Document:

ex_154773.htm

Exhibit 4.1

 

NovaBay Pharmaceuticals, Inc.

 

CERTIFICATE OF DESIGNATION OF PREFERENCES, 

RIGHTS AND LIMITATIONS

OF

SERIES A CONVERTIBLE PREFERRED STOCK

 

 

PURSUANT TO SECTION 151 OF THE

Delaware GENERAL CORPORATION LAW

 

 

        The undersigned, Justin Hall, hereby certifies that:

 

                1. He is the President and Secretary, respectively, of NovaBay Pharmaceuticals, Inc., a Delaware corporation (the “Corporation”).

 

                2. The Corporation is authorized to issue 5,000,000 shares of preferred stock, none of which have been issued.

 

                3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):

 

        WHEREAS, the certificate of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 5,000,000 shares, $0.01 par value per share, issuable from time to time in one or more series;

 

        WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation thereof, of any of them; and

 

        WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a series of the preferred stock, which shall consist of up to 2,700,000 shares of the preferred stock which the Corporation has the authority to issue, as follows:

 

        NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:

 

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TERMS OF PREFERRED STOCK

 

Section 1.      Definitions. For the purposes hereof, the following terms shall have the following meanings:

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.

 

“Alternate Consideration” shall have the meaning set forth in Section 7(c).

 

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 6(d).

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the Corporation’s common stock, par value $0.01 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Corporation which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Conversion Amount” means the sum of the Stated Value at issue.

 

“Conversion Date” shall have the meaning set forth in Section 6(a).

 

“Conversion Price” shall have the meaning set forth in Section 6(b).

 

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance with the terms hereof.

 

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

 

“Fundamental Transaction” shall have the meaning set forth in Section 7(c).

 

“GAAP” means United States generally accepted accounting principles.

 

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“Holder” shall have the meaning given such term in Section 2.

 

“Liquidation” shall have the meaning set forth in Section 5.

 

“New York Courts” shall have the meaning set forth in Section 8(d).

 

“Original Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred Stock.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Preferred Stock” shall have the meaning set forth in Section 2.

 

“Purchase Agreement” means the Securities Purchase Agreement, dated as of the Original Issue Date, among the Corporation and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

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

 

“Share Delivery Date” shall have the meaning set forth in Section 6(c)(i).

 

“Shareholder Approval” means such approval as required by the applicable rules and regulations of the NYSE American from the shareholders of the Corporation with respect to the conversion of all Preferred Stock and issuance of all of the Underlying Shares, in excess of 19.99% of the issued and outstanding shares of Common Stock on the date of the Purchase Agreement.

 

“Stated Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.

 

“Successor Entity” shall have the meaning set forth in Section 7(c).

 

“Trading Day” means a day on which the principal Trading Market is open for business.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

 

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“Transfer Agent” means Computershare Shareholder Services, Inc., located in Providence, Rhode Island, Providence County, as the transfer agent and registrar of the Corporation in the United States, and Computershare Investor Services, Inc., located in Toronto, Ontario, Canada, as the co-transfer agent and registrar of the Corporation, and and any successor transfer agent of the Corporation.

 

“Underlying Shares” means the shares of Common Stock issuable upon conversion of the Preferred Stock.

 

Section 2.      Designation, Amount and Par Value. The series of preferred stock shall be designated as Series A Convertible Preferred Stock (the “Preferred Stock”) and the number of shares so designated shall be 2,700,000 (which shall not be subject to increase without the written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)). Each share of Preferred Stock shall have a par value of $0.01 per share and a stated value equal to $1.00, subject to increase set forth in Section 3 below (the “Stated Value”).

 

Section 3.      Dividends. Except for stock dividends or distributions for which adjustments are to be made pursuant to Section 7, Holders shall be entitled to receive, and the Corporation shall pay, dividends on shares of Preferred Stock equal (on an as if converted to Common Stock basis, disregarding for such purpose any conversion limitations hereunder) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of Preferred Stock. The Corporation shall not pay any dividends on the Common Stock unless the Corporation simultaneously complies with this provision.

 

Section 4.      Voting Rights. Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have no voting rights. However, as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders, or (c) increase the number of authorized shares of Preferred Stock.

 

Section 5.      Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder of Common Stock would receive if the Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock. The Corporation shall deliver written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

 

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Section 6.      Conversion.

 

a)     Automatic Conversion of Preferred Stock. Prior to Shareholder Approval, the Preferred Stock is non-convertible. As of the close of business on the date of the Shareholder Approval (the “Conversion Date”), each share of the Preferred Stock shall convert, automatically and without any action by any person, into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion Price.

 

b)     Conversion Price. The conversion price for the Preferred Stock shall equal $1.00, subject to adjustment as provided herein (the “Conversion Price”).

 

	 	
			c)

				
			Mechanics of Conversion

			

 

i.     Delivery of Conversion Shares Upon Conversion. Promptly following the Conversion Date, but not later than seven (7) Trading Days after the Conversion Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to each Holder of Preferred Stock (A) the number of Conversion Shares to be issued upon the conversion of the Preferred Stock as provided herein, which Conversion Shares, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the date a registration statement covering the resale of such shares by the Holder is declared effective by the Commission, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) shall be free of restrictive legends and trading restrictions, and (B) a bank check in the amount of accrued and unpaid dividends, if any. When delivering the Conversion Shares as provided herein, the Corporation shall use commercially reasonable efforts to deliver the Conversion Shares required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established clearing corporation performing similar functions, unless otherwise agreed to with the Holders.

 

ii.     Obligation Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder. Nothing herein shall limit a Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

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iii.     Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding shares of Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

iv.     Fractional Shares. No fractional shares or scrip representing fractional Conversion Shares shall be issued upon the conversion of the Preferred Stock. As to any fraction of a share which the Holder would otherwise be entitled to receive upon such conversion, the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

 

v.     Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any valid transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name of any Person other than that of the Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required for same-day processing and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares, in each case, to the extent available.

 

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d)     Beneficial Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and a Holder shall not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to such conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates (such Persons, “Attribution Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock) beneficially owned by such Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies, the determination of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates and Attribution Parties) and of how many shares of Preferred Stock are convertible up to the Beneficial Ownership Limitation shall be in the sole discretion of such Holder as such Holder in good faith notifies the Corporation in writing. The Corporation shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request (which may be via email) of a Holder, the Corporation shall within one Trading Day confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including the Preferred Stock, by such Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any shares of Preferred Stock, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Preferred Stock held by the applicable Holder. A Holder, upon written notice to the Corporation, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Preferred Stock held by the Holder and the provisions of this Section 6(d) shall continue to apply. Any such increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Corporation and shall only apply to such Holder and no other Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.

 

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Section 7.      Certain Adjustments.

 

a)     Stock Dividends and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)     Pro Rata Distributions. During such time as this Preferred Stock is outstanding, if the Corporation declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Preferred Stock (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

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c)     Fundamental Transaction. If, at any time while this Preferred Stock is outstanding prior to its conversion, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of this Preferred Stock), the number of shares of Common Stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable, if any, as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Preferred Stock is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of this Preferred Stock). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration, if any, based on the amount of any such Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation under this Certificate of Designation in accordance with the provisions of this Section 7(c) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Preferred Stock which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Preferred Stock (without regard to any limitations on the conversion of this Preferred Stock) prior to such Fundamental Transaction, and with a Conversion Price which applies the Conversion Price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock and, such number of shares of capital stock and such Conversion Price being for the purpose of protecting the economic value of this Preferred Stock immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate of Designation with the same effect as if such Successor Entity had been named as the Corporation herein.

 

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d)     Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

 

e)     Notice to the Holders. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder by facsimile or email a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

Section 8.     Miscellaneous.

 

a)     Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at the address set forth above Attention: Corporate Secretary, facsimile number (510) 225-0371, e-mail address jhall@novabay.com, or such other facsimile number, e-mail address or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 8. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the Corporation. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or e-mail at the e-mail address set forth in this Section 8 prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

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b)     Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, and accrued dividends, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.

 

c)     Lost or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate (to the extent issued to a Holder) shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

 

d)     Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware without regard to the principles of conflict of laws thereof. All legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Certificate of Designation (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). The Corporation and each Holder hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. The Corporation and each Holder hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. The Corporation and each Holder hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Certificate of Designation or the transactions contemplated hereby. If the Corporation or any Holder shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

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e)     Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.

 

f)     Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

 

g)     Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

h)     Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.

 

i)     Status of Converted or Redeemed Preferred Stock. If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series A Convertible Preferred Stock.

 

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RESOLVED, FURTHER, the President and Secretary of the Corporation be and hereby is authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and the provisions of Delaware law.

 

        IN WITNESS WHEREOF, the undersigned has executed this Certificate this 12th day of August, 2019.

 

	 	
			 /s/ Justin Hall

			
	
			Name:

				
			Justin Hall

			
	
			Title:

				
			President & Chief Executive Officer,

			General Counsel and Secretary

			

 

13Exhibit

Exhibit 4.1

CERTIFICATE OF DESIGNATION
OF
5.625% PERPETUAL NON-CUMULATIVE PREFERENCE SHARES
OF
ASPEN INSURANCE HOLDINGS LIMITED
ASPEN INSURANCE HOLDINGS LIMITED, a Bermuda company (the “Company”), HEREBY CERTIFIES that pursuant to resolutions of duly authorized Directors adopted on May 29, 2019, the creation of the 5.625% Perpetual Non-Cumulative Preference Shares, with a liquidation preference of $25,000 per share (the “Preference Shares”) were authorized and the designations, preferences and privileges, voting rights, relative, participating, optional and other special rights, and qualifications, limitations and restrictions of the Preference Shares, in addition to those set forth in the Memorandum of Association and Bye-Laws of the Company, were fixed as follows:
Section 1.Designation; Amount of Shares.  The designation of this series of Preference Shares shall be “5.625% Perpetual Non-Cumulative Preference Shares,” and the number of shares constituting this series shall be 10,000; provided that, if the Company elects to issue additional Preference Shares after the date of this Certificate of Designation, any such additional shares are not treated as “disqualified preferred stock” within the meaning of Section 1059(f)(2) of the United States Internal Revenue Code of 1986, as amended, and such additional shares are otherwise treated as fungible with the Preference Shares for United States federal income tax purposes. The additional shares would form a single series with the Preference Shares. The Preference Shares shall have a liquidation preference of $25,000 per Preference Share (the “Liquidation Preference”). Each Preference Share shall be identical in all respects to every other Preference Share, except for the issue price, date of issuance and, in some cases, the initial Dividend Payment Date (as defined in Section 4(a)). Any Preference Shares retired by purchase or redemption, or otherwise acquired by the Company, will have the status of authorized but unissued Preference Shares and may be reissued as part of the same class or series or may be reclassified and reissued by the Board of Directors in the same manner as any other authorized and unissued shares. The number of authorized Preference Shares may be reduced (but not below the number of Preference Shares then in issue) by further resolution duly adopted by the Board of Directors.  No such reduction shall affect the due authorization of any Preference Shares in issue.
Section 2.    Definitions.  As used herein with respect to the Preference Shares:
(a)    “5.625% Perpetual Preference Shares” means the 5.625% Perpetual Non-Cumulative Preference Shares, par value 0.15144558¢ per share, of the Company designated as the 5.625% Perpetual Non-Cumulative Preference Shares.
(b)    “5.95% Perpetual Preference Shares” means the 5.95% Fixed-to-Floating Rate Perpetual Non-Cumulative Preference Shares, par value 0.15144558¢ per share, of the Company designated as the 5.95% Fixed-to-Floating Rate Perpetual Non-Cumulative Preference Shares.
(c)    “Additional Amounts” has the meaning assigned to such term in Section 5(a).
(d)    “Agent Members” has the meaning assigned to such term in Section 14(a).
(e)    “Applicable Supervisory Regulations” means such insurance supervisory laws, rules and regulations relating to group supervision or the supervision of single insurance entities, as applicable, which are applicable to the Company or the Insurance Group, and which shall initially mean the Group Rules until such time when the BMA no longer has jurisdiction or responsibility to regulate the Company or the Insurance Group.
(f)    “Appointing Preference Shares” means any other class or series of preference shares of the Company, including the 5.625% Perpetual Preference Shares and the 5.95% Perpetual Preference Shares, ranking equally with the Preference Shares either as to dividend rights or rights upon liquidation, winding-up or dissolution and upon which like Appointing Rights have been conferred and are exercisable.
(g)    “Appointing Rights” has the meaning assigned to such term in Section 10(b).
(h)    “BMA” means the Bermuda Monetary Authority, or, should the Bermuda Monetary Authority no longer have jurisdiction or responsibility to regulate the Company or the Insurance Group, as the context requires, a regulator which is otherwise subject to Applicable Supervisory Regulations.
(i)    “Board of Directors” means the Board of Directors of the Company.
(j)    “Business Day” means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law or executive order to close.
(k)    “Bye-Laws” means the amended and restated bye-laws of the Company, as they may be amended from time to time.
(l)    “Capital Adequacy Regulations” means the solvency margins, capital adequacy regulations or any other regulatory capital rules applicable to the Company from time to time on an individual or group basis pursuant to Bermuda law and/or the laws of any other relevant jurisdiction and which set out the requirements to be satisfied by financial instruments to qualify as solvency margin or additional solvency margin or regulatory capital (or any equivalent terminology employed by the then-applicable capital adequacy regulations).
(m)    “Capital Disqualification Change Event” means that the Preference Shares do not qualify, in whole or in part (including as a result of any transitional or grandfathering provisions or otherwise), for purposes of determining the solvency margin, capital adequacy ratios or any other comparable ratios, regulatory capital resource or level, of the Company or any subsidiary thereof, where capital is subdivided into tiers, as Tier 2 capital securities under then-applicable Capital Adequacy Regulations imposed upon the Company by the BMA, which would include, without limitation, the Company’s Enhanced Capital Requirement, except as a result of any applicable limitation on the amount of such capital.
(n)    “Capital Disqualification Redemption Event” means that the Preference Shares qualify, in whole or in part (including as a result of any transitional or grandfathering provisions or otherwise), for purposes of determining the solvency margin, capital adequacy ratios or any other comparable ratios, regulatory capital resource or level, of the Company or any subsidiary thereof, where capital is subdivided into tiers, as neither Tier 1 nor Tier 2 capital securities under then-applicable Capital Adequacy Regulations imposed upon the Company by the BMA, which would include, without limitation, the Company’s Enhanced Capital Requirement, except as a result of any applicable limitation on the amount of such capital.
(o)    “Certificate of Designation” means this Certificate of Designation relating to the Preference Shares, as it may be amended from time to time.
(p)    “Change in Tax Law” means (a) a change in or amendment to laws, regulations or rulings of any Relevant Taxing Jurisdiction, (b) a change in the official application or interpretation of those laws, regulations or rulings, (c) any execution of or amendment to any treaty affecting taxation to which any Relevant Taxing Jurisdiction is party after August 6, 2019, or (d) a decision rendered by a court of competent jurisdiction in any Relevant Taxing Jurisdiction, whether or not such decision was rendered with respect to the Company, in each case, described in (a)-(d) above occurring after August 6, 2019; provided, however, that in the case of a Relevant Taxing Jurisdiction other than Bermuda in which a Successor Corporation is organized, such Change in Tax Law must occur after the Succession Date.
(q)    “Dividend Payment Date” has the meaning assigned to such term in Section 4(a).
(r)    “Dividend Period” has the meaning assigned to such term in Section 4(a).
(s)    “Dividend Record Date” has the meaning assigned to such term in Section 4(a).
(t)    “Enhanced Capital Requirement” means the enhanced capital and surplus requirement applicable to the Insurance Group and as defined in the Insurance Act or, should the Insurance Act or the Group Rules no longer apply to the Insurance Group, any and all other solvency capital requirements or any other requirement to maintain assets applicable to the Company or in respect of the Insurance Group, as applicable, pursuant to the Applicable Supervisory Regulations.
(u)    “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
(v)    “Global Preference Shares” has the meaning assigned to such term in Section 14(a).
(w)    “Group Rules” means the Group Solvency Standards, together with the Group Supervision Rules.
(x)    “Group Solvency Standards” means the Bermuda Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Rules 2011, as those rules and regulations may be amended or replaced from time to time.
(y)    “Group Supervision Rules” means the Bermuda Insurance (Group Supervision) Rules 2011, as those rules and regulations may be amended or replaced from time to time.
(z)    “Insurance Act” means the Insurance Act 1978 of Bermuda, as amended from time to time.
(aa)    “Insurance Group” means all subsidiaries of the Company that are regulated insurance or reinsurance companies (or part of such regulatory group) pursuant to the Applicable Supervisory Regulations.
(bb)    “Issue Date” means August 13, 2019, the original date of issuance of the Preference Shares.
(cc)    “Junior Stock” means any class or series of capital stock of the Company, including the Company’s Ordinary Shares, that ranks junior to the Preference Shares either as to the payment of dividends or as to the distribution of assets upon any liquidation, dissolution or winding-up of the Company.
(dd)    “Liquidation Distribution” has the meaning assigned to such term in Section 6(a).
(ee)    “Liquidation Preference” has the meaning assigned to such term in Section 1.
(ff)    “Memorandum of Association” means the memorandum of association of the Company, as it may be amended from time to time.
(gg)    “Nonpayment” has the meaning assigned to such term in Section 10(b).
(hh)    “Ordinary Shares” means the Ordinary Shares, par value $0.01 per share, of the Company, or any other class of shares resulting from successive changes or reclassifications of such Ordinary Shares consisting solely of changes in par value, or from par value to no par value, or as a result of a subdivision, combination, merger, consolidation or similar transaction in which the Company is a constituent corporation.
(ii)    “Parity Stock” means any class or series of capital stock of the Company that ranks equally with the Preference Shares as to payment of dividends and the distribution of assets on any liquidation, dissolution or winding-up of the Company, including the 5.625% Perpetual Preference Shares and the 5.95% Perpetual Preference Shares.
(jj)    “Paying Agent” initially means Computershare Trust Company, N.A.  The Company may, in its sole discretion, remove the Paying Agent within ten (10) calendar days prior notice to the Paying Agent; provided that the Company shall appoint a successor Paying Agent who shall accept such appointment prior to the effectiveness of such removal.
(kk)    “Preference Share Director” has the meaning assigned to such term in Section 10(b).
(ll)    “Preference Shares” has the meaning assigned to such term in the recitals.
(mm)    “Rating Agency Event” means any nationally recognized statistical rating organization, as defined in Section 3(a)(62) of the Exchange Act, that then publishes a rating for the Company (a “Rating Agency”) amends, clarifies or changes the criteria it uses to assign equity credit to securities such as the Preference Shares, which amendment, clarification or change results in (1) the shortening of the length of time the Preference Shares are assigned a particular level of equity credit by that Rating Agency as compared to the length of time they would have been assigned that level of equity credit by that Rating Agency or its predecessor on the initial issuance of the Preference Shares; or (2) the lowering of the equity credit (including up to a lesser amount) assigned to the Preference Shares by that Rating Agency as compared to the equity credit assigned by that Rating Agency or its predecessor on the initial issuance of the Preference Shares.
(nn)    “Redemption Date” means, in the case of an optional redemption, the day specified in the Company’s notice of redemption.
(oo)    “Redemption Requirements has the meaning assigned to such term in Section 7(a)(1).
(pp)    “Register of Members” means the Register of Members of the Company.
(qq)    “Registrar” initially means Computershare Trust Company, N.A. The Company may, in its sole discretion, remove the Registrar within ten (10) calendar days prior notice to the Registrar; provided that the Company shall appoint a successor Registrar who shall accept such appointment prior to the effectiveness of such removal.
(rr)    “Relevant Date” means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the dividend disbursing agent on or prior to such due date, it means the first date on which the full amount of such moneys has been so received and is available for payment to holders, and notice to that effect shall have been duly given to the holders of the Preference Shares.
(ss)    “Relevant Taxing Jurisdiction” means (a) Bermuda or any political subdivision or governmental authority of or in Bermuda with the power to tax, (b) any jurisdiction from or through which the Company or its dividend disbursing agent are making payments on the Preference Shares or any political subdivision or governmental authority of or in that jurisdiction with the power to tax or (c) any other jurisdiction in which the Company or a Successor Corporation is organized or generally subject to taxation on a net income basis or any political subdivision or governmental authority of or in that jurisdiction with the power to tax.
(tt)    “Senior Stock” means any class of share capital or series of capital stock of the Company established after the Issue Date by the Board of Directors, that ranks senior to the Preference Shares as to payment of dividends and the distribution of assets on any liquidation, dissolution or winding-up of the Company.
(uu)    “set aside for payment” means, without any action other than the following, the recording by the Company in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of a dividend or other distribution by the Board of Directors, the allocation of the funds to be so paid on any class or series of the Company’s shares; provided, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Company or delivered to a disbursing, paying or other similar agent, then “set aside for payment” with respect to the Preference Shares shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.
(vv)    “Succession Date” means the date on which the Company consolidates, merges or amalgamates with a Successor Corporation or conveys, transfers or leases substantially all its properties and assets to a Successor Corporation.
(ww)    “Successor Corporation” has the meaning assigned to such term in the definition of Tax Event.
(xx)    “Tax Event” means a Change in Tax Law that, in the Company’s reasonable determination, results in a substantial probability that the Company or any entity formed by a consolidation, merger or amalgamation involving the Company or the entity to which the Company conveys, transfers or leases substantially all its properties and assets (a “Successor Corporation”) would be required to pay any Additional Amounts with respect to the Preference Shares, which obligation cannot be avoided by the Company through reasonable measures.
Section 3.    Ranking.  The Preference Shares shall, with respect to dividend rights or rights upon the liquidation, winding-up or dissolution of the Company, rank (a) senior to all Junior Stock, including, without limitation, the Ordinary Shares, (b) on parity with all Parity Stock, including, without limitation, the 5.625% Perpetual Preference Shares and the 5.95% Perpetual Preference Shares, (c) junior to any Senior Stock and (d) junior to all of the Company’s existing and future debt obligations. The Preference Shares shall also be subordinated in right of payment to all obligations of the Company’s subsidiaries, including all existing and future policyholders’ obligations of such subsidiaries.
Section 4.    Dividends.
(a)    Rate and Payment of Dividends.
The holders of Preference Shares shall be entitled to receive, only when, as and if declared by the Board of Directors, subject to compliance with Bermuda law, non-cumulative cash dividends from, and including, the Issue Date, quarterly in arrears, on January 1, April 1, July 1 and October 1 of each year (each, a “Dividend Payment Date”), commencing on October 1, 2019, without accumulation of any undeclared dividends.
To the extent declared, dividends shall accumulate, with respect to each Dividend Period, in an amount per share equal to 5.625% of the Liquidation Preference per Preference Share per annum.  Dividends payable on the Preference Shares shall be computed on the basis of a 360-day year consisting of twelve 30-day months with respect to a full Dividend Period, and on the basis of the actual number of days elapsed during such Dividend Period with respect to a Dividend Period other than a full Dividend Period.
Dividends that are payable on Preference Shares on any Dividend Payment Date shall be payable to holders of record of Preference Shares as they appear on the Register of Members at 5:00 p.m. (New York City time) on the immediately preceding December 15, March 15, June 15 and September 15 (each, a “Dividend Record Date”). The Dividend Record Dates shall apply regardless of whether a particular Dividend Record Date is a Business Day.
A dividend period (each, a “Dividend Period”) is the period from, and including, a Dividend Payment Date to, but excluding, the next Dividend Payment Date, except that the initial Dividend Period shall commence on, and include, the Issue Date and shall end on, and exclude, the October 1, 2019 Dividend Payment Date. If any date on which dividends would otherwise be payable is not a Business Day, then the Dividend Payment Date shall be the next succeeding Business Day after the original Dividend Payment Date, and no additional dividends shall accumulate on the amount so payable as a result of the delay.
If a Redemption Date falls on a day that is not a Business Day, the payment of dividends and redemption price shall be made on the first Business Day following such Redemption Date, without accrual to the actual payment date.
Dividends on the Preference Shares are non-cumulative. Consequently, if the Board of Directors does not authorize and declare a dividend for any Dividend Period, holders of the Preference Shares will not be entitled to receive a dividend for such Dividend Period, and such undeclared dividend will not accumulate and will not be payable. The Company will have no obligation to pay dividends for a Dividend Period after the Dividend Payment Date for such Dividend Period if the Board of Directors has not declared such dividend before the related Dividend Payment Date, whether or not dividends are declared for any subsequent Dividend Period with respect to the Preference Shares.
Holders of Preference Shares shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends, if any, declared and payable on the Preference Shares as specified in this Section 4.
(b)    Priority of Dividends.  So long as any Preference Shares remain in issue for any Dividend Period, unless the full dividends for the latest completed Dividend Period on all issued Preference Shares and the latest completed dividend period on all issued Parity Stock have been declared and paid or declared and a sum sufficient for the payment thereof has been set aside:
(1)    no dividend shall be paid or declared on the Ordinary Shares or any other shares of Junior Stock or Parity Stock (except in the case of the Parity Stock on a pro rata basis with the Preference Shares as described below), other than a dividend payable solely in Ordinary Shares, other Junior Stock or Parity Stock, as applicable, and
(2)    no Ordinary Shares, other Junior Stock or Parity Stock shall be purchased, redeemed or otherwise acquired for consideration by the Company, directly or indirectly (other than (a) as a result of a reclassification of Junior Stock for or into other Junior Stock, or a reclassification of Parity Stock for or into other Parity Stock, as applicable, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, or the exchange or conversion of one share of Parity Stock for or into another share of Parity Stock, as applicable, (b) through the use of the proceeds of a substantially contemporaneous sale of Junior Stock or Parity Stock, as applicable, (c) as required by or necessary to fulfill the terms of any employment contract, benefit plan or similar arrangement with or for the benefit of one or more employees, directors or consultants of (d) in the case of Parity Stock, in accordance with the provisions of Section 7(a)(6)). 
When dividends are not paid or duly provided for in full on any Dividend Payment Date upon the Preference Shares and any shares of Parity Stock, all dividends declared upon the Preference Shares and all such Parity Stock and payable on such Dividend Payment Date shall be declared on a pro rata basis so that the respective amounts of such dividends shall bear the same ratio to each other as the full amount of dividends payable on the issued Preference Shares for such Dividend Period and the accumulated and unpaid dividends, or the full amount of dividends payable for such Dividend Period in the case of non-cumulative preferred stock, on all such Parity Stock bear to each other. In the case of any Parity Stock having dividend payment dates different from the Dividend Payment Dates pertaining to the Preference Shares, the measurement date for such Parity Stock shall be the Dividend Payment Date falling within the related Dividend Period for the Preference Shares.
Section 5.    Payment of Additional Amounts.
(a)    The Company shall make all payments on the Preference Shares free and clear of and without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of any Relevant Taxing Jurisdiction, unless such taxes, fees, duties, assessments or governmental charges are required to be withheld or deducted by (x) the laws (or any regulations or rulings promulgated thereunder) of any Relevant Taxing Jurisdiction or (y) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in any Relevant Taxing Jurisdiction). If a withholding or deduction at source is required, the Company shall, subject to certain limitations and exceptions described below, pay to the holders or beneficial owners of the Preference Shares such additional amounts (the “Additional Amounts”) as may be necessary so that every net payment made to such holders or beneficial owners, after the withholding or deduction, shall not be less than the amount provided for in this Certificate of Designation to be then due and payable.
(b)    The Company shall not be required to pay any Additional Amounts for or on account of:
(1)    any tax, fee, duty, assessment or governmental charge of whatever nature that would not have been imposed but for the fact that such holder or beneficial owner (i) was a resident, citizen, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the Relevant Taxing Jurisdiction or otherwise had some connection with the Relevant Taxing Jurisdiction other than by reason of the mere ownership of, or receipt of payment under, such Preference Shares or (ii) presented, where presentation is required, such Preference Shares for payment more than 30 days after the Relevant Date, except to the extent that the holder or beneficial owner would have been entitled to such Additional Amounts if it had presented such Preference Shares for payment on any day within that 30-day period;
(2)    any estate, inheritance, gift, sale, transfer, personal property or similar tax, fee, duty, assessment or other governmental charge;
(3)    any tax, fee, duty, assessment or other governmental charge that is payable otherwise than by withholding or deduction from payment on the Preference Shares;
(4)    any tax, fee, duty, assessment or other governmental charge that is imposed or withheld by reason of the failure by the holder or beneficial owner of such Preference Shares to comply with any reasonable request by the Company addressed to the holder within ninety (90) days of such request (a) to provide information concerning the nationality, citizenship, residence or identity of the holder or beneficial owner or (b) to make any declaration or other similar claim or satisfy any information or reporting requirement, which is required or imposed by statute, treaty, regulation or administrative practice of the Relevant Taxing Jurisdiction or any political subdivision thereof as a precondition to exemption from all or part of such tax, fee, duty, assessment or other governmental charge;
(5)    any taxes, duties, assessments or governmental charges required to be withheld or deducted under Sections 1471 through 1474 of the United States Internal Revenue Code of 1986, as amended (or any United States Treasury Regulations or other administrative guidance thereunder); or
(6)    any combination of items (1), (2), (3), (4) and (5).
(c)    The Company shall not pay Additional Amounts with respect to any payment on any such Preference Shares to any holder or beneficial owner who is a fiduciary, partnership, limited liability company or other pass-through entity or a person other than the sole beneficial owner of such Preference Shares if such payment would be required by the laws of the Relevant Taxing Jurisdiction to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership, limited liability company or other pass-through entity or a beneficial owner to the extent such beneficiary, settlor, member or beneficial owner would not have been entitled to such Additional Amounts had it been the holder or beneficial owner of the Preference Shares.
(d)    If a payment on the Preference Shares is subject to withholding or deduction for, or on account of, any taxes or other governmental charges imposed or levied by or on behalf of any Relevant Taxing Jurisdiction, the Company shall pay the taxes or other governmental charges to the Relevant Taxing Jurisdiction in accordance with applicable law and furnish to the dividend disbursing agent certified copies of tax receipts (or other evidence of payment reasonably satisfactory to the dividend disbursing agent) evidencing payment of the taxes or other governmental charges. Copies of such documentation will be made available by the dividend disbursing agent to holders of the Preference Shares upon written request.
(e)    The requirement to pay Additional Amounts shall apply to any Successor Corporation.
Section 6.    Liquidation Rights.
(a)    Voluntary or Involuntary Liquidation.  In the event of any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Preference Shares shall be entitled to receive out of the Company’s assets legally available for distribution to shareholders, after satisfaction of indebtedness and other liabilities of the Company (including policyholder obligations of its subsidiaries), if any, the Liquidation Preference, plus declared and unpaid dividends thereon, if any, to, but excluding, the date fixed for distribution, without accumulation of any undeclared dividends (the “Liquidation Distribution”), before any distribution of assets is made to holders of Ordinary Shares, or any of the Company’s other Junior Stock.
After the payment to the holders of the Preference Shares of the Liquidation Distribution to which such holders are entitled as provided in this Section 6, the holders of the Preference Shares shall have no right or claim to any of the remaining assets of the Company.
(b)    Partial Payment.  In the event the Company’s assets are not sufficient to pay the Liquidation Preference in full to all holders of the Preference Shares and the liquidation preference of any Parity Stock to all holders of such Parity Stock, the amounts paid to the holders of Preference Shares and to the holders of any Parity Stock shall be paid pro rata in accordance with the respective aggregate liquidation preferences of those holders.
(c)    Residual Distributions.  In the event the Liquidation Preference has been paid in full to all holders of the Preference Shares and any holders of any Parity Stock, the holders of the Company’s other capital stock shall be entitled to receive all of the Company’s remaining assets according to their respective rights and preferences.
(d)    Merger, Consolidation and Sale of Assets Not Liquidation.  For purposes of this Section 6, neither a consolidation, amalgamation, merger, arrangement or reconstruction involving the Company or the sale or transfer of all or substantially all of the shares of capital stock or the property or business of the Company shall be deemed to constitute a liquidation, dissolution or winding-up of the Company.
Section 7.    Redemption.
(a)    Optional Redemption.
(1)    The Company may not redeem Preference Shares prior to October 1, 2024, except as provided in Sections 7(a)(2), 7(a)(3), 7(a)(4) and 7(a)(5). On October 1, 2024 and at any time thereafter, the Preference Shares shall be redeemable at the Company’s option, subject to compliance with Bermuda law, in whole or from time to time in part, upon notice given as provided in Section 7(c), at a cash redemption price equal to $25,000 per Preference Share, plus an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period, if any, to, but excluding, the Redemption Date, without accumulation of any undeclared dividends.
(2)    At any time prior to October 1, 2024, if (i) the Company submits to the holders of its Ordinary Shares a proposal for an amalgamation or merger, or (ii) if the Company submits any proposal for any other matter that requires, as a result of any change in Bermuda law after August 6, 2019, for its validation or effectuation an affirmative vote of the holders of the Preference Shares at the time in issue, whether voting as a separate series or together with any other series or class of preference shares as a single class, the Company shall have the option, subject to compliance with Bermuda law, upon notice given as provided in Section 7(c), to redeem all of the issued Preference Shares at a cash redemption price of $26,000 per Preference Share, plus an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period, if any, to, but excluding, the Redemption Date, without accumulation of any undeclared dividends; provided that no such redemption shall occur prior to October 1, 2024 unless (1) the Company has sufficient funds in order to meet the Enhanced Capital Requirement and the BMA approves of the redemption or (2) the Company replaces the capital represented by Preference Shares to be redeemed with capital having equal or better capital treatment as the Preference Shares under the Enhanced Capital Requirement (the conditions described in clauses (1) and (2), the “Redemption Requirements”).
(3)    At any time prior to October 1, 2024, the Preference Shares shall be redeemable at the Company’s option, subject to compliance with Bermuda law, in whole or from time to time in part, upon notice given as provided in Section 7(c), at a cash redemption price equal to $25,000 per Preference Share, plus an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period, if any, to, but excluding, the Redemption Date, without accumulation of any undeclared dividends, at any time within 90 days of the date on which the Company has reasonably determined that, as a result of (i) any amendment to, or change in, the laws or regulations of Bermuda that is enacted or becomes effective after the Issue Date; (ii) any proposed amendment to, or change in, those laws or regulations that is announced or becomes effective after the Issue Date; or (iii) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the Issue Date, a Capital Disqualification Redemption Event has occurred; provided that any such redemption in part may only be made if (x) the Company has reasonably determined that the portion of the Preference Shares to be redeemed are the subject of the Capital Disqualification Redemption Event and (y) after giving effect to such redemption, the Company has reasonably determined that a Capital Disqualification Redemption Event will not exist with respect to the then-issued Preference Shares and such redemption will not result in the suspension or removal of the Preference Shares from listing on the New York Stock Exchange; provided further that no such redemption may occur prior to October 1, 2024 unless one of the Redemption Requirements is satisfied.
(4)    At any time prior to October 1, 2024, the Preference Shares shall be redeemable at the Company’s option, subject to compliance with Bermuda law, in whole or from time to time in part, upon notice given as provided in Section 7(c), at a cash redemption price equal to $25,000 per Preference Share, plus an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period, if any, to, but excluding, the Redemption Date, without accumulation of any undeclared dividends, at any time following the occurrence of a Tax Event; provided that no such redemption may occur prior to October 1, 2024 unless one of the Redemption Requirements is satisfied.
(5)    At any time prior to October 1, 2024, the Preference Shares shall be redeemable at the Company’s option, subject to compliance with Bermuda law, in whole, upon notice given as provided in Section 7(c), at a cash redemption price of $25,500 per Preference Share, plus an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period, if any, to, but excluding, the Redemption Date, without accumulation of any undeclared dividends, within 90 days after the occurrence of a Rating Agency Event; provided that no such redemption may occur prior to October 1, 2024 unless one of the Redemption Requirements is satisfied.
(6)    Unless dividends on all issued Preference Shares and all Parity Stock shall have been declared and paid (or declared and a sum sufficient for the payment thereof set apart for payment) for the latest completed Dividend Period on all issued Preference Shares and the latest completed dividend period on all issued Parity Stock, no Preference Shares or any Parity Stock shall be redeemed, purchased or otherwise acquired by the Company unless all issued Preference Shares and any Parity Stock are redeemed (or purchased or otherwise acquired); provided, that the Company may acquire fewer than all of the issued Preference Shares or Parity Stock pursuant to a written purchase or exchange offer made to all holders of issued Preference Shares and Parity Stock upon such terms as the Board of Directors in its sole discretion, after consideration of the respective annual dividend rate and other relative rights and preferences of the respective classes or series, shall determine (which determination shall be final and conclusive) will result in fair and equitable treatment among the respective classes or series.
(b)    No Mandatory Redemption; No Sinking Fund.  The Preference Shares shall not be subject to any mandatory redemption, sinking fund, retirement fund or purchase fund or other similar provisions. Holders of Preference Shares shall have no right to require redemption or repurchase of any Preference Shares.
(c)    Notice of Redemption.  Notice of each redemption of Preference Shares shall be given by first class mail, to the holders of record of the Preference Shares to be redeemed, not less than 30 nor more than 60 days prior to the Redemption Date. Notwithstanding the foregoing, if the Preference Shares or any depositary shares representing interests in the Preference Shares are held in book-entry form through The Depository Trust Company, notice of redemption may be given to the holders of Preference Shares in any manner permitted by The Depository Trust Company. Each such notice given to a holder shall state: (1) the Redemption Date; (1) the number of Preference Shares to be redeemed and, if less than all of the Preference Shares held by such holder are to be redeemed, the number of such Preference Shares to be redeemed from such holder; (1) the redemption price or the methodology for determining the redemption price; and (1) the place or places where certificates for such Preference Shares are to be surrendered for payment of the redemption price.
(d)    Partial Redemption.  In case of any redemption of only part of the Preference Shares at the time in issue, the Preference Shares to be redeemed shall be selected either pro rata or in such other manner as the Company may determine to be fair and equitable.
(e)    Effectiveness of Redemption.  If a notice of redemption has been duly given and if all funds necessary for the redemption have been set aside for payment by the Company for the benefit of the holders of any Preference Shares called for redemption, then, from and after the Redemption Date, dividends shall cease to accumulate on all Preference Shares so called for redemption, all Preference Shares so called for redemption shall no longer be deemed in issue and all rights of holders of such Preference Shares shall forthwith on such Redemption Date cease and terminate, except the right of the holders thereof to transfer the Preference Shares prior to the Redemption Date and the right to receive the redemption price pursuant to Section 7(a).
(f)    Payment of Redemption Price.  On or prior to the Redemption Date, the Company shall deposit with the Paying Agent an amount in immediately available funds sufficient to pay the aggregate redemption price plus an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period, if any; provided that if such payment is deposited on the Redemption Date, it must be received by the Paying Agent by 10:00 a.m. (New York City time) on the Redemption Date.  An amount equal to the redemption price plus an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period, if any, shall be paid to the holders promptly following the later of (i) the Redemption Date and (ii) the time of book-entry transfer or surrender of the certificate(s) evidencing such Preference Shares to the Paying Agent, as applicable. Any declared but unpaid dividends payable on a Redemption Date that occurs subsequent to the Dividend Record Date for such Dividend Period shall not be paid to the holder entitled to receive the redemption price on the Redemption Date, but rather shall be paid to the holder of record of the redeemed Preference Shares on such Dividend Record Date relating to the Dividend Payment Date.
Section 8.    Maturity.  The Preference Shares have no stated maturity.  The Preference Shares shall remain in issue perpetually, unless and until the Company elects to redeem the Preference Shares.
Section 9.    Variation or Exchange.
(a)    At any time following a Tax Event or at any time following a Capital Disqualification Change Event, the Company may, without the consent of any holders of the Preference Shares, vary the terms of the Preference Shares or exchange the Preference Shares for new securities, which (i) in the case of a Tax Event, would eliminate the substantial probability that the Company or any Successor Corporation would be required to pay any Additional Amounts with respect to the Preference Shares as a result of a Change in Tax Law or (ii) in the case of Capital Disqualification Change Event, would cause the Preference Shares to become securities that qualify as at least Tier 2 capital (where capital is subdivided into tiers) or its equivalent under then-applicable Capital Adequacy Regulations imposed upon the Company by the BMA, including the Enhanced Capital Requirement, for purposes of determining the solvency margin, capital adequacy ratios or any other comparable ratios, regulatory capital resource or levels of the Company or any subsidiary thereof.  In either case, the terms of the varied securities or new securities considered in the aggregate shall not be less favorable, including from a financial perspective, to holders and beneficial owners of the Preference Shares than the terms of the Preference Shares prior to being varied or exchanged (as reasonably determined by the Company); provided that no such variation of terms or securities received in exchange shall change the specified denominations, or any payment of dividend on, the redemption dates (other than any extension of the period during which an optional redemption may not be exercised by the Company) or currency of, the Preference Shares, reduce the Liquidation Preference thereof or the dividend payable thereon, lower the ranking of the securities, reduce the voting threshold for the issuance of Senior Stock or change the foregoing list of items that may not be so amended as part of such variation or exchange. No such variation of terms or securities received in exchange shall impair the right of a holder of the securities to institute suit for the payment of any amounts due (as provided under this Certificate of Designation), but unpaid with respect to such holder’s securities.
(b)    Prior to any variation or exchange, the Company shall be required to (i) receive an opinion of independent legal advisers of recognized standing to the effect that holders and beneficial owners of the Preference Shares (including as holders and beneficial owners of the varied or exchanged securities) shall not recognize income, gain or loss for United States federal income tax purposes as a result of such variation or exchange and shall be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case had such variation or exchange not occurred, and (ii) deliver a certificate signed by two executive officers of the Company to the transfer agent for the Preference Shares confirming that (x) a Capital Disqualification Change Event or a Tax Event has occurred and is continuing (as reasonably determined by the Company) and (y) the terms of the varied or new securities, considered in the aggregate, are not less favorable, including from a financial perspective, to holders and beneficial owners of the Preference Shares than the terms of the Preference Shares prior to being varied or exchanged (as reasonably determined by the Company).
(c)    Any variation or exchange of the Preference Shares described above shall be made after notice is given to the holders of the Preference Shares not less than 30 nor more than 60 days prior to the date fixed for variation or exchange, as applicable.
Section 10.    Voting Rights.
(a)    General.  Except as provided in this Section 10 or otherwise required by Bermuda law from time to time, the holders of the Preference Shares shall not have any voting rights.
(b)    Right to Elect Two Directors upon Nonpayment Events.
(1)    Whenever dividends payable on any Preference Shares shall have not been declared and paid for the equivalent of any six (6) Dividend Periods, whether or not consecutive (a “Nonpayment”), the holders of the Preference Shares, acting together as a single class with holders of any and all other series of Appointing Preference Shares then issued, shall be entitled to the appointment (the “Appointing Rights”) of a total of two additional members to the Board of Directors (each, a “Preference Share Director”), provided that the appointment of any such directors shall not cause the Company to violate the corporate governance requirements of the New York Stock Exchange as applied to U.S. issuers (or any other securities exchange or automated quotation system on which the Company’s securities may be then listed or quoted) that listed companies must have a majority of independent directors. In the case of a Nonpayment, the number of directors on the Board of Directors shall automatically increase by two (to the extent such increase does not exceed the maximum number of directors permitted under the Company’s Bye-Laws), and the new directors shall be selected by at least a majority of the aggregate liquidation preference of the Preference Shares and any other Appointing Preference Shares at a special meeting called at the request of the record holders of at least 20% of the aggregate liquidation preference of the Preference Shares or of any other series of Appointing Preference Shares then in issue. The Board of Directors shall duly appoint the Preference Share Directors selected by the holders of the Preference Shares and any other Appointing Preference Shares then issued, and shall, subject to the Company’s Bye-Laws, determine which classes of directors the Preference Share Directors shall be a part of and shall allocate such Preference Share Directors to the classes having the longest term of office remaining at the time of such appointment. Each Preference Share Director shall be entitled to one vote per director on any matter.
(2)    The Appointing Rights shall continue until dividends on the Preference Shares and any such other series of Appointing Preference Shares following the Nonpayment shall have been fully declared and paid (or declared and a sum sufficient for the payment of such dividends shall have been set aside for payment) for at least four (4) consecutive Dividend Periods. When the term of a class of directors of which any Preference Share Director is a part of is expiring, the Board of Directors shall set the size of such class of directors to be elected by the Company’s ordinary shareholders at a level to include such Preference Share Director duly appointed by the Board of Directors upon the exercise of the Appointing Rights. The Company shall use its best efforts to increase the number of directors constituting the Board of Directors to the extent necessary to effect these Appointing Rights.
(3)    So long as a Nonpayment shall continue, any vacancy in the office of a Preference Share Director (other than prior to the initial appointment after a Nonpayment) may be filled by the Board of Directors pursuant to an exercise of the Appointing Rights by the holders of Preference Shares and any other Appointing Preference Shares then in issue.
(4)    If and when dividends for four (4) consecutive Dividend Periods following a Nonpayment have been paid in full (or declared and a sum sufficient for the payment of such dividends shall have been set aside), the holders of the Preference Shares shall be divested of the Appointing Rights (subject to revesting in the event of each subsequent Nonpayment, as described above) and, if such Appointing Rights for all other holders of Appointing Preference Shares have terminated, the office of each Preference Share Director so appointed shall, notwithstanding the class of directors such Preference Share Director shall be a part of, automatically be vacated and the number of directors on the Board of Directors shall automatically decrease by two (2). In determining whether dividends have been fully paid for four (4) consecutive Dividend Periods following a Nonpayment, the Company may take into account any dividend the Company elects to pay for a Dividend Period after the regular Dividend Payment Date for that period has passed.
(c)    Voting on Variations of Rights and Senior Stock.
(1)    Notwithstanding the Company’s Bye-Laws, the affirmative vote or consent of the holders of at least 662⁄3% of the aggregate Liquidation Preference of the issued Preference Shares and any series of Appointing Preference Shares, voting together as a single class, shall be required for the authorization or issuance of any class or series of Senior Stock (or any security convertible into or exchangeable for Senior Stock) ranking senior to the Preference Shares as to dividend rights or rights upon the Company’s liquidation.
(2)    The affirmative vote or consent of the holders of at least 662⁄3% of the aggregate Liquidation Preference of the Company’s issued Preference Shares shall be required for amendments to the Company’s Memorandum of Association or Bye-Laws that would materially adversely affect the rights of holders of the Preference Shares.  The authorization of, the increase in the authorized amount of, or the issuance of any shares of any class or series of Parity Stock or Junior Stock shall not require the consent of any holder of the Preference Shares, and shall not be deemed to materially adversely affect the rights of the holders of the Preference Shares.
(3)    If all preference shares of the Company are not equally affected by any such proposed amendment and if the Preference Shares would have diminished status compared to other preference shares as a result, the approval of holders of at least 662/3% of the issued Preference Shares, voting together as a single class, shall be required.
(d)    The foregoing voting provisions of this Section 10 will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all issued Preference Shares shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been set aside for payment by the Company for the benefit of the holders of Preference Shares to effect such redemption as set forth in Section 7.
Section 11.    Record Holders.  To the fullest extent permitted by applicable law, the Company and the transfer agent for the Preference Shares may deem and treat the record holder of any share of Preference Shares as the true and lawful owner thereof for all purposes, and neither the Company nor such transfer agent shall be affected by any notice to the contrary.
Section 12.    Amendments or Modifications; Waiver.
(a)    To the extent permitted by applicable law, the Board of Directors may modify the terms of this Certificate of Designation without the consent of any holder of Preference Shares for any of the following purposes:
(1)    to evidence the succession of another person to the Company’s obligations;
(2)    to add to the covenants for the benefit of the holders of the Preference Shares or to surrender any of the Company’s rights or powers under the Preference Shares;
(3)    to cure any ambiguity to correct or supplement any provisions that may be inconsistent, provided that such action shall not adversely affect the interest of the holders of the Preference Shares in any material respect; or
(4)    to make any other provision with respect to such matters or questions arising under this Certificate of Designation which the Company may deem desirable and which shall not adversely affect the interests of the holders of the Preference Shares in any material respect.
(b)    Except as provided below in Section 12(c), this Certificate of Designation may be amended, modified or supplemented, and noncompliance in any particular instance with any provision of this Certificate of Designation or the Preference Shares may be waived, in each case with the affirmative vote or written consent of the holders of at least a majority of the aggregate Liquidation Preference of the Preference Shares then issued, including any modification occurring in connection with any merger or consolidation of the Company or otherwise.
(c)    The Board of Directors may, subject to the prior written consent or the affirmative vote of the holders of at least a majority of the aggregate Liquidation Preference of the Preference Shares in issue at the time, amend the terms of this Certificate of Designation or the rights, powers, preferences and privileges of the holders of the Preference Shares; provided, that no such amendment shall, without the consent of the holder of each issued Preference Share affected by the amendment:
(1)    change any Dividend Payment Date;
(2)    reduce the rate of dividends payable on the Preference Shares when, as and if declared by the Board of Directors;
(3)    reduce the redemption price or alter the October 1, 2024 optional redemption date;
(4)    change the place or currency of payment;
(5)    impair the right to institute suit for the enforcement of the Preference Shares; or
(6)    change the percentage of aggregate Liquidation Preference of the Preference Shares whose holders must approve any amendment.
Section 13.    Merger, Amalgamation, Consolidation and Sale of Assets.  The Company covenants that it will not merge or amalgamate with or into, consolidate with or convert into any other person or entity or sell, assign, transfer, lease or convey all or substantially all of the Company’s properties and assets into any person or entity, unless:
(a)    either the Company is the continuing corporation or the successor corporation is a corporation organized under the laws of the United States, a state thereof, the District of Columbia, Bermuda or any country which is, on the date hereof, a member of the Organisation for Economic Cooperation and Development and the Preference Shares shall be exchanged for or converted into and shall become Preference Shares of the successor corporation with substantially the same rights, powers, preferences and privileges; and
(b)    the Company or the successor corporation is not, immediately after such merger, amalgamation, consolidation, conversion, sale, assignment, transfer, lease or conveyance, in default of any obligation under the Preference Shares.
Section 14.    Form.
(a)    The Preference Shares shall be issued initially in the form of one or more fully registered global certificates with the global securities legend set forth in Exhibit A hereto (“Global Preference Shares”), each as set forth on the form of Preference Shares certificate attached hereto as Exhibit A which is hereby incorporated in and expressly made a part of this Certificate of Designation. The Global Preference Shares certificate may have notations, legends or endorsements required by law, stock exchange rules, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). The Global Preference Shares shall be deposited on behalf of the holders of the Preference Shares represented thereby with the Registrar, as custodian for DTC (or with such other custodian as DTC may direct), and registered in the name of DTC or a nominee of DTC, duly executed by the Company and countersigned by the Registrar as hereinafter provided, The aggregate number of Preference Shares represented by Global Preference Shares may from time to time be increased or decreased by adjustments made on the records of the Registrar and DTC or its nominee as hereinafter provided.
In the event Global Preference Shares are deposited with or on behalf of DTC, the Company shall execute, and the Registrar shall countersign and deliver, initially one or more Global Preference Shares certificates that (a) shall be registered in the name of Cede & Co. or other nominee of the Depositary and (b) shall be delivered by the Registrar to DTC or pursuant to DTC's instructions or held by the Registrar as custodian for DTC. Members of, or participants in, DTC (“Agent Members”) shall have no rights under this Certificate of Designation with respect to any Global Preference Shares held on their behalf by DTC or by the Registrar as the custodian of DTC or under such Global Preference Shares, and DTC may be treated by the Company, the Registrar and any agent of the Company or the Registrar as the absolute owner of such Global Preference Shares for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Registrar or any agent of the Company or the Registrar from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary practices of DTC governing the exercise of the rights of a holder of a beneficial interest in any Global Preference Shares.
(b)    Owners of beneficial interests in Global Preference Shares shall not be entitled to receive physical delivery of certificated Preference Shares, unless:
(1)    DTC is unwilling or unable to continue as Depositary for the Global Preference Shares and the Company does not appoint a qualified replacement for DTC within 90 calendar days;
(2)    DTC ceases to be a “clearing agency” registered under the Exchange Act and the Company does not appoint a qualified replacement for DTC within 90 calendar days; or
(3)    the Company decides to discontinue the use of book-entry transfer through DTC (or any successor Depositary).
In any such case, the Global Preference Shares shall be exchanged in whole for certificated Preference Shares in registered form, with the same terms and of an equal aggregate liquidation preference (unless the Company determines otherwise in accordance with applicable law). Certificated Preference Shares shall be registered in the name or names of the Person or Person specified by DTC in a written instrument to the Registrar.
(c)    An Officer shall sign the Preference Shares certificate for the Company by manual or facsimile signature. If the Officer whose signature is on a Preference Shares certificate no longer holds that office at the time the Registrar countersigns the Preference Shares certificate, the Preference Shares certificate shall be valid nevertheless.
A Preference Shares certificate shall not be valid until an authorized signatory of the Registrar signs the Preference Shares certificate by manual or facsimile signature. The signature shall be conclusive evidence that the Preference Shares certificate has been countersigned under this Certificate of Designation.
Section 15.    Notices.  All notices or communications in respect of Preference Shares shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designation, the Memorandum of Association, the Bye-Laws or by applicable law.
Section 16.    No Preemptive Rights.  Holders of the Preference Shares shall not have any rights of preemption or subscription whatsoever as to any securities of the Company, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 17.    Limitations on Transfer and Ownership.  The holders of Preference Shares shall be subject to the limitations on transfer and ownership contained in the Bye-laws.
Section 18.    Conversion.  The Preference Shares shall not be convertible into or exchangeable for any other securities or property of the Company.
Section 19.    Other Rights.  The Preference Shares shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions other than as set forth in this Certificate of Designation, the Memorandum of Association, the Bye-laws or applicable law.
Section 20.    Calculation in Respect of Preference Shares.  The Company shall be responsible for making all calculations called for in respect of the Preference Shares, including, but not limited to, the determination of the dividends payable on the Preference Shares.  The Company or its agents shall make all of these calculations in good faith and, absent manifest error, such calculations shall be final and binding on holders of the Preference Shares.  The Company or its agents shall deliver to the Paying Agent a schedule of its calculations and the Paying Agent shall be entitled to rely upon the accuracy of such calculations without independent verification.  The Paying Agent shall forward such calculations to any holder of the Preference Shares upon the request of such holder.
Section 21.    Severability.  In the event any provision of this Certificate of Designation shall be invalid, unenforceable or illegal, then, to the fullest extent permitted by applicable law, the validity, enforceability and legality of the remaining provisions shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF, ASPEN INSURANCE HOLDINGS LIMITED has caused this Certificate of Designation to be signed this 13th day of August, 2019.
ASPEN INSURANCE HOLDINGS LIMITED

By: /s/ Scott Kirk    
Name:  Scott Kirk
Title: Group Chief Finance Officer    

		
	Attest:
	/s/ Mark Cloutier                          

Name: Mark Cloutier
Title: Group Chief Executive Officer & Chairman

[AIHL – Signature Page to Certificate of Designation]

EXHIBIT A
Form of Preference Shares Certificate

5.625% PERPETUAL NON-CUMULATIVE PREFERENCE SHARES
FACE OF SECURITY
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE CERTIFICATE OF DESIGNATION REFERRED TO BELOW.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

	
			
	Certificate Number
	 
	Number of Preference Shares

	1
	 
	10,000

	 
	CUSIP NO.: G05384303

	 
	 
	ISIN NO.: BMG053843030

5.625% Perpetual Non-Cumulative Preference Shares
(liquidation preference U.S.$25,000 per Preference Share)
of
ASPEN INSURANCE HOLDINGS LIMITED
ASPEN INSURANCE HOLDINGS LIMITED, a Bermuda company (the “Company”), hereby certifies that Cede & Co. or its registered assigns (the “Holder”) is the registered owner of 10,000, or such number as is indicated in the records of the Registrar and the Depository, fully paid and non-assessable preference shares of the Company designated the 5.625% Perpetual Non-Cumulative Preference Shares, with a liquidation preference of U.S.$25,000 per share (the “Preference Shares”). The Preference Shares are transferable on the books and records of the Registrar, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preference Shares represented hereby are issued and shall in all respects be subject to the provisions of the Certificate of Designation dated August 13, 2019, as the same may be amended from time to time (the “Certificate of Designation”). Capitalized terms used herein but not defined shall have the meaning given them in the Certificate of Designation. The Company will provide a copy of the Certificate of Designation to a holder without charge upon written request to the Company at its principal place of business.
Reference is hereby made to select provisions of the Preference Shares set forth on the reverse hereof, and to the Certificate of Designation, which select provisions and the Certificate of Designation shall for all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the holder is bound by the Certificate of Designation and is entitled to the benefits thereunder.
Unless the Registrar has properly countersigned, these Preference Shares shall not be entitled to any benefit under the Certificate of Designation or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has executed this certificate this 13th day of August 13, 2019.

ASPEN INSURANCE HOLDINGS LIMITED

By:__________________________________
Name:
Title:

REGISTRAR’S COUNTERSIGNATURE
These are Preference Shares referred to in the within-mentioned Certificate of Designation.
Dated: August 13, 2019

COMPUTERSHARE TRUST COMPANY, N.A., as Registrar

By:_______________________
Authorized Signatory

REVERSE OF SECURITY
Dividends on each Preference Share shall be payable at the rate provided in the Certificate of Designation.
The Preference Shares shall be redeemable at the Company’s option in the manner and accordance with the terms set forth in the Certificate of Designation.
The Company shall furnish without charge to each holder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class or series of share capital and the qualifications, limitations or restrictions of such preferences and/or rights.

ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the Preference Shares evidenced hereby to:
	
			
	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

(Insert assignee’s social security or tax identification number)
	
			
	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

(Insert address and zip code of assignee)
and irrevocably appoints:
	
			
	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

agent to transfer the Preference Shares evidenced hereby on the books of the Transfer Agent. The agent may substitute another to act for him or her.

Date: ____________________________________________________________

Signature:________________________________________________________
(Sign exactly as your name appears on the other side of this Preference Shares Certificate)

Signature Guarantee: _______________________________________________

(Signature must be guaranteed by an “eligible guarantor institution” that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Transfer Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the U.S. Securities Exchange Act of 1934, as amended.)

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