For purposes of this definition, (i) any direct or indirect holding company of HRG shall not itself be considered a Person for purposes of clauses (1) or (3) above or a “person” or “group” for purposes of clauses (1) or (3) above, provided that no “person” or “group” (other than the Permitted Holders or another such holding company) Beneficially Owns, directly or indirectly, more than 50% of the voting power of the Voting Stock of such company, and a majority of the Voting Stock of such holding company immediately following it becoming the holding company of HRG is Beneficially Owned by the Persons who Beneficially Owned the voting power of the Voting Stock of HRG immediately prior to it becoming such holding company and (ii) a Person shall not be deemed to have beneficial ownership of securities subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement. “Change of Control Offer” has the meaning assigned to that term in the Indenture governing the notes. “Collateral Agent” means Wells Fargo Bank, National Association, in its capacity as the Collateral Agent, or any collateral agent appointed pursuant to the Collateral Trust Agreement. “Collateral Coverage Ratio” means, at the date of determination, the ratio of (i) the Fair Market Value of the Collateral (but only to the extent the notes are secured by a first-priority Lien on such Collateral pursuant to the Security Agreements that is subject to no prior Lien) to (ii) the principal amount of Debt secured by Liens on the Collateral outstanding on such date. “Collateral Trust Agreement” means the collateral trust agreement dated as of January 7, 2011 among HRG, the Collateral Agent and the trustee, as amended from time to time. “Consolidated Net Income” means, for any period, the aggregate net income (or loss) of HRG and its Subsidiaries for such period determined on a consolidated basis in conformity with GAAP, provided that the following (without duplication) will be excluded in computing Consolidated Net Income:
| | (1) | the net income (or loss) of any Person that is not a Guarantor, provided, however, that dividends or other distributions actually paid in cash to HRG or any of the Guarantors by such Person during such period shall be included; |
| | (2) | any net income (or loss) of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition; |
| | (3) | any net after-tax gains or losses attributable to or associated with the extinguishment of Debt or Hedging Agreements; |
| | (4) | the cumulative effect of a change in accounting principles; |
| | (5) | any non-cash expense realized or resulting from stock option plans, employee benefit plans or post-employment benefit plans, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other rights; |
| | (6) | to the extent covered by insurance and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (a) not denied by the applicable carrier in writing within 180 days and (b) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within 365 days), expenses with respect to liability or casualty events or business interruption; |
| | (7) | any expenses or charges related to any issuance of Equity Interests, acquisition, disposition, recapitalization or issuance, repayment, refinancing, amendment or modification of Debt (including amortization or write offs of debt issuance or deferred financing costs, premiums and prepayment penalties), in each case, whether or not successful, including any such expenses or charges attributable to the issuance and sale of the notes and the consummation of the exchange offer pursuant to the registration rights agreement; |
| | (8) | any expenses or reserves for liabilities to the extent that HRG or any Subsidiary of HRG is entitled to indemnification therefor under binding agreements; provided that any liabilities for which HRG or such Subsidiary is not actually indemnified shall reduce Consolidated Net Income in the period in which it is determined that HRG or such Subsidiary will not be indemnified; |
| | (9) | to the extent specifically included in the unconsolidated Statement of Operations of HRG, (a) unrealized gains and losses due solely to fluctuations in currency values and the related tax effects according to GAAP shall be excluded (until realized, at which time such gains or losses shall be included); and (b) unrealized gains and losses with respect to hedging obligations for currency exchange risk shall be excluded (until realized, at which time such gains or losses shall be included); and |
| | (10) | to the extent specifically included in the unconsolidated Statement of Operations of HRG, any charges resulting from the application of FASB ASC 350, Intangibles—Goodwill and Other, ASC 815, Accounting for Derivative Instruments and Hedging Activities, Accounting Standards Codification Topic 360-10-35-15, Impairment or Disposal of Long-Lived Assets, Accounting Standards Codification Topic 480-10-25-4, Distinguishing Liabilities from Equity—Overall Recognition, or Accounting Standards Codification Topic 820 Fair Value |
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