Persons at a price not less
than, and on terms no more favorable to such offerees than, those set forth in such Securities
Participation Rights Notice, at any time after the Securities Participation Rights Notice is sent
but on or before the 90th day after the Securities Participation Rights Notice was sent. In
addition, during the period beginning ten (10) Business Days after the Securities Participation
Rights Notice was sent and ending on the 90th day after the Securities Participation Rights Notice
was sent, the Company may offer any Equity Securities of the Company of the Securities
Participation Amount that are not timely elected to be purchased by the applicable Purchasers in
accordance herewith to any other Person or Persons, provided that if such Equity Securities
of the Company are to be offered at a price less than, or on terms materially more favorable to
such offerees than, those specified in the Securities Participation Rights Notice, the Company
shall promptly notify the applicable Purchasers in writing of such modified terms and such
Purchasers shall have five (5) Business Days after the receipt of such notice in which to elect to
purchase the Securities Participation Amount of such Equity Securities of the Company at the price
and on the terms specified in such subsequent notice.

                    (iv) The closing of the purchase of Equity Securities of the Company by each Purchaser
pursuant to this Section 5.5(b) shall occur as promptly as practicable following delivery
of the Securities Exercise Notice to the Company by all Purchasers; provided that such
closing shall be subject to and shall occur not earlier than the later of (x) concurrently with the
closing of the purchase of Equity Securities of the Company by such offeree and (y) ten (10)
Business Days after delivery of the Securities Exercise Notice by each Purchaser to the Company.
The closing of the purchase of Equity Securities of the Company by the applicable Purchasers
pursuant to this Section 5.5(b) shall also be subject to the receipt of any necessary
regulatory approvals, the expiration of any required waiting periods and applicable Law.

                    (v) Notwithstanding anything to the contrary contained in this Agreement, in the event any
Purchaser would be required to file any Notification and Report Form pursuant to the HSR Act as a
result of the purchase of Equity Securities of the Company by such Purchaser pursuant to this
Section 5.5, the closing of such purchase by such Purchaser shall be delayed (in whole, or
at the option of such Purchaser, only to the extent necessary to avoid a violation of the HSR Act),
until such Purchaser shall have made such filing under the HSR Act and such Purchaser shall have
received early termination clearance in respect thereof or the waiting period in connection with
such filing under the HSR Act shall have expired. In such circumstances such Purchaser shall use
commercially reasonable efforts to make such filing and obtain such clearance or expiration of such
waiting period as promptly as reasonably practical

42

 

and the Company shall use commercially reasonable efforts to make all required filings and
reasonably cooperate with and assist such holder in connection with the making of such filing and
obtaining such clearance or expiration of such waiting period.

          5.6 Hedging Restrictions. Each Purchaser agrees that from Closing until the date that
is the earlier of (i) the date such Purchaser ceases to hold any Shares and (ii) the expiration of
the Hedging Limitation Period, such Purchaser shall not, and shall cause each of its Affiliates not
to, enter into any Hedging Agreement with respect to the Common Stock or the Convertible Preferred
Stock or the equity securities of any Subsidiary of the Company that are traded on a national
securities exchange. For the avoidance of doubt, following the Hedging Limitation Period, nothing
in this Section 5.6 shall prohibit such Purchaser or its Affiliates from entering into any
Hedging Agreement with respect to the Common Stock or the Convertible Preferred Stock or the equity
securities of any Subsidiary of the Company, including any transactions involving an index-based
portfolio of securities that includes Common Stock or the equity securities of any Subsidiary of
the Company (regardless of the value of such Common Stock or equity securities of any Subsidiary of
the Company in such portfolio relative to the total value of the portfolio of securities) or
involving the purchase or sale of derivative securities or any short sale of the Common Stock or
the equity securities of any Subsidiary of the Company. Anything in this Section 5.6 to the
contrary notwithstanding, this Section 5.6 shall not prohibit or restrict any activity of
the Soros Purchaser in an account under the discretionary investment management of a third-party
investment adviser, provided that the Soros Purchaser does not instruct or advise such third-party
investment adviser to act in a manner that would be considered a breach of the terms of this
Section 5.6. For the avoidance of doubt, anything in this Section 5.6 to the
contrary notwithstanding, the parties hereto acknowledge, that all the covenants made by the DDJ
Purchaser in this Section 5.6 are being made only with respect to the account managed by
DDJ and shall not apply to any Shares that may be beneficially owned by the DDJ Purchaser that are
not held through such Account.

          5.7 Form 8-K. The Company shall, promptly following the date hereof (but in any event
within the time period required by the rules and regulations of the SEC), file a Current Report on
Form 8-K, disclosing the material terms of the transactions contemplated hereby and filing the
Transaction Agreements as exhibits thereto, provided that the Company shall afford the Purchasers
with reasonable opportunity to review and comment on such Current Report on Form 8-K prior to the
filing thereof. Notwithstanding the foregoing, except as required by Law, court order, subpoena,
stock exchange, self-regulatory organization, governmental agency or regulatory body (including
pursuant to any rules or regulations of any of the foregoing), the Company, the Company’s
controlled Affiliates and the Company’s Representatives shall not directly or indirectly use or
refer to Soros Fund Management LLC (“SFM”), the “Soros” name, or any derivation thereof, or the
funds advised by SFM, for any purpose whatsoever (including, without limitation, in any filing with
any governmental authority, any press release, any public announcement or statement, advertisement
or in any interview or other discussion with any reporter or other member of the media) without the
prior written consent of SFM with respect to each such use or reference. Notwithstanding the
foregoing, except as required by Law, court order, subpoena, stock exchange, self-regulatory
organization, governmental agency or regulatory body (including pursuant to any rules or
regulations of any of the foregoing), the Company, the Company’s controlled Affiliates and the
Company’s Representatives shall not directly or indirectly use or refer to JHL Capital Group LLC
(“JHL”), the “JHL” name, or any

43

 

derivation thereof, or the funds advised by JHL, for any purpose whatsoever (including,
without limitation, in any filing with any governmental authority, any press release, any public
announcement or statement, advertisement or in any interview or other discussion with any reporter
or other member of the media) without the prior written consent of JHL with respect to each such
use or reference. Notwithstanding the foregoing, except as required by Law, court order, subpoena,
stock exchange, self-regulatory organization, governmental agency or regulatory body (including
pursuant to any rules or regulations of any of the foregoing), the Company, the Company’s
controlled Affiliates and the Company’s Representatives shall not directly or indirectly use or
refer to DDJ, the “DDJ” name, or any derivation thereof, or the funds and/or the accounts advised
by DDJ, for any purpose whatsoever (including, without limitation, in any filing with any
governmental authority, any press release, any public announcement or statement, advertisement or
in any interview or other discussion with any reporter or other member of the media) without the
prior written consent of DDJ with respect to each such use or reference.

          5.8 Tax Characterization. Unless otherwise required by a “determination”, as defined
in Section 1313(a) of the Code, the parties agree to treat the Convertible Preferred Stock as stock
other than preferred stock for U.S. federal, and to the extent applicable, state and local income
tax purposes.

          5.9 Confidential Information.

               (a) Each Purchaser recognizes that Confidential Information may have been and may be disclosed
to such Purchaser by the Company or any of its Affiliates. Each Purchaser shall not engage in the
unauthorized use, and shall cause its Affiliates not to engage in the unauthorized use, or make any
unauthorized disclosure to any third party, of any Confidential Information without the prior
written consent of the Company and shall use due care to ensure that such Confidential Information
is kept confidential, including by treating such information as such party would treat its own
Confidential Information. Notwithstanding the foregoing, the Purchasers shall have the right to
share any Confidential Information with any of their Representatives, each of whom shall be
required to agree to keep confidential such Confidential Information to the extent required of the
Purchaser under this Section 5.9. With respect to each Purchaser, at the Closing, the
confidentiality agreement entered into by the Company and such Purchaser prior to the date hereof
shall terminate. As used herein, “Confidential Information” means all information, knowledge,
systems or data relating to the business, operations, finances, policies, strategies, intentions or
inventions of the Company and/or its Subsidiaries (including any of the terms of this Agreement)
from whatever source obtained, except for any such information, knowledge, systems or data which
(i) has become publicly known and made generally available through no wrongful act of such
Purchaser, (ii) has been rightfully received by such Purchaser from a third party who, to the
knowledge of such Purchaser, is not bound any obligations of confidentiality with respect to such
information, knowledge, systems or data, (iii) is independently developed by such Purchaser without
use of Confidential Information, (iv) is already known by a Portfolio Company of such Purchaser or
is already in the possession of a Portfolio Company of such Purchaser prior to the date hereof, or
(v) subject to the obligations set forth in Section 5.9(b), is required by law, court
order, subpoena, stock exchange, self-regulatory organization, governmental agency, or regulatory
body to be disclosed.

44

 

               (b) If any Purchaser is requested to disclose any Confidential Information by any Governmental
Entity or for any regulatory reason, such Purchaser will promptly notify the Company, as is
reasonably practicable and legally permissible under the circumstances, to permit it to seek a
protective order or take other action that the Board in its discretion deems appropriate, and such
Purchaser will cooperate in any such efforts to obtain a protective order or other reasonable
assurance that confidential treatment will be accorded such Confidential Information, at the
Company’s sole cost and expense. If, in the absence of a protective order, such Purchaser is
compelled to disclose any such information in any proceeding or pursuant to legal process, such
Purchaser may disclose to the party compelling disclosure only the part of such Confidential
Information as is required to be disclosed (in which case, prior to such disclosure, such Purchaser
will advise and, if requested by the Board, consult with the Company and its counsel as to such
disclosure and the nature and wording of such disclosure) and such Purchaser will use its
commercially reasonable efforts to obtain confidential treatment therefor. Notwithstanding the
foregoing, the Purchaser shall not be required to notify the Company if it is required to disclose
Confidential Information pursuant to a routine regulatory inquiry or blanket document request, not
targeting the Company or the Board.

          5.10 Amendment to Certificate of Designation. Each Purchaser hereby consents and
agrees to the adoption, execution and filing by the Company of the First Amendment to the
Certificate of Designation of Series A Participating Convertible Preferred Stock, attached as
Exhibit E (the “First Amendment to the Certificate of Designation”), for all purposes of
SECTION 4 of the Certificate of Designation.

          5.11 Most Favored Nation Status. With respect to the next $45 million of Additional
Permitted Preferred Stock issued or sold by the Company, prior to the time when the Purchasers
cease to own any shares of Convertible Preferred Stock, the Company shall not (x) sell any such
Additional Permitted Preferred Stock with a cash dividend rate, an accreting dividend rate or a
combined dividend rate that is higher than the dividend rates applicable to the Convertible
Preferred Stock, (y) sell any such Additional Permitted Preferred Stock for a price per share less
than $1,000 or (z) pay to any Person that is acquiring such Additional Permitted Preferred Stock
any transaction fee or similar fee or compensation in connection therewith other than reimbursement
of actual out-of-pocket costs and expenses.

     6. Conditions Precedent.

          6.1 Conditions to the Obligation of the Purchasers to Consummate the Closing. The
obligations of the Purchasers to consummate the transactions to be consummated at the Closing, and
to purchase and pay for the Shares pursuant to this Agreement, are subject to the satisfaction of
the following conditions precedent:

               (a) the Company shall have filed with the Secretary of State of the State of Delaware the
Certificate of Designation;

45

 

               (b) the Purchasers shall have received the Registration Rights Amendment and Joinder, duly
executed and delivered by the parties thereto (other than the Purchasers);

               (c) the Purchasers shall have received the Tag-Along Agreement, duly executed and delivered by
the parties thereto (other than the Purchasers);

               (d) the Purchasers shall have received from Paul, Weiss, Rifkind, Wharton & Garrison LLP,
counsel to the Company, an opinion substantially in the form attached hereto as Exhibit D;

               (e) no Law shall be in effect and no judgment or order shall have been entered, in each case
that restrains, enjoins or prohibits the performance of all or any part of this Agreement or the
consummation of all or any part of the transactions contemplated hereby, or declares unlawful the
transactions contemplated hereby or would cause any of the transactions contemplated hereby to be
rescinded; and

               (f) since December 31, 2010, there shall not have occurred any Material Adverse Effect.

          6.2 Conditions to the Obligation of the Company to Consummate the Closing. The
obligation of the Company to consummate the transactions to be consummated at the Closing, and to
issue and sell to the Purchasers the Shares pursuant to this Agreement, is subject to the
satisfaction of the following conditions precedent:

               (a) each Purchaser shall have executed and delivered each Transaction Agreement to which such
Purchaser is a party;

               (b) the Certificate of Designation shall have been duly filed and accepted by the Secretary of
State of the State of Delaware; and

               (c) no Law shall be in effect and no judgment or order shall have been entered, in each case
that restrains, enjoins or prohibits the performance of all or any part of this Agreement or the
consummation of all or any part of the transactions contemplated hereby, or declares unlawful the
transactions contemplated hereby or would cause any of the transactions contemplated hereby to be
rescinded.

     7. Additional Covenants.

          7.1 Material Non-Public Information. If any Purchaser has notified the Company in
writing that it does not want to receive any material nonpublic information regarding the Company
and its Subsidiaries, the Company shall thereafter not disclose material nonpublic information to
such Purchaser, or to advisors to or representatives of such Purchaser (in their capacity as such)
until such time as such Purchaser may again request in writing to receive such information.

          7.2 Information Rights(1) . For so long as a Purchaser and its Affiliates
collectively own at least 12,500 Shares (or Common Stock issued upon conversion of such

46

 

Shares) (as adjusted for any stock splits, combinations, re-classifications or the like),
whether or not the Company is required to file any forms, reports or documents with the SEC, the
Company shall deliver to each such Purchaser all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Form 10-Q or Form 10-K, as
applicable, if the Company were required to file such Form with the SEC and, with respect to the
annual information only, a report thereon by the Company’s independent registered accountants.
Notwithstanding the foregoing, the Company’s obligation under this Section 7.2 to deliver the
foregoing information shall be deemed to have been satisfied upon the filing of the abovementioned
forms, reports and documents with the SEC in accordance with applicable Laws.

     8. Transfer Restrictions. Each Purchaser understands and agrees that the Shares and
any Conversion Shares may be offered, resold, pledged or otherwise transferred only (a) in a
transaction not involving a public offering, (b) pursuant to an exemption from registration under
the Securities Act provided by Rule 144 thereunder (if available), (c) pursuant to an effective
registration statement under the Securities Act, (d) to the Company or one of its Subsidiaries, (e)
to any Affiliate of such Purchaser (provided such Person is an institutional investor) or (f) to
any other holder of shares of Convertible Preferred Stock and to any Affiliates thereof (provided
such Person is an institutional investor); in each of cases (a) through (e) in accordance with any
applicable state and federal securities laws; provided that as a condition precedent to a
transfer of any Shares or Conversion Shares to an Affiliate of a Purchaser pursuant to clause (e),
any such Affiliate shall assume, on a several and not joint basis, all then continuing obligations
of such Purchaser hereunder pursuant to a written agreement reasonably acceptable to the Company.
Any purported transfer of Shares or Conversion Shares other than in compliance with the terms
hereof shall be void ab initio.

     9. Legends; Securities Act Compliance.

               (a) Each certificate representing the Shares and each certificate representing Conversion
Shares will bear a legend conspicuously thereon to the following effect:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS THE SAME ARE REGISTERED AND QUALIFIED IN
ACCORDANCE WITH THE SAID ACT AND ANY OTHER APPLICABLE STATE SECURITIES LAWS
OR SUCH OFFER, SALE, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND ANY OTHER APPLICABLE STATE SECURITIES LAWS.”

               (b) Removal of Legends. The legend set forth above will be removed and the Company shall issue
a certificate representing Conversion Shares without such legend to the holder of such certificate
or issue to such holder by electronic delivery at the applicable balance account at The Depository
Trust Company (“DTC”), if (i) such Conversion Shares are

47

 

registered for resale under the Securities Act, (ii) such Conversion Shares are sold or
transferred pursuant to Rule 144 (assuming the transferor is not an Affiliate of the Company) or
Rule 144A, or (iii) such Conversion Shares are eligible for sale under Rule 144 without regard to
the volume, notice, manner of sale or current public information requirements of Rule 144. The
Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent on the
effective date of a Shelf Registration Statement (as such term is defined in the Registration
Rights Agreement) to cover any removal of legend pursuant to clause (i) of this Section 9(b) and
the transferor shall provide to the Company an opinion of counsel to cover any removal of legend
pursuant to clauses (ii) and (iii) of this Section 9(b). For further clarity, if any portion of
the Shares are converted at a time when there is an effective Shelf Registration Statement to cover
the resale of the Conversion Shares under clause (i) of this Section 9(b), or if such Conversion
Shares may be sold under Rule 144 under clause (iii) of this Section 9(b), then such Conversion
Shares shall be issued free of all legends. Following the effective date of a Shelf Registration
Statement, or at such earlier time as a legend is no longer required for Shares or Conversion
Shares, the Company will no later than three (3) Business Days following the delivery by a
Purchaser to the Company or the transfer agent (with notice to the Company) of (i) a legended
certificate representing such Shares or Conversion Shares (endorsed or with stock powers attached,
signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer) or
(ii) a conversion notice in the manner stated in Section 5 of the Certificate of Designation to
effect the conversion of such Shares in accordance with its terms and an opinion of counsel to the
extent required, deliver or cause to be delivered to such Purchaser a certificate representing such
Conversion Shares that is free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to the transfer agent that enlarge the restrictions on
transfer set forth in this Section 9(b).

     10. Indemnification; Survival.

          10.1 Company Indemnification. The Company shall defend, indemnify, exonerate and hold
free and harmless each Purchaser and its Affiliates and their respective directors, officers and
employees (each, a “Purchaser Indemnified Party” and, collectively, the “Purchaser Indemnified
Parties”) from and against any and all Losses actually incurred by such Indemnified Parties that
arise out of, or result from: (i) any inaccuracy in or breach of the Company’s representations or
warranties in this Agreement or (ii) the Company’s breach of its agreements or covenants in this
Agreement.

          10.2 Survival of Representations and Warranties. The representations and warranties
contained herein shall survive until 5:00 p.m. EDT on the fifteen (15) month anniversary of the
Closing, other than the representations and warranties set forth in Sections 3.1,
3.2, 3.3, 3.4 and 3.26, which shall survive indefinitely (the
“Survival Period”). For the avoidance of doubt, all other covenants, agreements and obligations
contained in this Agreement shall survive indefinitely (unless a different period is specifically
provided for pursuant to the provisions of this Agreement expressly relating thereto).

          10.3 Purchaser Indemnification. Each Purchaser, severally and not jointly, shall
defend, indemnify, exonerate and hold free and harmless the Company and its Affiliates and their
respective directors, officers and employees (each a “Company Indemnified Party” and collectively,
the “Company Indemnified Parties”) from and against any and all Losses

48

 

actually incurred by such Company Indemnified Parties that arise out of, or result from: (i)
any inaccuracy in or breach of such Purchaser’s representations or warranties in this Agreement or
(ii) such Purchaser’s breach of its agreements or covenants in this Agreement.

          10.4 Limitations. Notwithstanding anything in this Agreement to the contrary, (i) no
indemnification claims for Losses shall be asserted by the Purchaser Indemnified Parties under
Section 10.1 or by the Company Indemnified Parties under Section 10.3 unless and
until (x) the aggregate amount of Losses that would otherwise be payable under Section 10.1
or Section 10.3, as applicable, exceeds $2,000,000 (the “Basket Amount”), whereupon the
Purchaser Indemnified Party or Company Indemnified Party, as applicable, shall be entitled to
receive only amounts for Losses in excess of the Basket Amount or (y) Losses have been asserted
against such Person in accordance with this Section 10.4, and (ii) the aggregate liability
of the Company or any Purchaser for Losses under Section 10.1 or Section 10.3, as
applicable, shall in no event exceed the applicable Share Purchase Price.

          10.5 Procedures. A party entitled to indemnification hereunder (each, an “Indemnified
Party”) shall give written notice to the party from whom indemnification is sought (the
“Indemnifying Party”) of any claim with respect to which it seeks indemnification promptly after
the discovery by such Indemnified Party of any matters giving rise to a claim for indemnification
hereunder; provided, that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section 10 unless
and to the extent that the Indemnifying Party shall have been materially prejudiced by the failure
of such Indemnified Party to so notify such party. Such notice shall describe in reasonable detail
such claim. In case any such action, suit, claim or proceeding is brought against an Indemnified
Party, the Indemnifying Party shall be entitled to assume and conduct the defense thereof, with
counsel reasonably satisfactory to the Indemnified Party unless (i) such claim seeks remedies, in
addition to or other than, monetary damages that are reasonably likely to be awarded, (ii) such
claim involves a criminal proceeding or (iii) counsel to the Indemnified Party advises such
Indemnifying Party in writing that such claim involves a conflict of interest that would reasonably
be expected to make it inappropriate for the same counsel to represent both the Indemnifying Party
and the Indemnified Party. If any one of the foregoing clauses (i) through (iii) applies, the
Indemnified Party shall be entitled to retain its own counsel at the cost and expense of the
Indemnifying Party (except that the Indemnifying Party shall only be liable for the legal fees and
expenses of one law firm for all Indemnified Parties, taken together with respect to any single
action or group of related actions, other than local counsel). If the Indemnifying Party assumes
the defense of any claim, the Indemnified Party shall nevertheless be entitled to hire, at its own
expense, separate counsel and participate in the defense thereof; provided, that all Indemnified
Parties shall thereafter deliver to the Indemnifying Party copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the claim, and each
Indemnified Party shall reasonably cooperate in the defense or prosecution of such claim. Such
reasonable cooperation shall include the retention and (upon the Indemnifying Party’s reasonable
request) the provision to the Indemnifying Party of records and information that are reasonably
relevant to such claim, and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. The Indemnifying Party
shall not be liable for any settlement of any action, suit, claim or proceeding effected without
its prior written consent (not to be unreasonably withheld, conditioned or delayed). The
Indemnifying Party further agrees that it will not, without the

49

 

Indemnified Party’s prior written consent (which shall not be unreasonably withheld,
conditioned or delayed), settle or compromise any claim or consent to entry of any judgment in
respect thereof in any pending or threatened action, suit, claim or proceeding in respect of which
indemnification has been sought or may be hereunder unless such settlement or compromise includes
an unconditional release of such Indemnified Party from all liability arising out of such action,
suit, claim or proceeding and is solely for monetary damages.

          10.6 Additional Limitations. Notwithstanding anything contained herein to the
contrary, “Losses” shall not include (i) any Losses to the extent such Losses could not have been
reasonably foreseen by the parties as of the Closing, and (ii) punitive damages, except to the
extent payable by an Indemnified Party to a third party. No party hereto shall be obligated to
indemnify any other Person with respect to any representation, warranty, covenant or condition
specifically waived in writing by any other party on or prior to the Closing.

          10.7 Exclusive Remedies. Notwithstanding anything to the contrary herein, the
provisions of Section 10 and Section 12.6 shall be the sole and exclusive remedies
of parties under this Agreement following the Closing for any and all breaches or alleged breaches
of any representations or warranties, covenants or agreements of the parties contained in this
Agreement. For the avoidance of doubt, this Section 10 shall not prevent the parties from
obtaining specific performance or other non-monetary remedies at in equity or at Law pursuant to
Section 12.6 of this Agreement and shall not limit other remedies that may be available to
the parties under any of the Transaction Agreements (other than this Agreement).

     11. Termination.

          11.1 Conditions of Termination. Notwithstanding anything to the contrary contained
herein, this Agreement may be terminated at any time before the Closing by either the Company, on
the one hand, or any Purchaser, on the other hand, if the Closing shall not have occurred on or
prior to 5:00 p.m., New York time, on August 5, 2011.

          11.2 Effect of Termination. In the event of any termination pursuant to Section
11.1 hereof, this Agreement shall become null and void and have no further effect, with no
liability on the part of the Company or any Purchaser, or their directors, partners, members,
employees, affiliates, officers, stockholders or agents or other representatives, with respect to
this Agreement, except (a) for the terms of this Section 11.2 and Section 12
(Miscellaneous Provisions), which shall survive the termination of this Agreement, and (b) that
nothing in this Section 11 shall relieve any party or parties hereto, as applicable, from
liability or damages incurred or suffered by any other party resulting from any intentional (x)
breach of any representation or warranty of such first party or (y) failure of such first party to
perform a covenant thereof. As used in the foregoing sentence, “intentional” shall mean an act or
omission by such party which such party actually knew, or reasonably should have known, would
constitute a breach of this Agreement by such party.

     12. Miscellaneous Provisions.

          12.1 Public Statements or Releases. Neither the Company nor any Purchaser shall make
any public release or announcement with respect to the existence or terms of this

50

 

Agreement or the transactions provided for herein without the prior approval of the other
parties, which shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing, nothing in this Section 12.1 shall prevent any party from making any public
release required (in the exercise of its reasonable judgment) in order to satisfy its obligations
under law or under the rules or regulations of any United States national securities exchange, in
which case the party or parties, as applicable, required to make the release or announcement shall,
to the extent reasonably practicable, allow the other party or parties, as applicable, reasonable
time to comment on such release or announcement in advance of such issuance.

          12.2 Interpretation. The words “hereof,” “herein” and “hereunder” and words of
similar import when used in this Agreement will refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section and subsection references are to this Agreement
unless otherwise specified. The headings in this Agreement are included for convenience of
reference only and will not limit or otherwise affect the meaning or interpretation of this
Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement,
they will be deemed to be followed by the words “without limitation.” The phrases “the date of
this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise
requires, will be deemed to refer to the date set forth in the first paragraph of this Agreement.
The meanings given to terms defined herein will be equally applicable to both the singular and
plural forms of such terms. All matters to be agreed to by any party hereto must be agreed to in
writing by such party unless otherwise indicated herein. Except as specified otherwise herein,
references to agreements, policies, standards, guidelines or instruments, or to statutes or
regulations, are to such agreements, policies, standards, guidelines or instruments, or statutes or
regulations, as amended or supplemented from time to time (or to successors thereto). All
references herein to the Subsidiaries of a Person shall be deemed to include all direct and
indirect Subsidiaries of such Person, unless otherwise indicated or the context otherwise requires.
The parties hereto agree that they have been represented by counsel during the negotiation and
execution of the Transaction Agreements and, therefore, waive the application of any Law, holding
or rule of construction providing that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.

          12.3 Notices. All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be deemed delivered (a) three (3) Business Days after being
sent by registered or certified mail, return receipt requested, postage prepaid (b) one (1)
Business Day after being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, (c) on the date of delivery if delivered personally, or (d) if by
facsimile, upon written confirmation of receipt by facsimile, in each case to the intended
recipient as set forth below:

	 	(a)	 	if to the Company, addressed as follows:
	 
	 	 	 	Harbinger Group Inc.

450 Park Avenue

27th Floor

New York, New York 10022

Attention: Francis T. McCarron

Facsimile: (212) 906-8559

51

 

	 	 	 	with copies (which shall not constitute notice) to:

	 
	 	 	 	Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attention: Jeffrey D. Marell and Kelley D. Parker

Facsimile: (212) 757-3990
	 
	 	(b)	 	if to the Soros Purchaser, to:
	 
	 	 	 	Quantum Partners LP

c/o Soros Fund Management LLC

888 Seventh Avenue

New York, New York 10106

Attention: Maryann Canfield

Facsimile: (646) 731-5551
	 
	 	 	 	with a copy to (which shall not constitute notice) to:
	 
	 	 	 	Soros Fund Management LLC

888 Seventh Avenue

New York, New York 10106

Attention: Alex Shapiro

Facsimile: (646) 731-5802
	 
	 	(c)	 	if to a DDJ Purchaser (as applicable), to:
	 
	 	 	 	DDJ High Yield Fund

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	General Motors Hourly-Rate Employes Pension Trust — 7N1H

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	General Motors Salaried Employes Pension Trust — 7N1I

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541

52

 

	 	 	 	Stichting Pensioenfonds Hoogovens

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	Caterpillar Inc. Master Retirement Trust

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	J.C. Penney Corporation, Inc. Pension Plan Trust

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	Stichting Bewaarder Interpolis Pensioenen Global High Yield Pool

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	Stichting Pensioenfond voor Fysiotherapeuten

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	Houston Municipal Employees Pension System

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	UAW Retiree Medical Benefits Trust

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541

53

 

	 	 	 	DDJ Distressed and Special Situations Fund, L.P.

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	Russell Investment Company — Russell Global Opportunistic Credit Fund

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	 	 	DDJ Capital Management Group Trust — High Yield Investment Fund

c/o DDJ Capital Management, LLC

130 Turner Street, Building 3, Suite 600

Waltham, MA 02453

Attention: Legal Department

Facsimile: (781) 283-8541
	 
	 	(d)	 	if to the JHL Purchaser, to:
	 
	 	 	 	JHL Capital Group Master Fund L.P.

c/o JHL Capital Group LLC

900 N. Michigan Avenue

Suite 1340

Chicago, IL 60611

Attention: David Weiss

Facsimile: (312) 628-7351

     Any party may change the address to which notices, requests, consents or other communications
hereunder are to be delivered by giving the other parties notice in the manner set forth in this
Section 12.3.

          12.4 Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction to be illegal,
void or unenforceable, the remainder of this Agreement will continue in full force and effect and
the application of such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of such void or
unenforceable provision.

54

 

          12.5 Governing Law; Jurisdiction; WAIVER OF JURY TRIAL.

               (a) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, regardless of the laws that might otherwise govern under applicable principles of
conflicts of law thereof.

               (b) Each of the parties hereto irrevocably (i) agrees that any legal suit, action or
proceeding brought by any party hereto against arising out of or based upon this Agreement may be
instituted in any United States federal court or New York State court located in the Borough of
Manhattan in The City of New York (a “New York Court”), (ii) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the laying of venue of any
such proceeding and (iii) submits to the non-exclusive jurisdiction of a New York Court in any such
suit, action or proceeding.

               (c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PURCHASER OR THE COMPANY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

          12.6 Specific Performance. The parties hereto agree that the obligations imposed on
them in this Agreement are special, unique and of an extraordinary character, and that irreparable
damages for which money damages, even if available, would not be an adequate remedy, would occur in
the event that the parties hereto do not perform the provisions of this Agreement in accordance
with its specified terms or otherwise breach such provisions. The parties acknowledge and agree
that the parties shall be entitled to seek an injunction, specific performance and other equitable
relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which they are entitled, at law or in equity;
and the parties hereto further agree to waive any requirement for the securing or posting of any
bond or other security in connection with the obtaining of any such injunctive or other equitable
relief. Each of the parties agrees that it will not oppose the granting of an injunction, specific
performance and other equitable relief as provided herein on the basis that (x) either party has an
adequate remedy at law or (y) an award of specific performance is not an appropriate remedy for any
reason at law or equity.

          12.7 Delays or Omissions; Waiver. No delay or omission to exercise any right, power,
or remedy accruing to a party upon any breach or default of another party under this Agreement
shall impair any such right, power, or remedy of such party, nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. No waiver of any term,
provision or condition of this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or condition of this
Agreement. Any agreement on the part of a party or parties hereto to any waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party or parties, as

55

 

applicable. Any delay in exercising any right under this Agreement shall not constitute a
waiver of such right.

          12.8 Fees; Expenses.

               (a) Except as set forth in this Section 12.8, all fees and expenses incurred in
connection with the Transaction Agreements and the transactions contemplated hereby and thereby
shall be paid by the party or parties, as applicable, incurring such expenses whether or not the
transactions contemplated hereby and thereby are consummated.

               (b) The Company shall pay any and all documentary, stamp or similar issue or transfer Tax
payable in connection with this Agreement, the issuance of the Shares at Closing and the issuance
of the Conversion Shares.

               (c) Each party shall pay for any filing fees associated with any filings made by it to the
Insurance Regulatory Authorities.

          12.9 Assignment. None of the parties may assign its rights or obligations under this
Agreement without the prior written consent of the other parties, provided,
however, that each Purchaser may assign its right and obligations hereunder to an Affiliate
of such Purchaser without the prior written consent of the Company or any other Purchaser;
provided, further, that as a condition precedent to such assignment (x) any such
Affiliate shall assume, on a several and not joint basis, all then continuing obligations of such
Purchaser hereunder pursuant to a written agreement reasonably acceptable to the Company, and (y)
no assignment and assumption shall relieve such Purchaser from any liability hereunder;
provided, further, that any assignment to an Affiliate shall only be effective for
so long as such Person remains an Affiliate of the applicable Purchaser and the rights assigned to
such Person shall cease to be of further force and effect when such Person ceases to be an
Affiliate of the applicable Purchaser. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties to this Agreement and their
respective successors and permitted assigns. Any purported assignment other than in compliance
with the terms hereof shall be void ab initio.

          12.10 No Third Party Beneficiaries. Except for Section 10 (with respect to
which all Indemnified Parties shall be third party beneficiaries), this Agreement does not create
any rights, claims or benefits inuring to any Person that is not a party hereto nor create or
establish any third party beneficiary hereto. Without limiting the foregoing, the representations
and warranties in this Agreement are the product of negotiations among the parties hereto and are
for the sole benefit of the parties hereto. In some instances, the representations and warranties
in this Agreement may represent an allocation among the parties hereto of risks associated with
particular matters regardless of the knowledge of any of the parties hereto. Consequently, Persons
other than the parties hereto may not rely upon the representations and warranties in this
Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or
as of any other date.

          12.11 Counterparts. This Agreement may be executed and delivered (including by
facsimile or electronic transmission) in any number of counterparts, and by the different

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parties hereto in separate counterparts, each of which when executed shall be deemed an
original, but all of which taken together shall constitute a single instrument.

          12.12 Entire Agreement; Amendments. This Agreement and the documents and instruments
and other agreements among the parties hereto as contemplated by or referred to herein, including
the Disclosure Letter and the Annexes and Exhibits hereto, constitute the entire agreement between
the parties hereto respecting the subject matter hereof and supersede all prior agreements,
negotiations, understandings, representations and statements respecting the subject matter hereof,
whether written or oral. No modification, alteration, waiver or change in any of the terms of this
Agreement shall be valid or binding upon the parties hereto unless made in writing and duly
executed by the Company, on the one hand, and the Purchasers holding a majority of the Shares
issued at the Closing (whether held in the form of Convertible Preferred Stock or Common Stock
issued upon the conversion of Convertible Preferred Stock), on the other hand; provided,
however, that any modification, alteration, waiver or change that (a) has a
disproportionate and adverse effect on any right of any Purchaser under this Agreement, (b)
increases any restriction or imposes any additional restriction upon any Purchaser or any successor
or assigns thereof with respect to the Shares acquired by such Purchaser at Closing or with respect
to any Common Stock acquired upon conversion thereof or otherwise or (c) increases in any respect
the obligations or liabilities of any Purchaser under this Agreement shall not be effective against
such Purchaser without the written approval of such Purchaser; provided, further,
no modification, alteration, waiver or change with respect to Section 5.4 (Standstill) or
5.6 (Hedging Restrictions) for the benefit of any Purchaser shall be effective unless such
modification, alteration, waiver or change is made equally applicable to all Purchasers;
provided, further, that with respect to the rights and obligations of any Purchaser
under Sections 2 (Authorization, Purchase and Sale of Shares), 5.4 (Standstill),
5.5 (Participation Rights), 5.6 (Hedging Restrictions), 5.10
(Confidentiality), 5.11 (Most Favored Nation Status), 6.1 (Conditions to the
Obligation of the Purchasers to Consummate Closing), 7.1 (Material Non-Public Information),
7.2 (Information Rights), 11 (Termination), and 12.13 (Freedom to Pursue
Opportunities) such provisions may be amended with respect to the rights and obligations of such
Purchaser by written instrument duly executed by the Company, on the one hand, and such Purchaser,
on the other hand; provided, further, that Sections 3 (Representations and
Warranties of the Company), 4 (Representations and Warranties of the Purchasers),
5.2 (Shares Issuable Upon Conversion), 5.8 (Tax Characterization), 10
(Indemnification; Survival) and this 12.12 shall not be modified, altered, waived or
changed unless made in writing and duly executed by each of the parties hereto.

          12.13 Freedom to Pursue Opportunities. Each of the parties hereto expressly acknowledges
and agrees that: (i) each Purchaser has the right to, and shall have no duty (contractual or
otherwise) not to, directly or indirectly engage in the same or similar business activities or
lines of business as the Company or any of its Subsidiaries, including those deemed to be competing
with the Company or any of its Subsidiaries; and (ii) in the event that a Purchaser acquires
knowledge of a potential transaction or matter that may be a corporate opportunity for each of the
Company and such Purchaser, such Person shall have no duty (contractual or otherwise) to
communicate or present such corporate opportunity to the Company or any of its Subsidiaries, as the
case may be, and, notwithstanding any provision of this Agreement to the contrary, shall not be
liable to the Company or its Affiliates for breach of any duty (contractual or otherwise) by reason
of the fact that such Purchaser, directly or indirectly,

57

 

pursues or acquires such opportunity for itself, directs such opportunity to another Person, or
does not present such opportunity to the Company.

          12.14 No Person Liability of Directors, Officers, Owners, Etc. No director, officer,
employee, incorporator, shareholder, managing member, member, general partner, limited partner,
principal or other agent of any of the Purchasers or the Company shall have any liability for any
obligations of the Purchasers or the Company, as applicable, under this Agreement or for any claim
based on, in respect of, or by reason of, the respective obligations of the Purchasers or the
Company, as applicable, under this Agreement. Each party hereby waives and releases all such
liability. This waiver and release is a material inducement to each party’s entry into this
Agreement.

          12.15 Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser
under this Agreement or any Transaction Agreement are several and not joint with the obligations of
any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under this Agreement or any other Transaction Agreement.
Nothing contained herein or in any other Transaction Agreement, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by this Agreement or any other Transaction Agreement. Each
Purchaser confirms that it has independently participated in the negotiation of the transactions
contemplated hereby and has been represented by separate counsel. All rights, powers and remedies
provided to the Purchasers under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative or exclusive, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of
any other rights, powers or remedies by such party or any other party.

[Remainder of the Page Intentionally Left Blank]

58

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	 	COMPANY:

HARBINGER GROUP INC.

 	 
	 	By:  	/s/ Francis T. McCarron
 	 
	 	 	Name:  	Francis T. McCarron 	 
	 	 	Title:  	Executive Vice President & Chief

Financial Officer 	 
	 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

	 	 	 	 	 
	 	QUANTUM PARTNERS LP

 	 
	 	By:  	/s/ Jay A. Schoenfarber
 	 
	 	 	Name:  	Jay A. Schoenfarber 	 
	 	 	Title:  	Attorney-in-Fact 	 
	 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

	 	 	 	 	 
	 	JHL CAPITAL GROUP MASTER FUND L.P.

 	 
	 	By:  	/s/ James H. Litinsky
 	 
	 	 	Name:  	James H. Litinsky 	 
	 	 	Title:  	Managing Member

JHL Capital Group LLC 	 
	 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

Caterpillar Inc. Master Retirement Trust

By: DDJ Capital Management, LLC, on behalf of
Caterpillar Inc. Master Retirement Trust, in its
capacity as investment manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

DDJ Capital Management Group Trust — High Yield Investment Fund

By: DDJ Capital Management, LLC, in its capacity as Investment Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

DDJ High Yield Fund

By: DDJ Capital Management, LLC, its attorney-in-fact

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

General Motors Hourly-Rate Employes Pension Trust — 7N1H

By: State Street Bank and Trust Company, solely in
its capacity as Trustee for General Motors
Hourly-Rate Employes Pension Trust (Account 7N1H),
and not in its individual capacity, as directed by
DDJ Capital Management, LLC, as Investment Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ Kimberly A. Dinsmore
 	 
	 	 	Name:  	Kimberly A. Dinsmore 	 
	 	 	Title:  	Client Services Officer State Street
Bank and Trust Company 	 
	 

General Motors Salaried Employes Pension Trust — 7N1I

By: State Street Bank and Trust Company, solely in
its capacity as Trustee for General Motors Salaried
Employes Pension Trust (Account 7N1I), and not in its
individual capacity, as directed by DDJ Capital
Management, LLC, as Investment Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ Kimberly A. Dinsmore
 	 
	 	 	Name:  	Kimberly A. Dinsmore 	 
	 	 	Title:  	Client Services Officer State Street
Bank and Trust Company 	 
	 

Houston Municipal Employees Pension System

By: DDJ Capital Management, LLC, in its capacity as Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

J.C. Penney Corporation, Inc. Pension Plan Trust

By: DDJ Capital Management, LLC, on behalf of J.C.
Penney Corporation, Inc. Pension Plan Trust, in its
capacity as investment manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

Russell Investment Company — Russell Global
Opportunistic Credit Fund

By: DDJ Capital Management, LLC, in its capacity as
Money Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

Stichting Bewaarder Interpolis Pensioenen
Global High Yield Pool

By: Syntrus Achmea Asset Management, as asset manager

By: DDJ Capital Management, LLC, as subadviser

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 

Stichting Pensioenfonds Hoogovens

By: DDJ Capital Management, LLC, on behalf of
Stichting Pensioenfonds Hoogovens, in its capacity as
Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

Stichting Pensioenfonds voor Fysiotherapeuten

By: DDJ Capital Management, LLC, in its capacity as
investment manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

UAW Retiree Medical Benefits Trust

By: State Street Bank and Trust company, solely in
its capacity as Trustee for UAW Retiree Medical
Benefits Trust, as directed by DDJ Capital
Management, LLC, and not in its individual capacity

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

DDJ Distressed and Special Situations Fund, L.P.

By: DDJ/GP Distressed and Special Situations, LLC, its General Partner

By: DDJ Capital Management, LLC, Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                          /s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

Annex A

Shares and Purchasers

	 	 	 	 	 	 	 	 	 
	       Purchaser	 	Shares	 	Share Purchase Price
	Quantum Partners LP
	 	 	25,000	 	 	$	25,000,000.00	 
	DDJ High Yield Fund
	 	 	250	 	 	$	250,000.00	 
	General Motors Hourly-Rate Employes Pension
Trust – 7N1H
	 	 	3,750	 	 	$	3,750,000.00	 
	General Motors Salaried Employes Pension
Trust – 7N1I
	 	 	2,000	 	 	$	2,000,000.00	 
	Stichting Pensioenfonds Hoogovens
	 	 	1,250	 	 	$	1,250,000.00	 
	Caterpillar Inc. Master Retirement Trust
	 	 	2,500	 	 	$	2,500,000.00	 
	J.C. Penney Corporation, Inc. Pension Plan
Trust
	 	 	3,000	 	 	$	3,000,000.00	 
	Stichting Bewaarder Interpolis Pensioenen Global High Yield Pool
	 	 	3,250	 	 	$	3,250,000.00	 
	Stichting Pensioenfonds voor Fysiotherapeuten
	 	 	1,000	 	 	$	1,000,000.00	 
	Houston Municipal Employees Pension System
	 	 	1,000	 	 	$	1,000,000.00	 
	UAW Retiree Medical Benefits Trust
	 	 	3,750	 	 	$	3,750,000.00	 

 

 

	 	 	 	 	 	 	 	 	 
	Purchaser	 	Shares	 	Share Purchase Price
	DDJ Distressed and Special Situations Fund,
L.P.
	 	 	1,000	 	 	$	1,000,000.00	 
	Russell Investment Company — Russell Global
Opportunistic Credit Fund
	 	 	2,000	 	 	$	2,000,000.00	 
	DDJ Capital Management Group Trust — High
Yield Investment Fund
	 	 	250	 	 	$	250,000.00	 
	JHL Capital Group Master Fund L.P.
	 	 	25,000	 	 	$	25,000,000.00	 
	 	 	 	 	 	 	 
	TOTAL:
	 	 	75,000	 	 	$	75,000,000.00	 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

Exhibit A

Form of Certificate of Designation

[see attached]

 

 

Exhibits B

Form of Registration Rights Amendment and Joinder

[see attached]

 

 

Exhibit C

Form of Tag-Along Agreement

[see attached]

 

 

Exhibit D

Form of Legal Opinion

[see attached]

 

 

Exhibit E

Form of Amendment to Certificate of Designation

[see attached]exv10w3

Exhibit 10.3

Execution Version

First Amendment

to

Securities Purchase Agreement

          This First Amendment (this “Amendment”) to the Purchase Agreement (as defined below),
is entered into as of August 4, 2011, by and among Harbinger Group Inc., Delaware corporation (the
“Company”), Quantum Partners LP (the “Soros Purchaser”), DDJ High Yield Fund, an
entity organized under the laws of the Province of Ontario, Canada, General Motors Hourly-Rate
Employes Pension Trust — 7N1H, a trust maintained by General Motors Corporation, a Delaware
corporation, General Motors Salaried Employes Pension Trust — 7N1I, a trust maintained by General
Motors Corporation, Stichting Pensioenfonds Hoogovens, a Dutch pension plan regulated by the Dutch
Central Bank, Caterpillar Inc. Master Retirement Trust, a trust maintained by Caterpillar, Inc., a
Delaware corporation, J.C. Penney Corporation, Inc. Pension Plan Trust, a trust maintained by J.C.
Penney Corporation, Inc., a Delaware corporation, Stichting Bewaarder Interpolis Pensioenen Global
High Yield Pool, a Dutch tax transparent pool of assets, Stichting Pensioenfonds voor
Fysiotherapeuten, a Dutch pension plan regulated by the Dutch Central Bank, Houston Municipal
Employees Pension System, a pension plan organized pursuant to Texas government code, UAW Retiree
Medical Benefits Trust, a trust consisting of three separate employees’ beneficiary associations,
DDJ Distressed and Special Situations Fund, L.P., a Delaware limited partnership, Russell
Investment Company — Russell Global Opportunistic Credit Fund, a Massachusetts business trust, DDJ
Capital Management Group Trust — High Yield Investment Fund, a trust maintained by The Bank of New
York Mellon, a New York State chartered bank, as trustee (collectively, the “DDJ
Purchasers”), JHL Capital Group Master Fund L.P. (the “JHL Purchaser”), Luxor Capital
Partners, LP, a Delaware limited partnership, Luxor Wavefront, LP, a Delaware limited partnership,
Luxor Capital Partners Offshore Fund, LP, a Cayman Islands limited partnership, OC 19 Master Fund,
L.P. — LCG, a Cayman Islands limited partnership, and GAM Equity Six Inc., a British Virgin Islands
company (collectively, the “Luxor Purchasers”). Capitalized terms used in this Amendment
and not otherwise defined herein shall have the meanings ascribed to them in the Purchase
Agreement.

          WHEREAS, the parties hereto (other than the Luxor Purchasers) entered into that certain
Securities Purchase Agreement, dated as of August 1, 2011 (the “Purchase Agreement”); and

          WHEREAS, in order for the Luxor Purchasers to be joined as Purchasers under the Purchase
Agreement, the parties hereto wish to amend certain provisions of the Purchase Agreement and agree
that all other terms and conditions of the Purchase Agreement otherwise remain unchanged except as
expressly set forth herein.

          NOW THEREFORE, the Purchase Agreement is amended as follows:

          1. The third recital in the Purchase Agreement is hereby amended and restated in their
entirety as follows:

     WHEREAS, the Company has authorized the issuance and sale of 120,000 shares
of Series A-2 Participating Convertible Preferred Stock, par value $0.01 per
share, of the Company (the “Convertible Preferred Stock”), the rights,

 

 

preferences and privileges of which are to be set forth in a Certificate of
Designation, in the form attached hereto as Exhibit A (the “Certificate
of Designation”), which shares of Convertible Preferred Stock shall be
convertible into authorized but unissued shares of Common Stock (as defined
below);

     2. The following definitions set forth in Section 1 of the Purchase Agreement are hereby
amended and restated in their entirety as follows:

     “Purchasers” means, collectively, the Soros Purchaser, the DDJ Purchasers,
the JHL Purchaser and the Luxor Purchasers.

     3. Section 1 of the Purchase Agreement is hereby amended to add the following definition:

     “Luxor Purchasers” shall mean, collectively, Luxor Capital Partners, LP, a Delaware
limited partnership, Luxor Wavefront, LP, a Delaware limited partnership, Luxor Capital
Partners Offshore Fund, LP, a Cayman Islands limited partnership, OC 19 Master Fund, L.P. -
LCG, a Cayman Islands limited partnership, and GAM Equity Six Inc., a British Virgin Islands
company.

          4. Section 5.11 of the Purchase Agreement is hereby deleted in its entirety and replaced with
a reference to “[Reserved.]”

          5. New subsection (e) is hereby added to Section 12.3 of the Purchase Agreement as follows:

               (e) if to the Luxor Purchasers, to:

Luxor Capital Group, LP

1114 Avenue of the Americas, 29th Floor

New York, NY 10036

Attn: Operations Group

Fax: (212) 763-8001

          6. Annex A of the Purchase Agreement is hereby amended and restated in its entirety as set
forth on Exhibit A hereto.

          7. Each of the Luxor Purchasers agrees that upon execution of this Amendment, such Luxor
Purchaser shall become a party to the Purchase Agreement and shall be fully bound by, and subject
to, all of the representations, warranties, covenants, terms and conditions of the Purchase
Agreement as though an original party thereto and shall be deemed a Purchaser for all purposes
thereof and entitled to all the rights incidental thereto.

2

 

          8. Except as expressly amended herein, all provisions of the Purchase Agreement shall remain
in full force and effect.

          9. This Amendment shall be governed by and construed in accordance with the laws of the State
of New York, regardless of the laws that might otherwise govern under applicable principles of
conflicts of law thereof.

          10. This Amendment may be signed in any number of counterparts each of which shall be an
original and all of which shall together constitute one and the same agreement. Any counterpart or
other signature hereupon delivered by facsimile shall be deemed for all purposes as constituting
good and valid execution and delivery of this Amendment by such party.

[Signature Pages Follows]

3

 

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year
first above written.

	 	 	 	 	 
	 	COMPANY:

HARBINGER GROUP INC.

 	 
	 	By:  	/s/ Francis T. McCarron
 	 
	 	 	Name:  	Francis T. McCarron 	 
	 	 	Title:  	Executive Vice President & Chief
Financial Officer 	 
	 

[Signature Page to First Amendment to the Purchase Agreement]

 

 

	 	 	 	 	 
	 	QUANTUM PARTNERS LP

By: QP GP LLC, its General Partner

 	 
	 	By:  	/s/ Jay A. Schoenfarber
 	 
	 	 	Name:  	Jay A. Schoenfarber 	 
	 	 	Title:  	Attorney-in-Fact 	 
	 

[Signature Page to First Amendment to the Purchase Agreement]

 

 

	 	 	 	 	 
	 	JHL CAPITAL GROUP MASTER FUND L.P.

 	 
	 	By:  	/s/ James H. Litinsky
 	 
	 	 	Name:  	James H. Litinsky 	 
	 	 	Title:  	Managing Member

JHL Capital Group LLC 	 
	 

[Signature Page to First Amendment to the Purchase Agreement]

 

 

	 	 	 	 	 
	 	

Caterpillar Inc. Master Retirement Trust

By: DDJ Capital Management, LLC, on behalf of

Caterpillar Inc. Master Retirement Trust, in its

capacity as investment manager

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 
	 	DDJ Capital Management Group Trust — High Yield

Investment Fund

By: DDJ Capital Management, LLC, in its capacity as

Investment Manager

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 
	 	DDJ High Yield Fund

By: DDJ Capital Management, LLC, its attorney-in-fact

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

[Signature Page to First Amendment to the Purchase Agreement]

 

 

	 	 	 	 	 
	 	General Motors Hourly-Rate Employes Pension

Trust — 7N1H

By: State Street Bank and Trust Company, solely in

its capacity as Trustee for General Motors

Hourly-Rate Employes Pension Trust (Account 7N1H),

and not in its individual capacity, as directed by

DDJ Capital Management, LLC, as Investment Manager

 	 
	 	By:  	/s/ Kimberly A. Dinsmore
 	 
	 	 	Name:  	Kimberly A. Dinsmore 	 
	 	 	Title:  	Client Services Officer State Street
Bank and Trust Company 	 
	 
	 	General Motors Salaried Employes Pension Trust —

7N1I

By: State Street Bank and Trust Company, solely in

its capacity as Trustee for General Motors Salaried

Employes Pension Trust (Account 7N1I), and not in its

individual capacity, as directed by DDJ Capital

Management, LLC, as Investment Manager

 	 
	 	By:  	/s/ Kimberly A. Dinsmore
 	 
	 	 	Name:  	Kimberly A. Dinsmore 	 
	 	 	Title:  	Client Services Officer State Street
Bank 

and Trust Company 	 
	 
	 	Houston Municipal Employees Pension System

By: DDJ Capital Management, LLC, in its capacity as

Manager

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

[Signature Page to First Amendment to the Purchase Agreement]

 

 

	 	 	 	 	 
	 	J.C. Penney Corporation, Inc. Pension Plan Trust

By: DDJ Capital Management, LLC, on behalf of J.C.

Penney Corporation, Inc. Pension Plan Trust, in its

capacity as investment manager

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 
	 	Russell Investment Company — Russell Global

Opportunistic Credit Fund

By: DDJ Capital Management, LLC, in its capacity as

Money Manager

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 
	 	Stichting Bewaarder Interpolis Pensioenen

Global High Yield Pool

By: Syntrus Achmea Asset Management, as asset manager

By: DDJ Capital Management, LLC, as subadviser

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 
	 	Stichting Pensioenfonds Hoogovens

By: DDJ Capital Management, LLC, on behalf of

Stichting Pensioenfonds Hoogovens, in its capacity as

Manager

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

[Signature Page to First Amendment to the Purchase Agreement]

 

 

	 	 	 	 	 
	 	Stichting Pensioenfonds voor Fysiotherapeuten

By: DDJ Capital Management, LLC, in its capacity as

investment manager

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 
	 	UAW Retiree Medical Benefits Trust

By: State Street Bank and Trust company, solely in

its capacity as Trustee for UAW Retiree Medical

Benefits Trust, as directed by DDJ Capital

Management, LLC, and not in its individual capacity

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 
	 	DDJ Distressed and Special Situations Fund, L.P.

By: DDJ/GP Distressed and Special Situations, LLC,

its General Partner

By: DDJ Capital Management, LLC, Manager

 	 
	 	By:  	/s/ David J. Breazzano
 	 
	 	 	Name:  	David J. Breazzano 	 
	 	 	Title:  	President 	 
	 

[Signature Page to First Amendment to the Purchase Agreement]

 

 

	 	 	 	 	 
	 	LUXOR CAPITAL PARTNERS, LP

 	 
	 	By:  	/s/ Norris Nissim
 	 
	 	 	Name:  	Norris Nissim 	 
	 	 	Title:  	General Counsel 	 
	 
	 	LUXOR CAPITAL PARTNERS OFFSHORE MASTER FUND, LP

 	 
	 	By:  	/s/ Norris Nissim
 	 
	 	 	Name:  	Norris Nissim 	 
	 	 	Title:  	General Counsel 	 
	 
	 	LUXOR WAVEFRONT, LP

 	 
	 	By:  	

/s/ Norris Nissim
 	 
	 	 	Name:  	Norris Nissim 	 
	 	 	Title:  	General Counsel 	 
	 
	 	GAM EQUITY SIX INC.

 	 
	 	By:  	/s/ Norris Nissim
 	 
	 	 	Name:  	Norris Nissim 	 
	 	 	Title:  	General Counsel 	 
	 
	 	OC 19 MASTER FUND, L.P. — LCG

 	 
	 	By:  	/s/ Norris Nissim
 	 
	 	 	Name:  	Norris Nissim 	 
	 	 	Title:  	General Counsel 	 
	 

[Signature Page to First Amendment to the Purchase Agreement]

 

 

Exhibit A

Annex A

Shares and Purchasers

	 	 	 	 	 	 	 	 	 
	Purchaser	 	Shares	 	Share Purchase Price
	Luxor Capital Partners, LP
	 	 	14,384	 	 	$	14,384,000.00	 
	Luxor Capital Partners Offshore Master Fund, LP
	 	 	22,263	 	 	$	22,263,000.00	 
	Luxor Wavefront, LP
	 	 	5,159	 	 	$	5,159,000.00	 
	OC 19 Master Fund, LP
	 	 	1,603	 	 	$	1,603,000.00	 
	GAM Equity Six, Inc.:
	 	 	1,591	 	 	$	1,591,000.00	 
	Quantum Partners LP
	 	 	25,000	 	 	$	25,000,000.00	 
	DDJ High Yield Fund
	 	 	250	 	 	$	250,000.00	 
	General Motors Hourly-Rate Employes Pension Trust — 7N1H
	 	 	3,750	 	 	$	3,750,000.00	 
	General Motors Salaried Employes Pension Trust — 7N1I
	 	 	2,000	 	 	$	2,000,000.00	 
	Stichting Pensioenfonds Hoogovens
	 	 	1,250	 	 	$	1,250,000.00	 
	Caterpillar Inc. Master Retirement Trust
	 	 	2,500	 	 	$	2,500,000.00	 

 

 

	 	 	 	 	 	 	 	 	 
	Purchaser	 	Shares	 	Share Purchase Price
	J.C. Penney Corporation, Inc. Pension Plan Trust
	 	 	3,000	 	 	$	3,000,000.00	 
	Stichting Bewaarder Interpolis Pensioenen Global High Yield Pool
	 	 	3,250	 	 	$	3,250,000.00	 
	Stichting Pensioenfonds voor Fysiotherapeuten
	 	 	1,000	 	 	$	1,000,000.00	 
	Houston Municipal Employees Pension System
	 	 	1,000	 	 	$	1,000,000.00	 
	UAW Retiree Medical Benefits Trust
	 	 	3,750	 	 	$	3,750,000.00	 
	DDJ Distressed and Special Situations Fund, L.P.
	 	 	1,000	 	 	$	1,000,000.00	 
	Russell Investment Company — Russell Global Opportunistic Credit Fund
	 	 	2,000	 	 	$	2,000,000.00	 
	DDJ Capital Management Group Trust — High Yield Investment Fund
	 	 	250	 	 	$	250,000.00	 
	JHL Capital Group Master Fund L.P.
	 	 	25,000	 	 	$	25,000,000.00	 
	 	 	 	 	 	 	 
	TOTAL:
	 	 	120,000	 	 	$	120,000,000.00

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